Operator: Welcome to the Getinge Q1 Report 2025. [Operator Instructions]. Now I will hand the conference over to the speakers CEO, Mattias Perjos; and CFO, Agneta Palmer. Please go ahead.

Mattias Perjos: Thank you very much. Welcome everyone to today's conference. Today, we'll focus on first, a quick look into our performance in the first quarter and then reflect a bit on the current market situation and our expectations for 2025. So we can jump directly to Page #2, please. Looking then at some of the key takeaways when it comes to the performance from the first quarter. We do look back at a solid quarter when it comes to top line. Our order intake grew by 7.1% and it was 2.9% organic growth out of this. Our net sales increased by 10.7% in the quarter, where organic growth was 6.2%. The positive development was primarily attributed to Acute Care Therapies and from a geographic perspective to the Americas. When it comes to the adjusted gross and EBITDA margins, they improved by about 1 percentage point in the quarter, and this was mainly thanks to leverage from volume, acquisitions, healthy price increases and positive mix as well. Currency was a headwind and weighed on the EBITDA margin in the quarter. When you look at our financial leverage, it's now back on a similar level to last year in spite of the increased net debt level after the acquisition of Paragonix. So that means our financial position remains solid. We can then move to Page #3, please. So I just wanted to touch briefly on some of the key activities and events during the first quarter of this year from -- let's start with sustainability and quality. Securing compliant quality in our products and operations continues to be our highest priority. I'm happy now to see that the KPIs supporting these efforts are trending positively. We can see, for example, that both findings per regulatory audit and field corrections in relation to net sales are continuing to go down year-on-year. We also see a positive downward trend for our CO2 footprint in Scope 1 and 2, thanks to increased share of renewable electricity and gas. When it comes to the offering and our customers. So if we start with Paragonix, they continue their healthy growth journey since the acquisition last year. The latest product launch, the KidneyVault, which is designed to protect the most in-demand organ during transportation has been a success with positive user feedback. Furthermore, we also have now EU MDR approval for the large majority of products, which is an important milestone in the expansion outside of the U.S., which is an initiative that we're kicking off this year. The intended phaseout of the product category is Surgical Perfusion is following our plan. It impacts organic order intake and net sales negatively, but it's still expected to be accretive to margins already now in 2025. In Life Science, we launched our DPTE-FLEX Alpha Port, which is an important addition to our Sterile Transfer portfolio and an important part in serving our former customers in this important segment. We can then move over to Page #4 and our top line performance. Overall, as I said, good top line momentum, particularly strong top line performance in Acute Care Therapies and in the Americas region. Our order intake grew 7.1% in the quarter, whereof 2.9% was organic growth. Acute Care Therapies grew high-single digit, coming mainly from ventilators in Critical Care and ECLS disposables within our Cardiopulmonary product category. In spite of double-digit growth in Sterile Transfer, Life Science was significantly down when it comes to order intake, and this is mainly due to weak orders in the Bio-Processing subsegment. Surgical Workflows grew orders slightly, thanks to continued strong performance in infection control. When it comes to sales, we grew 10.7% in the quarter, whereof 6.2% was organic growth. Acute Care Therapies delivered double-digit organic growth coming from the same categories as orders, so ventilators and ECLS disposables again. Life Science was down by about 2% in the quarter in spite of growth in all product categories besides Bio-Processing, where the market globally has been challenging for some time now. Mitigating actions are ongoing to both reignite sales and also right-side costs specifically when it comes to our Bio-Processing structure. Surgical Workflows was basically flat year-on-year. All in all, when zooming in Infection Controls consumables grew by almost 10%, while sales was soft in Digital Health Solutions and in Surgical Workplaces. With that, we can move over to Page #5, and I'll hand over to you, Agneta, briefly.

