Elekta AB (publ)

Hi and good morning everyone and welcome to this conference call for our third quarter. My name is Peter Nyquist and I'm the Head of Investor Relations here at Elekta. With me here in Stockholm at the head office I have our President and CEO Gustav Salford and our CFO Tobias Hägglöf who will present the result today. So today's agenda we will start off with Gustav presenting some highlights of the development during the third quarter and the fiscal year of 2024-25 as well as some strategic achievements. Then Tobias will take over and give some details on the financials and the presentation then will end with Gustav's view on the Elekta outlook. And after the presentation, there will be, as always, time for Q&A. But before we start, I want to remind you that some of the information discussed on this call contains forward-looking statement. This can include projections regarding revenue, 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. So with that said, I would like to hand it to you Gustav, please.

Thank you, Peter, and thank you all for attending our call. And I would like to start with the key takeaways for the third quarter of our fiscal year 24-25. So our net sales increased by 2% in constant currencies, mainly driven by solid performance in Europe and most markets in APAC, while the US and China declined. The adjusted gross margin improved to 37.1%, and the increase came from price increases and a favorable product mix with an increased share of service. The adjusted EBIT margin amounted to 11.7%, a slight increase year-over-year, mainly impacted by the positive gross margin development and, as expected, higher amortization costs following recent product launches. The book-to-bill ratio was strong and came in at 1.15 in the quarter, and we saw a 21% order growth in constant exchange rates compared to last year with growth across all regions and business lines. In EMEA, the order growth was supported by the new product launches of Elekta Evo and Elekta One. China continued to deliver strong order growth compared to last year's low level, and we're seeing an increasing public procurement activity in the Chinese market, implying a solid foundation for future sales growth. Electa Evo, our latest AI-powered adaptive city Linux, and our new software suite, Electa One Planning, have been well received by customers and had a positive impact on the order and sales growth in the markets where it is regulatory cleared, with Europe contributing most. The installations of Elekta Evo are progressing well and we have also done many upgrades during the quarter. The new system went clinical during the quarter with very positive customer feedback and the first patient on Elekta Evo was a curative treatment enabled by the superior image quality provided by the new CT technology Iris. During the quarter, we have secured significant commercial wins, including a major deal in Mexico and unity wins from competition in the US as well as in Europe. Moving to the next slide, will I give you more details regarding the sales and market development during the quarter. In constant exchange rates, group sales increased by 2% year-over-year. In America, growth in South America was fully offset by decreased sales in the US, mainly as a consequence of customers awaiting the EVO clearance. APAC sales grew by 6% in constant exchange rates with good performance across most markets. However, the market in China remained impacted, resulting in an 8% sales decline in the quarter. Sales in EMEA increased by 5% in constant exchange rates compared to last year, driven by strong performance in Europe, supported by the new product launches. And we saw strong growth in countries like France, the UK, as well as in Germany. Elekta has a globally installed base, growing with around 4% per year, enabling significant service upgrades and off-the-sales opportunities going forward. And since we launched Access 2025, we have been accelerating innovation. And recently, we launched our new CTLinac Elekta Evo and treatment planning software, Elekta One Planning. And today, we have the leading and most comprehensive portfolio in the industry with our Delexel Gamma Knife Esprit. Brackey Studio, MR Linux Unity, and even Electa Harmony on the CT Linux side, and also Electa One Software Suite. So looking across this portfolio, we can now proudly say that we enable adaptive treatments in all our product lines, Neuro, Brachy, LINAC and software solutions. And where our Unity has unique MR imaging and comprehensive motion management technology, the Elekta Evo now complements our adaptive LINAC portfolio with its online and offline adaptive capability with AI enhanced imaging with the IRIS technology. We will leverage our leading product portfolio to drive profitable growth going forward. So looking closer at the significant opportunity for profitable growth from Evo and Electa One in the ongoing rollout in Europe and coming waves in the rest of the world, you can see that for new solutions revenues, we will drive installations of new systems and software, and we have seen a fast uptake in Europe of both orders and installations. And in Q3, almost 50% of the LINAC orders in Europe were EVO. And it has been very well received among customers and it's relating to clinical needs and elevating personalized care as well as increased productivity. So for upgrade revenues, we saw a strong increase in the IRIS upgrades during the quarter, and we have an ongoing campaign where we'll sell the upgrade package that will drive after-sales growth in the coming quarters and years. Now if we turn to some of our success stories in the quarter. During Q3, we have secured several commercial wins, among others a public tender for eight LINACs and ElectaOne planning to IMSS, Mexico's largest public healthcare and social security institutions. This significant order marks a major milestone in Lekta's ongoing effort to support Mexico's healthcare system and enhance cancer treatment capabilities across the country. And furthermore, it strengthened our market-leading position in the country. And our unity traction is progressing well, and during the quarter we signed a deal with Moffitt Cancer Care Center in Florida, a national cancer institute designated comprehensive cancer care center, and it was to grow their MR-guided adaptive radiation therapy program around the Alexa Unity MR-Linac. We also saw the first clinical Evo treatment and it occurred in DTTC in Germany in December 2024, treating with Electa Evo. and it was delivered with a new irish capability that comes with a better images ai enhanced and getting much clearer visibility of the targets and also the organs at risk and it was a curative treatment for bladder cancer it's super exciting to get the first patient treated and we are looking forward to helping more cancer patients around the world getting treated with this new technology I'm also very happy to be able to communicate that the LECT has once again won the Best in Class award, which is based on feedback from thousands of clinical users collected and evaluated by the independent research firm CLAAS. The introduction of LectaOne with Software as a Service offering demonstrate our focus on personalization, integration and streamlined user experience. This enables clinicians to boost productivity and enhance personalized care. And winning this prestigious award and the increased use of Elekta's digital solutions globally is the results of our investments in software during the recent years. And we see how accelerated innovation brings a direct benefit to healthcare providers and the patients they treat. So with that, I would like to hand it over to Tobias for the financials.

