Q3 2024 Grifols SA Earnings Call

November 7, 2024

I don't know if head of Investor relations and sustainability.

Speaker Change: Today I'm joined by Grupo <unk>, Chief Executive Officer, Notch, Avia, and Chief Financial Officer, Rahul is arena by sudden.

Yes.

[music].

Okay.

[music].

Speaker Change: As well as Roland bundling president of Biopharma.

Speaker Change: Today's call will last about an hour, including our Q&A session. All materials used during the call are available on the investor relation website at Greif was that gum.

Speaker Change: Moving to slide two I will first like to share a disclaimer on forward looking statements.

Speaker Change: Forward looking statements are subject to substantial risks and uncertainties. They are only valid on the day of the call on the company is under no obligation to update or revise them.

Speaker Change: Before financial statements are prepared in accordance with EU a year for us on other applicable reporting provisions.

Hello, everyone and welcome to when you first quarter 2024 financial results Conference call.

Speaker Change: These include alternative performance measures also known as a pms prepared under the group financial reporting model as defined by the guideline.

Danny Segarra: My name is Danny Segarra, and I'm, Vice President head of Investor Relations and sustainability.

Danny Segarra: Today I'm joined by Grupo <unk>, Chief Executive Officer, Notch, Avia, and Chief Financial Officer, Rahul is Sabrina by Sun.

Speaker Change: European Securities and markets Authority.

Speaker Change: Please note that Green Forest management users apm's to evaluate its financial performance cash flows and financial position as the basis for it operational and strategic decisions.

Speaker Change: Well as Roland bundling president of Biopharma.

Speaker Change: Today's call will last about an hour, including our Q&A session. All materials used during the call are available on the investor.

Speaker Change: These Atms are prepared for all time periods presented in this document.

Speaker Change: Website at Greif in Satcom.

Speaker Change: Moving to slide two I will first like to share a disclaimer on forward looking statements.

Speaker Change: On today's call Nacho will start off shortly with some introductory remarks and a discussion on business performance.

Speaker Change: We're looking statements are subject to substantial risks and uncertainties that had only valid on the day of the call and the company is under no obligation to update or revise them.

Speaker Change: Then Rahul will discuss the financial results for the quarter and year to date before turning the call back over to natural for his final remarks.

Speaker Change: Because he feels financial statements are prepared in accordance with EU are you first is on other applicable reporting provisions.

Speaker Change: With that thank you very much for joining us today.

Speaker Change: These include alternative performance measures.

Rahul Arena: Over to you.

Danny Segarra: Also known as a pms prepared under the group's financial reporting model as defined by the guidelines of the European Securities and markets Oh, sorry.

Speaker Change: Good evening or afternoon or morning to all of you depending on where you are in the world.

Speaker Change: I appreciate you dialing in for in for our third quarter results call.

Speaker Change: Before I turn to the results I would like to provide you with a few updates on key matters.

Danny Segarra: Please note that Greenfields management uses a P M stable right its financial performance cash flows and financial position as the basis for it operational and strategic decisions.

Speaker Change: First please note that the focus in this session will be angry false third quarter results.

Speaker Change: Which as you will see a reflective of our progress and indicating we are heading into the right direction.

Danny Segarra: These APM type prepared for all time periods presented in this document.

Speaker Change: We will not be addressing any questions or comments related to brookfield or any potential transaction.

Speaker Change: On today's call Nacho will start off shortly with some introductory remarks and a discussion on business performance.

Speaker Change: As you are aware grateful to enter it into an NDA with Brookfield, whereby Brookfield was granted access to perform due diligence on all what I can confirm is that it is ongoing as per today.

Danny Segarra: Then Rahul will discuss the financial results for the quarter and year to date before turning the call back over to natural for his final remarks.

Speaker Change: And if I do that update will be communicated to the market in due course and in accordance with applicable laws and regulation.

Danny Segarra: With that thank you very much for joining us today.

Speaker Change: As always the Great Falls board of Directors and management team are committed to acting in the best interests of all the shareholders and we remain very focused on continuing to execute the company's strategy and delivered to our commitments.

Speaker Change: Over to you.

Speaker Change: Thank you Ronnie and good evening afternoon or morning to all of you depending on where you are in the world.

Speaker Change: I appreciate you dialing in for in for our third quarter results call.

Speaker Change: Please understand that we are not going to make any further comment on these matters on today's call I. Thank you in advance and appreciate your understanding.

Speaker Change: Before I turn to the results I would like to provide you with a few updates on key matters.

Speaker Change: First please note that the focus in these sessions will be angry false third quarter results.

Speaker Change: The second key update I want to provide you with regarding to Spain's National Securities Market Commission C. N N b and the C. S C as well.

Danny Segarra: Which as you will see a reflective of our progress and indicating we are heading into the right direction.

Speaker Change: As we reported last month C. N N V has concluded the review on our financial reporting having identified no additional elements to the US initially reported the March 2024.

Danny Segarra: We will not be addressing any questions or comments related to brookfield or any potential transaction.

Danny Segarra: You are aware Grateful center it into an NDA with Brookfield, whereby Brookfield was granted access to perform due diligence on all what I can confirm is that it is ongoing as per today.

Speaker Change: The FCC has also conveyed that they have completed the review of the company's filing with no additional comments nor actions.

Danny Segarra: And if I did that update will be communicated to the market in due course and in accordance with applicable laws and regulation.

Speaker Change: Finally, I also would like to touch on some leadership changes.

Speaker Change: In September we announced that Thomas Glassman will transition into the role of non executive chairman of the board.

Danny Segarra: As always the Great Falls board of Directors and management team are committed to acting in the best interests of all the shareholders and we remain very focused on continuing to execute the company's strategy and deliver to our commitments. Please.

There is another step in our previously announced governance enhancements, which we first began in 2022.

Speaker Change: And allows us to fully vacate his time to the nonexecutive chairmanship role.

Danny Segarra: Please understand that we are not going to make any further comment on these matters on today's call I. Thank you in advance and I appreciate your understanding.

I would like to stand on behalf of the board of directors and the entire company, our deepest gratitude to Thomas for his time and dedication to agree false and his executive role over the last years.

Danny Segarra: The second key update I want to provide you with regarding to Spain's National Securities Market Commission C. N N b and the C. S E T as well.

Danny Segarra: As we reported last month C. N N V has concluded the review on our financial reporting having identified and no additional elements to the US initially reported the March 2024.

Speaker Change: Personally I also want to show my strong appreciate you to Thomas for his invaluable support during my first months at Greif ones. Thank you Thomas and I look forward to continuing to work with you and your non executive role.

Danny Segarra: The FCC has also conveyed that they have completed the review of the company's filings with no additional comments nor actions.

Speaker Change: Well I will Miss sitting next to Thomas on these calls I'm pleased to welcome our new CFO Rahul is for me by Sun.

Danny Segarra: Finally, I also would like to touch on some leadership changes in.

Who has joined me on the call today and will introduce himself shortly.

Speaker Change: The vision of a whole marks the completion of a broad management transition and represents the final piece to complete the new executive management team.

Danny Segarra: In September we announced that Thomas Glassman will transition into the role of non executive chairman of the board.

Danny Segarra: There is another step in our previously announced governance enhancements, which we first began in 2022.

Speaker Change: The whole brings a proven track record of financial success, and we look forward to benefiting from his expertise.

Danny Segarra: And allows us to fully vacate his time to the nonexecutive chairmanship role.

Speaker Change: Finally, and before starting the presentation I want to take a moment to highlight and appreciate the many initiatives we've taken over the last two years as we work to transform the business and delivered a strong result in a sustainable basis.

Danny Segarra: I would like to stand on behalf of the board of directors and the entire company, our deepest gratitude to Thomas for his time and dedication to agree false and his executive role over the last years.

Speaker Change: Over the last few years, our business has faced a number of headwinds as it was heavily impacted by the Covid pandemic.

Danny Segarra: Personally I also want to show my strong appreciate you to Thomas for his invaluable support during my first months at Greenfields. Thank.

Speaker Change: That led to a reevaluation of our operations and our strategic direction.

Danny Segarra: Thank you Thomas and I look forward to continuing to work with you in your non executive role.

Speaker Change: Peripheral responded by doubling down on the fundamental growth of the business strengthening corporate governance refreshing executive management in Boston, Greater financial discipline, and reinforcing a culture of performance and accountability.

Speaker Change: Well I will Miss sitting next to Thomas on these calls I'm pleased to welcome our new CFO Rahul as for knee by Sun.

Danny Segarra: Who has joined me on the call today and will introduce himself shortly.

Speaker Change: Such actions are reflected in the positive results. We are reporting today are a direct consequence of the resilience and adaptability we've demonstrated during these times.

