Grifols S.A. Q1 2023 Earnings Call

May 9, 2023

Nuria Pascual: Hello everyone, and welcome to the Grifols Q1 2023 Conference Call. Thank you very much for taking the time to join us today. This is Nuria Pascual, Investor Relations and Sustainability Officer, and I'm joined by Thomas Glanzmann, our Executive Chairman and CEO, Victor Grifols Deu, our Chief Operating Officer, and Alfredo Arroyo, Chief Financial Officer. This call will last for about 60 minutes. There will be a presentation of approximately 30 minutes, followed by a Q&A session. If you want to raise a question, press star followed by five when the Q&A session begins. We will kindly ask you to limit your questions to a maximum of two, please. As a reminder, this call is being recorded. The materials for the call are on the investor relations sections at grifols.com.

Núria Pascual: Hello everyone, and welcome to the Grifols Q1 2023 Conference Call. Thank you very much for taking the time to join us today. This is Nuria Pascual, Investor Relations and Sustainability Officer, and I'm joined by Thomas Glanzmann, our Executive Chairman and CEO, Victor Grifols Deu, our Chief Operating Officer, and Alfredo Arroyo, Chief Financial Officer. This call will last for about 60 minutes. There will be a presentation of approximately 30 minutes, followed by a Q&A session. If you want to raise a question, press star followed by five when the Q&A session begins. We will kindly ask you to limit your questions to a maximum of two, please. As a reminder, this call is being recorded. The materials for the call are on the investor relations sections at grifols.com.

Hello, everyone and welcome to the agree felt first quarter 2023 conference call. Thank you very much for taking the time to joining US. Today. This is noted have a squad investor relations and sustainability officer, and I'm joined by Thomas Glassman, Our executive Chairman and CEO .

Victor refunds, though our chief operating officer and.

Chief Financial Officer.

This call will last for about 60 minutes, there will be a presentation of approximately 30 minutes followed by a Q&A session. If you want to raise a question.

Star followed by five when the Q&A session begins we will kindly ask you to limit your questions to a maximum of two please.

As a reminder, this call is being recorded.

Materials for the call or on the Investor relations sections of the referrals that come.

Nuria Pascual: The transcript and webcast replay of the call will also be available on the investor relations website within 24 hours after the end of the live conference call. Let me turn now to the legal disclaimer on slide two. Before we start, I draw your attention to the forward-looking statements disclaimer on this slide of the release. Forward-looking statements on the call are subject to substantial risk and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of these statements. Now I would like to turn the call over to Thomas Glanzmann.

Núria Pascual: The transcript and webcast replay of the call will also be available on the investor relations website within 24 hours after the end of the live conference call. Let me turn now to the legal disclaimer on slide two. Before we start, I draw your attention to the forward-looking statements disclaimer on this slide of the release. Forward-looking statements on the call are subject to substantial risk and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of these statements. Now I would like to turn the call over to Thomas Glanzmann.

And the transcript and webcast replay of the call will also be available on the Investor Relations website within 24 hours. After the end of the live conference call.

Let me turn now to the legal disclaimer on slide two.

And before we start I'll draw your attention to the forward looking statements disclaimer on the slide on this slide.

Of their release and forward looking statements on the call are subject to substantial risks and uncertainties and speak only as of the calls original date and we undertake no obligation to update or revise any of these statements.

Now I would like to turn the call over to Thomas Glassman.

Thomas Glanzmann: Thank you, Nuria, and thank you everyone for joining the call today. Before we turn to the specifics of our business performance financials and full year 2023 guidance, I would like to make some introductory comments. Over the past few months, we had the opportunity, after many years, to meet in person with more than 80 investors and 60 investment houses in London and New York, addressing questions and concerns about performance, debt, governance, and whether any fundamental changes will be made directionally at the company of the plans that had been laid out. For me and the management team, these meetings were of great value, and I would like to take this opportunity to thank all participants for their honest and often very direct feedback, which was much appreciated. We have indeed taken note of what we heard and were told.

Thank you Maria and thank you everyone for joining the call today before we turn to the specifics of our business performance financials and full year 'twenty three guidance I would like to make some introductory comments over.

Over the past few months, we had the opportunity after many years to meet in person with more than 80 investors and 60 investment houses in London, and New York addressing questions and concerns about performance depth governance, and whether any fundamental changes will be made direction.

At the company of the plans that had been laid out.

For me and the management team. These meetings were a great value and I would like to take this opportunity to thank all participants for their honest and often very direct feedback which was much appreciate it.

Indeed taken note of what we heard and we're told.

Thomas Glanzmann: In light of that, I would also like to take this opportunity to reiterate my key messages from these meetings. First, and very importantly, Grifols is committed to creating value for all our shareholders and restoring our credibility and trust of the financial community. As I noted in our meetings, we understand that to do so, we will need to consistently to deliver on our commitments, which we are already doing and will continue to do. Second, the priorities set with our board remain the same. We will improve our financial profile, reduce debt, execute and deliver our operating improvement plan, capture commercial opportunities, and unlock Biotest's substantial value. Today's Q1 results should give you confidence that we are very focused on doing just that. Third, we outlined that we would clarify governance, streamline the organization, and implement a performance culture that is aligned with our shareholders.

In light of that I would also like to take this opportunity to reiterate my key messages from these meetings fares.

First and very importantly, grateful is committed to creating value for all our shareholders and it is restoring our credibility and trust of the financial community as I noted in our meetings, we understand that to do so we will need to consistently deliver.

And our commitments, which we are already doing and will continue to do second the priority set with our board remains the same we will improve our financial profile reduce debt execute and deliver our operating improvement plan capture commercial opportunities.

And the unlock biotech substantial value today.

Todays Q1 results should give you confidence that we are very focused on doing just that.

Third.

We outlined that we would clarify governance streamline the organization and implement a performance culture that is aligned with our shareholders. In fact over the last year. The senior leadership team has already made significant strides to reinforce our operational excellence of which the most.

Thomas Glanzmann: In fact, over the last year, the senior leadership team has already made significant strides to reinforce our operational excellence, of which the most important first step was establishing a new organizational model. This involved the creation of four strategic business units and the appointment of new management, under whom we have refocused our strategic efforts to accelerate growth. Upon my appointment as executive chairman in February this year, I quickly thought to streamline Grifols' leadership structure, establishing a core senior leadership team with clear responsibility. Now, as yesterday was announced, my appointment to CEO further clarifies our decision-making process to accelerate Grifols' growth and strategic progress. Victor has been appointed as the Chief Operating Officer, and Raimon Grifols has been appointed as the Chief Corporate Officer.

Important first step was establishing a new organizational model. This involves the creation of four strategic business units and the appointment of new management under whom we have refocused our strategic efforts to accelerate growth.

Up in my appointment as executive Chairman in February this year I quickly thought to streamline Griffiths leadership structure, establishing a core senior leadership team with clear responsibility and now as yesterday. It was announced my appointment to CEO further clarifies.

Our decision, making process to accelerate griffes growth and strategic progress Victor.

Victor has been appointed as the Chief operating Officer, and Raymond Great Falls has been appointed as the Chief Corporate Officer.

Thomas Glanzmann: We have now clearly defined the responsibilities of our senior executive leadership team, enabling us to continue to deliver on our successful transformation with the greatest accuracy and speed. I will return to this key topic in more detail later in the presentation. Returning to our commitments, our fourth commitment was to improve our communication with stakeholders, and we are, and will certainly do so. We have our quarterly calls, and we will follow up on a regular communication with our global investor base. With the input from some of our investors, we have also decided to expand our IR footprint into the United States to better serve investors in North America. Going forward, we are also determined to expand our reach and continue to engage with equity and fixed income market participants.

We have now clearly defined the responsibilities I was senior executive leadership team, enabling us to continue to deliver on our successful transformation, where the greatest accuracy and speed I will return to this key topic in more detail later in the presentation.

And returning to our commitments our fourth commitment was to improve our communication with stakeholders and we are and we will certainly do so we have our quarterly calls and we will follow up on a regular communication with our global Investor base.

With the input from some of our investors. We have also decided to expand our IR footprint into the United States to better serve investors in North America going forward. We are also determined to expand our reach and continue to engage with equity and fixed income market participants.

Thomas Glanzmann: I hope and trust that you will walk away from this presentation with a sense that Grifols is stepping up and aggressively aligning all the needed pieces to position the company for a successful future. With that, let me turn to slide 4 to kick off our presentation. In 2022, we set clear priorities to reposition the company and made a number of key commitments in our February 2023 call. I am pleased to report that in Q1 2023, we are effectively meeting and exceeding our commitments while we continue to execute on key priorities. Grifols is on the rebound, and our operational delivery in this Q1 reflects this, while it also demonstrate the company's strong fundamentals in a growing market. Let me review a few highlights of the Q1.

I Hope and trust that you will walk away from this presentation with a sense that Griffiths is stepping up and aggressively aligning all the needed pieces to position the company for a successful future.

With that let me turn to slide four to kick off our presentation.

In 'twenty, two we set clear priorities to reposition the company and made a number of key commitments in our February 23 call.

I am pleased to report that in the first quarter of 'twenty three we are effectively meeting and exceeding our commitments, while we continue to execute on key priorities.

Griffiths is on the rebound in our operational delivery in this first quarter reflects this.

While it also demonstrates the companys strong fundamentals in a growing market.

So let me review a few highlights of the first quarter.

Thomas Glanzmann: As I mentioned earlier, we implemented significant changes to our executive governance, clarifying the leadership structure. In Q1, we also strengthened our performance culture by rolling out new short and long-term incentive plans aligned with shareholders' interests. The new plans award participants for overachievement and for Grifols share price appreciation in the long term. Now, turning to the numbers. We delivered a solid start to the year, meeting and exceeding on our commitments in some key metrics. Revenues grew by 23% and by 14% on a like for like basis, excluding Biotest, driven by a strong performance of Biopharma, which delivered an increase of 26% and by 15% like for like. Excluding Biotest, adjusted EBITDA margin for Q1 was 21%, exceeding the 19% to 20% guidance set for H1 2023.

As I mentioned earlier, we implemented significant changes to our executive governance clarifying the leadership structure. In Q1, we also strengthen our performance culture by Rolling out new short and long term incentive plans aligned with shareholders' interests.

The new plants award participants for over achievement and four grateful share price appreciation in the long term.

Now turning to the numbers, we delivered a solid start to the year meeting and exceeding our commitments and some key metrics revenues grew by 23% and by 14% on a like for like basis, excluding buyer test driven by strong performance of Biopharma.

Which delivered an increase of 26% and by 15% like for like.

Excluding buyer test adjusted EBITDA margin for Q1 was 21% exceeding the 19 to 20 guidance set for the first half of 'twenty three.

Thomas Glanzmann: Consequently, we are raising our guidance to above 21% for H1 and for the whole year to 22% to 24%. Therefore, we now expect to exceed the EUR 1.4 billion EBITDA guidance for 2023. The execution of our operational improvement plan is also exceeding our expectations, with more than 80% of the EUR 400 million already deployed as of today. We have identified additional savings and are raising also here our target to more than EUR 450 million. This achievement has not been easy, and I would like to take this opportunity to express my gratitude to all those working tirelessly on the front lines to make this happen.

