Ladies and gentlemen, thank you for standing by, and welcome to the Report on Operations 2020 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session you will need to press star one on your telephone keypad. I must advise you that this conference is being recorded today on Wednesday, the 10th of February 2021. I would now like to turn the conference over to your first speaker today, Thomas Axelsson. Please go ahead, sir. Thank you very much, welcome to Vitrolife Report on Operations 2020. The speakers of today will be Mikael Engblom, the CFO of Vitrolife, and myself, Thomas Axelsson, that is the CEO. Please, let's go into the presentation then, and page number two. As you are well aware of, it's been a turbulent year for Vitrolife, but we ended very strong. Let's go through first the Q4. It was sales of SEK 382 million, and that's a decline of 7% in Swedish currency. Sales were unchanged in local currency. Our EBITDA was SEK 164 million, corresponding to a margin of 43%. If we are then looking into the complete year of 2020, the sale was SEK 1,246 million, and that is equal to -16% in Swedish currency. Sales decreased by 13% in local currency. EBITDA was corresponding to a margin of 36%. More about the financial numbers will Mikael Engblom go through at the end of this presentation. After the end of the period, the board proposes a dividend of SEK 87 million. It is corresponding to SEK 0.80 per share. I would also like to say that after closing day, Vitrolife has received information that a civil lawsuit has been filed against Vitrolife in Germany by Ares Trading, a Swiss company, regarding claimed infringements of three patents in the time-lapse area. Vitrolife will dispute the lawsuit. For your information, that Vitrolife has not included any provision for the lawsuit in the annual accounts, as in the assessment that we have done, there has been no infringement of any patent. By that, please, go to page number three. What I will try to do right now is to explain and see what situation we have inside the company within our customer market, the IVF clinics. I will then also, when I go through this on page number three, make some comments on the COVID situation. The COVID situation and the short-term outlook is on page number four. I will then, during page number three, do some comments that are then comments on page number four. Sales and growth per market region. Let's start with the region Japan Pacific. Total sales in that region was SEK 64 million. It was a decline of -3% in local currencies. That market has been going quite well. What I mean with that is that it is almost normal numbers in the Pacific area and in Japan. What we can see is that with a decline of -3%, we have had good sales in our consumer business. By looking at the consumable business and in contact with our end users, the clinics, we are having a good feeling about what kind of pent-up demand that's happening on some markets, and also in comparison to 2019, what the clinics are doing. It looks like both of those markets are back, and they've also dealt with the pent-up demand that by partly closing the clinics in Q2 last year then. The next market is the China Asia. China is our biggest market. There we have a slightly different situation where China more or less is back to normal cycles. We can see that Southeast Asia, unfortunately, are not back. We also know that India is currently the number of cycles are increasing, but they are not in any way back to 2019 numbers. Why, for instance, we see some decline in Thailand, that is a good IVF market, is that everywhere where you have IVF [cures], they are still not back to normal numbers. The reason is, as you know, difficulty to travel and all of those kind of obstacles that are currently around us within the IVF market. I am very pleased to say that our growth compared to last year in local currency was 0, which is quite good under those circumstances. The growth, same here, we can see is coming from China, and it is all our consumable business. Especially well has the media gone during the quarter. Sales in that region was SEK 82 million. Going to the EMEA region, where we have quite big differences between some countries and some geographical areas. We had a good growth of 6%, and taking into consideration that globally, but going into the EMEA market, our best guess is that if we're comparing to last year, we do believe that the clinics are not doing more than around 90% of the earlier cycles. Having a growth of 6% in that territory, we are quite pleased with that. Regarding sales also, I would like to mention that in a situation where we have 0% growth in local currencies, this quarter was our second best ever. Some extra sales, we do believe, has come from, for instance, U.K., due to that there are a couple of times that they have prepared for Brexit and some inventory buildup has happened in U.K. Still, behind normal numbers are where IVF tourists do exist, and that is, for instance, Spain and Turkey within the EMEA region. Russia is not really back to normal numbers. I would also like to mention that what we see right now also is that it's difficult to project where Q1 this year will go. Due to the restrictions and especially travel restrictions, we can see that the IVF tourists will not come back in Q1, not in Europe, and probably not even in Asia. That has an impact on how we can travel and do in-services, and in-services is especially something we need to do for the technology side, and that's the