Good afternoon, this is the Chorus Call Conference operator. Welcome, and thank you for joining the Medacta Full Year 2023 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.
Thank you, and good morning or good afternoon. I'm going to present Full Year 2023 Results. I'm here with Corrado Farsetta, CFO of Medacta. We have already presented our revenues, and we did post again very good growth in terms of top line, close to 20% in constant currency and basically 17% reported. This growth was coupled with a very good margin protection in terms of EBITDA. In fact, we managed to slightly beat our guidance in terms of constant currency EBITDA. And we, I think, clarified better with a graph in this slide how the effects have impacted EBITDA margin evolution. And we will go much more into details in the next slides. In terms of number of employees, we added close to 200 new jobs in 2023, both in terms of headquarters and in terms of subsidiaries.
If we go to the next slide, we have proposed to the board of directors that we'll propose to the AGM a distribution of CHF 0.55 per share. And in terms of outlook for this year, 2024, we are targeting revenue growth at constant currency in the range of 13%-15% and an adjusted EBITDA margin, again at constant currency, improving around 50 basis points from 2023. The revenue bridge by geographic area in the next slide showed once again very, very strong performance in the EMEA region with a growth of 22.6%. Still very strong in the U.S., close to 16%. And in Asia Pacific, with both Australia and Japan performing extremely well and close to 20%. Latin America, significantly smaller market, good growth around 12%.
This geographic mix change has an impact as well on both gross profit and a little bit on the EBITDA as well. We will discuss it later on. In terms of product mix, we have been very pleased with our core business line, hip and knees, with 15.5% growth on the hip side and over 23% on the knee side. The shoulder and sports medicine market have increased close to 34%. So, again, a very, very strong performance. And spine above 15%. So this is something that, in my opinion, is definitely significantly faster than the market growth across all the product line. It did have a positive impact from a tailwind, in terms of overall backlog recovery, especially in the first half of 2023. Still see some positive effect. I'm sure there will be some question about it.
But overall, a very, very, very strong performance in terms of top line. The reason behind this growth remain very solid, and we expect to continue to grow above market in 2024 because of the products we have in our product range. So in terms of hip, our offering on anterior minimally invasive surgery. The knee with the newly launched and newly introduced new KA or kinematically aligned knee, the SpheriKA, is really driving a lot of attention. On the shoulder side and on the spine side, both in terms of products and in terms of technology, we see a very strong drive for our future growth as well. I would like now to ask Corrado Farsetta to step in and drive us through the P&L performance of 2023.
Thank you, Francesco. And good morning and good afternoon, everybody. So if we look at our 2023 profit and loss, we see that with revenue of EUR 511 million, we registered a gross profit of roughly EUR 348 million or 68.1% of revenue. This gross profit margin shows a reduction of roughly 1.7% compared to the previous year. But this 1.7% is 1.5%, so almost entirely explained by FX headwind coming from the FX evolution and translation effect into our currency, euro, which is the currency we present the numbers.
This reduction also includes some pressure on our GP coming from, as Francesco said, the geographic mix evolution and also some price cuts and erosion in our key markets, which was almost entirely offset by a higher leverage on G&A sustained by the expansion in the top line that we registered in 2023 and some industrial efficiency that we registered also on our production cycle. Moving down to the fixed costs, we see that the operating expenses on revenue passed from 54.1% of last year to 53.3% with a reduction of 0.3%, which is almost entirely attributable to the, let's say, higher leverage on G&A.
The rest of the other lines remain more or less stable as a percentage of revenue compared to the previous year, and which is, of course, explained by the expansion in basically top line and research and development structure. In addition, the total cost was EUR 58.4 million, showing also at this level a reduction as a percentage of revenue of roughly 0.4% compared to the previous year. All these effects generated an EBITDA in 2023 of EUR 134.2 million equal to 26.3% at reported currency or 27.9% at constant currency, representing an increase and improvement compared to previous year of 0.3%. Moving down to the EBIT line, we see that it was EUR 74.4 million or 14.6% at reported currency. If we compare the previous year EBIT of EUR 61 million, the increase at reported currency is equal to 21%.