Consequently, we are raising our guidance to above 21% for the first half and for the whole year to 22% to 24%.

Therefore, we now expect to exceed the $1 4 billion your EBITDA guidance for 223.

The execution of our operational improvement plan is also exceeding our expectations with more than 80% of the 400 million Euro already deployed as of today, we have identified additional savings and are raising.

Also here our target to more than $450 million. This achievement has not been easy and I would like to take this opportunity to express my gratitude to all those working tirelessly on the front lines to make this happen.

Thomas Glanzmann: The plan, as it stands today, has resulted in a reduction of our cost per liter of more than 15%, driven primarily by a 25% decline in donor compensation, both figures compared to the peak in July 2022. We are laser-focused on further reducing cost per liter, and we expect this to contribute to EBITDA expansion in the range of 200 to 400 basis points starting in H2 2023. Additionally, we continue to make good progress on several work streams to meet our debt reduction commitment in order to get to a leverage ratio of 4x by 2024. Returning to our commercial and innovation priorities, we continue to see significant opportunities for our high-margin Alpha-1 protein and our subcutaneous IG product, Xembify.

The plan as it stands today has resulted in a reduction of our cost per liter of more than 15% driven primarily by a 25% decline in donor compensation both figures compared to the peak in July of 'twenty two.

We are laser focused on further reducing cost per liter and we expect this to contribute to EBITDA expansion in the range of 200 to four and a beeps starting in the second half of 'twenty three.

Additionally, we continue to make good progress on several work streams to meet our debt reduction commitment in order to get to a leverage ratio of four times by two 'twenty 'twenty 2024.

Returning to our commercial and innovation priorities, we continue to see significant opportunities for our high margin Alpha one per last them in our subcutaneous product Samba fight.

Thomas Glanzmann: Additionally, we are making significant efforts to accelerate the approval and successful launch of the new Biotest proteins. Once launched, these proteins are expected to have a substantial positive impact on Grifols' financial performance, and bringing them to market quickly is a critical aspect of our current integration with Biotest. Turning now to slide 5. Over the past years, Grifols has made significant strides to reinforce its board of directors with diverse competencies, backgrounds, and experiences. The board now consists of 11 members, 6 independents that are led by a lead independent director. The board operates today very well, and decisions are made by consensus with effective checks and balances while promoting great transparency and accountability. To further enhance its governance, Grifols is currently in the process of hiring a 12th board member who will be independent and possess strong credentials.

Additionally, we are making significant efforts to accelerate the approval and successful launch of the new biotech proteins. Once launched these proteins are expected to have a substantial positive impact on griffes financial performance and bringing them to market quickly is a critical.

Aspect of our current integration with bio test.

Turning now to slide five.

Over the past years Griffiths has made significant strides to reinforce its board of directors with diverse competencies backgrounds and experiences. The board now consists of 11 members six independents that are led by our lead independent director the board.

It's today very well and decisions are made by consensus with effective checks imbalances, while promoting great transparency and accountability.

To further enhance its governance Griffiths is currently in the process of hiring a 12 board member who will be independent and possess strong.

Credentials.

Thomas Glanzmann: In addition, with the latest appointments, all committees of the board are now led by independent board members. As I mentioned before, the co-CEO office has transitioned to the senior leadership executive team, which I'm honored to chair. We have now defined the responsibility of this committee. Victor, as Chief Operating Officer, is responsible for the day-to-day operations and has all the operating units reporting to him. He will also continue to serve on the board of directors. Raimon, current vice chairman of Grifols, in addition to his board duties, assumes the role of Chief Corporate Officer, focused on optimizing the value of our corporate alliances and partnerships, as well as leading other key ad hoc initiatives. The senior executive leadership team has a hands-on operating approach and meets weekly to ensure that we deliver.

In addition, with the latest appointments all committees of the board are now led by independent Board members.

As I mentioned before the co CEO office has transitioned to the senior leadership executive team, which I am honored to chair we have now defined the responsibility of this committee Victor as Chief operating Officer is responsible for the day to day operations and has all the operating.

Units reporting to him.

He will also continue to serve on the board of Directors Raymond current Vice Chairman I'm Grateful. In addition to his board duties assumes the role of Chief Corporate officer focused on optimizing the value of our corporate alliances and partnerships as well as leading other key AD hoc initiatives.

The senior executive leadership team has a hands on operating approach and meets weekly to ensure that we deliver its responsibilities include capital allocation the strategy communication human resources policies overall business performance and varying.

Thomas Glanzmann: Its responsibilities include capital allocation, the strategy, communication, human resources policies, overall business performance, and very importantly, oversight of critical projects and priorities. A key priority right now is obviously our operational improvement plan and delivering on our commitment to further improve our operating performance and, very importantly, reduce our debt level. Now turning to slide 6. It is important to note that we have also made changes across the organization beyond the senior executive team. In 2022, a new organization model was established to increase focus and build a performance culture that is more efficient, effective, agile, decisive, and accountable. These changes included the appointments of new management to lead the Biopharma and plasma procurement business units and a new president for Diagnostic. These new leaders have extensive experience in diverse industries, including healthcare, particularly biopharmaceuticals, as well as retail distribution channels.

Fortunately oversight of critical projects and priorities.

A key priority right now is obviously, our operational improvement plan and delivering on our commitment to further improve our operating performance and <unk>.

Very importantly, reduce our debt level.

Now turning to slide six.

It is important to note that we are that we have also made changes across the organization beyond the senior executive team.

In 2022, and new organization model was established to increase focus and build a performance culture that is more efficient effective agile decisive and accountable. These changes included the appointments of new management to lead the biopharma and plasma procurement.

<unk> units and a new president for diagnostic.

These new leaders have extensive experience in diverse industries, including health care, particularly by our pharmaceuticals, as well as retail distribution channels.

Thomas Glanzmann: Their knowledge will be key to ensure effective product launches, especially considering the key Biotest proteins, while creating the most efficient, advanced, and very importantly, donor-friendly global plasma network. Finally, as I mentioned before, we have reinforced our performance culture by rolling out short- and long-term incentive plans. The new short-term variable remuneration is an important step forward as it further aligns with our current key priorities. The equity-based long-term incentive plan aims to support and accelerate the achievement of the company's long-term strategy while increasing alignment with shareholders as the stock price is a key metric. As you can see, much is happening at Grifols to reposition us across the board for the future. Let us now turn to Victor and then Alfredo, and then I will be back for the final remarks, and then we will be happy to take your questions.

Their knowledge will be key to ensure effective product launches, especially considering the key biotech proteins, while creating the most efficient advanced and very importantly donor friendly global plasma network.

Finally, as I mentioned before we have reinforced our performance culture by rolling out short and long term incentive plans. The new short term variable renew Mauritian is an important step forward as it further aligns with our current key priorities the equity based long term incentive plan.

<unk> aims to support and accelerate the achievement of the company's long term strategy, while increasing alignment with shareholders as the stock price is a key metric.

As you can see much is happening at great falls to reposition us across the board for the future.

Let us now turn to Victor and then Alfredo and then I will be back for the final remarks, and then we will be happy to take your questions.

Victor Grifols Deu: Thank you, Thomas. Good morning or good afternoon to everyone, and thank you for joining us today. Let's turn now to slide 8 for business performance comments. In Q1 2023, Grifols' total revenue grew by 18% at constant currency and 23% on a reported basis, reaching a record level of EUR 1,561 million. If we exclude Biotest, total revenue reached EUR 1,444 million, an increase of 9% at constant currency and 14% on a reported basis. This growth was mainly driven by the performance of our Biopharma business unit, which grew by 21% at constant currency, and 10% at constant currency like for like, excluding Biotest, backed by robust underlying demand, favorable pricing, and product mix. Now turning to slide number 9.

Victor Grífols Deu: Thank you, Thomas. Good morning or good afternoon to everyone, and thank you for joining us today. Let's turn now to slide 8 for business performance comments. In Q1 2023, Grifols' total revenue grew by 18% at constant currency and 23% on a reported basis, reaching a record level of EUR 1,561 million. If we exclude Biotest, total revenue reached EUR 1,444 million, an increase of 9% at constant currency and 14% on a reported basis. This growth was mainly driven by the performance of our Biopharma business unit, which grew by 21% at constant currency, and 10% at constant currency like for like, excluding Biotest, backed by robust underlying demand, favorable pricing, and product mix. Now turning to slide number 9.

Thank you so much.

Morning, or good afternoon to everyone.

And thank you for joining us today.

Let's turn now to slide <unk> for our business performance comments.

In Q1 'twenty three the first total revenue grew by 18% at constant currency.

23% on a reported basis, reaching a record level of 1000 561 million euros. If we exclude by your tests total revenue reached 1000 444 million, an increase of 9% at constant currency and 14%.

Then on a reported basis.

This growth was mainly driven by the performance of our Biopharma business unit.

Which grew by 21% at constant currency and 10% at constant currency like for like.

Excluding biotechs back by robust underlying demand favorable pricing and product mix.

Now turning to slide number nine.

Victor Grifols Deu: We delivered a robust first quarter, driven by the strong performance of our flagship product, IG, in both the US and international markets. It experienced a significant 14.5% growth in Q1 at constant currency. We expect this upward momentum to persist backed by robust underlying demand. Our efforts to grow the market share and revenue of our subcutaneous immunoglobulins Xembify are yielding positive results, with an increase of 34% in Q1 2023. Albumin growth was supported by higher demand and price increases in China, offsetting current market dynamics in the US. Looking ahead, we expect volume demand to rebound to high single-digit growth, mainly driven by China. Also, improved product mix was supported by the ALBUTEIN FlexBag.

Victor Grífols Deu: We delivered a robust first quarter, driven by the strong performance of our flagship product, IG, in both the US and international markets. It experienced a significant 14.5% growth in Q1 at constant currency. We expect this upward momentum to persist backed by robust underlying demand. Our efforts to grow the market share and revenue of our subcutaneous immunoglobulins Xembify are yielding positive results, with an increase of 34% in Q1 2023. Albumin growth was supported by higher demand and price increases in China, offsetting current market dynamics in the US. Looking ahead, we expect volume demand to rebound to high single-digit growth, mainly driven by China. Also, improved product mix was supported by the ALBUTEIN FlexBag.

We delivered a robust first quarter driven by the strong performance of our flagship Bravo.

Jim.

In the in both the U S and international markets.

As expedient, a significant 14, 5% growth in Q1 at constant currency.

We expect this momentum to persist backed by robust underlying demand.

Our efforts to grow.

The market share and revenue of Ara for potassium when our global and <unk> are yielding positive results with an increase of 34% in Q1 2023.

Argument growth was supported by higher demand and price increases in China offsetting current marketing dynamics in the U S. Looking.

Looking ahead, we expect volume demand to rebound to high single digit growth, mainly driven by China.