Agneta Palmer: Thank you, Mattias. So once again, we see positive impact from the leverage that we get on margins when sales volumes go up and restructuring efforts come into effect. Adjusted gross profit increased by about SEK 0.5 billion to SEK 4.337 billion in the quarter, primarily on the back of volume, acquisitions, continued price increases and favorable mix. Gross margin was up by 0.8 percentage points in total, thanks to positive contribution from Acute Care Therapies. On adjusted EBITDA margin, the positive effect from adjusted gross profit contributed by 0.3 percentage points, excluding currency effects, thanks to those factors that I just mentioned. I'm pleased to see that we continue with a good trend on OpEx, which had a 1.5 percentage point positive impact on the margin in the quarter when adjusting for currency, and this was mainly due to operating leverage. FX had a negative impact on the margin in the quarter by minus 1.1 percentage points. So all in all, this resulted in an adjusted EBITDA of SEK 1.003 billion, improving on our margin about 1 percentage point year-on-year to 12.1%. Let's then move to Page 6, please. Free cash flow decreased in the quarter to SEK 0.2 billion. Compared with last year, free cash flow was impacted by volume-driven inventory increases, lower operating liabilities and some payments from last year's restructuring activities. There was also some unfavorable timing of accounts receivables compared to prior year. At the end of Q1, net debt amounted to SEK 9.7 billion. If we adjust for pension liabilities, we are at SEK 7.3 billion. So this brings us to a leverage of 1.4x adjusted EBITDA which is well below the 2.5x, which we have as an internal threshold. We adjust for pension liabilities, the leverage is at 1.1x adjusted EBITDA. So the signals that could remain in a solid financial position and we are actually at the same leverage as last year, even though we have made investments in strategic acquisitions since then. Cash amounted to approximately SEK 4.2 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 please to Page 7 and back to you, Mattias.

Mattias Perjos: Okay. Thanks, Agneta. When it comes to our strategy for profitable growth, there are some key enablers that we focus on. And part of this is about increasing the share from recurring revenue, accelerating the share of sales from high-margin products like ECLS and also BetaBags in our Sterile Transfer product category. And this all should be supported by solid and effective quality processes. So these improvements should of course, be achieved through responsible leverage and attractive long-term return on invested capital. We clearly see that we're delivering according to our plan in this respect as all those KPIs are trending in the right direction. You can see that sales from recurring revenue is now at 65% and high-margin products make up about two-thirds of our sales currently. When it comes to quality, the number of field actions in relation to sales has also decreased significantly, which is a good leading indicator for the hard work that's been going on for quite some time with this. We can move over to Page 8, please. So in addition to our quarterly performance, I wanted to spend some time talking about what's going on in the world right now and how we navigate this. Certainly lots of dynamics in the market related to this geopolitical uncertainty that we're seeing now. So here are three examples of areas offering both some challenges and opportunities for us. When it comes to tariffs, the current situation with increased trade barriers and higher tariffs, we believe is unfortunate. We're a global company with a global footprint, which mitigates this naturally to some extent, and I'll touch that a little bit more on the coming slides. When it comes to budgets, there is a trend for more investment in defense and the civil sector, where we also hope to be able to contribute. Germany's €500 billion plan is one concrete example of this. Furthermore, the ambition of the health care sector to become more productive is also well in line with the strength of our products and service portfolio. And then specifically in the U.S., we have lately seen some pulls in research funding impacting our Life Science sales to customers within this business area. On the other hand, we do note as well that several big pharma companies are preparing for U.S. expansion, and that's something that we are well positioned to support them with. When it comes to some of the structural changes at the FDA that has been in the news, this has not yet resulted in any negative impact for us. We continue to have a constructive dialogue on a weekly basis. So the way we address these dynamics are, for example, by continuing to have a close dialogue with our customers and the authorities, there are -- for our stakeholders in our business. And we, of course, also look into optimizing our supply chain further to ensure both availability of product but also cost effectiveness throughout the whole supply chain. We will continue to make price adjustments if needed and where possible. So this is ongoing work, something that we've been working on for many years here, and that needs to be accelerated a bit now, and we will also be agile when it comes to allocation of volumes to secure profitability throughout our operations. We can then move to Page #9, and I just wanted to share an overview of our global footprint. So Getinge has a geographically well-diversified production footprint. We have 25 production sites spread over nine countries. So on the slide here, you can see an overview of our footprint down to product category. So in the U.S. and EU, we produce for all business areas, while the Chinese site in Suzhou supports Acute Care Therapies and Surgical Workflows. Let's then move to Page #10, please. And when it comes to our sales in the U.S., we have about 60% of everything that we sell in the U.S. is also produced domestically. And you can see on the slide here, an overview per macro region. So when translating this into sales, you get to 60% of sales in the U.S. produced in the U.S. that I just mentioned. For EU and China, respectively, about 10% is produced in the U.S., about 1% of sales in EU and U.S. is coming from China. Still a lot of uncertainty and changing dynamics related to the tariff situation. So we would not comment on any potential financial impact of this yet. But hopefully, the view shared here should bring some clarity when it comes to our exposure. So with that, let's move to Page 11, please and the outlook for the year. So the outlook for 2025 is unchanged. We remain with our expectation for organic net sales growth to be in the range of 2% to 5% compared to last year's sales. And this outlook then assumes sales contribution from the intended phased out Surgical Perfusion business at about two-thirds of 2024 figures, which equates to roughly SEK 300 million. In addition, we expect recent acquisitions to contribute with about 2% such a growth this year. We can then move to Page 12, please. So just to summarize some of the key takeaways for the quarter. We've delivered a very strong performance when it comes to net sales and also with improved margins. Our leverage continues to go down, now at the same level as before the acquisition of Paragonix and our financial position overall remains very solid. We stand by our outlook for 2025, will be guide for organic net sales growth of 2% to 5%, and when it comes to our priorities for 2025, they are also unchanged. It's about addressing the remaining challenges in Acute Care Therapies when it comes to our quality. It's about sustainable productivity improvement and cost consciousness when navigating the geopolitical uncertainty that's been with us for a while now and it's about continuing to create value for our customers. So with that summary, I open up for questions. Thank you.

