Getinge AB (publ)

Welcome to the Gitanji Q3 Report 2023. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Matias Perjos and CFO Agnetha Palmer. Please go ahead.

Thank you very much and thanks everyone for joining today. We can move directly to page number two and the key takeaways from the quarter, please. So we look back at a quarter where we continue to see strong global market momentum for our products. Order intake growth for getting as a whole increased by 10 percentage points, of which organic growth amounted to 7.4%. And this is thanks to positive development in all business areas except for life science. And it's a good geographic spread as well when it comes to the order intake. Net sales increased by three and a half percent in the quarter, where organic growth was flat to last year. Adjusted gross margin in life science and surgical workflows improved in the quarter. However, it decreased in acute care therapies and also for the group as a consequence of this. And this is mainly due to negative mix inflation and under absorption. This was partly mitigated then by healthy price increases, which signals that our products are attractive to customers. And even if our financial leverage has increased somewhat after the acquisition of Paragonics, our financial position remains solid. With that, we can move over to page number three, please. So I wanted to take an opportunity to highlight some of the key activities and events in the quarter. And if we start with sustainability and quality in the quarter, the notified body TIFSYD reinstated the CE certificate for the HLS and PLS consumables that are used for ECLS or ECMO therapy. TÜV Syd also extended the temporary suspension of the CE certificate for the intraordinary balloon pump, CardioSave, until July 1st, 2025. This decision has no material financial impact for us and the extended time period will now allow us to improve the product in line with the regulatory requests that we have. We're still able to supply the CE markets with our interordic balloon catheters. And furthermore, and as informed about earlier in the quarter, we made a provision of 482 million SEC related to the ongoing negotiations with the CGU in Brazil. If we then move to offering and customers, our servo ventilators received official cybersecurity clearance, which is called authority to operate certification from the US Defense Health Agency. This means that the ventilators are allowed to be purchased by the US Department of Defense and operate within their strict networking environments. We consider this an important quality stamp and proof of our strategy to provide safe device connectivity for our customers. Within our life science business, we acquired assets of the US-based company Intact Solutions with technology that makes aseptic treatment and transfer safer and more effective throughout the complete bioprocessing value stream. In September, we also completed the acquisition of Paragonics Technologies, which is a leading US company within the fast-growing market for organ transport products and services. We see a strong fit with getting us existing product portfolio, our technologies and also our global sales reach. Paragonics will form a new product area within acute care therapies called transplant care and will be an additional lever for us in our purpose as a company to help save more lives globally. We can then move over to page four, please. So as I mentioned earlier, order intake grew by 10% in the quarter, where 7.4% was organic growth. Net sales increased by 3.5% and 0.2% of this was organic growth. Order intake grew in all regions, and the increase in organic order intake was especially strong in Americas, driven by acute care therapies and the surgical workflows. From a net sales perspective, we had organic growth around 1-2% in Americas and EMEA, whereas APAC declined organically compared to last year's strong performance. We can then move over to page number five, please. This takes us to the outlook then where we reiterate our previous guidance for 2024 and we expect organic net sales growth to be in the range of 2-5% and in addition to this we expect recent acquisitions to contribute with 3-5%. We can then move to page number 6 please. So we move into dissecting the order intake per business area a bit. In acute care therapies, the organic order intake increased strongly during the quarter, mainly in critical care, in cardiac surgery and in cardiopulmonary. For life science, the order intake declined organically, mainly due to fewer orders for steam sterilizers compared to the comparable quarter last year. There was a positive performance in bioprocessing and the growth in sterile transfer also continued. In surgical workflows then the organic order intake increased overall mainly thanks to a double digit increase both in infection control and in digital health solutions while orders in surgical workplaces declined slightly. So all this together summarizes to 7.4% organic order intake growth and in actions growth was 10%. Let's move over to page number seven then. So looking at the sales breakdown for the quarter, organic net sales in acute care therapists decreased slightly during the quarter, mainly due to a lower number of consumables sold in cardiac assist and lower sales of ECLS hardware in cardiopulmonary. Furthermore, temporary supply chain challenges have impacted net sales negatively in the quarter, but we are expecting this situation to improve in Q4. In acute care therapies, we saw continued growth within critical care as well. And if we move to life science, the life science organic net sales declined mainly due to lower sales in bioprocessing and sales of isolators. This was partially offset by the strong performance within sterile transfer. However, net sales from High Purity New England in the quarter makes up for all and a little bit more of this. If we then move to surgical workflows, organic net sales for surgical workflows increased following growth in all product categories. And I also want to point out that the acquisition of Healthmark continues to contribute to growth in a material way for surgical workflows. Acquisitions contributed to an increase in net sales of 535 million SEC in the quarter. Currency had a 286 million negative impact on net sales for the getting a group in the quarter. Recurring revenue increased while sales of capital goods was down year on year. Can I move over to page number eight, please? So looking then at the gross margin and the gross profit, the adjusted gross profit decreased by 91 million SEC to 3 billion 799 million SEC in the quarter, where currency effect impacted negatively by 151 million SEC. The group's adjusted gross margin declined by 2.8 percentage points versus last year, mainly attributable to negative mix inflation and under absorption. This was partly offset by healthy price increases. Inflation is mainly attributable now to employee cost. We have seen a decline when it comes to material cost. We see good traction in normalizing cost of materials thanks to the purchasing initiatives that we have been working hard on for the last couple of years also. For acute care therapists, the adjusted gross margin decreased by 5.6 percentage points, mainly due to lower sales, negative mix effect under absorption and higher quality improvement costs compared to the comparable quarter. For life science, the adjusted gross margin increased by 2.9 percentage points as a result of price adjustments, productivity improvements and also mix. And this was partly offset by higher materials and employee costs. Certical workflows adjusted gross margin increased by 1.2 percentage points to a large extent thanks to the strong performance of acquired health mark, of price adjustments and also of mix effects. Overall, I'd say we are pleased to see that the integration of the acquisitions made last year have developed according to plan, even a little bit better in some case, and that the business performance has been above expectations. So on that positive note, I hand over to Agneta and page number nine.

