In the recent Agfa Third Quarter 2024 Results Conference Call, CEO Pascal Juery outlined the company's performance, highlighting significant growth in the Digital Print & Chemicals segment and the transition of the Healthcare IT division to a cloud-based model.
Despite facing accelerated declines in the medical film market and a negative free cash flow, Agfa raised its full-year growth forecast and remains optimistic about long-term prospects, particularly in cloud solutions and digital printing. The company is also undergoing a cost-cutting transformation program to address market challenges and improve profitability.
Key Takeaways
- Agfa's Digital Print & Chemicals segment shows double-digit growth in sales and profitability.
- Healthcare IT division's order intake increased by 23%, with a significant shift to cloud solutions.
- Medical (TASE:PMCN) film segment, especially in China, faces accelerated declines, prompting a transformation program with potential job reductions.
- Despite a stable overall group sales, contrasting performances are seen across segments, with negative free cash flow due to higher capital expenditures.
- Agfa raised its full-year growth forecast to at least 20% and reported a 57% net new customer growth.
- The company is cautious about 2025 sales projections due to the transition to cloud services and awaits conclusions on the Aurelius and Offset division assessments.
Company Outlook
- Positive expectations for Q4, especially in HealthCare IT, which usually performs well in December.
- Long-term growth anticipated with a focus on cloud solutions and digital printing innovations.
- Restructuring program aims to cut costs by €50 million, with initiatives expected to be implemented by 2025.
Bearish Highlights
- Radiology Solutions segment struggles with declining film markets, despite growth in Digital Radiography.
- Transition to cloud services in Healthcare IT expected to lower short-term sales.
- Negative free cash flow of €6 million in Q3 due to increased capital expenditures and working capital changes.
Bullish Highlights
- Record 23% increase in order intake for Healthcare IT, with 45% related to cloud solutions.
- Digital Printing and Green Hydrogen Solutions segments report double-digit growth.
- Full-year growth forecast increased from a high single-digit to at least 20%.
Misses
- Revenue recognition for recurring contracts in Healthcare IT will take five to six years, impacting short-term growth.
- Growth in Hydrogen projects slower than anticipated.
Q&A Highlights
- Analysts seek clarity on the disparity between declining sales and anticipated profitability boost in Healthcare IT.
- CEO explains that the transition to cloud services is designed to enhance profitability over time despite immediate sales impact.
- Restructuring program is expected to be self-funded, with cash benefits exceeding implementation costs.
- Radiology EBIT expected to remain negative in Q4 due to market challenges.
- Company prepares for a mid-teen percentage market decrease, with a scenario of a 10% to 15% decline.
- Aurelius transaction delay is a primary concern, with a dispute over approximately two-thirds of the owed amount.
Agfa (AGFA) remains committed to navigating through short-term challenges while steering towards a promising future in digital and cloud-based solutions. The company's emphasis on innovation and strategic restructuring aims to secure its position in the evolving market landscape.
Full transcript - None (AFGVF) Q3 2024:
Operator: Hello, and welcome to the Agfa Third Quarter 2024 Results Conference Call. Please note that, this conference is being recorded, and that for the duration of the call, your lines will be on listen-only. [Operator Instructions] I will now hand you over to your host, Pascal Juery, CEO, to begin today's conference. Thank you.
