Q3 2022 Grifols SA Trading Statement Call

November 8, 2022

Yes.

Nuria Pascual: Good day everyone, and welcome to Grifols Business Update Conference Call. We are very pleased to host this call today, and thank you for joining. As we have already explained, we want to increase our engagement with the capital markets and with investors. This is a testament to our commitment to enhance our communication. The call will last one hour. There will be a presentation of something like 30 minutes, and then we will follow with a Q&A session of well, to complete the hour, or if you have no questions, we'll finish earlier. Today, I'm joined by Steve Mayer, our newly appointed Executive Chairman, Raymond Grifols and Victor Grifols Deu, our socios, and Alfredo Royo, our CFO. The materials of this call are already available on the investor relations section of grifols.com.

Good day, everyone and.

Welcome to <unk> business update conference calls, we are very pleased to host this call today and thank you for joining.

So we have already explained we wanted to increase our waiting in Asia, where there has been a market trend with investors.

Turning to our commitment to enhance our communication.

The call will last a one hour there will be amortization.

Something like 30 minutes, and then that way will follow with the Q&A session.

So to conclude their work or.

You have no questions why don't finish up there today I'm joined by Steve Mayer, our newly appointed executive Chairman, but I am hungry for Sunday our.

Our FERC us.

Our CFO .

The materials for this call are already available on the Investor Relations section of <unk>.

It follows that path.

Nuria Pascual: Well, our forward-looking statement disclaimer here for this business update. We undertake no obligation to update or revise any of these statements, and this is the forward-looking statement refers to the substantial risk and uncertainties. With that, I will turn the call over to Steve. Thank you.

And.

So one of our forward looking statement disclaimer here for the vision for this business update.

We undertake no obligation to update or revise any of these statements on this is Sam.

Forward looking statements at first as a substantial risk.

Uncertainties.

With that I will turn the call over to Steve. Thank you.

Steven F. Mayer: Thank you, Nuria, and thank you for everyone for joining the call today. Since I am new to the Grifols Executive Chairman role, I would like to begin the call by emphasizing a few high-level points before we turn to the specifics of our business update.

Steven Mayer: Thank you, Nuria, and thank you for everyone for joining the call today. Since I am new to the Grifols Executive Chairman role, I would like to begin the call by emphasizing a few high-level points before we turn to the specifics of our business update.

Thank you Maria and thank you everyone for joining the call today.

Since I'm new to the executive chairman role I would like to begin the call by emphasizing a few high level points before we turn to the specifics of that.

Our business update.

Steven F. Mayer: Many of my friends and acquaintances have asked me why I elected to take on this role at Grifols at this point in my life. The answer is actually pretty simple. Grifols is a great company with a clear mission and a long history of improving the health and well-being of people around the world. It also has very strong fundamentals in place, irreplaceable assets supporting a long-term strategy, and the challenges it has recently faced can and will be overcome. I've recently read a few reports that have questioned whether, in light of the fact that I've been on the Grifols board for several years, there will be any real changes in the offing.

Steven Mayer: Many of my friends and acquaintances have asked me why I elected to take on this role at Grifols at this point in my life. The answer is actually pretty simple. Grifols is a great company with a clear mission and a long history of improving the health and well-being of people around the world. It also has very strong fundamentals in place, irreplaceable assets supporting a long-term strategy, and the challenges it has recently faced can and will be overcome. I've recently read a few reports that have questioned whether, in light of the fact that I've been on the Grifols board for several years, there will be any real changes in the offing.

Many of my friends and acquaintances have asked me why I elected to take on this role it ripples at this point in my life.

The answer is actually pretty simple.

This is a great company with a clear mission.

Long history of improving the health and wellbeing of people around the world.

It also has very strong fundamentals in place.

Replaceable assets supporting our long term strategy.

And the challenges that you've recently things can and will be overcome.

I recently read a few reports the question whether you in light of the fact that I've been on the board for several years, there will be any real changes in the offing.

Steven F. Mayer: In response to that question, on the one hand, I can refer you to my long private equity career that was focused on being a change agent and helping companies that we owned realize their potential. On the other hand, I also fully recognize that words are not what matter. Our execution and our performance will ultimately tell the true story. I ask that you judge us on our strategic, operational, and financial performance over the coming months, which is how we will be judging ourselves. If you check out my personal background, you will also know that I'm highly competitive and driven to win with a lot of experience in team sports. While I am now ultimately responsible for delivering, at the same time, you should know that this is one team and we will align as a single unified team behind our goals.

Steven Mayer: In response to that question, on the one hand, I can refer you to my long private equity career that was focused on being a change agent and helping companies that we owned realize their potential. On the other hand, I also fully recognize that words are not what matter. Our execution and our performance will ultimately tell the true story. I ask that you judge us on our strategic, operational, and financial performance over the coming months, which is how we will be judging ourselves. If you check out my personal background, you will also know that I'm highly competitive and driven to win with a lot of experience in team sports. While I am now ultimately responsible for delivering, at the same time, you should know that this is one team and we will align as a single unified team behind our goals.

In response to that question on the one hand, I can refer you to buy long private equity career.

That was focused on being a change agent and helping companies that we owe to realize their potential.

On the other hand, I also fully recognize that words are what matter our execution and our performance will ultimately tell the true story.

I ask that you judge us on our strategic operational and financial performance over the coming months, which is how we will be judging ourselves.

If you check out my personal background that you will also know that are highly competitive and driven to win a lot of experience in team sports.

While I have now ultimately responsible for delivering at the same time you should know that this is one team and we will align as a single unified team behind our goals.

Steven F. Mayer: In that regard, we are, as a team, laser-focused on our top priorities. First of all, creating an organization with a performance culture that will be efficient, effective, data-driven, agile, and decisive. We're already implementing a renewed emphasis on planning and execution. Again, if you look at the investments I led at Cerberus, you will see that in most of them, improved operational performance was at the heart of their success. That improved performance comes from a disciplined approach to planning, project management, and rigorous execution against the plan. I also believe strongly in the principle of accountability. Everyone in the organization will be accountable using measurable indicators, starting with me. We will also be much leaner and more cost-effective, and while this will improve our margins, just as importantly, it will enable us to move faster and serve patients better.

Steven Mayer: In that regard, we are, as a team, laser-focused on our top priorities. First of all, creating an organization with a performance culture that will be efficient, effective, data-driven, agile, and decisive. We're already implementing a renewed emphasis on planning and execution. Again, if you look at the investments I led at Cerberus, you will see that in most of them, improved operational performance was at the heart of their success. That improved performance comes from a disciplined approach to planning, project management, and rigorous execution against the plan. I also believe strongly in the principle of accountability. Everyone in the organization will be accountable using measurable indicators, starting with me. We will also be much leaner and more cost-effective, and while this will improve our margins, just as importantly, it will enable us to move faster and serve patients better.

In that regard we are as a team laser focused on our top priorities.

First of all creating an organization with a performance culture that'll be efficient effective data driven agile and decisive.

We're already implementing a renewed emphasis on planning and execution again, if you look at the investments I've met at Cerberus, you'll see that in most of them improved operational performance was at the heart of their success.

That improved performance comes from a disciplined approach to planning project management and rigorous execution against the plan.

I also believe strongly in the principle of accountability.

We wanted the organization will be accountable measurable indicators starting with me.

We will also be much leaner and more cost effective this will improve our margins just as importantly, it will enable us to move faster.

Serve patients better.

Steven F. Mayer: Our next priority is to meaningfully improve our cash flow and expense profile. We have been making and expect to continue to make progress on the cost of plasma. Of course, there is a 6-to-9-month lag before cost reductions are recognized in our income statement as a result of our long inventory cycle, which, as you know, is characteristic of our industry. We are also focused on reducing fixed and semi-fixed costs throughout the organization from delayering, better spans of control, organizational streamlining, facilities rationalization, and capacity optimization, outsourcing certain non-core functions, and better use of technology and data. We are also making further effort to reduce working capital and CapEx cash use. Very importantly, we are implementing a zero-based budget process for 2023. A third and very important priority is debt reduction.

Steven Mayer: Our next priority is to meaningfully improve our cash flow and expense profile. We have been making and expect to continue to make progress on the cost of plasma. Of course, there is a 6-to-9-month lag before cost reductions are recognized in our income statement as a result of our long inventory cycle, which, as you know, is characteristic of our industry. We are also focused on reducing fixed and semi-fixed costs throughout the organization from delayering, better spans of control, organizational streamlining, facilities rationalization, and capacity optimization, outsourcing certain non-core functions, and better use of technology and data. We are also making further effort to reduce working capital and CapEx cash use. Very importantly, we are implementing a zero-based budget process for 2023. A third and very important priority is debt reduction.

Our next priority is to meaningfully improve our cash flow and expense profile.

We have been making and expect to continue to make progress on the cost of plasma.

Of course, there was a six to nine month lag before cost reductions are recognized in our income statement as a result of a long inventory cycle, which as you know is characteristic of our industry.

We're also focused on reducing fixed and semi fixed costs throughout the organization from delayering.

Better spans of control.

Organizational streamlining.

Facilities rationalization and capacity optimization.

Outsourcing sourcing certain non core functions and better use of technology and data.

We're also making further effort to reduce working capital and Capex cashews.

And very importantly, we are implementing a zero based budget process for 2023.

A third and very important priority is debt reduction.

Steven F. Mayer: Right now, we are evaluating a variety of levers, and although we have nothing to announce today, it is clear that the company has highly valuable assets throughout the world, and therefore we have a range of attractive deleveraging alternatives under consideration. We do, however, believe that the company's stock is meaningfully undervalued today, so issuance of equity in today's trading range is not a favored option. We firmly believe that by year-end 2023, and very possibly before, concerns about leverage will be substantially mitigated. A fourth priority is capturing commercial opportunities with certain of our existing products that we believe are underpenetrated currently. For example, our subcutaneous IG product, which commands a higher price than IVIG, represents only a single-digit percentage of our IG sales compared to 40% for CSL.

Steven Mayer: Right now, we are evaluating a variety of levers, and although we have nothing to announce today, it is clear that the company has highly valuable assets throughout the world, and therefore we have a range of attractive deleveraging alternatives under consideration. We do, however, believe that the company's stock is meaningfully undervalued today, so issuance of equity in today's trading range is not a favored option. We firmly believe that by year-end 2023, and very possibly before, concerns about leverage will be substantially mitigated. A fourth priority is capturing commercial opportunities with certain of our existing products that we believe are underpenetrated currently. For example, our subcutaneous IG product, which commands a higher price than IVIG, represents only a single-digit percentage of our IG sales compared to 40% for CSL.

Right now we are evaluating a variety of levers.

And although we have nothing to announce today. It is clear that the company has highly valuable assets throughout the world.

Therefore, we have a range of attractive deleveraging alternatives under consideration.

We do however believe that the company's stock is meaningfully undervalued today.

No issuance of equity in today's trading range is not the favorite option.

We firmly believe that by year end 2023, and very possibly before concerns about records will be substantially mitigated.

Our fourth priority is capturing commercial opportunities with certain of our existing products that we believe are underpenetrated currently.

For example, our subcutaneous subcutaneous <unk> product, which commands a higher price than IDI G represents only a single digit percentage of our <unk> sale.

Compared to 40% for C. S L.

Steven F. Mayer: In addition, we continue to see opportunities for our high-margin Alpha-1 product, Prolastin, and through ongoing efforts in patient identification. We'll be mentioning a recent favorable development in that regard later in this call. Our final top priority to mention today is the effort to unlock the full value of Biotest. We and Biotest are dedicating resources to accelerate integration and the recognition of both cost and revenue synergies. As you know, we also believe that the approval, commercialization, and successful launch of the new Biotest proteins are likely to have a substantial impact on Grifols' financial profile. Of course, any initiative that's dependent on regulatory approval and successful commercialization and market launch inherently involves uncertainty. We continue to believe that fibrinogen and IgM are a matter of when, not if, and that ultimately they will be very significant and high-margin contributors to profitability.

Steven Mayer: In addition, we continue to see opportunities for our high-margin Alpha-1 product, Prolastin, and through ongoing efforts in patient identification. We'll be mentioning a recent favorable development in that regard later in this call. Our final top priority to mention today is the effort to unlock the full value of Biotest. We and Biotest are dedicating resources to accelerate integration and the recognition of both cost and revenue synergies. As you know, we also believe that the approval, commercialization, and successful launch of the new Biotest proteins are likely to have a substantial impact on Grifols' financial profile. Of course, any initiative that's dependent on regulatory approval and successful commercialization and market launch inherently involves uncertainty. We continue to believe that fibrinogen and IgM are a matter of when, not if, and that ultimately they will be very significant and high-margin contributors to profitability.

In addition, we continue to see opportunities for our high margin Alpha one product for less than two years.

Ongoing efforts and patient identification will be mentioning a recent favorable development in that regard later in this call.

Our final top priority to mentioned today.

Isn't reactor to unlock the full value of biotech.

And by a test or dedicated resources to accelerate integration.

And the recognition of both cost and revenue synergies.

As you know we also believe that the approval commercialization and successful launch of the new biotech proteins are likely to have a substantial impact.

<unk> financial profile.

Of course any initiative, that's dependent on regulatory approval and successful commercialization and market launch inherently involves uncertainty.

But we continue to believe that fibrinogen and IGF more a matter of when not if.

And that ultimately they will be very significant and high margin contributors to profitability.

