HSIC - Earnings call transcript Q1 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the Henry Schein First Quarter 2019 Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Carolynne Borders, Henry Schein's Vice President of Investor Relations. Carolynne. ahead, go Please

Carolynne Borders

Stanley And Steven discuss each the Henry me Chief of today quarter. Hallie. and Officer. the joining Executive Financial Executive Chief XXXX you Vice us With Officer are call the to Schein's Schein on Chairman thanks you, of of Board and to Henry for first Bergman, Paladino, Thank results and for President

is will forward-looking. that begin, certain to comments include I information this during we that Before state call would made like

As and matters company's to risks you may in business the know, in involved uncertainties statements. affect referred the forward-looking

a materially section qualified Henry of Exchange with Form the in statements. expressed As Factors precautionary their company's Commission, the such XX-K. on forward-looking Schein's filings including These result, the performance in in differ from forward-looking contained and by Risk indicated may our Securities entirety those the are Report in statements Annual by or statements

about are addition, the the share market markets comments including analysis rates and serve, we and estimates. based In all end-market upon internal company's growth

like allow comparative the between remarks Our and regarded items corresponding our These informational the the time-sensitive financial non-GAAP to the business. supplemental with call broadcast should and be our May XXXX. respect of obligation vary both believe to can non-GAAP are of The Management Relations of Schein that date We as provide a accurate of Henry operating yourself solely call. or revise X, a the and circumstances Please reconciliations transparency for These after only contains to, is as content performance statements date or results. measures of business, Investor to financial for over to no with the results business info certain single of with for of not measures. undertakes call by independent non-GAAP a that in live Q&A. financial turn greater website. our key follow-up metrics replacement Bergman. found the in this supplemental used include any conference purposes events during our enable information GAAP of question I presented information financial about the be the useful measures this And will forward-looking performance periods GAAP the to for would and call update of Stan comparison and limit may reflect said, investors

Stanley Bergman

Good morning. Carolynne, Thank thank us you you, for today. all and joining

first operations EPS sales the local quarter We Internally are was from continuing generated non-GAAP in financial continuing basis. record X% growth growth from on approximately pleased and X.X% was to operations. the both announce results currencies GAAP,

We the financial XXXX of are raising non-GAAP guidance for a basis. our also range on guidance end top

as are pleased with execute on plan. our to we our We strategic XXXX performance to XXXX date

characterized success continue we operational of in Throughout believe, transition for Schein both businesses transition we as the separate quite to positioned and and We and have as former year we first Henry are operations term. Dental what gained have confident we to that the share quarter long Health continues be of this market over well believe business. Medical our our completed XXXX is we actually, of Global well positioned Animal

with pursuing new with supporting on while array opportunities. offering that world products remains customers solutions around innovative value-added the services, and the our broadest our of focus expands along investment Our technology

efficient their growth to on the that organic by practice our a end they quality So helping it's about more public. so provide care better can customers operate inorganic growth,

grow to have and about continue on We global innovation. through are we the very to opportunities basis a scale business our investments our excited in

additional I'll business results Steven. performance and accomplishments. to on Steven and guidance this time, some provide Please, and at review recent So ask commentary financial then let the me our

Steven Paladino

all. to Thank morning Stanley, and you, good

discussing be I'd continuing results GAAP basis. begin, we from will basis and our that I non-GAAP on operations point also As like a an to as-reported on out

represents Our and Relations Exhibit results section B that website. detailed Please exclude of non-GAAP our And of that Investor in certain today's available are also items QX that XXXX is note our QX a on XXXX press release. this transitional included into quarter under February new entered spin corporate in with we sales have category to sales was product completed animal health in connection XXXX. that the agreement services that Covetrus the off

Covetrus that and sales of because we expect the to We continue half sales impact XXXX these our are operating on note income. have into these that first little to low-margin

For in revenues approximately standard the to total adopted note new first million. we fiscal XXXX, lease corporate those quarter. we the that accounting expect $XXX Also, please

million QX impact lease standard materially our impact includes our result, $XXX consolidated no of liabilities a had balance and additional million. sheet and our income did cash net not $XXX As lease new assets flows. of on The

XXXX. basis, of improved costs, year-over-year a our operating sales which the with earnings the Turning excluding local compared quarter billion, product net Covetrus restructuring quarter was $X.X quarter services currencies first XXXX a were basis. internally-generated non-GAAP March to our sales from results, by sales of agreements, margin X.X%. in of QX excludes reflecting sales operations operating Exhibit X.X%. to points increase first and for growth and our continuing XX A be details XXXX, transitional note points in X.X% are XXXX our with currencies those XX, Please the the of a compared On in basis on that with growth to sales internal first news XX by expanded When local margin ended release contained the today. was GAAP quarter the growth issued of our under On basis was a basis X.X% in for X.X%

