UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March ~~31, 2023~~29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the transition period from to

Commission File Number: 001-39054

ENVISTA HOLDINGS CORPORATION

(Exact name of Registrant as specified in its charter)


Delaware		83-2206728
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

200 S. Kraemer Blvd., Building E		92821-6208
Brea,	California
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: 714-817-7000

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	NVST	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of common stock outstanding as of April ~~28, 2023,~~26, 2024, was ~~163,702,043.~~171,858,245.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
		PAGE
Item 1.	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2422
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3531
Item 4.	Controls and Procedures	3531

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3632
Item 1A.	Risk Factors	3632
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3632
Item 3.	Defaults Upon Senior Securities	3632
Item 4.	Mine Safety Disclosures	3632
Item 5.	Other Information	3632
Item 6.	Exhibits	3733

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENVISTA HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, except share amounts)


		As of
		March 31, 2023		December 31, 2022
	As of							As of
	March 29, 2024						March 29, 2024		December 31, 2023
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	585.2	$	606.9
Trade accounts receivable, less allowance for credit losses of $16.0 and $16.2, respectively		401.8		393.5
Cash and cash equivalents
Cash and cash equivalents
Trade accounts receivable, less allowance for credit losses of $19.8 and $17.3, respectively
Inventories, net	Inventories, net	307.2		300.8
Prepaid expenses and other current assets	Prepaid expenses and other current assets	120.1		123.4
Total current assets	Total current assets	1,414.3		1,424.6
Property, plant and equipment, net	Property, plant and equipment, net	297.6		293.6
Operating lease right-of-use assets	Operating lease right-of-use assets	132.9		131.8
Other long-term assets	Other long-term assets	158.3		153.7
Goodwill		3,506.4		3,496.6
Goodwill, net
Other intangible assets, net	Other intangible assets, net	1,065.5		1,086.7
Total assets	Total assets	$	6,575.0	$	6,587.0
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Short-term debt
Short-term debt
Short-term debt	Short-term debt	$	510.8	$	510.0
Trade accounts payable	Trade accounts payable	186.8		228.3
Accrued expenses and other liabilities	Accrued expenses and other liabilities	423.6		471.4
Operating lease liabilities	Operating lease liabilities	28.4		27.0
Total current liabilities	Total current liabilities	1,149.6		1,236.7
Operating lease liabilities	Operating lease liabilities	121.3		121.4
Other long-term liabilities	Other long-term liabilities	151.3		151.3
Long-term debt	Long-term debt	873.8		870.7
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:
Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued or outstanding at March 31, 2023 and December 31, 2022		—		—
Common stock - $0.01 par value, 500.0 million shares authorized; 164.4 million shares issued and 163.7 million shares outstanding at March 31, 2023; 163.7 million shares issued and 163.2 million shares outstanding at December 31, 2022		1.6		1.6
Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued or outstanding at March 29, 2024 and December 31, 2023
Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued or outstanding at March 29, 2024 and December 31, 2023
Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued or outstanding at March 29, 2024 and December 31, 2023
Common stock, $0.01 par value,500.0 million shares authorized; 173.8 million shares issued and 171.9 million shares outstanding at March 29, 2024; 173.3 million shares issued and 171.5 million shares outstanding at December 31, 2023
Additional paid-in capital	Additional paid-in capital	3,712.8		3,699.0
Retained earnings	Retained earnings	775.2		731.4
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(210.6)		(225.1)

Total stockholders’ equity	Total stockholders’ equity	4,279.0		4,206.9

Total stockholders’ equity

Total stockholders’ equity
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	6,575.0	$	6,587.0

See the accompanying Notes to the Condensed Consolidated Financial Statements.

ENVISTA HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ and shares in millions, except per share amounts)






		Three Months Ended
		March 31, 2023		April 1, 2022
Sales	Sales	$	627.2	$	631.4
Sales
Sales
Cost of sales
Cost of sales
Cost of sales	Cost of sales	264.5		257.3
Gross profit	Gross profit	362.7		374.1
Gross profit
Gross profit
Operating expenses:
Operating expenses:
Operating expenses:	Operating expenses:
Selling, general and administrative	Selling, general and administrative	266.1		258.2
Selling, general and administrative
Selling, general and administrative
Research and development
Research and development
Research and development	Research and development	24.5		24.4
Operating profit	Operating profit	72.1		91.5
Nonoperating income (expense):
Other income		0.3		0.3
Operating profit
Operating profit
Nonoperating (expense) income:
Nonoperating (expense) income:
Nonoperating (expense) income:
Other income, net
Other income, net
Other income, net
Interest expense, net
Interest expense, net
Interest expense, net	Interest expense, net	(16.7)		(5.9)
Income before income taxes	Income before income taxes	55.7		85.9
Income before income taxes
Income before income taxes
Income tax expense	Income tax expense	11.9		15.5
Income from continuing operations, net of tax		43.8		70.4
Income from discontinued operations, net of tax (Note 3)		—		4.5
Income tax expense
Income tax expense
Net income
Net income
Net income	Net income	$	43.8	$	74.9
Earnings per share:	Earnings per share:
Earnings from continuing operations - basic		$	0.27	$	0.43
Earnings from continuing operations - diluted		$	0.25	$	0.39

Earnings from discontinued operations - basic		$	—	$	0.03
Earnings from discontinued operations - diluted		$	—	$	0.03

Earnings per share:
Earnings per share:
Earnings - basic
Earnings - basic
Earnings - basic	Earnings - basic	$	0.27	$	0.46
Earnings - diluted	Earnings - diluted	$	0.25	$	0.42
Earnings - diluted
Earnings - diluted
Average common stock and common equivalent shares outstanding:
Average common stock and common equivalent shares outstanding:
Average common stock and common equivalent shares outstanding:	Average common stock and common equivalent shares outstanding:
Basic	Basic	163.6		162.2
Basic
Basic
Diluted
Diluted
Diluted	Diluted	177.4		179.8

See the accompanying Notes to the Condensed Consolidated Financial Statements.

ENVISTA HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

($ in millions)

Three Months Ended

March 31, 2023

April 1, 2022

Three Months Ended

March 29, 2024

Net income

43.8

74.9

Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustments

14.8

(59.6)

Cash flow hedge adjustments

—

1.4

Foreign currency translation adjustments

Pension plan adjustments

(0.3)

(0.1)

Total other comprehensive income (loss), net of income taxes

14.5

(58.3)

Comprehensive income

58.3

16.6

Pension plan adjustments

Total other comprehensive (loss) income, net of income taxes

Comprehensive (loss) income

See the accompanying Notes to the Condensed Consolidated Financial Statements.

ENVISTA HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

($ in millions)

Three Months Ended March 31, 2023
Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other
Comprehensive Loss Total
Envista
Equity
Balance, December 31, 2022 $ 1.6 $ 3,699.0 $ 731.4 $ (225.1) $ 4,206.9
Common stock-based award activity — 13.8 — — 13.8
Net income — — 43.8 — 43.8
Other comprehensive income — — — 14.5 14.5
Balance, March 31, 2023 $ 1.6 $ 3,712.8 $ 775.2 $ (210.6) $ 4,279.0


	Three Months Ended March 29, 2024
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Envista Equity












Balance, December 31, 2023	$	1.7	$	3,758.2	$	631.2	$	(217.2)	$	4,173.9
Common stock-based award activity			9.2		—		—		9.2
Net income	—		—		23.6		—		23.6
Other comprehensive loss	—		—		—		(66.4)		(66.4)
Balance, March 29, 2024	$	1.7	$	3,767.4	$	654.8	$	(283.6)	$	4,140.3

Three Months Ended April 1, 2022
Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other
Comprehensive Loss Total
Envista
Equity Noncontrolling Interests
Balance, December 31, 2021 $ 1.6 $ 3,732.6 $ 466.9 $ (143.5) $ 4,057.6 $ 0.4
Cumulative effect of adjustment related to change in accounting principle. See Note 1 — (77.8) 21.4 — (56.4) —
Balance, January 1, 2022 1.6 3,654.8 488.3 (143.5) 4,001.2 0.4
Change in noncontrolling interest — — — — — (0.4)
Common stock-based award activity — 13.1 — — 13.1 —
Net income — — 74.9 — 74.9 —
Other comprehensive loss — — — (58.3) (58.3) —
Balance, April 1, 2022 $ 1.6 $ 3,667.9 $ 563.2 $ (201.8) $ 4,030.9 $ —


	Three Months Ended March 31, 2023
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Envista Equity












Balance, December 31, 2022	$	1.6	$	3,699.0	$	731.4	$	(225.1)	$	4,206.9
Common stock-based award activity	—		13.8		—		—		13.8
Net income	—		—		43.8		—		43.8
Other comprehensive income	—		—		—		14.5		14.5
Balance, March 31, 2023	$	1.6	$	3,712.8	$	775.2	$	(210.6)	$	4,279.0

See the accompanying Notes to the Condensed Consolidated Financial Statements.

ENVISTA HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions)

Three Months Ended

March 31, 2023

April 1, 2022

Cash flows from operating activities:

Net income

43.8

74.9

Noncash items:

Depreciation

8.5

7.8

Amortization

27.9

23.5

Amortization

Allowance for credit losses

2.0

1.7

Stock-based compensation expense

15.0

7.5

Gain on sale of property, plant and equipment

—

(6.0)

Stock-based compensation expense

Restructuring charges

0.1

(1.9)

Restructuring charges

Impairment charges

0.3

3.9

Impairment charges

Amortization of right-of-use assets

6.5

6.4

Amortization of debt discount and issuance costs

1.0

Amortization of debt discount and issuance costs

Change in trade accounts receivable

(8.5)

(16.2)

Change in inventories

(7.1)

(20.3)

Change in inventories

Change in trade accounts payable

(38.1)

(2.5)

Change in prepaid expenses and other assets

1.3

(16.8)

Change in prepaid expenses and other assets

Change in accrued expenses and other liabilities

(41.3)

(51.5)

Change in operating lease liabilities

(8.3)

(8.0)

Change in operating lease liabilities

Net cash provided by operating activities

3.1

3.5

Cash flows from investing activities:

Payments for additions to property, plant and equipment

(17.5)

(19.8)

Proceeds from sale of KaVo treatment unit and instrument business, net

—

30.0

All other investing activities, net

(4.5)

(5.1)

Net cash (used in) provided by investing activities

(22.0)

5.1

All other investing activities, net

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from borrowing

—

0.3

Repayment of borrowing

—

(0.5)

Proceeds from stock option exercises

4.6

13.1

Proceeds from stock option exercises

Tax withholding payment related to net settlement of equity awards

(6.1)

(7.6)

Net cash (used in) provided by financing activities

(1.5)

5.3

Tax withholding payment related to net settlement of equity awards

All other financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

(1.3)

(9.2)

Net change in cash and cash equivalents

(21.7)

4.7

Net change in cash and cash equivalents

Beginning balance of cash and cash equivalents

606.9

1,073.6

Beginning balance of cash and cash equivalents

Ending balance of cash and cash equivalents

585.2

1,078.3

Supplemental data:

Cash paid for interest

14.3

2.8

Cash paid for taxes

6.6

14.1

Cash paid for taxes

ROU assets obtained in exchange for operating lease obligations

7.6

7.1

ROU assets obtained in exchange for operating lease obligations

See the accompanying Notes to the Condensed Consolidated Financial Statements.

ENVISTA HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. BUSINESS AND BASIS OF PRESENTATION

Business Overview

The Company provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, as well as to improve the aesthetics of the human smile. The Company is a worldwide provider of a broad range of dental implants, orthodontic appliances, diagnostic solutions, general dental consumables, equipment and services and is dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity.

The Company operates in two business segments: Specialty Products & Technologies and Equipment & Consumables.

The Company’s Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products. The Company’s Equipment & Consumables segment primarily develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumables; and restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.

Basis of Presentation

All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the financial statements. All significant intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying Condensed Consolidated Financial Statements.

The Condensed Consolidated Financial Statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments and reclassifications to conform to current year presentation) necessary to present fairly the financial position of the Company as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, and its results of operations and cash flows for the three month periods ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~2023. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Consolidated Financial Statements and accompanying notes for the three years ended December 31, ~~2022,~~2023, included in the Annual Report on Form 10-K filed by the Company with the SEC on February ~~16, 2023.~~15, 2024.

