Earnings Call: Q3 2021

Oct 20, 2021

Hello, and welcome to the Gartner AB Audiocast with Teleconference Third Quarter 2021. Throughout the call, all participants will be in 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 am pleased to present Matthias Perio, CEO and Lars Starchstrom, CFO. Please go ahead with your meeting. Thank you very much, and welcome everyone to today's conference. As you said here, I have Lars Sandstrom, our CFO, with me as well, and he will present the financials a little bit later during the call. Well, we can get started and move directly over to Page 2, please. So I just want to begin by covering the key takeaways for the quarter in terms of performance. And as Expected net sales declined year on year as we had record breaking deliveries of ICU ventilators in Q3 of 2020. However, in the Q3, organic order intake increased by more than 20%, thanks to strong development in all our business areas and all our regions. Organic Yes. Order growth is strong both compared to Q3 2019 and Q3 2020. The adjusted EBITDA margin amounted to 18.4% and adjusted to COVID-nineteen effect, the EBITDA margin continues to improve, thanks to structure Mix shift and also increased productivity for most parts of the company. Free cash flow remains Strong as well, so strengthening our already very solid financial position. And with that, we can move over to Page 3, please. So let's take a step back then and look at some of our other key events In the quarter, we had a number of launches and other activities. So one example is that we introduced the RotorFlow 2, A new product for advanced life support. The technology here enables up to 14 days of ECMO therapy in a compact format, giving health care professionals The flexibility needed to provide real high quality care. In addition to this, we also launched new functionality for our Volista Surgical Light range, this is a feature that includes a near infrared fluorescence imaging system And it's used to identify structures that need to be removed, such as cancer cells, without causing damage to nerves, blood vessels and other vital organs. In the quarter, we also acquired advanced technology in biological indicator from Verix, an American Start up company. This acquisition follows our strategy of strengthening our consumables portfolio in infection prevention It's still a good timing and it also is a logical follow on from our previous acquisition of Quarrelin a year ago. The product is in development phase and it's not yet commercially available. We expect this to happen sometime during 2022. The overall loss of the improvement journey for getting it continues. So in the quarter, getting it completed its remediation work in Heshi and in Germany In accordance with the consent decree with FDA, this doesn't mean that we are automatically out of the consent decree, but it means that all entities covered by the We, which is Heshingen and Rastak in Germany and Meramec and Wayne in the U. S, can put all the efforts now into more forward looking activities linked due customer benefits and driving growth. The project to expand the production capacity of DPC beta bags In Meramec in the U. S, it's also proceeding according to plan. In addition to this, We are also increasing production capacity in Afrikaans to meet the growing global demand for bioreactor So this is another important growth initiative in the company. With that, we can move over to Page 4, please. So we take a look on order intake development in the quarter. We had an order intake increase by 28 sorry, 21.8 percent and net sales decreasing 20.1 percent organically. And as I mentioned previously, we have a strong order growth momentum at the moment in all regions and all business areas. So that's the reason for the 21.8 percent organic growth. This is due to a combination of comeback effect, So to speak here in the wake of the pandemic. So there's a long tail of COVID effects related to ventilators and also new and higher normal level For ecmotherapy, for development and production of biopharmaceutical drugs. From a regional perspective, the Americas and APAC order intake is growing as a result of good performance in all business areas, While EMEA's growth was not as high as a result of challenging comparative figures for ventilators in Q3 of 2020. Net sales decreased as expected due to the challenging comparison quarter Q3 last year. Compared to Q3 2019, those sales decreased Significantly on a currency adjusted basis as a result of continued high demand for products for our life supporting ECMO therapy, Bioreactors and products for sterile transfer combined with a continued high sales of ventilators and a general recovery in other parts And given the robust order momentum that we have across the board, things look very promising for net sales in 2022. We can move over to Page 5, please. So let's talk about the outlook for the rest of the year. It's based on what I just said. And despite the more negative FX impact than expected, especially in First half of the year, we choose to keep the outlook for 2020 unchanged at SEK 27,000,000,000 in net sales at the floor for the full year. You might ask about the risks here. And yes, of course, there are we are still in a pandemic that we haven't seen the life of before. With a fast paced spread right now of the delta variant in several parts of the world and with negative effects Throughout the supply chain when other industries are coming back to normal. We often get questions on the supply chain and how potential Constraints could impact our