Earnings Call: Q1 2021

Apr 20, 2021

Hello, and welcome to the Getinge AB Q1 Report 20 21. Throughout the call, all participants will be in a listen only mode and afterwards there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Matthias Perjos, CEO. Please begin with your meeting. Thank you very much, and welcome to today's conference, everyone. I have Lars Sandstrom, our CFO, with me, and he will present the financials A little bit later on, but let's move directly over to Page number 2, please. We'll start with a bit of a summary from a financial perspective of the Q1. So these are the key takeaways. We had organic net sales growth Of the 12.6 for the Q1 of this year. This is mainly explained by large deliveries of products for Transfer and ECMO therapy, where we expect continued strong demand going forward as well. We also delivered a large number of advanced I see ventilators in the quarters, but expect sales of ventilators to return to more normal levels for the full year of 2021. So we Confirm what we've said earlier in that regard. Order intake decreased organically by 22.8 21? Percent compared to 2020. And 2020 was the Q1 there was the 1st quarter where we had an exceptional COVID-nineteen related order intake, as you may remember. The large volumes and continued focus on productivity as well resulted in higher margins. It also strengthened our free cash flow. And as a result, we had a much lower net debt year on year as well. The consequence of that is obviously that our leverage improved to 0.7% compared to 2.4% 1 year ago. We can then move over to Page number 3, please. So a lot of moving parts when it comes to order intake trends. So if we take a closer look at this, we can clearly see that the trends So largely continued to converge, and the exception here is life science, where growth was exceptional also in this quarter. When it comes to ventilators, we continue to move towards normalization. While we expect the underlying demand in cardiopulmonary to stay on even if the order comp year on year on year is up there. When it comes to products for planned cardiovascular surgery, we continue to see improved traction During the quarter, and we expect this part of the business to continue to gradually improve as more and more people get vaccinated and more Those can focus on handling the backlog of surgeries rather than the pandemic itself. As a large portion of our sales in these categories To take place in North America, it is highly important that we continue to see good development in this in the vaccination ongoing vaccination campaign We also start to see good signs of recovery of the order book in sort of the workflows as hospitals start to look beyond vaccination and invest in more Infrastructure, so this was encouraging during the start of the year. We expect this recovery to continue and And also materialized in consistent net sales growth in the second half of twenty twenty one and onwards. When it comes to Life Science, we still have good growth in sterile transfer products, but it was also encouraging to see our other categories In Life Science growing in the quarter, so it's really positive. We can then move on to Page 4, please. So if we take the trends that we saw on the previous page and look at what this could mean in terms of net Sales for 2021 compared to 2019, it might look like something like what you see on the picture here. In cardiac pulmonary, we expect the high demand on products for ECMO therapies to continue, so driving growth throughout the year. This is It's supported by gradually increasing capacity as well. You may remember that we are still in the midst of a capacity expansion program here will have gradual effect throughout 2021. When it comes to Critical Care, we expect the year to be on par 2019, despite us coming in a bit stronger in the Q1 of 2021, and the reason this is that we believe in normalization and demand for ventilators for the rest of the year. So we will have a bit of a reverse hockey stick here. When it comes to products for cardiac and vascular procedures, we started off around 10% below 2019, but expect recovery at hospitals to go back to new to whatever the new normal will look like. And from there, we expect to grow to meet the modeling to the backlog of surgeries. In Surgical Workflows, we expect orders to continue to recover in the first half of twenty twenty one and then transform into net sales growth in the 1. 2nd half of the year, which will bring us closer to 2019 levels for the full year. And then when it comes to Life Science, we expect approximately 100% net sales growth in sterile transfer, and this is mostly related to production of Seams, which is an additional volume compared to what we've had before for this part of the product range in Life Science. And the capital goods portion of Life Science, we expect the recovery in orders in the first half of twenty twenty one to transform in To increase sales in the second half of the year. So all in all, this sums up in a rather dynamic 2021 as expected and then also guided for earlier. With that, we can move to Page number 5, please. So based on what I just described here and based on what we know from our customers and also given the That do remain regarding COVID-nineteen and also currency impact. We choose to keep the outlook for 2021 unchanged. Of course, if we continue to see stable and consistent improvement, we may consider adjusting this. But for now, we remain with the guidance given earlier. So with that, we can move to Page number 6, please. So we take a step back then and look at some of the key activities and events during the quarter. It's been a busy quarter