Eagle Capital Growth Fund, Inc. Price & Performance (GRF)

I would first like to share a disclaimer on forward looking statements. Forward looking statements are subject to substantial risks and uncertainties. They are only valid on the day of the call, and the company is under no obligation to update or revise them. The default financial statements are prepared in accordance with EU IFRS and other applicable reporting provisions. This includes alternative performance measures also known as APMs. Prepared under the group financial reporting model. As defined by the guidelines of the European Securities and Markets Authority. Please note that Grifold's management uses APMs to evaluate its financial performance. Cash flows and financial position as the basis for its operational and strategic decisions. These APMs are prepared for all time presented in this document.

On today's call, will start with some introductory remarks. Followed by a discussion on business performance and strategic execution. Then Rahul, will walk us through the financial results for Q4 and full year 2024. 2025 guidance will be addressed in detail during tomorrow's Capital Market Day. After Rahul's remarks, we will hand it back to Nacho for his closing comments. With that, thank you very much for joining us today. Achille, over to you.

Thank you, Lenny.

And good evening, good afternoon, and good morning to all of you, depending on where you are in the world. I appreciate you joining our full year results call. It is my pleasure to share with you the completion of a year mark by meaningful accomplishments, but also notable challenges for our company. 2024 has not been an easy year for us. We navigated a complex environment that challenged all of us to overcome several obstacles. However, we remain focused on executing our strategy. Upholding the mission and vision of the company these reasons, I am particularly proud on our teams and whoever in focus and dedication throughout 2024. Their hard work and commitment enable us to achieve record results while continuing to drive our strategy forward. [indiscernible] we will review these achievements the key drivers and financial metrics behind our performance, and outline our priorities for achieving sustainable growth in the upcoming years. Tomorrow, February 27, the company will host its Capital Markets Day in London. Where it will be a great opportunity to hear from Grifold's leadership on the company's strategy ambition for the future. And also about our guidance for 2025. Turning to Slide five. As already mentioned, 2024 presented many challenges.

Despite this, the company continued implementing its the strategy across the organization. This is reflected in our strong business performance, reinforced financial position, On the fundamental level of the business, we closed a landmark year by outpacing market growth, driven by robust underlying demand and our strong biopharma franchise.

This solid business momentum was underpinned by increased plasma capabilities and efficiencies, and the completion of all key [indiscernible] We have reported improvements across key financial ratios, while prioritizing free cash flow generation and deleveraging. Both Q4 and full year 2024 Revenues and adjusted EBITDA reached new all time highs. At the same time, significantly strengthened our balance sheet through the Sanger Ras asset sale organic deleveraging and enhanced liquidity. We continue to reshape the company with strengthening corporate governance and leadership team. The Board was expanded with additional members who brings a broad range of expertise and experience, reflecting an ongoing determination to the best practices. As we announced yesterday, Thomas Glassmans will retire from the Board and Anne Catherine Bernard will be nominated to become the new Chair after the AGM in June.

And joined us independent directors few months ago. And I look forward to working with her to continue enhancing and strengthening our government. I want to take this opportunity to thank Thomas for his continued support and great contribution to Griphos over two decades and specifically for his strong support to me Thanks for everything, Thomas. You will certainly be miss. In parallel, the leadership team continued to evolve. Recent appointments of executive to key organizational position reflect focused efforts to bring in top talent, blending fresh perspective with invaluable experience of internal leaders. This governance and leadership efforts has been has also been closely linked with our continuous improvements in sustainability. Which is a fundamental aspect of our corporate and business activities. In 2024, we advanced our sustainability agenda and this is reflected in Grifols being ranked the number one biotech company in the Dow Jones best in class indices and recognized as a 2025 industry operated companies by Sustainalytics. Shifting our focus to financial results in more detail, in Q4, we were able to continue building on the strong momentum and close the year on a high note. Revenues in the fourth quarter totaled nearly €2,000,000,000 representing a 13.6% increase percentage increase on a constant currency basis compared to the previous year.

This fueled record full year revenues, which reached the EUR72.2 billion. Representing double digit growth of 10.3% at constant currency over a record 2023. Adjusted EBITDA for the quarter reached €526,000,000 with a margin of nearly 27 Full year adjusted EBITDA came in just shy of full year guidance, but exceeded market [indiscernible] reaching $1,779,000,000 euros an all time record high for the company with a 24.7% margin. Regarding free cash flow, I want to emphasize the clear commitment and consistent execution we have demonstrated in these area. The sustained generation of cash flow has been a key milestone of our financial performance this year. Thanks to our strong business fundamentals and conservative financial approach, free cash flow for the quarter further improved €335,000,000 and this contributed to a strong year end results of $267,000,000 far exceeding our initial guidance for the year. As we continue to view cash flow generation as a cornerstone of our Rahul will shortly provide a more in-depth analysis. Parallel, we have continued to execute our disciplined approach We have continued our organic deleveraging path reducing our leverage ratio to 4.6 times. A significant improvement over 6.8 times in Q1 'twenty four.

