Straumann Holding AG

Good morning or afternoon, and thanks a lot to all for joining us for this presentation of Stroman Group's first quarter 2025 results. 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 first quarter performance, and then Yang, 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. And then let's move directly to slide five. I'm very pleased about our strong start to the year, despite the macroeconomic uncertainties that we are all facing. Thanks to the team's relentless customer focus and commitment to innovation, digitalization, and education, we achieved 681 million Swiss francs in revenue, driven by a dynamic demand in all our business segments. This resulted in a strong organic revenue growth of 11%, reflecting resilient performance across a landscape of ongoing varied regional market dynamics. Looking back at the first quarter, I see three major highlights. First and foremost, our continued strong performance in the EMEA and APAC regions. Our presence at the IDS dental fair, which drove massive interest from visitors at our booth, thanks to the launch of many new customer-focused solutions, from innovative products to seamless digital workflow integrations. And thirdly, our new collaboration with the 3D printing pioneer company SprintRay, which combined with Stroman Access cloud-based platform, marks a significant step forward in single-visit chair-side restorative dentistry. All these highlights reflect the strength of our business, both in terms of our diversified portfolio and our global market presence. They continue reinforcing the solid foundation we are building to keep delivering sustainable long-term growth. Also, in challenging times like this, our high-performance player learner culture is critical, is navigating fast-changing market dynamics. It enables us to stay agile, adapt quickly, and continue to size new opportunities as they arise. This leads me to our confirmed outlook for 2025. Despite an increased uncertainty within our microeconomic environment, we are confident about our continually strong performance and aim to achieve organic revenue growth in the high single-digit percentage range with 30 to 60 basis point improvements of the core EBIT margin at constant 2024 currency rates. With this, let's have a look at the regional development on slide six. While we had a strong start into the year despite ongoing macroeconomic uncertainties, we continue to observe significant variation across regional market dynamics, which are reflected in differences in patient flow and consequently in regional performance. I have already highlighted the excellent performance of our largest region, EMEA. Given the high baseline, continuing to deliver strong growth quarter after quarter is a remarkable achievement. Our performance can be attributed to four key factors, one structural and three specific to the Stroman Group. On the structural side, since the pandemic, people are spending more on their health and well-being. In addition, in the EMEA region in particular, the price gap between a three-unit bridge and an implant treatment has narrowed over the past years. This, combined with improved reimbursement from private insurers over the past years and a growing number of trained dentists offering implant treatments, is supporting continued higher market penetration. Secondly, our multi-price, multi-brand strategy has been instrumental in serving a broad customer base and gaining market share. Thirdly, we have made significant investments in direct go-to-market capabilities in Eastern European and Middle Eastern countries, such as Romania, Poland, and Turkey as an example, rather than focusing solely on more major markets of Western Europe. And lastly, our adjacent businesses, such as scanners and clear liners, are also contributing to boost the overall regional performance. In the first quarter, we saw broad-based momentum across all business segments in EME. In implantology, our challenger brands delivered strong double-digit revenue growth. while the Stroman Premium brand continued to gain share, supported by early successes following the IXL launch in selected markets last year. Orthodontics also made a meaningful double-digit growth, further strengthening the region's performance. Finally, with the EMEA launch of new solutions such as our Stroman Access Platform, the IXL implant system and unique prosthetic service in the first quarter, we continue to create the conditions to further expand our market position. The second highlight is the performance of the Asia-Pacific region, which achieved a historical high against a strong comparison base. Asia-Pacific, outside of China, performed very well, with strong double-digit growth in emerging markets like Thailand, India, and Malaysia, while developed markets, such as Australia and Japan, sustain their growth momentum. The implantology business remained the primary growth driver, with both premium and challenger brands playing an instrumental role. Furthermore, digital solutions made a meaningful contribution to the overall regional performance, supported by the launch of our entry-level Sirius internal scanner across the region. Once more, the growth in China stood out, driven by the long-lasting structural impact of the volume-based procurement initiatives that boosted awareness and made implants treatment more affordable. When it comes to North America, the challenging macroeconomic environment had an impact on consumer sentiment, leading to soft demand during the first quarter. Despite these very volatile market conditions, both our premium and challenger segments delivered positive growth, with Stroman benefiting from the growing traction of the newly launched IXL implant system. On the other side, the orthodontics business remained soft. Finally, the digital business contributed positively to growth, driven by the successfully launched unique prosthetic service and intraoral scanners. Looking at Latin America, we are very pleased with the consistent, strong double-digit growth. The implant business, led by our challenger brand Neodense, remained the main growth driver in its home region, with key markets like Brazil and Mexico delivering strong revenue performance. It is also worth highlighting the accelerated growth in the premium segment, thanks to specifically targeted initiatives. In addition, ClearCorrect delivered an impressive performance, with Brazil and Mexico also being the main contributors. The digital business played a key role as well, particularly with strong demand for Serious Central Scanners, further supporting the region's robust growth. And with this, I hand over to Yang to provide additional details on the financials.

Thank you, Guillaume, and hello, everyone. I would like to remind you once again that we restated our financials according to IFRS requirements following ourselves of Dr. Smyth's business in September 2024. So the financials I will walk you through now refer to continuous operations for both 2025 and prior year first quarter numbers. On slide 8, our revenue in the first three months of this fiscal year reached 681 million Swiss francs. which corresponds to an organic growth of 11%. For the first time in several years, the foreign currency impact was rather muted. However, as you have likely noticed, the Swiss franc has recently been strengthening again, and we could face foreign exchange headwinds in the coming quarters. For this quarter, there was also no M&A impact.

