Straumann Group (STMN.SW), a leader in the dental sector, reported a strong financial performance for the full year of 2023, with notable organic revenue growth and high profitability. Despite facing macroeconomic headwinds and geopolitical tensions, the company successfully expanded its market share across all regions and saw significant growth in China following a new procurement process.
Straumann Group also proposed an increased dividend and maintained a healthy cash position, while continuing to invest in digital transformation and production capabilities.
Key Takeaways
- Straumann Group achieved a 9.8% organic revenue growth in 2023, totaling CHF 2.5 billion.
- Profitability remained high at 25.1%, with an aim to reach around 26% in 2024.
- The company helped 5.6 million smiles globally, progressing towards its 2030 goal.
- All regions reported growth, with Asia Pacific, led by China, showing a 15.8% increase.
- Straumann Group ended the year with CHF 410 million in cash and a net cash position of CHF 172 million.
- A dividend of CHF 0.85 per share was proposed, marking a 6% increase from the previous year.
- Investments of CHF 189 million were made in production, acquisitions, and digital transformation.
- The company expects high single-digit percentage organic revenue growth in 2024.
Company Outlook
- Straumann Group anticipates high single-digit organic revenue growth in 2024.
- The company is focused on maintaining a strong balance sheet and exploring mergers and acquisitions.
- A long-term margin target of 30% by the end of the decade is expected, driven by new businesses such as orthodontics and digital solutions.
- The addressable market in 2023 was above CHF 19 billion, with opportunities for further expansion.
Bearish Highlights
- The strong Swiss franc negatively impacted revenue and profitability.
- The orthodontics market, particularly aesthetic treatments, has been affected by the current macroeconomic conditions.
- DrSmile, the company's direct-to-consumer orthodontics business, has faced challenges and will be resized to focus on organic growth.
Bullish Highlights
- Straumann Group expects a balanced growth trajectory throughout 2024.
- The company aims to maintain double-digit growth by investing in training, education, and technology.
- The EMEA region and North America are expected to continue showing strong performance.
Misses
- The company did not provide specific guidance for regions but expects continued volatility in financial expenses due to foreign currency valuation.
- Some small headwinds related to the minimum tax rate may be experienced in 2024.
Q&A Highlights
- CEO Guillaume Daniellot discussed the company's commitment to driving DrSmile's business forward despite economic challenges.
- The company's digital investments and their monetization strategy were addressed, with a focus on long-term growth.
- Daniellot highlighted the potential of the iEXCEL platform in the premium implant market over the next 4 to 5 years.
Straumann Group's earnings call demonstrated the company's resilience and strategic focus in a challenging economic landscape. With continued investments in innovation and digitalization, along with a commitment to sustainability and customer experience, Straumann Group is positioned for sustained growth and profitability.
The company's leadership changes, with Holger taking over the EMEA region and Andreas Utz heading the Implantology Business Unit, underscore a commitment to strong management and strategic execution.
As Straumann Group moves forward, it aims to leverage its diversified business segments and geographical presence to deliver on its long-term ambitions and create even more smiles around the world.
Full transcript - Straumann Holding AG (STMN) Q4 2023:
Guillaume Daniellot: Good morning or good afternoon to you all. Thank you for joining this conference call on Straumann Group's full year results for 2023. After almost 4 years, it's great to hold this full year presentation in hybrid format again, with some of you joining us in person here in Basel at our headquarters. Please take note of the disclaimer in our media release and on Slide 2. During this conference, we are going to refer to the presentation slides that were published on our website this morning. As usual, the presentation and discussion will include some forward-looking statements. The conference will follow the usual format. As shown on the agenda on Slide 3, I will share with you some highlights of our strong results. Then our CFO, Yang Xu will dive deeper into the financial details. After that, I'll update you on our key strategic initiatives and the outlook. The presentation will be followed by a Q&A session, where Yang and myself will be happy to answer your questions. Let's start with our highlights and move directly to Slide 5. In 2023, we kept our focus on our perform and transform strategic agenda. We continued innovating, adapting and further expanding, which led to another very strong year. Despite the macroeconomic challenges and geopolitical tensions, the team achieved organic revenue growth of 9.8% or CHF 2.5 billion in revenue for the full year. Taking the strong currency headwinds into account, revenue growth in Swiss francs was 3.9%. The fourth quarter was strong with CHF 624 million in revenue, corresponding to an organic growth of 13.2%. It was also a strong achievement to deliver a high profitability of 25.1% for the year despite a significant currency impact on our business and considerable investments in our future growth. In partnership with dental professionals, our dedicated and customer-focused teams helped 5.6 million smiles globally compared to 4.4 million in 2022. With this remarkable growth, we are on track to achieving our goal of 10 million smiles annually by 2030. One critical point of 2023 is our performance in China. The implant volumes in both the premium and challenger segments significantly grew after the Chinese authorities introduced a volume-based procurement process early in the year. I will come back to that later in more detail in the presentation. Another major highlight is the 81 engagement score that we achieved with our employment survey, which is 3 points above the global Glint benchmark, placing the Straumann Group in the top 25% of companies worldwide. We are strongly convinced that culture is and will continue to be instrumental in the success of our company, short-, mid- and long-term. While we expect geopolitical and macroeconomic uncertainties to continue having an impact on the business in most geographies, the overall patient flow is expected to keep a positive dynamic. In addition, our continued investments in innovation, education, digital transformation and the skill set of our team members worldwide are laying a solid foundation for the future. As a result, in 2024, the group aims to achieve organic revenue growth in the high single-digit percentage range and profitability at around 26% at constant 2023 currency rates or between 24% and 25%, including expected FX headwind. With this, let's move on to Slide 6. In 2023, we gained market share in all businesses and across all regions. The patient flow was dynamic with distinct regional differences. The 2 largest regions, EMEA and North America reported high single-digit organic revenue growth. Latin America showed a remarkable consistent growth rate of around 20%. And as previously mentioned, Asia Pacific stood out with its performance driven by the implant volume growth in China. EMEA as the largest revenue contributor showed good patient flow, resulting in organic revenue growth of 7.6% for the year or 5.8% for the fourth quarter. Both premium and challenger implant business segments showed strong growth and the digital business remained at very good level. For the orthodontic side, on the one hand, the doctor-led direct-to-consumer business, DrSmile performance has been impacted by a softer consumer demand, which affected, as a consequence, the EMEA overall regional results. On the other hand, the group significantly gained traction with its orthodontics B2B offering in EMEA through its ClearCorrect brand activities. North America showed a solid 6.7% organic revenue growth for the year and had a strong fourth quarter with 7.2% growth. This, despite some more challenging market conditions that slowed demand progressively over the year, especially on the large implant-based reconstructions and orthodontic treatments. The digital business is growing fast, and our Straumann AXS platform is now driving our Smile in a Box service solution through an improved customer ordering process. The implant business remained the primary growth driver with both the Straumann premium and the Neodent challenger brands growing. LATAM consistently delivered around 20% organic growth with Brazil as the region's largest revenue generator, thanks to the implant brand Neodent and Peru being the fastest-growing country in the region. Nationwide, educational events helped attract new customers and expand market share in the region. Highlights were the 30-year Neodent celebration and the ITI Congress held in Chile in the fourth quarter. Looking now at Asia Pacific outside China, the region showed good performance with Australia, Japan and India driving growth. While the performance in China was impacted by COVID-19 at the beginning of the year, the significant volume increase starting from Q2 onwards supported APAC to reach an organic revenue growth of 15.8% for the full year. And let's have a closer look at the development in China on Slide 7. Early 2023 was marked by the consequences of COVID-19 and the introduction of a volume-based procurement process by the Chinese authorities. This was followed by a strong pent-up demand in the second quarter and increased patient flow; a result of both the postponed treatments due to COVID-19 and the implementation of the VBP, which is significantly reducing prices. The team on the ground quickly adjusted the setup and the sales strategy and was able to more than offset the considerable price reduction. As a result, 2023 was marked by remarkable volume growth in implant volumes in both the premium and challenger segments, notably the Straumann and Anthogyr brands. And with this, I hand over to Yang for a deep dive into the financial details.
