Sirona Dental Systems, Inc. (NASDAQ:SIRO)
Citi 2013 Global Healthcare Conference Call
February 26, 2013, 09:35 am ET
Simone Blank - EVP & CFO
Good morning everyone. My pleasure to be here and to present Sirona to you this morning. I would like to draw your attention to the Safe Harbor statement in the presentation. If we returned on the music that would be very helpful for me, actually. Thank you.
Good. If we look at Sirona, you know, we have a very interesting investment rationale. We are active in a very attractive global dental market. Everybody I think is aware of the ageing population. People want to keep their natural tooth much longer in the mouth and want to have nice good looking teeth and dental care clearly drives the increasing population because tooth are not put all the times, but people try to preserve the teeth in the mouth and that's clearly a clear trend.
We are the global leader in dental technology. We are the innovator in the industry and we will talk more about that as we move through the presentation and we have a strong financial performance, double digit growth in the top and on the bottomline over the last six years. And the industry actually is steadily growing; not alone the ageing population is a very interesting factor that drives it; we also have a global shift to private pay. People are willing to spend more money for natural looking teeth, for wellness, for healthcare in general. They want to have it in a very convenient way and most of our products address that need and that trend is convenient both for the dentist, but also for the patient.
We have an increasing level of dental care globally. I mentioned that earlier, more and more people go to the dentist. More treatments and procedures are available. Aesthetic dentistry plays a major role. People want to have good natural looking teeth and preventive care obviously is increasing. We particularly see that in the US with hygiene procedures continuously at a high level.
As I mentioned, Sirona is the innovator in the industry. Innovation has been and continues to be our hallmark. We have a strong financial commitment in innovation. We have the highest R&D budget in the industry. We have more than 290 engineers and scientists on a global basis that work on advancements in dentistry everyday and we spend about 6% of our sales annually on R&D and we spend more than $290 million over the last six years in bringing new product to the markets, which we successfully did.
The high-tech dental product grow faster than the overall market and our featured product are in the segment of CAD/CAM and also in the segment of digital imaging and a lot of networking is continuing or starting in the dental industry. We can connect our product, the digitization of the dental office is in everybody’s mouth and many new treatment options are available to as a general dentist these days. And the dentists need to adopt these new technologies to stay competitive and to address the increasing needs of the patient.
Now we have a center of innovation in Bensheim, Germany where most of our R&D guys are located. We try to enhance and try to bring them altogether to encourage innovation and also to encourage the connectivity of our products that to drive technology to new heights. We are not a very young company. We are in the business for more than 130 years. You see some nice pictures here in the presentation. You know, we were the first company to bring out the electric drill for dentistry. We were the first company to bring outcome treatment center as such the first dental X-Rays that we have many, many first over the last decades, including the first CAD/CAM system to the market and I have to say, you know, we continue to dominate that space until now.
So you see many things that we did. We continued the tradition of innovation with many products that we bring out, last mega launches were the, for example, the Omnicam, we will talk about later, little bit more, 2D, 3D, XG units and clearly more to come. We have a large international dental show, mid next month, very soon, which typically is also launch platform for new products and where we continue feature our existing products, but clearly also show the Omnicam again.
Omnicam in everybody’s mouth at this point in time, one of our latest launches unsurpassed technology; it’s in the segment of CAD/CAM technology. It’s an acquisition technology that we now use. It’s designed for easy access; it’s very slim; it’s easy to work within the mouth, its glides over the teeth so to take pictures is very convenient, it’s also very forgiving, if you missed the part, you can just go back. So it’s very easy to access. It has colour streaming which is first time that you see pictures taken in the mouth here in the dental industry. And that show colour and that is very easy to use for people that starts with the technology and also helps in the evaluation of the clinical situation, because I think it’s very intuitive that you see much more. And it’s a powder free camera, so no powdering required, so very easy to use, unsurpassed technology, we are very excited about that product has just been launched so we are looking forward to see what it does over the next month.
We have a comprehensive product portfolio comprising of our CAD/CAM segment, our imaging segment treatment center segment and instrument segment, which is the smallest one and again they all can be connected and we will talk about each individual segment in just a few minutes. We have a dominant leadership position in the CAD/CAM segment and in that CAD/CAM market. The market comprises of various areas, the biggest and the most important one is our direct product followed by the offerings that we have for the dental lab market; we also can connect the lab and the dentist through an internet platform so they can exchange information and exchange the cases. We have an outsourcing service called infiniDent and we also supply materials.