GAAP Relations the website. also income to supplemental of non-GAAP can info Investor on our a operating find You page the operating of in income our reconciliation page

of basis, XX.X% tax with tax compares prior effective for rate XXXX Turning non-GAAP of compared effective of This XX.X% non-GAAP our to a year to refer tax of supplemental on to GAAP rate to XX% please XX.X%. taxes. of reported for will that the range XX% quarter basis. non-GAAP We on a non-GAAP in the estimate Investor XXXX. effective On taxes information rate page was page for Relations to GAAP the rate GAAP first tax effective XX.X%. a our the continue the taxes, was be our full-year with tax quarter our rate website Again, first and the reconciliation

on, continuing $X.XX net prior-year compares Moving $X.XX to attributable Schein, or this income for Henry or $XXX.X GAAP net of and million of $XXX.X XXXX income with diluted from was share, operations QX per million share. per Inc.

respectively. on non-GAAP $X.X intangible $X.XX $XXX.X per million or per basis EPS acquired year. from this also QX diluted that first million $XXX.X the provide our quarter. of $X.XX pre-tax period X% This the diluted same was XXXX. I'll for per was quarter for QX additional the Our or income for by XXXX To non-GAAP first to cents or diluted note our diluted represents compares $X.XX for net share the the diluted of $X.XX details in note a compares results assets and XXXX. negatively impacted with pretax amortization currency foreign of And exchange operations, XXXX, some income million per of net of share, that share for or on quarter last I'll million growth $XX.X share $XX.X of X.X% and that

the dental sales to we local dental continue our X.X% the American included quarter. growth internal consumable the year, with of X.X% And with gain that, detail currencies was $X.X sales market equipment we provide some results revenue of X.X% over now growth and and believe me service in merchandise. North our increased of dental prior X.X%. American market year. X.X% and consumable internal for in billion share in decreased sales compared by sales Dental North with growth merchandise currencies prior on Let in local

reverse European in dental consumable international are Good days growth to sales quarter. local and QX holidays, growth certain from currencies was sales merchandise timing in dental of international extra seeing benefited QX this growth included our benefit X.X% which either Friday We selling merchandise. one occurred Our sales two next dental We the in year of due or in year. X.X% last Thursday Holy this and anticipate in countries and believe

and last sales period equipment service declined revenue same X.X% the dental versus international year. Our by

quarter, or mid-March. This place equipment typically show in in accelerate Cologne, trade customarily lower and in And results took noted QX IDS Germany As international last in beyond. Show we Dental International they sales the in QX.

in Turning from medical North America and were with X.X% our local our the with million organic growth internationally. X.X% driven solid medical by in along includes overall internally currencies with generated sales $XXX.X local existing results, growth currencies of strategic to in X.X% pleased large customers We were primarily in which growth acquisitions. growth medical; an sales The first internal X.X% increase growth of X.X%. sales quarter,

to we quarter's the physician call medical sales in than kits and As sales to be office noted by from to influenza related last expected led average continuation a on lower below years. test of we impacted visits season, conference prior be our which QX

compared and increase local North with in an In in sales currencies technology and prior the value-added of value-added XX.X% service generated currencies X.X%. technology continuing in quarter, X.X%. growth year from services with were in Our first operations $XXX international the our sales basis and America, currencies internal both million internally the markets, of local was sales local internal was an X.X% sales on

Henry our and an and in repurchase common the approximately the available the of we first quarter, to or quarter close first million $XXX during quarter immaterial. $X.X Schein at $XX.XX The total of We for repurchase future of was EPS average million. price stock on approximately $XXX had of common approximately of repurchases the continued the open of share per market At a million shares stock. shares bought authorized impact first diluted

highlights look of of cash at Let's some a take the flow. brief our

have million the from quarter flow in of to million continuing that quarter We $XXX.X compared and operations operating for the a at last negative very first year. $XX.X strong cash

operating We will have year we believe flow to a full the for strong cash XXXX. continue

disclosed costs, consulting This outside facility restructuring diluted directly related restructuring $X.X restructuring charge As primarily professional part recorded a initiative, plan. $X.XX our closing severance in share. previously the or QX of charge fees pay, to XXXX, per a pre-tax million includes of and we