Thanks to broad-based share gains,

The group growth globally, reflecting the strength of our strategy, the broad geographical mix, and the diversity of our portfolio, which helped to balance different regional dynamics. The significant growth in the first quarter was also across all segments, implantology, orthodontics, and digital. Let's move to slide nine and our capital allocation principles. We remain committed to our longstanding and successful capital allocation principles. As a growth company, our top priority remains to reinvest in sustainable growth in the business. We also aim to maintain a strong balance sheet through economic cycles, as evidenced by our low leverage and strong liquidity management. With heightened macroeconomic uncertainty, we continue to support our customers, leverage our global supply chain network, and ensure sufficient inventories across various markets. Mergers and acquisitions remain a strategic priority to accelerate our strategy. Two weeks ago, we also paid our dividend, which was 12% higher than the previous years, reflecting our commitment to maintaining or gradually increasing the absolute dividend in line with earnings growth. Today is also my final quarterly results presentation with the Stroman Group. I want to thank you all for the meaningful discussions we've had and look forward to saying goodbye in person during my last roadshow next week. With that, Guillaume, back to you.

Thank you, Yang. Let's move on to slide 11 straight away. In the current environment, with so many uncertainties, we can strongly rely on our key fundamentals. First, we operate in a growing market where we hold approximately a 12.5% share. Secondly, our multi-brand and multi-price portfolio is very well diversified to cater to different customer segments. And thirdly, we benefit from our broad geographical market presence served by a global manufacturing footprint. Looking at the market first, implantology remains the cornerstone of our business, And with a global market share of around 35%, we are clearly the leading company in this business segment. And while we have come a long way, there are still very significant growth opportunities ahead of us within and beyond the implantology market. Moving on to slide 12, I would like to highlight once again the fact that the implantology market remains yet significantly underpenetrated offering a vast growth potential. Spain, with its large number of surgically trained dentists and a dynamic DSO presence driving increased affordability for patients, 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 U.S., as well as in emerging markets like India. We are confident that market penetration will actually continue to rise. This development is driven by increasing patient awareness of dental implant treatments, a growing number of surgically trained dentists who can place implants in all geographies, and more affordable treatment costs. These factors will further accelerate market expansion and we are well positioned to capture this opportunity. A good example is China, where the three elements mentioned above, unlocked by the implementation of the VVP, have significantly increased implant penetration, although overall levels still remain relatively low. Therefore, we believe China, as one strong example, represents a large market with significantly long-term growth. Let's move on to slide 13. The second important strength I mentioned is that we have significantly expanded and built a diversified portfolio over the years. Thanks to our multi-brand strategy in implantology, we offer solutions at various price points catering to the different customer segments. In addition, we have successfully diversified beyond implantology and strengthened our global presence, giving us the flexibility to adapt to different customer needs and pricing expectations worldwide. Moving on to our third strength on slide 14, we have significantly expanded our geographical footprint, both in terms of presence and production facilities. While we operated just six manufacturing sites in 2013, we now run 19 production facilities worldwide, including the Shanghai campus, which we expect to be fully operational in the next coming month. This expanded manufacturing network strengthens our supply chain and significantly improves its agility and resilience to a fast-changing environment. We already leverage local production across several business areas. For instance, in the U.S., where we have the capability to produce a significant portion of the solutions sold in that market. This applies to premium implants, as well as most other business areas, such as customized prosthetic and orthodontics. These three fundamental strengths form a strong foundation for sustainable growth, allowing us to serve different customer segments in over 100 countries. It is precisely this reach that gives us a decisive advantage in times of economic fluctuation. Our strategic compass is designed to capture a growing share of our total addressable market of 20 billion Swiss francs. Innovation, Digitalization and education are our three key pillars to unlock these opportunities. I am pleased that we have continued to make significant progress in the first quarter along all those dimensions. Let's start with our approach to innovation and digitalization on slide 16. Innovation is clearly critical to expanding market share, and there are two major elements to it. what we call the what dimensions. It is corresponding to the product and solution side. We constantly innovate there with the goal of helping clinicians to reach clinical excellence and efficiency, always backed by scientific evidence. Secondly, the how dimension. This is related to the customer experience side. As in many industries today, Delivering a superior customer experience in terms of simplicity, efficiency, and convenience is what separates successful solutions from those that fall behind. Technology, and especially digital innovation, is a key driver in creating this differentiated experience for clinicians. Thus, by innovating on both the what and the how dimensions, we ensure that we remain ahead of the competition and keep expanding the leadership in our core segment. Now, let's move to slide 17 and talk about how we combine innovation, digitalization, and education at the International Dental Show in Cologne in March. With regard to the one dimension, we pursued our global IXL launch at IES. This next-generation implant system combines four implant designs in one. With both unique features such as rock-solid material and SL-active surface, it supports minimally invasive treatments and faster OCO integration, and thus drives practice efficiency and high clinical outcomes. We also introduced UNIQ, our cloud-based prosthetic service that enables labs to outsource the design and production of highly customized respirations. Finally, Falcon, our first compact dynamic navigation system for real-time surgical guidance, generated a very high interest. These innovations reflect the strength of our core implant business and our ability to further expand our market share in this segment in the short and mid-term. Now moving to the how dimension, which also strongly relates to our key success pillar, digitalization. In today's environment, it is no longer enough to have great products and solutions. We have to make workflows simpler, faster, and more connected, and that's where our digital capabilities come in. Our cloud-based platform, Stroman Access, which we just launched for the EMEA region, connects the entire treatment journey from diagnostics to execution in all one seamless digital ecosystem. Let's move on to slide 18. At the IDS, we announced our collaboration with Sprintray and launched the Stroman Signature Midas Chairside 3D printer. Combined with the Sirius Intraoral scanner and a complete integration into our Stroman Access platform, we can now offer a unique chairside workflow solution that allows clinicians to deliver single respirations in under 10 minutes, making efficiency single-visit treatment a reality. Thus, we increase patient benefits by shortening time to tooth while enabling clinicians to treat more patients efficiently. So by combining both the what and the how dimensions and emphasizing on education, even such as ideas, we are delivering meaningful value to our customers and building a foundation for our short, mid, and long-term growth. Now let's move to slide 19 and talk about how we support our growth journey. We are investing significantly in innovation and digitalization, as mentioned earlier, but also in education, since implantology and orthodontics are not covered in undergraduate clinical education. We therefore play an important role in empowering clinicians to be more active in specialty dentistry cases. now the largest share of our capital expenditure goes to expanding production capacity and strengthening our supply chain in china the volume based procurement initiative has a long lasting impact by boosting awareness and making implant treatments more affordable we see significant growth opportunities ahead which are supported by the large population and the aging trend to capture these growth opportunities we invested in local production. The ramp-up of our Shanghai Compass is well on track. Production has already started, and we expect to begin fully approved manufacturing for China VBP commercial products during the second half of 2025. Another major milestone is the start of construction of our third new manufacturing in Curitiba, Brazil, to support the strong growth of our challenger brand implant volume. As you can see in the photo, work is already well underway. The site is expected to be operational by the end of 2026. Together with other supply chain enhancements, both investments will enable us to continue delivering high-quality solutions at scale and support our ambitious growth plans. which bring me to our outlook on slide 20. We have entered 2025 from a position of strength backed by a diversified portfolio, a strong market presence, and a clear strategic vision. With this foundation, we remain confident in our ability to navigate the complexities of the global landscape and continue expanding our market share, reinforcing our confidence in our long-term ambition for 2030. Our broad geographical presence provides resilience against regional economic fluctuations, while our worldwide manufacturing footprint supports our supply chain flexibility in times of growing geopolitical complexities. While tariffs will have an impact, we have set up the right measures to manage the consequences. Therefore, we remain confident for 2025 to achieve organic revenue growth in the high single-digit percentage range, with a 30 to 60 basis points improvement of the core EBIT margin at constant 2024 currency rates. And now, before to conclude, I would like to thank Yang for all her contributions, her dedication, insights, and very positive spirit have made a lasting impact, and we are grateful for everything she has done. Thank you, Yang. With this, we can open the question and answer session. Please press star and 1 on your phone to join the queue. Finally, limit yourself to two questions. This will give all participants a chance to ask a question within the available time. Can we have the first question, please?

