Q4 20/21

May 28, 2021

Good morning, everyone, and warm welcome to the presentation of Elekta's Q4 and Year End of our Fiscal Year 2020 2021. My name is Cecilia Keetals, and I'm Head of Investor Relations at Elekta. With me here in Stockholm, I have Elekta's President and CEO, Gustaf Solfort and our CFO, Johan Adebek. Today's agenda, I'll start off by Gustaf presenting highlights of our development. Then Johan will give you details on the financials, and the presentation will end with Gustaf's view on Elekta's outlook. Presentation, there will, as usual, be time for your questions. But before we start, I want to remind you that some of the information discussed in this call contain forward looking statement. This can be projections regarding revenue, operating result, cash flow as well as products and product developments. And these statements And with that said, I hand over to you, Gustaf. Thank you, Cecilia, and welcome, everyone, and really thank you for listening into our 2020. The rate really are strategic priorities that is all about driving precision radiation medicine and helping clinicians to improve patients' lives. And throughout this very special year, we have been successfully focusing on driving resilience initiatives and digitalization across the company. We have also been very much focused on and we have also accelerated innovation in our Linac family, the platform and a lot of software solutions across And finally, we have focused a lot on building strong partnerships across the Cancer Care Continuum, and we will get come back to these priority areas throughout the presentations. And I would also like to share some of my perspectives on the fiscal year of 2021, a year that has been challenging in so many ways, but also filled with opportunities for Elekta. And here are some highlights. Initially in the year, I mentioned it before, but we focus primarily on securing patient treatments and the uptime in our installed base. And their patients during the pandemic. We also launched products across our portfolio, and I'm very, very pleased to see the interest and the demand for our recently launched solutions Harmony, Brackis Studio, Mosaic 3 and the lightning software for Lexel Gamma Knife. We are in the 2nd phase of Unity, And it's so inspiring to see the volume of clinical evidence in the MOMENTUM study growing as we continue to advance the knowledge and application of MR Guided Radiation Therapy globally. Throughout the year, We have seen our customer and employee satisfaction scores increase significantly across all our areas and all our geographies. And already in Q2, we returned back to revenue growth, and we've seen strong and stable cash flow throughout the year. In Q4, we have gained market share, and we had a very strong order finish of the year. So if we turn to orders in the quarter, you can see that our orders grew with a strong 18%. Q3 report and during the quarter, installation volumes driving revenue was still impacted by lower access to hospitals and came in at 1% in the quarter and 1% for the full year. However, we saw a recovery of installations in At the end of the period, Elekta had an installed base of approximately 4,750 units enabling more cancer patients around the world to get access to radiation therapy. The market situation has improved in all our regions, and all our regions also showed healthy growth. So just to give you a bit of a summary, North and South America orders grew with 13% in the quarter with both North and In South America, the order situation also improved with strong performance in countries like Colombia and Chile. Performance in Middle East Africa and solid development in Europe. Some mature European countries are showing signs of recovery from the pandemic with the launch of new public tenders, and there was also strong demand for Harmony in the region. The Middle East had a good order intake with strong growth in the United Arab Emirates and in German. And in Africa, the development was also strong. Asia Pacific orders grew with a very strong 46%. 2020. The continuing recovery in orders was broad based with many markets contributing, but mainly driven by very strong performance in China and India. The Chinese public market continues to be the main growth driver in the region. And below, you can see some examples of deals per region in the quarter. I think it's very important to look at our performance on a rolling 12 month basis. 2020. And as mentioned, the market situation is improving, and many health care systems and hospitals are starting to recover from the pandemic and investing to manage cancer care need that had built up during the last year. On the graph, You can see Elekta's order and revenue development before and during the pandemic. And you can see a clear U shaped recovery. And during the year, North and South America grew with 23% in orders, Asia Pacific with 5% and EMEA declined with 4%. And we expect installation revenue to improve during next quarters. I have to say a couple of words on China. The Chinese market continues to be a key growth driver for Elekta. And in our Q4, we booked large orders with PLE, the general hospitals of People Liberation Army. And our region in China has gone from strength to strength and really accelerated out from COVID during the year and now showing a 25% order growth and 30% revenue increase in the fiscal year. I am very, very proud of our team in China I also would like to share a couple of perspectives on Harmony, our new linac. And it's really the latest addition to our family of linacs. And treatment slots can be reduced by up to 25% and enabling our customers, the clinicians, to deliver high quality cancer care 2020. And I'm very excited about that our first Harmony went live at 2020 in May 2021. And we have now booked orders in 11 countries in