Hello, everybody. This is Harald Hasselmann speaking. I have shared my screen already. For those who wanted to see my face, whether I am smiling or whether I am looking seriously, you have to wait another 15 minutes before I stop sharing the screen. I welcome everybody participating in today's call. It is the first time that we are doing a reporting about 2025. There is another conference followed on this one with those who are joining the Kepler Cheuvreux call, which was also announced earlier today morning on the Kepler Cheuvreux press release news. Now, what we would like to do is give you more insight on top of the press release, which was published earlier today by Caroline, giving you an overview about the result of the first quarter, about the first three months of this year.
This is a normal disclaimer that everything is important based on what I'm going to present. This is basically the summary, the starting point of my presentation, as well as the closing remark of the next 15 slides, where I would like to give you that announced overview. Basically, despite all difficulties, challenges, hurdles, problems, whatever you name it, we remain absolutely optimistic to achieve our guidance published earlier in March of this year regarding net sales of EUR 320 million and around EUR 78 million EBIT adjusted. This is the number which we did publish earlier and which we'd like to reiterate today again based on the first quarter, but also the outlook of the remaining eight to nine months still pending for this year. Now, everything is changing.
The Executive Board remains the same, Frank for the U.S. business and the isotope business, Gunnar doing the operations in the segment medical, and hopefully most of you participating in today's call do know me already myself physically. Here, that slide is something which becomes busier and busier. You see the big pharma is continuing in acquiring small companies and running into the radiopharmaceutical world. The race has not stopped yet with big companies, but also smaller companies acquiring whatever fits to enlarge the value chain of their product portfolio. You see a lot of common companies, known companies, but also those entering that field relatively newly are also adding here that play field. That makes the potential of Eckert & Ziegler very bright and optimistic for us to play a dominant role here.
Here again, that is also a slide which you should be aware of with our core isotope products, which we are delivering, and that is actinium, yttrium, lutetium, and gallium, the four dominant isotopes enlarged by the equipment, our hot cells production company in Dresden. The market, EUR 30 billion at the end of the day, with all the challenges we might discuss here later on, has remained unchanged for the years to come. Our three-pillar product portfolio and customer list for lutetium, for actinium, and for CMO activities, if you look backwards and to start with the right one with the contract manufacturing work, at the beginning, we only had Oncosil and Bayer there. Now it is Telix, it is Bicycle recently joined that list, and Pentixapharm, our former subsidiary, is now also an arm's length customer on the CMO activities. Actinium, more and more companies are asking for actinium still.
The numbers are very, very low because it's only used for preclinical or early clinical stages, but it's very important for us to step into that business from the very beginning or to make sure that these companies also later, if they proceed and if they are successful with their activities, that they also then remain as a customer for Eckert & Ziegler. The same applies for lutetium, where we have existing companies, but also new companies being added to that list. That will also in the years to come play a quite important role for our revenue and profit. Eckert & Ziegler still consists of the two segments. The upper one is the pharma part, and the lower part is the industry part, in which basically the revenue, I will demonstrate that in a second, is split 50/50.
Those segments do remain important pillars for the entire Eckert & Ziegler group. Now, the highlights of this quarter, normally we do announce here four, not to overrun or overboard you with too many information, but here again, you see basically what Eckert & Ziegler stands for. It is supply agreements for isotopes, and the first two mentioned here, another supply agreement for actinium, another supply agreement for lutetium, both equally important for the future of Eckert & Ziegler. Then CDMO, a new partnership with Bicycle Therapeutics, a company which is worthwhile looking at, and that demonstrates that also CMO activities will remain and will become a more and more important pillar of the portfolio of Eckert & Ziegler. Last year, we had the first license deal with Telix.
This year, another license deal was followed with the Chinese company QKM for another EUR 10 million plus royalties for the tech transfer and also license agreement to produce actinium-225 in China for the Chinese population. Producing in China for the Chinese market is always something which we were demonstrating as being key to success in China. If you look to these four examples of highlights of last year, that demonstrate that we are executing what we have announced beforehand. Now, in a nutshell, how that was last year's number to demonstrate here the starting point, 50/50 in terms of revenue and even adjusted slightly better than on the medical side, but it also shows you that both segments are important for the future growth of the company, equally participating in the revenue growth.