The first question comes from Brandon Vasquez from William Blair. Please go ahead.

Hi. Good morning, everyone, and thank you for taking the question. First, I just wanted to start on the guidance. You guys put up a good first quarter here, and I hate to harp on it because you actually reiterated guidance on what's an uncertain macro. But just maybe talk a little bit about the dynamics because as you go through the year for guidance, your comps get a little bit easier. You did a double digit to start the year, so it implies a little bit of a deceleration through the year. Perhaps maybe is there just a little conservatism that you're building in for the full year organic growth guidance? Maybe we can start there.

Yeah, I think, you know, we are pleased with our first quarter. In the current environment, we believe that adding a high single-digit growth guidance is already quite a very significant objective. then we don't know a lot of the kind of macro evolution in the coming quarters, then I think it's still not so easy to predict that the Q1 conditions will remain the same for the remaining quarters of the year. Now, if everything stays the same, we will be very pleased by the second part of the year to revise guidance if needed. But for the time being, we believe the guidance is well placed, and we are really confident in being able to achieve it.

Yep, that makes sense. And then maybe one, I'm sure others will have questions on macro as well, so maybe I'll pivot here and ask. Guillaume, there's a lot of new products that you guys are launching, a lot that you highlighted from IDS. Maybe spend a minute just talking about the top one or two that you think will be most impactful here to growth in maybe the next 12 to 24 months and why they may be the most impactful to the company growth profile. Thanks.

