Elekta AB (publ)

Hi and good morning, everyone. My name is Peter Nyqvist, Head of Investor Relations here at Elekta. With me here in Stockholm, I have Gustav Salford, Elekta's President and CEO, and our CFO, Tobias Hägglöf, who's presenting the result. Today's agenda starts off with Gustav, who will present the highlights from the development during the first quarter of the fiscal year 2024-2025, as well as strategic achievements during the quarter. Then Tobias will, in more detail, go through the details of the financials in the presentation, and then we will end with Gustav giving us the outlook. And after the presentation there will, as always, be time for questions. Before I start, I want to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenue, operating results, 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 to our CEO, Gustav.

Thank you, Peter, and thank you all for attending our call. I will now focus on the key takeaways for the first quarter of fiscal year 2024-25. So you can see here that net sales increased by 1% in constant currencies and main driver was strong installations in the US. Gross margins came in at 37.8% at decline year over year related to inflation and reduced impact from inventory revaluation. However, the gross margin improved sequentially supported by an improved service margin in the quarter. The adjusted EBIT margin declined year-over-year, mainly impacted by the gross margin development, and we have initiated cost reduction activities to manage the OPEX levels. Tobias will go through this later in his presentation. The book-to-bill ratio improved to 1.10 from last year's 1.0 and the 12-month rolling figure for a book-to-bill ratio is well above 1, a solid foundation for future sales growth. At the end of the quarter, we announced a major customer win from the largest private health care provider in Mexico, Hospital Angeles Health System, amounting to 64 million dollars. And if we move to the next slide, I'll give you some more details on the sales and market development during the quarter. So you can see that group sales amounted to 3.8 billion SEC in Q1, almost equally distributed between our three regions. And based again on constant exchange rates, we delivered a strong 16% growth in Americas, driven by both North and South America. It's really encouraging to see that installations in the US are showing strong development and also that Canada and Mexico were also showing growth sales in Q1. The APEC region increased sales by 3% despite continued negative impact from anti-corruption campaign in China. But if you exclude China, the region grew by 29% with India and Korea as the main drivers. In the region of Europe, Middle East and Africa, sales declined by 12% compared to last year when the reading grew by 15%, driven by large installations in Spain and Italy. Most markets in the Middle East and Africa showed growth. And if we then look at the key components of our Access 2025 strategy, I want to highlight some strategic achievements during the quarter. An important strategic win for us that I mentioned before was of course the major order from the largest private healthcare provider in Mexico, Hospital Angeles Health System, including radiotherapy solutions, software and Electa S3, the Lexell Gamma Knife. The total value of the order was 64 million, with installations expected to start in December 2024. In the area of driving partner integration across the cancer care ecosystem, we today announced that we have entered into a joint venture with Ansheng, our Chinese software partner. This strategic investment aims to ensure Elekta's market-leading positions in China and accelerating the adoption of radiation therapy in the country. This is truly a sign of our commitment to deliver state-of-the-art radiotherapy solutions in China, and we continue to take actions to even further strengthen our market position. In the area of drive adoption across the globe, we received a unity with the University Hospital in Lund in Sweden. And the expansion of the MR-Linac technology is important as the system will be dedicated to pushing the boundaries of treating cancer. And of course, for me personally, I'm really proud to deliver the most advanced radiation therapy solution to the town where I grew up. Since we launched Access 2025 we have been accelerating innovation and recently we launched our new CT-Linux Electa Evo and treatment planning software Electa One Planning. And today we have the leading and most comprehensive portfolio in the industry with our MR-Linux Unity, Brackey Studio and in the middle you see Electa Evo and then of course we also have Electa Harmony. And then you have the Lecta One software suite and of course the Lexell Gamma Knife S3. And looking across this portfolio, we can now proudly say that we enable online adaptive treatments in all of our product lines. Neuro, Brachy, Linux and software solutions. Where our Unity has unique MR imaging and comprehensive motion management technology, the Elekta Evo now complements our Linux portfolio with a high versatility in terms of personalization and productivity. we will leverage our leading product portfolio to drive profitable growth going forward. And then if we take a closer look at Electa Evo, it comes fully ready for online adaptive treatments or can easily be upgraded over time if that is the customer's preference. It has best-in-class image quality due to the AI-enhanced IRIS technology, and it also 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 it's also vendor-agnostic to ensure it supports not only Elekta devices, but also other products in the market. Electa Evo has been well received among customers relating to the clinical needs and elevating personalized care as well as increased productivity. We are expecting CE and FDA submissions in the second quarter and we look forward to delivering the new solutions to our customers in the coming quarters. And with that, over to Financials and Tobias.

