GVS S.p.A. ($GVS)

Good afternoon. This is the conference operator. Welcome, and thank you for joining the GVS Full Year 2025 Results Web Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Massimo Scagliarini, CEO of GVS. Please go ahead, sir.

Thank you. Good afternoon, and good morning to everybody. Welcome to the 2025 results presentation of the GVS Group. A quick snapshot on the number. Okay. So yes, I hope everyone can see. So sales at EUR 425 million, plus 2%, excluding FX versus 2024. Adjusted EBITDA EUR 107 million, so plus 3% versus 2025 (sic) [ 2024 ] and 25.2% as a margin, 95 bps better than previous year. Adjusted net income, net of FX impact at plus 5.9%, EUR 47.4 million, increasing the margin to 11.2% from the 10.4% of 2024. Net financial position, EUR 240 million with a leverage ratio post M&A at 2.2x. So these are the quick snapshot. Now some more detail by division. So we have the Healthcare and Life Sciences division at plus 1.5% versus previous year. And if we exclude the effect of dialysis impact is plus 5.7%. Energy Mobility, minus 7.5% and Safety plus nearly 12% versus previous year. Adjusted EBITDA, as I mentioned before, plus 3% at EUR 107 million from -- as a margin from 24.3% to 25.2%. Net financial position, EUR 240 million, 2.2x. It's interesting to see that without external effect is 1.6x. So now I leave the speech to Guido for some more granular detail.

Thank you, Massimo, and good afternoon to everyone. So on Slide 4, we have the bridge between sales full year 2024 and sales full year 2025. So the first impact we comment is the FX. We have a negative impact of EUR 12.5 million. The main factor out of the EUR 12.5 million is linked to the depreciation of the U.S. dollar that accounts for almost EUR 9 million out of the EUR 12.5 million. And then we have the remaining part is equally spread among other 3 currencies, depreciation of the 3 currencies that are Chinese, Brazilian and Korean currency depreciation. So excluding the FX, we have a growth of 2% year-on-year is composed by plus 1.4% equal to EUR 6.1 million that is pricing. It is a data that is fully in line with the performance we have recorded in the previous year. And then we have plus 0.6% of volumes or EUR 2.5 million. This volume effect is impacted by several factors. The most important are the M&A contribution, so the Haemonetics Whole Blood business acquired in January 2025 that account for EUR 15.8 million of positive contribution. And on the opposite side, we have a negative impact by the U.S. Dialysis business that accounts in volume for minus EUR 10 million. And this is a topic that we have already discussed in the previous conference. So all in all, the overall growth, again, excluding FX is plus 2%. But if we consider only the like-for-like perimeter, but we exclude also the impact of the U.S. Dialysis, we have anyhow an overall growth of 0.7% in the year. We now move to the following slide and where we have the breakdown of the sales by different division. So as Massimo said before, Healthcare & Life Sciences reported a growth -- positive growth, excluding FX of 1.5% and going to and deep diving into the different subdivision, we have Life Sciences reporting a negative performance of 3.7% is in any case, significantly better than the result we had in the 9 months. It was almost minus 8%. So there was an improvement in the fourth quarter. The Transfusion Medicine recorded a performance close to plus 30% as discussed is linked to the M&A contribution and is in line with the 9-month result performance. Regarding the MedTech, we have a minus 3.9%. But if we exclude the impact of the U.S. Dialysis business, this turns into a positive growth of 0.6%. This is also an acceleration compared to the 0.1% growth excluding dialysis we had in the first 9 months of 2025. Safety division is reporting a very healthy performance. So almost 12 percentage points of growth, excluding FX, this basically confirms a very positive trend we saw also in the previous quarter and the previous year. Regarding Energy & Mobility, last division today, Mobility accounts for 13% of our overall sales reported a decrease in sales in the year, excluding FX of minus 7.5%. Also in this case, there was a strong fourth quarter. And if you recall, the performance in the first 9 months was minus 10.8%, excluding FX. So it was a substantial improvement in the last quarter. And now I'll hand over to Marco for the EBITDA.

