Straumann Holding AG

Good morning, ladies and gentlemen, and thank you for joining the Straumann Group conference call on our 2019 9-months results. We are using the presentation that was published on our website this morning.

And we kindly ask you to take careful note of the disclaimer regarding forward-looking statements on Slide 2. As usual, I will begin with the highlights and then Peter Hackel, our CFO, will share the financial and performance details with you.

I will follow with an update on our strategic progress together with the full-year outlook. And after that, we will look forward to answering your questions.

Let me begin with the highlights on Slide 4. For the first time, our 9-months revenue crossed the CHF 1 billion threshold, propelled by strong organic growth of 17% and lifted by an excellent third quarter and organic growth actually reached 19%.

North America was our fastest-growing region and together with EMEA contributed more than 2/3 of our growth. Straumann’s apically tapered BLT implant continued to be a significant source of growth, complemented by the successful launch of our next generation fully-tapered implant, BLX.

This and the international expansion of our value brands attracted new customers and helped us to win important supply contracts with large dental service organizations around the world. In addition, our clear-aligner business continued to grow dynamically.

We continued to invest in projects to support future growth. We entered a strategic joint venture to unlock the dental market in Hong Kong and Macau.

And we invested in a Korean implant company to compete more effectively in the lower value segment. And we entered the orthodontic consumables business by acquiring a company specialized in thermoplastics and polymers.

Based on these initiatives and our continuing strong results, we are lifting our outlook for full-year organic revenue growth to the mid-teen percentage range. As you can see in Slide 5, we gained momentum in Q3, thanks to accelerations in North America and Asia Pacific.

The pace eased slightly in EMEA, but LATAM performed impressively in a tough environment. Nevertheless, with double-digit growth in all regions, we outperformed the market significantly and gained further sale.

Once again, I would like to congratulate and thank all our employees for their contribution to these excellent results. And now, I will hand over to Peter for the business and regional performance details.

Thank you, Marco, and good morning, everyone. As you can see in Slide 7, our reported 9-months revenue in 2018 amounted to CHF 989 million.

There was no relief from the FX headwind that we saw throughout the first half. And the negative impact over the 9-month period amounted to CHF 20 million.

The acquisition effect, mainly of Anthogyr, T-Plus and Zinedent, added slightly more than CHF 40 million, bringing the adjusted revenue base in 2018 to CHF 983 million. You can see the regional organic growth rates in the center of the slide, while the regional contributions to overall growth are shown on the right.

Our two largest regions, EMEA and North America, each contributed 34% to overall growth. And despite the fact that EMEA is our slowest-growing region, it is still outpacing the market by a factor of more than 2.

Remarkably, North America has since passed Asia Pacific as our fastest-growing region, while Latin America maintained a strong pace in a tough environment, but more about that in a minute. Looking at Slide 8, EMEA posted a strong third quarter with organic growth of 13%.

The region’s largest market, Germany, delivered a solid increase. While France, Iberia, Russia, South Africa, Turkey and the Middle East, all posted double-digit growth.

In North America, organic growth rose to 24% in Q3, driven by continuing strong unmet demand for Straumann BLT and supported by the full-market-release of BLX in July. The non-premium implant franchise progressed well, driven mainly by Neodent GM, which was launched a year ago.

Moving on to Slide 9, with organic growth of 23%, Asia Pacific achieved its best performance since the third quarter of last year despite a challenging baseline. The dynamic pace continued in China, helped by digital equipment sales and the DSO business.

Both South Korea and Japan posted strong growth in Q3, the latter benefiting from elevated sales ahead of the consumption tax increase on October 1. This and the recent severe typhoon are expected to have an impact on the market in Q4.

Organic growth in Latin America was slightly softer in Q3 than in H1, but at 17% was nevertheless a very good result in view of the prevailing difficult economic situation in Brazil and Argentina. Mexico, Colombia, Chile and Peru all posted very strong growth driven by Neodent and Straumann, including BLX.

Biomaterials and clear-aligners, which were launched in Brazil earlier in the year, both added to the increase. Now, let me give you some color on our performance by business segment.

Implants and restoratives continued to be the largest source of growth, driven by Straumann BLT and lifted by BLX, which is now entering full market releases in most key markets, but not yet in China, Japan, Russia and Turkey. By virtue of its excellent handling and prosthetic range, BLX has drawn hundreds of new customers to Straumann over the past 6 months, many of whom have also purchased BLT for the first time.