Europe, Asia and Latin America. In relation to the regulatory process, we received CE Mark in November and the process for getting approval in the U. S. Is pending. The Chinese Natural Medical Products Administration approval will be somewhere around the beginning of 2022. To finalize the first section here, we are celebrating because in the quarter, we booked our 100 and the order the machine was ordered by St. George Hospital in New Zealand. So now Unity is registered in all major markets, and it's very, very encouraging to see the progression of the second phase of the Unity journey, focused on growth through further market adoption, clinical studies, gradual reimbursement. And to date, we have treated more than 2,500 patients for 50 Anatomical Areas. And we have also significantly reduced installation time and been driving COGS reduction initiatives throughout the year. So congratulations to the teams and also to our customers for the EUR 100 1,000,000 Unity ordered in the quarter. So with that, I would like to hand it over to Johan. Thank you, Gustaf. I will now go through the financials, starting with net sales and EBITA margin development. In the 4th quarter, 2020. Total net sales grew 1%, with solution sales decreasing 2% and service sales increasing with 6%. Solutions sales was negatively impacted by the pandemic, especially in the emerging markets where installations took longer than normal. Service sales, however, finished the year strongly. For the full year, sales was hampered by the pandemic. Based on constant currencies, net sales grew 1% with a decline of 1% in solution sales and with service sales growing a stable 5%. Turning to EBITA margin. We came in at 19.7% for a full year after achieving a 20.3 EBITA margin in the 4th quarter. Our EBIT margin for the full year was 13.9%. Let me continue with sales for the Q4 from a regional perspective. Starting with North and South America, Sales declined with 2%. North America as well as the U. S. Market was unchanged. The South American market declined due to continued negative effects from the pandemic. Turning to Europe, Middle East and Africa. With declining sales in Africa and the Middle East. Finally, Asia Pacific, where sales grew in China, India and Japan, but other markets were in general slower, which resulted in unchanged sales in the quarter. Overall, the situation we saw early in the year continued in the Q4 with the mature markets performing stronger than emerging markets. Gross margin came in at 38.5%, in line with previous quarter, but lower than last year. High supply chain and service costs and negative foreign exchange effects, mostly from a weaker U. S. Dollar, continued to impact gross margin. EBITA margin decreased versus Q4 last year, primarily due to the lower gross margin. Net financial items were higher than normal as we prepaid a USD 50,000,000 loan. This will have a positive effect on financial items in coming quarters. If we summarize the quarters and look at full year numbers, we see that sales in North and South America declined 4%, with a relatively flat development in North America, but a significant decline in South America due to the pandemic. Sales in Europe, Middle East and Africa declined 2% with Europe growing and the emerging market part of Reading having lower sales, 2018, again driven by the COVID effect. And the 3rd region, Asia Pacific grew 11% with China being the main growth driver, but we also saw good performance in Japan this fiscal year. Gross margin for the year was 40.8%, EBITA margin for the year was a strong 19.7%, up from 17.3% last year, mostly from lower expenses and a positive net foreign exchange effect. I will go through the foreign exchange effect in more detail later. Finance net for the year was SEK 200 minuteus SEK277,000,000 as we have had unusually high gross debt and cash levels during the year to mitigate potential negative COVID effects. As we have performed very strongly, not least in cash flow, despite the pandemic, we have now decreased gross debt levels and foresee an improved finance net going forward. Our tax rate came in at 23.1 percent, in line with projections and an improvement from last year's tax rate of 25.4 percent. Net profit for the year improved with 16 percent to SEK 1,253,000,000 and EPS came in at SEK 3.28 an improvement of 15%. Let's move into expenses for Q4. We continue to do significant parts of both our internal and external activities on digital platforms. But As conditions started to normalize in the quarter, with increases in access to customers and increased travel, expenses also normalized somewhat, resulting in an increase compared to Q3. Main driver of increase in selling and admin expenses compared to Q3 was a one off legal cost of SEK 35,000,000 from the successful outcome of a multiyear Humedica arbitration. We also saw increased expenses in the quarter from incentives and holiday pay as less holidays was used due to a pandemic. Net R and D expense declined due to increased capitalizations. Our gross R and D expense continued to increase as we invest in innovation. For the full year, gross R and D expenses corresponded to almost 11% of net sales. As I mentioned earlier, our EBITA margin for the full year was 19.7 percent and EBITA was SEK 2,709,000,000. This bridge illustrates the EBITDA growth of SEK188 1,000,000 or 7% for a 12 month period. The pandemic had a negative impact on installation volumes with a corresponding negative impact on profitability. The product and Product mix during the year also contributed negatively. This was mitigated by lower sales and R and D expenses. Foreign exchange differences had a positive effect on EBITDA overall, including the effects on all P and L lines. FX had a positive effect on EBITDA of around SEK 145,000,000 Looking at this foreign exchange effect in some more detail, we have seen large market movements with the Swedish krona appreciating versus most major currencies and with the U. S. Dollar weakening overall. 