also from that Perspective. So during the quarter, we launched, for example, a new integrated solution for efficient sterilizations, Sterilization of bioreactors for labs. I like this because it's the first major examples of how we can capitalize on the combined Strength of Geringa and Apticon, which we acquired in the beginning of 2020. Also in the wake of At Endemicare, we've introduced a virtual hospital where our customers can interact with our products, which is a really good complement to the experience centers that we have in the U. S, in Europe and in Japan, where customers can interact Basically with our products. So this is a very good complement to avoid travel. To strengthen getting its attractiveness in the work Well, we launched a globally flexible workplace concept. And in short, this means that employees can choose to continue to work remotely as they've been doing throughout COVID-nineteen. And combine this with also, of course, the face to face interactions once we have our arms around the pandemic. So internal reactions have been very positive and we see good opportunities for increased productivity for Garengen. This is also supported by research that's been done both before and during the pandemic. We also see potential for further We improved the employee engagement and it's also, of course, positive from a sustainability perspective. We also initiated a strategic partnership with the School of Business Economics and Law at the University of Gothenburg, and this is focused On sustainability and also customer centric innovation in health care and life science context. So very excited to be part of this. We've also decided to host a virtual Capital Markets Day towards the end of the year. The date for this is November 22nd, and we very much look forward to this. So please make a note in your calendars for this day. Then if we move to the right hand side of this picture, our improvement journey continues when it comes to productivity as well. We have a restructuring plan in place for our facility in Rastaf in Germany. What this means is that we will focus on R and D and high value add Assembly of operating tables and cardiopulmonary hardware products, where we have a strong local heritage and strong competence. In panels, we will increase our efforts to reduce costs and improve productivity. So for Santander savings are expected from capacity reductions, from procurement, from support function and outsourcing of noncore activities. The restructuring costs that we've taken in the quarter is SEK 19,000,000 and approximately 70% of this is related to surgical workflows and the rest It's related to acute care therapies. And the measures under implementation now are expected to have a gradual effect From late 2021 and onwards, and the annual effect is the same as the restructuring costs, so SEK 90,000,000. We're also continuing the consolidation of our operations in New Jersey and the U. S. The project is running according to plan and expect to be finalized By the end of 2021. And really want to compliment the team who has done an amazing job in very difficult conditions during the whole of last year. And We look forward to finalizing this now in a good way in 2021. One of the financial effects of this right this quarter is a capital gain of SEK 37,000,000 from sale of real estate in the first The quarter and this is reported as an item affecting comparability. We can then move over to Page number 7, please. So we had organic net sales growth in all business areas in the Q1 of sales growth. Now when we look at order intake, we had a decline as expected. We had a 22.8% decline when it came to order intake. I assume this wasn't a surprise to anyone, given that we were comparing now with the Q1 of 2020, where we had the positive impact of the early phase of the pandemic, especially related then to ventilators and products for brake fluid therapies. However, I think it's good to point out that we have a really strong order momentum in Life Science. We've grown in all product categories and all regions. It's especially nice to see the strong comeback in Asia Pacific within United Science. Here, we had almost 200% organic growth in the quarter. We also see orders recovering in a nice way in Surgical Workflows and the parts of the Clear Care Therapies that have been negatively impacted by COVID-nineteen, so quite a mixed picture under the aggregated number here. Net sales then, we had 12.6 percent organic growth in sales in the quarter. We had growth in all business areas And in all regions. When it comes to acute care therapists, this explains a large portion of the strong development in EMEA. We had also life science growing sales significantly in MAM and Surgical Workflows showed really good progress year on year, especially in Asia Pacific. So from that top line view, we can move to Page number 8, Please, and look at this from a different perspective. When it comes to order intake then, it amounted to SEK 6.16 SEK616,000,000 in the quarter. In Acute Care Therapies, we had an organic decline of 38.8 percent And there was SEK 3,133,000,000 decline in actual numbers here. And the order intake then decreased as a result of the very challenging comps that we had when it comes to ITU ventilators and products for ECMO therapy in the Q1 of last year. When it comes to order intake in cardiovascular surgery products, we saw a gradual improvement during the quarter, but didn't quite reach The level of last year. In Life Science, we had a 55.5 percent organic growth And SEK277 1,000,000 in actual numbers. We saw significantly increased organic Categories and in all regions within the life science