BICO Group AB
STO:BICO
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
34.02
69.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
BICO Group AB
You don't have any saved screeners yet
And thank you so much, everyone, for taking the time today. We really appreciate it. I'm here. I'm Erik Gatenholm, Co-Founder, CEO of BICO, I'm here with Mikael Engblom, Interim CFO. And the purpose of this call is to present the preliminary results and provide a trading update for the group.
I would like to start by, of course, thanking the entire team for the continued strong efforts in Q2, and that's truly been a great pleasure working with everyone serving our global customers around the world. We're on an exciting journey together to create the future of life-saving treatments with our customers and look forward to continuing to serve their laboratory needs. Next slide, please.
With that being said, we now see market slowdowns in emerging biopharma and biotech as a consequence of the recent macroeconomical challenges. While demand for our products remain strong and we can point to healthy underlying demand worldwide in the second quarter, which is reflected in a high order intake and continued interest in the product portfolio, uncertainty ahead has impacted our way of working and it's leading to a more cautious approach. BICO's core business remains strong and sustainable in the long run. Our automation, lab software and workflow products are designed to improve efficiency and significantly reduce costs for our customers.
We will continue to deliver these capabilities to demonstrate strong ROI for BICO products, even in the current macroeconomic environment. I'm very confident in our products, technologies and our team's ability to serve our customers as customer satisfaction is the same most important thing for us.
We live and breathe for our customers. We're in this business for the long run, and our ambition is to build a healthy, growing and profitable business over the coming decades. Our ambition is to reach profitability and reach the positive cash flow so that we can further finance our investments with the cash flow from operations.
In the second quarter, the company achieved a preliminary organic sales growth of 9% [ including ] one-off customer credits related to accounts receivable, and negative 12% including the credits. Next slide, please.
Sales and marketing activities have continued throughout the first part of the year, and we're excited to continue to see more and more conferences and trade shows take place. As laboratory tools and software and reagents provider, these venues are essential as we get to interact with many of our customers, understand their current and future needs, find and meet partners and expand our brand [ names ].
The majority of our customer base is pharmaceutical companies such as Roche, Novartis, AstraZeneca, and many more, and academic institutions. And we remain committed to serve these great customer segments.
Next slide, please.
I'll take you through some of the preliminary numbers for the second quarter.
So preliminary net sales, excluding customer credits for the second quarter amounted to SEK 543 million compared to SEK 293 million for the same period last year and that corresponds to a growth of 85%. And including customer credits, the preliminary net sales was SEK 484 million, corresponding then to a growth of 65% compared to last year. As Erik mentioned, the organic growth in the second quarter amounted to 9% excluding the one-off customer credits, and minus 12% including the growth.
The preliminary EBITDA, then excluding the customer credits for the second quarter amounted to minus SEK 20 million compared to plus SEK 11 million in the same quarter last year. That corresponds to a margin of minus 3.6%. The preliminary EBITDA including the customer credits amounted to minus SEK 63 million, corresponding to a margin of 13%.
For the first 6 months of the year, the company achieved a strong organic growth rate of 22%, excluding the credits; and 8% [ plus ], including the credits.
The net sales for the period amounted to SEK 1.020 billion corresponding to a growth of 141%. The preliminary net sales then including the credits amounted to SEK 962 million, corresponding to growth of 128% compared to last year.
The preliminary EBITDA for the period then excluding the customer credits effect amounted to minus SEK 39 million compared to minus SEK 24 million last year, and it corresponds to a margin of 3.8% negative. The preliminary EBITDA then including these credits amounted to minus SEK 82 million, corresponding to a margin of minus 8.6%.
Next slide, please. With this rapidly changing market environment, we can see a shift in our customers' liquidity and buying behavior, with purchasing decisions for larger CapEx being pushed forward, for example, impacting sales across Biosciences and Bioautomation.
Assuming a more reserved market situation in H2 this year and potentially next year, we have made the following operational changes to our ways of working. We've improved our sales processes to better assess customers' liquidity and ability to pay for evaluating credit history and setting reasonable prepayment requirements when necessary.
Favoring working capital and due to a more conservative approach to credit terms, during the quarter the company has chosen to decline some orders. We've reviewed all inadequate accounts receivable processes and improved collection and invoicing activities by enhancing collecting processes and adjusting payment terms. Proactive resolutions of all accounts and uncertain receivables resulted in the total credit and credit provisions of minus SEK 59 million in the second quarter, resulting in a negative EBITDA of minus SEK 43 million. So that is the net of the credit and the cost of goods.
