Vitrolife AB (publ)

Good morning, everyone, and welcome to the Vitralife Group Q4 report. I'll now move you to the first slide of the presentation. Let me start with the highlights. We delivered 6% organic growth in local currencies, excluding discontinued business, beating our own internal forecast for the quarter in relation to the top line. Strong growth in Americas, again driven by North America. I should also call out that APAC also performed very well in the quarter with 10% organic growth in local currencies. And the third point that I would like to highlight is that following a strategic review of our genetic services business, we announced a restructuring program in December. This will allow us to focus on the key tests and markets with stronger prospects for profitable growth. I'll now move you on to the next slide, please, and take you through the key highlights. So sales in the fourth quarter were 891 million SEIC, an organic growth in local currencies of 6%, as I mentioned, but significantly impacted by minus 10% from currency effects. Gross margin was 58.6 when adjusted for the restructuring. This was a decrease versus Q4 2024, which was exceptionally strong. Additional factors impacting the gross margin are a currency impact, which is the majority, in fact, the regional mix. So you will see in the coming slides, we are increasingly having a greater percentage of our revenue coming from Americas, And then we also have a mix effect within consumables in APAC, where we had a targeted campaign in disposable devices. Moving down then to EBITDA, we had EBITDA of 251 million SEC in the quarter, equating to an EBITDA margin of 28.2%. We also have a significant negative currency impact here, just under 3%. um regional mix and product mix as i mentioned also in relation to margin is is playing a role and we do have higher opex here due to strategic investments that we made in sales and marketing in north america of course that also helped us to drive the growth there and also in it where we have made investments to support our customer journey and also enabling us to drive growth in north america I'd like then to comment on the operating cash flow, 160 million sec. Clearly here the starting point is lower for the reasons that I have just explained. Last year we also had a positive effect from changes in net working capital. So then for the full year, we have organic growth in local currencies, excluding discontinued business of 4%. And actually Par in his final slide of the financial section will take you through the full year numbers in detail. Okay, moving on then please to the sales and growth per geographical segment. So I'll start with Americas, where, as I said, we delivered 9% organic growth in local currencies, driven by a very strong performance in our key focus market of North America. Americas, as you can now see, accounts for 34% of our revenues. Moving on then to EMEA, a challenging quarter for our EMEA region, as we expected, due to very high technology quarter across the region in Q4 2024. I do want to highlight that Europe is performing well. However, genetic services in the Middle East is impacting the overall EMEA results. A great quarter of consumables across the region with share gains in key focus markets. EMEA now accounting, as you can see there, for 34% of the share of token sales. Okay, moving on then to APAC, we have strong growth in APAC, up 10% organic growth in local currencies, and this region outperformed our internal expectations in both consumables and technologies. Okay, we'll move on now and take a deeper dive into each of the regions, starting with market region EMEA. Sales in EMEA were 333 million SEAC, a decrease of minus 1% in local currencies, excluding discontinued business. Consumables delivered 11% growth, well above market growth levels. And this was driven by share gains in key focus markets where we decided to double down. So you're really going to see that focus is the name of the game for us. As I previously mentioned, we were very challenged to deliver growth in technologies in this region due to the comps with last year, so this decline was forecasted and expected. What I am pleased with is the run rate revenue coming from the consumables part of technologies is performing strongly. Moving into genetics then in the EMEA region, genetics is performing very well in Europe. However, clinics in the Middle East have insourced activities to boost their income during the downturn from the geopolitical situation, and we don't expect this business to return. Typically, when clinics insource, it tends to stay that way. Moving on then to market region Americas. Americas, we had sales of 299 million sales in Americas and organic growth of 9% in local currencies. We delivered strong growth across the entire portfolio in all markets in the region, which was great to see. The investments we have made in sales and marketing in North America are clearly paying off and there is no doubt that we are taking share in this key region for the Vitrolife Group. We have been focusing the team on increasing the penetration of embryoscope, and we were delighted to see a 40% growth in technologies in this region in the quarter. Genetics also continued to perform well, driven by share gain momentum. Earlier in the year, we had taken quite a bit of share in North America, and that share gain momentum continued in Q4. Okay, I will now move you on to market region APAC and give you some more colour on the performance here. So a strong finish to the year in our APAC region. Growth of 11% in local currencies in consumables driven by share gains in disposable devices where we launched a targeted campaign. We delivered 13% growth in technologies as clinics finally released year-end budgets, thereby allowing for investments in capital purchases. So overall, a strong finish to the year after a tough first half in APAC. I will now hand you over to Pat, who will take you through further details on our geographical segments.