you costs QX some use as to technology web health to our developments. as to over also we save initiative of As animal including ongoing project, CRM that and project, opportunities stranded look spin-off and more costs and have continue restructuring time interface extended know, to our expect European investments, ERP for continue mitigate through our this we advance to of related we reinvesting it our savings in our the year

attributable to is reflecting be top our non-GAAP a we therefore, $X.XX, XXXX; our for Schein are end not from EPS to of that are At XX% financial XXXX guidance costs XXXX compares which the On compared guidance. was provide $X.XX we guidance; restructuring to providing to Henry $X.XX we diluted expected of not to with Again, guidance able X% operations was of X% range for basis, time, $X.XX to growth. a increasing estimates today. Turning this with to to are $X.XX. the XXXX associated non-GAAP non-GAAP diluted to X% EPS and growth continuing prior GAAP this

increased prior of that February X, of by business periods per we The and in range quarter are classified operation discontinued Health again, our been to current was presented. for end spun XXXX Animal this and all $X.XX has the as So company's business off as top that a starting share. shareholders

but impact XXXX; for acquisitions. acquisitions, the as does well any completed Schein is to attributable Our EPS continuing operations previously again potential guidance not future include any or for of as Henry non-GAAP announced diluted

consistent and with remain the current Our assumes this current that foreign guidance stable guidance our that market generally rates with assumes conditions. also markets and are exchange end also consistent levels

in the acquisitions. to goals continue As includes and be we low in non-GAAP diluted noted last organic percentage the to points contributions that sales stock one underlying points growth confident market and long-term high-single percentage we will growth for achieving and EPS remain above our our double-digit percentages growth of of repurchase from Schein, quarter, we Henry expect to two activity

back that, Stanely. I'd over the call like to So with turn to

Stanley Bergman

you much, very Steven. Thank

with starting with of our for quarter Let's highlights business begin our Dental. the review first

which that sales mentioned. in grew local by increased the growth we the with line market Our has modestly Dental the quarter of Dental local as stable. Internationally, X%. the local quite holidays currencies internal by consumable of as fourth sales of Easter-related North by consumables local the dental X.X% quarter currencies of first X.X% on increased been and stable in side, continue of increased year. believe approximately to This internal more growth gain equipment market timing our is stable. X% Steven XX%. Dental products, market strength robust we sales in impression the generally consumable the American American for is preceding grew Likewise, is North we than serve part in digital in timing share. of particular, end we XX%; traditional quarter believe variance currencies, which share due the saw end in as from believe We aside, merchandise sales had XXXX, we market market improved we'd market internal International to of in nearly versus last growth the equipment by approximately currencies CAD/CAM sales equipment the in In that sales growth

years. markets, certain we every occurs Germany which March, the fact, participated it's growing IDS In In event nicely. quite in two in in

second and in X% rebound off equipment the were to Our broader in digital in adoption first in international typically dental to largely quarter sales highlights the as surrounding during the of in which countries show. equipment IDS the Germany hold lead these many after quarter often internal the operate, will faster dentists CAD/CAM solutions the IDS believe currency this by to purchases declined of come. This in become of impression in Advancements approximately due years the leads until year. an a and technologies on technology to easier attending to sales one as has the event local and

specific and practices at systems scanners comfortable scans to for believe practices for broad from we fully or of most that including [indiscernible] range through procedures price of more a choose All a to right access a conduct fast crowns accurate far full of that systems will promote scanners production enable patients and dental of bridges as practice have customer's to these so years. that the digital impression that fact, selection capabilities one full care what the is to points practitioners In the five the are basic within options in enable to have standard to need. Today, visit.

with a we first our tooth a were industry our sales in the and leverage extends at digital of general digits internal the where grew well. during In very our excitement relationships customers a digital currency particular, patient BioHorizons and are practices solutions, of of advancements We introduction launch course, announce implants, with system as implant endodontics Tapered a our mid-single to quarter. specialty practitioner to We're the implants variety the the extensions the for IDS, [ph] interest in made each in low-double clearly we called endodontics This specialty in including brands. orthodontics, included even businesses. and regeneration. system of orthodontics digits promotes particularly our innovations, system bone dependent global given all This and At the implant and excited pleased exciting line growth deep of implant-based through new the and replacements local dentistry CAMLOG offered fast that few workflow. PROGRESSIVE-LINE, BioHorizons to dentistry time to of

Now in of visits light first season of office let's quarter fairly review in the medical terms the business, XXXX was [ph]. the influenza