~~As discussed in Note 3, Discontinued Operations,~~Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update requires a public business entity to disclose, on ~~December 31, 2021,~~an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the ~~Company sold substantially~~extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of ~~its KaVo dental treatment unit~~refunds received disaggregated by federal, state/local, and ~~instrument business (the "KaVo Treatment Unit~~foreign and ~~Instrument Business"), which was part~~by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. Adoption of the ~~Company’s Equipment~~ASU allows for either the prospective or retrospective application of the amendment and Consumables segment. However, the transfer of assets in certain countries was not executed and closed until 2022 (“Deferred Local Closing”). As a result, the financial results related to the Deferred Local Closing countries were reported as discontinued operations and all segment information and descriptions exclude the activity related to those countriesis effective for ~~the three months ended April 1, 2022. As of~~annual periods beginning after December ~~31, 2022, all Deferred Local Closings were completed and therefore there is no discontinued operations activity reported for the three months ended March 31, 2023.~~

~~Risks and Uncertainties~~

15, 2024, with early adoption permitted. The Company ~~is subject to risks and uncertainties as a result of the novel coronavirus (“COVID-19”) pandemic.~~

~~The extent~~has not yet completed its assessment of the impact of ~~the COVID-19 pandemic~~ASU 2023-09 on the Company remains uncertain and difficult to predict because of the dynamic and evolving nature of the situation. The global impact of the outbreak continues to adversely affect many industries, and different geographies continue to reflect the effects of public health restrictions in various ways. The economic recovery following the impact of the COVID-19 pandemic is only partially underway and has been gradual, uneven and characterized by meaningful dispersion across sectors and regions with uncertainty regarding its ultimate length and trajectory. During the three months ended March 31, 2023, notwithstanding improvement in many markets in which the Company operates due to a return to more normalized business operations, certain markets continued to be adversely impacted by COVID-19.Company’s Condensed Consolidated Financial Statements.

In ~~addition, Russia’s invasion~~November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improving Reportable Segment Disclosures” (Topic 280). The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of ~~Ukraine~~other segment items by reportable segment, and ~~the global response to this invasion, including sanctions imposed~~any additional measures of a segment's profit or loss used by the ~~U.S. and other countries, could have an adverse impact on~~CODM when deciding how to allocate resources. Adoption of the ~~Company’s business, including impacting the Company’s ability~~ASU requires retrospective application to ~~market and sell products~~all prior periods presented in the affected regions, potentially heightening the risk of cyber security attacks, impacting its ability to enforce its intellectual property rights in Russia, creating disruptions in the global supply chain, and by potentially having an adverse impact on the global economy, financial ~~markets, energy markets, currency rates and otherwise.~~

~~Accounting Standards Recently Adopted~~

~~In August 2020, the~~ ~~Financial Accounting Standards Board issued Accounting Standards Update~~ ~~2020-06,~~ ~~“Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40),”~~ (“statements. ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 was2023-07 is effective ~~for public entities~~ for fiscal years beginning after December 15, ~~2021. On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective~~2023, and for fiscal periods after December 15, 2024 for interim periods. Early adoption approach. The cumulative effect of the change was recognized as an adjustment to the opening balance of retained earnings at the date of adoption and resulted in a $75.0 million increase to the carrying value of the convertible notes due 2025, a decrease to additional paid-in capital of $77.8 million, a $21.4 million increase to retained earnings and an $18.6 million decrease to the related net deferred tax liability.

~~NOTE 2. ACQUISITIONS~~

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into new and attractive business areas.is permitted. The Company has not yet completed a number of acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Company’s Condensed Consolidated Financial Statements. Among other things, goodwill arises because the purchase prices for these businesses reflect a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive natureits assessment of the ~~processes by which the Company acquired the businesses, avoidance~~impact of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. For those assets and liabilities that were accounted for on a preliminary basis, the Company may up to 12 months after closing, refine the estimates of fair value and more accurately allocate the purchase price. Only items that existed as of the acquisition date are considered for subsequent adjustment.

~~During the year ended December 31, 2022, the Company completed the following acquisitions which were accounted for under Accounting Standards Codification 805~~ ~~Business Combinations using the acquisition method of accounting:~~

~~Osteogenics Biomedical Inc., Allotech LLC and OBI Biologics, Inc.~~

On July 5, 2022, the Company acquired all of the equity of Osteogenics Biomedical Inc., Allotech LLC and OBI Biologics, Inc. (together "Osteogenics") for total consideration of approximately $128.2 million, subject to certain customary adjustments as provided in the Equity Purchase Agreement dated May 17, 2022. Osteogenics develops innovative regenerative solutions for periodontists, oral and maxillofacial surgeons, and clinicians involved in implant dentistry throughout the world, and is part of the Company’s Specialty Products & Technologies segment. ~~The finalization of the acquisition valuation assessment for Osteogenics may result in a change in the valuation of deferred taxes and goodwill, which could have a material impact~~ASU 2023-07 on the Company’s ~~financial statements.~~

~~Carestream Dental Technology Parent Limited’s Intraoral Scanner Business~~

On April 20, 2022, the Company completed the acquisition of Carestream Dental Technology Parent Limited’s (“Carestream Dental”) intraoral scanner business (the “Intraoral Scanner Business”) for total consideration of $580.3 million, including contingent consideration of $7.5 million, and subject to certain customary adjustments as provided in the Stock and Asset Purchase Agreement dated December 21, 2021 and as subsequently amended by the closing agreement dated as of April 20, 2022 (together, the “IOS Purchase Agreement”). The Intraoral Scanner Business manufactures, markets, sells, commercializes, distributes, services, trains, supports, and maintains operations of intraoral scanners and software, and is part of the Company’s Equipment & Consumables segment. The Company purchased the Intraoral Scanner Business through the acquisition of certain assets and the assumption of certain liabilities as well as the acquisition of all of the equity of certain subsidiaries of Carestream Dental.

~~The following table summarizes the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates ($ in millions):~~

Osteogenics
July 5, 2022 Intraoral Scanner Business
April 20, 2022
Assets acquired:
   Cash $ 2.1 $ 2.7
   Accounts receivable 2.5 0.1
   Inventories 13.3 6.1
   Intangible assets 53.0 129.8
   Property, plant and equipment — 0.3
   Prepaids and Other Current Assets 1.3 —
   Goodwill 77.3 373.1
   Non-current deferred tax asset — 96.0
   Operating lease right-of-use assets 2.6 0.9
   Other long-term assets 4.9 0.2
       Total assets acquired 157.0 609.2
Liabilities assumed:
   Accounts payable (4.1) (0.5)
   Accrued expenses and other liabilities (2.5) (27.9)
   Non-current deferred tax liability (14.3) —
   Other long-term liabilities (5.8) —
   Operating lease liabilities (2.1) (0.5)
       Total liabilities assumed (28.8) (28.9)
Total net assets acquired $ 128.2 $ 580.3

~~The intangible assets acquired consist of trade name, developed technology, and customer relationships. The weighted average amortization period of the acquired intangible assets in the aggregate is~~ 8 ~~and 10 years for the Intraoral Scanner Business and Osteogenics, respectively.~~

The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisitions. Goodwill attributable to the acquisitions has been recorded as a non-current asset and is not amortized, but is subject to review at least on an annual basis for impairment. Goodwill recognized was primarily attributable to expected operating efficiencies and expansion opportunities in the businesses acquired. Goodwill is not deductible for income tax purposes. The pro forma impact of the acquisitions is not presented as the acquisitions were not considered material to the Company's Condensed Consolidated Financial Statements.

~~NOTE 3. DISCONTINUED OPERATIONS~~

On December 31, 2021, the Company sold substantially all of the KaVo Treatment Unit and Instrument Business (the “Divestiture”) to planmeca Verwaltungs Gmbh, Germany (“Planmeca”), pursuant to the master sale and purchase agreement (the “Purchase Agreement”) among the Company, Planmeca, and Planmeca Oy, as guarantor. However, the transfer of assets for Deferred Local Closing countries was not executed and closed until 2022. As of December 31, 2022, all Deferred Local Closings were completed and the Company received total net cash consideration of $386.4 million in accordance with the terms of the Purchase Agreement.

For the three months ended April 1, 2022, the Company recognized an earnout payment of $30.0 million. As all Deferred Local Closings were completed as of December 31, 2022, there are no discontinued operations reported for the three months ended March 31, 2023.

The operating results of the Divestiture for the three months ended April 1, 2022 are reflected in the Condensed Consolidated Statements of Operations within income from discontinued operations, net of tax as follows ($ in millions):

~~Three Months Ended~~

~~April 1, 2022~~

~~Sales~~

~~6.9~~

~~Cost of sales~~

~~5.9~~

~~Gross profit~~

~~1.0~~

~~Operating expenses:~~

~~Selling, general and administrative~~

~~1.1~~

~~Research and development~~

—

~~Operating loss~~

~~(0.1)~~

~~Income tax expense~~

—

~~Loss from discontinued operations~~

~~(0.1)~~

~~Gain on sale of discontinued operations, net of tax~~

~~4.6~~

~~Net income from discontinued operations~~

~~4.5~~

NOTE 4.2. CREDIT LOSSES

The allowance for credit losses is a valuation account deducted from accounts receivable to present the net amount expected to be collected. Accounts receivable are charged off against the allowance when management believes the uncollectibility of an accounts receivable balance is confirmed.

Management estimates the adequacy of the allowance by using relevant available information, from internal and external sources, relating to past events, current conditions and forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses and is adjusted as necessary using the relevant information available. The allowance for credit losses is measured on a collective basis when similar risk characteristics exist. The Company has identified one portfolio segment based on the following risk characteristics: geographic regions, product lines, default rates and customer specific factors.

The factors used by management in its credit loss analysis are inherently subject to uncertainty. If actual results are not consistent with management’s estimates and assumptions, the allowance for credit losses may be overstated or understated and a charge or credit to net income (loss) may be required.

The rollforward of the allowance for credit losses is summarized as follows ($ in millions):


Balance at December 31, ~~2022~~2023	$	~~16.2~~17.3
Foreign currency translation	~~0.2~~ (0.3)
Provision for credit losses	~~2.0~~4.5
Write-offs charged against the allowance	~~(1.8)~~(0.8)
Recoveries	~~(0.6)~~(0.9)
Balance at March ~~31, 2023~~29, 2024	$	~~16.0~~19.8

NOTE 5.3. INVENTORIES

The classes of inventory are summarized as follows ($ in millions):


		March 31, 2023		December 31, 2022
	March 29, 2024					March 29, 2024	December 31, 2023
Finished goods	Finished goods	$	234.6	$	229.2
Work in process	Work in process	24.5		23.9
Raw materials	Raw materials	105.7		103.4
Reserve for inventory obsolescence	Reserve for inventory obsolescence	(57.6)		(55.7)
Total	Total	$	307.2	$	300.8

NOTE 6.4. PROPERTY, PLANT AND EQUIPMENT

The classes of property, plant and equipment are summarized as follows ($ in millions):


		March 31, 2023		December 31, 2022
	March 29, 2024					March 29, 2024	December 31, 2023
Land and improvements	Land and improvements	$	10.0	$	10.0
Buildings and improvements	Buildings and improvements	158.4		154.5
Machinery, equipment and other assets	Machinery, equipment and other assets	384.9		370.2
Construction in progress	Construction in progress	63.9		71.2
Gross property, plant and equipment	Gross property, plant and equipment	617.2		605.9
Less: accumulated depreciation	Less: accumulated depreciation	(319.6)		(312.3)
Property, plant and equipment, net	Property, plant and equipment, net	$	297.6	$	293.6

NOTE 7.5. GOODWILL

The following is a rollforward of the Company’s goodwill by segment ($ in millions):

Specialty Products & Technologies Equipment & Consumables Total
Balance at December 31, 2022 $ 2,047.8 $ 1,448.8 $ 3,496.6
Foreign currency translation 4.6 5.2 9.8
Balance at March 31, 2023 $ 2,052.4 $ 1,454.0 $ 3,506.4


	Specialty products & Technologies						Equipment & Consumables						Total
	Gross		Accumulated Impairment Charges		Total		Gross		Accumulated Impairment Charges		Total		Gross		Accumulated Impairment Charges		Total

Balance at December 31, 2023	$	2,007.0	$	(134.5)	$	1,872.5	$	1,497.5	$	(77.8)	$	1,419.7	$	3,504.5	$	(212.3)	$	3,292.2
Foreign currency translation	(26.2)		—		(26.2)		(6.2)		—		(6.2)		(32.4)		—		(32.4)
Balance at March 29, 2024	$	1,980.8	$	(134.5)	$	1,846.3	$	1,491.3	$	(77.8)	$	1,413.5	$	3,472.1	$	(212.3)	$	3,259.8

NOTE 8.6. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities were as follows ($ in millions):


		March 31, 2023				December 31, 2022
		Current		Noncurrent		Current		Noncurrent
	March 29, 2024										March 29, 2024			December 31, 2023
	Current									Current		Noncurrent	Current		Noncurrent
Compensation and benefits	Compensation and benefits	$	107.1	$	19.7	$	148.0	$	17.5
Sales and product allowances	Sales and product allowances	58.2		1.4		85.1		1.3
Contract liabilities	Contract liabilities	94.1		8.4		78.9		8.6
Taxes, income and other	Taxes, income and other	47.4		68.2		42.1		68.6
Restructuring-related employee severance, benefits and other		7.9		—		18.9		—
Restructuring-employee severance, benefits and other
Pension benefits	Pension benefits	5.6		16.1		5.6		17.5
Loss contingencies	Loss contingencies	11.1		25.7		8.1		27.6

Other	Other	92.2		11.8		84.7		10.2
Total	Total	$	423.6	$	151.3	$	471.4	$	151.3

NOTE 9.7. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. On January 17, 2023, the Company entered into a ~~two-year~~two-year cross-currency swap derivative contract, with a notional value of $150.0 ~~million, with respect to its $650.0 million senior term loan facility.~~million. This contract effectively converts a portion of the ~~$650.0 million~~Company’s U.S. dollar denominated senior term loan ~~facility~~facilities to ~~an obligation~~obligations denominated in euros and partially offsets the impact of changes in currency rates on foreign currency denominated net investments. This instrument matures on January 17, 2025.