Danny Segarra: The addition of a whole marks the completion of a broad management transition and represents the final piece to complete the New York secretive management team.

Speaker Change: I'm confident that these actions will keep leaving our business towards performance expectations for years to come.

Danny Segarra: The whole brings a proven track record of financial success, and we look forward to benefiting from his expertise.

Speaker Change: Shifting to our financial results, we continued to build on our momentum with another strong performance in the third quarter.

Danny Segarra: Finally, and before starting the presentation I want to take a moment to highlight and appreciate the many initiatives we've taken over the last two years as we work to transform the business and delivered a strong result in a sustainable basis.

Speaker Change: This quarter results underscore our capacity to capture robust robust global demand effectively across our key markets and demonstrate how we are well positioned to sustain this trajectory moving forward.

Danny Segarra: Over the last few years, our business has faced a number of headwinds as it was heavily impacted by the COVID-19 pandemic that.

Speaker Change: Revenue in the third quarter totaled nearly one 8 billion Europe, representing 12, 4% increase on a constant currency basis or one of the previous year.

Danny Segarra: That led to a reevaluation of our operations and our strategic direction.

Danny Segarra: Grief all responded by doubling down on the fundamental growth of the business strengthening corporate governance refreshing executive management in Boston, Greater financial discipline, and reinforcing a culture of performance and accountability.

Speaker Change: While year to date revenues reached $5 2 billion, representing a nine 1% increase.

Speaker Change: Adjusted EBITDA for the quarter came in at 462 million with a margin of nearly 26%.

Danny Segarra: Actions are reflected in the positive results we are reporting today.

Speaker Change: This increase was an improvement of 26, 7% at constant currency from the previous year.

Danny Segarra: A direct consequence of the resilience and adaptability we've demonstrated during these times.

Speaker Change: Free cash flow for the quarter improved to 127 million Europe, and we continued our deleveraging path radiation or deliberate trade two to $5 one from $6 eight in the first quarter.

Danny Segarra: I'm confident that these actions will keep leaving our business toward performance expectations for years to come.

Danny Segarra: Shifting to our financial results, we continue to build on our momentum with another strong performance in the third quarter.

Speaker Change: Looking ahead to our fourth quarter, we are a strong third quarter performance is a positive indicator of our ability to meet full year guidance.

Danny Segarra: This quarter, our results underscore our capacity to capture robust robust global demand effectively across our key markets and demonstrate how we are well positioned to sustain this trajectory moving forward.

Speaker Change: While we recognize that the upcoming quarter will be a demanding one will remain focused in our commitment to ensure we close out the year in a strong manner.

Danny Segarra: Revenue in the third quarter to tell it nearly one 8 billion Europe, representing 12, 4% increase on a constant currency basis over the previous year.

Speaker Change: Plasma continued to play a significant role in driving profitability or cost per liter continued to decline in 2024, and we expect that trend to continue.

Danny Segarra: Year to date revenues reached $5 2 billion, representing a nine 1% increase.

Speaker Change: Managed plasma supply to ensure we are able to meet the growing demand.

Danny Segarra: Adjusted EBITDA for the quarter came in at 462 million with a margin of nearly 26%.

Speaker Change: Going forward, we will continue to execute on its initiative to further improve plasma and manufacturing efficiencies.

Danny Segarra: This increase was an improvement of 26, 7% at constant currency from the previous year.

Helping to reduce costs and expand profitability.

Speaker Change: Greenfields continue to view innovation as one of its top pillars and I am pleased to share that we are on track to achieve all our 'twenty 'twenty four innovation My list.

Danny Segarra: Free cash flow for the quarter improved to 127 million Europe.

Danny Segarra: And we continued our de leveraging path radiation or deliberate trade two to $5 one from $6 eight in the first quarter.

Speaker Change: Hitting these targets is key to continue building on our fundamentals for future growth.

Danny Segarra: Looking ahead to our fourth quarter, we view our strong third quarter performance is a positive indicator of our ability to meet full year guidance.

Speaker Change: Of particular importance in Oregon regulatory process has seen significant progress, which I will cover in more depth later on this call.

Speaker Change: Additionally, I'm excited to announce that we were awarded the U S. BARDA contract to develop <unk> recombinant polyclonal antibody therapeutic plus platform.

Danny Segarra: While we recognize that the upcoming quarter will be a demanding one will remain focused in our commitment to ensure we close out the year in a strong manner.

Speaker Change: We have made significant strides in corporate stewardship, as we advance our sustainability agenda, achieving our highest score in every area.

Danny Segarra: Plasma continued to play a significant role in driving profitability or cost per liter continued to decline in 2024, and we expect that trend to continue.

Speaker Change: We're in the 'twenty 'twenty, four standard and Poor's global corporate sustainability assessment and being awarded a global metal by a cabela's.

Danny Segarra: I have managed plasma supply to ensure we are able to meet the growing demand.

Danny Segarra: Going forward, we will continue to execute on its initiative to further improve plasma and manufacturing efficiencies, helping to reduce costs and expand profitability.

Speaker Change: Turning to slide six let's take a look into our key financial metrics, which shows a clear sequential growth across the board.

Speaker Change: As mentioned, we achieved nearly one 8 billion in sales in this quarter, representing a 12, 4% increase on a constant currency basis.

Danny Segarra: Greenfields continue to view innovation I was wondering if it stopped pillars and I am pleased to share that we are on track to achieve all our 2024 innovation My list.

Speaker Change: On the profitability side adjusted EBITDA for the last 12 months reached $1 7 billion, which margins increasing to 25, 8% in the third quarter from the 21, 6% reported in the first quarter of the year.

Danny Segarra: He didn't these targets is key to continue building on our fundamentals for future growth.

Danny Segarra: Of particular importance in Oregon regulatory process has seen significant progress, which I will cover in more depth later on this call.

Danny Segarra: Additionally, I'm excited to announce that we were awarded the U S. BARDA contract to develop do you got 10, recombinant polyclonal antibody therapeutic plus platform.

Speaker Change: Free cash flow generation continues to be a priority and we are pleased with the sequential improvement we've seen over the year.

Speaker Change: As discussed on my first quarter earnings call slides may opt amazing of working capital was a payroll pivotal driver for improved free cash flow in 2024.

Danny Segarra: We have made significant strides in corporate stewardship, as we advance our sustainability agenda, achieving our highest score in AR.

Danny Segarra: In the 2020 for standard <unk> Poor's global corporate sustainability assessment and being awarded a global metal by a code base.

Speaker Change: This is reflected in our third quarter positive free cash flow generation of 127 million Euro.

Speaker Change: We significantly breach the gap towards our full year 2024 guidance.

Danny Segarra: Turning to slide six let's take a look into our key financial metrics, which shows a clear sequential growth across the board.

Speaker Change: That said, we expect the additional working capital consumption in the fourth quarter as we will be building up inventory to meet the strong underlying demand we expect in 2025.

Danny Segarra: As mentioned, we achieved nearly one 8 billion in sales in this quarter, representing a 12, 4% increase on a constant currency basis.

Speaker Change: Finally.

Speaker Change: We continue to reduce our leverage ratio apparel credit agreement led by the repayment of senior secured debt. Following the receipt of $1 6 billion in Shanghai restaurants, as well as the significant EBITDA improvement.

Danny Segarra: On the profitability side adjusted EBITDA for the last 12 months reached one 7 billion euro which margins increasing to 25, 8% in the third quarter from the 21, 6% reported in the first quarter of the year.

Speaker Change: Rahul will deal deeper in these and other relevant financial metrics later in the presentation.

Danny Segarra: Free cash flow generation continues to be a priority and we are pleased with the sequential improvement we've seen over the year.

Speaker Change: Turning to top line you will see that total revenue year to date has increased nine 1% on a constant currency basis, driven by a strong performance across all business units.

Danny Segarra: As discussed on my first quarter earnings call slides may optimizing of working capital was a playbook pivotal driver for improved free cash flow in 2020 for.

Speaker Change: Revenue growth has continuous collating from five 5% in Q1 to nine 3% in Q2 to a remarkable 12 point employee 12, 4% in Q3, all in constant currency basis. This acceleration was disturbed by Biopharma growing at 12, 1% for the quarter and nine 1% year to date.

Danny Segarra: This is reflected in our third quarter positive free cash flow generation of 127 million euros with.

Danny Segarra: We significantly breach the gap towards our full year 2024 guidance.

Danny Segarra: That said, we expect the additional working capital consumption in the fourth quarter as we will be building up inventory to meet the strong underlying demand we expect in 2025.

Speaker Change: The immunoglobulin franchise continues to show a strong results with double digit growth driven by a b G and subcutaneous AG.