Just three quarters ago.

Additionally, we have conducted a series of capital market transactions at have helped us to refinance our debt. Address near term debt maturities and enhance our liquidity position. Turning to top line Grifols. I will share the drivers to our positive performance. Reported, our total revenue grew by 10.3% at constant currency in 2020 This growth has continued escalating from 9.3 in Q2 to 12.4% in Q3 and to a remarkable 13.6% in Q4. All on constant currency basis. This acceleration was steered by biopharma. Growing at 15.1% for the quarter and 11.3% in the year.

Our biopharma business and more specifically our immunoglobulin franchise continued to be the cornerstone of our growth strategy. With double digit growth driven by IBIG and SUQUEIG. Demand remained robust as immunoglobulin reinforced its position as the standard of which lead us to anticipate continued strong demand. Albumin also delivered a solid performance as we continue to see the China and The U. S. The long term agreement with China through Shanghai RAS reinforces our Diagnostic, we saw a 2% decline on a constant currency basis for the quarter, resulting in a 0.7% increase year to date.

Diagnostics remains a key contributor to our business and even more important to our cash flow. As we maintain our leadership position and strengthen our presence in Core Mark. We remain confident in the future of diagnostics as we are implementing our strategic plan. Biopharma remains an attractive business with high growth potential. The rising demand for plasma derived therapies is clear given the amounts of undiagnosed patients within our core markets and clear potential for new indications on proteins. Our biopharma business continued to be the main growth driver in the Robust underlying market demand coupled with improved commercial excellence enable us to improve our sequential performance and growth compared to previous quarter.

With a 15.1% increase in the fourth quarter and 11.3% year to date growth.

Immunoglobulin continues to be our highest growth protein reflecting increasing demand for both Intravenous and Subcutaneous therapies. Sales of IVIG had a strong quarter. Growing at 15.6%. And closed the year with 13.6% growth. By a strong performance in The U. S. And international markets. At the same time, expanding by 56% in the year at constant currency. Driven by successful launches and continued traction in key global regions. Meanwhile, album and demand remained steady with full year growth of 8% both at constant currency, driven by consistent demand in China and The U. S. Alphawatt and Specialty Proteins continue with solid results improving for a year to date growth of 4.9% at constant currency. The U. S. Alpha-one franchise continued recovery momentum following the transition of the specialty pharma distributor demand for rabies continues solely to the quarter. Our global diversified plasma footprint footprint continues to enhance supply reliability. Drive efficiencies and support sustainable long term growth. In the recent years, we have strategically expanded our donor center food [indiscernible] Alongside, we have continued efforts to network efficiency through implementing integrated new technologies and process improvements to optimize collection and manufacturing. Through targeted operational efficiencies, we have streamlined our organization and enhanced donor center operation.

Leading to consistent reduction in our cost per liter. Simultaneously, we have optimized donor compensation models to balance cost efficiently [indiscernible] As part of our efforts to continue generating efficiency our plasma optimization strategy, our core initiative is the individualized number and rollover. Which is already implemented in approximately 60% of our U. S. Donor centers. This initiative is designed to improve donation quality and donor satisfaction while increasing plasma volume per donation. With a strong execution plan in place, we are currently on track to improve nomogram U. S. Adoption further enhancing our collection capabilities. On the manufacturing side, we continue to deliver sustained yield improvement maximizing the output from each liter of plasma collect. Which remains critical lever in ensuring a reliable and cost effective supply. Turning to Slide 10, innovation remains a fundamental pillar of our long term strategy. And 2024 was a year of substantial progress in research and development. As I noted earlier, we achieved all innovation related milestone. Reinforced our own commitment to bringing transformative therapies to the market. The more recent update within our pipeline is the progress of FibroGen, After the success of the AtFirst clinical trial, showing positive top line study results released in February 24.

The required regulatory filings were completed in both Europe and in The U. S. The FDA has since accepted our BLA filing and granted a PDUFA date for this 12/27/2025. We expect the first countries' approvals in The United In advance, we are on track to share the study results shortly as we have engaged with several relevant stakeholders in the scientific landscape. We also released the completion of our presurice study, Although the trial did not meet this primary endpoint, an improvement in transplant free survival more [indiscernible] a notable improvement in time to liver transplant or death at at three months was observed for the study treatment. We continue to work on analyzing the full results Finally, as I speak through innovation as a fundamental pillar, want to highlight that Grifols received a grant from the Michael J. Fox Foundation for Parkinson Research to identify plasma based biomarkers that could indicate a personal likelihood of developing Parkinson's disease. Many years before clinical diagnosis. The initiative we call Kronos PD would accelerate the discovery of knee diagnostic tools as well as the identification and development novel diseases modifying therapeutic These advancements demonstrate the strength of our innovation pipeline and our dedication to improving Page eight.

And with that, I'll turn it over to Rahul, who will walk us through our financial results. Thank you. Thank you, Nacho.