2020. As a consequence, we've had a large negative effect on our revenue. This has been mitigated by positive FX effects on our cost base, of approximately SEK 135,000,000 Moving to cash flow. We continued the strong performance seen earlier in the year. Cash flow after continuous investments for the 12 month period came in at SEK 1,706,000,000, and we had an operational cash conversion of 82%. This was our strongest cash flow year ever in absolute terms. 2020. If we look at net working capital in more detail, we had an improvement in all major underlying working capital items in the 4th quarter. Share improved to minus 7%. Our financial position continued to be very strong with a low net debt level. And we ended the year with a net debt to EBITDA level of SEK 0.25. Based on a strong result and cash flow, the board has proposed an increase in the dividend for SEK 1.8 to SEK 2.2 per share, in total, SEK 840,000,000 and corresponding to 67% of net income. Our new outlook for the midterm and some comments on the trends and impacts we see here in Q1. But I would like to see what we announced this morning and talk about what we announced this morning, Elekta's midterm outlook until 'twenty four, 'twenty to 8% over the coming years, the midterm period, we are now having a growth view of more than We have moved from EBITDA to EBIT percentage expansion over the period. And we have also announced that we'll go to more than 50% of annual net profit in dividend, and that's in line with how we have Q1, we booked Elekta's largest deal ever with Genesis Care in that quarter. On the revenue side, we see improved access for installations and driving revenue growth over the next couple of quarters. And we also are continuing to accelerate our innovation investments in our linac So just to summarize our Q4. You have seen an accelerated order growth, And we have been gaining market share. We have seen the revenue and gross margin still impacted by the pandemic, but will improve going forward. We booked 100 units order, and we saw continued strong cash conversion, And we have also presented our new outlook. So with that, thank you for listening, and I would like to hand it over to Cecilia. Thank you, Gustav. And as you mentioned earlier, our Capital Market Day is approaching, and it will be a digital event on June 7 starting at 2 p. M. Central European Summer Time. And if you have not done so yet, so please register to participate on our website. And even if it's digital, we will, of course will be possible to ask questions. And we think you will find it interesting as we do some deep dives into the market, the strategy and the drivers behind our midterm outlook. And with that, we open the lines for your questions. Please, operator, over to you. And our first question comes from the line of Onit Lueck of Handelsbanken. Please go ahead. Your line is open. Thank you so much and congrats to mention on this very decent order growth. You mentioned that you are taking market shares. I wonder if you could share a little bit more color on this. You may also highlight that Please on both products and regions, share a little bit more on how and where you take market share. Then on your comments on mid term guidance saying that we're returning to pre pandemic growth assuming 6% to 8% market growth, I think numbers has been a little bit higher and maybe you think there will be At least in the short term some pent up demand for this coming year. But also Do you think an ambition of reaching at least 7%, which are on par with market growth Is ambitious or are your midterm guidance a little too conservative? And then just a little bit on innovation. Could you make a short comment on Unity or other solutions in back to potential use within cardiac radio affiliation? Thank you so much. Thank you, Annette. Great questions. So I'll start a bit on the market share, talk a bit market growth and the linkage So if you take market shares, yes, I think in the numbers we see and track in all our different regions, you saw in Q4 a very Strong growth, you can say, in all the regions. And we've seen that trend when we compare to our competitors over the last couple of quarters that We have been speeding up when I think compared to competition and taking shares in most countries and most regions. And it's quite broad when it comes to product areas as well. So it is linacs, it is unit, of course, it is brachy, it is Gamma Knife that have shown a strong market share gain throughout the last couple of quarters, but you can say especially year in Q4 with 18% order growth. If you look at the market growth, I would say that and I mentioned before, pre the pandemic, the market was growing 10%, 11%, if you just added all the Industries order numbers. So it was very strong. In historical comparison, the average growth has been around the 6% to 8% and sometimes a bit lower, 3% to 5%, we have also been talking about historically. So that's why when we look ahead, we see, of course, a pent up demand right now Post COVID, that people need to invest in cancer care. But over the longer period, we believe that the 6% to 8 20%. Market growth is the best prediction we can give based on all the analysis we have been doing. We are then having our own outlook for revenue, and we're saying more than 7%. And I think that's Important to say as well, and that's the number we will be driving for. So the message there is that we should grow faster than the market. The key drivers for that is, of course, unity. It is all the software investments we are doing in innovation right now as well as in the Linnaq family. And then, of course, we have very, very strong positions in the Gamma