Ambu A S Ord

Good morning everyone and a warm welcome to our AMBU Q4 and full year 25-26 results. My name is Britt Meelby Jensen, I'm the CEO of AMBU and with me today I have our CFO Henrik Skak Bender. So we'll go through a presentation where I will start with the business highlights before I turn over to Henrik to go through the financials. And let me start by a summary of the progress that we have had in the past financial year. So overall, as we predicted a year ago, we had a growth picking up to be stronger towards the second half of this year. And we ended the year with 13.9% organic revenue growth in Q4, leading to also an endoscopy revenue growth in Q4 of 21.2%. and 2.8% in anaesthesia and patient monitoring. So this strong uptick led to a total organic revenue growth in the full year of 10.1, driven by this re-acceleration of endoscopy solutions where we grew in total 16.4%, a strong testament to the continuation of driving the single-use conversion from reusable endoscopes. So we continue to lead this conversion through innovation of new solutions. This was in particular in the past year shown in our respiratory segment where we saw a re-acceleration of our growth leading to a total growth for the year of 14.6%. Urology ENT and GI also continued a strong momentum with 18.2% growth for the year driven by our existing solutions. Anesthesia and patient monitoring grew 0.4%. This was very much driven by the market leading portfolio that we have and offset by some of the lower volumes in anesthesia that we talked about after our Q2 and which has stabilized since then. So taking a step back, it was a strong year. But what I think is even more important is that when we look ahead, there is a significant opportunity for us. We see very strong momentum on our innovation pipeline that we are going to talk more about today. We see strong momentum in our commercial execution, and we are very much excited to deliver strong growth ahead. When we look at how that looks for the coming financial year, we guide an organic revenue growth of 9.5 to 11.5% growth, and this is driven by continued momentum in our endoscopy solutions where we expect growth of around 15%. So if we take a look at the results and what you see on the left here is that endoscopy solutions now make up almost two-thirds of our total business. Focusing on the numbers from Q4, we had an organic revenue growth of 13.9, endoscopy grew 21.2 and anaesthesia and patient monitoring 2.8%, leading to an EBIT margin of 851 million DKK, which resulted in Q4 17.2% growth. If we look at the free cash flow, we delivered almost 500 million DKK in the full year and 216 million in the quarter. So let me dive more into the specific segments, starting with respiratory. So again, what we saw in respiratory in the past quarter was a growth of 21%. And if we look at the full growth for the year, it was 14.6%. What is important to highlight here is that when we look ahead, we still see significant headroom. Respiratory is a more penetrated category than some of the other categories, but still the majority of the procedures in this segment is still performed by reusable endoscopes, so there is significant runway ahead. What's interesting is also that our growth was driven broadly by our Ascope 4 and our Ascope 5 bronchoscope portfolio, and then we also had SureSight adding another dimension to this growth. Both in terms of driving the bronchoscope sales but also by establishing its own business where we see synergistics between the bronchoscope portfolio and our new SureSight video laryngoscope portfolio. When we look ahead as well, there is strong momentum that we see going into the next fiscal year in this segment. What we focus on is really what is it our customers need? How is it we strengthen our offering? And that is what has basically created our growth momentum using the playbook that I will come back to later in my presentation. Let me turn to the rest of our endoscopy portfolio. Here we also had strong momentum across urology, ENT and GI delivering organic revenue growth in Q4 of 21.3% and if we look at the full year 18.2%. I think it's important to highlight that the growth was broad-based across these three categories, still having our Ascope 4 family of cystoscopes and rhinolaryngoscopes driving most of this growth. We also in Q4 saw a good growth in our GI portfolio, but still from a lower base. In ENT it's very clear that the acquisition of Tim's Medical that I'll come back to that has strengthened our offering in ENT and it has also potential to accelerate our growth in this area as we move into the next fiscal year. And very much like in respiratory, what we see in this segment as well is the playbook that we have is working. We are very much looking into new innovative solutions that will not only strengthen our competitive position, but it will also add new procedures, new patient populations to our portfolio. So stay tuned for more details on this. A few comments on our anesthesia and patient monitoring portfolio. In total for the year, we delivered 0.4% growth here. And when we look at the last quarter, the growth was 2.8%. Most of this growth came from the patient monitoring business, where we grew 6.5%. In anesthesia, we continue to be impacted by the lower volumes in some of the non-exclusive US accounts that we highlighted in Q2, and where there has been no significant change since then. So we are expecting those volumes to recover gradually. And once these normalize, when we look at this segment and also with the limited investments we make into innovation, we expect that this segment should continue to grow in the tune of 3-5%. So now it's one year ago since we launched our Zoom Ahead strategy and if we look at how we have executed on this, we have actually had very good progress across all the four strategic themes of customer centricity, innovation, our business platform and not least