HSIC - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Henry Schein Second Quarter 2021 Conference Call. [Operator Instructions]. I would now like to introduce your host for today's call, Carolynne Borders, Henry Schein's Vice President of Investor Relations. Please go ahead, Carolynne.

Carolynne Borders

Thank you, Regina, and thanks to each of you for joining us to discuss Henry Schein's results for the 2021 second quarter. and call Chief Stanley Schein; Executive Paladino, Vice the the Chairman and on Executive and Officer. Board Officer President me today Bergman, are of Steven With Financial Chief of Henry

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

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

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

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

financial Our and like and financial measures non-GAAP periods the provide about items are GAAP informational as in vary is as The contains business, of of this of press respect conference release, call and With time-sensitive or greater to results. Schein of of financial transparency of non-GAAP the would independently metrics Investor date Instructions]. available website solely can today's non-GAAP Henry to corresponding between call. key this of over where may by Exhibit of Supplemental call conference presented to a information in include to should GAAP in events [Operator purposes B not with our section We the or turn for useful Information reflect for forward-looking found remarks call measures both is operating section be results content no between Stanley non-GAAP information business. of of and only financial performance XXXX. supplemental obligation performance that our investors Investor Relations and replacement the These accurate to the live our broadcast, the August in comparative and that, management for after our certain be revise circumstances Reconciliations will the update Bergman. financial X, GAAP comparison any business believe allow used website. which Relations with measures undertakes I regarded statements the measures. enable the date

Stanley Bergman

you, you very for joining Thank of thank today. everyone. us morning, Carolynne. Good course, And much

to significant drove in We when key most continue the report record quarter number sales as pre-COVID-XX increases are pandemic. in strategies. demand to second global be to strong environment compared the execute year-over-year by local increased medical and dental with COVID-XX specific, financial worldwide versus because data, practices prior activity internal the our markets quarter second Medical of pleased Notably, the and currencies of results Strengthening in year XX.X%. Schein's on we Dental a of sales XXXX suspended Henry of

if in you the second local compared of by XXXX, in So worldwide that sales again, to see increased currencies growth will Schein's quarter Henry XXXX, you go XX.X% internal XXXX. to back

reflects that a product as expense also operating favorable leverage. with expansion pleased as are margin mix We operating well

Value-Added to continue $XX dental supplement approximately million. we to of the annual of XXXX quarter during sales in invest we As Technology several across completed our solid acquisitions organic and growth, second and aggregate businesses business the with Services

share our shareholders. million as as a $XXX approximately provide means Our detail part to on capital deliver will also in the authorization. strategy allocation Board-approved Steven our to greater includes of value second repurchases repurchase share spent quarter the

visits that note in that practice which material recent the most Association driving economies have as end traffic. billings dental with are Data other with new also current not procedures the as patient While has are to globe. claims and points slightly One Rather, levels. underrepresent for Schein recover volumes restorative levels, reports seen we increased in either markets Henry practice XXX% pre-pandemic continued improve improvements believe have currently serve The may of risen pre-pandemic the global data XX% show traffic which pre-pandemic or associated cases volume are date, We've to at above Dental processing open. better American across specialty a patient levels, shows with impact practice of we practices. generally certain than certain greater consistent I the survey line continued COVID offices number to we geographies, on dental industry purchases. in will seen also

the $X.XX. and and are in traffic to financial fiscal operations And and raising continued. the be United to the pandemic. We the physician surgical today, from the for above guidance traffic close specific favorable more we a New or centers XXXX year, in in we for to levels. XXXX half our improving With operations. first our global believe States ambulatory So execution improving market countries. ongoing is in we Canada, the to with patient Brazil U.S., Australia and XXXX to EPS solid patient have and traffic in numbers non-GAAP improving results also due challenges practice geographies overall continue continuing face outlook seeing recovery of remainder dental the higher is Patient at or approach Zealand European as offices normalized in Europe, diluted end of Asia, said, are certain That certain markets above

a for this me stress, representing floor Let year. XXXX the fiscal is

uptick rate are any will among especially that up. go course, international monitor a vaccination the business experiencing to and And impact optimistic result as an our continue of to unvaccinated. we're, certain cases, of as those we COVID-XX, diagnosed particularly some So states in potential geographies U.S.

going like thoughts forward. provide our to the our on I'll and hand be our conditions discuss back on With guidance. to over current financial comments, business commentary detail markets to opening I'd to more provide these Steven call our additional performance the quarterly in and Then

please. So Steven,

Steven Paladino

and to Okay. Thank morning everyone. you, Stanley, good

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

Please in Our Supplemental second exclude release Investor quarter B non-GAAP are of Information today's and services note website. the QX a under section again that This sales for that the Exhibit detailed concluded of in items year agreement. XXXX transitional corporate sales in press to fourth category of Covetrus represents results that Relations our included for we XXXX and have XXXX. certain prior the quarter

sales reflected agreement the has year the ended, in still While results. these comparative prior are