Thank you, Bronwyn. We are now on page number nine in the deck, where I will provide more details of the geographical segment Americas, EMEA and APAC. Starting with the Americas on the left side. As Bronwyn mentioned, SACE amounted to 299 million SEK, reflecting a 9% organic growth in local currencies and a minus 4% growth in SEC, negatively impacted by currency. Gross income amounted to 167 million SEK with a gross margin of 55.7. This compares to last year's gross income of 171 million SEK and a margin of 55.0. An improvement of 0.5 percent points driven by the products mix despite the negative impact by the FX effect on the gross margin. Selling expenses for the quarter rose from 76 million SEK to 83 million SEK, reflecting the ongoing investments in sales and marketing in the U.S. As previously announced, the market contribution for the quarter was 27.9% compared with 30.5% last year, impacted by the increased strategic investment into sales and marketing capabilities. Let's move on to EMEA. There we have a minus 7% decrease in local currencies and minus 13 in SEC, totaling to 333 million SEC sales. The sales were negatively impacted by currencies and the discontinued business. Excluding the discontinued business, sales decreased by minus 1% in local currencies. Gross income was 195 million SEC with a gross margin of 58.5 compared to margin of 63.9 last year, mainly driven by the restructuring reserve, negative currency and product mix effects. The gross margin excluding the restructuring was 60.2. Selling expenses increased from 82 million SEK to 100 million SEK Excluding the restructuring cost, the selling expense amounted to 79 million SEK, which is in line with last year's EBLN. The market contribution margin for the quarter was 28.4% compared to 42.4% explained by restructuring cert and publics. The adjusted market contribution was 36.4%. In APEC, sales amounted to 259 million SEK, reflecting an increase by 10% organic growth in local currencies, but a 2% decrease in SEK, negatively impacted by currency. Gross income was 155 million SEK, with a gross margin of 59.9%. which is lower than previous year's gross income of 170 million SEK and a gross margin of 64.2%. A decline of 4.3% points compared to previous quarters, negatively impacted by currency and products mixed within the consumables in APAC. The selling expenses increased from 40 million SEK to 45 million SEK. The market contribution margin for the quarter was 42.5, down from 49.1, last year explained by lower gross margin and somewhat higher OPEX in the quarter. Let's move to the next slide. On this slide, I will comment on the Q4 financial highlights. starting with net sales. As earlier mentioned, the sales amounted to 891 million SEK compared to previous year with a sales of 959 million SEK corresponding to a 3% growth in local currencies, a minus 7% decrease in SEK and positive growth of 6% in local currencies excluding discontinued business. The gross margin income amounted to 522 million SEK compared to 586 58.0 down from 61.1. Q4 2024 was an exceptional strong quarter from a margin perspective. Adjusted for the restructuring, the margin Q4 this year was 58.6, which is more in line with our historical performance. The drop in the margin is explained by mainly currency effect, but also regional mix effect, and also the mix effect coming from the consumables in APAC. And then I move to EBITDA. EBITDA, all in all, this gives us an adjusted EBITDA of 251 million SEK compared to 337 million SEK previous years, as I just mentioned. This was an exceptionally strong quarter last year. This gives us an EBITDA margin of 28.2% when adjusting for restructuring expenses compared to 35.1% last year. The drop in margin is explained by currency effect, freedom of mix effect, and mix effect within the consumer rules in APEC. Okay, let's move to the next slide where I will go more into the latest on the operation expense development last year compared to this year. of 361 million SEK, and this year we ended up at 378 million SEK. And let me explain the bridge here then. On the selling expense, we saw an increase. I'll start over. This is excluding impairment and restructuring reserves. So this is clean from those on-time bookings. So the selling expense, increased by 6 million SEK, reflecting the investment we have done in North America in sales and marketing. The admin expense, we saw a reduction of 2 million We still have some increased IT expenses here, but that has been offset by reduction in other admin areas. So a positive net effect. On the R&D, we saw an increase of 5 ms in the quarter compared to last year, which is mainly a phasing effect. And the spending here is in line with our effort to increase our R&D expenses in preparation of new product launches. And