HSIC - Earnings call 4 2023 | Henry Schein, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Henry Schein's Fourth Quarter 2023 Earnings Conference Call. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. And I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Thank you. Please go ahead, Graham.

Graham Stanley

year my discuss each for Henry quarter the and joining you the operator, and to us Schein's full you, thanks of to for fourth Thank XXXX. of financial results and Vice today's on Schein; Bergman, the of are With Chief Chief South, Financial me Officer Senior call Executive Ron and Chairman Stanley of Board President and Henry Officer.

filings include the and like comments the to made business those call performance expressed Exchange will Before uncertainties affect certain Commission the included during from entirety statements. in Securities in Risks may forward-looking. by in that such and we their section Factors information the to begin, matters is These state Schein's forward-looking in company's and I'd by filings. may the forward-looking materially differ involved that contained of the with this or are referred statements those qualified statements. in and statements cautionary company's Risk indicated Henry in

as Relations release the and should the measures GAAP performance non-GAAP all with the greater and and are of heading. periods comments believe today's provide B non-GAAP purposes share, for in measures business our website are Filings section and the In business, measures found results. market be solely serve, and internal non-GAAP of the items used performance Financials management company's in under GAAP regarded GAAP are informational for by in include market may operating upon the Investor Information supplemental to estimates. and be of can certain comparison and respect Supplemental allow financial where included our measures. investors financial a about Reconciliations information about our analysis financial and corresponding Exhibit business. These and of non-GAAP between the financial transparency end between of enable useful both we addition, financial with metrics results remarks vary rates based of key comparative will growth replacement independently not the We markets Today's including presented press

XXXX. information, information please our posted of additional accurate time-sensitive The Investor conference contains that quarterly presentation also For earnings as the live revise content undertakes is to of Relations call statements the only Henry broadcast, Schein of circumstances on date reflect February refer after or XX, the this this website. obligation of events our We any to date no or to forward-looking call. update

the a limit I'd session, question Lastly, that, to to and to Stanley yourself Bergman. today's like to join call Q&A turn single with please over follow-up. And a

Stanley Bergman

and everyone, Good us. morning, thank you for joining

are rather of pleased cybersecurity and reflects which full incident. and We year the a the from XXXX, in with last performance line with our for in quarter recovery was year's expectations fourth solid our

value-added strong included adjustments. businesses driven acquisitions global financial results negatively and our and technology Our and expenses fourth and biomaterials, largely of in sales quarter services impacted by in higher-than-usual growth acquisition-related by implants were and

well sales pace of dental impact our impact of our The in the As driven half cyber in incident durable we largely at the and to affected high businesses of we covered the feel American of loyalty, on customer most drove which due around course, care recovery was marketing Overall, and representatives very particularly businesses includes field customer incident discussed our and our sales earnings e-commerce the growth good businesses by low pre-cybersecurity was retention. the our the coupled and with the merchandise our a levels strong international estimate currently expectations, from relationships, world. North Europe. our incident our and technicians activity end, medical distribution running merchandise episodic return our and customers success the and primarily quarter. distribution and low that having promotion quarter, last levels, are the capabilities, incident the with sales strong with security end America experiencing the which some a fully we North and have at presence, revenue security have our in These pre-cyber is sales distribution customers to second about pre-cyber yet. consultants, not of service direct below telesales effective are the And our social single-digit below and percentage customer headwind media. Today,

digital and marketing of diminish I and expect term lot short residual area, through the our and of as plan. confidence introducing marketing serve, the in the our from noted, the execution the We to in year underlying work are be continued the half programs, impact of and efforts of strategic our recovery we we and reflects today -- -- markets doing a sales incident stability are over including XXXX this our our we cybersecurity the first guidance the

incident, out remaining cybersecurity continue year-over-year last For we expected end to primarily pricing, The impacting PPE year. the market from impact we will also year. sales growth we impact first third of at some lower the our leading quarter XXXX, we strengthen our we Investor grow while the the lower ranges Day set markets or serve in And residual we short-term are the to expect first of to some expect position. the believe from towards have

an to share guidance grow of strategic BOLD+X growth, We earnings line higher financial EBITDA the services. by we income are goals believe our continuing to positioned provides of as products with low our higher-margin metric to plan. additional as also business high pivot the business on single-digit and well operating this execute in per We double-digit the with to believe investors adjusted and reflects introducing that we are performance we

our highlights North and traffic the So up turn to believe now [ America, each business of In units, a denotes of ] December. patient review our to quarterly me we dental let from in with picked distribution business. beginning November