Lifted by the continuing international rollout of Neodent, Anthogyr and Medentika, our non-premium implant franchise continued to outpace the premium business. The digital business was driven by the continuing dynamic expansion of clear-aligners, especially in North America where the number of new cases started increased by 60%.

Digital equipment sales were soft, owing to supply issues and the impact of the Dental Wings fire in May. This and strong interest in intraoral scanners and other equipment has made it particularly challenging to meet the demand.

Biomaterials reported the strongest growth of all segments, reflecting robust sales of bone graft and membrane products as well as the continuing roll-out of the botiss portfolio and new products like Straumann XenoGraft, XenoFlex and Emdogain Flapless. And on that positive note, I will hand you back to Marco.

Thank you, Peter. Our sustained strong performance and market share gains underline that our strategy is effective and our execution is good.

We remain committed to the same three strategic priorities with culture at the top of the list, because it determines the way in which we get things done. In the initial phase of our cultural journey, which began 5 years ago, we established the framework, core behaviors and training programs to promote the player-learner mindset and create a high-performance culture throughout the organization.

The training program continues today, and our goal still is to include all employees worldwide also rapid growth makes this increasingly challenging. Earlier this year, we launched Cultural Journey 2.0 to help leaders reach their full potential, inspire high performance and drive organizational culture through others.

The concept was developed in-house and is taught by our leadership team. The top 2 management tiers have completed the training and are very positive.

The result of our annual staff survey became available in Q3 and confirmed that we are making good progress with all of these initiatives. More than 90% of respondents said they are proud to work for the Straumann Group, they love what they do and they feel that their work contribution helps the company to achieve its goals.

More than 80% perceived the company culture as positive and supports the cultural journey. I am convinced that mindset and cultural change are the backbone of our sustained outperformance.

Both my successor and my executive colleagues share this view, which is good because continuity in leadership is important, and the company is performing well. On Slide 14 and 15, you can see this principle in action.

Rob Woolley, our new Head of North America came on board at the end of Q3 and is in the process of stepping into the shoes of Guillaume Daniellot, who is working closely with me towards the CEO transition. Similarly, Holger Haderer is preparing to take over from Frank Hemm as Head of Marketing & Education at the end of the year.

It is a particular pleasure for me to announce the inclusion of Dr. Andreas Meier in the Executive Management Board.

He has been the company’s General Counsel for the past 14 years and serves on the Board of most Straumann Group companies. He has participated in EMB meetings for many years and last year took on additional responsibility for business development and licensing and other corporate functions.

Including his promotion, we have been able to fill 3 of 4 top management positions with internal candidates. Moving on to our strategy priority of targeting unexploited markets and segments, please turn to Slide 17.

A major highlight in Q3 was the launch of Straumann BLX in North America. Elsewhere, in EMEA and Brazil, full market release has started in Q2 and is proceeding well.

This next generation implant, together with Straumann BLT, Neodent Helix and Drive GM, Anthogyr Axiom PX and Medentika Quattrocone provides us with a formidable portfolio of fully and apically tapered implants. We are, therefore, well positioned to become the leading global provider of immediacy solutions, which was hardly imaginable 2 years ago, and our fully tapered offering comprised just 1 non-premium design.

Our aspiration to be a leading provider of immediacy solutions is not based on tapered implants alone, but also on our comprehensive edentulous portfolio. This is important because most immediate loading procedures are performed in full-arch replacements and every third implant is placed in an edentulous indication.

Slide 19 shows how our implant portfolio covers each price segment. The latest addition is Warantec, which we told you about in August, shortly after we announced our agreement to acquire a 34% stake.

Warantec will help us to address the lower-value segment and compete more effectively with Korean brands. Moving on to Slide 20 and the dynamic clear aligner market, which currently grows an estimated CHF 2.6 billion and is growing rapidly, it is also changing as new players and commercial models emerge.

Our clear aligner business has grown dynamically over the past year, and we are urgently ramping up production capacity, as you can see in this slide and Slide 21. In addition to the expansion project in the U.S., our new factory in Brazil will soon go into operation.

And in the near future, production will begin in Germany and China. In August, we also told you that we had acquired an orthodontic planning service in Pakistan.