Steven F. Mayer: In addition to these five key priorities, we plan to continue improving transparency and enhancing our communications with the capital markets and with investors. Today's call is evidence of this. We also expect to schedule meetings with individual investors once we have progress to report on the priorities I've just walked through. I look forward to meeting many of you in person before too long. Before turning the call over to Ramon and Victor, I do want to state that it is highly important to me to ensure that we will deliver on all of our goals while remaining true to Grifols' core values and sustainability. Over to Victor.

Steven Mayer: In addition to these five key priorities, we plan to continue improving transparency and enhancing our communications with the capital markets and with investors. Today's call is evidence of this. We also expect to schedule meetings with individual investors once we have progress to report on the priorities I've just walked through. I look forward to meeting many of you in person before too long. Before turning the call over to Ramon and Victor, I do want to state that it is highly important to me to ensure that we will deliver on all of our goals while remaining true to Grifols' core values and sustainability. Over to Victor.

In addition to these five key priorities, we plan to continue improving transparency and enhancing our communications with the capital markets and Investor.

Today's call is evidence of this.

We also expect the scheduled meetings with individual investors once we have progress to report on the priorities I've just walked through.

I look forward to meeting many of you in person before too long.

Before turning the call over to why go into Victor I do want to state that it is highly important to be to ensure that we deliver on all of our goals, while remaining true to the core values and sustainability.

Victor.

Victor Grifols Deu: Thank you, Steve. Thank you all for being in the call, here today with us. I would like to start by highlighting the two recent leadership appointments that come after the recently announced reorganization. We have appointed Pia D'Urbano to lead our Biopharma business unit and Jordi Balsells to lead our Plasma Procurement business unit. Pia brings with her 29 years of experience in healthcare, particularly in biotherapeutics, including high responsibility roles in top management multinational companies like Sanofi or Novo Nordisk in the US. Her experience spans global product launches, new product planning, establishing new businesses, heading marketing and sales, business development activities, strategic planning, and alliance development. She's an impressive executive, and her broad experience with market launches of new products is expected to be especially helpful as we look forward to launching the Biotest new proteins, for example.

Thank you Steve.

Thank you all for being here today.

Yes.

I would like to start by highlighting two recently this has appointments come after the recently announced reorganization.

We have appointed.

No.

Three if I remember you send a unit in Germany Mercedes relief.

Oh man.

Got you.

Theories with 19 years of experience in habitat.

Okay.

Yes.

Sometimes you're asking for management multinational companies like Sanofi phenomenon.

In the U S.

Yes, that's fine.

Fantastic.

Im planning.

Salaries and wages has Kevin Mccabe unsafe.

Alumina activities.

Planning and alliances in a moment.

She has an impressive executive and has broad experience with market launches of new phenomenon.

<unk> to lead especially.

As we look forward to what philosophy.

Thanks.

Victor Grifols Deu: We have also named Jordi Balsells for the Plasma Procurement business unit. Jordi held various roles during his professional life, with a special focus on retail distribution channels worldwide and global expansions. His experience also includes building local teams in subsidiaries, developing relationships with strategic partners, deploying omni-channel and high-tech projects. All this knowledge and experience in retail business will for sure reshape and evolve the way Grifols has historically approached the management of plasma procurement operations. I'm sure that this will move us to a more efficient and effective sourcing network. We are all looking forward to working with them. Now changing gears to the Q3 2022 highlights and the financial performance. Let me start with revenues.

We have also named Joseph I would say is for the Biopharma platform.

Our main business unit.

Germany has been just Raj.

Question on ride with a special focus on events.

China is worldwide and robotics franchise.

He has experience.

St. Louis building local teams and subsidiaries.

<unk>.

Economists.

Omnichannel.

All of this knowledge and experience.

We just wanted to wanted to shape and evolve the way we approach.

So anytime you have noticed.

Okay.

I'm sure he is.

We'll ask.

Asked for monetization and if you got yours sourcing network.

We are all looking forward working with them.

Victor Grifols Deu: Now changing gears to the Q3 2022 highlights and the financial performance. Let me start with revenues. Really, I am proud to say that Grifols delivered very strong operational performance in Q3, leading to a solid Q3 year-to-date 2022 number, while operating all that in a very complex macroeconomic environment. Compared to Q3 2021, global revenues on a combined basis were up 23% operationally, reaching EUR 1.5 billion in revenues. On a reported basis, this growth represented a 37% increase due to the foreign exchange tailwind. Underlying standalone operational performance has been the driver, with revenues growing at 13.7%. Of these underlying drivers for the quarter, it's thanks to higher plasma collections in H1 of this year, 2022, driving volumes of key proteins, especially immunoglobulins, together with pricing upticks, product mix, and the Biotest contribution.

Now changing gears to the Q3 financial highlights and the financial performance.

Let me start with revenues.

Victor Grifols Deu: Really, I am proud to say that Grifols delivered very strong operational performance in Q3, leading to a solid Q3 year-to-date 2022 number, while operating all that in a very complex macroeconomic environment. Compared to Q3 2021, global revenues on a combined basis were up 23% operationally, reaching EUR 1.5 billion in revenues. On a reported basis, this growth represented a 37% increase due to the foreign exchange tailwind. Underlying standalone operational performance has been the driver, with revenues growing at 13.7%. Of these underlying drivers for the quarter, it's thanks to higher plasma collections in H1 of this year, 2022, driving volumes of key proteins, especially immunoglobulins, together with pricing upticks, product mix, and the Biotest contribution.

And really I am proud to say that post that event.

Our performance in the third quarter, leading to a solid.

QC yesterday 2022 number.

While the financing on that and have any conflicts macroeconomic environment.

Compared to <unk> 21, lower revenues on a combined basis.

23% operationally.

$1 5 billion.

Randy.

On a reported basis.

Please go to the foreign exchange headwinds.

And then my next time on our financial performance has been done.

With revenues growing.

13, 7%.

On these underlying drivers for them for the quarter.

Thanks to highest lot of my questions.

Half of this year.

Hugh.

But I think volumes of keeping things, especially in enrollments.

With prices are fixed.

Thanks.

And then my desk comes in Russia.

Victor Grifols Deu: Year-to-date revenues totaled EUR 4.351 billion, increasing by 9.5% at constant currency and 18.8% on a reported basis compared to the same period, 2021, with a standalone operational performance of +3.8%. Regarding plasma procurement, following the latest update, plasma collections volume grew by 25% in the first 42 weeks of 2022 versus the same period of 2021, which we anticipate will underpin a strong sales growth in H2 and onwards. We need to continue to build on this momentum in the coming future. Additionally, the lifting of the restrictions for the Mexican donors in mid-September has also started to contribute notably to further increase in plasma donations, and we expect it to continue to do so.

Yes, so net revenues totaled.

Sure.

Good luck.

Increasing by nine 9% in constant currency.

88% on a reported basis.

Compared to the same periods in 2021.

With a standalone operation or performance of plus three 9%.

Regarding philosophic here man.

Following the latest updates.

And as our collection volume growth.

Industry response at 12 weeks.

Just one.

The vessels S&P post 2021.

Which we anticipate will end up being as close as we announced in the second half of that year and onwards.

Later.

Some of this momentum and they're coming to you.

Additionally, the leasing a better solution for the Mexico in mid September .

Folks are starting to contribute notably.

Future increase in plasma donations and we expect it to continue to Lasalle.

Victor Grifols Deu: In terms of EBITDA, volumes, pricing, operational leverage, and cost discipline partially offset cost per liter and inflationary pressures to drive reported EBITDA to EUR 927 million, representing a 21.3% margin on sales. Excluding Biotest, it stood at 22.2% of sales. Adjusted EBITDA was EUR 899 million, with an adjusted EBITDA margin of 20.7%. Excluding Biotest, it stood at 20.7%. Paramount in the industry is the balance between volume of plasma and its cost. As plasma collection volumes normalize, we are now focused on driving cost per liter reduction by driving lower donor compensation, optimization of labor costs, and the rest of the fixed costs that are impacted in the cost per liter.

In terms of EBITDA.

Volumes pricing operational evidenced and cost discipline.

Turning offset cost per liter and inflationary pressures.

Reported EBITDA to nine $997 million.

Representing us in at one three.

Sales excluding by your test EBIT stood at 22, 2%.

Makes sense.

Adjusted EBITDA.

Wes commented 90 899 million.

With an adjusted EBITDA margin.

10%.

And excluding this.

97%.

Yes.

Panama City.

Yes.

If the management can volume of plasma and its cost.

Let's talk on a symbolic normalize we are now focused on driving cost per liter reduction.

Lower non compensation Optum.

<unk> limitation of labor cost.

And the rest of the fixed costs that are impacting in the costs that Lisa.

Victor Grifols Deu: Donor fee is one of the key components of the cost per liter, accounting roughly to 35% of the fully loaded cost, and therefore, the one that has the greatest impact in the short term. Since its peak in July this year, donor fee declined more than 15%. Comparing September versus January, it declined a total of 7%. At the same time, since volumes are sequentially increasing, the fixed cost portion of the cost per liter benefits from operating leverage. We firmly believe that this trend will be sustained, and we are confident on a further reduction from now to year-end that will positively contribute to profitability going forward. We will continue assessing the trade-off between plasma collection and donor fee, and balancing these two components to enhance our performance.

The NRC is one of the key components of the cost per liter accounting roughly two.

10% of the fully loaded cost and therefore, no longer calculate that impact in the short term.

Since its peak in July this year.

The decline declining more than 15%.

September <unk> genuity.

The climate, a total of 7% and at the.

Same thing since one.

I'll just ask the question of increasing the fixed cost portion of the cost per reserve benefits from operating the evidence.

We certainly believe that this trend will be sustained.

And we are confident in our future on a further reduction from now till year end.

Positively contribute.

This is Juan Pablo.

We will continue assessing and disseminate off between plasma collection.

In balancing these two companies to enhance our performance.

Victor Grifols Deu: Moreover, as restrictions for Mexican donors were lifted, there is a significant upside to further increase plasma collection, which will certainly determine our decisions on donor fee evolution. Regarding the leverage, the reported leverage ratio declined from 9.0x in H1 2022 to 8.6x in this last month, September 2022. It is expected to stand below 8x by the year-end, specifically at 7.9. As we are focused on driving donor fee reduction, cost optimizations, and operational efficiencies, this is expected to trigger more EBITDA and working capital improvements throughout 2023, leading to a further reduction on the leverage ratio. After two years of highly complex pandemic environment that has severely impacted the plasma industry, and now followed by its consequences in the midst of this challenging macroeconomic backdrop, we live it from three different.

So in terms of the Mexican zone as well.

Very simply we think on our side to further increase plasma collection.

What's happening at the mine.

On the NRC erosion.

Regarding deleveraging.

Our reported leverage ratio declined from nine times in the first half.

2022 to $8 six times in this last month September such as Vantiv.

And you can expect us to stand below eight times by the year end, specifically, a seven point back.

As we are focused on driving none of your reduction of cost optimization and operational efficiencies. This is expected to remain one of EBITDA and working capital improvements throughout 2023.

Under released resolution on the leverage ratio.

After two years of highly complex pandemic environment.

It really severely impacted.

And now followed by its consequences.

In the means of this kind of the same macroeconomic backdrop.

Excellent.

Victor Grifols Deu: We see it from three different angles. On the one side, inflation and the current challenging macroeconomic context are further driving plasma collection momentum, which can potentially contribute to further cost per liter reduction. On the other side, macroeconomic backdrop is impacting our labor costs to some extent, especially those in our plasma centers. Third, our exposure to interest rate hikes is limited, as close to 65% of our total debt is tied to a fixed interest rate. To finalize these highlight sections, I will move to the innovation pipeline. Certainly, we continue to advance on our most advanced programs of our innovation pipeline, such as fibrinogen, IgM, albumin in cirrhosis, and antithrombin III in sepsis, among others. In this quarter, please let us highlight that we received FDA clearance for our AlphaID At Home products.

We see from.

Backups.

Victor Grifols Deu: On the one side, inflation and the current challenging macroeconomic context are further driving plasma collection momentum, which can potentially contribute to further cost per liter reduction. On the other side, macroeconomic backdrop is impacting our labor costs to some extent, especially those in our plasma centers. Third, our exposure to interest rate hikes is limited, as close to 65% of our total debt is tied to a fixed interest rate. To finalize these highlight sections, I will move to the innovation pipeline. Certainly, we continue to advance on our most advanced programs of our innovation pipeline, such as fibrinogen, IgM, albumin in cirrhosis, and antithrombin III in sepsis, among others. In this quarter, please let us highlight that we received FDA clearance for our AlphaID At Home products.

On the west side inflation in the current challenging macroeconomic context.

That's part of it 90 plasma collection momentum.

With some potential interim review for further cost reduction.

On the other side macroeconomic backdrop is impacting our labor costs to some extent, especially those in our plan.

Yes.

Our exposure to interest rates.

So obviously.

As close to 65% of our total debt.

To a fixed interest rate.

And to finalize these highlights section I will move to that.

Thanks, Sean.

So does that mean, we're going to use our banks and our most most advanced programs behind on some pipeline.

And RJ ICM asset royalties.

And in theory.

Among others.

But in this quarter, let's just highlight that we received FDA clearance for our alpha.

At home.

Victor Grifols Deu: The first free service for US adults to screen for the genetic risk of Alpha-1 antitrypsin deficiency that doesn't need subscription, prescription, sorry, from the healthcare professionals. Now let me please transition to Alfredo, who will give us further details on the financial performance.

The fifth place hedges for U S. I looked at the screen for the genetic risk of Alpha one antitrypsin deficiency.