We actually ate about $9 million of the $14 million CAD/CAM restoration that are manufactured each year in the market. And when we look at our sales in that categories, $334 million last year and a double digit six year CAGR in that category and we have more than 34,000 systems installed from that CEREC system, for those of you who are not so familiar with the CEREC system, what does it do, and when you have a problem with tooth and you need (inaudible) that’s the majority of the applications of that system then you typically go to the dentist, the dentist to test the cavity. In the traditional process, the dentist will take a physical model, and send that physical model to the dental lab. The dental lab would manufacture restoration and would send it back to the dentist.
Now for the patient it means, he or she needs to get a temporary solution which is not so easy, because you will feel cold and heat and you have to be little bit careful with that, and also you have to come back at least twice hopefully the first time the restoration fits that the lab manufactured and so that’s your process. For the dentist obviously, you know that also needs twice preparing the obligatory paying a fee to the lab.
With the CEREC system the whole thing is much different and easier and you still have to prepare the cavity, but the camera like the only time we just talked about will take that picture in the mouth and that takes second and that information goes to us, software goes to the system, the system prepares a ceramic restoration, the dentist if you like so just pushes the button, its noted at the shaft and put into one single digit. So obviously very nice for the patient, no physical impression, no temporary, only one visit and he or she goes away with a very bio competitive, aesthetically good looking restoration. Very attractive for the dentists it has been said (inaudible) he has very attractive proposition for his patients. Also he does dentistry because he needs to in many cases needs to take away less of his tooth structure than in the traditional process so very attractive.
It’s clinically proven for over 20 years there are many, many studies out there that show and support the unsurprised reliability and also precision and the durability of that kind of restoration. And it’s very attractive and that's the biggest part of the CAD/CAM markets. We offer lab systems and as I mentioned earlier we believe that we have more than 50% market share in the systems at our place and dental lab you know around the world. We have a wide range of material that is used and can be used by the dental lab.
We also have a centralized facility service supporting the lab and we continuously launch new products like we did for example in 2010 with the new product extra-oral inEos scanner that is used in the laboratory.
All of our systems have software attached you know last year and the year before we launched a totally new software platform for the (inaudible) the 4.0 software you might have heard about that which is very attractive. Its very easy to use for the end user and also gave us a lot of benefits because we now have a platform where its much easier to add new applications to which we actually did over the last years like in the CEREC system you can not only do a single tooth restoration, you can get a drilling guides, you can get customized department, you can do smaller bridges, you can do veneers so many things that we've added to the system over the last year.
I already mentioned Sirona connects the combination of a software platform of labs and dentists, so they can get together here. We also offer them as standalone digital impression unit but what was experienced is that most of the people that look at the proposition want to go for the full process because that gives them most of the benefit.
We can also combine our leading edge technologies and the next slide shows you an example for that, how we can combine the CAD/CAM, the CEREC technology with the imaging or X-ray technology that we have in the market. So 3D is a very interesting proposition for those who do implants and how does that work.
You take a picture with a 3D imaging unit that takes all level data information, they also take pictures with a CEREC camera that takes surface information and so those information are combined. Our X-ray system have a software attached with which you can plan the implant, how it is positioned, you can send us that information and we would manufacture a drilling guide for you. So that drilling guide would go on the tools and would determine the position and the depth of the drill for the implant.
At the same time with the CEREC system, we can plan already at the start of the process not only the position of the implant also the ideal position of the abutment on top of the implant and then on top of that the final restoration. That's very convenient. It’s a very guided well-documented process which is important particularly for general practitioners and more of them want to go to add additional procedures to their dental office including implantology procedures.
We are the only ones who can do that because we are the only ones who have both technologies and can combine those technologies and that's a very interesting feature, just one example of how to combine our product. Then we also as you know have the second largest segment is our imaging segment. Here there is the continuous trend towards digitization having a digital image unit.
We have a six year CAGR of 17% in that category, revenues of $344 million last year and we offer a wide range of product in that category. It starts with the intra-all imaging product which takes the picture of one tooth or two teeth. You put the recipient technology in our cases, sensor into the mouth; generator goes to your cheek and you probably all experience that because most of the dental offices around the world have at least central imaging units and that is a two dimensional picture. We also offer larger equipment which is called extra oral imaging under the brand name Orthophos Galileos and they take a picture. You stand in them, they will take around your head and take a picture of the full (inaudible) even the full skull, this system is important for many procedures to see more than just one tooth to see the situation in your mouth.