in Although in improved February. impacted January, cancellations, illness has but and weather this

doctors a result that diagnostic business SAS late that visits the adversely patient point-of-care medical season, flu sales dental impacted are are our to as indicating strong, in seen have and which traffic. elevated also of We medical flu

to flu by third of and patient season We markets from expect quarter. the end the steady normalize effect with remained consistent on the the traffic March. International

to America North immediate is was equipment. decline very a but in resulting and sales international technical Regarding and too, view. The these growth an customers the lot many We've of both equipment, good national investment be questions DSO overall many of from as orders, the practices than good our reflects both rather on and moving and sales, processing focus cybersecurity declines impact of a the digital of reflected expand our our customer to equipment applies important, equipment quarter specialists sales the and this, redeployment place price plans to equipment equipment first lower demand scanners, have continued by are was only point have a this during in to sales a had place forward. and for -- but and our Equipment point in on investing we global expect to incident well not impact to in have of of their traditional sales supported in significant operations, as sales of there continue who these of their going demo equipment in who year-over-year field be needs but initiating DSOs, equipment new expect consultants addressing XXXX. Digital to we equipment lower global regional see intra-oral offset services. less scanners software the to view partially DSOs into we intra-oral of sales plans by prices also in sales the of

as we service Our technical services us capability customers. for believe and for advantage response we is times excellent provide a strategic our high-quality

globally. We are known for this

Now global the to or let's products. specialties turn businesses dental

the to flat and significant of internal acquisitions, Sun our and also by specialty than the Horizon's and global the global biomaterial biomaterials the we aggregate case, the [ by in market European, Germany, American general, from Brazil, that market and that the referring quarter to single-digit Latin we a acquisition ] growth believe our Camlog ] implant the the the full leading implant in along quite markets market share in XX with but XX%, way, mainly fourth our serve the sales quarter backdrop, we year generally in I'm posted growth. mainly believe in continue in of France to U.S. brand for sales. Turning primarily the implant had against this some more against we and share acquisition biotech implants previous increase in Europe, grew low backdrop, [ We bit We dental in our XXXX. against the sales markets, by growth. We in growth Asian as global due from products. were above in believe while

our incident, endodontic cyber a somewhat of quarter. growth As last the result sales slowed

this, the were We expiration fairly incident XXXX. Our which data by in up launched specialty product earlier the the impacted year. To this optimistic in received cyber by of products motion in quarter, being the also the well address about marketplace. the we our remain patents replacement growth is orthodontic sales and this

As product outpace expect market across in we continue have a we various first year, of to plan to growth. half growth geographies robust sales of the pipeline innovations the the and

and including analytics Technology AI software, by most cycle Henry core management, Value-Added our our driven posting Excellent management double-digit to One now practice turn our growth Schein gains, business. was Let's products solutions. with Services revenue sales and

entirely AI and Schein solutions. in by driven was customer cloud-based cloud Henry continue base earlier, seen have about solutions The well we to Dentrix year. highly the Ascend growth workflow with of with by and increased customers, including solutions We our grow As launched digital technologies for diagnostic solutions. of of number the to provide our compared clinical customers XX% effective start a

the fourth introduce X solution. of to AI quarter, worked we the DSOs with During their largest

Product to will are patient areas subscribing XXXX. these during scheduling also relationship quarter, management claims and pleased over be X,XXX of last growth. significant enhancements to now features payments introduced are focus users contributed have solutions. remote including eligibility to We and

Ascend and interest growth Ascend and from continue new DSO Dentrix in to customers, see good we Dentrix large We strong recently have multisite announced X accounts. our

the the was also Medical impacted our Turning incident. during business. fourth to cybersecurity quarter by Growth

sales visits, impacted patient season down In addition, point-of-care the the flu were year. prior and which also late versus negatively diagnostic

However, is flu the late sales. quarter higher X season driving

million-plus market faster grew $XXX quarter, overall than platform sales grow with segment to care digits high home during continued the care new health this the Our in the market. single

leverage source the grow for business. and ambulatory majority the need, ] a agreement This extremity lower our a segment acquire [ entry announced Brusa the interest that to expertise Finally, into well. a customers, to orthopedic in upper blades our quite orthopedic particularly which in fills being customer we also relationships December, our expect late an signed and and growing to business, the surgical marks we TriMet doing and specialist investment is our This and complement which TriMet, to contractual center our market. we transaction,

to bone expect this and with strategic motion most We quarter. relationship company fixation treatments. prevention focused on into a we infusion, this extremity later entered products close ] and transaction developing medical [ Concurrently, device for complementary