This one-off adjustment significantly reduced the due accounts receivables in the group. Product return and credited are anticipated to shift to other customers in H2 this year, which increases our capacity to deliver products in H2, the company's historically strongest part of the year.
Next slide, please.
Given the changing macroeconomics and integration of the subsidiaries, the company has also decided to implement cost savings. And given our financial target of achieving a positive EBITDA result. The cost reduction program targeted to reduce expenses by SEK 100 million on a 12-month basis. And this includes, but is not limited to, organizational restructuring and improved efficiencies. The cost reduction are expected to materialize gradually over the rest of the year and be in full effect from the first quarter of 2023. The new finance team has made a big difference to our business with clear improvements in processes made in a short time. With the expense reduction program measures taken in reducing accounts receivable, we remain focused on maintaining momentum in the industry, leading with our technology and streamlining our organization for efficiency.
Next slide, please. We are committed to our vision and mission, which is [ due ] to be the future of lifesaving treatment by reducing organ shortage and speed up drug development by providing accessible life science solutions that combine biology and technology.
We thank you for joining this call, and we appreciate the opportunity to update you on our business and preliminary numbers. The full financial performance and outlook as well as an update on cost reductions will be presented in the interim report January through June 2022, scheduled for August 24, 2022.
We now welcome any questions and comments that you may have. Thank you.
We will now begin the question-and-answer session. [Operator Instructions]
Our first question comes from Ulrik Trattner from Carnegie.
A few questions on my end. And if we can start off with the account receivables. And I know, Mikael, you've been going through these since you became the interim [ CEO ]. Are you comfortable with the current credit situation and confident in the remaining receivables, this sort of [ SEK 59 million ] is roughly 10% after outstanding receivables end of Q1? And secondly, what are the type -- sort of the typical customer that is driving these provisions?
Yes, I can start by answering, Ulrik. Yes. I mean we have done a big work of going through the outstanding accounts receivable with a focus on the due receivables in order to reduce the working capital and collect. And in this case, we have found where the best solution for some of these customers that have old outstanding debt is that they return the goods and we credit the invoice. So it's part of that review. And with the review that we have done, we feel confident that the accounts receivables that we have recorded are collectible. So that is the answer to that question.
And for your second question and a very important one, I think we can shine a little bit light on the customer groups and the ones that are affected. So as an example, some of the customers include small and medium-sized biotech. What these customers have now in the current macroeconomical environment have had much more of the time raising capital than anticipated. And that, of course, affects their ability to pay. And this is something that's where we as a company, in a proactive manner, have come to agreement on how to proceed with these customers.
Others include academic customers, the universities, for instance, where the [ instrument ] has perhaps not solved the solution as anticipated. But that, of course, has gone through reviews from technical experts and application specialists and we have done work with the customer to find a way where these products can really solve the customer challenge prior to coming to any other agreements.
Okay. And just on the provisions you made now in Q2. Could you give us some hint about sort of the age of these receivables? We know that there has been quite a lot of sort of overdue receivables in recent quarters. Are these to be considered old receivables? Or are these quite newly sort of accounted for receivables?
The credits, as you say, I mean, we have had quite a few customer accounts receivables that were more than 180 days due and it is in that range where the vast majority of these credits belong to.
Great. And my second question is on the slowdown in organic growth, which on my end, it sounds a bit worrisome and you really sort of point out your softer market outlook for the second half and possibly 2023. And you talked about the Biosciences and Bioautomation. But in my book, Bioautomation, it's mainly driven by diagnostic companies. So which segments are you particularly worried about for the coming 6 months and for 2023?
Very good question [indiscernible]. And of course, it's first of all, very important to mention that our goal is to continue to build this business for the long run. We are positioning ourselves to build a company as a continuously growing and profitable business over the next coming decades. We look at our customers' needs. We want to serve those needs. We will continue to serve those needs to ensure that they are happy with the products and offers that we provide.
With that being said, of course, yes, some smaller, medium-sized biotech is definitely customer segments that are hit with the current economical challenges. They're having harder time raising capital. This results, of course, in more uncertainty, we don't know. I think the -- yet to the extent of which these macroeconomical effects will impact the entire life sciences industry. It's hard for anyone to say that, I think.
