Trinity Biotech(TRIB) - 2023 Q2 - Quarterly Report

Trinity Biotech Q1 2023 Financial Results Summary Highlights The company reported Q1 2023 core revenue growth of 2% to $14.0 million while divesting its Fitzgerald division to reduce debt and focus on core franchises Revenue and Margin Revenue and Margin Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Total Revenue Q1 2023 | $17.2 million | Includes discontinued operations | | Core Revenue Q1 2023 | $14.0 million | Excludes VTM & Fitzgerald; +2.0% YoY | | Gross Margin (ex-Fitzgerald) | Broadly flat YoY | 4-point improvement vs Q4 2022 | - Revenue growth was driven by strong performance in Autoimmune (+35% YoY), Clinical Chemistry (+15% YoY), and diabetes HbA1c consumables (+10% YoY)[5] - US Autoimmune product revenues increased over 80% YoY, and diabetes consumable deliveries in Brazil rose by approximately 45% YoY[5] Haemoglobins Business - The company is working with the FDA to gain 510(k) clearance for its Premier Resolution Haemoglobin Variants instrument, with a US market introduction expected in H2 2023[5] - Development of the next-generation Premier 9210 diabetes instrument is on track for a 2024 rollout, aiming to expand market, reduce service costs, and increase operating margins[5] - The company is focusing on expanding its footprint in China and Brazil for its Haemoglobins product lines to enhance cost competitiveness and market access[5] TrinScreen HIV - TrinScreen HIV has been established as the standard screening test in Kenya following the adoption of a new HIV rapid testing algorithm by the Kenyan Ministry of Health[12] - Significant orders are expected in H2 2023 upon the resolution of legal challenges to the new algorithm[12] - The Kenyan HIV screening program represents a major market, with an estimated 7 to 9 million screening tests performed annually[12] Portfolio Transformation & Capital Structure - In April 2023, the company completed the sale of its Fitzgerald Industries division, generating approximately $30 million in proceeds[12] - Approximately $10 million of the proceeds were used to reduce debt, as part of a strategy to focus on core Haemoglobins and HIV franchises[12] - A flexible $20 million term-facility was secured in February to enable opportunistic M&A transactions in disruptive diagnostic adjacencies[12] Structural & Operational Initiatives - The company has multiple initiatives underway to significantly reduce the cost of goods sold in its core Haemoglobins and HIV franchises[8] - These initiatives include instrument and consumable design updates, supply chain optimization, and exploring outsourced/localized manufacturing to drive higher operating margins[8] Financial Performance Analysis (Continuing Operations) Continuing operations revenue fell 5.4% to $14.8 million due to lower COVID-19 product sales, widening the operating loss to $3.9 million Revenue Analysis Revenue by Segment | Revenue Segment | Q1 2023 (US$'000) | Q1 2022 (US$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Clinical Laboratory | 12,669 | 13,511 | (6.2)% | | Point-of-Care | 2,160 | 2,164 | (0.2)% | | Total | 14,829 | 15,675 | (5.4)% | - The decrease in Clinical Laboratory revenue was mainly due to a $1.2 million reduction in sales of PCR VTM products as COVID-19 testing programs scaled down[11] - The decline was partly offset by strong year-over-year growth in autoimmune products (over 35%) and clinical chemistry products (over 15%)[13] Profitability Analysis Key Profitability Metrics | Profitability Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Gross Profit | $5.6 million | $6.0 million | | Gross Margin | 37.6% | 38.2% | | Operating Loss | ($3.9 million) | ($1.2 million) | | Loss from Continuing Ops | ($6.3 million) | ($13.1 million) | | Basic Loss per ADS | ($0.15) | ($0.50) | - The Q1 2023 gross margin of 37.6% represents an improvement over the Q4 2022 