Hello, thank you for taking the time today. I would like to give you a very warm welcome to BICO Group's 2022 Q4 earnings call. My name is Erik Gatenholm, President and CEO here at BICO, today I'm here with our newly appointed CFO, Jacob Thordenberg. The purpose of this call is to present our Q4 financial results and provide a business update for BICO Group. I would like to start off by thanking the entire team for the extraordinary performance in 2022. It's a great pleasure working with everyone on our team, serving the continuously growing needs of the life sciences industry around the world, through persistence and resilience, manage the conditions in this uncertain macroeconomy.
2022 has certainly been a turbulent year for many growth and life sciences companies, I believe that we're doing the right things to steer the business towards a more profitable and cash flow-oriented way of working, and to ensure, of course, longevity and continuity of our mission. While many important projects are still in progress, I'm proud to see us continue in the right direction. The products we offer enable the pharmaceutical and biopharma industries develop new treatments faster and safer, with more specificity and less need for animal testing. We're on an exciting journey to create the future of life-saving treatments together with our customers, we look forward to serving their increasing laboratory tools, reagents, and automation demands.
Our ambitious goal to create the future of health require us to invest and expand the novel application areas of research that will make an impact on the healthcare industry many years down the road. We will start today's session with a Q4 highlight describing the quarter in more detail, followed by a review of the financial performance by Jacob, followed by a business area performance update, and finish with a general outlook for the business. In Q4, BICO achieved an all-time high net sales of SEK 674.1 million, resulting in a total revenue growth of 30% and an organic revenue growth of 8%.
We're especially pleased to see continued organic growth for the full-year in constant currency, although we experienced certain slowdown due to our more cautious market approach with reduced focus on the small biotech customer segment, diminishing COVID-related business, and strong comparison from last year, where many orders from the third quarter were pushed over to the fourth quarter. The rapid reduction of COVID-related sales, especially in our diagnostics automation business, and specifically concentrated to one company, Ginolis, has resulted in a more normalized level of sales for parts of 2022. When excluding this from organic growth, we achieved organic growth of 20% in Q4 and 25% for the full-year. This is also more in line with our ambitious goals as the business returns to a more normalized level.
Worldwide demand for BICO's products continues to remain strong in the fourth quarter, reflected by high order intake and persistent interest from our academic and pharmaceutical customers. Our laboratory tools cater to all top pharmaceutical companies, several Fortune 500 companies, and prestigious academic institutions. With this strong customer base across all business areas, the Bioprinting business area achieved 21% organic growth, the Biosciences business area achieved 18% organic growth, and the Bioautomation business area achieved -11% organic growth. Excluding COVID-diminished sales in Ginolis, Bioautomation achieved 22.1% organic growth. Again, this is thanks to our continued success with laboratory tools and sample preparation products, cell biology and Bioprinting portfolio, and automation workflows. As mentioned and specifically related to our lateral flow automation business at Ginolis, COVID-related sales shrunk rapidly over the year and significantly in Q4, resulting in negative growth and losses.
Going into 2023, we continue to further right-size the Ginolis organization according to a much more normalized business level. We're also pleased to see the continued improvement in profitability this quarter. Reported EBITDA amounted to SEK 24.3 million, corresponding to a margin of 3.6%. This improved profitability was driven by increased sales, lower operating expenses in relation to sales, and some currency tailwinds. While the EBITDA margin still remains relatively low, it is encouraging to see continuous results from the initiated activities to strengthen profitability in the group. Given the turbulent macroeconomic environment, we have a firm focus on profitability and cash flow. Great focus has been placed on improving profitability in the four group companies with a negative EBITDA, and as well as reducing central overhead costs with a recently announced cost reduction program.
