EL.En. S.p.A. (ELN) Earnings Call Transcript & Summary

[Foreign Language] Nicola, go ahead.

Okay. Good afternoon to everyone, and welcome to the conference call of 2020 Financial Results of El.En. Today's call will be recorded. And therefore, there will be the opportunity for questions at the end of the conference call. With me on the call are Andrea Cangioli, El.En.'s Managing Director; and Enrico Romagnoli, El.En.'s Chief Financial Officer and Investor Relator. Before we begin, please note that there is a remark the management makes on the conference call about future expectations, plans and prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business conditions, and condition in the industry the company operates and may be affected should the assumption turn out to be inaccurate. Consequently, no forward-looking statement can be guaranteed, and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation about content nor to update the forward-looking statement to reflect events or circumstances that may arise after the date hereof. But at this time, I want to turn the call to Andrea Cangioli. So please go on, Andrea.

Thank you, Nicola, for the introduction. Thank you, Bianca, also for the introduction. Good afternoon. And welcome, everybody, to this earnings call that we're holding after the release of the 2020 financials and the release of the guidance for fiscal year 2021. As usual, Enrico Romagnoli is joining me in the call. In a few minutes, he will go through the financial details after my brief introduction. Once again, we are very pleased with the performance of our group in the most challenging environment, we have ever faced overcoming the restrictions and the limitations that are still deeply impacting our businesses and our lifestyle. We managed to register a sales volume increase and a profit generation, which we did excellent in the circumstances. Our Q4 performance has been outstanding, beating our own forecast, and the fear of the impact of the restriction that were enforced in early November in Italy, Germany, France, among the others, and testifying that notwithstanding the general economic problems that are evident and in front of everybody, our activities are back on the path of solid growth of revenues and income that we had planned for the group. The pandemic hit us hard and forced us to deviate from that path. It slowed down our pace and cast a shadow on our performances. During this same earnings call that we held 1 year ago, I was reporting about the Chinese lockdowns that had forced us to close the plant in Wuhan, Wenzhou and Lin Yi. A few days later, Italy would have followed the Chinese model, and we were forced to close or abruptly slowdown in Italy and France all our activities. If I now look at the performance of this Q4 and compare it to our internal quarterly budgets, as we prepare them in late 2019, I notice that we are aligned, beating them in certain segments. And finally, if I look at the momentum that our various business units have now in terms of orders intake, I see a situation that is very close to where we wanted and planned to be today when we did our planning prior to the pandemic back in 2019. I would like to spend a few words on what enabled such a strong comeback because we're, of course, happy of our latest results, but we are even more proud than happy for the grounds on which the results are and have been constructed. The brightest evidence is our vision in planning our logistics and production infrastructure. Who have been with us in the last years know the extent of the investments that we have put in place in order to expand our production capacity, both in the medical and the industrial area, but more heavily in the laser cutting business in Italy and in China. And of course, when I see that in Q4 2020, we doubled the number of systems delivered with respect of Q4 2019 in China, I am aware -- we are aware that this could not have happened without the bold strides we have taken before. But the most important factor sits in the general capabilities of our organization, capabilities that are based on a very solid construction built on human resources of inestimable quality. Not only our people are carrying with them a stratification of knowledge, know-how, expertise that allow them and us to master all the science and technology needed to effectively develop new innovative devices, but the severe test of the pandemic brought out the resilience and the strong commitment that our people are dedicating to the company. The company played its role in setting up all the safety precautions and procedure that allowed the employees to work safely and most important to feel safety in the workplace. The