Creating opportunities for customers and shareholders Berenberg Equities Conference, Pennyhill, 05 December 2018
Disclaimer This presentation contains certain forward-looking statements that reflect the current views of management. Such statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this presentation. The Group is providing the information in this presentation as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. The availability and indications/claims of the products illustrated and mentioned in this presentation may vary according to country. 2
Straumann Group: the pure play in dentistry ~5,700 Employees 1954 Founded Domiciled in Switzerland 11bn Market Cap 180,000 Customers; active in >100 countries 62 Subsidiaries ~1.3bn Annual revenue Highly profitable: ROCE 2017 of 42% 3
DIGITAL PRACTICE WORKFLOW Data Acquisition Planning Surgery Impression Design Production Post Processing Final Restoration Prosthetics Regenerative Biomaterials OUR SOLUTIONS CAD/CAM planning components Ceramic Implants Crowns Clear Aligners PRODUCT PORTFOLIO HIGHLIGHTS CAD / CAM Screw-retained Bridges and Bars Bone Level Tapered Implants Bone Level Implants Retention Systems Soft Tissue Implants Mini Implants Biomaterial Bonering 4
Production facilities spread around the globe Malmö (SE) Biomaterials Montreal (CA) Digital headquarters, software and hardware Villeret (CH) Implants and prosthetics Markkleeberg (D) CAD/CAM milling Round Rock (USA) Aligner headquarters Arlington (USA) CAD/CAM milling Andover (USA) Implants and prosthetics Basel (CH) Global headquarters Renningen (D) Prosthetics and implants Mumbai (IN) Implant system components Shenzhen (CN) CAD/CAM milling Narita/Chiba (JP) CAD/CAM milling Taipei (TW) Implants and prosthetics Curitiba (BR) Headquarters, implants and prosthetics, CAD/CAM milling Global presence in over 100 countries. 5
Looking back Financial performance 9M 2018 6
Double-digit growth in all regions Revenue development (CHFm, rounded) Regional share of organic growth 23.4% CHF 18.0% organic 43.2 14.3 989.0 10% LATAM 44.3 29% 48.9 APAC 34.1 838.3 801.3 2.9 Change in organic growth 29% North America 13.0% 18.6% 30.2% 18.1% 32% EMEA Revenues FX effect M&A effect Revenues EMEA North APAC LATAM Revenues 9M 2017 9M 2017 @ FX 2018 America 9M 2018 7
Clear-aligner business growing fast Significant case growth in Q3 (+60%) Customer base expands >10% in first 9M +60% case starts Pilot programs completed in Europe sales force built up with the aim to fully launch in 2019 ClearCorrect well received at Orto 2018 trade fair in Brazil; preparations underway for launch in early 2019 Production capacity expanded Q1 2017 Q2 Q3 Q4 Q1 2018 Q2 Q3 ClearCorrect begins to promote clear aligners together with remote monitoring system in North America 8
Another encouraging quarter keeps us on track to deliver our full-year targets REVENUE CHF 989m Up 23% from 9M 2017 FX effect neutral Acquisition effect: 5%-points GROWTH +18% organic 1 over 9M & in Q3 TOP PERFORMERS APAC & NAM generate 58% of Group 9M growth; APAC growing fastest (+33%) FUTURE GROWTH Innovations PURE 2-piece ceramic implant; New mini implant system BLX next-generation fully-tapered implant EXPANSION Foothold in 3rd-tier Control of T-Plus strengthens foothold in non-premium segment in Taiwan and China OUTLOOK 2 Raised Full-year organic revenue growth in the high-teen percentage range; outlook otherwise unchanged 9 1 Organic growth i.e. excluding the effects of currency fluctuations and acquired/divested business activities 2 Outlook expectations barring unforeseen events/circumstances
Track record to deliver profitable growth Organic revenue growth Underlying EBITDA 1 in CHF million and margin Underlying Net Profit 2 in CHF million and margin A v e r a g e + 9 % + 1 0. 5 % - p o i n t s + 11. 0 % - p o i n t s 6.4% 9.1% 13.1% 18.0% 15.7% 400 300 200 19.3% 24.8% 23.0% 27.6% 28.3%29.3%29.8% 400 31.0% 29.0% 300 27.0% 25.0% 200 23.0% 21.0% 10.6% 20.4% 21.3% 21.6% 18.4% 18.1% 15.9% 25.0% 20.0% 15.0% 10.0% -1.0% 1.2% 100 100 19.0% 17.0% 5.0% 2012 2013 2014 2015 2016 2017 9M 2018 0 2012 2013 2014 2015 2016 2017 H1 2018 0 15.0% 2012 2013 2014 2015 2016 2017 H1 2018 0.0% Exceptionals EBITDA excl. exceptionals Underlying margin 10
11 Success factors for growth
