Good day, and welcome to the Trinity Biotech Fourth Quarter and Fiscal Year 2018 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Joe Diaz of Lytham Partners. Please go ahead.

Thank you, Carrie. And thanks all of you for joining us here today to review the financial results of Trinity Biotech for the fourth quarter and full year 2018, which ended December 31, 2018. With us on the call representing the company are Ronan O'Caoimh, Chief Executive Officer; and Kevin Tansley, Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question-and-answer session. But before we begin with the prepared remarks, we submit for the record the following statement. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides the Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify those forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, but not limited to, the results of Research & Development efforts; the effect of regulation by the United States Food and Drug Administration and other agencies; the impact of competitive products, product development commercialization and technological difficulties; and other risks detailed in the company's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements reflect management's view only as of today. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements. With that said, let me turn the call over to Kevin Tansley, Chief Financial Officer, for a review of the results. After Kevin's remarks, we'll hear from Ronan O'Caoimh, on his review of the quarter. After which we'll open the call to your questions. Kevin?

Thanks very much, Joe. Today, I'll take you through the results for quarter four, followed by the results for the full year 2018. You will notice in your release that there's an impairment charge that's being recognized this quarter, which I will disclose at the end of the income statement segment. But in the meantime, the metrics I will quote exclude the impact of this charge. So I'll begin with an outline of the results for quarter four first. Total revenues for the quarter were $24.5 million, which was virtually identical to last year. As usual, Ronan will provide more details on the revenues later in the call. So I will move on and discuss the other aspects of the income statement. The gross margin for the quarter was 41.7% compared to 41.5% last year, hence, a slight improvement. This increase is due to the cost savings programs that we implemented earlier in the year. These savings also served to offset the impact of higher instrument sales which tend to have a lower margin, as well as the impact of adverse currency movements, principally, the Brazilian real but also to a lesser extent, Canadian dollar and the euro. Moving on next to our indirect costs, our R&D expenses for the quarter were $1.4 million compared to $1.5 million in 2017. Meanwhile, our SG&A expenses have also fallen from $7.6 million to $6.8 million. In both cases, you're very much seeing the impact of our cost savings again. But I will say, there was a lower level of discretionary expenditure than normal this quarter. And I would caution, again, thinking of the $6.8 million as being the normal run rate for SG&A. The benefit of the gross margin improvement, and even more so, the reduction and indirect costs has had the…

[Operator Instructions]. The first question will come from Jim Sidoti of Sidoti & Company.

Great. Can you just remind me what are the steps left to win a HFO -- WHO approval for the HIV screening test? Ronan O’Caoimh: Well, we have to complete our clinical trials, collect all the information and then submit to the WHO. And then they will review that and may or may not inspect our factory.

Okay. And how much longer till you submit? Ronan O’Caoimh: We're hoping to submit August, September.

Okay. And then once you win approval, how long before you think you would see revenue from that product? Ronan O’Caoimh: I mean, I think virtually all African countries review their algorithms every 18 months or 2 years. So -- but they're continually being reviewed. So there's a continual flow of applications. So I think it would be fairly immediate.

Okay. And then Kevin, you mentioned that there's going to be an accounting change for leases that would impact the balance sheet. Now in the past, you've talked about -- I think up to the $3 million of cost savings that you expect to generate from some of the initiatives you're already taking. Would this be -- would this offset that? Or would this be pretty minor relevant to that?

Well, the first thing I'd say is that the cost savings are real, they're cash savings. And you're seeing the benefits of those coming through. The changes, I'm talking in relation to the leases are purely bulk entries. And so it's due to a change in how leases are being -- are going to be accounted for in the future. So in essence, in the past when you would've leased a building from a landlord, you would've just taken an annual rental charge. Now, it's almost as if it looks like you bought the actual building in question. You put it on the balance sheet as a fixed asset, you effectively put an interest charge through and then you depreciate it. So what's going to happen is, broadly speaking, you're going to see our rent probably going down by the -- the order of about $3 million, which would've gone through partially above the line, partially below the line. And we have -- then we will see an increase in depreciation, a bit lower than that, maybe by about $2.5 million. And there'll be an interest charge of $800,000 or $900,000. So if you top that off, you're probably going to see a negative impact somewhere in the region over the course of a year of about $400,000 or $500,000. So about $100,000 a quarter. But again, I stress, it's purely book adjustments we're talking about here. And you'll see this for every company. And it's been implemental drive for us, which obviously impacts the rest of the world. And it's going to be implemented in the U.S. GAAP at the same time, and obviously the two accounting bodies are in league with each other in that regard.

Okay. And then last one for me. Do you think in 2019, you both have turned the quarter regarding cash flow? Do you think you'll be cash flow positive in 2019?

Yes. Our stated aim is very much to be cash flow positive for the year as a whole. I'm not saying it's going to be like that in every individual quarter. For example, obviously with quarter coming up, quarter 1 is typically our weakest quarter. But for the year as a whole we would be -- we are very much targeting a cash flow breakeven. And that will come from growth, the implementation of our savings. And obviously, we're below our interest charge at the moment as well. So yes, is the answer to your question.