Yeah, I think thanks for highlighting this. We have to say we are really, really happy with the level of innovation we are bringing to the market on a consistent manner. And this is one of the key strengths we have to continue gaining share, even if some, as we see, the macro is not very positive. Gaining share is the only way to grow, and we are still having or keeping the conditions for all our sales team worldwide. I would say the two major or the three major products that we are going to see impact in the next 24 months are obviously the IXL implant system. This is the way to grow share in our core implant segments. On the premium side, the feedback we are hearing from customers using it already is extremely positive. Then we are really confident there. The second side is considering the digital dimension. We are really excited with our intraoral scanner portfolio, our entry-level serials, especially in markets like Brazil, like China, like South Europe, for example, already providing significant growth on this side. And of course, the partnership with FreeShape is allowing us to have a complete portfolio. And we believe that digital penetration will continue to significantly increase despite uh the macroeconomic environment uh we believe that efficiency gain is going to be important into the practices and the price level of scanners have significantly decreased and we are still believing significantly in this growth driver and lastly is this uh partnership with uh uh with midas and spring trade where it could also significantly change the landscape in single tooth restoration chairside that will be, I would say at the beginning, a slow development because we are then implementing this technology, but we believe that in 24 months from now, it could represent something very interesting for us. then that's the way we are seeing that and we are very exciting about those products that has been launched less than three months ago or four months ago meaning that a lot of growth potential for us the next question comes from david edlington from jp morgan please go ahead thanks for questions

Maybe just firstly, if you could point towards the trajectory through the quarter, were you seeing any softness in either the US or Europe? And then secondly, just on foreign exchange, give an update in terms of what you think the headwinds will be from here for the rest of the year, top line and margins. And then finally, on tariffs, you alluded to it, but is it safe to say that you expect very limited impact from tariffs? Excellent.

Thank you, David. I got the two last questions that I'm sure Yang will take. For the first one, I did not capture the first. It's the dynamic within the quarter for the region. That was the question?

Yeah, exactly. I just wondered if you were seeing any softness given the macro headwinds increased through the quarter. I just wondered if you saw any softness as it came towards the end of the quarter in either Europe or U.S. specifically.

Okay. Yeah, all three interesting questions. Actually, what we have seen in North America while being soft is a very volatile situation from quarter to quarter. And we have seen actually customers somewhat responding to the news that they were receiving on a macroeconomical side. Then there have been fear of potentially stocking themselves. a little bit less patient flow than we have seen up and down from month to month. But I would not say that we are seeing worsening during the quarter. We actually ended March better than we were in the middle of the quarter. It's still a very volatile environment. And it has been a lot related to the uncertainty, we believe, on the marketplace. And I really believe that in a better and at least in a better and more stable dynamic in the months to come. Thanks, of course, from our innovation that will keep providing us new customer acquisition opportunity, but also by the fact that I think some clarity will be, I hope, gained when it comes to macro. For the two other questions, Yang, do you want to chime in?

Hey, David, first on the FX question, yes, we have seen very muted, almost zero impact on the first quarter. However, if we take a snapshot of today or yesterday's spot or forward, it could be as high as 100 basis points on the top line. And it depends on if you look at the spot or the forward rate, it could be 20 to 30 basis points on the bottom line. But this is, of course, point in time, and nobody has a crystal ball, so we just have to observe and update the market as we go. The tariff is, of course, we are somewhat insulated from the tariffs thanks to our global network, but we're not immune. Their tariff has some bearing in our financials, but it's fully embedded into our confirmed guidance. The reason is we are also diligently putting in place the network optimization in responding to the changing tariff situation. And we do have a footprint that is across the globe, including the United States, and that helps us to listen to some of the things. But we, of course, right now as we speak, as everyone else, we are managing the network in the most efficient way so we can respond to the tariffs and be able to absorb some of the negative impact into our full P&L for this year.

The next question comes from Victoria Lambert from Bloomberg.

Please go ahead.

Hi, thank you for taking my questions. The first one is just on the outlook for the US. Are you guys still expecting patient volumes in 2025 to be ahead of 2024? I think you gave that color in February. So just an update on that would be helpful. And then my second question is just on CareCorrect. You had some cost savings from the Dr. Small exit last year and you've been reinvesting. So just wanted to get a sense of if any of this reinvestment has been paying off, what we're seeing in market share. I know that U.S. has been a bit softer, but maybe ex-U.S. we could get a bit more color. Thank you.

Yes, of course. When it comes to U.S. forward-looking, again, I think it's still very unpredictable in some ways with all the elements that are at play and all the discussion that you guys are hearing as much as we do on the potential impact on tariffs and inflations and then potentially having a lower demand overall. But we actually don't see this at the moment. We don't see the situation worsening And we believe still that we are going to have a better 2025 than 2024. This has been our, I would say, our view before starting 2025, and it did not change so far. then we have a – it's a slow start based on all the different announcements that have not been planned by anyone. But we still believe that we have strong fundamentals that are going to be at play here, once again, on the innovation side for market share gain, also by a more stable environment and a strong execution. Thank you. we will then deliver on a better U.S. from our perspective, and that's what has been included in our guidance. When it comes to ClearCorrect ex-US, I think double-digit growth. We are very pleased with the feedback we are receiving from customers that are pleased with the improvement we have done in software, with the capability to support them in growing their number of cases. Then both Europe and Latin America are really then keeping developing our auto business. And this is what we are looking at also structuring in the same manner for U.S. when the macro will be more supportive of case growth. And that's why the The investments that have been done on the one side, feet on the ground, and on the second side on technology, be it software, but also treatment planning expertise, have helped us really to improve our value proposition as we were expecting.

The next question comes from Hassan Al-Waqil from Barclays. Please go ahead.

