RTX Corporation Price & Performance (RTX)

Okay. I acknowledge. Yeah. No. Okay. [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] Oh, little bit. Yeah.

Yeah. Also, So the tool team is in. [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] Okay. It's 10 o'clock. Should we get started? Here in Copenhagen, we have [indiscernible] the Chairman and Shimmerland, Jesper Miron, Remodible. Are you wise?

No. I haven't been part of the board. Sure. It's a member of the board, but been there for many years. So we will start by middle running through the presentation and then, we will do a Q and A after raise the hand, but we will fund that from here. So, Mil, [indiscernible] RTX right. As usual, we will start with this disclaimer as RTX talking about forward looking statements. There is an uncertainty. And you've all seen this many times before, so I'll skip through that. We've structured this presentation with just a short introduction to the key elements of RTX. Many of you know these already, so I'll go through them relatively quickly. Then I'll dive into some highlights on the RTX segments. For this quarter, supplemented by the financial highlights for the quarter. Rounding off with outlook for the financial year and then we'll go to Christian and Anssen.

So every company has a purpose and RTX purpose is helping people perform at their best. And the reason that we have included there this here is that we are a technology company who provide wireless solutions for our customers And these wireless solutions are either means to to the customers in their daily operation or an integrated part of their product. But what is important for us as a technology company is to understand how these products are used and how they support our customers processes and businesses. So that's why we've got this purpose [indiscernible] overall purpose when we do development of new products together with our customers. The trends that the RTX are tapping into is anywhere, anytime, as we call it, that RTX an increased demand for wireless communication throughout different segments. I think everybody knows that the RTX quality and RTX with good wireless solution has increased quite a lot over the last 10 years, just over the last 5 years. And the reason that this RTX is both that the battery lifetime becomes much better, the reliability is much better and it enables you to to do something else while being connected. The 4 pictures that we've chosen to highlight is examples of where wireless communication is increasing and isn't important part of that business.

Operation. The first is Concert. I think everybody would agree that good quality in Audio Solutions is quite important. So the bass and the guitar are not sort of sync. The other top picture is 1st RTX, where it is very important that we can easily communicate with each other on a safe channel even under circumstances where normal coverage is not available. The picture to the bottom left is from warehouse RTX the need to communicate across sometimes large areas is quite RTX. Also, it enables employees to talk to each other, both, of course, work wise, but also to have an inter interface with colleagues that you can talk about Have a RTX with your colleagues. The bottom left RTX corner is in hospitals RTX more and more patient monitoring devices are becoming wireless RTX enables both personnel to use RTX resources in Amoy effective way, but it also enables you to be more flexible and more mobile within the hospitals and even outside of the hospital. So these are the trends that we are tapping into delivering wireless communication. Our customers are global customers. Many of you know most of those here on the left side. So we are designing products together with these RTX customers not RTX is not delivering customers in RTX name on the market, but we are designing solutions into [indiscernible] solution RTX, the branded company's solution portfolio.

What we are also doing is that we are enabling manufacturing. So we are together with large production manufacturing. We RTX producing the products, but we don't have production facilities ourselves. These production partners are global partners with footprint all over the world. This one is also known to many of you RTX we've got typical design in solution together with our customer. With a long lifetime cycle and when we have the main phase, which is where both our customers and RTX earn money, that is between RTX to 10 year plus 10 year plus being the RTX where the lifetime [indiscernible] the lowest end, which is modules for the lifetime could be RTX. So what we do we've got these 3 segments that all of you probably know, RTX for audio and health [indiscernible] [indiscernible] handsets, headsets and base stations. Which enables many businesses to have a good and solid communication. System, which is also quite cost effective due to the fact that they don't have RTX attached to it.

For audio, our main focus is the modules RTX we have high quality audio modules, which can be integrated in different RTX, in professional audio like microphones, stage equipment and and big sports events and things like that. RTX, we deliver the infrastructure to collect data from different patient monitoring devices display them on a on a centralized station, also enabling both alarms and [indiscernible] more efficient RTX. [indiscernible] [indiscernible] Then we go to the highlights for the quarter for the 3 business units. If we look to RTX, we we can see is that if we start in the bottom, the revenue for the quarter is €79,000,000 compared to a very low last year of €45,000,000 So of course, solid increase but also on the on compared to a very low last year. What we can see is that we see new orders coming in from some of our long term customers. And what we both see is that we get new orders, but we also few of them get 12 months RTX, which gives us insight into the expectations for the coming year. We have for one of them also gained insight into their stock level and their desired stock level. [indiscernible] trying for them to find a balance with as low as possible inventory combined with being in flow so that RTX able to deliver in time.

