Elekta AB (publ)

Good morning everyone and warm welcome to the presentation of Elekta's year-end and fourth quarter 2022-23. My name is Cecilia Ketels and I'm Head of Investor Relations at Elekta. With me here in Stockholm I have Gustav Salford, Elekta's President and CEO and our CFO Tobias Hägglöv who will be presenting the results. And today's agenda starts off with Gustav presenting some highlights of the development Then Tobias gives you details on the financials, and the presentation ends with Gustav's view on Elekta's outlook. After the presentation, there will, as usual, be time for your questions. Before we start, I want to remind you that some of the information discussed in this call contains forward-looking statements. These can include projections regarding revenue, operating result, cash flow, as well as products and product development. And these statements involve risk,

and uncertainty that may cause actual result a different material from those that port in the statement and with that said I hand over to you thank you as a CLA and good morning everyone here from Stockholm and really really thank you for joining or call so I'll just take you a bit through initially I said you should do our strategy access 2025 and what we did in in q4 Because during this quarter, our last quarter of the fiscal year 22-23, we continued to deliver on our Access 2025 strategy. Our focus was really to drive and secure profitable growth and reduce working capital. We continued to successfully deliver on a cost reduction initiative and we launched a new software solution suite. And all of this is in line with our vision of towards the world where everyone act has access to the best cancer care so let's turn to some of the full year achievements so what you can see here is is really dick key parts over access twenty twenty five strategy and if you look at the driving adoption across the globe our strategic milestone to do that provide access to an additional three hundred million people in underserved market is well on track and by now more than 180 million people have gained access to radiation therapy which is the head of plan and something we're very proud of also important part of a strategy is to go direct into market them in February elect I quite are high love distributor if you turn to the customer lifetime companion In October at Astro, the big trade show in the U.S., Electa launched ElectaCare360, which is our portfolio of customer services that really help enhancing clinical operations. It includes, for example, dosimetry, consultancy services, physics startup services, and ElectaCare360 increases our value-added services. And it further strengthened our position as a lifetime companion to our customers. When it comes to accelerating innovation, our new Lexel Gamma Knife, the Electa 3, was launched this year and is now operating, treating its first patients in the UK, Japan, and the Netherlands, and very soon in the U.S., when it comes to elect that unity comprehensive motion management with that to tracking and automated gating this is a true milestone in the M R Lynn act paradigm shift it was launched in October and received FDA approval in February a loss but not least elect our one or comprehensive suite of end-to-end applications just recently launched at Estro in Vienna I'll come back to that more later in presentation When it comes to partner integration across the cancer care ecosystem, it was in the quarter Lecta entered into joint venture with Sinopharm in China to increase the adoption of radiation therapy to all patients in the country. And we were also very, very proud to announce that MacTulius Health equips the Robert Junker Clinic with integrated oncology solutions from Lecta and Philips. this is really enabled by the agreement that we've had with Philips now and our strategic partnership if we now turn a look at orders and the markets in in q4 the demon for radiotherapy was very healthy and it supported order backlog growth and a book-to-bill ratio of 1.24 If you look at the markets in the regions, in the Americas, orders were flat compared to last year. North America was slightly down, driven by lower order intake in Canada. But throughout Latin America, despite all these regional economic challenges, growth continued due to increased demand for patient access to radiotherapy. In EMEA, order intake declined by 4%. Europe had good growth from the southern European markets together with Poland. However, the Middle East and Africa had negative order development, mainly as a consequence of weak markets in Egypt and Turkey, as these markets continued to be negatively impacted by their domestic macroeconomic situations. Or as an APAC increased by 4%. that three largest countries in a pack China Japan and India all showed double-digit growth during the fourth quarter this growth was however largely offset by headwinds in the Australian market and we ended the court and that's important to say with a strong order backlog of 43 billion sec that will support revenue growth going forward so let them turn to revenue so in the quarter we showed double-digit revenue growth with strong performance for both solutions and service solutions revenue as you can see here was supported by continued improvements in a supply chain situation and strong installation volumes service grew with seven percent and it's really growth across all our business lines and I'm very very pleased to see that the service revenue is growing faster that installed base growth you can see here on the slide as well at the end of the period elect I had an installed base all approximately 7,000 150 devices all which about five thousand 250 units for Linux Emily next or Excel gamma systems for the full year we delivered four percent revenue growth we was supported by significant improvements in the global supply chain situation during this second whole of the year so if we turned to one of my favorite topics unity and look at the development of our Emily neck we're really proud to see that elected unity systems are in clinical use on four continents with a total of 75 install elected unit systems across the world clinic clinical unit systems shows an impressive 99 percent uptime and 100 percent of the unity treatments are now adapted to the change position of the target and six are adapted to changes in shape of tumor it's really clear to demonstrate in the unity superior technology and capabilities to change patient outcome more than 40 indications are treated with prostate cancer being the largest number We have seen more than 600 peer-reviewed publications and more than 4,000 patients recruited in the Momentum study, making it the powerful foundation for research and innovation. And now over to the strategic partnership with Sinopharm. This is really about increasing the adoption of radiotherapy. and it also collaboration with sign a form that will help ensure that Chinese patient will have access to the same high-quality position radiation therapy regardless or where they live if the joint venture with sign a form that the largest sales and distribution network in China is about increasing adoption radio therapy across the country in underserved areas it's about expanding elect a service offering And it's also about improving clinical operations at RT centers. So in summary, it's about combining the high-quality offering of Electa with a vast network of Sinopharm. And if we then turn to the big launch we did at Estro, Electa 1. And this was after the quarter close in Vienna. an elected one is a comprehensive sweet of empty and applications is really offering clinicians more automation more mobility and more time to spend with patients this is really important because elected one allows our customers could to connect their existing product to this new innovative solution with no loss of functionalities smooth transition to new platform and continuous data integrity would mosaic as a backbone this new elective software enables cancer care teams to plan and manage on quality specific workflows more efficiently and the goal is to increase or customers productivity with around 50 percent through these and halls workflow management and with that now over to to be up for the financials thank you go stuff and good morning everyone

