Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q3 2022 Earnings Call Transcript

Operator: Our next question comes from the line of Amit Hazan with Goldman Sachs. Please proceed with your question.

Unidentified Analyst : Thanks. This is Phil on for Amit. I thought I’d ask some kind of directional kind of preliminary questions on 2023. So I think the first one, hopefully we can €“ pretty simple on the currency front most are giving at least a preliminary look for next year is the kind of six to seven range that’s going to end up shaking out for this year a good place to start for the headwind for next year as you guys see it?

Juan Jose Chacon-Quiros: Yes, I mean obviously there is a lot of €“ currency is fluctuating right, but I think as a start that is not a bad place to be. We’ll see more pronounced impact obviously in the first part of the year. But yes, and so I would also suggest we’ll give a lot more detail and a lot more guidance around 2023 when we report our fourth quarter numbers.

Unidentified Analyst : Yes, absolutely. That’s helpful as a starting point. And then on the OpEx side, it looks like for the year you are going to end up growing SG&A a bit ahead of where total sales numbers are going to be, even on an underlying basis with all of the investments that you’re making for next year in the U.S. and in China, is that growing SG&A similar or ahead of sales a reasonable starting place for next year with all the investments that are going on?

Juan Jose Chacon-Quiros: And again, all of these plans are in development, right as we think about budgeting for 2023 and what the year looks like. But I think you are directionally thinking about it correctly, right, that the next several quarters are going to be periods of investment for us as a company, right? As we stand up €“ Mia as we stand up the U.S. operation, this is not a time we will see significant leverage from us. However, as those opportunities start to materialize, Mia next year, in the U.S. hopefully not too long after that the leverage will start to show in our model. But I think you are thinking about it correctly in that the next few quarters are not quarters where we’re expected to show a lot of operating expense leverage.

Unidentified Analyst : Okay, that’s helpful. If I could sneak one last one, Raj, I believe you said 23% European sales and 44% for the APAC region. I know the questions have been asked about the regions already, but I’m wondering if there’s anything one time to call out either from a distributor standpoint, APAC that was a pull forward or from Europe that you would highlight kind of to the negative side. Just kind of trend lines a little bit off. Thanks.

Raj Denhoy: Yes, I was one who mentioned. I mean, Europe, obviously that number is being impacted quite a bit from currency. That’s the major thing, pushing that number to that 23%. We’re also seeing stronger seasonality, I think, in Europe. So really nothing one time, I think, the business is doing very well. We’re still taking shared most of our markets, so I wouldn’t call that anything specific in terms of one time there. And Asia-Pacific is one as I mentioned, we’re seeing very strong growth, the traction with implants and the move to Motiva in a lot of these markets continues. And so I think it’s again, currency kind of impacting Europe and then just really good growth in a lot of other markets. Good demand.