But with that being said, what we're doing wisely and in a healthy manner, which we believe is the right thing to our management team to do is to take a proactive and cautionary approach. This is how we believe that we will build a sustainable and long-term business.
So in terms of outlook, I mean, it's hard to say much like many other of our peers that were reporting preliminary numbers now for the last week and so, we see peers are reporting negative organic growth. We see peers are reporting very low organic growth compared to expectations. And I think it's important to mention that without taken into consideration, we're still reporting a positive organic growth for the Q2, excluding the customer credits. On H1, we're reporting a double-digit organic growth.
And I think with that being said, it remains to see where the macroeconomic effects will take our customers. We are at the mercy of our customers, and we will always continue to be at their mercy. So our job is to serve their needs in every possible way that we can.
All right. And just a follow-up on that one. If you're mentioning that the main customer growth affected as of now would be the smaller nonprofitable biotech companies. So what's your current exposure to those types of customers as well as secondly, do you believe that you've been [indiscernible]? Yes, sure.
Let me add. Yes. I was going to shed some more light on that. Of course, we also are seeing some delays on CapEx and larger purchases by pharma and industry. And that, of course, remains to be our biggest portion of our customer base. Pharma and industry is -- together with academic users are the majority of our customer base. So we are seeing some delays on larger CapEx purchases.
That, of course, goes without saying, as you know, our Bioautomation business has to do with larger-sized products and instruments and workflows. So that, of course, by nature, would, in that case, be affected.
So it is across borders, but then the question is, of course, will these orders come in, in the next coming months, quarters or year. That remains to be seen depending somewhat on the macroeconomical effects [indiscernible] the ability for these customers to feel comfortable with proceeding with their investments.
Okay. And just obviously, it looks like in at least the SEK 59 million that you've been too generous in terms of the payment terms to these companies. And now you've done an overhaul of your entire business, but you do expect demand for your system given that you're a new player on the block with quite disruptive systems to have a slowdown in demand given that you are giving them less favorable terms.
I think it's -- the terms of how other laboratory equipment companies are doing business in this industry is, of course, dependent on the customer needs and the customers' ability and of course, some pharma -- some very large pharma, indicate something [ on ] very long payment terms and that has a requirement for all of their suppliers and vendors. I think those things are some type -- those things you can't avoid in certain dealings with different pharma, especially large pharma [indiscernible] on terms.
But with that being said, I believe that we have proactively announced at a very healthy process and procedure moving forward. I really appreciate the increased efforts that we're doing on ensuring the liquidity of our customers. And I believe that this is a very healthy step for us as a company to ensure our long-term growth and our long-term ability to serve our paying customers.
Right. Last question on my end, and then I'll get back into the queue. The cost saving program of SEK 100 million. Would you state it is to enable you to reach your financial target of positive EBITDA? Could you shed some more color on that? And are you confident that you should be able to achieve positive EBITDA for the full year 2022.
I can say that the cost savings program is an important program that we will roll out. And of course, we're going to shed some more light on the cost savings program in the Q2 report and the conference call associated with that. But of course, our ambition remains to deliver on a positive EBITDA. It's definitely our ambition. And our ambition is also to work the cash flow to ensure that we can reach positive cash flow and finance our investments with our own positive cash flow.
So those things, of course, remain to be our ambition. And we're doing the important steps now to proactively prepare the company for, however, tomorrow may look, but we're also positioning ourselves for the longevity of the business to build a long-term company.
Sure. But just -- what does that entail for 2022? Obviously, the ambition is to reach positive EBITDA and positive cash flow. But your financial target is to have a positive EBITDA during this period. Is there something that we should expect? Or is this overly ambitious?
I mean the target remains. And of course, we have to work through the plans and the execution of cost savings, et cetera. But the target remains.
Our next question comes from Rickard Anderkrans from Handelsbanken.
So first one on the restructuring side. Are you looking over the company structure or are you considering to divest any assets or part of the business to sort of strengthen up?
Thank you for the question, Rickard, and good to have you here. I can't comment on the details of the cost saving program at this time. But of course, what we have mentioned previously is that it involves certain organizational restructuring, and it involves, of course, ensuring the company is more efficient.
We've previously mentioned in Q1 in association with the Q1 report that we are committed to more integration of the acquired [ institutions in ] 2021. This is, I think, if that's the right direction to ensure that we achieve efficiencies within the group and I think integration of these daughter companies is going to be a crucial part of that.