Today, we’re announcing a further deal to secure another important link in the chain by entering the clear aligner materials business, as you can see in Slide 22. We have just acquired Bay Materials, a strategically important company specializing in the design, development and supply of high performance thermoplastics for orthodontic applications.

Based in California, Bay Materials was founded in 1999 to meet the need for applied polymer research in Silicon Valley. It developed the first advanced aligner material for Align in 1999 and today is renowned for high performance branded materials, including new state-of-the-art multilayer thermoplastics.

The latter offer high stress retention and other features that put them on a par with market-leading materials. Demand for orthodontic thermoplastics is increasing rapidly and is covered by a small number of providers.

Our strategy with this acquisition is fourfold: first, we gain access to high performance materials for our own aligners; secondly, we bring expertise in-house; thirdly, we enter the orthodontic consumables business; and fourth, we foster research and support base in enhancing patient care through the open availability of best-in-class products. Slide 23 provides an overview of various initiatives that put us in a very good position to win in clear aligners.

We offer top intraoral scanners with our software, we own the treatment planning service we offer 3D printers, we have production sites on 4 continents, we have and supply high-end materials, we offer patient monitoring with artificial intelligence, we have brands to address a global market and we have global sales and marketing power. Looking at our geographical reach on Slide 24.

In October, we entered the joint venture with Modern Dental Group to serve the dental communities in Hong Kong and Macau. The jointly held company, Peak Dental Solutions, will offer and cross-sell an exceptional range of products and solutions to the customer bases of both companies.

Our ability to offer total solutions at multiple price levels make us an attractive partner for dental service organizations around the world. In Q3, we won substantial supply contracts and became a preferred provider for the 4 leading implant clinic networks in Europe and North America.

Collectively, these organizations account for more than 1,300 clinics and 400,000 implants placed annually. Slide 26.

Once again, we use numerous high profile meetings and congresses around the world to launch new products and to present clinical experience, not only to audiences on site, but also to the global dental community via the Internet. Thanks to our special relationship with the ITI, we enjoyed exclusive access to more than 3,000 specialists attending various ITI meetings.

And that brings me to the outlook for 2019, which is summarized on Slide 28. Based on our continued strong performance, we are upgrading our outlook for the second time this year and expect full-year organic revenue to grow in the mid-teens.

Apart from this, the outlook remains unchanged. And with that, I would like to open the question-and-answer session.

If you are dialing in by phone, please make sure you have a good phone connection. Kindly limit yourself to two questions in order to give everyone the chance to ask a question.

Webcast participants who wish to ask questions anonymously can use the tool in the audio webcast. So, operator, can we please have the first question?

Thank you. Good morning, Marco.

Hi, Peter, Marco. I have a few questions, but first of all, I just wanted to take the opportunity to also thank Marco for this journey that he has created for us, analysts, now covering Straumann over the past – a few years now.

I think now you were able to keep us in a constant state of amazement, so to say, in the words of another kind of successful dental implant company manager. So thank you for that.

With that, let me get to the questions. And one of – the first is one of your competitors recently stated that he has seen positive pricing trends in the premium implant market segment.

Could you maybe discuss the pricing environment in that segment from your perspective and also regarding the BLX product specifically relative to your expectation? The second question would be relative to the BLX.

Would you be also kind and share with us the number of implants sold year-to-date? That will be great.

If I remember right, it was around 30,000 after half year. And then the last question is also on the BLX.

Again, your – or the new arch competitor, so to say, kind of discussed their latest product launch, the N1. And I was just wondering kind of know from your perspective, if you could compare and contrast the superiority or from your perspective of the BLX relative to that implant, that will be great.

That’s all. Thank you.

Thank you, Chris, first of all for your kind words and very much appreciated. And also, I appreciate your comments that, obviously, competition is seeing a positive price development in the premium dental implant segment.

That’s actually very positive news, because it shows in a way that the crazy discounting that has happened during the first 6 months seems to be definitely is in the past. You know that BLX, we are pricing BLX at an ASP, which is roughly 10% above BLT.

So also BLX is contributing positively to the trend you just mentioned. We had a very successful start in the U.S.

and in Canada. So the launch in North America was extremely successful.

I mentioned during our half-year conference that our target is to sell around 100,000 BLX implant during 2019. We are well on track to achieve this and are now convinced that we will even sell more than 100,000 implants in 2019, which is a clear indication that the implant is delivering up to expectations.