We do know that the EBIT adjusted number is better, that the profitability is higher in medical because there the growth momentum is it. Now, let's have a look to the numbers, and these were earlier published. Basically, we always demonstrate and present here three key performance indicators, net sales and EBIT adjusted as one which are guidance for. For those who are still looking to the net income numbers, we are also publishing that. You have been informed about quite some internal challenges we were facing. That was the cyber attack on February the 3rd, which was really something you do not wish for your friends and neither for your enemies. Really extremely time-consuming in terms of restoring everything which was blocked for quite some time and also took us time away from producing and then later on selling in the right time frame.
That is why the first quarter was really blocked by that cyber attack. Equally embarrassing was the temporary delivery stop for the generators. Both have been set by now, but still, of course, the first quarter was influenced by that delay of producing or delivering to our customers. That is why we already announced earlier this year that there will be a shift from Q1 to the outer part of the year. In a nutshell, that is why we still are here on last year's—let me take my presentation later on. We are still here on last year's overall sales, which under the circumstances is a good result because we had the fear that due to the cyber attack and the delivery stop, there would be more hurdles to overcome.
We are extremely happy that basically last year's performance in terms of sales could be repeated. In terms of profitability, that is important because for the entire group, the EBIT margin went up from last year 22% to 24%. Normally, we're saying everything above 22% makes us happy or makes me smiling. Due to some cost avoidance of last year, we were able to increase the EBIT adjusted from EUR 15 million to EUR 16.2 million in the first quarter because, A, a better product portfolio in the medical segment, a weaker product portfolio in the isotope segment. That was balanced. In the segment, under the holding, basically, we could avoid certain cost actions, and that was contributing to the savings and increasing the profitability.
In terms of net income, you can say including the former IFRS 5 or not, it's demonstrating here that from last year's, it went up from EUR 9 million to EUR 9.7 million. You see what is influencing here, that is currency effect, that is hyperinflation still influencing, and it's cost of the cyber attack IT infrastructure. These items here were influencing the net income, but we shouldn't spend too much time on that. Looking into the two segments, I do start with the medical segment. Basically, the same appears here for the generator business. Due to the delivery stop in the first quarter, we couldn't ship as much as we wanted. That's why sales are on last year's performance. We had a license deal, as I mentioned earlier, for actinium-225 in China and then also in CMO, a better development compared to last year.
That's why here the downsides and upsides were balanced to each other. Looking to the EBIT adjusted, increasing from €9.7 million to €10.7 million, €1 million more compared to last year, basically due to the positive effect of that license deal I just talked about. If you look to the isotope portfolio, also there a slight improvement compared to last year, but not really worthwhile mentioning it. In terms of the profitability, the weaker product mix, i.e., less oil we're logging in the beginning of this year, was one of the reasons why the profitability is not as strong as last year. Gross margin, two percentage points lower than last year, 44% instead of 46% last year. Also, if you look to the EBIT adjusted margin, it went down from 19% to 16% for the first quarter. That is the situation for the beginning of the year.
We do the translation from the reported EBIT to the adjusted EBIT, and I go straight here to the total. There are not so many topics. The biggest influence here is the currency effect that in this year, you see EUR 0.1, whereas last year we had to take a positive effect of EUR 0.5. That is a development. The weaker dollar starts to make an effect here for comparing it to last year's performance. The rest is upwards and downs. Basically, there are no big changes between EBIT reported and EBIT adjusted. If there are more questions, we can face them during the Q&A session. Let's have a look to the group revenue. America is still the biggest part of our revenue drivers with 44%, with all the consequences resulting out of that strong North American presence.
America is followed by Europe with 33%, and then Asia due to the good deal in China. We have now 20% being represented by Asia. Mainly China demonstrated the largest growth compared to the previous quarter, the first quarter of 2024. All in all, you see here an increase of 9.8%-13.8% based on the effect here in China earlier this year. Middle East and Africa remains relatively low with only 3%. That is still something which might be developed. If you look to the product group of radiopharmaceuticals, then the number of last year was EUR 125 million. Here we have now included one column in order to demonstrate that there is a difference of purely extrapolation of the first quarter numbers of this year times four. That would result in that number due to the lower shipment data of Q1.