different parts of the business in terms of delays and cost increases. As you've seen in the quarter, we Withstood material negative effects from cost increases and supply chain delays very well during the quarter. Very grateful for the team in Supply chain and the great work they've done here for 18 months actually now. And this is thanks to better structure and process at the hands of these kind of things compared to just a few years ago. So we are benefiting from the overall improvement problem that we have been on for a while now as well. This has materialized in multiple preventive actions mitigating the negative effects. At the same time, the sales organization is very disciplined And on pricing, which obviously also helps us for. If things worsen, though, in the coming quarters, we may, of course, be affected negatively from a cost perspective, but also from a temporary net sales perspective, meaning that there can be a phasing of net sales forward into 2020. One example is the shortage of semiconductors version. This could, of course, have an impact on us. Another example of what could happen is The large projects like greenfield hospitals are delayed due to other parties suffering from supply constraints. We see, for example, that Constructors, the building industry is having an impact on new hospital construction and also refurbishment of the existing hospitals. So It may happen that customers say that they're happy with orders that they have placed, but may allow us to postpone the delivery for a while until All the other work is finished. We've seen some tendencies like that in the quarter, and we expect that to be stored for the coming quarters as well. So normally, you will see a Q4 pattern driven by deliveries in surgical workflows, especially in December. That is more unlikely to happen this year. So I think the guidance should be seen as more like SEK 27,000,000,000 and SEK 27,500,000,000. With that, we can move over to Page 6. So order intake amounted to SEK 7,079,000,000 in the quarter. In acute care therapies, we had 18.6 percent organic Growth, which was SEK545,000,000 in actual numbers. Order intake remained high in Ventilators and products for ECMO therapies in ACT. Other product categories increased their order intake or the growth in cardiovascular surgery product slowed slightly in the quarter as a result of the spread of the delta virus in parts of the U. S. Primarily. In Life Science, we saw a SEK 29.6 million organic increase of SEK 204 1,000,000 in actual numbers. We saw continued strong order intake growth in our transfer products, which is used in production of vaccines, for example, of course, Biopharmaceutical Drugs in general. We had good growth of bioreactors for development and production of biopharmaceutical drugs as well. And we also We had service growing double digits in the quarter. If we now look at Surgical Workflows, we had a 24.6 Percent organic increase, SEK 432,000,000 in actions. And here we have strong Order growth in all regions from low levels last year, which means that the order book continues to recover at a good pace in surgical workflows. Growth was particularly high in surgical workplaces, which includes mostly surgical or operating room products. We can now move over to Page 7, please. Looking Sales then, net sales amounted to SEK 6,306,000,000 in the quarter. If we compare this with 2019, net sales is up in actions And significantly so if we adjust for currency. In Acute Care Therapies, we had a 31.6 organic decline or SEK 1,700,000,000 in actuals. The decrease in acute care therapies is Due exclusively to a very challenging comparative figures in Q3 2020, of course, driven by ventilator Then please. Continued growth in ECMO therapy as well in cardiovascular products. Although growth in the latter category slowed in the quarter as a result of The virus spread mostly again in the U. S. Life Science, we had a 17 point 3 percent organic increase or SEK 120,000,000 in actions. We saw continued high organic sales growth in sterile transfer products, In washers and bioreactors to meet the increased need for efficient and reliable technology in the development and production of the biopharmaceutical brands. Net sales was increased in service and spare parts, although not as much as for the other categories that I just mentioned. In Life Science also, we saw growth in all regions with particularly good development in the Americas. Looking then at Surgical Workflows, we had a 2.9% organic decline or SEK 73,000,000 in actions. So we had continued negative development in organic net sales despite the recovery in order intake. And this is, of course, explained by the long lead times of order to delivery in this business area, slightly coupled with delays from customers as well. The organization's focus on the customer Offering in service and consumables continues and continues to contribute positively to the business areas turnover. That's also important to keep in mind. Currency had a negative effect negative impact on net sales for the group in the quarter, SEK 77,000,000 or equal to about 1%. With that, we can move over to Page 8, please. Looking at gross profit then, adjusted gross profit decreased by SEK 1,444,000,000 to SEK 3,334,000,000 in the quarter, where negative FX accounted for SEK 46,000,000. For the group as a whole, the gross margin decreased as a result of lower volumes compared to Q3 2020, especially in ventilators In acute care therapies and lower absorption in production here is obviously a big factor. However, the measures implemented to