Operator: [Operator Instructions]. The next question comes from Rickard Anderkrans from Handelsbanken. Please go ahead.

Rickard Anderkrans: Good afternoon and thank you for taking my questions. Two from my side, please. So quite outstanding performance in Americas for Acute Care Therapies. It would be interesting to hear a bit more on the background there. What visibility do you have around potential stocking, both from a strong flu season, but also potential prebuying ahead of tariffs here? And given the historical supply chain volatility around, for example, ECMO consumables, is it not reasonable to assume some customer interest in sort of stocking up in a more uncertain environment? So I'll start there. Thank you.

Mattias Perjos: Yes. Thanks. I mean, the strong performance in the U.S. for Acute Care Therapies is largely attributable to ventilators and to ECLS. When it comes to ventilators, we don't think this has anything to do with stocking. This is merely the next step in this gravitation towards the remaining suppliers of ventilators that we've seen since the end of last year, really, that's really the main factor. So that's something that we believe is going on according to expectations and to our plans, and we're in a good position to support that. I think our team has done an outstanding job when it comes to delivering ventilators, both end of last year, but also during the first quarter of this year. When it comes to the ECLS consumables part, I think there is a flu effect in Q1. Whether there's any stocking or kind of hoarding in this, we have no evidence of that at all. I can't rule it out, but we have nothing to support that.

Rickard Anderkrans: All right. That's very clear. Second question on the margin in Surgical Workflows. With growth in Americas and higher sales contribution from recurring revenues in this segment. Can you elaborate a little bit on the softer margin development even excluding FX? Anything we should keep in mind there? And any thoughts on how we should think about the underlying margin trend going forward in Surgical Workflows? It just stood out a little bit on the softer side compared to the sort of mix development.

Agneta Palmer: Yes. Thank you for that question. I can say the short answer is that if we adjust it for currency, it is very much in line with last year, and we are continuing to see good development in Infection Control consumables and good growth there. We have in this quarter some adverse product mix on the capital side that impact this margin, but the major effect that you're seeing is from currency.

Rickard Anderkrans: Okay. I'll stop there. Thank you for taking my questions.

Operator: The next question comes from Mattias Vadsten from SEB. Please go ahead.

Mattias Vadsten: Hello, good afternoon. I have two questions as well. So starting off on ECMO, look like strong demand here, obviously, once again in this quarter. As I understand it, maybe Getinge is perhaps most critical to the sales development in terms of having stability in production. So my question is, do you expect this to be the case also for coming quarters through 2025? Or how should we look on the sales development in ECMO consumables going forward? That's the first one.

Mattias Perjos: Yes, I think you're right. I mean it's, historically, we've been the bottleneck ourselves here, but we have added capacity, and I think the team has done a really good job now for several months with stable output and gradually working down the backlog situation that we live with for a while. So I think that we do expect that to continue. It is a more and more robust operation, and we certainly hope not to be the bottleneck going forward that you'll see the real end market demand reflected also in our order intake and sales.

Mattias Vadsten: Thank you for that. And then in terms of margin in the Life Science segment, obviously, very strong Q4 and then weaker here in Q1, and it has been a volatile segment coming to margins. Do you think we will likely have to live with that given the difference in margin among product segments? Or how should we look on the margin trajectory for Life Science? Is this around the bottom that we're at right now? Or how do you see it? That's the second one.

Agneta Palmer: So regarding margin on Life Science, to your point, there is a volume effect that is very strong on the margin. So in Q4, when we had strong volumes, we do get very good leverage on that and then some of the opposite now in the first quarter.

Mattias Vadsten: Thank you. And then maybe squeezing one more. Looking at the group EBITDA margin trajectory for the full-year. I think on the last conference call, we talked about the slight margin uptick for 2025. So, yes, how are you communicating around margin for the full-year now in light of the uncertainties that you alluded to on tariffs and FX and other drivers? That's the last one. Thank you.