Danny Segarra: Finally.

Danny Segarra: We continue to reduce our leverage ratio apparel credit agreement led by the repayment of senior secured debt. Following the receipt of $1 6 billion in Shanghai restaurants, as well as the significant EBITDA improvement.

Speaker Change: Our alpha one trend is improving as well in Q3 reversing the impact of prior quarters and albumin also performed well.

Speaker Change: Oh in the mine in the U S, Canada and rest of the world give us confidence in our upside potential moving forward.

Speaker Change: Rahul will deal deeper in these and other relevant financial metrics later in the presentation.

Speaker Change: In diagnostics, we saw a one 3% uptick on a constant currency for the quarter landing at the one 7% of bonds year to year on a like for like basis guided by blood typing solutions.

Speaker Change: Turning to top line you will see that total revenue year to date has increased nine 1% on a constant currency basis, driven by a strong performance across all business units.

Speaker Change: I will also cover more on this business unit.

Speaker Change: Revenue growth has continuous collecting from five 5% in Q1 to nine 3% in Q2 to a remarkable 12 point for a 12, 4% in Q3 all in constant currency basis. This acceleration was stirabout biopharma growing at 12, 1% for the quarter and nine 1% year to date.

Speaker Change: Biopharma continues to be the main growth driver in the third quarter. The AG franchise remains the highest growth protein with up to 16, 6% in the third quarter and 14, 3% in the year, both on a constant currency basis I.

Speaker Change: <unk> growth was driven by strong demand in the U S and international market at the same time subcutaneous AG continues to gain traction and grew a remarkable 52% on a constant currency basis year to date.

Speaker Change: The immunoglobulin franchise continues to show a strong results with double digit growth driven by a b G and subcutaneous AG.

Speaker Change: Our alpha one trend is improving as well in Q3 reversing the impact of prior quarters and albumin also performed well.

Speaker Change: Reinforced by a strong performance in the U S are multiples lunches within the European Union.

Speaker Change: Growing demand in the U S, Canada and rest of the world give us confidence in our upside potential moving forward.

Speaker Change: Albumin was up 11, 7% in the third quarter and 10, 3% year to date, both on a constant currency basis caused by a higher demand in China.

Alpha one in the specialty proteins revenue improved by three 8% on a constant currency basis from last quarter, bringing our year to date growth to one 3%.

Speaker Change: I will also cover more on this business unit.

Speaker Change: In the U S. Our alpha one franchise is regaining momentum following the transition of especially the pharma they stay with her.

Speaker Change: Biopharma continues to be the main growth driver in the third quarter. The Iga franchise remains the highest growth protein with up to 16, 6% in the third quarter and 14, 3% in this year, both on a constant currency basis I.

Speaker Change: While demand for rabies treatment has increased these court.

Speaker Change: Now I would like to show an overview of our priorities to further enhance our performance, which focus upon efficient system and third to strengthen our leading market position in both the commercial and plasma center operations.

Speaker Change: First we further build out our portfolio of her subcutaneous I G shouldn't be fired gains further traction in the European market.

Speaker Change: Reinforced by a strong performance in the U S are multiples lunches within the European Union.

Speaker Change: With age launches executed so far in 2024.

Speaker Change: We see that our AG product offering with both of them on Accenture amplify is well receive reflected by momentum in pull through across geographies.

Speaker Change: Albumin was up 11, 7% in the third quarter and 10, 3% year to date, both on a constant currency basis caused by a higher than mining China.

Speaker Change: In addition, we are reinforcing the value proposition for Alpha one patients, which is already offering expanded capabilities to our products and users.

Speaker Change: Alpha one in the specialty proteins revenue improved by three 8% on a constant currency basis from last quarter, bringing our year to date growth to one 3%.

Speaker Change: We're seeing increased momentum in the U S and our commercial strategy continued to focus on growth both in existing and new key accounts in Europe. Our teams again excelled reporting another quarter of double digit growth.

Speaker Change: In the U S. Our alpha one franchise is regaining momentum following the transition of especially the pharma they stay with her.

Speaker Change: While demand for rabies treatment has increased these court.

Speaker Change: Proud of lifecycle management pay with new product development also continues to be key with.

Speaker Change: We secure approval for hem B five by weekly dosing from FDA in July and enroll our first patient for Alpha one antitrypsin, 15% subcutaneous phase one and two.

Speaker Change: First we further build out our portfolio of our subcutaneous <unk> B five gains further traction in the European market with age launches executed so far in 2024.

Speaker Change: Furthermore, we're progressing in our filing for fibrinogen, they will cover in the next slide.

Speaker Change: Finally, we're enhancing the performance and accepted and the talent of our teams and language. The rest of the Air force across the company. We're currently building our skills and new capabilities in our commercial team in the U S, while enhancing customers and patients engagement.

Speaker Change: We see that our AG product offering with both of them on Accenture MB five is well receive reflected by momentum in pull through across geographies.

Speaker Change: In addition, we are reinforcing the value proposition for Alpha one patients, which is already offering expanded capabilities to our products and users.

Speaker Change: In addition to these key air force that are fueling our strength in the market positions, we continue to improve our operational effectiveness.

Speaker Change: We're seeing increased momentum in the U S and our commercial strategy continuing to focus on growth both in existing and new key accounts in Europe. Our teams again excelled reporting another quarter of double digit growth.

Part of this we are optimizing our global plasma Center network, which comprises 405 plasma centers around the U S Europe, Canada and Egypt.

Speaker Change: Additionally, we're working to leverage new technologies and implement process efficiencies.

Speaker Change: Proud of lifecycle management pay with new product development also continues to be key with.

Speaker Change: We've been increasing our AG yields through they blow minutes, no employment of nomogram and the element of our roadmap to expand continuous improvement initiatives.

Speaker Change: We secure approval for hem B five bi weekly dosing from FDA in July and enroll our first patient for Alpha one Antitrypsin 15 per sensor cutaneous phase one and two.

Speaker Change: While implementing these strategies, we're also prioritizing enhancing the donor experience and improving the improving donor satisfaction.

Speaker Change: Furthermore, we're progressing in our filing for <unk> inaugural say will cover in the next slide.

Speaker Change: Turning to slide 10, let me reiterate that innovation has continued to be one of our main cornerstones and as I mentioned earlier, we are on track to accomplish our 2020 for innovation related milestones.

Speaker Change: Finally, we're enhancing the performance and except with the talent of our teams language arrest or the air force across the company. We're currently building our skills and new capabilities in our commercial team in the U S, while enhancing customers and patients engagement.

Speaker Change: Through the first three quarters of the years, we've completed all but two of these milestones, which we anticipate will see positive updates by year end in July can be five by weekly dosing to receive it FDA approval in September Carbonex Inbox began conformance lot testing.

Speaker Change: In addition to these key air force that are fueling our stent in the market positions, we continue to improve our operational effectiveness.

Speaker Change: Part of this we are optimizing our global plasma Center network, which comprises 405 plasma centers around the U S Europe, Canada and Egypt.

Speaker Change: And people that are not yet there are some exciting advancements in the European Union, where the marketing authorization application was successfully submitted through the centralized procedure, including several countries.

Speaker Change: Additionally, we're working to leverage new technologies and implement process efficiencies.

Speaker Change: We've been increasing our AG yields through deployment of note to the deployment of nomogram and development of our roadmap to expand continuous improvement initiatives.

Speaker Change: Recently, the U S regulatory pathway is progressing well maintaining to scheduled pace. This development Mark an important milestone in bringing these products into the markets will ultimately benefit the patient care on a broader scale.

Speaker Change: While implementing these strategies, we're also prioritizing enhancing the donor experience and improving the improving donor satisfaction.

Speaker Change: We have also begun clinical or start up activities for investigational new drug application of <unk> 23, 39, which is a next generation antibody drug targeting and date, but that's just a day, but that is b virus. Following the receipt of FDA approval.

Speaker Change: We're excited as well with a contract awarded to <unk> by the U S. BARDA to develop a recombinant polyclonal antibody therapy for two proteins. These contracts marks a milestone and will additionally support grief walls in the amount of factoring in a phase one trial as a value up to $135 million over the next six years.

Speaker Change: <unk> there are some exciting advancements in the European Union, where the marketing authorization application was successfully submitted through the centralized procedure, including several countries.

Turning to slide 11, our diagnostic business remains an important part of our operations and I wanted to shine a spotlight on the business and whether with vision for further growth.

Speaker Change: Recently, the U S regulatory pathway is progressing well maintaining to scheduled pace. These development Mark an important milestone in bringing these products into the markets will ultimately benefit the patient care on a broader scale.