response we had in terms of effectiveness of the deliverables was outstanding. No single development milestone was missed, even during the months in which we had to extensively apply payroll protection programs that reduce available hours for the company and income for the employees. I believe that for myself, as Managing Director, and for all of you, as shareholders of the company, it's important to know how solid this base ground of our business are. And during these times where the mantra of sustainability is permeating our vision and our business approach, you have to know that the human resources leg of our long-term business sustainability infrastructure is very, very strong. The stronger traction in revenue growth is coming through the laser cutting business. We are active in this business in Italy with Cutlite Penta based here nearby in Prato. And with our Chinese Penta Laser company based in Wuhan, Wenzhou and Lin Yi. What is determining the sustained growth of this segment is technological innovation and subsequent application breakthrough. The laser power available for laser cutting systems increased exponentially in this last year. A couple of years ago, we were thrilled of being able to use a 10-kilowatt later source. We are now installing laser systems equipped with 30-kilowatt laser sources. At the same time, the cost of the laser sources progressively decreased, widely improving the cost effectiveness and both technical and economic productivity. As an effect, we are enjoying the opening of new application market, which become reachable, thanks to higher laser power. And we are talking of heavy-duty applications in construction and also for manufacturing of large technical vehicles, as an example. And we're also enjoying of the widening of the existing application markets due to the superior performance and affordability of the systems which are currently offered. And we are enjoying this favorable phase based on our superior capability in integrating high-power lasers on our system and based on our infrastructure and distribution footprint created by the investments I was mentioning before. Also, the trend in medical laser system sales is encouraging. We did not reach the same volumes as we did in Q4 2019 in this Q4 2020. But Q4 2019 was a record quarter. But we had strong sequential growth in all the segments. Aesthetic was up in Q4, driven by the new hurls of products, which are also the backbone of our current order bookings. Also driven by the sales in Japan for the products that we locally distribute. As I mentioned before, the high volumes of sales booked for these devices, which bear a fairly small gross margin, are one of the main reasons behind the gross margin reduction that we are showing on our 2020 financials. Urology and surgery are still struggling. Still the focus of the hospital systems is on COVID. And the new ways of hospitalization are not helping, since we will need a normalization of the situation in order to resume our growth. In urology, we did very well in the consumable side. The sales of single or multi-use optical fibers used in each surgery were -- we marked a sales increase over 2019. Key new products launched in the second half of 2020 are the new hair removal device by Deka called Again; the new chrome device by Quanta System, a Q-Switched platform for dermatology; and a new range of body contouring devices with the introduction of muscle stimulation by high-intensity magnetic fields and the improvements of the existing devices based on microwaves, Onda, or on superluminescent laser matrixes. In the urological field, Fiber Dust, the new system based on fiber technology is being launched, covering a range gap that our competitors were trying to leverage against us. And finally, where we don't have exciting results in terms of sales for certain products like Monna Lisa Touch or the new acne, Accure Acne device, I can tell you that the good news there is that our excellent performance was obtained without a material contribution of these items and the activities aimed to the launch or relaunch of these devices will eventually allow their material contribution that is not yet factored in, in our annual guidance. Prior to getting into the details of the financials with Enrico, please consider one general point that in Q4 2020, we incurred in a onetime nonmonetary expense of EUR 2.1 million due to our shares allocation to the managers of the Chinese entities. Net of this expense, consolidated EBIT margin for the quarter would have been 10%, and EBITDA margin 12.2%, beating Q4 2019 in these metrics, too. I'm done with the introduction. Enrico, you can go ahead with the financial data comments.