When it comes to N1, to be honest, it’s not our policy to comment on competitive products. At the end, customers have to decide.

They have to decide by buying this implant, by trying this implant, by sustainably continuing to use this implant, if it is really as great as our competitors are claiming.

Okay. Thank you.

You’re welcome.

Great and good morning. I have two questions.

Firstly, on ClearCorrect, can you please disclose the case growth and the customer base growth for the quarter as you’ve done in the past? And then question number two is on the dental chains.

Can you comment when these agreements were signed in Q3? Did they impact the quarter for the full quarter or only part of the quarter?

And are these contracts that you signed for a defined number of units or is it open for the chain to decide? Thank you.

Thank you, Michael, for your questions. In terms of case processed, clear-aligners case growth was around 50% also in Q3.

It was a little bit lower than in Q2 to be honest. On the DSO business, we have just recently signed these contracts.

The volumes which we have seen coming through out of these contracts in Q3 has been minor, so they have not yet impacted our Q3 numbers.

Okay. And, Marco, on the customer base growth, do you have a number for that as well on ClearCorrect?

Yes, the customer number growth is obviously lower. It’s around 20%.

Okay. And then, when it comes to the dental chains, I’m confused, because in your report, once you refer to dental chains, and then in another section you refer to DSOs primarily in China.

Are these the same thing or are we talking about two different events?

No, no, sometimes we use DSOs, sometimes we use dental chains, but it’s the same. We have to be careful in future that we use one expression.

So for us, dental chains and dental service organizations are the same.

Okay. And then, one this relationship have you got a guaranteed volume, because you mentioned before I think that they sell or they use 400,000 implants per year?

Are you guaranteed a certain amount of those under the DSO agreement?

In most of the agreements, no. It’s kind of an intention to buy a certain volume, but it’s not legally binding.

So we have to make sure we convince the different clinics, together with the DSO management that our products are the best ones to serve their patients. But there is – in most of these contracts, we cannot legally enforce the DSO to buy a specific volume.

And then the final question is, on these DSOs, on average, are you now – are there two suppliers, three suppliers? I’m just trying to understand how concentrated the customer base is amongst those DSOs.

Normally, when you start to work with the DSO, there are incumbent systems. We have that example with ClearChoice.

They were using a competitive product. And it took us almost 3 years to get to 96%, 97%.

There are still 3% of the practices who use in certain indications, certain cases, a competitive product. And that’s normally the case with DSOs.

So it’s a relatively long process to convince the different clinics that actually the Straumann product is the best one. And they, obviously, also first want to do some trials.

Once the trials are successful, then they start to switch. So it’s not something that happens overnight.

Great. Thank you so much.

Yeah, thank you very much. And also from my side, Marco, all the best, great job done.

I would like to ask two questions on the aligner business. I mean you were saying the case growth in Q3 was 50%, so that was the second sequential slowdown after Q2, which slowed already compared to Q1.

Can you give a bit of a reason why that is the case and does that have something to do with increased competition, given several new market entrants like 3M, Envista and so on? And how is pricing developing here?

And then also on your capacity additions, I mean, obviously, you are expanding quite significantly with four sites. How long is this capacity enough to fuel future growth?

I mean, I would assume case growth, you assume to accelerate next year with entering these new markets. How much growth is possible with these capacities?

Is it 2 years, 3 years, just to have an idea on that? Thank you very much.

Yes, you’re right. In terms of percentage growth, the development is kind of stagnating, and obviously, still at a very high level.

The reason for that is not competitive pressure. The reason for that is simply, we cannot deliver to everybody who would like to use our products.

We are limited right now in terms of the output from our factory in Round Rock, and that’s the reason why we are heavily investing, as we speak, into expanding our Round Rock facilities. We will be ready by Q1 – beginning of Q1, with the new setup in Round Rock and will then also be able to serve much more customers and to cope with the demand that exists.

At the same time, we are in the process of building up our capacity in Markkleeberg, the same place that we also have today our milling center. That will be in place end of Q1, beginning of Q2.

And the same happens, as we speak, in China in Shanghai. So we are on 3 different locations, we are in the process of ramping up capacity.

Clearly, yes, competitors are also getting into this market as you said, 3M, Ormco, Envista. Keep in mind one very important point.

These companies primarily serve specialists, because they already have an established base of customers and the established base of specialists. And they primarily serve specialists, so they are primarily competing with Align.

