Q4 2024 Materialise NV Earnings Call
Ladies and gentlemen, thank you for standing by. Welcome to the fourth quarter, 2024 materialized Financial results conference. Call at this time, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question and answer session.
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Speaker Change: Please be advised that today's conference is being recorded. I would now like to turn the conference over to Harriet freed of Alliance advisors Harriet. Please go ahead
Speaker Change: Thank you for joining us today for materializes quarterly, earnings call with us on the call. Our brigitta devet, Von chief executive officer and Kung bouches Chief Financial Officer.
Speaker Change: Today's call and webcast are being accompanied by a slide presentation that refuses materializes strategic financial and operational performance for the fourth quarter of 2024, as well as the full year.
Speaker Change: to access the slides if you've not already done, so, please go to the investor relations section of the company's website at www.materialnotice.com
Speaker Change: Before we get started, I'd like to remind you that management may make forward-looking statements regarding the company's plans, expectations, and growth prospects among other things.
These forward-looking statements are subject to known and unknown uncertainties and risks.
Speaker Change: That could cause actual results to differ materially from the expectations expressed.
Speaker Change: Including competitive Dynamics and Industry, change. Any forward-looking statements, including those related to the company's future results and activities represent Management's estimates as of today. And should not be relied on as representing their estimates as of any subsequent day.
Speaker Change: Management. Disclaims any duty to update, or revise any, forward-looking statements to reflect future events or changes in expectations,
Speaker Change: A more detailed description of the risks and uncertainties and other factors that may impact the company's future business, or financial results can be found. In the company's most recent annual report on form, 20 F filed with the SEC.
Speaker Change: finally management will discuss certain non-ifrs measures on today's call a Reconciliation table is contained in the earnings release, and at the end of the slide presentation,
Speaker Change: And with that, I'd like to turn the call over to Brigitte de vet Veneta. Please go ahead.
Speaker Change: Good morning and good afternoon.
Speaker Change: Thank you for talking.
Speaker Change: I'm very pleased to present our fourth quarter and full year 2024 results to you
Speaker Change: You can find the agenda for our call.
Speaker Change: CEO for a day for 1 year.
Speaker Change: I'm proud of the achievements. We have realized in this year and I would like to highlight some major Milestones realized in 2024, in this call.
Speaker Change: I would also reflect on the achievements and our results of the fourth quarter.
Speaker Change: After that.
Speaker Change: Our pasta flow.
Speaker Change: Finally, I will come back and explain what we expect 2025 to bring.
Speaker Change: When we've completed our prepared remarks, we'd be happy to respond to questions.
Speaker Change: 2024 has been a difficult year for the industry, driven by high interest rates, geopolitical tensions in a difficult economic climate.
Speaker Change: I am very proud that in this difficult climate. We realized 4% growth and managed to keep our adjusted ebit stable while continuing to invest in our growth businesses. And while making progress on our strategic objectives,
Speaker Change: On slide 4, I would highlight some of those strategic object objectives and major achievements in the various segments.
Speaker Change: Starting with medical.
Speaker Change: We continue to make progress on our journey towards Mass personalization where our aim is to bring personalization to many more patients.
Speaker Change: We broaden the patient population that can benefit from our solutions by reducing our lead times. Thanks to the opening of our us plan plan and further automating our processes in order to conquer the trauma Market.
Speaker Change: So patients that cannot be scheduled and need to be treated within the week.
Speaker Change: we also brought personalization to New Markets and in particular, to the cardiovascular Market, where we complemented our existing planning Solutions with simulation offerings from Fields, the company that we acquired in the third quarter of 2024,
Speaker Change: while the acquisition has had a negative impact on our ebits on the short term and impacted our fourth quarter results.
Speaker Change: We are pleased with the customer feedback and the progress of the integration.
Speaker Change: As a highlight for the fourth quarter, I also want to mention the launch of our mimics platform to accelerate the adoption of personalized Solutions, and help companies and hospitals, bring personalization to more patients by making it easier and faster to segment images, plan cases and design a personalized instrument or implants.