This, of course, targeted for savings of SEK 100 million with an expected full effect from Q1 2023. The program is well on track, and in the fourth quarter, we have seen positive developments in three of the four loss-making companies, with an improved outlook in the coming year. We have initiated an exciting partnership with one of the leading life science companies in the world, Sartorius. In the fourth quarter, BICO reached an agreement with Sartorius on strategic cooperation, followed by a SEK 487 million directed share issue of shares to Sartorius.
The partnership has strengthened BICO's balance sheet, but most importantly is a strong quality stamp validating the underlying product and technological potential for BICO and its future ahead. It highlights the exciting potential for BICO's bioconvergence platform and the business opportunity that has been built over the last seven years. In conjunction with the share issue, we have agreed to explore a wide range of cooperations within technology, sales, and marketing. Our primary focus will be BICO's spheroid, 3D cell culturing, and bioprinting technologies, as well as digital solutions for laboratory automation workflows. Additionally, we're exploring commercial expansions of these BICO's products, in APAC regions, and the strategic collaboration with Sartorius expected to significantly expand our presence and accelerate growth in APAC, where BICO today has considerable expansion potential.
We will get access to value-adding complementary technologies and products, which will enhance our current customer offering within Bioprinting and Bioautomation while also getting access to a world-renowned marketing and sales organization with decades of success. The collaboration agreements are currently being developed in detail, and we expect them to be signed during the first quarter. While the COVID pandemic created supply and logistical problems in its wake, we experienced strong revenues in 2020 and 2021 in conjunction with the global medical response via providing fast and innovative diagnostic automation equipment. This was especially relevant to one company, Ginolis, which successfully ramped up their organization to meet global demand for lateral flow tests. The ramp-up required significant recruitment for operations and R&D personnel, investments in infrastructure, and expansion of sales channels around the globe.
By 2022, and as mentioned in Q3, sales related to COVID diagnostics automation were diminishing much faster than anticipated. On top of this, Ginolis faced stronger competition from Asia undercutting in lateral flow automation pricing, which has become a commodity since the global pandemic brought heightened demands over the last two years. Ginolis has not been able to transition as fast as we had desired and address new customer segments and has therefore faced challenges both in order intake and profitability. In addition to this, the company has maintained a heightened organizational cost structure longer than necessary, incurring losses in 2022. Ginolis reported sales and EBITDA in 2022 of SEK 140 million and negative SEK 74 million, respectively.
With this vast reduced focus on lateral flow automation segment alongside our impairment tests of goodwill, it has led to the decision to write down goodwill in Ginolis totaling SEK 625 million. While the pandemic period has contributed to major market uncertainties and rapid fluctuations, this performance is far below our expectations and ambitions. Further measures such as extensive cost cuts have been taken to right-sized organization to more normalized market situation. We're confident in our ability to ensure continued expansion of BICO Group, and on the bright side, it's encouraging to see such strong performance from the other companies in the group, delivering both organic growth and profitability for BICO. Now Jacob will tell you a bit more about the Q4 financials.
Thank you very much, Erik. I will take you through the key financials in the fourth quarter. Net sales amounted to SEK 674 million compared to SEK 519 million in the fourth quarter last year, which corresponded to an increase of 30%. Organic growth for the quarter amounted to 8%, negatively impacted by a very strong fourth quarter last year, with supply chain issues shifting revenues from Q3 - Q4, as well as the post-pandemic downturn in Ginolis just mentioned by Erik. Gross profit in the quarter amounted to SEK 482.5 million, translating into a gross margin of 71.6%. EBITDA in the quarter amounted to SEK 24.3 million, corresponding to a margin of 3.6%.
This improved profitability was driven by increased sales, lower operating expenses in relation to sales, and some currency tailwinds. The result was negatively impacted by restructuring costs and significant losses in Ginolis. Net profit loss for the quarter amounted to SEK -901.8 million and was affected by goodwill impairment of Ginolis amounting to SEK 625 million. A few comments on the full-year performance. Net sales amounted to SEK 2,239.5 million compared to SEK 1,257.3 million in the previous period, which corresponded to a total increase of 78%. Organic growth for the period amounted to 17%. EBITDA for the full-year amounted to negative SEK 56.3 million, corresponding to a negative margin of 2.5%.