If we net this amount from the FX effect negative this year and adjustments, we see that the growth of the EBIT was 28%, which represents the increase attributable to the top line growth of 19% at constant currency this year. Moving down to the financial result line, we see it was EUR 15.7 million with an increase of EUR 9 million compared to the previous year. I'll just say this increase is entirely explained by an unrealized loss, registered in 2023. And the biggest part of this unrealized loss was generated in the last three months of the year where we have observed a very quick and big reduction in the valuation of U.S. dollars against the Swiss francs. Profit before tax resulted equal to EUR 58.7 million, after being already discounted the FX effect on the financial result.
So the income tax was EUR 11.4 million with a slight increase compared to the previous year generated by a change in the profit mix associated to one-off effects attributable to the creation of the logistics hub in the United States. And this generated EUR 47.4 million in 2023 as profit for the period. Moving to the CapEx chart, we see that in 2023, the total CapEx expense was EUR 80.6 million, out of which more than 60% of this amount is attributable to new instruments required by the expansion of our customer base and revenue increase. But I wanted to drive your attention to the table below where you see the highlighted percentage of revenues on CC growth, the last line of the table where you see in 2022, for every EUR 100 of additional revenue, we had to invest EUR 119 in CapEx instruments and other investments.
This ratio in 2023 reduced by 25% down to 94%, which means that for every EUR 100, we needed only EUR 94. This represented a big win, say, saving in terms of cash needed to sustain our strong growth. Moving down to the cash flow slide, you see here, the free cash flow generated in 2023 was negative EUR 5.5 million after having had investing activities for more than EUR 80 million, as we said. Now the last of my slides, which shows the evolution of our net financial position with an increase of EUR 24 million compared to last year, up to EUR 135 million. This is representing, in any case, a very low leverage, which passed from 0.93 times the EBITDA last year to 1.01 times the EBITDA of this year. This was the last slide from, say, for the 2023 result.
Now, back to Francesco.
Yeah. I would just go back to the 2024 outlook. As I said before, we remain very confident in our ability to sustain significantly above-market growth across all our business line and geographies. And that is why we are providing an outlook of top-line growth in constant currency of between 13% and 15%. And at the same time, we believe we can further expand our margins. And the expected adjusted EBITDA margin for 2024 should improve by 50 basis points from 2023 reported. I think we can move to the Q&A session. And I would like to thank everybody for this year's performance, both our customers, our suppliers, and our employees across the world. If the operator can manage the Q&A, we are ready.
Yes, of course. Thank you. This is the Chorus Call Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Thando Skosana with UBS. Please go ahead.
Hi. Thank you very much for taking my questions. I've got two, please. The first one is just on the 2024 guidance. It would be great to get a sort of margin bridge there, Corrado, in terms of how you get to the 50 basis points this year. So I'm thinking here your investment plans, you know, price erosion, geographic mix. It would be great. And then just in particular, FX, given the current rates now, what do you expect for the end of the year? And then my second question is just on free cash flow. Would love some sort of guidance for free cash flow this year, just going through your working capital and then CapEx.
And then just based on that inventory investment that you guys have made this year, and also selling and marketing that you've made, do you think you're pretty much conservative on your 2024 revenue guidance? Thank you.
Okay. Thank you, Thando. So the first question is a bridge between the this year marginality and next year marginality. We believe that the gross profit margin should stay more or less at the same level as, like this year. We should see an increase inflationary effect at that level that should be offset by some improvements in our industrial processes, efficiencies. So basically, we expect that to stay at the same level of this year. We will continue to see a negative effect coming from geographic mix evolution because in our plan, Europe, say, the EMEA area is not expected to reduce, which is good news, but that line should also put some pressure.
On the other side, a positive effect should come from higher leverage on fixed costs, which will be sustained by the expansion of the top line that we forecast to be in the region of 13%-15% compared to this year. Those are the main trends that we see in our numbers. If we speak about CapEx, as we have seen this year, we registered an improvement. The ratio is significantly lower than last year. We do not expect a similar significant reduction in 2024, but it's reasonable to expect a ratio in the region of the same percentage of this year, including some extraordinary, let's say, long-term better, long-term investment, that we have in our plan to sustain the expansion of the company in the next years. Free cash flow, free cash flow, we see an improvement, not a dramatic change.
We should see a positive result next year because, again, don't forget that the expansion of our top line requires always a big investment in terms of new inventory, accounts receivable, which are new customers, and investments. We expect to have some positive cash next year, not a dramatic change compared to this year because we still have some long-term growth in our pipeline to find to support the growth of next year.