Pascal Juery: Thank you very much, Francois, and hello, everyone. Welcome to the call. I'm sitting in Mortsel today with our new CFO, Fiona Lam; with Viviane Dictus from Investment Relations, and with my colleagues from the Executive Committee of Agfa. Today, as Fiona joined us only a few weeks ago, okay, I'm going to take the call as I did in the previous quarters. So don't be surprised. I'll be covering the full set of slides today. And of course, we'll open up for questions after the -- after my messaging. So first, what are the key takeaways of the Q3 results for Agfa? Number one, I think DPC is on track for growth, very good performance of DPC, top and bottom line, validating really the strategy of the Company. Point number two, HealthCare IT is officially a cloud player. We have started our first ever cloud-enabled enterprise imaging software at customers in the U.S. So that makes us officially a cloud player. I think what is important for us is the traction that we have in the market. We have the highest ever order intake that we've seen in the business. And the transition to the cloud is probably faster than we anticipated, and that is not without any consequence for the short-term delivery situation of the Company, because it does change the timing of revenue and margin going to the cloud is delaying its revenue and margin. But overall, we are very happy with where we are. We have launched cloud solutions barely a year ago, and it's now a significant part of our order intake. Then Point number three, very difficult situation in film in terms of market background. We are seeing an accelerated decline of some key markets in the film. And when I say key markets, it's mainly on the medical film, and mainly focused on specific geographies, like especially the China market. So in order to offset the impact of this decline, we have launched, as you know, a significant transformation program that we announced back in August. Today, we have actually announced what would be the social impact of such a program in our Belgium operations. And we have initiated with our social partners the dialogue that will lead to the implementation of the program. So we confirm the €50 million. We have announced the specific Belgium social impact today that could be as high as 530 job suppressions -- and we have started what I hope will be a constructive dialogue with our social partners in order to be ready for implementation as soon as in 2025. So that's really the three main messages. The growth engines are doing fine. DPC already under delivery. HealthCare IT on the leading indicator in the context of the cloud transition, and a complex situation for film that we are tackling through this self-help productivity program overall. So -- now, when we look at the numbers, you will see for HealthCare IT 23% increase in 12-month rolling, highest number of order, 45% cloud related for something that we launched only a year ago, meaning showing the excellent traction we've got in the market. And more importantly, we are gaining customers, and this is something that needs to be really said here. We are now winning share and winning customers in a significant way through this cloud transition. So overall, I'm very happy about it. It has an impact on the short term. I'll come back to that when I show you the numbers in the HealthCare IT system because indeed, short term, it has an impact on the bottom line. DPC, double-digit top line growth in our growth engines. So very happy about that. This is an acceleration of the growth. It was to be expected. We explained why that's precisely the impact of the FI partnership and the launches we've done at the beginning of the year. And we have also our first packaging printer that is now in operation at our first customer on the first commercial printing will actually happen next week, but the machine is in place and has been printing now for a few weeks. Then Radiology, as I said, it's mainly a volume issue that we are seeing today with an accelerating decline in the market. And although DR is growing 9%, which is, I think, a good performance in the current market background, we cannot make up this decrease. So if I turn to numbers in the next slide, of course, we have stable sales overall for the group, but a very contrasted situation where Radiology is decreasing double digits and DPC is increasing double digit, while the sales of HealthCare IT are a bit eroded, I would say. Same situation on the bottom line, I mean, DPC Radiology used to be the main moneymaker for the Company, but now is DPC, illustrated by the way, the pivot of our portfolio as well. So strong increase of profitability in DPC Radiology under pressure, hence the reason why we are launching this productivity program, it will mainly impact the radiology, but other units mainly. And HealthCare IT, a bit profitability on quarter is not as good as last year. That's mainly due to the mix, and I will come back to also again the impact of the cloud transition. So, now I'm going to turn to the P&L. So you see that, I'm not coming back to the sales, which is overall flat when you remove the impact of currency. The decrease in gross profit is really mainly coming from the film impact. Operational expenses are, I believe, quite under control, and we will continue our effort in this area as well. So it translates into an EBITDA that is below last year, I would say, with a shift with a specific, shift of profitability of the different businesses as discussed. If I look at the bottom part of the P&L, we continue in terms of adjustment, which we used to call non-recurring adjustments, and restructuring expense, as you see, are under control, and much lower than last year as already stated. This will change with the implementation, of course, of the transformation program. But this is -- we will be in a position to tell you about it when we have concluded the negotiation with the social partner. But I can already tell you that for this program, we expect it to be self-funding and actually cash to the group at... [Technical Difficulty]
Operator: Okay, we can hear you now.