That doesn't need sufficient surpluses.

So im sure <unk> already from the first couple of questions.

And now the Midland transitions.

This is based on a national level.

Alfredo Arroyo Guerra: Thanks, Victor. Hello to everybody. Thanks for joining this call. Now let's review our P&L, starting with revenues. Grifols delivered very strong operational performance during Q3. Compared to Q3 2021, global revenues were up by 22% at constant currency, reaching EUR 1.5 billion and a 37% growth on reported basis. Robust revenue growth was driven mainly by Biopharma, SCIG proteins following increase of plasma supply, positive product mix, positive pricing, and very positive FX tailwind, as well as significant contribution from Biotest at circa EUR 200 million. Gross margin was impacted by a high cost per liter from the plasma collected in H1 of the year due to mainly high donor compensation and labor costs impacted by inflationary pressures.

Thanks.

Turning to everybody. Thanks for joining this call.

Now, let's review our P&L.

With revenues default.

Strong operational performance.

Sure.

Compared to the same quarter of 2021 grow our revenues were up by 22% at constant currency.

Ricky.

You know $1 5 billion.

10% growth on reported.

Revenue growth was driven mainly by Biopharma.

Key proteins for Wii and DS.

Primary supply positive product mix positive pricing and then positive FX kidney.

As well as significant contribution from biotech timeline.

So you've got 200 million.

Gross margin was impacted by a high cost per liter.

From the plasma collected in the first half of the year due to mainly high abdominal compensation legal costs impacted by inflation.

Alfredo Arroyo Guerra: Additionally, it is worth mentioning the negative impact from the high margin diagnostic business triggered by the end of the one-off COVID testing and mandatory Zika screening, which largely impacted gross margin by 180 basis points versus Q3 2021 and 250 basis points versus Q3 year-to-date, September 2021. At the EBITDA level, we were able to offset the impact at gross margin level and deliver a sequential EBITDA global expansion, which was supported by operational leverage, cost savings, and R&D prioritization. The inflationary pressures were partially offset at OpEx level as well. Net income totals EUR 118 million profit, which reflects higher financial expenses linked with Biotest acquisition bond and high interest rates. Now moving to slide 9, revenue performance.

And you suddenly it is noteworthy to mention the negative impact from the high margin diagnostic business can we get by the end of the one off public testing and mandatory cash sweep.

Lastly impacted gross margin by 180 basis points.

Sure.

One.

250 basis points versus Q3 year to date September 21.

The MDA level, we were able to offset the impact at gross likely limit.

And either a sequential.

This expansion, which was supported by operational leverage and cost savings.

R&D.

Yes.

Inflationary pressures.

Partially upset at Opex level as well.

Net income totaled 118 million profit.

Higher financial expenses.

And equally inspired pest acquisition bond and high interest rates.

Now moving to the <unk>.

Slide nine.

Alfredo Arroyo Guerra: Our main division, Biopharma, revenues reached 1.3 billion euros, or EUR 1.2 billion excluding Biotest, during Q3 2022. Growing by 34% at constant currency, and close to 50% on reported basis, thanks to positive FX impact. Several drivers were behind this strong performance, including robust immunoglobulin underlying demand, larger plasma supply, prices increase, and product mix. Especially significant were the sales of Xembify, our subcutaneous immunoglobulin, thanks to higher demand and a favorable customer mix. Year to date, Biopharma sales stood at euros close to EUR 3.6 billion, or EUR 3.4 billion excluding Biotest. This represents a year-over-year increase of 16% at constant currency, 26% on reported basis.

<unk>.

Our main give you assumed biopharma revenue to reach.

One 6 billion.

One two excluding biotech.

It's important.

222, growing by 34% at constant currency and close to 50%.

Basis.

Two positive FX impact.

As mentioned.

Given our drivers were behind the strong performance.

Robert.

Immunoglobulin and aligned.

The larger plasma supply.

Prices increased and prove to me.

Significant work has changed.

<unk> not only thanks to higher demand and a favorable customer mix.

Yesterday biopharma phases to that.

You are close to <unk> 6 million or 3.4, excluding biotech.

Do you have a sense of the edp.

So 16% at constant currency.

6% on reported basis.

Alfredo Arroyo Guerra: Excluding Biotest, Biopharma revenue grew by 8.7% at cost and currency, and 19% on reported basis in the first nine months of 2022 compared to the same period of 2021. The sales performance reflects sequential accelerated growth of 21% at cost and currency in the third quarter, compared to 0.1% growth at cost and currency in the second quarter, and 7.1% growth at cost and currency in the first quarter. The diagnostic revenues declined by 20.8% at cost and currency to EUR 170 million in Q3 2022, primarily due to the non-recurring sales of our COVID test and the termination of the mandatory Zika virus test, which was partially offset by growth sales of blood typing solutions.

Excluding biopharma or anything grew by eight 7% at constant currency and 19% and importantly in this.

As far as <unk>.

Months of 2022 containers, you say pds.

'twenty one.

<unk> performance.

Reflects sequential growth of <unk>.

The 1% that firsthand currency, the third quarter compared to <unk>.

One 1% growth at constant currency in the second quarter.

1%.

Growth at constant currency in the first quarter.

The diagnostic revenues declined by 28% at constant currency, we have a 170 million EQT.

You can see 2022, primarily due to the nonrecurring sales of our <unk> test and determination of the mandatory Zika virus.

Which was partially offset by sales of blood typing.

<unk>.

Alfredo Arroyo Guerra: Diagnostics recorded circa EUR 500 million of revenues during the first nine months of 2022, down by 21% at constant currency compared to the same period of the previous year. Excluding the one-off COVID test and the Zika virus screening, the decline was just 3.5%, mainly due to country mix and price. Bio Supplies reported significant revenue growth in Q3, expanding close to 30% at constant currency, reaching EUR 44 million following the acquisition of Access Biologicals. The business unit grew by 5% at constant currency during the first nine months of 2022. Moving to the next slide, to the margins. Gross margin stood at 38.2%, representing a slight sequential decline from 38.9% reported in H1 2022.

Diagnostic.

Circa 500 million euros revenues during the first nine months of 2022.

Down by 21% at constant currency compared to CBS all people here.

Excluding the one off <unk> test and the Zika virus screening the decline was just <unk>, 5%, mainly due to country mix.

Right.

By supplying reported significant revenue growth in the same quarter, expanding close to 50% at constant currency.

44 million units following the acquisition of Axis biologics.

Have you considered it grew by five 1% constant currency during the first nine months of 2022.

When we put <unk> side to the margins.

Gross margin stood at 38, 2%, representing a slight sequential decline from 38, 9% reported in the first half of 2020.

Alfredo Arroyo Guerra: This reflects a high cost per liter incurred in the H1 as a consequence of donor compensation and labor cost inflation. Grifols continue to expand and enhance its operations despite inflationary pressure. The company's effort to optimize cost and operational efficiency resulted in a stable cost per liter during the H1, despite the 8% to 10% annual inflation in our regions of operation. On the back of solid plasma collection level, Grifols is focused on balancing volume and cost per liter to drive margin expansion, with an emphasis on reducing donor compensation and also optimization of labor and fixed costs. The donor fee, as mentioned, that accounts probably 35% of the fully loaded cost, it fell by 7% from January to September and by more than 15% from its peak in July 2022.

This reflects a high cost per liter.

The first half of the year as a consequence of total compensation.

Labor cost inflation.

This has continued to expand.

Each operations despite inflationary pressures.

The company's effort to optimize cost and operational efficiency.

What did you mean stable cost per liter during the first half of the year, despite the 8% to 10% inflation in our regions of operations.

On the back of solid platinum equity is 11.

These forces focus on balancing volume and cost per lead to drive margin expansion with an emphasis on reducing that.

Compensation and also optimization of labor and fixed cost.

Lastly, as mentioned that accounts probably.

35% of the fully loaded cost.

Fell by 7% from January to September and by more than 15% from its peak in July 2022.

Alfredo Arroyo Guerra: Additionally, as mentioned, it is important to highlight the impact of the diagnostic into gross margin, due to the COVID and once again, the Zika screen that impacted by 250 basis points, the first nine months of 2022, compared versus previous year. EBITDA grew up to EUR 927 million during the first nine months of the year, with 22.2% margin and 21.3% including Biotest. This represents an EBITDA growth versus previous year of 12.8%. As I already mentioned, Grifols continues to apply cost discipline through its savings plan and the prioritization of R&D projects, which partially offset the inflationary pressures as well as higher Biotest expenses, particularly related to the Biotest next level project.

As next Gen. It is important to highlight the impact of the diagnostic into gross margin due to the call it and once again, the sika screen, that's impacted by the 250 basis points.

And the first nine months of fiscal <unk> to confer with PD.

This year.

They grew.

Up to 957 units.

During the first nine months of the year.

32, 2% margin on 51%, including via these represent an EBITDA growth of 12, 8%.

Yes.

As I already mentioned.

I mentioned the first continues to apply cost DCP savings plan and the prioritization of R&D projects, which partially offset the inflationary pressure as well as higher expenses, particularly related to the bio test next level <unk>.

Alfredo Arroyo Guerra: This accounts for the 5 months period where, you know, since the time that we acquired Biotest of EUR 35 million. Adjusted EBITDA for Q3 of the year has proved to be in line with of H1 of the year, reaching close to EUR 900 million, with an adjusted EBITDA margin of 20.7%. Here, you know, the adjustments basically are related to one-off restructuring costs as well as one-off extraordinary gains. Excluding Biotest, it stood at similar levels of the standalone company. Moving to the EBITDA sequential improvements. As shown in the slide, in H2 2021, the EBITDA was low, especially in Q4 2021.

Sure.

<unk> for the five months.

Peter.

<unk> at the time that we acquired <unk> pest.

Pissed off $35 million.

Adjusted EBITDA for the third quarter of the year.

Testaments to be in line with the first half of the year, reaching close to 900 million euros.

Yes, it's EBITDA margin of 27%.

The adjustment basically are related to one off.

Structural cost as well as one off external of the gate.

Good biotechs, either stood accumulate levels off.

Of the of the stand alone company.

Moving to the EBITDA.

Sequential improvement.

As Tony does lag in the second half of 2021.

Especially in the last quarter of 2021.

Alfredo Arroyo Guerra: Basically since due to low sales because, you know, lower plasma product, as well as certain restructuring and write-offs that took place in the last quarter of last year. Till then, we have been addressing both the main impact from COVID, which were lower plasma collections and the higher cost per liter of plasma. As mentioned, also the impact from diagnostic division has been significant. We were able to improve EBITDA throughout 2022 through cost control, R&D prioritization, bringing a contribution of EUR 70 million savings in terms of OpEx. Also, the positive contribution from Access following integration, that includes a one-off capital gain. This bridge also reflects what I've been mentioning so far, mirroring the sequential improvement.

<unk>.

Due to.

No change to cause lower.

Patent approach as well as starting with <unk>.

Doctoring and write offs that took place in the last quarter.

And that does.

Since then.

We have been addressing both the main impact from colleagues, which were lower plant connections and the higher cost per liter of plasma.

As mentioned also the impact from the industrial initial has been significant.

We were able to improve EBITDA throughout the 2022 to cost control R&D presentation. They had a contribution of.

70 million savings in terms of Opex.

Also the positive contribution from access for all of the integration that includes a one off capital gain.

As rich also reflects what has been mentioned so far.

The sequential improvement.

Alfredo Arroyo Guerra: In the next slide, as already explained, plasma collections increased by 25% year-to-date versus previous year, and to a larger extent in the US, expanding by 28%. Now that plasma volumes increases are normalized, we are focusing on cost per liter reduction, driving donor compensation decrease, as well as optimization of labor and fixed cost. There is an ambitious plan to keep reducing cost per liter with the aim to revise this cost per liter. Donor compensation reduction will continue going forward. In addition, optimization of labor and fixed costs, including some plasma centers relocation, consolidation, and also closing those less efficient. This will support further reduction in terms of cost per liter. Having said that, we'll continue assessing the trade-off between plasma collections and donor fee, and balancing these two components to enhance our performance going forward. On the leverage, yes, we are laser-focused on leverage.

And the next slide.

As already explained plasma collections.

25% year to date versus previous year, and two larger stent in the U S expanded by 28%.

None of that plan are volumes increased our normalized we're focusing on cost reduction.

Driving danone compensation decrease as well as optimization of labor and fixed cost.

That is an ambitious plan to keep reducing cost per liter with the aim to rebase.

Cost per liter.

Total compensation reduction will continue going forward.

The addition optimization of labor and fixed cost improving some plasma centers relocation consolidation and also closing those less efficient. These will support further reduction in terms of cost per lead.

Having said that we will continue assessing the trade off between plasma collections and donor T. Balancing these two components to enhance our performance going forward.

On the leverage yes, we are laser focused on leverage.

Alfredo Arroyo Guerra: Basically the main levers of the organic deleverage are in this order. First, EBITDA improvement, working on margin, plasma cost, as well as OpEx already mentioned. Optimizing working capital. This year, we have to build up inventories. Once, you know, last year, the inventories were exhausted, you know, as a result of the lower plasma collections. For the next year, the inventory increase will be limited in line with, I would say, normal times. Also, limited CapEx, no meaningful acquisitions, discipline in capital allocation. Since we are well invested, you know, this business require no significant capital moving forward. This is, you know, as mentioned by Steve, in the opening remarks, a top priority.

Basically the main levers of the organic deleverage are in this order first.

Again improvement working margin plasma costs as well as office origination.

Optimizing working capital this year, we have to build up inventory.