Speaker Change: The mimics platform is an integrated Cloud solution. Combining our strong desktop toolbox mimics and traumatic AI based Automation and cloud-based 3D viewing capabilities in an end to end cloud-based environments.
Speaker Change: The mimics platform, addresses. The challenges that customers face. When scaling their personalized offerings.
Speaker Change: Typically manual. Segmentation and design work, come with some communication between engineers and clinicians.
Speaker Change: Stringent regulatory requirements and growing patient. Privacy legislation.
Speaker Change: At the end of 2023, we launched the mimics case management tool to provide an end-to-end workflow and generate efficiencies in the process of commercializing patient with specific devices.
Speaker Change: With the launch of the new mimics platform called mimics flow. We've gone a step further, enabling our customers to collaborate effortlessly and benefit from AI based Automation, in a frictionless way while staying compliant with the latest regulations.
Speaker Change: You know manufacturing segments we continue to the shift from prototyping to certified. Manufacturing of end use parts and in particular in our Focus segments in which we saw growth throughout the year and in which we continue to strengthen our position.
Speaker Change: Let me give you the example of the IRS base segment which has been a focus segments throughout the year.
In Aerospace we offer en 90001 um 35 manufacturing for polymer and metal parts.
Speaker Change: We have production, organization, approval, and a printed more than 500,000 flying parts so far.
Speaker Change: We saw 28% Revenue growth in this segment throughout the year.
Speaker Change: As a next step in this market, we recently opened our Iris base competence Center in delft.
Speaker Change: The TU delft, the Technical University is a leading University in Aerospace.
Speaker Change: and as a vibrant ecosystem that has developed around it,
Speaker Change: we are joining this selective Aerospace networking space.
Speaker Change: allowing us to collaborate closely with our
Speaker Change: these companies in this Hub and bring our knowledge to Foster, the smart use of additive Manufacturing in the industry to our Manufacturing Services and our software.
Speaker Change: Our long experience in this market gives us access to Performance data. From hundreds of hours, space builds, including parameters, by part density, 10 South trains and elastic modules.
Speaker Change: With a clear view of process. Repeatability and reliability. We are well positioned in this space.
Speaker Change: Let me give you another example of 1 of our Focus segments.
Speaker Change: At actech, we expanded our market segments, to the production of what we call huge and heavy parts.
as you know, we expanded our facilities in Germany to accommodate production of this type of parts
Speaker Change: We have seen growth above 30% in the segments throughout the year.
Speaker Change: Now, while making progress in our Focus segments, we have also seen headwinds in the traditional business segments such as prototyping and the casting of combustion engines for the automotive sector.
Speaker Change: Accelerated by an increasingly unfavorable macroeconomic, industrial environment in Europe. And the general softness of the automotive sector in the fourth quarter.
Speaker Change: These headwinds.
Speaker Change: In addition to the planned reduced operational capacity at Arctic due to the opening of the new plant.
Speaker Change: Led to a difficult Q4 with disappointing results.
Speaker Change: We expect these headwinds to continue in 2025.
Speaker Change: To adjust to this reality. We have taken action in the fourth quarter and implemented a restructuring in our 3D printing, manufacturing activities, to reduce our cost base in 2025.
Speaker Change: Now, turning to software in software, we had 2 main priorities throughout the year.
Speaker Change: First, strengthening our position in Factory management based on Korean through Partnerships and second organically, adding capabilities and expanding our position in the preprint magic smart Market by adding functionality for users, that scale in end, use production.
Speaker Change: Throughout the year, we have made progress on both fronts.
On the coem side, we announced numerous Partnerships throughout the year.
Speaker Change: and we added functionality, for example, to monitor the builds and capture data in our qpc module,
Speaker Change: we continue to onboard new partners on this platform, which is an essential Foundation to accelerating our future growth.
Speaker Change: In the preprint segment. We accelerated the shift towards the subscription based model for Magic's customers.
