Elekta AB (publ)

Good morning everyone. My name is Peter Nyqvist and I'm the Head of Investor Relations here at Elekta and I've just completed my first quarter here at Elekta. And with me here in the studio in Stockholm I have Gustav Salforth, Elekta's President and CEO and our CFO Tobias Hägglöf. Who will today present their results? Today's agenda starts with Gustav presenting some highlights in the development during the quarter as well as some of the strategic achievements we have done throughout the year as well as the quarter. Tobias will give you more details on the financials and Gustav will end the presentation with Lekta's view on the outlook. After the presentation there will be, as usual, time for questions as well as answers. But before we start, I want to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenues, operating result, cash flow, as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. With that said, I would like to hand over the word to you, Gustav.

Thank you, Peter, and good morning, everyone, and thank you for attending our call. I will now focus on the key takeaways for the full year. And we look at the full year, you saw that the net sales increased by 5% with growth in all regions, which is strong considering the challenges we have had in some markets like China, where anti-corruption campaigns has impacted order intake as well as sales significantly. The adjusted EBIT margin increased by 150 basis points to 11.8% and we delivered an adjusted EBIT of over 2.1 billion SEC. We have strengthened our product portfolio by launching the market-leading Elekta Evo, an AI-powered, CT-adaptive and highly versatile Linux. And together with our comprehensive software suite, Elekta One, this Linux will be able to drive both increased personalization and higher productivity for our customers. We delivered a strong operating cash flow of the continuous investments of 850 milliseconds, more than double compared to last year. And a strong cash flow is a proof point of an efficient business model. And going forward, we will continue our activities to structurally improve working capital. The board proposed a dividend of 2,40 kronor per share for fiscal year 2023-2024 and underlying support of Elekta's strong financial position. And if we now look into the key takeaways for the fourth quarter, we saw that the market conditions in the quarter were challenging, reflected by a weaker-than-normal sales development, The quarter showed a decline in net sales by 2%, mainly driven by lower installations, particularly in mature markets like Europe and the U.S., The adjusted gross margin amounted to 36.6%, driven by an unfavorable market mix and inflation pressure on material and salary costs. The adjusted EBIT margin amounted to 13%, down from last year due to inflation and higher operating expenses, mainly related to the recent product launches. The order intake in the fourth quarter declined by 1%, mainly due to lower market activity in Europe, while APAC showed double-digit growth, mainly driven by China, where several unity orders were signed in the quarter. Order intake in China continues to be impacted by the Hong Kong anti-corruption campaign. However, gradual improvements have been seen towards the end of the quarter. Looking at the order backlog, it is still on a robust level amounting to over 44 billion SEC and the book-to-bill ratio was strong with 1.28 in the fourth quarter. Rolling 12 months, book-to-bill ratio was 1.09, a platform for future growth. During the quarter, we announced the strategic partnership with GE Healthcare's MIM software, strengthening and complementing our software suite Elekta One. And with the addition of our acquisitions of Philips Intellectual Property for the treatment planning system Pinnacle, we are now very well positioned as a leading provider in software solutions and we're reaffirming our vendor agnostic commitment. I am not satisfied with the outcome in Q4. While a challenging market and increased spending driven by product launches partly explain part of this performance, we will improve profitability going forward. And this will involve reducing our cost of goods sold and operating expenses. And also, we must leverage and we will leverage our recent product launches to enhance our financial results. And now over to our strategy, Access 2025, that we continue to deliver on in Q4. And if you look at the key components here on the slide, I wanted to give you some highlights from the quarter. And of course, in the area of accelerate innovation with customer utilization in mind, we did this continued acceleration by launching Electa Evo, a new CT-adaptive, highly versatile Linux. And I'll come back to that. In the areas of driving partner integration across the cancer care ecosystem, we have deepened the partnership and collaboration with MIM software that's owned by GE Healthcare by providing the best-in-class software solutions to our Linux portfolio. And when it comes to driving adoption across the globe, we have continued our journey, converted former U.S. centers to our MRLINAC program with ElectaUnity, and we see good potential going forward in this journey. and now to something i'm very very proud of that we have launched in in the in the quarter at estro for example is that with these recent launches of the new city linac evo and the treatment planning software electa one planning we have truly accelerated innovation in the market and the radiation therapy field And we have the leading and most comprehensive portfolio in the industry that you can see on this slide. With our MR Linac Unity, our image-guided Brackey Studio, our Electa Evo as well as the Electa Harmony. our Elekta One software suite, and of course, the Lexell Gamma Knife Esprit. And looking across this portfolio, we can now proudly say that we will enable online adaptive treatments in all our products lines, Neuro, Brachy, and Linac solutions. Where Unity has a unique MR imaging and comprehensive motion management technology, the Elector Evo now complements our Linux portfolio with a high versatility in terms of personalization as well as productivity. And no matter the incidence or the clinical need, we have the comprehensive offering to match our customers' needs. And we will leverage these products to drive our growth and financial performance going forward. And if we look a bit closer at our latest addition to the portfolio, Lecter Evo, that was launched at Estra with great customer feedback. It comes fully ready for online adaptive treatments, or it can also easily be upgraded over time for the customer preferences. It has best-in-class image quality due to the AI-enhanced IRIS technology, and it leverages our new treatment planning system, Elekta One Planning, powered by MIM. This new software offers AI-driven auto-contouring, faster dose calculation and planning, and is vendor-agnostic to ensure it supports not only Elekta devices, but also other products in the market. ElectEvo gives us a unique position in the marketplace. It is an adaptive CT Linux with a versatility only comparable to other CRM Linux and the adaptivity that allows for either online adaptive from the start or an upgrade from offline to online over time. And depending on the customer preference. Furthermore, our installed base of Versa HDs, including those in our order backlog, are now upgradable to online adaptive Linux thanks to the Evo technology. And this adaptivity offered by Evo, together with the standalone planning software, both provide great leverage to our existing installed base and provide new avenues for margin and creative growth. And for Electa Unity, we saw a lot of positive market momentum in the quarter. Our customers are continuously realizing workflow efficiencies in their clinics, with a recent example in Australia, where they treated 20 patients in one day, fully what we call adapt to shape. And we see that adoption is increasing across the globe. For example, another unity transition in Italy and strong recent momentum in India. And at the recent MR-Linna consortium meeting at Estro, more than 100 abstracts were showcased, further underscoring the clinical benefits of our unity. And of course, one of the key focus areas in Access 2025, which lies in the heart of everything we do, is to contribute to a world where everyone has access to the best cancer care. And I am very happy to be able to communicate that we now have provided radiation therapy access to 260 million people in underserved markets. Well on track to reach our target of 300 million people until fiscal year 2024-2025. And this not only means that we provide best-in-class solutions to people worldwide, it also means that we extend our footprint and will be able to continue to deliver profitable growth as our installed base continues to grow. And we will continue this journey during fiscal year 2024-2025 and we will reach our targets. Now over to the financials and Tobias.