Slide 11 says it has been a strong finish to a second consecutive record year.

A performance that we are proud of, notwithstanding all the challenges faced by the company in Let me also take the opportunity to thank all our colleagues for their amazing work in 2024 keeping their eye and efforts resolutely focused on delivering for our We often talk about the Grifols Grifols internally. This collective performance in 2024 exemplifies this Grifols spirit and I am proud to be a part of this awesome team. Moving to Page 12. Before I go into our Q4 and full year financial performance in '20 Please consider twenty twenty four's relative performance to what was already a record financial performance 2023. Q4 twenty twenty four was the best quarter in our history. In fact, our four best quarters ever and our Q4 performance versus our prior record Q4 twenty twenty three performance shows the continuing strong momentum we have significantly outgrowing revenues and adjusted EBITDA by 13.618.5% respectively on a constant currency basis. The cherry on top of this performance was the significantly improved free cash flow generation pre M and A of $335,000,000 This quarter, And I will expand on the drivers of this performance further in the presentation. With respect to our full year performance, very strong momentum in revenues up 10.3% on a constant currency basis, to €7,200,000,000 well ahead of guidance.

Led by Biopharma that was up 11.3% on a constant currency basis over our prior record year in 2023. With our international business growing significantly and further diversifying our strong biopharma business alongside our U. S. Business that also delivered a strong Q4. We are growing meaningfully faster than the mark. Market. 2024 adjusted EBITDA was up 21% on a constant currency basis, and adjusted EBITDA margin improving by two thirty basis points having improved 160 basis points 2023. And also pleasing to see that momentum come through in net income that was up over 270%. Even if it is coming from a low base and fully acknowledging that we have more work to do to fulfill our potential at that net income level. Clearly, the standout performance was our significant beat at the free cash flow level confirming our strong conviction around Grifols' ability to generate free cash flow, and we are confident around our ability to ramp up this free cash flow generation meaningfully over time. On leverage, at 4.6 times, it may seem that we fell shy of the 4.5x expectation, but that does not reflect the full story. The rapid strengthening of the U. S. Dollar in Q4 created a headwind for us from a balance sheet translation perspective which would ordinarily be more than offset by the positive impact at EBITDA level if the strengthening had happened, say, less rapidly over the course of the year.

Adjusting for this re leveraging as a result of the rapid dollar strengthening, our leverage would have been in fact, come inside the 4.5x guidance. You can see our rapid deleveraging progress in the last four quarters from 6.8x in Q1 to 4.6x at the end of Q4. The leverage indications here, consistent with with the way we have shown it in the past, is defined as per our credit agreement. And as I had guided to in Q3, our secured leverage now is at only 2.7 times that is the lowest I recall Grifols Grifols leverage ever be.

And finally, I feel very good about our liquidity position Slide 13. The consistency of the performance across the board and across every metric shows the fundamental health and momentum in the business. 6% in Q4. Quarterly EBITDA margin improving from 21.6% by 500 basis points to 26.6% in Q4 Quarterly free cash flow pre M and A progression allowing us to convincingly beat our guidance And on the leverage front other than the Shanghai RAS disposal, impact on metrics in Q2, the deleveraging has been organically driven by the significant growth in adjusted EBITDA free cash flow pre M and A performance. Simply put, it has been a terrific year led not only by actions from the business during the year, from the past bearing fruit. And we look forward to taking this momentum into 2025 and beyond. Whilst dealing with the headwind of the Inflation Reduction Act in The U. S. Slide 14. The simple message from this slide is that adjusted EBITDA is coming through in reported EBITDA rapidly. Often within six to nine months. And I expect this convergence to continue particularly as we focus on reducing the cash adjustments between adjusted EBITDA and reported EBITDA.

And the momentum in reported EBITDA is even more satisfying having grown 32% versus our prior record year in 2023. Reported EBITDA margins grew three eighty basis points in 2024, and the drivers for adjusted and reported EBITDA growth are CPR reduction, volume growth, yield improvement and continuing operational leverage and cost discipline. In terms of the main adjustments between adjusted and reported EBITDA, the main cash adjustment relate to one off restructuring and transaction costs. So pretty identifiable and then being exceptional and one off.

And on non cash adjustments principally related to 15. We see the clear evidence on the left hand side Of the operational leverage improvement I referred to on the prior slide, where OpEx as a percentage of sales has declined to 21% in 2024. As I mentioned on the Q3 call, we we believe that there could be further squeezing of those OpEx margins possible and we do intend to use some of that benefit to keep our R and D effort invigorated. I would also like to update you on a change in our treatment of our U. S. Fee for services and GPO fees. In line with market practice, these fees will be accounted for in our gross to net sales rather than in OpEx, which will have no impact on EBITDA at all. The full year impact of this change was made in Q4 twenty twenty four and as a result, it will distort the revenue growth profile somewhat in the coming quarters. Conversely, we have more work to do on the gross margin front. Which is just as exciting as we think about opportunities to continue our EBITDA margin growth in the coming years. And we believe that returning to pre COVID gross margins is achievable, driven by further planned CPL reduction, commercial growth efforts across the board, new product launches including fibrinogen [indiscernible] I yield improvement efforts and continued execution of the plan at BioTest.