business area. The good order growth in Asia Pacific, Which I mentioned is attributable to good order intake in sterilizers, in bioreactors and in sterile transfer products. Also very encouraging to see that Surgical Workflows had a 9.1% organic growth in the quarter, SEK 20,000,000 in actual numbers. And organic growth there from an order perspective was in all product categories And contributed to a good sequential recovery in the order book as well. If we look at the Sub areas for vertical workflows, we had integrated workflow solutions accounting for the largest increase in relative terms with strong growth In EMEA and Americas primarily. In absolute terms, infection control accounted for the largest organic growth attributable to the Americas And followed by EMEA. Let's then move over to Page number 9, please. So net sales amounted to SEK 6,169,000,000 in the quarter. We had acute care therapies with 12.9 percent organic growth or SEK 57,000,000 in actuals. Large deliveries of ICU ventilators in all regions for advanced treatment of COVID-nineteen patients Contributed to the good growth. So some of the lingering pandemic effects that we talked about in the Q4 is clearly visible here. We also saw that sales of ECMO therapy products continued to grow organically, and this is a longer term trend that we expect to continue. When it comes to organic sales of cardiovascular surgery products, we saw a gradual strengthening in the quarter, It seems in line with the order intake development there. When it comes to Life Science, we had a 38% organic Yes, increase in sales SEK 162,000,000 in actuals. We had significant organic sales growth in all regions and in all product categories For sterilizers, which have longer lead time from order to delivery. When it came to sterile transfer products And bioreactors, these are the categories that we see the strongest growth in, followed by dishwashing disinfectors. We're also positive to note that we had service and spare parts increasing organic sales by almost 15% compared to Q1 of 2020. So overall, really good in life science. Surgical Workflows, we had a 3.1% The organic growth, that minus SEK 84,000,000 in actual numbers. And we saw sales growing organically in all product categories And particularly good growth in operating room products with significant deliveries in EMEA and in Southeast Asia. And despite the headwinds of 2020, we kept our residents to support customers, which really pays off now in the beginning of 2021. Last but not least, we had a significantly negative currency impact on net sales in the quarter, so minus SEK638 million or equal to minus 10.6%. Let's then move over to Page 10, please. So when it comes to adjusted gross profit, we had an increase by SEK 67,000,000 to SEK 3,285,000,000 in the quarter, and this is driven mainly by significant contribution from Life Science and to some extent also from Acute Care Therapies. If we compare with 2019, gross profit is up almost SEK 500,000,000 all in all, so rather robust Performance from that perspective. We can see that FX is, of course, hitting us hard on gross profit this quarter. We minus SEK418,000,000 of impact there. However, we are still benefiting from positive volume and mix effects From ventilators, but also from ECMO and sterile transfer. And I must say that it's encouraging to see historical workflows improving versus last year as Well, the team here has done a very good job during 2020 preparing for a post pandemic reality. With regards to sterile transfer, you can clearly see start to see how the strong momentum is having a positive effect on the gross margin for Life Science, which is up almost 3 percentage points from 2019. And it's also encouraging to see the improvements in Surgical Workflows compared to 2019, as I mentioned. For the group as a whole, the gross margin is flat year on year. On the positive side, we have support from volume and product mix, While at the same time, we still have a very negative FX impact, but also under absorption in production in parts of our business areas. This is something that on the other hand creates an opportunity as we go forward and continue to fill the order books. With that, I suggest we move over to Page number 12, and I leave over to Jullars to talk about the financial development a bit more in detail. Thank you, Matthias. Well, starting with adjusted EBITDA, it increased by SEK 408,000,000 in the quarter despite the fact that we had negative FX effects of SEK 169,000,000. The main reason for the improvement comes from a significant decrease in OpEx year over year. They are mostly on selling and admin expenses, as you can see here. On the margin, OpEx explains 5.4 percentage points on the difference in the data margin year over year. In relative terms, OpEx decreased by 14.8% compared to Q1 2020, Mainly due to currency effects, restructuring activities and the new ways of working as a result of COVID-nineteen that has started to take effect from Q2 2020. Organically, adjusted operating expenses decreased by 4.6%. Adjusted gross profit growth also contributed positively by SEK67 million due to the reason Matthias just mentioned. On the GP on the margin, GP explains 1.1 percentage points of the improvement from last year. Yes, we have higher sales and lower depreciation. We also see positive contribution from Depreciation at almost 1 percentage point on the margin year over year. Currency had a negative impact of 0.8 percentage points on the margin year over year. All in all, this resulted in adjusted EBITDA of SEK 1,079,000,000 compared to SEK661 1,000,000 in Q1 2020. And the margin increased from 11% to 17.5% year over year. In 