Drägerwerk AG & Co. KGaA

Ladies and gentlemen, welcome to the Q3 2025 earnings conference call. I am Matilde, the course call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stefan Träger, CEO. Please go ahead.

Yes, good afternoon, and thank you for joining our conference call on our financial results for the first nine months, 2025. I have with me today Gert-Heinz Glesbo, CFO, as well as Tom Fischer and Nikola Sammerschmidt, both investor relations. We would like to take you through the results of the presentation that we made available on our webpage this morning. Following the presentation, we will open the floor to your questions. Let's get started on page five with the business highlights. With a significant increase in orders, noticeable growth in sales and very good earnings, We delivered a strong business performance in the first nine months of 2025. Despite difficult economic conditions, demand for our technology for life rose to around 2.6 billion euros. The last time we had such a high order intake after three quarters was in our record year 2020. Growth was driven by both divisions and only The same is true for net sales, which increased to around 2.3 billion. Earnings before interest and taxes almost reached the prior year level at around 77 million euros, despite the positive one of the effects which supported last year's. As a reminder, last year we had divested a non-core business in the Netherlands and unused property in the United States, and a building in Spain, totaling around 30 million euros in one-off effects. Those effects are missing this year. In addition, this year, we need to compensate for some quite strong headwinds, currencies, and tariffs, and a substantial negative impact on our earnings. So, without these headwinds, our EBIT which has been significantly above the prior year level. Our business in the third quarter made a substantial contribution to the strong overall performance in the first nine months. That says we're significantly above the prior year level in Q3 by a bit more than doubled. In addition to our top nine, we were able to improve our operating cash flow in the first nine months with a considerable increase by more than 35 million euro to around 93 million. This development has also been recognized by investors. Until the publication of our preliminary figures, our preferred shares had already increased by around 44% year to date. On the day after the publication, they rose by 12% resulting in an increase of around 63% in the current year. Our common shares have shown strong performance as well, with an increase of around 41% year-to-date. Ladies and gentlemen, as communicated two weeks ago, we now tend to expect the net sales growth at the EBIT margin in the upper half of our forecast range. I will come back to our outlook at the end of our presentation. For that, I turn over to Stefan for a review of the percentages. Stefan, please.

