Straumann Holding AG

Good afternoon to all of you and thank you for attending the presentation on Stroman Group's full year results. It's a great pleasure to welcome some of you here in Basel at our headquarters. Please take note of the disclaimer in our media release and on slide two. Through this conference, we will reference the presentation slides that were published on our website earlier this morning. As always, the presentation and discussion will contain forward-looking statements. The conference will follow the usual format. As shown on the agenda on slide three, I will first give you an overview of our strong full year and fourth quarter performance, and then Yang Xu, our CFO, will share details about the financials. After that, I'll provide you with an update on strategic initiatives and our outlook. As always, we will answer your questions at the end of the presentation. Let's move directly to slide five. Before we talk about financials, I would like to highlight that we have created more than 6.7 million smiles in 2024. In other words, together with dental professionals, we supported 20% more people improving their oral health and confidence than in previous years. With this, we keep delivering on our purpose and are fully on track to achieve 10 million smiles annually by 2030. Moving to slide six, I'm very pleased to share the strong results we achieved this year despite the geopolitical tensions and macroeconomical uncertainties which we faced in 2024. Thanks to the team's relentless customer focus and commitment to innovation and education, we achieved an organic revenue growth of 13.7% or 2.5 billion Swiss Francs for the full year. The fourth quarter was also strong with 645 million Swiss francs in revenue, which translated into an organic growth of 11.5%. While we continue to invest significantly in capacity expansion in our team members and in our digital transformation, we delivered a core EBIT margin of 27.6% at constant 2023 currencies, or 26% considering the significant currency headwinds. Looking at 2024, I would like to mention three highlights. The first one is clearly the performance of the EMEA region in the fourth quarter. Its double-digit organic revenue growth of 12.3% was driven by robust contributions across all businesses. The second highlight was the launch of the premium next-generation implant system IXL in North America and in some selected EME markets where clinicians provided excellent initial feedback. I will tell you more about it later. And the third highlight is our employee engagement score of 82 in 2024 that places us among the top 10% of companies surveyed worldwide. It's testament of the unique Stroman Group culture, fostering a customer-centric entrepreneurial mindset and a commitment to deliver superior performance. This strong culture is instrumental for keeping a high pace in expanding market share. This is why we are confident about our continually strong performance despite a continued uncertain macroeconomic environment, which leads me to our outlook. We aim to achieve an organic revenue growth in the high single digit percentage range with 30 to 60 basis point improvement of the core EBIT margin at constant 2024 currency rates. With this, let's have a look at the regional development on slide seven. Through through the year, regional performance reflected a broad base share gain globally in an environment with continued varied patient flow. I have always mentioned the excellent performance in EMEA where we grew across all business segments. In implantology, the challenger brands stood out with double-digit revenue growth while Stroman's premium segment continued to gain market share with first successes following the Q4 IXL launch in some markets. Orthodontics also made a significant contribution driven by strong execution and a more targeted approach to both specialists and general dentists. In North America, we continue to gain market share in the premium and challenger segment within a demanding macroeconomic environment and persistently soft consumer demand through the year with a stabilization during the fourth quarter. Our strong execution in the region coupled with the growing traction of the recently launched IXL implant system and the solid performance of our challenger brands Neodems drove sequential quarterly growth in the fourth quarter. The orthodontic segment faced headwinds due to the soft demand while our digital business maintained its strong growth momentum. In Latin America, the region continued its consistent growth path driven mainly by the implantology business, and namely the challenger brand Neodent, with Brazil, Peru, and Argentina showing strong revenue growth. The premium implantology business also contributed to the excellent results. A key highlight for the year was the performance of the orthodontics business. ClearCorrect expanded across the LATAM region and gained significant market share fueled by high WTG growth in Brazil and strong momentum in Mexico. Finally, Asia Pacific was the fastest growing region with an organic growth rate of 33.3% in 2024, maintaining a very solid growth in the fourth quarter despite high comparison base. Growth in China was driven by the patient flow unlocked from the volume-based procurement initiative that's boosted awareness and made implant procedures more affordable. We gained significant market share in this growing market thanks to our commercial strategy, strong execution, intensified go-to-market activities, and increased education efforts. Outside China, The APAC team also achieved excellent results through the year and double-digit revenue growth in the fourth quarter, gaining market share in mature markets like Japan and Australia, and in dynamic emerging markets such as Thailand, India, and Vietnam. With this, I hand over to Yang to provide additional detail on the financials.