Speaker Change: [noise] correlate our primary segments in transfusion medicine in our blood typing solutions and nucleic acid testing Bernardo screening.

Speaker Change: The transfusion medicine market is a critical field that ensures that safe and effective supply of blood and plasma to patients in need.

Speaker Change: We have also begun clinical or start up activities for investigational new drug application of <unk> 23, 39, which is our next generation antibody drug targeting in diapers a day, but that is b virus following the receipt of FDA approval.

Speaker Change: Within the VTS segment referrals focus is to become the leading player through capitalizing on our current position and expanding through improved profitability.

Speaker Change: Execution of our commercial plan focusing on our core markets and continue our development of the next generation of instruments.

Speaker Change: We're excited as well with a contract awarded to <unk> by the U S. BARDA to develop a recombinant polyclonal antibody therapy for two proteins. These contracts marks a milestone and will additionally support grief holes in the amount of factoring in a phase one trial as a value up to $135 million over the next six years.

Speaker Change: Our performance in the third quarter is reflective of our progress we have grown double digits in our core market.

Speaker Change: Our flagship it flexes instrument continues to gain market share in conjunction with successful tenders in key markets.

Speaker Change: And are not segment. This thing for this is in Byron markets are critical to ensuring a safe blood and plasma supply.

Speaker Change: Turning to slide 11, our diagnostic business remains an important part of our operations and I wanted to shine a spotlight in the business whether with vision for further growth.

Speaker Change: This is an important segment, we are focused on driving steady growth through lifecycle management of our propylene Panther instrument, maintaining and strengthening our strategic accounts and developing them when I say technology for blood and plasma screening.

Speaker Change: Currently our primary segments in transfusion medicine in our blood typing solutions and nucleic acid testing donor screening.

Speaker Change: The transfusion medicine market is a critical field that ensures that safe and effective supply of blood and plasma to patients in need.

Our performance in the third quarter reflects our near term goal through a steady levels of the nations in the U S solid progress in the tissue and organs testing segment and successful tenders and growth Mark.

Speaker Change: Within the VTS segment referrals focus is to become the leading player through capitalizing on our current position and expanding through improved profitability.

Speaker Change: With our near term focus of strengthening or grow in our core BD is in that segment when.

Speaker Change: <unk> of our commercial plan focusing on our core markets and continue our development of the next generation of instruments.

Speaker Change: When vision, a brother expansion by our diagnostics business.

Speaker Change: Leveraging our expertise in translational medicine, we view expansion into the clinical diagnostic segment as a natural progression.

Speaker Change: Our performance in the third quarter is reflective of our progress we have grown double digits in our core Mark our flagship reflects this instrument continues to gain market share in conjunction with successful tenders in key markets.

Speaker Change: Driven by increase in prevalence of chronic disease emphasis on preventative health care and advancement in technology. The segment is growing on an area, where we can explore leveraging our IBD expertise and focus on the development of new testing platforms.

Speaker Change: And are not sickman destined for this is ambarella markets are critical to ensuring a safe blood and plasma supply.

Speaker Change: Finally, an additional area of growth is expanding our testing capabilities internally to provide a best in class and seamless support model for our Biopharma business.

Speaker Change: He is an important segment, we're focused on driving steady growth through lifecycle management of our propylene Panther instrument, maintaining on instead of strengthening our strategic accounts and developing them when I say technology for blood and plasma screening.

Speaker Change: Creating further synergies between our largest businesses will allow for accelerated testing a new drug development.

Speaker Change: Our performance in the third quarter reflects our near term goal through a steady levels of the nations in the U S solid progress in the tissue and organs testing segment and successful tenders in growth Mark.

Speaker Change: And with this and I would like to turn the call over to roll the whole.

Rahul Arena: <unk> for the warm welcome and for all your help with my transitioning since my start at Griffith was a few weeks ago. It is an absolute privilege to be here in this capacity for Griffith and I'm aware with this privilege comes the huge responsibility towards the company and all its stakeholders, including the critical institutional investors across our <unk>.

Speaker Change: With our near term focus on strengthening our growing our core BT is in that segment.

Speaker Change: When vision, a brother expansion by our diagnostics business.

Speaker Change: Leveraging our expertise in transfusion medicine, we view expansion into the clinical diagnostic segment as a natural progression.

<unk> in that complex.

Speaker Change: Driven by increasing prevalence of chronic disease emphasis on preventive health care and advancement in technology. The segment is growing on an area, where we can explore leveraging our IBD expertise and focus on the development of new testing platforms.

Rahul Arena: Moving to page 13.

Rahul Arena: Some of you might be aware I have followed the Griffith story for a number of years from a different vantage point from where I developed much admiration for the company's commitment to its inspiring mission of improving patients' lives globally, and serving our donuts as well as the company's growth mindset and by doing so dealer.

Speaker Change: Finally, an additional area of growth is expanding our testing capabilities internally to provide a best in class and seamless support model for our Biopharma business.

Rahul Arena: <unk> not only for all our stakeholders, but also to society.

Speaker Change: Creating further synergies between our largest businesses will allow for accelerated testing of new drug development.

Rahul Arena: The strong momentum and growth prospects that the company benefits from today is as a result of the bold and visionary actions taken in the past, giving us a solid foundation and a market leading position with significant scale in a highly attractive industry that is characterized by secular <unk>.

Speaker Change: And with this and I would like to turn the call over to Rahul.

Rahul: <unk> for the warm welcome and for all your help with my transitioning since my start at Griffith was a few weeks ago. It is an absolute privilege to be here in this capacity for growth for us and I'm aware with this privilege comes the huge responsibility towards the company and all its stakeholders, including the critical institutional investors across our <unk>.

Rahul Arena: <unk> and high barriers to entry notwithstanding all the challenges and considerable distractions that the company has faced this year to grow our top line by almost double digits and EBITDA by circa 25% speaks to the attractive business fundamentals and the resilience of our over 23000.

Rahul: In that complex.

Rahul: Moving to page 13.

Rahul: Some of you might be aware I have followed the Griffith story for a number of years from a different vantage point from where I developed much admiration for the company's commitment to its inspiring mission of improving patients' lives globally, and serving our donuts as well as the company's growth mindset and by doing so does.

Rahul Arena: Teammates and the company as a whole.

Rahul Arena: As a senior management team, we are now in a fortunate position to be able to harvest over the coming years. This highly defensive portfolio with very exciting growth levers and related cash flow prospects and in this fortunate position of being able to harvest our various growth legs. There is much greater focus on Anil.

Rahul: <unk> not only for all our stakeholders, but also to society.

Rahul: The strong momentum and growth prospects that the company benefits from today is as a result of the bold and visionary actions taken in the past, giving us a solid foundation and a market leading position with significant scale in a highly attractive industry that is characterized by secular <unk>.

Rahul Arena: Elliptical rigor and general discipline beat financial cost or capital allocation discipline and to continue our relentless efforts on deleveraging and improving free cash flow generation.

Speaker Change: <unk> and high barriers to entry.

Speaker Change: An aspect that has been particularly great to see them. These initial weeks since I started is the organization's focus and progress on continuous improvement and operational excellence to drive efficiencies. The success of the operational improvement plan and evidenced thing its conversion into significant actual cash EBITDA.

Speaker Change: Notwithstanding all the challenges and considerable distractions that the company has faced this year to grow our top line by almost double digits and EBITDA by circa 25%.

Speaker Change: Speaks to the attractive business fundamentals and the resilience of our over 23000 teammates and the company as a whole as a senior management team. We are now in a fortunate position to be able to harvest over the coming years. This highly defensive portfolio with very exciting growth levers and related.

Speaker Change: Has been the catalyst for this mindset change across the organization and it bodes well for the quarters and years ahead.

Speaker Change: Moving on to the last point on this page from everything that I've seen in my first few weeks here I continue to have a very strong conviction for the Gryphon story and I believe that we have a significant communication and engagement opportunity to share the strength of the story in the coming months.

Speaker Change: Cash flow prospects and in this fortunate position of being able to harvest all various growth legs. There is much greater focus on analytical rigor and general discipline beat financial cost or capital allocation discipline and to continue our relentless efforts on deleveraging and improving free.

Speaker Change: With each of our various stakeholders.

Speaker Change: For all these reasons I have no hesitation in making the significant professional change after receiving nachos and the board's offer and to leave the safety and the considerable comfort of my prior role to take on this invigorating challenge and deciding to relocate my family from London to Barcelona with that.

Speaker Change: Cash flow generation.

Speaker Change: An aspect that has been particularly great to see them. These initial weeks since I started is the organization's focus and progress on continuous improvement and operational excellence to drive efficiencies. The success of the operational improvement plan and evidenced its conversion into significant actual cash EBITDA.

