Ambu A S Ord

Ladies and gentlemen, welcome to the AMBU Q1 2026 conference call. I am Valentina, the chorus 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 Britt Melbud Jensen, CEO. Please go ahead.

Thank you very much and good morning, everyone. Welcome to this Q1 2025-26 conference. quarterly call. I'm here this morning with our Chief Financial Officer Henrik Skagbender and we will go through our results and I'll start with a business update. So if we look at page 3 as a start and then moving into slide 4 starting with the headlines for this call. So on the back of a a strong Q1 and even a strong H1 last year. We have delivered a very solid Q1 for this year with strong revenue growth, in particular on our endoscopy business. We said in November that our growth was going to be stronger in the last part of this fiscal year compared to the first part of this year, but we are quite satisfied with the strong start of the year that we have had. In particular, what I want to highlight is that we have had very strong momentum across all our endoscopy business areas. We continue to see a very strong underlying momentum in conversions from reusable endoscopy to single-use, where we are both winning new customers on a very high rate, as well as we are increasing the penetration with existing customers. In particular, we had a strong quarter on respiratory soil, but also the other areas look strong. I'll comment on that in a short while. On margins, Henrik will come back to this, but we continue to drive a very high operational leverage while we invest in growth. So that's the balance that we continue to focus on. And then we are adjusting for temporarily high tariff costs that we have seen and also some FX headwinds. Finally, what has been a highlight for this quarter is that we launched our summer head growth strategy. We see that this has been well adopted and we see strong early momentum as we continue to be on track for delivering on our full year outlook. Please turn to the next page and let us then look at the financial results from Q1 2020. And if we look at our overall business, we now have endoscopy solutions making up 63% of our total revenue and anesthesia patient monitoring 37%. Overall, the business grew 8.6%. percent on the quarter, and that is a split between endoscopy solutions of 14.4 percent and then almost flat as anticipated on anesthesia and patient monitoring with minus 0.1 percent growth. On the profitability side, we delivered 164 million DKK EBIT margins before special items, and that corresponds to a 10.5% EBIT margin. And then we have a free cash flow of 13 million DKK. Before diving into the segments, if we move to the next slide, I'd like to talk a little bit about the market that we operate in. And here I have... two key points that I would like to highlight. The first one is that we as a company are benefiting from an overall trend towards an increase in global procedures performed with an endoscope, whether it's reusable or single use. And at our capital market day, we communicated an underlying growth rate of around 5%. And if we look at the quarter that we just exited, we see also an endoscopy volume growing at around that number. So I think that's one thing that, of course, affects our business. If we then look at what is a stronger growth driver for us, then it's the single-use endoscopy penetration. And here we see across all four areas that we are in a very strong increase If we take respiratory first, here we see efficiency and economics is really supporting the conversion from reusable to single use. And we do also have some flu-related demand that is increasing the penetration in this segment. Then in urology, we also see the accelerated conversion in particular with sister scopes, but also with our newly launched ureteroscopy market. And this is, again, driven by efficiency and economics among the customers. And on the ureteroscopy side, also a move towards single use because of the tough procedures and the scopes being more fragile by nature. Then on the ENT market, this is a market for single-use that is in particular strong in the US and in the UK. And here we continue to see a strong growth in single-use endoscopy penetration, very much driven by moving from reusable to single-use when performing the procedures. And then gastroenterology, this is a market that has not really converted to single-use. It's the lowest single-use penetration of all. just below 1%. However, what we track is some niches that are out of the suite where we see a very nice and solid conversion to single use as they are seeing the benefits of these solutions in the clinics. So if we then move to the portfolio and some of the highlights on the next slide of progress across our portfolio, then I'm excited about our respiratory area where we have recently introduced our SureSight Mobile. So this I'll come back to later, but it's basically a handheld and much more... mobile version of our video laryngoscope solution. And this one we have introduced so far in North America and Great