More on this is part of our value creation plan at our Capital Markets Day presentation Slide 16, This slide shows our quarterly evolution of free cash flow pre M and A. We had a very strong finish to the year generating $335,000,000 of free cash flow pre M and A, culminating a year with sequential improvement of free cash [indiscernible] [indiscernible] A couple of points to flag on this slide. One, the sequential improvement of free cash flow pre M and A in 2024 is a coincidence, but it is fair to assume that Q1 tends to be our worst quarter being meaningfully negative from a free cash flow generating perspective before turning in subsequent quarters. The second topic I want to touch on was the key drivers behind our free cash flow outperformance in 2024 versus our prior guidance at the beginning of 2024. Two principal drivers for the outperformance: one, unusually inventory evolution in 2024 released capital rather than consuming capital and this was due to a, some of the structural improvements in inventory that I will touch on the next slide and b, we have been much more aggressive in our management of inventory And again, we will see that on the next slide.

Second driver being a rationalizing and rescheduling of CapEx that isn't time critical, ending up spending meaningfully less our guidance at the beginning of twenty twenty four. Third point, I would caution against run rating Q4 cash flows or indeed the free cash flow conversion achieved in Q4. We finished 2024 with a free cash flow pre M and A to adjusted EBITDA conversion of 15%. And we will share with you tomorrow our expected Fourthly, the benefit of having Diagnostics in our portfolio given its high free cash flow conversion, is very clear.

And the final point I'd make here is that this business can at absolutely produce meaningful amount of free cash flow whilst continuing to support the CapEx capital needs of the business to be able to not only capture the high highly attractive and secular top line and profitability growth opportunities, but also continue to develop our product portfolio to deal with any competitive threats over the medium to long term.

Based on all the actions taken in the past, both during the course of 2024 and earlier, it is clear that we have a number of levers to deliver progressively stronger free cash flow. And we will talk about that further in our Capital Markets Day tomorrow, Slide 17.

On the left hand side, we show the evolution of our inventory days and the annual consumption or release in capital relating to inventory. The combination of lower inventory days and capital invested in inventory declining from 2022 and the exceptional capital release from inventory in 2024 are for the following reasons: CPL continuing to reduce nicely over the period inventory levels improving normalizing, implying less need to invest capital to replenish inventory levels an improvement in balancing the liter yield improvements essentially being able to do more with less In the case of 2024, a very strong sales push across the year and end to end supply chain management with respect to inventory In our efforts to demonstrate more quickly our ability to unlock free cash flow generation, That being said, we will resume our efficient with our inventory levels while ensuring we have the right inventory to satisfy the strong and growing demand for our products. And you will hear from us tomorrow our plans for 2025 and beyond with a balanced On the right hand side, this chart includes all our CapEx in capitalized IT and R and D over time. And the expectation remains that current elevated levels as a percentage of revenues will subside over the coming years and tomorrow we will provide guidance on how to view our spend in absolute numbers as well as the implied percentage of revenues that will show a meaningful normalization in the coming years.

We are in an industry that has secular high growth rates. One that benefits from high profitability levels with strong prospects for free cash flow generation pre M and A. This is the lens through which we need to view our investment in inventory and CapEx and capitalize IT and R and D to capture these phenomenal opportunities. Slide 18. Respect to the underlying momentum behind the normalizing of free cash flow generation pre M and A as we compare 2024 to 2023. This slide also shows the different phases of our inventory evolution since the pandemic. With 2023 being the last of the years where exceptional capital investment was required in order to replenish our inventory to more normalized levels. And 2024 significantly benefiting from some of the factors I mentioned in the prior slide, including continued CPL reduction, strong sales growth in 2024, and a more aggressive end to end supply chain management with respect to our inventory. We continue to feel positive about improving free cash flow generation from EBITDA growth subsiding levels of CapEx and capitalized IT and R and D over time, reducing cash outs from transaction and restructuring costs and over time reducing our cash interest.

More on that Slide 19 Our balance sheet derisking is substantially progressed and our continued focus on organic deleveraging will complete this process. The significant debt reduction achieved via the Shanghai RAS stake disposal coupled with the strong deleveraging resulting from the 21% growth in our adjusted EBITDA together with the meaningful outperformance of our free cash flow generation pre M and A, has taken leverage down from 6.8 times in Q1 to 4.6 times at the end of twenty twenty four, as we mentioned previously, with our secured leverage being at what I think is an all time low of 2.7 times.