Yang Xu: Thank you, Guillaume. Good morning, and good afternoon, everyone. So let's move directly to Slide 9, where you can see the revenue development. At 2023 exchange rates, our full year 2022 revenue would have been CHF 145 million lower. There was significant year-over-year currency impact, mostly driven by U.S. dollar, euro and Chinese renminbi. To put the currency impact into perspective, it is more than 3x higher than the previous year's currency impact, which amounted to CHF 43 million. The M&A effect in 2023 added CHF 20 million to our adjusted revenue base. This was largely related to the acquisition of PlusDental and our distributor in the Baltics. As previously [Audio Gap] while APAC and LATAM reported strong double-digit organic [Audio Gap] of our growth was generated by EMEA and APAC. Based on our estimates, we gained market share in all regions. Slide 10 leads us to our performance by business segments. Straumann's premium and our challenger implantology business both performed very strongly with double-digit growth in volume. Premium implantology was primarily driven by BLT and Straumann's immediacy portfolio. The challenger brands continue to expand their global footprint with strong double-digit growth in all regions. Neodent stood out as a leading challenger brand, celebrating its 30-year World Tour and sustaining very strong growth momentum across the regions. In orthodontics, our ClearCorrect B2B business reported double-digit growth. We remain dedicated to strengthening its geographical presence in existing markets and introducing new solutions and further increasing our educational effort. In our direct-to-consumer orthodontics business, namely DrSmile, slower consumer demand significantly impacted the growth of the business, which also led us to book an impairment charge. Our digital solutions business continued with its growth contribution to the group's overall performance. In particular, the Virtuo Vivo scanner performed very well. The division posted almost double-digit growth, primarily led by the North American region. With the recent acquisition of AlliedStar, we expect to further expand our installed intraoral scanner customer bases, which will help us to increase market penetration through our multi-brand and multi-price approach, which is the backbone of our strategy. Looking at gross profit development on Slide 11. Our gross margin for core and reported amounted to 74.3% and 74.1%, respectively, in 2023. Currency adjusted, this represent a margin contraction of 30 basis points. The portfolio mix represented a headwind of 40 basis points, high utilization in our production facilities combined with continued efficiency improvements to minimize cost increase, partially offset negative portfolio mix and the China VBP pricing impact. The strong Swiss franc impacted the gross margin by 110 basis points. Now let's move to Slide 12. Driven by top line growth and efficiency gains, the core EBIT margin reached 25.1%, which is 90 basis points lower than the reported number in the prior year. Considering the substantial currency headwinds of 200 basis points, our 2023 core EBIT performance represented a significant improvement in terms of operational profitability. In fact, looking at our core EBITDA 2022 currency rate, it would have been at 27.6%. As previously mentioned, our doctor-led direct-to-consumer DrSmile business was impacted by the challenging macroenvironment and the reduced willingness of health consumers to seek aesthetic treatments. In addition to that, DrSmile is switching its marketing strategy from paid to organic demand generation to prioritize profitability over revenue growth. As a result, we have incurred onetime noncash impairment charges for the DrSmile business. Such goodwill impairments, combined with amortization of acquisition-related intangible assets and one-off restructuring costs result in a reported EBIT margin of 17%. Now let's have a closer look at the cash development on Slide 13. Our free cash flow was CHF 316 million, CHF 95 million higher compared to a year ago. Overall, the free cash flow as a percentage of net revenue increased from 9.5% to 13.1%. Cash flow from operating amounted to CHF 504 million, CHF 89 million higher than 2022, primarily driven by slower increase in net working capital versus a year ago. Capital expenditures reached CHF 189 million, which continues to be CHF 127 million, which brings us to an ending cash on hand of CHF 410 million at the end of 2023 and the net cash position of CHF 172 million. Turning to Slide 14. Let's take a look at our core financials. For full clarity, you will find the year-on-year comparison on a reported IFRS basis as well as a core reconciliation table in the appendix of this presentation. More details can be found in the annual report. As mentioned before, the main difference between the core and reported numbers are onetime noncash impairment charges mainly related to goodwill recognized for the DrSmile business, amortization of acquisition-related intangible assets and some one-off restructuring costs. The strong Swiss franc was a very strong headwind for our revenue and profitability in 2023. Net financial expenses amounted to CHF 54 million, reflecting increased currency and hedging costs as well as currency loss in the group's main exposure in U.S. dollar, euro and Chinese renminbi as well as [indiscernible]. Now on Slide 15. We wanted to outline our long-standing successful capital allocation priorities. As a growth company, our first capital allocation priority is to reinvest in organic, sustainable future growth, keep maintaining a strong balance sheet through cycles and to deploy capital on mergers and acquisitions to accelerate our strategy. And lastly, we also intend to maintain and continuously increase the absolute dividend amount with earnings growth. This leads me to Slide 16. Based on the 2023 results, our Board of Directors proposed a dividend of CHF 0.85 per share, which is subject to shareholder approval and payable on April 18, 2024. CHF 0.40 of the CHF 0.85 are proposed to be paid from capital contribution reserve. This year's dividend represent an increase of about 6% and a core EPS payout ratio of about 30%, which is fully in line in the capital allocation priorities I just presented. And with this, I hand back to Guillaume.
