Greetings, and welcome to the Trinity Biotech First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eric Ribner, Investor Relations for Trinity Biotech. Thank you. You may begin.

Thanks very much. Before we begin, please note that statements made during this presentation may be deemed forward-looking statements within the meaning of federal securities law. These statements are subject to known and unknown risks and uncertainties that may cause actual events to differ from those expressed or implied in such statements. These risks include, but are not limited to, those set forth in the risk factor statement in the company's annual report on Form 20-F filed with the Securities and Exchange Commission. Trinity Biotech undertakes no obligations to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrence of unanticipated results. And with that, I will turn it over to John Gillard, CEO of Trinity Biotech.

Good morning, everyone, and thank you for joining today's call. We appreciate your interest in the company. This quarter, we are pleased to report significant advances are being made across our entire business. We are growing our revenue base while, at the same time, delivering higher profit margins. We had almost 40% quarter-on-quarter revenue growth in Point-of-Care revenues driven by the successful scaling of rapid HIV test output. This was accompanied by a 360 basis point improvement to gross margins quarter-over-quarter. We remain on track to achieve annualized revenues of approximately $75 million by Q2 2025 with approximately $20 million in EBITDASO. That is earnings before depreciation, amortization, tax and share-based compensation costs from our existing business. Now let me walk you through some of the key achievements and provide more details across the 3 main priority areas for our new leadership team, which were: one, growing TrinScreen HIV revenue; two, moving from the planning to the execution phase for the key initiatives underpinning our comprehensive transformation plan; and three, progressing our main long-term growth strategy based on our newly acquired continuous glucose monitoring or CGM technology. Firstly, let's discuss growing TrinScreen HIV revenue. As I mentioned on our last call, we successfully ramped up production of rapid HIV tests, in particular, TrinScreen HIV in Q1. You can see in today's results the financial impact of that increase with an almost 40% quarter-on-quarter increase in our Point-of-Care revenue. A key priority of mine in quarter 1 was to increase production so we could meet our TrinScreen orders and therefore, prove to our customers, partners and indeed competitors that we could be a real player in the large volume HIV screening market as we roll out our new TrinScreen HIV product across multiple markets. I'm delighted to report that we have…

Thanks, John. Before I speak to our financial results for the period, I want to take a moment to mention the most recent correspondence we received from Nasdaq around our continuing Nasdaq listing. On November 21 last year, we received a deficiency letter from Nasdaq notifying the company that for the preceding 30 consecutive business days, the market value of our publicly held shares remains below the minimum $15 million for continued inclusion on the Nasdaq Global Select. At that point, we were provided a 180 calendar days to regain compliance. This 180-day period ended on May 20 of this year. And as expected, yesterday, we received a further notice notify enough that we have not regained compliance. We intend to seek a hearing from Nasdaq. And that will put a stay on any further action until that year. We have appointed specialist adviser to support us in this manner, including the preparation of a comprehensive and compelling compliance plan. The Board has determined that the company will remain Nasdaq listed. And I know from speaking with our top investor that they're supportive of the company maintaining the listing. We'll update shareholders throughout the process. Now I will speak to our financial results for the first quarter of 2024. Our revenues for the first quarter of 2024 were $14.7 million compared to $14.8 million for the first quarter of 2023. Our Point-of-Care business experienced a strong performance in the quarter with revenues increasing by $0.8 million or 38.5% to $3 million. This increase was driven by our HIV screening test, TrinScreen, which had sales in the region of $1.2 million as we shipped further products to Africa following our more initial shipments in December 2023. In addition to this, we have received substantial orders for TrinScreen HIV post quarter end…

[Operator Instructions] Our first question comes from the line of Jim Sidoti with Sidoti & Company.

Can you talk a little bit, let's start with the TrinScreen sales? Is everything of the 8 -- is all of the $8 million in 2024, is that all to Kenya? Or do you expect to be -- start shipping to other countries in 2024?

Jim, thanks for the question. For commercial reasons, we're not going to give that level of detail at this point, right? But what I will say is we do expect to be shipping to other countries outside of Kenya in 2024.

Okay. All right. And it sounds like there was a considerable amount of onetime on the costs in the quarter as you ramp up production. Can you give us -- can you quantify that at all, the onetime costs to ramp up production for TrinScreen?