on our people and culture agenda. If I have to highlight a couple of examples here, not going through everything you see on this slide, I think there are three important highlights to mention. First of all, it's the SureSight. Not only do we have a broad SureSight portfolio with its blades, but we also launched a mobile version, so we are seeing very strong traction, initially very much driven by the US and the UK. The second thing to highlight here is the TIMSS medical acquisition. And I'm going to come back to that, but this has really established and strengthened our endo intelligence offering in terms of hospital integration and workflow technology, which is something where we can see we can make a true difference for our customers. The third thing I want to talk about is how we are seeing strong progress on innovation. I'll come back to talk about what we have in our portfolio as we look ahead, but just mention here that with the Euridro portfolio, we recently announced the expansion of this portfolio with an important accessory in terms of an access heath for kidney stone removal, which also helps expand our solution for these customers. So I think all of this and what you see on this slide is a very strong example of how we are continuing to build momentum in line with our strategy. If I also briefly recap on some of the strategic choices that we have made across the portfolio, there is no doubt that with the ambition that we have to drive global endoscopy leadership, this starts very much from winning in respiratory and urology. These are also the segments where we see the highest single-use penetration right now, and it's where we have been investing most in leading that conversion. But we see the same momentum and potential also in ENT and in GI. And if we look at the structural trends across all of these segments, we remain very excited about the potential. So we see single-use endoscopes becoming more and more the standard of care. This supports very much the ambition we have of leading that conversion, which we still do by far across all these segments. And we also see that we have a very clear playbook of how we are driving this conversion based on one platform with our endo intelligence being the only ones that offer the same platform and can leverage that across all the endoscopy areas. And this is paying off. So let me bring that to life looking a bit into our respiratory portfolio. So what we have seen in respiratory is a clear acceleration. If we look at the second half of this year, we have grown in respiratory by 19%. What has been critical to and essential to this growth has really been innovation that has increased this. On the bottom here you see the journey that we have had since we came out with our first bronchoscope back in 2009, where we were pioneers in single-use endoscopy. We have built in respiratory a very strong position both in OR and in ICU and the market when we look at this is a 10 billion DKK market and a market that is still highly under-penetrated as only 25% of the procedures are done with a single use endoscope and this is, I will remind you, the segment that is the most progressed. Therefore, we also believe that there is significant runway ahead. And what we see is that beyond the solutions that we have now, we are investing into new innovation that will gradually expand this also to eventually be able to be relevant in the Bronco suites as our technology and innovation advances. And SureSight is another example of our strategy in action, because since its launch, this has really also been a key lever in accelerating the single-use endoscope conversion that we are currently driving. So in short, I think An important takeaway here is that our growth is coming from converting reusable endoscopes to single use and how we are leading that is through innovation that will both strengthen our competitive position and also gradually expand the procedures that we can address as well as the patient population that we can address. And this is a nice segue into looking a little into our future when it comes to innovation. Because actually we have a very exciting innovation pipeline. And today I want to give you a little more visibility into that. Because over the next two financial years, so the next 24 months, we are going to launch new generations of endoscopes across our four main endoscopy areas. The first one that will come is in ENT, our rhinolaryngoscope, and then the next ones will come following that. These are not just upgrades. These are new generations of endoscopes with a significant improvement for both the clinicians and the patients, both to support the quality in the procedure and also to support the whole portfolio. And that's where our Sumo head strategy is guiding very much our focus towards solutions, because now this goes very much beyond the endoscopes. This also touches on the accessories that we are providing, and more importantly, it touches on our endo intelligence, both in relation to the software that we offer that can help Our hospitals be more efficient on their workflow, both before, during and after the procedure. It helps with the documentation. And then we are also investing more into AI enabled features that can help improve even the quality and efficiency of the procedures. So this is the big shift. And when you look at this, we are very excited about the busy agenda we will have over the next two years as we bring real innovation to our customers. A highlight on this endo-intelligence platform that we have is our TIMSS Medical acquisition. This has been an acquisition that first and foremost immediately strengthens our position in ENT because the 7,000 installations that TIMSS Medical has are very focused on ENT. But there's also a very strategic importance in this acquisition, as it also helps us to expand on the documentation side into some of the other areas where we are currently