Elekta AB (publ)

Hi everyone and good morning. My name is Peter Nyqvist and I'm head of investigations here at Elekta. With me here in Stockholm, in the studio, I have Jonas Belander, Elekta's president and CEO, and our CFO, Tobias Hägglöf, who will be presenting today's result. At the end of the day we will start with Jonas presenting some highlights of the development during the fourth quarter and the full year and some strategic achievements that we have done during the quarter. Then Tobias will give you details on the financials and the presentation will end with Jonas view on Elekta's outlooks and some conclusions. After the presentation, we will, as usual, there will be 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 statements. This can include projections regarding revenues, 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 statement. With that said, I would like to hand over the word to Jonas. Please, Jonas.

Thank you very much, Peter, and thank you all that attend this call. Since this is my first quarterly report and conference call as CEO and president of Elekta, I thought I would take just a few moments to introduce myself. So my name is Jonas Bolander and I've been working here at Elekta for over 20 years. I have experience from multiple roles in the company. Prior to this position, I held the position as general counsel and head of a number of group functions. My first time as CEO and president has been intensive, and I've focused hard on stabilizing and simplifying the business, and of course delivering on the commitments made to our different stakeholders, including the financial community. I would also like to update you on our ongoing recruitment process for a new president and CEO. We have an external recruitment process ongoing that proceeds as planned and we will provide you more information as soon as the board has selected the candidate. So now focusing on the financials starting with the key takeaways for the fiscal year 24-25. The book-to-bill ratio continued to be solid and came in at 109 for the full year of 24-25, implying a solid foundation for future sales growth. We have seen a positive contribution from our product launches in general, and in particular from Europe, where Elekta Evo and Elekta One Planning have received very positive feedback from our customers. As you know, the Chinese market has been negatively impacted by the anti-corruption campaign since August 2023. However, improvements have been visible in recent quarters, resulting in a high single-digit order growth for the full year and positive book-to-bill ratio. Net sales increased by 1% in constant currencies, in line with our guidance given in the Q3 report. The adjusted gross margin improved to 37.8% and increased by 30 basis points year over year. The increase came mainly from price increases and improved product mix. The adjusted EBIT margin amounted to 11.6%, a slight decrease year over year, mainly impacted by higher amortization costs following recent product launches. However, in line with our guidance. Our operating cash flow after continuous investments improved by SEK 240 million to SEK 1,056 billion for the full year. The board proposes a dividend of 2.40 Swedish krona per share to the AGM, and it is the same amount as last year, underlining Elekta's strong financial position. Now we will focus a bit on the key takeaways for the fourth quarter of fiscal year 2024-2025. The book-to-bill ratio came in at 1.12 in the fourth quarter. We saw a 10% order decline in constant exchange rate compared to last year. China showed a slight decline compared to last year's tough comparison, which then last year included a few unity orders. while we continue to see an increased public procurement activity in China. As expected, the US showed continued decline as a consequence of customers awaiting for the EVO clearance. We have strong order development for software, which will safeguard margins going forward. And we are in the middle of a global launch phase of Electa Evo and are expecting several approvals around the globe. Net sales increased by 6% in constant currencies, mainly driven by continued strong momentum for Europe supported by Elekta Evo and Elekta One Planning. It has been very well received. The adjusted gross margin improved significantly to 40.3%, an increase of 370 basis points year over year. And this is the best Q4 gross margin in five years. It is a very important step in our ambition to return to pre-pandemic levels. The adjusted EBIT margin amounted to 16.3%, positively impacted by the increased gross margin, while as expected, higher amortization costs will follow from recent product launches. During the fourth quarter, a non-cash impairment of 1 billion 64 Swedish krona was booked. We have done a review of Elekta's R&D assets on the balance sheet, which resulted in an impairment for projects where the course of direction has been changed. The non-cash impairment is predominantly a consequence of a change of scope. within software, partly driven by moving from an internal development cloud solution to an external suppliers platform. And Tobias will provide a bit more detail later in the presentation. Furthermore, in consultation with FDA, we have changed our regulatory submission strategy in mid-May for Elekta Evo to better