As the clock strikes 10, we are live here at Investor Studios when Acuvi is holding their business update. During this broadcast, I will keep my eye on the live chat for any questions that might come in, which I will take at the end of this sort of discussion between me and CEO Nils Sjöholm. Those who are joining us here live in the studio are also free to ask their questions during the end of this broadcast. It is just a matter of raising your hand, and we will deliver the microphone to you. Without further ado, Nils Sjöholm, welcome very much to the studio.
Thank you very much. I'm really looking forward to this.
Great. I thought we could begin this business update with sort of an introduction to Acuvi for those viewers who might not know you, as well as others. Could you give us a brief overview of the company and your sort of business areas?
Yeah. Acuvi is a motion precision technology company. We develop solutions for our customers who have a need to position different things. We can do that over several meters or even down to nanometer resolution.
Sounds like customers have very specialized needs when it comes to these micro sort of.
It's a very novel technology. Of course, the customers have very high demands, and they have very specific solutions. I'm sure that at least some of you already know that we have really high-profile customers in different areas.
How closely do you work with your customers in your different projects?
We try to work really close with them. The idea is to sort of hold their hand throughout the entire project. It depends a little bit on what role we have. In some cases, we are direct with them, and that's much easier for us to discuss and negotiate and talk to them and design stuff together with them. In other cases, we go through distributors. We are not as much involved, but we have to support our distributors, of course.
We'll talk about distributors, of course. Before we do that, could you give us a brief overview of the markets that you're active in?
I mean, basically, we don't say no to any markets. Obviously, being so high-tech that we are, we are mostly present within med tech, life science, semicon, of course, and also lab automation. I mean, there are also other areas where we're looking into developing further. A few may be like nuclear physics, space, and so on, radiation areas. Yeah. There's quite a lot of interesting things going forward.
Indeed. The competition in these different sort of industries?
I think there's competition, of course. I think, you know, given the customers that we have seen and that we already have, basically, there is room for a lot more new customers. There is also room for more competition. I think we're in a good situation, and we have ideas on how to position ourselves going forward.
Acuvi is facing a lot of change recently, not to mention you, who stepped into the CEO role at the beginning of October, if I'm not mistaken, or in the middle of it. Can you give us a brief introduction to yourself and give us a little bit of an overview or background?
My business background or personal background or both?
Yeah, sure.
OK. I mean, I was actually adopted from Nepal. I lived in Nepal for three years with my Swedish parents. We moved to Italy. I've been there for a year and then four years in Ethiopia, four years in Tanzania, four years in Kenya. I moved one year to the U.S., came back to Sweden, and went to the Royal Institute of Technology, where I did electrical engineering. My inspiration or interests have always been within biology. I managed to find a way from electrical engineering into the med tech business. I've done med tech for pretty much 20 years, seven years at Karolinska, seven years at Siemens, six years with a pathology distribution company. It's sort of my passion. It's been my passion for quite some time. I came across Acuvi from an investor point of view.
I'm really interested in stocks. I've been investing since 2007, 2008. The big interest took place when the financial crisis occurred, and there was an opportunity to buy stocks at reasonable prices and make maybe not a fortune, but at least some money. Since then, you know, I've been listening and trying to find new interesting companies. I was listening to a podcast, and this was a couple of years ago. Acuvi came up as one of the companies. Usually, there are so many companies that are mentioned, and most of them just disappear. There was something about this company that really touched my nerve or spiked my interest, I should say. I think it's the combination of truly high-tech stuff and a Swedish company, Swedish manufacturing, but also being now since 2021 global. There are so many interesting aspects with this company.
I started buying stocks. And then eventually, I had quite a stake. So I thought, you know, I might as well just work closer to my own investment. So I sent Acuvi an email, and that's where we're now.
I see. From an investor point of view, you were a shareholder.
Exactly. All the shares that I had were actually acquired before I started.
I see. As you're now stepping into the CEO role, if I'm not mistaken, you were head of sales. Have you a replacement there?