We have broadened our portfolio and deepened our customer interactions Manufacturer Distribution/subsidiaries Dental professional (our clients) Patient pool (our client s client) 2012 Institut Straumann 23 Focus on implant specialists Patients with missing teeth Today 63 63 R&D team +140% Active in non-premium Complete CAD/CAM offering Entry into clear aligners >95% of our business is conducted directly Nearly tripled our subsidiaries Capture growth opportunities in underpenetrated markets GPs expanding into specialty procedures >2x our sales force Dedicated DSO team Expanding into esthetic dentistry Exploring entry into preventive dentistry 12
Reputation as innovation leader underpinned 19 BLX implant Mini implant 18 PURE 2-piece ceramic implant Grand Morse implant 17 N!ce fully-crystallized glass-ceramic 16 ProArch edentulous solution Small diameter implant ( 2.9mm) 15 BLT implant Grand Morse Grand Morse 13 12 14 Roxolid-on-all Short implant (4mm) 13 Variobase abutments PURE ceramic 1-piece implant Roxolid implant material
Targeted investments in high growth markets Implant volumes in key markets (million units in 2017) Penetration: Implants per 10 000 inhabitants INDIA CHINA / HONG KONG JAPAN UK-IRELAND USA RUSSIA TURKEY BRAZIL GERMANY ITALY SPAIN 0.3 0.2 0.4 0.8 1.4 1.4 1.3 1.2 1.5 2.4 2.7 2 10 33 38 74 160 98 118 160 197 319 Premium Non- Premium Our new subsidiaries 14
More diversified and less dependent on mature markets in Europe Straumann Group regional revenue split 2011 and 9M 2018 LATAM 5% 2011 Easter EU & MEA 3% LATAM 9% 2018 Easter EU & MEA 7% APAC 15% APAC 19% Europe 36% North America 22% Europe 55% North America 29% 16
Key market trends 1 Digitization of workflows Patients want aesthetically pleasing, affordable solutions and shorter treatments 4 2 Improved materials and production methods Consolidation of manufacturers 5 3 High growth markets outside Europe Customer base alters Better informed and demanding patients 6 7 17
Industry trends reflected in our strategic priorities DRIVE OUR HIGH PERFORMANCE CULTURE TARGET UNEXPLOITED MARKETS AND SEGMENTS BECOME A TOTAL SOLUTION PROVIDER IN ESTHETIC DENTISTRY 18 55 3 strategic priorities broken down into 55 Must-win initiatives (MWI)
Tapered and non-premium segments represent large potential for future share gains Non- Premium Market value (implant & abutments) CHF 3.9bn Main players: Nobel Biocare, BioHorizons, MIS, Implant Direct, Megagen Neodent, Anthogyr and Equinox Fully tapered Market volume (Implant fixtures) 25 million units Parallel walled Neodent, Anthogyr and Equinox Premium Straumann Group share Apically tapered 19 Implant dentistry market segment comprises regular implant fixtures (excl. mini, zirconia and zygomatica implants), abutments and related instruments (excl. healing caps, temps and copings; information based on DRG 2016 and Straumann estimates. All Straumann Group brands considered.
Our present implant portfolio Surface treatment Material Design Parallel-walled Parallel-walled Apically tapered Fully tapered Fully tapered Parallel-walled Tissue Level Bone Level Bone Level Bone level / external Bone level / internal Tissue Level / ceramic Straumann Straumann Straumann Straumann Straumann Neodent Neodent Neodent Neodent
Latest addition to our portfolio BLX PURE 2-piece ceramic Mini implant First Straumann fully tapered implant Designed for optimum primary stability in all bone classes Unique design combined with Roxolid and SLActive 2 nd generation ceramic implant increases prosthetic flexibility Designed for optimum esthetics First manufacturer to offer Lifetime Plus Guarantee for a ceramic implants Future trend 2.4mm diameter, apically tapered for high primary stability Cost-effective, minimally invasive solution for edentulous patients with reduced bone 1.6m >1m 21 Addressable market
Straumann BLX key benefits Perfected for immediacy; broad range of indications Business opportunities: chairtime efficiency; attract more patients Cut, Collect, Condense - high bone-to-implant contact Designed for optimal primary stability in all bone types One connection Slim & undercontoured prosthetics Easy soft-tissue conditioning Trusted premium Swiss brand Roxolid enabling 3.75mm diameter for broad range of indications 22
Unroll the non-premium business worldwide Medentika home market Premium Premium Premium Zinedent home market Non- Nonpremium Non- premium Premium Premium Neodent home market Equinox home market Non-premium offering (current) Future non-premium markets (2018/19) 23
Digital penetration still in the early innings % of GPs using intra-oral scanners (IOS), LHS % of dentists using IOS AND chairside milling equipment, RHS UK 9% UK 5% Italy 11% Italy 4% US 24% US 13% Germany 12% Germany 11% 24 Source: Straumann proprietary GP survey in US, DE, IT, and UK; samples size >200 dentists.