present with our endoscopes. So to summarize on that, when I look at our portfolio, it is broader than our endoscopes. It's covering also accessories, software and AI, and these workflow solutions are coming together in one complete offering for our customers. Let's just take a deeper look at TIMSS Medical and what this is. So we closed on 11 of September, so close to two months ago, we closed this transaction of a US-based company and we welcomed 56 new colleagues to AMBU. TIMSS Medical is a US-based company that is specializing in medical imaging. It's specializing in reporting and workflow solutions. And these are supporting and integrated with the hospital IT systems, which is a key benefit for us to leverage. TIMSS has for more than 20 years helped customers and really created a very strong reputation and position across all these hospitals with its 7,000 installations. And again I want to repeat the strategic rationale for AMBU really in this acquisition is twofold. It's on the ENT side where we see an immediate opportunity to get the synergies from our endoscopy offering with the TIMSS medical system and then What is even more important as we look further out, it's also to continue to build on the great capabilities and experience and solutions that TIM Medicals offers as we are expanding our endo-intelligence offering and ambition. So we are both bringing established capabilities in software, but we are also bringing a great knowledge around what is the hospital IT infrastructure that we are tapping into and where we see benefits of helping our customers with a more effective workflow, which is very much tapping into one of the key trends and challenges we see in healthcare. How is it that we can manage the increasing patient throughput with fewer resources? So let me finish before handing over to Henrik summarizing the five elements that really underpins the strong position that we have in AMBU. So first it's very important to highlight that we are operating in a uniquely highly attractive endoscopy market. While the market of single-use endoscopes today only still represent about 4% of the total endoscopy procedures, we see a strong change and conversion from reusable to single-use endoscopes. This growth is taking place at more than 20% growth every year. It's very much driven by what we are tapping into in terms of workflow efficiency so we can address these rising patient volume challenges. When we look at Ambu, we are the number one single-use endoscopy player today. We have more than 60% market share globally, and we have a large and very specialized footprint across all key markets. And we have from being the first, we have the knowledge around how is it we can help customers be more efficient with single-use endoscopy solutions. Thirdly, it's important to highlight the innovation and how this is core to what we are doing. We invest more in R&D than most in our field. And what we are investing in, as I alluded to earlier, is to go beyond the actual scope, but more to help with the full solution that is really creating value and differentiating us from competition, both in terms of the existing products and also the solutions that we have in development. And that leads naturally to the strong innovation pipeline we have. We are looking at more than seven new solutions hereof, four new generations of endoscopes that are coming within the next two financial years. And this is touching across our portfolio of respiratory, urology, ENT and GI. So we believe last but not least that we have a very clear path to value creation. We have grown in the last three years, we have grown with double digit pace. In the last four years, we have grown more than 15% with our endoscopy solutions. We are continuing to drive scalability from this growth, making sure that we can also see a gradual margin expansion, which we have shown in the recent years. And this is very much then underpinned and supported by a very disciplined capital allocation. So with that, I would like to conclude my presentation and hand over to Henrik to go through the financials.

Thank you, Britt, and good morning, good day to everyone on the call. First, before going deeper into the financials, I just want to share the same level of excitement as Britt for both the momentum we have coming out of a very strong Q4, but particularly also the innovation pipeline and the future that lays ahead, which also I'll come back to when I look at our long-term outlook. But first, let us have a closer look at revenue. As Britt already explained, we had a Q4 growth of 13.9% organically, including FX 16% growth, the positive FX effect coming mainly from the USD DKK appreciation during the fourth quarter. This brings our full year growth to 10.1, driven mainly by the very strong endoscopy solutions growth at 16.4 and barely getting NPM to a positive growth at 0.4% overall for the year. Solid and within our guidance and particular for the fourth quarter driven by the very strong momentum in endoscopy. If we look at the growth composition for the fourth quarter across our regions, we saw, particularly in North America and the rest of the world, a very, very strong growth, driven again in particular by very strong growth in endoscopy solutions. This was both for respiratory and for urology, ENT and GI. EMEA also had a solid growth, but at a slightly lower level, still also seeing very solid growth, particularly in urology, ENT and GI. ANPM also had improved growth. We still have a lower growth in anesthesia and anesthesia specifically because of the volume losses on selected accounts in US, which is impacting the North American growth. But besides that, we see solid growth across the ANPM portfolio and particularly within patient monitoring, also solid growth across the globe. Then turning into margin and starting with gross margin first. Overall, for the year, we landed more or less at a flat margin