All right. Fair enough. And just a little bit more on the receivables here and then where they are coming from? Is it a particular business unit or company?
Yes. I mean the receivables are linked to a few of the group subsidiaries that's where we have done the crediting.
Just so acquired companies then.
Well, we don't want to go into details of which subsidiaries that have been involved, but it's related to a few of the group subsidiaries.
Okay. And looking at the convertible bond, can you remind us when that refinancing is? Is it 2026? Or -- and maybe if you could also remind us a bit more on some of the terms of that bond.
I think we will have to come back with more information on that. I believe the date is for 2026 that's what I believe. Don't take my word for it at this point. Unfortunately, I will -- we will have to come back with more detail on that, too.
And just looking at organic growth, can you comment how was the amount of June in terms of organic growth compared to April and May? And can you say anything about how July has started?
Unfortunately, at this time, we can't give any more details on Q3 or Q2 that has been provided in the press release and during this telco.
All right. Fair enough. And then final question then maybe Mikael, if you can take this one. So where do you think BICO currently in terms of internal controlling and finance valuation compared to where you want to be, like 3 out of 10, 6 out of 10? Would you add flavor to that? Would be interesting to hear more.
And -- yes. I mean I've only been with the company for a couple of months. But I mean that we have identified some areas that we would like to strengthen. There has been a lot of acquisitions done last year, and we are working to [ cost ] holidays and align reporting and forecasting and things like that.
So I mean, we are on a journey to create strengthening processes and what we mentioned with accounts receivable is a very important area. So I don't want to give any grading as you asked, but I think we are moving in a fast pace in the right direction.
Your next question comes from Jakob Lembke from ABG.
I have a few questions. I think I'll start with one on the organic growth in Q2. So I'm just wondering, first of all, if it is including or without FX movements? And then you sort of considering [ level ] and that you're now more conservative with the diligence of the customers and the market slowdown you're seeing? Where do you see organic growth going for the foreseeable future from here?
Yes, I can answer the first part of the question. So the organic growth is including FX, [indiscernible]. And I don't have the numbers available -- what the numbers would look like excluding FX.
As for the second part, I mean, again, as mentioned to [indiscernible] during the telco, I mean, the future is somewhat uncertain for certain customer segments, and we are being proactive to that.
Our goal is not to build the business on unreasonable expectations. Our job is to serve the customer needs and ensure that they get the product and service that they need from us. And based on those premises, we will ensure that [ customers ] also with our improved processes now and proactivity here will pay for these products within a reasonable time.
So I think that -- with that being said, we can't, unfortunately, go into the expectations for the rest of the year, but we will continue to serve our customers and build a long-term business. That's our job.
Okay. Just a follow-up on the organic growth. I mean, the U.S. dollar is up like 10%, 15% year-on-year in Q2. So I mean is the risk that the organic growth is actually negative in Q2?
As I mentioned, I mean, we haven't published the organic growth, including the FX effect, and I don't have that readily available what the FX effect is. But I mean, we are not selling everything in the U.S.
Okay. And then on the cost development in Q2, I mean, to my understanding, you have been looking to balance costs since the end of last year and yet costs are still increasing at a very high pace. So can you just comment on that development.
Yes. I mean, our strategy has been to grow into the cost base as you say. And the strategy has been to increase the cost base to support future growth, but at the same time, plan for a very high growth rate. So we will grow into the cost base over time. But with the slowdown now and with the uncertainties ahead, we have revised our plan and are then looking to reduce the cost base also in absolute terms by this cost reduction program.
Okay. And can you also comment on the sort of working capital movements and the CapEx and free cash flow in Q2? I know that you may not have the number, but sort of roughly where you think it will be?
I think we'll have to come back on that in the Q2 report when we have done our cash flow analysis and [indiscernible] our close.
Okay. And sort of considering the market slowdown and the cost reductions, when do you think you will be able to achieve a positive free cash flow?
That is difficult to say, and that is something we'll have to come back on. I mean, the first step is, of course, a positive EBITDA result. But then you have working capital, you have CapEx before you are at a level of a positive free cash flow. So for sure, it's come after the time that we've achieved a positive EBITDA result. So we'll have to come back later on the assessment of that. We haven't done any targets on that. So the first and most important target is to have a positive EBITDA results.
Okay. But are you looking also to reduce the CapEx because it has been a quite substantial number also over the past quarters?