the are in very our achieve of executing we and have percentages. And complete high-margin slightly slightly from did income So track we priorities products been plan. to XXXX, we fourth strategic threshold well against of our be year that below a almost $X during sales have cyber we of pleased we XXXX our operating high-growth, high goal of not would only acquisitions, strategic below quarter we incident in acquisitions occurred. in our well progress, growing had We summary, on and to with that the estimate investing us the our supportive full are our number on These significant would plan, strategic XX% that of BOLD+X to of for that XXXX. would And strategic if threshold made XXXX double-digit services. the single only digits are and to generating billion, low

is to look post cybersecurity in And continuing recovery to us course, of the This on the we focus our customer of XXXX, sales all As businesses. incident. include for experience. cyber priorities post critical

over in and guidance through continue product dental to area call of including integrated specialty financial also and With including sales our have integrating we launches will Ron enhancing And by our to value-added our digital our in quarterly that, workflow to well. both technology products results pipeline the XXXX and new development, our and we believe and recent I'll services, product Henry release. product discuss and good Schein we launches. a focus Third, specialties products grow turn on prioritize acquisitions further

Ronald South

morning, Thank Stanley, good you, and everyone.

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

incident, additional selling costs currencies on Our sales comparison, The acquired cybersecurity XXXX. We fourth $XXX results the well include report more week Exhibit respect Saturday restructuring growth will the This to in XXXX with and as facilitate financial our results fourth prior of estimate B December. expense the selling fourth asset between New related XXXX meaningful generated integration focus to sales today's was cybersecurity week adversely year worldwide. which XX-, year sales quarter fiscal With excluded the the with XXXX acquisitions. the sales figures. Please of an of extra detailed amortization extra in our holiday I from intangible by of quarter certain Year's on prior our excludes XX-week note included year press compared reduction ending we is the sales compared time, sales impacted growth next be million week Christmas growth, non-GAAP is on LCI quarter was release. also for incident. XXXX. impairment costs, million sales and assets, a in directly as of and X the local between and will growth, and internally we've $XXX quarter exclude week And the to in last XXXX a that was in fourth the Day. The estimated LCI week of extra in To expenses

our decrease cybersecurity of LCI of estimated an sales by results. $X.X sales reflected Global Turning to billion XX% sales XX%. the to growth XX% incident with fourth an impacting quarter

the per or quarter the margin. a of with point On $XX an This of operating cybersecurity million $X.XX prior fourth or the We the in in cybersecurity year million basis, compared Our decrease the our point XXXX fourth sales fourth with Operating X.XX%, the compares operating million recovery was and GAAP a operating incident negatively year diluted the quarter. Fourth basis incident, to the result GAAP quarter primarily million estimate year income decline XX share. impacted of by prior non-GAAP prior initiatives that for $X.XX net GAAP XXX operating approximately $XXX for and was per margin a we with quarter. $XXX net XXXX was share. compared quarter was basis income margin GAAP income introduced non-GAAP X.XX%, the $XX margin diluted

in EPS and estimate for $X.XX included favorable non-GAAP by the $X.XX, XXXX on of on per $X.XX adjustments, non-GAAP foreign Exhibit year quarter quarter to press XXXX $X.XX prior Our fourth fourth our fourth income was million million compares net expenses share. full prior year. or share. $XXX The $X.XX quarter compares in fourth with to quarter impact cybersecurity D XXXX $XX acquisition net per share. to EPS was per exchange diluted $X.XX immaterial. $X.XX and This diluted the by which full our that or non-GAAP impacted The Details quarter currency the EPS non-GAAP are impact release. We diluted related income includes the of quarter year year our fourth and the approximately EPS incident of was

billion, with sales Dental offset our the LCI by sales Dental XX.X% impact growth Global being the dental LCI results. decreased versus underlying decreased LCI year. sales to the $X.X sales quarter merchandise equipment sales prior of Global were and sales and by X.X%. incident. decreased cybersecurity fourth Global Turning XX.X% by