Thank you, Guillaume, and hello to everyone. I would like to remind you that following our sale of the Dr. Smile business in September 2024, We receded our financials according to the IFRS requirements. So the financials I walk you through today refers to the continuing operations. On slide nine, our full year revenue reached about 2.5 billion Swiss francs, which corresponds to an organic growth of 13.7%. The effects effect for our full year amounts to 100 million Swiss francs, showing the currency headwinds about 5% on our top line. The effect of mergers and acquisitions added 25 million Swiss francs, following the acquisition of our distributors in Baltics, Poland, and a light star in China. This resulted in an adjusted full-year revenue basis of 2.2 billion Swiss francs. Thanks to our broad-based share gain, the group posted double-digit growth globally, reflecting the strength of our strategy, the regional expansion, and a diversified portfolio. Slide 10 takes us to an overview of our performance by business segments of the year. Advancement in implantology, orthodontics, and digital solutions reinforced our position as a leader in oral care. The implantology segment, we achieved double-digit growth. Our premium brand strongman grew globally and was further boosted by China's post-VVP program. Our challenger brands, Neodent, Medentica, and Andogia all continue their geographic expansion journey and grew double-digit. In the orthodontic segment, our ClearCorrect brand also saw double-digit growth in 2024 with strong performance, especially in EMEA and LATAM. The digital business also performed very strongly throughout the year, including the fourth quarter, despite a very strong comparison base. The launch of the new straw man series intraoral scanner in the fourth quarter further complimented our digital portfolio offering. On slide 11, I will walk you through our gross margin development. Our core gross margin was 71.4% in 2024. Currency adjusted, this represent a margin contraction of 240 basis point. As expected, the portfolio mix impacted by Product, geographical, and customer diversification represented about 80 basis point. The China full-year VVP effect and our investment in the Shanghai campus result in a year-over-year 90 basis point effect. Other impacts, including further investments in orthodontics treatment planning, supply chain digitalization, and capacity expansion had an 80 basis point impact and partially offset by small productivity gains. This resulted in a currency adjusted gross margin profit of 1.79 billion Swiss francs, or an increase of 11% versus prior year, driven by strong revenue growth across all business areas. Now, let's move to slide 12. Our core EBIT at 2023 currency rates reached to 27.6%. despite a lower gross margin and significantly increased investment in go-to-market initiatives, people, and digital transformation. Considering the currency headwinds of 160 basis points, our 2024 core EBIT margin at actual FX reached about 26%. To put our profitability into perspective, based on our ambition that we presented at Capital Marketing 2021, the core EBIT margin would have been more than 32% at constant 2021 FX rates. The group's core distribution expenses, including Salesforce and logistic cost rose by 40 basis point at a strong investment to sustain high growth. Core administrative expenses, including digital transformation investment, marketing, research and development, and general overhead rose by 90 basis point, As a percentage of revenue, core administrative expenses declined by 110 basis points compared to the prior year, thanks to our operational leverage. Now let's have a look at our cash development on page 13. Our first cash flow amounted to 373 million Swiss francs, or 14.9% of revenue. Cash from operations is 539 million Swiss francs, 35 million higher than last year. Many driven by net profit expansion offset by changing net working capital and income tax paid. Cash flow from investing was driven mostly by CapEx investment and M&A activities including earn outs. Cash from financing was mostly driven by our dividend payouts. The group's balance sheet remains very strong, with cash on hand 375 million Swiss francs at the end of the year, well exceeding our debt position of 200 million outstanding bond. Turning to slide 14. Let's take a closer look at our core financials. For full clarity, you will find the year-on-year comparison on our reported IFRS basis, as well as the core reconciliation table in the appendix of this presentation. More details can be found in the annual report. Net financial expenses amount to 27 million Swiss francs, reflecting currency hedging costs and the currency losses in the group's main exposures. and the year-over-year improvement primarily reflect a stabilizing currency environment and enhanced hedging program. Income tax now reflect the full effect of BEPS 2.0. Core net profit amounted to 502 million Swiss francs, sustaining a high margin of 20% of revenue. FX adjusted basic core earnings per share increased by 15% at 3 francs 14 cents. On slide 15, we remain committed to our longstanding and successful capital allocation principles. As a growth company, our first priority is to reinvest in sustainable organic growth for the future. We also aim to maintain a strong balance sheet through economic cycles and strategically deploy capital for mergers and acquisitions to accelerate our strategy. Lastly, we're committed to maintaining and gradually increasing the absolute dividend amount in line with earnings growth. This leads me to slide 16. Based on the strong 2024 results, our board of directors proposes a dividend of 95 cents per share, which is subject to shareholder approval and payable on April 16th, 2025. 38 of the 95 cents are proposed to be paid from the capital contribution reserve. This year's dividend represents an increase of about 12% and a core EPS payout ratio of about 30%, which is in line with the capital allocation principles I just presented. And with this, I hand back to Guillaume.