Hi, good morning. Thank you for taking my questions. A couple from me, both follow-ups. Firstly, on tariffs, could you talk about what your assumptions are today and whether you're embedding all announced tariffs and if there's a range of impact within the guidance that you're thinking about? And then to what extent can you cover your manufacturing needs from Andover and what about digital equipment? And then secondly, following up on your U.S. comments when we met at IDS, Guillaume, you sounded more cautious on this market and the volatility you were observing here. Are you seeing any evolving dynamics between single tooth and full arch? And how confident are you in achieving consensus expectations of mid-single digit growth in North America in full year 25? Thank you.

Well, when it comes to tariffs, we have quite a good coverage of already local manufacturing. We are obviously optimizing our handover site to be able to produce more finished product locally to the U.S. market. But we think we can absorb a significant part of the volume. So there, 100% of our customized prosthetic is done in Texas. 100% of our clear liner is manufactured also in Texas. For the U.S. market, a significant part of our biomaterial is done with local partners like L&H in Virginia. Then I think we have our Challenger brands that is produced in Brazil that is going to, of course, be – going through the tariff side. And we are looking at solutions for our digital portfolio together with our partner on the FreeShape side and our own manufacturing side as well. Then I think a large part of our manufacturing is then already based in the U.S. And for confirming our guidance, we have taken the situation that has been expressed by the US administration early on when they have announced the Liberation Day. then that's where we stand. Then we are going to look at what it means from the kind of final discussions or alignments in between countries in the, you know, the Freeman kind of period that has been granted for those kind of international alignments. That's why we are not taking the easy way and we are planning for the worst and expect for the best. When it comes to the U.S., you know, we are normally confident to do better than what we have done in 2024 in the current macro environment. Obviously, if you would have a very strong deterioration of the U.S., it will be very different. But at the moment in time, we don't see sign of this in the market. We are discussing, of course, with all our customers and staying very close to them. They have seen, again, a lot of volatility, but not a worsening trend. And that's one of the reasons where we believe we can still achieve the vision that we had at the beginning of the year.

Very helpful. If I could just follow up on the strong, clear, correct performance OUS. Are you seeing any difference in performance or the mix between specialists and GPs? I know this is something that you've been working actively on.

No, we have seen strong performance ex-US, but not in the U.S.,

Yes, and my question is, you know, how the performance is trending between specialists and GP.

Okay. I think our portfolio capture more to the GP segment, but you have some countries where clear liner and orthodontics are done only for specialists, and Brazil is a very good example. Then I would say that we have, from an overall European standpoint, a much more GP penetration, where when it comes to Latin America is much more specialist penetration when it comes to regulatory situation of those two different regions. That's where we are pleased that our systems can now both be delivering on specialist and GP segments, looking at the performance we have been able to pose for the past quarters already.

Perfect. Thank you.

The next question comes from Daniel from ZKB. Please go ahead.

Good morning. The first question is on Germany and France. You mentioned Germany was again strong. Strong, does that mean like the EMEA region so close to double digit or and what were the major drivers there? Was it IXL or you know? premium challenger and so on, and including, so that question is the French market you didn't really mention. And on top of my mind, I think you had a certain management change there. How does it look in France? Thanks.

Yes, Daniel, Germany was strong. And the major reason of this change very solid performance is the combination of all our businesses that are delivering very well. You know, I've been expressing the fact that in EMEA and I would say Germany also especially, we have seen more dentists placing implants. We have seen also reimbursement evolving a little bit favorably over the year. Then the market conditions are positive for supporting implant market penetration. And we have significantly increased our capability to serve customers on both premium and challenger brands. And we were relying mainly on premium brands in the past. And we are now getting the combination of premium challenger brands, some clear correct and some digital, which are bringing then our German market performance much above the total market growth that we see. When it comes to France, I think we are – well, France is not in a period of best performance. It's actually acceptable. But as you can imagine, our expectation is to be significantly above market growth. And we are on the one side – then the need to increase and improve execution, but also the fact that we have our former leader has been then looking for a different experience at the beginning among the group. And that's why we had also a change of leadership here, and we are trusting our French team to be able to leverage all the innovation that we are giving also as an opportunity of creating more customers and delivering even higher performance than the one we are having right now.

Okay, thanks very much.

The next question comes from Vic Topra from Wells Fargo. Please go ahead.

Hey, good morning, and thanks for taking the question, too, for me. Appreciate the commentary on tariffs, but I'm just wondering if you can quantify the tariff exposure you're facing in 2025 and when you expect those tariffs to hit the P&L. And then I just had a follow-up, please.

I think the tariff exposure is fluctuating. You know, it has been fluctuating during the whole first quarter. Depending on what's going to be applied, what is not applying, then we have a different range and different scenario. And when it is going to hit, then it has already started fluctuating. to hit the company with the 10% that have been implemented for all the different countries. And for the time being, this is the first step that we have, like every company submitted to tariffs, and then we are going to see what's going to be the final results in a couple of months from now. But that's where we stand at the moment by being able to have more clarity on this side. But when we look at the worst-case scenario, we are able to manage the consequences by all the preventive measures we have put in place.

Okay, got it. That's very helpful. And then my follow-up question is, I just wanted to get some additional color about the differences in growth this quarter in your value and your premium implant businesses and how we should think about them for the rest of the year. Thank you.

On the global perspective, when we look at two different brands, premium and challenger brands, then Challenger is growing always faster than premium. But premium is also very, very strong. And we can say that we are almost on both sides. We've having our then with our Challenger brands being able to, of course, be much more dynamic because of the geographical mix. Once again, having all those emerging markets growing faster from a volume standpoint and all being at 90%-ish in the challenger side.