Last year, the inventories were exhausted.

And sort of the.

The the lower plasma collections, but for the next year.

EBIT.

Keith will be limited in light with Apple take normal times.

Also limited topics.

No meaningful acquisitions.

This complaint in capital allocation and since we are well invested.

This business.

Requiring no significant capital moving forward.

This is <unk>.

As mentioned by Steve. This is it in the opening remarks, you said top priority.

Alfredo Arroyo Guerra: In Q3, we were able to reduce the 9x, as of June, that was the peak of the year, down to 8.6. By year-end, expected to further decline and will be around 7.9x. We will continue to evaluate also, as already mentioned, our worldwide base of valuable assets for optimization. Important to mention that Grifols' strong liquidity position at the end of the quarter totaled EUR 1.6 billion, including a cash position of circa EUR 500 million, while there are no significant maturities until 2025. Victor?

You can see we were able to reduce the nine times as of June that was the peak of the year down to $8 six by the year end expected to further decline and will be around seven nine times.

We will continue to evaluate also as already mentioned, our global wide base of valuable assets for us to be safe.

Important to mention that reinforce our strong liquidity position.

In the quarter totaling $1 6 billion, including a cash position of circa $500 million. While there are no significant maturities until 2025.

Victor Grifols Deu: Thank you, Alfredo. Now I will enter into more detail about the performance of the business units. Biopharma, we are optimistic that we are seeing improved momentum evidenced by a strong Q3 across key proteins, especially IG, our flagship, which grew by 12% in Q3, Q3D year-to-date 2022. As global plasma supply increases, we're anticipating a strong growth with opportunities on core indications, such as primary immune deficiencies and CIDP. Demand has and it is expected to remain robust. Many patients, even in top markets, remain underdiagnosed. Furthermore, even though incidences of the diseases are similar across geographies, consumption rates can vary very significantly from one geography to another. Actually, IG in the US, for instance, is still consumed at almost 3 times the rate per head of population when compared to Europe.

Thank you.

Not only will enter into more detail about the performance of the business units might've thought.

The math, we are optimistic that we are seeing improved momentum evidenced by our strong third quarter across key proteins officially.

Our flagship.

Which grew by 12% in Q QC yesterday subsequent date.

As global plasma supply decreases we're anticipating a strong roes.

With opportunities from core indications.

But I know you've touched inefficiencies.

Demand has and is expected to remain robust.

Many patients even in tough markets remain under agnostic.

Furthermore, even though issuances of the diseases as stimulus across geographies consumption rates can vary significantly from when you allocate to another.

Actually in the U S for instance.

Theyre consumed at almost three times the rate per head of population when compared to Europe .

Victor Grifols Deu: Noteworthy to mention how new products continue increasing its contribution, driven by our core plan to boost our subcutaneous franchise, Xembify, to contribute to the revenue performance going forward. In albumin, as Ruben already mentioned, in the second quarter of the year, sales were flat versus the first nine months of 2021. With lower volumes in China partially offset by low single-digit price decreases. Looking forward, we anticipate volume demand in China to continue to grow at mid- to high single digits. Alpha-1 and specialty proteins delivered a high single-digit growth. Alpha-1 recorded mid-single-digit increase due to favorable customer mix and competitor supply shortages. Additionally, we delivered robust growth of our latest launches, such Entyravir's new formulation, tablets, and Vistaseal, due to its sustained higher demand, while other more regular products are performing well.

Noteworthy to mention how new products continue increasing its contribution.

Driven by our.

Core plan to boost our Super Daniels franchise 75.

To contribute to the revenue performance going forward.

In order to meet as soon we already mentioned in.

In the second quarter of the year.

Sales were flat versus the first nine months of 2021.

With lower volumes in China facilities said by low single digit price increases.

Looking forward, we anticipate volume demand in China, continuing to grow at mid to high single digits.

And a specialty broad base delivered a high single digit growth.

Also on record with mid single digit increase the dose and what our customer mix and competitor supply shortages.

Additionally, we delivered revenue growth of our latest launches such anti Arabias, Newport combination tablets and Q&A Sheila.

Duo is sustained at higher than that.

Wire other models.

<unk> as a.

Victor Grifols Deu: All in all, offsetting the FX rate tender pressures that we are seeing. Moving to Diagnostics. Diagnostic performance has been impacted due to non-recurrent sales of the NAT technology to detect COVID-19. The termination of mandatory Zika virus testing, which was partially offset by global sales of blood typing solutions. Excluding these two items, the business unit declined by 3.5% at constant currency in Q3 year-to-date 2022. As already mentioned, these two items impacted consolidated gross margins by 260 basis points in Q3 year-to-date 2022. This, together with some country mix and pricing, were partially offset by growth in the Chinese market and higher donation volumes, resulting in 35% growth in China year-to-date 2022. Blood typing solutions division recorded a robust growth of 20%, supported by solid performance across EMEA and US regions, and stronger gel card sales in Eastern Europe. As well as growth in China and rest of Asia Pacific due to increases in donations and sales of gel cards as well as instruments. Recombinant proteins declined primarily resulting from the joint business collaboration on a new R&D project. Bio Supplies reported significant revenue growth in Q3, led by Bio Supplies diagnostics, supported by plasma for diagnostics, cell culture media and serum, as well as with acquisition of Access Biologicals. Bio Supplies Biopharma declined due to lower sales of non-therapeutic use albumin and Fraction V, which were partially offset with cell culture media revenue resulting from the acquisition again of Access Biologicals. Now I give the word to Steve Mayer with his closing remarks. Thank you.

Following with Paulino offsetting.

The effect on <unk>.

And the pressures that we're seeing.

Moving to the agnostic.

Yes, Nonstick performance has been impacted due to nonrecurring non equivalent sales of NFC technology.

With COVID-19.

And as a nation of mandatory Zika virus.

Which was partially offset by railroad says of loss.

Okay.

Excluding these two items the business unit declined by five.

5% at constant currency.

Yesterday 2020.

As already mentioned this two items impacted consolidated gross margins by 206.

50 basis points in Q3 year to the extent its anti Tau.

This together with some customer mix and pricing.

Partially offset by growth in the Chinese market.

Some volumes, resulting in 75% growth.

China yesterday 2020.

Victor Grifols Deu: Blood typing solutions division recorded a robust growth of 20%, supported by solid performance across EMEA and US regions, and stronger gel card sales in Eastern Europe. As well as growth in China and rest of Asia Pacific due to increases in donations and sales of gel cards as well as instruments. Recombinant proteins declined primarily resulting from the joint business collaboration on a new R&D project. Bio Supplies reported significant revenue growth in Q3, led by Bio Supplies diagnostics, supported by plasma for diagnostics, cell culture media and serum, as well as with acquisition of Access Biologicals. Bio Supplies Biopharma declined due to lower sales of non-therapeutic use albumin and Fraction V, which were partially offset with cell culture media revenue resulting from the acquisition again of Access Biologicals. Now I give the word to Steve Mayer with his closing remarks. Thank you.

Blood typing solution Division recorded revenue growth of 20% supported by solid performance across EMEA and U S regions.

Stronger Jessica sales Eastern Europe .

As we all as well as growth in China, and rest of Asia Pacific unit increases installations and sales.

<unk> gas as well as <unk>.

Yes.

Recombinant proteins decline decline, primarily resulting from the joint business collaboration.

R&D projects.

Regarding by your supplies reported significant revenue growth in the third quarter led by your suppliers the agnostic supported by plasma for the agnostic.

Media.

As well as with acquisition of access.

Okay.

Yes.

But also clarify your primary client due to lower sales of non <unk>.

Teachers are looming and.

In fractional fire.

Were partially offset with telcos and media revenue, resulting from the acquisition of gas both access layer logica.

And now I give the word.

To achieve with his closing remarks, thank you.

Steven F. Mayer: Thank you, Victor. I'd like to conclude by reiterating a few points that we've already made, but that I think bear repeating. To be clear, my management style is to keep returning to the most important priorities in the business, both those that make us strong and those that need changing, in order to ensure that our organizational and business priorities are absolutely clear and are driven to and then beyond the finish line. The Grifols board of directors asked me to join the company as executive chairman in order to enhance operational execution, financial discipline, business performance, and shareholder value. We are going to do so initially by prioritizing operating efficiency and cost reduction throughout the organization, especially, but not only, in the cost per liter of plasma, by the improvement of cash flow and by debt reduction. These initiatives are already underway.

Steven Mayer: Thank you, Victor. I'd like to conclude by reiterating a few points that we've already made, but that I think bear repeating. To be clear, my management style is to keep returning to the most important priorities in the business, both those that make us strong and those that need changing, in order to ensure that our organizational and business priorities are absolutely clear and are driven to and then beyond the finish line. The Grifols board of directors asked me to join the company as executive chairman in order to enhance operational execution, financial discipline, business performance, and shareholder value. We are going to do so initially by prioritizing operating efficiency and cost reduction throughout the organization, especially, but not only, in the cost per liter of plasma, by the improvement of cash flow and by debt reduction. These initiatives are already underway.

Thank you Victor.

I'd like to conclude by reiterating a few points that we've already made.

Bear repeating.

Clear My management style is to keep returning to the most important priorities in the business.

Does that make us strong and those that need changing.

In order to ensure that our organizational and business priorities are absolutely clear.

Driven too and then beyond the finish line.

The <unk> Board of Directors asked me to join the company as executive Chairman in order to enhance operational execution.

Initial disciplined.

Business performance and shareholder value.

We're going to do so initially by prioritizing operating efficiency cost reduction throughout the organization, especially but not only the cost per liter of plasma.

By the improvement of cash flow and by debt reduction.

These initiatives are already underway.

Steven F. Mayer: Standing back from them, though, I am absolutely certain that the fundamentals of our business and our strategy are strong and that we are well-positioned to capitalize on our highly valuable assets and platform for years to come. I will be working closely with the entire management team to help Grifols focus on its key priorities and achieve its goals. We are creating a culture of performance and accountability. To be crystal clear, I will be accountable for delivering, period. Recapping what you've heard about our recent business results, plasma collections have grown by 25% over the previous year, which in turn is underpinning strong sales growth in H2 2022 and onwards. The market remains strong, and we aim to continue this momentum into the future. We're laser-focused on driving cost per liter down further.

Steven Mayer: Standing back from them, though, I am absolutely certain that the fundamentals of our business and our strategy are strong and that we are well-positioned to capitalize on our highly valuable assets and platform for years to come. I will be working closely with the entire management team to help Grifols focus on its key priorities and achieve its goals. We are creating a culture of performance and accountability. To be crystal clear, I will be accountable for delivering, period. Recapping what you've heard about our recent business results, plasma collections have grown by 25% over the previous year, which in turn is underpinning strong sales growth in H2 2022 and onwards. The market remains strong, and we aim to continue this momentum into the future. We're laser-focused on driving cost per liter down further.

Standing back from them, though im absolutely certain that the fundamentals of our business and our strategy are strong and that we are well positioned to capitalize on our highly valuable assets and platform.

Years to come.

I'll be working closely with the entire management team to help group is focused on its key priorities and achieve its goals.

We are creating a culture of performance and accountability.

And to be Crystal clear.

We'll be accountable for delivering great.

Recapping, what you've heard about our recent business results, but the collections have grown by 25% over the previous year.

Which in turn is underpinning strong sales growth in the second half of 2022 and onwards.

The market remains strong and we aim to continue this momentum into the future.

We're laser focused on driving cost per liter down further.

Steven F. Mayer: Donor compensation per liter has declined by more than 15% since its peak in July 2022, and our objective is to realize further cost per liter decreases through a combination of continued donor fee management, operating leverage as higher volumes absorb fixed costs, and meaningful reductions in fixed and semi-fixed costs per liter, such as labor and occupancy costs. Recall the characteristic of our industry, these lower costs will in general be recognized in our operating results 6 to 9 months after they are realized. We're also on track to meet our financial commitments for full year 2022. We expect global revenues to finish the year in the EUR 5.8 to 6 billion range, including Biotest for about 7 months of the year. Adjusted EBITDA margin for the full year is expected to remain in the 20% to 21% range.

Steven Mayer: Donor compensation per liter has declined by more than 15% since its peak in July 2022, and our objective is to realize further cost per liter decreases through a combination of continued donor fee management, operating leverage as higher volumes absorb fixed costs, and meaningful reductions in fixed and semi-fixed costs per liter, such as labor and occupancy costs. Recall the characteristic of our industry, these lower costs will in general be recognized in our operating results 6 to 9 months after they are realized. We're also on track to meet our financial commitments for full year 2022. We expect global revenues to finish the year in the EUR 5.8 to 6 billion range, including Biotest for about 7 months of the year. Adjusted EBITDA margin for the full year is expected to remain in the 20% to 21% range.

Compensation for leader has declined by more than 15% since its peak in July 2022.

And our objective is to realize further cost decreases.

Combination of continued donor fee management.

Operating leverage was higher volumes absorbed fixed clause and meaningful reductions fixed and semi fixed cost per leader, such as labor and occupancy costs.

We called the characteristic of our industry. These lower cost more in general will be recognized in our operating results six to nine months after they are realized.

We're also on track to meet our financial commitments for the full year 2022.

We expect global revenues to finish the year and the five 8% to $6 billion euros range, including bio test for about seven months of the year.

Adjusted EBITDA margin for the full year is expected to remain in the $20 to 21% range.