Knife business or the Neuro business as well as in the Brachytherapy business. So that is the areas that we will drive for growing faster than market. Just before you talk about the evolution, ask you, for example, in the states where your position within Solutions are Do you also expect to that one to increase significantly also within Solutions? Is it mainly greenfield replacement? Or are you flipping hospitals too? Sorry, could you take that one again, Annette? I didn't get the first part of the question. In the U. S, are you increasing your market share? Are you planning to increase your market share as well in the states where you have a fairly low We're planning to gain market in all the different regions, of course. But If you take the U. S, it is the market where we Elekta has the lowest market share for historical reasons. So it is a very important market For us, we have new products to launch into that market. So yes, we our ambition is, of course, to gain market share. And I have often said that in the past that the U. S. Market for us, for Elekta, is not really a market growth market. It's much more of a market share gain market. So that will be the plan going forward as well. And I think Larry Biscotti and his team Are doing a great job in that market. Okay. And then just short on the radio Aviation potential? Yes. It is an area that we're looking into, of course, in our different innovation projects and R and D projects. So yes, We are looking into it. We have some initiatives there as well. And we are following it both, if you say, on the MR side and on the based side. So we think it's an interesting area. Okay. Thank you so much. Thank you. Our next question comes from the line of Patrick Wood at Bank of America. Please go ahead. Your line is open. Perfect. Thank you very much for taking my questions. I'll keep it to 2. The first one, just curious, you'd mentioned the 5% installed base growth, But the services revenues were down 1%. I mean, there's a bunch of different ways mathematically that could happen. Did you have, for example, Fewer more new systems being placed than usual and fewer replacement systems or was it pricing? I'm just curious if there's anything It's a comment on there. And then for the second question, obviously, the order backlog, partly driven by Unity, is still in an incredibly inflated state. And I'm just trying in my head to sort of reconcile that 7% sales CAGR with the very large backlog. So maybe could you give us a little bit of color on the duration of that backlog in terms of is that typically coming through in the next 3, 5 years? Just to get a sense of how those two things relate the backlog relative to the Great than 7 sales CAGR. Thanks, guys. Yes, of course. So if we start with the service question, I'll ask Johan to ship in as well. But Throughout, we saw the 5% growth of the installed base during a pandemic year. And I think That is strong, and that also shows that Elekta is strong in new sites. It's not just about replacements. It's really about getting out to the greenfield areas, taking new share as well. If you take the service revenue growth, that was It's a strong number in the quarter, an isolated quarter, I think, was 6%. We have seen a bit lower numbers in the previous quarters. And the reason for that, Patrick, was that the service contracts, they generate the revenue stream, recurring, of course. But then on top of that, we had a bit more time and material That is more on a case by case basis. And that was more difficult to deliver during COVID. But that's coming back as well. Johan, do you want to add something there? Yes. I would say in the quarter, I mean, the main driver of the good revenue growth in So this was the contract customer. So even though the non contract improved somewhat, that's Still a bit impacted by COVID. So but glad to see the strong service Revenue growth in the quarter. I think I did yes. And then if we take the Unity question, my understanding of the Question was when will the order backlog on Unity turn to revenue. Was that right, Patrick? Essentially, it's just you have a very large backlog Relative to that greater than 7% guide. So I'm just trying to reconcile the backlog versus that guide. No. So greater end, I mean, it should be higher than 7% if I Start there and the Unity backlog. We have had a good year actually, of course, with some headwinds from getting our global teams 2020 to install the machines. But we have seen a fantastic reduction in the time it takes to install the machine, And we have also been able to do quite a good number of installations. But if you take the average Time between order to revenue and Elekta at installation start. On the regular linac, I mentioned 1 year. If you take Gamma Knife for So then you get the indication for the timing. And then, of course, it was impacted compared to the plan we had before COVID on the installation side, but we're quite pleased with the outcome in the year when it comes to unit installations. Very helpful. And just to confirm to make sure I've got it right, the Solutions revenues being slightly down in fiscal 2021 versus 2020. Okay. So I think the installed base growth is linked to the new machines we're installing adding to the installed base. Yes. No, of course. So I think the indication is that it's the new sites, and I think that's something that's very, very positive, of course, And also the opportunity to upsell to the installed base new services, upgrades, after sales, etcetera. 