The next question comes from Maja Stefani Pataki from Kepler-Chevreau.

Please go ahead. Good morning, everyone.

Two questions, please. Could you provide us a bit of an estimate of how much the potential impact from the IDS was on growth in Q1 and also what you think that the Easter impact, the positive Easter impact was in Q1 just to see where the potential underlying growth could have been in Q1? And then a second question, more broadly speaking, I fully understand that the visibility on what is going to happen particularly in the US is very low and you reflect on the market being very volatile. In case the market would remain very volatile and growth would slow a bit and you would not get to your target, how do you think about costs? Would you consider to adapt on the cost side to match the new environment or do you think the projects that you've put in place for long-term growth

should be continued throughout this challenging time thank you yes good question maya as well and when it comes to ideas ids is not really a place where we sell We are selling to some customers in the German market, but I would say it's a limited impact on the total number that you are seeing. This could be excluded as a special effect. Secondly, the Easter effect is a good one, at least when it comes to EMEA. Last year, then it has, I would say, supported a bigger growth or a stronger growth in Q1. because Easter is in April this year, and it was in March last year, meaning that we have somewhat extra selling days this year into one that we're not going to have in Q2. And we are expecting, of course, this effect in the second quarter for the EMEA region. When it comes to our investment policy and related to our short-term performance, we are, of course, a growth organization, an innovation-based growth organization, and investment in growth for the long term is really critical. Now, obviously, we are also... catering and caring for the short- and mid-term perspective. And there are significant investments that are planned for our growth projects. Some are, of course, committed. Some are more flexible. And if we were having to see significant, I would say, headwind from macro because of recession in any part of the world or whatsoever, then we would have, of course, the ability to take care of our total spending and assess, of course, the criticality of our different investments for the long term. And it will be always the balance that we have been able to do. If you look at the COVID time, if you look at the more difficult time in the past, we have been always balancing the short-term and the reasons with our long-term growth investments. And this is what we would be doing the same way if those kind of scenarios would be coming up.

Thank you. The next question comes from Oliver Metzger from Adobe HF. Please go ahead.

Yeah. Good morning from my side. Two questions I have. The first one is about the dynamics in China. So can you make comment about right now about this the strong dynamic. Do you see some, does some happen from penetrating the tier three clinics or would you regard the current momentum basically as the underlying market dynamic? Second question is on IXL. So, IXL brings more freedom to the dentist, which comes at a premium. So, value contribution should be bigger than the volume contribution. First, can you confirm this? And second, can you make a comment whether IXL has been so far more successful at the conversion of existing stroma customers or at the approach of new customers? Thank you.

Thank you, Oliver.

China question is obviously important and we see overall in the marketplace still a significant dynamic. Once again, we believe that the VVP rules have created a very significant conditions for then growth because the reservoir that have been unlocked is massive in between patients that are having missing teeth and that are able to afford treatment. Now As always, because of education level, because of information availability, those kind of change are happening first in Tier 1, Tier 2 cities with people being able to invest, to adapt, and this is what we have seen in the first 12 to 18 months. And we have seen this dynamic being also then now happening in Tier 3, 4, 5 cities where we see a lot of dynamic in this part of the country. And that's one of the reasons also that our multi-brand portfolio is very critical. We are having three brands in China at three different price points. We are having Stroman Premium. We are having Ontoji as a value brand. And we are having Keyplus as our entry-level brand. And all three are growing or at least are helping us to grow increase further, not only our top line, but also our market shares. When it comes to IXL, yeah, it creates value at the practice level. I think not only because of simplicity, if you recall something which is important that we might not underline enough, because of the fact that IXL is based on rock-solid material, then you can use an hour implant diameter. It means, for example, in specific macro conditions like today, you can do what we call graftless procedure. It means that in very thin jawbone, you can place an implant without adding bone grafting, which is reducing surgery complexity, which is reducing the total procedure price, and which is increasing speed to treatment. Those kind of really interesting technical advantage are really supporting practices, not only to have an easier inventory management, not only higher kind of clinical outcome, but also having the possibility to increase conversion rate. And this is what we are driving with IXL, and it creates increased value within the practice on both their capability to respond to all patient needs, but also their capability, obviously, to have a lower than the inventory. Are we more successful with existing than new customers? I think we have to be successful in both because obviously we have launched this first with a new customer acquisition strategy because you have limited volume to start with and we want to make sure that we generate growth. But at the same time, all your very good customers want to try it and want to make sure that they are also first in line to be able to leverage your new technology. then we are having, I would say, a healthy mix in between new customers and existing customers then using IXL and both with the same level of very positive feedback.

The next question comes from Dylan Van Haften from Stiefel.

Please go ahead.

Hi, guys. Thanks for taking my questions and wishing me the best, Yang. Um, so maybe just to get a clear sort of understanding of a clear, correct sort of dynamics in the U S could you confirm to us whether it's deteriorated when it comes to the trajectory or not? Uh, we understand the O U S growth, but just anything you can tell us there. And then my second question would just be on the initial traction with the Midas and the serious bundle and how we should think about that over the rest of the year, including the consumable component. Thank you.