Today our digital offer supports all customer groups and needs Scanning Design Production Final products Dental office Dental laboratory Central milling Straumann CARES Scan & Shape 25
More than an implant manufacturer Implant provider 12 Total solution provider tooth replacement 16 Total solution provider esthetic dentistry 18 26
Competitive landscape 2017 Market Total dentistry ~26-28 bn Implant dentistry 1 >4 bn Others (400+) 22% 24% Straumann Group Leading players Straumann share Straumann position Henry Schein Dentsply Sirona Danaher 4% #7 STMN Group Danaher Dentsply Sirona 24% #1 Osstem Zimmer Biomet 6% 7% Henry Schein 8% 14% Dentsply Sirona 19% Danaher 27 1 Implant dentistry market segment includes implant fixtures, abutments and related instruments (excl. auxiliaries, temps and copings); information based on DRG and Straumann Market Model
Broader portfolio helps to address needs of GPs % of patients treated by GP per month by indication Caries 40-50% Periodontitis Crowns/Inlays Implant restoration Implant surgery Orthodontics Tooth whitening 10-20% 7-12% 5-8% 1-5% 3-10% Up to 5% 28 Source: Straumann proprietary GP survey in US, DE, IT, and UK; samples size >200 dentists.
Desire for esthetics increasing periodontal disease increasing due to aging population Disease & esthetic driven scope expansion Prevention of oral disease & tooth loss Prevention of implant loss Natural tooth Tooth loss Implant tooth Implant loss Healthy pre-disease Mild - moderate disease Severe disease Tooth replacement Healthy pre-disease Mild - moderate disease Severe disease Piloting Tooth health (caries, periodontitis) Tooth-borne prosthetics Orthodontics Tooth whitening Implants & prosthetics Digital solutions Biomaterials Piloting Implant health & peri-implantitis 29 Disease driven Esthetically driven
Pilot initiated for GP portfolio additions incl. Preventive GP portfolio additions GP pilot sales force Oct 2018 30
Prevalence: 75% of the population have misaligned teeth Prevalence of malocclusion & crooked teeth, by severity grade 1 Global orthodontic market, by age group 2 25% No treatment required 1 15% Purely esthetic needs Primary focus on mild-to-moderate malocclusion 45% Mild to severe; may require some orthodontic correction Global clear aligner market, by age group 2 31 15% Orthodontic treatment required 1 Source: William Blair and National health & Nutrition Examination Survey (NHANES III) 1 Source: Company information, AAO, Straumann estimates Teenager Adults
Clear Aligners is an underpenetrated segment and a key growth driver for us People / eligible patients in million (2017) 1 800 NAM EMEA LATAM APAC 1 350 11 60% eligible 6.6 15-17% treated 1.8 UPPER AND MIDDLE CLASS PREVALANCE OF MISALIGNED TEETH ORTHODONTIC CASES P.A. TREATABLE W ITH ALIGNERS CASES 32 Source: World Statistics; Global Industry Analysts Inc. 2016; company fillings as well as broker research reports: Robert W. Baird 2015, William Blair 2017, Stifel 2017, Leerink 2017.
Intra-oral scanning and AI are an integral component of the solution Data capturing Treatment planning Measuring the progress remotely Current state shared with dentist Match data with planning data Move to the next aligner or call patient in, respectively 33
Tailor made products/solutions for each customer group Solution/customer matrix Surgeon Perio Ortho GP surgical GP nonsurgical Lab DSO Implant surgical X X X X Implant prosthetics X X X X Digital workflow X X X X X X X Ortho X X X X Toothborne / C&B X X X X Periodontitis X X X X X Peri-implantitis X X X X X Caries X X X Tooth whitening X X X 34
Looking ahead
Main growth drivers for the coming years Growth potential Expansion into esthetic dentistry Preventive dentistry Preventive dentistry could add up to CHF 2bn to Group s addressable market Preventive Address unexploited markets and segments Clear Aligners Implantology Market share gains (innovation, sales excellence) Market growth traditional business Scope expansion Biomaterials CAD/CAM 36 Graphic for illustrative purposes only
Growth potential in all segments Market segments Est. segment size (in CHF bn) Growth rate Our current market share Biomaterials 0.6 High-single digits Implantology 2 4.3 Mid-single digits CAD/CAM equipment 1.5 Double digits CAD/CAM prosthetics 3.7-3.9 Double digits (All ceramic) Clear aligners 2.0 >25% 37 1 Based on number of market players, market concentration as well as technical as and commercial entry barriers. 2 Overview based on E2018 figures. Implant and standard abutments business also includes copings, closure screw and auxiliaries.