2019, we were at SEK369,000,000 and an EBITDA of SEK 6,700,000. It's also worth mentioning here in compared to 2020 that we can see that the improved EBITDA was It's actually attributable coming from all business areas. Then let's move over to Page 13 bps. As we have mentioned before, currency had a material Effect on our net sales and profit for the quarter due to the strengthening of the SEK year on year versus most other currencies. This is, of course, taken into account when setting the outlook for the year. On the left, on the page, you can see 3 major currency pairs for us, Followed by a combination of smaller, so to say, currencies with high volatility against it. Each of them represent a small portion of our business, but Put together, they stand for approximately 10% of our revenues. And of course, we use a strict pricing discipline and use Prices in many currencies in these countries in order to secure a good integrated margin, but you cannot mitigate all effects when you see volatility like this. The dark blue solid line in each graph is average rate, which we use in our reporting. You can see there is quite a substantial difference year over year, especially here in the first half. The dotted line represents closing rate each month. As we are sort of long in U. S. Dollars, where we have more revenues than costs. And the U. S. Dollar represents more than onethree of our total revenue. Depreciation of the U. S. Dollar in relation to CFO of well above 10% will, of course, have a negative impact for us, Especially now then in the first half of the year. I wanted to show you this as a reminder when taking FX into account. You'll also find some good information on this in the annual report that we just launched. Please then let's move over to Page 14. Free cash flow Doubled year over year to approximately SEK2 1,000,000,000 mainly due to increased earnings and continued good control on working capital. We also had a capital gain from sales of real estate impact and net investments in the quarter. When it comes to working capital days, This continues to decrease on a rolling 12 month basis, which is, of course, helped by the increase in revenue. We are down from 36 days from the peak in Q2 2018 now. We also see a continued increase in our operating return on invested capital, where we are at 20% sharp on a rolling 12 month basis. And one could expect to see some kind of reversal trend, of course, a more long term trend on working capital days and return on net net capital when net it's moving to, I would say, more normal territory. Let's move to Page 15, please. Net debt was positively impacted by the free cash flow, taking us to SEK 5,600,000,000. And if we adjust for pension liabilities, we are at SEK2.4 billion. We have continued to reduce funding during the quarter with more than SEK 2,200,000,000 and we continue in coming quarters as well. This brings a leverage of 0.7 times EBITDA. And if you adjust for pension liabilities, leverage is at 0.3 EBITDA. Cash amounted to approximately SEK 5,700,000,000 at the end of the quarter, And this is, of course, something we're looking closely at as our intention is to have an effective balance sheet over time. Let's move to Page 17 and over to you, Maders. All right. Thank you, Lars. So before we move to Q and A, let me just summarize some of the key takeaways after the Q1 of 2021. We can see that we have a market that it's moving towards some kind of new normal, but a lot of uncertainty remains. There are pandemic effects In several of our markets and at the same time, we do see hospitals trying to really get or shift the Towards working on the surgery backlog and some of the longer term investments in instead. We both had a quarter with rather good activity levels, not only on the market, but also with really good progress on Strategy implementation continue to work on our productivity. From a financial perspective, we've recorded a good organic Net sales growth, where you can see that both the volume effect, mix effect, but also the productivity work has a positive impact on our margins. And we've been able to continue to strengthen our free cash flow as well. And as a result of this, we have now a leverage ratio of 0 point 7% compared to 2.4% a year ago. And what this means for the rest of the year is that we do keep our Outlook for 2021, unchanged. So at least SEK 27,000,000,000 in sales is what we expect for the full year. With that, I thank you for listening, and we move to the Q and A part of this conference call. Thank Our first question comes from the line of Annette Lueke from Handelsbanken. Please go ahead. Thank you so much. And I think it's in its place to say congrats on a very, very strong quarter. I would like you to share a little bit more on the ventilator sale. How many units did you actually sell here in Q1? And based on that, where do you see the full year range to be? I know you have highlighted the 8000 to 12000 systems for 2021. Have orders in, for example, Brazil or Portugal, maybe change That or where are you in that range? Then, Matthias, please, any help you can offer to us on the margins. You have incredible margins this quarter. Of course, not all of that is sustainable for the rest of the year, but where should we be compared to what you had in 2020? And then how much in this quarter of The improvements we have seen come from the beta bags. It would be very nice to have a feeling how much of an impact Do we actually have more to come for the remainder of 2021 in terms of the feedback? And then finally, are you discussing orders for 2022 with the vaccine companies? That's all for me. All right. Thanks, Annette. That