Guillaume Daniellot: Thanks, Xu Yang. Let's move on to Slide 18 straightaway. As we grew, so did our overall addressable market, which we estimate to have grown to above CHF 19 billion in 2023. Starting with implantology, which is our core business, the market grew from CHF 5.4 billion to CHF 5.6 billion, which is about 4% growth. We were able to win many new customers and hence, increase our market share from about 30% to 32% during the course of the year. At the same time, as you can see on the slide, there is still a lot of room for us to grow. To ensure we keep capturing a significant share of this market potential, we must continue to invest in our future growth. Let's move on to Slide 19. With the clear objective to become more resilient to potential macroeconomic downturns, we have transformed our organization over the past years and diversified strongly in terms of geography, business segments and solution offerings. As we significantly increased the revenue share of North America, Latin America and especially Asia Pacific, our global footprint is much more balanced today. We also estimate that the number of general practitioners who can place implants has doubled since the financial crisis in 2007, which is also improving our resilience in case of challenging macroeconomic conditions. Our business mix is also more resilient today. We invested in the digital business segment, entered orthodontics with the acquisition of ClearCorrect in 2017 and have expanded into the nonpremium segments of implantology, where there is still a lot of growth potential. Finally, we have also significantly diversified our implant brand offering in order to cover the different price points and ensure our competitiveness in those different segments. Next to our iconic Straumann brand in the premium segment, we have our Neodent, Anthogyr, Medentika and NUVO challenger brands. Now let's move on to Slide 20 and have a closer look at our global company strategy. As mentioned before, people are the key to success and the ultimate lever to deliver performance through flawless strategy execution. Culture is the main driver for any transformation and business growth. And this is why we ask our employees every year for feedback. I am pleased that in 2023, we again achieved a high employee engagement score of 81, 3 points above the global Glint benchmark, which is a sine qua non condition for strong execution. This puts the group in the top 25% of companies worldwide. Now let's move to Slide 21 and dive into our strategy, which will support our future growth. Our group strategy is illustrated with the strategic compass. It shows our business priorities with customer centricity at the heart and defines the everyday priorities of all teams. Our key pillars to success across all our business areas are innovation, education and clinical evidence. As an example, in 2023, we demonstrated our focus there by increasing educational activities by another 15% globally across all brands. Now let's have a closer look at how this is applied to premium implantology on Slide 22. Innovation is the critical pillar of our double-digit volume growth in the premium implant segment, which was mainly driven by our immediacy portfolio, such as BLX, followed by the BLT line. Apically tapered and fully tapered implants that are designed for immediacy approaches are growing faster as they offer shorter time to treatment options, which are preferred by many health consumers. This is why we are also excited about the [Audio Gap] GalvoSurge in 2023. We can now offer a unique medical device that helps to treat peri-implantitis and protect against implant loss without harming healthy soft and hard tissue. As this dental implant cleaning system can be used regardless of the implant brand, it also offers a great opportunity to keep supporting our strategy to partner with new customers. Next to innovation, education is another key pillar of growth, combined with our scientific approach, which sets us apart from the competition. A good example of demonstrating our dedication to offering evidence-based quality solution is the recent 10 years data showing that the Roxolid unique material performs better than Titanium. In addition, during 2023, we renewed our partnership with the international team [Audio Gap]. Let's move to our challenger brands on Slide 23. In the value segment, geographical expansion, combined with innovation and education are our strategic imperatives. We launched an expanded implant innovations such as the Neodent Zi Ceramic Implant and Anthogyr X3 solution for immediacy in the challenger segment. In addition, education is very important to ensure market access and market share gain. In 2023, the 30 years Neodent World Tour was a huge success, combined with the global congress in Brazil with more than 3,000 international attendees. As you can see on the slide, there is still plenty of growth potential for our challenger brands across all regions. Due to the increased number of cases, we opened a new treatment planning site in Costa Rica that will support our growth. Moreover, significant investment in education is of utmost importance to continue to build on the brand's recognition, awareness and reputation globally. We train thousands of clinicians on orthodontics, which is an important part of the geographical expansions of ClearCorrect. Let's move to Slide 25. Digitalization transforms all aspects of the dental industry from patient communication and practice management to diagnostics and treatment. The entry point to any digital workflow are intraoral scanners. They are the foundation for driving more users to our Straumann AXS platform. And therefore, I am pleased that we could further increase the installed IOS customer base in 2023 through our successful partnership with 3Shape and our own device, Straumann Virtuo Vivo. To continue building our installed base of intraoral scanners, [indiscernible] AI development like our CoDiagnostix AI assistant, distant measuring and monitoring features. This leads to more predictable reasons in both simple and more complex implant surgical cases. The AI assistant has been developed together with implant specialists and addresses important pain points of surgical planning, which are mainly anatomy visualization and available time to plan. This leads me to Slide #26, where you can see how everything will be connected. Building our digital platform, Straumann AXS, we aim to create a unique customer experience through integrated cloud-based clinical workflows for implantology and orthodontics, driving efficiency in dental practices. The platform plans to integrate all our software applications, services and solutions, encompassing the spectrum from initial patient engagement to pretreatment diagnostics, followed by comprehensive planning, treatment and monitoring through the post treatment phase. In 2023, we further built infrastructure of our digital platforms, Straumann AXS, and made major progress in adding new solutions such as Smile in a Box and the implant registry on the platform. Following the successful introduction in North America, we plan to launch Straumann AXS in more regions this year. Let's move to Slide 27. Culture is key when it comes to our digital transformation as it is not only about technology. Key to success is, as always, through the people dimension. We believe that fostering a digital mindset in our organization will help us become the digitally powered oral care company we aspire to be. Not every employee needs to learn how to code obviously, but every employee needs to be literate in digital skills. This is why we launched the initiative Edge Up worldwide. Edge Up provides a platform for employees to explore, engage and improve their digital skill set. We designed a specific cultural Edge Up workshop to develop further agile working methods inside of our organization. We also encourage on-the-job and peer-to-peer learning. Talking about our people, this is a good transition to Slide 28. Wolfgang Becker, the Head of EMEA, will retire this June after 40 years of service with the group. It is hard to overstate all that Wolfgang has done for the company and all his colleagues over so many years. He has played a key role in the company's success in all the positions he has held and he's a truly outstanding and highly respected leader, role modeling the Straumann Group culture like no one. He has been