Release Date: July 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AddLife AB (FRA:1AD1, Financial) reported strong growth in the second quarter with an 8% increase, or 7% when adjusted for currency and organic factors.
- EBITDA increased by 21%, reflecting successful profitability improvement initiatives.
- Both Labtech and Medtech segments showed strong growth, with Medtech's EBITDA increasing by 37% and margin strengthening to 12.3%.
- Operating cash flow improved significantly to SEK195 million from SEK82 million in the same quarter last year.
- The company successfully reduced net debt by SEK120 million during the quarter, despite paying dividends and acquisition-related costs.
Negative Points
- Labtech experienced a slight margin decline, attributed to delays in instrument projects and cautiousness in academic research due to budget constraints.
- Inventory levels increased by SEK59 million, partly due to supply chain disturbances and the addition of new suppliers and products.
- There are ongoing supply chain issues, particularly in orthopedics, affecting product availability.
- The Medtech segment faces challenges from long patient waiting lists and staffing shortages in healthcare, impacting elective surgery volumes.
- Some areas within the company still require margin improvement, although they are not as significant as the issues faced by Camanio and AddVision.
Q & A Highlights
Q: Can you explain why the Labtech margin was slightly weaker year over year despite good growth?
A: Fredrik Dalborg, CEO: The margin is within our expected range of 10% to 12%, currently at 11.6%. It's a decent margin, and the variation is typical quarter to quarter. There's no significant issue causing this change.
Q: What is the current margin development for AddVision in the Medtech segment?
A: Fredrik Dalborg, CEO: AddVision is currently in the mid-single digits for profitability. They have improved significantly and are expected to continue this trend in the second half of the year, focusing on high-profit products and commercial activities.
Q: How should we think about Medtech margins going into Q3, considering last year's strong performance?
A: Fredrik Dalborg, CEO: Typically, planned surgical activities decrease during the summer months, impacting margins. It's reasonable to expect a similar seasonal pattern this year, with lower margins in Q3 compared to Q2.
Q: Can you provide insights into the acquisition of Bonsai Lab and its expected impact on margins?
A: Fredrik Dalborg, CEO: Bonsai Lab operates in a fast-growing and profitable segment, contributing positively to our margins. While we don't disclose detailed numbers, its margins are above the current Labtech average, aiding overall margin improvement.
Q: Are there any expectations for Labtech's organic growth in the second half of the year, given the current trends?
A: Fredrik Dalborg, CEO: While we don't provide specific growth outlooks, Labtech is growing faster than the market, driven by a focus on high-growth segments. Despite some investment hesitancy in big instruments, we expect ongoing projects to finalize this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