Okay. Thank you. And then just to follow up on that where you sorry?
Did I answer all your questions?
Yes, you did. Just the last one was just on the investments you've made and whether you feel that you are conservative on your 2024 revenue guidance.
Maybe I can take this. I think we are always conservative in our guidance. Those guidances are, in any case, very challenging because we don't know how much tailwind to expect in 2024. We definitely expect less tailwind than in 2023, potentially tapering down the effect at the end of H1. The market growth for 2023 in terms of data are not really fully available yet. But I do not expect the same kind of tailwind in 2024 that we've seen in 2023. So we have been a little bit more cautious. The beginning of the year is more or less in line with last year in terms of tailwind from the market. But we don't expect this to last for all 2024. So we are a little bit cautious always, as you probably have learned from us in the last years.
Thank you.
The next question is from Edouard Riva with ZKB. Please go ahead.
Yes. Good afternoon. Thank you very much for taking my questions. Actually, I would have two of them, well, three, if you allow me. The first question would be, when one looks at the annual report, one would see that the inventories in the cash flow statement grew by EUR 44 million. This seems a lot compared to last year. And my second question would be, the Swiss franc has been going down against euro since the end of January. Could you already see that as well, a good sign for the first half of the year? Thank you.
Yes. Hi, Edouard. Thank you for your questions. So, back to the first question, inventory. I think that the biggest part of the increase is explained by ordinary growth of our customer base. And we wanted to make sure that there were no disruptions and no, let's say, lack of material in our inventory around the globe. This was also a factor which allowed us to catch new customers in 2023, say, taking some opportunities in the market, coming exactly for that same reason, which means basically the inability to some competitors to supply. So we wanted to make sure that was not the case for Medacta.
And second, there was also a more, say, just to mention I think, it's worth to mention, but it's just an accounting treatment because in 2022, 2023, there was a, let's say, delivery which was delayed from 2022 to 2023 from our supplier, which amounted to roughly EUR 5 million. This is also an increase that you see from an accounting standpoint, but which, which is not a real increase. So if you wanted to have a normalized effect, you should deduct EUR 5 million from this year and to put back in 2022 numbers. This is more normal. But again, this is just a one-off, let's say, accounting treatment effect rather than a real operating effect. What we can say is that the current level of inventory is exactly what we need to sustain the globe. Now, the second point is effects.
In January, they were a bit better. They were, if you look at the U.S. dollar evolution against Swiss francs, there was exactly the opposite trend with similar magnitude compared to the last quarter in 2023. But to be honest, it's too early to say what could be the effect in 2024. We all hope that this will stabilize, but it's very difficult to say if and when. If you look at last year performances in second semester, we had a jump in this effect, which was not even forecasted at the end of the first semester. So if you compare the first and the second semester, we almost doubled, which was not the case in the past. So it was an extraordinary situation. So we all hope that this should not happen again in 2024.
If you speak about the more specific unrealized loss, we have measures that we are discussing in order to improve the situation and to reduce, say, the fluctuation in our profit and loss, having said again that that is an unrealized loss. It's just the valuation of some intercompany accounts receivable that have been valued at 31st December, currency translation.
Very clear. Thank you very much.
Thank you.
The next question is from Sam England from Berenberg. Please go ahead.
Hi guys. Thanks for taking the questions. The first one, you talked about some pricing erosion in key markets in 2023. Could you just talk a bit about how you're thinking about pricing for 2024? And does the guidance assume further erosion in pricing for, for this year? And then secondly, can you talk a bit about your COGS inflation expectations for 2024? Are you seeing any additional supply chain challenges given global events at the moment that, that are perhaps impacting on your assumptions around inflation for this year? Thanks.
Yeah. I might take the price erosion. Thank you for your question. We constantly see some price pressure across all the different geographies. In general, in the last couple of years, we've actually seen less price erosion than what was typically happening in the market. I think the inflation effect gave us, in terms of industry, an overall robust excuse or reason to hold in terms of prices. But nevertheless, there are some markets where the pricing is fixed by governments. We have seen Australia, for example, or Japan in certain instances that did simply reduce the price of their price list. Not all the price erosion, of course, is directly impacting our EBITDA, but of course, you see it immediately in the gross profit.