2020. Our next question comes from the line of Veronika Dubajova of Goldman Sachs. I have 3, please. I just want to kind of push you a bit on the midterm guidance, And I appreciate we're going to have the CMD in a few days, but I'm slightly confused. If I look back at the midterm guidance that you had pre COVID, 2020. That's making you more cautious. Is it market outlook? Is it your relative competitive position? What is it that has kind of made you more concerned and therefore less constructive on the midterm outlook for the business, in particular, considering the facts Of the base for that guidance. So that's kind of my first question. My second question is also on the midterm guidance and around Sort of the margin picture of it. 1, kind of would love to understand the rationale for why you've switched to EBIT as opposed to EBITA since that's been Historically, the KPI that you were focused on. And when you talk about margin improvement, I guess, what is the magnitude? And then my third question is, I appreciate the guidance is for 7% plus growth and improvement in margin. But if you can 2020. How you think 2022 will compare to that mid term guidance? In particular, on the margin picture, when I think about things like gross margin, if you can give us some insights into that, given where we are tracking? That would be very helpful. Those are my questions. Thanks, guys. Thank you, Veronika. And of course, great questions, all of them. And I think this if I start with our view on the midterm guidance, I think we have done our homework. We have learned the lessons from the past. Outlook of value creation for the company. It's not each and every quarter or the annual focus. It's much more long term than that. Previous guidance. And I think now we are looking ahead, and we're seeing that if you take the historical market growth and you've seen the historical growth of Elekta, This is an acceleration compared to those levels, and we are then growing faster than market. So I think that's the It is global in many challenging markets around the world. So therefore, we much rather focus on the longer term picture. When it comes to the EBIT question, I hand it over to Johan. Yes. Thank you, Gustaf. So I mean basically, it's we wanted we think it's further down in the P and L, and I think it shows more and more That's really the thinking, Rehan. It's similar to showing total performance. We don't have any items Margin question into next year. We don't really guide on next year margins. It's we say margin expansion on average throughout the period. But if we talk about a couple of the drivers, you can see our gross margin has been quite low in the 2 last quarters due to the reasons we talked previously about, supply chain costs, servicing costs and of course, FX. But if you look at Elekta historically, we have been able to deliver quite a good leverage on our SG and A costs throughout the years. And so that's 2020. And we also see good opportunities for efficiencies in service costs and also installation and manufacturing costs going forward as well. So I think we have many levers to work with. And on the top line side, it's also about the investments we have been doing in service and software and, of course, new platforms like Harmony and Unity that would drive that as well. So that's a couple of the summary of the drivers that we'd also see in the beginning and throughout the next year. Thanks, Johan, Gustaf. That's really helpful. Can I just follow-up? I don't mean to belabor the point, but I'm slightly confused. So the old guidance was 8 to 10, The new guidance is 7 plus off of a lower base. I'm just trying to kind of get to the point of what has changed. Why are you less optimistic today on the growth outlook for the business than you were before? Is it because your assessment of market growth has changed? Or is it because your assessment of your competitive position has changed? No, I think we're saying over 7%, Veronika. So it can, of course, be higher. And for the previous guidance, we have we're not guiding in that way before we left it a couple of quarters ago. So this is the new midterm guidance that we're referring to. And then we've also said that the dividend policy has gone up to 50 more than 50%. And that's also where we've been over the last couple of years. So that's the 3 main components, of course, of our midterm guidance going forward. Okay. Okay. So your assessment of either market or competitive position hasn't changed? No. I think what you have seen actually in the last couple Throughout the year. So we have a very positive outlook on both the underlying demand drivers When it comes to the need for cancer care and our product portfolio, what we're driving right now. Okay. I'm just I mean, I'm just surprised that you're not guiding to 8% plus or 9% plus in that context. Okay. Okay. No, no, understood. Thanks, guys. I'll let you carry on. Thank you. Thank you. Our next question comes from the line of Kitley Jefferies. My first one is just on the EBIT margin guidance. Is it fair to assume that the amortization cost will actually be coming down, so it will actually be supportive to the EBIT margin expansion. And I guess, essentially, my question is, do you still expect to expand your margin on EBITDA On the EBITDA line, please. And my second question is just on the Unity order. If I look back Since you last provided an update to the number of orders, it seems that you've taken maybe 5 Unity Systems And given that you're now in the 2nd commercial phase, is that run rate of 5 orders good enough for you? Or What are your expectations going forward as the market start reopening again? Thank you. Yes. So I can start with the Unity question. And Johan, you can take 2020. So on the Unity side, you're right, it's around 25 orders if you do that math in the year. So that is what we came in, in the year. And if you look Going forward, if you remember, Kit, we have often talked about getting to installation volume around 24 Units in the year, we were not really there this year yet, and we mentioned that before, but we see good opportunity to get there very soon. And we've had quarters