Medacta Group S.A.

Good afternoon, this is the Coral School Conference Operator. Welcome and thank you for joining the Medacta Group Full Year 2024 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta Group. Please go ahead, sir.

Thank you, and good afternoon, everybody. Welcome to Medacta 2024 full year results. I am here with Corrado Forsetta, MD, CFO, and we will guide you through the presentation we released this morning. First of all, let's just remember our disclaimers. So the highlights of 2024 started with our revenue release that we already published A few weeks ago, a very good growth, over 16% in cost and currency, surpassing €590 million. And this is combined with a good, excellent profitability with a 28% EBDA margin in cost and currency or 27.1 in euro, a good increase of 19.4% over 2023. The net profit as well increased by almost 54% to 73 million euro roughly. And we are proposing a dividend of 0.69 Swiss francs per share, which represents an increase of over 25% year over year. 2024 is now the fifth year of very, very strong growth. Between 2020 and 2024, the CAGR has been 18%, 18.1%. And this considerable above-market revenue growth is a result of our innovative products that have been developed and are able to often change the way things are done. The more innovation we put in the market, the more medical education is required to support the safe introduction of this innovation and safe adoption of this innovation by our customers. And we have... the need to further penetrate the different geographies where we are present, and we do it by constantly expanding our sales force and team in the different regions where Medacta is active. We have already released the sales figures a few weeks ago, so I will not go too much into the details, but this growth was supported by all our geographies with very strong performance in Europe, in North America, in Asia Pacific and in Latin America. And under a business line point of view, we had across all our lines two to three to four times above market growth for hip, knees, extremities, and spine. We have been slightly changing the product mix compared to the past and This is mainly related to the strong acceleration of knees, which is basically now at the same level of the hips. And extremities and spine represent roughly 80% to 90% each. The products related to those performances are a very well-established product, very strong strategy. On the hip, still focusing on anterior minimally invasive products. surgery, which allows Medacta to grow more than two times the market year over year. There's still a very, very strong interest in all over the geographies and, of course, as well in the U.S. with ASC developing, so good need for minimally invasive procedures. Very, very good expansion of our knee portfolio with the GMK Spherica continuously rolling out. The GMK Spherica is the first and still today the only implant specifically designed for kinematica alignment, which is a new and better personalized way to implant a total knee replacement, which is now becoming more and more accepted with solid data and very good performance. The growth of the knee in 2024 has been more than three times the market. Very good growth in spine as well, above 17%, more than three times the market, combining here our implants with our technologies. And this is a very important element to differentiate our portfolio in a very crowded market, which is the spine market. And the highest growth, we had it once again in the extremities with a CAGR of 36.5% and basically a growth of five times more than the market in 2024. And here as well is a combination. of our very complete and competitive product portfolio in terms of implants supported by the Nexstar technology, which is very unique in this space. All this growth comes in a very sustainable way. We did a release this morning as well, the 2024 sustainability report where you can find a lot of information on our activities. But here we picked some highlights for 2024. And once again, we were able to source 100% of our electricity in our manufacturing plants from renewable sources. We had 97% of our new supplier evaluated according to ESG indicators. And 98% of our employees trained on health and safety matters. And then another KPI, which we are very proud of, 100% rate of return after maternal leave in our headquarter, thanks to the support that we provide to our female employees. You will find more details about the different pillars of our ESG reports, so caring for the environment, the supply chain, control, caring for our people, and caring for the community. A lot of KPIs here as well. A big one is definitely almost 44% of greenhouse gas emission reduction. in the last years, and this is despite our very, very solid growth. We mentioned responsible and reliable supply chain control. For our people, of course, we continue to professionally develop their careers. We have invested a lot in training hours for our employees, which has constantly increased. We recently finalized a company survey and we had an outstanding 87% response and providing a lot of feedback. So we're very happy with the dialogue we have with our rapidly growing family and all our employees. And just to give you an idea, almost 30% of the new employees we hired last year DID COME FROM AN INTERNAL EMPLOYEE REFERRAL PROGRAM WHICH WAS INTRODUCED A COUPLE OF YEARS AGO. SO VERY SUCCESSFUL. AND LAST WE KNOW WE HAVE A BIG IMPACT ON OUR COMMUNITY AND WITH OUR MEDACTA FOR LIFE FOUNDATION WE SUPPORT A LOT OF INITIATIVES STARTING FROM THE MY SCHOOL TICINO WHICH ENABLES US TO SUPPORT NOT ONLY OUR EMPLOYEES BUT AS WELL TO GIVE SUPPORT TO OUR COMMUNITY ON TOP OF DIFFERENT HUMANITARIAN PROJECTS that rely on us to get implants, support people and know how to help areas which are in need. Our commitments are listed here as well in terms on slide 14 of adoption of task force and climate related financial disclosures. More details, as I said, will be available or are available on our sustainability report. I would like now to ask Corrado to drive you through the financials in details, and I will be back with you for the conclusions.