Speaker Change: Let's now go through our Q3 and year to date financial performance on page 14.

Speaker Change: Before I go into our Q3 and year to date financial performance in 2024.

Speaker Change: Has been the catalyst for this mindset change across the organization and it bodes well for the quarters and years ahead.

Speaker Change: Please consider 2020 fours relative performance to what was a record financial performance in 2023, given the sales and adjusted EBITDA Records that Griffith achieved in 2023 with.

Speaker Change: With that important context to frame, our 2024 performance year to date and Q3 2024 revenues are up very strong versus our record 2023 by over 9% and 12.

Speaker Change: With each of our various stakeholders.

Speaker Change: For all these reasons I have no hesitation in making this significant professional change after receiving nachos and the board's offer and to leave the safety and the considerable comfort of my prior role to take on this invigorating challenge and deciding to relocate my family from London to Barcelona with that.

Speaker Change: 3% on a constant currency basis, respectively, taking our year to date sales up to five point to three 7 billion and very much tracking to our seven plus billion revenue guidance for the year.

Speaker Change: Year to date gross profit was up 14.5% versus 2023 and year to date adjusted EBITDA was up 25% versus the record 2023.

Speaker Change: Let's now go through our Q3 and year to date financial performance on page 14.

Speaker Change: Before I go into our Q3 and year to date financial performance in 2024.

Speaker Change: Three of Gryphon best ever quarterly adjusted EBITDA results had been achieved in the last four quarters, which hopefully is not lost on all our stakeholders that follow our financial performance I will elaborate on the drivers of this growth in the next page.

Speaker Change: Please consider 2020 fours relative performance to what was a record financial performance in 2023, given the sales and adjusted EBITDA Records that peripheral achieved in 2023 with.

Speaker Change: With that important context to frame, our 2024 performance year to date and Q3 2024 revenues are up very strong versus our record 2023 by over 9% and 12.

Speaker Change: As a result, our year to date reported net result has swung from being meaningfully negative in 2023 to positive $88 million that said financial expenses in our P&L are higher than 2023 year to date for three reasons, one noncash one off impact.

Speaker Change: 3% on a constant currency basis, respectively, taking our year to date sales up to five to three 7 billion and very much tracking to our seven plus billion revenue guidance for the year.

Speaker Change: Of deferred financial costs of $15 million that is linked to the redemption of senior secured debt from the Shanghai Ras proceeds in keeping with our commitment to de lever.

Speaker Change: Year to date gross profit was up 14.5% versus 2023 and year to date adjusted EBITDA was up 25% versus the record 2023.

Two noncash one off FX impact of over 13 million related to the Shanghai restaurants action and three higher cash interest expense from the $1 3 billion senior secured notes principally used to repay the senior unsecured notes maturing in 2025.

Speaker Change: Three of Griffith its best ever quarterly adjusted EBITDA results had been achieved in the last four quarters, which hopefully is not lost on all our stakeholders that follow our financial performance I will elaborate on the drivers of this growth in the next page.

Speaker Change: <unk>.

Speaker Change: As Nacho mentioned earlier, the free cash flow generation, excluding the effect of the Shanghai restaurants action continues as we expected with a strong Q3 and year to date free cash flow being significantly higher than 2023, and we remain on course to achieve our guidance I will go into more detail about the free cash.

Speaker Change: Slow generation in a subsequent slide.

And finally on leverage our total net leverage per our credit agreement has declined further from six eight times in Q1 to five five times in Q2 and now to five one times at the end of Q3 with the debt repayment from the Shanghai Ross proceeds and our continued strong momentum.

Speaker Change: Of deferred financial costs of 50 million that is linked to the redemption of senior secured debt from the Shanghai Ras proceeds in keeping with our commitment to de lever.

Speaker Change: Two noncash one off FX impact of over 13 million related to the Shanghai restaurants action and three higher cash interest expense from the $1 3 billion senior secured notes principally used to repay the senior unsecured notes maturing in 2025.

Speaker Change: Tim and EBITDA driving this significant deleveraging in only a couple of quarters. In addition, I also wanted to draw your attention to our net secured leverage ratio, which stands at three one times per our credit agreement and that's one of the lowest levels that I can ever remember it.

Speaker Change: <unk>.

Speaker Change: Being for <unk> and the significant secured capacity buffer that exists to the extent that it is ever needed and in contrast to the past so the meaningful strengthening of our balance sheet continues at pace and continued deleveraging and improve cash flow generation remain key priorities for Griffith.

Speaker Change: Slow generation in a subsequent slide.

Speaker Change: And finally on leverage our total net leverage per our credit agreement has declined further from six eight times in Q1 to five five times in Q2 and now to five one times at the end of Q3 with the debt repayment from the Shanghai Ross proceeds and our continued strong momentum.

<unk>.

Speaker Change: Moving on to page 15.

Speaker Change: We highlight the significant momentum in our adjusted EBITDA.

Speaker Change: Adjusted EBITDA margin for Q3, 'twenty four is 25, 8% with the margin up 260 basis points versus Q3, 2023, and a quarter on quarter growth of 26, 7%.

Speaker Change: We see similar strong momentum if you consider the year to date performance with year to date, adjusted EBITDA being up 25% on a record 2023.

Speaker Change: This momentum across gross margin and adjusted EBITDA margin is primarily being driven by volume growth in biopharma.

Speaker Change: B four griffins and the significant secured capacity buffer that exists to the extent that it is ever needed and in contrast to the past so the meaningful strengthening of our balance sheet continues at pace and continued deleveraging and improve cash flow generation remain key priorities for Griffith.

The continuing improvement in the cost per liter the benefits of our operational improvement plan coming through via plasma and manufacturing yield improvements and finally from operational leverage which I will touch upon on the next page.

Speaker Change: <unk>.

Speaker Change: Moving on to page 15.

Speaker Change: As Nacho mentioned, we need to achieve similar growth versus 2023 in this final quarter to achieve guidance.

Speaker Change: We highlight the significant momentum in our adjusted EBITDA.

Speaker Change: Adjusted EBITDA margin for Q3, 'twenty four is 25, 8% with the margin up 260 basis points versus Q3, 2023, and a quarter on quarter growth of 26, 7%.

The momentum within the business is certainly there and the entire organization remains very focused on that objective.

Speaker Change: Moving onto page 16.

Speaker Change: We see similar strong momentum if you consider the year to date performance with year to date, adjusted EBITDA being up 25% on a record 2023.

Speaker Change: Notwithstanding the very robust bounce back and adjusted EBITDA margin from the Covid years, we remain below our pre COVID-19 margin levels.

Speaker Change: We expect an improving trend in our margin levels in the years to come and we will share more details in our next earnings call with respect to guidance and targets for 2025.

Speaker Change: This momentum across gross margin and adjusted EBITDA margin is primarily being driven by volume growth in biopharma.

Speaker Change: The continuing improvement in the cost per liter the benefits of our operational improvement plan coming through via plasma and manufacturing yield improvements and finally from operational leverage which I will touch upon on the next page.

Speaker Change: The drivers of the adjusted EBITDA margin over the years are similar to the drivers I mentioned on the prior page. In addition, it is our expectation that the adjustments to EBITDA will reduce as our transaction activity and the restructuring activity reduces.

Speaker Change: As Nacho mentioned, we need to achieve similar growth versus 2023 in this final quarter to achieve guidance the momentum within the business is certainly there and the entire organization remains very focused on that objective.

Speaker Change: And finally, our track record of converting adjusted EBITDA to actual cash flow quickly is very positive often occurring in less than 12 months.

Speaker Change: On the right hand side of the slide you see the clear benefit of our operational leverage momentum coming through.

Speaker Change: Moving onto page 16.

Speaker Change: Notwithstanding the very robust bounce back and adjusted EBITDA margin from the Covid years, we remain below our pre COVID-19 margin levels.

Speaker Change: These numbers appropriately exclude the one offs and you see that our opex as a percentage of sales is even lower than our pre COVID-19 levels and we believe that there is an opportunity to continue to squeeze that going forward equally we do expect some of our SG&A savings to be reinvested into R&D.

Speaker Change: We expect an improving trend in our margin levels in the years to come and we will share more details in our next earnings call with respect to guidance and targets for 2025.

Speaker Change: In the coming years to be able to better monetize some of the exciting opportunities that we see in front of us.

Speaker Change: Page 17.

Speaker Change: The all important free cash flow slide.

Speaker Change: The bottom line of this page is that we are very much still tracking to our guidance to the market to be free cash flow breakeven by the end of the year, we took a big step forward towards achieving that guidance with $127 million of free cash flow generation pre Shanghai Ras in Q3, whilst it might be tempting.