QX comparisons these the prior impact of pandemic with metrics XXXX. I will of comparing also height some in In business our QX year, addition of to given on the with key be the XXXX, of occurred

results. were currencies increase for XX.X% quarter internal reflecting XX.X%. sales compared the XX, compared The And June sales XX.X% in XXXX, Exhibit local release with increase currencies. to period. A earlier increased basis margin of performance of A-X, details of sales our of our pre-pandemic prior XXXX, quarter were our $X XX our financial Exhibit Total the the ended Internally are details turning with points XXX points contained which billion, press the in sales on up compared with net year reflecting local of generated So growth of the second Note in quarter XXXX an it compared second was operating with a of for contains XXXX. an was that of issued X.XX%, GAAP sales also today. XXXX. year with compared basis, and earnings prior basis On performance

XXXX. the basis performance versus an operating on operating X And our points X.XX% our XXX of basis prior increased with pleased non-GAAP margin margin and are quarter. compared to basis, We in increase the second of a by points year

Information You of a the page website. operating can find reconciliation our non-GAAP in our Relations Investor operating GAAP Supplemental margin of to margin also

to Turning taxes.

reported loss. tax effective the is our also rate quarter year, XX.X%. rate effective compares reconciliation Note a of prior the rate Relations XXXX. tax effective effective A pretax rate to for supplemental quarter was the on the Investor second that GAAP for Our the the also of And page XXXX with in on of tax rate That a basis, by tax on XX.X%. the page non-GAAP the only X.X% effective impacted website. GAAP effective rate non-GAAP GAAP was tax our second tax available of was non-GAAP

We the the a basis both no expect the course, assumes legislation. that rate range, tax non-GAAP on XX% of of and tax for continue effective And in in the approximately year. changes remainder to GAAP

from of GAAP the for attributable Schein on. operations or operations acquired approximately operations continuing diluted million continuing per $XX.X in second continuing net QX million intangible $X.XX Amortization $X.XX Henry $X.XX per or diluted or net This XXXX. $X.XX with On million income the and This with loss per diluted for operations non-GAAP $XXX.X was non-GAAP million of from last net was or $X.XX assets of was share. of diluted to XXXX second share. income loss $XXX.X for this per the period share to from or pretax compares of diluted a $XX.X XXXX $X.X per GAAP compares million continuing of the quarter quarter diluted from Moving the compares share, year second $X.XX share. net basis, year. same from quarter 'XX share pretax for million or prior a per $XX.X income

EPS XXXX, the $XX.X impacted with that year. compares or also of $X.XX positively currency note million by assets $X.XX same the share. $X.XX $XX.X diluted last exchange share million For per from QX period was approximately acquired intangible diluted XXXX in This half diluted per amortization share. first our pretax I'll or per foreign

now provide me results on for sales the some Let quarter. detail our

last our increased with COVID-related the increased merchandise U.S., in XX% local Dental $X.X Canada, particularly sales the Europe, sales overall sales merchandise and strength the by PPE in internal XX.X%. to We currencies. XXXX. and And in QX of billion France, comparing and internal X% prior Europe, growth excluding and merchandise to Poland sales businesses, XX.X% Asia, with global in same Dental Zealand, internal in of compared or growth excluding year. with with currencies of XX.X% the currencies X.X% and products. versus XXXX, XXX% Germany, solid local growth In currencies the sales American compared we compared sales was QX America compared broad-based U.K. North dental XXXX. in XXXX internal dental XXX.X% When Italy, in growth PPE sales and international last North The Brazil QX year consumable both Our internal in year, Global sales increase growth Belgium, quarter growth experienced saw consumable it sales particular sales period New was in COVID-related Australia and Compared XXXX, a second in consumer Austria, the was with of with same local products, local increased Netherlands, the period XX.X%.

XX.X% sales and compared PPE or X.X% or XXX% Again, XXXX merchandise QX compared consumable dental PPE with local American was North however, this in QX excluding XXXX, products. to products. increased excluding XXX% COVID-related when Our growth and currencies COVID-related

internal primarily the modest XX% Our quarter currencies units manufacturers growth American XXXX our local QX versus dental compared North sales and growth reflecting times second equipment chairs, customers. of XXXX. to XXXX, resulting with in lead X.X% was was versus longer with of delays lights, in certain U.S. and Sales QX

in sales We a also full period the and practices. seen view ultimately the chairside due chairside are will we note At experienced though, will more in incoming equipment we to imaging, construction manufacturer supply recently potential XXXX. second versus solutions softer QX from as the these be equipment, traditional time installed inventory on to believe time current it's be a well our the challenges handpieces delays existing buy as XXXX in some the we U.S. practices believe Further, any chain in some as quarter. sterilizing challenges early of today, the part we this more to high-tech to lead scan-only the to than that in at likely extended meaningful - solutions. change we affect have system. placed time, full impact including CAD/CAM satisfy the growth of believe inventory resulting with large U.S. orders impact also compared equipment. expect are number impact orders experiencing XXXX Based purchased not QX customers greater of same sales customers term, we and as for this important will equipment half At the to lead times supply QX Longer traditional

growth QX increased XX.X% Comparing in at XXXX. products. with local merchandise The to is consumable excluding versus placed excluding compared local a internal sales dental XXXX, 'XX the other recognize or equipment local COVID-related XXXX products. time the international Just or was and QX XX.X% sales QX is versus when orders merchandise PPE in as or and dental XX% internal consumable currencies growth and currencies capital International sales reminder, times. equipment internal sales we installed order XX.X% QX XX% in versus currencies for COVID-related the XX% PPE was