So there are always quite a lot of activities that you can put in place on the cost side to try to minimize the overall effect of price erosion at EBITDA level. But in terms of gross margin or gross profits, there's very little you can do. And then there is the joint mix, etc. I think the price erosion will continue moving forward, in particular in the U.S. market. The ambulatory surgery centers are much more price-sensitive than the hospital pricing. And as we all know, both the market and Medacta is shifting rapidly into this segment of the U.S. market. There are some exceptions to this general rule in other markets where we manage to not only stop the decrease for now, but as well have a price increase. Those are smaller markets, and I would say is more the exception to the rule.
I will maybe ask Corrado to comment on the COGS, which I know in general are slightly less than what we have seen in the past for sure.
Yes. Thank you, Francesco. So in 2024, I would say that we should continue seeing a pressure on our GP line. And because in addition to what Francesco just discussed, which is the price evolution, we will have the geographic mix effect. As we say, the European markets will continue growing faster than other countries. And inflation. In 2024, we should see, after two years, an effect on our COGS of inflation on raw materials because now we have almost completed using the old inventory, and the level is now, let's say, the utilization is now peaking the most recent finished products that have been produced with the updated cost, unfortunately. So this will be all negative pressure on our profitability at that line.
On the other side, we expect to have some positive effects coming from industrial projects that will continue to be deployed in 2024. Another potential area of benefit could be an additional increased leverage on our instruments. We significantly improved in 2023, and we see there is still some more margin for other improvements in 2024. So this should help us to contain the erosion of our gross profit, let's say, GP level.
Great. Thanks.
Thank you.
The next question is from Edward Hall. Please go ahead.
Good afternoon, Francesco, Corrado. Thanks for taking my questions. My first one will be on your CapEx development and more specifically on your investments into your expansion. So with the U.S. operations becoming operational in mid-2025, is it fair to assume that your overall CapEx could somewhat stabilize an absolute amount in around 2025, 2026? And in terms of this particular facility, what does this do in terms of production volumes? And then my second question would be a question on FX and its impact on EBITDA versus sales. What's driving the difference in FX impact between these two? Thanks a lot.
Yeah. I would take, maybe the first, question because I, I see that there is a little bit of, confusion. So the U.S. operational hub is a pure distribution center, a very large distribution center where we basically have split the global product supply in order to both serve the U.S. market and minimize as well the risk of distribution in case of something happens to the past and only central warehouse we had here in Switzerland. I think, this was a situation we lived during COVID, and we really didn't want to have all our stock globally in one location. So this is just a pure distribution. The vast majority of our long-term investment in CapEx are in Switzerland. That's where we are basically doubling our, production capacity. And this gives you, if you want, an idea of our, mid-term view in terms of, growth potential of the company.
These investments, in terms of production space and office space in our headquarters, should allow the company to minimize long-term investment until probably 2026, 2027 maximum. But of course, it all depends on our top-line growth. So if we continue to grow at an accelerated pace compared to our original plan, which was the case in the last three years, we will have to restart investing in production capacity more or less in 2027 and then more heavily in 2028, 2029. So but 2020 for the next three years, I think what we are doing three, four years, what we are doing now is definitely enough. But you can imagine when you have to expand your manufacturing plants, this process requires at least two to three years in terms of buying land, building the buildings, and finish the project.
I hope this addressed your first question, and I will let Corrado go over the FX effect between top-line and EBITDA.
Yeah. Sure. So just to add some additional information about the FX effect, first of all, I would like to, to remind that if you take the 2019 result compared to 2023, you see that const ant currency, the profitability of the company has increased by 0.5%. So the rest is coming from translation into euro. And going line by line, we see that if we take this year as the last, let's say, one of the biggest chunks of that variance, that, that FX effect, you see that in the top line, which is 2.6% reduction compared to the const ant currency growth, the biggest variation is coming from dollar, U.S. dollar, and Japanese yen, other currencies as well. But basically, those two are representing the biggest part of our, reduction in the top line.
Moving down, this is the FX effect is generated by other negative evolution still against euro, always against euro. But in this case, if we speak about gross profit, we have to take into consideration that the Swiss franc, our production is entirely in Switzerland, which is, let's say, 95% represented by Swiss franc, cost in Swiss franc. So converting this super strong Swiss franc into euro generates the 1.5% FX effect at GP level, which is again entirely explained by the Swiss franc, evolution against euro. If we move down, fixed costs are offset by the evolution of the exchange of the currency against Swiss against euro because if you take the U.S. dollar, you have a reduction in both top line and fixed costs.