Speaker Change: And finally, our track record of converting adjusted EBITDA to actual cash flow quickly is very positive often occurring in less than 12 months.

Speaker Change: On the right hand side of the slide you see the clear benefit of our operational leverage momentum coming through.

Speaker Change: To extrapolate the Q2 and Q3 free cash flow progression to an even bigger number in Q4, we would caution against that approach and would simply reiterate our breakeven target.

Speaker Change: In the coming years to be able to better monetize some of the exciting opportunities that we see in front of us.

Like we saw on Q2, you will see interest paid in Q4 to be higher than Q3 to reflect the interest periods of our debt instruments and at the bottom of the page. The extraordinary growth Capex is almost entirely due to immuno tech payments and I will touch on this further on the next page.

Speaker Change: Page 17.

Speaker Change: The all important free cash flow slide.

Speaker Change: The bottom line of this page is that we are very much still tracking to our guidance to the market to be free cash flow breakeven by the end of the year we.

Speaker Change: Transaction and restructuring costs, whilst elevated in 2024 is expected to decline significantly in 2025.

Speaker Change: We took a big step forward towards achieving that guidance with $127 million of free cash flow generation pre Shanghai rise in Q3, whilst it might be tempting to extrapolate the Q2 and Q3 free cash flow progression to an even bigger number in Q4, we would caution against that approach and would simply.

Speaker Change: Our liquidity at the end of Q3 stood at $704 million, we use some liquidity during Q3 to repay debt at the bi test level and in doing so optimize our consolidated interest expense.

Speaker Change: We reiterate our breakeven target.

Speaker Change: J T.

Speaker Change: The various cash flow optimizing initiatives that have been implemented are yielding results be it our working capital and inventory management focus or our disciplined approach with respect to cash across the board like we saw on Q2, you will see interest paid in Q4 to be higher than Q3 to reflect the interest periods of <unk>.

Speaker Change: On the left hand side of this slide we show our Capex evolution over time and I also make the distinction between maintenance and growth capex each year.

Speaker Change: We have typically guided the market to annual Capex that includes both maintenance and growth capex to be around $300 million some years slightly lower than other years higher but around 300 million on average the extraordinary growth capex in 'twenty, 'twenty, four which we expect to be around $280 million for the full year.

Speaker Change: Debt instruments and at the bottom of the page the extraordinary growth Capex is almost entirely due to immuno tech payments and I will touch on this further on the next page.

Speaker Change: Almost entirely relates to immune attack and we expect this extraordinary growth capex to halve in 2025, and then further half again in 2026.

Speaker Change: Transaction and restructuring costs, whilst elevated in 2024 is expected to decline significantly in 2025.

Speaker Change: On the right hand side of the slide we summarize the evolution of stock turnover days to show progress on inventory management as you might be aware in 2020 in 2021 during COVID-19, we suffered inventory shortages that resulted an artificially low inventory levels.

Speaker Change: Page 18.

Speaker Change: On the left hand side of this slide we show our Capex evolution over time and I also make the distinction between maintenance and growth capex. Each year, we have typically guided the market to annual Capex that includes both maintenance and growth capex to be around $300 million some years.

Given the characteristics of the industry as you are aware the length of stock turnover period is quite high which is entirely normal but what this chart does reflect is some of our recent improvements on the back of initiatives to better balance the liter.

Speaker Change: Lower in other years higher but around 300 million on average the extraordinary growth capex in 'twenty, 'twenty, four which we expect to be around $280 million for the full year almost entirely relates to immune attack and we expect this extraordinary growth capex to halve in 2025.

Speaker Change: Given the strong growth tailwind, we do expect to continue to invest in having the right levels of inventory, but the combination of our operational improvement as well as taking a more dynamic approach to our inventory levels. The aspiration continues to be to remain efficient going forward.

Speaker Change: And then further half again in 2026.

Speaker Change: Page 19.

Speaker Change: We've had a number of questions about how we use the Shanghai Ras proceeds.

Speaker Change: The entirety of the net proceeds we received went to prepay our secured debt as shown in this table.

Speaker Change: And we summarized the tranches that will pay down.

This contributed significantly to our deleveraging progress and finally, our near term priorities number one achieving 2024 free cash flow and adjusted EBITDA guidance number two continue our relentless focus on deleveraging number three the process to extend our Aussie.

Speaker Change: Given the characteristics of the industry as you are aware the length of stock turnover period is quite high which is entirely normal but what this chart does reflect is some of our recent improvements on the back of initiatives to better balance the liter <unk>.

Speaker Change: <unk> is already underway and we have received very supportive feedback from our bank syndicate in general.

Speaker Change: Number four terming out our 2025 senior secured debt maturities for which we have a number of different options unsurprisingly given the strong momentum we continued to see and the lowest secured leverage that we have had that I can remember.

Speaker Change: Page 19.

Speaker Change: We've had a number of questions about how we use the Shanghai RASK proceeds the.

Let me wrap this up.

Speaker Change: The entirety of the net proceeds we received went to prepay our secured debt as shown in this table.

Speaker Change: By leaving you with the following final points.

Speaker Change: The momentum of the Griffith story has meant that it has grown back into its capital structure rapidly after a once in 100 year pandemic.

Speaker Change: And we summarized the tranches that will pay down.

Speaker Change: This contributed significantly to our deleveraging progress and finally, our near term priorities number one achieving 2020 for free cash flow and adjusted EBITDA guidance number two continue our relentless focus on deleveraging number three the process to extend our Aussie.

Speaker Change: The resilience of this business is very clear and has been proven.

Speaker Change: The outlook continues to be very encouraging and the entire Griffiths team is focused on capturing the tailwind that we observe across our different business segments led by Biopharma. This next phase of the Gryphon story is very much a harvesting one and capturing the full value of the portfolio that enjoys.

Speaker Change: <unk> is already underway and we have received very supportive feedback from our bank syndicate in general.

Speaker Change: High growth potential strong margins and high cash flow conversion prospects with meaningful momentum from our operational improvement initiatives that are clearly yielding results. The entire organization remains very focused on continued deleveraging and improving free cash flow generation.

Speaker Change: Let me wrap this up.

Speaker Change: By leaving you with the following final points.

I have significant conviction for the peripheral story and as a senior management team. We look forward to discussing our perspective with all stakeholders in the coming months and quarters and with that I will hand over to Nacho to conclude the presentation.

Speaker Change: The momentum of the Griffith story has meant that it has grown back into its capital structure rapidly after a once in 100 year pandemic.

Speaker Change: The resilience of this business is very clear and has been proven.

Nacho: Thank you Rahul.

Speaker Change: The outlook continues to be very encouraging and the entire Griffiths team is focused on capturing the tailwind that we observed across our different business segments led by Biopharma. This next phase of the Gryphon story is very much a harvesting one and capturing the full value of the portfolio that enjoys.

Nacho: As we wrap up our call I want to take a moment to emphasize several important points.

Nacho: Despite many M precedent events, having transpire this year, we remain steadfast in our commitment to executing our strategy and optimizing our business.

Nacho: With our new management team now fully in place we are optimally positioned to drive our initiatives forward.

Nacho: Our Q3 results have been strong, placing us to meet our fiscal year 'twenty for guidance. We are laser focused on delivering a successful Q4, while not losing sight on all of our top priorities generating free cash flow and reducing leverage and efficiently allocating capital.

Speaker Change: I have significant conviction for the peripheral story and as a senior management team. We look forward to discussing our perspective with all stakeholders in the coming months and quarters and with that I will hand over to Nacho to conclude the presentation.

Nacho: These efforts are not just about numbers there about ensuring that we have the financial strength to continue grow in navigating any answered scientists.

Nacho: The plasma industry is engaging in expansionary momentum fueled by a strong underlying demand in core markets. We see this as a prime opportunity to continue widening our footprint and further strengthen our market share.

Nacho: Thank you Rahul.

Speaker Change: As we wrap up our call I want to take a moment to emphasize several important points.

Nacho: Furthermore, we are dedicated to improving our operations through increased efficiencies and leveraging the growing use of technology in our plasma centers and manufacturing facilities.

Speaker Change: Despite many M precedent and events, having transpired this year, we remain steadfast in our commitment to executing our strategy and optimizing our business.

Speaker Change: With our new management team now fully in place we are optimally positioned to drive our initiatives forward.

Aligning processes and adopt innovative solutions have been and will remain instrumental going forward.

Nacho: Finally, I want to emphasize our commitment to innovation, we're making significant progress in our R&D pipeline, which will enable us to broaden our product offerings and new indications and launch new products.