A - Pascal Juery: Okay. So, I guess, I'm back online. Sorry about that. I'm not sure when it was interrupted, but I'm going to start back where I was. I was talking about the adjustment and restructuring expenses, which is much below last year. And I was commenting that indeed, the program that we are launching will mean a significant, of course, charge, but that -- this program is expected to be cash accretive during the length of the project and almost at all time of the project. So it's a self-funding program. I want to make it clear, but we are not in a position to communicate on it before we have concluded an agreement with our social partners. And that's probably what I will comment on this P&L. Then working capital, it's roughly in line with last year, especially when you take into account that we have a specific impact of the higher silver price in the value of our inventory, and as well the added transit time for -- due to the situation in the Middle East. This being said, this working capital will be worked off by the end of the year exactly like we did last year. And the plan is to come back to a kind of a similar situation that we have seen last year. Free cash flow for Q3. As you see, impact of indeed working capital, higher CapEx than usual. I would like to remind you that, we are still in full swing building the green membrane plant. So this is -- we are still in this effort that will continue in '25. So overall, a negative free cash flow of €6 million after pension charges of €11 million for the quarter. The debt position influenced, of course, by especially the seasonality of the working capital during the year. So we expect, as in the previous years to reduce this debt position by the end of the year as Q4 will, of course, show cash generation, mainly, of course, fueled by the decrease of working capital. Now, if I turn to the businesses and start with HealthCare IT. So indeed, when I look at sales compared to last year, a bit below last year, and EBITDA significantly below last year, in fact, due to the mix. This being said, the quarterly results can be a bit lumpy. But what you need to understand is this rapid transition to the cloud has an impact. And it has a kind of a double impact, I would say. First, you have a lot of customers a bit delaying or stopping their refreshment purchases before making the transition to the cloud. So there is a tendency to delay, for instance, the renewal of hardware, and to also take a step back and that's what we see at some of our current accounts, especially in the U.S., where the move to the cloud is going the faster. And a second consideration also that everybody needs to understand, and I'm going to try to explain it through a very simple example is that, indeed, it's a significant change in the revenue model in terms of timing and therefore, on the margin. So it means when you have a transition to the cloud, the first phase will have actually some negative impact on your top line and bottom line. Let me explain. If traditionally, I was -- we were selling, roughly speaking, about €100 million of orders in a given year. This €100 million, you could give or take, say, you will find it back in your sales in the next year, to make a very simple projection. However, if now you sell -- instead of selling €100 million of project-based software, you 50% -- €50 million is going to the cloud. It means this €50 million will not be there in your sales next year. And with the same order intake, you will probably be in a position to invoice about 1/5 of this €50 million. So it means with the same order intake of €100 million, if you split it between the cloud-based project and project, you will have a top line the year after of €60 million instead of €100 million, okay? So that's what it does to your revenue. The switch to cloud is good news for us, because it means we're going to have more sticky customers, longer contracts, good visibility, built-in growth in our contracts. But short term, it will have a significant impact on the business. So we are in growth mode. As you see, we are growing the business in terms of orders by 20%, but it will not be enough to eliminate this kind of mechanical effect of going to the cloud. And you start seeing some of it already, which is more indirect and direct today, but we start seeing this phenomenon to happen. So again, it's excellent news for us, this switch to the cloud. And what is excellent news is we are gaining net new customers and significant net new customers all over the world. But the translation into growth will be delayed due to this change of revenue and margin model. And that's what we will see in the next quarter as well. So when you look at the P&L, the performance of the quarter on the top line fully reflects in the bottom line, because we are missing -- that's really where we are missing a top line, and we are missing it with a less favorable mix, in fact. Now, this being said, it's good news for us. Order intake, plus 23%, highest ever order intake that for the Company. We have, if anything increased our view of the full year. We were saying it was going to be high single-digit increase. Now we say, it's going to be at least 20%, in fact. So it means the momentum is still there. And as you see, 45% of these deals are in the cloud. I would like to remind you that. a year ago, it was 0%. Net new customers, 57%. This is the highest ever performance in gaming customers. And we have now 56% of the projects that are project and 44% that are recurring. And when you look at recurring business, this is this part that will take, I would say, five or six years to recognize as revenue once before it was treated as, I would say, everything in the same year, okay? So that's what it does to the business. As I said, we are very pleased to announce that, we have our first cloud project already running and satisfactorily, it was a good deployment for the first. And here, then after we give you examples of the gains that we have made. And as you see, it's in the U.S., in the U.K., but also in the South Europe and also in Asia. So it's a bit of a global trend that we are today gaining projects. So very happy with the development of the business, even if the short-term delivery is impacted. Now, if I turn to DPC, DPC double-digit growth. And when you look at where it comes from, it comes from the right areas as well. So it means DPS has a very good drive in digital printing. The start of the year was a little bit weaker, and we told you the reason why, mainly we were renewing a significant part of our range of equipment and as well the EFI partnership would kick in only in the second half. You see it happens. That's exactly what happens. Very dynamic situation for DPS, 19% growth versus quarter last year and Q4 shapes up as an excellent quarter, which is the strongest quarter of the year anyway for DPS. Green Hydrogen Solutions, sales growth of 15% versus Q3. The comparables are increasing