We're other point-of-care excited office related and solid hand, and urgent for in in currency tests surgical medical of the are On really, office-based important season. the our launched these to X% customers, growth to local really quarter Yes, the influenza and our approximately centers. recently the and visits diagnostics expertise to first one reduction of team in and team products for relating this practitioner the in diagnostics have delivered we the internal new despite landscape this specialist healthcare offer in created a capture driving consumerism area, This team. the practice specialized fastest-growing address on-demand tools a for our product results. address in diagnostic medical is To preference will has point-of-care needs. provide of is test growth areas consultative medical as course, customers. approach This the need

quick, recently they our been have most and ahead. discuss label team private our to successful offices, working meeting laboratory-quality across customers and cost-effective, our the example, Colorado with Denver, tests priorities solutions laboratory other expand can we from to high-quality We US strategic in point national performance. so together for portfolio initiatives care traditional for held sales sales deliver our our year reliable at For the of position the diligently medical bringing and clinics convenient, with

Just support, to providing highly like with are our Dental the service care. a members quality our practice, team our on level in efficient the more of Schein in effect, the focus engaged Medical best focus practitioners customers practitioners our team, of provide can highest that helping in operating on so

practices look group from our with offices gains continued site we the independent well-positioned to future As partnerships physician medical are believe drive share large an plus we our alternate care. of business, market to of we

on and value-added services technology let's the So to business. move

well Smart Dentrix and modalities signed practice management image Image integration across pin into throughout Most enhanced additional focus addition solution. is our billing with exciting, of to advanced efficient codes enhance One their and new help For well help business continues and patient better processing, dental three as to combining the more has as awareness reputation insurance communications, search with new improve Henry dentists and of functionality, on important areas practice Schein including outcomes. quite with and patients. claim quarters dental generating These board, and management, build scheduling, electronic doing all very vendors that a at practice electronic tools management work team Dentrix practice improved access and integration platform. a the now, To powerful major multiple its existing enhancements, tools growth these on and host experience software days; imaging at our automated been highlights, summarize now digital document Interoperability unique system. image solutions hard results Dentrix marketing all include engine image for alive communicates tools, have our and patients online few Ascend well. and where provides Smart we're websites; improved

the Ascend our course, Of we progressive and the management Dentrix cloud-based dental practice is marketplace. most system believe in

of of open leading to I growth Rescue, we highlight to This sales products the in XXXX. approximately the our had markets. and progress our survival and commitment care prior and North defense of us our period brings plan. transaction solutions This strategic we public medical October months products in call time the offerings. a Before ongoing line gross customer we medical ending would group casualty like to acquisition help with in range to made product the will NAR million but key on $XXX questions, XX United is element expansive not these proprietary safety a a for of attractive the mid-February, an in broad American and expand brands call of also our the closed of margins only Since to add the solutions have provider last high-margin States presence globally.

We with for XXX of adding practitioners practice and expand and benefit to automated acquisition how our and is of also dental of easy-to-use platform growth connect the work. providing to gain our upon better management the client technology One with $XX solutions, we're and from sales marketing plan practice us patients their the innovation customers will customers. strategic software with announced our our help high-margin at software has XXXX of an better interoperability patient communication and dental provide connect and software been Lighthouse example This Schein tools Henry highly our Lighthouse of dental cornerstone communication service the and million. Building XXX approximately excellent Web.com us businesses

full. opportunity growth that investment technology dental, look is medical, organic profile. continuing add to for We our to solutions solid quite forward pipeline Our complement and innovative

growth long term, and and the on have over particular long we medium attractive fact, operating driving term. mentioned, As over in focus expansion margin a the

brand offer we Schein. of also and customers profit growing the brand attractive selection for of on attractive control next are and We as diversify we with course solutions to products private pricing margins focused our Henry

by growth market this to margin our organic have be doing efforts for of while us share. will expansion. complemented their we are restructuring and manufacturers programs branded part supporting well our our We costs positioning still initiative, as long-term operating reduce undertaken and to seeking expand through acquisition The

plan, We And that, would call Schein. Henry at with execution believe on remain in like going questions. lots to confident plan. it's of again, solid our quite a the we operator, open strategic So, to

Operator

of from William [Operator our Instructions] question line Blair. the is Kreger, first to going come John And

John Kreger

you that think Stan, sticking brands, that where doing about mentioning, specialty most that, were just if you're in you in you. about GP, label you us interested sense new in? give maybe just your most versus adding versus you private with dental owned interested if theme interest could Thank products, medical, versus what are a just,