Add to that the leverage neutral refinancing we executed in December 2024 after which our next set of meaningful funded maturities is not until Q4 twenty twenty seven. And finally a significantly improved liquidity of $1,900,000,000 by the end of twenty twenty four. Our balance sheet is in a strong position and I have no concerns at all about any refinancings as and when they come due, as evidenced by the two private placements this year. Our key focus will be to optimize the conditions of the reef refinancing and we can do that given our strong rerating potential amongst using other levers.

And finally, have a syndicate of global banks that have supported our extension of the RCF and I'm very pleased with the high quality of the syndicate. So to summarize, we have a strong finish to a second successive record year and we have made significant progress on critical fronts. Be it the meaningful outperformance on free cash flow generation pre M and A, or the substantial de risking and strengthening of our balance sheet. We will stay resolutely focused on execution and driving the business forward. Notwithstanding the headwind of the Part D redesign in the Inflation Reduction Act, we look forward to updating you tomorrow on our strategic plan as well as sharing our expectations for another record year in 2025. With that, let me hand it back to Nacho wrap it up. Thanks, Rahul.

Would like to wrap up the presentation with some final remarks. Reflecting up on 2024, we continue to position Grifols for long term success. 2024 has been a pivotal year to ensure sustained growth and operational excellence. Our commitment to disciplined capital allocation, strategic expansion and enhanced efficiency has created a stronger foundation for the future. We are proud of the achievements that have positioned the company for continued We have shown resilience and delivered record breaking financial results. Strengthening our operational framework and advancing our innovation pipeline. All while reinforcing our financial foundations. These accomplishments are a direct result of the vacation expertise and perseverance of our global team. Executing on our strategy and operational improvements have delivered continued savings and efficiencies. Maintained financial discipline and agility. And we are optimizing cash flow generation with a sharp focus on deleveraging to further strengthen our financial position. Additionally, our ongoing yield and manufacturing improvement and transformation programs enhancing our operations while continuing to drive down cost. Looking ahead to the keys to our continued future success and growth, we must remain highly focused on executing upon our strategy.

That's crystal clear. We hit all time highs this past year. But that only sets the stage for us to expand this improvement into 2025. We'll provide a clear roadmap tomorrow with a midterm strategic plan that will show how we will deliver sustainable growth and margin expansion over the next years. We will keep free cash flow generation and deleveraging as a top priority. And last, maintain the momentum gained through our commitment to best in class and sustainability. I want to stress that we as an organization are not anywhere where we still want to be. We are just beginning on this path. As we move forward, we remain committed to better deliver long term value for our shareholders. Partners, donors and the patients who rely on us. Before we open the call for questions, I'd like to remind everyone that Grifols will be hosting its Capital Market Day tomorrow February 27 at 01:30 p.

M. London time.

We hope you will turn in to learn more about our plans for the future and our strategy for achieving long term success.

Thank you again for your continued support. And with that, Danny, back to you. Thank you, Nacho.

Now let's turn to the Q and A session. Please remember to press 5 We need to place a limit of two questions per analyst. If you have follow-up ask your question, we will put you on mute to reduce any background noise. I think that our first question comes from Morgan Stanley Thibault, please Thank you. First question is from the Quite a strong growth acceleration for the year. Just if you could comment if the joint plasma collection capacity that type of portfolio?

Just high growth. Just hold on a second, Hugo.

Can you [indiscernible] [indiscernible] Yes, sure. Thank you. So my first question is just on Limino, babbuline. Very strong growth through this year. Just if you could comment on Your current situation in terms of inventories and also plasma collection capacity. If you can sustain that growth going forward? Or if you if we should expect in particular, more CapEx investment in order to support that growth? So basically kind of the current state of your capacity to support that. And then just a question on the pipeline. So clear progress on Sebren Lagene. Wanted to know if you could give us an update on primodulin, which was the other protein that was the center of the Biotest acquisition. And when do we can see an update here? Thank you.

Thank you, Thibault, for your question. I'll answer the first part and Roland will comment on the dry modeling As per the capacity of the company, I think that you will if you tend tune in tomorrow for the Capital Markets Day, we definitely share more information. But what I can tell you right now is that company has been doing the homework in the last years and our we are well prepared both from Adorno's capacity and also from manufacturing capacity for the future. I think that the next year are in a very a very solid position, which means that essentially the next wave of significant CapEx to expand our manufacturing footprint or the donor centers will not come in the next three to four years. Then is the time that we will need to entertain significant CapEx again. But obviously, by then, our position will be different than today. But for the next years, we are well set And tomorrow, we will share more information about that. As per tray modeling, Roland will comment. Yes, Nacho, Trimodulin, which is our polyclonin antibody preparation, including IgG, IgM and IgA. We continue with our Phase three study We recently amended a protocol for updates in standard of care after COVID.

Which we believe positions us in a in a better place to have comparable data for the future. The program is continuing. We are looking at an interim analysis what we're expecting in the first half of twenty twenty six. And needless to say that we were very excited about the potential that tramodeling could bring for the treatment not only for SCAP, which is the lead indication, but also for infections beyond that. And we'll be happy to explain that in more detail tomorrow.

