AddLife AB (publ)

Good morning everyone and most welcome to the AdLife third quarter presentation. We will take you through the third quarter today and then you will have opportunity to ask questions. After the call and after the Q&A session you will have the opportunity to stay on to watch a brief video. Normally these videos are about one of our companies in the group. This time around since it's a special year for AdLife we're celebrating 10 years as an independent company. We have a brief video talking about our history with our roots that go actually 120 years back from Bajman & Behaving and AdTech and so on. And it describes our entrepreneurial and decentralized business model that has been so powerful for us. So let's now get going. The positive development that we have seen in the company for some time now continued in the third quarter. On top of that, we also saw an increased acquisition activity. Sales increased by 7%, supported by organic momentum, but also acquired growth. Margins strengthened overall, up to 11.5%. A strong increase on the lab tech side, and a minor decrease on the med tech side, but still quite stable, I would say. Operating cash flow improved significantly, and we saw that overall sales was really in a positive trend. advanced products continue to help us grow and improve margins. And we added new products to the portfolio during the quarter. We had a little bit of fewer instrument deliveries during the summer months, which is quite normal. And the ongoing health care dispute that we saw in Spain held us back somewhat. But we saw stable development in the Nordics. good growth in UK and Ireland, and also in Eastern Europe, a continued strong development. So we're really pleased to note that acquisition activity has really increased. So we completed the UNICAM acquisition during the quarter, and in October, we completed the acquisition of Lenin.

Revenue growth in the quarter was 7%. Organic growth was 4%, assuming we're just for the endoscopy business, and acquired growth contributed with additional 3%. Organic growth of 4% reflect market growth. In Labtech, we had 2%, following a very strong Q3 last year with 9% organic growth. And Medtech had 5% organic growth. The adjusted EBITDA increased with 11%. This is of course supported by organic growth, mainly driven by increased gross margins and acquisitions contributing with 8%. Adjusted EBITDA exclude continued considerations and the earn out has been revaluated and in some cases it has gone up, in some cases it has gone down and there's a positive net of 32 million over the profit and loss. Revenue increased with 7%. Underlying organic growth was 4% and acquired growth was 3%. Gross margin continued to increase. In this quarter it was 1 percentage point. This is driven both by price management in the companies but also by a higher share of advanced products contributing with a higher gross margin. In the quarter, we had unusually high operating expenses. This is due to gross investments into the companies, advanced products being one of them, but also of course operating expenses relating to acquired companies and acquisition costs relating to acquisitions. Extraordinary items is the continued considerations and then the adjusted EBITDA margin increased to 11.5 and profit before tax was up 61%. EBITDA margin has clearly improved over the past years. Year to date, we were at 12.2 compared to 11.9 last year. The lab tech margin that was 12.9, a clear year-on-year improvement, mainly driven by stronger gross margins, improvements in the companies and the addition of acquisitions. Medtech margin was 11.3, slightly below last year, but also here we see continued positive margin development in selected areas. Margin expansion remain the top financial priority for us. Operating cash flow increased with 62% in the quarter. And the improvements was mainly and primarily driven by lower working capital tied up. Cash conversion remained strong, above 100%, and working capital efficiency is a continued focus going forward. Operating cash flow was 236 and working capital was negative 58. Working capital was impacted by collection of accounts receivables, payments of account payables, and also inventory increased slightly. This is partly driven by the introduction of new products, but probably we also have a small build-up entering the fourth quarter and the last quarter of the year. So inventory represented 18% of sales, which is slightly higher compared to the 17% we saw in the first half of the year. Acquisitions relates to Unicam. And looking at the net debt, it was slightly up in the quarter. This was impacted by FX translations, and that had an impact of 91 million in the quarter. When we talk about net debt, we include bank loans, lease liabilities, continued considerations, pension liabilities, the provisions, and then we deduct cash. After quarter end, the bank facilities has been refinanced. It's a three-year term, and there's two one-year extension options in addition. Leverage was at 2.5, which is below the ambition of being at 3 or below. Net debt to equity ratio was 0.8, and since a year back, the balance sheet supports both organic and acquisition-driven growth. And with that, I will hand over to Fredrik again.