And again to mention implantology procedures are even (inaudible) and not as a very interesting product range. You can have them in two dimensional or three dimensional digital versions, three dimensional you draw, so you see much, much more and that is very interesting and very important.
We just launch a new intraoral sensor the  which is a very interesting product and it is the best product at the moment in the market in terms of transparency of the picture and diagnosis possibility. You know, I think it's very intuitive for why digital imaging is preferred over film based imaging.
It's easy to understand you save on film cost, you save on development cost, you save on a special route to do. So you have a lot of cost savings on the material. It is much easier storage. You will find it immediately it’s a digital storage and it's much, much lower radiation than for some units. So it's very intuitive about. 50% of the market is digital at the moment in the US so you see dentist is very conservative, it takes some time until these new technologies are actually in the market.
All of our products have the lowest dosage in that category and that is a very important feature. The market at the moment is very interested in combination units on the extra-oral side having a 2D and the 3D unit combined because it gives the dentist a choice to choose whatever he or she needs for the clinical procedure they are doing.
And our third segment is the Treatment Center segment. The Treatment Center segment is the center piece of the dental office and often underestimated but this is the category which the dentist works mostly. He stands or sits on that beside that product for most of the day and so it’s very important that they are very convenient for him that the ergonomics are right because dentist suffer a lot of leg pain as you can imagine the work on the small area the whole day so its very important that is all serves that purpose. And they all integrated into our Treatment Centers so they include instruments and other smaller units. They have a screen attached to it. You can also attachment intraoral imagining units so that this is the really centerpiece of the dental office.
We are the market leader in Europe. We have a very diversified portfolio addressing the needs of the dentist which are slightly different from country to country because dentistry is done differently. There are these famous examples of the dentists in France that don't work with an assistant typically so they need the instruments in a range for their different ways a German or a US dentist would because they stand in 12 O’clock position behind the patient and so they have to be able to pull the instruments on both sides whereas as we probably know it typically the dentist sits in the 3 O'clock positions and has their assistant on the other side, so these things are typically differently arranged, we have to be ergonomic in both ways.
And we have, our high end product is the (inaudible) it also features on the presentation. This is the growth out of the treatments unit in the industry but as I mentioned we also have various other products that care about the needs of the dentist, about $197 million in revenue a CAGR of 7% over the last six years. Revenue CAGR, this is the replacement market, probably bought surprising which typically grows [GDP] plus a few percentage points but consistently outgrown that market with our attractive product offerings in our sales and services in the future.
Our smallest segment is the instrument segment and you have all the products that a dentist needs in his office, turbines [synthesis] electrosynthesis and that is the clear trend in the overall global market from turbines speed on up to electrosynthesis which has the motor eye and where the speed is controlled much more. For many procedures this is beneficial as the (inaudible) mentioned root canal treatments nobody would do with the turbine, you need to control speed to go into the root or implant procedures you need to have very controlled processes.
And we also offer soft tissue lasers and you have endodontic specialty product and so to round that overall portfolio we have high-tech equipment and to clean, lubricate and take care of the instruments which is a regular process that is adopted in the dental offices.
And about a 102 million sales last year, so this smallest of our segment six year revenue CAGR of 6%, again we are a replacement market where it goes GDP plus a few percentage points. So also here we have outgrown in that market. And what is also important to understand about the owners of our global footprint, we've invested over the last five to six years into sales and service infrastructure around the world that in addition to our outstanding innovative products has helped us to grow as we did double digit on the top and bottom line, and in addition to the traditional markets like the US and Europe on the Asia Pacific and recently more so also in Latin and South America and that has been very beneficial for us and so we have strong sales and service infrastructure around the world that helps us to grow.
The global diversification you can see on the slide that is just up on the screen, strong growth in the US, Germany but also even stronger growth in those markets outside of those two main markets that we have and again the result of our products and our investments in the sales and service infrastructure. Our historical performance 11% cargo on the top line and 13% cargo on adjusted EBITDA. So very strong financial performance.
First quarter we just reported our fiscal year end in September, so our first quarter is last calendar year quarter and we reported constant currency revenue growth of 8.6%. We also had a strong performance on our non-GAAP adjusted EPS, also 9%. We are very pleased with third quarter. We continue to see strong demand for our recent product launches but also for our existing products and we had a very strong quarter in the US in the first quarter.