Thank you, Roland. Very clear. Thank you, Thibault. Now let's move to Tom Jones. [indiscernible] Sorry, my first question is just on revenue per liter trends.

You mentioned in your prepared remarks that some of the benefit you saw in Q4 came from improved revenue per liter. I was just wondering if you could kind of drill down a little bit more on that because it seems with IVIG, significantly outpacing the growth of everything else. The revenue per lead is probably going to be if that goes on, you're going to get progressively more unbalanced revenues per liter. And you don't really make a lot of money just selling IG from perhaps the recovery in alpha-one, is there anything else you can point to beyond new products where you will seek to try and improve the revenue per liter or at least stop the or offset the disproportionate effect that the very rapid growth in IG has versus the other proteins. So that was question one. And then second two question two, I was just wondering if you might be able to share what the impairment related to that you took in Q4 That would be great. Thanks.

Yes, Tom, starting with your question on revenue per liter. Important to highlight that we always aim to balance the growth in iQI with the the growth that we have on the albumin side And looking at last year, we definitely were able to sell the equivalent amount of albumin. Which obviously helps just as the basis of the plasma economics in addition to the additional proteins that you mentioned. And the other part to highlight is that we have seen in course of last year an improvement in yield for IG, which further strengthens, of course, our revenue potential per liter, in addition with our work to I want to make on the IG front is that we see very momentum with our subQ IG exemplify in The U. S. That we have at the premium price, which also helps us on the pricing side. So looking across that's those are the drivers that translated into higher revenue per liter last year.

And the question on impairment. Relatively small. Think is roughly about $25,000,000 or so split between split between a small impairment at Griffle's for something that is not publicly disclosed, but it's a tiny part of our Healthcare Services business. And then there's another portion within BioTest, again, relatively small numbers Tom. So nothing I would, but happy to pick it up in detail offline if you'd like to.

Okay. Thank you very much. The full now I mean, Alvaro from Alantra.

Hi. Thanks for taking my questions. The first one is on gross margin. I see on Q4 in particular is down both in year on year and quarter on quarter terms. If you could explain what could have happened there. Of course, that has been offset by lower SG and A cost because EBITDA margin is up. But just to understand that the gross margin dynamics. Second question, Rahul, I believe mentioned significant impact from FX on net debt. Because I believe from September to December, the dollar appreciated by 5%. So you quantify the impact? Because when I try to reconcile The net debt evolution compared to the to the $333,000,000 free cash flow you provided in Q4, I estimate an impact of roughly €300,000,000 which me would seem too much for the FX impact. So if you could clarify that it would be very helpful. And yes, I will jump back for follow-up questions. Thank you.

Sure. So your question on on gross margin, so if you go to Page 31, if you go to Page 31 you actually see an improvement of gross margin by roughly about 100 basis points versus twenty twenty three. Driven by lower plasma costs, Most of that margin improvement actually coming from biopharma I think about up about 170 basis points or so. And drivers are lower plasma costs, U. S. CPL down quite nicely, higher volume and revenues, which is always helpful. And then we had some negative effects going the other way. Other thing that I would also say is that I made reference to the change in FIFA services and GPO. That also has a negative impact on gross margin by roughly about 60 basis points to 80 basis points well. So in reality, it could be higher than that. So that's the question on gross margin. Your question related to the translation impact. As you know, we've got we've got a reasonable portion of our debt that is denominated in U. S. Dollars.

So a significant strengthening of the dollar creates a translation impact And if it's a rapid one in this case, actually creates a re leveraging impact because ordinarily, a strengthening of the dollar is actually deleveraging because of the significantly improved impact at the EBITDA level.

So in terms of quantifying as I mentioned to you, if it wasn't for that strengthening, we would be between 4.4 times and 4.5 times, so just inside the 4.5 times guidance. That we had provided previously. Thank you.

Thank you, Alvaro, for placing these two questions. I would like to get James Gordon from JPMorgan.

Hello, James Gordon, JPMorgan. Thanks taking the two questions.

First one was just free cash flow generation, as you mentioned, is a lot better this quarter, so strong in Q4. But in terms of phasing, so is working capital have you made quite a lot of the near term progress already there?

Or do you think that there's still quite a lot more to be done near term? Just connected to that, the extraordinary growth CapEx was only €20,000,000 this quarter, So is that a helpful phasing benefit, but it just means you're going to have more still to come next year or actually you're doing a bit less extraordinary growth CapEx? So how much extraordinary CapEx is there still out there? And how much of it have you burned through And the second question, there was a mutual comment about gross margin. One question I've had about for many companies is about what tariffs could do So in terms of tariffs, if there is, it looks like we now a 25% tariff from product that comes in from Europe into The U. S. Are you still doing quite a lot of fractionation in Barcelona and then that product supports into The U. S. And how would that work? So if there is a 25% tariff on anything that comes from Barcelona into The U. S, how much of your U. S. Sales would that impact?