time-lapse. We can more or less address that that's the time-lapse. If we then are leaving EMEA and we go to Americas, there is a huge difference between U.S., Canada, and South America. Still, they're quite far behind in Brazil, Chile, Peru, and we see that it's a rebound, but it takes time. U.S. goes very well. Our best guess is that the pent-up demand has been dealt with during Q3 and Q4 in U.S. Totally, if we're looking on that region compared to last year, it was -10%. Even in that region and in comparison to the consumables, we can see a good growth in those product areas. In all of those market regions, we had a good market contribution. I would like to mention that the sales, and I mean, the complete organization has been under a lot of stress during this COVID time. With savings and also working with customers differently, I do think that we can see a large potential in how we can work together with the customer and keep up the service level and all support. By that, I am directly into page number four regarding the current situation and short-term outlook for the COVID. As mentioned, we do believe that if fourth quarter corresponding to earlier year, around 90% of the cycles globally is being done. As mentioned also, it's a large difference in the recovery between some regions. Private clinics in Europe, we can see that, and also in some other places where you have a mix between private and somehow public, is that it is the private clinics that has had really good growth, and some of them has been in the pent-up demand come up to levels about 20% more than comparison number 2019. As mentioned, we do believe that we are going to be affected even in Q1 this year, I mean, the current quarter, and that it is especially within the technology due to what I said. Training and installations of time-lapse equipment is difficult when we can't travel, for instance, out from Denmark with some of our team and all of the restrictions. Okay. By saying that, let's go into page number five and a short summary on our sales per division. Consumable sales, +7%. Under these conditions, where we believe that it is 90% IVF cycles and we are growing there with 7%. It is taking market share, it is some inventory built up, and we are also knowing that from customers that the situation and how we dealt with Q2 and Q3, especially for having a clear goal to always support our customers with product. As you know, back end, we took some scrap, and we can see that the customers are very satisfied with that kind of service level. On technology, a decline with minus 10%. It is partly recovered, and it will recover, but it's going to be one or two quarters behind the consumable business. Genomics, +2. It is more or less in line with what we see that laboratories are doing and what the clinics are sending to those laboratories. By that, please go to page number six, and Mikael will take over. Yes. I will take you through some of the key financials during the fourth quarter. First, we had a fluctuation in exchange rates that negatively impacted the EBITDA of SEK 21 million in the quarter. That corresponds to about one percentage points of negative effect on the EBITDA margin. Besides the currency effect, we were positively impacted by the combination of high sales, as Thomas mentioned. We also had a favorable product mix with selling more consumables than we did with equipment in the quarter. We also had low expenses. For example, lower selling expenses, traveling, and lower personal costs. The cash in the end of the period amounted to SEK 974 million. As before, we don't have any financial loans. Looking at the gross margin, improved from 62% in the fourth quarter 2019 to 66% in the fourth quarter 2020. Out of this improvement, about two percentage points comes from reduced amortization of acquisition-related intangible assets due to that these assets have been finally depreciated. We also had about one percentage point of positive mix effects, as I mentioned before. On the EBITDA margin, besides the variances on the gross margin, we have had then reduced operating expenses in relation to sales due to the same reasons as I mentioned before, with traveling, exhibitions, and low personnel costs. The net debt in relation to EBITDA at the end of the period was -2.1, and as before, we plan to use the cash for value-adding acquisition. Please change to page number seven for the long-term outlook. We expect the market growth to be 5%-10% long term in monetary terms. As before, we believe this will be driven by the growing middle class, increased social acceptance for IVF, and the trend for parents to be waiting longer before they have children. We are planning to expand sales and broaden the product offering. To do that, we're investing in the marketing and sales organization. We are also doing development projects. This year, we are planning to launch an AI-based software that we call iDAScore. We are also planning to launch a new test for genetic testing. With that, operator, we are ready to take questions. Thank you. If you wish to ask a question, please press star key one on your telephone keypad and wait for your name to be announced. To cancel your request, please press the hash key. Once again to ask a question, please press press star key and one on your telephone keypad and wait for your name to be announced. Please standby as we compile the Q&A list. Yes, our first question comes from the line of Ulrik Trattner. Please ask your question. Good morning, Thomas