Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Recordati SpA (RICFY, Financial) reported a 12% increase in net revenue for the first nine months of 2024, reaching 1.743 billion euros.
- The company achieved an EBITDA margin of 38.2%, reflecting strong profitability.
- Recordati SpA (RICFY) confirmed its full-year 2024 financial targets, which were upgraded in July, indicating confidence in continued business momentum.
- The acquisition of global rights to NJO from Sanofi is expected to contribute positively to EBITDA from 2025 onwards.
- Recordati SpA (RICFY) reported a robust free cash flow of 434.3 million euros, up 11% from the previous year.
Negative Points
- The company faced adverse effects in Turkey due to recent devaluation and timing of price increases, impacting growth.
- There is volatility in quarterly EBITDA margins due to seasonal factors and hyperinflation accounting in Turkey.
- The metabolic franchise experienced mild erosion in the US due to generic entries affecting Carbaglu.
- Recordati SpA (RICFY) anticipates higher financing expenses in 2025 due to the NJO acquisition.
- The company expects minimal financial contribution from NJO in 2024, pending regulatory approvals.
Q & A Highlights
Q: What is causing the erratic trend in EBITDA margin evolution this year compared to previous years?
A: Luigi La Corte, CFO, explained that the quarterly EBITDA margins are influenced by the seasonal nature of the cough and cold business, which has a healthy margin, and the timing of international distributor orders. Additionally, the accounting rules for hyperinflation economies like Turkey add some volatility. The company is also investing in the potential approval of a broader label for Isturisa in the US, which affects margins.
Q: What are the expectations for Isturisa's approval in China and its potential revenue impact?
A: Rob Corman, CEO, stated that Isturisa was approved in China earlier than expected, and they anticipate peak sales in the range of EUR 50 million. This approval is part of the company's guidance, and they are optimistic about the product's potential in both China and the US, where they are seeking a label extension.
Q: How should we think about the metabolic portfolio and the erosion of Carbaglu in the US?
A: Luigi La Corte, CFO, and Scott Pescatori, provided insights that while Carbaglu is experiencing some erosion in the US, the overall metabolic portfolio is expected to remain flat. Growth in international markets and other products like Panhematin and Cystadrops are expected to offset the decline.
Q: How will Recordati manage the transition of the NJO acquisition from Sanofi to minimize disruption?
A: Scott Pescatori mentioned that early interactions with Sanofi have been positive, and they anticipate minimal disruption. The transition is being managed carefully, with plans to integrate the new team smoothly once the deal closes.
Q: What factors could influence Recordati's revenue guidance, and how is the company managing its financing post-NJO acquisition?
A: Rob Corman, CEO, noted that the business momentum is strong, and they are confident in meeting the guidance. Luigi La Corte, CFO, added that the financing for the NJO acquisition is secured, with a mix of fixed and variable rates, and they expect an increase in financing expenses next year due to the acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