That's why we do remain optimistic that by the end of the year, followed by our guidance, that number should end up around EUR 150 million for the entire year. That's why we are not looking to the extrapolation number, but rather to our internal data. If I look to the preliminary figures of April, then we are confident to deliver also on that guidance number. Looking to the Q1 data, here you see Q1, I'm repeating what's happening, only very low growth here, small growth from EUR 28 million to EUR 29 million, 4% growth, but that should then better develop in the next quarters for the group of radiopharmaceuticals. Cash is king these days, EUR 180 million we have on our bank accounts.
Now, people might say, "Why do you have so much cash?" Yeah, it's a lot of money for Eckert & Ziegler, but we should not forget, if you look to the balance sheet, that we also have provisions, that we have certain liabilities on the passive side of the balance sheet, and that's why money has also been kept in addition to pure assets. If you look here to the long-term liabilities, here are our loans. You see that we are continuing in decreasing our loan liabilities at the end of Q1. EUR 19 million is left for the time being. Key figures, key performance indicators, that is the one which was published in the press release, EUR 16 million EBIT adjusted. Cash flow slightly better than last year, EUR 4 million, now EUR 7 million, also positively influenced by the license deal. The rest is basically mentioned here.
You see a reduction in the loans, equity ratio remains stable, and headcount slight increase from 1,070 to 1,090 people, demonstrated by an increased demand in the CMO activities. All in all, this is the financial overview. Coming to an end, the outlook is once again the first slide I started with. We remain optimistic to deliver on our guidance, both in top line as well as bottom line, with the number being published earlier on. With this one, I at least for the time being stopped sharing this screen. I now see here 30 people participating in the call, and I'm more than happy to take all questions you might have. Together with Julian or Olivier and Caroline, we will then do our best in answering all the questions you might have.
Please use your electronic hand so that we can see who has a specific question, which enables us to take your question and then answer it. Who is first? I am looking around. We see the first question coming from Nicolas. You have your slide and your session in an hour's time, but happy to take your first question here as well. Please go ahead, Nicolas.
Hi, I will stick to one question then. Just on the, let's say, one-off payment that you will get from tech transfers, could you provide us a bit of guidance on how should we think about that moving into 2025 and maybe 2026 too? I guess for this quarter, this was EUR 5 million already, so only EUR 5 million left for the rest of the year.
I will give you first a general answer and then ask Julian to give a precise order.
What is five? What is ten? What is before tax? What is after tax? And what is incoming? What is our part of it? Because it's joint venture. We are happy to answer that question. Different to a generator, which is a recurring business. You sell a generator, and after a year, you take the generator back and you send a new one. It's ice cream all day long. License deals like the license deal with Telix, with QKM, and with others to be followed is not plannable as if you're a recurring business like a generator. We worked hard and heavily to get a license deal with Telix. Same applies to QKM in China. You have an extraordinary, but extraordinary high effect on that. You are working on the next license deal.
Our aim is to be a full service provider to our customers, A, in supplying isotopes, and B, fulfilling all their needs. If a potential pharma company tells us, "We want you as a supplier," we supply them. If they tell us, "We want you as a tech transfer company," we also do that. If they say, "We want both of the above," then all of the above, then we are also happy to play that role because it is better to serve them twice instead of losing the opportunity or possibility in giving that second option to a potential competitor. Pure supply depends on the success rate of the pharma company, and we see positive developments and lower developments. The same applies to the license deal.
If you ask me what will happen in 2026, I can tell you we are working on having continuous license deals. Can I make a promise as of today that by June 15, 2026, we will have a signature on the next line? A bit difficult. I would ask Julian to once again explain the structure of why EUR 10 million is only EUR 5 million.
Hi, Nicolas.
Thank you.
Actually, I think everything is answered, but you are completely right with the EUR 5 million. When we first published that deal, there was a number of around EUR 10 million communicated. Due to the fact that this is our joint venture, which is buying from us, we have to eliminate another 50%. You are correct.
It is EUR 5 million, and this is the total EUR 5 million of the deal, as the other five got or will be shown over time, but not yet. For the time being and for this year, this is what is coming from that deal with the Chinese joint venture.
Okay. I guess you also have EUR 10 million from the Telix agreement that we should.
Correct. Correct. The other one in place is a Telix agreement and something between EUR 10-EUR 15 million.
Okay. Thanks.
Alexander, also a well-known analyst here in this scenery. Hello, hello, Mr. Garletson.