and Mikael, congratulations on a strong quarter. I have a few questions. Could we please start off with the market share gains in China, where you believe to be the main explanation for this? Is there any part of this that is a rebound of the lost market shares last year due to the delivery issues, or was that fully sort of resolved in Q3? As well as EMEA, obviously very strong development, with the clinics back to approximately 90%. It seems like you're gaining market share here as well. If you could please shed some light on that. That is my first question. Okay. Hi, Ulrik. Thank you for those questions. Let's start with China. I would like to say it is three things. Yes, you are right that when we had some production problems 2019 during the summer then some of the customers that had to go to a competitor, most of them has changed back. That is, of course, something. There is also another thing when we see that we are not only getting our old customers back, we are also getting partly new customers, and that is due to that China right now is going through a situation where we have been quite successful, and that is within the regulatory approval side. We can see that other companies are having some challenges with getting their old regulations updated and approved. There can be a slight change there that customers are then, since they are today asked to only buy regulatory approved products. Some is regulatory considered. Thirdly, that our expansion also, and that China is starting to use more and more time-lapse, our interaction with the customers through that kind of communication. Time-lapse, how you could do morphology, the importance of having a good media system, all those combined are helping us in getting customer satisfaction, which is the same as growth. EMEA, since it's a huge territory, there are also huge differences. There are, what we for short can say, that the IVF tourists do not exist, more or less. That is impacting Spain, as I said, it's impacting Turkey. We also see some decline in Russia. In Q4, it was a difficult situation in Middle East in some places. We have been able to take market shares in our, let's say, strong markets that are Western Europe, U.K., and we have done it through, I would like to say two things. First is that we have, during this period, focused a lot on service level. Due to the situation that customers that were not before buying from Vitrolife, has in some circumstances, come to us and asked for products since another supplier were not able to do it. Our ambition to have a high service level, and unfortunately, we then back in Q1 and Q2 last year, had some scrap that has paid off. I think that in EMEA region, it is customer service level that has helped us. Great. Thank you. That sort of leads me into my second question. If you're looking at EMEA or just, we can start off with EMEA and on the service, do you believe that this market share that has been gained is sustainable, or are we to expect a gradual shift back to normalized levels? The second question is, I note that you mentioned that there's been more virtual interactions with your customers, which then translated into quite some significant cost savings. You also mentioned that time-lapse require more hands-on time. How much would you consider to be sustainable out of this technology or virtual customer interaction works that you have done that could actually translate into savings for comparable periods? Yeah, that's a very good question. We have had a good outcome of our digitalization and the way of working together with customers. We have only started that journey. What I see is that going forward and the acceptance to do training and to do support and have interactions through what we are calling Vitrolife Academy and also by individual meetings, that will be a long-term saving. We will continue to invest because what we see also is that we can even gain more from web-based shopping, for instance, and currently, we have good part of our business, but it can be a lot larger. There is a trend that we need to invest. We will continue to invest. We can see an acceptance rate, and that will of course be savings in all levels, even at the end user side, even at our customer's side. What was the other question? The other question was on the sustainability of the gained market share in the EMEA region. Our market share gain is coming from media, of course, but it is also coming from labware and our needles. Within our consumables, it is pipette media, labware and the media. When customers are changing from not Vitrolife Labware and going into Vitrolife Labware, it is a big change for them. They are going from labware products that are a lot cheaper than the Vitrolife. When they buy into this situation with quality control plastic products, and they change, it is by buying into that and see a difference, they will not go back and buy the traditional labware. With regulations also changing where in some markets, I am just mentioning one of them, for instance, U.K., it is a demand that they will only use regulatory approved product, IVF-approved products. There, it is a matter of when competition will come into this area. That's something that you don't change so easy. The same with the needle side, with the improvements that we have done the last couple of years and introduced and/or upgraded our needles, we've been able to take customer after customer. Those are the main reasons for it, and I do think that's going to be a sustainable