where we have installed the SEK 6 per quarter. So going forward, I would say, no, we want a higher number, of Of course, then the 5 you were referring to are the numbers that we've had in this year going forward. And that's what I expect as well 2020 from the market and from our business. And on the link between amortization and capitalization, Jan? Yes. So I think The question was too, is amortization going to go down? Yes, they will go down from unit in the coming years. So we will have some positive impact there. Is that driving the statement why we how we see EBIT margin improving over the coming 4 year period? No. I mean that's We see an underlying improvement, excluding amortizations and capitalizations. That's great. And now I have a follow-up as well, please. Just on Genesis Care, You booked quite a large order back in Q1 last year, but I think there is still half of the total order that would still be Both in the next few quarters. Can you just give us some sense of when The rest of the order will be booked. What was the timing of that, please? Yes. So if I take the overall picture, I mean, it's good to know, and I think all of you know, that Elekta 5 years for service orders. So if you have a Unity outside that period, then you will wait until 1 year and then book it when it comes into the year. So based on that, we'll continue to book throughout with that policy throughout this year as well on those orders we have that is Kind of currently longer than 3 than 5 years. And specifically on Genesis, Kir, you and I. It's dependent on, as Gustaf said, when the different What was outside the that period comes into play, and that depends on how the Close an exact number, but we will book some of that order this year as well, yes. Okay. So is it fair to assume that it will be less lumpy When you first booked the order. Yes. It's much more of a continuous booking as we continue to work off and do the installations and so on. So it's going to be over time. But it's an it's an important part of Q1 as well. And as I mentioned in the outlook for the Q1, we will not book as much, of course, in the Q1 because that was the biggest deal we did ever In Q1 last year. So I think just be mindful of that when you look at the numbers going forward. Okay. That's great. Thank you. Thank you. Thank you. And our next question comes from the line of Karl Nordian of A couple of questions from my side. First, can I just confirm that you said that Yes? Can you hear me now? Not much better. Yes. We can hear you. Okay. Yes. So my first question was just to check what you said on your EBIT A margin guidance, do you still do you expect it to increase going forward in your outlook, excluding the Or if we look at how you have been accounting right now with your amortizations? So I mean the first step is that we go to EBIT because we think it's The way of guiding further down in the P and L. And we've talked about that for quite a while to go there when we have kind of amortized a big proportion of Unity. And then yes, on the EBIT level, we should see an improvement. So it's EBIT we will continue to talk about In the coming quarters and years here, Karl. Yes. Thank you. But I just wonder if your EBITA margin, do you still expect that to increase from current levels in your guidance? I think they will be the same drivers because we should get to a better The balance between the amortization and capitalization, I think it's very much fair to say we are doing large investments in innovation here and now, and they will also be amortized A lot of those projects later in this guidance period or outlook period as well. So So I think we've come to better kind of steady state in the situation between capitalization and amortization if you look in the coming years, sir. Okay. And then just a question on the installation environment, maybe more short term. Can you say anything what you've been seeing at the end of the quarter maybe In May, Malv. Yes. I think it's good progress. We were a bit impacted actually by with the SUEZ The crisis, we had a couple of machines not getting all the way through the Suez channel. It was not that many machines. But Overall, I think we see better access. We also see that the cancer care systems need more installations to take As I mentioned, recovery in many mature markets. China, very, very strong. Some emerging markets still trailing. So I think that's kind of the overall picture. Some disturbances, as you've seen in other industries as well in the logistic chains, But overall, an improvement. Yes. Thank you. And just the last one on your you touched upon it on your Maybe the supply chain on logistics. When can we see this gross margin headwind? When do you expect that to fade and Difficult to analyze from our side. But when we talk to our logistics suppliers and so on, it's during and after the summer that's The autumn. And then we expect it to become more to a normal situation later in the autumn. That's the best available information we have. Yes. Thank you for answering my questions. Thank you, Carl. Thank you. Our next question comes from the line of Two questions, sort of. First, when it comes to Unity, could you comment what the installed base Of Unity Machine saw now. And related to that, how soon do you think you will average 2 installations per month, I. E, 24 Installations per year. My second question comes to what assumptions you have done for the gross margin in the new margin Guidance. Yes, that's it. Thanks. Thank you, Christophe. So the first question was unit installed base and then what's the gross margin assumption. And the third one was sorry, I missed that. 2. 