Yes. Obviously, as probably most of the listeners know, we are focusing heavily on growing our revenue and sales. I came in, and I did that for two months. I see a lot of potential. Of course, that is really critical for me to replace that position because it is going to be needed going forward. Luckily for me, I have some people in my network. A person that I have been working with during my time at Siemens was available, and we have already signed him, and he is going to start on December 1. That is a quick hire, I would say. We are also looking for a CFO. My strengths are more within sales and customer relations and interactions with teams and building the strategy behind the company.
I really need somebody who's really good at the financial parts as well so that they can help us grow the company together. It's going to be a global company. We're publicly listed. We also have ideas for mergers and acquisitions. Lots of exciting things going ahead. This is really a good time, if you're a potential CFO candidate, to reach out, I'd say.
Interesting. Considering your background in specifically sales and customer service, is that where focus will be as you take the rudder of Acuvi?
Obviously, we have to look at costs. That's going to be very important. We have to look at production efficiency. I see that we can do quite a few things in both those areas. Driving sales is going to be the key going forward. I mean, we are sprung out of a research group from the beginning. When you develop something that is so novel technology, like p iezo motors, not very many players can actually do what we're doing. If you're an engineer with a need to move something with nanometer precision, you will probably Google that, and you will find Acuvi through the web. That's, I think, how sales has been done quite a bit in the past. We were pretty much reactive.
Look, we have more than 500 customers, and they are spread out through a lot of different niches and branches. We are probably represented in almost every high-tech area there is. There is no reason why we should not be able to just go out and target similar customers to the ones that we already have. This requires a sales force. It is really nice that I now get to step in at a time where some of the foundation for this has already been laid. We have a couple of salespeople that are doing inside sales that will support the sales directors out in the regions. We have at least one regional sales director in each of the continents, the U.S., Europe, and Asia. This is going to be a huge difference now that we have these people out there.
We also have to be the way that we are selling will change a little bit over time because I think we are coming from the research group where everybody knows a lot about everything, but maybe were not very good at selling stuff. Now we have really proficient salespeople that need to interact with the product engineers that actually know the technical details very well. Together, we will be able to develop our customers together with them. I think it is going to be very essential that we have these product engineers supporting in the sales meetings, not up at front from the beginning. The salespeople will need to be able to open the door and develop the customer a little bit. Once it comes to the design phase, that is when you want the true product people to get involved.
The big strategic initiative that you're doing is that you're moving away from using distributor in your American and European markets, instead focusing on what I assume to be in-house sales. Why is this the right move?
Exactly. I think there's a very good rationale behind doing that because when you're selling something that's very, very complex, it makes a lot of sense to actually be much more directly involved with the customer because they usually don't come to us with a ready solution and want to buy hundreds and thousands of motors. They usually come to us with an idea. They want to develop that idea together with somebody who's very knowledgeable. We believe that although we have very good distributors, nobody can do it as good as ourselves. For a lot of the markets, it makes sense to actually get involved directly with the customers. I think we're already seeing a lot of fruits coming from that strategic initiative. Like you mentioned, we have not included Asia in that.
Because I think also with my cultural background, having lived in lots of different countries, it's so easy to think like Sweden and Denmark are the same, where the culture is so similar that there's not much of a difference. It actually turns out that there is a difference. When you look at Asia, and I've spoken to people who have lived there for many, many years, especially like Japan, for an example, you cannot make business if you're a company that's just been around for a year or two years. They need the highest technology or the best technology on the market, but they will never do business with you unless they really trust you and the company. They want to see that you've been around for quite a few years. Also, the cultures between Japan, Taiwan, China, they're quite different.
I think we have to be very careful and do this in a very strategic, proper way. I think the way forward is to actually keep the distributors in Asia and develop them together with us. We have not had the practice of training the distributors properly, having processes in place for that, for regular updates and trainings and go through product launches and so on. I think if we just support them in a better way going forward, we can get much more out of those distributors than we are today. The market in Asia is huge.
Talk to us more about Asia because you will stick with using distributors there. Is that also true for the long term? I mean, considering maybe two, three years, you might know the market a bit more intensively.