Thank you, Andrea. And as usual, I'm going to give you some details on our last financials. Thanks to the record turnover of the Q4, the turnover of 2020 reached EUR 408 million, exceeding the result of the previous year by 1.8% and, therefore, recovering the gap that had formed in the first half of the year. The gross margin stood at EUR 141.6 million, showing a decrease of 9.2% compared to the last year. And the impact of gross margin on turnover reduced from 38.9% in 2019 to 34.7% as of December 2020. The decrease derives from a reduction in margins that the crisis has induced on both the medical and industrial sector, albeit in a different way. In the industrial sector, the goal of expanding market shares was also pursued by choosing to give up some marginal point, especially when competitive pressure in China became stronger after the pandemic. In the medical sector, the mix of products sold -- saw a lower impact of the higher-margin segments such as surgery and physiotherapy; while in the aesthetics, the turnover remained at the level of 2020, also thanks to the significant increase in sales of some products, but with a lower marginality. Operating costs amounted to EUR 34 million, down compared to the EUR 43 million of 2019. And the impact on turnover reduced from 11% to 8.4%. And the savings derived mainly from S&M expenses due to the limitation to travel and from the cancellation of all fair and congress events. The amount of staff in 2020 was equal to EUR 66.7 million, on the same level of last year. But as already mentioned by Andrea, there was a onetime cost of EUR 2.1 million registered by Penta Laser Wenzhou. And excluding it, the reduction in labor cost is mainly due to the government payroll protection program, such as the Cassa Integrazione in Italy, used also in France and in Germany, mainly in the first 6 months of the year. On December, the employees of the group were more 1,600 and the new hires were mainly in China, where the factories were working at a full capacity with the volume exceeding the volume of last year. EBITDA was EUR 40.8 million, down by the -- 11.9% compared to the EUR 46.3 million of last year, and with an impact on sales of 10% compared to the 11.6% over last year. Amortization and other accruals, increase of EUR 2.6 million due to the relevant investment made in 2019 and in 2020, and to the increase in provision for bad debt represents in the most balanced way the possible deterioration of some credit position. The increase can be split in EUR 1.6 million as bad debt and risk accrual and EUR 1 million as more depreciation and amortization. In 2020, the total amount of fixed cost, hence operating cost, of course, and depreciation, showed a decrease of 2% and the impact on sales was 27% compared to the 29% of last year. So thanks to the reduction of the debt impact, the profitability -- the reduction of profitability in terms of gross margin level, we can see a decrease of 4% was reduced to 2% on EBIT level. And we had a positive balance of EUR 30.1 million, down from the EUR 38.2 million with an impact on sales of 7.4% compared to the 9.5%, improving -- but improving the profitability in the second half of the year in accordance with our last guidance. Pretax result was EUR 27.9 million with a negative effect of ForEx and a negative contribution of associated companies. Net income was EUR 20.2 million with a tax rate of 19% versus 26% of last year. In 2020, there were some onetime benefits such as the remission of the IRAP balance 2019, together with the first down payment 2020, IRAP is an Italian income tax on the accounting of deferred tax asset of some assets revaluated in accordance with the Italian law. The total amount of those benefits were around EUR 3 million. In the fourth quarter, we registered a record turnover of EUR 140 million. And we can mention that the same explanation used for the whole year to explain a decrease in gross margin and profitability in Q4, too. In the meantime, we had a recovery in profitability with an EBIT margin of 8.6% lower than Q4 2019, but the best result achieved in 2020 and higher in total value than operating result of Q4 of last year. The impact on negative ForEx reduced the income before tax to EUR 11 million, on the same level of Q4 2019. In terms of net financial position, we had a positive balance of EUR 69.2 million compared to the EUR 61.4 million over last year. And about EUR 20 million, plus EUR 5 million, as possible earn-out, were invested in the acquisition of an important minority stake in Penta Laser Wenzhou. And the amount of investment in technical fixed assets were around EUR 30 million, down on 2019. We had a strong cash generation in the quarter for EUR 19 million, thanks to the good level of activities and to a reduction in net working capital compared to the first 9 months of the year. In looking to the revenue breakdown by business, you can see that in the medical sector, which is in 2020, account for approximately 56% of the group's turnover. The sales trend was affected by COVID and showed a decline of about 5%, slightly more since we did in the sale of system than in that of aftersales services and consumable, which benefited among other things from the growth of revenues from optical fibers for urological surgery. The resilience of the Aesthetic sector is extraordinary, showing a slight growth compared to the 2019. Two main reasons behind this result. The first one is the launch on the market of new system for hair removal, as already mentioned by Andrea, and for body and skin treatments with a high degree of innovation who have found great success. The second one is the good performance of our Japanese branch with upgrade on the installed base and seats of interesting volume of locally produced equipment through the same channels. On the contrary, sales in surgery, and even more markedly in physiotherapy, was affected by COVID pandemic as the attention of medical health structures was concentrated mainly on the treatment of COVID problems. In the industrial sector, sales increase of 23% is the increase of the cutting. The industrial increase of 13%, a brilliant result, given the condition. In Q4, the increase was 52%, thanks to the excellent performance of cutting segment. The cutting segment grew up 23% in 2020, thanks to the 2 last excellent quarters, with a growth in Q4 of 75%, in Q3 of 43%. The other 3 main segments, marking, source and after-sale service, continued to suffer the effect of the pandemic and recorded double-digit decrease without any significant improvement in the quarter. Looking to the distribution of revenue by geographical areas, the countries that have contributed most strongly to grow are those outside Europe. In medical sector, we performed very well in Japan, where COVID had a less incisive impact and where our own branch has set a record turnover, EUR 45 million in the year, plus 60% over 2019. And in the U.S. market, where our distributors in the medical sector performed well despite a very adverse environmental condition for most of the year. The drops recorded in Italy and in Europe are to be considered excellent results in light of the extended lockdown periods and various restriction suffered. In industrial sector, in China, the activity of cutting sector maintained a record space in the second half of the year, and Cutlite Penta too showed a brilliant performance on Italian and European markets. Chinese company registered for the whole year 2020 a turnover of EUR 107 million, plus 21% year-on-year and plus 106% in the Q4. Cutlite Penta too registered a very brilliant year with a turnover of EUR 50 million plus 60% year-on-year, and 20% in the Q4. Andrea, please go ahead.