And then we've got RTX good dialogue with particularly 1 RTX 2 of these enterprise customers. What we also see is that our order horizon remained short So we've got a good insight on the next RTX months. A little bit less on 4 to 6 and very limited orders which are placed more than 6 months in advance. We have, as one of our focus points, looked at these SME customers, which can take a relatively standardized product So a group of smaller customers RTX very little development is required from RDX, but where they can take [indiscernible] handsets and make them their own. And there we've got a good development in a number of customers and prognosis also for the volume development in this segment. All of these RTX us relatively content under the circumstances with the enterprise RTX for the When we look to RTX audio, we have had the past year, we've we have communicated that we focus on modules as opposed to to product business because product business, we've got with these customers that we have, we've got they have got relatively high stock. And the prognosis of reducing this stock to a level where we can see a continuous flow for RTX is limited, particularly for one of the customers.

And that is one of the reasons that we have focused on module and the other reason is that modules are very standardized products RTX we can use the same module for many customers with limited effort design effort for RTX. Our customers across a wide range of products can integrate this module gaining RTX development time for them and very high quality audio This transition from RTX product to module is taking a little bit longer than we anticipated. What we can see is that we've got a number of customers who are in the design phase, so that means that have paid currency technology access fee to gain modules and the technology inside to RTX it into their module. But their phase of designing and bringing it to market is taking a little bit longer than we anticipate. What you can see for the year is that our ore pipeline is is building up and in a way so that we think that the outlook that we communicate for our techs as a whole for the year is RTX. And when we look to RTX, the revenue for this quarter is a mere €5,000,000 compared to €14,000,000 last year.

And some of this is is due to this transformation that we have from taking over the ownership of the product systems from this agreement that we communicated in November 20 RTX. This taking over ownership is course, a software takeover where our partner had developed a part of the software. We have another part And this taking over RTX into new product has just taken longer than what we anticipated and that has impacted our revenue for this RTX. I think last time we communicated that we had a field RTX, a successful field trial We gained some important learnings from that. And we have integrated these learnings in our adjustments to the development, and we've planned a new trial in late RTX, early [indiscernible] Together with a big hospital chain, another hospital chain is showing interest in doing the same thing. So that shows that there is an interest within these hospital RTX bigger insight on this product that we are launching. In order to create this mobility and leverage on the infrastructure already installed in the hospitals. We also RTX see an auto pipeline building up for the year. Also supporting the outlook. Then when we look to the financial highlights, we see a revenue of just above RTX 100,000,000 compared to SEK 82 1,000,000 last year.

And as stated, the RTX business is the business which is experienced a the biggest growth compared to last RTX. Of course, U. S. Dollar to Danish kroner has also RTX, but compared to last the Q1 of last year it's approximately 1.8% in terms of the U. S. Dollar. When we look to the gross margin, we see a gross margin at the level that we reached also in Q3. [indiscernible] last RTX. And much higher than Q1 last year. Also RTX to Q1 last year, we had a very low gross margin, which was impacted both by these semi variable costs playing at much larger [indiscernible] on the gross margin, but also product mix where we had some low margin products in the mix and a little bit of invoicing of components, so you can say, [indiscernible] So how have we reached this 51% even with a revenue which is significantly lower than in Q4? It is both an effort RTX result of the effort to improve unit costs on key products. It's an effort of reducing these semi variable costs planning better. So we've got fewer startup shutdown costs of RTX. RTX. And then it's a result of some of the price increases that we announced last year.

Taking into effect. This, of course, reflects to the EBITDA RTX we reached a level of minus 9.4 compared to minus 31 last year. And that is basically a result of the improved revenue gross margin and that we have kept our capacity costs in line with our target. And we've selected Arnulf. RTX financial highlights that we think are interesting when looking at RTX Currently, the first one is inventory that we also booked on previous month RTX we had more or less the same level as we were at the end of Q4 RTX. And this is this inventory RTX both goods in transit and our component inventory. All in all, we see that RTX inventory is being used RTX in production, less so in this quarter as the mix of product Has not taken so much of the inventory as previous. But the goods and transit are higher than than previous quarter. Our net liquidity position is at 90 7% compared to 107 RTX last year. We have decreased during the quarter, and that's, of course, because of this reduction in RTX negative results.