The result during the year was negatively impacted by significant losses in Ginolis, as well as provisions for bad debt and restructuring costs. A few words on the negative impact then of Ginolis. The result during the fourth quarter, as well as the full-year, has been impacted by significant losses in Ginolis, and we are now addressing this through extensive cost reductions, as mentioned by Erik. However, the rest of the group performed quite well, as you can see in the table to the right. Excluding Ginolis, BICO reported organic growth of 20% in the fourth quarter and an EBITA result of SEK 82 million, corresponding to a margin of 12.3%. If we look at the full-year, BICO, excluding Ginolis, delivered SEK 18 million in EBITA and an organic growth of 25%.
In summary, excluding Ginolis, BICO showed very strong organic growth and improved profitability. Some comments on the cash flow. Cash flow during the quarter amounted to SEK 439 million, increasing total cash reserves to SEK 925 million per December 31st. As I mentioned, the EBITdA increased during the fourth quarter and amounted to SEK 24 million. Cash flow from operating activities for the quarter amounted to negative SEK 69 million, of which net SEK 180 million consisted of net changes in working capital. Out of this, the increase in operating receivables amounted to SEK 98 million. This has primarily increased accounts receivables following high sales in December, which are expected to be collected in the first quarter of 2023.
The inventory decreased by SEK 16 million following the high volume of customer deliveries in Q4. Cash flow from changes in operating liabilities amounted to negative SEK 37 million and was mainly impacted by decreased contract receivables converted to revenues. We continued to invest in our facility construction projects in Finland and Germany. The facility investments during the year amounted to SEK 43 million. Investments in product development projects continued, and during the quarter, intangible CapEx amounted to SEK 67 million. Cash purchase price for acquisitions and contingent considerations amounted to SEK 28 million and was related to past acquisitions of Advanced BioMatrix and Biosero. We also divested the remaining balances of short-term investments, resulting in a cash contribution of SEK 199 million.
Finally, the direct share issue to Sartorius in December resulted in a net contribution of SEK 481 million after transaction costs. We are also working on a plan to strengthen profitability and cash flow. This plan consists of continued sales expansion driven by market growth. There are growth opportunities in all group companies, even though the growth rate differs amongst them. Another component in the plan is the cost reduction program, targeting to reduce expenses in the excess of SEK 100 million on a 12-month basis, with expected full effect from Q1 2023. The program is directed towards the four loss-making companies and the group central cost and is on track. Additional cost reductions are being implemented in Ginolis.
The company intends to continue to invest resources in high-performing companies to support their continued profitable growth. The investments in the construction projects in Germany and Finland continued and amounted to SEK 43 million during the fourth quarter. The remaining investment schedule for these buildings are estimated to SEK 60 million in 2023. The project in Germany is progressing as planned and is expected to be ready in the summer. The plan is to sell the facility when it's complete and the market is deemed attractive. The company is evaluating short-term financing as a bridge until the sales process is completed, considering liquidity needs and costs. The project in Finland is delayed and is expected to be completed during the end of the first quarter.
Given the weak development in Ginolis and the weak real estate market in general, BICO has postponed the sales process until the situation has clarified. In order to reduce working capital tied up in accounts receivable, management is planning to introduce factoring to finance the accounts receivables. After the end of the period, BICO entered into a factoring agreement and expects factoring to commence on a limited scale in the first quarter, reducing capital tied up in accounts receivables. We are also working to reduce the time from invoice issuance to payment in general. The inventory reduced somewhat following the high volume of the deliverables in the fourth quarter. However, we assessed that the inventory levels can be lowered further given the improved global supply chain, and we will focus on reducing it further in 2023.
With these activities, we expect that earn-out payments next year will be financed by available cash. With that, I hand over the word to you again, Erik.
