GVS S.p.A. ($GVS)

Good afternoon. This is the conference operator. Welcome and thank you for joining the GUS first quarter 2026 results web call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Massimo Scagliarini, CEO of GUS. Please go ahead, sir.

Thank you very much. Good afternoon and good morning. Welcome, everybody, to the first quarter presentation of GVS Group. [Technical Difficulty]Okay, again, good afternoon and good morning. So, welcome to the Q1 presentation of the GVS group. A quick snapshot on the number. So, okay, first quarter at 105 million plus 3.9 versus previous year, Q1 25. I just had EBITDA at 25.9, so plus 0.3% versus previous year and margin at 24.6, 57 BPS better than 2025. Net income at 10.7 million with a margin of 10.2 and the net financial position at 249 with a leverage of 2.3. Okay, some quick detail. We have a nice 3.5% grow on healthcare and life science, and as a mobility flatfish, MU05, and safety, a nice grow at plus 8.6 versus previous year. As I mentioned before, just EBITDA at 24.6 and a value of 25.9, so plus 0.3 versus previous year. And a financial position at a leverage of 2.3 with 249 meters. Now I leave the speech to Guido for some granular repeats.

Thank you. Thank you, Maximo, and good morning, good afternoon to everyone. So we now implement the variance analysis on sales Q1 2026 revenues. versus Q1 2035. So the first step we recommend is the negative effects impact of about 6% and it is mostly related to US dollar depreciation of 5.4 million out of the 6.4 are related to US dollars. Excluding the effects, we have 3.9% organic growth. It is made by volume and pricing growth. from pricing, the 1.6 million equivalent to 1.4% year-on-year is in line with the performance we recorded in the last quarter and the last six years, while we have a nice million for 2.4% year-on-year volume growth compared to the first quarter of the previous year. We have a completely life-for-like perimeter in this quarter and these 2.6 million are referred to the growth mostly of safety, transportal medicine and medtech. So moving now to the next slide, we see the performance division by division. First thing we want to highlight is the very good performance of healthcare life science, not only for the growth, 3.5% excluding extra organic performance versus the previous quarter, but also the fact that all the three subdivisions of healthcare are delivering or solid organic growth. So starting from MedTech, plus 2%. Compared to the previous quarter, the transfusion medicine, we almost have almost 8.7.9% of organic growth and the life high at 6.2% growth. Moving down to safety, safety is delivering ecosystems very high single digit growth. This quarter is plus 8.6% previous versus the first quarter of the previous year. We have a stronger FX impact on this. But the organic is absolutely in line with the very good performance that this division delivered in the previous quarter. And then as much more anticipated mobility, we have a substantial stability in the sales of mobility. And this is a very important social stabilization after this simple quarter of the division. So we are basically on organic perspective. There's still some impact of SX given also the exposure we have on the automotive business to the US market. And now I'll hand over to Marco.

Thank you, Guido. Good morning, good afternoon. everybody on the call. So let's move to the financials. First, EBITDA. EBITDA in absolute terms is slightly going up from EUR 25.8 million to EUR 25.9million. If we look at the adjusted EBITDA margin, there is an improvement of around 60 bps, so 60 bps, mainly driven by pricing. We increase pricing by 1.4%. That impact has nothing to do with the reaction. We are going to implement to offset raw material pricing going up. In Q1 there is no impact of that. Then volume is positive around EUR 1 million unfortunately negative effects already commented by video and then you see there is negative 0.9 you see other this is mainly due to the startup cost linked with the transfer of the transfer medical production from the Tijuana plant of Monetics to our Mexican plant. So it's just a matter of time. For sure we are going to improve and release efficiencies in the second part of the year. Now we can move to the next slide, which is about the adjusted net income. If you look on the left, there is a strong improvement of the adjusted net income, but this is mainly driven by effects. Effects related to the US dollar intercompany loans. But if we remove that impact, you see a slightly negative trend. The adjusted net income is equal to around 10%. which is more or less what we showed last year, but it's going down slightly due to the higher DNA, higher DNA are mainly due to the new 20-25 carbs for the plant in UK and China and it's also due to the, as I said before, the movement, the transfer, the startup of the transfer through of the new production cancer, of the production of the transfusion medicine products. Now, the last slide is about the net financial position. Here it's perfectly aligned with our guidance and with our budget. Net financial position, as usual in the first quarter, is going up. So here you see the deterioration of around EUR 10 million mainly due to net working capital. You see there is negative EUR 21 million as usual in 200 is negative trend of both stock and receivables, which we are going to offset later on during the 2026. If you look, if you compare net financial positions at the end of March 2026 to the net financial position of the 12 months before, you see an improvement of around 26 million euros, but you should remove the total impact of the already mentioned the cut for the new plant. If you do that, if you have an improvement of the net financial position in 12 months of around 35-36 million euros, which means more or less an average improvement of 9 million euros per quarter, which is more or less our target. And now I can give the floor to Maximo for the conclusions of the presentation.

Okay, nothing really changed compared with the last conference. MedTech, we are working on establishing a new subdivision to have more focus on high growth segment. Transfusion Medicine, the platform has been built, so now we have to push on grow and accelerate the new product development. Safety, expanding the business, using the run part of new products and not only the new geography. Life science, validation with pharmaceutical customer, new distribution agreement, mobility, stabilize the revenue and continue to grow on EV-related solution and recovering some volume in the agricultural people application. Guidance, again, nothing has changed. So in sales, low single digit growth. with a progressive acceleration through the year, adjusted EBITDA from 20 to 50 BPS of margin expansion versus previous year and average ratio in the region of 1.8, of course, excluding the impact of the voluntary partial tender offer on the treasury shares. So here we close the presentation and I believe we can move to the Q&A section.