quarter-after-quarter. If you look at the year-to-date growth of ZIRFON, it's plus 34%. But of course, I would say, and everybody knows, indeed, the Hydrogen projects are not happening as fast as what we thought. This being said, it was never part of our plan. And for the time being, we are quite on track with what we forecasted for the project. We will still see growth, but not as explosive as one could expect. EBITDA good on the strength of the good top line performance, we have delivered, I would say, the corresponding EBITDA for the business. So I would say, DPC becomes indeed a very more reliable growth engine for the Company on the strength of its growth businesses. If I look in a little bit more details about where we are, I think, what the key message is you see the increase on equipment today after a more subdued first half for the reasons, I just explained. Inks continue to grow. On this quarter, it was 10%. Last quarter, it was more than 20%. We believe for the full year, it will be around 15%. I mean, we are doing fine in inks. We are installing more and more equipment. So we are quite okay in inks. As I said, the first SpeedSet Orca packaging printer is in operation at the customer site in the U.K. It is printing actually. And I know that, some of you made the trip last year to Cambridge to see this machine. So it's now a machine that is in operation. And as already explained, we have kept bringing new initiatives to the market. And here, you have a few examples that is the illustration of a very dynamic portfolio evolution where every time, we are going kind of upmarket, increase productivity and the value for our customers. So that's really going quite on track. Green Hydrogen Solutions. We are on track for the buildup of the new plant. Anyway, this new plant will not bring only capacity, but also the ability to increase the productivity of the way we make membrane. So, even if -- again, we don't need this new plant to be operating at 100% to see the benefit from the start. We are continuing -- today, we have more than 130 customers in the firm, and we continue our global expansion, and I'm glad to report that we have secured our first significant order for India. We know that, the final investment decisions are a bit delayed in this market. However, it was always taken into account in our business plan, and we never took to our plan the projections made either by public, by governments or even private players in the range. Now, let me turn to Radiology Solutions, where obviously the messaging is a bit different. We are under pressure in the film market. And although, DR is increasing top line, given the relative size of the two businesses, it's not enough, of course, to offset the film decline. And that reflects fully on the EBITDA of the business and the need to launch this program that is in place, as you know. So if you look at the P&L, this is clearly the illustration of this fast decline. We are also managing as well as we can our OpEx, our rates in OpEx, making a significant effort to reduce this OpEx, as you can see. But nevertheless, we cannot eliminate the full impact of the volume decrease. And as well, at the same time, unfortunately, we still have a situation in manufacturing that is not yet ideal in terms of, I would say, quality and productivity for sales. So I want to stress, in this market decline, we are keeping the same market share. Actually, we are not losing share. We are keeping up with our share, but we just suffer from the overall situation of the market. So we -- the actions we are taking, we take actions, yes, in the film production. You've seen an announcement related to Belgium today, but our effort is actually global in the film production. And at the same time, we have also announced actually last week that we will shut down a plant in Germany, catering the CR market, the Computed Radiography market, which is a kind of a technology that has been declining for a number of years. So that's also part of the measure we are taking to -- to improve the situation. Apart from that, in DR, we continue to innovate, but more on the AI/software side, providing more and more features to our customers and the 9% top line growth that we are seeing for this business validates, I say, our approach in this area. So CONOPS, a brief word on CONOPS. Well, as you know, this is the division that actually supplies the ECO3 offset business. So, here, not much to report. Sales are -- let's say, a bit below last year. And the EBITDA is a contractual EBITDA. So actually, it covers all our cost and the cost of capital. So the EBITDA that you see here is reflecting this. The year-to-date EBITDA is positive, but the Q3 EBITDA is at 0. Outlook, well, first, HealthCare IT, Q4 is the highest quarter of the year, and we expect it to be in line or higher than last year, actually. And as I said, we expect the momentum in order intake to continue. DPC, we will continue also the trend that we are seeing today and DC will continue to perform. I would say on these two divisions, there is not much change to our previous guidance at all. Probably, the impact of the cloud in HealthCare IT is a bit higher than anticipated because the transition is a bit faster than what we thought. However, in Radiology, we are not expecting any improvement from what we are seeing today. So certainly, not in Q4 and especially as all the self-help measures that we will bring to life will only impact in '25. And I say, time to implement will probably impact mostly the second half of '25. So there is nothing for me that will improve short term on the results for Radiology. Working capital will be back to normal. It's a bit like the same pattern as last year. So most of -- we'll see all of the decline of working capital in Q4, and we will do exactly the same way that we did last year. For Aurelius and Offset division, I would say that, as you know, we are still actually waiting the outcome of the expertise. The expertise that started actually in mid-July. It takes a lot longer than our expectations and the planned conclusion by the expert. So the work is still ongoing, and we are still waiting for the final decision of the expert. Depending on the timing, and if the decision doesn't come in the next, I would say, in the next two to three weeks, it means the cash that we are expecting for our use will be in '25 and not '24. We are coming to a situation in terms of calendar that we need a decision, I would say, in the next weeks. And last but not least, I'm not coming back to what we -- what I already explained on the transformation program that was today announced for this Belgium part this morning. So not coming back to that, I mean, we discussed it, I think, already. Just a word of sustainability to say that, broadly we are in line with our objectives for sustainability. And I would like now to turn to questions. And operator, I would like to take the questions from the analysts and the press.