Thank you, Jakob. We'll talk a little bit about the business area performances. In the fourth quarter, the Bioprinting business area reported net sales of SEK 232.6 million, representing 35% of the total Group sales. The organic growth was 21%. The segment generated an adjusted EBITA of SEK 58.5 million, representing a margin of 25%. In terms of our products, our flagship BIO X and Quantum X platforms have continued strongly around the world. These two platforms are the result of years of R&D, refinements, and customer input to ensure customers get the ideal products for their applications, whether that may be 3D cell culture, tissue engineering, or photonics research. It's rewarding to see that the expanding customer base for these types of products include the most renowned universities and academic institutions on the planet.
This is also along with Fortune 500 companies and military organizations. Worth noting, during the quarter, President Biden signed the FDA Modernization Act into law. This is reshaping the entire field of drug and treatment development and discovery. It's remarkable to see that the entire field of life sciences move in the right direction as we can only remember how the industry looked just seven years ago when we started this company, and our mission, of course, to revolutionize this industry. The FDA Modernization Act will have a significant effect on how the industry develops new types of treatments in the future, and it's exciting to see BICO's strong position when it comes to these types of alternative testing models.
The big drivers behind the rate of adoption when it comes to alternative testing models will be on how well these models can be made, requiring a high level of reproducibility, user-friendliness, and automation. These are aspects we have applied to our holistic product portfolio to ensure our customers can rapidly get started with our tissue engineering portfolio. We consider ourselves to be a first mover in the field of tissue models, bioprinting, spheroids, and 3D cell cultures, all being potential replacements to the archaic use of animals in research. In the fourth quarter, the Biosciences business area reported net sales of SEK 298.8 million, representing 44% of the total group sales. The organic growth was 18%, and the segment generated an adjusted EBITDA of SEK 8.55 million, representing a margin of 2.8%.
During the fourth quarter, we have continued to see a strong order intake and demand for our laboratory automation products, especially in our laboratory automations division, by taking in several new multimillion-dollar orders from first-tier global pharma companies. These projects are to be delivered over the coming quarters. Our microscopy division has continued to grow profitably and generate a strong cash flow for the area. In particular, the CELLCYTE X live cell imaging system has gained further market traction as a strong contender in the field of live cell analysis. On the same time, our liquid handling division and single cell division have continued with their strategy towards increased profitability and have focused on rightsizing their organizations according to our cost savings programs to better align with the group-wide financial performance targets.
Cytena, for instance, has made strong strides with their C.STATION product, and the first installation of the system took place during the quarter. The system is specifically designed to ensure efficient and automated single-cell sorting for a wide range of applications such as cell and gene therapies. In addition, DISPENDIX has further expanded its footprint for the I.DOT system in an important application area such as drug discovery and compound screening. It's always exciting and rewarding to see repeat customers in the pharmaceutical segment, and during the quarter, a customer ordered its 15th system to date for drug screening applications. As we continue to secure many large, long-term projects with major pharma companies, Biosciences is well-positioned to continue to gain market share in the growing laboratory automation market.
This continuous increase in demand for automation in clinical and pharma laboratories creates a very attractive opportunity for Biosciences moving forward. In Q4, the Bioautomation business area reported revenue of SEK 170.4 million, representing 25% of total group sales. The organic growth was - 11%. The segment generated an adjusted EBITDA of SEK -4.1 million. The business area has seen diminishing COVID sales over the year, and in Q4, the effect was at its peak, resulting in lower sales and profitability, particularly for one of the companies, Ginolis. When excluding this effect, Bioautomation reported revenue of SEK 161 million, organic growth of 22.1%, EBITDA of SEK 49 million, and an EBITDA margin of 30%.