Steven F. Mayer: For the reasons we've discussed and with additional operating leverage, we anticipate margin expansion for 2023. Our leverage ratio is expected to decline to about 7.1x by year-end, a significant drop from the 9x reported just six months ago. Also, keep in mind that this leverage ratio does not include any pro forma results relating to the Biotest transaction. As you know, we've forecast about EUR 60 million of synergies between Biotest and Grifols. None of these synergies are included in the forecast ratio I just cited, and none of the deleveraging alternatives we are considering are included in that ratio either. As mentioned, the entire executive team is focused, and I mean focused, on accelerating the execution of the company's operating plan on operational excellence, on cash flow improvement and debt reduction, and ultimately on increasing value for all shareholders.

Steven Mayer: For the reasons we've discussed and with additional operating leverage, we anticipate margin expansion for 2023. Our leverage ratio is expected to decline to about 7.1x by year-end, a significant drop from the 9x reported just six months ago. Also, keep in mind that this leverage ratio does not include any pro forma results relating to the Biotest transaction. As you know, we've forecast about EUR 60 million of synergies between Biotest and Grifols. None of these synergies are included in the forecast ratio I just cited, and none of the deleveraging alternatives we are considering are included in that ratio either. As mentioned, the entire executive team is focused, and I mean focused, on accelerating the execution of the company's operating plan on operational excellence, on cash flow improvement and debt reduction, and ultimately on increasing value for all shareholders. We look forward to communicating with you more frequently and transparently, including through quarterly earnings reports and calls. Thank you.

For the reasons, we've discussed and recognition of operating leverage we anticipate margin expansion for 2023.

Our leverage ratio is expected to decline.

Seven one times by year end.

The significant drop in the mine plans reported just six months ago.

Also keep in mind that this leverage ratio does not include any pro forma results related to the biotech transaction.

As you know, we forecast about 60 million euros of synergies between testing ripples.

None of these synergies are included in the forecast ratio I, just cited and none will be deleveraging alternatives, we are considering to do that ratio.

As mentioned the entire executive team is focused.

Focus on accelerating the execution of the company's operating plan, while the operational excellence on.

On cash flow improvement debt reduction.

Ultimately.

Accretion value for all shareholders.

Steven F. Mayer: We look forward to communicating with you more frequently and transparently, including through quarterly earnings reports and calls. Thank you.

We look forward to communicating with you more frequently and transparently, including kind of quarterly earnings reports and calls.

Thank you.

Yes.

Nuria Pascual: Thank you, Steve, and thank you all for your time. Now let's start. We will be pleased to take questions from the sell-side analysts that follow our company, that follow Grifols. Please press star five and to raise your hand, and so we will be progressively taking your calls. Just one thing, be conscious of also your colleagues' time in order to have time for everybody to ask questions. Let's start with Vineet Agrawal from Citi. Please, Vineet.

Thank you Steve and thank you all for your time, so now let's let's just.

We will be pleased to take questions from the sell side analysts that follow our company.

Please press star five on that ratio.

So we will be progressively.

Cause deaths, one thing be conscious of I'll say your colleague.

Time, Inc.

We have time for everybody to ask why it's so.

This is Todd.

<unk> from Citi.

Please Dennis.

Vineet Agrawal: Hi. Can you hear me?

Hi can you hear me.

Nuria Pascual: Yes.

Alfredo Arroyo Guerra: Hello.

Yes Hello.

Vineet Agrawal: Great.

Nuria Pascual: Hello, yes.

Vineet Agrawal: Thanks. This is Vineet here from Citi on behalf of Peter. 2 questions. First of all, on 2023, can you give some preliminary thoughts around 2023? And if the trends you're seeing persist, can you give us a sense of the scope of margin recovery you hope to see? Could it be 22% to 25% or better? Second, how motivated are you to accelerate your deleveraging activities? Could we assume all options being considered, including collapsing the dual share class structure, monetizing your Shanghai RAAS stake, and/or doing something with diagnostics? Thank you.

Great.

Thanks.

We need to hear from you on behalf of two.

Two questions.

So first of all are there any can.

Can you give some moving.

Got it.

Greg.

Can you give us a firm focus group of margin recovery.

Could it be 20% to 25% or better and second.

How motivated are you to ex deliberate.

Broking activities.

Yes.

Options being considered.

Collapsing.

Share class structure monetizing Shanghai rustic.

Something with diagnostics.

Nuria Pascual: Maybe as, I think your first question, it was a bit difficult to hear you because maybe you were too close to the mic. I think your first question was on the fibrinogen and the timing associated to that. Is that correct?

Maybe.

Thank you for the question it was a bit difficult to hear you.

And then maybe you as opposed to the micro but.

I think your first question listen that either in our agenda.

And then the timing associated to that is that correct.

Yes.

Vineet Agrawal: No, I was just asking if you can, you know, give some preliminary thoughts around the 2023 margin progression. Could we hope to see, you know, 22% to 25% margin or

I was just asking if you can.

Get some preliminary thoughts around 2023 market progress yet.

B could vehicles.

20% to 25% margin we cannot achieve.

Nuria Pascual: No, we cannot. Sorry, Vineet.

So again.

Alfredo Arroyo Guerra: Before he speaks, you maybe go to the second.

Victor Grifols Deu: Before he speaks, you maybe go to the second.

Brewery ships go through the cycle.

Nuria Pascual: What was your second question?

Yes, good question.

Steven F. Mayer: I think the questions involved margin progression during 2023, which maybe Alfredo you can respond to. The second half of the question had to do with deleveraging alternatives, which he mentioned a couple, which I can respond to.

Steven Mayer: I think the questions involved margin progression during 2023, which maybe Alfredo you can respond to. The second half of the question had to do with deleveraging alternatives, which he mentioned a couple, which I can respond to.

Right.

Okay.

Margin progression during 2023, which maybe alfredo.

In the second half of the question had to do with deleveraging alternatives.

Rich you mentioned, a couple of which I can respond to.

Nuria Pascual: Okay, thank you.

Alfredo Arroyo Guerra: Thanks, Steve. To your first question, the margin progression, my comment is the following. The worst is already behind. By focusing on the lower cost per liter, as I already mentioned, we see, you know, a significant decline moving forward. Remember that it will take time to flow through the P&L based on our, you know, long inventory cycle. That means that we will see meaningful, I would say, gross margin improvement coming from a lower cost per liter more in the H2 next year, so backloaded. On the additional OpEx savings, yes, you know, we will capture those, you know, since the end of the year, so that will help to improve our gross margin.

Okay. Thank you.

Steve.

To your first question.

The margin progression.

My comments he said the following.

The worst is already behind.

So by focusing on the lower cost per lead data so I already mentioned.

We see it.

Significant decline moving forward, but remember that it will take time to flow through the P&L deshaun hour.

No.

EBIT through cycle.

So that means that.

We will receive meaningful let's say gross margin improvement coming from lower cost per liter more in the in the second half of <unk>.

On the additional Opex savings, yes, we will.

We'll cut to dose <unk>.

End of the year. So that's how it will help to improve our gross margin.

Alfredo Arroyo Guerra: Also if I move, you know, back to the, you know, the end of the P&L, by increasing the share of Sub-Q, which we will expect that will be meaningful next year, this will help us to improve the gross margin. Remember that there is a significant price gap between the regular IG and the Sub-Q IG. So this is gonna help, you know, quite a bit about the gross margin also starting next year. That's what I'm gonna tell you now based on the gross margin as well as ABD and margin. The worst is already behind.

But also if I move back.

<unk>.

Moving to the P&L.

By increasing the share of first half skew.

Which we will expect that will be meaningful next year. This will help us too.

Improve the gross margin.

There is a significant price gap between the.

Yes.

E on this.

Sub Q E. So this is going to help quite a bit about the.

Gross margin also.

It starts next year so thats.

That's what I'm going to attend now based on the gross margin as well as ABB in March So there were certainly behind.

Steven F. Mayer: With respect to the deleveraging alternatives, we're going to wait until we have something to announce before we give any details. I'll just broadly state that Grifols has an extremely valuable, I would say irreplaceable, group of assets globally. We believe that there are opportunities to capitalize on these to reduce leverage while continuing the overall long-term strategy that Grifols has. With respect specifically, I think you asked about the consolidation of the two classes of shares. We've already said that we think that the equity is meaningfully undervalued today. That applies to both classes of shares. We're not looking to a capital increase or equity issuance in today's trading range. That also applies to the consolidation of the two classes of shares.

Steven Mayer: With respect to the deleveraging alternatives, we're going to wait until we have something to announce before we give any details. I'll just broadly state that Grifols has an extremely valuable, I would say irreplaceable, group of assets globally. We believe that there are opportunities to capitalize on these to reduce leverage while continuing the overall long-term strategy that Grifols has. With respect specifically, I think you asked about the consolidation of the two classes of shares. We've already said that we think that the equity is meaningfully undervalued today. That applies to both classes of shares. We're not looking to a capital increase or equity issuance in today's trading range. That also applies to the consolidation of the two classes of shares. As the stock price recovers to what we believe to be a better reflection of the value of Grifols, that, you know, will be one of the alternatives we consider.

With.

Respect to the deleveraging alternatives.

We're going to wait until we have something to announce before we give any details, but I will just.

Broadly states that <unk> has an extremely valuable I would say irreplaceable.

Group of assets globally.

We believe that there are opportunities to capitalize on these to reduce leverage while continuing the overall long term strategy global SaaS.

With respect specifically I think you asked about the.

Consolidation of the two classes of shares.

We've already said that we think that the equity is meaningfully undervalued today.

That applies to both classes of shares so we're not.

Looking to.

Our capital increase or equity issuance.

In today's trading range and that also applies to the consolidation of the two classes of shares.

Steven F. Mayer: As the stock price recovers to what we believe to be a better reflection of the value of Grifols, that, you know, will be one of the alternatives we consider.

The stock price recovers to what we believe to be a better reflection of the value of referrals.

Okay.

It will be one of the alternatives we consider.

Nuria Pascual: Okay. Thank you, Steve. Now let's move to James Gordon, JP Morgan. James, please.

Okay. Thank you, Steve and now let's move to James Gordon Jpmorgan. Please.

James Gordon: Hello, James Gordon. Thanks for taking the questions. One question was about the medium-term target. Last year in conjunction with the Biotest deal.

Alright, James Gordon Thanks for taking my questions.

One question is about the medium term target.

A lot has changed in conjunction with the black is too high.

Nuria Pascual: James.

Again.

James Gordon: Can you hear me okay?

Nuria Pascual: We can't hear you.

Alfredo Arroyo Guerra: We can't hear you.

Can you hear me.

We can hear you.

James Gordon: I would say that last year there were targets set in conjunction with the Biotest acquisition for revenues, EBITDA and leverage. More than EUR 7 billion revenues, EBITDA EUR 2.8 billion, and leverage below 3.5x. I believe those targets were pushed out to 2025 at the CMD. Should we still think that those targets could be achieved in 2025, or are those targets under review? Might it take longer to get to those targets? A review on where we are on the revenue, EBITDA and leverage targets in the medium term. The other question was just in terms of pipeline. There were some previous plans in terms of investing in various pipeline projects, things like alpha-1 disease, etc.

Last year, they would target.

Conjunction with the biotech acquisition.

For revenues EBITDA and leverage.

More than 7 billion revenues EBITDA at $2 8 billion and leverage below three and a half times I believe the targets were pushed out to 2025 at the Cfd. So should we still think those targets could be achieved in 2025.

Are those targets under review might take longer to get to the targets.

A review of where we are the revenue EBITDA and leverage targets in the medium term.

The other question was just in terms of pipeline. So there was some previous plans in terms of investing in various pipeline projects things like outside of this disease et cetera.

James Gordon: Are all those plans still going on or might you change some of the pipeline priorities as well? Is the second question.

You guys plan to getting on or might you change some of the pipeline priorities as well as the second question.

Okay.

Victor Grifols Deu: To the first question about the leverage. Yes, by 2025 it will be a combination of organic and non-organic. Clearly, you know, our target is, you know, to be below 4x. So that's. Also remember that we need to go to the market to the debt markets to refinance the portion of our debt. So clearly it's a must to be, you know, at a very good, I would say, leverage ratio at that time. So it will be a combination of both.

Alfredo Arroyo Guerra: To the first question about the leverage. Yes, by 2025 it will be a combination of organic and non-organic. Clearly, you know, our target is, you know, to be below 4x. So that's. Also remember that we need to go to the market to the debt markets to refinance the portion of our debt. So clearly it's a must to be, you know, at a very good, I would say, leverage ratio at that time. So it will be a combination of both.

So the first question about the leverage.

Yes, like three to five either all will be the combination of organic and Nonorganic clearly our target.

To be below four times.

You also remember that.

We need to go to the market.

To the debt market to refinance a portion of our debt. So pn is a must.

<unk>.

Good.

I'd say leverage ratio at that time, so it will be a combination of both.

Nuria Pascual: Thank you. James, can you please repeat the second one?

Thank you.

James can you please repeat the second one.

James Gordon: Sure. Sorry if I've got a bad line. The second question was, are all of the previous pipeline plans and pipeline investment plans still definitely going ahead, or is Grifols also reviewing them? Could there be changes in terms of investment plans and pipeline?

Sure I'm sorry, the second question was the previous pipeline plans.

Pipeline investment plans.

Definitely going ahead.

We're also reviewing them could there be changes in terms of investment plans in pipeline.

Nuria Pascual: Very difficult to understand you, but I think you're asking about the pipeline.

It was my understanding, but I think youre asking about the pipeline.

James Gordon: That's correct.

Nuria Pascual: Grifols?

That's correct.