Mattias Perjos: I think the main point when it comes to margins is that we stand by the guidance that we gave at the Capital Markets Day when it comes to the 16% to 19% EBITDA margin span for 2028. When it comes to some of these short-term dynamics now, it's impossible to say, it's too early. We need to understand the message regarding tariffs has changed on a weekly basis. And there's a time lag in how one can pass on price increases. We need to work with some of the costs and some of the supply chain flows. And this is well, it's not possible to model that dynamics right now. So we can't answer anything in the short term.

Mattias Vadsten: Appreciate that. Thank you very much.

Operator: The next question comes from Erik Cassel from Danske Bank. Please go ahead.

Erik Cassel: Hi, first, I want to ask about Life Science and especially Bio-Processing. I mean, Danaher, they were just out with numbers and being quite upbeat about Bio-Processing momentum in general. And I think general comments have been quite positive from other peers as well. So I wanted to ask to what extent do you think this might be a Getinge specific issues? And if you could go into some more granularity on the Life Science issues and how say, temporary, they might be?

Mattias Perjos: Yes, it's hard to say how temporary they are. If you look at some of the weakness in Life Science now, it is related to the NIH funding cuts. If you look at the -- almost the entire reduction compared to last year, when it comes to order intake can be explained by projects that have been put on hold. So that is definitely a factor for us. How Getinge specific that is, I don't know. It's difficult to get anything from our peer report. I think so far, at least. So that's something we'll have to continue to monitor. And I think when it comes to comparison with some of our peers as well, historically, we've had a relatively large China and relatively large R&D exposure in our part of the portfolio. And there's some single dependence is that may be a bit more pronounced for us as well. So if I look at the broader customer base, we do have good momentum with quite a few of those customers as well. So it is, I think some Getinge specific impact in the numbers for this quarter.

Erik Cassel: Okay. Thank you. And then I realized ECMO consumables doing well this quarter, maybe stocking, maybe not, but is there any chance you can give comments on how the hardware sales of ECMO is doing in terms of market share in new system sales and sort of how it's holding up? I think that may be gives us a good indication of the health within ECMO for you guys.

Mattias Perjos: No, we can't dissect that any more than, we've singled out some of the numbers that debate quite a bit now. And on this time, it was a positive one when it comes to the ECLS consumables, but there's nothing else that stands out that we can kind of call out when it comes to hardware performance right now.

Erik Cassel: Okay. Thank you. And just the last question. I know you said that you don't really want to comment on margins. But just on the pure FX impact compared to last year, where we stand that spot. Can you give us an indication of what you think the potential clean FX impact would be?

Mattias Perjos: You mean for the full-year or?

Erik Cassel: Yes, for the full-year.

Agneta Palmer: Yes. So I will say this, we will not speculate in currency movements. In general terms, we are favored by a stronger U.S. dollars, but the main effect that we are seeing in Q1 is this revaluation effect. So the fast movement downwards on the dollar.

Erik Cassel: All right. Thank you.

Operator: The next question comes from Kristofer Liljeberg from Carnegie. Please go ahead.

Kristofer Liljeberg-Svensson: Thank you. Three questions. First, if you could just give an update on how the work is going for solving the quality issues? Then I wonder a little bit about the demand situation for Surgical Workflows, that seems to be more flattish here in the quarter. And finally, given the working capital buildup in the quarter, could you say anything about the outlook for working capital for the full-year and how we should think about that? Thank you.

Mattias Perjos: Yes. When it comes to quality, I think it's one of the areas that's been doing well for another quarter now with steady progress on remediation work. I mentioned briefly in the call, a lot of the leading indicators now are pointing in the right direction when it comes to everything from medical device reporting to field actions is going well. So we're pleased with the progress when it comes to quality. When it comes to the Surgical Workflows demand, nothing particular to call out. You know already that it's a somewhat lumpy business by nature, but nothing else. We haven't noticed any really big constraints when it comes to CapEx spending, for example. There is a little bit of wait and see in some areas, but that's probably more related to Life Science than to Surgical Workflows, I would say. And when it comes to the working capital buildup, like Agneta said earlier, it is a volume increase related buildup of working capital. There are some timing effects in there as well, but we don't make any projections for the full-year.

Kristofer Liljeberg-Svensson: Thank you.

Operator: The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.