thank you gustav and good morning everyone so let's then start by looking into the q1 results in more detail during the first quarter we deliver a net sales growth of one percent in constant exchange rates we continue to increase our service business with the five percent growth year over year solution sales declined by three percent driven by europe and china just the gross margin amounted to 37.8 percent The decline versus last year is coming from inflation and pressure from material and salaries, changes in foreign exchange rates and reduced impact from inventory valuation. Sequentially, the adjusted gross margin increased by 120 basis points supported by an improved service margin. The adjusted EBIT margin declined to 7.4%, mainly driven by the lower gross margin. Increased operating expenses was mainly driven by higher administrative costs and higher amortization following the recent product launches. Net income amounted to 71 million SEK and earnings per share to 0.18 SEK. In the quarter, we continue to drive cost reduction initiatives with the aim to lower structural costs and enhance productivity across the organization. The target is to generate annual savings by around 250 million SEK at the end of the fiscal year 2024-2025 at an estimated implementation cost of 250 million SEK. In Q1, annual run rate savings of 70 million SEK were achieved with a limited financial impact on Q1. The implementation cost amounted to 109 million SEK and our reporting as items affecting comparability. In the seasonal week first quarter, cash flow after continuous investments amounted to 891 million SEC negative, similar to last year. Working capital as a percentage of sales improved to minus 5% compared to minus 4% last year. Taxes paid was lower than last year due to an R&D expenditure credit in the UK. In the first quarter, we have continued to make R&D investments in new products, solutions and software amounting to 336 million SEC and intangible assets of 61 million SEC. The rolling 12 months cash flow from operating activities amounted to 2.5 billion SEK, which is an increase of 900 million SEK year-over-year. Cash conversion amounted to 83%, well above our target of 70%. Now, over to our book-to-bill reporting. I will start with explaining the development during the quarter, and then I will give you the background of why we are changing our order reporting going forward. Looking at Q1, you previously heard Gustav, the book-to-bill ratio improved to 1.10. As Gustav previously mentioned, we received a large order for a value of approximately 64 million USD. Installations will begin during the third quarter of 2024-2025, with the last system expected to be installed during the first quarter of 2027-2028. Approximately 38 million US dollar has been booked in Q1 and the first deliveries are expected in December 2024. Let me then explain the background of why we are changing our order reporting. The regional order reporting is challenging to use for forecasting future sales as many larger deals leading to volatility in quarterly order growth are not tied to the sales growth in a specific quarter. They are rather distributed over a longer time horizon. The timeline from orders to revenue depends on various factors such as the size of the customer, region and whether it's hardware, service or software. The book-to-bill ratio is the most relevant indicator for sales growth. A consistent strong book-to-bill ratio over an extended period serves a solid foundation for future growth where Elekta has been able to deliver a book-to-bill ratio of more than one for a long period of time. The book-to-bill ratio is also in line with industry practice. When we have looked at industry peers as well as other listed companies, if reporting orders, book-to-bill ratio is clearly the most used metrics. When we then look ahead, we will move focus more towards the action markets, sales and profitability development in the quarter, supporting our ambition to reach our targets. When reporting the group total book-to-bill ratio, we will include both solutions and service. And lastly, we will continue to report total gross order intake as it's an important part of explaining the book-to-bill development. With that, I hand over to you, Gustav.