Victor Grifols Deu: The pipeline, you are on the pipeline?

Yes.

James Gordon: Yes.

Victor Grifols Deu: Okay. As we said in our Capital Markets Day back in July, we continue to believe very strong in the progress that we are doing in the different projects that we are undergoing. Very clear for Biotest products, hyperimmunization and IgM, they continue basically on track. Regarding the albumin in liver disease continues on track as well. Secondary immune deficiency for our Ig products continue on track. Antithrombin III in sepsis as well continues on track. Overall, everything continues as we said in our last Capital Markets Day.

Okay.

We said in our capital markets day.

Back in July we continue to believe very strongly in the approach that we have a bleed.

Brian .

Project.

Good morning.

Very clear.

Our bio based products.

And IBM.

Danielle.

Continuously on tracks.

Regarding the.

How do you mean in liver disease continues on track as well secondary immune deficiency, what our <unk> to continue on track and actually Tony's Hfc's container transactional overall everything continues as we said.

In our last capital markets day.

Nuria Pascual: Okay.

Yes.

James Gordon: Thank you.

Okay. Thank you.

Nuria Pascual: Thank you, Victor. Now, Sarita Kapila from Morgan Stanley, please. Sarita.

Thank you.

Morgan Stanley please.

Yes.

Sarita Kapila: To understand how we should think about increasing competition in the Alpha-1 space, so particularly from Inhibrx, following the FDA decision to grant accelerated approval and given that the data we've seen to date is quite encouraging. Thank you.

Just to understand how we should think about increasing competition in the alpha one site.

Hey, Brett.

The Fda's decision to grant accelerated appraisal and given that the data we've seen to date is quite encouraging. Thank you.

Victor Grifols Deu: Regarding alpha-1, this is a project that needs still time to arrive to the market, if it's the case. Regarding plasma products, as we have said today, for instance, we are continuously developing tools that can help our franchise to progress. In this case, it's the evolution of our AlphaID test. Now, in this case, At Home profile so that patients can self-test and get the results at home from this new tool. We continue to develop as well some life cycle management formulations for the better convenience of our patients. This is regarding alpha-1, how we see the landscape.

Regarding <unk>.

This is a project that mix impact.

What I have to the market. This is the case.

Regarding plasma products.

We have said today for instance, we are continuous developing tools that kind of held our franchise towards our progress in this case, you see evolution of Hawaii.

<unk> now in this case.

Hum horrified.

Patients as fast as our results have Cogs from from this new tool.

And we continue to develop as well some nice second management formulations toward an eventual convenience.

Our patients. So this is regarding us.

We see the landscape.

Yes.

Nuria Pascual: Thank you. Thank you, Victor. Now we have Guillermo Campaya from CaixaBank Equities. Guillermo.

Thank you Lisa.

And we have.

Awesome. Thanks, Kevin Thank you Ts EMEA.

Yeah.

Steven F. Mayer: Yes. Can you hear me?

Guillermo Campaya: Yes. Can you hear me?

Yes.

Amy.

Yeah.

Nuria Pascual: We can hear you.

We do.

Steven F. Mayer: One question regarding the recapitalization process for recapitalizing the stake of GIC in Biomat. How far we are in this process and whether you're still counting on this.

Yes, yes, okay perfect.

Guillermo Campaya: One question regarding the recapitalization process for recapitalizing the stake of GIC in Biomat. How far we are in this process and whether you're still counting on this to your leverage targets. Two small questions on the results. If you could provide some details on Shanghai RAAS's performance this quarter, and if you could provide some color on the FX impact on quarter and quarter net evolution.

Okay. So one question regarding the.

<unk> process for trying to think of GIC environment. How we are in this process.

Are you still counting on this to.

Nuria Pascual: To your leverage targets. Two small questions on the results. If you could provide some details on Shanghai RAAS's performance this quarter, and if you could provide some color on the FX impact on quarter and quarter net evolution.

So your leverage targets.

And then two small questions on the results. So if you could provide some details on Shanghai has performance this quarter and if you could provide some color on the FX impact on quarter over quarter net technical issue.

Alfredo Arroyo Guerra: Okay. Regarding your question of GIC, just to remind you that the aim of both parties and the rationale had been always, and still is, that this is a financial instrument, which is an equity. Both parties, this is the understanding of the parties at the time of the agreement. As you all know, afterwards, you know, the auditors, KPMG, they have, you know, some, I would say, some inside talking, and finally they came back with that applying the accounting rule that this is a debt. The agreement is not expected to be modified in the short term. However, still, you know, the door is open. This is really where we are.

Okay.

In your question.

Yes.

Mind you that.

I'm all for both third parties and the rationale has.

<unk> has been always initiative.

This is a financial instrument would you say in equity. So both parties do you see that the spending on the parties at the time was I believe.

As you will know afterwards.

The auditor KPMG they have some I would say.

E site talking and finally, they came back.

That's applying the accounting will that thesis that this is a nick.

<unk>.

Have you been is not expected to be modified in the short term. However, there's always hoping.

So this is really where we have a commitment.

Alfredo Arroyo Guerra: Remember, this is a 20-year, I would say, term. Now it's hard to get, I would say, a debt for 20 years. As you can imagine, this is a real equity or quasi equity. That's, as I said, not on the table for us.

We have an additional 20 years, let's say.

So now I'm, just trying to get to I would say.

Yes, so as you can imagine this is.

And equity you're questioning equity so that that is not going to take one for us.

Nuria Pascual: Yeah. On the FX impact.

Yes, and then on the FX impact this actually impact overall.

Alfredo Arroyo Guerra: The FX impact, overall, yes. This year is gonna be close to EUR +100 million at the EBITDA level, because there is a significant dollar revaluation, especially versus euro. Since most of our revenues and most of our ADA is dollar driven, we're expecting, and it's already bringing, by the end of September, EUR +74 million of positive FX. By the year, expected to be, if the dollar trend remains the same around EUR +100 million. So very positive, this year. For the next year if it continues at the similar level, we see also a positive impact, less than this year, but positive indeed.

Overall, yes. This year is going to be close to 100 million at EBITDA level.

Because the.

That is significant.

Dora.

The revaluation.

Especially versus Europe . She is most of our revenues in most of our NDA is dollar driven would expected and is already bringing by the end of <unk>.

Timber 74 million units of positive ethics by the EIA.

I expect it to be easy.

<unk> direct chain remains the same at around one.

Around 100, so very positive.

This year and for the next year.

<unk> continues the similar level.

We have also which is also a positive next year, but.

Nuria Pascual: Mm-hmm. Thank you, Alfredo. Emily Field from Barclays. Hello, Emily.

Okay.

Thank you Jonathan.

And then the and then retain from Barclays.

Emily.

Emily Field: Hi. Thank you so much for taking my questions. Just a couple. Just on the divestitures point, is there anything that is off the table? Because obviously, you know, between diagnostics and Shanghai RAAS, I know that was kind of asked earlier, but there is some complexity. So I just, you know, kind of was wondering is sort of anything on the table if, you know, if a satisfactory price can be obtained. Then secondarily, you mentioned in the prepared remarks a couple of times about fixed and semi-fixed costs. I believe the company commented a few years ago about the split between fixed and variable costs and how that, and how that could be managed in the event of emerging competition.

Yes.

Hi, Thank you so much for taking my question just a couple on just on the divestitures point.

Is there anything that is off the table.

Because obviously between diagnostics and Shanghai Ross I know that was kind of asked earlier, but there is some complexity.

Just kind of was wondering it sort of anything on the table.

Satisfy satisfactory price can be obtained and then secondarily you mentioned in the prepared remarks, a couple of times about fixed and semi fixed cost I believe the company commented a few years ago about the split between fixed and variable costs and how that.

And how that could be managed in the event of emerging competition could you just give us an update on how you see that split between.

Emily Field: Could you just give us an update on how you see that split between fixed and variable costs and, you know, how much costs you would be able to shift in the event of emerging competition? Thank you.

Certain variable costs and how much cost.

You would be able to shift in the event of emerging competition. Thank you.

So to the proportion of fixed and variable costs.

Alfredo Arroyo Guerra: To the proportion of the fixed and variable costs, you know, a significant component obviously is the labor cost that, you know, overall accounts for near 50%, let's say 45% of our total cost. Some of the costs, those costs are, I would say, yes, variable, because, you know, you need certain people to run manufacturing plants, you need certain people to run operations and, you know, some in the back office. Clearly, you know, there is a room for improvement. You know, the team up to now and moving forward is gonna, you know, keep working on ripping off, you know, some of those savings. There are some low-hanging fruit there, and both at the plasma cost side as well as the rest of the cost across the whole range. Clearly, you know, there are some upsides, not only at Grifols' site, but also as mentioned by Steve at Biotest level. You know, there are some synergies that can be captured.

Adhesion component, obviously is illegal caused desktop.

All in all accounts for near 50% ish, a 45% of our total cost on some.

Some of the costs those costs are I would say.

Yes variable because it's unique certain people to run manufacturing plant you need certain people can run operations.

In the in the back office, but clearly there is room for improvement on that.

On the team now and moving forward is going to.

Keep working on.

Ripping off some of those savings there some low hanging fruit on both at the at the plasma cost side as well as the rest of the cost across the whole organization. So clearly the Asia.

Alfredo Arroyo Guerra: There are some low-hanging fruit there, and both at the plasma cost side as well as the rest of the cost across the whole range. Clearly, you know, there are some upsides, not only at Grifols' site, but also as mentioned by Steve at Biotest level. You know, there are some synergies that can be captured.

There are some upsides.

Not only are diesel side, but also as mentioned by Steve.

Notice level.

Synergies that can be touched.

Nuria Pascual: Yeah. Maybe on the first part of Emily's question, Steve, maybe you can take this one.

Yes, and then maybe on the first question is Steve maybe you can take this one.

Steven F. Mayer: Well, I think the critical point with respect to what you've described as divestitures, which I'm not sure I would employ that term, but, you know, we think we have this portfolio of irreplaceable assets. We also have a long-term strategy. Obviously, as with any company, we're gonna try to optimize that portfolio of assets in order to achieve both the financial objective of deleveraging, but also the long-term strategic goal of driving shareholder value in the long term. When you say, when you ask if there are sacred cows or if there is anything off the table, value aside, what's gonna be off the table is something that we think would have a material negative impact on long-term strategic and shareholder value.

Steven Mayer: Well, I think the critical point with respect to what you've described as divestitures, which I'm not sure I would employ that term, but, you know, we think we have this portfolio of irreplaceable assets. We also have a long-term strategy. Obviously, as with any company, we're gonna try to optimize that portfolio of assets in order to achieve both the financial objective of deleveraging, but also the long-term strategic goal of driving shareholder value in the long term. When you say, when you ask if there are sacred cows or if there is anything off the table, value aside, what's gonna be off the table is something that we think would have a material negative impact on long-term strategic and shareholder value. We do believe that there are many different ways of achieving our strategic objectives consistent with evaluating these deleveraging alternatives.

Well I think the big.

Critical point with respect to what you've described as divestitures, which I'm not sure I would support that term but.

We think we have this portfolio of irreplaceable assets. We also have a long term strategy.

And obviously as with any company, we're going to try to optimize that portfolio of assets in order to achieve both the financial objective of deleveraging.

But also the long term strategic goal of driving shareholder value in the long term.

So would you say when you ask if there are sacred cows, alright, there is anything off the table.

Value aside.

What is going to be off the table is something that we would have a material negative impact on long term strategic and shareholder value, but we do believe that there are many different ways of achieving our strategic objectives consistent with evaluating these deleveraging alternatives.

Steven F. Mayer: We do believe that there are many different ways of achieving our strategic objectives consistent with evaluating these deleveraging alternatives.

Okay.

Nuria Pascual: Okay. Thank you, Steve. We have next in the line, Tom Jones from Berenberg. Hi, Tom.

Sure.

Okay. Thank you Steve.

Next in the line Tom Jones from <unk>.

Tom.

Tom Jones: Hi. Afternoon, everyone. I have two questions, one for Alfredo and one for Steven, if that's all right. Alfredo, just a quick housekeeping one. I was a bit surprised on the drop through in Q3 between EBITDA and net income. Was there just a step up in interest rates that caused that? Or were there any significant large one-off items that affected Q3? I know the tax rate can bounce around and occasionally you get a relatively large FX charge in there as well. Was there anything kind of a bit more one-off in nature that meant that the EBITDA number didn't quite drop through to the bottom line? Then my second question for Steven, it's really a big picture one, really. You've obviously been on the board quite a long time and followed this company and industry for even longer than that. What would you say in your words, is it that's in Grifols that excites you, that you think we as investors miss? You know, investors do love to hate Grifols a bit and you know, what is it that the market is missing, do you think? Maybe a sort of corollary to that is if you could just click your fingers today and change one thing about Grifols, what would that be?

Hi afternoon, everyone two questions one for a Friday over one for Stephen if that's all right.

Just a quick housekeeping one.

It was a bit surprised on the drop through in Q3 between EBITDA and net income.

Or is that just a step up in interest rates. The course that or are there any significant large one off items.

Rosie Turner: That affected Q3. I know the tax rate can bounce around and occasionally you get a relatively large FX charge in there as well. Was there anything kind of a bit more one-off in nature that meant that the EBITDA number didn't quite drop through to the bottom line? Then my second question for Steven, it's really a big picture one, really. You've obviously been on the board quite a long time and followed this company and industry for even longer than that. What would you say in your words, is it that's in Grifols that excites you, that you think we as investors miss? You know, investors do love to hate Grifols a bit and you know, what is it that the market is missing, do you think?