Also improved product mix was supported by the albumin inbox container Phi.

Victor Grifols Deu: Finally, Alpha-1 and specialty proteins delivered a mid-single digit growth, thanks to the higher demand of Alpha-1 and a strong demand and favorable customer mix in our hyperimmunes portfolio. Now turning to slide 10. We continue to maintain a strong position in the IG market with a diversified product portfolio that includes Grifols and Biotest intravenous immunoglobulins. Our subcutaneous immunoglobulin commercialized in the US, and having received approval in several European countries and Australia for PID and secondary immune deficiency in 2022, as well as our hyperimmunes. The global IG market is valued at more than EUR 40 billion, and is expected to grow by high single digits in the upcoming years, mainly driven by primary and secondary immune deficiencies, which represent approximately 40% to 55% of the total IG market.

Victor Grífols Deu: Finally, Alpha-1 and specialty proteins delivered a mid-single digit growth, thanks to the higher demand of Alpha-1 and a strong demand and favorable customer mix in our hyperimmunes portfolio. Now turning to slide 10. We continue to maintain a strong position in the IG market with a diversified product portfolio that includes Grifols and Biotest intravenous immunoglobulins. Our subcutaneous immunoglobulin commercialized in the US, and having received approval in several European countries and Australia for PID and secondary immune deficiency in 2022, as well as our hyperimmunes. The global IG market is valued at more than EUR 40 billion, and is expected to grow by high single digits in the upcoming years, mainly driven by primary and secondary immune deficiencies, which represent approximately 40% to 55% of the total IG market.

Finally, alpha one and specialty proteins delivered a mid single digit growth. Thanks to the higher demands of Alpha one and a strong amount of.

Our core customer mix in our hyper portfolio.

Now turning to slide 10.

We continue to maintain a strong position in the AG market with a diversified product portfolio that includes greenfields and biotech intravenous immune globulins, our subcutaneous globally commercialize in the U S and having received approval in several European countries and Australia for <unk>.

And secondary immune deficiency in 2022 as well as our high premiums.

The global AG market is valued at more than 40 billion euros and is expected to grow by high single digits in the upcoming years, mainly driven by primary and secondary immune deficiencies, which represent approximately 40% to 55% of the total AG market.

Victor Grifols Deu: Secondary immune deficiencies have notably increased due to an aging population and the use of immune suppressive therapies, such as immuno-oncology treatments, for which IG is often the preferred and only option. Additionally, the increasing awareness around the benefits of IG therapy and improved diagnosis of primary immune deficiency have led to more patients receiving treatment with IG therapies. With a broader and top market that is increasing at a pace above the rest of the IG usages, we believe this represents a substantial growth opportunity for our franchises. Grifols Immunoglobulin strategy is based on key three pillars. We are focused on growth in the US and on prioritizing selected countries, in line with our aim to leverage our geo-mix.

Victor Grífols Deu: Secondary immune deficiencies have notably increased due to an aging population and the use of immune suppressive therapies, such as immuno-oncology treatments, for which IG is often the preferred and only option. Additionally, the increasing awareness around the benefits of IG therapy and improved diagnosis of primary immune deficiency have led to more patients receiving treatment with IG therapies. With a broader and top market that is increasing at a pace above the rest of the IG usages, we believe this represents a substantial growth opportunity for our franchises. Grifols Immunoglobulin strategy is based on key three pillars. We are focused on growth in the US and on prioritizing selected countries, in line with our aim to leverage our geo-mix.

Secondary immune deficiencies have notably increased due to an aging population and the use of immune suppressive therapies, such as immuno oncology treatment for which he is often the preferred and only option.

Additionally, the increasing awareness around the benefits of <unk> therapy.

An improved diagnosis of primary immune deficiency.

Led to more patients receiving treatment with as you set up this.

With our brother untapped market that is increasing at a pace.

Above the rest of the IC as you suggest.

We believe this represents a substantial growth opportunity for our franchises.

First from an immune globally strategy space.

One key three pls.

We are focused on growth in the U S.

And on prioritizing selected countries in line with our aim to leverage our genomics.

Victor Grifols Deu: We are focused on the immunodeficiency market, with PID and secondary immunodeficiency growing ahead of the rest of the uses, while continuing to accelerate our subcutaneous Xembify adoption, building upon the important traction gain over the last quarters. To leverage on this expected growth, among others, we are dedicating efforts to lifecycle management, which includes seeking new indications. One of these lines, we are pursuing the approval of Xembify to treat patients with CLL, which is the fastest-growing indication within the secondary immune deficiencies. CLL is expected to grow 9.5% from the period 2018 to 2025, with a market potential of over $1 billion. We also aim to maintain leadership in neurology and acute care within autoimmune diseases, where IVIG remains the standard of care. Our flagship Gamunex-C remains the most prescribed IG for CIDP as of today.

Victor Grífols Deu: We are focused on the immunodeficiency market, with PID and secondary immunodeficiency growing ahead of the rest of the uses, while continuing to accelerate our subcutaneous Xembify adoption, building upon the important traction gain over the last quarters. To leverage on this expected growth, among others, we are dedicating efforts to lifecycle management, which includes seeking new indications. One of these lines, we are pursuing the approval of Xembify to treat patients with CLL, which is the fastest-growing indication within the secondary immune deficiencies. CLL is expected to grow 9.5% from the period 2018 to 2025, with a market potential of over $1 billion. We also aim to maintain leadership in neurology and acute care within autoimmune diseases, where IVIG remains the standard of care. Our flagship Gamunex-C remains the most prescribed IG for CIDP as of today.

We are focused on the immune deficiency market with <unk> and secondary immunodeficiency growing ahead of the rest of their users while continuing to accelerate our photonic simplify adoption building up on the important traction gain over the last quarters.

To leverage on this aspect of growth among others. We are dedicating efforts to lifecycle management, which includes seeking new indications one of these lines we are pursuing.

Approval of <unk> to treat patients with C. L L, which is our fastest growing indication were seeing the secondary immune deficiencies.

<unk> is expected to grow nine 5%.

From the period of 18 to 2025 with a market potential of over $1 billion U S dollars.

We also aim to maintain leadership in neurology and <unk>.

Acute care within auto immune diseases, where <unk> remains the standard of care.

Our flagship game on <unk> remains the most prescribe it IC for <unk> as of today.

Victor Grifols Deu: We plan to build on this track record for further strengthening our leadership, especially through continued uptake of our subcutaneous Xembify, which offers an improved patient experience and a vast commercial opportunity for us. Having said all this, we are well-positioned to capitalize on this IG market growth, which is expected to outpace any potential impact from new technologies within the CIDP space. On top of this, the company has a robust pipeline of IG products in different phases of development, with several key milestones anticipated for 2023. Now turning to slide 11. As Thomas has already commented, the cost per liter trend is encouraging and reflects the significant progress we are making in the execution of our operational improvement plan.

Victor Grífols Deu: We plan to build on this track record for further strengthening our leadership, especially through continued uptake of our subcutaneous Xembify, which offers an improved patient experience and a vast commercial opportunity for us. Having said all this, we are well-positioned to capitalize on this IG market growth, which is expected to outpace any potential impact from new technologies within the CIDP space. On top of this, the company has a robust pipeline of IG products in different phases of development, with several key milestones anticipated for 2023. Now turning to slide 11. As Thomas has already commented, the cost per liter trend is encouraging and reflects the significant progress we are making in the execution of our operational improvement plan.

We plan to build on this track record for further strengthening our leadership, especially through continued uptake of our subcutaneous simplify which offer an improved patient experience and I've asked commercial opportunity for us.

Having said all this we are well positioned to capitalize on this market growth.

With respect to outpace any potential impact from new technologies within the <unk> space.

On top of this the company has a robust pipeline of ICL products in different in different phases of development with.

With several key milestones anticipated for 2023.

Now turning to slide 11.

So I must have already commented the cost per liter trend is encouraging and reflects the significant progress we are making in the execution of our operational improvement plan.

Victor Grifols Deu: Taking the figures we reported in fiscal year 2022 results, cost per liter and donor compensation declines have notably expanded from 10% and 20% to more than 15% and 25% respectively. This positive trend will be reflected at a larger extent in our P&L starting in H2 2023, due to the inventory accounting practices of the plasma industry, which entail a 9 months period lag. Initiatives triggering this positive cost per liter trend are donor compensation reduction, optimization and reduction of staffing and overheads, and the rationalization of our plasma center network. In the first three months of 2023, seven underperforming plasma center were consolidated. As of today, adding up to 18 centers shut down in Q4 2022, we have consolidated more than 75 of the total 25 centers to minimize the impact on plasma collection volumes.

Victor Grífols Deu: Taking the figures we reported in fiscal year 2022 results, cost per liter and donor compensation declines have notably expanded from 10% and 20% to more than 15% and 25% respectively. This positive trend will be reflected at a larger extent in our P&L starting in H2 2023, due to the inventory accounting practices of the plasma industry, which entail a 9 months period lag. Initiatives triggering this positive cost per liter trend are donor compensation reduction, optimization and reduction of staffing and overheads, and the rationalization of our plasma center network. In the first three months of 2023, seven underperforming plasma center were consolidated. As of today, adding up to 18 centers shut down in Q4 2022, we have consolidated more than 75 of the total 25 centers to minimize the impact on plasma collection volumes.

Taking the figures reported in fiscal year 2022 results cost per liter and donor compensation declines have notable expanded from 10.

20% to more than 15 and 25% respectively.

This part of the strength.

It will be reflected at the larger extending our P&L starting in second half of 2023 due to the inventory accounting practices of the plasma industry, which entail a nine months nine months period black.

Initiatives regarding these positive cost per liter trend.

Within our compensation reduction optimization and resolution of our staffing and overheads.

And the rationalization of our plasma Center network.

In the first three months of 2020 377 underperforming plasma center were consolidated.

As is today, adding up to 18 centers shut down in Q4 2022, we have consolidated more than 75 of the total 25 centers to minimize the impact on plasma collection volumes.

Victor Grifols Deu: Going forward, we expect this cost per liter to drop dramatically following current in-development and under-evaluation savings initiatives focused on implementing lean processes and digitalization. Now turning to slide 12. We continue to advance on our innovation pipeline as we are delivering on our commitments on this Q1. Our subcutaneous Alpha-1 15% phase 1, phase 2 study advanced from single-dose to repeat-dose phase. In terms of lifecycle management, we provided final results for of the Xembify bi-weekly dosing study, and the complete clinical study report is being prepared, as well as for the IVIG PK study, which has also been concluded, and at the same time, we are finalizing our CSR data. Additionally, we expect this patient to be enrolled and treated in the Xembify CLL study very shortly.