instrumental in building a loyal, expanding and trusting customer base and delivered outstanding performances together with his teams. On behalf of all colleagues, I want to thank him for his dedication, infectious optimism, energy and leadership. We wish him a happy and fulfilling retirement from June onwards. With Wolfgang leaving, Holger Haderer, the current Head of Implantology Business Unit, will take the lead of the EMEA region. Holger joined the group in 2006. He is an experienced leader and has excellent track record in marketing, sales and innovation coming from the various roles he has held in the group, whether it was as Managing Director of the German subsidiary or as Regional Head of Marketing in Western Europe. Most recently, he has led and transformed the core business unit of the company Implantology over the last past 4 years. He strengthened and newly established strong partnership with key opinion leaders in dental implantology across all our regions. As a strong cultural ambassador, Holger is a perfect fit to lead our largest revenue contributor, the EMEA region. With this, I'm also very pleased to announce that Andreas Utz, an internal talent who is currently Managing Director of Straumann Group Germany, the third largest subsidiary in terms of revenue contribution, will lead the Implantology Business Unit and also join the Executive Management Board. Andreas joined the group in 2004 and has an outstanding track record in leading global innovation programs, marketing initiatives, commercialization and sales organization to success. We are convinced he's an excellent successor with the right experience and passion for leading our Implantology business as well as being a role model for our company's culture. We wish both Holger and Andreas all the best and a lot of success in their new roles. And with this, let's move to the next slide. Slide 29 shows our progress on our sustainability goals. As mentioned before, I am proud that we, together with dental professionals, helped to create 5.6 million smiles in 2023. And I am pleased that we reached a score of 77 with regards to employees saying that they have good opportunities to grow and learn in our organization. It is also great progress that we are using 93% of electricity from renewable sources today compared to 80% in the prior year. And on top of that, the science-based targets initiative, SBTi, validated our ambitious commitment to achieve net zero emissions by 2040. The bold sustainability ambition we set in 2021 is definitely a journey. We achieved 40% for women in leadership positions. The global education activities increased by 15% worldwide, but decreased to 28% in the low- and middle-income countries due to the VBP process in China, which temporarily reduced our education activities in the countries. You will find more details on our sustainability progress on Page 44 of our annual report published today. Let's move now on to Slide 30. As mentioned earlier, to ensure we keep capturing a significant share of our market potential, we must continue to significantly invest in our future growth. In 2023, we invested CHF 189 million, mainly focusing on the expansion of production capacities in Switzerland, Brazil, the U.S. and China and the financing of the initial digital transformation phase. As already mentioned by Yang, we also acquired our distributor in the Baltics region as well as innovative companies such as GalvoSurge and the intraoral scanner brand, AlliedStar. Furthermore, we continuously invested in the capabilities of our team members worldwide and hired new team members who drive core activities or contribute to the group's digital transformation. As a result, our global workforce grew to more than 11,000 employees. And with this, let's go directly to Slide 32 to speak about the outlook. While geopolitical and macroeconomic uncertainties continue impacting consumer confidence in different geographies, we expect the overall patient flow to keep a positive dynamic overall. Thanks to our differentiated value proposition in all key business segments, combined with strong execution from all our team members worldwide, we remain confident that we will continue to gain market share within the estimated global addressable market of above CHF 19 billion. Our geographical diversification catering to different price points and our extensive training efforts results in more clinicians being able to perform implant and orthodontic procedures. In the meantime, we continue to invest in growth and transformation to maintain the competitive edge of Straumann Group going forward. Taking all of this into account in 2024, the group aims to achieve organic revenue growth in the high single-digit percentage range and profitability at around 26% at constant 2023 currency rates or between 24% and 25%, including the expected FX headwind. With this, we also confirm our 2030 long-term ambition. And now, I would like to open the question-and-answer session. As usual, we will first take the question from our guests here in Basel before opening the lines on the phone. [Operator Instructions]. So please, can we have the first question from the room?
Q - Anja Pomrehn: Anja Pomrehn, Mirabaud Securities. You mentioned China a few times also reflecting last -- a year ago when the VBP program sort of kicked in. And Guillaume, you mentioned at that time that pricing was coming down by around 40% to 45% in China as such. Could you elaborate a little bit more on the progress of volumes in China in '23? I assume, but maybe you can enlighten us there, that pricing has remained stable. And what are you expecting for '24 in China?
Guillaume Daniellot: Yes, I think when we started same place last year, it was difficult to predict what the total year is going to be, but that's also one of the reason we spent a lot of time on the field to be able to then understand the trends and the consequence of those decreased prices, especially at the health consumer side. We have been very pleased to see that it has obviously unlocked a significant additional addressable patient segment in China and thus driving a massive patient flow within the Chinese dental practices. With this then, we decided to invest and play offense instead of defense and being able to support our teams with then more people on the field and also supporting local solutions and customizations in order that we can really trigger the right solutions to the local needs. Then our volume in China have significantly increased. Then the -- I would say it has been massive from a volume development. We have seen something like more than 30% to 40% more patient flow coming in. And we believe that the reservoir of patients that has been unlocked by this new pricing is far from being fully addressed. Then we believe that 2024 and in the years to come, it will still be a significant driver of growth in the Chinese market. We have been expressing, and I would confirm that expectation for China in the next 18 months to 24 months would be a CAGR between 15% to 20%. That's the way we are seeing that as of today. We'll be in China again in March, and we'll be able to try to confirm, again, this on a regular basis, but this is currently what is the perception from the market feedback we are receiving. From a pricing standpoint, Anja, to also address this point, we have not seen any further change in pricing after the new VBP implementation, neither on the patient price nor on the industry player price.
Daniel Jelovcan: Daniel Jelovcan at Stifel. The first question is about North America. The interesting Slide 23 with your market share in the challenger brands. I was a bit surprised that your market share in North America is below the market share of EMEA. And in that is the question, I guess you're probably not really happy with your organic growth in North America below the EMEA growth over the full '23. I mean I understand complex treatments, consumer slowdown. But what is the possibility to address growth reacceleration in North America? That's the first question. And the second, I mean, Latin America is stunning, around 20% organic growth. How much inflation is in there? Or I think you have a special reporting in Latin America adjusted for inflation, but maybe you can clarify.
Guillaume Daniellot: Thanks, Daniel. Could you specify exactly what is leading you to think that we are not happy with challenger growth in North America?