reported strong France, were XX.X% sales particular We delays. compared in dental no equipment mainly in Australia. was 'XX and there internationally dental growth in performance compared Italy strong to also markets, We because equipment internal our local growth with manufacturer and solid reported international XX% equipment QX XXXX. QX growth currencies with significant International

oral in internal in dental internal Dental growth each implants, and $XXX of versus XXXX. quarter surgery, Our specialties' XX.X% QX and XX.X% currencies local prior specialties in dental XXXX and year-over-year QX with businesses was in orthodontics, America versus the doing Growth and categories, global second in all in was versus with XXX% XX.X% endodontics specialty North versus revenue XXXX. North also well growth of internationally. was XX% growth at the including million, both America Internationally, strong XXXX. our X currencies Growth local versus year strong and of was sales QX XX.X%

Turning to Medical our global sales.

growth XX.X%. were XX.X%. America QX, million, currencies XXXX, QX sales increased in in growth During internal Compared same XXXX. versus The versus increased XXXX, they with increased international North an to internal year, while sales XX.X% sales local in compared XX.X% of local with sales of currencies XX.X% period and with 'XX growth the XX.X% QX increase last internal XX% including QX and XXXX compared compared $XXX.X

XXXX, broad-based laboratory equipment in including growth Medical medical-surgical and Our sales sales. to product experienced compared growth

product COVID-related first and in that XXXX tests. compared QX $XX sales we with includes in that of and This the the of million XXXX. multi-assay COVID-XX our $XXX COVID-XX quarter with sales X.X% second flu I'll tests sold currencies in test quarter XXXX, Medical and also Excluding with local in compared global XXXX. XX% contribution, of increased note in PPE and million compares number a combination higher approximately

of moderate. expected expect test And sales America, and currencies. prior including internal and an increased compared during local to at same sales Services in and onset growth elevated levels. of sales As million, the remain have Technology to increase continue since we COVID-XX Value-Added COVID-XX, we XXXX. with local QX Dental both year, versus North PPE declined sales previously to were our $XXX.X our we Technology businesses commented, Medical the while demand Value-Added XX% in of internal versus XX.X% for the growth In XX.X% and growth currencies XX% sales XX.X% the Internal in period currencies in XXXX. was local

financial performed business XXXX. our versus Services in prior and as Tech the increased the Value-Added and One Schein Henry well sales was Our X.X% second quarter, driven year businesses, the which practice Internationally, internal services by XX% primarily revenue. did with compared transitions

immaterial. $XXX per quarter, repurchase shares average approximately to for authorized the second At future million for we buying during diluted $XXX approximately million the The totaled stock was million EPS quarter. had impact of continue and We common X.X our of market end repurchases. stock of approximately available in the the the at quarter, second shares open on an repurchase quarter these $XX.XX and second the price of that share,

cash balance our and to Turning sheet flow.

to last access to year. quarter operating flexibility of significant continuing We flow liquidity, for Operating financial income have operations increase $XXX.X $XX.X investment second stability. to working due the million. was of compared second flow increases capital. and negative primarily providing net the cash quarter year-over-year That and million of was cash in lower for XXXX from This in

EPS we share. QX unable At guidance now we of for did this attributable impact a of we GAAP EPS restructuring non-GAAP XXXX time, the be diluted operations now non-GAAP our EPS Bear $X.XX. significant XXXX that at compares pretax my by I guidance earnings or of tax on costs including per have restructuring our $X.XX. ongoing raising represents the guidance not as to we continuing our without providing unreasonable was mind, non-GAAP conclude not Henry which for which to charge we will this initiative, for initiative, an and provide, again, disclosed previously related with recorded be $XXX,XXX expect diluted are our in diluted previous diluted to are part to guidance. a Schein, 'XX, EPS the Once in As a of corresponding above updating will floor effect. guidance. remarks effort, estimate This any from floor

Our guidance impact remain share and associated current the for Henry does XXXX as operations also assumes stable current rates with is guidance as announced acquisitions not acquisitions, future previously future over back of with there and adverse and Stanley. Guidance material are The that completed potential me repurchases, non-GAAP restructuring diluted turn Schein markets consistent EPS foreign or attributable assumes levels now conditions. from exchange call consistent include expenses. summary, any, also to the are or continuing market that if that COVID-XX. With end no with let to market generally are changes well

Stanley Bergman

Thank distribution you We Dental value-added excellent wide positions to and of services including in our as businesses well believe our Henry expand much, foundation self-manufactured and specialty practitioners, leadership for Medical serve products global solutions to the as Schein's very Steven. an products. range as continue

Schein path One profitability These on to happy remain the the of in and outpacing goals. on to high-margin profit last across focused further leverage we our our growth efficiencies operating long-term discussed our mix as products achieving we Distribution are We expense and them over strategies. long were in strategies discuss call. believe We growth, this expand part term, through gross increased and One business, the call on

compounded record track In performance public fact, business to our as a We XXXrd of around. growth, with the build very growth, with all of expect we company. continued the our pleased EPS quarter are EPS on do

which of the represented and at Services worldwide of looking When high-margin over and and Services, Technology specialties our high-margin sales It's comprised looking non-GAAP of about Value-Added sales. results components in and One, XXXX businesses, the income. comprised fact, dental operating of Technology Value-Added and Schein contributed of businesses, income. Henry operating XX% worldwide approximately our X% for of X/X approximately XX% In our are XXXX, at GAAP businesses, already including worldwide

comprised in specialty with worldwide XX% X% XXXX, worldwide income. of operating On along dental of sales side, the this approximately about

and, consumable America. a of with little excellent experienced dental growth revenue into second markets growth by in consumable And deeper We and merchandise specifically, the equipment international go dental delivered merchandise driven sales both North bit our distribution during double-digit the Let's quarter, business. XXXX. sales more compared

in markets, international and both during So growth equipment XXXX. North traditional of our America Steven business. discussed the the internal challenges supply U.S. experienced we growth, dental for double-digit state

We at and not to business eventually quarters our specific look a times expect would over is lead that take and X to it like few quarter. a to normalize important stress equipment

XX.X% So market, currency for in our in growth. example, the North equipment dental first the was local quarter American

What promote hear treatment and, to it the and actually American look And dental quarters. and is equipment accurate course, the in important as of North invest business business, revenues equipment continue very of optimistic well we diagnoses that's business, workflow efficiency. practice we So more we as to that globally. the in is plan enthusiastic couple practitioners from solutions a our improving to growth technology that about are and Canada, United in remain our dental at hear dentists over planning States, and

the dentistry. that full systems in believe seeing equipment investing encourage prospects remain chairside come and to noted we dentists investors committing advancement while internationally, As managing the dentistry. sales digital medium-term scanners versus trends from to some as capital prospects, the fact, and, dental stronger extent, purchases digitalization laboratories and still are the I America even focused North stand-alone of both to are of of digital we will carefully in long-term on in

look a a at $XXX take our annualized now million. let's So dental at category businesses, specialties sales which brief has over

penetrate extremely key As versus well as Steven both sales markets, these total dental performed growth domestically specialty noted, we global internal dental specialty specialties XXXX double-digit internationally. and further - with

in strategic also quarter. developments specialty of dental of during second key had We categories number product the a each our

in products of global specialty we solutions which implants increase include dental implant regeneration oral surgery businesses, continue and we products, to is dental our the bone bone to of regeneration markets. share course, largest new seek key and businesses, deliver Our and as

the Camlog in launched the U.S., instance, addressing For we our multiunit with recently full-arch implants progressive market. prosthetics

also complements value segment We solution price have offering implants line implant which market. the to successful, introduce been enhance expect of This the the very particularly Medentis region. Fusion our to to implant our in our value for DACH

providing augmentation of for address many on words, spot providing focused the of high-quality a but DACH our is region, equation also a for of underpinned Europe, the technologies line high-quality value. in pricing a also providing plan the dentists we're high-value, enhancements end clinical foothold world, investment customer We is year, strategy well. other various new material. and particular solutions focus we implant while solutions. the in In as the of tissue implant Asia requirements parts in believe of in now bone gaining well unique in to set broad in Our by price the in these By quality works Each a U.S. to next-generation specifically of launch differentiated a treatment.

me international and strong sales markets. specifically Let business, turn with accounts but large where in driven was in by the second growth the performance a now endodontic overall, the to quarter just

file with we In to solutions and core to in aligner offer enhance orthodontic with the and North and our countries launches strength be Today, and France, platform reach market, are Ireland, and we bioceramic as Aligner Spain. particular Our received Italy globally, recent pleased portfolio in our Poland, America continues we Clear XX the expand continue Reveal well with internationally. progress Europe. in continue to broaden

solutions. Reveal with with and Sirona scanners. XShape integrated Planmeca customers Dentsply in choice providing integrates the flexibility soon are and their We scanners with both of

in to development. enhancements ahead Looking our aligner clear

XXXX. treat our Pro tools U.S., patients, treatment an launch visualization launch will the to internationally with planning software a bring preparing and to are which in Studio We scan help effectively and in update that advanced dentists

platform management to efficiency. are Dentrix expanding OrthoX practice will integration integration Clear Reveal and We our enhance our that and stream workflow with Software lab practice Aligner practice currently DDX between

We by also the of our will available this software expect cloud-based end integration Ascend solution year. for Dentrix be the

supplementing In Henry of in promotion dentists Schein our to addition, United One are aligners And DentalPlans.com manufacturing the also DentalPlans' of expand faster Reveal to is patients. facility delivery manufacturing ensure we direct-to-consumer to American Clear begin summer, new we the States. and with with even platform quite effective. will times North to The Aligners working this

Our markets of global dental continued across specialties in high-acuity key oral seeing are in our strength to businesses traditional addition procedures many care procedures.

