Embla Medical Hf S/Adr

At this time I would like to welcome everyone to this Embla Medical Q3 2026 conference call. For the first part of this call all participants will be in a listen only mode. Afterwards there will be a question and answer session. Today's call is being recorded. If you have any objections please disconnect at this time. I would now like to introduce President and CEO Sveinn Solvason. and CFO Anna Sveinsdottir. Sveinn, please begin.

Thank you very much and good morning everyone and welcome to Embla Medical's third quarter 2026 conference call. I'm Sveinn Solvason, President and CEO of Embla Medical and joining me today are our Chief Financial Officer, Anna Sveinsdottir and our Head of Industrial Relations, Klaus Sindahl. We expect the presentation to take around 15 minutes, and we will then open the call for questions. Let's move to the next slide, please. For the first nine months, sales reached $741 million, with reported growth of 10% and organic growth of 5%. Growth in the quarter was led by prosthetics and neuro-orthotics, while pricing and support delivered moderate growth. Patient care was flat in the quarter, and performance is below our expectations that we set at the start of the year. We are, however, moving in the right direction, and for a large part of our clinic's platform, we're making very meaningful progress. And I'll come back to this in more detail later in the presentation. Our EBITDA margin remains strong at 22% in line with the Perth quarter last year. This was supported by consistent cost control and increased profitability in patient care, despite the lower than expected sales growth. We also continue to make good progress on innovation. During the quarter we launched a new neuro-swing joint in neuro-orthotics and two new adapter kits in our prosthetic section. Based on our performance in the first nine months and our outlook for the fourth quarter, we are narrowing our FUJI guidance to around 5% organic sales growth and an EBITDA margin of around 21%. Let's move to the next slide, please. EMEA was the main driver of sales growth in the third quarter, supported by continuous strong performance in prosthetics and neuro-orthotics across both established and new emerging markets. Sales in Americas were flat organically while sales in APAC declined. If we now move to looking at each segment in more detail and please turn to the next slide. Prosthetics and Neurothorax delivered again strong organic sales growth of 7% in the third quarter. EMEA continued to perform strongly supported by broad-based volume growth in prosthetics including bionics and growth in sales in Ukraine. The Stripen Enter business also contributed with strong growth here in the quarter. In the Americas growth was flat in Q3, strong performance in our CollegePlus portfolio and Bionics was partly off by softer sales in other categories. In APAC sales were softer in the quarter, strong growth in Australia, New Zealand was offset by weaker sales in Asia, mainly due to increased competition in China. Neuro-orthotics performed well in EMEA and the Americas also contributed positively although from a low base as the US commercial rollout continues to progress. Overall, prosthetics and neuro-orthotics remains Embla Medical's main growth driver, supported by our broad portfolio, strong innovation pipeline, and expanding international reach. Please turn to the next slide. Grating and Support delivered organic sales growth of 2% in the third quarter. The Americas performed well, supported by new business and broad state demand across our core product portfolio. APEC also delivered strong growth while EMEA was flat. Contributions from new products and growth in selected markets in Europe were offset by changing market dynamics elsewhere. We turn to the next slide, please. Patient Care Sales were flat in the third quarter and slightly up from prior quarters. As I mentioned at the beginning of the call, Patient Care Sales have developed below the expectations we had at the beginning of the year. EMEA returned to growth here in Q3 with solid performance across all major markets, with the exception of Sweden. Performance in Sweden has been impacted by a loss of a regional tenter from the beginning of 2026, impacting overall sales growth in the patient care business by approximately 2 percentage points for the full year. We have however secured a new tenter in another Swedish region. This will start towards the end of the year and is similar in size as the tenter we lost and will therefore impact our growth in 2027 positively. In the Americas we continue to make progress across the maturity of our clinical network, however offset by impact of the last major integration in the US. We are encouraged by the progress we are seeing in both productivity and profitability across the network. At the same time there is still more work to do to deliver consistent sales performance across all clinics. With a more integrated and efficient operating platform now in place, our focus is on strengthening commercial execution and turning these operational improvements into renewal sales growth. That concludes my overview for the quarter. I'll now hand it over to Arna who will take us through the financials in more detail. Arna, over to you please.

Thank you, Svein. If you please turn to the next slide for an overview of our financials. In the third quarter our gross profit margin was 62% compared to 63% in Q3 2025. A stronger gross margin in our patient care business was partially offset by a temporary cost related to the optimization of selected molar manufacturing sites in our prospective business. These initiatives are expected to improve efficiency and support possibilities over time. For the first nine months of 2026, the gross profit margin was broadly in line with last year at 62.4% compared to 62.6%. OPEX was $160 million, or 46% of sales, in line with Q3 2025. Organic OPEX increased by 2% in the quarter compared with organic sales growth by 4%. This reflects our continued focus and Diffident Cost Control, particularly within SG&A, as well as improved profitability in patient care. As a result, the EBITDA margin was 22% in the quarter, in line with Q3 2025. For the first nine months, the EBITDA margin was 21%, also in line with the same period last year. Net profit was $26 million, or 1% up from Q3 2025. Higher operating profit was partly offset by increased net financial expenses due to adverse exchange rate movements. For the first nine months, the net profit increased by 19%. Let's now move to the next slide for an update on the cash flow and leverage. CAPES was around $7 million in the third quarter, equivalent to approximately 3% of sales. For the first nine months, CAPES was approximately 2% of sales. The full year we now expect capital to be between 2% and 3% of sales, compared with our previous expectations of 3% to 4%. This reflects the moderate level of investment during the first nine months. Free cash flow was $31 million of 5% of sales, compared to $38 million in the third quarter last year. The year-on-year decline in the quarter mainly reflects timing effects, while free cash flow for the first nine months increased by 30%. Cash flow continued to benefit from strong operating performance, disciplined working capital management in moderate topics. Net Interest Rate Debit was 2.1 times at the end of the quarter. And that concludes the financial overview and I'll hand back to Svein for our closing remarks and guidance.