Operator: [Operator Instructions] Our first question comes from Alexander Craeymeersch from Kepler Cheuvreux.
Alexander Craeymeersch: Alexander from Kepler Cheuvreux. So, first question would be on the HealthCare IT segment. It's a nice flow into the cloud solutions there. But I'm struggling to understand a bit the match between the outlook and the ongoing business. So the guidance is to have a performance roughly in line with prior year for the full year 2024, and that would imply a 20% increase in EBIT in Q4, whilst the sales are trending lower. The order intake seems to be skewed towards cloud storage, which you mentioned that is stretched over a longer period of time. And the nine-month mark is 26% below prior year on the adjusted EBIT level. So, could you just help us understand where the sudden sharpen increase and sales increase in profitability would come from? And then maybe the second question on HealthCare IT would be on the consensus of 2025. Am I correct that your remark is basically saying that the consensus in terms of sales is rather too high, because the sales at this stage implies a sales increase next year? But if I understand your remarks on cloud storage correctly, that would imply a sales decrease, but then, of course, margins that are higher. That would be a bit on HealthCare IT. Maybe I can follow-up with some other questions later.
Pascal Juery: Okay. On HealthCare IT, very simply, Alexander, it's -- Q4 is the highest quarter for HealthCare IT, the same every year. That was the same last year. So indeed for -- I think, it's a practice that is not only for us in this market. But indeed, we will have a very strong fourth quarter sales and EBITDA. That's -- but again, it's similar as last year. And this is why I'm sticking to what you say. Yes, indeed, not all quarters are built the same. And this is a pattern that we have that this year, more than 50% of the EBITDA of the business will be done probably in December. So -- but we stick to our guidance, and we'll be striving in order to deliver that. Regarding -- I think your second question is extremely important, because it's about the modernization of the transition to cloud. I would, however, we're in the process of planning next year and making our budget. So it's a bit early for me to give you a guidance for '25. Normally, I prefer not to do that before having a very complete view. But I repeat, indeed, I repeat what I said. When you have a transition to the cloud, even if you grow significantly your order intake, you understand that the first, the short-term impact is a decrease of your sales. And again, because in a project, you invoice everything in one go. If you have a €10 million project, you will invoice €10 million and then have an SMA for the next year, but a relatively modest one in a cloud environment, by the way, SaaS or non-SaaS because they are also hybrid model. This €10 million of revenue will probably not be €10 million anymore, but €12 million or €13 million. But this €12 million and €13 million instead of invoicing in one year, you will invoice in five-six years, for instance, okay, depending on the length of the contract. So mechanically, it has an impact on your top line, even if you are growing your order intake. But I want to be very precise answering your question. And I will do it at the next opportunity, because now it's a bit too soon to guide on '25. But there is a mechanical impact. But again, I want to stress that transforming this business from a project business to a recurring business is the right thing to do. The value of the business is increasing, I think. And -- but it has this impact. So it's overall a very good news. We have done this quite rapidly. We are well positioned in the market to take advantage. And again, that's a business that is gaining customers today. So we have momentum because not all the players can do what we do today. And the tremendous increase that we've seen in customer satisfaction and in cash report mean actually a lot of interest in our solutions.