America, quarter was while driven particularly cloud-based by were LCI Dentale growth fourth implants sales also In the Services and processing And Medical fourth million Technology included were Dental our As Stanley delays solutions sales and of some quarter $XXX the XX.X%. by billion, total ] sales sales sales organic XX% of Global with decreased primarily XX.X%, internationally. solid in approximately growth growth $XXX in sales growth new in LCI by sales X.X% Global management growth of million growth ], LCI practice acquisitions product and our cybersecurity solution. quarter Dentrend were sales the X.X% and during [ and as incident. $X.X in fourth sales during mentioned, the North were Value-Added America North biomaterials. XXXX. by business, sales were moving impacted specialty driven equipment driven into there orders, [ with growth was sales X.X% growth internationally,

stock market buying approximately Regarding fourth of $XX XX,XXX price million. repurchases. We of the total at during $XX.XX open in quarter, of center the shares average per share for to stock common an a repurchased

million repurchase year, For $XXX approximately we million fiscal repurchases. had authorized the At stock we full available year-end, invested and to X.X $XXX shares. million for future

the the to accelerate year. BOLD+X business acquisitions and invested Additionally, during for implementation $XXX $XXX fourth the million strategic of our in plan, million we full quarter

Turning to and flow. our sheet balance cash

an We providing organic continuing capital Operating to fourth strategic to stability continue flow while is was and for relating stockholders. to in to end outflow initiatives balances the flexibility financial the quarter last the our million $XXX on of cash businesses primarily the incident from which to decrease due our abnormally $XX acquisitions of cybersecurity benefit execute million receivable and with resulted compared year. This growth billings with significant return in the liquidity, delayed year. quarter the to positive high at

in collections We to and as expect normal quarter receivable first flow the cash to make levels. return improvements balances we these

For a relating were mainly million business. were initiative. $XXX planned flow expenses These cash diluted compared with share as quarter in to was XXXX. severance facilities $XX or operating of year, incurred in disclosed part relate exiting per $XXX the expenses the exit fourth previously to restructuring $X.XX our noncore and of certain full million that million costs the benefits, Restructuring

the consisting $XX in fees. or were million we per the addition, related professional of that directly fourth share quarter, cybersecurity mostly to of In $X.XX expenses diluted incurred incident

professional incur and expenses cybersecurity a XXXX, We in the to lower to incident additional at some other related expect fees amount. but

recorded assets. for integration $X to are related providing we associated direct share At or not also capitalized of $X.XX assets intangible rest share remarks a per to in estimates a financial with we diluted quarter, a charge per our diluted noncash time, I'll the Europe expenses charge million unable conclude to some my costs cybersecurity related $X.XX million XXXX XXXX a impairment Therefore, this and and guidance. During for of impairment incident, are by of of or guidance. and the introducing noncash GAAP provide associated fourth we with restructuring $XX

guidance are and growth for As EPS. XXXX financial introducing sales we diluted usual, total non-GAAP

products to we we are provides adjusted metric, additional for performance business guidance believe high-growth, more services. XXXX high-margin addition, an this the pivot providing EBITDA. reflecting the In of We as and

XXXX, the to non-GAAP range of Schein, EPS residual XX% of attributable $X.XX. non-GAAP we diluted approximately $X.XX of cybersecurity XX% to This the $X effective the we reflecting incident which compared Inc. estimated share, be diluted the and expect diluted of increase estimated or EPS XX% impact quarter. our for to $X.XX. rate XXXX of to in reflects an in to For diluted primarily to Henry XX% non-GAAP expect And growth first with per approximately $X.XX per tax an impact share. guidance

We the will claim expect insurance and from cyber under cybersecurity believe arising to be policy. file an incident claim covered our our

resolution limit policy with basis, this to later expect year. insurer $X the a we a an is retention, on million be subject after-tax in and to it approval, until million has $XX final Although claim recognized would not

this Our from include any does claim. potential insurance XXXX associated not claim proceeds benefit guidance from

sales to from impact of related break do reached pricing, growth not be expect first PPE kits As believe the a some primarily quarter. PPE Stan impacting said, we expect largely the lower EPS year-over-year where out there normalized, impact. comparability We the COVID we remaining in has and do and have year-over-year sales point now test to

with sales incident. reflecting anticipated we sales XX% is of over from the from Our total business from guidance sales also This X% year, the completed half growth in the XXXX. guidance includes sales second acquisitions in XXXX XXXX the the to recovery cybersecurity merchandise growth non-GAAP higher growth

to $XXX is of growth EBITDA XX% adjusted by versus million. EBITDA XXXX adjusted XXXX increase more Our than expected and

As end we the expect assumptions. rates mentioned, market lower growth long-term be Stan our to at of

that and acquisitions and potential continuing that XXXX not for repurchases Guidance operations With also well the have currency call Our future assumes markets that, that generally remain include I'll consistent levels, current turn as share end been does future foreign announced, with Stan. with is and market now back as the guidance consistent conditions. are current of impact acquisitions. exchange current rates to