It is still within our RTX policy between €80,000,000 RTX 100 So in that respect, it's still within the RTX, yes. Our free cash flow, which is combined of the operating cash flow and then cash flow from investment, is minus 14% compared to minus 23% last time. And of course, we highlight this key figure because we are very focused on getting a positive cash flow for our business and we are working hard on reaching that again. And that's why we have decided to highlight that as well in these highlights.

The last one is our RTX ratio. At 68%, which is continues to be at a solid level, also showing our business balance sheet. [indiscernible] That leads to an outlook for the year where we maintain the outlook we communicated in the financial RTX. Revenue of 14 9,000,000 to EUR 520,000,000,000 to RTX and EBIT -35,000,000 to -15,000,000 As I communicated before, we've got That is factory first form RTX. We've got visibility into the current RTX, so Q2. Q3 a little bit visibility in Q4 with firm RTX. We've got not so much. So, so that's the background of us maintaining this outlook even though it was our 1st quarter is significantly better than last year.

Okay. Thank you, Milan. And then if anybody has questions, [indiscernible] [indiscernible] start with a few questions. Coming back to [indiscernible] [indiscernible] Is it similar across all RTX segments, the insight you have into the pipeline? Or is that only in RTX that you are having this 3 months and then all is not much beyond 3 months. I guess health care is that better or RTX is a little bit longer.

RTX horizon, but it is I think enterprise we are gaining insight into the 12 months forecast on some of them, but RTX months orders is across both Wario and RTX that this is where we've got Of course, we've got a few customers who place longer orders so that's what gives us visibility into the 4th to 6 months.

And then while you are getting this insight into a client inventory. Is that on one of the clients where you have improved RTX, [indiscernible] one of the clients where They are still not giving any orders because they have too much inventory. Do you have any insight into declines with too much inventory RTX.

We've got it the to your first question, it's it is on orders on clients where the order where they've reduced the inventory to a level where they are now satisfied. Even to a level where they probably reduced it a little bit too much. Which of course enables us to enter a good dialogue of how can we have a flow which is beneficial for both them and us. We do have insight into higher inventory for some of the customers that they have higher inventory. We've got limited insight into their pullout in the market. Be it because, of course, it's is also negotiation criteria for them not to expose that they that they might be needing RTX and a short while.

I don't know how much we can put into the RTX distribution of RTX, but the Danish one is what the Danish sales is doing very well is that the retail part I think that we cannot reach much into the geographic distribution. The Danish part is not in RTX. S. Sale, no. Somewhat. [indiscernible] the transition to modules is that decision to focus on modules for the long term or is it just something you do the short medium term to secure more sales as you're waiting for The long term or the [indiscernible] change that you also in the future was to focus more on the modules.

It is a strategic focus on modules. See that the per audio customers are RTX very fragmented and therefore we don't see the option to to gain high enough volume and high enough margins in a continuous flow from from for audio business. What we do see from the product side. From the product side then. For the modules, we see that because this is the customer setup, we've got very many smaller solutions into different segments of the professional audio, where RTX very good at that specific point, but they need an a very solid audio solution and they are not always experts in that. And that's RTX we see that with a limited Work effort, yeah, on the from RTX, we can use the same module to many different clients.

Is that then expanding your market potential or is it RTX? Just wondering how many are in the different segments full product or just checking in a module. [indiscernible] Think that it is expanding our market potential. Because many many of our many customers can use this model to relatively quickly RTX professional audio to market. If we work with RTX customers, [indiscernible] and therefore both the development time and success becomes very dependent on this particular segment.

Look into future revenues and margins, When you assume your transition to mainly being modules and generally no problems, is that then going to RTX your revenue down to a level and then you should start growing from that And how is that going to impact the gross margin on the RTX [indiscernible] The module businesses have better gross margin than for our business within ProAudio.

We have had some of the previous years, we've had revenue from product business which has created high inventory So of course, we are catching up on some of this revenue that we've had in the previous years. But that was, as we saw, not a sustainable year by year revenue. So So yes, we will catch up on revenue, but we see that the module business is better margin business than the product business. Within ProAudio.

Catch up on revenue mean that you will get [indiscernible] Prior to the changes, totally [indiscernible] you have to see a drop or rebase before you get there. RTX are you which level are you talking about? Because we've had one really high year with 180 But there you had a sell into a client.

Exactly.