Thanks, Guido. Hello, everybody. EBITDA is up year-over-year from EUR 104 million to EUR 107 million. EBITDA margin is up as well by around 95 bps being the main reason pricing already described by Guido EUR 6 million year-over-year, or 1.4%, 140 bps pricing increase, which translates into 140 bps pricing translates into more or less 100 EBITDA margin increase. So EBITDA margin increase is explained by pricing. And if you look at EBITDA margin in absolute terms, you see that the increase of pricing is partially offset by mix and mainly due to the decrease of the FX dollar effects 4%-over-year. And then you see on the right side of the slide, EUR 2 million of improvement due to the fact that we decreased the short-term incentives paid to the management. Now we can go to the next slide, adjusted net income, excluding FX related to the intercompany loans. I believe that you are now familiar with that metrics. And you see the adjusted net income trend is merely the one of the EBITDA margin. So there is an increase year-over-year from 10.4% to 11.2%, so more or less 80 bps increase. And so the trend is already explained by EBITDA balance analysis. On top of that, I want to say that the EUR 47.4 million of adjusted net income is a very good approximation of the cash we have generated into next -- last year. So as a matter of fact, you can see in the next slide that the next, the cash generated ordinary cash generated in 2025 is EUR 43.3 million, which means that we generated around EUR 30 million in the fourth quarter. And then, of course, the net financial position is affected by extraordinary actions as well. You probably remember M&A, the acquisition, EUR 44.6 million, the acquisition we made in January, the transfusion medicine products that we bought from Haemonetics. Then around EUR 9 million is money we spent to complete the 2 plants, one in China and the other in the U.K. and then EUR 10.3 million is the buyback. So in the end, as already said by Massimo at the beginning of the call, we were able to decrease the leverage ratio if you exclude all the extent effects from 2.1x to 1.6x. So we improved our leverage ratio by 50 points. And now I believe I can give the floor to Massimo.

Okay. Where we'll be focusing on 2026, what are the activity for 2026? Of course, hundreds of activities, but just to resume in a more synthetic way. On the MedTech division, we are working on establishing new subdivisions and this will allow us to sharpen the commercial focus on the most important niches of the MedTech, where we are expecting the higher growth result. And of course, this will maximize the commercial M&A synergies, the one that we are expecting from the last acquisition. Transfusion Medicine. We have completed the platform from Asia to the United States. And now, of course, the focus will be growing the business on the sales side and accelerating the new product development, the one that we are missing in our portfolio. Safety, continued expansion, supported by the ramp-up of the new product across all the geography. Life Sciences, the main driver will be the validation with pharmaceutical customer and the new distribution agreements that we are working on right now. Mobility, the main focus will be to stabilize the revenue and continuing the growth of the EV-related solutions plus recovering volume in the agricultural and vehicle application. All this activity will bring us -- is bringing us to this guidance. So what we are expecting is a low single-digit growth, excluding FX versus 2025 with a progressive acceleration in the revenue through the year. Adjusted EBITDA, an improvement from 20 to 50 bps versus 2025 and a leverage ratio in the region of 1.8x. With this, we have closed the presentation, and I think we can move to the Q&A section.

[Operator Instructions] First question is from Christian Hinderaker, Goldman Sachs.

I want to start with the guidance, if I can. Just curious if you can help frame the price volume expectations in the growth rate. And then also in terms of the commentary on phasing, i.e., progressive acceleration through the year. Is that led more by your expectations in terms of how you see markets developing? Or is it more a relation to some sort of internal operational challenges in terms of hemodialysis and that side of the business?

You take for the pricing.

Okay. Okay. In terms of pricing, we are assuming in 2026 increase by 1.4%, which is what we saw in 2025 and in 2024. Of course, that is not including potentially extraordinary actions to recover a possible increase in the raw material. So just assuming no impact from all what is happening in the Iran and so on, let's say, on a steady state, 1.4% pricing. As for the volumes, the organic growth, we said low single digit. For example, you can assume 3%. But if you look at the reported revenues, you should also take into account negative effect. If we assume as an average FX, the current -- today's FX, you would have a negative 3% generated from FX. So now you can be your case for the current year, assuming 3%, 1.4% pricing, 3% organic growth and just to be precise, minus 4% FX. That's based on today's FX and then maybe you asked also about the ramp-up across the quarters. I don't know if Massimo if want to give the answer.

Basically, we are, let's say, launching all across now the production of TM is all under our control. We are already producing everything in our plants. Of course, we want to monitor this and we see this growing gradually during the year. So that's, let me say, the explanation of this gradual expansion through the year.

So Transfusion Medicine?

Transfusion Medicine, yes plus the MedTech reorganization and then the more focus, et cetera, also this will start to pay back during the year. So these are the reasons why we see this -- we have made this statement.

Maybe picking up on one of those comments, which was going to be my third question, but I'll bring it forward. So as we think about -- I think it's the Haemonetics business where there was some revenue loss in back in the third quarter. I think in the slides, you had about EUR 15.8 million contribution for the year. Do I remember correctly that EUR 28 million was the sort of expectation net of intercompany sales if we sort of roll the clock back 12 months? And I guess as we think about 2026 and now I think you said you're now sort of in control there in terms of the output. Is that how we should think about demand recovery? Is there a catch-up dynamic? Yes, just have I got that clear.