Okay. Thank you. Thank you, Enrico. Just to close the presentation, we close with the guidance for 2021, which please let me comment the pictures here. We have the before and after, usually we have before and after as a static effect. The before and after here is for this fresco in the Casa dei Ceii in Pompei that we have to clean up some of the depositions, and I believe it's really turned to new life. Anyway, we are enjoying the phase of positive overall momentum, notwithstanding the continued uncertainty cast by the pandemic on the economic environment, and the difficulties that we continue to encounter in certain of our business segments. Our business positioning seems very promising at the beginning of this 2021, and we confirm that we're looking forward to continuing our aggressive growth plan. On this slide, we target for 2021 revenue growth over 10%, which will lead to an increase in EBIT, and we hope and we're going to work hard for an increase in EBIT margin. Thank you for your attention. I believe we can go ahead with the Q&A session now.

[Operator Instructions]

I'm François Robillard from Intermonte speaking. Can you hear me?

Yes.

First one is about your guidance. If you can give us some more granularity about the composition of your 10% -- over 10% sales growth target, giving it by segments? And if possible, what are your expectations per business units? And finally as well, in terms of short-term versus long term visibility, how much do you expect it to be achieved in the first half versus the second half, for instance? Then second question is on gross margin. Can you give us a hint of your gross margin for industrial and medical activities on the full year? And what kind of margins are you expecting within your new guidance, in that can we expect some kind of return to previous year's levels, especially in the industrial segment? And final question is on fixed costs. What kind of savings seen in 2020 do you expect to remain structural in 2021?