Our focus clearly is general practitioners. And when it comes to general practitioners, I don’t say we have a monopolistic situation, don’t misunderstand me.

But we are actually not yet coming across the competitors you just mentioned when it comes to the GP segment. That might change going forward, but at this point in time, it’s not yet the case.

Okay. Great.

Thank you very much. Good to hear that you could grow faster even than you actually can.

All right. Thank you for taking my 2 questions.

For the first one, on the aligners business, you guys have often and today highlighted quite a lot of the infrastructure surrounding how you’re going to keep the growth up. But I’m curious, do we have any update on the progress over time to increase the number of slightly more complex malocclusions that you guys can address with your system?

Obviously, at the time, we talked about it a little bit when you moved in and bought ClearCorrect. But I’m just curious how you feel – or potential case starts, how many of them you’re sort of giving up, because you can’t deal with the sort of more complex malocclusions?

And is that something to focus on? Or does the GP not care?

That’s the first question. And then the second one, just curious, I’m sorry if I missed it, but on Japan, if we could, is it possible to size the potential impact that you think roughly we might see for the back end of the year?

Just to get a little bit of flesh on the bones there, that would be helpful, if possible. Thanks.

Okay. Your first question, the acquisition of Bay Materials will allow us to get access to really state-of-the-art materials, multilayered thermoplastics, for example, and that’s always a prerequisite to actually treat more complex cases.

So we have done a step now on the materials side by the acquisition of Bay Materials. We are also in the process of revamping, or let’s put it that way, reconfiguring our treatment planning software, because that’s actually the second key to be able to treat more complex cases.

So we are working on this. Again, it’s not our key priority to really compete with Align as the other competitors mentioned before in the specialist segment.

However, obviously, one of our strategic initiatives also is to make sure that as many cases can be treated with our products as possible. On the Japanese issue, we are talking here an impact of – yeah, I would say, maximum CHF 3 million to CHF 4 million.

Super. Thanks for the color.

Good morning. Also a couple of questions with regards to ClearCorrect.

Marco, could you give us a bit of feedback on how the international rollout is proceeding and what kind of feedback you’re collecting? Then the second question, how long is it going to take you to introduce a new material in your clear aligners?

And then lastly, you have mentioned the direct-to-consumer road when it comes to clear aligners. There’s clearly a market potential in there.

You seem to have all the building blocks together. Is it part of your strategy in clear aligners to tap into that market?

Thank you.

Thank you, Maja, for your questions. The international rollout is obviously not ongoing on at the speed we initially thought it will happen, again, due to capacity restraints.

Europe, Brazil – Europe, we are serving customers – specific customers who have already done cases with us in the pilot phase, and we obviously want to maintain that business. But we are still in what we call LMR phase, so limited market release, until we have enough capacity coming out of Round Rock and obviously, I also mentioned Markkleeberg, which will then serve as the production facility for the European business.

So in Europe, we are far behind projections, which we’ve done at the end of 2018 and were also included in the budget for 2019. Brazil is developing nicely.

I was just last week in Brazil, and I talked to many of our key opinion leaders. They are all very, very positive about the products, and both products is delivering.

In terms of margins, we are not yet there in Brazil, because we still have a very manual process in place in our factory in Curitiba. But also there, from Q2 onwards next year, we will actually manufacture our clear aligners in our new site also in Curitiba co-located with the old site.

And there, we will have a fully automated process in place, which will also allow us to sell the aligners to the Brazilian market at much higher margins compared to today. And finally, China.

China, we’re also behind. There, it’s also a question of ramping up capacity.

So overall, when looking at the international rollout from a volume point of view, we are clearly behind due to constraints in terms of capacity. And also, from a margin point of view, we are not yet there where we want to be.

In terms of the new material, we anticipate that during the second half of 2020, we will actually apply the multilayered material space into the product range of ClearCorrect. So that will happen in the second half of 2020.

And finally, your third question, direct-to-consumer, yes, obviously this is a big topic. If you look at the clear aligner market today, already roughly CHF 600 million of the CHF 2.6 billion total markets are actually covered by direct-to-consumer solutions.

So this is a channel and a topic we are looking at as we speak. And we will probably be able, during full year conference in February of next year, to give you some more light in terms of our plans.

Thank you very much, Marco. Just to quickly come back on your international rollout.