When you look at last year, 13% or 12.6% to the exact constant currency revenue growth on the top line, we had on our non-GAAP adjusted EPS a single digit growth rate for those of you who looked it up before. Last year was for us a year where we've accelerated investments into sales and service infrastructure. We've highlighted that at the beginning of the year and explained that we see many more opportunities around the world to set up that infrastructure and that's exactly what we did and obviously we expect to benefit from that this year as we move into the following year.
We also are strong cash flow generator in general as a company which is shown on the next page, we delivered materially we have been a three time private equity buyout before we first emerged on the NASDAQ in 2006, so we delivered actually three times. The last time you can see here on the slide from about five times leverage to no leverage at this point.
Our main focus is to invest into our operations, that's always number one and in addition to that we have a share buyback authorization that we are executing. We just had a recent change actually last week in our CEO position. Jost Fischer has retired and Jeff Slovin who is with us for a very long time already, he was the former CEO of (inaudible), the company we acquired and we reverse merged into the NASDAQ has taken over the CEO of the company. We are very excited about that and we expect a very seamless transition from that. Thomas Jetter has taken the position of Non-Executive Chairman of the Board.
Now I think I hope I could demonstrate to you that we are very well positioned for the future. We are the leader in dental technology. We have a very strong financial profile. We are the innovator. We have leadership positions across all regions, across all segments. We have a very high installed base which is very important here in the dental industry. We are focused on the high end innovation of the market with CAD/CAM technology and digital imaging technology.
We have a very innovative R&D platform, the largest R&D budget in the industry and we have a world class global distribution network consisting of larger distributors like (inaudible) in the U.S., [Henry] (inaudible) in Europe, but also our own sales and services infrastructure around the globe, and we have a very experienced management team with a successful track record. Thank you for your attention.
I have a couple of questions that we're going wait and ask in Q&A now. So if there is anybody out, please do make yourself known and there will be (inaudible) comes around. I will just start off with one question on I made which is on sort of over the course of Chicago, there was a bit of noise around future product launches and what might happen. I know Simone touched on how IDS is very important event for the company and I am just wondering if you can give us any color on any product launches and also following on from that what we should expect in terms of great margin development over the rest of this year.
Yeah, I know IDS is always a very interesting event. It's the largest show for the dental industry not only for us. It's every second year. So in a few days, IDS will start in Cologne again. Clearly, the major product launch is the (inaudible) at the IDS. We started to launch this year in the US in August and showed it to the US market. We also launched it in many other markets, but the IDS clearly is a platform to show that product again.
All of our major products is important to understand that when we launch them, this is not a one quarter event. This is something where we expect the benefit for a long time, you know, over my (inaudible) years because our equipment stays in the dental office for quite some time. So these are investment good. So obviously that will be one of the major launches, although it's already talked about a lot.
There was some information out there about a dental [operation] unit called [Apollo] that’s going to be launch that is correct. We will show that [operation] unit that for us is an addition to our existing product portfolio, it’s different from the full direct process where you just start with the dental impression and end up with an restoration or a customize department or whatever you want to do. This unit will allow at an entry level point will allow the dentist to start with a dental impression only the rest of the process is more the traditional process you would connect with your lap.
So this is a market which will continue to develop, for us this direct product, this direct offering will continue to be the major offering in that market and we will also determine the future of that categories as they did in the past. So this is an additional offering which will help us to address those that might need a little bit longer to get used to the system because the system although is very attractive, highly attractive still people need to be convinced to change the way they do dentistry and to adopt the equipment.
And firstly following on from that how do you feel that will affect the gross margins of our business over the course of year, and I know you give me a quite a look of detail and how gross margin were going to develop anyway? So if you could just run up through that.
Sure we gave guidance for the blended segment gross margin profit margin for the full year this is what we typically do, and we said that we expect that to be on the same level or similar level as in the prior year that’s the guidance we have given. We have also talked about when we launch the Omnicam that the Omnicam, we expect to have a lower gross profit margin percentage than the Bluecam and let me explain that a bit and with increase the price for the Omnicam system it also have higher manufacturing cost so the gross profit dollars are expected to be similar to the existing Bluecam systems, but obviously with that the gross profit percentage is a little bit lower.
We also announced in our first quarter earnings call that we expect to have trade up programs in the second half of the year, that people again who know us and seen this, has an impact on the gross profit margin. So as we move through the year, you can expect to see a little bit lower margins in the CAD/CAM segment of the business, but our guidance for the blended rate is unchanged and would include all of that.