Yeah. We expect that we will think last year we had 120 or so. We expect that we will increase the revenue not necessarily this year, but on the module business. So we RTX a sustainable level in line with with what we've had [indiscernible] [indiscernible] [indiscernible] has there been a major delay in let's just say, RTX transition of ownership? Has there been a delay in the ramp up? And is that because that the products are not finished? Is that because the selling by your customer RTX their customers because it's B2B, takes longer than everybody has expected. And I guess when it's RTX to hospitals, there must be a lot of extra checking that if RTX just selling into an office environment like ours. Yes. So what's the reasons here?

It is a delay in the transition of the software from our partner. To us. I think in any software or any project, but definitely software RTX. RTX, not everything is defined in every details at the start. [indiscernible] Facilitates RTX discussions into the details of what should it be able to do now. What has changed since we made the agreement what is actually necessary. So this transition has taken longer than anticipated. Your second question on whether it's the drive for the market, we experienced from our partner that they are also very impatient in getting this to market because having this system working makes their compatibility on the rest of their products, patient monitoring. Much better So the pull from the market is definitely there. RTX the second field trial on a hospital here at the end of financial Q2. And we hear from another large hospital chain that they're also very interested in in testing this. So pull from the market, we don't experience that it's it's less than anticipated, but the solution needs to be for all parties and the hand open is to be clear. So yes, there RTX been a delay compared to what we expected in the development.

And what do you mean by that you have to implement the lessons RTX from the first test. Is it other functionality RTX is it to improve stability or It is I think the I don't have all the details, but what I can say is that the integration process So how do you integrate it? How do you map how many of these devices you need? To do a coverage. [indiscernible] the coverage across segments, how do you do that in the best way? To be able to both sell into the critical sections of the hospital. But then also have possibility to expand [indiscernible] [indiscernible] was it the RTX report that you've done just in late?

Summer in the U. S. When you talk about the tests now, is that at the same hospital or group or Yes. [indiscernible] To take the lessons learned and to kind of do a second RTX, does it work as it should with the same group of [indiscernible] RTX, so both us, RTX and And health care provider and the hospitals. So the same group together here.

I think RTX also in the Q4 reports said something about potentially partner distribution. Selling this solutions in the U. S. Yes.

Any progress there? Or Yes. We're also progressing RTX, but we are RTX [indiscernible] on how to set this up. The timeline for it, I cannot say as of yet, but that's progressing as well.

And then when you You are saying that in Q1 that the amortization of R and D comes down, then you're right. [indiscernible] It will increase going forward, the because the RTX should have been developed and is coming to the I've shown this as the RTX problem.

Yes.

So is that from Q we should see higher amortizations on the product. In general because of the loss of this [indiscernible] I think it is going to be you're going to see an increase in Q2 [indiscernible] RTX very much in Q3. It is, of course, it's aligned with when the product become content to the market and we also see a sale of these products. So somewhat this quarter and but mostly next quarter, RTX.

That means that if you start a molotetization in Q2, we should also see sales And is that sales for your partners' inventory or is it because that they can start selling out to their clients. Is it RTX buildup or is it [indiscernible] I would assume that it's sell out because it's part of the plan to for them to acquire this so they can sell their system. So it's not building up inventory for a launch later this year. It isn't.

And for the year, you see solid growth in Healthcare RTX.

On the back of the launch. Yes.

Solid is that 10% 50%, 20%.

It's a good word, solid I mean, solid is I think if it had been double, I probably would have been [indiscernible] Used a different word. But solid is not 10%. That's I wouldn't say that's solid So it's somewhere between [indiscernible] That's the last year. Sorry to interrupt. I just want to confirm what time you guys want to have lunch because 11:10 Okay, good. [indiscernible] So it's less than 10 this year than actual RTX next year?

No, I say what I say is that I wouldn't call 10% increase Solid. Smaller than 10. It's more than 10. Okay. It's less than [indiscernible] Of last year.

Okay.

So somewhere between 10 100 Yeah. Something like that. I think RTX very cautious here because we have We need to get the product.

It's more important to get it RTX. We have to get it fast, at least in the short term, because we see a buildup over the content RTX. That's really key for us. That's where we are on our island.

Yeah. Focus should be where RTX want to be. But People also look midterm RTX if there's traction or if there's no traction or And so do we. But it's RTX important to get right Moving to [indiscernible] The gross margin So when you reach 51% gross margin in in this quarter, On the lower sales, and we could compare that to last RTX. Versus where you did better revenue but lower margins. Is this an exceptional quarter or are you by these 51% actually you have set a new level of RTX profitability on the sales.