Thank you, Mattias. So adjusted EBITDA declined by 198 million and the margin came in three percentage points lower, mainly then coming from the decline in the gross margin. Adjusted gross profit had a negative effect on the margin by 2.7 percentage points due to what was just mentioned by Mattias. However, on the OPEX side, adjusted for currency, we really start to see encouraging signs on OPEX, which had a 0.4 positive impact on the margin in the quarter due to operating leverage and positive contribution from acquisitions. Adjusted for currency, depreciation and amortization had no impact on the margin. And finally, FX impacted negatively by 0.7 percentage points. All in all, this resulted in an adjusted EBITDA of 903 million and a margin of 11.5%. Over to page 10 please. Free cash flow amounted to around 0.4 billion. Lower operating profit and higher financing costs contributed negatively. Working capital, however, increased to a less extent than last year. We do see positive development in operating receivables, where we have been able to leverage learnings from previous periods and apply those in many of our markets. The provision made for Brazil has no impact on the cash flow in the quarter. Working capital days continue to be well below 100. We are now at 91 days. We continue to be below trend on operating return on invested capital with 10.4% on a rolling 12-month basis, which is still above the cost of capital. Let's then move to page 11, please. The change in net debt year over year is due to the acquisitions that were finalized in the fourth quarter of 2023 and in this quarter, taking us to 11.3 billion in net debt at the end of the third quarter. If we adjust for pension liabilities, we are at 8.6 billion. And this brings us to a leverage of two times EBITDA, which is well below the two and a half times which we have communicated previously as a threshold. If we adjust for pension liabilities, leverage is at 1.5 times EBITDA. This signals that we remain in a solid financial position even after the recent strategic acquisitions, and this is according to our plan. We intend to work this down going forward. Cash amounted to approximately 2.2 billion by the end of the quarter. So all in all we can conclude that the financial position continues to be strong. Let's then move to page 13 and back to you Mathias.