increase productivity partly mitigated the negative volume effect. For Life Science, the adjusted gross margin strengthened by 1.7 percentage points as a result of higher volumes, a favorable mix And also better absorption in production. And if you look at Surgical Workflows, the adjusted gross margin increased by 2.7 percentage points, Primarily as a result of increased productivity and also some favorable mix effect. And this was, for example, in the form of increased Sales of service, while we had some under absorption in production that continued to contribute negatively to the margin. So with that, we move over to Page 10, and I'll leave over to you, Lars. Thank you, Matthias. Then looking at adjusted EBITDA, we decreased SEK 868,000,000 and the margin was Down 7 percentage points to 18.4 percent in the quarter. And adjusted for currency, Gross profit has 1.9 percentage point impact on the margin. And of course, that's very much impacted by the lower volumes compared to the Q3 last year. OpEx is down year on year, but this positive Development could only be part of the offset the negative volume effect on the margin year on year. And the OpEx for contribution to the margin is consequently Minus 3.5%. As you can see, we continue to have lower depreciation and amortization due to less assets in the balance sheet. But the decrease isn't as large as the loss in volume for us here year on year. And Consequently, D and A adjusted CapEx is impacting margin by 0.8%. Currency had a negative impact of SEK 0.8 percent, but then the margin on the margin. And all in all, this resulted in an adjusted EBITDA of SEK 1,160,000,000 compared to SEK 2,28,000,000 in Q2 20 In 2019, we were at SEK 677,000,000 and then we did another SEK 10,900,000,000 with that. Then let's go to Page 11, please. The free cash flow continues to be strong, amounting to SEK 1 point SEK 4,000,000,000 This is the result of a healthy operating profit in combination with the positive contribution from reduced working capital. Looking at the working capital days, this has leveled out somewhat but continues to be Well below 100. We are now at 90.5 days, down some 39 days from the peak in Q2 2018. You also see a continued strong operating return on invested capital, where we are at 18.8% on a rolling 12 month basis. And we start to see some kind of reversal towards the long term trend on returning invested capital as net sales have started to move more into, Was it normal territory then? Let's move to Page 20. Net debt was positively impacted by the free cash flow, taking us to SEK 4,100,000,000. And if we adjust for potential liabilities, we are at SEK0.9 billion. This brings us to a leverage of 0.6 times EBITDA. And if you adjust for pension liabilities, it's at 0.1 times EBITDA. And cash at the end of the quarter here amounted to approximately SEK 4,700,000,000. Then let's move to Page 14 and back to you, Andreas. Okay. Great. Thank you, Lars. So just Reiterating the key takeaways from the quarter then. We've had a Q3 with very strong organic order growth, a broad based recovery across All our business areas and geographies. We continue to have good activity levels when it comes to the progress on strategy implementation as well. And You can see results, I think, of the 4 years of productivity work that we've done here really Coming to the surface now in the wake of the pandemic. Our EBITA margin adjusted for COVID-nineteen continues to improve very well and with Good cash flow, thanks to strong result, of course, but also really good continued work on working capital. So all in all, a very solid financial position going into the last quarter of 2021. And last but not least, we have passed the milestone of completing the remediation work in our Heshieng facility In Germany, meaning that we can focus much stronger now on long term innovation activities and really creating customer value. So With that said, I open up for questions. Thank you. The first question comes from Karl Noren from Danske Bank. Please go ahead. Yes, good morning. So the first question I have is if you could elaborate and say how many ventilators you sold in the 3rd quarter? That's a good question, Karl. I don't have the number in front of me. We'll dig it up and come back to you in a moment. Okay. Then I can go on with some other ones. I have a question regarding Sorry, I'm working quickly here. The number of units for the Q1 was some 3,200 units. Okay. Thank you. So if we move over to the cost side, I think that is quite impressive because I think cost was down for the group, 8.5% organically now in Q3, and it was also relatively flat in Q3 2020. Could you please just provide some more info What the drivers is behind the decrease in OpEx? And how much is temporarily due to COVID? And how much do you think is permanent cost savings? Yes. Two main factors. One is that there is still a lingering pandemic effect with less travel, less activities, even if that is Starting to come back now. So that's part of the explanation. The other one is the effects of the productivity improvement program that has been going on for quite While now we are really learning to do things in a more productive way across the company. We don't have any other new guidance when it comes to how much is permanent. We've said earlier that the annual effect is Around SEK 300,000,000 and roughly SEK 500,000,000 per million. Okay. And then just the last question on the remediation side. When you I'm finished now. I think everything is everything of the costs that you've been taking has been in the Acute