So the effect at the fixed cost line is much lower than you can see in the gross profit. That's why you see that from 1.5%, you pass to 1.6% at the EBITDA margin level.
Perfect. Thank you very much.
Thank you.
The next question is from [Anya Komreign], from Mirabaud Securities. Please go ahead.
Good afternoon, gentlemen. One question on CapEx has just been answered, but I'd like to add another couple. Francesco, you mentioned during your presentation that H1 2023 was impacted, positively impacted, on backlog recovery. And if I look at the distribution between the two semesters of 2023, the sales are roughly equal. So my question is, you expect a slowing in the first half of 2024 with a strong recovery then in the second half of 2024, as such? And what would be the prime drivers then in the second half for an additional boost? That would be one question. And the second question would be also regarding your margin guidance. Just to clarify, again, I mean, you are guiding an increase basically of around 50 bps above the reported 2023 EBITDA margin, which was 26.3%.
We are now basically no more comparing than the adjusted EBITDA at constant currency, but now at the reported level. Is that correct?
Absolutely. It is correct. So, every year, we restart from the reported, and that's the new constant currency baseline. So if you want the 50 basis points improvement in terms of EBITDA compared to 26.3%. So we're basically talking about 26.8%, expected, in terms of EBITDA for 2024. Yes.
Okay. Okay. And in terms of the back backlog?
Yeah. The backlog is something that, I would say in the H1, we were, the industry was probably surprised by the wave and at the speed of the wave. You remember last year, basically, everybody updated their guidance at the end of Q1. We did it at the end of H1 simply because we report in July. But this was more or less the surprise. We have seen a very big effect in, especially U.S. in the first half and in Australia in the first half. We have then continued to see a good positive effect in the second half as well, a little bit less in Australia because it was linked to this specific government-driven private to public to private program, which stopped. And we don't know if and when, for example, in Australia, this will restart.
That's why I don't like to bet on things I cannot control. If it comes, we will be ready in terms of supply chain as we have been in 2023 to grab those opportunities. But until we don't see it, I would not bet on that. We still continue to see a good demand both in Europe and in the U.S. I think in the U.S. there is still a little bit of a tailwind. While in Europe, the only significant market we know there is a backlog is the U.K. But to be able to recover this backlog, it does require a significant focus under a political point of view. And we don't see it happening at the moment. And you know that the U.K. market is at the moment marginally impacting our EMEA performance.
So the European performance is mainly driven by a very solid demand from the market and our ability to take market share, especially linked to the inability of our main competitors to supply, probably because of the extra demand they had in the U.S. So they prioritized the U.S. market versus Europe, and this created a lot of extra opportunities. If we go back to our own expected source of growth, I think what we are seeing on the knee side, on the shoulder side, is really driven by our product offering. So kinematic alignment after almost 10 years of collecting data and preaching the market about how good this technique was is finally breaking through. And I believe our offering is very, very unique, very robust, with very solid data, and very good key opinion leaders supporting this concept.
So this is maybe something that we will collect in terms of ability market share in the second half of 2024. In the first half, we have a lot of marketing events, celebrations around our 25th anniversary. We have symposia in the U.S., in Europe, in Lugano next month, in Japan and in Australia in the second half of the year. So there will be quite a lot of marketing push from our side to sustain knee sales, which are typically then pulling some hip sales as well. It was exactly the opposite in the past. And then we have the other lines, shoulder and spine, which have relatively smaller base. And that's why we expect significantly higher than market growth, very much in line with what we have seen in the past.
Okay. Thank you very much.
Thank you.
The next question is a follow-up from Edouard Riva of ZKB. Please go ahead.
Yes. Thank you very much. I would have a follow-up question regarding the sports med segment because this year, you have separated it from what used to be spine, sorry, shoulder and sports med. And we can see that it grew almost by 100%. Is it due to new products, or is it simply a reshaping of the segment? Thank you.
So the sports medicine is still reported under the extremities. Yes, it did grow very, very high in percentage, but it's still a small portion of our overall revenue. So we are simply finalizing the product portfolio and starting to create a dedicated sales force, either selling sports medicine only or combined with our shoulder team. And that is why at the moment it is still combined under the extremities. I don't see where the sports medicine is reported separately.
