AddLife AB (publ)

Good morning and welcome everyone to the AdLife fourth quarter presentation. We will take you through today an overview of the quarter and the outlook for the future. And then after, of course, the presentation, we will have a Q&A session. But as usual, we have recorded a great video of a company within the group. And this time around, it's Trigulab. So I encourage you all to stay on to watch that video of a fantastic company within the lab tech business area. AdLife was able to finish 2024 in a very strong way. The companies performed really well, given by healthy customer demand, but also diligent work on the business fundamentals, improving efficiency and profitability continuously. And this is, again, an important piece of the AdLife DNA. Sales increased by 11%, quite healthy development. Organic and currency adjusted, the growth was 9%. In lab tech, we saw strong instrument sales after a bit of a weakness in Q3 2024, and also a very healthy invoicing and sales development in Eastern Europe. On the MedTech side, we saw strong development in multiple countries, and the positive margin trend really continues in a very good way. This means that we were able to increase the EBITDA by 24%, reaching 12.3% EBITDA margin, which represents a significant improvement over last year. The profitability improvements initiatives that we have ongoing in multiple parts of the group and in multiple companies are progressing very, very well, and we can see the results of that in the numbers in this quarter. The cash flow improved significantly by almost 50%, reaching almost 700 million in cash flow in the fourth quarter, enabling us to reduce debt in a significant way. So with that, we will move on, and Kristina will take you through a summary of the company financials. So welcome, Kristina.

Thank you, Fredrik. So sales growth was 11%, with strong organic growth of 9%. Acquired growth was 1%. Medtech organic growth was 11%, and Labtech was 6%. The acquired growth comes from Labtech and acquisition of Bonsai Lab. Our company has throughout this year worked diligently with defending the gross margins. This has been done via price increases, but also by working with the product mix. And the addition of new, advanced, high-margin products is one component when working with the product mix. OPEX increased slightly, 1.5%, impacted positively by the closure of Kamani. This quarter, we had less capitalized R&D in the other income and expenses compared to last year. Financial net and looking specifically at the interest cost, that has gone down. So it's now 30 million compared to 77 last year. We did have a negative impact in the financial net by currency. Last year, we had a gain while we had a loss this year. Looking at last year EBITDA, that included some extraordinary items. We had reversal of continuing consideration. That was a positive thing. But also we had restriction costs related to Camano and Advision. When we talk about adjusted EBITDA, we have excluded those two. Also last year included a write-down of intangible assets. So summarizing and looking at adjusted EBITDA, we saw a growth of 33%. The EBITDA margin was 12.3% compared to 10.2% last year. We ended the year with a very strong EBITDA margin, 12.3% in the fourth quarter. Looking at the full year, the EBITDA margin was 11.3 compared to 10.5 last year. Also, the profit expansion, or the EBITDA growth, was 14%. That is just below a financial target of 15%, and that is despite the fact that we have only done limited acquisitions, one, this year. Fourth quarter is normally the strongest when it comes to operating cash flow. This year was not an exception. We had almost $700 million in operating cash flow. If you look at the accumulated operating cash flow, we achieved above $1 billion. 2024, which is higher compared to last year. Also looking at the cash conversion, that has improved. And right now we are at the highest level, excluding the COVID years. This has been done via a continued focus on inventory reduction and working capital efficiency in general. With that strong operating cash flow, that of course comes from the increased EBITDA, but also via positive working capital. And this was achieved even though we have strong organic growth. So the companies worked hard with collecting account receivables and also lowering the inventory. With a strong operating cash flow, we could pay off debt with 450 million in the quarter. So net debt decreased in the quarter, of course, with the repayment of the bank debts. But we had a negative impact from FX since the majority of the loans are in euro. With a strong EBITDA development and also a decrease of net debt, the leverage was 3.2 in the quarter. Net debt to equity ratio was just below the internal guidance and ended on 0.9. As said previously, debt is to be reduced via self-generated cash flow. The interest rate in the quarter was 5.3, lower than last quarter, which was 5.7. And interest cost is expected to continue to come down with the recent interest rate cuts that has been communicated by ECB. So for the coming two quarters now, we will see the interest rate going down. We have two covenants. Interest coverage ratio should be above 4. It was 5.5 in the quarter, increased since last quarter. And equity ratio should be above 25%, and that was 41% in the quarter. And with that, I hand over to Fredrik again.