We have informed that we are doing a cost reduction program of SEK 100 million of reducing expenses and some of those expenses are personnel costs and other costs. And of course, personnel costs can also be capital-light development costs, which we record as CapEx.
Okay. Understood. And if we move on to the credit provision, I mean, as I understand it, you are starting to be more conservative here now in the end of Q2 in what terms or what sort of customers you are taking on. But is there any risk that there could be more credit provisions from sales that have occurred over the past 6 months, but are yet not overdue?
Yes. I mean you can never exclude the risk of future bad debt. There is also, I mean, changes in the economy that it could impact customers' ability to pay going forward, et cetera. But we have done a review of the accounts receivable, and we feel confident with the accounts receivable that we're recording in the half year close.
Okay. And can you just update us on the financial position? I'm thinking about your ability to refinance the convertible bond and also settle any potential outstanding earn-out obligations.
Yes. I think we can't comment on the cash flow in the second quarter since we haven't finalized a cash flow analysis and things like that. So I don't want to comment on the financial position in detail on end of June. But as you know, by end of March, we had a substantial cash reserve and we have had a negative cash flow. And what we are doing now is activities in order to improve the cash flow situation in order for us to fulfill all the obligations that we have as a company. So when it comes to the long-term outlook, that is something on cash flow that something we'll have to come back on later.
Okay. But just on earn-outs, I mean, I think in the end of Q1, you recorded expected earn-outs of SEK 470 million. Are you still expecting to pay those here within the coming 2, 3 years?
I mean earn-outs are, of course, based on certain target fulfillments and these are being judged each quarter. And so it's difficult to say anything about the future there. That is something we'll have to monitor and then adjust these liabilities depending on how the forecast looks like. So we'll have to come back on that.
Okay. Understood. And just a follow-up on one of the other questions before me. I mean, are you considering selling any of your acquired businesses? Sort of is there pressure on the balance sheet?
We don't have any plans on selling any of our businesses. We are -- I think what's important to mention is of course, that -- and especially started in Q1 is that we are in the integration process of the client [indiscernible] 2021. And we have also slowed down our M&A activities remarkably.
Okay. And as a final question, I mean now with your sort of more restrictive payment terms and the slowdown in the market [ under ] the effect to small and mid-sized biotech. Is it reasonable to assume that you're no longer selling to 20% of your previous customers?
I can't comment on that. I don't know where that number comes from. What I can say is that we are very committed to offering our products and solutions to customers that are able to pay for them. We've been a reasonable and process approved time periods. And we're committed to continuing to work with these customers and ensure that they use our products for the right purposes and ensure that it serves them value. I can't comment on the number that you presented. I don't know where it's from.
[Operator Instructions] Our next question comes from Karl Norén from SEB.
I have a couple of questions. So maybe if we start with the overdue receivables. I think you have like SEK 300 million in overdue receivables as of end of last year. And I was curious how we can be so confident that you only need to write down [ SEK 6 million ] of this given that you are now stating that the macroenvironment is significantly worse versus 6 months ago. How can you be so sure that you don't need to write down even more receivables?
Yes. I mean this is a judgment that you do every quarter. And some of these receivables are not long overdue. And there, we believe that we have more about the collection process, how we push the customers to pay, reminders and things like that. So some of these are more [ linked ] we believe to how we work with our customers to collect money more than that the customers are not able to pay for these products.
Okay. And then I have a question regarding -- I mean, you speak a lot about EBITDA. I think it's more [ primary ] to look at the cash flow. And given your burn rate, it has been around SEK 200 million in negative free cash flow per quarter during the last few quarters. I mean, it's really SEK 100 million in cost savings is going to make that big of a difference or how should we view it? Because I think the cash flow has been the big drag down in the case of BICO recently?
Yes, it's correct that we've had a big negative cash flow. We have made an assessment of different measures we need to do in order to improve the cash flow. It also includes working capital, CapEx as well as cost reduction. So we have different types of measures in order to improve the cash flow situation.
Okay. And then a [ quick one ] on organic growth. I mean, quite a big difference versus your previous reported quarters and I'm just curious really what is driving this? And is it some kind of COVID impact that you're seeing that had tougher comps in some business areas or what is really going on in the organic growth? Because I think a lot of other biopharma companies I speak with and look after are reporting a quite positive organic growth in Q2.