Thank you, Gustav, and good morning, everyone. Let's then look into the Q3 results in more detail. During the third quarter, net sales increased by 2% in constant exchange rates. As Gustav previously mentioned, we had lower sales in the US and China, hampering our growth. Our service business grew strongly by 10% year-over-year, with growth in all regions and business lines. Solutions sales declined by 4%, driven by lower volumes in the US and China. Adjusted gross margin amounted to 37.1%. The increase versus last year was mainly driven by price increases and a favorable product mix, including an increased share of service. Changes in foreign exchange rates had a negative impact in the quarter of 60 basis points on gross margin level year over year, somewhat less than in the second quarter this year. The service margin in the quarter was negatively impacted by market mix and higher material costs. The adjusted EBIT margin improved to 11.7%, supported by the higher gross margin. Selling and amortization costs increased following the recent product launches. Admin expenses declined, driven by the cost reduction initiatives. Last year's quarter was also negatively impacted by FX, which is visible on the FX Another row. Net income amounted to 336 million SEK and earnings per share 0.89 SEK compared to 0.80 SEK last year. Now focusing on the cost reduction initiative. The cost reduction initiative announced in Q1 amounted to 264 million SEK in annual run rate savings for the first nine months, which is ahead of plan and target. Year-over-year savings of 80 million SEK were achieved in the first nine months. The implementation cost amounted to 167 million SEK and are reported as items affecting comparability. Then, looking into our cash flow. During the third quarter, cash flow after continuous investments increased to 730 million SEK, which is a record high third quarter cash flow. The increase was supported by higher EBITDA, lower investments and reduction of working capital. Net working capital as a percentage of net sales improved from minus 6% last year to minus 7%. In the third quarter, we had continued to make R&D investments in new products, solutions and software amounting to 321 million SEC and tangible assets of 45 million SEC. The rolling 12 months cash flow from operating activities amounted to 2.38 billion SEC, a sequential increase. Our cash flow in Q3 was strong and rolling 12 months cash conversion amounted to 79% above our target of 70%. With that, back to you, Gustav.