2, okay. If we then start with So installed base, if I start with that one, you'll get more of an update in more detail at the Capital Markets Day. But I think the installations are going well, and we are somewhere around more than 40 installed machines. But you'll get more updates in the Capital Markets Day from Lionel and Thijs from the business line. So I think that's when it comes to the 2 per month that we have been talking a long time, I think in next year, we should be able to be there. And we've shown that we can be on a month by month or quarter by quarter basis, but we need to get to that important milestone as well, But somewhere in next year, I would say. And Do you see if you look at the backlog you have now of products, do you see customers also being ready to take installations? If I remember correctly, that was sort of an issue the 1st few years. Yes. The readiness is, of course, much Better and we have now many more discussions around it. That has not been easy during COVID, of course, because it is a significant Installation. So I think that has actually gone better than we expected throughout the COVID situation. And we also have a lot of those discussions with our customers to confirm the installation dates. And we haven't had any cancellations. I think that's important to say as well. So yes, a lot of these discussions are going on to confirm the dates when we start the installations on the Unity side. So I have a positive outlook there, and that discussion is also stabilizing. On gross margin, I mean, we have a Capital Markets Day in more than a week. So I would like to postpone that question Until that, we will go through the drivers, as we stated, for the outlook at the Capital Markets Day. Yes. But don't expect the gross margin guidance. I think we will focus on EBIT. It's just the fact that you started over the first half of this fiscal year, you have this amazing gross margin and then second half It's been weaker than normal. And at the same time, I think that the starting point for the EBIT margin of 13.9% is, of course, also you don't have to do it now, but that's a No, I think it's an important point. And that's why, I mean, in this presentation, we talked quite a lot about Currency because it is such a significant currency swings for Elekta with the Swedish krona, the euro and the dollar in the quarter. And you have more of that information also in the PowerPoint. And we will give more comments and views on that in the Capital Markets Day as well. But We try to guide and help you when it comes to currencies going forward with our revenue splits and so on. Thank you. Thank you. Thank you. And our next question comes from the line of Michael Jungling of Morgan I'd like to ask 3 questions. Firstly, on the midterm sales growth CAGR, the guidance of more than 7%. I would like to get a sense of what you're assuming with respect to the Siemens and Varian combination In terms of their guidance about trying to capture market share from you as a result of the bundling of imaging with Linacs, I I think that sense of how much of a threat that is in that midterm guidance. Question number 2 is on Unity. Can you talk about the quality of the Clinical data that you've been able to accumulate and how close you are to using that in applying for incremental reimbursement In the United States. And then the third question is on EMEA when it comes to the order book momentum. Adjusted for comps, it looked quite weak. And I would like to know how you would describe the prospects of pent up demand over the next 12 months in the major countries. And also perhaps you could make a comment about the prospects between the government hospitals and the private hospital operators. That's all. Thank you. Thank you. I could probably talk about that for 2 hours, those questions. But I'll try to give a summary. So In terms of the competitive situation in the view of our outlook, I think our view is that we should take share. And of course, our competition is saying that as well. But we will continue to drive and accelerate and be focused in what we do and what we develop in the precision radiation medicine or the radiation therapy area. Of course, we need to have strong partnerships when it comes to larger deals with other players in the cancer care ecosystem. So and that's not a new situation for Elekta. As you know, that has been Part of Elekta's success always and part of how we do our business, but we will be focused on Precision Radiation Medicine. And we see most of the business is actually to the radiation therapy clinic currently. How much of synergies or I mean, it's more the synergies is something they talk about. I mean, on our side, we are driving our agenda and our growth And our products, so that's what we are focusing on the midterm guidance that we just presented. Unity, we have the momentum study, as you know. It is progressing very well, and we have big meetings Right now, actually, with our consortia members and our members around the world presenting Data discussing the data and so on. And it's very, very fascinating and encouraging to see what our users and how they can treat patients that you couldn't treat before those cases. So that's building up. EMEA. If you take EMEA, it is really about 2 different, say, regions. It is about The more mature European Western European countries, North, South, that has recovered quite nicely. And then it's been a bit more struggling in the emerging markets. I think we have shown a great performance taking market share, But overall, the market has been not growing or sometimes also contracting compared to previous years. So I think that's what you see Yes, in the numbers. Did I miss something, David? Yes. Could you just comment on the demand prospects here between the government Europe, please, EMEA. Europe, Europe. So what we've seen is that the public tender activities has been accelerating. The private initiatives, we have also seen that throughout the pandemic, but a bit more now in the end. But