AddLife AB (publ)

Good morning everyone and welcome to AdLife's second quarter call. As usual, we will be providing you with an overview of the quarter and then go through the financials and then have the Q&A. And after the Q&A, as always, a video from one of our subsidiaries, this time around from Ropebox, one of the companies within the home care area, which we are focusing on a little bit extra in this quarter. So let's move on to the numbers. In the second quarter, we are really pleased to note that we see positive development across AdLife's companies. Margins, our highest priority, are improving significantly, so 12.6% EBITDA margin for the group compared to 11.9% in the corresponding quarter of last year. margins improved in both business areas. In lab tech a full percentage point up to 13.4%. In med tech a strong improvement to 12.8% EBITDA margin. Improvement initiatives are part of our DNA and in many areas we have had long-standing improvement efforts. In home care we are pleased to note that we see significant growth in the quarter and margins are clearly improving. In eye surgery there has been a long effort to gradually evolve the business and now we are in a very positive margin trend and we think this demonstrates stability and confidence in the future. Overall, sales is in a positive trend. Advanced products are driving growth and margins. We see strikes in Spain and a little bit subdued capital spend in the UK market. That did hold back revenue growth a little bit, but strong growth in the Nordics, solid improvement in Eastern Europe and continued positive development in research, as we have talked about in the past, and then, as I mentioned earlier on, very good growth in home care, so a lot of positives when it comes to growth. And then finally, we are pleased to note that our recent acquisitions are really meaningfully contributing to earnings growth. And now, I hand over to Kristina to take us through the detailed numbers.

Thank you, Fredrik. So, organic growth in the quarter was 4%, while acquisitions contributed with additional 3%. Organic growth of 4% had been adjusted for the divestment of the endoscopy business in the UK end of last year. Also, the doctor strikes in Spain had a negative impact on organic growth. profit expansion or EBITDA growth was 11% in the quarter. Organic growth was 5% and acquisition contributed with additional 6%. Revenue increased with 6%, underlying organic growth was 4% and acquisition was 3%. Growth margin improved in the quarter with half a percentage point. This is due to diligent price management within our companies and also product mix with a higher share of advanced products. OPEX increased. This is reflecting both growth investment into current companies, but of course also the completed acquisitions and acquisition costs. And if we divide both of them, it's about half-half between current business and new acquisitions and acquisition costs. EBITDA margin increased to 12.6. from 11.9 last year and profit before tax was up with 29%. EBITDA margin has clearly established on higher level. It was 12.6 in the quarter compared to 11.9 last year and EBITDA margin increased in both Labtech and Medtech. Labtech increased with one percentage point to 13.4 while Medtech was at 12.8 from 12.4 last year. Margin expansion has been a key priority for us since 2023 and that remains going forward. Operating cash flow increased 165 compared to 119 last year and last 12 months cash conversion remained strong at around 100%. Operating cash flow 165, working capital was a negative 149 compared to a negative 180 last year. Working capital includes lower accounts payables but also slightly higher inventory driven by introduction of new products and suppliers. We had an expectation of an account receivables release in the quarter due to strong sales end of Q1, but we also had strong sales end of Q2 in June, meaning that it was approximately the same numbers. Closing cash was impacted by acquisition and dividend payments. Acquisition and dividend payments of around 400 lowering the cash balance is the main reason for net debt to increase in the quarter. Also with majority of the loans in Euro we had the negative FX impact of 58. The acquisition also comes with earnouts and we have booked earnout liabilities of 114 million in the quarter. Leverage increased to 2.6 in the quarter, mainly driven by acquisition and dividend payments. This is comfortable below our ambition of being at 3 or below. Also net debt equity ratio was 0.8, below the internal guidance of 1. And the balance sheet now clearly supports both organic and acquisition-driven growth. And with that, I hand over to Fredrik again.

