Vitrolife AB (publ)

Hello and welcome to the Virtual Life Group Interim Report Q3 2024. My name is Laura and I will be a coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen-only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Patrick Tov, to begin today's conference. Thank you.

Thank you, and good morning to you all, and welcome to the telephone conference for the third quarter 2024 for the Virtual Life Group. Today is the 24th of October, 2024, and the time is now 10 o'clock. My name is Patrick Tolf, and I'm the CFO for the Virtual Life Group. You will find the presentation on our website, virtuallifegroup.com slash investors. And I will now leave the word over to our CEO, Bronwyn Brophy.

Thank you very much, Patrick, and good morning, everyone. So if I can move you to page two, which is the Q3 2024 highlights. Highlight number one is a growth of 7% in local currency. I would say we're not getting ahead of ourselves here, but this is our highest quarter in terms of growth in local currency since quarter one, 2023. Consumables growth of 13%. We're particularly happy to see our core business growing double digits, and this is also one of the strongest quarters. for our consumable business, actually in a couple of years. And then finally, genetic services, North America growth of 9%. So good to see North America genetic services turning the corner. So if I can now move you to page three, please, where we'll talk about the key financials. So sales of 867 million sec in the quarter, a growth of 2% in SEC and 7% in local currency. The sales growth in SEC, I must point out, was impacted by the appreciation of the SEC versus some of the major currencies in APAC and South America, and Patrick will talk a little bit more about that later. Growth margin increased to 58.6. driven by product mix and operational efficiencies, primarily coming from our genetics business area. EBITDA margin, 33.4, so stable and remaining above the 33% mark. Operating cash flow, 206 million sec, and earnings per share, 0.85 sec. So, we could maybe bring you down then to the first nine months of 2024, because, of course, We just have one quarter to go. So our organic growth is 4% year-to-date in local currencies. I think we do see some steady progression here. We had 0% growth in quarter one, 4% growth in quarter two, and now 7% growth in local currencies in quarter three. And then moving on to EBITDA year-to-date, 888 million SECs. which is a margin percentage of 33.5 up from 32.3 the same period last year. So if I can now move you on to page four, please. And I'll talk you through our sales and growth per geographical segment. So let me start by saying that we are growing across all product lines with double digit growth in media, disposable devices, and technology. We have one exception, which is genomic kits. Genomic kits declined by 26% in the quarter, and the region that was most impacted is America, or the U.S., if I'm to be more specific. So, looking then, we had America's at 2%, 9% in EMEA, which is our biggest region, 9% in APAC, giving us the 7% in total. So, looking at America then, we had sales of 273 million sec, with strong growth in media and technology, and as previously mentioned, 9% growth in genetic services in North America. However, genomic hits continued to decline, impacting growth in this region as a whole. EMEA now our largest region, still our largest region, with 38% share of total sales. So here we had growth of 9% with media and disposable devices doing very well, actually. I should call out our southwest region where we have gone direct in Iberia, and here we delivered triple-digit growth in the quarter. This is a combination of volume and margin. And then finally to APAC. So APAC returned to growth this quarter, which is good to see. Japan, Southeast Asia, and India were driving the growth. China also performing well, but I think it's good to see other markets picking up their growth rate, particularly Japan, which had a great quarter. Okay, moving on then to page five, and we will start to look at the business areas. So, starting with our consumable business area, and as I mentioned, 13% Organic growth overall, 9% in Americas, 22% in EMEA, and 8% in APAC. So with 345 million SEC in revenue, this is not our largest quarter in absolute revenue terms, but it is our highest growth percentage in local currency for a couple of years. And you will remember that genomic kits previously formed part of our consumables business area. That is now part of genetics business area. Media continues to perform very well where we are outgrowing the market and taking share in all regions. But I think what's also nice to see here in consumables is that disposable devices is growing even faster actually than media this quarter. The commercial teams have been focusing their efforts here, so it is nice to see some traction across the broader consumables portfolio. So, good performance by our core consumables business. If I could now move you on then to page six to our technologies business area. So, here we delivered organic growth of 11%, 11% in Americas, 6% in EMEA, and 17% in APAC. So, another good quarter here in technologies on the back of a very large quarter, too, you will remember, with APAC and particularly Japan performing very strongly in both time lapse and off-tax lasers. I think what's also good to see in the technologies business is that revenue per system, which is a key indicator of utilization within the clinic is also increasing. Look, I want to draw your attention to the bar chart because you will see that going into quarter four, we have some very tough comparables to navigate, which is gonna make it challenging to beat that record-breaking Q4 in 2023 But overall, technology's business looking in very good shape, actually. The rolling 12-month growth is looking good from both a systems, consumables, and service revenue perspective. And then finally, before I hand you over to Patrick, I'll move you to page 7, where we will look at our genetics business area. So, genetics business area, flat for the quarter in genetics. with genetic services back to growth at 5.5%, but genomic kits declining by 26%. We had 9% growth in genetic services in North America and 12% growth in APAC, so we can see that genetic testing is definitely increasing outside of Americas. And the growth in APAC and, in fact, in the U.S. was driven by PGT. with both PGTA and the more differentiated PGTM doing well. However, genomics, genomic kits, continued to decline, although I should point out that the rate of the decline is decreasing month on month, quarter on quarter, as the stocking effect eases. We can see that during the transition to embryo map, which is our new kit technology, some customers did use that transition to move to next generation sequencers or higher throughput sequencers, more modern sequencers, several ways to describe that one, of course. Genomic kits only account for approximately 10% of the total revenue of genetics, but they do allow us to offer a genetic testing solution to customers who test in-house. So what are we doing to return our genomic kit business to growth? So we've now validated our kits on the next generation sequencers, and we believe that combined with the embryo map software, we have an opportunity to return the genomic kit business to growth in the coming quarters. So with that, I will hand you over to Patrick, who will take you through the geographical segments.