like-for-like margin of 33.4%, reflecting benefits from price increases and cost optimization[15] - The increased operating loss was mainly due to lower revenues and higher indirect costs, particularly a non-cash share-based payments charge[19] Expense Analysis - R&D expenses declined slightly to $0.9 million in Q1 2023 from $1.0 million in Q1 2022[16] - SG&A expenses increased by $2.4 million to $8.6 million in Q1 2023, compared to $6.2 million in Q1 2022[16] - Key drivers of the SG&A increase included a $1.2 million higher non-cash share-based payments charge and increased salary and travel costs[17] Financial Income and Expenses Financial Item Breakdown | Financial Item | Q1 2023 (US$'m) | Q1 2022 (US$'m) | | :--- | :--- | :--- | | Financial Expenses | 2.6 | 12.2 | | Loss on disposal of Exchangeable Notes | – | 9.7 | | Term loan interest | 2.1 | 2.0 | - The significant decrease in financial expenses YoY is due to a one-off $9.7 million loss on the disposal of Exchangeable Notes recorded in Q1 2022[22] Non-IFRS Financial Measures The company uses non-IFRS measures like Adjusted EBITDASO to clarify core operational performance, reporting a loss of $2.0 million for Q1 2023 - The company presents non-IFRS measures, Adjusted EBITDA and Adjusted EBITDASO, to provide a more complete understanding of underlying operational results by excluding items like share-based payments, depreciation, and amortization[28][29] Reconciliation to Adjusted EBITDASO (Q1 2023) | Reconciliation to Adjusted EBITDASO (Q1 2023) | Amount (US$'m) | | :--- | :--- | | Operating loss | (3.9) | | Depreciation | 0.3 | | Amortisation | 0.3 | | Adjusted EBITDA for continuing operations | (3.3) | | Share option expense | 1.4 | | Adjusted EBITDASO for continuing operations | (2.0) | Liquidity and Capital Resources The cash balance ended Q1 2023 at $4.2 million, with post-quarter proceeds from a major asset sale expected to significantly improve liquidity - The Group's cash balance decreased from $6.6 million at the end of Q4 2022 to $4.2 million at the end of Q1 2023[30] - Cash used by operations for Q1 2023 was $2.7 million[30] - Net proceeds of $4.9 million were received from a drawdown under the senior secured term loan facility in February 2023[30] - The disposal of Fitzgerald Industries post-quarter-end for **$30 million** provides capital for growth, transformation, and potential debt reduction[30] Consolidated Financial Statements (Unaudited) Unaudited statements for Q1 2023 show a total loss of $5.8 million, with total assets of $91.2 million and total liabilities of $97.8 million Consolidated Income Statements Income Statement Summary | (US$000's) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenues | 14,829 | 15,675 | | Gross profit | 5,573 | 5,982 | | Operating Loss | (3,919) | (1,216) | | Loss for the period on continuing operations | (6,305) | (13,070) | | Loss for the period (total) | (5,809) | (12,279) | | Loss per ADS (US cents) | (15.2) | (50.0) | Consolidated Balance Sheets Balance Sheet Summary | (US$ '000) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | ASSETS | | | | Total non-current assets | 32,895 | 45,436 | | Total current assets | 58,262 | 46,668 | | TOTAL ASSETS | 91,157 | 92,104 | | EQUITY AND LIABILITIES | | | | Total deficit | (6,618) | (2,176) | | Total current liabilities | 16,150 | 17,339 | | Total non-current liabilities | 81,625 | 76,941 | | TOTAL LIABILITIES | 97,775 | 94,280 | | TOTAL EQUITY AND LIABILITIES | 91,157 | 92,104 | Consolidated Statement of Cash Flows Cash Flow Summary | (US$000's) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | (2,718) | (1,493) | | Net cash used in investing activities | (1,329) | (1,715) | | Net cash provided by/(used in) financing activities | 1,608 | (12,872) | | Decrease in cash and cash equivalents | (2,439) | (16,080) | | Cash and cash equivalents at end of period | 4,153 | 10,012 |