I understand the capacity constraint, which are representing a hurdle for growth right now. But from a sentiment perspective, do you believe once the capacity is there, you should see quite a fast ramp-up?

Or do you think then you will need to start to tap into the market and do the educational part just to get a bit of a feeling how we should think about the ramp-up once the capacity is there?

We are known as being quite conservative in terms of promises indication speaking. This time, I’m actually less conservative.

The feedback we have received on the product by all consumers, by all dentists so far is just excellent. So I’m very positive that once we have resolved the capacity issue, we will see a quite fast ramp-up, take up for clear aligners as well as [clear aligners] [ph] in Europe and also in China.

Perfect. Thank you very much.

Yes. Thanks for taking my questions.

So my first one is on the supply chain issue you mentioned on the equipment side. Could you shed some light what is happening there?

And how long it will take to resolve this problem? And my second question is on your profitability.

Given the ongoing outperformance of implants and underperformance of equipments and clear aligner sales compared to your initial budget, is it fair to expect a similar kind of gross margin contribution in H2 like you posted in the first half of this year? Thank you.

To your first question, the issue we have with our intraoral scanners manufacturing at Dental Wings is with the optical lens, which is obviously the central part of every intra-oral scanner. We have to change the provider there, because the old provider was not able anymore to provide lenses at the quality levels we expect.

And the transition from the old to the new provider was less smooth than anticipated. So the output coming out of the factory of the new provider is lower than what we have in our plants, and that’s actually constraining the number of intraoral scanners we can assemble and we can actually provide to our customers.

In terms of profitability outlook, we confirm the outlook for 2019, as reiterated on Slide #28 of the presentation. So we are committed, as already indicated back in August to increase our EBIT and EBITDA margins.

Okay. And on the timing when this issue with the equipment will be resolved, do you have a kind of date for us here?

Yes. This will – this is in the process of being resolved.

So we have already larger outputs coming out of our Montreal facility where we assemble the Virtuo Vivo of the Dental Wings manufactured intra-oral scanner. Q3 will already have more output compared to the first 3 quarters.

And then Q1 and Q2 next year, we will see further improvement in terms of output capacity.

Okay. Great.

Thank you.

Good morning as well. Just from the BLX, BLT patents, I was a bit surprised that you mentioned that also new BLX customers ordered for the first time BLT.

I actually saw that the door-open function is rather the all the way around, especially as BLX is a smaller segment than BLT, if you can comment a bit on that? And the second question is with Bay.

Is that already – are you already a customer of them or to what extent? That will be nice to know.

Thanks very much.

Yeah. It also came as a positive surprise to us, Daniel, that we were able to convert that many BLX – new BLX customers also to BLT.

And the reason is that now they have something from Straumann to work on full edentulous cases for immediacy cases they didn’t have before. And they are now looking into switching their full portfolio to Straumann from incumbents.

That’s the reason why we also have, not only a positive impact from BLX, but we also see a positive impact when it comes to our BLT franchise. Your second question, yes, we are already using Bay Materials thermoplastics.

Obviously, by actually buying Bay Materials, we will actually profit also in our P&L from lower material costs. So our gross margins on clear aligners will potentially go up.

Thanks. And so in BLX, so it was BLX was the missing part of the – for full edentulous?

Yes, exactly. And now we have this BLX, we have an entry ticket in many best practices where we were not able to enter before because we did not have this product.

And many of our new BLX customers, they have been using heavily the star product of our competitors, because of the mechanical stability and using these products specifically for immediate loading, and they took them also for full edentulous indications.

Okay. Thanks.

And on BLX, the instrument supply issues in Q2, that is now solved? Or...

It’s about to be fully resolved, yes.

Okay. Good to hear.

So thanks again. And yeah, I’m very sad that you are leaving, but all the best.

Thank you.

Thank you, Daniel.

Hi, good morning, gentlemen. Thanks for taking my question.

And Marco, a quick word first, and congrats for the many years of tremendous success. Also pretty sad to see you leave, but I’m 100% sure that Straumann is in good hands with a Frenchman at the helm, right?

So just a couple of follow-up questions. On Q4 trends, I was just curious as to whether there is a reason for the guidance to look a bit cautious.

Is that because of the term cuts you will be facing and also possibly of some disruption in Japan? So any explanation here would be helpful.