Yes. It's a catch-up dynamic. We have backlog that we have to recovery and we are gradually recovering all the backlog. So this is correct.

And then maybe on the MedTech growth opportunities, I appreciate some is 2026, but there's obviously a longer-term mindset here. Maybe could you substantiate it a little bit more in terms of, shall we say, the therapeutic focus or product areas that you define as higher growth? And then also what sort of market growth rates should we think about for those higher growth segments that you're looking to focus on?

We are working on this. When we will be ready, we will communicate to the market the new subdivision and so that we like to where we want to focus and put our energy for the future. So I prefer to finish the job and then when we are ready to have a formal and official communication to the market.

Next question is from Emanuele Gallazzi, Equita.

Let's say, 2 questions from my side. Starting from the guidance. It's clear that you are guiding for this low single-digit organic trend in 2026. But can you help us understanding your expectation by division and specifically on the safety because it reported a strong performance in 2026. I was wondering if in your guidance of low single digit in 2026, you are assuming a slowdown or a material slowdown in the safety business? And still on the guidance, can you quantify the expected headwind from the hemodialysis business included in this low single-digit top line trend? And the second one is on the geopolitical scenario, the Middle East war. It's pretty clear your, let's say, statement on the top line in the press release. But I was just wondering if you can elaborate a little bit more on the potential impact on your input cost, and I'm clearly referring to the plastics. And just to be clear, does your guidance on EBITDA already factor in some pressure on the gross margin side related to the plastic or not?

Okay. So in terms of growth, we don't go into the single division. Let me tell you that it's a very complex mix because we have expectation of strong growth from certain division, then we have expectation, for example, in the MedTech being impacted again by the dialysis decrease. So there is a mix of different input in this guidance. Mobility, again, we think it will stabilize, but for sure, is a very critical division to be controlled and predicted for next year. So it's a mix between nice potential of growth versus some thread of potential of decline in the area that I mentioned to you. So this bring us to this guidance of low single-digit growth. For what regards the actual geopolitical situation, we are working to fix the pricing at least through the third quarter of this year, so do not have any type of impact in price and more important in shortage of raw material because right now, at least from the appearance, from what we see, it seems that we are back to 2022. And so we are preparing ourselves for another year of turbulence in terms of pricing, shortage of raw material, et cetera, et cetera. The nice thing is that this year, we are just focusing on improving our process, protecting our business, growing our business versus 2022, where we were acquiring and integrating companies. So we have much more things on the table than what we have today. So our vision is quite clear. We know what we have to do, and we are moving to protect the business in the best way.

Very clear. And if I may, just a clarification on the ForEx impact. You were mentioning it is 4% negative impact from the ForEx. On which euro-dollar assumption is based?

$1.17.

Okay.

Next question is from Alessandro Tortora, Mediobanca.

I have, let's say, 4 questions, okay? The first one, sorry, Massimo, if you can just jump back to the -- to your comment on the [indiscernible] in the U.S. and the contract you have still in place. Can you remind us, let's say, if it's fair to assume, let's say, roughly EUR 20 million exposure, okay, to these contracts in the U.S. And the view here is to assume a further decline this year. But in the end, when you talk with, let's say, these clients, are you thinking about, let's say, keeping this kind of phase or we are going, let's say, we can rather phase out and therefore, going to 0 in the coming 2, 3 years? So just -- this is the first question, just a comment on this line of sales that you have?

Yes. Generally speaking, as I mentioned before, I don't like the dialysis business because it's a very low margin type of business. So my intention is to gradually exit from this business. So that's why I am forecasting also for this year a decreasing in this area and this will follow for the next 3, 4 years. And then for sure, it will remain one part of the dialysis business because that is a service that we give to our customer, but it will have definitely less impact with their fluctuation comparing with today. Today, the fluctuation are impacting our revenue quite strongly. And so we want to minimize this situation and to be more in control of our revenue and, of course, margins.

Okay. Then the second question is on the whole blood, let's say, sales contribution because I recall it that originally, we were thinking about, let's say, the regime to see this new product division helping you, let's say, to get the EUR 30 million, EUR 35 million sales, excluding, let's say, also some we say, intercompany or sales already done in the past. So can you tell us, let's say, where we are here for this division? I recall it in the past that you also mentioned that you were starting, let's say, not to approach new clients for this division in order to build, let's say, much better backlog for the coming quarters. So let's say, an update on this because in my understanding, we should have seen in the compared to last year where you got basically in the first part almost, I don't want to say 0, but a very marginal amount of sales, I would have expected, let's say, some incremental sales here. So I would like to, let's say, comment on this.