The Bioautomation business area is focused on precision dispensing and sample preparation for a wide range of life science applications, with major focus on diagnostics and pharma. We're pleased to see our sample preparation division is experiencing an all-time high demand for their unique portfolio of Bioshakers, paving the way for new business opportunities in this fast-growing market. The division designs and builds innovative solutions for mixing and temperature control of molecular samples on robotic liquid handling platforms that accelerate and streamline research, drug discovery, and clinical diagnostics for our customers. We serve multiple markets through strategic alliances with lab automation partners who have well-established marketing and distribution capabilities around the globe.
We also continue to see strong uptake for our single-cell handling products, our single-cell handling, sorting, and sample preparation technologies has had a record year, and we look forward to continue to expand the product globally in 2023. The success is mainly driven by the increased demand for single-cell omics and the rapidly growing field of single-cell proteomics, where we're tending to start a leadership position. Lastly, as we have seen diminishing demand for COVID-related diagnostics and as previously mentioned, larger capital expenditures, we are right-sizing organization catering to these areas specifically and focus all our attention on the areas that will contribute to profitable growth for BICO moving forward, such as proteomics, single-cell sample preparation, and spheroid printing.
Now to summarize, we're seeing continuous signs of improvements following our major efforts in 2022 and are thankful for all of our personnel and their dedication and persistence in what has been a turbulent year. This is with major important adjustments. Customer demand remains strong, supporting the near-term market outlook, even though seasonal patterns normally suggest that the first quarter is usually the weakest. A potentially weaker economy and external disturbances could, of course, continue to impact the near-term future for the industries that we operate in. On the more positive note, our strategic partnership with Sartorius leaves us well-positioned to capitalize on new technical and commercial opportunities, adding to the rest of our development pipeline.
We remain focused on executing on our business plan for profitable growth and improved cash flow and have a new COO and CFO to help steer the organization towards the strategic goals. Our ambitions were defined in a new financial targets for 2023 onwards, announced in connection with the Capital Markets Day in November. As mentioned previously, we're well-positioned to capture future and long-term market opportunities within the pharma and academic segments as demand for automation laboratory tools continues to be strong. We're fortunate to have built such an advanced product portfolio in just seven years since our humble beginnings. Our technology and IP assets ensure we maintain high entry barriers and promote our market leadership position.
We're catering into an extremely important part of the global market for laboratory tools and reagents, and it's essential we continue to focus all our attention on providing unique value-adding products to our customers around the world. The measures we're focusing on the short term are necessary for the continued long-term success of the company. It's exciting to see that the transition from our pure growth-oriented agenda to a cash flow and profitability prioritized strategy is well on track. Lastly, I would like to once again take the time and thank the entire team for the tremendous efforts in Q4, as well as the full-year. It has truly been a great pleasure working with everyone. We're also thankful for all the shareholders and investors who continue to support us on this journey. Most importantly, we thank our customers for their loyalty.
We are committed to our vision and mission, which is to create the future of life-saving treatments by aiming to reduce the organ shortage and speed up drug development by providing accessible life science solutions that combine biology and technology. With that, we would like now to thank you for your time and welcome any questions and comments that you may have.
Thank you. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Ulrik Trattner from Carnegie. Please go ahead.
Thank you very much. Good morning. A few question on my end. Let's start off with Ginolis, the sore spot in your operations. By the numbers you provided, is it true that they only contributed SEK 8.2 million in sales for Q4? In my numbers, that would indicate a decline by 85% year-over-year. Something very dramatically must have happened here. Could you shed some more light on that, please?
Ulrik. Thanks for taking the time. I believe you're correct in terms of your analysis of Ginolis. Yes, I can start by saying it has been an extremely drastic change in the way the company has worked and also how things have developed over 2022, which in fact is the reason why we have decided and concluded to proceed as we are. We saw strong sales and of course, strong deliveries during 2021. We continued to see some positive effects in the beginning of 2022, but it was a quite drastic effect and decline in terms of sales and, of course, with that comes a major loss, which we have now decided to right-size the organization based on.
Of course, according to that, we have to act quite rapidly because this heightened organizational structure or the size of the organization has mainly been the reason for this loss.