Victor Grífols Deu: Going forward, we expect this cost per liter to drop dramatically following current in-development and under-evaluation savings initiatives focused on implementing lean processes and digitalization. Now turning to slide 12. We continue to advance on our innovation pipeline as we are delivering on our commitments on this Q1. Our subcutaneous Alpha-1 15% phase 1, phase 2 study advanced from single-dose to repeat-dose phase. In terms of lifecycle management, we provided final results for of the Xembify bi-weekly dosing study, and the complete clinical study report is being prepared, as well as for the IVIG PK study, which has also been concluded, and at the same time, we are finalizing our CSR data. Additionally, we expect this patient to be enrolled and treated in the Xembify CLL study very shortly.

Going forward, we expect this cost per liter to drop.

These cost per liter to drop to amplify.

Following coring in development and under evaluation savings initiatives focused on implementing lean processes and digitalization.

Now turning to slide 12.

We continue to advance on our innovation pipeline as we are delivering on our commitments on this first quarter.

Our supertankers Alpha 115% phase one phase two study.

Advanced from single dose to repeat those face.

And in terms of lifecycle management will provide a final result of the gym defined by weekly dosing study.

And it's being prepared the complete clinical study report.

As well as for the <unk> study, which has also been concluded and at the same time, we are finalizing our CSR data.

Additionally, we expect this patient.

Two we enrolled and treated in the simplify CLI study very shortly.

Victor Grifols Deu: In Q2 2023, we also expect to finalize the enrollment of the PRECIOSA trial, while the enrollment of the SPARTA trial will be completed during H2 of this year. Biotest milestones for its novel proteins trials in 2023 continue on track. For trimodulin, we expect study initiation in H1 and fibrinogen trial to be completed, as well as top-line study results in H2 of this year, 2023. The developments expected for 2023 are very solid, a very solid combination of life cycle management and new proteins such as trimodulin, fibrinogen, ATIII in sepsis, which we expect to continue significantly to the company plasma economics in the midterm. Now turning to slide 13 for Diagnostic and BioSupplies performance.

Victor Grífols Deu: In Q2 2023, we also expect to finalize the enrollment of the PRECIOSA trial, while the enrollment of the SPARTA trial will be completed during H2 of this year. Biotest milestones for its novel proteins trials in 2023 continue on track. For trimodulin, we expect study initiation in H1 and fibrinogen trial to be completed, as well as top-line study results in H2 of this year, 2023. The developments expected for 2023 are very solid, a very solid combination of life cycle management and new proteins such as trimodulin, fibrinogen, ATIII in sepsis, which we expect to continue significantly to the company plasma economics in the midterm. Now turning to slide 13 for Diagnostic and BioSupplies performance.

In Q2 'twenty three we also expect to finalize the enrollment of the placebo trial, while the enrollment of this part of the trial will be completed.

In this second half during the second half of this year.

Biotech milestones for its novel proteins trials in 2023 continue on track for three modeling, we expect study initiation in the first half and.

Probably be noted and trial to be completed as.

As well as top line study results in the second half of this year 2020.

Development is expected for 'twenty three are very solid and a very solid combination of lifecycle management and new proteins, such as my mother have any notion HSE and sepsis, which we expect to continue significantly to that.

Contact to the company of plasma economics.

In the midterm.

Now turning to slide 13 for the agnostic.

And by our supplies performance.

Victor Grifols Deu: Blood Typing Solutions were the main driver of the Diagnostic business unit, with a robust high single-digit growth rate recorded in key geographies such as the US and China. Performance of the NAT technology has been impacted by the pricing concessions in exchange for extending a large contract with a key customer for 15 years. Recombinant proteins increased by 28%, including a diagnostic company commercial true up of EUR 90 million, which was partially offset by lower joint business profits. Excluding this true up, revenues decreased by 32%. BioSupplies increased by 70% at constant currency, and by 78% on a reported basis, following the acquisition of the remaining 51% capital of Access Biologicals in 2022.

Victor Grífols Deu: Blood Typing Solutions were the main driver of the Diagnostic business unit, with a robust high single-digit growth rate recorded in key geographies such as the US and China. Performance of the NAT technology has been impacted by the pricing concessions in exchange for extending a large contract with a key customer for 15 years. Recombinant proteins increased by 28%, including a diagnostic company commercial true up of EUR 90 million, which was partially offset by lower joint business profits. Excluding this true up, revenues decreased by 32%. BioSupplies increased by 70% at constant currency, and by 78% on a reported basis, following the acquisition of the remaining 51% capital of Access Biologicals in 2022.

Blood typing solutions.

Were the main driver of the risk of the agnostic business unit with a robust high single digit growth rate recorded in gives you other fees such as the U S and China.

Performance of the United Technologies has been impacted by the pricing concessions in exchange for extending a large contract with a key customer.

For 15 years.

Recombinant proteins increased by 28%, including agnostic company commercial through up of $90 million with was partially offset by lower joint business profit.

Excluding this throughout revenues decreased by 32%.

By your suppliers increased by 70% at constant currency and by seven 8% on a reported basis. Following the acquisition of the remaining 51% capital of access Biologicals in 2022.

Victor Grifols Deu: This acquisition of Access Biologicals was driven by the goal of achieving higher margins through vertical integration and gaining commercial footprint to expand in the cell culture market, as well as in vitro diagnostics and diagnostic R&D solutions. It also strengthened the company's offering of biological products. Now turning to Alfredo.

Victor Grífols Deu: This acquisition of Access Biologicals was driven by the goal of achieving higher margins through vertical integration and gaining commercial footprint to expand in the cell culture market, as well as in vitro diagnostics and diagnostic R&D solutions. It also strengthened the company's offering of biological products. Now turning to Alfredo.

The acquisition this acquisition of Axis radiological.

What's driven the way the goal of achieving higher margins sort of vertical integration and gaining commercial footprint to expand in the circle toward market as well as in vitro diagnostics and the agnostic R&D solutions.

It also strengthens the company suffering of biological products and now touring talk forever.

Alfredo Arroyo: Thanks, Victor. Hello to everybody. As Thomas mentioned, Grifols delivered solid results for Q1 2023 across all key metrics, beating our EBITDA guidance provided during our last earnings call. We're very confident to meet our updated full year 2023 guidance, as we will see later. Reported total revenues increased by 23% and by 14% on like-for-like basis, meaning excluding Biotest. While reported biopharma revenues were up by 26% and 15% like-for-like, excluding Biotest. FX impact with no significant, I would say, impact on this Q1 2023. While our gross margin is still impacted by a high cost per liter from the plasma collected in H1 2022 due to the nine-month lag inventory accounting, now we are in the recovery path.

Thanks, Victor Hello to everybody.

As Thomas mentioned.

<unk> delivered solid results for the first quarter of 2023 across all key metrics within our EBITDA guidance provided during our last earnings call.

We're very confident to meet our updated full year 2023 guidance as we will see later.

Reported total revenues increased by 23% and by 14% on like for like basis.

Meaning excluding biodiesel.

While reported Biopharma revenues were up by 26% and 15% like for like excluding biotech.

<unk> impact with no significant I would say.

Impact on 'twenty, one Q1 of 2023, while our gross margin is still impacted by high cost per liter from the plasma collected in the first half of 2022 due to the nine month lag even to the accounting now we are in the recovery path.

Alfredo Arroyo: Operational leverage together with savings from the operational plan drove our Q1 adjusted EBITDA margin to 21%, excluding Biotest, which is above the guidance. Our leverage ratio stands at 7x with a solid liquidity position of EUR 1.3 billion, and also with a positive operating cash flow, excluding the one-off restructuring charge. Plasma collection increased by 11% in Q1, while cost per liter significantly declined to more than 15% by end March from its peak of last July. Good news on the execution of our operational improvement plan, which is progressing ahead of initial expectation. We have already deployed more than 80% of the initial EUR 400 million euro cash cost savings, and now we have updated this target to more than EUR 450 million. Next slide, Grifols is experiencing a turnaround supported by our strong financial performance.

Operational leverage together with savings from the operational plan drove our.

Q1, I guess EBITDA margin to 21%, excluding biotech which is above the guidance.

Our leverage ratio stand at seven times with a solid liquidity position of $1 3 billion.

Or should we see.

Positive operating cash flow, excluding the one off restructuring charge.

Plasma collection increased by 11% in Q1, while cost per liter significantly declined to more than 15% by March from its peak.

Last July .

Good news on the execution of our operational improvement plan, which is progressing ahead of initial expectations.

We have already deployed more than 80% of the initial 400.

Million Euro cash cost savings and now we have updated this target to more than $450 million.

Next slide.

Geforce is experiencing.

Around supported by our strong financial performance.

Alfredo Arroyo: Revenue continues to show sustainable growth with a high single digit increase in Q1, driven by solid plasma supply, by price increases, and by product mix backed by our SubQ IG. Regarding operating performance, as we see in the second chart, adjusted EBITDA on last twelve months basis reached EUR 1.2 billion on the back of operational leverage and savings from the operational plan, showing a sequential improvement both in absolute terms and in margin. This sequential quarterly EBITDA improvement is going to continue throughout 2023. Leverage ratio stood at 7x as of March, and we reiterate here our commitment to debt reduction, targeting 4x by end of 2024. We reconfirm our commitment to the leverage and on the back of the improvements and the leverage transactions.

Revenue continues to show sustainable growth with a high single digit increase in the first quarter driven by solid plasma supply.

Like price increases.

By product mix backed by our <unk> AG.

Regarding operating performance as we've seen the second chart.

Adjusted EBITDA last 12 months basis reached $1 2 billion euros on the back of operational leverage and savings from the operational plan.

Showing a sequential improvement both in absolute terms and in margin.

Do you sequential quarterly EBITDA improvement.

He is going to continue throughout 2023.

<unk> ratio stood at seven times as of March.

We reiterate here our commitment to debt reduction target in that four times by end of 2024.

We reconfirm our commitment to deliver it and then the bulk of the improvement.

These transactions.

Alfredo Arroyo: The adjusted EBITDA bridge shows the improvement in Q1, reaching EUR 299 million at 21% margin excluding Biotest, supported by positive performance of Biopharma, BioSupplies, as well as OpEx reduction. As we explained the last earnings call, the EUR 125 million one-off charge includes EUR 140 million restructuring charge that has been fully booked in this quarter. We have also adjusted EUR 19 million coming from the one-off commercial true up in the Diagnostic revenues. We do not expect any further restructuring costs in the upcoming quarters. We are successfully executing our operational improvement plan. As we speak, more than 80% of the initial EUR 400 million cash cost savings have been already deployed. Furthermore, we have increased this target to more than EUR 450 million on the back of further improvements, especially in the plasma operations.

The adjusted EBITDA Bridge shows the improvement in Q1, reaching 299 million euros at 21% margin excluding biotechs.

Supported by positive performance with Biopharma bio supply as well as Opex reduction.

As we explained in the last earnings call.

$125 million.

One off charge includes 140 million restructuring charge.

That has been fully booked in this quarter.

We have also adjusted 19 million euros coming from new what one off commercial grew up in it.

I'll stick with us.

Not expect any further restructuring costs in the upcoming quarters.

We're successfully executing our operational improvement plan.

As we speak more than 80% of initial 400 billion cash cost savings have been already deployed.