Speaker Change: We added functionality such as e stage for metal plus a software that automates support structure, generation and helps customers make metal additive manufacturing more economically viable and we expanded our build processor functionality.
Speaker Change: In the fourth quarter of specifically, we announced the launch of our Magics. Sdks expanding our users' ability to customize their 3D printing operation.
This allows our users to create custom workflows in m, in the magic software.
Speaker Change: protect the intellectual property behind component, designs and print high performance geometries
Speaker Change: With access to algorithm.
Speaker Change: For 34 years.
Speaker Change: Years. Customers will now be able to scale additive manufacturing operations economically.
Speaker Change: Overall, I am proud of the progress that we made throughout 2024.
Speaker Change: Progress achieved, despite the difficult climate throughout the year and in particular in the fourth quarter, impacting our financial results.
Coon: I will now pass the floor to Coon to summarize, the financial results of the fourth quarter and the full year
Coon: Thank you brigitta. Good morning or good afternoon to all of you on this call.
Coon: I'll begin with a brief review of our Consolidated revenue on slide 5.
Coon: As a reminder, please note that unless stated otherwise all comparisons in this call are against our results for the fourth quarter and the full year 2023.
Coon: In the final quarter of the Year, 2024 our Revenue increased slightly to 65.7 million euro
Coon: Materialized medical continued. Its double digit growth increasing its Revenue by more than 14%.
Coon: Once again, posted a quarterly Revenue records.
Coon: Manufacturing, on the other hand remained confronted by challenging market conditions that even intensified in the last months of the year.
Coon: While software continued its transition, towards a recurring Revenue business model, which will positively impact its Revenue potentially in the future.
Coon: As you can see in the graph on the right side of the page materialized medical accounted for close to half of our Consolidated Revenue during the fourth quarter of 2024.
Coon: Materialized manufacturing for 35% the materialized software for 17% reflecting the impact of the different growth rate rates of the 3 business segments.
Coon: For the full year, 2024 we generated over 267 million euro of Revenue which is 4% above 2023.
Coon: our medical segment represented 44% manufacturing, 40 and software 16% of the annual revenue total
Coon: the amount of deferred revenue on our balance sheet related to software licenses, and maintenance fees increasing Q4 of 2024 by 5.9 million, ending at 46.9 million euro,
Coon: The total deferred revenue reported on our balance sheet was just above 59 million euro at the end of the year.
Coon: Now, on slide 6, you will see our Consolidated, adjusted, evida and ebit numbers for the fourth quarter, as well as, for the full year.
Coon: Consolidated adjusted, evida for the fourth quarter amounted to 4.3 million euro.
Coon: Increasing from 8.5 million euro for the 2023 period. The corresponding adjusted evida margin in the last quarter of 24 was 6.6%.
Coon: This declining Q4 is mainly attributable to combination of factors.
Coon: Including the startup of production in our you active plants, the difficult industrial environment in particular in Europe, impacting our manufacturing results, but also restructuring causes taking in manufacturing and GNA and continued investments in medical including the integration of fails.
Coon: Full year adjusted evida remained stable at 31.5 million euro, with an adjusted ebida margin for the full year to reach 11.8%.
Coon: Consolidated adjusted ebit, 4 to 4 quarter, decreased to minus 1.2 million, euro compared to 3.2 million euro for the corresponding period of 2023.
Coon: Reflecting the impact of a lower Aida and higher depreciation charges.
Coon: Our adjusted ebit margin for the quarter was negative by minus 1.8%.
Coon: Full year. Adjusted ebit ended at 9.7 million euro compared to 9.9 million euro in 23.
Coon: Our adjusted ebit margin for the full year. Reached 3.7% compared to 3.9% last year.
Coon: moving now to slide 7, you will notice that the quarter total revenue in our materialized medical segment increased, Once More by 14% to 31.8 million euro,
Coon: Once again, a quarterly Revenue record.
Coon: The strong growth was generated by both higher revenue from medical devices and services, sales, and by higher revenue for medical software which grew respectively by 15 and 14%.
