Grifols, S.A. (NASDAQ:GRFS) Q3 2023 Earnings Call Transcript
Grifols, S.A. (NASDAQ:GRFS) Q3 2023 Earnings Call Transcript November 2, 2023
Nuria Pascual: Hello, everyone, and welcome to the Grifols Third Quarter 2023 Conference Call. Thank you very much for taking the time to join us today. This is Nuria Pascual, Investor Relations and Sustainability Officer. I'm joined by Thomas Glanzmann, our Executive Chairman and CEO; Victor Grifols Deu, Chief Operating Officer; and Alfredo Arroyo, CFO. This call will last about 60 minutes. There will be a presentation of approximately 30 minutes, followed by a Q&A session. [Operator Instructions] As a reminder, this call is being recorded, and the materials for the call are on the Investor Relations website at grifols.com. The transcript and webcast replay of the call will also be available on the Investor Relations website within 24 hours after the end of the conference call.
Now if we turn to Slide 2. Before we start, I would like to draw your attention to the forward-looking statements disclaimer in this slide deck of the release. Forward-looking statements on the call are subject to substantial risks and uncertainties speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. Now I would like to turn the call over to Thomas Glanzmann.
Thomas Glanzmann: Thank you, Nuria. Good afternoon and morning to all on the call. Thank you for joining us today. As you can see from our press release issued this morning, we have reported another strong quarter, further accelerating growth, improving our EBITDA and meeting our commitments. But before we go into our operational performance, I want to address upfront what is and has been the market's concern about our deleveraging progress. Our commitment to deliver a material deleveraging transaction in 2023 of at least €1.5 billion in cash has not changed nor has our very focused efforts to reach a leverage ratio of 4x by 2024. We continue to give full priority to this. Regarding the in June announced transaction in China, we are progressing and working diligently towards getting the agreement signed and expect to announce it before year-end 2023, in line with our commitment.
As we are dealing with a very highly regulated environment, we expect to get all approvals and closing the transaction during the first half of 2024. Ultimately, this will support the organic results we are currently already delivering to continue deleveraging the company. Let me now walk you through how we are meeting our other commitments. Q3 was another quarter of strong revenue growth, where we also delivered a 25.1% adjusted EBITDA margin, which is a significant improvement of 480 basis points compared to Q4 '22 margin. The revenue growth was primarily driven by biopharma and our flagship franchises, immunoglobulin and albumin, and we expect that momentum to continue throughout the year. All the measures to achieve the €450 million cash cost savings from our operational improvement plan have been successfully executed.
We are already seeing and will continue to see the related margin expansion throughout Q4 and next year. This is particularly visible in plasma with cost per liter further declining, while our plasma supply levels continue to grow at a double-digit pace. As a result, we are now committing to the top of our adjusted EBITDA guidance to deliver €1.450 million for the full year 2023. Annualizing the operational improvement plans total savings, our adjusted EBITDA margin is anticipated to increase to 28% to 29%, which is in line with 2019 EBITDA margins. Our EBITDA and cash flow improvement are significantly contributing in our organic deleveraging progress with our leverage ratio now at 6.7 versus a peak of 9x last year. As mentioned, and I strongly reiterate, we will continue to lower this ratio and are very focused on meeting our 4x target, including signing one deleveraging transaction this year.
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