I'll take the tariff one and Rahul comment on the free cash flow and extraordinary CapEx. On the tariff, obviously, we the situation right now all over the world, I would say, I would call it fluid and moving.

So I think we have to be [indiscernible] and we are. So I think our company situation in this front is quite safe from the point of view that we have large fractionation capacity in The United States and that we collect Most of our plasma from The United States too. So yes, we still have some fractionation or significant fractionation in Barcelona, but definitely if the tariff would become in place, mean, we might need to make some adjustment to the supply chain, but we are in a position [indiscernible] generation and from our fractionation capacity. So we are good in that front.

As per your second question or your first question, Rahul will comment now. Thanks, Nasho.

Your question about extraordinary growth CapEx, If you go to Page 18, James, what you'll see is that for the full year, we ended up with extraordinary growth CapEx of $276,000,000 and on our Q3 call, I believe I had guided to €280,000,000 So the phasing is entirely as we expected. With respect to your question around inventory and free cash flow and more to go, as I mentioned earlier in my piece, There are a number of structural reasons why 2024 was very positive for us, and I touched on all of those I think it was on Slide seventeen and eighteen. And I also reiterated our expectation that we will begin to invest in net working capital and inventory from 2025. I will touch on that in more detail at our Capital Markets Day Tomorrow. Thank you very much, Nacho. Thank you, Rahul. Let's move to Santander.

Hi. Good afternoon. So a couple of questions from my side.

Could you tell us how is the donor fee evolving and whether there is further downside potential there? And also maybe you can comment on how is the plasma collection growing? What is the strategy here to grow more in line with the sales?

So accumulate and collect more and have more inventories. And maybe a final one, if I may. Competition from CIDP, hygienics, what are the dynamics you are seeing in the market? Thank you very much.

Thanks Jaime. And I'll I'll take the first the comments on the plasma and Roland will elaborate on the CADP. I mean, the donors fees is a matter that has become quite complex and dynamic over over time. I think that there is more and more smart compensations methodology is being applied, which [indiscernible] And I think that it's the evolution is not a linear evolution anymore. And I think that we could see situations where and that's our goal that we can offer a good proposition to the donors still being efficient in the utilization of our donor center. And this answers partially the your second question, right? From a plasma collection point of view, our donor centers, as for the coming years, as I mentioned before, don't see an expansion in donor centers because our installed base is sufficient. Existing donor centers. So our focus is going to be to work with the donors to incentivize well the donors and increase the plasma collection in the existing centers. And we have that capacity and definitely it will come without any requirement for significant CapEx in this area, at least in the next three years.

As per CADP, Roland will comment.

Yes. For CIDP, we have seen some use of the FcRn blocker are mostly in second line patients for the few patients that do not tolerate or do not respond to IVIG. But important to note that we have not seen any impact on the momentum on our side it comes to CIDP. And in fact, as you know, CIDP is a disease that still remains undiagnosed. And where we see that increasing awareness is helping us to treat more patients. It is a disease that is multifactorial, which means that a range of mechanisms play a role. It's a disease where IVIG with its ability to actually attack all of these different mechanisms remains and is the first line treatment and this is what we hear back from thought leaders. So So to summarize, yes, some uptake, no impact on our momentum, and we remain very confident in the role as first line treatment of IVH moving forward. Thank you very much, Roland. Very clear. Thank you, Nacho. And thank you, Jaime. Now I would like to hear from Guillermo from Cascia Bank.

Guillermo, please.

Hello.

Thank you for taking my question. So the first one is still on gross margin. You mentioned to eight zero bps impact in terms of gross margin due to the difference in accounting. If you could clarify if this is the for the full year, I assume so. And if you could provide the figures specifically for Q4 just for us to have a comparison [indiscernible] if you have any ballpark figure on what level of cost per liter declined since June 22 peak is already reflected in margins? This is on gross margin then. If you could provide a bit more detail on the drivers of our main growth slowdown this quarter would be great.

Thank you.

So on gross margin, The impact we're talking about is roughly €50,000,000 and essentially all that does is it reduces your net revenues by that amount and it reduces OpEx. So no impact on EBITDA. Is somewhat indirect as a result as well, right? So that's how you get to those numbers. So Hopefully, that that addresses the first point. Your second question was on was on yes, cost per liter. Look, I don't think where we provide views on pricing on that cost per liter evolution. Suffice it to [indiscernible] that it continues to be a very healthy trend. And we continue to feel pretty encouraged about where we can take that house per liter and create the win win situation that Nacho mentioned earlier on. And so still feel very encouraged about that.

And looking at alumina, our Q4 in terms of volume was actually our highest quarter this year. So this is just a year over year comparison with a very strong Q4 that we had last year. Thank you, Roland.

Thank you, Guillermo. Now I would like to get from Charles Pittman, Barclays. Charles, please.