Coon: Within our medical devices and services business. We saw continued growth. Also here, both in direct, and partner sales.
Coon: Increased costs may be coming from higher R&D spend as we make progress on various study and FDA approval tracks, and the integration of fails impacted, the operational profitability in the fourth quarter.
Coon: Nevertheless, we realized and increased adjusted evida of 9.5 million. Euro representing an adjusted EV Dem margin of 30% for the quarter.
Coon: As a reminder, the 2024 numbers also include the impact of fails as of July 2024, which in its current development, phase is still contributing negatively to our events.
On the full year basis, our medical segment Revenue increased by almost 15% to 116 million euro translating into an adjusted. EBA of 35.6 million euro and adjust the TVA margin of 30.6%
Coon: The share of medical software Revenue remains stable throughout the year at around 30%.
Coon: It's like 8 Summers. The results of a materialized software segment.
Coon: In the fourth quarter, software Revenue, remained close to Flat despite the further transition to a cloud and subscription-based business model.
Coon: Recurring revenue from software maintenance and license sales including Kam increased Once More by 19%.
Coon: On the other hands, non-recurrent Revenue, decreased by 35%.
Coon: The adjusted EBA in our software segment. Remained roughly stable in Q4 at 1.1 million, euro representing an adjusted. Eva margin of 10.1%
Coon: Also on a full year basis. Our software segments, Revenue remains stable, around 44 million euro, which translated in an adjusted EA of 5.6 million euro and adjusted Eva margin of 12.7%.
Coon: While this includes also the impact of increased investments in our growth products.
Coon: Now, let's turn to slide 9 for an overview of the performance of our materialized manufacturing segments.
Coon: Into 4. We realised further growth in our strategic Focus areas Aerospace and met Tech. But this was more than offset by continued weak prototyping demands by actex, new plant startup. And by strongly unfavorable macroeconomic climates in the industrial sector particularly in Europe.
Coon: Unlike our other reporting segments, the vast majority of the revenues in our manufacturing segments are generated in Europe.
Coon: As a result of these Revenue decreased by 13% compared to last year's fourth quarter.
Coon: As a consequence of this lower Top Line also adjusted evida ended at minus 3 million euro while the fourth quarter of 2024 also included restructuring, costs incurred to reduce our cost basis going forward.
Coon: On a full year basis, manufacturing Revenue, decreased by 3% to 106.5 million euro, realizing 1.7 million euro of adjusted iida representing and Aida margin of 1.6%.
Coon: Slight 10. Provides you the highlights of our Consolidated income statement for the fourth quarter and the full year
Coon: Our gross profit for the fourth quarter ended at 36.4 million, euro representing a gross profit margin of 55.4%.
Coon: Over the full year, the gross profit margin was 56.5%, roughly stable compared to Prior year.
Coon: Our operating expenses in the quarter increased by 3.6 million euro, or 10% in Aggregates, with the largest increase coming from higher R&D spent, which grew by 20% compared to 2023.
Coon: The higher R&D. Spent in fourth quarter was, also already mentioned, mainly driven by Medical
Coon: Furthermore to forecasts included unfavorable impacts as ALS mentioned from the active, plan startup fee of 6 integration and from restructuring costs to reduce our cost based going forwards.
Coon: for the full year operating expenses were in aggregate 9.5% higher than in 2023 with the main impact again coming from increased R&D spends
Coon: The net operating income in the quarter was positive at 1.4 million euro compared to a negative 3.3 million euro last year, where 2023 included non-recurring charges from the impairment of Goodwill tangible and intangible assets for 4.2 million euro.
Coon: For the full year net operating income was positive at 4.2 million euro compared to a negative 6.5 million euro for love for 2023.
Coon: As a result of all of these elements, the group's operating result in the quarter was negative.
Coon: At 1.3 million euro compared to also a negative 1.1 million euro in last year's period.
Coon: for the full year, operating result increased to 9.5 million euro compared to
Coon: 5.6 million euro.