Furthermore, we have increased the target to more than $450 million on the back of further improvements, especially in the platinum operations.

Alfredo Arroyo: All in all, annualized total plasma related savings now are more than EUR 340 million from the initially expected EUR 300 million. On the left-hand side of this slide, we can see the previously announced plan, and on the right-hand side, the updated plan. In 2023, cash savings will now amount to EUR 275 million, and cost savings flowing through the P&L will be EUR 130 million. In 2024, we are now expecting additional EUR 175 million cash savings and EUR 320 million cost savings that will be recognized in the P&L. As a reminder, you know, the plasma cost accounting rule of this industry, which, you know, implies a nine months inventory lag. Our positioning, deleveraging, and achieving the full leverage ratio target by end of 2024 has not changed.

All in all annualized total plasma related savings now are more than 240 million euros.

The initial expected 300 million users.

On the left hand side of this is light.

Can see the previously announced plan and on the right hand side the updated plan.

In 2023 cash savings will now amount to euro 275 million in cost savings.

Flowing through the P&L.

$130 million.

In 2024.

Now expecting additional 175 million euros cash savings.

$320 million cost savings that will be recognized in the P&L.

Binder, the plasma cost accounting rule of this industry, which implies a nine months inventory lag.

Our position in deleveraging and achieving the full leverage ratio target by end of 'twenty 'twenty four.

Not change as we can see in this REIT.

Alfredo Arroyo: As we can see in this bridge, considering that 50% of the 1.8x reduction relates to EBITDA improvement, overall, the leverage ratio declining from 7x to 4x is coming from 70% of EBITDA improvement and 30% from the leverage transaction. A significant piece of this EBITDA improvement is driven by the EUR 450 million operational improvement plan. We're making a good progress on the several work streams of the leverage transactions, and we plan, as already mentioned, to complete one transaction during this year. The cash proceeds will be prioritized for debt reduction. We currently have a total liquidity of EUR 1.3 billion and cash on hand amounting to EUR 400 million.

Considering that 50% of the 1.8 times reaction released to the improvement overall.

The leverage ratio declining from seven times to four times is coming from 70% of EBITDA improvement and 50% from deleveraging transaction.

A significant piece of DCP the improvement is driven by the $450 million.

You'd operationally implement Brian .

We're making a good progress on the civil work streams of the nearest transactions and we plan as we mentioned to complete one transaction during this year.

The cash proceeds will be prioritized towards debt reduction. We currently have a total liquidity of $1 3 billion euros and cash on hand amounting to 400 million euros.

Alfredo Arroyo: Based on our solid performance in Q1, we reiterate our full year guidance for top line, and we upgrade our adjusted EBITDA margin guidance for the H1 to more than 21% margin, and for the full year, it will be the new margin range between 22% and 24%, excluding Biotest. As a result of this, we're very confident that we can beat the full year EBITDA of EUR 1.4 billion, as well as the EUR 1.7 billion considering the annualized cash cost savings. These numbers confirm that our strong recovery path is ongoing. With that, I hand over to Thomas.

Based on our solid performance in Q1, we reiterate our full year guidance for top line and we operate our judgment EBITDA margin guidance for the first half to more than 21% margin.

For the full year.

The new margin range between 22, and 24% excluding biotech.

As a result of this we're very confident that we can beat the full year EBITDA.

Utah, one 4 billion as well as.

The $1 7 billion euro considering the annualized annualized cash cost savings these numbers confirm that.

Recovery path is ongoing.

And with that I hand over to Thomas.

Thomas Glanzmann: Thank you, Alfredo. I would like to conclude by reiterating a few points we've already made, but that are worth repeating. My management style is to keep returning to the most critical priorities, those that make us strong and those that need changing, to ensure that these are absolutely clear and that we continue to effectively execute against them. The company has clarified its governance and leadership structure and made significant progress in defining the responsibilities of the senior leadership team, ensuring focus and accountability. The company has introduced a new operating organizational model, which has resulted in a stronger and more efficient structure. This is supported by strong focus on a performance-driven culture, which will continue to make the company more efficient, effective, agile, decisive, and accountable. The new short and long-term incentive plans will play a key role here.

Thank you Alfredo I would like to conclude by reiterating a few points, we've already made but that are worth repeating.

My management style is to keep returning to the most critical priorities those that make us strong and those that need changing to ensure that these are absolutely clear and that we continue to effectively execute against them.

The company has clarified its governance and leadership structure and made significant progress in defining the responsibilities of the senior leadership team, ensuring focus and accountability. The company has introduced a new operating organization model, which has resulted in a stronger and more efficient structure. This is.

Ported by strong focus on our performance driven culture, which will continue to make the company more efficient effective agile decisive and accountable the new short and long term incentive plans will play a key role here.

Thomas Glanzmann: The strength and a new leadership will be instrumental in driving change and ensuring that the organization is more responsive to the changing market dynamics. Grifols delivered a solid financial start to the year, and we are on track to meet an improved guidance. The company has successfully deployed, as Alfredo mentioned, more than 80% of the initial EUR 400 million cash cost saving of its operational improvement plan and updated its target to more than EUR 450 million, mainly driven by plasma initiatives. Testament of the execution of the plan is the cost per liter reduction of more than 15%. As has also been mentioned multiple times, deleveraging remains our top priority and our commitment to reduce leverage ratio to 4 by 2024 remains unchanged. We are advancing on several work streams to execute deleveraging transaction.

The strengths and a new leadership will be instrumental in driving change and ensuring that the organization is more responsive to the changing market dynamics Griffiths delivered a solid financial start to the year and we are on track to meet and improved guidance.

The company has successfully deployed as Alfredo mentioned more than 80% of the initial Europe 400 million cash cost saving of its operational improvement plan and updated its target to more than 450 million, mainly driven by plasma initiatives Testament of the execution of the plan.

<unk> is the cost per lead a reduction of more than 15%.

There's also been mentioned multiple times deleveraging remains our top priority and our commitment to reduce leverage ratio to four by 224 remains unchanged. We are advancing on several work streams to execute deleveraging transaction.

Thomas Glanzmann: Adjusted EBITDA margin for the full year, excluding Biotest, is again, as Alfredo mentioned, expected to reach the 22% to 24% range, and we are confident on exceeding EUR 1.4 billion. Performing the additional EUR 300 million, the adjusted EBITDA margin would stand at over EUR 1.7 billion, setting the base for a further expansion of EBITDA in 2024. As promised, we are delivering a step change in performance as we advance in 2023. We are increasingly better positioned and confident that we will keep building on this positive momentum. As mentioned, I'll repeat, Grifols is on the rebound. Finally, I want to thank our entire Grifols team for making it all happen. Without everyone's effort, focus, and dedication, the progress made in Q1 2023 would not have been possible.

Adjusted EBITDA margin for the full year, excluding bioterrorist.

He is again as Alfredo mentioned expected to reach the 22 to 24 range and we are confident.

Exceeding one 4 billion euro.

Pro forming the additional euro $320 million the adjusted EBITDA margin would stand at over $1 7 billion euros setting the base for our further expansion.

Of EBITDA in 'twenty four.

As promised we are delivering a step change in performance as we advance in 223, we are increasingly better precision and confident that we will keep building on this positive momentum as mentioned.

And I'll repeat referrals is on the rebound.

Finally, I want to thank our entire grateful team for making it all happen without everyone's effort focus and dedication the progress made in the first quarter of 'twenty three would not have impossible.

Thomas Glanzmann: I appreciate your attention, and then I now turn it back to Nuria, who will open it up for your questions. Thank you very much.

I appreciate your attention and I now turn it back to in a new area, who will open it up for your questions. Thank you very much.

Nuria Pascual: Thank you, Thomas, and thank you all. Let's start the Q&A session. Remember, you need to press star five to ask a question and we need to limit to two per person. If you have additional questions or follow-ups, then you press star five again and then you can go back to the list. Let's start with Jo Walton from Credit Suisse. Jo, thank you. Hello? Jo, are you there?

Núria Pascual: Thank you, Thomas, and thank you all. Let's start the Q&A session. Remember, you need to press star five to ask a question and we need to limit to two per person. If you have additional questions or follow-ups, then you press star five again and then you can go back to the list. Let's start with Jo Walton from Credit Suisse. Jo, thank you. Hello? Jo, are you there?

Yes.

Thank you Thomas and thank you all so let's just start the Q&A session remember you need to press star five to ask a question on we need to limit to two per person. If you have additional questions or follow ups then.

Press the star five again on <unk> and then you can go back to the to the list. So let's just start with Jo Walton from Credit Suisse. Joe. Thank you.

Okay.

Hello.

Joe are you there.

Jo Walton: Sorry. Yes. Can you hear me?

Nuria Pascual: Oh, yes. Now, yes. Thank you.

Núria Pascual: Oh, yes. Now, yes. Thank you.

Sorry, Yes can you hear me Oh, yes, yes. Thank you.

Jo Walton: Oh, perfect. I wonder, in order to put some context on it, whether you can tell us what the cost per liter is now, not in relation to July 2022, but a pre-COVID world. A couple of clarifications, please. In terms of your sales growth for this year, the 8% to 10%, is that including the 2.5% or so benefit that we get from the first time consolidation of Biotest or on a clean underlying basis? Thank you.

Perfect.

One guy in order to put some context on it.

You can tell us what the cost per lead is now also in relation to July 22.

Pre COVID-19 world.

And a couple of clarifications. Please.

In terms of your sales growth for this year, the 8% to 10%.

Is that including the 2.5% or so.

Benefit that we get from the first time consolidation of biotechs.

Clean underlying basis. Thank you.

Alfredo Arroyo: Hello, Jo. I take the question on the cost per liter. We are comparing to this like kind of benchmark, if this is the word, from the peak that we had. If we compare this to 2019, it's still above that level, mainly because of two factors. The one is, well, it's kind of inflation related, both of them. One is the donor commitment compensation or donor fee. It has increased, as we all know, and the same for the labor cost associated in our plasma structure. Excluding those two kind of items, we are still higher than 2019, but narrowing the gap every month as we progress.

Right.

Joe I'll take the question on the cost per liter.

We are comparing to these are like kind of benchmark is if this is award from the peak that we had.

If we compare this to 2019.

Still above that level.

Mainly because of two factors one is what kind of inflation related both of them. One is the donor commitment of compensation or the NRC has increased for us as we are now in the same part of the labor cost associated with our <unk>.

Lastpass throat or excluding those two kind of.

Items.

We are still higher than the 19, but narrow at narrowing that gap every month as we progress.

Thomas Glanzmann: Sales? Sales growth 8 to 10 with you, Alfredo.

So.

Eight to 10.

Okay.

Alfredo Arroyo: To your question regarding the 8 to 10 revenue growth, as you know, as disclosed in the slide, this is including Biotest. Same relates to Biopharma, that 10 to 12 includes Biotest. That means that the revenue all in is basically including Biotest. Like for like in Biopharma, we are, you know, a high single digit. That's our best estimate for the year-end.

To your question regarding the eight to 10.

Revenue growth.