Speaker Change: Our Q3 results have been strong, placing us to meet our fiscal year 'twenty for guidance.

Speaker Change: We are laser focused on delivering a successful Q4, while not losing sight of our top priorities generating free cash flow and reducing leverage and efficiently allocating capital.

This focus on innovation is crucial for us staying competitive and meeting the evolving needs of the market.

Speaker Change: These efforts are not just about numbers there about ensuring that we have the financial strength to continue grow in navigating any answered scientists.

Nacho: And with this thank you again for your continued support and Danny back to you.

Danny: Thank you and I to now, let's turn to the Q&A session. Please.

Speaker Change: The plasma industry is engaging in expansionary momentum fueled by a strong underlying demand in core markets.

Nacho: Please remember to press star five two.

To ask a question.

Nacho: We need to place a limit of two questions per person.

Speaker Change: We see this as a prime opportunity to continue widening or footprint and further strengthen our market share.

Nacho: Regarding your question, we will put you on mute reviewed any background noise.

Speaker Change: Furthermore, we are dedicated to improving our operations through increased efficiencies and leveraging the growing use of technology in our plasma centers and manufacturing facilities.

Nacho: Our first question comes from Tom Jones.

Speaker Change: From Bloomberg.

Speaker Change: I'm gonna be done just that they're gonna be James Gordon.

Speaker Change: Streamlining process.

Speaker Change: Hello claims Gordon JP Morgan Thanks for taking the question.

One question was about immunoglobulin and how it's doing in CRT P. J.

Speaker Change: The U S. The IDP approval.

Speaker Change: And they said about half of U S plans are now covering it Nathan.

Speaker Change: And they said they got 300 patients, but then September one therapy.

Speaker Change: $85 90 per tenant on the frontline Chi does that tally with what you see are they coming from partly coming from Quickbooks LG or are they coming from somewhere else.

Speaker Change: And I saw that you still had 17% growth. This quarter. So that does look good do you think that's sustainable or was there anything exceptional about how you grew strongly with maybe a bit more competition.

Speaker Change: The second question with China, a number of Western health care and consumer company that talked about slowdown in demand that product in China, maybe partly local competition.

Speaker Change: Copay issue in terms of economic sensitivity and some other things going on.

Speaker Change: Are you seeing anything there.

Speaker Change: China is still doing well, but any impact on albumin tomorrow Shanghai right.

Speaker Change: And if I could squeeze in just a clarification because someone asked me.

Speaker Change: This is a target to get to four and a half times net debt to EBITDA by the end of the year or where are we on that target is that part of the guidance you reiterated thank you.

Speaker Change: Let me, let me address the China question I would like Roland to talk about the ADP and what we're seeing there and finally the last question Rahul will will comment on that the games. So I just came back from China I was there last week and I can.

Speaker Change: And I can see that.

Speaker Change: I understand the comment I understand the concerns, but that's another way we are seeing in our in our business, we see the business growing and in our conversations with our with our partners there.

Speaker Change: We at least for albumin products, and <unk> and plasma derived products, we see a continuous demand and and we are planning the next year based on that.

Speaker Change: Especially ADP Froylan would you like to comment.

Speaker Change: Thanks for the question, yes, Indeed, we have a as expected seen some trial for CRD V patients in second line for patients that have the few patients that have not been responding in a poll rating I E.

Speaker Change: So in second line Aspira.

As per our expectations, we continue to see growth in that segment and we remain very confident that it will remain the standard of care for see IDP, we hear from oils that the suitability for eye cheese and this multifactorial disease is one.

Speaker Change: One aspect that really stands out with its multimodal monochrome mm mm.

Speaker Change: Our mode of action.

Speaker Change: We also see the high response rate our proven safety long standing experience and expect that pricing I've seen our ends a while with increasing payer coverage will really put that treat them more into the second line space. So in addition, we are increasing our engagement in this space, we built an increasing awareness and our longstanding experience with comex.

Speaker Change: And while we remain absolutely confident in the role that I play and see IDP. We also want to highlight that our continued growth in primary immune deficiency in secondary immune deficiency are very encouraging beyond that.

Speaker Change: Good question.

Speaker Change: The four five times target by year end. The short answer is we remain on course to achieve that James and it is inextricably linked to us achieving our EBITDA guidance because most of the deleveraging is coming from EBITDA expansion.

Speaker Change: One other point of detail that I think will be helpful to most of you guys is that the delta between adjusted EBITDA and credit agreement adjusted EBITDA will be much lower.

Speaker Change: As at the end of Q4 than it is currently the case and has been for the last.

Speaker Change: A couple of quarters, and that's probably what is perhaps thrown some of the numbers.

Speaker Change: When you guys do your back of the fact back calculation. So very much remain on course to achieve the four five times.

Speaker Change: Thank you very much I appreciate that now yes, Tom Jones please.

Tom Jones: Hi, Thanks for taking a few questions.

Tom Jones: One on the precocious studying one on free cash flow.

Tom Jones: Just on free cash flow is a question for both of you really both.

Tom Jones: Both of you kind of having an opportunity to look at the business with fresh eyes, when it comes to free cash flow.

Tom Jones: I appreciate you're doing a lot of things to kind of improve the day to day free cash flow, but having followed this business for <unk>.

Tom Jones: Over 20 years now I've been through several cycles of.

Tom Jones: Poor cash flow in advance of growth.

Tom Jones: And then the growth slows a bit in the cash flow improves and then more cash goes back into growth and then the cash flow.

Tom Jones: It comes down it goes up and goes through these cycles.

Tom Jones: Across the whole cycle has always been a very capital intensive business.

Tom Jones: And sort of small operational improvements that you're trying to implement have always have you had any thoughts or color Neal ideas about how you can improve the structural free cash flow of peripheral b that through geographic mix business makes the industry. However, you might go about it because we can look at short term free cash flow trends and I know you're doing everything.

Tom Jones: You can't improve it given your leverage situation, but that's short term small margin improvements you can make but is there anything you've.

Tom Jones: With the opportunity as you look at this business with completely fresh eyes thought about in terms of improving the sort of through the cycle structural cash flow nature.

Tom Jones: Nature of the business and then on the protect study just kind of wondering what you're assuming the results are good which I think we would probably will be what your kind of approach to commercializing that date is likely to be.

Tom Jones: I think it was the 2018 capital markets day that there was a whole session dedicated to <unk>.

Tom Jones: Albumin and liver failure, both chronic and acute on chronic.

Speaker Change: And you know we didn't have much since so I just wanted to kind of how you're thinking about taking this data to market and in leveraging at GTT as a volume driver of price driver.

Just some thoughts on that would be interesting.

Speaker Change: Thank you for your question Tom.

Speaker Change: As for the first question.

I would say that definitely cash flow generation has been on our on our radar on my rather since the beginning of maintaining around and finally Andre holds in since he's here.

You are right I mean as a as these regions are capital intensive and require significant amount of working capital to operate and that and we see the answer to that question in two ways right. So I think that one is.

Speaker Change: To optimize cash flow, we definitely need among other things to optimize working capital and to do that.

First of all I think that there is some efficiency that can be seek gas by.

Speaker Change: Doing a better job working on our end to end supply chain business model right. So I think that we can we can really work across the different steps and are in the in the in the life of the of the business in order to identify where working together and not in silos and deliver an IRA as we can be more.

Speaker Change: Optimal that's why we have been doing this year and that's what what we can see improvement in working working capital.

Speaker Change: Capital this year.

In there in the middle long term as in that there are considerations that can be made in terms of first time lining streamlining manufacturing site and contributing product portfolio.

Speaker Change: And those may have significant implications as well in working capital and we will explore those and the potential impact of those decisions as we move forward. Finally, we will keep an eye on these.

Speaker Change: On this area and our free cash flow generation will continue being our top priority in the years to come.

Speaker Change: When he is gonna be Roland.

Speaker Change: If you wish.

Speaker Change: As we shared before the study is finished and we said that we'll be sharing top line results in Q4, we're still awaiting the final data and we're on track to sharing the data later on this quarter and we are happy to contribute to the understanding of the role of albumin in liver disease with this study but keep in.

Mind that albumin is used.

Speaker Change: In a wide range of diseases and conditions and we continue to educate and aim to differentiate the use of our albumin albumin inbox across our markets around you know beyond liver disease around all of these stages.

Speaker Change: Thank you so much thank.

Speaker Change: Thank you Tom. Thank you very much we are going to switch to Santander Jaime please.

Hi, good afternoon. So two questions from my side, the first one regarding working capital.

Speaker Change: There is one line.

Speaker Change: Other working capital adjustments of 158 million. So if you could elaborate.

Speaker Change: Substantiate this line because it's obviously a big amount that that allow us to generate quite a lot of free cash for a while.