Yes. We are definitely expecting incremental sales on TM division, no doubt on this. There are important bid that will arrive by the end of '26, really important bid. Of course, I am not bidding, I apologize for the words. I'm not bidding on this. And I prefer to see a more gradual growth because, as I mentioned before, we internalized all the production process in December. And so we are now seeing this full supply chain and production developing. But I prefer to be calm in proposing growth until I don't see all the supply chain work smoothly and nicely as I've been showing in the first 2 months of the year, but I want a little bit more time before on this.

So, Massimo, just if understood well, you see now, let's say, the full platform working. If we look at, let's say, the first, let's say, 2 months, okay, let's exclude March, what you see is, I don't know, a division printing some margins, not the one you have. But let's say, your view is to see, let's say, a flawless production for this division in order to better understand which kind of profitability you can reach this year. Is it correct?

No. In terms of profitability, we have already the confirmation that we are where we expected. So this is, again, is a positive. It's more a question of when you launch a new process and so complex process because we start -- we are fully verticalized. So we start from the plastics and we finish with the product that collect the blood and deliver the blood to a patient. So it's a very long process that include different plant and sterilization, et cetera, et cetera. I just want to see that everything is running smoothly and nicely for at least 6 months before to start mentioning strong growth, et cetera, et cetera. This is also why we see the progressive acceleration during the year.

Okay. Understood. Understood. Then the third question -- the third question is on the, let's say, your margin guidance. Clearly, this is a margin guidance on reported this is not something, let's say, including any FX impact on the margin -- EBITDA margin trend for the year. The question is what are the reasons that brought this lower level of, let's say, margin expansion compared to the past year? Is it something related to what you mentioned before that there was some increasing inflationary pressure you see on some raw materials? Because in the end, if we look, let's say, even back just 1 quarter, okay, even the fourth one, you get, let's say, the magical level of sales, let's say, in the region of EUR 110 million and you were able to get to the 26% margin. So is it something that you are including into this EBITDA margin guidance that we need to be aware of. So just to understand because I know in the past, we saw, let's say, larger margin expansion you were able to achieve.

No. Well, Marco, if you want to go, please?

If I may, first of all, in the second half, the EBITDA margin we posted is equal to the one we posted in the first half. We closed the first half with 25.1% and the whole year is at 25.2%. If you remove the FX impact second half versus the first half, you will find a very stable trend in terms of revenues and EBITDA margin. So the 25.2% is a good reference not only -- so don't look at Q4, okay? It's not the best reference because Q4 was very good in terms of sales, okay? So if I may, please reference the average EBITDA margin we posted in 2025. Then what we are assuming as for the cost. We are assuming so something which we have not yet mentioned. We are assuming to hire people to strengthen the sales team in order to extract the commercial synergies in order to be more focused on subdivisions of MedTech. Then we said already FX. Unfortunately, FX is going to be negative year-over-year. And then another item you should factor in your forecast is short-term incentives because in 2025, we decreased the amount of short-term incentives paid to managers. Now we are assuming for 2026 to hopefully increase the money we are going to pay to them. So in the end, when you look at your EBITDA, it is that we have positive pricing. We have some positive volume effect. We said 2%, 3% of organic growth, but we have also some costs up. We said about people, about short-term incentives.

Okay. Very clear. Then, let's say, the last 2 points are basically the first one, if you can give us, let's say, an idea of the CapEx for this year because we shouldn't have, let's say, any extraordinary item. And the last one, just a comment on the fact that if you have committed this year to present at a certain point at a certain timing, business plan update?

Yes. CapEx, again, it will be in the house of the 6%. As always, we don't foresee any extraordinary CapEx for this year. For sure, all the investment will be dedicated to product development and continuous improvement to gain efficiency and to reduce industrial cost. So we are back at our origins in terms of CapEx. And the second question...

Strategic plan [indiscernible].

We are working on the strategic plan, as mentioned before. And as some we will be ready, we will formally publishing the new business plan. Again, it will be middle of this year.

Sorry, Massimo, I didn't get your answer on the business plan update because basically, I saw [indiscernible]. So if you can, sorry, repeat the point on this.

Yes. We are working on this. I mean we have finished now the forecast for 2026. And so now we are working on the business plan and the expectation is to arrive between half to the second half of this year.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Excellent. Thank you very much, and thank you to everybody. See you on the next presentation during this year. Thank you.

Thank you. Bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices.