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Edited Transcript of EKTA B.ST earnings conference call or presentation 15-Nov-19 10:00am GMT

Preliminary Q2 2020 Elekta AB (publ) Earnings Call

Stockholm Dec 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Elekta AB (publ) earnings conference call or presentation Friday, November 15, 2019 at 10:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Cecilia Ketels

Elekta AB (publ) - Head of IR

* Gustaf Salford

Elekta AB (publ) - CFO & Executive VP

* Richard Hausmann

Elekta AB (publ) - President & CEO

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Conference Call Participants

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* Annette Lykke

Handelsbanken Capital Markets AB, Research Division - Medtech Analyst

* David James Adlington

JP Morgan Chase & Co, Research Division - Head of Medical Technology and Services Equity Research

* Johan Unnerus

Pareto Securities, Research Division - Analyst

* Kristofer Liljeberg-Svensson

Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst

* Michael Klaus Jungling

Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst

* Patrick Andrew Robert Wood

BofA Merrill Lynch, Research Division - Director in Equity Research and Head of the EMEA MedTech & Services Team

* Sebastian Walker

UBS Investment Bank, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Hello and welcome to Elekta's preliminary Q2 results. (Operator Instructions) And please note that today's call is being recorded. I will now hand you over to Cecilia Ketels. Please begin.

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Cecilia Ketels, Elekta AB (publ) - Head of IR [2]

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Good morning, everyone, and warm welcome to this call about our preliminary financial results and updated guidance. Dr. Richard Hausmann, Elekta's President and CEO; and Gustaf Salford, our CFO, are here to give you some clarification on the press release.

Richard will start with some initial remarks, and then we will open up for questions. We will answer the best way we can, but please keep in mind that these are preliminary figures and you will get more information when we publish the full report on November 28.

And due to this, we will also limit the call to 30 minutes. But first, let me remind you that some of the information discussed on this call, including our projections regarding revenue, operating results, cash flow as well as product and product development, contain forward-looking statements. And these statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statement.

And with that, I hand over to Richard.

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Richard Hausmann, Elekta AB (publ) - President & CEO [3]

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Hello, everybody. Today, we published preliminary financial results for the second quarter of 2019, '20. As you have seen in these results, in particular, the EBITA number differ from the plans that we have set out.

First of all, I want to state that the underlying business continued to be strong. Order intake was up 5% in the quarter and 17% year-to-date. Unity continues to drive the market and our software solutions drew a lot of interest at ESTRO earlier in the quarter.

You've probably also realized that our Unity at Uppsala University is now treating patients since last week. It's 1 of out of 18 Unitys in the world treating patients now, and there are more to come soon.

However, because of currency effects and some delayed start of installations, we experienced a negative impact on the EBITA in the quarter, the main reason for the preliminary report. The main negative effect of around 200 basis points was exchange rate. Delays in installations of -- mostly of the Leksell Gamma Knifes, impacted our revenue number and consequently EBITA by around 150 basis points. In total, we came out around 350 basis points behind our plan.

With the already strong installation pipeline for the second half of the year, we do not see a way to fully recover the delayed installations from Q2 in the rest of the year. And that is the reason we have decided to adjust our EBITA margin guidance to around 18% or 1 percentage point less for the fiscal year 2019, '20.

The net sales target of 8% to 10% for the full year stays unchanged. The underlying business continues to be strong and Elekta's midterm scenario, therefore, remains unchanged. With that, I open for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Michael Jungling from Morgan Stanley.

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [2]

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I would like to ask 2 questions, please. Firstly, when it comes to order book growth, can you comment on why it was relatively weak, given easy comparisons? And can you please make specific reference to the order book growth in the Americas and the United States? And question number two is, in relation to your organic sales growth target for the year of 8% to 10%, you've not changed it. Does it mean that the delay in the installation, that we're now looking more towards the 8% number? And could we see further risk to the timing of installations and that you may need to go below the current guidance range?

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Richard Hausmann, Elekta AB (publ) - President & CEO [3]

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To take the last one first because of the easier one. So as I said, we stay at the guidance between 8% to 10%. We will not fully recover, as I mentioned before, most likely with Gamma Knife installations, but there is variability and we still keep the guidance up from 8% to 10%.

On the order book side, we have a strong order book, as you see already in the number, which is 17% up for the first half of the year. Second quarter was a little weaker than the first quarter, but that's typically a seasonality we have. We have -- we don't go yet -- please, please excuse that we don't go yet in the regional distributions that we'll delay in 2 weeks in the call.

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [4]

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Okay. Richard, let us briefly follow up. I mean even if you can't give us a number for the United States, maybe I can ask it more directly, are you seeing an impact as a result of the proposed reimbursement situation that may lead to a change in the behavior, meaning we go from 15 fractions down to 7. And therefore, there's less demand for linac. Have you seen that in your current Q2?

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Richard Hausmann, Elekta AB (publ) - President & CEO [5]

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We have -- in Q2, we had, in the U.S., to be specific, with these 2 Unity orders quite a strong quarter. So from that point of view, we don't see that. We need to watch out a bit more how the effect of these changes in revenue in reimbursement. But right now, cannot really comment on it.

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [6]

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For ex-Unity did the U.S. decline? Ex Unity orders?

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Richard Hausmann, Elekta AB (publ) - President & CEO [7]

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Pardon? Sorry?

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [8]

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In the U.S., did orders decline in the quarter if you exclude the Unity orders?

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Richard Hausmann, Elekta AB (publ) - President & CEO [9]

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No, no.

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Operator [10]

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Our next question comes from the line of Sebastian Walker from UBS.

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Sebastian Walker, UBS Investment Bank, Research Division - Associate Analyst [11]

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I've got 2 as well. Just on the EBITA margin miss. Could you walk me through the mechanics of how the Gamma Knife delays could be in part responsible because as I understand it, you only would recognize the revenue on installation. And therefore, we should have seen a weaker performance at either revenue or gross profit if that was the key driver of the EBITA miss. So that's the first one. And then secondly, just on a global basis, if we exclude the 6 Unity systems, orders did decline in the base business. So what was the driver of that decline, if it wasn't the U.S.?

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Richard Hausmann, Elekta AB (publ) - President & CEO [12]

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Okay. So before Gustaf goes into the details, the difference which we see between our own plan and the EBITA number, which finally comes out as 14.5%, is 350 basis points. 200 out of that is exchange rate effects and Gustaf will explain, and 150 basis points is due to delayed of installations, which, of course, have a also a little bit of effect on the revenue but trickled down to the EBITA number. And Gustaf, maybe you explain bit further details of this exchange rate effect?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [13]

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Yes, on the exchange rate effect, it comes from 2 main areas. It is partly unhedged balance sheet revaluations in the quarter where we have partly local currency in smaller countries and smaller currencies that we're not able to hedge and that these countries like South America, partly Turkey and India. So part of those volumes are unhedged. And that is also part of the 200 basis points currency effect in the quarter.

There's also an effect from the strengthening of the pound, both during the quarter, but especially now in October where the pound increased around 5% versus the dollar and around 3% versus the SEK. And the pound, as you know, has a big effect on our expenses because we have large operations in the U.K.

When it comes to the installation, out of the 150 basis points that we saw and we were behind around 100 basis points, so that's 150, was coming from the Leksell Gamma Knife delays in installations. And you're right, Sebastian, we take revenue on start of installation. But we are very clear on that trigger point and the machine needs to go all the way from the factory in logistics to the bunker on the customers before we can take revenue on it. And there has been delays in the quarter compared to the plan we had.

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Operator [14]

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Our next question comes from the line of Annette Lykke from Handelsbanken.

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [15]

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First of all, can you say how many new Unity systems you expect to be clinical during '19, '20 or this full year? Or how many -- maybe I should ask different, how many do you think you have acceptance so you can recognize sales? Then during the second half, you had talked about new -- focus on new installations. Would you see -- would these be in the neighborhood of 6 or should we expect a different number? And then I would also like to ask, should 2021 be the year where we could sort of expect Elekta to be fully operating in terms of making Unity installations. So what are sort of the problems why you're not installing a lot of new products, as you have a quite decent order backlog? And then I'll come back with one other question.

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Richard Hausmann, Elekta AB (publ) - President & CEO [16]

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So -- okay. So first of all, we have, I think, 18 units -- Unitys clinical-ready, and there will be more coming in the fiscal year. Did you ask me the exact number, how many Unitys can be clinical in this year, this is a difficult thing for us because it's very much related to the installation process as well as training process, et cetera. But I would have -- my guess is there will be definitely probably another 5 to 8 going clinical during -- until the end of this fiscal year at least, maybe even more towards the 10. And then secondly, the order book -- sorry?

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [17]

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No, it's just -- what I'm trying to figure out is not how many is clinical, but how many will be clinical this year? So I assume maybe last year, you had like 12 systems being clinical. And then by the end of this year, you would have the 18 plus, I don't know, 6, another 12 systems being clinical? Or how should I anticipate it...

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Richard Hausmann, Elekta AB (publ) - President & CEO [18]

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So in total -- sorry, it's very hard to hear you. In total, we have 18 from the start. All of -- we count all of them, we don't count in fiscal years. Now we have 18 systems and our customers are clinically doing patients.

As I said, between 5 to -- 8 to 10, 5 to 10, more will come -- become clinical in this fiscal year. They are either on installation or installed already and being trained, et cetera, or being shipped but it takes a bit time. So at the end of this fiscal year, I expect something like up to 28 to be clinical. And the pipeline is strong. The pipeline is getting stronger. The 75 is -- we will most likely will overachieve mid of next year. We're shooting for 75 orders already at the end of this fiscal year.

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [19]

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Okay. And then in respect to get fully up to speed in terms of installing Unity systems, would that happen during next year? Or I'm sort of -- is it probably on the bunker corporation...

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Richard Hausmann, Elekta AB (publ) - President & CEO [20]

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Okay, I honestly -- yes, we have good -- no, as I said in the last call also and then the -- that the we're learning -- whole team is learning and trained as we speak on a faster installation of Unitys, et cetera. It's simply is a learning curve. You're right that we're quite ahead of this learning curve. We're monitoring that very strongly. The recent installations took already quite -- much little less time. And I would say it's a good estimate to say that we will be at the end of this fiscal year, I would say, in an operational mode where we -- so we can improve, but are on a satisfactory level, yes.

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [21]

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Okay. And then just finally on the Gamma Knife issues, is it a specific region? Or is it specific departments where the issues are? And what kind of options do you have to sort of speed up the process? Or is Gamma Knife delay actually related to your focus on getting the Unity systems clinical?

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Richard Hausmann, Elekta AB (publ) - President & CEO [22]

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No, no. The last one, clear answer is not. It is really, as Gustaf has said before, since we're now more -- bit more sensitive on the readiness of the customers to take the system because that's our point of revenue recognition in the system, physically is in the bunker. And we have, for example, for the rest of the year, extremely strong installation pipeline for the Gamma Knifes. We have ordered -- we have purchased actually an additional loading machine to have more installation capabilities, so that's already done. By the way, the Gamma Knife business is doing quite well. That's the underlying topic. And so from that point of view, we're trying to push this pipe which we have now more or less to delay from Q2 into the rest of the year, but we won't make it all in and that's why we reduced our guidance for the year on the EBITA.

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Operator [23]

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Our next question comes from the line of Patrick Wood from Bank of America.

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Patrick Andrew Robert Wood, BofA Merrill Lynch, Research Division - Director in Equity Research and Head of the EMEA MedTech & Services Team [24]

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Just one last for me, and I'm sure it's a very stupid question. But for the systems that were delayed on the Gamma Knife side, I'm just kind of curious, you said some of them would be delayed out of this fiscal year in its entirety and that's part of the reason we see some of the guidance change. I'm just curious, what was the discussion with the customers that kind of led to that? What's leading to delays in a more meaningful way? What's driving that? And are you comfortable that you're getting through -- it's just a delay you're getting through next year?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [25]

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Thanks for the question, Patrick. If you look at how we deliver our product, it's really a slot in installation plan. And if you miss that, we have a certain capacity that, of course, we can work with throughout the year. But if you miss that in the quarter and that push forward a bit, then the rest of the year is often full. So therefore, we get this negative effect in Q2, and we'll recover some of it in the second half, but not all of it due to that the slots in the shipment plan is full for the second half. So that's the main effect. It is not that we lost the projects or anything like that, it's just we've taken a bit longer to install them.

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Patrick Andrew Robert Wood, BofA Merrill Lynch, Research Division - Director in Equity Research and Head of the EMEA MedTech & Services Team [26]

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Got you, so it's like a capacity issue on your side?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [27]

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Sorry?

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Patrick Andrew Robert Wood, BofA Merrill Lynch, Research Division - Director in Equity Research and Head of the EMEA MedTech & Services Team [28]

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So I was saying -- so it's -- essentially, it's a capacity issue from a project management perspective on your side, right?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [29]

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Yes. And it's -- the customer needs to be ready. The logistics needs to work. It's custom questions. It's a broad spectrum of things in the supply chain...

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Richard Hausmann, Elekta AB (publ) - President & CEO [30]

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Licenses also from the custom side for the material to take it. So those topics are coming up.

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Operator [31]

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Our next question comes from the line of David Adlington JPMorgan.

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David James Adlington, JP Morgan Chase & Co, Research Division - Head of Medical Technology and Services Equity Research [32]

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Maybe just a follow-up on the orders because I think from memory, you didn't have any Unity orders last year and 6 this year. So kind of doing the maths on that, it looks like your underlying business is down very high single digit. Just wondering if you can confirm that. And if that's the case, doesn't sound like U.S. was down. So assuming all the Europe or APAC was materially less, any further color you can give us there?

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Richard Hausmann, Elekta AB (publ) - President & CEO [33]

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Well, frankly, I see my business as a total business and linac -- MR-linac is also a linac, and we developed MR-linac to basically be the innovator in this market, and that's what we're seeing right now. So I'm not -- we will not split up everything into these individual products as we have never done before. So we see strong momentum in the orders, as you see in our numbers. We're very happy about that. Our competitors in the MR-linac field are quite weak at the moment, yes, and weakening. I think the more clinical data we get back, the more customers are seeing how much better our system is. From that point of view, I think we're quite happy about our order development.

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Operator [34]

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Our next question comes from the line of Kristofer Liljeberg from Carnegie.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [35]

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A lot of discussions about orders, but I think your real problem is more audience, which are -- seems to be stuck at this 18% level. Currency seems to play a big role here, so could you give a little bit more details there. I guess you have a positive impact from currencies on sales. Is that correct?

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Richard Hausmann, Elekta AB (publ) - President & CEO [36]

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Yes.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [37]

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And you said -- the $120 million that you mentioned, is that the total currency impact in the quarter?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [38]

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No, that's the FX differences as reported in the P&L.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [39]

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Okay, that makes -- so what was the -- yes. Okay.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [40]

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And then to clarify, if you take the -- if you calculate the revenue effect, the cost expenses effect heavily impacted by the pound movement in the last month there, and we go through the hedges, so the FX difference in the reported P&L, then you get this EBITA effect that we've talked about around negative 50 in the quarter. And the reason for why it's negative is to lower system fees, balance sheet revaluation, those hedges, but also the pound effect, the big effect here in October linked to the Brexit process that's strengthening and that' the expense side of that equation. And therefore, it turned out to be -- that's what the 2 drivers impacted, so the EBITA effect also was negative.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [41]

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Okay. So the 120 million is the hedge line and minus 50 is the total impact on your EBITA number in the quarter on both trigger shot for the quarter.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [42]

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Around 50%, yes. We come back to the exact number there in the quarter report, but it would be in that area.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [43]

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Yes. But how much of the -- you lowered a full year margin guidance with 100 basis points. How much of that is the margin effect -- or the currency effect? It seems it should be a pretty large part of that.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [44]

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Yes. So the year-to-date situation, we cannot totally turn around, of course. It is what it is year-to-date. But if you look forward and think about the currencies, and it's always difficult as I said in the previous call to look forward, but if you take current exchange rates and look forward, it looks like that would be a positive effect for the remaining of the year. As a negative effect year-to-date, you'll have a bit of a positive effect in the second half. So it's primarily linked to the delays in installations, I would say, and the reasons for the guidance to around 18%.

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Kristofer Liljeberg-Svensson, Carnegie Investment Bank AB, Research Division - Head of Health Care & Financial Analyst [45]

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Okay. So your view on the full impact from currencies for the full year now versus what you have when you set the target, that hasn't changed really. It's more of a phasing effects -- currencies is more a phasing effects between quarters?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [46]

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Yes. So with today's currency rates that can, of course, change. Your statement is correct. And we will give an update on [that rhotic] as well on the quarterly call.

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Operator [47]

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Our next question comes from the line of Johan Unnerus from Pareto Securities.

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Johan Unnerus, Pareto Securities, Research Division - Analyst [48]

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Yes, recent clarification was very useful, I thought, especially. And -- so if the full year FX exchange effect is not really changed that much since you gave the guide you -- and also you catch up some of the Gamma Knife installation, you come back to the point that traditional RTs even if you don't want to divide it, seem to be softer. And even if we don't want to divide the business, it's a fact that you sell different version and premium end and so on of the traditional linac segment, what -- can you give some clarification on the support from Versa HD and sort of less advanced linac and also little bit of the software momentum and outlook for this year? And of course, coming into next year, you plan to have the value linac book. We can take that later, but...

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Richard Hausmann, Elekta AB (publ) - President & CEO [49]

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Of course, yes, sure -- yes, I mean let me say -- I mean our linac business is, of course, also doing quite well, in particular in Asia Pacific. And we will go into more detail in the 2 weeks in the call. And it's not that we now put everything on Unity, of course. We have -- the value linac is more bunker linac being scheduled to be released in the first half of next year -- next calendar year. So that will also create momentum as well. Our Versa HD in particular combined with Monaco is doing very well. The software in total does very well. So we get -- we will get to more details on that one. We don't have the full report yet and we understand that and I hope in 2 weeks from now, also the regional distribution.

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Johan Unnerus, Pareto Securities, Research Division - Analyst [50]

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So Versa HD is doing well. The software is doing well or reasonably well. So some of the less perhaps -- as always, there is price pressure. But perhaps that's been a bit higher than in the lower segment of the traditional RT, especially as you earlier clarified that your new installation is actually -- new site is actually growing quite well. So you, sort of, conclude that there is fair amount of price pressure in the less premium end linacs?

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Richard Hausmann, Elekta AB (publ) - President & CEO [51]

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No, as you see in our margin numbers, our margin numbers are more or less as expected, 41% -- yes, the gross margin, gross margin...

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [52]

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So I think we -- forward-looking, it's exactly what Richard is saying. If you look at the first half and the second quarter, it's really about the neuro delays that's impacting the margin versus plan. And the rest of the business lines are doing very well compared to last year if you look at the half year number. And then we're looking forward as well, but we're not guiding or talking about specific business line performance when it comes to revenue.

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Johan Unnerus, Pareto Securities, Research Division - Analyst [53]

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So should we, perhaps, have in the back of our minds that you are a bit cautious when you point into 18%, that you have quite a lot of confidence in that -- built in that number?

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [54]

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Yes, we're driving for 18% for the full year based on the logic and the initiatives we're driving here. I think it's also important to say, and as we've said previously, that the COGS saving program that we have worked on for a long period of time now, will give benefits, primarily in the second half of this fiscal year. That's also one of the drivers for gross margin in the second half.

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Operator [55]

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Our next question comes from the line of Sebastian Walker from UBS.

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Sebastian Walker, UBS Investment Bank, Research Division - Associate Analyst [56]

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I just wanted to ask again on the initial question, maybe I'm missing something obviously. But what I don't quite understand is if the EBITA miss was caused by delayed Gamma Knife installations, why is the miss at EBITA so much larger than at the gross profit level? I would have assumed that we should have seen an impact at the gross profit level as well.

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Richard Hausmann, Elekta AB (publ) - President & CEO [57]

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Yes, thank you, Seb. So if you think about the currency there, because that's really what is explaining your question as I see it, then the gross margin should have been even higher because you should have had a bigger revenue effect on gross margin. Some of that effect when it's hedged and in the balance sheet and is what explains the big difference between the gross margin and the EBITA margin. And then we all know that the Gamma Knife business is a profitable part of Elekta's business lines. And if you see delays there on units, that could have a big impact in the isolated quarter. But that's what we're now working with the recovery in the second half.

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Sebastian Walker, UBS Investment Bank, Research Division - Associate Analyst [58]

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Okay, got it. So it's mainly FX then?

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Richard Hausmann, Elekta AB (publ) - President & CEO [59]

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Yes.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [60]

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Yes, it's -- 200 basis points is FX. And 150 basis points is delayed projects. And out of those 150 basis points, 100 is related to the Leksell Gamma Knife.

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Operator [61]

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And our next question is a follow-up from Annette Lykke from Handelsbanken.

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [62]

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My question is, can you confirm to us, you have focused on clinical installations or preparations in the first half, how many new installations should we expect during the second half in this year of Unity?

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Richard Hausmann, Elekta AB (publ) - President & CEO [63]

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So that's what I said. I don't have the exact number, but I see around 5 to 10 additional clear installations for Unity.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [64]

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Yes. And Annette, I think you're also asking about the installation starts, if we call it that, because that's our main revenue as well. And when we last met, I think, ASTRO and we had our investor meeting, we were talking about -- around 15 units. So that's...

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Annette Lykke, Handelsbanken Capital Markets AB, Research Division - Medtech Analyst [65]

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In the second half?

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Richard Hausmann, Elekta AB (publ) - President & CEO [66]

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No, in the full year.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [67]

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In the full year.

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Operator [68]

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Our next question is a follow-up from Michael Jungling from Morgan Stanley.

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [69]

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Both on orders. So first, if you look at the delayed orders, can I just confirm that the delays that you're talking about in the Gamma Knife are not the fault of yours but are the fault of the client not being ready for the installation for whatever reason? And question number two is, if I look at the complexities of your technology, do you foresee that going forward, Unity orders may have a higher propensity of getting delayed as well similar to what we've seen, let's say, with IBA, where proton therapy has become more complex and as a result installations and revenue recognition becomes quite unpredictable or less predictable than previously?

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Richard Hausmann, Elekta AB (publ) - President & CEO [70]

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Mike, it's a good question. First question about the Gamma Knife. Typically, we don't blame our customers for delays. I would say it's a mixture. You can always -- I always blame my own people. Why didn't we more prepare to gather with the customers to get that their licenses are rare and all those things are prepared. And we go into other strange countries as well with our systems. And it's more complex than sometimes necessary. So I would say it's a mix. I think we have to learn from that a bit more. And as I said before, we have really a strong pipeline of Gamma Knife right now to execute on. And from that point of view, I think we can learn in the next few quarters, and we will improve that. And we have a strong installation plan now for the rest of the year as well.

Second question about the Unity. I think there's a huge difference between Unitys and the Proton Therapy. Proton Therapy, I think, you have been there decide this is a project business, so more or less that you have years to -- a year or 2 to install such a system. This is, by far, not as is the case for Unity. I mean what we, as a company, had to learn or our people had to learn is a bit in cooperation with Philips, our magnet supplier, what does it mean to have a magnet, so to say, in our bunkers. And the preparations for that and measurements for that and these kind of things and the timing of those topics, we're improving, as I said before, answering another question, that we are reducing our installation times right now as we speak. And we have good numbers already for the recent installations. So no, I don't think that it's less unpredictable as a normal linac. If we have our act together in the sense of this magnet topics then it's -- I compare it more to a normal linac installation.

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Michael Klaus Jungling, Morgan Stanley, Research Division - MD, Head of MedTech & Services and Analyst [71]

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Okay. And then, Richard, can you just comment on -- if it's not the fault of the client solely, do you have to pay penalties? Because if I'm a client...

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Richard Hausmann, Elekta AB (publ) - President & CEO [72]

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No, no, no. We don't have to pay penalties. No.

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Cecilia Ketels, Elekta AB (publ) - Head of IR [73]

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Okay. I hope that you've got some clarification on the press release, and then you will get more information when we publish our full report on the 28th of November and that will be followed up on a webcast the same day at 10 o'clock. So hope to hear you from you then. Thank you for today. Bye-bye.

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Richard Hausmann, Elekta AB (publ) - President & CEO [74]

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Thank you. Bye.

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Gustaf Salford, Elekta AB (publ) - CFO & Executive VP [75]

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Thank you.

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Operator [76]

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This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.