versus the same period last year, i.e. a gross margin of 60.1% for the full year and 60% for the quarter specifically. We see positive trends from the fact that our product mix is improving with higher growth in endoscopy and lower growth in NPM. As Britt said in the opening, endoscopy now represents almost two thirds of our total sales. At the same time, we also see some negative effects on gross margin from the fact that we have accelerated the movement of production from Malaysia to Mexico, both to ensure we are more agile to serve our U.S. customers, but also to manage the tariff costs. This impacts our gross margin because of slightly higher COGS, but at the same time also creates more leverage in distribution costs, which lowers our OPEX ratio. And therefore, this is still on an EBIT line and net neutral move. Longer term, we're still confident in the potential to drive up gross margin from a combination of better output efficiency at our plants, continued strong pricing governance, and a continuation of higher growth in endoscopy versus ANPM. With that, let me turn to OPEX. OPEX for the past two years has clearly been affected by tariffs and therefore as you will see in the graph in a second we're both showing what was OPEX with tariff expenses and tariff refunds but also what was OPEX without tariff expenses and without refunds. Overall OPEX ratio for the full year 25-26 landed at 47% which is an improvement of 0.2 percentage points versus the same period last year. OPEX for the fourth quarter was only 42.8%, but also massively impacted by the tariff refund that we communicated earlier in the year of DKK 85 million. That is a net income reported as part of OPEX in Q4. Overall, OPEX still sees a positive trend and we continue to see how our operating leverage is improving across the year, across our business. For Q4 specifically, next to tariff, we also, and Q3 as well, we also had some impact from the TIMS acquisition. As Britt mentioned, we closed it on the 11th of September, but already in Q3, we reported some transaction costs and there were additional transaction costs and integration costs in Q4 specifically. So overall adjusting for this both for the tariff cost and refunds as well as some of our one-offs related to TIMs we still see a very very nice operating leverage which is something that also makes us confident in the journey ahead and why we still believe there's a lot of operating leverage we can still drive to deliver on our long-term targets. So let me round off on margin by having a closer look at the EBIT margin for Q4 specifically. So as said it was a significant pickup in EBIT margin for Q4 landing an EBIT margin of 17.2% of which the vast vast majority of the uptake versus the same Q4 last year was driven by a better OPEX ratio i.e. OPEX to revenue. That OPEX included the tariff refunds I referred to before i.e. 85 million DKK corresponding to a 5% EBIT margin impact. At the same time it also included tariff cost of around 20 million i.e. 1 percentage point impact. So overall we feel a good result and considering that this also carried some extra costs related to the TIMSS acquisition, a result that also proves that we continue to be able to scale our business. With that, let me turn to cash flow. Cash flow also continues to be a focus area of ours and we continue to drive a strong operating cash flow across the business. For Q4 specifically, we landed at a free cash flow of 216 million, driving our full-year free cash flow or leaving our full-year free cash flow to 487 million. This also means that we landed the full year at a cash conversion rate of 39%, very close to how we guided from the start of the year, i.e. around 40%. Next to this we also of course have an impact on cash flow from the acquisition of TIMSS specifically in Q4 that impacted our cash flow with around 189 million DKK bringing the free cash flow after acquisitions still to a plus of almost 300 million DKK. Very solid and means that our balance sheet position continues to be very very strong. With a strong balance sheet position we've also decided to propose a dividend for approval at the AGM for the next year of 151 million DKK corresponding to 0.56 per share. And next to that also launch another share buyback program of 400 million in total that will start at the beginning of next year and run for the consecutive six months. Dividend of course is still subject to the final approval at the annual general meeting at the 2nd of December. Next to this we are also proposing at the annual general meeting cancellation of a selection of treasury shares which will again be a testament to how we when we run the share buyback programs and hold a higher share of treasury shares we will also cancel them if we don't see a need on the longer term. With all of this and even with the acquisition of TIMSS we still therefore overall maintain a very very strong balance sheet and a much lower net interest bearing debt than our internal target of up to 2.5% leaving a lot of room for further investments for the future. We will continue to revisit this and review this on an annual basis and continue to actively look at how we best manage our balance sheet. This brings me to the guidance for 26-27. Britt has already touched upon a couple of the key elements of the guidance, but let me expand a few more notes on how we see this develop both for the full year, but also across the year. Starting with top line, we are guiding for a 9.5 to 11.5 organic growth for the full year. For endoscopy solutions specifically, we are guiding for around 15% growth, respiratory continuing the strong momentum that we saw throughout the full year last year landing at a 14.6% growth for the full year, moderating around that level for the next year i.e. into 26-27. Urology ENT and GI, we also still see strong growth, but at a slightly lower level, bringing the total endoscopy solutions to an overall