Care side that has been expensed. Can you just say anything? I think you previously had said that around or a little bit more than SEK 100,000,000 of cost that Can gradually be phased out once the remediation is finished. Is it possible to give some kind of indicative time line for these cost savings? And Have some of these savings already been implemented in the organization? Yes. Some savings have been implemented gradually. That's part of the improvement journey, especially in the sites that I've been quicker with the remediation work. So that is a positive contributor already. We've not quantified the effect in this order going forward. And what we've said though is that it's not like a step Change it's we reached a phase now where we can start to work more with productivity and lean out the So to speak, but still have an effective quality management system in place. So it's still a significant amount of money, but it's going to be a gradual improvement Here now, the remediation is over. Okay. Thank you. Thank you. The next question comes from Victor Forso from Nordea. Please go ahead. Thank you very much, and I hope you can hear me well. I'll start with a question on the underlying gross margin in Acute Care. You've We've been having gross margins of around 61% now in 2 quarters for this year. Could you give us perhaps some qualitative Comments at least regarding what levels are to be sustained? Do you see a major COVID impact here still? Or If that impact now decreases over time, should it be offset by other factors in order to sustain current levels? Thanks. Yes. Now looking at we will come back to discussing, of course, a more long term view when we have the Capital Markets Day. But if you look at this, We don't we have, of course, some positive impact from the pandemic here with still some high deliveries next to that. But We also have then the recovery on the electric part that we expect to continue going into next year as well. So and then, of course, SW has been held back quite a bit here during the whole 2020 and all into 2021. And they have on average then, of course, lower margin, but we see also here the margin improvement. So There are these moving parts here, but we don't see a radical shift going forward here actually. We continue to work With improvement here, and we see them kicking in 1 by 1 here in the different product areas where we are active. And just to sort of follow-up on the Acute Care side, should we, I mean, experience a reversed effect on gross margins due to lower ventilator volumes? I think, going forward, where we are yesterday, Yes. But where we are now, we are coming down more and more slowly to more normal levels when it comes to the margin side. Of course, there will be a further Impact on it, but we don't see huge impacts from that actually. Yes, okay. So rolling 12 months, yes, But not from much more from these levels. So that you can see on the impacts on the events, let's say, going on. Yes. Great. Thanks. And on the gross margin side of Life Science then and the costs that you've been taking are related to the sterile transfer ramp up in France. Any comments regarding how expensive that has been, I. E, if that has mitigated some part your margin potential From the recently strong growth and what you foresee in this regard next year when you will have 2 sites? When it comes to the ramp up there that we have now, it's mainly impacting from the French site in London, Where we have had a significant ramp up working almost 20 fourseven here. Of course, that comes with a cost to bring in people, etcetera. But then when things calm down, that should have a bit of support going into next year. But then we will, at the same time, ramp up in the U. S. Side. So all in all, it will not have a significant impact. But of course, We are readily coming back to more the same or better margins there and that's the same as well. But we have a slight positive impact. Okay. And just a final one for me, Matthias. I think you alluded to closer to SEK 27,000,000,000 net Sales for this fiscal year compared to, let's say, 27,500,000 Could you give some more color on that, The drivers for Q4, I think that you mentioned Surgical Workflows, but any other comments regarding the Q4 net sales? No, it's mostly that people tend to expect a rather strong hockey stick in the Q4, and That's usually driven by Surgical Workers. But what we see now with the order intake recovery and the delivery patterns here, It is more supportive 2022 in terms of net debt than this year. So the business has kind of inherently longer lead times. And then you have the added effect of customers wanting to delay deliveries because they are managing complex Products where maybe other suppliers haven't been able to deliver their part. So therefore, we think you will not see the same seasonal pattern as maybe that you're used to in this business. It will be a phasing question here between Q4 and the first half of next year. Okay. Yes, makes sense. Thanks a lot guys. Thank you. The next question comes from Christopher Liljeberg from Carnegie. Please go ahead. Q2, is that due to ventilators, the volume being lower or something else? Sorry, Gustaf. You broke up in the beginning. Can you repeat the question? Yes. I just wonder about the lower gross margins Sequentially in the Q3 versus the Q2. If I look at it on a group level, that might be to simplify things. But The group sales is pretty much the same. Gross margin, 52.9% versus 55% in the second quarter. I was wondering if That difference is lower ventilator sales or