The Company also has foreign currency denominated long-term debt ~~in the amount~~consisting of ~~€208.0 million. This~~a senior euro term loan facility. The senior euro term loan facility represents a partial hedge of the Company’s net investment in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro. The senior euro term loan facility is designated and qualifies as a non-derivative hedging instrument. ~~The senior euro term loan facility matures in September 2024.~~

Refer to Note 1311 for further discussion of the ~~senior euro term loan facility.~~Company’s debt and credit facilities.

The change in the fair value of the cross-currency swap instrument and the foreign currency translation of the senior euro term loan ~~facility~~facilities are recorded in accumulated other comprehensive loss in equity in the accompanying Condensed Consolidated Balance Sheets, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive loss as reflected in Note ~~14.~~12.

The Company has also historically used interest rate swap derivative contracts to reduce its variability of cash flows related to interest payments with respect to its senior term and senior euro term loan facilities. The interest rate swap contracts exchanged interest payments based on variable rates for interest payments based on fixed rates. The changes in the fair value of these instruments were recorded in accumulated other comprehensive loss in equity (see Note ~~14)~~12). The ~~Company did not have any outstanding interest rate swap contracts as of March 31, 2023.~~

~~Any ineffective portions of the above net investment and cash flow hedges were reclassified from accumulated other comprehensive loss into income during the period of change. Additionally, the~~ interest income or expense from the cross-currency and interest rate swaps ~~were~~was recorded in interest expense, net in the Company’s Condensed Consolidated Statements of Operations consistent with the classification of interest expense attributable to the underlying debt. The Company did not have any outstanding interest rate swap contracts as of March 29, 2024.

The following table summarizes the notional values as of March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ and pretax impact of changes in the fair values of instruments designated as net investment ~~and cash flow~~ hedges in accumulated other comprehensive loss (“OCI”) for the three months ended March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ ($ in millions):



	Notional Amount		Gain Recognized in OCI
Three Months Ended March 29, 2024
Foreign currency denominated debt	$	377.8	$	8.6
Foreign currency contract	150.0		3.3

Total	$	527.8	$	11.9

Notional Amount Loss Recognized in OCI
Three Months Ended March 31, 2023
Foreign currency denominated debt $ 225.5 $ (2.8)
Foreign currency contracts 150.0 —
Total $ 375.5 $ (2.8)

Notional Amount Gain Recognized in OCI
Three Months Ended April 1, 2022
Foreign currency denominated debt $ 229.7 $ 6.8
Foreign currency contracts 650.0 17.9
Interest rate contracts 250.0 1.8
Total $ 1,129.7 $ 26.5



Three Months Ended March 31, 2023	Notional Amount		Loss Recognized in OCI

Foreign currency denominated debt	$	225.5	$	(2.8)
Foreign currency contract	150.0		—

Total	$	375.5	$	(2.8)

The Company did not reclassify any deferred gains or losses related to its net investment ~~and cash flow hedges~~hedge from accumulated other comprehensive loss to income during the three months ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~2023. In addition, the Company did not have any ineffectiveness related to its net investment hedge and ~~cash flow hedges~~therefore did not reclassify any portion of the above net investment hedge from accumulated other comprehensive loss into income during the three months ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~2023. The cash inflows and outflows associated with the Company’s derivative ~~contracts~~contract designated as a net investment ~~hedges are~~hedge is classified in investing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

The Company’s derivative ~~instruments,~~instrument, as well as its non-derivative debt ~~instruments~~instrument designated and qualifying as net investment hedges, were classified in the Company’s Condensed Consolidated Balance Sheets as follows ($ in millions):

March 31, 2023

December 31, 2022

March 29, 2024

December 31, 2023

Derivative liabilities:

Accrued expenses and other liabilities

—

Accrued expenses and other liabilities

Other long-term liabilities

Nonderivative hedging instruments:

Long-term debt

225.5

222.7

Long-term debt

Amounts related to the Company’s ~~derivatives~~derivative expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months ~~are~~is not significant.

NOTE ~~10.~~8. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation; and Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):


		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
March 31, 2023
	Quoted Prices in Active Market (Level 1)									Quoted Prices in Active Market (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
March 29, 2024:

Liabilities:	Liabilities:

Cross-currency swap derivative contracts		$	—	$	—	$	—	$	—

Liabilities:

Liabilities:

Cross-currency swap derivative contract

Cross-currency swap derivative contract

Cross-currency swap derivative contract
Deferred compensation plans	Deferred compensation plans	$	—	$	18.0	$	—	$	18.0
Contingent consideration	Contingent consideration	$	—	$	—	$	6.0	$	6.0

December 31, 2022:
December 31, 2023:
December 31, 2023:
December 31, 2023:
Liabilities:	Liabilities:
Liabilities:
Liabilities:
Cross-currency swap derivative contract
Cross-currency swap derivative contract
Cross-currency swap derivative contract
Deferred compensation plans	Deferred compensation plans	$	—	$	15.8	$	—	$	15.8
Contingent consideration	Contingent consideration	$	—	$	—	$	6.0	$	6.0

Derivative Instruments

The cross-currency swap derivative contract was classified as Level 2 in the fair value hierarchy as it is measured using the income approach with the relevant foreign currency current exchange rates and forward curves as inputs. Refer to Note 97 for additional information.

Deferred Compensation Plans

Certain management employees of the Company participate in nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis. All amounts deferred under this plan are unfunded, unsecured obligations and are presented as a component of the Company’s compensation and benefits accrual included in accrued expenses in the accompanying Condensed Consolidated Balance Sheets (refer to Note 8)6). Participants may choose among alternative earnings rates for the amounts they defer, which are primarily based on investment options within the Company’s 401(k) program. Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates on investment options within the Company’s 401(k) program. Amounts voluntarily deferred by employees into the Company stock fund and amounts contributed to participant accounts by the Company are deemed invested in the Company’s common stock and future distributions of such contributions will be made solely in shares of Company common stock, and therefore are not reflected in the above amounts.

Contingent Consideration

Contingent consideration represents a cash hold back intended to be used for certain liabilities related to the Company’s ~~acquisition of the Intraoral Scanner Business (as further discussed in Note 2).~~acquisitions. Contingent consideration was classified as Level 3 in the fair value hierarchy as the estimated fair value was measured using a probability weighted discounted cash flow model.

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments were as follows ($ in millions):

March 31, 2023 December 31, 2022
Carrying Amount Fair Value Carrying Amount Fair Value
Liabilities:
Contingent consideration $ 6.0 $ 6.0 $ 6.0 $ 6.0
Cross-currency swap derivative contracts $ — $ — $ — $ —
Convertible senior notes due 2025 $ 510.8 $ 1,033.5 $ 510.0 $ 873.0
Long-term debt $ 873.8 $ 873.8 $ 870.7 $ 870.7


	March 29, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value



Liabilities:
Contingent consideration	$	3.8	$	3.8	$	3.8	$	3.8

Cross-currency swap derivative contract	$	—	$	—	$	3.3	$	3.3
Convertible senior notes due 2028	$	487.6	$	441.8	$	486.9	$	455.7
Convertible senior notes due 2025	$	115.5	$	135.8	$	115.3	$	145.1
Other debt	$	902.9	$	902.9	$	911.2	$	911.2

The fair value of long-term debt approximates the carrying value as these borrowings are based on variable market rates. The fair value of the convertible senior notes due 2028 and convertible senior notes due 2025 ~~was~~were determined based on the quoted bid price of the convertible senior notes in an over-the-counter market on March ~~31, 2023~~29, 2024 and December 31, ~~2022.~~2023. The convertible senior notes are considered as Level 2 of the fair value hierarchy. The fair values of cash and cash equivalents, which consist primarily of money market funds, time and demand deposits, trade accounts receivable, net and trade accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.

NOTE ~~11.~~9. WARRANTY

The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

~~The following is a rollforward of~~ At March 29, 2024 and December 31, 2023, the ~~Company’s accrued~~ warranty liability ~~($ in millions):~~



~~Balance at December 31, 2022~~	$	~~9.2~~
~~Accruals for warranties issued during the year~~	~~3.6~~
~~Settlements made~~	~~(3.0)~~

~~Effect of foreign currency translation~~	~~0.1~~
~~Balance at March 31, 2023~~	$	~~9.9~~

was $8.0 million and $9.0 million, respectively.

NOTE ~~12.~~10. LITIGATION AND CONTINGENCIES

The Company records accruals for loss contingencies associated with legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated.

~~The~~For litigation matters that the Company has determined ~~that the liabilities associated with certain litigation matters~~ are both probable and can be reasonably estimated, ~~and~~the Company has accrued ~~$36.8~~$37.5 million and ~~$35.7~~$38.0 million as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, respectively, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) 450-20-25. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; or there are numerous parties involved. To the extent adverse verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated. In the Company's opinion, based on its examination of these matters, its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in the Company's Condensed Consolidated Balance Sheets, is not expected to have a material adverse effect on the Company's financial position. However, the resolution of, or increase in accruals for one or more of these matters in any reporting period may have a material adverse effect on the Company’s results of operations and cash flows for that period.

NOTE ~~13.~~11. DEBT AND CREDIT FACILITIES

The components of the Company’s debt were as follows, net of debt discount and debt issuance costs ($ in millions):


	March 29, 2024					March 29, 2024	December 31, 2023
Senior term loan facility due 2028 (the “2028 Term Loan”)
Senior euro term loan facility due 2028 (the “2028 Euro Term Loan”)
Convertible senior notes due 2028 (the “2028 Convertible Notes”)
Convertible senior notes due 2025 (the “2025 Convertible Notes”)

		March 31, 2023		December 31, 2022
Senior term loan facility due 2024 (the “Term Loan”)		$	648.6	$	648.3
Senior euro term loan facility due 2024 (the “Euro Term Loan”)		225.2		222.4
Convertible senior notes due 2025		510.8		510.0
Total debt

Total debt

Total debt	Total debt	1,384.6		1,380.7
Less: current portion	Less: current portion	(510.8)		(510.0)
Long-term debt	Long-term debt	$	873.8	$	870.7

Credit Facilities

On August 31, 2023, the Company entered into a second amended and restated credit agreement (the “Second Amended Credit Agreement”), which amends and restates the Company’s credit agreement dated June 15, 2021. The ~~Company maintains~~amended and restated credit agreement dated June 15, 2021, consisted of a $650.0 million Term Loan and a €208.0 million Euro Term ~~Loan.~~Loan (collectively the “2024 Term Loans”), which were due in 2024. Additionally, the ~~Company maintains~~amended and restated credit agreement dated June 15, 2021 included a revolving credit facility ~~(together with the Term Loan and the Euro Term Loan, the “Senior Credit Facilities”),~~ with an aggregate available borrowing capacity of $750.0 million and a $20.0 million sublimit for the issuance of standby letters of credit.

Under the Second Amended Credit Agreement, the Company entered into the 2028 Term Loan for $530.0 million and the 2028 Euro Term Loan for €350.0 million (collectively the “2028 Term Loans”). The Second Amended Credit Agreement also includes a revolving credit facility (together with the 2028 Term Loans, the “Senior Credit Facilities”) with an aggregate available borrowing capacity of $750.0 million and a $30.0 million sublimit for the issuance of standby letters of credit that can be used for working capital and other general corporate purposes. The Company may request further increases to the revolving credit facility inby an ~~aggregate~~ amount ~~not to exceed $350.0~~that is the greater of 100% of Consolidated EBITDA or $525.0 million. As of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023 there were no borrowings outstanding under ~~the~~this revolving credit facility. The Senior Credit Facilities mature on ~~September 20, 2024.~~August 31, 2028, and are subject to an earlier maturity date of 91 days prior to the maturity date of the 2028 Convertible Notes, if more than $250.0 million of such notes are outstanding at that time.

The proceeds from the 2028 Term Loans were used to pay outstanding balances of the 2024 Term Loans. The Company paid fees aggregating approximately $5.2 million in connection with the Second Amended Credit Agreement.

Under the Senior Credit Facilities, borrowings bear interest as follows: (1) ~~Eurocurrency Rate~~Term SOFR Loans (as defined in the Second Amended Credit Agreement) bear interest at a variable rate ~~equal to the London inter-bank offered~~on a forward-looking Secured Overnight Financing Rate (“~~LIBOR”~~SOFR”) term rate plus 0.10% credit spread adjustment plus a margin of between ~~0.785%~~0.910% and 1.625%, depending on the Company’s Consolidated Leverage Ratio (as defined in the Second Amended Credit Agreement) as of the last day of the immediately preceding fiscal quarter; and (2) Base Rate Loans (as defined in the Second Amended Credit Agreement) bear interest at a variable rate equal to (a) the highest of (i) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 0.50%, (ii) Bank of America’s “prime rate” as publicly announced from time to time, ~~and~~ (iii) the ~~Eurocurrency Rate~~Term SOFR (as defined in the Second Amended Credit Agreement) plus 1.0% and (iv) 1.0%, plus ~~(b)~~ a margin of between ~~0.00%~~0.0% and 0.625%, depending on the Company’s Consolidated Leverage Ratio as of the last day of the immediately preceding fiscal quarter. In no event will ~~Eurocurrency Rate~~Term SOFR Loans or Base Rate Loans bear interest at a rate lower than 0.0%. ~~In the event of LIBOR cessation, the Secured Overnight Financing Rate will be used as a replacement rate.~~ In addition, the Company is required to pay a per annum facility fee of between 0.09% and 0.225% depending on the Company’s Consolidated Leverage Ratio as of the last day of the immediately preceding fiscal quarter and based on the aggregate commitments under the revolving credit facility, whether drawn or not.