So Labtech had a strong second quarter. Currency adjusted growth was 7% and EBITDA margin improved the full percentage point to 13.4%. The positive demand trend that we have talked about for a few quarters now in research, that really did continue and strengthen further during the quarter, so that's a positive sign. And then also customers in Eastern European countries are investing significantly in research and diagnostics, so we see a positive development in multiple countries, including, for example, Poland. Recently completed acquisitions really are making a significant contribution to the positive development both in sales and margins. Moving on to Medtech, the acquired growth was 2% and the organic growth 5%, so solid growth there, and EBITDA margin also improved to 12.8%. Growth and profitability was quite strong in the Nordic region. Advanced products is really driving this growth and the margins improvement as well. In Spain, we had a good underlying growth. Our strong companies there are really delivering. However, there was a doctor's strike in the country that affected each month of the quarter in a significant way, so that certainly held back revenues a bit. And in the UK, the subdued market for capital investment in the healthcare system was still ongoing, so it was a bit slow, but the order book for capital goods for us is strong, so we are confident in the future. In eye surgery and home care, as I mentioned earlier, we have been driving long-term significant improvement programs. And we are really pleased to see that in both of those areas we are making strong improvements. And I will talk a little bit more about home care. That's an important area for us and also where we will be focusing with the video after the call. So moving on to home care, here we have a quite comprehensive product offering. Our products include home adaptation to update and adapt homes for people to be able to live at home for longer. We have technical aids that are portable and fixed. We have welfare technology, various digital solutions such as fall detectors, safety alarms and so on, and also construction supporting indoor work to create adapted homes for elderly and the people with various disabilities. So all in all a very comprehensive product portfolio and this is indeed important because just one product cannot achieve the goal of having a higher quality life in your home for longer. You need a range of products which we are pleased to be able to provide. So the product portfolio that we have really corresponds well with the macro trends that we see in home care. We all know that the population in Europe and in other parts of the world is aging and so with that comes the requirement for allowing people to age at home for longer. So that is a quality of life topic but also a way for the societies to handle that potential burden. Fortunately, there are a lot of new things coming, new technologies. So the digital products, for example, are a big piece of the puzzle, allowing for a safer environment at home, and we have those products in our portfolio. Taking care of all these elderly people is, of course, a challenge to society, in particular in light of the fact that we see healthcare staffing shortage across Europe. So with these technologies that we are able to provide from home care, can really help address these things in an efficient way taking care of more people with fewer staff. So all in all we have a portfolio that fits really well with the market trends. So, the Adlife home care offering then, to summarize. It's a comprehensive, combined product portfolio, which we're quite proud of. We have a large share of proprietary products, much more than the rest of the company, actually around 50% of the products we make ourselves, so that's clearly a strength. We are well established in the Nordic region, and the Nordic region is leading in many areas of home care. We have a growing export business, and we certainly have the ambition to expand this business outside of the Nordics. The business unit consists of six well-established companies, a turnover of around 700 million Swedish, and with improving margins. So, to summarize the second quarter, we see consistent positive development across the board. Sales, earnings, operating cash flow, all developing quite well. We have been driving for quite some time the initiatives to increase the share of advanced products in our product portfolio and we are certainly seeing that in this quarter that it is generating both growth and improved margins. We are also consistently and diligently driving improvement efforts in our companies, and sometimes these are long-term efforts. In home care and eye surgery we have really seen in this quarter strong improvements and stability that gives us good confidence for the future. We see strong growth in the Nordics, in Eastern Europe, in research, in home care, And we are really pleased to note that the recently acquired companies are making a significant and important contribution to our earnings growth. And also, of course, we are actively pursuing a number of new acquisitions. We are developing our processes and we are developing the resources to further pick up the pace when it comes to acquisition. So with that, we can sum up the quarter and open up for Q&A. open up for questions. Yes, I will answer that. So, the question was around the UK capital investment. So, you are correct. We had a quarter where we continued to see a bit of a hesitation around the capital investment as we've seen in previous quarters. Also, this continued in the second quarter, but I would also say that we are fairly confident in a positive development there because we do have a good order book. We have instruments in stock and we have orders so we will be delivering those as it suits the customer. So, you know, a little bit of still a slow-moving activity there but, you know, the orders are coming in and we are ready to ship.