other type of mix effects? I think it is partially then connected to the lower deliveries of ventilators Here coming in, but also some other product mix, etcetera, are impacting. But looking at Each product area touch, we don't see a big impact within the quarter. So it's more connected to the product mix. And So here, as Matti has mentioned, we had a bit lower deliveries in the next quarter at the end of the quarter here. You could see that in some parts that also impacted here in between the quarter. And if you don't if you will not have this usual Positive season effect in Surgical Workflow, which is a lower margin business. Is that something we should see positive then for the gross margin in the 4th quarter? Yes, it is, yes. Okay. 2nd question also When it comes to margin for Life Science, seeing a new higher level here in the second quarter or in the third quarter. So Is this a new sustainable level or some positive one off effects? There are no particular positive one off effects related to Life Science. This is a gravitation towards More profitable parts of the business. That's really the main explaining factor. Okay. And my third question when it comes to Surgical workflow and the drop flow in margin, Pretty good considering the continued weak sales. So do you see potential for this business to be back at the 3% margin when sales are improving hopefully next year? I think we will take this one step at a time. We're very happy that we have a good margin improvement here despite the headwind in net sales. But we I want to reiterate that our first milestone here is to make this a double digit EBITA business of about 10%. And I think that is linked to volume clearly, and we need to be closer to the pre pandemic level, around SEK 9,500,000,000 or above To see this, I think. And then, of course, depending on how successful we are when it comes to the portfolio mix rotation towards more Super Bowls continued best to work with service and so on. There's maybe a few good opportunities for the longer term as well, but we Don't want to stick our chin out at this point and same thing more that we have the double digit EBITA milestone to clear first. Okay. That's great. Thank you very much. Thank you. Thank you. The next question comes from Richard Anderkans from Handelsbanken. Please go ahead. Good morning. Thanks for taking my question. So first, looking at orders. So it's stated that ventilator saw significant growth in the quarter for the ACT seven. Can you provide any quantification there? And then if you see Any risks for deliveries going into Q4 and perhaps in Q1 as well would be helpful. Thanks. We don't disclose order intake numbers for the different product The group is here, but it has been an elevated level compared to a normal year, so to speak. And we do see risks In terms of delivering going forward, it's a daily fight to make sure that we have enough components that logistic systems Keep operating the way they should. So it's definitely one of the areas where we are vulnerable to supply chain disruption. All right. That's very helpful. Thank you. And looking at the orders for the Life Science segment, we saw significant growth in APAC. Can you talk a bit about developments in China and how we should think about it going forward? Or is that sort of a sustainable path there? Or was it some type of one off? Could you just help us understand? China is an important market for us for much Very quick on both the kind of, call it, the legacy offering in Life Science, but also the bioreactors. It's an important part for that. So it is a good long term trend here. I think the main risk we got in China is this public political model I think. All right, fair enough. And then a final one from my side. You know, hospitals being Pressured from wage inflation and the constraints with staff, etcetera. How well are you able to mitigate Price increases, I'm thinking particularly as we might see rising input costs, etcetera, going into Q4 and then perhaps into first Next year as well. How well equipped are you for offsetting rising input costs essentially? I think we are rather well equipped. The organization, both on the supply side but also on the sales side, have done Good job in both mitigating cost increases as such, but also keeping a close dialogue with customers about the need for raising prices in In certain categories that are impacted. So far, I think we've done a rather good job here and it's something that we need to continue for the coming quarters the way we see it. All right. So we should think that you should be able to raise prices in most categories then, Yes. Well, this is active work and we've been successful so far. I mean, no guarantees and It is a very fluid situation, I would say, but I think we've managed it well so far and hopefully we can continue to do so. I appreciate that. Thanks for taking my questions. Thank you. The next question Shankh comes from Ed Ridley Day from Redburn. Please go ahead. Hi, good morning. Thank you. Just a couple of follow ups. First of all, on the Acute Care order book, that's very encouraging. Matthias, you spoke a little To the Rotaflow launch and continuing demand, could you give more color on that? Because clearly, I think if we were set back A few quarters ago, that's a good clip in terms of your acute care order book As we move out of the COVID period. So if you give some more color on that and how you think that can be sustained into 2022, That will be helpful. And just a quick follow-up on the Meramec expansion on the bags and just remind us when