Coon: In 23.
Coon: in to 4 net Financial income amounted to a positive 3.3 million euro,
Coon: including a positive currency exchange results of 2.9 Million Euro, mainly reflecting the change US dollar to Euro position
Coon: Interesting come.
Coon: of which are partly offset by interest expense on our reducing Financial
Coon: Amounting to 0.3 million euro.
Coon: Income tax in a quarter amounted to a positive 0.9 million euro in line with the prior year.
Coon: As a result net profit for the fourth quarter and the positively at 2.9 Million, Euro representing 5 per share. Compared to a loss. Net loss of minus 0.5 million euro or minus 1% per share for the 2023 period.
Coon: Over the full year, we realized a net profit of 13.4 million euro resulting in 23 cents per share.
Coon: Compared to a net profit of 6.7 million, euro, or 11th, Euro cents per share in 2023.
Coon: Now, please turn to slide 11 for a recap of balance sheet cash flow highlights.
Coon: Also, in fourth quarter, our balance sheet remains strong, but cash Reserves. At the end of the quarter amount 202 million euro
Coon: the cash position was impacted though, by an anticipated bullet loan repayment of 10 million euro in Q4
Coon: Over the full year, low repayments totaled, 23 million euro and reduced our gross debt to 41 million euro.
Coon: To result in net net cash position at the end of the fourth quarter of 61 million euro slightly below the position at the beginning of the year.
Coon: Compared to the balance sheet, at the end of 2023, we reduced our net, networking Capital over 24 by, 1.8 million euro, to increase focus on the underlying components.
Coon: The total deferred income composition amounted to 59.3 million euro at year, end of which, 46.9 million euro was related to deferred revenue from software licenses and maintenance contracts. As I already mentioned earlier,
Coon: As you can see, from the graphs on the right side of the page cash flow from operating activities for the fourth quarter in, 2024 amounted to 6.2 million Euro Gyro while above the last quarter of 2023.
The impact from lower BNL components was compensated by favorable working capital movements.
Coon: Capital expenditures for the quarter amounted to amounted to 7.8 million euro, Which is higher than average and which is reflecting the acting investments in the completion of the building and installation of new machines.
Coon: As a result of these larger than usual Investments.
Coon: And as some limited income, from asset, sales are free cash flow over the quarter of 2024 turn negative by minus 1.3 million euro.
Coon: Now, for the full year, the operational cash flow increased to 31.5 million euro up by 56% compared to 2023.
Coon: Free cash flow remained positive of the Year while we invested more than 26 million, euro of capex, including both recurring and non-recurring Investments. And while we completed the sale of acquisition.
Coon: We have the bulk of investments in our new active facility behind us now, but we'll continue to invest in additional Machinery. As we gradually ramp up the new facilities, throughput incoming months,
Brigitta: And with that, I'd like to hand the call back to brigitta.
Brigitta: Thank you, Coon.
Speaker Change: Let's turn to page 12 for quick review of our financial guidance.
Speaker Change: Looking at 2025, we remain confident that our medical and software business will continue to grow with the growth of our material. Life software. Segment is still not being fully reflected in the segments revenues as we continue the transition towards the cloud-based subscription business model.
Speaker Change: At the same time, we expect that the uncertain macroeconomic industrial environment in Europe will persist in 2025 and will continue to impact our manufacturing segment which is particularly exposed to the European environment.
Speaker Change: As a result, we expect revenues to be in the range of 270 to 285 million euro and adjusted ebit in the range of 6 to 10 million euro.
Speaker Change: We intend to continue our investments in the growth markets of the future and in particular in the medical segment and the factory Management Solutions and software.
Speaker Change: While keeping a strong focus on cost control and optimization in our manufacturing segments and our corporate overheads.
Speaker Change: Where's our guidance, reflects the impact of the uncertain economic environment in Europe. On our manufacturing business, we believe materialize is ideally positioned in the market for personalized, medical products and the market for additive software and for Manufacturing Services.