Daniel Jelovcan: No, with the overall growth. It's below EMEA growth and North America should [ be growing ] more, I believe.
Guillaume Daniellot: And what's the rationale for this? No, that's interesting. I think that --- what would be the rationale of why North America would be needing to grow faster than EMEA?
Daniel Jelovcan: Because the penetration in EMEA is probably much higher, especially in Germany and so on.
Guillaume Daniellot: Okay. Then thank you for the precision. I can address then all those points. Let's talk about market penetration first because I think it's a very interesting point. I would say, those numbers are somewhat comparable where I would agree that because Italy and Spain, as for example, are much more penetrated in implant treatment, when we look at still U.K., France, Germany, as an example, we still have a way to go from market penetration like North America. Then I would say, from a pure implant penetration standpoint, U.S. has even more room to grow, but it's pretty comparable. I don't think that we can really differentiate the 2 regions from that standpoint. The second aspect is pricing. Health care and dentistry as part of health care is very expensive in North America, much more than in Europe, meaning that when you have high interest rates like it is the case in the U.S. and when you have, of course, a lot of the North American population used to leverage credit for paying different treatments, then you have more impact of macroeconomical conditions in North America, at least on the short term than in Europe. And that would explain some of the different growth rate that you can be seeing here. We have seen more slowdown of the demand for large reconstruction in North America that we have seen in Europe, and that's one of the explanation that you can see in between the 2 different growth rate. Now with regard to how happy are we with the growth in North America, we are actually very happy, 7.2% is more than 2x the overall market growth in the U.S. Then we believe that we have been taking very significant market share in North America during 2023. Then if interest rates would decrease, and we are expecting like many different industry players, some signs from central banks to reduce interest rates, we believe that it would have a bigger impact in North America than in Europe, for example, in growth rates if macroeconomical environment would ease. But as a conclusion, we are pleased with North American results. We are pleased with EMEA results because both are driving significant market share growth.
Yang Xu: I'll take the second question then about the inflation in Latin America, Daniel. Let me unpack a little bit. We're quite pleased actually for the Latin American growth, both in terms of revenue, but also in volume. Our volume has always been consistently growing at double-digit as well. So to put into perspective, our Latin America is primarily led by our Brazilian business. So if you were to proxy, you can see the Brazil inflation. And then that will be a good proxy for you to model it out.
Daniel Buchta: Daniel Buchta from ZKB. First -- two questions maybe. The first one on the margin guidance. I mean the long run 2030 guidance was for 25% to 30%. Now for this year, '24, you're guiding, including FX obviously, to be below that range. And given what the Swiss franc has done over the last 10 years, I mean, how realistic is it that you get into this range again and maybe even closer to the midpoint of that range? And how can you influence getting in that direction? And then the second on the ortho business. I mean, we see that the market leader in the B2B business is performing weaker than it used to be. And I also guess DrSmile was not showing the greatest performance in '23. What's your outlook here going into '24? Can we expect both businesses to accelerate again and be back to a normal growth pattern even?
Guillaume Daniellot: Yes. I think for margin guidance, when we have done our Capital Market Day and we presented our EBIT corridor of 25% to 30%, it was at constant FX rate. If you apply the '21 FX rate to our EBIT 2023, you will find 29% EBIT. Then with regard to the guidance we gave at that time, we are really spot on or even better that what we were potentially thinking to be at the current stage of our development cycle until 2030. Then what is very important when we look at EBIT is we want to make sure that we are delivering very significant operational EBIT performance as an organization. And when you look at this year, we have gained 110 basis points from an EBIT at constant FX rate. And that's what we want to reproduce in 2024, then moving from 25.1% to 26%. Then that's where we are focusing on what we are controlling. And we are also then not wanting to decrease investments and our capability to drive double-digit growth in the future by just trying to reduce investments by then compensating the FX rate. Then we believe that FX rate will, of course, be a challenge again for 2024, but we think it would ease in the long term as soon as we see inflation really significantly going down in all the different countries and especially the ones where -- that are very important for us, especially the North American dollar zone and the Eurozone. When it comes to ortho, orthodontics are very -- 2 different trend here, at least as far as we are concerned. We have the B2B side, ClearCorrect, which is having double-digit performance, growth performance. We are really pleased with the development, and we think that we want to continue accelerating here because this is, of course, our core activity to be able to support clinicians performing treatment. When it comes to DrSmile, the DrSmile is more targeting simple treatment, what we call the Social 6 treatments, and this is more into the -- what we can call the aesthetic treatments, and that's the one that are impacted by the people are, of course, then rescheduling or just postponing treatment that are really not so much important for their overall health and for their oral health. And that's what we see globally in the orthodontics market. We see that the treatment that are functional are still done. We see that the treatment that are aesthetically-driven, mainly adult Social 6, have been not here or at least significantly decreased from a volume standpoint with those current macroeconomical conditions. Finally, for 2024, how do we see this? We see B2B continuing to grow significantly, thanks to the investment we are doing on training, and education, on feet on the ground and also, of course, in term of technology, while we see DrSmile trying to stay a little bit where they are in terms of performance, but increasing profitability because this is what we have decided as an overall strategy, less relying on paid marketing for increasing top line, but making sure we create that organic traffic in order to drive similar number of cases, but at a better profitability standpoint.
Sibylle Bischofberger: Sibylle Bischofberger from Vontobel. I had 2 questions. First, could you say something about the first 2 months, January, February, how they developed and especially U.S. and the 2 beauty countries, Brazil and Turkey? And secondly, you invested heavily in CapEx last year. Is this now over? Is the CapEx coming back to lower levels now?
Guillaume Daniellot: Well, what we can say in January, February, it's that nothing major has changed. And that we cannot comment per specifically per month for each country. But I would say, so far so good that we see the patient flow being dynamic in the different regions. Then, of course, I think there will be still the uncertainty that we know from the regions that we have expressed already. But I would say, no surprise for the time being. When it comes to CapEx, we are here to invest in growth. And when we are continuing to grow almost double--digit like this, we still need to develop our infrastructure. Then we are going to keep adding CapEx above CHF 200 million in 2024, on the one side, infrastructure. When it comes to manufacturing, we have our China compass, which is in really full swing in term of investment and development. We hope to be able to manufacture already some first part for testing in the second part of 2024. Then this is a lot of investment in terms of machines still going there. When you see the volume that we are delivering in China and worldwide, we still have a lot of investment that we need to do in machines and people from a manufacturing standpoint on -- also on Brazil, expanding what we want to do in Neodent and challenger volume, which is growing. And infrastructure, also on the digital transformation, everything which is cloud-based, from a technology standpoint, is requiring significant investment. And with all the Straumann AXS platform, there is a lot of software development that we are doing that is capitalized and that are also included into the CapEx side. Then CapEx will still be in the same kind of area that we have been this year, it's actually a little bit above because we'll be CHF 200 million, CHF 220 million, something like that, Yang?