starting with the cure for financials elect us revenue grew strongly in the quarter driven by a good commercial rate of our order backlog net sales increase ten percent organically you graphically the growth was driven by a pic growth rate more than thirty percent america's show four percent growth with positive development in the US strong growth in Mexico Europe had growth good growth in the quarter Middle East and Africa have backed the development in the mail summarizing email to minus one percent just a gross margin improved to 30 7.8 percent our adjusted EBIT Morgan increased to about 60 percent with higher sales lower expenses foreign exchange rates had a positive effect gross as well as on EBIT Morgan finance that rose in the quarter driven by higher interest expenses revaluation due to hyperinflation in turkey our adjusted gross margin improved by eighty percent basis points compared to q for last year to help in that says group contributed positively with three hundred basis points the strong solution group as well as the geographical mix led to a total negative mix two hundred eighty basis points Foreign exchange rates had a positive impact of 260 basis points, mainly driven by the strengthening of the U.S. dollar compared to last year. While supply chain conditions have improved and logistics costs are declining, inflation and pressure from higher material and component prices continue to put pressure on our gross margin. The net impact in the quarter was 200 basis points negative. then looking into our expenses in constant currency and adjusted for items affecting comparability all in all the operating expenses decreased by seven percent both year-over-year and sequentially as we continue to see the results of our cost reduction initiative selling expenses decreased by two percent year-over-year in the fourth quarter sequentially our selling expenses increased by three percent driven by higher level of in-person activities and inflationary pressure over administrative expenses declined year-over-year and even more so sequentially net or in the expenses declined both year-over-year and sequential gross R&D has continued to decline from the peak in q1 and on a rolling 12-month basis gross R&D ended at 13.3 percent of net sales Net R&D decreased year-over-year as a result of lower gross R&D spend. Capitalization was in line with Q4 last year, while amortization was slightly higher. For the full year, our revenues grew by 4%. All regions grew, and sales of solutions as well as services increased year-over-year. Our gross margin has improved, what was negatively impacted by inflation and high supply chain costs despite easing supply chain disruption towards the end of the year. revenue growth and FX contributed positively all in all gross margin amounted to 38.1 percent for the full year OPEX decreased by 1 percent in constant exchange rates with a sequential decline towards the end of the year our EBIT margin came in at 10.3 percent net financial items increased and income tax rate decreased to below 22 percent all in all adjusted earnings per share increased to 3.11 switch krona we have to on the soft store all the year to improve financial performance in the second whole growth rates have increased operational calls have been addressed foreign exchange rates have turned to being ebit more than a creative and the result is an improved operating Morgan close to 300 basis points in the fourth quarter since the beginning of the year we have worked with our cost reduction initiative it has progressed according to plan or spending within the year has declined with the estimated 200 minutes we have reduced the run rate of spending by 450 million sec the calls for implementing the savings amounted to 312 million sec with 71 million impacted gross income them moving over to the balance sheet our working capital was substantially reduced in a quarter Following the strong sales at the end of Q3 and in Q4, inventories decreased. Accounts receivables and accrued income improved, driven by healthy cash collection. Also, our liabilities improved in the quarter. In the fourth quarter, we delivered a record strong cash flow. EBITDA amounted to above 1 billion SEC. following the reduction of working capital cash flow from operating activities amounted to almost two billion sec resulting in a operational cash conversion of seventy six percent on the rolling twelve month basis or continuous investments amounted to four hundred seventeen million sec mainly driven by investments in our innovation pipeline all in all our cash flow of the continuous investments was about one and a half billion sec when that's up to you but a ratio was by the end of the quarter below one in March we refinance maturing debt which increased our debt portfolio duration to 4.3 years we are continuing to link to funding to push for our sustainability agenda and in addition to our sustainability link bond we now also have closed the sustainability revolver this facility is not only linked to the social KPI of Linux in underserved markets but also to our scope 1 and 2 emissions as well as the scope 3 target regarding suppliers setting own emissions reduction target that are science-based including the ungrown revolving facility our available funds or six billion SEC all in all we have a strong balance sheet and a solid financial position the board suggests maintaining the high dividend level from previous year for