Let me now hit. Value-Added business. pandemic turn continued the early of patient and was to the Sales days when Technology traffic from Services improve to hardest

across During particular, board One, the this largest quarterly a the sales we Demandforce, reported In Schein the Henry growth to solutions. revenue. Ascend, Dentrix Dentrix Enterprise, quarter, with contributor DentalPlans.com saw solid in record-high business the

cloud of compared to versus second our cloud scalable Ascend, flexibility quarter and of offering, to the our second services. and Dentrix on XXXX, of focused are migration the bit solutions adoption and the in In the a too. to quarter recorded cloud-based XXXX second solid We XXXX create we quite growth quarter,

periods. of In than both increased sales fact, with traditional faster when compared sales Dentrix Ascend

a efficiency solutions continue so revenue in engagement, We A have unified practices patient for customer analytics is solution we solutions suite and simplify patient management marketing to and integrate relations capabilities. continue can key tightly Henry our cycle drive to and that Schein One Schein. invest with to to Henry enhance practice priority and

use the patient technologies. expanded engagement We and Schein Henry One are customers of have that communication our seeing

Value-Added offering. our Let related integrated our recently me Services to acquisitions expanding announced reflect on

virtual Analytics extremely a mission efficiently profitability. dental dental to comprehensive our practices dental but is and that businesses. to problems, eAssist help excited patients. and data internationally, the company amongst to about services solutions performance, billing tools Solutions to a services deliver that care analytic cloud-based leading and programs offer of is strengthen offers the high-quality develops are eAssist, We more prospects improve to and our business smaller dental ability practice key Jarvis efficient of management practices. Jarvis amongst developer growing decision-making professionals DSOs, advance well-received leverage best-in-breed and of that more business help and will operate Dental midsize Dentally to outsourced extensive Dentally improve And suite to enable an also the now to be particularly diagnose practices

Turning markets quarter. center, believe internal with to all business We performance care of growth pleased to outpace the continue sales. growth. the to medical sales alternate local second were strong the our double-digit Trends in look We a care improve. Medical currencies. sales now and surgery during the at Please the physician, continue our in home market ambulatory, take

Excluding growth is our the market. internal in X% COVID-type products, reflective growth of of this almost

As products of test have decline. expected, continued to sales COVID

see But in out subsided somewhat me this quarter, that on point in pricing accordingly. July, trend. everyone the I'm boost let In Although did also as call generally declined we a sure we rates, are demand. and second a that infection understands, seeing of reversal of

are of business was PP&E tests other by customers. well. this quite tests the COVID It partially medical merchandise all that sales doing is well quite our as as tests, other of products Generally, sell well. in we to and equipment sales in reduction particular, Our doing consumable offset

course, that delivery with business of We solution of which the core cost-effective offerings segments continue to expand differentiated care. service the for a of setting market, distribution low-acuity with the is - beyond differentiated our health Medical most

in Dental moderated remain the to outlook in have Our at Medical for unchanged. pandemic, demand PPE remains demand the levels PPE height expect from levels. elevated yet we of both and businesses sales

pre-pandemic We will unit view, expect at While levels. to lower from quite protocols revert that moderate, that we a care believe will our do sales remain unit to point new to pricing levels. of will we will elevated continue remain comfortable health be not by driven sales continue PPE

the well Financial social investors we Task we're now progress with and Sustainability XXXX. years, X The line kinds Accounting and target. disclosed ESG of Global with report this compliance our latest a environmental, ago. Among panel Force a diverse our called to our started a when GRI, by decades discussed end to plan towards with Recently, our number workforce. the with Initiative, Henry couple on our supply panel we Board call, of It issued number May, annual in I'd a work for we to plans a Climate-Related with inclusive undertaking, we over for discussing sustainability briefly focus report. we also Before wasn't and and in also next area decades for hosted ESG initiatives of science-based initiatives and of so-called the with actually. like Reporting Magazine establish in these In experts, analysts, Standard newly goals, and we on ESG, IR comment Disclosures just of hosted we that governance chain participated Schein

find You as videos our CSR of these as on report well can events website. our

investor we answer questions, operator, ready So are you. Thank please. to

Operator

Instructions]. [Operator

Our line with first William from of John Blair. question comes the Kreger

John Kreger

Maybe, improvement just gross trends in thoughts nice are but kind levels your to about metric the couple of talk the to of you of Very get What Steve, can I XX% that down ago. to from years second know little a half year-over-year, it's bit your and level? ability still back about margins? close that a how

Steven Paladino

gross also for think little bit adjustments everyone quarter. that We margin John. that the during have did than knows do of Yes, supplier lower opportunity rebates believe some expansion. is We inventory a is normal. small I there And

others. the the some for completely favorable by expansion as than balance for a year. growing of are the gross see driven as I gross modest margin higher the So that would opportunity adjustments as again, be the And will of mix businesses well faster an margin elimination, inventory

John Kreger

in correct? then hurting you equipment? that's And chain just Europe? not be? America you challenges North the can basic And So great. but that clarify about talked supply that would why Is That's

Steven Paladino

start some and then will want comments. maybe add Yes. I'll to Stanley

from So the North equipment America internationally. in for manufacturers different buying than generally are traditional we're that

the traditional to related materials but to more It's want year, that second of We buying. manufacturers. any Stanley, manufacturers North to because we're seeing to and are units of not John, internationally how of delays long hard that. you we by do color half the chairs, and tell, lights So raw that from impacted to that that? America take rectified delivery in whether the this continue for the hard It's add - say it's be it will expect this to to tell. they're did really

