Straumann Holding AG

Good morning or afternoon to all of you, and thank you for attending this conference call on Stroman Group's third quarter results. Please take note of the disclaimer in our media release and on slide two. 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. As shown on the agenda on slide three, I will go through the highlights first. Yang, our CFO, will then share the financial details. After this, I will provide you with an update on our strategic progress and outlook. We will both be happy to answer your questions at the end of the presentation. Let's start with our highlights and move directly to slide six. In the first quarter, we were able to deliver strong results and make progress in our key strategic areas. we achieved strong organic revenue growth of 11.2% of 586 million Swiss francs. While we continue to see different market dynamics in the regions, we have continued to gain market share across the globe. This brings us to a total of about 1.9 billion Swiss francs for continued operation in the first nine months of the year, or 14.5% organic revenue growth. One of the highlights of the third quarter was clearly the performance of the EMEA region. Its double-digit organic revenue growth of 11.4% was driven by all business segments. The second key highlight was the global launch of Stroman Sirians, our competitive wireless intraoral scanner, which will help us to grow in the mid-to-entry segment. The third important highlight, which I will come back to later, is our continued investment in manufacturing capacity to support our growth across all the different regions. Thanks to the progress we have achieved in the first nine months, we confirm our outlook for the full year 2024. And with this, let's have a look at the regional development on slide six. In the third quarter, the specific patient flow dynamic per region remained almost the same as the previous quarters. As mentioned, the EMEA region performed strongly and across all business segments, with countries like Germany, Italy, and Spain as main revenue growth contributors. In implantology, the Challenger brands showed double-digit growth and new innovations were launched. Orthodontics supported the strong performance in the EMEA region, growing at a double-digit rate and winning new customers with some among the orthodontic specialist community. Looking at North America, we see a less dynamic picture due to the effects of the unfavorable macroeconomic environment. The high interest rates have led to financial constraints for our stakeholders, such as patients, dental practices, and some of the large dental service organizations impacting the patient flow in BUS. This has resulted in fewer patient consultations, limiting the growth of the number of implant cases. While the patient flow was slow, the region is still delivering growth. According to our estimate, we have then continued to gain market share in implantology in North America in both the premium and the challenger segments during this first quarter. In parallel, the orthodontic business also faced a soft quarter. On the other side, the Latin American regions once again delivered consistent double-digit revenue growth. The local challenger brand Neodent remained the main growth driver, with markets like Brazil and Colombia contributing significantly. In addition, the orthodontic business performed strongly and entered markets like Argentina and Costa Rica. Finally, Asia-Pacific was the fastest-growing region despite a gradually normalizing baseline in China. You might remember that last year, the VVP demand significantly accelerated patient flow in the country, which heavily influenced the region's performance. In China, both implantology premium and challenger segments showed strong growth. Asia-Pacific outside of China showed also double-digit revenue growth, driven by markets like Thailand, India, and Malaysia. Intensified education efforts, including congresses and courses, significantly drove the expansion of the challenger brands in those countries. And with this, I hand over to Yang to provide additional details on the financials.

Thank you, Guillaume, and hello, everyone. On slide eight, you can see that our nine-month revenue reached about 1.9 billion Swiss francs, which corresponds to a double-digit organic growth of 14.5%. The FX effect In the third quarter, it's similar to the second quarter and amounts to 85 million Swiss francs in the first nine months, showing the strong currency headwind of about 5% on our top line. The effect of mergers and acquisitions added 21 million Swiss francs, which is due to the acquisitions of our distributors in the Baltics and Poland and a light star in China. This resulted in an adjusted nine-month revenue base of 1.6 billion Swiss francs. Despite the single-digit organic growth in North America, the group posted very strong double-digit growth globally, which underlined the strength of our strategy of regional expansion and a very diverse portfolio. Slide nine takes us to an overview of our performance by business segments for the third quarter. The implantology business was very successful across the regions, further boosted by many innovations we launched this year. Overall, the premium segment grew mid-single digits and the challenger brands double digits. We were able to gain market share in all regions, including North America, where implantology market was soft and patient flow slow. Asia Pacific, strongly supported by the VBP effects in China, showed the strongest growth rate in both premium and challenger brands. Following the successful launches in North America and France, our new innovation IXL was prelaunched in Germany, Italy, and Spain in the third quarter. The orthodontics business showed strong momentum globally, except for NAMM, where the environment was challenging. In the EMEA region, we closed the Dr. Smile transition in the third quarter. Our B2B auto brand ClearCorrect continues to pick up fast due to the team's strong execution and an intensified focus on specialists on top of our general dentists. Latam performed very well, and APAC is also making great progress, although at a much lower level. The digital business grew well in general, while the growth rate was slower in the U.S. in the third quarter due to high digital sales in the previous quarter. We launched our lifestyle in China at the beginning of this year, and the demand for the intraoral scanner continues to show very strong momentum. With this, I will hand over to Guillaume to provide an overview about our recent achievements and strategy.