align with FDA's approval process with greater focus on cybersecurity. We expect that the impact of this delay on the overall product launch will be limited. It should be noted that Elekta Evo and our software suite Elekta One are fully operational, currently in clinical use and has received outstanding feedback from healthcare providers across Europe. We continue to work tirelessly with the approval process and will resubmit to the FDA in near time. Moving to the cash flow for the fourth quarter. The operating cash flow of the continuous investment improved by Swedish krona, 376 million to 1,248 billion, driven by improved earnings. Moving to the next slide where we'll give you more details regarding the sales and marketing development during the quarter. In constant exchange rate, group sales increased by 6% year over year. In the Americas, the development was similar to the third quarter of the fiscal year 24-25, where growth in South America was fully offset by the decrease in the US, mainly as a consequence of customer awaiting Evo clearance. APEC sales grew by 5% in constant exchange rate with a good performance across most markets. The Chinese market remained soft, still impacted by the consequences of the anti-corruption campaign. However, improvements were seen during the quarter, resulted in a limited sales decline of 1% compared to last year. Sales in EMEA increased by 16% in constant exchange rates compared to last year driven by a strong performance in Europe supported by new product launches. We saw a strong growth in countries like Italy, Germany and Spain. Elekta has a global installed base growing with around 4% per year, enabling significant service upgrade and after sales opportunities going forward. During recent years, we have been accelerating innovation. And recently, we launched our new CT Linux Evo and our software Electa One planning and Electa One online. And today, we have the leading and most comprehensive portfolio in the industry, with Dilexel, Gamma Knife Esprit, the Brackey Studio, MR-Linux Unity, Elekta Evo and Harmony, and Elekta One Software Suite. Looking across our portfolio, we can now proudly say that we enable adaptive treatments in all our product lines, Neuro, Brackey, Linux, and software solutions. Where our Unity has a unique MR imaging and comprehensive motion management technology, the Elekta Evo now complements our adaptive Linux portfolio with its online and offline adaptive capability with AI-enhanced imaging. We will leverage our leading product portfolio to drive profitable growth going forward. During the quarter, we can clearly see how our adaptive capabilities across all our products are generating concrete customer wins. We see several deals where customers want both Elekta Evo and Elekta Unity, which is a proof point that the most advanced cancer centers will utilize both CT adaptive and MR adaptive treatments to enhance cancer care. We also celebrated an important Brachy win in the US with 20 system to the US oncology networks. Elekta is the global market leader in Brachy and this is highly profitable business for us. Brachy therapy with our imaging ring Brachy Studio plays an important role when treating certain cancer types where it improves outcomes and ensure better quality of life. These capabilities are what drives the demand for Brachy solutions also in very mature market. What binds our adaptive story together is, of course, the software suite, ElectaOne. During the quarter, we see how ElectaOne planning and ElectaOne online are part of many of our deals globally. Recently at ESTRO, the European Congress for Radio Oncology, We saw a great customer interest in this latest feature, and this is reflected in our orders. ElectaOne drives the shift towards adaptive treatments. So, with the current geopolitical landscape, we also would like to take the opportunity to briefly clarify our US exposure to tariffs. Elekta sales in the US market is roughly 22% of our total sales and it includes approximately one third devices, one third software and one third service. Looking at the software, it is locally developed in the US. And services are by nature domestic and are not directly impacted by tariffs. However, for the services we provide, we have minor imports of spare part. When it comes to devices, our Linux are from the UK, which is the biggest portion of the device business. Brackey derives from the Netherlands and Nura from Sweden. expect some software imported from China to the US. We have very limited flows between the US and China. When it comes to China, the absolute majority of products sold in China are produced locally in China, which is generally local for local market. We are working actively with many different mitigation activities, which include, but not are limited to tariff clauses in our contract. We improve our sourcing efficiency. We adjust our cost base and we are constantly adjusting our prices. Important is also the fact when starting to sell EVO in the US market, it will be in a position as a premium product price on a higher level than our current offering in the US market. Overall, We are closely following the development on the tariffs and are actively trying to manage the situation in the best possible way. With that, I will hand over to Tobias for the financials.