I mean, as of today, we don't have exclusive contracts with distributors. We are free to take over sales whenever we want. I still think it doesn't make sense to do that or communicate that unless you are very sure that you can do it better than them. At this point in time, I don't see that we can do it better than them. I don't exclude that option going forward. For many years from now, I think we'll go with the distributors. Some of our distributors are actually very well connected. It turns out now we are collaborating a little bit more with Business Sweden, who are represented in many of the Asian countries. We can get a lot of traction and help from them, I think.
Talk to us a little bit about margins then, because I assume there's one margin to consider when using distributors and another to consider when you're using your own resources for these sales pipelines. Could you tell us what the expected net effect is of using your own sort of resources for this?
Yeah, very valid point. Of course, you would expect the margins to be higher if you can do the direct sales. I actually think that the entire sales will improve a lot if you do direct sales properly because it's not just getting higher margins on what you sell, which is true, but it's also getting more customers when you're doing it directly and by yourself. I think there's a double positive effect on that. As you know, and I want to be clear about this, I mean, I see a huge potential for the company. These are not projects that go from zero to 100 overnight. It's usually about very demanding design engineers that are in a product cycle where they need a development or something, and they will reach out and sort of start investigating our solutions and products and see if they fit.
They will buy something small to start off with, maybe for an experiment. Then half a year later, they might buy a few more motors just to grow their experiment. Eventually, a couple of years down the line, that's when they have an instrument that may be FDA approved or whatever. It is going to take a couple of years. For sure, you need to start somewhere. If we do not start today, we will not have it in two or three years either. I think the potential is huge. That is part of the reason why I wanted to take myself on to this job in the first place.
Will this strategy, will it yield more volumes in sales?
We're already seeing that some of our direct relationships are yielding more sales because these customers are growing. I think part of the reason that they can grow is that they have a better solution in place already at the design phase. By us being involved at an early stage, we are able to come up with a better solution for the customer. We've seen that because some customers have bought things from us, and they come back to us a year later, and they say, well, we're not getting the lifetime that's supposed to be out of this motor, or we're not getting the solution to do exactly what we wanted and so on. It turns out when we look at these things that they haven't really fitted the motors or designed their instrument in the right way.
I think there's a huge win-win if we can be involved early and help them.
As we have discussed margins and cash flow, can we also talk about your current projects and pipelines? Does that sort of change as your strategy also does?
I mean, part of what I've been doing now is trying to gather information on where we stand as a company. I joined three months ago as VP Global Sales, and I was focused on entirely the sales part of the company. Now, since the last month, that has changed. I'm looking much more into what are we doing, what projects do we have ongoing, what is our roadmap going forward. We have a lot of projects going on. I'm not the expert to determine exactly which ones are going to be the biggest winners for us. This is the work that me and our team have to do together and find out which ones we want to move forward with. I know what has been communicated also. Some of these are high expectation projects. Some of them are high volume projects.
Some of them are small volume but high margin projects. It is really about surgical precision, trying to find out which horse is to bet on. It is something that I have to do together with the team. We have not touched that, but I also want to be clear on the fact that my job now is to come up with a strategy and a plan for Acuvi both in short term, midterm, and long term. That plan needs to be presented to the board. That is going to be done very soon now. The board was very generous to give me a lot of time. They want to have this be a good plan and something that we can really deliver on. They gave me a lot of time, but I do not need all that time. We can have that meeting quite soon.
Once that's been communicated and everybody has agreed, I think we'll be able to communicate much more to the shareholders and the market as well.
More specifically, can I ask when?
I think it's fair to say that we need the Q4 numbers to come out first. After that, I think we should be good to go. Yeah, maybe for the next quarter, we should really be done and ready.
I know one viewer is curious about Sensapex. Could you speak to us a little bit about that?
Yeah, Sensapex is one of the three daughter companies that we have. They are specialized in micromanipulators. They've been doing really well since the acquisition. I would say that the potential of doing much better is big. They have certainly not disappointed us, and they have a really good team in place. I have been involved in some of the pipeline that's going on right now, and some quite interesting stuff has been coming up very recently. I think there's huge potential for Sensapex, and it sort of complements our portfolio quite nicely, I would say. What Sensapex is doing is also something that is relevant for the Asian market. I think we can see some interesting projects from them.