The interest rates for borrowings under the 2028 Term Loan were ~~6.41%~~6.65% and ~~5.98%~~6.70% as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, respectively. The interest rates for borrowings under the 2028 Euro Term Loan were ~~4.09%~~4.98% and ~~3.28%~~5.00% as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, respectively. Interest is payable ~~quarterly~~monthly for ~~both~~ the ~~Term and Euro~~2028 Term Loans. The Company is required to maintain a Consolidated Leverage Ratio of ~~3.75~~4.00 to 1.00 or less and includes a provision that the maximum Consolidated Leverage Ratio will be increased to ~~4.25~~4.50 to 1.00 for the ~~four~~three consecutive full fiscal quarters immediately following the consummation of any acquisition by the Company or any subsidiary of the Company in which the purchase price exceeds $100.0 million. The Company is also required to maintain a Consolidated Interest Coverage Ratio (as defined in the Second Amended Credit Agreement) of at least 3.00 to 1.00. The Company is subject to customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants, including covenants that, among other things, limit or restrict the Company’s and/or the Company’s ~~subsidiaries~~subsidiaries’ ability, subject to certain exceptions and qualifications, to incur liens or indebtedness, merge, consolidate or sell or otherwise transfer assets, make dividends or distributions, enter into transactions with the Company’s affiliates and use proceeds of the debt financing for other than permitted uses. Additionally, upon the occurrence and during the continuance of an event of default, the lenders may declare the outstanding advances and all other obligations immediately due and payable. The Company was in compliance with all of its debt covenants as of March ~~31, 2023.~~29, 2024.

2028 Convertible ~~Senior~~ Notes ~~(the “Notes”)~~

On ~~May 21, 2020,~~August 10, 2023, the Company issued the 2028 Convertible Notes due on ~~June 1, 2025,~~August 15, 2028, unless earlier repurchased, redeemed or converted. The aggregate principal amount, which includes the initial purchasers’ exercise in full of their option to purchase an additional ~~$67.5~~$65.2 million principal amount, ~~of the Notes,~~ was ~~$517.5~~$500.2 million. The net proceeds from the issuance, after deducting purchasers’ discounts and estimated offering expenses, were ~~$502.6~~$485.9 million.

The ~~Company used part of the net proceeds to pay for the capped call transactions (“Capped Calls”) as further described below. The~~2028 Convertible Notes will accrue interest at a rate of ~~2.375%~~1.75% per annum, payable semi-annually in arrears on ~~June 1~~February 15 and ~~December 1~~August 15 of each year. The 2028 Convertible Notes have an initial conversion rate of ~~47.5862~~21.5942 shares of the Company’s common stock per $1,000 principal amount, ~~of Notes,~~ which is equivalent to an initial conversion price of approximately ~~$21.01~~$46.31 per share of the Company’s common stock and is subject to adjustment upon the occurrence of specified events. The 2028 Convertible Notes are governed by an indenture dated as of ~~May 21, 2020~~August 10, 2023 (the “Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The Indenture does not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness or the issuance or repurchase of the Company’s securities by the Company.

The 2028 Convertible Notes are ~~the Company’s~~ senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2028 Convertible Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

Holders of the 2028 Convertible Notes may convert at any time on or after February 15, 2028 until the close of business on the second scheduled trading day immediately before the maturity date. Holders will also have the right to convert prior to February 15, 2028, but only upon the occurrence of specified events. The Company will settle any convertible note conversions through a combination settlement by satisfying the principal amount outstanding with cash and any convertible note conversion value in excess of the principal amount in cash or shares of the Company’s common stock or any combination thereof. If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of their 2028 Convertible Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date, the Company would increase the conversion rate for a holder who elects to convert in connection with such an event in certain circumstances. As of March 29, 2024, none of the conditions permitting early conversion by holders had been met, therefore, the 2028 Convertible Notes are classified as long-term debt.

The 2028 Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after August 17, 2026 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount to be redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any 2028 Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that 2028 Convertible Note, in which case the conversion rate applicable to the conversion will be increased in certain circumstances if it is converted after it is called for redemption.

The 2028 Convertible Notes are accounted for in accordance with ASC 470 “Debt” and ASC 815 “Derivatives and Hedging.” The Company has evaluated all the embedded conversion options contained in the 2028 Convertible Notes to determine if there are embedded features that require bifurcation as a derivative as required by U.S. GAAP. Based on the Company’s analysis, it accounts for the 2028 Convertible Notes as single units of accounting, a liability, because the Company concluded that the conversion features do not require bifurcation as a derivative.

2025 Convertible Notes

On May 21, 2020, the Company issued the 2025 Convertible Notes due on June 1, 2025, unless earlier repurchased, redeemed or converted. The aggregate principal amount, which includes the initial purchasers’ exercise in full of their option to purchase an additional $67.5 million principal amount was $517.5 million. The net proceeds from the issuance, after deducting purchasers’ discounts and estimated offering expenses, were $502.6 million. The Company used part of the net proceeds to pay for the capped call transactions (“Capped Calls”) as further described below.

On August 10, 2023, the Company entered into exchange agreements with a limited number of holders of the 2025 Convertible Notes to exchange $401.2 million principal amount of the 2025 Convertible Notes for aggregate consideration which consisted of approximately $403.0 million in cash, which included accrued interest, and approximately 8.4 million shares of the Company’s common stock (the “Notes Exchanges”).

The 2025 Convertible Notes accrue interest at a rate of 2.375% per annum, payable semi-annually in arrears on June 1 and December 1 of each year. The 2025 Convertible Notes have an initial conversion rate of 47.5862 shares of the Company’s common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $21.01 per share of the Company’s common stock and is subject to adjustment upon the occurrence of specified events. The 2025 Convertible Notes are governed by an indenture dated as of May 21, 2020 (the “2025 Convertible Note Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The 2025 Convertible Note Indenture does not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness or the issuance or repurchase of the Company’s securities by the Company.

The 2025 Convertible Notes are senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2025 Convertible Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

Holders may convert at any time on or after December 2, 2024, until the close of business on the second scheduled trading day preceding the maturity date.Holders ~~of the Notes~~ will also have the right to convert ~~the Notes~~ prior to December 2, 2024, but only upon the occurrence of specified events. ~~In December 2021, the~~The Company ~~made the irrevocable election to~~will settle ~~all Notes~~any convertible note conversions through a combination settlement by satisfying the principal amount outstanding with cash and any ~~Notes~~convertible note conversion value in excess of the principal amount in cash or shares of the Company’s common stock or aany combination ~~of both.~~thereof. If a fundamental change occurs prior to the maturity date, holders ~~of the Notes~~ may require the Company to repurchase all or a portion of their 2025 Convertible Notes for cash at a repurchase price equal to 100.0% of the principal amount plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date, the Company would increase the conversion rate for a holder who elects to convert ~~its Notes~~ in connection with such an event in certain circumstances. As of March 31, 2023 and December 31, 2022, the stock price exceeded 130% of the conversion price of $21.01 in 20 days of the final 30 trading days ended March 31, 2023 and December 31, 2022, which satisfied one of the conditions permitting early conversion by holders of the Notes, therefore, theThe 2025 Convertible Notes are classified as short-term ~~debt.~~debt as of March 29, 2024 and December 31, 2023, as holders may convert at any time after December 2, 2024.

The 2025 Convertible Notes ~~will be~~are redeemable, in whole or in part, at the Company’s option at any time, ~~and from time to time, on or after June 1, 2023 and~~ on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal ~~amount of the Notes~~amounts to be redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130.0% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any 2025 Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” ~~(as~~, as defined in the ~~Indenture) with respect to that~~2025 Convertible Note Indenture, in which case the conversion rate applicable to the conversion ~~of that Note~~ will be increased in certain circumstances if it is converted after it is called for redemption.

The following table sets forth total interest expense recognized related to ~~the Notes~~convertible notes ($ in millions):

Three Months Ended
March 31, 2023 April 1, 2022
Contractual interest expense $ 3.1 $ 3.1
Amortization of debt issuance costs 0.7 0.7
Total interest expense $ 3.8 $ 3.8


	Three Months Ended
	March 29, 2024		March 31, 2023
Contractual interest expense:
2028 Convertible Notes	$	2.2	$	—
2025 Convertible Notes	0.7		3.1
Amortization of debt issuance costs:
2028 Convertible Notes	0.7		—
2025 Convertible Notes	0.2		0.7
Total interest expense	$	3.8	$	3.8

For the three months ended March 29, 2024 and March 31, 2023, ~~and April 1, 2022,~~ the debt issuance costs were amortized using an annual effective interest rate of 2.4% and 3.0% ~~to interest expense over~~for the ~~term of~~2028 Convertible Notes and the ~~Notes.~~2025 Convertible Notes, respectively.

As of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, the if-converted value of the 2025 Convertible Notes exceeded the outstanding principal amount by ~~$489.2~~$2.0 million and ~~$311.7~~$16.9 million, respectively. As of March 29, 2024 and December 31, 2023, the if-converted value of the 2028 Convertible Notes did not exceed the outstanding principal.

Debt Issuance Costs

The remaining unamortized debt issuance costs for ~~the Convertible Senior Notes, Term Loan and Euro Term Loan~~debt outstanding were as follows ($ in millions):

March 31, 2023 December 31, 2022
Convertible Senior Notes $ 6.7 $ 7.5
Term Loan 1.4 1.7
Euro Term Loan 0.3 0.3
$ 8.4 $ 9.5



	March 29, 2024		December 31, 2023
2028 Convertible Notes	$	12.6	$	13.3
2025 Convertible Notes	0.8		1.0
2028 Term Loan	4.0		4.2
2028 Euro Term Loan	0.9		1.0
	$	18.3	$	19.5

The above unamortized debt issuance costs have been netted against their respective aggregate principal amounts of the related debt and are being amortized to interest expense over the term of the respective debt.

Capped Call Transactions

In connection with the offering of the 2025 Convertible Notes, the Company entered into Capped Calls with certain counterparties. The Capped Calls ~~each~~ have an initial strike price of approximately $21.01 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2025 Convertible Notes. The Capped Calls have initial cap prices of $23.79 per share, subject to certain adjustments. ~~The Capped Calls cover, subject to anti-dilution adjustments, 2.9 million shares of the Company's common stock.~~ The Capped Calls are generally intended to reduce or offset the potential dilution from shares of common stock issued upon any conversion of the 2025 Convertible Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. In connection with the Notes Exchanges as discussed above, the Company completed a partial unwind of the Capped Calls.

As the Capped Call transactions are considered indexed to the Company's own stock and are considered equity classified, they are recorded in equity and are not accounted for as derivatives. The cost of $20.7 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital.

NOTE ~~14.~~12. ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component are summarized below ($ in millions).