Thank you. We will now begin the question and answer session. [Operator Instructions] The first question is from Emanuele Gallazzi, Equita.

Good afternoon, everybody. Thank you for taking my question for the presentation. I have to start with two questions. The first one is on the guidance because you were pointing to a gradual improvement in organic growth through the year. While you posted already in the first quarter, I would say a good performance at the 4%. versus a low single-digit target for the full year. I was just wondering which division overperformed your initial expectation. And the second one is on the safety business, still very good performance in the first quarter. Can you give us more color on the new product? And generally speaking, how demand and the competitive environment is evolving for the safety business?

Okay, for the first question, I would say there is an overall grow that it's a little bit better than our expectation. So there are not one division that is performing better than the other. For what regard to safety, I would say that we have different products that are in launch phase. Of course, the full face mask that will gain full speed this year because entered in the market by the end of last year. Then we have new helmets to be used on the PIP market or on the assisted air type of protection device. We have even a new system, a radio system for communication between operators to be added to the helmet. So there are many different things that will help accelerate the growth. But again, I will keep this inside what we are expecting from this division. So around 80% growth.

The next question is from Alessandro Tortora, Mediobanca.

Good afternoon to everybody. I have, let's say, three, three questions. Okay, if I may, the first one, the first one relates to the transfusion medicine business, if you can. help us to understand, you mentioned before that the expectation for the ER is the acceleration with a good static one. But the question is, how do you see the future medicine progressing over the ER? Should we expect, let's say, I don't know, a second alpha significantly better due to, I don't know, some development on the commercial side? So just to understand how you see the development of these segments of the area? This is the first question.

I am very prudent on transfusion medicine because it's true that now we have internalized all the production and we are fully vertically integrated. But I am basically launching 50 or 60 new product code in production. And so that's my generate a lot of turbulence, a lot of problem. So right now we are moving well in the right direction. I just want to be prudent because there are many variables that are playing in this in this kind of process.

But just maybe my question wasn't correct on this one. What is the initial feedback you're getting from clients because you are sort of a new entrant into the market. So what is the initial feedback you're collecting from clients?

Well, it's a very good question. The point is the product that we have is recognized by the market as the best product. No doubt. You can ask that every user is absolutely the best product for these applications. And the product is in the market for many, many, many years. So everyone knows the product. Of course, we are here, but we are replicating the process that has been in place on the last 20 years. Again, we have to do everything right in our production process, so to keep the top quality of the product and not making any type of mistake in this direction, and the market will pride us. If we make mistake, that might slow down our growth in this market. So that's why I have my eyes pointed on this process business, and I am personally following every single step of this expansion.

Okay, okay, understood. Then the second question is on the topic related to arising cost inflation, but also on the input side for you. Can you tell us, first of all, if you are observing in your, let's say, no cost base, some initial attention on this and what is, what are the countermeasure you are doing in order, let's say, to mitigate this impact clearly, this year, but also said XDFX.

Basically, I am seeing a letter of force majeure indication every day. And this means that whatever type of contract you have is not considered anymore. Of course, this is more a kind of preparation by everybody to understand what's going on with the barrel and with the petrol. Right now, we have already acted in terms of increasing our stock to cover ourselves into the future. And of course, we are working on the pricing with the customer. This is the only two things that we can, let's say, do and we are strengthening also our supply chain so that we are more and more local for local and not depending on transportation across the oceans because that's the other topic that will be hot in the future. So right now for our forecast we don't see Marco confirm.

No material impact in Q2 at.

Least exactly and but then I believe that everybody's on the window to see what is going to happen with our most.

Okay so just to be clear on top of let you know the positive price trend I know we saw already in Q1 you haven't let's say announced today incremental prices increases to customers.

Alessandro, let's say that incremental pricing to customers will offset raw material pricing. That's the sum in the end. That's why I'm saying that no significant impact is expected. So there are early signs of raw material going up. But we offset that with incremental pricing to customers. So no impact on EBITDA?

Okay, thanks. And then the last question from my side is just a confirmation or if you can tell us if you are still committed at a certain point of the year to give us an update on the middle term for GBS?

Thanks. Yeah, we are still committed. I suppose it will be after this number as a period.

The next question is from Christian Hinderaker of Goldman Sachs.

Good afternoon, Massimo, Marco, Guido. Apologies in advance because I was having some firewall issues and hence late to the call. I wanted to start, if I can, on the life sciences growth dynamics. Growth has improved there. I guess, I think when we think back to the fourth quarter, there were some potential distribution agreements that were being mentioned. I wonder how we should think about the timing of those. Did they support the better growth in Q1 or is that something that's still to come in the?

Still coming. I mean, all these kind of negotiation are not also because if we have to substitute another player, it's not something that happened quickly, but they are coming. So this is the positive. This is the positive.

Thank you. And then just turning, you said in the past, net income represents a reasonable proxy for your free cash flow, should be around EUR 10 million to EUR 12 million per quarter. You had EUR 10.7 million of net income in Q1, but then the free cash outflow, in my math, is around EUR 10 million negative appreciate inventories and receivables usually up in the first quarter seasonally, but I wonder how do we think about the net working capital expectations as we look ahead through the rest of the year?

You're right, because in the end we will, our expectation is to fully offset that trend in the second part, which means that our target in the end is to have zero impact on the working capital. but this is at the end of the year and we you if you look at this of the company you see in the first half negative Trend in the second-half you have the opposite Trend.

[Operator Instructions] Ladies and gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Excellent. Thank you very much. Thank you to everybody and see you at the next conference call. Thank you for the participation.

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