Alexander Craeymeersch: Okay. That's very clear. But just one small follow-up on that. So I am not mistaken to say that traditional solutions get cannibalized by the cloud solutions. And therefore, this would imply that your sales would decline next year if those traditional sales get transformed into cloud sales. That's correct, right?
Pascal Juery: Let me come back to you on that at a later stage, because it might be -- we don't know -- we have yet to finalize our plan. But it could -- could it be declining that? I don't know. But at least, I would say, it's going to be stable to decline. But having stability or decline means, in fact, a lot of underlying growth, in fact. But indeed, I would like to give a more precise guidance when we know what the plans are for 2025, and we are working on it, I would say.
Alexander Craeymeersch: Okay. Maybe then a question on Radiology. So the silver prices, I mean, do you have a plan in place to pass some of these silver price increases on to the customer? Or is this impossible in the current environment? And then on the outlook there, the EBIT is negative, and you mentioned that results will not improve. So can we then also expect a negative EBIT in the final quarter? Is that what has been said there?
Pascal Juery: Well, first on silver, overall, on the film, we have a lot of segments where we do increase the price of silver. And sometimes it's even contractual in our commercial activities. So -- the only -- there are only specific geographies and markets where we cannot do it. But most of the time, we would do it, I would say. But it's not possible to do in specific markets and segments. So that's for Silver. And then your next question regarding the EBIT of silver of Radiology for Q4. I think for Q4, we are going to be -- I'm saying, no improvement, but I think normally, we will have a positive EBIT in Q4.
Operator: [Operator Instructions] The next question comes from the line of Maxime Stranart from ING Bank.
Maxime Stranart: So a couple of questions from my end. First of all, coming back on the guidance for HealthCare IT. I hear, what you say, Pascal, about the guidance being roughly the same. But if you look at what you said in Q2, you were mentioning continued progress. This is slightly different to roughly in line you're seeing now. So any -- could you shed some light on what basically has changed there? That would be the first question. Secondly, looking at the restructuring program, you announced that your ambition to cut the cost base by €50 million. Could you provide us with some granularity on what's additional to the current level and what's required to just remain at the current level? And thirdly, if I may squeeze that one in, basically, looking at Radiology, medical film being down 17% compared to last year. Given the accelerated decline of the market, is that the new normal we should look into? That would be all for me.
Pascal Juery: Okay. HealthCare IT, first, what has changed? What are the key changes that we've seen? More rapid transition to the cloud. We were not expecting to be at that level of almost -- well, as you've seen, 45% of our projects are now cloud. That was not what we thought was going to happen in the past quarters, and we're a bit surprised by the speed of the transition and the fact that it goes actually that fast. That's the first change. Second, as I said, as a lot of customers contemplate to go to the cloud, it has a bit of a withholding effect on their current purchases. They would not refresh their hardware. They would not do something that they would plan to do. If they plan to have a larger move to the cloud. So it has a short-term impact where it's impacting also our business. So this -- that's really what has changed for us, okay? I must say that order intake, we are -- if I look, we always, of course, communicate to -- compared to last year, and we said plus 23%, and it's going to stay over 20% growth at the end of the year. Our first projections of order intake, I mean, our budget, if you want, was below that. Actually, we are well above what we thought we were going to be. So -- but the two things impacting short term, that's really what I told you, I mean, the speed of the transition to the cloud and the impact it has already on some holding patterns with customers. That's really what has changed actually. Regarding the restructuring program, well, €50 million. After two years, we will have probably 80% to 90% of the initiatives that will be already implemented. We believe, therefore, that if we are able to conclude the agreement that we want to conclude with our social partner, we will start seeing benefits in '25. But again, the full benefits will be at the end of '27. In terms of granularity, when you look at the social announcements, we have made today about 530 positions that could go part of this project, you understand that the vast majority of the savings is actually indeed related to cost of labor, but it's not only that. We also have initiatives regarding operational excellence and initiatives that are also purchasing based and initiatives that are leveraging different productivity levers. So that's what I can say. I think you had a question on -- and on -- and we will guide further as we go. We -- our plan is to try and finalize our social agreement by year-end, meaning at the time of yearly results, we'll tell you also about the cost of the program and how it's going to work. But I already can tell you and repeat that, this program will be self-funded and that we will see cash benefits from this program and that -- yes, I mean, even if we have to, of course, spend money to implement it, again, the benefits of the program will be higher than the cost at all time. And regarding films, yes, you mentioned 17% decrease. I'm not -- not checked the number, but it's probably directionally correct indeed. Our expectation -- well, I don't have a crystal ball first, and I cannot really tell you, if it is going to continue. But let me tell you that in our current assumptions and in the way we are also structuring our transformation program, yes, I mean, we count on mid-teen indeed decrease of the market. So we are preparing all these scenarios accordingly. Now, will it be minus 15%, minus 10%? I cannot tell you. Next (LON:NXT) year, it's a bit too early, I would say. But yes, we are setting up everything in order to be able to face this order of magnitude of decrease and hence, the program that we are implementing. Have I covered all your questions, Maxime?
