Elekta AB (publ)

Hi and good morning everyone. My name is Peter Nyquist. I'm the Head of Investor Relations here at Elekta. With me here in Stockholm I have our CEO Jonas Belander and our CFO Tobias Hägglöf who will be presenting the results from the first quarter of this fiscal year 2025-2026. So we will start with the normal agenda with Jonas presenting some highlights from the development during the first quarter, as well as some achievements we have reached during the quarter. Then Tobias will bring us down to more details on the financials, and then we will have an outlook from Jonas by the end of presentation. And as always, after presentation, we will end with a Q&A. But before starting, 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 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, Jonas.

Please, Jonas. Thank you very much, Peter, and thank you all for attending this call. So we start with the key takeaways for the first quarter of fiscal year 2025-2026. The book-to-bill ratio came in at 1.05 in the first quarter. We saw a 1% order decline in constant exchange rate compared to last year. However, rolling 12-month book-to-bill remains at 1.09, reflecting a healthy business environment. Net sales increased by 3% in constant currencies, mainly driven by continued strong momentum in Europe, where our latest linear accelerator Electa Evo and our new software suite Electa One are gaining traction as online adaptive treatment capabilities continue to set new benchmarks in the market. The adjusted gross margin declined to 37% compared to 37.8% last year, mainly driven by changes in FX and tariff cost, with a total negative impact of 190 basis points. The negative impact was partly offset by price improvement. The adjusted EBIT margin amounted to 6.5% compared to 7.4% last year. The lower adjusted EBIT margin derives mainly from the gross margin and increased expenses from net R&D. However, the negative effect was partly offset by lower selling and administrative expenses, reflecting the positive effect from cost-saving initiatives. Moving to the cash flow for the first quarter. The operating cash flow after continuous investments amounted to negative minus 361 million Swedish krona and improvement by 529 million Swedish krona year over year, mainly driven by improved working capital management. Moving to the next slides where I will give you more details regarding sales and market development during the quarter. In constant exchange rate, group sales increased by 3% year over year. America's sales declined by 4% in constant exchange rate compared to the last year when the region grew by 16%. The stable development in Latin America was fully offset by lower sales in North America, where U.S. volume declined mainly as a result of customers awaiting the Electa Evo clearance. APEC sales declined by 4% in constant exchange rates, mainly due to lower volumes in China and India. Chinese sales were negatively impacted by last year's weak order intake. Sales in EMEA increased by 15% in constant exchange rate compared to the last year, driven by strong performance in Europe, supported by new product launches. We saw a strong growth in countries like France, UK and Poland. As you can see in this slide, EMEA is now the biggest region with 40% of the group's total sales. During the quarter, we can clearly see how our adaptive capabilities across all our products are generating concrete customer wins. If you go to ElectaUnity, we have noted that the erectile, which demonstrates ElectaUnity's capability to treat prostate cancer while preserving the erectile function, has gained significant attention. University of Texas Southwestern is the second bullet where we also celebrated an important and comprehensive deal including some of our most advanced solutions to the University of Texas Southwestern. UT Southwest is at the very forefront of radiotherapy and a long-standing partner to Elekta and we are very proud that our solutions will be taking cancer care to the next level in terms of ultra-hypofractionation. And the last slide then, during the quarter, or the last bullet, during the quarter, the Lexel Gamma Knife received FDA clearance for treating certain types of epilepsy. This is an important step towards expanding the scope of stereotactic radiosurgery. Elekta is the global market leader in neuro, and this is a highly profitable business segment for us. Neuro with our Lexel gamma knife plays an important role when treating certain cancer types where it improves outcomes and ensures a better quality of life. During recent years, we have, as you know, been accelerating innovation. I'm therefore very glad for the positive customer response for our recently launched solutions, Electa Evo, and our software, Electa One Planning, and the Electa One Online. During the quarter, we have seen several deals, including both Electa Evo and Electa One, showcasing the great value Electa offers to its customers. We will continue this journey and leverage our leading product portfolio to drive profitable growth going forward. So, with the current geopolitical landscape, we want to take the opportunity once again to remind you about exposure to U.S. tariffs. Elekta's sales in the U.S. market, roughly 21% of total sales include approximately one-third devices, one-third software, and one-third of service. We communicated our exposure already in the fourth quarter and that we expected an impact from tariffs in Q1. After a report of first quarter, we now have a better view of the magnitude of the negative impact from tariffs. In the first quarter additional tariffs compared to last year amounted to 33 million Swedish krona and tariffs had a negative impact on the adjusted gross margin of 90 basis point. For Q2 we expect continuous negative impact on the gross margin. We are trying and working hard to offset these extra costs in various ways. We have implemented a specific tariff clause in our contract. We work on prices, improving our sourcing efficiency and adjusting our cost base. For prices, we are continuously adjusting our prices as we have done for quite some time. Also, when EVO is launched in the US market, their prices will be adjusted in accordance to the product being in the premium segment. Overall, we are closely following the market development and are actively trying to manage the situation in the best possible way. With that, I will now hand over to Tobias for the financials.