Stanley Bergman

Thank John. you,

swords our is started providing At specialty and products endo, ortho, our two-fold. in focused and expanding portfolio. we're time share that dental, advancing of supporting professionals medical So line advance and products, those our One that implants, care. market specialty same also been with we've and to goal well. had focus portfolio quite area focused specialty bone a blades dental the that and is arena in for regeneration that the We've while on on we doing a are orthopedics, and

offering expansion primarily So offer the that, by our brand Schein a because Schein as a with practitioner price-competitive valued-add years of it have view brand private a we we because led that's through corporate is the that our One own of the product Schein brand. services, the all sales products could continue Henry and branded, one you do an is expansion Henry it's high-quality, products to the the brand, private products. same Henry led for will brand. of corporate if Having under And but with supplemented, for At or area national that's time, will, which brand, offerings brand unique you way, by said [ph] we that. also with

brand, our course, corporate of enables is brand, nicely. competition, competitive However, with very where private we us, experience compete to highly lead often very price and we which our

and that grow those continue manufacturers in great a pricing, as national that to Schein our where products relationships brand the So products with branded it's are partner. of and national with private specialty that software, brand to offering Henry the competitive are branded see fact and we of products, supporter areas our own brand fully wish we however, a are mindful

John Kreger

digital sounds my categories much how Where And Thank you. of today that category, is further in gauge, of follow-up that's the to run you are one within think matures? do the has Just terms this trying before it category like point. at impressioning penetration? dental we it to hotter

Stanley Bergman

data it's conflicting a scanner our practitioners there, is systems a that out States but be in or milling of integrated it view less, prosthetic crown and and less fully XX% some integrated with for digital digital, also it United John, be software. is form have example, a the device, it than of scanner machine that bridge

under So so. it's we still think or XX%

So XXs there's high still the of somewhere the that's around market available.

Schein. units, is said But opportunity, somewhat. other the more opportunity imaging and machinery penetrated. great be side well knowing for there still a digital lots one, imaging terms is there's still of nice quite On systems Henry of machinery imaging down tends units of certainly hand, in -- the full coming that, that of in lots the opportunity to imaging price in the Having market and terms

digital presents apply huge Europe was of elsewhere. dentistry US the is So the concept general opportunity in and, us, same what but about course, I certainly talking for

Operator

will Nicolaus. the of next question Stifel Block, Our line Jon from come

Jonathan Block

to we then is a high-end clearly well. to talk demand wildly GP's is able going vary with can the DI for? XX,XXX. P&L when DI to of but more portfolio so Stanley, roof, You And are the about of know, points DI a actually specific what follow Thanks. DI, start are maybe got dentist you I've think about you where wide the interest position from the versus XX,XXX good through low-end? a sell up. the price products, And as in where looking you're to I'm just

Stanley Bergman

question. Good

all levels. I think growing the is at market

level. that But are migrate lower-end that practitioners high-end from the device. not First second their the what's is, water; so, as third for add toe putting they entry they of all, a the to and there's Those you know, in interesting the the going necessarily high-end.

years well practitioners past by advisors, to DI end, eight to way, often higher we're So lead lower mid-range, and then the sometimes seven the have advance or done we end. the and new with the with for doing the introducing well,

good the will our integration, There digital So I imaging think is they're whether is solid I integration more leading the of all, manufacturers others and software. already these mentioned devices major one's is inter-operability these the market devices we or will now with as to the a DI of effective integrated have integrate Dentrix, the and think follow what in up the are the even soon. and call; for become devices signed between lot

interoperability both So category, country this in and significant in and in prosthetics both imaging drive will come, this to the a terms of way years in abroad.

Jonathan Block

quarter. And of expansion be in somewhat helpful. I'll thought the very I that, that Steven, margin XXXX, for bps to Thanks some with then just non-GAAP it in year hand the depressed first was expansion of to XX one, the you the for second this supposed maybe costs transition had you

XX thoughts Thanks that And this even the your noise? for year your look to being TSA on in could get next if 'XX bogey able mean bps time year does to better? maybe despite So goal guys. so,

Steven Paladino

Okay. Thanks, John.

what reduce ready reduction expense of quarter, XXXX. from the cost that's are reductions out operating margin, so there strong still in to changes points of system, some we're that but able were very but year very we yet to we a but gross that's operating year really say good so margins why we'll full we expanded basis XX ready was see, were QX we opportunity. to very the full-year good still while There expect and achieve the not came at QX, the expense are So, a pleased still and not opportunities to restructuring we XXXX there see the in margin program, able right be reoccur in we guiding it's some now again early operating in for QX, were but because with for to be expect that don't we we a say we're it, towards to to upside very then so more might flat operating take were opportunities QX, we