business now. Great. Thank you very much, Thomas. One last question before I get back to the queue, and let someone else ask the question as well. You're talking about this AI-based technology you're going to launch as well as a new test for genomics. Could you shed some more light on when you're expecting to launch those? On the genomics side, is that invasive or non-invasive tests? We will launch it during this year. I can't really give you exactly what quarter it will be, but it's going to be launched during this year. The iDAScore, the AI system, is going to be launched before, most likely, the genetic testing in selling to end users. The test that we will come out with is going to be an invasive one. Correct me if I'm wrong, but this should enable you to sell this genetic test on a wider geography than the previous collaboration with Illumina, right? Correct. Great. Thank you, and I'll get back to the queue and jump back with additional questions. Thank you. Your next question comes from the line of Bjorn Orlando. Please ask your question. Yes. Thank you for taking my question. I'll start with that end question, regarding the new tests and so on. Is that the one that's going to be in China and sort of the expansion of the Illumina agreement? For the genomics, the agreement is that we, Bjorn, then will get access to Asia-Pacific. Yeah. Did you have a date on that, or time shared? No, we are going to introduce the Vitrolife PGT-A test during this year. Yeah. Okay. Going on to the technology part, and it seems like you indicate that the recovery is probably going to be slower for the technology compared to consumables and so on. What is the reason for that? Is it financial constraints at the clinics, or is it just that you mentioned that time-lapse installations and training and so on could sort of be limited during this difficult period of time with less traveling and so on? Is this just way of an accounting? For you to book sales, do you have to complete installations and training, or is the interest in those types of technologies lower right now at the customer level? I would like to mention two main reasons. One is that the clinics themselves, in Q2 and Q3, they came into a situation, more or less a shock, that the customers just went away. Some of them has delayed. Those clinics then that has a good growth and good pent-up demand, we are in contact with them, and some are, with purpose and in negotiation with us, delaying the installment due to that when you install, you often close part of the laboratory for some time when you're doing a new piping and those. If you have, let's say, a demand situation and you're trying to cover up what you lost, and you also have the regulations where you can't work the normal way. For some clinics to do, let's say normally 100%, they need to work differently and that's taking more time, closing down some parts of the laboratory, something that they want to delay one or two quarters, they feel that they can deal with the pent-up demands. It's more about those things. There is a situation where on the public side in Western Europe, we have good clinics and a lot of those public IVF clinics are under a tough situation where, for instance, in Benelux, in Belgium, they're more or less closing them, and they're prioritizing other activities, the same in U.K. There is a situation also that the publics are delaying, or stopping their purchase of time-lapse. They are still under the traditional bid process. A quick one. The lawsuit related to time-lapse, I suppose you're not prepared to give very much details on those, but do you have a timeline for that? When do you expect more news from that? Also expenses, I suppose there are patent lawyers and so on going to be involved, and if so, are there material expenses expected for that? Yeah, I can answer that, Bjorn. The process will continue, and it has several steps, and we'll just have to follow that. It's difficult to predict the timeline for when this will be closed. We will have costs for lawyers in representing us in this case. They will be accounted for as running costs throughout the year as the costing curve. Yeah. Okay. When I have you on the line, I have also a question regarding the bad debt losses. You mentioned that reduced provision for bad debt losses. Was that only the SEK 3 million from North and South America or something else? Yes, that was basically the amount. Yes. Yeah. The flip side of that coin, if you look in the P&L, that was basically the other operating revenues. You have the SEK 6.9 million in operating expenses. Are there any particular reason for that being unusually high? If we talk about the bad debt, that was recorded as a reduced marketing and sales expenses. Oh, okay. It's in that line item in the P&L. When it comes to other operating expenses, those are primarily related to currency. Okay. Finally, we usually talk about the M&A and so on. It seems a bit conservative to distribute SEK 87 million in dividend when you have almost SEK 1 billion in cash. What types of acquisitions do you expect? These are quite substantial amounts, in the past, you have bought some distributor or some complementary technology or something like that. Has the scope changed in any way to any larger acquisitions or something? How is the market for that right now? We have not changed any strategy. We are looking into this. What I could mention then is that COVID has had impact even on that side, that our companies that during the COVID has