Foreign Currency Translation Adjustments Unrealized Pension Costs Total Accumulated Other Comprehensive Loss
Three Months Ended March 31, 2023
Balance, December 31, 2022 $ (240.5) $ 15.4 $ (225.1)
Other comprehensive loss before reclassifications:
Increase (decrease) 14.1 — 14.1
Income tax impact 0.7 — 0.7
Other comprehensive income (loss) before reclassifications, net of income taxes 14.8 — 14.8
Amounts reclassified from accumulated other comprehensive loss:
Increase — (0.4) (0.4)
Income tax impact — 0.1 0.1
Amounts reclassified from accumulated other comprehensive loss, net of income taxes — (0.3) (0.3)
Net current period other comprehensive income (loss), net of income taxes 14.8 (0.3) 14.5
Balance, March 31, 2023 $ (225.7) $ 15.1 $ (210.6)

Foreign Currency Translation Adjustments Unrealized Loss on Cash Flow Hedges Unrealized Pension Costs Total Accumulated Other Comprehensive Loss
Three Months Ended April 1, 2022
Balance, December 31, 2021 $ (139.6) $ (1.7) $ (2.2) $ (143.5)
Other comprehensive (loss) income before reclassifications:
(Decrease) increase (53.8) 1.8 — (52.0)
Income tax impact (5.8) (0.4) — (6.2)
Other comprehensive (loss) income before reclassifications, net of income taxes (59.6) 1.4 — (58.2)
Amounts reclassified from accumulated other comprehensive loss:
Increase — — (0.2) (0.2)
Income tax impact — — 0.1 0.1
Amounts reclassified from accumulated other comprehensive loss, net of income taxes — — (0.1) (0.1)
Net current period other comprehensive (loss) income, net of income taxes (59.6) 1.4 (0.1) (58.3)
Balance, April 1, 2022 $ (199.2) $ (0.3) $ (2.3) $ (201.8)


	Foreign Currency Translation Adjustments		Unrealized Pension Costs		Total Accumulated Other Comprehensive Loss
Three Months Ended March 29, 2024
Balance, December 31, 2023	$	(223.7)	$	6.5	$	(217.2)
Other comprehensive loss before reclassifications:
Decrease	(63.3)		—		(63.3)
Income tax impact	(2.9)		—		(2.9)
Other comprehensive loss before reclassifications, net of income taxes	(66.2)		—		(66.2)
Amounts reclassified from accumulated other comprehensive loss:
Decrease	—		(0.2)		(0.2)
Income tax impact	—		—		—
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	—		(0.2)		(0.2)
Net current period other comprehensive loss, net of income taxes	(66.2)		(0.2)		(66.4)
Balance, March 29, 2024	$	(289.9)	$	6.3	$	(283.6)

1816


	Foreign Currency Translation Adjustments		Unrealized Pension Costs		Total Accumulated Other Comprehensive Loss
Three Months Ended March 31, 2023
Balance, December 31, 2022	$	(240.5)	$	15.4	$	(225.1)
Other comprehensive loss before reclassifications:
Increase	14.1		—		14.1
Income tax impact	0.7		—		0.7
Other comprehensive loss before reclassifications, net of income taxes	14.8		—		14.8
Amounts reclassified from accumulated other comprehensive loss:
Decrease	—		(0.4)		(0.4)
Income tax impact	—		0.1		0.1
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	—		(0.3)		(0.3)
Net current period other comprehensive loss, net of income taxes	14.8		(0.3)		14.5
Balance, March 31, 2023	$	(225.7)	$	15.1	$	(210.6)

NOTE ~~15.~~13. REVENUE

The following table presents the Company’s revenues disaggregated by geographical region for the three months ended March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenues. The Company has historically defined emerging markets as developing markets of the world ~~which prior to the COVID-19 pandemic, experienced~~experiencing extended periods of accelerated growth in gross domestic product and infrastructure, including Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan and Australia). The Company defines developed markets as all markets of the world that are not emerging markets.


		Three Months Ended March 31, 2023
		Specialty Products & Technologies		Equipment & Consumables		Total
				Three Months Ended March 29, 2024
				Three Months Ended March 29, 2024
				Three Months Ended March 29, 2024
								Specialty Products & Technologies	Specialty Products & Technologies	Equipment & Consumables	Total
Geographical region:	Geographical region:
North America
North America
North America	North America	$	185.3	$	139.4	$	324.7
Western Europe	Western Europe	117.0		32.1		149.1
Other developed markets	Other developed markets	24.0		8.6		32.6
Emerging markets	Emerging markets	83.7		37.1		120.8
Total	Total	$	410.0	$	217.2	$	627.2

Three Months Ended April 1, 2022

Specialty Products & Technologies

Equipment & Consumables

Total

Three Months Ended March 31, 2023

Specialty Products & Technologies

Geographical region:

North America

179.3

156.3

335.6

North America

Western Europe

106.3

32.0

138.3

Other developed markets

24.4

10.3

34.7

Other developed markets

Emerging markets

87.1

35.7

122.8

Total

397.1

234.3

631.4

Total

~~Sales by Major Product Group:~~

Three Months Ended
($ in millions) March 31, 2023 April 1, 2022
Consumables $ 535.5 $ 529.9
Equipment 91.7 101.5
Total $ 627.2 $ 631.4

Consumable products include implants, regenerative products, prosthetics, orthodontic brackets, aligners and lab products from our Specialty Products & Technologies business segment and traditional consumables such as bonding agents and cements, impression materials, infection prevention products and restorative products from the Company’s Equipment & Consumables business segment. The Company’s equipment products include digital imaging systems, software and other visualization and magnification systems.

Remaining Performance Obligations

ASC 606 requires disclosure of remaining performance obligations that represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include noncancelable purchase orders, extended warranty and service agreements and do not include revenue from contracts with customers with an original term of one year or less.

As of March ~~31, 2023,~~29, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$62.3~~$87.3 million and the Company expects to recognize revenue on the majority of this amount over the next 12 months.

Contract Liabilities

The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. These contract liabilities are classified as either current or long-term in the Condensed Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, the contract liabilities were ~~$102.5~~$124.0 million and ~~$87.5~~$114.8 million, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. Revenue recognized during the three months ended March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ that was included in the contract liability balance at December 31, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$32.9~~$38.7 million and ~~$24.8~~$32.9 million, respectively.

Significant Customers

Sales to the Company’s largest customer were 10% of sales for both the three months ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~

~~Seasonality~~

Based on historical experience, the Company generally has more sales in the second half of the calendar year than in the first half of the calendar year, with the first quarter typically having the lowest sales of the year. Based on historical customer buying patterns, the Company generally has more sales in the fourth quarter than in any other quarter of the year, driven in particular by capital spending in the Equipment & Consumables segment. As a result of this seasonality in sales, profitability in the Equipment & Consumables segment also tends to be higher in the second half of the year. There are no assurances that these historical trends will continue in the future.

2023.

NOTE ~~16.~~14. RESTRUCTURING ACTIVITIES AND RELATED IMPAIRMENTS

Restructuring Activities

The Company’s restructuring activities are undertaken as necessary to implement management’s strategy, streamline operations, take advantage of available capacity and resources, and ultimately achieve net cost reductions. These activities generally relate to the realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, as it relates to executing the Company’s strategy, pursuant to ~~significant~~ restructuring programs.

~~The related liability which is included in accrued liabilities in the Condensed Consolidated Balance Sheets is summarized below ($ in millions):~~

Employee Severance
and Related Facility Exit
and Related Total
Balance, December 31, 2022 $ 18.2 $ 0.7 18.9
Costs incurred 2.4 1.5 3.9
Paid/settled (12.9) (2.0) (14.9)
Balance, March 31, 2023 $ 7.7 $ 0.2 $ 7.9

Restructuring related charges by segment were as follows ($ in millions):

Three Months Ended
March 31, 2023 April 1, 2022
Specialty Products & Technologies $ 1.6 $ 4.0
Equipment & Consumables 2.6 (0.9)
Other 0.1 0.6
Total $ 4.3 $ 3.7


	Three Months Ended
	March 29, 2024		March 31, 2023
Specialty Products & Technologies	$	3.3	$	1.6
Equipment & Consumables	2.8		2.6
Other	0.8		0.1
Total	$	6.9	$	4.3

Restructuring related charges were reflected in the following captions in the accompanying Condensed Consolidated Statements of Operations ($ in millions):

Three Months Ended

March 31, 2023

April 1, 2022

Three Months Ended

March 29, 2024

Cost of sales

1.5

(0.3)

Selling, general and administrative expenses

2.8

4.0

Selling, general and administrative expenses

Total

4.3

3.7

Total

At March 29, 2024 and December 31, 2023, the restructuring liability was $13.0 million and $16.0 million, respectively.

NOTE ~~17.~~15. INCOME TAXES

The Company’s effective tax rates ~~from continuing operations~~ of ~~21.4%~~33.1% for the three months ended March 29, 2024, and ~~18.0%~~21.4% for the three months ended March 31, 2023, ~~and April 1, 2022, respectively,~~ differ from the U.S. federal statutory rate of 21.0%, primarily due to a valuation allowance against certain U.S. interest carryforwards, and to the Company’s geographical mix of earnings and net discrete tax ~~benefits.~~benefits, respectively.

On ~~August 16, 2022,~~January 1, 2024, certain provisions of the ~~U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15%~~Organisation for Economic Co-operation and Development base Erosion and Profit Shifting 2.0 Pillar Two global minimum tax (“GMT”) became effective in various jurisdictions. Based on ~~book income~~currently enacted law, the impact of ~~certain large corporations, a 1% excise tax on net stock repurchases, and several tax incentives to promote clean energy. Based~~GMT on the Company’s ~~current analysis of the provisions, this legislation did~~2024 financial results is not ~~have a material impact on its Condensed Consolidated Financial Statements as of or for the three months ended March 31, 2023.~~expected to be material.

NOTE ~~18.~~16. EARNINGS PER SHARE

~~Earnings~~Basic earnings per share is calculated by dividing the applicable income by the weighted average number of shares of common stock outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential shares outstanding during the period using the treasury stock method, except for the 2028 Convertible Notes and 2025 Convertible Notes, which are calculated using the if-converted method. Dilutive potential common shares include employee equity options, non-vested shares and similar instruments granted by the Company and the assumed conversion impact of ~~the Notes.~~convertible notes. The Company will settle any ~~Notes~~convertible note conversions through a combination settlement by satisfying the principal amount outstanding with cash and any ~~Notes~~convertible note conversion value in excess of the principal amount in cash or shares of the Company’s common stock or any combination thereof. As ~~such, the Company uses the treasury stock method for the assumed conversion of the Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. As~~ the Company will settle the principal amount of ~~the Notes~~convertible notes in cash upon conversion, the ~~Notes~~convertible notes only have an impact on the Company's diluted earnings per share when the average share price of the Company’s common stock exceeds the conversion price, ~~of $21.01 per share~~ in any applicable period. See the computation of earnings per share below for the dilutive impact of the ~~Notes~~convertible notes for the three months ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~2023.

In connection with the offering of the 2025 Convertible Notes, the Company entered into Capped Calls, ~~(see further discussion in Note 13),~~ which are intended to reduce or offset the potential dilution from shares of common stock issued upon ~~conversion~~conversion. The Company completed a partial unwind of the ~~Notes. However, this~~Capped Calls in connection with the Notes Exchanges. Refer to Note 11 for further discussion of the Capped Calls.

The impact of the remaining Capped Calls is not included when calculating potentially dilutive shares since their effect is anti-dilutive. The Capped Calls will mitigate dilution ~~from~~for the conversion of the remaining 2025 Convertible Notes up to the Company’s common stock price of $23.79. If the remaining 2025 Convertible Notes are converted at a price higher than $23.79 per share, the Capped Calls will no longer mitigate dilution from the conversion of the remaining 2025 Convertible Notes.

2119

The table below presents the computation of basic and diluted earnings per share ($ and shares in millions, except per share amounts):


		Three Months Ended
		March 31, 2023		April 1, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		March 29, 2024
		March 29, 2024
		March 29, 2024
Numerator:	Numerator:
Income from continuing operations, net of tax		$	43.8	$	70.4
Income from discontinued operations, net of tax		$	—	$	4.5
Numerator:
Numerator:
Net income
Net income
Net income	Net income	$	43.8	$	74.9

Denominator:	Denominator:

Denominator:

Denominator:
Weighted-average common shares outstanding used in basic earnings per share
Weighted-average common shares outstanding used in basic earnings per share
Weighted-average common shares outstanding used in basic earnings per share	Weighted-average common shares outstanding used in basic earnings per share	163.6		162.2
Incremental common shares from:	Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive restricted stock units		2.8		4.2
Assumed conversion of the Notes		11.0		13.4
Incremental common shares from:
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive restricted stock units and performance stock units
Assumed exercise of dilutive options and vesting of dilutive restricted stock units and performance stock units
Assumed exercise of dilutive options and vesting of dilutive restricted stock units and performance stock units
Assumed conversion of 2025 Convertible Notes
Assumed conversion of 2025 Convertible Notes
Assumed conversion of 2025 Convertible Notes
Weighted average common shares outstanding used in diluted earnings per share
Weighted average common shares outstanding used in diluted earnings per share
Weighted average common shares outstanding used in diluted earnings per share	Weighted average common shares outstanding used in diluted earnings per share	177.4		179.8

Earnings per share:	Earnings per share:
Earnings from continuing operations - basic		$	0.27	$	0.43
Earnings from continuing operations - diluted		$	0.25	$	0.39

Earnings from discontinued operations - basic		$	—	$	0.03
Earnings from discontinued operations - diluted		$	—	$	0.03
Earnings per share:

Earnings per share:
Earnings - basic
Earnings - basic
Earnings - basic	Earnings - basic	$	0.27	$	0.46
Earnings - diluted	Earnings - diluted	$	0.25	$	0.42
Earnings - diluted
Earnings - diluted

The following table presents the number of outstanding securities not included in the computation of diluted income per share, because their effect was anti-dilutive (in millions):

Three Months Ended
March 31, 2023 April 1, 2022
Stock-based awards 1.8 0.6


	Three Months Ended
	March 29, 2024	March 31, 2023
Stock-based awards	3.5	1.8

2028 Convertible Notes	11.3	—
Total	14.8	1.8

NOTE ~~19.~~17. SEGMENT INFORMATION

The Company operates and reports its results in two separate business segments, the Specialty Products & Technologies and Equipment & Consumables segments. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. Operating profit represents total revenues less operating expenses, excluding nonoperating income (expense), interest expense and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance. The identifiable assets by segment are those used in each segment’s operations. Inter-segment amounts are not significant and are eliminated to arrive at consolidated totals.

The Company’s Specialty Products & Technologies products primarily include implants, regenerative products, prosthetics, orthodontic brackets, aligners and lab products. The Company’s Equipment & Consumables products primarily include traditional consumables such as bonding agents and cements, impression materials, infection prevention products and restorative products, while the Company’s equipment products primarily include digital imaging systems, software and other visualization and magnification systems.