was quite a lot of questions there. So we'll start from the beginning. We had about 3,500 ventilators So in the Q1, and we this is in line with our own expectations. So it doesn't change the outlook. As you said, we guided for between 8,012,000 for the full year, and we remain with that number as well. So we have a bit of a reverse, obviously, I think, is the best way to put it probably here for 2021. When it comes to the margin development, There are a lot of moving parts here, as you've noted. And I think the best thing that we can say, I'd like more to talk about the underlying margin improvement journey that we are on. We said also in the previous quarter that we do expect this to continue also in 20 2021, so at least 1 percentage point of underlying improvement. That's really the best View on the future that I can give you. When it comes to the Betabag margin impact, we don't break that out Per se, but it's, of course, positive. It has higher average margin than Life Science in general and higher gross margin Then the group average as well. And it draws very little OpEx. So it does continue to have positive mix effect of course, and we do expect that to continue during 2021. We I mentioned when we're doing the presentation here, we do expect our sterile transfer products to increase in sales with about 100% for this year. So There will continue to be a positive impact from this. And the longer term outlook is that we in our discussion with customers, we have long term discussions as well. This is not only for 2021. It would stretch through 2022 and probably into 'twenty three as well. Given how the vaccine rollout is going right now and also given the different mutations that we see, I think the outlook is we will have to live with this for a while and that will obviously impact our sales transformation. Okay. Thank you so much. And the next question comes from the line of Michael Jungling from Morgan Stanley. Please go ahead. Thank you and good morning all. I have three questions. Firstly, how much were the COVID-nineteen related savings in the quarter From lower travel marketing costs, etcetera. I'm looking at Page 4 of your report, and it said it was down or operating costs were down 4.6 Percent down organically. Is that all because of COVID-nineteen? Or were there other things in there that were relevant? So a bit of a split from COVID-nineteen. Secondly, You make a big point in your report about the new way of working, and I'm trying to understand what the reduced expenses Maybe. Do you foresee that the savings that you have from COVID-nineteen will be permanent going forward? Is that the statement That you're trying to make in your Q1 release. And then thirdly, on Surgical Workflow, can you comment on How much restructuring you think is left in terms of time until this business is achieved close to where you want it to be? Will it be 20 21. Thank you. Yes. Okay. When it comes to the COVID-nineteen related savings, we don't break them out Per se, the bulk of it, if you compare to this quarter compared to the quarter of Q1 2020, There is a significant portion of COVID-nineteen savings because Q1 last year, we operated at normal at least 2 of the 3 months. It was really only in March or second half of March that we saw a real impact of this. So it's a big portion of it, absolutely. But there are also some underlying productivity savings in there. When it comes to the Smart Workplaces content, we do this for three reasons. One is that It will increase the productivity of the company. So that's really a key point. 2nd is that we do see that it does increase employee engagement as well, which think supports many good things in the operation of the company. And the third thing is that it has a positive impact on sustainability as well. So It will lead to a portion of the COVID-nineteen savings being permanent, but I don't have any new breakdown other than the figures we gave you. I think Q3 of last year, that about half of the COVID-nineteen related OpEx savings were going to be permanent and half of the would likely I'd like to come back. And then your final question when it comes to Surgical Workflows. I think the team has done a really good job during 2020, continuing implementing the productivity improvements that we have in our plans. So the restructuring you saw now It's really one of the key last ones, I would say. I think a lot of work has been done now. A lot of implementation Will be done by the end of this year. So we should really see continued gradual improvement in Surgical Workflows reinforced as well by the fact The market is likely to come back for that part of our business. Okay. And then I might just follow-up on the COVID-nineteen related savings, I. E, The permanent change in the way that your employees will work, do you foresee that this will then have no impact on organic sales growth, meaning You can run these businesses now much leaner with the same level of organic growth. Is that sort of the conclusion that You've come too. Yes, absolutely. We don't expect any negative impact on growth. And I think I could talk at length about this Constantly, we've gone through, I think it's about 60 types different types of work roles in the companies. And we have the whole From rows that cannot work remotely at all to row that can work here remotely permanent. So what the average is there, I really couldn't Tell you, but we certainly don't expect any impact on growth here. It's as I said, it's productivity, it's employee engagement and it's sustainability. Okay. I promise this is the last question, but I find this interesting. If you look at the COVID-nineteen related savings, is it