Thank you Gustav and good morning everyone. We will start with a full year overview. During full year 23-24 we delivered a 5% net sales growth in constant exchange rates with revenue growth from all regions. China grew despite challenging market conditions with the ongoing anti-corruption campaign. This is a sign of our strong position in China and we continue to gain market shares. We continue to increase our service business with a 6% growth year-over-year, where our solutions business grew with 4%. Adjusted gross margin amounted to 37.5%. An unfavorable market mix and inflationary pressure was offset by leveraging revenue growth combined with cost control. The adjusted EBIT margin expanded to 11.8%, an increase by 150 basis points compared to last year. The increase derives from higher sales as well as further leverage on our operating expenses where our focus on cost control has paid off. The EPS grew by 38% compared to last year. If you then continue with the development during the fourth quarter, net sales decreased by 2% in constant exchange rates. This was driven by slower market activity in Europe and challenging market conditions in the US. We grew sales in APEC despite negative impact from the anti-corruption campaign in China. As we are stating in the outlook, we expect the first half of 2024-2025 to be weaker due to challenging market conditions. This will be particularly evident in our mature markets. Adjusted gross margin amounted to 36.6%, a decrease by 120 basis points compared to last year and 30 basis points sequentially. The market mix in the quarter had a negative impact on the margin as emerging markets show strong growth. We have also seen continued inflationary pressure waiting on the gross margin. The adjusted EBIT margin amounted to 13%, a decrease by 320 basis points compared to last year. The decrease is mainly driven by the lower gross margin and higher operating expenses related to recent product launches. In order to mitigate the impact from mentioned cost increases and inflation, we will intensify our activities by focusing on reducing COGS and our operating expenses. We expect cost savings to mount to half our previous program initial during fiscal year 2022-2023. The majority will be visible in OPEX with a gradual impact, which will in particular improving EBIT during the second half of current year. More details will be given when we report our Q1 earnings. Then, looking more in detail into our expenses in constant currency and adjusted for items affecting comparability. All in all, expenses increased by 12% year-over-year, mainly driven by product launch-related cost. Sequentially, OPEX increased by 8%. During the fourth quarter, selling expenses increased by 5% year-over-year, driven by selective investments in customer activities and commercialization of product launches. Administrative expenses excluding non-recurring items increased by 7%. Selective investments in IT was made in the quarter. Net R&D expenses increased by 20% year-over-year due to higher gross R&D and amortization costs following our product launches. We remain focused on our innovation pipeline. During the fourth quarter, we launched Electa Evo, a city-adaptive Linux as well as new software features strengthening our Electa One software suite. R&D is the ultimate way for us to improve our profitability by launching market-leading product solutions. It is key for us to continue to deliver new innovations to improve our margins, particularly the gross margin. In the quarter, gross R&D increased sequentially by 30 basis points to 12.2% of net sales on a rolling 12-month basis driven by higher gross spend. Net R&D increased by 30 basis points sequentially to 7.7% of net sales on a rolling 12-month basis, mainly driven by higher gross spend and amortization cost following the aforementioned product launches. Cash flow after continuous investments amounted to 872 million SEK in a quarter, resulting in an increased cash flow by almost 500 million SEK for the full year. Cash conversion amounted to 77%, well above our target of 70%. Networking capital as a share of sales ended at minus 10% in the quarter, a significant improvement versus Q4 previous year. The improvements compared to last year were mainly driven by lower accounts receivables and that accrued income has come down due to strong collections from projects in Southern Europe with longer billing terms. We've also had higher prepaid income deriving from the US and China. And as Gustav mentioned, the board suggests a dividend per share of 2.4 SEC, the same absolute level as last year. This represent a payout ratio of 70% of the net income. And as Gustav said, underlying elect us strong financial position. With that, I hand over to you, Gustav.