Thank you for taking the question. Maybe just on the first moment in revenues, I wonder whether, I mean, I understand that probably all of that relates to medical and specifically radio pharma, if we talk about generators and engineering revenues.
Just wonder if you can give any color as to what magnitude that was. I see that your engineering revenues declined quite a bit, I think EUR 3 million, a quarter- over- quarter you lost. What is the magnitude, I guess the question is, what is the magnitude of gallium revenue is missing? To what extent should we expect the catch-up to happen in Q2, if you can get any clarity on that?
The cyber attack as such did block all systems for a certain time of being. That means for a certain period, we could not produce, we could not wrap, we could not send, we could not ship, and we could not invoice. That was predominantly the case for the medical segment, not so much for the industry IP segment.
But with all clearness, also in the IP segment, in particular for those products being produced in Germany within the IP segment, they were also involved and bothered by that cyber attack. There is also a certain delay in the IP segment. Right you are, I would say 80% is within medical. Now, if you say that normally we should ship a range of 100, not 100 generators, but 100, then probably in February and March, the number of these 100% ordinary delivery was melting down to 20%, something around that. That means that in the months April and May and June, the better, the earlier, the better. Mainly April and May, we should recover that fallout of 80% for February and 60% perhaps for March being recovered in the following two months.
If I see what happened in April, how many generators we shipped, that confirms basically that fallout of the numbers I just mentioned will be recovered. At the end of the day, we will catch up the entire amount of generators not being shipped out, but with that delay of one or two months. Who else has a question? Ladies and gentlemen, this is a once-in-a-life opportunity. Martin Teller.
Hi there. Yes. How did your customers react then to not being able to receive product? Has it had any impact that could be more longer term?
One of the key success factors in radioisotopes is that you can guarantee a good interaction with your customers. These, whatever good means, is based on good quality in time delivery, good communication, and reliable communication.
If you look to another area in which the medical segment is not so active, but some of you might be aware of that, there is the technetium generator situation. There you have delivery stops quite often for whatever reasons. Now, Eckert & Ziegler, in particular for the gallium generator business, wants to demonstrate and has demonstrated that they can rely on what we have promised. A cyber attack is really something extraordinary, and we did communicate that cyber attack proactively into the community, making sure there will be some hiccups. We are doing our utmost best to overcome that shortage. I must say that the feedback from our customers was very unpleasant, but we do understand that you really put all power on deck in order to make sure that the fastest recovery process has been initiated, and we do appreciate that.
Thirdly, they also said, "Hopefully, that does not happen to us." Hopefully, no customer data has been also used in a wrong manner. Both could be confirmed, so that we had a very intensive communication with our customers saying, "We are pretty sure that by that event, you will get a generator. Do you have still enough energy?" In most of the cases, these customers do order a generator far in advance so that they do know if there is a week or two weeks' delay, they can still survive it. I would say they accepted it, and the complaints we really received were countable in less than a hand. I think that is based on the good relationship.
In the other segment, Alexander Garletson was mentioning in the engineering part, of course, you are in a construction phase with your customer, and then you are drawing something, how to construct and to erect a hot cell. Then suddenly, you do not have access to the drawings for a certain time of being. The customer is sitting and playing the piano with his finger on the desk, waiting for the next meeting, which is postponed. That is, of course, unpleasant. Here again, people do know that a cyber attack can happen at any time, at any place. That is why it was interpreted different than drunken people in the production area or whatever, where we are losing control.
Thank you.
Alexander, you have another follow-up question.
Yes, please. Just a couple of short ones, maybe regarding the CapEx.
Could you just remind us what you expect to deploy for the full year? I think Q1, in terms of investment, has been on the lighter side of things. Also, on the CDMO partnership with Bicycle. For a project like that, when it sort of progresses further on into maturity, what is the kind of potential revenue generation capacity of those projects? Or if you can provide any color.
Yeah. Julian can give you an outlook about the CapEx in a minute. Companies like Bicycle. At the end of the day, we are all striving for the same target, and that is to become the commercial supplier of these products. Commercial supplier of that product in a timeframe of, let me say, four years should then be in the middle double-digit EUR amount.