Yang Xu: That's right.
Operator: The first question from the phone is from Hassan Al-Wakeel from Barclays (LON:BARC).
Hassan Al-Wakeel: I have 2, please. Firstly, can you talk about EMEA growth in the quarter, what growth would have been without the DTC effect? And when do you expect to see an acceleration here? What have you baked in for EMEA as part of your 2024 growth outlook? And is this more H2-weighted with iEXCEL ramping? And then secondly, can you talk about the margin building blocks in 2024 at the EBIT level? And to what extent China and clear aligner growth and mix headwinds to the margin in 2024?
Guillaume Daniellot: EMEA growth, yes, actually, that's a good point. We will -- if you look at EMEA without DrSmile, we would have a really -- a pretty exciting growth of double-digit. Then the EMEA is really delivering really strongly when we look at what the fourth quarter has been, especially very strong performance in digital -- on the fourth quarter in digital in EMEA because this is really the quarter where digital is making a difference. How do we see EMEA in 2024? Still healthy, not so much backloaded because of course, iEXCEL will have an impact, but it's going to be launched in a phased process for all the different countries, and you will not have then -- the major contribution to growth will potentially not be iEXCEL for EMEA in 2024. This being said, we still expect EMEA to perform also really significantly well and a little bit in line with the overall guidance into high single-digit because this is, again, the largest contributor of the group. When it comes to the margin EBIT level with the growth of clear aligner and China, yes, I think China had an effect already this year, but we have been able to compensate it by all the additional volumes. Then as we are expecting that a lot of additional volume will still come from China, when we look at absorbing the local cost, as an example, I think it will not be too much detrimental to the overall group margin. And clear aligner is growing, but it's still low double-digit for our total organization. And while we are increasing also in volume, it's allowing us to absorb most of our -- more of our structural cost that we have been developing significantly for ortho business. And I'm thinking, for example, about sales rep on the field and also the investment we are doing on the software development side, then it will not be so much detrimental to the overall EBIT if you compare 2024 versus 2023.
Hassan Al-Wakeel: That's really helpful. If I can just follow up on growth. Overall, should we assume that your growth guidance for the group is more front-end loaded, given the easy comp in China for the first quarter?
Guillaume Daniellot: Yes. I think one can see that. At least, I would say, for quarter 1, it would be yes. But for quarter 2, it's not a case because it's -- we had the pent-up demand. Then I think it's pretty balanced in between first half and second half, that's the way, but it will not be balanced from a quarter standpoint. Quarter 1 last year was weak, but quarter 2 was strong. And that's where it will be balanced from that standpoint. And we don't have so much front-end loaded or back-end loaded budget. I think it's pretty -- it's much better than it was last year, actually.
Operator: The next question from the phone comes from Maja Pataki from Kepler Cheuvreux.
Maja Pataki: There will be 2. I would like to start with the clear aligner treatment. Post the impairment of DrSmile and your commentary around the softness in aesthetic treatments, you also have the exposure in Latin America through Smilink. Having -- owning those businesses now, obviously, for 2 years, has anything changed in how you regard that part of the business to direct-to-consumer-oriented aligner business? That will be my first question. Second question would be, you talked about your 2030 guidance before and you elaborated on the FX impact. Now, if we look at the top line growth that was very strong in 2023, given the environment and the guidance for 2024 is also strong, but what is it really? What is the key metric that is going to push your top line growth back into the double digits? Is it the better interest rate environment that is going to support again the full arch treatments? Or is it a pickup on the aesthetic side on the clear aligner? Is there anything that you could pinpoint to because lots of your pockets of business are delivering very strong growth. So I'm just trying to understand what is missing to get you to the double digits.
Guillaume Daniellot: Thank you, Maja. Then to your 2 questions, first, when we do doctor-led direct-to-consumer orthodontics, we only have DrSmile because we have stopped Smilink already quite some time ago that it was a very, very small business. It has been integrated within our activity in ClearCorrect Latin America. We have continued to deliver then the treatment to the patients. But we have resumed our direct-to-consumer distribution then from that standpoint. But when you look at DrSmile, I think we have done DrSmile for 2 reasons. The first one has been, and the most important one in our eyes in the long-term perspective, it was being able to understand how to address the health consumer directly. And it was a lot about learning and integrating additional expertise on how to address this direct-to-consumer activities, whether it's, of course, including the clinicians within -- at the beginning of the process or only during treatment time. And this is really, really important for us because we are leveraging a lot of this knowledge in some of the digital activities that we are doing right now. The second reason of then investing in DrSmile was, of course, potentially seeing that it would represent a significant part of the orthodontic treatment market in the long run. What we are seeing is that, obviously, it has been not resilient at all to macroeconomical environment because the DrSmile business is mainly focusing on simple treatments that are aesthetically-driven and that are being impacted by the current situation from, yes, the capability of people to invest with their available income. Then the reason of actually our impairment of DrSmile is just -- we have just driven the business scale -- the business case, and we have seen that the business case is not fitting exactly what we were having in 2020 when we have done the acquisition. This being said, we do believe this model is interesting, as soon as you are able to drive a much more sustainable strategy, which is organic growth versus paid marketing. That's why impairment is a sign of resizing the expectations, but it's still -- we still have a commitment to the DrSmile team and to our DrSmile activity to drive this business moving forward and to also help then our teams to create additional patient flow to the dental practices because that's one of the aspect of direct-to-consumer, which is interesting. For a lot of practices, the Dr. Smile partnership is helping them to meet new consumer that they would have never met if they would not have been then supported by the DrSmile initial contact. And this from a customer centricity standpoint, supporting clinicians to increase their patient flow is still a very significant request we're having from them. When it comes to your second question, what would it -- we are not far away from double-digit still this year, but I just want to put things into perspective. Our overall market is estimated, we have said, at around 3% to 4% growth. That means we have delivered more than 2.5x the overall market growth. Then from a performance standpoint, it means that a lot of the things that we have done have been running very well, the implant side, whether it's premium and whether it's challenger, our digital business has been running very well, our B2B orthodontics business has been running very well. Then for getting back on the double-digit growth, we just need a little push from the macroeconomic environment. And I think if we continue being able to deliver on all our different initiatives, how we are doing today, I think there is no reason that we cannot get back there in the future. But once again, it's all about focusing on quality and execution that we can keep market share gain, which is going to help us then continuing leading our market and especially leveraging our size afterwards for driving then revenue in the different segments we are in.