Labtech had a strong quarter in Q3. The growth was 7% and with a quite significant acquired addition of 5%. EBITDA margin improved significantly to 12.9 compared to 11.2 in the corresponding quarter of last year. Diagnostics remained stable and strong, I would say, and research activity was seasonally a little bit lower during summer, which is a pattern we normally see. Eastern Europe continued to show strong development, supported by investment in advanced technology. And then we're quite happy with the fact that Unicam was added to the mix towards the end of the quarter. This is a great company that strengthens our position further in Southern Europe. Medtech also had a strong quarter with a good growth and an addition of acquired growth as well. EBITDA margin was slightly lower, 11.3 versus 11.6 in the corresponding quarter of last year. Nordics delivered a really good growth while Spain was still affected by the ongoing healthcare dispute that we have seen now for some time. UK activity improved with higher surgical volumes and the delivery of capital goods that were ordered in the previous quarter that we highlighted at that time. So we're really pleased to see that those deliveries are indeed happening. Home care continued to develop well, further strengthened by the acquisition of Lenin after the closure of the quarter. This is also very much in line with the strategy that we have communicated. So, moving on to the acquisitions. So, very warm welcome to Unicam. We're happy to welcome them to the team and to the Abbaye family. This is a Portuguese company focusing on advanced analytical laboratory equipment, primarily in the areas of chromatography, spectrometry and microwave technology. They are really well renowned in the market for a super strong technical and clinical and application service. So this fits really well into the model that we have. So this will, of course, become part of the lab tech business. In October, we were very pleased to complete the acquisition of Lenin, a company that will become part of the home care business. Lenin is a family owned company with manufacturing of high quality stainless steel products. They have a strong position in the German market and other markets in Central and Eastern Europe. So they are a very nice addition to the home care business. So we wish the Lenin team a warm welcome to the Adlife family. Decentralization and entrepreneurship is really part of the AdLife's DNA, as many of you know, and you can also see if you decide to stay on to watch the video after the Q&A session. It is a powerful model and it is something we're living really in our day to day activity. I want to give you a few examples of what we have recently done. MBA, a successful company in Spain and Portugal, have created three specialized divisions to drive the respective product portfolio that has proven to be extremely successful in Healthcare 21. We have organized in country-specific organizations and we have created specialized commercial divisions with a high level of autonomy. And finally in ADVISION we have removed a significant group function and really again decentralized decision making and responsibility to the local entities. So all of these measures have been very successful in efficiency, and drive and agility. So what are, in summary, the benefits of our decentralized model? I think it makes us agile and efficient. The subsidiaries have the freedom to act quickly and work efficiently, close to customers and suppliers. That's very important. Also in M&A, we can really use our deep market knowledge and have a higher capacity for acquisitions. So the acquisition work has been delegated to the business unit leaders and they own the acquisition funnel and they are supported by the experienced advisors as well as the subsidiary resources. And finally, decentralization certainly attracts and retains talent. It helps us give opportunity for people to develop and evolve. It also attracts individuals and also, last but not least, is very attractive to potential acquisition targets that we are in dialogue with. So decentralization has been a part of our model for 120 years now, and it's still a very powerful piece of the AdLife DNA. So moving on to a summary and outlook, we do see continued consistent positive development and that's fantastic. Sales, earnings, operating cash flow developed well in the quarter. We see stable development in the Nordics, good growth in UK and Ireland and strong development in Eastern Europe. We are continuing to introduce and drive advanced products and I'm pleased to note that we have during the quarter added important product portfolios to the mix. The decentralized model continues to support efficiency and agility, and it helps us drive acquisition, attract, develop, and retain talent. Finally, we are pleased to note that we are seeing an increased acquisition activity and we have been for a while and continue to strengthen resources in that area so we can expect a continued high acquisition activity going forward. So with that, we open up for questions. Okay everyone, I think we are ready for questions and we have Albin, I think you raised the hand first, so please go ahead Albin and please don't forget to unmute.