that should come online. Yes. The ATT order book, I think, as you said, is developing well. We see continued strong Demand for our ECMO therapy products and the Rotaflow launch is a good addition to the ECMO already strong ECMO I should say. So that's something that we expect to continue. The whole elective portfolio had Started a recovery in Q2 and continued into Q3 there. We saw some weakness in the second half For the quarter because of the Delta virus. So we expect this to be a continued recovery, but a bit more lumpy than maybe we expected in When it comes to the Merrimack expansion, that's going according to plan, and we expect this The factory to come online in most likely end of November, beginning of December. So commercial deliveries during next year. That's great. Thanks. Thank you. The next question comes from Scott Bardo from Berenberg. Please go ahead. Yes. Thanks very much for taking my questions. Good morning, guys. So first question, please, Just relates to the full year, I think your sales guidance implies about 8,000,000,000 Revenues in the Q4, which would make it your largest revenue quarter. And I think historically, Seasonally, Q4 has had higher margins or the highest margin of the year. So I guess the question is, would you still expect that to be the case that seasonally we have the strongest EBA margin this year? Or is there any reasons That would not be the case. That's question number 1, please. Question 2 on Hettengene. It sounds like a positive update. Matthias, I wonder if you could just help us understand what you mean by remediated here. Has this been approved and agreed by the FDA? Or is that a view of your consultants? I wonder if you can help us understand then what needs to happen to get the consent decree dissolved? I think that's been in place for 6 years or so now. So I'll pause there and I have a follow-up. Thanks. Yes, sure. If you look at the 4th quarter, we expect it seem It'll be a strong quarter, but if you relatively speaking compared to normal year, a bit weaker, but still strong on EBITDA margin level. Without providing any more granular guidance there. When it comes to Heisingen, the work is done and it is It's verified by 3rd party consultants, but it needs to be verified by SBA themselves as well. So we have asked them to have an inspection, And this is something that is likely to happen hopefully during the first half of next year. And on the sort of expectation for consent decree, I mean, that's been around a long time now. Yes. It's very difficult to say. If you look at other companies that have been in In situation, there have been observation periods ranging from 1 to 5 years, and that's not something that we can answer until the FDA have done their inspection We see the results of this. Understood. And a question on surgical workflows, please. So I think you've seen very nice order momentum, so 17.6% for the 1st 9 months, yet your sales are down 1% for the 9 month. And I think you're highlighting that, that bodes well for 2022 growth. Can you help us understand whether this Sort of order momentum that we see, double digit order momentum necessarily translates into a double digit top line dynamic Surgical Workflows, does the typical lead times hold for 2022 for this division, please? I think the lead times are a little bit extended at the moment, and they are likely to be so in the beginning of next year as well. And We have already seen delays in the Q3 now, and we expect that to continue for some time going forward. And That's probably the best answer I can give you. We've had an average of about 6 months in this year. Before, it's probably a little bit longer right But I'd say it's a very low moving parts and a very dynamic situation. So it's difficult to really guide you going forward. Great. Thank you. And last question, if I may, just on the balance sheet. Obviously, some great progress in terms of deleveraging. I think now as I look to your leverage position, it's the lowest I think it's been now for well over a decade. I don't think it's ever been this low. And I think, If I'm right, your Chairman doesn't particularly like inefficient balance sheets. So underlying nature of the Matthias, I mean, are you getting more interested in M and A? Are you working on any targets here that you can put your balance sheet to work? Some comments there would be appreciated. Yes. I think nobody likes an inefficient balance sheet. But It's not that we are more interested in M and A. We've always been interested in M and A also when the balance sheet wasn't that strong. We just have more room to maneuver now. It is a very active pipeline and has been for some time as well. The valuations are very high. So I mean, if you're concerned about return on capital, I think 1 needs to be disciplined in this arena. So Verisk is one of the opportunities that did materialize here in the quarter. We It continues to be active. It's the number one priority, I guess, for deploying cash Okay. Thanks, guys. Thank you. The next question comes from Christopher Liljeberg from Carnegie. Please go ahead. Yes. Just a follow-up. Did you comment on the ventilator shipments in the quarter and what you expect for the full year? And when it comes to ventilator, I'm also a bit Interested to hear your view now how that how you expect that demand will be after the pandemic if we when we go into 2022. We have talked Before about the potential for doing software upgrades, etcetera. Thanks. Yes. No, the number of inventories delivered in the quarter was 3,200, and Demand has continued to