Let's talk about your targets then for 2025. Your EBITDA target is between SEK 52 million and SEK 55 million. In your Q2 report, these targets were raised, SEK 65 million with an EBITDA margin of between 25% and 30% in 2026. In 2027, it's SEK 85 million in EBITDA. Considering the changes you're currently doing in your strategy and the company overall, do these stand?
I mean, I understand if you look at the numbers that you may have concerns on how this year is going to end. It's a natural question, I think. From my perspective, I'm coming in from the outside. I'm really new. I was CEO at a different company almost seven years before I joined Acuvi. From that time, I know that you develop a feeling for how the business is going. You know that some business is going to come in late at the year, even if you don't have it in the books and so on. This is a sort of a gut feeling that I don't have at Acuvi right now.
What I do know is that the board has a, what do you call it, like they have to communicate something to the market as soon as they feel that we will miss the targets, for instance. Since they haven't done that, I have no reason to believe that we will miss them. I think going forward, it is an aggressive timeline. My personal standpoint would be that it depends on what we did in the sales work two, three years ago because that's what we're going to see going forward. That's the sort of puzzle that I'm putting together right now. I mean, like I told you before, the potential for this company is huge, really. It will be really fun going after those numbers.
Profitability is one thing, cash flow, and yeah, cash flow. Can you tell us about that? What do you expect to be cash flow positive?
Actually, I believe that we became cash flow positive this autumn. That is a really good foundation for us going forward.
All right. I will open up the floor for any questions that we might have here and also sort of talk about a few questions that came in here in the live chat. First and foremost, [Altrove], what is the sort of situation there?
OK, so [Altrove] is one of the projects that have come up when I dug around to see what we have as ongoing projects. It's a project that has come really far. I know that it was targeting mobile business and 5G business. I don't really know exactly what we're going to do going forward with that project or any of the other projects. I know it's been a very high target project in the past. I'll have to get back on that, but it's definitely on the radar.
We turn to the floor now for any questions that our audience might have. Yes, one moment. Yeah, regarding your M&A agenda, of course, it's impossible to predict the next acquisition. What is your ambition? What are you kind of looking for to complement the group?
There were a few things that were really attractive with this company in the first place. One of them was that we are a global company. We have manufacture in almost every one of the three continents. I come from a history with a serial acquirer where we bought lots of companies, not necessarily looking for synergies between the companies, but they could be quite different, actually. I'm really happy that Acuvi has a history of acquiring companies. I have spoken to the board about acquisitions. Everybody's on the same page saying that this is a very interesting aspect for us. There is a list of prospects and so on. I cannot speak for how far the board has come in that prospect list. I have a couple of potential candidates as well.
Whether we will look for synergies, because that could actually help some of our daughter companies, or whether we will have companies that are just involved with precision in motion, I think both are very, very relevant. It is definitely a topic that looks interesting and something I think we should pursue going forward.
If I could just come in here, in your own candidates for potential M&A, what are the common denominators?
Movement, I would say. The ones that I have picked up so far are prospects that I think would leverage our existing business. That would be synergies where one plus one becomes three, basically.
Any other questions from our live audience? Yes.
I have a background as electronic engineers. I think you have also.
I do.
Actually, I used the motor 10 or 15 years ago. I designed the control. I noticed that the motor was wonderful, beautiful. You did not have any knowledge in electronics. You had some consulting engineer who had a credit card-looking control against the motor. It was full with patches and things. You had to ask him. I think, do you have any plans to build up your knowledge of electronics, maybe making one chip solution or something to control the loss against the motor itself? Do you have any plans? Do you have any building up some department in your company?
Yeah, I hear what you're saying. We do have the electronics. It's been a work that's been progressing over a long time. I do believe that there's been patchwork and so on. They are working well today. However, you are right when you're saying that there may be a reason to look over it and maybe build something from scratch. I do not know at this time if that's the way we're going to go. It is one of the topics that we're looking into.