Okay. And we're ready to that -- the $5 million in CapEx in the quarter, was that unusually high? And do you expect that comes down?

You're going to see fluctuations. They are certainly a bit higher on the PP&E side. And as I said, I would have liked that for foreign relations to Buffalo facility, if that's something we did. And the second half of last year and that's not going to replicate the -- in our intangible profits. But intangible projects you see are more fluctuating cash profiles, so you can see, expect some ups and downs. And also some quarters will be lower, some might be a bit higher depending on third-party costs. So for example, as our trial cost come through, in relation to similar projects. That's going to have an impact.

The next question will come from Bill Lappe [ph], a Private Investor.

I have a few follow-up questions. From -- on the Trin and the pre-screening test, how far are you in the tests? In other words, you've already started the clinicals? You think that'll be done, I mean, you're projecting maybe August. But do you think that'll be done earlier based on your progress going forward? Are you getting all the patients and everything you need? Ronan O’Caoimh: Yes. We're working at three different sites in Africa. And we would hope to be finished July, and then place and then submission.

Okay. Is your product better than the competitors' product? Besides, maybe you can have a pricing competitive? In other words, is your pre-screening product better than what's out -- you'd believe than the one that's out there now. I mean, you're the gold standard in the other one? Ronan O’Caoimh: Yes. I mean, I think the HIV -- I mean, the market leader in screening is Abbott. The market leader in conforming is Trinity Biotech. Virtually, they performed virtually identically. In practical terms, there is very little difference between the screening and the conforming test. I know you would expect one to have higher sensitivity than the other. But the reality, the levels of sensitivity and specificity are so close to 100%, as in 99.99% and higher that you could regard both our existing tests and Abbott's existing test as virtually flawless. And I think, the same description would apply to the Trin-Screen product. So basically all three are excellent products. And the performance would be difficult to differentiate between the three, frankly.

Okay. And do you anticipate -- is there any other approval besides the FDA -- and it's not like an FDA or Irish approval of selling this product once you get the WHO approval? Is there anything you have to do from a regulatory standpoint to sell it besides...?

No.

Okay. Now you haven't ... Go ahead. Ronan O’Caoimh: The actual approval would -- at this stage is similar to in terms of how onerous it is, it would be similar to FDA.

Okay. But you've been with them before. I mean, they approved your gold standard test, right? The other test, right? Yes. You haven't mentioned Syphilis, are you selling much in the Syphilis market? What's going on there? Anything happening with your Rapid test in Syphilis? Ronan O’Caoimh: Well, we're the only approved and a clear way to the FDA, and clear way to approved Syphilis Rapid Test in the United States. And we're selling some of the -- around $1.5 million of -- it was just under that level. So it's a significant disappointment in terms of how it's [indiscernible]. But we're working on it. I think the CDC have been ambivalent in terms of their involvement here. And that hasn't been a help. And in an environment where public health dollars are scarce, and we've seen that with HIV spend, it's proven their disappointment, frankly. I mean I think we had estimated originally that this could be a $10 million product. And it may grow to be a $3 million product. But we've moved that closer.

So tell me this one, have you put in -- you own about 10.8% of the company now. And you went out and bought the stock in the old market, which gives us a lot of confidence. What's your big force right now for the company? Where are you optimistic? What are you excited about going forward in 2019, 2020? Ronan O’Caoimh: I think we're in a situation where, clearly, as I've described, we have an Infectious Disease business, which is in decline. But that's never smaller parts of our business. We have a HIV business, a Point-of-Care business, which diminished last year, but I explained that the reason for that was entirely due to -- in fact, it was a Tanzanian ordering process. And that's -- so basically our 2017 sales were high, and higher than they might have been and then they overstocked. And so '18 was lower as a consequence. And I think that we have that until of now -- remember, we have now, but if we stopped manufacturing our HIV product, and I'm talking about our existing confirmatory products and as well as, the fact that coming Trin-screen products. We now are -- have stopped manufacturing in China. And we have developed through -- invested $5 million in a manufacturing facility here. And basically, I have significantly cut back maybe 70%, 80% reduction in our cost base per unit. And so we basically now have scenario where we can compete in a very real sense and in a very -- with a very efficient factory for both confirmatory tests and the coming screen tests -- screening tests. And we believe that, that would provide a growth engine for us moving forward and a very significant one. And I'd identified that probably as a single, biggest…

Why don't you put your money where your mouth is? So that's good. What about the Brazil, did you ever get the manufacturing going there? Ronan O’Caoimh: Brazil. We're still waiting for ANVISA, that's the Brazilian equivalent of the FDA. We're still waiting for the -- they've approved the factory, haven't actually approved the product. So we're basically standing, waiting for the approval. And it's imminent. I think the change of government. Actually, I know that seems like a strange excuse or reason to give. But the change of government resulted in ANVISA being virtually inactive for a period of about 2 months. And that has -- because we had hoped to have had the approval by now, but we haven't. But it's imminent. Basically we're waiting. As soon as that comes through, we'll have savings, we'll reduce our cost base. And we'll be in a position to recommence instrument placements.