Thank you very much, François. On the mix, I mean, you got -- we also got to consider what kind of year we are running against now. So we are running against 2020, which -- I mean it has been quite a weak year in absolute terms. We're happy for what we've been able to perform, but has been weak, especially for medical. In this moment, our development plans are -- continue to be bullish in the industrial business. And even though the industrial business grew in 2020, we believe that it will grow more than the makeup business in 2021. Also due to the mix of sales that we had in 2020 that we expect to be rebalanced with less contribution of the sole distribution component for what we can see today. And we -- I mean, the model is for 10% being, let's say, with a sharper growth in industrial. So what concerned long-term and short-term view and where we're going to get the gain? Of course, after Q1, there will be a huge gain in industrial because Q1 is the quarter in which we had close to 0 revenue in China. And in this moment, China, as I mentioned, during my introduction, is running at full speed. We have our own -- the 4 factories running at full -- at almost full production rate. We still have some headroom. But our plan is that we will be in the need of our fifth factory coming up during the year in Lin Yi in order to continue growing and to continue to be able to manufacture the increase in volume that we are being demanded. In the first quarter, the comparison will be tougher with the medical because first quarter of 2020 was fairly strong in medical because the demand shortage happened right after the end of the first quarter. Of course, we plan to see a very large increase in revenue in the first 2 quarters, and we plan this increase in revenues versus 2020 to progressively decrease when will be faced to Q3 and Q4 2020 that have been two good quarters, especially the fourth quarter has been very good. Concerning gross margin, which is tied to profitability and is also tied to our cautious guidance in terms of profitability. We are very pleased with the results that are having with gross margins in the industrial business. We had -- we maintained the gross margins even with increasing volume. This gave us a very good leverage effect, which was evident on the bottom line. We are cautious on the medical business because during 2020 the weight of our sales to the U.S. grew into -- in our group. So we were very happy with the achievements we made with our main distributors in the United States, which are Cynosure and Cartessa for many aesthetic applications, international medical lasers where -- surgical application and more inputs for urology. But what we need to take into consideration is that the weakness of the U.S. dollar has already harmed our marginality in medical system sales at the end of the year. And we model our gross margin with 1.21 foreign exchange rate for 2021, which, of course, given the fact that most of our costs are in euro even if some of our costs are anyway in U.S. dollars. So we purchase something offsetting the foreign exchanges losses we get on sales, we -- I mean, the impact of the weakness of the dollar, we don't limit our ability to improve our gross margin. Should we see the dollar getting strong again in 1.1 or even better 1.05, 1.06 area where it has been over 2019 and the first months of 2020, our marginality would be materially improved. In terms of fixed cost, the model that we have is a slow return. So we are modeling a small increase of fixed costs. 2020 until this point of view has been, let's say, amazing because of the savings that we had in travel, congresses. I mean, meals and lodging has been extremely, extremely material. In a way, we hope that these savings will go away because it would be a sign of getting back to normality. On the other side, we know that it will take a long time. And unfortunately, I'm not sure if 2021 will be enough to see life to return as it was before. And I believe the business travel will take a while before it will get to be normal as it was at the end of 2019. Therefore, we are not planning to maintain the same very low level of expense until this point of view, but we are modeling some increase of expense without getting to the levels we were 1 year ago. I believe I've answered all your questions.

Yes. Just a quick follow-up. You mentioned the EUR 2.2 million impact of the Chinese managers sale of shares? Was it done in the fourth quarter?

Yes.

Yes.

So it's a share capital increase at a low price.

Are there questions?

If nobody else is going to ask any questions, I might have some more. I don't know if you can hear me well again. So yes, just on the new product launches you've announced, can you just come back on that? And how much of these new products will contribute to your guidance? Then on working capital, so in 2020, it was back down to 18% of sales. Can we expect a return to a more pre-COVID level of over 20% as soon as 2021?