2220

On December 31, 2021, the Company sold substantially all of its KaVo Treatment Unit and Instrument Business, which was part of the Company’s Equipment & Consumables segment. As a result, the financial results of the KaVo Treatment Unit and Instrument Business for the three months ended April 1, 2022, were reported as discontinued operations and all segment information and descriptions exclude the KaVo Treatment Unit and Instrument Business. As of December 31, 2022, all activities related to the sale of the KaVo Treatment Unit and Instrument Business were completed and therefore there are no discontinued operations reported for the three months ended March 31, 2023. Refer to Note 3 for more information on the Company’s discontinued operations.

Segment related information is shown below ($ in millions):

Three Months Ended

March 31, 2023

April 1, 2022

Three Months Ended

March 29, 2024

March 31, 2023

Sales:

Specialty Products & Technologies

410.0

397.1

Equipment & Consumables

217.2

234.3

Total

627.2

631.4

Operating profit and reconciliation to income before taxes from continuing operations:

Operating profit and reconciliation to income before taxes:

Specialty Products & Technologies

71.1

70.3

Equipment & Consumables

32.5

45.5

Other

(31.5)

(24.3)

Operating profit

72.1

91.5

Nonoperating income (expense):

Other income

0.3

Other income, net

Interest expense, net

(16.7)

(5.9)

Income before taxes from continuing operations

55.7

85.9

Income before taxes

Identifiable assets:

March 31, 2023

December 31, 2022

March 29, 2024

December 31, 2023

Specialty Products & Technologies

3,486.1

3,475.7

Equipment & Consumables

2,458.9

2,455.3

Other

630.0

656.0

Other

Total

6,575.0

6,587.0

2321

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with other information, including our Condensed Consolidated Financial Statements and related notes included in Part I, Item 1, Financial Information, of this Quarterly Report on Form 10-Q, our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the ~~“2022~~“2023 10-K”), and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references herein to the “Company,” “we,” “us” or “our,” or similar terms, refer to Envista Holdings Corporation and its consolidated subsidiaries.

Certain statements included or incorporated by reference in this Quarterly Report are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: ~~the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations;~~ projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; future regulatory approvals and the timing thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Envista intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, the following: the conditions in the U.S. and global economy, the impact of inflation and increasing interest rates, international economic, political, legal, compliance and business factors, the markets served by us and the financial markets, ~~the impact of the COVID-19 pandemic,~~ the impact of our debt obligations on our operations and liquidity, developments and uncertainties in trade policies and regulations, contractions or growth rates and cyclicality of markets we serve, risks relating to product manufacturing, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole or limited sources of supply, disruptions relating to war, terrorism, climate change, widespread protests and civil unrest, man-made and natural disasters, public health issues and other events, security breaches or other disruptions of our information technology systems or violations of data privacy laws, fluctuations in inventory of our distributors and customers, loss of a key distributor, our relationships with and the performance of our channel partners, competition, our ability to develop and successfully market new products and services, our ability to attract, develop and retain our key personnel, the potential for improper conduct by our employees, agents or business partners, our compliance with applicable laws and regulations (including regulations relating to medical devices and the health care industry), the results of our clinical trials and perceptions thereof, penalties associated with any off-label marketing of our products, modifications to our products that require new marketing clearances or authorizations, our ability to effectively address cost reductions and other changes in the health care industry, our ability to successfully identify and consummate appropriate acquisitions and strategic investments, our ability to integrate the businesses we acquire and achieve the anticipated benefits of such acquisitions, contingent liabilities relating to acquisitions, investments and divestitures, our ability to adequately protect our intellectual property, the impact of our restructuring activities on our ability to grow, risks relating to currency exchange rates, changes in tax laws applicable to multinational companies, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, risks relating to product, service or software defects, the impact of regulation on demand for our products and services, and labor matters, and other risks and uncertainties set forth under “Item 1A. Risk Factors” in the ~~2022~~2023 10-K and this Quarterly Report on Form 10-Q.

Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Forward-looking statements contained herein speak only as of the date of this Quarterly Report. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

2422

BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements present our historical financial position, results of operations, changes in stockholders’ equity and cash flows in accordance with GAAP.

~~Sale of the KaVo Treatment Unit and Instrument Business~~

On December 31, 2021, we sold substantially all of the KaVo Treatment Unit and Instrument Business (the “Divestiture”) to planmeca Verwaltungs Gmbh, Germany (“Planmeca”), pursuant to the master sale and purchase agreement (the “Purchase Agreement”) among us, Planmeca, and Planmeca Oy, as guarantor. However, the transfer of assets in certain countries was not executed and closed until 2022 (“Deferred Local Closing”). As of December 31, 2022, all Deferred Local Closings were completed and we received total net cash consideration of $386.4 million in accordance with the terms of the Purchase Agreement.

The Divestiture was part of our strategy to structurally improve our long-term margins and represented a strategic shift with a major effect on our operations and financial results as described in ASC 205-20. The sale met the criteria to be accounted for as a discontinued operation and therefore, we applied discontinued operations treatment for the Divestiture as required by ASC 205-20. In accordance with ASC 205-20, we have reported the financial results of the Divestiture as discontinued operations in our Condensed Consolidated Statements of Operations and have excluded the KaVo Treatment Unit and Instrument Business from all segment information and descriptions for the three months ended April 1, 2022. Our Condensed Consolidated Statements of Cash Flows include the financial results of the KaVo Treatment Unit and Instrument Business for the three months ended April 1, 2022. As all Deferred Local Closings were completed as of December 31, 2022, there are no discontinued operations reported for the three months ended March 31, 2023.

OVERVIEW

General

We provide products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, as well as to improve the aesthetics of the human smile. We help our customers deliver the best possible patient care through industry-leading solutions, technologies, and services. With leading brand names, innovative technology and significant market positions, we are a leading worldwide provider of a broad range of solutions to support implant-based tooth replacements, orthodontic treatments, ~~digital imaging and diagnostics,~~diagnostic solutions, as well as general dental consumables, equipment and services, and are dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity. Our research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 30 countries across North America, Asia, Europe, the Middle East and Latin America.

We operate in two business segments: Specialty Products & Technologies and Equipment & Consumables. Our Specialty Products & Technologies segment develops, manufactures and markets products primarily related to dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products. Our Equipment & Consumables segment develops, manufactures and markets products primarily related to dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumables; and restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.

For the three months ended March ~~31, 2023,~~29, 2024, sales derived from customers outside of the United States were ~~52.4%,~~52.8% compared to the three months ended ~~April 1 2022,~~March 31, 2023, of ~~51.2%~~52.4%. As a global provider of dental consumables, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

As a result of our geographic and product line diversity, we face a variety of opportunities and challenges, including rapid technological development in most of our served markets, the expansion and evolution of opportunities in emerging markets, trends and costs associated with a global labor force, consolidation of our competitors and increasing regulation. We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend in particular on our ability to expand our business in emerging geographies and emerging market segments, identify, consummate and integrate appropriate acquisitions, develop innovative and differentiated new products and services, expand and improve the effectiveness of our sales force, continue to reduce costs and improve operating efficiency and quality and effectively address the demands of an increasingly regulated global environment. We are making significant investments to address the rapid pace of technological change in our served markets and to globalize our manufacturing, research and development and customer-facing resources (particularly in emerging markets and our dental implant business) in order to be responsive to our customers throughout the world and improve the efficiency of our operations.

Key Trends and Conditions Affecting Our Results of Operations

~~There have been no material~~General Economic Conditions

In addition to industry-specific factors, we, like other businesses, face challenges related to global economic conditions, including inflation, interest rates, fluctuating foreign currency exchange rates, slow economic growth, and continuing supply chain disruptions. Dental costs are largely out-of-pocket for the consumer and thus utilization rates can vary significantly depending on economic growth. While many of our products are considered necessary by patients regardless of the economic environment, certain products and services that support discretionary dental procedures may be more susceptible to changes ~~to the key trends and conditions affecting our results of operations that were disclosed~~ in ~~our 2022 10-K, except as follows:~~economic conditions.

Foreign Currency Exchange Rates

On a period-over-period basis, currency exchange rates negatively impacted reported sales by ~~1.6%~~1.0% for the three months ended March ~~31, 2023,~~29, 2024, compared to the comparable period of ~~2022,~~2023, primarily due to the strength of the U.S. dollar against most major currencies. Any future strengthening of the U.S. dollar against major currencies would negatively impact our sales and results of operations for the remainder of the year, and any weakening of the U.S. dollar against major currencies would positively impact our sales and results of operations for the remainder of the year.

~~General Economic Conditions~~

In addition to industry-specific factors, we, like other businesses, face challenges related to global economic conditions, including rising inflation, increasing interest rates, fluctuating foreign currency exchange rates, slowing economic growth, and continuing supply chain disruptions. Dental costs are largely out-of-pocket for the consumer and thus utilization rates can vary significantly depending on economic growth. While many of our products are considered necessary by patients regardless of the economic environment, certain products and services that support discretionary dental procedures may be more susceptible to changes in economic conditions.

Pricing Controls

Certain countries, as well as some private payors, also control the price of health care products, directly or indirectly, through reimbursement, payment, pricing or coverage limitations, tying reimbursement to outcomes or (in the case of governmental entities) compulsory licensing. For example, China has implemented volume-based procurement policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumables.

Russia-Ukraine Conflict

Russia’s invasion of Ukraine and the global response to this invasion, including sanctions imposed by the U.S. and other countries, could have an adverse impact on our business, including our ability to market and sell products in the affected regions, potentially heightening our risk of cyber security attacks, impacting our ability to enforce our intellectual property rights in Russia, creating disruptions in the global supply chain, and potentially having an adverse impact on the global economy, financial markets, energy markets, currency rates and otherwise. While we are experiencing ~~some~~ volatility in sales from this region, Russia’s invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the three months ended March 29, 2024 and March 31, ~~2023 and April 1, 2022.~~2023.

~~COVID-19~~Israel-Hamas War

~~The extent of~~In response to the attacks in Israel and the subsequent hostilities, we continue to monitor the social, political, and economic environment in Israel and in the region for any impact ofto our operations. Revenue generated from Israel is approximately $12 million annually. We also maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand. While we have experienced some volatility in the ~~COVID-19 pandemic~~region, the Israel-Hamas War and related hostilities have not had a material impact on our business remains uncertain and difficult to predict because of the dynamic and evolving nature of the situation. The global impact of the outbreak continues to adversely affect many industries, and different geographies continue to reflect the effects of public health restrictions in various ways. The economic recovery following the impact of the COVID-19 pandemic is only partially underway and has been gradual, uneven and characterized by meaningful dispersion across sectors and regions with uncertainty regarding its ultimate length and trajectory. During the three months ended March 31, 2023, notwithstanding improvement in many markets in which we operate due to a return to more normalized business operations, certain markets continued to be adversely impacted by COVID-19.business.

~~For additional information on the risks~~Seasonal Nature of ~~COVID-19 to our business, please refer to the “Item 1A. Risk Factors—Risks Related to our Business” section of our 2022 10-K.~~Business

~~Acquisitions~~

~~Our growth strategy contemplates future acquisitions~~General economic conditions impact our business and financial results, and certain of our businesses experience seasonal and other trends related to the end markets and regions that they serve. For example, sales of capital equipment have historically been stronger in the fourth calendar quarter. However, as a whole, we continually evaluate potential acquisitions that either strategically fit with our existing portfolio or expand our portfolio into new and attractive business areas. Our operations and results can be affected by the rate and extentare not subject to which appropriate acquisition opportunities are available, acquired businesses are effectively integrated and anticipated synergies or cost savings are achieved. During the fiscal year 2022, we completed two acquisitions.material seasonality.

On July 5, 2022, we acquired all of the equity of Osteogenics for total consideration of approximately $128.2 million, subject to certain customary adjustments as provided in the Equity Purchase Agreement dated May 17, 2022. Osteogenics develops innovative regenerative solutions for periodontists, oral and maxillofacial surgeons, and clinicians involved in implant dentistry throughout the world, and is part of our Specialty Products & Technologies segment.

On April 20, 2022, we completed our acquisition of Carestream Dental’s Intraoral Scanner Business for total consideration of approximately $580.3 million, including contingent consideration of $7.5 million, and subject to certain customary adjustments as provided in the IOS Purchase Agreement. The Intraoral Scanner Business manufactures, markets, sells, commercializes, distributes, services, trains, supports, and maintains operations of intraoral scanners and software, and is part of our Equipment & Consumables segment. We purchased the Intraoral Scanner Business through the acquisition of certain assets and the assumption of certain liabilities as well as the acquisition of all of the equity of certain subsidiaries of Carestream Dental.

~~Envista Business Systems~~

Throughout this discussion, references to sales volume refer to the impact of both price and unit sales and references to productivity improvements generally refer to improved cost-efficiencies resulting from the ongoing application of Envista Business Systems (“EBS”). We believe our deep-rooted commitment to EBS helps drive our market leadership and differentiates us in the dental products industry. EBS encompasses not only lean tools and processes, but also methods for driving growth, innovation and leadership. Within the EBS framework, we pursue a number of ongoing strategic initiatives relating to streamlining business operations, portfolio simplification, reduction of costs, redeployment of resources, customer insight generation, product development and commercialization, efficient sourcing, and improvement in manufacturing and back-office support, all with a focus on continually improving quality, delivery, cost, growth and innovation.