Maxime Stranart: You did. I just have one follow-up, if I may. Looking back at HealthCare IT, if I look at Q2 order intake, 41% was related to cloud, 45% now. So I have a hard time reconciling what you just said about a more rapid transition than expected. This doesn't look like a major difference to me, 41% to 45% of the order intake. So, just if you can maybe elaborate a bit more on that, that would be helpful.
Pascal Juery: Well, I think it's still a lot of -- I was not really referring to -- I was more referring to Q1 versus Q2 and Q3. And what we have seen as well, as I told you, again, is a kind of a holding pattern of some customers in terms of current trading so to speak, and that also is impacting our business. Let me give you an example. I mean if you -- if someone -- if a customer contemplates going to cloud, he will not refresh its hardware and its servers anymore. You will not request any further, I would say, feature and whatnot. And that's what delay -- that's what's impacting also a bit our current trading, I would say. As the market is in transition, I mean, the decision time for our customers is slightly different, and it has a short-term impact on their current activities. That's what I meant by that, okay?
Operator: The next question comes from the line of Laura Roba from Degroof Petercam.
Laura Roba: First, one follow-up on HealthCare IT. So I understand that, the transition to the cloud means a temporary decrease in sales. But do you already have some visibility on how much time it will take for this higher order intake to translate into higher sales? And then I have a second question regarding the situation with the Aurelius transaction. What would be, in your view, the worst-case scenario here?
Pascal Juery: Okay. On HealthCare IT, excellent question on the time. I think, Laura, that's precisely what I would like to be able to probably guide after our yearly results. But indeed, it's not -- you don't do a cloud transition of this magnitude in a year. It's going to take a few years before you actually pivot your business. But there are also a lot of moving parts, and especially, the growth rate that we can extract from this transition to the cloud, which seems to be happening for us. So, if you -- so sorry, but you'll have to -- we'll guide more in -- at the end of the year. We still -- I had a question by Alexander. Can you guide us for '25? If I told Alexander, you've got to wait a bit to tell you, so that I can tell you what indeed is in store for '25. It's also true for the next years. But again, I want to stress it's not going to be -- it's going to have an impact, not a huge impact on sales. But the impact is we're not going to grow according to the growth of our order intake, of course, not at all. Regarding Aurelius, the worst-case scenario, for me, it's -- frankly speaking, we have an expert that takes a lot more time than originally anticipated to give the assessment. So for me, it's just a question of time, again, that we are -- on which we -- there is very little we can do in terms of influencing the time taken by the expert. So for me, the worst-case scenario, it's just a time delay, in fact. We are not in dispute for the full amount that is owed to Agfa. We are in dispute, roughly speaking, for 2/3 of it. But the worst-case scenario is indeed this delay.
Operator: There are no further questions. So I hand back to you, Mr. Juery, to conclude today's call.
Pascal Juery: Thanks a lot, operator. And again, I want to repeat all the growth engines of the group are really doing well. The short term of HealthCare IT is a little bit less bright due to the situation I explained and especially this rapid transition to the cloud. But everything that we see in terms of leading indicators are extremely good. The difficulty we are facing is really with the film, and we tackle that really upfront with the significant program we have to transform our operations, and we will continue to give you more details and facts on the program as we implement it. And last, but not least, the Q4 will see the specific improvement of working capital should be cash positive for us as well. And we are going to land in a kind of a similar situation that we did in Q4 last year in terms of working capital. So thanks a lot for your attention, and I'll talk to you soon. Thank you.
Operator: Thank you for joining today's call. You may now disconnect your lines.
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