Britain. Then when it comes to urology, what we see here is two things. One, we see a continuous progression penetration increase of our advanced solutions, Ascope 5 Sisto and also Ascope 5 Euridro. And then what we have launched in the quarter is Ascope 4 Sisto in China, which is locally manufactured at our factory in China. And this is the first time we're introducing this solution in China. Then when it comes to our indoor intelligence, we are also continuing to focus on this as an area of growing importance. And here we have in the quarter advanced our documentation to help optimize efficiency for our customers and reduce the administration burden. And we are also continuing to expand our capabilities that can support our hospitals in integration to the EMR systems at the hospital where they can upload pictures and videos to the patient files. Now let's look at the results in the different areas starting with the respiratory. So this is an area where we continue to see very strong momentum across respiratory. We saw organic growth in the quarter of 8.3% against a very strong Q1 last year. And if we look at where the growth is coming from, it's actually driven by the broad bronchoscopy portfolio we have with different sizes, both across ASCOPE 4, but also strong growth with our ASCOPE 5, where we see customers being willing to pay for these premium solutions. And then we have SureSight, the SureSight video laryngoscope that we launched around a year ago, that that is starting to generate meaningful revenue. So when we take a step back and look at some of these strong trends that we see in this market, and to guide a little on what to expect when you look ahead, we expect an acceleration in our growth levels in this segment for the coming quarters, which will be driven by both the ASCOPE 4 and 5 increased penetration and also driven by increased adoption of our SureSight solution and cross-selling of that into bronchoscopes. And talking about SureSight, let's move to the next page and look at the launch of our mobile version, which is expanding our overall portfolio in respiratory. So maybe a short recap on what we have shown before, that the video laryngoscope market, if we look at the U.S. where the market is largest, this represents a 4 billion GKK market in the U.S. alone. If we then look at laryngoscopy, it's also a method that is increasingly done using a video laryngoscope instead of direct laryngoscope. So that's basically using a laryngoscope method with a camera, and in the U.S., this method represents now 50% of all intubations that are done in the U.S., and it's a number that we see growing with around 20%. Then moving to our own solution, so we have launched the SureSight Mobile, which is basically the solution that you see at the top picture here on this slide. And what this supports is very much emergency airway management because it's a product that you can basically see the picture from the intubation directly on the screen. It means that you can have it in the pocket in an ambulance at different parts of the hospital and then have easy access to that, which opposite the Connect version that you put into and connect with one of our two screens, the AVU2 Advanced or the ABOX2 Advanced. So overall, this is a very strong addition to the already attractive portfolio that we have in respiratory. It works with the same templates that we have launched for the SureSight Connect, where we launched, as a reminder, five blades together with the Connect version around a year ago. And just before summer, we launched the additional five blades. So we now have 10 blades that both support this SureSight mobile version as well as the SureSight Connect. So now let's move to the other endoscopy products. on the next slide, which is urology ENG and GI, which is a segment that has become slightly higher than the respiratory segment now with a 21% growth in the quarter versus last year. So momentum is strong, as I mentioned in the beginning, across all the different areas that we have here with urology being the largest and biggest growth contributor, something we also expect will continue When we look at urology, growth was primarily driven by continued penetration of our Ascope 4 solution, where, again, revenue is coming from continued new customers being added, as well as increasing penetration with existing customers. And then we also see revenue increasing from our more newly launched solutions, and that is our Ascope 5 system and our Ascope 5 urethral system. Reflecting also, I mean, the speed of the uptake of these solutions, in particular when it comes to our ureteroscope, reflect the length of the sales processes that is slightly longer for these at the hospitals because these are more complex procedures by nature. So in these segments, if we look at what we expect as we look ahead, we did see a strong underlying momentum, which we expect to continue. What we also saw was that towards the end of the quarter, we saw a slight increase in the number of orders that came in before year end, which also