We have not seen a deterioration inside the quarter. We have seen up and down once again in between Jan, Feb, and March. Then that's why we have been, again, rather still with staying on our expectations for a better 2025 than the 2024 because of the dynamic of Q1. then that's what we are expecting to see in the second quarter. And I think the second quarter will tell us a lot about what will be overall NAM for Total Europe. When it comes to MIDAS and our cereals bundle, we are obviously very excited about this and, of course, changing dentistry from that standpoint. We are... We have just announced this at IDS, and we are currently training the team. Then the MIDAS will be commercially available for us starting at summer. Then I think the impact will be seen more in the second half, of 2025, and I would say it's going to be a step-by-step development because some people will want to try, and there will be a word of mouth that will, I expect, be positive. Then I think you will see no effect or limited, a very limited effect in second quarter. We should start to see third quarter, and I think the bigger effect for the year should be in the last quarter.

Awesome. Thank you.

The next question comes from Richard Felton from Goldman Sachs. Please go ahead.

Hi there. Thank you. Just two questions for me, please. The first one is on the clear aligners business. I was wondering if you could give us an update on profitability post the sale of Dr. Smile. And then the second question, as it relates to your China business and the establishment of your Shanghai campus, can you maybe provide a bit of detail on what that enables your business to do differently in China going forward.

Thank you. On the clear liner side, then as we are, you know, on the investment side to reach critical mass, we are not yet at the profitable stage. As we are really still increasing double-digit, we are feeling that we are then on the good track and a good path to get there. But at the moment, for us, it's really being able to reach science. And to reach size on the one side was to ensure that our value proposition was at the right level, which we see now. It's the case with regard to the traction we have. And secondly speaking, the feet on the ground. And as we are ramping up our volume and our shares, I think we are going to see profitability then along the way. But this is not what we are pursuing right now with the fact that as Dr. Smile is out, then we need to make sure that we are building up the critical mass of this business. And when it comes to Shanghai, I'm sorry, I did not hear the question well. Could you help me with your second question again?

I was just wondering, as the Shanghai campus is up and running and fully operational, does that have any implications on how you're running the business, either from manufacturing, education of your customers, that kind of thing? Just wondering how it changes your business operations in China.

Yes. On this one, from a pure business operation, it has not changed that much. The thing which is really positive, obviously, it brings free benefits. Okay. The first one is obviously being compliant with what we expect being the VBP 2.0 about having local manufacturing to be able to then participate in the VBP 2.0 volume, especially related to then most of the clinical operation in China. And that's the first very significant benefit. The second benefit is then having the opportunity of having a lower manufacturing cost country than Switzerland also, which is a good benefit looking at the profitability and the size of the country. It will help us to then continue to invest in the market, especially on the education side where there is a very, very significant need. The first one, which is sometimes underestimated, is the fact that China is also growing and developing very fast from a technology standpoint. By local manufacturing here, you get access to also technology ecosystem and environment, supplier environment of also different and advanced technology that would allow us not only to improve and increase our capability in China, but that would help us also to be smarter and maybe even more innovative for the future. Then that's what we see as a benefit of the Stroman Compass, and that's why we are very, very excited to get started officially with the commercially approved product in the second half.

Very helpful. Thank you.

The next question comes from Veronica Dubajova from Citi. Please go ahead.

Hi, Guillaume. Thank you guys for taking my questions. I have two, please. One is just if you could help us understand the APAC growth rate in the quarter by splitting out China versus the rest of the region. I know you called out strength in some of the emerging markets outside of China, but maybe if you could talk to whether Australia grew double digits, that would be super helpful as well. And then my second question is, is a question on the competitive environment in the U.S. market, and in particular, as you see this continued volatility, whether you are seeing more pressure from some of your peers on pricing and or from their value offerings. Thank you so much.

Thank you, Veronica. What we see, and I actually thank you for highlighting this, we have a very strong growth also from countries outside of China. We have the macro market like Australia and Japan. It's not double-digit growth, but it's still very, very solid growth that we see in those two countries that are leveraging also all the different parts of the portfolio. And the rest of the, I would say, really truly emerging markets are really strong double-digit markets. on market like India, Malaysia, Vietnam, Thailand as well. Those are really, really strongly growing country at a, yeah, I would say still low volume in most of the case, but really promising for what's coming in the future and keeping the very strong dynamic of the Asia-Pacific region. When it comes to competitive environment, I think we are still seeing North America as a very competitive market. This is the highest-priced market in the world. Then there is a lot of competition with a lot of players because of the lack of innovation or trying to gain share for price. Then we have seen that for a long time. This is still happening as we speak. And have we seen an increased... Price competition, not more than before, still at a very high level, but I would not say that we have seen that more than before.

Excellent. Thank you so much, Guillaume.

Next question comes from Hugo Solveig from BNP Exxon. Please go ahead.

Hi, hello. Thank you for taking my questions, and thank you, Yang, for the insight and discussions in the past couple of years. Wishing you the best. First, on North America, maybe in terms of a quick follow-up on phasing throughout the quarters, you mentioned, I think, Guillaume, that growth in March was stronger than February. Was growth in March also stronger than in January? And have you seen in March any pre-buying or stocking from the SOs? And second, on phasing but in China this time, you expect to have the local China plant up and running for commercial production in H2. How long will it take to fully wrap up commercial production there, and when exactly would you expect not to source anymore from Switzerland?