Thank you, Francesco. Let's have a look now at the key figures of our P&L, and I would start with the gross profit. This year, the gross profit was equal to $399 million. with an increase of roughly 15% compared to the previous year. The gross profit margin was at 67.6%. And I would say the net from transaction effects effect, the EGP margin of this year was substantially in line with the previous year. Moving to the next one, here we see the ADJUSTED ABDA EVOLUTION OVER THE LAST FIVE YEARS. LET'S START WITH THE 2024 WHERE WE HAVE REGISTERED AN ABDA ADJUSTED OF 160 MILLION WHICH COMPARED TO THE PREVIOUS YEAR 134 REPRESENT AN INCREASE OF MORE THAN 19% YEAR OVER YEAR. THE ADJUSTED ABDA MARGIN increased as well by 1.7 percent net from effects effect. You see this in the red line of this chart, passing from 26.3 percent to 28 percent net from translational effect in 2024. There is another line in this chart that we can have a look at, which is the highest line, the blue line, which illustrates the adjusted ABDA margin evolution net from effects effect over the years. You see that despite the reduction of the reported ABDA margin, which is the yellow line, net from effects effect, this ABDA margin was constantly around 30%, with a nice jump in 2024 of 1.7%, as we just said. Moving to the next slide, we see that the net profit in 2024 surged as well, and we reached about 73 million with an increase, as Francesca said before, of 54% compared to the previous year. Just a few comments about this jump. We say that the ABDA margin expanded in 2024, But this improvement in the net profit is also explained from a better financial performance, which is primarily coming from intercompany balances largely benefiting from more favorable effects evolution, particularly US dollar versus Swiss francs, and lower effective tax rate in 2024, which went down to 17%, starting from 19.4 last year. And this improvement is primarily attributable to the entry into force of the three-stats reform in 2025, 2024, 2025. Moving to the next, you see the usual CAPEX-5. And again, as usual, the largest chunk of this CAPEX-5 of 99 million in 2024 is explained by growth investment. The biggest chunk is instruments, 57.8 million. And the second chunk, the biggest chunk, is composed by other tangible for 23.8 million, and this number includes investments to expand the production facility here in Castel San Pietro in Rancate and the new logistics hub in Europe. Moving to the next, here you see the cash flow in 2024, we were able to generate a robust cash flow from our operating activities of 107 million with an increase of more than 40% compared to the previous year. And this robust cash flow generation was able to finance our strong investment plans of 99 million and generate a positive, small but positive, free cash flow of 8.3 million. Moving to the next one, here you see the very low leverage as a result of our ability to generate cash. Over the last five years, the leverage was constantly around one time, the ABDA. This year, 0.99, so very low. And moving to the next slide, you see here the dividend per share. As Francesco mentioned at the beginning of the presentation, the board is going to propose a dividend of 0.69 Swiss francs per share, representing an increase of 25% compared to the previous year. I believe that this concludes my part, and let me hand over to Francesco for the 2025 outlook and some final remarks.