I would think about that as an addition, right. So we don't think about it as somebody who wanted to buy a CEREC he is now buying in an [Apollo]. We see that as an expansion of our product portfolio, so all of our effort clearly will go in to selling as many CEREC as we can and than if we can sell addition Apollo units for those who want to start, that’s a good thing, that market has to be developed right. There is no big mega market at this point in time for digital impression only, I would say, so let’s see how it goes but our focus clearly is on CEREC.
But you have still about 10 Apollo for every one CEREC just in rough gross margin terms and if one of those purchasers of Apollo bought one CEREC, made the jump to buy CEREC, you are not gaining anything there?
No, but you imply that there will be a lot of cannibalization and we don't. So people who want to go for the full process will go for the full process. It’s a very different proposition right, to take a digital impression and to have the full process to install the (inaudible). It’s a very different proposition because with the digital impression you need only like in Apollo, you go under traditional process. So we expect that there will be people that just want to do that, right as the starting point and we will continue to focus on those who want to go for full process. So that implies cannibalization; we don't envisage that and the market is in general to be developed. If you look at the CEREC systems we have about 13% penetration in the US, 14% in Germany so you know there's room for a lot of things to happen going forward and clearly again our number one focus to target our sales and we continue to be, we expect them to continue to be in that full process on the CEREC system.
Unidentified Company Representative
And just to follow-up what Simone said keep in mind that people can currently buy a standalone camera, right. They can buy their standalone Bluecam which is obviously significantly less expensive than buying the whole system or an Omnicam standalone and the vast majority choose to buy the whole system.
So it was purely a pricing decision, there's an opportunity to just buy the camera. The point is that once you have that discussion with them it’s very, very obvious that the value in doing CAD/CAM really relates to the output, the milling, right. But there's a different conversation when you walk into someone, you say we have one system; it’s a $130,000, right. When you walk into someone and say look you need to be on the digital highway, right. The reality is the best way to do it is CAD/CAM and specifically with Omnicam.
And you should do that and here's why; but for those people that don't want to hear anything because it’s a $130,000 and they wouldn't even begin the conversation, but now you have another way to have a conversation with them. But ultimately, the person that actually steps back thinks about it and does any sort of analysis; it’s blatantly obvious that you want to go with the full system.
You said the attributes of Omnicam versus prior generation, can you just talk about some applications that might come along that could accelerate what has been a pretty consistent 1% penetration to hopefully something more along that kind of S curve adoption?
Yeah, what we've done in the past and what we will continue to do in the future is two things, one is to make the adoption of the technology easier, easier and easier and the Bluecam was a step, the Omnicam is clearly another step in using the system to take away any of those hurdles and we will continue to do so in the future. But I think the Omnicam is a very important step in that as I mentioned earlier because the way you take the pictures, you don't have to use powder so for everybody who had some issues with that, this is all gone now.
Secondly, overtime, we have expanded the range of application of this system. Now we need to understand that we started and we always do that with the majority of the use, because our main customers are the general practitioners and what does the general practitioner do is do restoration. So we started with the mass application, so to say, which is restorations in this on (inaudible) and we expanded it to veneers, we expanded it to smaller bridges, we expanded it to customized department.
You can also do drilling guides for smaller implant or one single tooth implant procedures. So we've done that and we continue to do that as we move through the next years and that, and we'll look at more specialty applications over time, so to make this more and more even more so I would say because for us actually the restoration is the primary usage for that system because this is what most dentists do on a day-to-day basis. We will add you know features and applications from other areas overtime.
Unidentified Company Representative
And I am glad you probably asked because I think one of the things my experience sort of on the other side one thing is I never appreciated the importance of the software and the material and how that really does, you know, enable people to do more things and we actually just launched the 4.2 software, which has a new articulation program which I mentioned we have a former dental actually sitting next to us. I mean you can probably do better explanation on how that’s important. These are the things, we always think about hardware but as we continue to do those things, that makes a big deal. I am going to put Jonathan on the spot.