Stanley Bergman

Sure, very question. you, A Steven. John. important Thank

particular, to Let and to me clear X be just units, lights. and sector chairs manufacturers, U.S. in of relates this that manufacturers X relates

of general demand, firstly, because Firstly, for equipment are these significant the are manufacturer this particular market. sector manufacturers because seeing but left in strong general. chairs, units And a also of and experiencing demand we particular in elevated or these demand, equipment the lights

not are equipment. significant in We experiencing imaging any terms supply of on shortages

Sterilizers, doing equipment, source particular scanners not and of in quite with okay it's And take no also is all, active looking in generally, delivery business, brand be at out, every pointed of that's CAD/CAM at fine. for And please to example. Europe available, the a a equipment But that at which account with mills. in Canada couple has with I may into as Zealand particular. quarters when this are adequate equipment okay. whether issues And stress is of too. sales, fine, quantity. don't an and is the to issue. quarter we're product. there no seems I And fact, X issue in do every or New XD. look There handpieces, is In be U.S. want Australia doing Again,

Operator

from Your comes Johnson with next question of Baird. the Jeff line

Jeffrey Johnson

on question, just Maybe guidance. qualifier. purposes. clarifying Steve, One question for one two clarification

ex versus I for XQ organic think 'XX years PPE. ex give Medical global dental dental PPE the consumables international Did ex North that you helpful. number That gave same a consumables? PPE. the America organic 'XX be XQ and ago you versus X Just growth versus would growth

Steven Paladino

Yes.

don't it if call. I the it I I give handy. see me think Let on have did

Jeff, know You small. the number, don't have what, is the very business exact medical international but I

the specific handy. So the have to But number similar, global number. it's very don't I American North the number,

Jeffrey Johnson

asking Steve, North was Yes. PPE. dental American ex sorry, organic consumables I I'm

Steven Paladino

American did consumables. North Yes, Oh, we I that. think say dental

Jeffrey Johnson

I heard with a X% was Maybe number. I'd I thought that though. misheard. PPE

Steven Paladino

Yes.

Let me check. my Medical, mistake, on. were thought to referring sorry. Yes. Hold I you

and So the was QX to and America total XXXX, was excluding XX.X%, compared products North the PPE X.X%. COVID-related

Jeffrey Johnson

X.X%. consumables? all That's North of or American American North dental

Steven Paladino

That's just... yes, consumables only, we're because

Jeffrey Johnson

understanding guidance. of kind Yes. And just

the back. than bounced even bit down look up It sounds the first sequentially you higher even past year coming 'XX. if stay to relative it's first like Dental revenues Steve, this this like here more half structurally, half though a expect of higher, are I at than they of or year, seems little years. XX% XX% PPE you're to So

understand You've of years XX%. half Medical. down anywhere floor, half I the versus it's down, organic get And but mind X both to kind the it conceptually, your ago, decline XX% 'XX. second got growth being alone it my could let But versus guidance, Dental second of implies close and a wrap can't I how around you

help the setting 'XX? why half be can floor suggest level the just pretty versus a So seems a that the to second us understand would understanding of of what significant you you're kind falloff that's floor,

Steven Paladino

really we we're lot not Similar increased did quarter. we QX, a projecting falloff. to increased. Well, floor moving a what lot it that in a uncertainties, we We this there's But $X.XX significant of a of gave parts.

I of a the preparing there's if see why if of it, for right But business, all momentum hopefully continue way the raise us, well. the again, uncertainties, you'll opportunity momentum But floor Jeff. that's And continue, We it we than the that's of better to there's see the things the things the we're in continue us we're think do amount are. with approaching the much now, uncertainties, because to still good floor. very business. way fair

Operator

from Your next question Block with Jon of Stifel. comes line the

Jonathan Block

a where bit. sort actually left off The mentioned, of take just margin different it 'XX little I'm a you a op or me pick so. up implies at going but deconstruct just XH of let maybe floor, to a mid-X% it. Jeff crack It and $X.XX

And Kreger's XH. to even margins in or question, X% high John you higher. stable did mentioned You maybe gross

it off half wasn't lower XX.X% through math, implies and that's the ran 'XX. of a of of high, base. in back revenue of sort Pre Steve, you even pandemic, OpEx it So that the

I parts, be amount you I a elaborate to And would in especially OpEx promise to the can shorter. deleverage then of levels? pre-pandemic to just throw sort So it's of directionally, you flat line, half, but the see we such back know the moving lot are relative GMs an in why up in if will on my follow-up

Steven Paladino

That's okay, Yes. Jon.