Obviously, the rest of the business looks to be performing quite well, quite nice margins. I think what is necessary here is if you can provide us with some granularity regarding when you're supposed to reach breakeven for Ginolis. It's been a positive earning story historically, when should we expect this?
Thank you, Ulrik. Maybe I can start with answering, and you could add, Erik. I think the timeline, it's a bit difficult to commit to a timeline, but what we have committed to and also started to execute is to reduce costs as quickly as possible and rightsize the organization. We have also on top of that changed the management in Ginolis during 2022, and also made more management changes here in February.
Okay. you can't be more precise on how to reach or when to reach break even? sort of what is the plan? Rightsize an organization, but how do you rightsize an organization that has previously gone from like SEK 50 million , SEK 60 million, SEK 70 million in sales to SEK 8.2 million? How do you do that practically?
I mean, practically speaking, and thank you for sharing that detail, Jacob. Practically speaking, it's about cutting costs in every basically, every way, shape or form that we can to ensure that the company doesn't bleed any more money for the group. That becomes. I mean, that results in layoffs, it results in reduction in staff, it reduces certain operation areas. We will, of course, on the same time ensure that we can support our current customer base, both from a technical but also a customer service perspective. It's a fine balance. But all in all, it's an important cost cut and a quite drastic one, so to say. Again, it's something that is extremely necessary. We're on top of this.
We're confident that we will get this in place, and we will get this in order. Now it's up to execution.
Seasonally Q4 is the strongest quarter for Ginolis. Should we expect this pattern to continue that SEK 8.2 is sort of the high point, and we are to expect lower sales than that from Ginolis going into 2023 for the first three quarters?
That's a good question, Ulrik, I think our main focus as this point is really to stop the bleeding rather than sort of trying to fix the top line. We have tried to address top line as much as possible, and we are continuing to address sort of our issues when it comes to order book and order intake in Ginolis. We're focusing quite a lot on that, also, as Erik mentioned, we're doing everything we can to rightsize the organization as quickly as possible to stop the losses.
To add a little bit on to that, of course, it's the organization and the way that the company works has major project timelines, and the sales of a product is not, you know, something that can be capitalized in a matter of a month or a couple of weeks. It's rather that, you know, once you sell a system or an automation workflow, it takes typically, you know, anywhere from 10 to 14 months to deliver, which means that you need to carry that organizational cost and that expanded cost and expenditure for a long period of time to ensure that you can deliver.
Quite frankly, we have come to the conclusion that that industry and that market with the new competitive forces also from Asia is not an area that we want to focus our attention on at this time. We're doing the right thing. We're rightsizing the organization, leaving the healthy core that is within the company and capitalizing on that in some kind of future sense and future potential. Of course, the sales from the levels of 2021 has diminished during 2022.
Last question on Ginolis, and then I won't ask you any more on that. Why don't you just kill it off as soon as possible? It doesn't seem to bring any large benefit to the group.
I appreciate the feedback on that, and I think that we're working as absolutely fast that we can to rightsize that organization. Believe me when I say we're doing everything in our power to cut costs and expenditures immediately. There are, of course, regulations, policies, and things in place that we need to consider. Those we are of course working with local regulations and according to the policies to do things correctly. We are moving as fast as we possibly can. We will do so to get this in order because it's as you see from the rest of BICO Group, it's a very strong company that we built, and it's a very strong group of well-performing, growing, profitable companies.
If we can again get this out of the way as quickly as possible, use that healthy core, whatever is left, and perhaps strategically implement that, within our other businesses, that's great. The idea here is really cut costs and focus on the businesses that are doing really well.
Okay, great. Next question would be on overhead cost, since you're talking about rightsizing. By my accounts, overhead costs almost doubled versus Q3. Is this sort of the maintained level of the overhead costs that we are to expecting? Or is there any reason for other external costs going up like four or 5x and personnel expenses more than doubling, quarter-over-quarter?