It's less onetime cost, Jim, in terms of -- like the CapEx is already spent. It's really around training the staff and then them getting up to speed. The lack of efficiency, I suppose, comes from that space. As I said, we're introducing further automation in June, right? That will further increase our efficiency. And then we're also getting much better pricing on our input materials as part of the work we've done in the supply chain. So it's really just a kind of transition as we move forward from initial scale up to kind of run rate manufacturing and run rate supply chain. But we do expect it will have a significant impact. And we always knew TrinScreen would have a lower margin contribution because of the lower pricing point in the screening market rather than the confirmatory market. So that was nothing that was not new to us or it's not known to us. But really what's happened here is we've had to ramp up so quickly, which is a great sign of success, but that also brings our challenges as we would have expected it takes time for that to bed in. The flip side is these much greater volumes, not just in TrinScreen but across our rapid HIV products generally give us more leverage to negotiate with suppliers and get better pricing. So overall, we'd expect better profitability contribution from our rapid HIV business as a result of this increase. And then obviously, with the move later in the year to assembly in an offshore location going live, we'd expect that to deliver further increases in margin contribution. So overall, we do expect our margins to increase and not just in Point-of-Care but across the organization and our main revenue lines through the various initiatives that we're putting through. And I think as I said in the last call that we would expect our margins to be 50%-plus in 2025, and we still expect that to be the case.

Okay. All right. If we move over to the hemoglobin business, it sounds like you've made significant progress on shifting production and lowering the cost for that product. How about on product development side? Do you have everything in the market now that you expect to have in 2024? Or do you expect to have new versions of your premier system out there this year?

So our key next product development is around the new column and buffer combination. And that's really what gives a higher number of injections per column, and the column is the main consumable that we sell. It also provides greater stability, requires less what's called calibration, which is a kind of overhead that our users have to incur. So it has more usability, lower cost, lower consumption of key raw materials. So that, I suppose, Jim, is our next key innovation that we're now bringing to the market. In terms of the instruments, we have been making changes in the background on that. As part of our supply chain optimization, we've not just been looking to reduce the cost of those components. We've also been looking to increase the reliability. So we carried out an analysis of what were the main parts of that component -- the main part of that system that failed. And we've looked to change those out either through supplier changes and/or engineering design changes. So that's really, I suppose, Jim, what we're doing to drive innovation within that. We continue to look at the medium throughput -- low to medium throughput device, which we typically call the T-10 or the T-20, and that's something we are continuing to look at in terms of the appetite for throughput through that instrument if and when we bring it to the market. And -- but for now, our focus is really around rolling out the column and rolling out those changes in the [ 90 to 10 ] from a reliability perspective.

Okay. All right. And then on the CGM side, you said development costs this year should be less than $2 million a quarter. Going forward, do you think that number ramps up in 2025 as trial activity continues? Or do you think that $2 million per quarter that stays relatively flat going forward, maybe not 2025, but in general going forward, should that number stay around that level?

Yes. So look, what I indicated in the past is we continue to spend on CGM while we continue to see real progress, right? And believe that we have a disruptive product that we can really make a significant contribution to the market. As I set out in my prepared remarks, we're more confident that now than ever, right? You're absolutely right, Jim. I think in 2025, as we move to pivotal clinical trials, that will increase our expenditure. But we'll only do that if we have a very high degree of confidence that the product would perform well in those trials and will support to getting regulatory approval. What are the benefits of doing this within Trinity is we have a large, large degree of experience in taking products through regulatory approval processes, both from the Trinity team that have been here a number of years and also some of the more senior people we've brought in over the last couple of years. So I think from our perspective, we wouldn't -- we would only go into that process, as I said, with a high degree of confidence. And from an investment and return perspective, Jim, that will be a very compelling proposition I would expect considering the size of the market and the opportunity we believe we have to disrupt it.

Okay. All right. And the last one for me, interest expense. I know you had the onetime adjustment in the quarter this quarter. So going forward, though, for the remainder of 2024 with the new debt level and the new interest, what should we assume a good number is for interest expense?

It's about 2.5 a quarter, I suppose, Jim, based upon that debt level, yes.

Okay. All right. Well, it definitely sounds like you've made a lot of progress on the cost side. So that was good to see. And especially with the increasing revenue from TrinScreen, it should lead to much better operating results. So that's very good to see. So I guess we'll just have to stay tuned to see how development goes on CGM.

Yes, Jim. Look, we're -- as I said, we're very happy with the progress we've had. We're very happy with the team that we've built, and actually, to reiterate a point I made in my prepared remarks, was to be really enlightening for us is the rich partner network that's out there in terms of people that have built already components, both from a physical perspective and a digital perspective for this type of industry. And I suppose doing this development within an established company like Trinity, where in many cases, we have long, long relationship with these customers means that we're much more credible than a startup in fostering those relationships and getting to a real point of traction with them. And we think that will really reduce down the amount of work and spend we need to incur in order to really move the development project forward. So outside of the work we've done over the last couple of months, reiterating the significant market opportunity and how our differentiated solution can really help capture that, the partner network and our credibility within that has been very, very positive, both from a timing perspective and a cost perspective.

[Operator Instructions] Thank you, ladies and gentlemen. This concludes our question-and-answer session. I'll turn the floor back to Mr. Gillard for any final comments.

Thank you, Melissa. And just for me, thank you for everyone for your continued interest in the company and joining today's conference. We continue to be focused on execution on those key priorities that we set out. And I look forward to updating you all over the next coming weeks and months in terms of our further progress. Thank you so much, and have a great day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.