Thank you Jonas and good morning everyone. Let's look into the first quarter. During the first quarter, net sales increased by 3% in constant exchange rates. Solution sales increased by 1% and service grew by 4%. As Jonas previously mentioned, our product launches in Elekta Evo and Elekta One had a continuous positive contribution to the growth in the quarter. The adjusted gross margin amounted to 37%, with a negative impact from foreign exchange rates and increased tariffs costs. Price improvements continued in the quarter. The adjusted EBIT margin amounted to 6.5%, corresponding to a year-over-year decrease of 90 basis points, driven by the lower gross margin and higher net R&D costs, while the SG&A costs were down compared to last year. Net income amounted to 106 million SEK and adjusted earnings per share amounted to 0.31 SEK. Then let's look into the different building blocks for the year-over-year adjusted EBIT development. Overall, as I mentioned, the adjusted EBIT margin declined to 6.5% in Q1. Our gross margin declined to 37% with a negative impact of 190 basis points from FX and additional tariffs cost. We have continued to improve our price levels with support from general price increases as well as from newly launched products. In the first quarter, expenses declined by 4% and admin expenses by 3% in constant exchange rates. The decline in SG&A costs is mainly related to the cost reduction initiative totaling 280 million SEK on an annual basis implemented during last year. Net R&D cost increased by 17% in constant exchange rate. This is due to higher amortization and lower capitalizations, while our gross R&D declined year over year. Then I will explain the FX movements in the quarter to facilitate understanding how it impacts electors P&L. Our reporting currency is the Swedish krona and what we have seen recently is the strengthening of the Swedish krona versus our main revenue currencies US dollar and euro. This leads to lower revenues and earnings in SEC, everything else equal. Secondly, we have more revenue than cost in US dollar. The depreciation of the US dollar versus our main cost currency, euro and pounds, has led to an unfavorable currency transactional impact in the quarter. We will continue to work with price improvements and productivity enhancements to mitigate FX headwinds. Let's then have a look at the cash flow development. In the seasonal week first quarter, cash flow after continuous investments improved by more than 500 million SEK year over year to negative 361 million. The improvement was mainly driven by the improvement in working capital, in particular operating receivables. Net working capital as a percentage of net sales amounted to negative 7%. Lower investments contributed positively as well. Rolling 12 months cash conversion amounted to 92%, which is well above our target of 70%. We also want to share the development of some key financial metrics. Net sales, gross margin, EBIT margin and operating cash flow, which are all key metrics for Elekta to deliver profitable growth. Although net sales on a rolling 12-month basis is relatively flat year over year, we see a positive trend for the gross margin and EBIT margin in line with our ambitions to move the gross margin to pre-pandemic levels and an EBIT margin of 14% and higher. Additionally, we have seen a positive development for the operating cash flow and we have delivered significant improvement year over year. With that, I hand over to you, Jonas.