A good question, Karl. And I think that, I mean, we would have to evaluate this in more detail as ahead of the Q2 report that will come out in August. And we will definitely shine more light on the different business areas, the segments and their individual performance and the underlying organic growth, et cetera, et cetera.
But with that being said, I mean, I think it's important to mention that we have declined orders in Q2. That's an important statement. That's the proactive work that we're doing to ensure that we can continue a long-term business with our paying customers.
We're also looking at our peers. I think it's very important to look at our peers because our peers are in the same segment. We can't categorize BICO as a biotech today. We can't categorize BICO as a pharma or a biomedical company or a medical device company. It's a very specific segment which is laboratory tools and equipment.
And with that being said, I mean, if you look at our direct peers, some of them are reporting negative organic growth for Q2. And that's an important thing to look at. We have to compare apples with apples. And when doing so, I would say that with our new proactive approach with our healthy way of doing business, I believe that reporting a 9% organic growth for Q2 and 22% organic growth for H1 is quite a healthy approach from looking at the uncertainties around those.
Okay. Fair. And -- but I'm a bit curious on that you said that you have a decline in orders. Can you may be shed a bit light on how much that is? And will that impact the second half sales? Or how should we see -- because I guess the margin and cash flow will be better if you decline it, but how should it impact organic growth in the second half?
We can shed more light on that in the full report in August. As I mentioned, we will also, of course, report on the 3 segments, the business areas that we're doing business and their individual organic growth as well.
Our next question comes from Dylan van Haaften from Bryan Garnier & Co.
Excellent. Just 2 short questions for me, one on outlook, one on the installed base. So just maybe to zoom out a little bit. And I think everybody [ reads ] the outlook is quite negative. Could you maybe tell us if you've done any sort of benchmark analysis where you've looked at sort of previous downturns and how we could think about the aggregate mix price and volume growth if we consider this as sort of a longer protracted sort of capital sales downturn. Any comments there would be very helpful.
And then my second question would be on what percentage of your installed base right now is just straight capital sales, no strings attached, money changing hands. And then if there are any additional return provisions in contracts that get in a more protracted downturn lead to returns?
I can start with the first one on a negative outlook. I mean, again, what I've seen and what our sales [ department ] team -- especially Q1 and conferences, trade shows, exhibition is, of course, continued interest in the products. There's continued strong order intake. That's important. But with that being said, we're also seeing some cautious approaches. And as I've mentioned previously, especially for small, medium biotech with inability to raise capital at this time, but also certain larger CapEx expenditures that drive business for our Bioautomation business area and Biosciences.
Now how will the outlook look for the coming quarters and years ahead, nobody knows. I think that's important to state if nobody knows, then there's uncertainty. If there is uncertainty, I will, together with my very [indiscernible] and experienced management team, make healthy decisions for the business to ensure the longevity of our company and our ability to serve our customers. I believe that the things that we're doing now are to ensure the longevity of the business, a healthy approach in how we're doing business with our customers and ensure that we can continue to serve their needs. That's our priority #1 today, and will always continue to be our #1 priority.
You had a question about installed base [indiscernible], and I think that was comparison with reagents. Is that right, Dylan?
Yes, it's their reagent rental contracts. And if there might be any return provisions, I'm just thinking about if you're a biotech in the current market, you might -- if all things go poorly, want to return a device, if possible, if allowed in a contract.
It's -- we can't shed too much light on this at this point. But what I can say is that a normal way of us doing business is not to allow returns in that fashion. We have come to agreement in very special cases to allow for these provisions. And with that being said, we have done the credits in Q2 to clean up these one-off provisions.
Moving forward, again, we've set a proactive and healthy approach to doing business with these type of customer segments that have stated and shown inability to raise capital or have lower liquidity. And for these customer segments, either we don't do business at this time or we ensure [ serve ] healthy upfront payments or some other provisions to ensure that we can actually get paid for these products.
Understood. Understood. And just maybe one question on that top line. Would you give more granularity on order intake in the second quarter? Obviously, as a non-IFRS measure, but is that something you could offer the market?
As we mentioned in the press release, unfortunately, we can't go outside the [ bounds ] of that. But looking at the second quarter, we had a high order intake and there continues to be interest in the product portfolio and there's strong sales activities and marketing [ maturities ] out in the field. So I would say that's what I can tell you. Have a good day. Thanks.
Thank you. That does conclude our question-and-answer session and our conference for today. Thank you all for attending today's...