New products, yes, we have several products that will contribute to the sales growth. We are especially confident in the new hair removal products, which are, Again, laser system from Deka distribution network, and they believe the hair removal solution system that we -- excuse me, hair removal system that we provide on our own basis to our long-term partner, Cynosure, and this will be one important piece in the sales growth for 2021. Also, we have a strong expectation coming from the body shaping devices. We now have a very wide range of body shaping devices. Remember, we were out of the minimal invasive or the noninvasive body shaping device market. We entered the market with Onda Coolwaves, it was 2018. And after that, other systems have flagged in this segment, Onda Coolwaves, specifically. We had the superluminescent matrices products, which are called B-Star and Physiq, which after a period of the study are now being launched in the United States. And so we are very hopeful to have a very good year with these products in the United States. While for Europe, we launched the systems which apply muscle stimulation based on the high-intensity magnetic fields. Those new technologies are extremely interesting, both for their ability to generate revenue and also because they were a fairly interesting profitability. And so this is one of the -- they are one of the backbones for our expansion, both in revenue and in market. Concerning industrial as a business, there, the new products are the introduction of very high-power laser systems. In Q1 2021, we have installed the first 30-kilowatt system. And as progress never stops, I believe that for -- in the next month, we'll be start handling 40-kilowatt laser systems. I mean all of this run to higher powers is allowing us, as I mentioned before, to enter new market segments, new markets, and the research in providing higher power laser sources is also providing the cheaper laser sources by the same manufacturers, and is allowing us to reduce costs, maintaining more or less the same margin, therefore, to enlarge the markets. Concerning the net working capital, we are very pleased with what we have been able to do in 2020. Quite weird to say in the areas where we have not had problems, where the market maintained its size or at least remained vital, we -- our customers, they came back better paying us than in the past. And so the other piece comes from the management of inventory. The management of inventory, of course, led to very strong increase in working capital after the sudden fall of demand in the first and second quarter recovered. And then what I noticed is that in these last months, we had again to increase our inventories, and I believe this is something we will need to do in the future even more because we are encountering some difficulties on our supply chain. There are certain components, which are critical. Even if not very expensive, they are critical for the manufacturing of our systems. I'm talking of some electronics and chip and/or some other electronic components, which suddenly switch to their -- changed the lead lime, changing from a typical lead time, which was between 8 and 10 weeks up to sometimes 24 or 30 weeks. You understand that if you have to plan an increase of production volume-based on an increased -- on an expected increase of sales in order not to have customers wait for months, we have to buy before, taking both a financial burden because you've got to buy before and probably paying before and there's risk because, of course, there's the market risk that the planned volume of sales do not actually take place. Unfortunately, there's no other way we can manage the situation because in this moment, which, as I mentioned, we have been a very solid order books. We are struggling with our production facilities in order to timely deliver according to the execution on the customers. But should we start delivering, in a longer-term, the customers would simply return than go to somebody else. So we need absolutely to give a certain level of service in terms of delivery to the customers and are already willing to increase investment in working capital in order not to miss that opportunity. And it won't be easy because at least as it has always happened after periods of deep economic downturn, all the supply chain is -- I mean it's not -- I wouldn't say it's fully disrupted, but has certain areas in which delivery times become much longer because the production facilities are not prepared to a sudden recovery of demand.

Just a quick question, if I may. [ Andrew Dalford, Metzger Research ]. Just -- well, first of all, congratulations for the results, notwithstanding what must have been a very challenging 2020. And could you give us an update on CapEx expectations for 2021? And also, if you have any large investments that you're planning for the coming years?

Yes. CapEx will be more or less, I believe, in line with what we did in 2020. We already started 2021 with a largest investment planned for 2021, the Cutlite Penta plant, the industrialized cutting manufacturing facility here in Prato near to Florence, bought another building in order to expand its production footprint, it was absolutely needed, it was planned. Actually, we -- the transaction was already disclosing in 2020. But for accounting purposes, it took place beginning of 2021. It's a EUR 5 million investment in fixed assets. Then during the year, we will complete our second building in Lin Yi. Lin Yi is the last of our factories that we initiated and last of our ventures, let's say, that we initiated in the region of Shandong. Shandong is a region between Beijing and Shanghai, is a very industrialized region. So it was appropriate to have a production facility in that area. It will be an investment of about EUR 2.5 million, EUR 3 million -- more than EUR 2.5 million than EUR 3 million to be born in 2021. Then we have other investments because as you know, in the last year, we have been investing a lot in all the infrastructure. Our business is very dynamic, and we need to remodel and refurbish also the older infrastructures. For instance, in this year, we are planning a fairly large investment in a building, which is on the other side of the road here in Calenzano. It's a building that were mainly used -- was mainly used as a deposit. During 2021, we're planning to refurbish it, to turn down the roof and make a new one with solar panels. I mean it will be a green building, sustainable building, and it will be more surface for us for our operations, which are slowly increasing. So on the bottom line, CapEx should be more or less on the same order of magnitude of 2020. We are not planning any other large investments in terms, let's say, of M&A or of internal restructuring. We did quite a lot in 2020. I remember we gained a larger share of our joint venture in China by purchasing most of the minority shares from our initial financial partner. As of today, we own about 85% of Penta Laser Wenzhou, which is the headquarter of the whole Chinese activities. And today, also owning Cutlite Penta in Italy. So we have a unique unit controlling the whole laser cutting business. But we don't plan -- at least, we don't have today any plan in making other large financial investments in 2021.

Andrea, can you hear me?

Yes.

It's Trevor Fitzgerald from Mirabaud Asset Management. I'm just intrigued about the permission to buy back stock. Could you just give us a walk through about the thinking there about the buyback, the size of the buyback and the mixture between dividends and returning cash to shareholders in this way?