Non-GAAP Measures

In order to establish period-to-period comparability, we include the non-GAAP measure of core sales in this report. References to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to GAAP, but excluding:

•sales from acquired businesses for one year from the acquisition date;

•sales from discontinued products; and

•the impact of currency translation.

2724

We exclude sales from acquired businesses in order to provide accurate year over year comparisons. Sales from discontinued products includes major brands or major products that we have made the decision to discontinue as part of a portfolio restructuring. Discontinued brands or products consist of those which we (1) are no longer manufacturing, (2) are no longer investing in the research or development of, and (3) expect to discontinue all significant sales of within one year from the decision date to discontinue. The portion of sales attributable to discontinued brands or products is calculated as the net decline of the applicable discontinued brand or product from period-to-period. We exclude sales from discontinued products because discontinued products do not have a continuing contribution to operations and management believes that excluding such items provides investors with a means of evaluating our on-going operations and facilitates comparisons to our peers.

The portion of sales attributable to currency translation is calculated as the difference between:

•the period-to-period change in sales; and

•the period-to-period change in sales after applying current period foreign exchange rates to the prior year period.

Core sales growth should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. We believe that reporting the non-GAAP financial measure of core sales growth provides useful information to investors by helping identify underlying growth trends in our on-going business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers. We also use core sales growth to measure our operating and financial performance. We exclude the effect of currency translation from core sales because currency translation is not under our control, is subject to volatility and can obscure underlying business trends.

RESULTS OF OPERATIONS

All comparisons, variances, increases or decreases discussed below are for the three months ended March ~~31, 2023,~~29, 2024, compared to the three months ended ~~April 1, 2022.~~March 31, 2023.


		Three Months Ended
	Three Months Ended
($ in millions)
($ in millions)
($ in millions)	($ in millions)	March 31, 2023				April 1, 2022				% Change		March 29, 2024						March 31, 2023					% Change
Sales	Sales	$	627.2		100.0%	$	631.4		100.0%	(0.7)	%	Sales	$	623.6	100.0%	100.0%	$	627.2	100.0%	100.0%	(0.6)	%
Cost of sales	Cost of sales	264.5			42.2%	257.3			40.8%	2.8	%	Cost of sales	267.3		42.9%	42.9%	264.5		42.2%	42.2%	1.1	%
Gross profit	Gross profit	362.7			57.8%	374.1			59.2%	(3.0)	%	Gross profit	356.3		57.1%	57.1%	362.7		57.8%	57.8%	(1.8)	%
Operating costs:	Operating costs:
Selling, general and administrative (“SG&A”) expenses	Selling, general and administrative (“SG&A”) expenses	266.1			42.4%	258.2			40.9%	3.1	%
Selling, general and administrative (“SG&A”) expenses
Selling, general and administrative (“SG&A”) expenses													284.9		45.7%		266.1		42.4%		7.1	%
Research and development (“R&D”) expenses	Research and development (“R&D”) expenses	24.5			3.9%	24.4			3.9%	0.4	%	Research and development (“R&D”) expenses	23.3		3.7%	3.7%	24.5		3.9%	3.9%	(4.9)	%
Operating profit	Operating profit	72.1			11.5%	91.5			14.5%	(21.2)	%	Operating profit	48.1		7.7%	7.7%	72.1		11.5%	11.5%	(33.3)	%
Nonoperating income (expense):	Nonoperating income (expense):
Other income		0.3			—%	0.3			—%	—	%
Other income, net
Other income, net
Other income, net													0.1		—%		0.3		—%		(66.7)	%
Interest expense, net	Interest expense, net	(16.7)			(2.7)%	(5.9)			(0.9)%	183.1	%	Interest expense, net	(12.9)		(2.1)%	(2.1)%	(16.7)		(2.7)%	(2.7)%	(22.8)	%
Income before income taxes	Income before income taxes	55.7			8.9%	85.9			13.6%	(35.2)	%	Income before income taxes	35.3		5.7%	5.7%	55.7		8.9%	8.9%	(36.6)	%
Income tax expense	Income tax expense	11.9			1.9%	15.5			2.5%	(23.2)	%	Income tax expense	11.7		1.9%	1.9%	11.9		1.9%	1.9%	(1.7)	%
Income from continuing operations		43.8			7.0%	70.4			11.1%	(37.8)	%
Income from discontinued operations, net of tax		—			—%	4.5			0.7%	(100.0)	%
Net income	Net income	$	43.8		7.0%	$	74.9		11.9%	(41.5)	%	Net income	$	23.6	3.8%	3.8%	$	43.8	7.0%	7.0%	(46.1)	%

Effective tax rate from continuing operations		21.4		%		18.0		%
Effective tax rate
Effective tax rate
Effective tax rate

GAAP Reconciliation

Sales and Core Sales Growth

% Change Three Month Period Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period

Total sales growth (GAAP)

~~(0.7)~~(0.6)

Plus the impact of:

~~Acquisition~~

~~(3.3)~~

Currency exchange rates

~~1.6~~1.0

Core sales growth (non-GAAP)

~~(2.4)~~0.4

Sales ~~and core sales growth~~ for the three months ended March ~~31, 2023~~29, 2024 decreased ~~0.7% and 2.4%, respectively, compared to~~0.6% while core sales growth increased by 0.4% for the comparable period in ~~2022. A decrease~~2023. An increase in sales volume ~~negatively~~positively impacted sales ~~growth~~ by ~~2.8%~~0.6% on a period-over-period basis, ~~slightly~~partially offset by ~~an increase~~a decrease in sales price of ~~0.4%~~0.2%. Sales ~~in developed markets~~ decreased ~~primarily~~ due to ~~a decrease~~lower demand in North America, partially offset by ~~growth~~an increase in ~~Western and Eastern Europe. Sales in emerging markets decreased primarily driven by China sales.~~China.

COST OF SALES AND GROSS PROFIT MARGIN

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

Cost of sales

264.5

257.3

Cost of sales

Gross profit margin

57.8

59.2

Gross profit margin

The increase in cost of sales during the three months ended March ~~31, 2023~~29, 2024 as compared to the comparable period in ~~2022,~~2023, was primarily due to unfavorable product ~~mix and the impact of higher costs due to inflation.~~mix.

The decrease in gross profit margin percentage during the three months ended March ~~31, 2023,~~29, 2024, as compared to the comparable period in ~~2022,~~2023, was primarily due to ~~a decrease in~~unfavorable sales ~~volume, unfavorable~~price and product mix, ~~and higher costs due to inflation,~~ partially offset by ~~period-over-period savings associated with productivity improvements.~~an increase in sales volume.

OPERATING EXPENSES

Three Months Ended

($ in millions)

March 31, 2023

April, 2022

Selling, general and administrative expenses

266.1

258.2

Selling, general and administrative expenses

Research and development expenses

24.5

24.4

SG&A as a % of sales

42.4

40.9

SG&A as a % of sales

R&D as a % of sales

3.9

R&D as a % of sales

The increase in SG&A expenses as a percentage of sales for the three months ended March ~~31, 2023~~29, 2024 as compared to the comparable period of ~~2022,~~2023, was primarily due to higher sales and marketing and compensation spend, ~~and increased~~partially offset by decreased amortization of intangible assets.

R&D expenses as a percentage of sales for the three months ended March ~~31, 2023, were~~29, 2024, was consistent with the comparable period in ~~2022.~~2023.

INTEREST COSTS AND FINANCING

Interest costs ~~increased from $5.9~~were $12.9 million ~~during the three months ended April 1, 2022 to~~and $16.7 million for the three months ended March 29, 2024 and March 31, 2023, respectively. The decrease in interest costs for the three months ended March 29, 2024 as compared to the comparable period of 2023 was primarily due ~~primarily~~ to higher ~~interest rates~~returns on ~~our~~cash and cash equivalents, partially offset by higher variable rate ~~Term Loan~~term borrowings and ~~Euro Term Loan borrowings.~~interest rates.

INCOME TAXES

Three Months Ended
March 31, 2023 April 1, 2022
Effective tax rate from continuing operations 21.4 % 18.0 %


	Three Months Ended
	March 29, 2024		March 31, 2023
Effective tax rate	33.1	%	21.4	%

Our effective tax rate ~~from continuing operations of 21.4%~~ for the three months ended March ~~31, 2023,~~29, 2024 was ~~higher~~33.1% compared to 21.4% in 2023. The change in the ~~comparable period in 2022~~effective rate was primarily due to the ~~Company’s geographical mix~~impact of ~~earnings and~~ a ~~decrease in~~valuation allowance against certain ~~discrete tax benefits.~~U.S. interest carryforwards.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases, and several tax incentives to promote clean energy. Based on our current analysis of the provisions, this legislation did not have a material impact on our Condensed Consolidated Financial Statements as of or for the three months ended March 31, 2023.

RESULTS OF OPERATIONS - BUSINESS SEGMENTS

Specialty Products & Technologies

Our Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.

Specialty Products & Technologies Selected Financial Data

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

Sales

410.0

397.1

Sales

Operating profit

71.1

70.3

Operating profit as a % of sales

17.3

17.7

Operating profit as a % of sales

Sales and Core Sales Growth

% Change Three Month Period Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period

Total sales growth (GAAP)

~~3.2~~ (0.3)

Plus the impact of:

~~Acquisitions~~

~~(2.2)~~

Currency exchange rates

~~2.0~~1.1

Core sales growth (non-GAAP)

~~3.0~~0.8

Sales

Sales ~~and core sales growth~~ for the three months ended March ~~31, 2023~~29, 2024 decreased 0.3% while core sales growth increased ~~3.2% and 3.0%, respectively,~~by 0.8% compared to the comparable period in ~~2022. Sales growth increased~~2023. An increase in sales volume positively impacted sales by ~~3.6% due to higher volume,~~1.1% on a period-over-period basis, partially offset by a decrease in sales price ~~which impacted~~of 0.3%. The decrease in sales is primarily due to lower demand in North America, partially offset by growth ~~by 0.6% on a period-over-period basis. Additionally, sales~~in China and Europe.

Operating Profit

Operating profit margin was 10.8% for the three months ended March ~~31, 2023 were also positively impacted by the acquisition of Osteogenics.~~

~~Sales in developed markets, for the three months ended March 31, 2023, increased primarily due to an increase in Western and Eastern Europe, partially offset by a slight decrease in North America.~~

~~Operating Profit~~

~~Operating profit margin was 17.3% for the three months ended March 31, 2023,~~29, 2024, as compared to an operating profit margin of ~~17.7%~~17.3% for the comparable period of ~~2022. The decrease in operating profit margin for~~2023. For the three ~~month period~~months ended March 29, 2024, the decrease was primarily due to unfavorable product mix ~~investments in~~and sales price, and higher costs related to our long-term growth initiatives, ~~and the impact of inflation,~~ partially offset by an increase in sales ~~volume and by period-over-period savings associated with productivity improvements.~~volume.

EQUIPMENT & CONSUMABLES

Our Equipment & Consumables segment primarily develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumables; restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.

Equipment & Consumables Selected Financial Data

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

Sales

217.2

234.3

Sales

Operating profit

32.5

45.5

Operating profit as a % of sales

15.0

19.4

Operating profit as a % of sales

Sales and Core Sales Growth

% Change Three Month Period Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period

Total sales growth (GAAP)

~~(7.3)~~(1.1)

Plus the impact of:

~~Acquisition~~

~~(5.2)~~

Currency exchange rates

~~0.8~~0.9

Core sales growth (non-GAAP)

~~(11.7)~~(0.2)

Sales

Sales and core sales growth for the three months ended March ~~31, 2023~~29, 2024 decreased ~~7.3%~~1.1%, and ~~11.7%~~0.2%, respectively, compared to the comparable period in ~~2022.~~2023. A decrease in sales volume negatively impacted sales ~~growth~~ by ~~13.9%,~~0.1% on a period-over-period basis, combined with a decrease in sales price of 0.1%. The decrease in sales is primarily due to lower demand from Europe, partially offset by the positive impact of a 2.2% price increase on a period-over-period basis. Sales for the three months ended March 31, 2023, were positively impacted by the acquisition of our Intraoral Scanner Business.

~~Sales in developed markets, for the three months ended March 31, 2023, decreased primarily due to a decrease~~higher demand in North ~~America, Western Europe, and emerging markets.~~America.

Operating Profit

Operating profit margin was ~~15.0%~~16.6% for the three months ended March ~~31, 2023,~~29, 2024, as compared to an operating profit margin of ~~19.4%~~15.0% for the comparable period of ~~2022.~~2023. The ~~decrease~~increase in operating profit margin for the three months ended March 29, 2024 was primarily due to ~~lower sales volume, increased~~favorable product mix, period-over-period savings associated with productivity improvements and decreased amortization of intangible assets, ~~and the impact of incremental material price cost due in part to inflation,~~ partially offset by ~~higher~~unfavorable sales volume and price.

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating and investing activities. We continue to generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity are sufficient to allow us to manage our capital structure on a short-term and long-term basis and continue investing in existing businesses and consummating strategic acquisitions.