We're going hit So floor. think the it way. we're looking wrong not you're the to I at saying

expect that. to of ahead We be

long all So haven't haven't above approach. the the just we floor are to the What the be, is your do floor, out expect that said is we all at there. I uncertainties done think, much and to we because, of how again, that analytics

this So the haven't floor again, the quantified the the I above of but not just analysis caution do to because to take you do how the floor, year, much the way be would expect we as you're we and doing just to point. at it balance

Jonathan Block

That's enough. Fair one. Okay.

ability So that seeing or maybe you're labor pivot, Steven, a experiencing. something your able time, real are to is that you costs, through just so, inflationary through? Stanley are to that perspective? anything if And that to pass on that if And you pass

Stanley Bergman

Yes.

have PP&E experienced on seen side, raw due in of branded increase inflation now. products, the course, On be in We've labor. supplier inflation to price seem some we those and Well, to material some moderating products. increases shortages

Our private price label is inflation. seeing some

that full are incurring expect We of they're lot a this swing, getting Companies will moderate. back up. overtime have catch into to

going to inflation. there's think some be I So

short-term two But we're we one. of going it's this see doing not is passing to customers. as where issue, that. we our a a this lot moderate, to Number think I number are on

due chain worried, but Container So it in up. costs back pressure we're to where supply super some are being is to quite XXXX. the there not not here was

by As being manufacturers. I said, overtime is incurred

were So this manufacturers pass but increase course, also to I this of to in alarming costs. it think on customers, we, sustained, point. it's don't at And work contain if with our it

Operator

from Bednar question next Piper Jason Sandler. comes of the with line Your

Jason Bednar

or you Stan an in that CAD/CAM you demand market over the Is indicator then the future. the units to upgrade is to do positioning how product all And side, on that and mentioned manufacturers? time? scan-only over more options those belief you to being dentists evolving expect you the CAD/CAM full sense high-tech offered scanner shifting those manufacturer selling the being by how see Steve, equipment influenced side, of and reflection from a X another promotions in and predominantly demand the capabilities the you're at by

Stanley Bergman

I'm say, is a but shift That's is expecting scan dentistry. in standard of saying think called scan certain this good They've it. not for And now. I We've I only. practices, very relatives. to question. practices, scanner, years to it practices, and about value to digital and close clearly the a higher-value public out a from use friends There heard it's use is only a think

scanners scanners dentists version. also that that moving dentists have are direction. of in scanners. number - have that So clearly there don't There's older an have we huge still of And number that a are a

now. towards quite think scanners. movement right is these there I a dentists investing So in are scanners And

of getting full because We But momentum. the clearly, the other going chairside, now. of are the also chairside money in the maybe words, I is into it's gain some will foreseeable dentists comfortable including case on lot - clearly, turn mill scanner scanners a focus program at couple mill CAD/CAM, And for that full quarters will, lot the these to a a be a have think And point, spend future. out, now. to adding

of has share the particular mills. think stable. actually that scanners machines, or X is of brand our chairside number I of major that brand course, are about doing sell a are we, with there market all market And in view. a scanners are major X point other and X significance between X from Now and major of to fewer our well. And sell the are all growing X, relative They the the the there, the ones manufacturers share of we

area where is dental bit The with other a seeing labs. of quite we're activity

We are the laboratory clearly of in and digitalizing provider labs largest dental world are well. as the products

in wouldn't have outlook about quarter. any This very strong But this of a on I with happen mills. I quite we're as chairside particular scanners. into particular optimistic kind quarter view category, read that wouldn't and anything systems this mills full quarter, to negative - we So

Jason Bednar

that. Stanley. really Appreciate That's color, right. great All

all challenges you one manufacturer framed like sounds, terms a business materials, guess at the clarify on as were which mean Just at maybe up, really really mean I in to and simply business into this follow-up that's side. slipping issue sourcing quarters sure, just it just you been the chain has would to there level you moving equipment for suggest on But competitive and that supply of make the referencing to basic quick distributors? future market-wide is I I others.

Stanley Bergman

no. no, No,

was On the strong. business very our equipment contrary,

There in - and a noted, that the units and in there there's is filled. America North Our That as to bit demand manufacturer practices. backlog chairs, is had strong. is product. market both in in investing very Dentists are Plus States capacity lights. or the United be their in I internationally X left a

units with a that. practices quite small practices, this the beyond with And else had equipment demand wouldn't chairs, as increase see in particular lights. that our doing read also filled, with course, of void coupled to a so are get I which and And with anything I that very, with and, very heavily. DSOs midsized is well investing are comfortable we But business,

equipment the I'm I to than at the particular, we well. experiencing chairs, in is The quite again, in and Europe, doing global markets. on scanners So domestic supply units, and doing to business in And lights And into up. our did good referring think, backlogs the that. full. the issues quarter, equipment But pick well, also imaging both chain more these well will won't full the is compared that not doing the CAD/CAM, read quite strong, with last backlog, overall, business XD. least well. The I are for

Operator

next from Steven Valiquette Your question comes the of line with Barclays.

Steven Valiquette

XX.X% it ago. kind it's regarding back the guess to things. like But seems growth 'XX for show Europe couple I the of dental of in just first, with feels a like 'XX. that 'XX, the number second QX IDS given Recall equipment of international trade XQ that industry, likely occurring comparison to quarter strong A year. tough hard March XXXX of dental pretty that this in versus of was was XQ think strong a eons quarter the

resume assuming it bump get you COVID of to want a 'XX? was normal impact drag the to trade trade the thoughts are And more of September the just Brazil just sales also equipment dynamics? for IDS, year, with that Or could in international on comparison. think this reasons. quick show I I down in set given in potential be to XQ on show related dental water your some the