Trevor, the buyback of share is no big deal. We always had it ready for any circumstances. So we have also the -- some contract with certain managers, which provides that we pay them share. So we need a provision for buying shares in order to be able to give shares to the managers rather than payment in cash, we have this kind of arrangements. And for other reason in this moment, there's no real impelling need, as we did in the past, and last time we have done it was, I believe, 2 years ago. We keep this tool open, if and when the circumstances will need us to use this.

Any other question, please?

It's Andrea Bonfa from Banca Akros. If I may, I would like to have -- to ask a few questions. Is that okay, Bianca?

Sure.

Yes, of course. Sure.

So very quickly, Andrea, I would like to know if the mix for medical, aesthetical will improve because, let's say, Japan would be more, you say, your own product sale than the third-party products. Well, this is my first question. The second one is, let's say, the shares given to the Chinese manager, is there something that can be repeated also in '21 or is that one short item? The third one, if I'm going by heart, your 2020 tax rate was pretty low. Is that sustainable or not? And in terms of, say, new product, if you can just remind us very quickly again, what you mentioned it before, what are the new products, which let's say, you are going to launch this year, which are not present last year, I mean 2020 -- or which didn't contribute?

Andrea, I didn't get your very first question. What -- did you ask about the medical sales?

My -- yes. If I'm correct, in Japan, this year, sales were very good because you distributed third-party products. So if this year, Japan mix will be more El.En. products than third-party ones. So if, let's say, the mix for medical aesthetical will improve because of that at the end of the day.

Exactly. Yes. The answer is yes. The model we have from now is that as much as this kind of sale helped the sales volume in 2020, we are modeling a decrease of that kind of sales in 2021. But since we're modeling faster growth of sales of all the other systems, we would see a very interesting growth in sales in medical in 2021. And for the mixed balance reason, we'll see also a margin increase. The only issue with margins in the medical system where we have a better mix -- we'll have a better mix, and we have new products, very higher margins is that a large part of our sales is directed to the U.S. And in the U.S., we have contracts in U.S. dollars on which we cannot change the prices or at least it is not appropriate for us to change the prices. So margin R&D will suffer a little bit from the weak dollar. The new products we are counting on for 2020 -- 2021, excuse me, that have not been great contributors in 2020 are the body shaping system that I was mentioning before that we're starting to sell in big volumes at the beginning of 2021. And the hair removal devices, the new hair removal devices I mentioned before, Again, and Elite, which have been entered in standard production and decent volume production only at the end of the year, so they hit our financials in Q4 only, while we're expecting their contribution to be constant and material throughout all 2021. I don't remember whether there was a question again...

There is a question on the tax rate, if you want, I can ask you.

Yes. Yes, tax rate, I was going to -- Enrico, please go ahead on the tax rate.

Yes, yes. The tax rate of 2020 benefited of some onetime benefit, as I mentioned during the presentation. So it's not recurring. The tax rate of 2020 is 19%, last year was 26%. So if you need to project this tax rate in the future, you can say, from the 25% to 28%, more or less.

And what about the shares to the Chinese managers, is that a one-off? Or you -- was that something...

Yes, it's -- I mean, actually, it's a plan that has 2 pieces. But I believe this first batch is about 3 or 4x larger than the second batch. So there will be a second bench, but I won't say that it's negligible, but it's much smaller. I hope it will be a negligible in face of the increased revenue and profits.

Okay. And if I may ask the last question, is that possible for you just to remind us, more or less, what are your U.S. sales for 2020?

Yes, yes. Roughly just below $50 million.

In Europe -- in euro wise -- that's euro wise or USD 50 million?

Dollars.

Is there anymore questions? Then if there are no more questions, we finish this conference. Andrea?

Excellent. Thank you for being with us. I believe I will be seeing most of you next week at the STAR conference. And some -- with some of you, I know I will be also talking soon. Anyway, thank you for being with us, and have a nice night. Bye-bye.

Bye-bye.

Thanks for attending the conference. Bye.