means that we think that there are good reasons why the growth in the coming quarter can be slightly lower than the 21 percent that is highlighted here. But I do want to say that this is more the timing of orders that is a result of that, and it's not related to the underlying growth momentum that we see in urology as well as the other segments represented here. So before leaving endoscopy, maybe on the next slide, let me briefly comment on endointelligence, which is our area of growing importance that supports our endoscopes across all the areas that we operate in within endoscopy. Because where we really stand out is that we have one software platform, our endointelligence, that all our endoscopes connect to. So that basically means, and we see health systems paying more and more attention to this, that they can have our information. either our ABU2 Advanced or our ABOX2, and then basically they can use our full industry portfolio on these monitors. And it's exactly the same user-friendliness, the same functionality that you have for a number of the functions. So it's very easy to use across all the different areas. And this is where we are unique with our board portfolio. Then it also has a lot of benefits and scale advantages because as we invest in advanced software features, we can also easily apply these across all the different areas that we are in. And an example here is also that we are working on and that we launched for training purposes is the AI bronchoscopy navigation training where basically you can use the solution to see where in which parts of the lungs you have expected. Something that is not available on our A-View 2 Advanced or A-Box 2 yet, I should say, but which is again part of our overall endo-intelligence offering. When we then look ahead, there's a lot of development ongoing within this area where we are looking at how we can solutions that can improve our navigation, detection, and documentation in the different areas as we see a clear need and demand among our customers. Also, we see increasing benefits of using technology to improve our image quality across the different areas, which again is a a key lever to improve detection rates. And then last but not least, the whole integration with connected devices and with the hospital systems is also something that we see is remarkably increasing or easing the workflow at the hospitals, which is a key focus as they are overburdened with a lot of administration and still face in many countries staff shortages. So overall, an area that we will continue to talk more about and integrate in the solutions that we have. Then let me briefly also comment on the next slide on our anesthesia and patient monitoring business because this was more or less flat versus last year when we look at it organically. Our anesthesia declined by 1.2% and patient monitoring grew then on the other hand 1.1%. We still see the same dynamics in these markets as previously. And you may remember that last year we grew in the quarter 18 percent, very much driven by selective high price increases. So we are more back to normalized growth levels now, where you should expect going forward growth around 3 to 5 percent, as we have communicated previously. Also, you should expect the growth coming a lot from volume increases, but also still have some price increase development, although much more modest than we have seen in the past couple of years. And looking at the coming quarters, we remain very confident around, again, the dynamics in this segment and that we continue to see nice growth rates driven by already very strong solutions as well as a highly loyal customer base. So before handing over to Henrik, let's move to the next slide and let's well finish with a few highlights on the key focus areas of our strategy. So customer centricity remains a key area where we are doing a lot of initiatives to continue to serve our customers better. What I want to comment on in this quarter specifically is our recircle program. So our program where we take back endoscopes for recycling, which is live in four markets and where we have now expanded to cover 50 hospitals and over 100 clinical departments. And in the quarter, we also expanded this to not only include the endoscopes, the full range of endoscopes, but also now the sure-sight blades. On innovation relating to the endo-intelligence that we discussed, we continue to also strengthen our capabilities within software and AI technology and have some very strong capabilities to drive the innovation in this area specifically. And then on the business platform, an important point here is that we continue to invest in in expanding our commercial execution to support the high growth agenda that we have. And then also what we do is that we continue to also have our Mexico factory improving both utilization and output, which is very much supporting specifically the growth in North America. So with that, let's move to the next slide. This concludes my presentation, and I'll hand over to Henrik to go through the financials.