Thank you, Stefan, and welcome, everyone. Please turn to page seven for a group overview. As usual, all growth rates are quoted on a currency-adjusted basis. As Stefan Dreger said, we continue to see a strong demand for our technology for life, and those divisions in all regions Order intake rose by 9% to around 2.6 billion in the first nine months of 2025. The Americas led the growth with an increase of around 19%, followed by EMEA and APEC. In Germany, the order volume was slightly above the prior year level. In the third quarter, orders grew by roughly 7%, as the slight decline in Germany and APEC was more than offset by an increase in the other regions. Our net sales development has further accelerated in Q2. We are well on track to compensate for the slow start in the year caused by some supply chain crashes. Net sales rose by more than 10% in the third quarter. In the first nine months, they increased by roughly 4% to around 2.3 billion. All divisions and regions contributed to in the EMEA and the Americas regions. I'll comment on that when we get to the divisions. Our profit margin increased by 0.7 percentage points in the first nine months to 45.1%, despite currency hedging and higher tariffs. The margin improvement was stronger in the medical division than in the safety division. Operating costs rose only moderately, reflecting disciplined expense management. Our financial expenses increased around 6% in the first nine months, but mainly driven by the absence of last year's $30 million runoff income. Excluding the positive runoff effects mentioned above, the cost increase amounted to 2.4% in the first nine months and to 1.5% in the third quarter. In nominal terms, however, financial expenses were on a slight decline in Q3. Due to the only moderate increase in costs and the significant growth in net sales, we more than doubled our eVitro around $57 million in Q3, coming from around $24 million in the prior year quarter, which had been still supported by the positive one-time effect amounting to $10 million. Our EBIT margin rose from 3.6% at 3.1% to 6.8%. Strong earnings performance in the quarter. Over the first nine months, EBIT came in at around 77%. The EBIT 3% margin is slightly below last year's 80 million and the 3.5% margin. Again, the positive and negative effects from the prior year are now missing. In addition, headwinds from currencies and tariffs key trading currencies. We carefully monitor the development of foreign currencies and manage its risks proactively through hedging and price adjustments. Having said that, FX still had a negative impact of roughly 22 million euros on EBIT. Our operating performance improved year on year, and that improvement nearly, but not fully, upset the absence of run-offs in the FX and tariff drag. Thus, our EBIT declined slightly. Finally, our rolling 12-month VBA improved significantly from roughly 30 million to around 49,000 euros. Let us now take a closer look at the on page 8. The group's order intake can almost talk to send to around 1.5 billion in the first 10 months of 2025, driven by high demand for ventilators, anesthesia machines, services, and consumers. In the second quarter, the mid-double-digit million-euro order for hospital infrastructure from hospital further powered our growth in the Americas. But even without this large order, demand in the medical division grows here and there. In the third quarter, order intake in the medical division increased by more than 5%. The decline in APEB was compensated for by the significant growth in EBR and by the positive development in the other regions. Thanks to EMEA and the Americas in particular, net sales rose significantly by more than 10% per quarter after a slight decline in the primary period. Looking at the first nine months, net sales increased by around 5% to 1.3 billion euros, driven by all regions. In APEC, growth was driven mainly by India and China, with business development somewhat uneven in China. in the third quarter. Although the resolution of our Q1 supply chain problems had a positive impact in Q3 as expected, these effects were offset by the overall weak business in China, resulting in a decline in net sales compared to the prior year quarter. Our gross margin expanded by nearly three percentage points in Q3 and by 1.1 percentage points in the first nine months thanks to a favorable product and country mix, and lower quality expenses from field actions. Functional expenses rose by 6% in the first nine months of 2025, and were roughly 8% in the third quarter. Excluding the proportionate product in one of the facts from the sale of real estate in the prior year, the increase amounted to roughly 4% in the first nine months, and also in the third quarter. Earnings in medical return to positive territory as we are making progress in improving the profitability in the division. Our EBIT grew considerably from minus 4 million to plus 11 million, lifting the EBIT margin from minus 0.9% to 0.3%. For the first nine months, EBIT amounted to around minus 23 million euros after around minus 28 million euros in the prior year period. As mentioned before, one of the facts in the prior year's period played a role. Our role in 12-month CBA improved significantly by around 22 million to around minus 45 million. I will now turn to our safety division. On page nine, in the first nine months, water intake rose by roughly 6%, driven by gas reduction, respiratory and personal protection products, and intermediate solutions. for occupational health and safety normalized after last year's large order for NBC protective filters leading to a lower demand in the U.S. and the Americans delivered strong double-digit order growth while APEC remained almost stable. After a somewhat slower development growth in APEC also contributed to this development. Q3 net sales rose significantly by roughly 10% driven by India and the Americas in particular. The first nine months, net sales increased by more than 2% thanks to growth in all regions. That said, our safety business is back on track after its line weakness in future. Our gross margin funded by 1% in 2020 was stable in the first nine months thanks to a favorable product mix. Financial expenses rose about 5% in the first nine months. This was mainly due to other operating income in the prior year period from the sale of our fire alarm systems business in the Netherlands and the sale of real estate. Higher marketing expenses also had a negative impact on financial costs. Excluding the other operating income of the previous period, financial expenses decreased slightly by 0.3% in the first nine months of the year and by 2.4% in the third quarter. So, good expense management and safety needs. Q3 EBIT improved significantly to roughly $46 million after $28 million prior year quarters. The EBIT margin increased to 12.6%. After the first nine months, the EBIT came just under 100 million euros, down from 108 million. The EBIT margin was just below 10%. Rolling 12-month BDA increased slightly, from roughly 3 million euros to around 94 million euros, coming from 97 billion euros in the previous years. That concludes the safety division review. Let's move on. the development of our cash flow and other key figures on to slide 10. In the first nine months, we significantly improved operating cash flow by around 35 million euro to roughly 93 million euro. This was mainly due to effective work with capital management, especially better development of trade receivables, trade payables, and other liabilities. Outflows from investing activities more than tripled from euros to about 6 million euros, resulting in a free cash flow of around 17 million euros after around 35 million euros. Among other things, the significant increase in outflow was due to a base fact. In the prior year, the sale of high alarm systems business in the Netherlands, the sale of the property in the U.S. had led to a considerable inflow, which is now missing. added in investments to one of its holdings in the first quarter of 2025, which has contributed to a higher outflow year-to-date. Looking at our net financial debt, we had modest reduction, keeping our leverage at a healthy 0.7 net financial debt to the PTA. Our 12-month return on capital employed rose from 10.9% to 12%. This was due to the significant increase in our capital employed. The considerable growth of our rolling 12-month pivot resulted from the good performance in the fourth quarter of 24, which had delivered much higher earnings compared to Q4 23. Net working capital was around 3% higher than in the prior year at around 721 million euros. Our equity ratio as of 2024. Now, I invite Stefan Dreger for our outlook on page 12.