outlook maintained for the full-year · outlook maintained for the full-year ̶soft quarter q3...
TRANSCRIPT
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Outlook maintained for the full-year
soft quarter
Q3 report 2019/20
February 20, 2020
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Agenda
1. Q3 performance
2. Financials
3. Outlook
4. Q&A
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Important information
This presentation includes forward-looking statements including, but not limited to, statements relating to
operational and financial performance, market conditions, and other similar matters. These forward-
looking statements are based on current expectations about future events. Although the expectations
described in these statements are assumed to be reasonable, there is no guarantee that such forward-
looking statements will materialize or are accurate. Since these statements involve assumptions and
estimates that are subject to risks and uncertainties, results could differ materially from those set out in
the statement. Certain of these risks and uncertainties are described further in the Annual Report in
section “Risks and uncertainties”. Elekta undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as
required by law or stock exchange regulations.
This presentation is intended for investors and analysts only. Some products are still in research and/or
not cleared/approved in all markets. Cancer statistics are given to show the potential market in the
respective area and does not mean that Elekta currently has products to treat these indications.
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1. Q3 performanceDr. Richard Hausmann
President and CEO
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We are
Everyone with cancer should
have access to and benefit
from precise, personalized
radiotherapy
Medicine.Radiation.Precision.
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Driving innovation and thought leadership
MR-Linac paradigm shift
• Elekta Unity superior high-field system
• Excellent clinical results from 20 Elekta
Unity systems
• Collaboration with ViewRay to drive
market adoption
7
Acquiring remaining
share of Palabra
Apps integrated in MOSAIQ Plaza
• Smart Clinic
• Voice Automation
• Teleport
Integration of ProKnow
• Centralize, archive, view and analyze
treatment planning data
• Automated metrics and performance
scorecards
• Cloud base scalable framework
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Elekta supporting World Cancer Day
Inauguration of 1st (Elekta) linac in Rwanda
Joint quest against women cancer in Vienna
Uppsala univeristy hospital
promoting Elekta Unity in Sweden
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Strong interest at Arab Health
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• Exciting meetings with
customers and partners
• Signing of multiple orders
with customers across
the region
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Q3 – Improved profitability
but weak order intake
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Key Q3 financials
• Organic order intake -11%
• Organic net sales +5%
• Gross margin 42.0% (40.7)
• EBITA margin 17.7% (15.2)
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Q3 – Improved profitability
but weak order intake
11
Key Q3 financials
11Get in high resolution
• Organic order intake +6%
• Organic net sales +7%
• Gross margin 41.8% (40.5)
• EBITA margin 15.4% (15.8)
9M – Confidence in full-year
outlook
Key 9M financials
• Organic order intake -11%
• Organic net sales +5%
• Gross margin 42.0% (40.7)
• EBITA margin 17.7% (15.2)
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Net salesrolling 12 months
4 000
8 000
12 000
16 000
20 000
16/17 17/18 18/19 Q319/20
MSEK
0%
5%
10%
15%
20%
16/17 17/18 18/19 19/20
EBITA marginrolling 12 months
Orders
Net sales
Creating value by innovation and thought leadership
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Q3: Strong order growth in EMEA and China
Europe, Middle East & Africa (EMEA)
9%• Strong growth both in mature and emerging
markets
• Big bundle deal win Jules Bordet/Belgium including 1 Elekta Unity and 4 linac-deal to university hospital Dresden
• Several linac orders in Russia
• 1st LGK order to Dubai
• Strong success in Nigeria, ordered 4 linacs
Asia Pacific
-6%• Strong order growth in China,
continuing taking market shares, being clear market leader
• Large bundle deal of 10 linacsto private HEDY Group/China
• Exciting win, HCM Oncology Hospital in Vietnam
North & South America
-43%• Negative development in the US
driving the region
• Good contribution from Brazil and Colombia
• Larry Biscotti heading Region North and Central America
Q3 growth rates based on constant exchange rates
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Europe, Middle East & Africa (EMEA)
Asia Pacific
North & South America
9M figures based on constant exchange rates
14
-10% +11% +15%
9M: Double-digit order growth in EMEA and Asia Pacific
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14Total 30 21
Reiterating 75 orders by Mid-2020 – most likely already at the end of the FY 19/20
Elekta Unity – 65 systems ordered as of today
+1Q3
Europe, Middle East & Africa (EMEA)
Asia Pacific
North & South America
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Elekta Unity demo in Tübingen in November:
Two oligomets in one session - adapting to the antonomy of the day
Rektum Rektum
Fraction n Fraction n+1
Courtesy: Dr. Gani, University of Tübingen
Oligomet no. 2Oligomet no. 1
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Partial breast irradiation (PBI)
Planning CT
Planning MR Registration daily MR / planning CT
Registration CBCT/ planning CT
Post Operative PBI
Insufficient target visualization with CT
following breast reconstruction
Target area clearly visualized with MR
IMRT SnS Plan, 40.05 Gy /15 fx
ATP workflow with MM (avg. 20mins)
Reference: Nachbar M et al. Partial breast irradiation with the 1.5 T MR-Linac: First patient treatment and analysis of electron return and stream effects.
Radiotherapy and Oncology. 2019;145:30–35.