Hi. Thank you very much for taking my questions. Just one quick kind of clarification. I apologize if this is a simple But just on the reclassification of the change of treatment fee for services. Can you just give us a little bit more detail around what kind of drove this change Like what does this mean for your recorded sales, COGS and SG and A? And why, if this was an industry standard, is this not was that not part of your prior reporting? And then just secondly, within the kind of IVIGSEIG mix and how you've been performing over course of this year. I was wondering if you can just give us a little bit more detail on what it is you're doing to continue to grow share? And maybe if you could just touch a little bit more on the kind of CIDP relative threat that you're seeing I understand that's more second line, but given ZembaFi is I believe, not approved for CIDP and this is a kind of subcut to subcut maintenance in the second line. Is there an element here that actually Gribble's IVIG you very much.

Sure. Let me take the first one and Roland will finish the part part of that first question before addressing the second one.

So it relates to fee for service and GPO fees. And one of the things that I was trying to do when I got in Q4 was essentially try and do a detailed benchmarking and understand essentially where the upsides and downsides were across the business. And one of the things that came out of that exercise and these are not big numbers. One of the things that came out of that exercise we were putting through OpEx these fees when a number of our competitors put it out as a reduction of sales. It's not a positive change in some respects, but it's a more realistic change. Why do I say it's not positive? Because it actually impacts our growth rates quarter on quarter going forward. But what I wanted to try and do is understand really is, are there is there further up side on the OpEx as a percentage of sales and this came out of that analysis. So relatively simple. In terms of what it exactly is, Roland will touch on that in terms of fee for services and GPOs before addressing the second question. Roland?

Yes, not much to add. It's just a general fee for service that you have in The U. S. And the GPL group purchasing authorization fees. That in the past we classified as OpEx It's just now going into the gross to net. And I think it's a standard, as you say, Raul, throughout the industry. Going to your questions around the subQ IG, yes, we are absolutely excited with the momentum that we see. Very much so in The U. S. And you're right, our indication at this stage is in primary immune deficiency. We see that our brand is highly valued there by prescribers. We see that our messaging is resonating very well. And we are investing, obviously, with our efforts on the commercial side to continue that momentum. In parallel, in The U. S, we're advancing our study to get the CIDP indication for XENVIFY as well, which will position us for growth in Europe. We are still in an early stage of launching Xandify, and we have a number of upcoming launches that will further expand our footprint there. And then lastly, on CIDP, yes, correct, in The U. S, we don't promote XENDPI for CIDP.

And from that side, yes, you could argue that the PID part, of course, would not be impacted. But I think beyond that, it's just important to highlight that we have a lot of confidence on the first line role of IG treatments in general in CIDP with growth potential beyond.

Okay.

Thank you so much, Roland. We have a couple of follow-up. First, from Alantra. Alberto, please.

Hi. Thanks for allowing me to jump again. Just if you could provide some detail on the IG dynamics because if I'm not mistaken, I saw on CMS data that Medicare and Medicaid was paying a little bit of a lower price than it had in previous quarters. So I'm surprised of the acceleration in revenue. So I don't know whether this is due to mix, due to the high growth on Semify. Maybe if you could provide some of the dynamics in terms of volumes and price between the within IG? And then my second question would be on taxes, which were very high on Q4. I don't know you if you explained that already on your prepared remarks, I'm sorry, but I missed it. Thank you. [indiscernible] The main driver for our growth is coming from volume. No doubt. As you may recall, in The U. S. Side, at the end of last year, we said that we will be adjusting our price strategy to compete effectively. We've been doing that. And indeed, when you look at the increasing share of subQIG in its premium price that is, of course, offsetting that trend And if you look at Europe, over the last years, we together with the rest of the industry, have been able to increase prices with the supply constraints that were there during the COVID time.

And so yes, we have over the last years, if you look at it, been able on the rest of world side to bring prices up. [indiscernible] relating to your question around taxes, so if I go to Page 31 of the presentation, [indiscernible] What you'll see is, as you rightly point out, your effective tax of 52% on a pretax income. And if If you adjust for some of the one offs, you get to a more normalized view around 26%. So as you rightly ask, what is what explains that difference? Two principal things that I would call out. One is we are we've got an exception relating to the tax audit in Spain. And you'll see more details of that in Note 28 think it's Page 95.

In the the English version of the accounts. Which and the simple thing there is we [indiscernible] four jurisdictions and frankly, we can only pay or we should only pay tax and not be duplicative. And so this relates [indiscernible] work through that and that's the exceptional. And then the other aspect on the tax elevated level of tax relates to the exceptionals related to taxes paid on the Shanghai RAS consideration, which was disclosed earlier in the year as well. So those two things [indiscernible] But what I would really look at, and I'll talk about taxes, a bit further tomorrow, in terms of the go forward tax rate, I think that 2626% to 27% is the appropriate sort of ballpark on a look forward basis. Thank you. Thank you, Rafael.

I mean, the second follow-up just dropped. So that was the last question, the last answer. Just to say thank you so much for your support for being here. Looking forward to see you tomorrow. Thank you so much.

Back in the