Can you repeat the question, Ulrich? Because I don't see how personnel expenses are doubling in the quarter.
Well, if you're backtracking how on operating sort of expenses for group functions, so if you were to exclude the side business and just look at the overhead, then you're looking at quite a dramatic uptick in operating expenses...
Okay.
for that non-business segment.
Okay, then I understand the question. Okay. Well, there are certain one-off costs in Q4, and our run rate on sort of the overhead costs are significantly lower than indicated in Q4. As Erik has mentioned now a couple of times, we have rightsized not only a few of the companies, but also on group level. The running cost that we now have on group level are sort of the cost that we will continue to have during 2023, and are in sort of line with our ambitions and aligned with the cost-saving programs.
Hang on. You said there were one-offs in Q4.
Excluding the one-offs.
Yeah, excluding the one-offs.
Excluding the one-offs.
Yes. Okay, yeah.
Excluding the one-offs.
Can you give us?
Yeah, yeah. Excluding the one-offs.
Yeah
We are at the right size.
Could you give us some quantification on the one-offs?
I will have to get back to you on the exact number of the one-offs.
Okay, great. Just question on the factoring that you mentioned that you have initiated. Could you just give us some more information on how big of part of the group is including in this factoring, and have you decided to go for factoring in more problematic areas than others?
We have selected a few companies within the group where we think that factoring will be more successful than others, and it's mainly in our companies in Germany.
Okay, great. Last question on my end would be on the margin for bioprinting. It took a major leap here in Q4. Seen a major uptick in profitability, which is obviously nice to see. Is there any reasoning behind the high margins in Q4, or is it just related to high sales and it is a scalable business and this margin can actually be maintained or even sort of increased here in the coming few years?
I can start with sort of commenting on the margin in Q4. The margin in Q4 is very much driven by the strong sales, as you allude to. On top of that, it's also related to the cost savings implemented in a few of the companies within bioprinting, showing effect now in Q4. When it comes to the development in 2023, we have the ambition with our financial targets. We won't go into commenting on specific business areas.
Okay, great. Those are all questions on my end. Thank you very much.
Thank you.
Thank you.
The next question comes from Alex Cogut from Bryan, Garnier & Co. Please go ahead.
Hi. Thanks for taking my question. Just a few on my end. Within your kind of midterm guidance, which you've reiterated, what can we expect for 2023, and are there any, you know, push or pulls that could impact the trajectory? For the second question, are there any specific products or seasonality headwinds or any emerging trends that could see that you could see a negative impact for in 2023?
Take the first one.
You wanna start?
I'll take the second one.
Yeah. Yeah, go ahead. You start.
I can start with the second question in that case. I think as we mentioned already in the call, we do see a continued headwinds in kind of large capital expenditures projects and areas where it's a significant investment for the customer. Perhaps the one-off placements or the sale of single or individual systems and reagents and consumables, we think that it's going to proceed quite nicely. In terms of these larger investment ticket sizes for our customers could see some headwind going into 2023, that's kind of what we've seen at least from 2022, and we think that effect could be continuing.
Yes. I mean, we are sticking to our target for 2023 and expect mid-2023 that we should be able to reach those targets. With that said, we live in a quite uncertain macro environment with high inflation rates and interest rates going up. It's difficult to predict, but we are extremely committed to meeting the targets by mid-2023.
As a follow-up to the first question. You mentioned that large capital expenditures. Which of the three business units could that affect the most?
I would say, I mean, all three have some level of major capital expenditures ticket sizes when it comes to their sales, right? Perhaps what we would be looking at mostly is these, you know, $5 million-$10 million order sizes of major automation or laboratory automation projects. That could be both from Bioautomation and Biosciences, we could see these types of headwinds.
Okay. Thanks a lot. That's it for me.
Thank you.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Well, I think with that, we thank you so much for your time and wish you a great day.
Thank you.
Thank you.
Bye.