Thank you very much, Yang. Then let's move on to slide 11 to talk about recent achievements and strategic updates. As you know, our estimated addressable market is around 19 billion Swiss francs, which leaves us with huge growth opportunities in all segments. Our strategic compass is designed to capture this market potential and innovation, education, and digitalization are the key pillars to success across all business areas. I'm pleased that we continue to make good progress in the third quarter along all those three dimensions. On slide 12, you can see our recent innovations that help us support clinicians to be successful with both clinical treatment outcomes and driving dental practice growth in the most efficient way. In implantology, one of the most important innovations is IXL, the new premium implant system for both bone and tissue-level treatments. It offers the unique benefit of four distinct implant designs with the simplicity of one single implant system. Another important recent launch was UNIQ in North America, which received very good feedback. Unique is our cloud-based on-demand prosthetic service that allows dental laboratories to outsource planning, design, and manufacturing of patient-specific customized abutments, bars, and full-control crowns. In the digital space, we pre-launched Schroemann Falcon, our first compact and portable navigation system for surgeries that guides dentists in their surgical procedures in real time. Finally, our latest launch, which I will come back to later, is our new intramural scanner. This scanner will help improve the clinical journey and is an important part of our digital strategy. Last but not least, ClearCorrect. In orthodontics, we focus on seamlessly integrated digital workflow for the treatment of coastal cases. The continuously further developed software ClearPilot now allows for a more intuitive and user-friendly treatment planning experience and enables clinicians to treat more advanced cases. All those innovations are important puzzle pieces in a clinician journey and critical in supporting clinicians to be successful with both clinical treatment outcomes and driving growth of their dental practices. Let's move to our education pillar on slide 30. Education is crucial for both clinical excellence and market penetration. In the third quarter alone, we showcased our full range of solutions and brands to more than 3,500 existing or potential customers at large events across the globe. The largest event hosted by Stroman Group was the International Aesthetic Days in Mallorca, Spain, which gathered about 1,400 dental professionals from across the EMEA region. For these three days, world-class experts shared their latest clinical expertise and held multidisciplinary treatment discussions. For the first time in this setting, the focus of this Congress was on the full range of implantology brands and digital solutions, as well as orthodontics. The event was a great opportunity to showcase our complete solutions and how they can be connected within our digital workflow and the Stroman Access platform. Apart from large multi-day events, We expanded also our education efforts to address specific clinical topics with smaller groups of clinicians, mainly involving hands-on sessions. In the Asia-Pacific region, many courses took place in our new partner centers in Malaysia and India, which were well received by all the participants. Our ongoing investment in education and enhancement of clinicians skills enables us to continually increase the market penetration of implant therapy. With this, let's move to slide 14 and talk about digitalization. At the International Aesthetic Days in Mallorca, we introduced Stroman Sirius, our new intraoral scanner designed to offer a competitive solution in the entry-level segment. By launching this innovative intraoral scanner, we aim to cover all price points in the iOS segment and continue increasing our install pace. Compact, lightweight, and wireless, Sirius offers high scanning speed and accuracy, efficiently processing digital data. Its seamless integration with our digital platform, Chroman Access, improves the clinical digital workflow, and with this, the overall clinician experience, driving a more streamlined and connected approach to patient care. Let's move on to slide 15. As mentioned earlier, intraoral scanners like serials are an important entry point for the clinician journey, as they offer a seamless connection into our cloud-based hormone access platform. We are creating this platform with our mission in mind to become the most customer-centric oral care company. Therefore, it is designed to capture the entire clinician journey from diagnostics, treatment planning to patient communication, and will connect our software solutions such as CoDiagnostics, SmileCloud, and ClearPilot in the future. Moving on to slide 16, I would like to celebrate the first anniversary of EdgeUp. Digital transformation is not just about technology. It is a lot about people. This is why, one year ago, we launched EdgeUp Initiatives, an internal education platform to help our employees embrace the opportunities of digitalization through workshops and courses. We also encourage colleagues to use our so-called digital lab, a space to explore cutting-edge digital tools. All of this has been a great success in the first 12 months, with more than 1,400 employees worldwide improving their digital skills through workshops and courses, creating a solid foundation for all teams. We are convinced that this digital mindset is one of the key conditions for becoming a digitally powered, successful oral care company. This is why we are further rolling out this program to our colleagues in sales and operations to help grow their digital proficiency, and I'm already excited to see the future results. On slide 17, I would like to speak about the continued significant investment we make in our future growth. In September, we led the foundation for our third neodent factory in Curitiba, Brazil. This new greenfield facility will cover a total of 40,000 square meters, and it's scheduled to be operational by the end of 2026. The third Curitiba site will further support the global expansion of our leading challenger brand, Neodem. We also continued our global network expansion in Asia Pacific by investing in additional capacities. The ramp-up of our China campus in Shanghai is well on track. While we are still in the validation process phase, production of the first semi-finished product has started. With this, Let's move to the full year outlook on slide 19. While we expect the current geopolitical and macroeconomic uncertainties to continue and lead to different dynamics in our regions, we remain confident that we will continue to gain market share within our estimated globally addressable market of 19 billion Swiss francs. Going forward, we will continue investing in capacity expansion, digital transformation, and more go-to-market activities. With what we have achieved so far this year, we can confirm our outlook for 2024. We are confident to achieve an organic revenue growth in the low double-digit percentage range and profitability in the 27 to 28 percentage range at constant 2023 currency rates. Now, I would like to open the questions and answers session. If you have a question, please press star and one on your phone to join the queue. As usual, we kindly ask you to limit the number of your questions to two in order to give other participants a chance to ask their questions within the available time. Corrie Scholl, can we have the first question, please?