around 15% organic growth. ANPM, we expect low single digit growth. This growth will likely be higher at the last part of the year because we again for the first quarter will have higher comparables and therefore for Q2, Q3 and Q4 we are expecting ANPM to normalize and be back closer to the longer term ambition of 3-5%. On the EBIT margin, we are guiding for a 13 to 15% EBIT margin reported. This obviously is driven by continued operating leverage on OPEX mainly. OPEX will be offset by growth investments. We are investing significantly in preparing for the product launches that Britt referred to earlier, but also still investing in ensuring we can deliver on the synergies and the potential from the TIMSS acquisitions. Tariff costs will still impact us in the next financial year with around a negative one percentage point effect which is in alignment with what we've been communicating for the last two three quarters. We're continuing to work on how we can minimize the tariff impact longer term but for the full year you should still continue to expect a one percentage point negative impact more or less across the year. Last but not least, this EBIT margin guidance does not include any tariff refunds. We're still working on additional tariff refunds and have previously communicated up to around 70 million DKK potential further refunds. At this moment, we are still working on seeing if we can collect more and targeting to try to at least collect half of that. But we have not included that in the guidance given uncertainty and timing and still also given the uncertainty around the process. Last but not least, on cash conversion, we are guiding for a around 30% cash conversion for the full year. Operating cash flow will be strong and continue to be strong. So this is mainly driven by increased CapEx investments, mainly CapEx investments to prepare for the upcoming launches in both the manufacturing capabilities, but also in innovation and R&D to ensure that we successfully can launch the four next generations that Britt referred to earlier. With the outlook for 26-27, we've also had a closer look at the outlook for 29-30, the outlook that we presented at our capital markets last year. Overall for the summer head period, we maintain our targets for 29-30, meaning we're still targeting an overall CAGR growth across the period of 11-13%, still targeting an endoscopy solutions growth of 15-20%, and anesthesia and patient monitoring of 3-5%. Obviously with the year behind us where we just landed just above 10% at 10.1% and now guiding 9.5% to 11.5% we are expecting a growth acceleration to the latter part of our summer head period. One driven by the new product launches that Britt referred to earlier across all of our four main endoscopy areas but also with a growing share of endoscopy business out of the total business for Ambu. On the EBIT margin, we are updating our view, maintaining the 29-30 view of 20% EBIT margin or more, but now replacing our mid-term EBIT guidance of around 20% with instead a guidance of EBIT will be growing faster than revenue for every year across the sumo head period. This is driven by a combination of our ambition to continue to invest in the business and several opportunities with innovation that I'll come back to in a second. Last but not least, we also maintain our view on the cash conversion guidance of around or above 40% cash conversion across the period. First year, we are more or less on target. For the next year, we will be a bit below with higher capex investments for the product launches. But we also expect this to pick up across the period and therefore still maintain our long-term cash conversion target. Let's have a closer look at the EBIT margin improvement and expansion journey towards the 20 or above for 2930. For the past year we now landed at 13.2, for 2024-2025 we were at 13 exactly and for next year we are now guiding 13-15% EBIT margin. That still leaves a significant improvement in EBIT margin across the period that we feel comfortable about of which we see 80% coming from OPEX ratio and 20% coming from gross margin. This is a change from what we communicated at the capital markets day where we saw a slightly higher degree of the uptick coming from gross margin and this is mainly driven from our ability to transfer manufacturing faster from Malaysia to Mexico which impacts our COGS but at the same time creates a higher level of operating leverage on our OPEX as distribution costs are reported as part of our OPEX. With the guidance as I mentioned before of EBIT growing higher in the revenue every year and which is also part of our guidance for 26-27 we of course also implicitly saying that you will need to see around 190 bps improvement on average across every year and with this guidance we are also therefore indicating that more of that uptake will come a little later in the Sumerhead period as a result of the impact that we're expecting from our strong innovation pipeline and specifically for the new four generations of endoscopes. The core drivers of the OPEX improvement remains the same and of which the two main ones are administration cost as a percentage of revenue going down and particular the distribution cost going down as a result of the move from Malaysia to Mexico. So with that, we remain confident on our long-term targets in connection with Zoom ahead towards 2930. We remain very confident with the momentum that we bring from the past financial year into next year and therefore also look very much forward to communicate how we progress across the coming financial year. With that, I end my presentation and I'll hand it over to the operator for Q&A.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a turn to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and then 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star 1 at this time. Our first question comes from Tyra Lee, UBS. Please go ahead.