Sorry. Page 165 of the annual report analysis of revenues.
Yeah. It might be. But it again, it's percentage-wise, it might be explosive. But the overall numbers are really, really small to begin with in a market that, as you know, it's between EUR 6 billion and EUR 7 billion. So it's a percentage of a small number. And this is not something really significant moving the line in terms of overall group sales.
Okay. Thank you.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Robert Davies with Morgan Stanley. Please go ahead.
Yeah. Morning, both. It's Robert Davies from Morgan Stanley. One question I had is just in terms of the competitive position against peers. How much of an issue are, you know, kind of, I guess, larger U.S. peers copying your route to market, copying products? How do you sort of stay ahead of the curve? And are you sort of noticing that, or is there not really a sort of push to copy your business model? Because I know it's sort of quite different to the way that they do it. Thank you.
I think we have been operating maybe a little bit more under the radar until now in the last two to three years. Our activities, our growth, our visibility has increased a lot. We have been introducing in the market 10 years ago this medially stabilized ball-in-socket concept. After several years, the vast majority of our large competitors did come out with something, let's say, in the same space, still not as good as in terms of technical features. Now, for example, in the last 10 years, we have been pushing kinematic alignment. And everybody was saying it was crazy, not good, criminal, unethical. Now, everybody's saying that it was not so stupid. And in the meantime, we have developed a new dedicated implant. So the short answer is that we try to stay ahead through innovation.
And so they will continue to look at us, especially if we grow at the pace we grow. I would say they have other strategies as well. They have to look at each other's first. We are still a very small player compared to them. Some of them have their own strategy, which works very well for them. But in general, I would say we must continue to stay ahead of the curve with innovative solutions that are able to move the needle in terms of patient satisfaction and at the same time really maintain an economical value, a sustainability in terms of healthcare cost, which is typical from Medacta. So again, short answer is, by innovation.
Thank you. And then maybe just one follow-up. Just thinking about the medium-term margin trajectory of the company, how important is the sort of business mix between hip, knee, extremity, and spine, for example, in terms of how your kind of optimistic and pessimistic outcomes on the margin? How, how big of a differential do you have across those businesses? So maybe as hip and knee normalizes over, over time, maybe a little quicker than extremities and spine, is that a headwind or a tailwind to your profitability medium term? Thank you.
So if we talk about profitability in terms of gross profit margins, I would say hip and knees are probably lower than spine and extremities. But then if you go down in terms of EBITDA, we don't have segments reporting. But it's clear that today, hip and knee profitability is diluted by our investments in the earlier phase of development of spine and shoulder and sports medicine. That's probably true at the EBITDA level. So short answer is that if we continue to develop the smaller lines, their dilution effect will decrease. And that is why we could expect, if other variables will not change dramatically, an improvement over time of our margins, step by step. And we are always talking about constant currency effect.
If you look at our constant currency EBITDA, it has been relatively stable around 30% from 2019 despite the fact that we had a very, very significant top-line growth. So this is another factor you should consider in the evolution. If we go back to a more reasonable, let's say, top-line growth, I think small margin expansion in constant currency at EBITDA level is something I would expect. If on the other side, we can grow much faster, we will sacrifice a little bit of EBITDA, CapEx, etc. And I would do it with great pleasure.
That's great. Maybe if I can just squeeze one final one. Just on your outlook statement and your 2024 guidance, just on the margin, the margin that you've guided to, what have you provided any color what the FX headwind would be to that margin? Or is that on the assumption that there isn't currently any FX headwind, but if it moves, then we would need to factor that in? Thank you.
Yeah. The second aspect. So we always provide guidance at constant currency. And so therefore, it is for you to figure out any FX effect. And then we will see it. I think it's very challenging for us to guide reported EBITDA and especially now with the fluctuations we have seen in terms of currency.
Yeah. And when we say constant currency, we always refer to the previous year as a comparator, say, constant currency new baseline.
I see. Okay. That's great. Thank you very much.
Thank you.
Mr. Siccardi, there are no more questions registered at this time.
I would like, once again, to thank everybody for participating to today's call. I would like especially once again to thank all our customers that have helped supporting and grow our company over the last years, our suppliers and our employees. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.