Yeah, I have to say that actually, I used the motor in a position, servo, position to control the position. It's wonderful. The competitive technology, you usually use an ordinary DC motor. With a DC motor, you control velocity. With your motor, it's like a stepping motor. It's much easier to control. I think it's wonderful. Still, I would like a one-chip solution for the interface against the motor, actually.
I appreciate the ideas. I mean, I'll bring up everything with the team. I cannot give you more of an answer right now, but definitely worth looking into.
Right.
A question from the chat then. When can we expect a turnaround for the product/PiezoMotor segment? Do you understand the reason why it is declining?
I mean, first of all, when we talk about standard products and so on, I'm not really familiar with that because I just came into the company. I see our product portfolio. I don't know exactly how we should go about this going forward. It will probably not make sense to make any changes for this year. Going forward, after next year, we may look into how we group our products and how we present that to the market. Sorry.
All right. I'll go with a final question. And then I'll also head—oh, I'm sorry. Yes.
Yes, I have a question on sales initiatives that you alluded to during the presentation. You're 55 full-time employees today. How many are in sales today? What do you foresee going forward? How much do you need to kind of invest in sales initiatives?
We have five and one-half full-time employees that are directly involved as salespeople. As I was explaining, I do not think we can do sales just the traditional way with one person reaching out to the customer and then developing them throughout the entire pipeline. I think we need support from the product group. Of course, those people also have to be involved in the sales process. We are setting up through our CRM system, which is very modern, being implemented as we speak right now. We are setting up an interface between the salespeople and the product people so that they can more easily support the sales channels. We will also have dedicated product people out in the region, at least one to two in the United States and one to start with in Asia. They will be supporting that salesperson immediately.
Now there's quite a few salespeople, I would say.
It is more of a reorg internally with current full-time employees than that you are going to add two in North America and another person. Is that correct?
I would say that we have increased quite a bit because in the past, there were a couple of salespeople around Switzerland, Austria. Now we have, like I said, five and one-half full-time dedicated for just sales. I think that's an increase by at least three people so far.
My question was more forward-looking.
OK, yeah. Definitely, the idea is that each region should not depend on people located somewhere else because we've seen that that's quite tiring, especially if you're a very good design engineer located in Sweden. You have to get up very early to support the Asian business. You have to stay up very late to support the U.S. business. We have to develop these teams across regions. I will say that in the past, it was quite easy. I mean, I'm talking like a decade or two decades ago. You would present a business case and say, if I can just have one or two more resources, I can deliver this much profit or revenue. This has changed. I think we need to invest carefully. We've already taken on some headcounts to show that we are willing to invest in growth.
Now the regions also have to deliver and show that they can benefit from those extra resources. Of course, we will just keep growing the teams as needed. I definitely think that if there's been a bottleneck for Acuvi in the past, it has been a lot on the sales side. It is really true what we've said that we need to focus on growth going forward.
I will ask one question we got in beforehand from some of the investors. Then I will also head and ask the live audience here. Can you tell us a little bit about your volume projects? How is work being done actively there?
I think the biggest volume projects that we have is one that you mentioned is the [Altra]. Regarding the business that we have today, it's not really high volume in that sense. Of course, there are some customers that are buying a lot of motors. I mean, generally speaking, we are today in a low volume area where we have very high margins and very specific customers. Going forward, yeah, that's something for me and the team to discuss. Also with the board, we have come quite far in some of the high volume projects. It might make sense to complete them. What I want to do is go through the list and find out what is the actual business case.
Because even if we've come very far in some of them, it doesn't make sense to throw more money at them if we don't still see that business case. To be honest, some of these development projects that we have in our pipeline, they have been ongoing for quite some time. I think it makes sense to actually look at the business cases that are still relevant before investing further.
We turn now to the live audience for a final time. No. I will express my gratitude towards the live audience here. I will also express our gratitude towards the viewers at home. Finally, Nils Sjöholm, CEO, I will express my gratitude to you for being here and answering our questions.
Thank you very much for having me here. It was great .