Speaker Change: Thanks to our strong product. Portfolio continued investments in Innovation and our strong, fin Financial Foundation.
Speaker Change: This concludes our prepared remarks.
Operator, we're now ready to open the call to the questions.
Operator: Thank you as a reminder, to ask a question. Please press star, 1, 1 1 on your telephone, and wait for your name to be announced and to withdraw your question. Please press star 1 1, 1 1 again.
And our first question will come from Alexandre Kramer with Kepler. Your line is now open.
Operator: Hey, hello, Alexandre from Kepler here. Um, yeah, uh, actually, I have a couple of questions 5, if that's possible. So first, um, could you remind us of the main margin difference between recurring and non-recurring revenue in the software segment?
Operator: Second question would be. What is there the average lifetime on the, on the subscription?
Operator: And the third question also on software would be, um, how much of the revenue in software is now recurring versus non-recurring. Uh, I saw some highlights there but I've calculated, it's still about 2/3 non-recurring. Does that sound about correct? Um, then maybe I'm going to list all my questions first and then I'll let you answer. So, the fourth question would be, if you could give us some granularity on the 1 off, um, I'm talking specifically on the increased R&D, spend the AC Tech startup and the, the fee apps integration combined with the structure and cost. If you could just give us a bit of a split, how much that impacted the adjusted ebit in the fourth quarter. Um, but given that the guidance of 11 to 14 million that you provided at the end of Q3 was, yeah, clearly that had an impact there. Um, so uh, and then the last question,
Operator: Would be considering the difficult climate that you talked about was already present after Q tree yet. You decided to send an optimistic message in October could you tell us what exactly has changed? Um and that you didn't have the visibility on the fourth quarter by the end of October. Thank you.
Speaker Change: Uh, thank you Alexandre for, uh, you know, the 5 questions um, trying to decide in which order. I will uh tackle in or we will tackle them um while I have to admit that, your first question is not exactly clear to me. So you wanted to understand the margin difference between the recurring and the non-recurring revenue assumptions. Yes. Is there a
Yeah. In the in the software segment. So you're going from a um non-recurring to a subscription model. Um, I was just wondering if there's any large margin difference there. Thanks. No, I don't think
Speaker Change: Expect a large margin difference, um, on the, on a different.
Speaker Change: The revenue recognition Alexandre do is, is different, of course in the 2i. Whereas, in the old Perpetual license model, we take the revenue immediately into pnl. And whereas, in a, in a recurring Revenue model, we we gradually, um, take it over the, the duration of the, um, the contracts. Um,
Speaker Change: Maybe they're picking also into your your question on what the split is between recurring and non-recurring. Um Revenue within within our software segment that we see as in the previous quarter a continued transition towards um recurring Revenue. If you look at the situation at the year, end to be roughly at about 76%. So just above 75% or 3 quarters of the revenue, the total software Revenue that we consider as to be recurring.
Speaker Change: And then maybe checking your software question on the average lifetime of the subscription, so most of our subscription based Revenue you you you should expect an annual. Um, so 1 year lifetime,
Speaker Change: Then maybe shifting to the question on the, um, clarification on the, uh, operational spend. Yes. Um, you have their, um, if I'm speaking correctly Alexandre, on, on how these these, um, different components, um, that you mentioned impact the, the Q4 cost increase. Um, without having the I without providing the detailed breakdown, I would say about half of the cost increase that I mentioned, um, um, quarter versus the last quarter of last year, which is between 1.5 and and 2 million half. I that amount, which is half of the total cost increase comes from from the 3. Um, um, elements you, you listed and the failures integration. The, um, the, the restructuring costs that we took and, um,
Speaker Change: um,
Speaker Change: the, the operation of the purely operational impact from from, from the Arctic, plant startup
Speaker Change: And then maybe commenting on your last, uh, question on uh, the uh, uh, whether we saw this coming or not. Uh, well, the first thing I would want to say we had sent the, uh, with the third quarter results. Um, we already indicated to be very cautious about around the fourth quarter results.