I think if I would highlight one factor, It would be the public procurement or tender increases throughout the last couple of months, and that's what we expect going forward as well. But there is a lot of private interest because I think a lot of more financial players, more commercial players See cancer care and radiation therapy as an area with good reimbursement And also a good prospective growth going forward, especially in emerging markets. Okay. And just a yes or no, please, on my Unity question about filing for incremental reimbursement. Are you in a position with the MOMENTUM study to do it This calendar year in the U. S. Let's we will give you an update on the Capital Markets Day. Okay. Thank you. Thank you. Thank you. And our next question comes from the line of Scott Bardo at Berenberg. Please go ahead. Your line is open. Yes. Thank you very much, guys. Some questions, please. So I think this is the first time that Elekta issues a mid guidance without having the prospective year guidance in place. So I'd like to understand the rationale For not providing a 2022 guidance, given your commentary about the visibility of installation and so forth this year. Related question, please. I think historically, Gustaf, you said the market was growing 10% prior to the crisis and you would expect it to bounce back in a similar magnitude given pent up demand. Is it fair to say then That 2022, in your opinion, should track at or above your midterm margin your midterm growth expectation. So I'd just like to understand that in the context of your previous comments. And last question, please. The group previously highlighted the ambition to have 200 basis points of EBITA margin expansion Thank you, Scott. So if we start with the first question on the next year guidance, so to say. We have decided, based on all the input, as I mentioned previously as well, shareholders from within Elekta. And we come to the conclusion that for Elekta, it's better to have a midterm focus. We are a product based company. We are in volatile markets. But over a long period of time, if you look at historically as well, We've been able to show strong sales growth and also margin expansion. So that is what we'll continue to focus on Going forward, and that's also the reason why we haven't then presented a 1 year outlook. However, we talk more about the quarter, and you see that in our presentations that we try to give some highlights on the coming quarters Also to guide investors and analysts. On then coming back to growth, I think we showed 18% growth in the quarter. And I agree, before the pandemic, the overall market was up 10%, 11%. But if you take a longer perspective there, Scott, and look at the listed company's order numbers, you'll get 2020. So if you take a longer perspective going forward, that's how we expect the market to grow. And then we are saying we should grow faster than the market. On the midterm, the previous guidance, The guidance that is not valid anymore, we talked about the 200 basis points. But now we're talking about the Margin expansion on EBIT level, but we have not disclosed any quantified number how that will develop over time going forward, But it should be an expansion. Okay. Just a follow-up then, please. I'm sorry, Gustaf, to push you on this. So yes, your order book growth looks very good indeed in the Q4. Is the signal then that in 2022, your revenue growth should be above your midterm framework. If you could be explicit on that, please. And furthermore, on the margin side of the equation, Is there any in your previous guidance, you had efficiencies and growth driving margin expansion. Has anything changed to the negative with respect to the sort of flow through and dynamic of margin progression? I think on the first question, you're asking me to guide for next year, Scott. And we're not guiding for next year when it comes to a specific number. What I can say about and as presented in the presentation, you have seen a great order recovery. And in this the used scenario, the recovery scenario, we expect revenue to follow In the coming quarters. So that's how much I can say on that topic. And sorry, the second question was So the underlying drivers for the improvement in margin, I think that they are. Yes. And I think I mentioned that earlier in the call as well. So I mean on top line, we drive a lot of software, 2020. And that has impact above gross margin. And then of course, you have leverage on SG and A expenses that we have shown in the past as well. So I would say that on a high level, that is some of the drivers. Thanks, guys. Thanks. And we are running out of time, but we will try to take the following question as well. But please try to state not that many, and we will try to give short answer from now on, sorry. And the next question comes from the line of Victor Forschel of ABG. Thank you so much for taking the question. I'll limit myself to 1. And it's looking at your Service margins at the moment, obviously, you had some tailwinds in the beginning of the year and now some headwinds So what's the latter part? So just curious how that progressed when comparing that on a year on year basis and perhaps also The last couple of years' trajectory that you've had on service margins and also what you see for the future? Thanks a lot. Yes. Thank you, Victor. I think as we stated, we've had higher service costs towards the end of the year. So that's had Some negative impact on service margins in the last quarter. Over time, service margins have been stable. So No. Major differences or changes in the last quarters and years. So it's fair to assume that it was rather flat on a year on year basis in this fiscal year? Yes, I would say that. Okay. Thanks a lot, guys. Thank you. Thank you. And there are no further questions in the queue at this time. Thank you.