As you know us.

<unk> disclosed in the in the slide this is including this including bio test same.

Same relates to Biopharma that 10 to 12 includes biotech so that means that revenue all in.

Is it basically.

Including biotech like for likes in Biopharma.

High single high single digit so that's our best estimate for the year end.

Jo Walton: My second question, if I could, is a bit more of a perspective on your relationship with Shanghai RAAS. You've talked about China a couple of times as being important, but I think it would be interesting to see how that relationship is going. Many thanks.

My second question, if I could is.

A bit more of a perspective on your relationship with Shanghai, Ross, you've talked about China, a couple of times as being important but I think it would be interesting to see how that relationship is Kelly many thanks.

Alfredo Arroyo: You know, first of all, just to remind everybody that the plasma business in China is booming. Shanghai results that are publicly, you know, available, since there's a listed company. I mean, they're very impressive, point number one. Point number two, we have, you know, a great and amazing relationship with Shanghai RAAS, with full collaboration in all areas. Also to remind everybody that they are our distributors for albumin and in Biopharma, as well as NAT in Diagnostic. You know, both business lines in China are booming also.

First of all just to remind everybody that.

The plasma business in China is booming and Shanghai results that are publicly.

Level.

There is a listed company.

There they are very impressive point number one point.

Number two we have you know.

Great and amazing relationship with Shanghai rash with full collaboration in all areas and also to remind everybody that there are our distributors for albumin and <unk>.

In biotech and Biopharma as well as any T in diagnostics.

Both business lines in China.

Luminoso.

Nuria Pascual: Alfredo. Now we have a question from James Gordon from JPMorgan. Hi, James.

Núria Pascual: Alfredo. Now we have a question from James Gordon from JPMorgan. Hi, James.

Further now we have a question from James Gordon from Jpmorgan, Hi, James.

James Gordon: Hello, hope you can hear me. James Gordon from JP Morgan. Thanks for taking the two questions. The first question was about EBITDA margins. You took up the H1 margin from 19 to 20% to 21% plus. I don't think you took up the H2 margin. Is that because this was more about cost savings being pulled forward? Or have things actually got a bit better on an underlying basis, and could that be a bit conservative for H2? What else has got better? Is it something else that's got better or is it just phasing? That's the first question, please. The second question, also related to cost savings. I think you're saving more on plasma operations.

Hello, I Hope you can hear me James Gordon from JP Morgan, Thanks for taking the two questions.

The first question was about EBITA margin. So you took up the H one margin from 19% to 20% to 21% plus but I think you took out the H T margin. So is that because this was more about cost savings being pulled forward, we'll have things actually got a bit better on an underlying basis and could that be a bit conservative H two.

While in high school or is it something else has got better or is it just phasing. So that's the first question. Please.

And the second question.

Also related to cost savings.

I think youre saving more plasma operations I read there that there may be smaller cuts in Spain than originally planned so is that going to be offset or more than offset by bigger cuts in the U S. And are we going to see further U S. Plasma centers being shot are you done on the on the closures that wherever the further savings coming from place okay.

James Gordon: I read that there may be smaller cuts in Spain than originally planned. Is that gonna be offset or more than offset by bigger cuts in the US, and are we gonna see further US plasma centers being shut, or are you done on the closures there? Where are the further savings coming from, please?

Alfredo Arroyo: Okay. To the first question on the EBITDA margin, you know, the improvement, you know, is based on basically the underlying business is better than expected. You know, I already mentioned about, you know, pricing, country mix, product mix, you know, as well as we see, you know, better operational performance on the plasma cost, manufacturing cost. You know, it's true that in the case of OpEx, we're ahead of the budget. It's not because of phasing, it's because we are, you know, upgrading our target. That's why I said that this EBITDA sequential improvement that we've seen in Q1 versus Q4 last year is gonna continue in the upcoming quarters.

Okay.

So to the first question on the on DVD margin.

The improvement each base on.

Basically the underlying business.

<unk> is better than expected.

Mentioned about pricing country meats produce.

<unk> as.

As well as we will see.

Operation performance on the also on the on the plasma cost manufacturing cost.

Then the ease to.

To that indication of Opex.

We're ahead of where ahead of the budget.

Not because the patient is because we are upgrading our target. So that's why I said that this EBITDA.

Sequential improvement that we've seen in Q1 versus Q.

Q4 last year this is going to continue.

Alfredo Arroyo: To the cost savings that you mentioned. Well, as I said, yeah, there are 80% already, you know, fully deployed, and we have upgraded the target in that sense. So that's why we are very confident that we can beat the EUR 1.4 billion by the end of the year.

Coming quarters too.

The cost savings that are.

That you mentioned.

Well as I said, there are you know 80% already fully deployed on <unk>.

And we we have a great.

The target.

On that sense.

So that's why we are very confident that we can beat the.

The $1 4 billion by the end by the end of the year.

James Gordon: Okay.

Nuria Pascual: Okay.

Núria Pascual: Okay.

Victor Grifols Deu: I think it was kind of a comment regarding plasma centers and further cost savings or further, sorry, centers closing. This is not the case. We think we have done already all the efforts in the front end of closing or consolidating plasma centers. The improvements that we are pursuing in the plasma network, it's let's say at center level, because again, overhead stuff above center level, the restructuring has already taken place as well. Now we are focusing on improving efficiencies at center level, aligning opening hours with donors flowing in, improving the donor flow time in at the center level and this type of activities.

Victor Grífols Deu: I think it was kind of a comment regarding plasma centers and further cost savings or further, sorry, centers closing. This is not the case. We think we have done already all the efforts in the front end of closing or consolidating plasma centers. The improvements that we are pursuing in the plasma network, it's let's say at center level, because again, overhead stuff above center level, the restructuring has already taken place as well. Now we are focusing on improving efficiencies at center level, aligning opening hours with donors flowing in, improving the donor flow time in at the center level and this type of activities.

And I think it was kind of a comment regarding plasma plasma centers.

Further cost savings for further surgery centers are closing now.

This is this is not the case, we're seeing we have done all the already all the air force in the front of closing or consolidating plasma centers now the improvements that we are pursuing in the plasma network, it's let's say a center level because.

Again overhead staff above center level, the restructuring has already taken place as well and now we are focusing on improving efficiencies at center level aligning opening hours with doughnuts flowing in.

Moving the donor flow time and at the center level and this type of activities.

Nuria Pascual: Thank you.

Núria Pascual: Thank you.

James Gordon: Thank you. I don't know if you can still hear me, but just as a follow-up, which would be, I think Alfredo was saying that things were actually better on an underlying basis in H1, so things were going better than you originally planned in H1, or you expect them to. Why would that not also mean profitability is better than you originally thought in H2?

Thank you I didn't know if you calculate it just is.

Just as a follow up which would be I think Alfredo was saying that things were actually better than the underlying basis in the first half. So things are going better than you. Originally planned in the first half or you expect them to but so why would that also mean profitability is better than you originally thought in the second half.

Alfredo Arroyo: Well, you know, we are, you know, as a matter of fact, if we look at the slide, we are also upgrading the, we think that, you know, that H2 is gonna be, you know, this within that range, 23 to 25%. Once we close Q2, we'll be in a position to provide you with, you know, additional color about H2. Clearly we are very confident, as I said, that the EUR 1.4 billion by the end of the year, you know, will be, I would say, better.

Well.

We are.

As a matter of fact if.

We look at that as like we are also upgrading the.

We think that that the second half is going to be.

Within that range, 20% to 25%.

Now on the once we closed the second quarter will be in a position to provide you with.

Additional color about the second half, but clearly we are very confident as I said that the one 4 billion by the end of the year will be will be I would say.

Yes.

James Gordon: Okay, thank you.

Nuria Pascual: Thank you. Thank you, Alfredo. We have Guilherme Sampaio from CaixaBank BPI. Guilherme?

Núria Pascual: Thank you. Thank you, Alfredo. We have Guilherme Sampaio from CaixaBank BPI. Guilherme?

Okay. Thank you. Thank you. Thank you.

Now we have.

From a cash along the bi yammer.

Guilherme Sampaio: Yes. Good morning. Thank you for taking my question. The first one on donor fees, if you could provide some color on your expectations for additional reduction in donor fees? And secondly, if you could go through the dynamics of the albumin markets in China and the US right now? Thanks.

Yes. Good morning, Thank you for taking my question.

Just trying to I'm done Ashish.

Provide color on our expectations for additional reduction in tonnage.

And secondly should choose.

Sure the dynamics of the albumin market in China, The U S right now.

Victor Grifols Deu: Maybe I take those two.

Victor Grífols Deu: Maybe I take those two.

Okay.

Alfredo Arroyo: Yeah.

Right.

Victor Grifols Deu: On the donor fees, as you have seen, there is a kind of progressive trend of lowering those donor fees versus the peak in July. We are expecting this to continue in a way throughout the year and to reach a lower level than today's level, by, let's say, by December 2023. In the environment in the market regarding donor fees, we are seeing in certain specific types of donor fees kind of a positive trend in the sense of lowering the donor fee. For the second question regarding albumin, as Alfredo in a way tried to instill in his previous comments on China, the market is kind of booming for albumin.

Yep.

Victor Grífols Deu: On the donor fees, as you have seen, there is a kind of progressive trend of lowering those donor fees versus the peak in July. We are expecting this to continue in a way throughout the year and to reach a lower level than today's level, by, let's say, by December 2023. In the environment in the market regarding donor fees, we are seeing in certain specific types of donor fees kind of a positive trend in the sense of lowering the donor fee. For the second question regarding albumin, as Alfredo in a way tried to instill in his previous comments on China, the market is kind of booming for albumin.

Yes.

On the donor fees.

You have seen there is kind of progressive strength of lowering those on our fees versus the peak in July .

We are.

Correcting this to continue in a way throughout the year and to reach a lower level than today's level, but let's say by December 2023, and in the environment in the market regarding donor fees. We are seeing in Saturday no specific types of donor fees, we're seeing kind of a positive strength.

In the sense of lowering the donor fee.

For the second question regarding albumin.

As a further in a way try to instill during his comments previous comments on China the market to each kind of booming for argument there is plenty of.

Victor Grifols Deu: There is plenty of need and demand from the market and from Shanghai RAAS, which is our distributor, so it's overall very positive there. In the US, we are seeing more, not challenging, but there is more product in the market and we are all now repositioning ourselves in the US in a way.

Victor Grífols Deu: There is plenty of need and demand from the market and from Shanghai RAAS, which is our distributor, so it's overall very positive there. In the US, we are seeing more, not challenging, but there is more product in the market and we are all now repositioning ourselves in the US in a way.

<unk> needs and demands from from the market from Shanghai rise, which is our distributor. So it's overall very positive there and in the U S.

We are seeing.

More not challenging but there is more product in the market and we are all now repositioning ourselves in the U S in a way.

Nuria Pascual: Thank you. Thank you, Victor, and thank you, Guilherme.

Núria Pascual: Thank you. Thank you, Victor, and thank you, Guilherme.