Q3 out of the tax rate can bounce around and occasionally you get a relatively large FX charge in there as well so was there anything kind of a bit more one off in nature of that.

And then to the EBIT EBITDA number didn't quite drop through to the bottom line.

And then my second question for Stephen It's already a big picture one really.

You've been on the board quite a long time and followed this company in the industry for even longer than that.

What would you say new what is it.

Didn't Griffith will set that excites you think ways investors Miss.

Investors do love to hate referrals a bit then.

What is it that the market is missing do you think.

Rosie Turner: Maybe a sort of corollary to that is if you could just click your fingers today and change one thing about Grifols, what would that be?

And then maybe sort of corollary to that is if you could just click your fingers today and change one thing about <unk> what would that be.

Okay.

Steven F. Mayer: Well, first, not to be contrary, but we don't take the view that the market's missing anything because we respect all of our shareholders, because we think they're owners of the business and the market is probably smarter than any of us individually. We're not bemoaning the fact that the market has not rewarded Grifols over the last year or two. Okay, our goal is to drive performance and then to make sure that we're transparent and communicative with the market, and we give the market all the available of that performance. If I stood back and looked in the biggest picture, at Grifols, I think it's a great industry, which over time has proved to have a lot of resiliency and growth characteristics.

Steven Mayer: Well, first, not to be contrary, but we don't take the view that the market's missing anything because we respect all of our shareholders, because we think they're owners of the business and the market is probably smarter than any of us individually. We're not bemoaning the fact that the market has not rewarded Grifols over the last year or two. Okay, our goal is to drive performance and then to make sure that we're transparent and communicative with the market, and we give the market all the available of that performance. If I stood back and looked in the biggest picture, at Grifols, I think it's a great industry, which over time has proved to have a lot of resiliency and growth characteristics.

Yes.

Okay.

For.

We ought to be contrary, but we don't.

Take the view that the market's missing anything because we respect all of our.

Shareholders, because we think they are all of them some of the business.

Market.

Probably smarter than any of us individually so.

We're not.

Bemoaning, the fact that the Marcus.

Has not rewarded grip holds over the last year or two okay. So.

Our goal is to drive performance and then to make sure that we're transparent and communicative with the market and we get into the market loyalty, but more about performance.

So if I step back.

And look the biggest picture.

At referrals I think it's a great industry.

Which over time has proved to have a lot of resiliency and growth characteristics and globally I think that growth will continue.

Steven F. Mayer: Globally, I think that growth will continue with a high degree of operating leverage. I think a return to margin, the margin structure that prevailed prior to the pandemic. Clearly at Grifols, there has been maybe not as much a focus on execution and performance, operational execution and performance as we might have had. I'm not pointing a finger at the past, but that's what we're gonna be laser-focused on. We do have a long-term strategy, but we also have a short to medium-term strategy. That short to medium strategy is going to be very, very execution-focused.

Steven Mayer: Globally, I think that growth will continue with a high degree of operating leverage. I think a return to margin, the margin structure that prevailed prior to the pandemic. Clearly at Grifols, there has been maybe not as much a focus on execution and performance, operational execution and performance as we might have had. I'm not pointing a finger at the past, but that's what we're gonna be laser-focused on. We do have a long-term strategy, but we also have a short to medium-term strategy. That short to medium strategy is going to be very, very execution-focused.

With a high degree of operating leverage.

And I think a return to margins the margin structure that prevailed prior to the pandemic.

Clearly.

Cripples.

There has been a.

Maybe.

Maybe not as much of a focus on execution and performance operational.

Execution and performance as we might have had well not pointing a finger in the past, but that's what we're going to be laser focused on.

No.

We do have a long term strategy, but we also have a short to medium term strategy and that short to medium strategy is going to be you got to be very.

Very execution focused.

Steven F. Mayer: If I could snap my fingers, I would advance 2 or 3 years and we would have a highly accountable, highly incented, highly performance-driven organization that was just really focused on execution and on delivery. I think we need to reinstill that in the organization a bit. When you look at the big picture and you look at the platform and the portfolio of assets that Grifols has and the long-term strategy, I'm extremely optimistic. That's why I stepped into this role.

Steven Mayer: If I could snap my fingers, I would advance 2 or 3 years and we would have a highly accountable, highly incented, highly performance-driven organization that was just really focused on execution and on delivery. I think we need to reinstill that in the organization a bit. When you look at the big picture and you look at the platform and the portfolio of assets that Grifols has and the long-term strategy, I'm extremely optimistic. That's why I stepped into this role.

So if I could snap my fingers I would advance two or three years.

We would have.

Lee accountable highly incentive.

Performance driven.

Organization.

That was.

Just really really focused on execution and on delivering.

I think we need to re instilled in the organization a bit.

But when you look at the Big picture and you look at the platform and the portfolio of assets that were supposed to have the luxury strategies extreme.

Extremely optimistic that's why that's why I stepped into this role.

Alfredo Arroyo Guerra: Tom, to your first question, the drop in the EBITDA margin mainly is driven by lower Biopharma margin associated to higher plasma cost. Remember that the timeline between the plasma cost increase and the time that flows to the P&L. Now in the second half of the year, so including Q3 and Q4, we're gonna see Biopharma margin decline due to the higher plasma cost. To the net income amount, the lower EBITDA level. To the net income, the drop is due to additional financial expense. Remember, which is associated to the interest rate hike. Despite the fact that we have 35% only floating debt, we had an impact, no doubt. That impact, you know, once the interest rate is announced, it takes around 2, 3 months to hit our P&L because that's we have the quarterly interest rates revisit. That's why now we see in Q3 and also in Q4, we're gonna see a higher financial expense. That explain why the net profit for the Q3 is lower.

So to your first question.

The drop in EBITDA margin, mainly driven by lower Biopharma.

Martina associated to higher plasma cost numbers.

Yes.

The time lag between the plasma cost increase on the time that flows through the P&L. So now in the second half of the year, so, including Q2 and Q4, we're going to see Biopharma margin declined due to the higher plasma cost.

So the net income amount.

<unk>.

No.

Sorry.

Sure.

Level.

<unk> net income drop.

You too.

Additional financial expense.

<unk>, which is associated to the interest rate.

Brink's height. Despite the fact that we have 75% only protein.

We had an impact no doubt.

Alfredo Arroyo Guerra: That impact, you know, once the interest rate is announced, it takes around 2, 3 months to hit our P&L because that's we have the quarterly interest rates revisit. That's why now we see in Q3 and also in Q4, we're gonna see a higher financial expense. That explain why the net profit for the Q3 is lower.

That impact was.

Right.

Announced it takes around two three months two to hit our P&L because that we have.

<unk> reached to revisit.

That's why now we see that.

Q3, and also Q4.

To see a higher financial expense. So that explains why the net profit for the Q3 is lower.

Nuria Pascual: Okay. Thank you, Alfredo. Now, we have three more questions. If you want to stay with us, we'll take these three and so to complete and to get the possibility to everybody. We have Rosie Turner from Jefferies. Rosie, hello.

Okay. Thanks, Jeff I don't know.

We have three markwest there. So if you wanted to stay with has will take these three.

So to complete that and add to that.

The personality to everybody. So we have demand from Jefferies said, Russia Hello.

Rosie Turner: Hi. Good afternoon. Thank you very much for taking my questions. Three left for me, please. Just thinking about your plasma collection volumes up 25%. I noticed that 42 weeks of the year. Does that include Mexico and the border reopening, and kind of, are you able to approximate kind of how much of that is Mexico versus US itself? Following up on Alpha-1 competition, can we just recap the level of penetration? I think is it 70% of patients currently going underdiagnosed? Finally, just on that competition theme, just checking, we're still not seeing any impact from the anti-FcRn competition in myasthenia gravis. Am I correct there? Thank you.

Hi, good afternoon. Thank you very much for taking my questions.

Three for me please.

Talking about your plasma collection volumes up 25% our nature.

42 weeks.

So does that include Mexico, and the board are reopening.

Are you able to approximate kind of how much of that is mix versus U S. And then following up on the Alpha one competition I just can we just recap the level of penetration I think is at 70% of patients currently going on.

On the diagnosis.

And then finally just on that competition theme just checking we're still not seeing any impact from the anti <unk> competition MRC. This conference my correct. Thank you.

Alfredo Arroyo Guerra: Okay. I take the question on Alpha-1. If I understood correctly, is the level of diagnosis of the disease what we think is the rate today?

Victor Grifols Deu: Okay. I take the question on Alpha-1. If I understood correctly, is the level of diagnosis of the disease what we think is the rate today? It's 90% of the potential patients are being not underdiagnosed. We hope that with, again, this enhanced tool with a diagnostic AlphaID At Home test, that we can improve the level of diagnosis. I think this was the question regarding Alpha-1. The other one is FcRn competition-

Okay.

I would say.

Just a question.

If I understood correctly.

Nevertheless, the analysis of that is is when we can.

<unk> is the right today.

Victor Grifols Deu: It's 90% of the potential patients are being not underdiagnosed. We hope that with, again, this enhanced tool with a diagnostic AlphaID At Home test, that we can improve the level of diagnosis. I think this was the question regarding Alpha-1. The other one is FcRn competition-

90% of the potential patients are being under the a note.

And we hope that again these enzymes.

Whether the agnostic.

Ivy as context, we can improve.

The level of diagnosis I assume this was a question regarding epsilon.

And the other one is <unk> and competition.

Nuria Pascual: Myasthenia.

Victor Grifols Deu: in myasthenia. Well, for Grifols and myasthenia accounts, I think on the 3% of our revenues today, we are not highly worried about that as we don't depend much on that. We will see the progress of these new products, and we will compete with our franchise. It's not a big threat for Grifols in this indication.

Yes, and yes.

For the Nissan.

And yes, Danielle accounts.

As seen on the 30% of our revenues today.

No.

Highly worried about that.

But we don't depend much on that.

You'll see it up at all layers of this new of new products, we will compete.

Hello.

But it's not a big stretch for.

For LIFO in this indication.

Nuria Pascual: Yeah. Thank you. On the Mexican-

And then on the lexicon.

Victor Grifols Deu: Well, the Mexican since September that now we can operate regularly our centers. For the border centers, we are seeing an accelerated return of these donors to our network. We are seeing every other week a move, a progression on the level of volume being collected at those centers. As you know, in pre-pandemic levels, those centers were roughly collecting around 1 million liters. Now we are in this ramp up, and we are seeing the trend that at some point we will hit this level of 1 million liters for those centers.

The Mexican.

So it's up to September .

Now we can open a regularly.

Our sensors.

One of them all of the centers, we are seeing an accelerated rate.

Sure.

These.

Through our network and we are seeing every other week or more.

As shown on the level of volume being collected.

Santa FES.

As you know.

Great pandemic levels those centers were roughly collecting.

Around 1 million liter side now, we're adding this ramp up and we are seeing the trend.

At some point, we will keep this level.

Of $1 million.

Yes.

Nuria Pascual: Okay. Thank you. Julien Dormois from BNP. Hi, Julien. I hope you're still with us.

Okay. Thank you.

Julie Endo milestone Bnb, Hi, Julien I hope you are to stay with us.

Speaker 14: I'm still with you, and thanks for squeezing me in. Appreciate. I'm sorry, I have three questions. One for Steve, one for Victor, one for Alfredo, if that's okay. The one for Steve is that you made it clear during the call that one of your focus is to return to pre-COVID margin levels or close to that. But do you plan to provide margin targets for the period 2023/2025? Because over time, there's been some misunderstanding between Grifols and the investment community and some disappointments on profitability. So do you plan to provide clear targets for us to build our models? For Victor, please, on the penetration for Xembify, could you help us understand what you would do differently going forward, to boost the penetration of this highly profitable product?

Julien Dormois: I'm still with you, and thanks for squeezing me in. Appreciate. I'm sorry, I have three questions. One for Steve, one for Victor, one for Alfredo, if that's okay. The one for Steve is that you made it clear during the call that one of your focus is to return to pre-COVID margin levels or close to that. But do you plan to provide margin targets for the period 2023/2025? Because over time, there's been some misunderstanding between Grifols and the investment community and some disappointments on profitability. So do you plan to provide clear targets for us to build our models? For Victor, please, on the penetration for Xembify, could you help us understand what you would do differently going forward, to boost the penetration of this highly profitable product because it's been on the market for 3 years?

I'm still with you and thanks for squeezing me in appreciate it I am sorry, I have two questions. One key one for Victor one footnote shredder if thats okay.

But one key is that you made it clear during the call, but one of your focus is to return to pre COVID-19 margin levels, so closer to that but.

But do you plan to provide margin targets for the period 2023 2025, because over time, there has been some misunderstanding between <unk> and the investment community and some disappointments on profitability. So do you plan to provide clear targets.

For us to build our models.

Victor please on the penetration for exemplify what could you help us understand what should we do differentiate going forwards.

The penetration of this highly profitable product.

Speaker 14: Because it's been on the market for 3 years. What can you do differently going forward in order to boost the penetration? The last question for Alfredo is a housekeeping on net financial costs. Following up on Tom's question, I think you had EUR 200 million in net financial costs in the H1 of this year. Is EUR 400 million of net financial cost for full year 2023 a good run rate, or could it be higher than this?

It's been on the market for three years. So what can you do differently going forward in order to boost the penetration and the last question for our photo is a housekeeping one and then financial costs and following up on Tom's question.