Speaker Change: How should we think about this line in Q4 and then the other question is regarding the guidance of $1 8 billion for the year. This means that in Q4, you need to do.

And EBITDA adjusted of around 550 <unk> jump.

Speaker Change: We are mid November or so probably you already have quite a nice visibility to year end. So my question basically what drives these $550 million EBITDA in Q4.

Speaker Change: Is it more the on the top line is coming very strong.

Speaker Change: Is it that we should expect a very high.

Speaker Change: The increase of gross margin or farther.

Operating leverage I know you are going to tell me, it's a combination of the three but.

You can.

Speaker Change: Give us a little bit more.

Nathan: Color on how these three moving parts are sure sure Nathan.

Nathan: The $1 8 billion.

Speaker Change: Thank you very much.

Speaker Change: Hi, Matt I'll take the second question and I'll pass to hold the first one.

Speaker Change: The second one I think.

It has been say, we know that Q4 will be a demanding quarter and that we have to continue performing well as well as we have been performing in Q1 to Q3 in order to deliver that that EBITDA and indeed is a combination of the three Reits or we expected we have the spectation with strong sales in the quarter.

Speaker Change: The gross margins will continue improving as they have on the back on the on the reviews plasma cost per liter that we have been enjoying through the year. Thanks to the air force done in previous periods and <unk> and finally, our strong cost control on expenses control. So I think that as I say.

We are we are committed to deliver those numbers. We believe they are feasible, but we still have to work a lot in the quarter and we are doing that.

The first question Rahul Yeah Jaime it's.

Speaker Change: If you're referring to other adjustments and other changes in working capital of $110 million versus $34 million in 2023 year to date.

Speaker Change: The most of that difference relates to the noncash adjustment.

The Noncontrolling interest result.

That's I would say 70% of that difference and if there are sort of for the aspects of detailed related to that question that you'd have we can take that offline with our investor relations team. Thank you.

Speaker Change: Hey.

Speaker Change: Thank you Jaime.

A lot of police.

Speaker Change: Hi, Thanks for taking my questions first a welcoming Rahul and congratulations on really great into our thrown out hopefully you will enjoy beautiful sedan because of winter.

Mike: Mike My first question would be on your first thoughts.

Mike: And your top priorities.

The group's new CFO, whether you are more focused on cost cutting or getting closer.

Closer to working capital or liquidity, you're negotiating with the banks and in particular I would like to know if you could provide some more detail on your current liquidity position and how do you see the rebound in group, especially being extended or even though you can provide some timeline on that.

Speaker Change: And then my second question would be.

Speaker Change: If you feel you feel now some comfort to provide free cash flow guidance for 295, I think you mentioned something on the.

Speaker Change: Extraordinary growth Capex, which should have for next year, but that's actually higher than what I had in mind and I thought it should go down to some 70 million. So if you could clarify if you can provide free cash flow guidance for some ballpark number and clarify the extraordinarily capex. Thank you.

Speaker Change: Okay. So let me start off with the.

Speaker Change: The first question, which was just around.

General impressions as well as giving you a little bit of an update around.

Speaker Change: Status of the Rcs extension.

Speaker Change: Look as I think about.

Speaker Change: As I think about general impressions I think you had you saw my there was a slide that talked about my first impressions, but as I think about priorities.

Speaker Change: Let me, let me start with the.

Priorities from a financial perspective.

Speaker Change: From a financial perspective in the short term. It is all about continuing to deliver the strong business performance and continuing to delever and improve free cash flow generation I.

Speaker Change: I see meaningful opportunities across the board to be able to do that and I also think that.

Speaker Change: There is an opportunity to be a lot more analytical and rigorous in our approach.

Speaker Change: As part of which I I, certainly look forward to contributing to better discipline, whether it's cost discipline, whether it's financial discipline, whether it's capital allocation discipline and I think that there are there are opportunities there in my mind.

Speaker Change: Another.

Speaker Change: On a point that I would say is risk management.

Speaker Change: In my prior seat spent a long time, just managing risk and and I believe I can contribute to that.

Speaker Change: White quiet.

Speaker Change: Considerably in the coming in the coming months.

Speaker Change: I also referred in my initial.

Speaker Change: Rations about the opportunity there or the communication opportunity that we have the I fundamentally believe that there is a that.

Speaker Change: That there is an opportunity to to.

Speaker Change: Better understand the Griffin story.

And I look forward to engaging in sharing my perspective.

Speaker Change: On the graph a story in the coming months and quarters.

Speaker Change: One final thing I would also say is.

Speaker Change: To the extent that we can simplify.

Speaker Change: Whether it's.

Speaker Change: In our business dealings financial interests.

Speaker Change: And and so on just in terms of whether it's a simplified structuring.

Speaker Change: I think that is something that are you.

Speaker Change: You know frankly.

Speaker Change: It might be helpful for our various stakeholders to better understand and engage with us on the Gryphon story and of course that does not talk about the long list of business improvements that Nacho has touched on previously which clearly remains a priority that I think we can.

Speaker Change: We can develop a good story around together I.

I think your second question relate what's your second question did it relate to guidance for 2025 four.

Speaker Change: Only assia, if you're up to on the Rcs.

Speaker Change: As a as I mentioned on my in my remarks.

Speaker Change: The the process of extending the Rcs has has has already has already commenced.

And and and you know I think our or the general sort of feedback has been.

Speaker Change: Very constructive and positive clearly the Q3 results. Here is is is Ah is helpful. In that respect and now with the Q3 results out my expectation is that we will have this wrapped up rapidly in the coming in the coming weeks.

Speaker Change: And as you think about Dr.

Speaker Change: Dr CF extension.

Speaker Change: I touched on this in my presentation.

Secured leverage at Griffith today per the credit agreement is at three one times it is going to be in the twos in the twos by the end of Q4. So the extension of the Rcs or you know liquidity and so on I have no concerns about and and we'll be able to demonstrate.

Speaker Change: Straight that.

Speaker Change: You know a very effectively.

Speaker Change: The coming week, so I feel I feel very well supported by the bank groups on that front. The second question.

Speaker Change: Guidance for free cash flow, okay. So free cash flow guidance certainly for we.

Speaker Change: Expect to provide free cash flow guidance.

At the next earnings call for 2025.

And and I, we look forward to discussing that in a in more detail at the time.

Rahul Arena: Medically thank you Rahul.

Speaker Change: Thank you Alberto.

Speaker Change: Now you May please go ahead.

Speaker Change: Thank you for taking my question.

The first one still on cash flow guidance, you've clearly had a guidance for 2000 25027, I still planning to provide an update on this guidance or just are going to release an update on the on the 125 guidance alone.

Speaker Change: For cash flow are we that we with our next earnings call.

Speaker Change: And the second question is related to Q4 again.

Speaker Change: So I Chi has been outperforming tens of regions.

Speaker Change: Cause if growth charted for things, which is not optimal to gross margins. How do you see the proteins growth balance in Q4, similar to Q3 or are there could be some changes here.

Speaker Change: Yeah.

Speaker Change: Thank you Jeremy.

Speaker Change: The cash flow guidelines I think that the.

Rahul Arena: This is Rahul just say a thing in the next earning call as is customary we will provide guidance for the for the year, including free cash flow for 2025 as for our projections for cash flow for the next years, I mean, where they're evaluating the depreciation and having internal discussions and at this time, we will communicate with you Mark.

Speaker Change: That's a separate proteins questions Roland will comment.

Speaker Change: <unk>.

Speaker Change: Mentum that we see.

Speaker Change: In I T and especially in the U S are building within Nike, but the one thing I want to double click on if you look at the split between <unk> and <unk>, we're very pleased with the growth rates that we see with <unk> with a premium pricing.

And with significant potential to further grow given that we only launched a few years ago. So.

Speaker Change: You think about <unk>, we see this as a very important contributor and a growth driver for the future and as we think about the rest of our portfolio and proteins. Similarly, we see us continue to build where of course for auto for one you know we are after the transition of the specialty pharmacy provider in the U S in a position to.

Speaker Change: Rebuilding growth and the one thing perhaps drive for Q4 is that right. These naturally has seasonality. That's the one thing to keep in mind, but the takeaway is really I think the one point is the growth potential and momentum that we see behind soft Q exemplify.

Speaker Change: Thank you Ron and thank you so much thank.

Speaker Change: Thank you Jeremy.

Speaker Change: With that we took all the questions today.

Speaker Change: We'll say it please feel free to contact the IR team for any follow up. Thank you so much for joining us today.

Q3 2024 Grifols SA Earnings Call

Request a DemoDemo

GRFS

Grifols

Earnings