[Operator Instructions]. The next question will come from Paul Nouri of Noble Equity.

Do you think there's a point in time this year, a certain quarter where the growth drivers of the lab business will kind of overcome the drag of the other side of the business, the ELISA business? Ronan O’Caoimh: Yes. And -- I mean, well we do. I mean, we expect -- we anticipate that we'll grow revenues this year. We don't tend to give guidance. But I mean if you were to look at Jim Sidoti's numbers, we'd be relatively comfortable with them. They might be under -- marginally demanding side. So they would reflect growth. And we do believe we can do that. And I mean, I think last year, we were hit with a -- we got a $2 million hit when we locked the Lyme contract. And on top of that, then we had a $2 million hit with the Tanzanian business. So you know if you were -- so that turns $99 million into $97 million. Without them, it would have been a $101 million. It would have been anemic growth but it would have been growth. So the consequent in the answer is, yes, we do believe so. We will achieve growth this year.

And I guess the Brazilian currency was a bit of a drag in 2018. Do you have any idea what we can expect on that in 2019? Ronan O’Caoimh: I mean I think that we can get 14% for that, it'll continue to do so. I mean, I think it has gone a bit weaker, again, still. So I mean it's just as difficult to predict how that will move. But I mean irrespective of how it moves and what we've done is, we have largely now achieved a bouncing -- a situation where we bounce our currencies. And so with the advent of the factory change -- sorry, with the advent of the ANVISA approval in the factory -- in the new factory. We basically have that, a natural hedge in place.

And in terms of gross margin and cost structure for 2019, will it be similar to 2018?

I've mentioned this before. One of the key drivers of our gross margin is volume. We've a significant fixed cost base. So the more growth we have on our top line, we will get an improvement on our gross margin. And obviously, that will be accentuated by the savings that we've implemented throughout 2018. But we'll get the full year effect of that in 2019. So I do see an improvement there. I don't anticipate an increase in relation to our SG&A and indirect costs as a whole. So in essence, any growth that we do get from the top line should flow very quickly down to the operating profit line. And so consequently, that'll drive our efforts, one, to grow our profits, but two, to get to the cash breakeven position that we're looking for.

And do you have any open credit line in place?

We have modest credit lines in terms of some equipment facility, we've got some short-term facilities. So we don't at this point. We do have relationships with a number of banks. But we don't have a form of facility in place. I think the days whereby you can have facilities resting there are largely gone. Just as I -- just in case and everyone has one. Just in terms of the capital asset in relation to banks now, they typically come with a charge. And therefore, you're only going to basically pull one of those in place if you thought that you needed those imminently. Otherwise, you're basically paying a charge for something that you really don't need.

And are you still in the market for buying back your bonds opportunistically? Ronan O’Caoimh: No. I don't think so. I think we've -- we decided to maintain our cash balances at $30 million and trying. And then our intention is -- we believe, it's a long time we've achieved cash flow breakeven. And that we, basically, would only buy back in a scenario where we had strengthened their cash balances beyond $30 million. We might -- So if we got it to $40 million, we might spend $10 million, if you know what I mean. But we've established $30 million as our base.

And then going back to the Syphilis tests, I mean there are articles out recently that STD is I think at record in the U.S., and on the rise in underdeveloped nations. Are you doing anything on the lobbying front to try to get more money allocated towards those? Ronan O’Caoimh: No. To be honest, I don't think we are. We've spoken with the CDC who are the biggest influencers here. And so in that essence, we've lobbied it, in the sense that we've tried to persuade them. And in fact, we ran a trial with them -- with them in essence -- yes, with them basically where we tried to prove to them that there was benefit to -- due to a public health, Syphilis problem. So basically that people would otherwise -- people would be -- HIV, sorry, the Syphilis positive would be detected as part of the public health program. And basically, who otherwise it wouldn't be -- if I dropped talking about them in place. And we ran quite a big trial. And we proved that we haven't seen it, and I probably -- [indiscernible] a time they were satisfied of that. That's only like 6 months ago. And we thought that might have changed their approach. But they -- so far, they haven't allocated any resources, either of any sort, financial or otherwise to pushing the Syphilis or Point-of-Care test. So what we're doing meanwhile is we're working...

And the -- I'm sorry, the Point-of-Care hemoglobin device that you have, how quickly can that put out a result? Ronan O’Caoimh: So it's probably like 12 minutes. And it -- so it's a very quick test. Once you have it up and running, if it repeats every 2 minutes, but the 12 minutes are referred to just a one-off. And so it's -- we're not launching it in the USA, right. There are other providers that serves the U.S. So our emphasis is mostly Southeast Asia, Brazil and some second world countries. We placed 115 instruments last year. And we'd hoped to place a multiple of that this year. And we're still waiting the Brazilian approval. And that'll certainly -- that would increase the level of activity significantly. Soon we will see that, we're anticipating getting that in the next 3 or 4 months.

Right. I think we have no more questions. And so I think we'll close the call now. Just to say thank you, everybody. And speak to you -- we'll speak, again, at our quarter one results. So good afternoon, and thank you.

Conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Have a great day.