Sten Gustafsson: Thank you. And good day everyone. A question on the tariffs. I understand you're not willing to give us any financial impact of it. But could you at least provide us with how much of the U.S. sales manufactured in the U.S. is actually sourced from the U.S. Is that 100% or in the U.S. production facilities, do you source from other countries? That would be helpful to understand.

Agneta Palmer: Sten in the U.S. is also sourced in the U.S.

Sten Gustafsson: So there are no components from other regions? That's good.

Agneta Palmer: There are some components, the absolute majority. I repeat the majority of it is export within the U.S.

Sten Gustafsson: Okay. So when do you think you will know how this will impact you given what we know today? We obviously don't know if the tariffs will go away tomorrow or next year. But based on what we know today, I think some kind of guidance would be very helpful.

Mattias Perjos: Yes, but it's too early to say anything about this. There are still a lot of changes in how the tariffs are being decided. There is this 90-day, call it grace period that we're in now with negotiations ongoing. There are still discussions about potential exemption for certain product categories and so on. It is futile to try to forecast now the impact of what this could be. It's just too early. Even if we wanted to, there's no way we could do this in a good way today.

Sten Gustafsson: So right now, today, you're not paying any tariffs?

Mattias Perjos: Yes, we are. Since the beginning of April, there are tariffs in place for medical prices as well.

Sten Gustafsson: Okay. My final question is on mitigating factors here. Are you able to raise prices locally quickly? Or is that sort of a long process?

Mattias Perjos: It is, in our industry, we typically have rather long-term contracts. There are some mechanisms in some for adjusting prices and so on. But I think the most important thing is that there is a constructive dialogue with customers regarding this. So that's something we're in the process of having right now, but it's way too early to discuss the outcome and the potential impact of this.

Sten Gustafsson: Okay. Excellent. Thank you very much. That's it for me.

Mattias Perjos: Thank you.

Operator: The next question comes from Aisyah Noor from Morgan Stanley. Please go ahead.

Aisyah Noor: Hi, good afternoon. Thanks for the question. I had one on the free cash flow, which is the weakest it's been in this quarter in the last year. I know you mentioned some unfavorable movements in accounts receivables, but could you elaborate a bit more the main contributing factors, which divisions this relates to? And would you expect this weakness to persist in the remainder of 2025? My second question is on the Life Science business. Could you elaborate on the drivers of this negative 25% decline in the U.S. between kind of research funding, pharma, et cetera? What are the main drivers of that decline? And then the third question is on tariffs. Which is more impactful to you between European imports into the U.S. or U.S. imports into China, and in terms of the magnitude of impact you think it might have on you? And then beyond -- actually, for those products that you think could be exempted from these tariffs, which divisions do you think could be exempted? Thank you.

Agneta Palmer: Okay. Thank you so much. If you start with the cash flow and the accounts receivable movements, this is a timing effect. So the answer is that we do not expect this to continue. It is related to the fact that we had a lot of deliveries very late in the quarter that are due for payments early in Q2.

Mattias Perjos: And when it comes to the Life Science part, it's almost the entire difference from last year order intake-wise is funding holds for some of our Life Science customers. So these are NIH funding holds specifically. Roughly half of those have already been released now beginning of April, but to again speculate the impact going forward is impossible, but the impact during Q1 and beginning of April is what I explained here. And when it comes to tariffs, we cannot dissect that any more than what I showed slide wise for you here, unfortunately. It's a very different tariff rates and different flows. When it comes to potential exceptions, I think the key priorities to discuss are certainly within Acute Care Therapies if there are any exceptions.

Aisyah Noor: Okay. Very helpful. Thank you.

Operator: The next question comes from David Adlington from JPMorgan. Please go ahead.

David Adlington: Hey guys, thanks for taking the questions. Almost all my questions have been asked, but maybe just following up on the foreign exchange points. If spot rates currently hold as they are, could you quantify the impact on margins for this year, please?

Agneta Palmer: Sorry, David, we've had a bit of a bad reception. Your question, I repeat, was it if currencies hold as they are now, how will we be impacted on the margin for the remainder of the year? Yes.

David Adlington: Correct, yes.

Agneta Palmer: Yes. So slightly negative, but not to the extent that it has been negative in Q1, because the major negative effect is related to the movement and the revaluation of the receivables that we get from those movements. So if currencies hold from now, there will be a slight negative effect, but not from the revaluation effect of that.

David Adlington: Got it. That's helpful. Thank you.

Operator: [Operator Instructions]. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Mattias Perjos: All right. Thank you very much, everyone, for joining. We've already done the summary here. So I appreciate you taking the time to listen in today and thank you for a very productive Q&A as well. So have a good rest of the day. Thank you very much.