Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boule Diagnostics AB (STU:8BD, Financial) reported significant improvements in operating profit and margin, with adjusted EBIT improving by 93.7% to reach 15.3 million Swedish crowns.
- The company achieved an adjusted gross margin improvement to 47%, up from 41.4%, due to favorable mix and efficiency gains.
- Boule Diagnostics AB (STU:8BD) recognized 16 million in annual savings potential through extensive reorganization efforts.
- OEM sales showed strong performance, growing 51% in Q3 and 17% year-to-date, indicating a promising growth area.
- The company is on track to ramp up manufacturing in India, which is expected to positively impact margins despite a negative impact on top-line sales.
Negative Points
- Sales were negatively impacted by lower instrument and consumable sales, with a 6.6% decline in Q3 sales.
- The transition to a license manufacturing model in India is expected to negatively impact top-line sales by an estimated 30 million annually.
- Boule Diagnostics AB (STU:8BD) reported two significant one-time costs, including a non-cash cost of 265 million Swedish crowns due to project impairment.
- The company is facing challenges in Asia and South America due to competition from low-cost Chinese manufacturers and a market shift towards five-part technology.
- Cash flow from operating activities was weaker in the quarter, mainly due to higher restructuring costs and tax penalties.
Q & A Highlights
Q: Would it be possible to quantify the licensing fees from India in the quarter? Is this the main reason for the decrease in reagent sales?
A: The impact of the licensing fee is approximately 1% year-to-date. The decrease in reagent sales was also influenced by the timing of customer orders. The licensing fees are included in the other product category. - Torben Nielsen, CEO and Holger Lembrer, CFO
Q: Regarding the expansion beyond hematology, will this be through acquisitions or new product development?
A: We intend to expand inorganically, focusing on partnerships, distribution opportunities, and possibly M&A. Our main focus is on partner and distribution opportunities for portfolio expansion. - Torben Nielsen, CEO
Q: You mentioned investments of 45 million for a new product platform next year. Will this be more in the first half of the year?
A: The investments will be slightly more in the beginning of the year, depending on the project's progress. - Holger Lembrer, CFO
Q: Can you clarify the write-down related to the BM 900 project?
A: The BM 900 project initially included a three-part variation. The write-down is due to changing the project scope and significant delays. The impairment test reflects the removal of the three-part from the business case. - Torben Nielsen, CEO and Holger Lembrer, CFO
Q: When can we expect the new five-part system to be launched?
A: We plan to commercialize the product in 2026, with the performance evaluation scheduled for the first half of 2025. - Holger Lembrer, CFO
Q: Should we expect more restructuring charges going forward?
A: While I can't comment on future costs, restructuring is part of our long-term strategy, and we will continue to reorganize and consolidate functions. - Holger Lembrer, CFO
Q: Should we expect cash flow generation to improve in Q4?
A: While restructuring payments will continue into Q4, we aim for positive cash flow by 2025. The high investment rate might result in a slightly negative cash flow in Q4. - Holger Lembrer, CFO
Q: Will there be a buildup or release of working capital in Q4?
A: It's hard to predict as it depends on sales. Restructuring payments will negatively impact cash flow, but inventory and receivables will depend on sales development. - Holger Lembrer, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