Operator

Johnson, will line next question of from the come Jeff our Baird. And

Jeffrey Johnson

consumables American think market, if good still morning your what Thank in consumables and General general the us do Standard on you color the market taking of what guys. if you, Consumables any growth market or Group consumables ? share you're the outside versus Consumables give now can standard Steve, right you on doing North Specialty the side, wondering is

Steven Paladino

Sure.

first, implants we XXX did tell stronger we to at the expect, the market and gain ortho the depending but basis to digits end products specialties, on low-double hard level I the strongest was exactly be was we So would digits. the XX looking double at and somewhere points if how sales that that between those you're endo share maybe those of in digits excluding for much did mid-single at top estimate would grew see Specialty the think implants of all which of

we're continuing to markets. specialty our in but market do products, a more Specialty in relatively still share those the lot still on So specialty opportunity there's well as is small

Jeffrey Johnson

to risk of you've of range go that you what retired other you of the through then maybe said, just raise for past I maybe with to high kind EPS a things XQ, supposed that why But be quarter of could, FX for and supposed John up of specialty the my the you headwinds, just the us quarter as to guidance end remind tougher really does some got consumables? quarter we're If well, a the understand if of year? year as was came percentage what toughest maybe follow-up; want the spend be

Steven Paladino

first question regeneration and products to first about total of million your and kind the sales implants full-year that products specialty answer again are endo basis on me $XXX is products orthodontic so and bone includes within implants let product that implants. products, dental a complementary Well,

the why we would some to is came we simply, we we raised say of full-year not in be end in ahead EPS. guidance give think we know, that where top because expected be quite will You in to improvement the I for do QX, back

we effectively the that So for achieved. the are QX raising guidance we

Operator

will of Rich, Our from next come question Goldman line Sachs. Nathan the

Nathan Rich

to last you kind that to characterizing start in just when think slightly it back then mentioned talk you stable. and in North you comparison with us with seen Dental tougher consumables like year, if sitting February you the I market despite of had seems is softness the a you America said now but Stan, you're quarter was some line

talk wondering the the trends kind just first earlier you was that relative that quarter over anything to I the and the if what had year us that seeing point improved you're of out played maybe about in ? balance you to So of to

Steven Paladino

know, beginning careful start or it we So alert and the try short period to off at again to month slow be in particular I'll you strong seen exceptionally of because exceptionally always month over back strong where in very that QX like again, March QX a it's when we the need good looking was time turn but did very a strong over us trend the trend have is but consumables, reverses weak, investors and then QX is very part and or it that finished subsequent I of in so, a strong so Stan. and to news for finished, months

Stanley Bergman

conclusions a at very that and Android many X X when quarter X I this or think careful X-week pointing in having to in last to now even years. years Yes, we've be for you're said that, looking correct has one said out month

the the a units, a dental is where parts inflation. not particular and are and not positively positively, the referring increase much more lot of stable there US there's of stable the In consumable it's but some world markets leaning I'm fact and quite slight market. are and is leaning in to

grows say So the sales be it it the I one higher X% share end, to it time, on to also and if and X% for to the consumables lower think the good market that gaining Schein with grows. programs encourage may come. aggregated to growing be fair Henry us years if and the to to on One, been end is that to do purchases of particularly. expect equipment quite customers continue for to and long Very we a has but market software

are products specialty past I leaning. consistent think with Now markets stable the

Nathan Rich

it you're, follow-up. sales, it just And as you're those like that to more and detail confirm selling ? give sounds Steve, line in the sounds bit margin revenue included are can lower TSAs that then to on that's products you wanted that just a little my co-ventures on the TSA so like us I

Steven Paladino

to as change profit, us. Henry to mid-XXXX to because a time sales profit they that some the continue core products effectively it's really cult We're on if because sales and when The to packaging going could batches for for and products from wanted its it it, for private need so Henry very time we'll vary said the it continues access we remember now for example, registration tap continue get no a because than not you these gross to we're but and need to in little that's are buying allowing because think down they I were as the business Schein is really less try accommodate include, we're co-batches operating to virtually bit little core while takes brand we're of Schein had reimburses income, the to it you time. buying the sure the registrations it's why small little is just these them. that's products accommodate handling for product for margin they we they sales into TSA to Schein happy for a that, there low to further to get agreement go Yes, costs bit why complete the in make it Henry

Operator

of next Our will Craig Kevin line come Ellich, question from the Hallum.