Thank you. Thank you. Thank you.

Tom Jones: Thank you.

Nuria Pascual: Now it's the turn for Berenberg, Tom Jones. Hi, Tom.

Thank you.

Núria Pascual: Now it's the turn for Berenberg, Tom Jones. Hi, Tom.

Now that turns are.

Johns item.

Alfredo Arroyo: Hello, Tom. No Tom.

Uh huh.

Nuria Pascual: We have lost Tom.

Núria Pascual: We have lost Tom.

We have lost some.

Tom Jones: Oh, well, no. Hello, hello. No, sorry, I am here. Sorry, you cut off just after you said, "The next caller comes from..." It stopped, so I couldn't hear. Sorry, I do have two questions. The first is just on the balance of revenue growth between the three key proteins or three key franchise areas in Q1. IG was trending well ahead of the other two. Is that a dynamic you expect to continue broadly for the rest of the year? What's driving the sort of excessive growth in IG? Is it kind of just price and mix, or is there a volume component to it too? 'Cause I guess it pertains to kind of revenue per liter. My follow-up question, which is more of a longer-term one on margins.

Hello Hello.

Yeah.

So you cut off just after you said the next caller comes from and then it stops.

Sorry, I do have two questions.

The first is just on the balance of revenue growth between the three key proteins three key franchise areas in Q1, <unk> was trending well ahead of the other two.

Is that a dynamic you expect to continue broadly for the rest of the year.

What's driving the sort of excessive growth.

Is it.

Kind of just price and mix or is there a volume component to it too.

I guess it pertains to the kind of revenue per litre.

And then my follow up question, which is more of a longer term one on margins I think we're all well aware of the margin uplift potential from.

Tom Jones: I think we're all well aware of the margin uplift potential from trimodulin and the fibrinogen products, but the one that doesn't get a lot of discussion is Biotest's IVIg product, Yimmugo. Given it's a relatively new product, one would assume that it's probably got a higher manufacturing yield than the incumbent products out there. I just wondered, you know, given how significant even a tiny improvement in yield can be on IVIg manufacturing, whether there's any longer term margin upside potential, I guess, coming from the Yimmugo technology. I know you're gonna distribute it for them in the US, but I just wondered if there's any kind of technology transfers you might be considering into your Grifols IVIg franchise, where you could potentially push the yields on your IVIg manufacture up a bit. Okay. Hello, Tom.

Sorry module and in the fibrinogen products, but the one that doesn't get a lot of discussion is tests.

Product demand.

Given it's a relatively new product one would assume that it's probably got a higher manufacturing yields than the incumbent products out there.

So I just wanted to.

Given how significant even a tiny improvement in yield can be automobile manufacturing.

Any longer term margin.

Upside potential I guess coming from that you won't go to technology, I know you're going to distribute it for them in the U S. But.

Just wondering if theres any kind of technology transfer as you might be considering into your Griffin G.

Franchise, where you could potentially push the yields on your on your Apache manufacturer off a bit.

Okay.

Tom Jones: On the first question about the balance growth among our proteins, clearly IG it's driving the race here for us. This trend will continue throughout the year, we expect. The goal of the company after all the turmoil of the plasma availability and so on is to kind of converge the growth, the pace of growth of the three main proteins for us: IG, albumin, and alpha-1. The idea is that to go and rebalance our growth for those three proteins in the coming months and during 2024 as well. The second question about Yimmugo and the yields, yes, we have launched the product in Europe. It's very well accepted in the markets that they are starting. Manufacturing-wise, they are ramping up.

Hello, Tom.

On the first question about the balance balanced growth among our proteins.

Clearly.

Driving driving the race here for us.

This trend will continue throughout the year, we expect.

But the goal of the company after all the turmoil of the plasma availability and so on is to kind of converge the growth the pace of growth of the three main proteins for us.

<unk> albumin and Alpha one caveat is that to go and rebalance our growth for those three proteins in the coming months and during 'twenty for.

As well.

And the second question about your mobile and yes, yes.

We have launched the product in Europe . It is very well accepted in the markets that they are that they are starting.

Manufacturing wise, they are ramping up but on the yield side, yes, we are seeing and learning from them about their yield and their performance they have and trying to get all the knowledge and possibly incorporating into some other product lines.

Tom Jones: On the yield side, yes, we are seeing and learning from them about their yield and the performance they have and trying to get all the knowledge and possibly incorporating into some other product lines. But all in all, it's a great product and it's gives us a lot of flexibility now with Gamunex, Flebogamma, and the Yimmugo product to, let's say, play with all those brands and use them as needed in a wise manner, let's say, from the geographical standpoint. Perfect. Then that's very helpful. Then one follow-up question on margins for Alfredo. Just help me understand the dynamics of this. When you gave the guidance for EUR 1.4 billion, that was back in February.

But all in all it's a great product.

And it gives us a lot of flexibility now with <unk> <unk> Gamma and you move a product to let's say play with all of those brands and use them as needed.

My wife's minority, let's say from the geographical standpoint.

Perfect and then that's very helpful. And then one follow up question on margins for a Friday.

Just help me understand the dynamics of this when you guys the guidance.

One 4 billion euros that was back in February since then the dollar has weakened somewhat against the.

Tom Jones: Since then, the US dollar has weakened somewhat against the euro, which is normally bad for your reported EBITDA and even worse for margins. So, A, have I got that correct? B, does that not imply that the underlying increase in guidance is probably slightly higher than that revealed by the figures you've given this morning? And then, C, might that also partially explain your caution regarding margins in H2, 'cause obviously the US dollar impact will be more significant in H2 than it will be in H1 at current rates.

You're right, which is.

Normally bad for your reported EBITDA and even worse for margins.

So I have I got that correct b does that not imply that the underlying increase in guidance is probably slightly higher than that review by the figures you've given this morning, and then say that also partially explain your caution regarding margins in the second half of the year because obviously the dollar impact will be most significant in H two there will be a nice one at current rates.

Alfredo Arroyo: Okay. Currently, in the first quarter, the FX impact of EBITDA is slightly positive. You know, if we somehow project, let's say, the 1.10 for the rest of the year, the impact, you know, versus the current trend of EBITDA will not be material. The fact that we want to be prudent doesn't have anything to do with FX. You know, on the contrary, as I said, you know, we expect that the EBITDA margin will continue to increase and expand every other quarter. Okay?

Currently.

In the first quarter.

If it impact of <unk> slightly positive.

If I, if we somehow project.

Sure the 110 for the for the rest of the year.

The impact.

Versus the current.

<unk> of EBITDA will not be material so.

The fact that we want to be prudent.

Does he has anything to do with ethics, but.

On the contrary as I said.

With respect.

Got it.

Lewis.

I think that the EBITDA margin will continue to increase and expand.

Every other quarter okay.

Alfredo Arroyo: as I said, you know, once we close the Q2, we'll have more visibility, and we'll provide you with an update guidance.

And as I said.

Once we close the Q2.

We'll have more visibility and we'll provide you with an update guidance.

Tom Jones: Perfect. That's very clear, Alfredo. Thank you very much.

Perfect, that's probably clarify that thank you very much.

Nuria Pascual: Thank you. Our next call is coming from Jaime Escribano at Banco Santander. Hello, Jaime.

Núria Pascual: Thank you. Our next call is coming from Jaime Escribano at Banco Santander. Hello, Jaime.

Thank you and our next call is coming from <unk>.

Banco Santander <unk>, Hello, Hi man.

Jaime Escribano: Hi, good afternoon. A couple of questions from my side. One regarding immunoglobulin volumes. The question would be, if you are selling higher volumes already than 2019, or there is still room to catch up, for example, in Europe or rest of the world or some countries that were left unattended, or you are already selling pre-COVID volume levels? The second question would be regarding free cash flow, which obviously has been negative this Q1 because of all the cost saving plan. My question would be, if you can give us some visibility on how we should think about Q2?

Yeah.

Hi, good afternoon.

A couple of questions from my side as well.

Regarding immuno.

Globally volumes the question would be and you are selling them.

Your volumes already in 2019 on sustained in a room to cut shops for example in Europe or.

On the wall or some countries that you understand and attended or are you are already selling.

Pre COVID-19 volumes.

And the second question would be regarding free cash flow, which obviously has been negative at least Q1 because of the cost saving plan and my question would be.

If you can give us some visibility on how how should we think about Q2. So a prolong lease operating cost you keep operating free cash flow and the constrain is also a positive free cash flow after capex or these will come later on in the year. Thank you very much.

Jaime Escribano: Probably positive operating free cash flow, and the question is also positive free cash flow after CapEx or this will come later on in the year? Thank you very much.

Victor Grifols Deu: Hello, Jaime. I take the first one. We are, let's say, grams-wise being sold for us compared to pre-2019. We are not yet there, but we are very close, after our plasma recovery.

Victor Grífols Deu: Hello, Jaime. I take the first one. We are, let's say, grams-wise being sold for us compared to pre-2019. We are not yet there, but we are very close, after our plasma recovery.

Hello, Hi, Matt I think the first one we are let's say grams wise being solved for us comparatively to 19.

Are not yet there, but we are very close after our plasma recovery.

Alfredo Arroyo: Regarding the operating cash flow, you know, in the Q1, as I said, we ended up with a positive operating cash flow, excluding the one-off restructuring charge. That gave us, you know, I would say a positive sentiment that in the Q2 and upcoming quarters to show a positive operating cash flow. That means including working capital and CapEx.

So regarding the operating cash flow.

In the Q1 as I said, we ended up with a positive operating cash flow excluding the one off restructuring charge. So that gave US you know obviously a positive sentiment that the in the Q2 in upcoming quarters to show a positive operating cash flow that needs, including.

Working capital and Capex.

Jaime Escribano: Okay. Thank you. Thank you very much. Just a final question, if I may. Regarding the donor fee, it relates a little bit with some of the questions that were raised around the guidance for H2. If the donor fee has declined by -25% from peak, as of February, you said it was -20%, this means that the donor fee has kept going down in Q1. What I think I wonder and the rest of analysts, because of this, in H2 or at least in Q4, should we not see a positive impact of this further decline in the donor fee? Thank you.

Okay. Thank you. Thank you very much.

A final question if I may.

Regarding Brazil, North sea and it relates a little bit with some of the questions.

Raised around.

Guidance for the second half of the year is that an RFP.

<unk> has declined by minus 25% from peak.

And you said it was minus 20%.

This means that they cannot see.

And.

Going down in Q1.

What I think I wonder on the rest of the partnership.

Because of the ease in the second half over the year or at least in Q4 should we now see.

A positive impact of the start of our declining in the industry. Thank you.

Alfredo Arroyo: No. First of all, from the cash savings perspective, you know, we expected and we see, you know, those days is after a significant decline of the donor fee. Now, you know, we are focusing on the rest of the cost, I mean, labor cost and other fixed costs. That's point number one. We, you know, the good thing is that the market, I mean, the market now is, you know, somehow, you know, we're trailing our donor fee because we see that, you know, there is a kind of collective decrease across the markets in donor compensation.