Operator: The next question is from Susannah Ludwig from Bernstein.
Susannah Ludwig: I have two. I guess, first, could you just provide some color on sequential performance of DrSmile in EMEA and then the full-arch business in North America? Are you seeing continued deterioration on a quarter-on-quarter basis in Q4 and into Q1? Or is it more that you're stabilizing at the lower level? And then second, more long-term, I guess, you've talked a lot about the strides you made in digital investments with Straumann AXS and the improvements in CoDiagnostix. Can you maybe talk a little bit about your monetization strategy for these digital investments? Is it sort of primarily going to return through the pull-through of implants? Or do you expect SaaS -- to generate SaaS revenues in the future? Or maybe it's just that greater efficiency and simplicity will help drive increased penetration, particularly in the GP segment?
Guillaume Daniellot: Yes. Thank you, Susannah. Quickly, what we can say on DrSmile from a sequential quarter performance is Q4 has been then weak based on the fact that DrSmile was driving a lot of performance marketing and then Black Friday is one of the big event that is happening in Q4. And then a lot of those activities on paid marketing was happening around Black Friday, Q4, which we have decreased this year significantly to make sure that we are really driving the profitability approach that we have been talking about. Then I think that's where Q4 has been showing a significant weakness for DrSmile in Europe in the fourth quarter. But we don't plan to see the same trend in the first quarter, even though it's too early to say right now. On the digital access -- on the digital side in Straumann AXS, actually, you are asking what's basically the underlying business model of Straumann AXS. There are 2, exactly the one that you mentioned. The first one is driving seamless workflow that are supporting clinicians to become much better clinically and much faster in driving procedure. Then this is what you're having with being able to integrate seamlessly all the different process about diagnostic, planning, surgical design, surgical guide design and treatment and also, of course, monitoring of the quality of the treatment. And as soon as you're able to do this, you are generating what we call a customer experience, which is going to drive significant competitive advantage, okay? That's what we have been saying in the vision we have. When it comes to digitalization, we are investing significantly innovation in 2 different dimension. The first dimension is what we call the hard stuff. We still need to innovate into implant design, implant surface, implant material, and that's what we are doing with a ceramic implant with iEXCEL specific design with -- and this is the core and the strength of Straumann and the Straumann Group with all its brands. But on the other side, now 50% of the value proposition will come from that customer experience because everyone is used to that Amazon (NASDAQ:AMZN) one-click experience like it has to be easy, simple, reproducible. You don't want to put your credit card numbers and your e-mail address all the time for every single patient you're asking for. And how do you integrate all those data all over the treatment process? It's going to be a critical request of all clinicians in the future. And of course, if you are looking a little bit beyond this with all that specific customer segment, which is created, which is the DSO, they are also willing to have an integrated view of what's happening in their environment. And without having this kind of a platform, you will not be able to give them the visibility that they see -- that they need in order to see how they are performing. Then one very important driver of revenue from that digital access is, as you said, then, of course, the use and the growth in our implant treatments and in our clear aligner treatments done through the platform. A second part of the revenue will be some new revenue stream that are going to be then license fees for some of the very advanced and unique software capabilities. This Smilecloud is a very good example. But CoDiagnostix is another very good example. But I still believe that while they are going to represent interesting recurring digital revenue, the major impact will come from market share gain on the core businesses of consumables that we're having.
Susannah Ludwig: Great. That's very helpful. I guess just one quick follow-up on the first question was in terms of the sequential performance of the full-arch business in North America. I guess, is that -- has that deteriorated throughout 2023? Or is that sort of stabilizing at lower levels, just -- and you don't think that will return until interest rates return lower?
Guillaume Daniellot: We have not seen that deteriorating more. Now, afterwards -- it's not easy to see actually on a month by month basis, it's more like a quarter-on-quarter basis. Then we have seen that still same kind of level than Q3 and Q4, and we will see in the months to come how this is evolving for the beginning of 2024.
Operator: The next question is from Anchal Verma from JPMorgan (NYSE:JPM).
Anchal Verma: This is Anchal Verma from JPMorgan on behalf of David Adlington. I have 2 questions, please. One, can you please confirm your guidance for net financials and for tax following Pillar 2 for FY '24? And then secondly, on your top line guidance, can you please provide what you are --- what your outlook is for pricing and also talk through your growth assumptions by regions? You've already touched upon EMEA, but how should we be thinking about APAC following a very strong comp in '23? And also, should we expect any acceleration in North America?
Guillaume Daniellot: Yes. I will take top line and then you can do the first question. Just for top line, yes, I think top line, from a pricing standpoint, we're expecting around -- a little bit around 2%, a little bit, I would say, that's what we have been able to deliver in the past years, except the year before, where we have been able to increase more because of inflation. But that's a little bit the overall perspective we have, 1.5% to 2% pricing. And the rest would be volume growth and market share gain. When it comes to the different geographies, we think that EMEA should be then on the high single--digit. We still see some interesting potential to grow still in North America. We are not giving here then precise statement nor we will give precise statement for regions for the time being, but we are seeing double-digit in LATAM and Asia Pacific still as really the -- one of the goal that we're having here. Then we see single-digit in EMEA and North America, double-digit in LATAM and Asia Pacific. That's the way we're looking at 2024 right now.
Yang Xu: And if I may go back to the first question, we don't provide precise guidance for financial expenses and taxes. But let me just help put into a little bit of context. So our financial expenses, mostly year-over-year drivers are the foreign currency valuation. So as you may imagine, that has -- 2023 has been a headwind, and we also anticipate that the volatility continue to persist. To what level? Yet to be seen, but we see the volatility is not going away. Secondarily, on the tax, I think if we remove all the impairment, onetime noncash impact and some related to tax losses related to that subject, I think our normalized tax rate is still in our normal range in 2023, 16% to 17%. In 2024, there's going to be some small headwinds related to the minimum tax rate. So I would just add a notch on top of that.
Anchal Verma: Okay. Perfect. So just is it fair to assume a bit of a touch-up in net financials and in tax mainly related to Pillar 2?
Yang Xu: Yes. For modeling purposes, financials, I wouldn't say necessarily higher, I think, in the neighborhood maybe.