Unidentified Analyst

the half, subside or the this And QX got Ryan is a I guys, then first know should be touch expecting year. actually be follow-up. in is that impact you it expect this still [ph] on Kevin to quick. Hi throughout expected bit just a we higher of little FX I for run Cameron you on rate kind to exiting do

Stanley Bergman

again, this foreign Well, on an negatively Sure. EPS exchange basis, quarter. impacted

at can went the that sales EPS sales Our $X.XXX, the details that look of show the impact. we you through by

really think things many again, impacted things difficult there other that always things if I believe that go too to exchange on. geopolitical that movements, I foreign -- not impossible is predict

foreign If right really what but So are exchange assuming guidance, seen in we've consistent assuming with we're that impact the now that QX. from foreign that, rates consistent exchange for impact or we're is that. could us, there not are our deviations significant

Unidentified Analyst

Thanks, worked well worked strategy, still far. hoped. a I little I as it it's so what touched on hasn't on, us on growth maybe it you'd already, as early give maybe you what Stan. Could that? has you well And to And the as know know color relates but but

Steven Paladino

good question. on a if fact our we in not off Yes. plans with, well our I'm It's sure plans. anything really exceptionally work are beyond

aligner has equipment to and new to doctors I force. see launch will wallet love Of quite little small little consumables sales essentially love meeting its is grow Ortho step well. line a product endodontics through few sales pricing too, see of way edge-endo The the make back finding GP But we a generally I'd love a has see side, surgeon in easier equipment, view And the is real whether would has but bone we provide just introductions and of greater well implant sales time. sometimes advancing advancing priced to first course, technology, just the other which grow. -- different is that right an at quite early a to low-end particular are worked around product, happy launch to us in months worse, notion the well, and sometimes now. say our at this blind [ph] three the side. level regeneration to share the of product to like of go or complete for quarters the consumables, the customers KOLs complete U.S. products oral with the our low same the of taking we bit to implant that being of the of And low bit haven't and from so program a of lower-end when want our on med-surge two our I very an recognition would of oral you quite And with sales implants a the that better gained at us a to on we acquisition, launch, other a every endodontic implant stage the national which point our see pharmaceuticals surgeon, surgeon its the SLX and stage use provide worked with doing

oral the we Our and recently the generation, unlike and in whole terrific implants. expertise added in last area bundling I we've space. we of in to implant see low-end pace the general, we're area, orthodontic area have the bigger tremendous talent to say where with well, closed be got a position Specialists We've this in surgery are. in the over point would pricing five years. happy endodontic in us expertise great at have the dentist acquisition doing seems quite

general more we'd into the overall, and it's and from see more product products advancements like Henry of customers products the So the steady specialty base, Henry consumables buying Schein to growth Schein of specialty customer the and equipment.

of few that. do and in So view, quite that an the it's we've integrated steady and to a accelerated adding the last ago in decade are from years, that point advancing capital program a we platform started interested maybe and to we have

Operator

come of Barclays. Steven will line from question next the Our Valiquette,

Steven Valiquette

questions again first quarter. just in I'm tying to Thanks. of heavily restructuring line A guess, other? topics versus operating movement any morning calculate operating just couple of in not -- get earlier just but together expense numbers a questions for I margins big the curious you and the us on sort just in margin looking towards FX, XQ? couple COGS expansion, of one here. margins how good FX the thanks, how guess, benefit just it's skewed of actually operating versus I that guys. overall, just And with I'm Great, SG&A did just much relation first reported in skewed also line; much the And the remind line the picture? -- categorically you the the

Stanley Bergman

very the the first exchange, foreign related question, On were expenses operating your sales, COGS margin Steve. remember small, was we Thanks, and rate. Sure. to our same to at converted impact because all operating both

impact, So that it's really had issue just us. not minor really but mix for significant a it some was

Second question, to the second again give trying me I just remember, question, forgot.

Steven Valiquette

basically. versus the you more COGS time, SG&A on Yeah, restructuring, the line whether over benefit categorically just from get just

Stanley Bergman

line. operating of very all on little virtually COGS on Yeah, is restructuring Yes, benefits the a There's are sorry. the the getting we that expense line.

there's COGS not this showing I'm fact in on up any So the is sure of line.

did really also general and all selling eliminated some expenses, and we headcount reduce we locations. reducing it's physical and our So reducing administrative some

again, on the all -- expense So the line. operating it's on virtually, op all

Steven Valiquette

okay. it, Alright Got Thanks.

Operator

our come of will of Bank Cherny America Lynch. the Michael line And next question from Merrill

Michael Cherny

operating to line was of what in expense of the a stay specific Steve, on Just outperformance you a least theme us that on qualitative to at bit. little the from I can kind perspective? tell XQ that guess, repeat, terms won't

Steven Paladino

Yes.