Following is an overview of our cash flows and ~~liquidity, which includes the cash flows of the KaVo Treatment Unit and Instrument Business for the three months ended April 1, 2022.~~

liquidity:

Overview of Cash Flows and Liquidity


		Three Months Ended				Three Months Ended
		March 31, 2023		April 1, 2022		March 29, 2024	March 31, 2023

Net cash provided by operating activities	Net cash provided by operating activities	$	3.1	$	3.5

Payments for additions to property, plant and equipment		$	(17.5)	$	(19.8)

Proceeds from sale of KaVo treatment unit and instrument business		—		30.0

All other investing activities, net		(4.5)		(5.1)
Net cash (used in) provided by investing activities		$	(22.0)	$	5.1

Proceeds from borrowings		$	—	$	0.3
Repayment of borrowings		—		(0.5)

Net cash provided by operating activities

Net cash provided by operating activities

Payments for additions to property, plant and equipment
Payments for additions to property, plant and equipment
Payments for additions to property, plant and equipment

All other investing activities, net

All other investing activities, net

All other investing activities, net
Net cash used in investing activities

Proceeds from stock option exercises

Proceeds from stock option exercises

Proceeds from stock option exercises	Proceeds from stock option exercises	4.6		13.1
Tax withholding payment related to net settlement of equity awards	Tax withholding payment related to net settlement of equity awards	(6.1)		(7.6)

Net cash (used in) provided by financing activities		$	(1.5)	$	5.3
All other financing activities
All other financing activities
All other financing activities
Net cash used in financing activities

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period due to working capital needs and the timing of payments for income taxes, restructuring activities, pension funding and other items impacting reported cash flows.

Net cash provided by operating activities was ~~$3.1~~$40.3 million during the three months ended March ~~31, 2023,~~29, 2024, as compared to net cash provided by operating activities of ~~$3.5~~$3.1 million for the comparable period of ~~2022, primarily due to lower net income, offset~~2023. The increase in cash provided by ~~lower overall net cash payments~~operating activities during the three months ended March ~~31,~~29, 2024 is primarily due to timing of vendor payments combined with lower year end incentive compensation paid in the current period, partially offset by lower net income as compared to 2023.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for capital expenditures and acquisitions. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology systems.

Net cash used in investing activities was ~~$22.0~~$10.7 million for the three months ended March ~~31, 2023,~~29, 2024, as compared to net cash ~~provided by~~used in investing activities of ~~$5.1~~$22.0 million for the comparable period in ~~2022,~~2023, primarily due to the ~~prior year period containing the earnout from the sale~~lower payments for purchases of ~~the KaVo Treatment Unit~~property, plant and ~~Instruments Business for the three months ended March 31, 2023.~~equipment.

Financing Activities and Indebtedness

Cash flows relating to financing activities consist primarily of cash flows associated with debt borrowings and the issuance of common stock.

Net cash used ~~in financing~~by finance activities was ~~$1.5~~$2.6 million ~~during~~for the three months ended March ~~31, 2023 as~~29, 2024 compared to net cash ~~provided~~used by financing activities of ~~$5.3~~$1.5 million for the comparable period of ~~2022~~2023, primarily due to ~~a reduction in~~lower cash ~~flows associated with the issuance of common stock.~~proceeds from stock option exercises.

For a description of our outstanding debt as of March ~~31, 2023,~~29, 2024, refer to Note 1311 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

We intend to satisfy any short-term liquidity needs that are not met through operating cash flow and available cash primarily through our revolving credit facility.

Cash and Cash Requirements

As of March ~~31, 2023,~~29, 2024, we held ~~$585.2~~$948.5 million of cash and cash equivalents that were held on deposit with financial institutions. Of this amount, ~~$91.3~~$326.2 million was held within the United States and ~~$493.9~~$622.3 million was held outside of the United States. We will continue to have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities as required and support other business needs. We generally intend to use available cash, internally generated funds and our revolving credit facility to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may need to enter into new credit facilities or access the capital markets. We may also access the capital markets from time to time to take advantage of favorable interest rate environments or other market conditions. However, there is no guarantee that we will be able to obtain alternative sources of financing on commercially reasonable terms or at all. See “Item 1A. Risk Factors—Risks Related to Our Business” in our ~~2022~~2023 10-K.

Generally, cash and cash equivalents held in these financial institutions may be withdrawn or redeemed at face value, and therefore minimal credit risk exists with respect to them. Nonetheless, deposits with these financial institutions exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits or similar limits in foreign jurisdictions, to the extent such deposits are even insured in such foreign jurisdictions. While we monitor on a systematic basis the cash and cash equivalent balances in the operating accounts and adjust the balances as appropriate, these balances could be impacted if one or more of the financial institutions with which we deposit our funds fails or is subject to other adverse conditions in the financial or credit markets. To date, we have experienced no loss of principal or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our cash and cash equivalents will not be affected if the financial institutions where we hold our cash and cash equivalents fail.

While repatriation of some cash held outside the United States may be restricted by local laws, most of our foreign cash could be repatriated to the United States. Following enactment of the Tax Cut and Jobs Act of 2017 (“TCJA”) and the associated transition tax, in general, repatriation of cash to the United States can be completed with no incremental U.S. tax; however, repatriation of cash could subject us to non-U.S. jurisdictional taxes on distributions. The cash that our non-U.S. subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. The income taxes, if any, applicable to such earnings including basis differences in our foreign subsidiaries are not readily determinable.

As of March ~~31, 2023,~~29, 2024, we believe that we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States.

~~There were no material changes to our contractual obligations during the three months ended March 31, 2023.~~

Off-Balance Sheet Arrangements

There were no material changes to the Company’s off-balance sheet arrangements described in the ~~2022~~2023 10-K that would have a material impact on the Company’s Condensed Consolidated Financial Statements.

Debt Financing Transactions

For a description of our outstanding debt as of March ~~31, 2023,~~29, 2024, refer to Note 1311 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

~~CRITICAL ACCOUNTING ESTIMATES~~Critical Accounting Estimates

There were no material changes to our critical accounting estimates described in the ~~2022~~2023 10-K that have had a material impact on our Condensed Consolidated Financial Statements.

The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict. If actual results are not consistent with management’s estimates and assumptions used for valuation allowances, contingencies, potential impairments, revenue recognition and income taxes, the related account balances may be overstated or understated and a charge or credit to net income may be required.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosures About Market Risk,” in our ~~2022~~2023 10-K. There were no material changes to this information reported in our ~~2022~~2023 10-K during the quarter ended March ~~31, 2023.~~29, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer, and ~~Senior Vice President and Chief~~Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our President and Chief Executive Officer, and ~~Senior Vice President and Chief~~Principal Financial Officer, have concluded that, as of the end of such period, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March ~~31, 2023~~29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3531

PART II. Other Information

Item 1. Legal Proceedings

There have been no material changes to legal proceedings from our ~~2022~~2023 10-K. For additional information regarding legal proceedings, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Legal Proceedings” in our ~~2022~~2023 10-K.

Item 1A. Risk Factors

~~There have been no material changes from the risk factors disclosed in Part I, “Item 1A. Risk Factors,” of our 2022 Form 10-~~

K. You should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our ~~2022~~2023 10-K, which could materially affect our business, financial position, or future results of operations. The risks described in our ~~2022~~2023 10-K, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations. The risk factor set forth below updates, and should be read together with, the risk factors described in our 2023 10-K.

The loss of members of our senior management and the resulting management transition might have an adverse impact on our future operating results.

On April 15, 2024, we announced the appointment of Paul Keel as our President and Chief Executive Officer, effective as of May 1, 2024. Mr. Keel was also appointed to our Board of Directors, effective as of May 1, 2024. In connection with this appointment and pursuant to the transition letter agreement dated February 22, 2024 between the Company and Amir Aghdaei, Mr. Aghdaei resigned from his position as a director of the Board effective May 1, 2024 and will transition to the role of senior advisor to support the Chief Executive Officer transition on that date. Additionally, as previously reported, we have experienced several executive officer departures over the past year, including our Chief Financial Officer. These leadership transitions along with other senior management changes may be inherently difficult to manage. If we do not successfully manage this transition process, it could be viewed negatively by our customers, employees or investors and could have a negative impact on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~(c) Our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. During the quarter ended March 29, 2024, the following officer adopted, modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 under Regulation S-K of the Exchange Act):

Amir Aghdaei, our President and Chief Executive Officer, adopted a new trading plan on March 2, 2024. The plan’s maximum duration is until December 31, 2024, and first trades will not occur until June 3, 2024, at the earliest. The trading plan is intended to permit Mr. Aghdaei to exercise and sell 2,195 stock options expiring on December 31, 2024.

The Rule 10b5-1 trading arrangement described above was adopted and precleared in accordance with Envista Holdings Corporation’s Insider Trading Policy and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly consistent with Section 16 requirements.

3632

During the quarter ended March 29, 2024, none of the Company’s directors and officers adopted or terminated a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408 under Regulation S-K of the Exchange Act).

Item 6. Exhibits

EXHIBIT INDEX


Exhibit Number			Description
3.1			Second Amended and Restated Certificate of Incorporation of Envista Holdings Corporation (incorporated by reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2021, Commission File No. 001-39054)
3.2			~~Second~~Third Amended and Restated Bylaws of Envista Holdings Corporation effective as of ~~August 23, 2021~~May 22, 2023 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed on ~~August 27, 2021,~~May 26, 2023, Commission File No. 001-39054)
10.1*10.1			~~Form of~~Consulting Agreement, dated January 2, 2024, by and between Envista Holdings Corporation ~~Performance Stock Unit~~and Barbara Hulit (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 28, 2024)
10.2*			Third Amendment to the Envista Holdings Corporation 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K filed on February 15, 2024)
10.3*			Separation Agreement and General Release between DH Dental Employment Services LLC and Patrik Eriksson, dated January 4, 2024 (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K filed on February 15, 2024)
10.4*			Transition Letter Agreement, by and between Envista Holdings Corporation and Amir Aghdaei, dated as of February 22, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 26, 2024)
10.5*			Offer Letter Agreement, dated March 5, 2024, between DH Dental Employment Services, LLC and Stephen Keller
31.1			Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of ~~Chief~~Principal Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certifications of Chief Executive Officer and ~~Chief~~Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Indicates management contract or compensatory plan, contract or arrangement.

3733

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ENVISTA HOLDINGS CORPORATION
Date: May ~~3, 2023~~1, 2024	By:	/s/ ~~Howard H. Yu~~Faez Kaabi
		~~Howard H. Yu~~Faez Kaabi
		~~Senior~~ Vice President and Chief ~~Financial~~Accounting Officer ~~(Principal Financial and Accounting Officer)~~

3834


	Osteogenics July 5, 2022		Intraoral Scanner Business April 20, 2022
Assets acquired:
Cash	$	2.1	$	2.7
Accounts receivable	2.5		0.1
Inventories	13.3		6.1
Intangible assets	53.0		129.8
Property, plant and equipment	—		0.3
Prepaids and Other Current Assets	1.3		—
Goodwill	77.3		373.1
Non-current deferred tax asset	—		96.0
Operating lease right-of-use assets	2.6		0.9
Other long-term assets	4.9		0.2
Total assets acquired	157.0		609.2
Liabilities assumed:
Accounts payable	(4.1)		(0.5)
Accrued expenses and other liabilities	(2.5)		(27.9)
Non-current deferred tax liability	(14.3)		—
Other long-term liabilities	(5.8)		—
Operating lease liabilities	(2.1)		(0.5)
Total liabilities assumed	(28.8)		(28.9)
Total net assets acquired	$	128.2	$	580.3


	March 31, 2023		December 31, 2022
Convertible Senior Notes	$	6.7	$	7.5
Term Loan	1.4		1.7
Euro Term Loan	0.3		0.3
	$	8.4	$	9.5


	Foreign Currency Translation Adjustments		Unrealized Loss on Cash Flow Hedges		Unrealized Pension Costs		Total Accumulated Other Comprehensive Loss
Three Months Ended April 1, 2022
Balance, December 31, 2021	$	(139.6)	$	(1.7)	$	(2.2)	$	(143.5)
Other comprehensive (loss) income before reclassifications:
(Decrease) increase	(53.8)		1.8		—		(52.0)
Income tax impact	(5.8)		(0.4)		—		(6.2)
Other comprehensive (loss) income before reclassifications, net of income taxes	(59.6)		1.4		—		(58.2)
Amounts reclassified from accumulated other comprehensive loss:
Increase	—		—		(0.2)		(0.2)
Income tax impact	—		—		0.1		0.1
Amounts reclassified from accumulated other comprehensive loss, net of income taxes	—		—		(0.1)		(0.1)
Net current period other comprehensive (loss) income, net of income taxes	(59.6)		1.4		(0.1)		(58.3)
Balance, April 1, 2022	$	(199.2)	$	(0.3)	$	(2.3)	$	(201.8)


	Employee Severance and Related		Facility Exit and Related		Total









Balance, December 31, 2022	$	18.2	$	0.7	18.9
Costs incurred	2.4		1.5		3.9
Paid/settled	(12.9)		(2.0)		(14.9)
Balance, March 31, 2023	$	7.7	$	0.2	$	7.9