on the other operating expenses, In this one, we also have the FX effect from our revaluation of accounts receivables and accounts payable had a negative effect in total. Okay, thank you. And then key financials. Here I will focus on the year-to-date column mainly. And the sales stand for the full year amounted to 3.5 billion SEK corresponding to a 2% growth in local currencies, a 5% decrease in SEK, and a 4% increase in local currencies excluding discontinued business. The gross margin decreased from 59.3 to 58.1, mainly due to currency effects. The adjusted gross margin is 58.2. The EBITDA for the full year amounted to 949 million SEK compared to 1,225 million SEK corresponding to an EBITDA margin of 27.6 versus 34.0 previous year. The adjusted EBITDA margin was 29.2. for the full year. And again, the decrease in the margin is heavily impacted by currency effect driven by a strength in SEC against other currencies. The margin was also negatively affected by the increase on OPEX, which I explained is mainly selling expenses in North America and our IT investment. Net income amounted to 390 million SEC compared to 540 million SEC previous year, heavily affected by the currency fluctuations. This gives an earnings per share of 2.89 krona compared to 3.78 krona last year. On the operating cash flow, it's amounted to 675 million SEK for the full year compared to 907 million SEK previous year. The main reason is the underlying result, but also we had a negative impact on the changes in networking capital this year, explaining part of the difference. Our leverage net debt to Ebitda ended up at 0.7 compared to 0.7 previous year. The proposed dividend from the board is 110 per share, which is the same as last year. And I will now hand over back to you again, Bronwyn.

Thank you, Pat. So moving on then to the focus for 2026. And as always, we will focus on three key areas, on growth and innovation and on operational excellence. And I'd like to start with growth. we will continue to drive share gains in key markets and that's very important we're not going to be all things to all people in key markets leveraging the full breadth of the portfolio i think one of the statistics that we've been tracking very closely is the percentage of customers who are now buying across consumables technologies and genetic services and this is trending up nicely So the strategy of leveraging the full breadth is working and will continue to drive share gains using our portfolio position. The second point on growth is acceleration, penetration of our combined embryoscope and lab control solutions. We've really doubled down here. That's why we're particularly happy with the 40% growth in North America in Q4. And it's really as a result of this combined embryoscope and lab control solutions. Third point, very important. We have been investing in commercial excellence capabilities for the past 12 months. It improves our segmentation. It helps us to drive profitable growth. And back to the point around taking market share, we've been tracking this very closely now with much more advanced metrics than we had previously. So we will further leverage the commercial excellence capabilities in 2026, again, to drive that profitable growth. Moving on then to innovation, we have prioritized the programs that will have the greatest impact and relevant for customers and patients. I think that's very important. And then we do hear clinics and customers crying out for help with automation. So we will further develop and we continue to invest in our IVF platform. this will ultimately help clinics to automate, to scale, and to drive efficiency. And actually, if you look at the integration that we now have between Embryoscope and our witnessing solution, you can see the forays that we are making in that area. In relation to operational excellence, we have invested in IT and digital capabilities. We need to make further investments there to improve the customer journey. This is really also helped us in North America last year, and then some of the key focus markets in APAC in Europe, and it also helps to increase our efficiency. Another focus area in relation to operational excellence heading into 2026 is we want to drive improvements in our internal processes and workflows to optimize our cost base. And then, as you know, the Vitrolife Group doesn't like to issue guidance, but we just wanted to give an opinion on the macroeconomic conditions as we turn the corner and are now into 2026. We do expect market conditions to return to more normal levels this year, thereby providing greater opportunities for us to drive profitable growth. So this will be the focus for the company in 2026. And with that, I think we can now move into Q&A. Thank you very much for your attention.