Speaker Change: Um, to be expected, um, in particular, in the manufacturing segment, um, as we were expecting the um, move, uh, to our new plan, um, to reduce the operational capacity, um, the industrial climate, um, was already very cautious at that point in time. However, what we did see is, um, then in the fourth quarter, we saw that climate accelerate in particular, in Europe, um, in, uh, and that is what you see. Now reflects it in, uh, in our fourth quarter results, uh, in the 2025 guidance,
Speaker Change: Does that answer your question? Sorry on that
Speaker Change: Yeah, about thank you.
Operator: As a reminder to ask a question. Please press star. 1 1 on your telephone. And our next question comes from Troy Jensen with cancer. Fitzgerald, your line is open.
Troy Jensen: Hey, good morning. Good afternoon. Brigette and Coon. Hi Troy.
Troy Jensen: Hello, hey. So I guess my question is uh, first of all, deferred revenue that was like a huge kind of growth.
Troy Jensen: In the quarter, in the software segments.
Koen: Um, I guess I was more hopeful that we'd hear better kind of forecast of the the, the software business. But can you just explain why it's such a big step function in in deferred revenues this quarter koen? Yeah, the deferred revenue went up with um, um, just below 6 million in the, in the fourth quarter, um, which is, which is something we had anticipated, it's in, in, in line. Also, if you look at the seasonality with, with prior years, there's quite some, some, um, some large contracts at the end of the year where we typically see in the first in the last quarter of the year, a buildup of the first revenue and then the depletion in in the second and the third quarter. So for us, it it works. Um, in line with what we had anticipated though, it was it was larger than than than last year. Um, and which is of course also the effect from from the conversion to to more recurring Revenue that we are doing.
Speaker Change: Yep. Okay perfect. And then just to follow up on this Opex question, um, how much of this 1 and a half to 2 million that you're mentioning falls off quickly? Or can you kind of help us out with? We had big step functions and kind of growth and and Opex sequentially in December.
In March, are they going to be down now in a sequential basis because these 1-time items fall out or or do they still hang around also.
Speaker Change: If if I can just comment. So um, K pointed out at the, you know, increase the R&D, the Arctic start of course, in the fields integration. If you look at those 3, the active data costs to taper down, um The increased R&D, we do want to continue to accelerate um our investments in the in the medical business in particular um as we very much believe in the growth of future growth there. Um now the CFS integration costs um should also taper down uh as we go
Speaker Change: Okay, do you think uh just like on an absolute basis it's up or down sequentially?
Speaker Change: I mean are you guys going to kind of cut costs? Now we're going to to try to kind of get back to higher profitability levels are these going to? Yeah so the um I mean it's essential
Speaker Change: You know what I said earlier that, you know throughout 2025, um, will, um, certainly, um, have will have a strong focus on cost control and optimization in particular in the manufacturing segment going forward.
Speaker Change: Okay.
Speaker Change: All right, that that's fine. So then how about just last European weakness? I may get European Auto makes sense, but is it much broader than just the automotive vertical?
Can you repeat that question to us?
Speaker Change: Is the European weakness? I would understand Autos really weak in Europe. Um, is it just, is it broader than Automotive in Europe? So the automotive sector.
Speaker Change: Is particularly weak in Europe. Um, it's a it's slightly broader um because of the uncertainty certainly in the fourth quarter. Um with the also, the impact of um, the the uh Trump Administration uh, in the US on Europe. Etc. So there's uncertainty factors around that.
Speaker Change: Right, I should. Okay, all right. Well, uh, good luck here in 25.
Speaker Change: Thank you.
Speaker Change: I show no further questions in the queue at this time. I would now like to turn the call back over to Brier at 4 closing remarks.
Speaker Change: Thanks again for joining us today. We look forward to continuing our dialogue with you through investor conferences or in 101 meetings or calls. Uh, please do reach out if you have any further questions and with that I want to say thank you and goodbye for now.
Speaker Change: This does conclude today's conference call. Thank you for your participation. You may now disconnect