Unidentified Company Representative
(Inaudible) of the company, but basically, this is the shape of a crown that effect how good it feels for the patient and one is how together and how that feels and its at rest in your teeth. The other is when you are grinding or chewing, how the, have this to do, lumps and bumps of a crown, filled next to each other and I think move across each other has a massive impact on how that crown fills in your mouth and so when you have a crown made in our lab, there is a guy, and I used to this as part of my training to sit there and basically put it in to what looks like a fake jaw and moved it around and use it sort of carbon paper to look for the touch point. The new 4.2 essentially helps that’s built into the system. I think some of the dentist cure is now that that’s the likely old fashion way. That is a big, big change in my view in how the system work.
Just a question on margins; just from a gross margin percentage, so you commented that on the down side, you know, Omnicam will have a depressing effect and then Apollo will have lower gross margin. What are some of the offsets and the upside to get you to the margin guidance that you talked about for the year?
Yeah, I think the main driver for us is to increase volume. So if we can increase volume, that’s obviously very good for us and very important to be done and then mixed in the (inaudible) because a full CEREC system doesn’t only consist of the Omnicam part, it also consist of billing unit part. So you always have a mix and the comments we made were on the Omnicam and that’s what we continue to do. We also ramp up manufacturing so there are always opportunities once you have done that to work on your manufacturing costs, once you are at a certain level of volume.
And generally you (inaudible) business mix (inaudible)
Yeah, I know, absolutely sorry about that yeah the business mix obviously as always we have talk us about mix across the segment so the faster we can grow is a CAD/CAM part even if we have a little bit of a depression on the relative gross profit margin despite so we can grow the imaging, the better of our overall gross profit margin so there is a natural margin expense opportunity in that.
(Inaudible) what are the values imaging, penetration at (inaudible) not 13%? And I think you fairly pretty confident you can get double-digit growth, what drives that?
It’s the consistent application of different technology in the dental office. This is partly a replacement market, the imaging market. As I mentioned most of the dentists have at least intra-oral imaging unit and many, many now have also extra-oral imaging. So when they had a (inaudible) they obviously have to replace it. In addition people add to their intra-oral imaging setup and extra-oral imaging setup because they want to more procedures in the dental office so they need more information, they need different success, and we have seen double-digit growth over last year and that trend is clearly continuing. I think the whole industry believe that it’s not a question of if, more question of when very conservative. It takes some time to get through final adoption rate.
(Inaudible) I have other couple of questions I would like to ask. Firstly you mentioned on customize the button and that was another thing, and that was a bit of a launch actually targeted this week and a new up and coming out stature. What do you think our markets were as a couple of other (inaudible) market and do you have an idea about that, and do you have any expectations or you think you can take in terms of share away from other capitalized (inaudible) being made out there?
Yeah, that is an interesting question actually, I think if we look at it, our main customers is the general practitioners, so the question in the end actually is how many implants will they do, and then when they do an implant, I think a very convenient and makes a lot of things to do it on the CEREC system. So the path that we can increase penetration of the CEREC systems, the more of those dentist also do implant quality procedure the better right. So I think that will drive that overtime. As an additional feature they can use and they do use, if they also do with an implant.
Okay, and then another question. You talked about investing in operations and deleverage. Is there any desire to meet physicians out there and are there any areas that you can see and where in that position would fit nicely.
Yeah, our approach to acquisition is actually has not change over the last years, the industry is relatively small, we look at everything and we evaluate everything but you have seen us very disciplined. We typically look into areas of technology, is there something out that we don't have agenda and that would be interesting either under development or developed so that we can take it to the next level, and this typically are smaller acquisitions and you might have seen us do some of those.
The third area would be either on the region of basis or within the existing segment. I would say that the (inaudible) acquisition has been a good example for that where we expanded our regional presence in the US, but also acquired good seamless technology for the intra-oral sensors that gave us a lot of synergies.
We would always look out for that but again in a discipline. Also I would like to say we have the strongest R&D theme in the industry so for those technology developments in many cases we are at the forefront of that. Not in all of them, but in many cases. And then the fourth area which we would always look to if we can add to consumable stream that would make sense to be added to our business. But again businesses have to be available number one, number two it has to fit a very disciplined and yeah but no change to approach that whether we will leverage around that much.
How much leverage do you think the business should have fairly you got known at that point of time, at this point in time.
That's an interesting question. As you know we have been highly levered at the beginning of our top market place. We had numerous discussions over the last year with investors that were very scared even about a 1.5 time leverage. So we delevered for assets and ongoing discussion internally and how do we see that, how are we going to position ourselves and we are in that discussion at the moment, but we were able to deal with that, we were also able to deal with no debt so.
Well, nice to have questions, I think we will wrap it up now. Thank you very much.
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