Operator: The next question is from Veronika Dubajova from Citi.
Unidentified Analyst: This is [Zihan Weng] speaking on behalf of Veronika. Most of our questions have been answered actually. So I just want to clarify that when it comes to North America expectation in 2024, you touched upon the potential for a lower interest rate. What is baked in your guidance with regard to this topic or topic of consumer and macro in North America?
Guillaume Daniellot: I'm sorry, I'm not sure I understand your question. You're asking us what is our expectation of North American consumer trend for 2024? Is that the question?
Unidentified Analyst: Yes. So when you talk about single-digit growth for North America, what exactly is your assumption when it comes to the consumer activities for the year, whether you're expecting it to ease for the year or whether you expect the headwinds to last for the full year?
Guillaume Daniellot: For the -- for our current guidance, overall anyway, does not only represent that for North America, but is that the overall macroenvironment will not change significantly, neither on the improving side nor on the worsening side. We are taking into consideration that the overall environment stay almost the same with a potential improvement by the end of the second half or the fourth quarter, but that would have a limited impact on our total 2024 year results anyway.
Operator: The next question is from Hugo Solvet from BNP Paribas (OTC:BNPQY) Exane.
Hugo Solvet: I have 2. As we move into 2024, could you maybe help us size the tailwind from the acquisition of distributors in the Baltics and Poland and also the new partnership with DSOs? You mentioned, I think, you have double-digit growth in Europe ex-DrSmile in 2023. So I mean, what's the contribution of that into 2024? And second on the long-term margin target, you obviously had a step-up investment in 2022, in 2023 and should continue in 2024. Just wondering how much of the contribution from local manufacturing in China should enable you to get to that 30% by the end of the decade. If you can -- or how should we think for that back-end loaded margin growth profile?
Guillaume Daniellot: I'm not sure -- Hugo, I got the second question, but not the first one. Could you ask it again, please? Sorry for that.
Hugo Solvet: Yes. Of course, no worries. Just if you could help us size the tailwind on growth in Europe from the acquired distributors in the Baltics and Poland, please?
Guillaume Daniellot: Okay. Yes. I think Baltics and Poland is a very good support for us for EMEA. It has some -- it's honestly not really super significant from the growth rate of EMEA. I would say it will not add something that you would immediately see top line. It has some impact, but versus the big countries like Germany, France, Spain, I think it still have a marginal impact from a growth rate percentage point standpoint. However, I think this is where, in the future, those markets are very significant growth potential because from a market penetration, there is a lot of work still to be done in education and development and especially something which is speaking a lot, I would say, from our corporate culture. The entire distributor team wants to stay in and that's what is really strong from our perspective is that those distributors who have been discussing integration for quite some time, we have been able, and congratulations to the EMEA team that has been done under the lead of Wolfgang once again. He has been able to convince the distributor to join, to stay, and we are going to have a pretty stable then the team and business, which is going to come with the Baltics and Poland integration. Then we believe that it will help us to keep then the current performance of the EMEA for 2024 and beyond. When it comes to long-term margin, I don't think you should expect too much about China manufacturing than, of course, one would be from a pure gross margin standpoint. It's much more a localization strategy to drive performance and China market penetration much more than optimizing COGS because, as you know, cost in China are increasing, then that's not where you want to set your manufacturing strategy if you want just to drive low COGS and low pricing. However, of course, it has an interesting impact from hedging our COGS from a Swiss franc standpoint because we will be able to manufacture in China for the Chinese market, and we will drive some of our Swiss franc cost of manufacturing in RMB, which is going to be interesting for us to drive a little bit of our Swiss franc exposure to the China RMB. That's one point. The second point, if you look at our 2030 standpoint, it's also the fact that we believe a lot of our investment that we have done on our new businesses that are orthodontics, that are digital are also going to pay off and deliver much more top line with the same level of investment or potentially a bit lower investment that we have needed from now. Then this is the way where we will drive operational leverage and a better absorption of our structural cost, especially in all our new businesses, and that's the way we will be able to drive our EBIT profile.
Operator: Today's last question from the phone is from Falko Friedrichs from Deutsche Bank (ETR:DBKGn).
Falko Friedrichs: Two quick questions from my side, please. Firstly, can you provide the latest sales split for your clear aligner business between the B2B and the DrSmile business? And then secondly, how much of a sales growth contribution do you expect in 2024 from your iEXCEL platform launch?
Guillaume Daniellot: Yes. We don't provide, Falko, as you know, the exact split in between B2B and B2C. We were used to say that it's really close, 50-50. I will reiterate that it has -- it's not far away from this. Then of course, then this year, it has -- it went more on the B2B side than the D2C side because of the current performances. But there is no significant huge changes yet in that ratio. When it comes to then the iEXCEL platform, it's going to be, as I said, a phased launch process. Then I think for 2024, it's not going to be the major growth driver. It obviously will have some impact. But the way you -- I prefer to highlight more the overall potential in the 4 to 5 years to come, more than just the one for 2024. Because if we look at the structure of our premium implant market, premium implant market is 2.7 billion, that's what we are showing. We know that 25% of this is fully tapered, then it's around, big picture, 700 million, 55% of those 2.7 billion is apically tapered and you can add another 1.5 billion. And the rest, the remaining 20% is parallel-walled where we're having 80% of the market that are going to be the remaining 500 million. The iEXCEL platform, thanks to its design of BLC, TLC and BLX, TLX with one single surgical kit, one single prosthetic platform, one single then connection, is targeting apically and fully tapered segment altogether. And it's an average market value of 2.2 billion, okay, based on what I just said. We have right now, around about 40% market share. Our goal in the 4 to 5 next year, we are planning to add another 10% here to reach at least 50% market share. Then we are considering here then 10% of a 2.2 billion, meaning 220 million incremental business directly from the iEXCEL platform. And that's, I think, the way that you should look at it to evaluate what's the potential of iEXCEL moving forward. And I think what we have been able to deliver with BLT, what we have been able to deliver with BLX from past execution is showing us that this is really a realistic perspective from a market share gain standpoint on the premium implant market. Well, then thank you. With this, then I would like to thank you with all of your questions and for joining us today also in Basel and on the line. And if you need further information, you will find it in our annual report, which is published online today. And of course, you are welcome to contact our colleagues in Investor Relations and Corporate Communication. That concludes our conference today. We look forward to meeting you at one of the upcoming roadshows, and our schedule is outlined on Slide 35. We wish you, your colleagues and your families all the best, and have a nice day and goodbye from Basel.
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