And I assume that your change in that going forward as well. Yes. I think that it is it is [indiscernible] both that we have fewer of these very low margin products that we had in the year [indiscernible] Particularly in the Enterprise business. It is also reflecting that we have had high focus on the semi variable costs getting those and in as small as possible through good planning and and focus And then it's just a reflection that we have taken the high volume products and try to reduce the unit costs of those. Given that we expect this to be a change where we will actually have a new baseline RTX [indiscernible] So it's not an exceptional quarter. There are no one time effects that has that has led us to this level.

And how much leverage [indiscernible] [indiscernible] It's not short term. If you look into the next year, if you get more RTX, if you get more [indiscernible] I would then assume that you would be able to raise your gross margins from current year. Yes. [indiscernible] Inventories RTX just a clarification, the components RTX of it has come down. And then you said that the inventories are mainly inventories in transit. So it's inventories, which you have been selling also to to clients. So RTX is just on the way. So when it's increasing, is it RTX fair assurance because that it's an indication of growth going on. Revenue growing going forward.

I think that it is since it's at the it's between RTX. Where it indicates whether this shipment to a particular customer. [indiscernible] RTX transit or not. [indiscernible] isolate and be seen as a indicator of growth. But Yes, we expect that the coming RTX will be higher in terms of coming back to this RTX. So it's RTX it's my firm.

A picture of what is the case at the 3rd first of December rather than an indication of And you're RTX in the report when it comes true. Talk about the Q2 RTX. You're not commenting on the second quarter, but you're commenting in first half saying that revenue will be higher than last year. [indiscernible] But then question is, will Q2 of RTX inside into Q2 now. Would that be higher than the RTX quarter last year?

I think that we've chose not to comment on that, but but I think it's fair to say that it will probably not be RTX than No questions from NASA. I'm coming to RTX, but then it's more for Chairman. Now you've got a new boss set up elected last Friday and you've got 2 new members on the RTX.

Can you put some words on what they are going to add to the business and to the Board setup? And do you see the Board overall stronger based on competences now than if we look back on the RTX bonds.

Yes. So this is, of course, also a way of aligning the board with what we need in the business.

So to answer RTX, at the end, the expectation suggests that that would be In terms of profiles, so we had 2 new people join, so Dieter and Karsten. The first detail comes from Yuval, So he has RTX global roles for quite some time in a large organization and been exposed to many different niches of RTX and customer base globally, but MediXin RTX there's some let's say, resonance or commonalities to the kind of customers that we have. That's some experience in bridging on the commercial side of the house and how to deal with large key accounts. [indiscernible] But also that she has a background in strategic initiatives and development within UL. RTX have a successful map for quite many years. So that's sort of 2 main elements of what she brings to the table. Then of course, RTX also know specifically that dealing with regulations and changes in that. Important also for ITX and then of RTX, it comes with a very solid backbone in that. So that was on for Carsten. Has a background as well on the technology side RTX much historically in the sort of the Nokia and cell phone to the telecom space, But then in many years now, we've now been in sort of technology heavy companies and startups models.

Smaller companies working to scale those. So that's part of what he brings to the table. Also has RTX from Gopspace in being sort of presenting a company to the investors and the stock market, which we see as relevant. So RTX very different profiles, but together they add I think, strength and experience to the Board.

And you also have a new CEO on board as well. Yes. Should we expect that when we get to August on the Q3 numbers or full year that there will be strategic statement refreshing what you've been doing or status so RTX? Will it be business as usual or So of course, a new CEO on board, there RTX be [indiscernible] Potential opportunities RTX looking at strategy. Change [indiscernible] But as we see right now also with the conversations we have with RTX, very much aligned on where we are aiming right now strategically. So we expect that those pillars will continue. The balance between them and how we detail them might change and get refined or time. And we expect some of that because Janak has an interesting and solid background and also RTX we don't expect our RTX in terms of where we are aiming, but right an evolution of what RTX doing.

And the decision to bring him on board with his back from system magic. Is that an indication of your increasing focus on the RTX going forward?

That's for sure one component. He has a broader background also from a company in the past and then systematic.

Yes, log insides into both hardware and not least the software size. Or software businesses, which is again a good match for ITX. And yes, then specifically, of course, she has led the healthcare business within Systematic. So it emphasizes at least what we're doing and should strengthen our capabilities in that area.

That was all from my side. RTX the final question from the web? It doesn't seem so.

And we'll finish here. And thank you for all participating and Thank you for your coming.

Thank you very much.