2018 outlook raised Barring unforeseen circumstances Market Global implant market expected to grow 4-5% Our revenue growth Full-year organic revenue growth in the high-teen percentage range Profitability 1 Further improvement in EBITDA margin; EBIT margin stable 38 1 Excluding exceptional effects from BatiGroup acquisition
Questions & answers &
12 th edition of Analyst Talk feat. BNP Exane Paribas From left to right: Marco Gadola, Straumann Group CEO, Julien Dormois, senior analyst at Exane BNP Paribas 40
Calendar of upcoming events 2018/19 Event Location 05 December Berenberg Equities Conference Pennyhill (UK) 13 December Corporate Governance meetings Paris 10-11 January Baader Helvea Swiss Equities Conference Bad Ragaz (CH) 19 February Full-year results conference Basel HQ 05 April 2019 AGM Messe Basel 09 April Dividend ex-date Social media Type Source Analyst Talk (Shift + left mouse) Executive interviewed by analysts straumann.com (Investors) / youtube.com StraumannIR (Shift + left mouse) Investor Relations Twitter @StraumannIR 41
Growth strategy pays off in CHF m 2013 2014 2015 2016 2017 9M 2018 5-year average Revenue 679.9 710.3 798.6 917.5 1'112.1 989.0 Organic revenue growth in % 1.2 6.4 9.1 13.1 15.7 18.0 12.5 Acquisiton / Divesture effect in % -0.8 0.0 9.5 0.8 4.1 5.0 3.9 Change in l.c.% 0.4 6.4 18.6 13.9 19.8 23.0 16.3 FX effect in % -1.3-1.9-6.1 1.0 1.4 0.4-1.0 Growth in CHF % -0.9 4.5 12.4 14.9 21.2 23.4 15.3 2013 2014 2015 2016 2017 H1 2018 CAGR 2013-17 Gross profit excl. exceptionals 535.9 558.7 628.0 718.5 842.4 521.7 12.0 Underlying margin 78.8% 78.7% 78.6% 78.3% 75.8% 52.8% EBITDA excl. exceptionals 156.4 176.2 220.7 259.2 325.5 203.1 Underlying margin 23.0% 24.8% 27.6% 28.3% 29.3% 20.5% EBIT excl. exceptionals 123.8 148.3 185.7 227.2 285.6 178.6 23.2 Underlying margin 18.2% 20.9% 23.3% 24.8% 25.7% 18.1% Underlying net profit 107.9 130.9 144.7 186.8 237.2 139.8 21.8 Underlying margin 15.9% 18.4% 18.1% 20.4% 21.3% 14.1% Earnings per share (adjusted) 6.98 8.42 9.19 11.94 15.13 8.63 21.3 2013 2014 2015 2016 2017 H1 2018 CAGR 2013-17 Operating cash flow 151.5 146.2 185.6 184.7 217.3 106.7 9.4 Capital expenditure (12.6) (18.8) (35.2) (46.7) (73.4) (44.4) as % of revenue -1.9% -2.6% -4.4% -5.1% -6.6% -4.5% Free cash flow 139.2 128.4 151.1 138.7 144.7 62.3 1.0 Number of employees (year-end) 1 2'217 2'387 3'471 3'797 4'881 5'474 21.8 42 1 In March 2015, Straumann acquired the remaining 51% stake of Neodent (Brazil), which added 930 employees to the Group. In 2017, the incorporation of Equinox, Medentika, Dental Wings, ClearCorrect added 479 employees, while the remainder came through internal expansion, mainly in Brazil, Switzerland and the US, largely in production.
Straumann s currency exposure Revenue breakdown FY2017 1 BRL 10% JPY 6% Other 14% CHF 9% EUR 31% Average exchange rates (rounded) FX sensitivity (+/- 10%) on full-year... 2017 H1 2018 9M 2018 Revenue EBIT 1 EURCHF 1.09 1.17 1.16 +/- 35m +/- 21m 1 USDCHF 0.99 0.97 0.97 +/- 29m +/- 14m 100 BRLCHF 28.37 28.15 27.11 +/- 11m +/- 3m 100 JPYCHF 0.90 0.88 0.88 +/- 6m +/- 4m USD/CAD/AUD 30% Cost breakdown FY2017 1 JPY 3% BRL 10% Other 11% CHF 27% USD/CAD/AUD 26% EUR 23% 43 1 These distribution charts represent the total net revenues and the total COGS, as well as OPEX in the various currencies. All numbers are rounded and based on FY 2017 figures as well as average FX rates in 2017. They also include Medentika, which was consolidated on 1 January 2017.
Thank you Investor.relations@Straumann.com