be high. If we look into next year, we do expect a normalization again in the wake The pandemic, what that means in number of units is too early to say, I believe. But we are excited about the opportunity with the installed base. Now It's a rather sophisticated electromechanical product that can be connected and there's a number of different services that can be provided thanks to this. There's also, I think, much higher awareness right now of the more sophisticated therapies like our Nova technology, for So this should be a good opportunity to continue to drive growth based on the installed base. So with 3,200 shipments in the quarter, what do you expect for the full year? We haven't Change the guidance. We've said it should land about 12,000 this year. That's the latest update on this. Okay, great. Thank you. Thank you. The next question comes from Victor Forso from Nordea. Please go ahead. Yes. Thanks for taking the follow-up. Just very quickly on Aplicon and the ramp up That you do there production wise, if you can provide us any sort of more color on that, what that means for For potential output increases into the coming years and a bit more about the short term performance here. How Is current growth rates also partly supported by a weaker last year? Or is this sort of a new level you see for Aplicon? Thank you. Yes. For amplicon, in terms of comparing with last year, we had a very muted first half of 2020 for Apticon, given that they are lab focused and China is the biggest market. So in terms of COPs, You need to think about that, absolutely. If you look at the momentum right now, though, we do think that the higher growth levels that you See now are more or less sustainable. There is some vaccine effect in there, of course. But the general trend when it comes to Research for new drugs and so on in the wake of the dynamic as well is really strong. So we do we acquired this company Assuming that it will be around 10% to 12% growth business, we expect this now to be quite a bit higher also for the long term. And in terms of meeting that with increased output? What does it mean? Yes. No, there's some additional investments going on in ramping up capacity. They are not material investments In terms of CapEx, very big for us. But it's really working with the supplier network to highly making sure that we have the parts needed for this. Okay. Thank you very much. Thank you. Thank you. Currently, we have one further questions in the queue. The next question comes from Scott Bartel from Berenberg. Please go ahead. Thanks for the follow-up. Yes. Just wonder if you could talk a little bit about infection control. It seems to me that this is, say, lagging the recovery. I wonder if you consider this business underperforming expectation or can talk a little bit around this and perhaps extend those comments into Where are you with the low temperature sterilization initiative, particularly in the North American market and filings? Thanks. I think when I think the Surgical Workplace, it's a little bit less momentum, but we're certainly not unhappy or disappointed With the evolution, we still believe that first of all, we have very strong position in this business globally. We've seen good progress when it comes to service, for example, and we are continuing to strengthen the offering, well, with more consumables. So We feel that we have good traction. By nature, it's a rather lumpy business, but there's nothing, I think, underlying that is negative or anything for us. I think our Our strategy hopes that the low temp offering is under development in full swing. It won't be ready until probably end of next year. It won't have any real impact in 2022, but the years from there, we should see A positive contribution from this is one of the bigger opportunities in the business. Very good. And no quarterly update can go without me asking you about the PMA for covered stent in the U. S. So And the update here, Matthias, we should have expected it by now, I think. Yes. We yes, to continue dialogue, we've I have a Q and A ping pong with the FDA on this. We do expect this still to happen, probably not this year. It's more likely that this will be a Q2 outcome, Q2 next year. Okay. Thank you very much, Andreas. Thank you. The next question comes from Patrick Ling from DNB Markets. Please go ahead. Yes. Good morning, guys. I have a follow-up question regarding the remediation. And Maybe you can shed a little bit light on this that apart from costs being phased out, Are there any other implications from being out to the remediation that you can talk about regarding the operations? Will it be easier for you to get the products approved, etcetera? Yes, absolutely. I think the main positive effect It's actually that we can focus all our R and D resources on real R and D going forward. So it's developing new products rather than remediating What we already have. So that's really a key long term effect on this. So that's the main benefit. And then of course, you have the possibility of taking down costs from the system as well. I think the main positive to me It's that we can focus our resources on really creating customer value for the long term. Okay, great. Thank you. Thank you. Thank you very much. As there are no further questions at this time, I hand over to our speakers for the closing comments. Good. Thank you very much. I think we've done the summary already. And if we have run out of questions, I interpret as a good sign Yes. So thanks for listening in today, and I wish you a good rest of the day. Thank you very much.