If that really flies with CDMO, CMO on a commercial production, and also then full capacity isotope production. There is really a lot of fantasy in it, only based on the assumption that the potential customer, be it Bicycle or someone else, is committed to co-finance pre-investments. We will not go upfront into a EUR 10, 20, 30 million investment period if we do not have the full commitment. That is why companies like Bicycle, they are low, low, low, low, low, low, low until they have proven evidence of their compound. Then based on that, they will then jump on. If that develops, then it can be easily reached a double-digit growth momentum in the years to come. If you ask me, will that happen in 2025, 2026, or 2027, I doubt that. That will be too fast in terms of achieving that numbers.
That is why we have quite a lot of horses starting in that race, being by our own and others, making sure that not everybody will reach the target line, but more than 50%. Julian, do you have a CapEx overview which you can share with your audience here?
Actually, we have not updated everything by now. The story that we have told you is still in place. We expected two years of higher investments around EUR 40 million-EUR 50 million we were always mentioning due to the fact that we had some focus last February and March on other projects that consumed very much time and a little bit of money. There is maybe some delay. We have not updated everything yet, but still, I expect it to be around EUR 40 million.
Martin, there is another question from Martin Teller again. If the hand is still extra one.
I did have another question. Yeah, probably one that's hard to answer. Anything you could reflect on in terms of what the company's learned about the cyber attack and, I guess, any mitigations you've done since and just what were the vulnerabilities that they managed to find?
Yeah. One of the takeaways is that, at least for us, under the certain circumstances, cloud solutions are better than physical solutions. We will immigrate basically completely into the cloud because it fits better to our needs and apparently provides a higher security. I'm not saying that this is then unbeatable, but cloud seems to be the better solution.
If you go to the firewall discussion, you see that firewall A is as good as firewall B, as firewall C, but you really have a good and valid security band if worldwide you are using 100% the same firewall. Even if other firewalls are equally certified and qualified and have the same standards, it makes more sense to have only one firewall. That is one. The third one is a training component. We cannot say what initiated the entire cyber attack. It can be me, you, or Julian, whatever, pressing or falling into a phishing mail or whatever. Positively speaking, that means training becomes a key element of prevention. Like everybody else, people here, employees, will be now facing situations where the training frequency goes up.
Also, fake phishing or phishing mails produced by our IT department should help to increase the awareness of not falling into another trap again, which might have been the reason. We do not know whether that was the cause of the root cause. These three elements are at least one of the key components we will make better in the future.
Thank you. That is very helpful.
Thank you. Gareth Blades, please.
Hi. Just wondering on the cyber attack, to kind of make out for the delays in shipping the generators, have you had to offer any kind of goodwill-type discounts to customers to keep them happy?
It's not basically the question of making them happy, but if we sell a generator with a quantity or a quality and activity of 100% and it arrives due to the delay only by 90%, then in these cases, and if it's for good cause because they ordered in time and they fulfilled all the requirements and all, but it's completely our mistake and only this 90% was being delivered, then in these individual cases, we were also then willing to reduce the price from 100% based on the actual activity of a generator later on in these cases.
Okay. Okay. Understood. Just wondering if you could.
Once again, the number of these cases where the quantity was, the activity was low is very countable.
Okay. Okay.
I guess in terms of potential business development opportunities, have any of those kind of come and gone because of the cyber attack? Maybe just through to the optics of having one.
No. Because you cannot if you then say, "Okay, Eckert & Ziegler does not deliver a generator by March 20, I'm so upset. I'm so angry, so annoyed that I want to shift to potential competitors," then there is basically only one competitor in the market. You know that there's a Belgian company called IRE. Now, if you call them on March 20, IRE, and said, "Can I have a generator?" "We're happy to deliver your generator. Please wait eight weeks because we have to produce and put it in row for shipping that to you." That would be even longer than waiting the remaining time for getting the delayed run from us.
That was not the case at all.
Okay. Thank you.
Do I see here another question from the audience as of now? That seems not to be the case. Nobody wants to come around. Thanks for dialing in. Thanks for the question. Thanks also for the patience. I think with the quite fair and good communication between the Eckert & Ziegler team here and you as the analyst on the other side, we can build on that open conversation, explaining the root cause for the numbers just being presented and that you follow us for the last years, but also for the quarters to come. I am very much looking forward in three months' time to present here again the Q2 data in due course. Thanks very much and have a good day. Bye-bye to everyone.