Thank you, Yang. And let's move on to slide 18 straight away. The implantology market continued to grow in 2024 to around 6 billion Swiss francs, thanks to improved patient awareness, increased affordability, and growing accessibility to implant treatments. Our strong innovation and execution capabilities led to strong growth in both the premium and challenger segments. And consequently, we gained significant market share in the overall implantology segment, moving up from around 32 to 35% globally. As you can see on slide 19, the implantology market remains significantly underpenetrated, offering a vast growth potential. Spain, with its large number of surgically trained dentists and a dynamic DSO presence driving increased affordability, serves as a valuable benchmark for evaluating average implant treatment penetration. Using Spain as a reference, we see significant potential for growth in both developed markets, such as France, Germany, and the US, as well as in emerging markets like India. We are then confident that market penetration will continue to rise. This growth is driven by increased patient awareness of dental implant treatments, a growing number of surgically trained dentists who can place implants in all geographies, and more accessible treatment cost. These factors will further accelerate market expansion, and we are well positioned to capture this opportunity. A good example actually is China, where the three elements mentioned above, unlocked by the implementation of the VDD, have increased implant penetration considerably, but the overall penetration is still remaining very low. Let's move on to slide 20. Beyond implantology, we are also dedicated to capture growth opportunities in other segments within our total addressable market of 20 billion Swiss francs. To win market share in the ClearLiner segment, our ClearCorrect team has continued to strengthen its value proposition by enhancing patient outcomes and clinical efficiency, supported by ongoing software upgrades and further investment in treatment planning and education. The CAD-CAM equipment segment, we primarily capture market opportunities with our intraoral scanner portfolio at different price points to capture the various customer needs. We also see significant growth opportunity in the large custom-made prosthetic market, which we aim to capture through dedicated product offering in key markets. Our digital platform, Chroman Access, will be the key enabler seamlessly integrating our recently launched prosthetic solutions, such as Unique and SmileInbox. To summarize, we have a 12.5% overall market share in an underpenetrated market, and our consistent strategy and investments put us in a position of strength to significantly grow in the short, mid, and long term. Let me elaborate on our strategic focus on slide 21. Our strategic compass is designed to capture the market potential I just talked about. Innovation, education, and digitalization are our key pillars to unlock these opportunities, and I'm pleased that we made strong progress in 2024 along all these three dimensions. Let's start with innovations in the premium implantology segment on slide 22. As said many times before, innovation is critical to expand the market and gain market shares. We can achieve this by creating superior and differentiated value propositions, supporting clinicians pushing clinical boundaries on the one side and increasing their practice efficiency on the other side. Our latest innovation, the IXL Implant System, has two critical differentiators. First, it improves clinical performances with a unique and clinically proven rock-solid material that delivers better mechanical properties than titanium, allowing for implants with a smaller diameter. It enables clinicians to place implants with minimal invasive procedures, reducing overall treatment costs for patients. In addition, our unique SL active surface allows for faster osteointegration, supporting long-term high success rate. Secondly, before the introduction of IXL, implants for different bone densities required separate instrument sets and prosthetic connections, complicating procedures and inventory management for most dental practices. iXcel solved these issues by unifying four implant design under one system, allowing clinicians to use only one single instrument set for all indication and the same dock feed connection, reducing significantly inventory needed in each practices. Based on this strong value proposition, iXcel will be a key driver for future market growth and initial feedback from clinicians has been very positive. Now let's move to slide 23. On top of implants per se, we also have unique innovative solutions that support clinicians in the best possible way to provide successful implant treatment outcomes, enhance their standard of care, and drive their dental practice efficiency and growth. This includes the newly launched Serious Intramural Scanner that provides excellent handling and precise data sets and is fully integrated into the Stroman Access digital platform to facilitate treatment planning. To support dentists in real time during surgery, we also recently launched Falcon, a unique compact dynamic navigation system, clearly preferring what implant placement will be in the future. Along with GalvoSurge, this helps prevent implant loss while preserving healthy tissue, These solutions contribute to support clinicians achieving better clinical outcome and especially position Stroman as the leading brand for implant therapy.