Well, thank you, Christina, for taking us through a nice set of financials. And now we dive into a little bit of an overview of what happened in the different business areas, starting with lab tech, of course. Organic currency adjusted growth was 6% in this business area and acquired growth was 3%. So this is, of course, linked to the Bonsai Lab acquisition, which we did in the third quarter of 2024. and this remains a very successful acquisition, growing very healthily with strong margins, so very pleased with that. The activity in diagnostics and pharma, as previously communicated, that remains very high and very healthy. We have also seen a slight weakness or hesitation perhaps in the academic research field. That seems to have improved somewhat in the fourth quarter, so a healthy, positive development there. This led to we had really good instrument sales in the quarter, a significant improvement over Q3, so very healthy development there. We saw a lot of deliveries related to recently won tenders that we talked about in Q3, and also finally completing a number of customer projects that we have been working on for multiple quarters now. We also saw a very nice and healthy growth in Eastern Europe, similar to what we saw in last year. So that meant that we were able to finish the year at 14.1% EBITDA margin, very high, but not quite as high as the fantastic fourth quarter of 2023. So moving on to the MedTech business area, we had a very nice growth of 11%. So this is driven really by broad, strong performance across all the companies within the group. This was driven by expanding product portfolios. Multiple companies have been taking initiatives to grow into new segments and successfully so. And now we're seeing the results of that. We are also able to take market share driven by this strong product portfolio, of course, in combination, as always, with our very strong service provision. Patient waiting lists have not really come down in the fourth quarter. This can be a driver for us, but in this fourth quarter, they didn't really come down. So that means there's still a lot of patients waiting for surgical procedures, and this is expected to have a positive effect for us in 2025. And the reason is probably mostly because of the staffing shortage that we see in the healthcare system, really across all the countries in Europe. Also important to note that in December, of course, we had fewer operating days compared to last year because of the Christmas holidays. The EBITDA strengthened to 11.6%, which is a significant improvement over last year. And this is driven by healthy development in high margin segments, but also, of course, efficiency improvement initiatives that we have been taking on and that are ongoing in multiple companies. Most notably, of course, in a division where we have taken some important steps during the quarter. And I feel confident in saying that we are on the right track here. We have taken probably all the major steps that we need to make. And now, since a couple of quarters, the main focus is indeed on commercial development, driving the right product portfolio, training our teams, training our customers, and focusing on the segments where we can make a difference. So positive development there. Camagno was indeed closed in the fourth quarter as planned. So now, as we had expected, costs are completely out in the fourth quarter. And this is a significant improvement for us. As many of you know, this represents about 60 million on an annual basis on the cost line, but also 90 million roughly in improvement in cash flow on an annual basis. So significant improvement there. So moving forward, the priorities we established back in 2023 will remain in 2025 again. And that is to protect and improve profit, to drive organic growth, to improve cash flow, and finally to drive acquisition in a selective way. I think it's fair to say that we have made solid improvements in all these areas, meaning that we can now increase the activity when it comes to acquisitions, in line with our updated strategy and our evolved processes. So, a little bit of a look on market trends might be useful as we enter a new year. We talked about significant waiting lists, and that will mean increased demand for surgical procedures. So this needs to happen. The people and patients waiting for surgical procedures are often in pain, so this needs to be addressed. And we think it will be, but it will take time. And we will be able to support the healthcare system with that, and this will help our growth going forward. But again, a long-term effect. Staffing shortage is an issue in the healthcare systems across Europe. And here we can actually contribute by offering time and resource saving products combined with a strong service offering as well. So this can really help the healthcare system to become more efficient. And we'll talk more about that when it comes to the technology side of it. In 2024, we saw some healthcare budget constraints, I guess as the healthcare systems were adjusting after COVID and so on. We do think that this situation will improve in 2025. We see in multiple countries very targeted and clearly communicated improvement efforts, new resources and funding being put into the healthcare systems. And again, value and productivity to get the most out of these resources will be critical. And here we can certainly help as a company. Finally, large companies in the medtech and labtech space are indeed updating their go-to-market strategies and focusing more on narrowing the portfolios and even pulling back from some markets. This offers opportunities for us where we can take on new product portfolios and increase the market share. So moving on, of course, we're all seeing a bit of a turbulence in the world market right now and the risk of global trade disruptions. This is something that we are keenly aware of, but also something that we feel we are well positioned to handle. As many of you know, our business is primarily in Europe. Actually, more than 90% of our sales are in Europe. And when it comes to supply, More than 80% of our products are indeed sourced within Europe, 9% in North America and 7% from Asia. This means that we have limited exposure to the disruptions that we are seeing happening right now. So, in addition to these general market trends that we have discussed, I also want to highlight three quite exciting technology trends that we stand to benefit from. The first one is next generation sequencing, a technology that's been around for some time in the area of research, but now increasingly moving forward into diagnostics, also an area of strength for us. This market is growing at around 20% per year. We have a fantastic range of suppliers in this field, and we can build on that to drive that business further and also grow it through acquisition like we did with Bonsai Lab. Another area which is quite exciting is robotic surgery. Here we expect the growth of around 15 to 20% going forward, and we are right now building our portfolio of products and in discussions with a broad range of very competent technology suppliers. This is an area where new technology is rapidly being brought to market, offering to improve clinical outcomes and reduce reliance on staffing. So this is very exciting, and I think we are well positioned to benefit from this technology trend. And finally, artificial intelligence, which is an interesting area for the healthcare system as a whole. Here we have seen proven improvements in diagnostic accuracy and healthcare efficiency. We have a number of collaboration partners in this field already, and we can base that on our strong customer relationships, on our thorough understanding of hospital procurement systems, and the unique combination of software, products, and services. So, to wrap up this presentation, I think it's fair to say that the companies in the group finished the year in a strong way and I really want to congratulate all our team members to a tremendous job. You have done a fantastic job throughout the year and finished it in a very strong way. So well done. Thank you, team. Profitability improvement initiatives are progressing well and we are seeing the effects in the numbers, which is great. The cash flow improvement initiatives are also yielding results, and this is the effect of diligent work across many companies to really improve the processes that we have in a very structured way. So with this, that we have improved profitability and also been able to increase the cash flow, we have been able to reduce debt, And this gives us the confidence to continue with the acquisition activities that we have been planning for quite some time now. So we will gradually increase our acquisition activity during 2025 in line with the previously communicated strategy. So, and I also want to say that during the month of January, I've been able to travel quite a bit and meet with many companies within the group. And I'm really impressed with everyone that we have in the team, fantastic customer relationships and solid plans for 2025. So with this, I can confidently say that we look forward with confidence to a strong 2025. So thank you very much for listening into this presentation. And now we open up for the Q&A. All right. Hello and good morning, everyone. So I think we are ready now for questions. So please raise your hand and then don't forget to unmute as we move forward. So I guess we start with Charles here, right?