mostly How will it impact your sales force? Will you have less salespeople because they will do more remote connecting with clients? I'm just current it's really around the sales function and these work from home type scenarios. Can you comment on that directly, please? Yes, sure. No, absolutely. I think the actually as a customer effect of this is also really positive. We can see that our Customers have become used to also a smarter way of working. So I don't expect any less interaction with customers, quite the opposite Actually. And I think when it comes to number of salespeople, again, there's no reduction in this, but it's more ways of working, both with sales but also with service. We're finding new, smarter ways of being more effective and productive when it comes to service. So both in terms of Increasing customer satisfaction, but also doing it in a more productive way. So we're quite enthusiastic about this. Great. Thank you so much. And the next question comes from the line of Karl Laurin from Danske Bank. Please go ahead. Yes, good morning. So I have a couple of questions. If we start with the surgical workflows, if you just could comment on how you're seeing the discussions going Right now with kind of a 3rd wave or whatever wave you want to call it, how is this impacting the ongoing discussions you have with Hospitals regarding the infrastructure investments. And then also on acute care therapies, what trends are you seeing right now With on the ventilator side, because I think it was in the Q3 report, you also said that you saw kind of an uptick when you had cannot pay second wave. Are you seeing the same thing right now? Or how is the order side looking during the last couple of weeks within ventilators? Yes. Okay. When it comes to Surgical Workflows, the 3rd wave hasn't really impacted much The discussions as we saw this time of 2020. So we do see more positive activity. I'd say overall, We have more tenders out there. There seems to be confidence despite the 3rd wave to continue and plan for investments. So Quite a big difference depending on where you look in the world. But on average, I'd say it's clearly positive. When it comes to acute care therapies, we've had a mini ramp up in the Q1 of 2021 as Well, to deliver against the increased demand that we have seen. But we do expect this to tail off Still here in the last three quarters of the year. So order intake was on about the Same level as sales in Q1, and that really gives us comfort that these 8000 to 12000 ventilators that we've guided for this year will materialize. When it comes to the other quarter with UC Care Therapies, we continue to see a good demand situation when it comes to your pulmonary business and especially ECMO therapy products then. And then a gradual recovery of Both the income business but also the other elective procedure related types of products. And I think I said after the Q4 that Our main plan, our main scenario for 2021 is that this will come back to pre pandemic that is due in Q2, and we stand by that statement. Okay. Thank you. And the next question comes from the line of David Adlington from JPMorgan. Please go ahead. Hey guys, I have the questions. So again, firstly on Surgical Workflows. It looks like you took a lot of orders through Q1 that you actually filled In Q1, is that fair? And maybe just a bit of further color into how you expect that trend to continue into the very short order to delivery time? And then secondly, just on elective surgeries. I just wondered if you could give a bit more detail into how you saw that improving through the quarter? Was January, February And then a big March or was it more tedious? Yes. When it comes to SW, it's a correct observation that we had a higher than normal, call it, book and turn in the quarter. So we've remained ready to supply Like the challenges of 2020, I think that's one of the things good decisions that we made in cervical workforce here to Maintain the readiness to deliver. So we benefited from that in the Q1. I don't think you should take that As a new normal that we will have much shorter lead time going forward. We as this business continues to come back To normal, we will gradually fill the capacity and probably have the same lead times as before. There may be some productivity improvements, but I think you should assume that It's in line with historic patterns, yes. And then when it comes to elective surgeries, It was a slower start of the quarter and it has gradually improved here. So stronger month by month through the quarter is the correct Perfect. And overall elective surgeries, I may have missed it in the commentary through the call, but was that still Up on year on year or is it always still negative territory in the Q1 in terms of electives? Still slightly negative. Perfect. Thank you. And the next question comes from the line of Christopher Liljebeth from Carnegie. Please go ahead. Thank you. Two questions coming back to this never ending store of ventilators. If it's correct that What you say here is that you will have below normal shipments in the second, third and fourth quarter. And also on operating costs, a lot of different moving parts. But if you take all of it together, Is it possible to in some way explain how much higher operating costs will be, let's say, in 2023 Versus the current lever? Or is there even a possible scenario here where operating costs are flat in this period? Thank you. Yes, thanks. When it comes to ventilators, there would be a bit of a reverse hockey So we if you take the 3,500 we delivered now and if you choose the middle of the road approach With 10,000, yes, it will be a little bit lower in