Julien Dormois: What can you do differently going forward in order to boost the penetration? The last question for Alfredo is a housekeeping on net financial costs. Following up on Tom's question, I think you had EUR 200 million in net financial costs in the H1 of this year. Is EUR 400 million of net financial cost for full year 2023 a good run rate, or could it be higher than this?

Thank you have 200 million Euro net financial costs in the first half of this year.

<unk> 400 million Euro net financial cost for full year 2023, a good run rate or could it be higher than this.

Steven F. Mayer: Well, let me start by addressing the first point, which had to do with whether we're gonna provide guidance in terms of EBITDA margins. Look, we're obviously in a somewhat turbulent environment macroeconomically, in terms of other factors that will impact those margins, such as synergies with Biotest, such as the ability to continue to drive down cost per liter of plasma and when those costs will be realized through the income statement due to the capitalization into inventory initially and the long inventory cycle on some of the other cost reductions that we're planning, when exactly the new Biotest proteins will be approved and commercialized, even factors like inflation globally.

Steven Mayer: Well, let me start by addressing the first point, which had to do with whether we're gonna provide guidance in terms of EBITDA margins. Look, we're obviously in a somewhat turbulent environment macroeconomically, in terms of other factors that will impact those margins, such as synergies with Biotest, such as the ability to continue to drive down cost per liter of plasma and when those costs will be realized through the income statement due to the capitalization into inventory initially and the long inventory cycle on some of the other cost reductions that we're planning, when exactly the new Biotest proteins will be approved and commercialized, even factors like inflation globally.

Well, let me just start by addressing the first point, which had to do with.

Whether we're going to provide guidance in terms of EBITDA margins.

Look we're obviously in Asia.

Somewhat turbulent environment Macroeconomically.

Other factors that will impact those margins such as.

Synergies with bio tests such as.

The building will continue to drive down.

Cost per liter of plasma and when those costs will be.

Realized through the income statement due to the capitalization of inventory initially at the long inventory cycle.

Some of the other cost reductions that we're planning.

Be well.

When exactly nubile, just proteins will be approved and commercialized.

But even even factors like <unk>.

Inflation.

Steven F. Mayer: I think for us to try to provide long-term EBITDA margin guidance would not be prudent right now. I think we'll revisit the question at least for 2023 in the coming few weeks or months. At the moment, I don't think we'll be giving any kind of precise guidance beyond 2023. Even for 2023, I would ask you to be a little bit patient because there are a lot of factors that are impacting it.

Steven Mayer: I think for us to try to provide long-term EBITDA margin guidance would not be prudent right now. I think we'll revisit the question at least for 2023 in the coming few weeks or months. At the moment, I don't think we'll be giving any kind of precise guidance beyond 2023. Even for 2023, I would ask you to be a little bit patient because there are a lot of factors that are impacting it.

So I think for us to try to provide long term EBITDA margin guidance is.

Would not be prudent right now.

I think what we visit the question at least for 2023 and they are coming.

Weeks or months, but at.

At the moment.

I don't think it will be.

No.

I think any kind of precise guidance beyond 'twenty. Three 2023, 2020, we ask you to be a little bit patient because there are a lot of factors that are impacting that.

Victor Grifols Deu: Okay. Thank you, Steve. On the question regarding Xembify franchise, as you know, we unfortunately, at the launch of this new product coincided exactly with the pandemic period. During the first two years of its launch has been very challenging, not being able to be present at hospitals and meet customers and so on. That said, it's progressing nicely, the penetration of our product. The main characteristic that probably gives a competitive advantage is the tolerability of the product for our patients. This is very well perceived by doctors and patients, of course. We are progressing nicely. The weight of our subcutaneous sales over the total IG is continuing to grow.

Okay. Thank you Steve.

<unk>.

<unk> franchise as you know.

Unfortunately, as the launch of this new product line side of it.

Exactly.

With the finance videos.

The fiscal year, so it's launch as a medic.

Very challenging not being able to do.

We've initiated a cost at ahs and meter.

Customers some salon.

And it's progressing nicely.

The penetration of our product demand characteristic thats for all of your competitive advantage is that alone.

Sure.

The ability of the product.

Our patients is very well perceived by the.

And patients of course.

We are sort of an exiting nicely the weight of our Super Dino saves over the total AG is continuing to grow now we are in the range of 3% and we are targeting to move that.

Victor Grifols Deu: Now we are in the range of 3%, and we are targeting to move that to a 5% proportion of IG sales. In the mid future, we are developing the secondary indication for that franchise that will further improve the prospects of this nice product.

So a 5% proportion of IHS.

The immediate future we are developing a secondary indication for that franchise that will fly there.

Improved.

The prospects of this nice product.

Alfredo Arroyo Guerra: And then-

Yes.

Victor Grifols Deu: Oh, regarding the financial expense, I'm talking about the interest because within the financial expense, you know, there are deferred financial costs. There are FX, but, you know, just purely focused on the interest expense associated to our debt. Our quarterly run rate for this year is around EUR 75 million and expected to grow, as I mentioned, because the impact in our accounts will be backloaded because the timing of the interest rate hikes. Expected that the quarterly interest expense run rate will be around EUR 100 million.

Alfredo Arroyo Guerra: Oh, regarding the financial expense, I'm talking about the interest because within the financial expense, you know, there are deferred financial costs. There are FX, but, you know, just purely focused on the interest expense associated to our debt. Our quarterly run rate for this year is around EUR 75 million and expected to grow, as I mentioned, because the impact in our accounts will be backloaded because the timing of the interest rate hikes. Expected that the quarterly interest expense run rate will be around EUR 100 million.

And then.

The financial expense I'm talking over the English because we've seen the financial expenses.

Deferred financial costs, there are fixed but just purely focused on.

The interest expense associated toward debt, our quarterly run rate for this year is around $75 million.

Expect it to grow as I mentioned, because the impact when it comes will be backloaded, because the timing of the interest rate hikes.

<unk> the quarterly.

The expense run rate will be around 100 in the year.

Alfredo Arroyo Guerra: Okay, thank you. We have Alvaro Lenze from Alantra. Alvaro?

Nuria Pascual: Okay, thank you. We have Alvaro Lenze from Alantra. Alvaro?

Okay. Thanks again.

Yes.

Linzess alone.

And then.

Speaker 15: Hi. Thanks for hosting this call. I think that having this increased communication from the leadership is very welcome. Three quick questions. The first one is, you have announced several management changes over the last couple of months, whether you are now happy with the team as it is right now, or we should expect any additional appointments. Second question is on cost cutting, whether you could quantify how much cost cutting you have identified and how much would you need to invest to achieve this cost cutting, or if you are still working on these calculations. If you are still working, whether you will provide some specific guidance on cost cutting once you have the plans ready. The last question, more philosophically on leverage.

Alvaro Lenze: Hi. Thanks for hosting this call. I think that having this increased communication from the leadership is very welcome. Three quick questions. The first one is, you have announced several management changes over the last couple of months, whether you are now happy with the team as it is right now, or we should expect any additional appointments. Second question is on cost cutting, whether you could quantify how much cost cutting you have identified and how much would you need to invest to achieve this cost cutting, or if you are still working on these calculations. If you are still working, whether you will provide some specific guidance on cost cutting once you have the plans ready.

Hi, Thanks, Thanks for hosting this call I think that having this increased communication from the leadership is very welcome.

Three quick questions. The first one is you have announced several management changes over the last couple of months, whether you are now happy with demos at least right now or we should expect any additional appointments second question is on cost cutting whether you could quantify how much cost cutting you have identified and how much would you need to invest to achieve these cost.

Or if you are still working on on this calculation is for any of you are still working whether you will provide some.

Pacific guidance on cost cutting.

Do you have the plans.

Alvaro Lenze: The last question, more philosophically on leverage. You have historically targeted 4x net debt to EBITDA as your long-term goal, whether this could be rethought. I know that there's still a long way to go to bring leverage down to 4x, but whether you could change this as a long-term target. Thanks.

And the last question more philosophically on leverage you guys have historically targeted four times net debt to EBITDA.

Speaker 15: You have historically targeted 4x net debt to EBITDA as your long-term goal, whether this could be rethought. I know that there's still a long way to go to bring leverage down to 4x, but whether you could change this as a long-term target. Thanks.

Term goal, whether this could be.

Are we still don't know that there is still a long way to go to bring leverage down to four times, whether you could change this.

Our long term target thanks.

Alfredo Arroyo Guerra: Okay. Victor?

Okay makes sense.

Victor Grifols Deu: Thank you, Alvaro, for your questions. I will probably take the first part of your question, and then maybe Alfredo.

Victor Grifols Deu: Thank you, Alvaro, for your questions. I will probably take the first part of your question, and then maybe Alfredo can complement. During the pandemic, and we have been announcing that and communicating that, we have been. We have gone through several kind of wide range of improvements of the operations of the company. We have closed business units that were not profitable or were not core anymore for us. In the case of hemostasis business line, blood bags, in the diagnostic division as well, and certain hospital division assets. Now, no longer the hospital division is being reported isolated. We have closed the facilities. We have gone through the Fit for Growth process across the board. Many things to improve the operations of the company. The same for R&D. We have prioritized or stopped and canceled some R&D projects as well.

Thank you.

Your question I will probably take the first part of your question.

Alfredo Arroyo Guerra: Mm-hmm

Victor Grifols Deu: ... can complement. During the pandemic, and we have been announcing that and communicating that, we have been. We have gone through several kind of wide range of improvements of the operations of the company. We have closed business units that were not profitable or were not core anymore for us. In the case of hemostasis business line, blood bags, in the diagnostic division as well, and certain hospital division assets. Now, no longer the hospital division is being reported isolated. We have closed the facilities. We have gone through the Fit for Growth process across the board. Many things to improve the operations of the company. The same for R&D. We have prioritized or stopped and canceled some R&D projects as well.

Kent can complement.

During the pandemic and we have been announcing them and communicating that.

Let's have the advanced <unk> segment.

Kind of wide range of improvement of the of the operations of the company. We have closed these business units.

Profit was up four anymore.

Blood bags.

As well as I've said I am positive that there is enough is now no longer the FERC decision.

With cash flows facilities was up.

To the <unk> process.

Sure.

Across the board so many many things to improve the operations of the company the same for R&D will prioritize or.

Our salt and conserve some R&D projects as well.

Victor Grifols Deu: Subsequent to that, the final move, as announced the last Capital Markets Day, was the reorganization of the company. Now fully accountable business units, and we needed specific presidents to run those business units. Now, we have Pia on board and Jordi on board. With that, we feel that all this kind of reorganization has been completed with those two appointments. Now the organization is fully at speed with all the structure and all the talent in place to develop further operational improvements and to drive all what we have been talking during this hour call about improving the business overall.

And subsequent to that the final move as announced the last capital markets day was a reorganization of the of the company now fully fully accountable business units and we need it as Pacific Presidents to run.

<unk> now.

The board and Jonathan Boldt, and without and we see it that all of these kind of reorganization has been completed with those two appointments and now the organization is fully as I speak.

We saw the structure and all the plans in place to.

So they are a large part of their operational improvements to drive.

Our focus during this hour about improving <unk>.

Alfredo Arroyo Guerra: Okay, to your couple questions. First, cost cutting. Here, I will, you know, address Steve's initial comments, where basically, we're gonna be focused on plasma cost, which is, you know, our main driver. Is where most of the costs are, I would say, in the company, including the company. This is a very, you know, various initiatives on driving down the plasma cost, point number one. Point number two, the OpEx, basically, lower fixed cost, you know, as well as, you know, higher efficiency, delayering and, you know, many, I would say, initiatives now ongoing.

Okay.

Sure.

Couple of questions first cost cutting.

Well.

I will address Steve.

Initial comments were basically.

We're going to be focused on plasma cost.

Which is our main driver.

Most of the costs I would say.

Yeah.

The company.

Company. So this is a very.

These initiatives on Tiger.

And on the plasma cost fund number one point number two.

The Opex basically.

Lower fixed cost as.

As well as <unk>.

Efficiency delayering.

Many I would say initiatives now.

Alfredo Arroyo Guerra: Let me not provide you with more color because for now, Steve just joined, and this is one of our top priorities, which is in our table. We are working on this, and we will provide you more color, you know, later on. Regarding the leverage, as I already mentioned, we will use, you know, whatever it takes, both organic and non-organic levers, to be at the target, I would say, financial discipline level, which is 4x or below, especially, as I said, ahead of the 2025 debt, you know, partial debt refinance.

Let me provide you with more color because now.

Yes, Duane this is one of our top priorities with tissue.

Table. So we are working on this and who will provide you more color.

Regarding the leverage as I already mentioned, we will reduce whatever you think both organic and nonorganic levers to me.

The target.

I would say.

Financial discipline level, which supports times.

We know, especially as I said are handled in 2025.

David.

Hal data refinance.

Yes.

Victor Grifols Deu: Okay. With that, we come to an end. Thank you everybody for joining. As always, the investor relations and sustainability team will be happy to take any additional questions, or any concerns, or any way we can help. Speak to you all soon. Thank you.

Nuria Pascual: Okay. With that, we come to an end. Thank you everybody for joining. As always, the investor relations and sustainability team will be happy to take any additional questions, or any concerns, or any way we can help. Speak to you all soon. Thank you.

Okay and now with that.

Thanks, Glenn and thank you everybody for joining as always the investor relation 10 sustainability team will be happy to take any additional questions or any concerns or anywhere.

How we can help and speak to you all soon thank you.

Yeah.

[music].

Yes.

[music].

Okay.

[music].

Yeah.

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