Thank you Jonas and good morning everyone. We'll start with the full year view. For the fiscal year 24-25, net sales increased by 1% in constant exchange rates. Most markets in the APEC region grew, while China and the US declined. While solutions declined by 2%, our service business grew nicely by 6% in constant exchange rates, with positive development in most business lines and regions. The adjusted gross margin amounted to 37.8%, an increase by 30 basis points year over year, supported by price increases and an improved product mix. Changes in foreign exchange rates had a negative impact of 60 basis points year over year. The adjusted EBIT margin amounted to 11.6%, a slight decrease year over year, mainly impacted by higher amortization costs following our recent product launches. Net income amounted to 240 million SEK, impacted by the impairment in the quarter. I will come back on details later in this presentation. Earnings per share amounted to 0.62 SEC and adjusted earnings per share amounted to 3.08 SEC. Let's then look into Q4. During the fourth quarter, net sales increased by 6% in constant exchange rates. As Jonas previously mentioned, our product launches of Elekta Evo and Elekta One had a positive contribution to the growth in the quarter. Solution increased by 7% and service grew by 4% in constant exchange rates, with positive development in most business lines and regions. During the quarter, we have seen a solid software growth of 10%, which validates the investments made within this area and is also another proof point of our strength in software offering with Elekta One. The adjusted gross margin amounted to 40.3%, an increase by 370 basis points, and this is the best Q4 gross margin since fiscal year 1920. This, in line with our strategy, was a result of higher volumes and continued price increases supported by our recent product launches, and strong software growth with high margins. It also includes a negative impact of 60 basis points year-over-year from changes in foreign exchange rates. The adjusted EBIT margin improved to 16.3%, supported by the higher gross margin, partially offset by increased amortization costs following the recent product launches, and this, as previously mentioned, is in line with our plan. Net income impacted by the impairment amounted to 380 million SEK negative. Earnings per share amounted to 1.01 SEK negative and adjusted earnings per share amounted to 1.11 SEK. Now, focusing on the cost reduction initiatives. As part of our ongoing efforts to improve cost efficiency, we had delivered on our targets. On April 30, 2025, annual run rate savings amounted to 279 million SEK above our targets of 250 million SEK. In 2024-25, year-over-year savings of 145 million SEK were achieved. implementation cost amounted to 189 million sec and our reporting as items affecting comparability now taking a moment to explain the rationale for the announced non-cash impairment As Jonas mentioned earlier, the fourth quarter results include a non-cash impairment amounting to 1,064,000,000 SEK representing approximately 8% of total intangible assets on the balance sheet. Elekta regularly performs asset impairment reviews in accordance with IFRS requirements. Following a change of directions of the product development roadmap during the quarter, an impairment testing of R&D assets was performed. For some development projects, the course of direction has been changed, and these projects are not being continued or are not expected to deliver according to the original business plan. The impairments are reported as items affecting comparability and further specifications can be found in Note 5 in the report. The impairment will reduce the increase of amortization by 100 million sec in 2025-2026. then looking into our cash flow during the fourth quarter cash flow after continuous investments increased to 1 billion 248 million sec an increase by 376 million sec year over year the increase was supported by higher ebta and lower investments networking capital as a percentage of net sales amounted to a negative nine percent at the end of the year In the fourth quarter, we continue to make R&D investments in new product solutions and software amounting to 291 million SEC and tangible assets of 28 million SEC. The rolling 12 months cash flow from operating activities amounted to 2.62 billion SEC, an increase by 165 million SEC year over year. Rolling 12 months cash conversion amounted to 80%, which is above our target of 70%. As you previously heard, the board suggests a dividend per share of 2.4 SEC unchanged compared to last year. This represents a payout ratio of 78% of the adjusted net income underlying Elekta's strong financial position. With that, I hand over to you, Jonas.