Stanley Bergman

One front kind whether number dental projections we solid. purchases equipment specific any have this Steven, is and quite can two is is we're don't But number equipment know, in please markets sales in I that generally, of of information. But Yes. be me. in the X disclose things. one. understand lumpy, I demand don't

their We X- Brazil. Brazil. That reference in exit defocused we was of in significant although a or manufacturers. the market now, part is do are doing quite the of want They our look well. Schein feel context a our Essentially, Henry overall, would investing Interest modern. doing and Dentists rates did And a practices. You X-quarter certain equipment well. issue. company, and are their not is in as to manufacturers equipment have equipment But added I other Brazil say market practices are helpful.

quality going solid to what categories account around. the the I who equipment is tax be at Of tax Who course, States? this generally, is the solid be continue the issue mix deal the for forward. expect are And situations. these end of exactly for when Canada, - North the all America internationally in trend manufacturers the will I with up. you XXXX have look numbers, dealt these domestically, with. growth going And trend And But would and chain particular sales knows will at situation United supply into you equipment in take what see quite look quarter issue. of the all at and to all fourth to to

Operator

question line last Sachs. Nathan one Rich from with Goldman for time the of have We

Nathan Rich

you. start, And been, line just bigger to the of a last about provide M&A at you in maybe mean back Stanley, to operating we I how helpful. then volatility would the picture, are there's of half Any quarters, of did have trend for how that in think quarter? significant margin. thoughts bit the looking the year? thinking that or then the could as operating And about X turning a you to kind model be margins impact FX Steve And Maybe on

thoughts international versus the your look consumables improve. could would as to think still there's still the momentum wonder highlighted of growth half below back You if markets just well get North international in in the far on in on like will It sounds for and we room be it how I the are as great America year. you baseline to XXXX. Asia. comment basis Europe X-year double-digit markets like you on And what

Steven Paladino

typically, answer people, to on points. negative the just question, profitability acquisition generally to the get by Yes. I impact acquisitions, Stanley. quarter operating costs, you do XX the get immediately. don't earnings. to quarters acquired improve impacted It turn few the you Plus a back companies. synergies And I'll I'll we margin quarter. synergies it remind deal QX, have and basis points drags basis us then people, the first for and Nathan, the of for But negatively impact which think XX was takes to the the our

Stanley Bergman

question the our business. So on international

I strong. that It's quite are Germany strong. business. size It's Implants think period, done Very and than quite very been believe, Europe. of anyone scope profitable. more well Germany in during period sell I it's in And solid. the biggest market dental there. is little our to overall, our in We, have exceptionally markets - international time. important bit this throughout has else. quite a have strong Parallels of us. implants retraction But to Canadian this it's

Netherlands been where visits, solid. are not okay. the in U.K. recovered. XXXX. are we recovering. back And of XXX% we in Our still in is prices the way. were terms fully markets and process are like reasonable, by France back Italy Other Spain to has the But of

Europe on think we 'XX, U.S. the little think over right COVID close. a that But stable. but to doesn't patient still would is well. market a visits. - compared data XXX% are. gaining long team the visits 'XX are higher time measurements growing, for very we high and in say markets, Brazil for get as our working the well these in Asia, internationally Europe than We've say stable and in to been room share. New management businesses. are markets to team, Australia well. and, has rate, ADA And as a driving U.S. is Henry and where believe exactly I market management and I'd an Zealand team, business average, hard we're course, and of from there's particularly there outside the equipment and the a consumables practices in contemplate we're have We're very But we certain are, Zealand Brazil. go, New dynamic to of management good And excellent the Schein doing technology outstanding back which is Australia 'XX pretty to is clearly In and all very compared All as - I our the with

relatively is and growing, U.S., management is investing - over of business slow small the there in to Our added but business. Medical outside the

So our business. is Carolynne, quite that overall, we're it? international about so optimistic

Carolynne Borders

Yes. remarks. for ready Stanley, we're closing

Stanley Bergman

Thank you, participating. Carolynne. all Okay. for Thank you Thank you, Steven.

good feel tone think very I and got with progress the we the call, you've is, the of making. we're that

the very we're implemented. Our of the And place. But optimistic every we I parts strategies that wouldn't are have say about expectations. I speed are believe strategies good are exactly are being exceeding in The management want. is very strategy a good. team there future. the we business

putting years. are we've for more XXXX final or to with been say the XXXX our the what past I We would touches line to plan. focused less on few in strategic

like XXXX. had, we bump largely from course, that. the in Of would a everyone, I recovered in road But say

midst think be it outlined, important, the a pandemic. of to in that is are Steven I Although we as aware

to But highly large the that in recovered team, even very we strategies. well. dental I our is on the once be markets, The is Management business medical think almost the We're concern And overall, performing more can motivated. doing have there. motivated. And dissipates, is So general, a optimistic. markets extent.

the on. capital sites, is to and we're in is stock So point cash. we we're believe care that putting our off it think, repurchase. way, the between And in right focused and place intelligent investments be, lot business a that's of throwing growth work, what our to The an from of the ultimate view, splitting I

your So quite for optimistic, you and interest. thank

Steven Of to answer questions. be would happy and course, specific Carolynne

I our as information website well. more investor think has

an to from you. Thank forward look and update now. you, months thank X So

Operator

today's joining. call. gentlemen, Ladies for that all Thank and you conclude does

now disconnect. may You

Henry Schein (HSIC) 3 Aug 212021 Q2 Earnings call transcript