Thank you, Britt. Morning and welcome to the call, everybody listening in. Happy to take over and take you through a couple of keynotes on the financial review. Before we go to the next page, I just want to reiterate what Britt also opened the call saying we are Very happy with the solid start of the year and very satisfied both with the results, but also particular on the strategic progress. With that note, let's take us to page 15. So overall, as Britt opened with saying earlier, we had a growth of 8.6%. Adjusting for FX, the reported growth was 3.2%. We continue to still be impacted by a US dollar DKK depreciation. which impacts our reported growth, particularly for North America, but also with the mix of effects, the growth in the rest of the world, something that I'll come back to later. Overall, the growth is particularly driven by endoscopy solutions, now representing 63% of our total revenue and a total growth for the quarter of 14.4%. Anesthesia, as Britt just mentioned, had a negative growth, while patient monitoring had a slightly positive growth, meaning that overall that segment was more or less flat. With that, let's have a closer look at the geographical split of our growth on the next page. Overall, we're still on a very, very solid growth trajectory for our key markets in North America and for EMEA, both going close to double digits. The solid growth in North America, particularly driven by endoscopy solutions, and for EMEA, driven by both endoscopy solutions and actually also still on a decent patient monitoring business. For the rest of the world, we did see a decline in organic growth, mainly driven by auto fluctuations As we do see in some of these markets, very big orders for one quarter or the other, as many of these markets are still covered by distributors, which means that there will be order fluctuations across the year. Looking at the same numbers in reported currency, North America's growth was almost flat because of the USD, DKK depreciation, and the rest of the world had a higher negative growth, again, in reported currency because of the negative FX effect. If we then turn to margin and start with gross margin. Overall, our gross margin was in line with expectations. We had a solid first quarter at 60.8%, which is lower than last year, same quarter, but higher than the average for the full year last financial year. The overall gross margin is continuing to increase, driven by a combination of higher endoscopy sales versus NPM, continued stronger and strengthened price governance, And as Britt mentioned on the strategic update and increasing utilization particular of our Mexico factory, which helps us ensure that we have lower production overhead and therefore supports an increase in gross margin. Overall, we therefore feel well on track on how gross margin should develop both for this financial year, but also towards our long-term targets, supporting our EBIT margin expansion journey. And speaking about EBIT margin, let's go to the next page. Overall, the EBIT margin for Q1 landed at 10.5% report, which was a decline of 5.6% this point versus the same quarter last year. We did, as communicated in our Q4, expect and also report a significant cost of tariffs, which is driving down the EBIT margin for the quarter. And combined with that, we also had a negative development in FX. meaning that if we adjust for the combination of the two, we saw an underlying adjusted EBIT margin of above 15%, which actually is very well in line with our EBIT margin expansion plan for this year and again also for the long-term targets. Overall, therefore, we feel on a solid start. As Brits had also in our opening, we communicated that we see a lower EBIT margin for the first half, and we are going to see a higher EBIT margin for the second half of this fiscal year. And this represents a solid start in accordance with our plans. Turning to free cash flow, we did report a low free cash flow for the first quarter. Overall, this is fully in line with the typical pattern of our free cash flow, where we always pay bonuses and tax in the first quarter. And therefore, this is also in line with expectations. Specifically, the free cash flow for the first quarter was impacted by negative development in net worth and capital, in part due to us lifting some of our safety stocks across the world to manage and mitigate some of the political uncertainties we see. Furthermore, the free cash flow was also impacted, of course, particularly by the higher tariff costs for this quarter specifically, if you compare this quarter to the same quarter last year. But overall, on free cash flow, also a solid start. And speaking about solid start and then looking at our outlook on the next page, we therefore also, as Britt also said in her opening, maintaining the outlook for the full year with a solid growth of 10% to 13% organics. driven in particular by industrial solutions at plus 15% growth. We see still further acceleration in respiratory. As Britt said, for the first quarter, the respiratory growth was impacted by the very high comparables for the same quarter last year. But we see that accelerating throughout the quarter. On the R&D and GI, we see a continued momentum growth. versus where we landed fully last year. We had a good first quarter. We are seeing some order patterns that are benefiting Q1, which means that we are seeing slightly lower growth expected for Q2, but overall across the year, a continued momentum versus the same growth levels we saw for the last financial year. For the decent-based monitoring, despite a flat growth for the first quarter, we still maintain a guidance of mid-single digits, as the first quarter was mainly impacted by high comparables. On EBIT margin, the impact from the external factors, particular tariffs, we are still seeing playing out as expected. And these will mainly impact the first half of the financial year. So the first quarter, which you saw, but also now into second quarter. Overall, we feel on a solid track on delivering on the 12 to 14 percent guidance, despite the tariffs and despite the FX headwinds. Last but not least, I said the first quarter had a lower cash flow and therefore also lower cash conversion fully in line with expectations and we also still feel very comfortable that we'll be able to deliver on the cash conversion guidance for the full year so overall again a solid start of the year something we're very happy with and also a lot of great progress on our strategic focus areas and with that i hand it back to the operator and open for questions we will now begin the question and answer session