Thank you. To start with the NAM, uh march without afterwards we don't want to go too much into detail because uh i think i don't think that this is giving uh too much anywhere light on what's happening as the market is very volatile and it was uh reacting to a lot of the news but i would say then march was somewhat uh in comparison with january uh then it's the same kind of ballpark numbers uh and uh Have we seen any stocking effect? No. I think because of the lack of volatility, because of the volatility, then there is a lack of confidence, and then I don't think that there is any kind of a significant stock, whether it's on DSOs or even on the single practices. When it comes to our Shanghai campus, We are going to ramp up over the second half. Then I think it will take something like six months to be able to deliver a large part of what we are selling in China today. being manufactured in China would say, you know, we should arrive somewhere in December, January to something like 80% or things like this, I would say in between 70 to 80%. And I'm saying this because we are manufacturing only what I would say the standard technology, which is then we are manufacturing titanium SLA products. and everything which is the high end of the portfolio and the latest technology like SL Active and RockSolid will still be manufactured only in Switzerland. That's the manufacturing approach that we have taken, and this is when it comes to the Stroman premium brand, which would be around an 80%, 20%, and that's a little bit the picture that you can have in mind. Thank you very much.

The next question comes from Julien Dormois from Jefferies. Please go ahead.

Hi. Good morning, Guillaume. Good morning, Yang. Thanks for squeezing me in. I have two questions left, please. The first one relates to a comment you made at the start, Guillaume, about the structural change in demand in Europe. I think you highlighted some reimbursement changes and also some of the dentists or more penetration among dentists being trained. So would you have any anecdotal evidence of that and maybe provide a few numbers around this? That would be super helpful. And the second question comes back on tariffs and elaborates on the question about price competition in the U.S. Did I get it right that you're not planning any particular price increase because of tariffs in the U.S. at this point of the year?

Yeah, when it comes to the structural... improvement in the market in Europe, and it's what we have seen that over the past, yeah, I would say five, seven, five to seven years, reimbursement, what was happening in Europe is that in the insurance model, but also in some of the social security systems that are existing in large European countries like France, then The free unit bridge was always reimbursed to a certain level, and implant was not at all. And that was obviously driving a significant gap into pricing, and especially out-of-pocket pricing for patients, where the three-unit bridge will be cheaper than an implant, and on top, it will be more reimbursed. And if you would like to get some numbers idea, I would say that a three-unit bridge for European pricing was around, you know, something like 3,000, 3,500 that went down, yeah, 3,500 that went down to 3,000, I would say, something like this. An implant was €4,000 six, seven years ago, and I think in average we should be around €2,500 now. Then the difference in between – and I think it will be close to the three-unit bridge that should be around €2,500 or €2,000 now. Then the price difference in between the implant and the three-unit bridge is – uh much lower and especially the reimbursement now it's almost the same because you have a very often system that said i will give you for your implant the same that i would give you for a free unit bridge because at the end this is the exactly the alternative then it has created an environment for gps to place implant as well and to be able to sell implant alternatives to freely bridge in a better reimbursement environment is that helpful

That's very helpful. Thank you very much.

And that's one of the differences in market penetration that we have not seen yet, where the price of the implant has really staying at a very high level, and this is where DSOs are somewhat helpful to be able to support a bit of a lower treatment cost in order to increase volume. And exactly what we have seen in Spain, where a DSO has decreased price of implant to play the volume gain, and we have seen the penetration going up very significantly. That's why we are confident that our market penetration will continue to rise in the years to come by having those kind of trends that will also develop geographically. And when it comes to tariffs, we are not planning any specific price increase for the time being with regard to the measures that we have been able to take.

That's great. Thank you very much.

And the last question comes from Robert Davies from Morgan Stanley. Please go ahead.

Yeah, thanks for squeezing me in. A couple of questions for me. One was just on your previous comments around growth expectations for China. I think you've mentioned something like 20% growth expected for this year and next year. That was my first question. Is that still true? And then the second one, just if you could give us a little more color around the pricing dynamics between the premium and challenger segments, as well as what you're seeing in clear aligners. That would be great. Thank you.

We did not express 20% in China. We expressed that when we were at the beginning of the VBP round, where we were saying that we expect 20% growth at least for the next 18 months. And this is actually where that happened because of the really strong new customer segment, which is now able to afford growth. We said then at the beginning of the years from a guidance standpoint that we still expect double-digit growth in China, which is still what we are believing into as far as we are advanced into the year right now. When it comes to price dynamic, we see then as it has been, I would say, in the past couple of years, quite some price pressure coming from different sides, from competition, from consolidating environments. But, again, that's where innovation is really helping us to hold our line and ensuring that we are not seeing any significant deterioration of pricing in the different segments. And then I would apply the same thinking when it comes to premium, to challenger, and to clear liners. When it comes to digital, I would say it's a bit different. It's a kind of mixed product. you have a different, it's not price, but you have some price pressure on the top end of the market where there is a significant price difference into the entry-level scanners with regard to the high technology scanner that we're offering. And that's where we have really always to demonstrate the quality of the technology of, for example, our partner FreeShape versus entry-level scanners to make sure that we're still keeping a healthy ratio between what would be premium technology and what would be entry level. And that's what we see not only for us but for the entire market. Okay. That's great. Thank you. Well, thank you. And that concludes our conference today. We look forward to meeting you at one of our upcoming events. Our schedule is actually outlined on slide 22. We wish you all the best and have a