the coming quarters, but still a lot of uncertainty here. So that's really the best It's a future view that I can give. Then when it comes to the future OpEx question, I really can't answer. We don't To guide that on that level and that long time I really couldn't give you a view on that going forward. Could I just follow-up on that? When you say that Half of the COVID related savings are sustainable. Does that include future Efficiency gains as well or will that come on top of those savings? I think when we made that statement after Q3 last year, I think it was not meant to include efficiency savings. We do continue to work with productivity, of course in addition to this. So the COVID related savings, they come from new ways of working, which I guess is an efficiency measure as well, but we talk about this purely in relation to COVID-nineteen and those different ways of working. Okay. Could I ask one more? On ECMO, you mentioned about being a group driver. Have you changed Sure. Or view in any way how much ECMO will increase this year? No. We remain with the same view as earlier. Okay. Thank you. And just as a final reminder, if you do wish to ask We have one more question from the line of Scott Bardo from Berenberg. 21. So firstly, on Life Science, please. Obviously, strong dynamic with sterile transfer. Has there been any requirement or need to Anticipate or accelerate your manufacturing expansion plans. I know you're looking to double Miramax And towards the end of the year or classes of Merrimack towards the end of the year, is there any ability to bring that forward? Perhaps on Life Science, I wonder if you could comment a little bit more about the bioreactor demand. Is this a function of the new product launches for The con or just a strong overall end market? The second question, please, relates to surgical workflows. I know that you've called out strong demand in infection control and your software business. Can you talk a little bit about the dynamic of your operating table business, And whether there's some green shoots there or that's still somewhat hindered as a market? And last question for me, please. Clearly, the balance sheet has pivoted into a lot of strength in the last 12 months. Can you talk a little bit about the M and A landscape and appetite to do deals at the Getinge Group business? Yes, sure. We'll start from the top. When it comes to live science and transfer The manufacturing plant that you're setting up in Meramec, there's for sure requests to or need a demand To do this earlier, but it's not possible really. So we do still expect this to come online in the Q4 of this year. There's no way to speed this up given the Construction work and also the validation required to make this operation. So we're doing this as quickly as we can, and the demand is When it comes to bioreactors, it's more underlying demand than any new products. I think I called out example of a good development here, but that's not something that's contributing to growth at the moment. It's a newly launched product really. So It's more the underlying demand that we see here, which is very positive at the moment. And in Surgical Workflows, I didn't mean to send any negative signals when it came to the surgical workplace part of it, the operating table, for example. We do see also Positive. We do have a lot of positive dialogues with customers now. We do see more tender activity also on that part of the business, no question. And then when it comes to the balance sheet, yes, we are definitely interested in adding through M and A. It is an integral part of our Strategy to continue to complement the offer that way. We continue to have a very busy pipeline here as well, but it is also a competitive market When it comes to M and A, so I really cannot predict what's possible this year other than that we are seeing a lot of activity And then remain interested in reinforcing our offering this way. Very good. And perhaps a follow-up. Sorry, I know I said that was my last question. But as I look to your performance in the Q1, I think all of the growth came from capital goods and consumables Flat. I don't think you'll beat a bad business you call out as consumable. But nevertheless, I wonder if you could share with us in your order book, is the mix now a little bit more orientating towards consumables? Or Would you expect consumables to remain subdued in the near term? I think the I mean, the numbers are we reported here and the exception is in terms of the nature of the business is what you mentioned when it comes to the beta banks, Which are recorded as capital goods here, but they are really the single use products. It's for legacy reasons and small elements of customization really that they are Call it capital goods here. So you will have the mix effect of, I guess, of that would look like more consumables going forward, even if it's recorded That's capital here. But that's the only thing, I think, unusual thing to be aware about in that mix. I don't know if Lars has something to add in this respect, but that's my view on this. No, I think that's a good conclusion. So we will see good support from Geatabergsen, Life Science and then the normal development in the other areas. And of course, On the electric department, that stops coming as planned. Great. Thanks, guys. Thank you. And as there are no further questions, I will hand it back for any closing remarks. Yes. Thank you very much, everyone. Thanks for listening in today. And I think we've done the summaries that we need to do here. So nothing to add from my This concludes the conference call. Thank you all for attending. You may now disconnect your lines.