Uh huh.

First of all from the cash.

Cash savings perspective.

Well, we expect it and we see those days. He is after you know.

A significant decline of the donor fee now we are focusing on the rest of the cost I mean labor.

Labor costs and other fixed costs.

So that's point number one.

The good thing is that the.

The marketing I mean, the market now he's seen.

How you know.

<unk> tailing, our donor fee because we see that.

There is.

Collective kind of a collective.

Decrease you know across the markets in in non compensation, but.

Alfredo Arroyo: also, you know, to your point of, you know, when is gonna go through the P&L, you need to wait until, you know, early Q1 of 2024. However, as you know, all the savings that we have already in the bag from the end of 2022 and Q1 2023, those will flow through the P&L this year. That's why in the H2, we expected, you know, higher margin than the H1.

But also you know to your point of when this is going to go through the P&L.

You need to you need to wait until early.

Q1 of 2024, how was it as you know all the savings that we have already in the bag from up from this from the end of 2022 in Q1 2023, those will flow through the P&L. This year. So that's why in the second half of the year, we expected higher margin.

<unk> done the first half of the year.

Jaime Escribano: Okay. Thank you.

Alfredo Arroyo: Okay, thanks.

Okay. Thank you.

Nuria Pascual: We have from Barclays now, Charles Pitman. Hello, Charles.

Núria Pascual: We have from Barclays now, Charles Pitman. Hello, Charles.

We have said from Barclays now tells statement Hello Charles.

Charles Pitman: Hi. Thank you very, very much for taking my questions. I've got two, please. Maybe just on the deleveraging. I understand you can't give us any specifics, but I was wondering if you'd give us any kind of direction or, like, expected target internally for what level of funds you expect to raise. I know you said 30% of the target was gonna be achieved through deleveraging. I mean, what portion of that is gonna be organic free cash flow versus what you intend to raise from some form of transaction? Maybe just second one on the refinancing. In 2025, you're gonna have to obviously pay down your debt. I understand you're gonna use your deleveraging transaction to help pay that down.

Hi, Thank you very much for taking my questions I've got two please.

Maybe just on the deleveraging I understand you can't give us any specifics I was wondering if you could give us any kind of.

Directional.

Back to target internally what level of funds you expect to raise I know you said 30% of that.

Target was going to be achieved through deleveraging what portion of that is going to be organic free cash flow.

Versus what you intend to raise from some point transaction.

Maybe just second one on the refinancing and so in 2025 you can answer.

Obviously, I don't know that I understand youre going to use or deleveraging transaction to help pay that down but.

Charles Pitman: Just what some of the questions we've been getting from credit investors is how ratings agencies are viewing the ongoing performance. I was just wondering if you could update us on your conversations with them and what you think you need to show this year as we see margins improve and the more fundamental improvement story continue, just to allay their concerns. As I know, for example, Moody's has a negative outlook right now. Thank you.

Just thinking about some of the questions are you beginning to.

Credit investors is how rating agencies of hearing ongoing performance. So I was just wondering if you could update us on your conversations with them.

Do you think you need to show this year as we see margins improve.

Fundamental improvements that we continue just to allay that concern.

Moody's is a negative outlook right now thank you.

Alfredo Arroyo: To your first question on the leverage, you know, as I said, you know, when we compare the current 7x versus the 4x, there is 1.8x that appears in the bridge, which is a combination of organic and non-organic. So 50% of this, which is 0.9x, relates to EBITDA improvement, and the rest is coming from the leverage transaction. So all in all, this represents that 70% of the total deleverage is coming from EBITDA improvement that includes both organic EBITDA improvement, plus the operational plan. 30% of this deleverage is coming from sale of assets.

First question on the leverage.

He said you know.

When we compare the currency and tax issues.

Four times there is there is.

One eight times net debt.

You know.

That is it appears in the bleach, which is a combination of organic and boom.

And what we've done so.

50% of these which is 0.9 times.

It relates to EBITDA improvement.

And the rest is coming from David transactional so all in all this.

They represent 70% of the total de leverage is coming from EBITDA improvement that includes both organic.

The improvement plus the operational plan.

30% of the of this.

The leverage is coming from sale of assets to.

Alfredo Arroyo: To the question of the refinancing of 2025, yes, we hold on quarterly basis or yearly basis conversation with the rating agencies, and they're, you know, we update those agencies with the current development. Clearly, you know, the reason why we wanna be at 4x by the end of 2024 is precisely to get, you know, an upgrade in our rating, and then ahead of a potential refinancing. You know, there might be, you know, other options like, you know, like paying off the debt, you know, ahead of the due date with the cash proceeds from the transaction, which, you know, will be our top priority.

To the question of the refinancing of 2025, yes.

Yes.

We hold.

On quarterly basis on yearly basis conversation with the rating agencies.

They are you know we update those agencies with the current development and clearly you know there.

And the reason why we won't have the full times by the end of 'twenty 'twenty four precisely to get an upgrade in <unk>.

Our rating.

And then I hit over potentially financing, but.

There might be other options like like.

Like pain.

Paying off the debt ahead of the.

The due date with the cash proceeds from the transaction, which is will be our top priority.

Jaime Escribano: Thank you.

Charles Pitman: Thanks very much.

Nuria Pascual: Now we have a final question from Peter Verdult from Citi. Hello?

Thank you very much.

Núria Pascual: Now we have a final question from Peter Verdult from Citi. Hello?

We have a final question from beneath our gorilla <unk>.

Hello.

Vinit Agrawal: Yeah. Hi. Hopefully you can hear me. Good afternoon. This is Vinit Agrawal, on behalf of Peter Verdult. Just have two questions. The first one is, we have two important phase 3 readouts coming over the summer. The first Biotest fibrinogen data and the FcRn data from argenx and CIDP. Maybe can you remind us how you're thinking about the commercial potential of fibrinogen, the revenue exposure in CIDP, and why do you think your IG business in CIDP will not be impacted by FcRn?

Yes, Hi, hopefully you can hear me. Good afternoon. This is <unk> on behalf of.

Of Pizza hut.

Just have two questions. So the first one is <unk>.

We have two important phase III readouts coming over the summer.

BARDA fibrinogen daytime the FTR and data from margin excellent.

<unk>.

Maybe can you remind us how youre thinking about the commercial potential of fiber into the gym. The revenue exposure in <unk> and why do you think your AG business and see IDP would not be impacted by our CRM.

Victor Grifols Deu: Okay.

Victor Grífols Deu: Okay.

Vinit Agrawal: And-

Okay.

Victor Grifols Deu: Sorry. Go ahead.

Victor Grífols Deu: Sorry. Go ahead.

Sorry, sorry go ahead.

Vinit Agrawal: Sorry. Just wanted to better understand how much of a gross margin driver Xembify can be, and wondering if you could remind us what percentage of your IG franchise revenues you know come from Sub-Q, and where would you like this to go over time? Thank you.

And then just wanted to better understand.

How much of a gross margin driver Jim before I can be and wondering if you could remind us what percentage of your franchisee revenues.

Come from sub Q.

And where would you like this to grow over time.

Victor Grifols Deu: Okay. Regarding fibrinogen, yes, the project is on track, and we expect to finalize the trial by the end of 2023, get the readout and clinical study report, and ready to launch for next year, 2024 in Europe. This is on track, and we expect this to be a great success for us. Regarding CIDP and one company delaying the results until July, we will—it's kind of wait and see what they bring as news to the market. Excluding this, not taking into account or putting this aside, it's as we have said in one of our slides for today, it's a huge market, the IG market.

Victor Grífols Deu: Okay. Regarding fibrinogen, yes, the project is on track, and we expect to finalize the trial by the end of 2023, get the readout and clinical study report, and ready to launch for next year, 2024 in Europe. This is on track, and we expect this to be a great success for us. Regarding CIDP and one company delaying the results until July, we will—it's kind of wait and see what they bring as news to the market. Excluding this, not taking into account or putting this aside, it's as we have said in one of our slides for today, it's a huge market, the IG market.

Okay.

Regarding fiber in ocean.

Yes, the <unk>.

<unk> is on track.

And we expect.

To finalize the trial by the end of 2023 get a readout on clinical study report and ready to launch four for next year 2024 in Europe . This is on track.

And we expect this to be a great success for us.

Regarding CIP on one company.

The results until July .

Well, it's kind of wait and see what what they bring.

As new to the market.

Taking this into not into account or putting this aside.

It's as we have said in one of our slides for for today.

Huge market the ICT market currently is.

Victor Grifols Deu: Currently, it's this level of EUR 14 billion, fast growing historically and the prospects signaling this kind of 8%, 9% ranges of growth for the market. We think even any competitor being successful, there is plenty of room for all of us to capture value from this market. We are very confident that with the life cycle management that we have in place that will come in the short and mid-term, we'll be able to capture significant value of this market growth. I think Today, Xembify in our current IG portfolio account for around 5%.

Victor Grífols Deu: Currently, it's this level of EUR 14 billion, fast growing historically and the prospects signaling this kind of 8%, 9% ranges of growth for the market. We think even any competitor being successful, there is plenty of room for all of us to capture value from this market. We are very confident that with the life cycle management that we have in place that will come in the short and mid-term, we'll be able to capture significant value of this market growth. I think Today, Xembify in our current IG portfolio account for around 5%.

Level of 14 billion.

Our fast growing historically and the prospects.

Selling these kind of <unk>.

8%, 9% range.

Ranges of growth of the market. So we're seeing even any competitor or being successful. There is plenty of room for all of us to capture value from from this market. So we are very confident that with the lifecycle management that we have in place.

That will come in the short and mid term.

We will be able to capture significant value of this market growth.

Let's see what happens.

Today should be five in our Korean IC portfolio account for around 5%.

Nuria Pascual: Okay. Thank you. Thank you, everybody. With that, we are coming to our hour, two minutes above it, so quite on time. Thank you everybody for taking part and let's continue talking. Any questions, you have the full IR team to your disposal and let's speak very soon. Thank you and bye.

Núria Pascual: Okay. Thank you. Thank you, everybody. With that, we are coming to our hour, two minutes above it, so quite on time. Thank you everybody for taking part and let's continue talking. Any questions, you have the full IR team to your disposal and let's speak very soon. Thank you and bye.

Okay. Thank you. Thank you everybody and with that we are come into our our dominion above it so quite a long time.

Thank you everybody for taking part in let's continue and talk.

And any questions you have there for IR team to hear this.

L. A shadow on let's just take.

Victor Grifols Deu: Thank you very much.

Victor Grífols Deu: Thank you very much.

Thank you Andi.

Vinit Agrawal: Thank you.

Victor Grifols Deu: Thank you.

Victor Grífols Deu: Thank you.

Thank you.

[music].

Yes.

[music].

Yes.

[music].

Okay.

Yes.

Yeah.

Yes.

[music].

Okay.

Yes.

Sure.

Grifols S.A. Q1 2023 Earnings Call

Request a DemoDemo

GRFS

Grifols

Earnings