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181) Original consortium members
1) 1)
1)1) 1)
1)
Shandong Cancer
Hospital & Institute
Hong Kong Sana-
torium & Hospital
1)
1)
Our Elekta Unity pioneers treating patients routinely20 installed Elekta Unity systems in clinical use with great feedback on performance
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2. FinancialsGustaf Salford
CFO
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Strong service revenue growth and margin improvement
• Net sales up 5% for the quarter
• Solutions +3% and Service +8%
• North and South America: -23%
• Europe Middle East and Africa: +25%
• Asia Pacific: +19%
• Gross Margin improvement
• Supported by Neuro and Oncology Information
System growth
• COGS reduction program contributing
• EBITA at 17.7%
• Improvement vs. last year and last quarter
• Net Profit growth of 45%
(SEK M)Q3
2019/20
Q3
2018/19
Net sales 3,656 3,320
Solutions 2,216 2,049
Service 1,440 1,270
COGS -2,121 -1,967
Gross margin (%) 42.0% 40.7%
Expenses* -851 -782
Exchange diff and other -36 -66
EBITA 648 505
EBITA margin (%) 17.7% 15.2%
Amortization -205 -194
EBIT 443 311
Net financial items -45 -39
Income taxes -89 -60
Net profit 308 212
EPS 0.81 0.55
* Excluding amortization
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• Increased selling expenses to drive growth and Unity
opportunities
• Administrative expense increase driven by
investments in IT solutions/operational excellence
and costs for litigation
• Net R&D decreased as capitalization increased
more than amortization vs LY driven by late-stage
R&D projects
• Gross R&D in relation to net sales at 10%
128
104 97
124101
135 132
120
176 166
197183 185 175
0
50
100
150
200
250
Q1 18/19 Q2 18/19 Q3 18/19 Q4 18/19 Q1 19/20 Q2 19/20 Q3 19/20
Capitalization and amortization
Capitalization Amortization
Expenses
(SEK M)Q3
2019/20vs. LY* vs. Q2*
Selling -339 5% -6%
Administrative -282 10% -4%
R&D (Net) -415 -1% -1%
Total -1,036 4% -4%
Continued focus on cost control
* Constant currency
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Volume and product mix main driver of increased EBITA margin
Q3 YTD - EBITA bridge (SEK M)
14221492
70
455
142 197
109163 86
1635
EBITA Q318/19
MEGdivestment
excl. MEG Volume Product Mix UnitySales Exp /Amortization
Admin /Other
Expenses
FX ratedifferences
Amortization EBITA Q319/20
15.4%15.8%
• Strong contribution from
volume and product mix
• Last year the MEG
divestment contributed 80
bps to EBITA
• On EBITA level currencies
had a negative SEK -40 M
YTD (and SEK +50 M in the
quarter)
15.0%
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398
Q2 19/20
9,741
88
Inventory Accounts receivable
125
Accrued income
68
Other Q3 19/20
9,374
Net working capital reflecting Brexit inventory and invoicing seasonality
Asse
tsLia
bili
ties
176
309 223
Customer Advances
Q2 19/20 Accounts payable
Prepaid income
Other Q3 19/20
10,345
10,10421
Net working capital change in the quarter Net working capital as % of sales
23
-14%-13%
-9%
-15%
-7%
-7%
-2%
-20%
-15%
-10%
-5%
0%
Q118/19
Q218/19
Q318/19
Q418/19
Q119/20
Q219/20
Q319/20
Key focus areas in Q4 quarters
• Get rid of Brexit inventory
• Collect on high invoice volumes generated in Q3
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3. OutlookDr. Richard Hausmann
President and CEO
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Measures to further improve profitability and cash flow
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Drive strong
installations
COGS
improvements
kick in
Profitability
Drivers
Current
status
Get rid of
Brexit inventory
Continue
improvement in
invoicing and
collection process
Increased gross
margin, reaching
42%
Continue draw
benefit from COGS
program
Strong installations
except in the US,
especially in OIS and
Elekta Unity
Deliver on plan and
optimize global
resources
accordingly
Currently worked
down and shipped to
customers
Zero Brexit
inventory at
end of April
Improvement,
more work needed
Regional targets and
central support
Improvements
in Q4
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Status and short term outlook of the Corona virus effect
• Caring about the safety of our personnel
• Service personnel been working to secure client’s systems
• No major production or engineering issue at present, neither in
Beijing nor in Crawley
• Opened production site in Beijing on February 10
• Securing production of linacs in Crawley/UK
• Some dependency on Chinese sub-suppliers
• Challenges in order flow and installations at clinics
• Public tenders temporarily on hold
Facts about Elekta in China
• ~14% of net sales YTD
• ~600 employees
• Production site in Beijing
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Guidance and priorities going forward
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Net sales
EBITA margin
8-10%
~18%
GuidanceFY 19/20
8-10%
>20% with expansion of up
to 200 BPS in the
end of the period
ScenarioFY 20/21-22/23
• Continue the success of Elekta Unity
• Harvesting MOSAIQ Plaza platform
• Execution of COGS reduction program
• Secure installation pipeline
• Continued cost control
Focus in Q4 19/20
Assuming a normalization of the Coronavirus situation in FY Q4
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In summary
• Good performance except in the US
• Strong Elekta Unity sales funnel, confident to reach the target of 75 systems
• Improved profitability, both gross margins and EBITA margin
• Good underlying business, with strong outlook for product portfolio – new linac to be launched at ESTRO
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at ESTRO
Invitation to follow
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Q&A