Second question is on BLT, regarding the penetration of BLT in your own portfolio. Is there any number that you can share with us as to what is the current penetration and how further it could go, and also possibly about the volume trends for that specific implant?

And the third question relates to clear aligners. You’ve now done two deals in the past quarters about treatment planning, now the material of the clear aligners.

Is there anything left before you get a complete setup in that business, just to get a better understanding of what you’re looking for in this space?

Thank you. And I can fully confirm what you said initially, we are very happy to have a French as the new CEO.

To your first question, and you already mentioned two out of three elements, why we are a little bit more cautious when it comes to growth rates for the fourth quarter. Prior year comps are very ambitious.

We were growing last year in Q4 organically by more than 20%. The Japan situation has been mentioned, the CHF 3 million to CHF 4 million impact in Q3.

And the third point is the digital equipment. And I mentioned that we will be out of this production capacity assembling limitations by the end of Q4, beginning of Q1 2020.

So that’s actually the third – that’s the third point why we are a little bit more cautious, when it comes to the organic growth numbers for Q4. In terms of BLX, BLT penetration, we were in the year with clearly more than 30% share in the apically paid for the premium segment.

So that has been our ambition when we launched BLT back in 2015. So we’re going to reach that.

And your third question in terms of do we have now everything we need to play successfully in the clear aligner segment, I would say everything, but what Maja asked before, when it comes to direct-to-consumer, we have to focus more on that, because it’s an interesting market. It is a fast-growing segment, when it comes to clear aligners.

And we are, as we speak, we are putting our heads together to look at potential models to participate in this segment.

Okay. Thank you.

Just as a quick follow-up, so you are targeting the more than 30% share in apically tapered. Is there any internal goal that you would like to share at this stage?

I mean are we talking about possibly 40% or 50% at some point?

Yes, that is the internal goal. But we don’t want to share that.

Okay. That’s fair.

Thank you. Thank you, Marco.

You’re welcome.

Good morning, gentlemen, and thank you for squeezing me in at the end. I will just add to all the sentiments echoed, echo them, and wish you all the best, Marco, for whatever the future holds.

I have two quick questions if I can, please. The first one is on EMEA, slightly surprised to see that the growth rate coming at effectively the same pace of growth as in Q2, even though the comps has gotten easier.

Just curious if you’re seeing any changes either within specific markets or specific customers or specific products, I would have expected a little bit more acceleration in growth here, given that BLX should have been contributing for the entire quarter. That’s my first question, then I’ll ask a follow-up after that, if that’s okay.

We are actually quite happy with the Q3 performance of EMEA. We had strong performances, for example, coming out of Germany.

We had also a strong performance coming out of Spain in Q3, so most of the countries were performing very strongly. And so, we are happy with the double-digit growth in our most important regions.

So there is no country I could actually call up, which did not live up to expectations. So, again, we are happy.

We are happy with the development of our Q3 results in EMEA. And your second question was, sorry?

And my second question is just thinking about the equipment business or the digital business heading into Q4. Obviously, you had a very, very strong performance there last year.

You’ve alluded a number of times to some of the sort of manufacturing disruption issues that you’ve had here. Just curious, is your expectation at this point in time that you can grow the digital business year-on-year in Q4?

Or should we be thinking of a more muted performance there?

No, to the contrary, we will have lower growth in digital equipment in Q4 this year compared to last year. And that’s again due to the manufacturing constraints.

So we expect a relatively weak Q4 compared to last year when it comes to digital equipment.

Okay. So we should be thinking of revenues being down year-on-year or flat year-on-year in Q4?

Just lower than last year.

Okay, lower than last year. Okay.

I wasn’t sure if I understood you correctly. Excellent.

Okay. Understood.

Thank you very much and all the best.

Thank you.

Thank you.

Good. So I assume that was the last question.

In closing, I would like to draw your attention to the Investor Relations calendar, which you can find on Slide 30. And with Guillaume taking over as CEO in January, this is my final quarterly results conference at Straumann.

I would like to thank you personally for the many stimulating discussions, interviews and meetings over the past seven years. I would also like to thank you for your interest, candor and curiosity, and above all, for your enthusiasm in presenting our company to your readers, clients and colleagues.

I’m sure that the excellent relationships that I have enjoyed will continue with Guillaume. It is a small world that I have no doubt that our paths will cross again hopefully in the not too distant future.

But for now, I wish you all the very best and have a great day. Thank you.