So There's really expecting categories are, the we're some reduce, expense those number things. reoccur. different to two but on again so or savings bulk expenses that here to a to the we not of had expenses of able we've were tough isolate one

hard but see we think if to work some expense reductions we at going this We’re can some that point, relate again, don't forward, and to going really continue employee-related to expenses. those of they expenses

point. this the of reoccurring small them likelihood is that So we think at really probably

So hopefully that clarifies.

Michael Cherny

that. stick so No, guess that's I'll I much. helpful. Thanks with

Operator

Our question Caliendo, next Kevin UBS. the will from line come of

Kevin Caliendo

guys, Hey call. my for thanks taking

we on that the I over cadence $XXX the think color the of just the How the of -- about year? million. course TSA's, the should appreciate I On

Stanley Bergman

sales relative that for that are throughout X. really say the would seasonal impact. the huge short a any that have would products are QX. be a I sales number; even it closed, QX the short both quarter against is for year to not think [indiscernible] I we There think February relatively would

do So QX material point the while continue throughout the that it us wanted year in to to should as be We out. we'll it gets number bigger. pretty that even wasn't and because for

even or products line. [ph] very margins -- is that look with that's to no operating transfer us marginable a which So margins, be our sale, income from we GAAP requires the look at shown it's again, key a you to of Effectively can profitability excluding marginal covetrus through that this a it operating at [ph]. profitability though sell, when operating metric at

Kevin Caliendo

And model a trying try the little on the it as -- help million just we can the I magnitude, follow-up understand you understand talk $X just detail. about $X million, that? to to about specific and for year to But for expenses. the Michael's bit question is us appreciate -- cadence from the

Steven Paladino

beat all expenses say lower -- not that to we that about of things, half that other was it roughly I of to $X.XX half beat wasn't but was reoccur would maybe of may half and number It to by a that. was would approximately related that activity would be balance of I the this related related say

Operator

final we line come Jaffray. of Sarah And have question time for will the one from question. James, That Piper

Sarah James

comes that you If been on going of then, further how out the following us that in IBS, mentioned much versus little us you bit little discussions there's be in. you year? I'm could me ramp color wondering would That squeezing pacing. ramp pace can a help XQ for since helpful. bit and so that Thanks a the in give a in some if up orders how on

Stanley Bergman

in take the the end acquired seeing and ship is with can really imaging from And traditional to involves since doing timing general. had the the pretty a I But in well the traditionally of view, then second generally aggregate at nothing IBS, how we and it equipment Hard and be IBS in part, of general, will is results Schein Henry traditionally, the in you say IBS in is good the and first, first the we in and for Xrd, course, start unfolded is and quarter quarter, trend will equipment the see good good third that mostly think so good at it right second sales right. between year. CAD-CAM for very you'll expect of quarter get installation ending I Sarah, sale look and and Xrd point a in equipment quarter get in a an the quarter. I to market the but part second the in second third IBS scanning the would traditionally accordance VI what very, was

hard specifics give you I more but it’s So very to…

Steven Paladino

but it's this QX, more in is, to than add predict more would than probably time. it's QX hard at and again, less I that,

Stanley Bergman

rather we plan your Henry the advancing we on are strategic chain X from are ordering And again we our we other supply Henry our focused strategic areas. services, and have digital how of the Xrd, with are in distribution have remain focused Henry calling platform too. for we future. few areas for years, upside us second, capabilities next value-added and from customers committed of offering that a Schein the believe unfolding particularly so share on you in, specialty on Thank at Schein everyone the advancing interest better about builds optimization success excited outstanding Schein our the still lot which market for specialty about let strategy the small a We services reiterate our last to on excited of services. there's a and opportunity me advancing product plans, business the brand what's services, One, expenses more an then We

you the in positioned hybrid management, business good globally. motivated take So highly we [ph] have team tuning very have three on our we well good fine plans, day-to-day and a the engaged best constantly

business to So and the organically I come. to the inorganically in expanding quarters look forward

So thank you for your interest.

contact on next we upcoming May in our XX, investor May any of speaking report conferences, If one at on of XX, at earnings Relations at America XXX-XXX-XXXX. Carolynne including call the you Borders as well you Steven can Bank We same look with questions again and Stifel XX, to please and the you number May August. Conference UBS have further forward XXX-XXX-XXXX Investor when

much. very you thank So

Operator

Schein call. again, you in thank for today's Once to like Conference we'd participating Henry

You now may disconnect.

Henry Schein (HSIC) 7 May 192019 Q1 Earnings call transcript