had some stress, so they are maybe changing strategy, and by that, they are looking for maybe some other kind of ownership or situation. There are also companies, I mentioned before, that with all the different kind of changes within the MDD, MDR regulatory sides, that they are also considering maybe a different ownership. As usual, we are looking on things that can help us in our distribution channels and in our technical development. Okay, very good. That's all for me. Thank you. We've got one more question, and it's from the line of Daniel Albin. Please ask your question. Thank you, Thomas and Mikael. Many of my questions have already been answered, but I have two short ones for Mikael, if I may. First one is, are there any positive government grants received in Q4 2020? Secondly, on the D&A sum, which is lower, is the sort of the Q4 level the new run rate to use going forward? Thank you. Yeah. I believe we had a small amount of government grants that we recorded in the fourth quarter, around SEK 1 million. When it comes to the D&A, yes, we are seeing lower D&A, and that will continue to be shown next year. It's due to that some of the intangible assets that we recorded as part of the FertiliTech acquisition have been fully depreciated now or fully amortized. Next year, we will also see the effect from the acquisition of MTG/OCTAX in 2016, where some of those assets will be fully amortized by the summer of next year. We will see lower depreciations or amortizations in the P&L next year. Okay, understood. Perfect. Okay. We have another question from the line of Ole Strater. Hi. Thank you for taking my questions again. I have a few. What I've been seeing talking to IVF clinics in Europe seems to be volume shift from public to private clinics. Is that something you would agree with? How does that impact you guys? Is that beneficial in any way? Yes, you are right. For example, if you take the U.K. market where they have had restrictions and where they have allocated resources differently on the public side, there has been a good good growth within the private in U.K. In my contact with the clinics in U.K., they are right now at the end of Q4 last year, in December, and beginning right now seeing that the extra restrictions are impacting even the private in the London area. You are right. Private has taken over some of the public where there are good alternatives for it. How does that impact you? Mostly positively. If we make an example on the markets where you have a mix between them, public clinics are often buying on price. If it is price, we are not the best supplier. Great. Three more questions, if I may. Could you specify or give some more information on which markets you're currently seeing pent-up demand? We all know the markets where the recovery is still in progress. Is there any specific markets where you clearly see a pent-up demand? Yes. There's markets where they have huge challenges. South America, it's a small market globally, but there we do believe there's a pent-up demand in, for instance, Brazil. There is also a challenge there also with the currency exchange for them. There is a pent-up demand. We see a pent-up demand when we are talking with clinic chains that are focusing on IVF tourists, partly in Thailand or in Spain, that believe that when borders are opening up, that they will come back to normal business. We are also seeing a similar thing in Russia, where there's a pent-up demand situation. In some of the Western Europe, like Belgium, Germany, there is a pent-up demand, but I can't quantify it. Great. No, that's fine. You mentioned during the presentation that one specific market had 20% more cycles compared to 2019. Could you help me remind me which market that was? Would you call that a good number to look at the pent-up demand? That is U.S., they have dealt with the pent-up demand. In comparison, some of the clinics in U.S., numbers 2019, 2020, Q3, Q4, they have had a lot to do, and they've been quite successful. That's why I mentioned that I don't think we will have a pent-up demand situation in the U.S. I think they've dealt with it quite well. Clinics are opened. They are bypassing and doing it very well on this kind of situation where initial discussions are held by Zoom or something similar. Then there is a process when they're calling into the clinic, and usually it is about 25% that are only continuing with the treatment. By having this done a more efficient way, they have been able to, let's say, sort those out quite quickly during Q3 and Q4, and that has helped them to get them quickly into the clinic. Great. Thank you. Just one last question. As you mentioned, there is not only an ongoing pandemic but also ongoing regulatory restraints on companies in the IVF industry. What's currently holding you back from doing M&A? Pricing. The right company, too. There are companies out right now for sale. The question is just, is that kind of business we would like to invest in? Maybe we are too picky, but I think we should focus on things that we know that we can handle and have good growth, and that also give value to both shareholders and customers. Great. Well, thank you very much. Once again, congratulations on a great quarter. Thank you. We have no further questions. Please continue. Okay. If that's the case, thank you very much for listening in on this extremely cold winter day in Sweden. Thank you, and bye. That does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers, please remain on the line.