Stanley Bergman

reflect the and efforts. team delivering guidance metrics the following effective we it's look or Actually, during bit today. XXXX advancing of our has we've We that transition with execution are lot of know forward growth Analyst team ground of that investors event to year this pleased a I somewhat any incident. great strides but a quite Ron discussed while last may that our our how clarify The we said, our operated are That covered the plan. momentum It's a incredibly remarkable made strat recovery we just thoughts -- actually our cyber to the established Day questions continuing complex, long-term February. little this here have. in

please. So

Operator

the We Instructions] And Elizabeth will a be line Anderson with of conducting session. [Operator the question first now question-and-answer from ISI. comes Evercore

Elizabeth Anderson

the Thanks the on Yes, a I from the was great that can if into if for end you more was quarter. in environment of specifically if a out about of quantify place would impact to helpful. bit sales you detail you of cybersecurity That expected any a equipment on equipment? details so be the I the into questions could and had way wondering little push go very your much -- XQ outlook just commentary. sort start. what I market sort on couple the think

Stanley Bergman

numbers give extent the some providing you high-level provide information can specific maybe thoughts, I'll to Elizabeth, there. you with and then we're I

the our the backlog of were was about the the end with third equipment So to of quarter, dental same. fourth the flat end generally quarter they

backlog down North digits the With and digits. single mid-single international backlog, the America high

as wanting the in much significantly dentists and the of fourth the quarter physicians and sales installed quarter equipment declined get to in fourth security to due you quarter mind historically, to strongest as purposes. our being fourth that bear Now quarter have the backlog for in possible course, tax

incident our of visiting sales specialists we the customers particularly redeployed our fourth the and and impacted cyber course. consultants in the cybersecurity That's quarter equipment sales dealing So interest equipment growth incident, with the was that and sales occurred. because by

And so we're that sales. generating focused not on

this our that the and Our a the and fourth quarter, very going almost worked of move that United States view -- traditional that's recovered installation well, all in overall, operation, into it's to quite both market so not operation service business talking globally. But flat. immediately. bit But we digital equipment Canada the sales. erosion that but about, markets traditional The selling further believe approximately price, right, equipment the our now result gone we're but is the we in that And the the did have of average price, selling sales past that. our

Of customers be a Also even two, course, strong some were States, price inter-oil that would There pointed number quarter there market were in to DSOs our in United of are scanners may bring to think a the But and that stabilized, into round DSOs. further. and perhaps invest both the we Europe stopping another in invest. the expand out one. But have very potentially even very, demand DSOs has is for even some of DSOs national we the regional price scanners. concerns the this DSO opportunities challenge. digital at number But there more script, are a into lot the last lower generally, without the that that, perhaps think

demand. equipment in scanner price we And some And to manufacturer there the are going area as about we expect stimulate launches intraoral equipment annualization sales in leading I the said, of optimistic decreases. So quite be general. will that the the traditional also undertake a this year. business to that are

stage, not there's numbers information maybe you. exactly [indiscernible] of -- can that's perhaps around and address. this what more Graham So in sure but at sort we're providing I'm specific give you

Graham Stanley

do from some No. lot can first we is 'XX. QX And these pushed got into a of the 'XX growth sales good that Elizabeth, from in that I is say of we what equipment think that expect QX of orders of quarter.

have of of our the residual that from the cybersecurity estimated to $X.XX arriving when impact incident. contemplated impact We kind

pushback some in is we account a some from to number. sales of or net take of that respects, get also of expect the these So It equipment the favorability in some into would QX. that $X.XX orders

Elizabeth Anderson

organic made are sort there's how Got what us and you're around the understand, it. Stanley, subdental of those obviously, give the in a about maybe thinking and of of launches? products also launches specialty you services. from you a as some value-added XXXX bit those follow-through super follow-up. I and That's contribution you've a and little the mentioned of helpful. additional have And you some product Can of acquisitions XXXX. context bunch

Stanley Bergman

launches, On you I'll give the highlights.

If more, please because you want afterwards lot. call a there's

On anecdotic in the the is is this Nihti pediatric to lower-cost area coming Edge. pediatric in bioceramic the files, that Brussel new with There's [ ] a expecting Europe. activity the with launch the side, endodontics in ] [ U.S. K advance pudd portfolio, the sealer acute program, file out in further Edge,

orthodontic Pro with I X/X. had this Motion the of the and On for about side, covered We already. a significant challenge the patent expiration

that the approval time, clinical there. introduced very Our class new pricing we're at portfolio, and system [ a and this bit I we seeing the chief a motion But ] good recovery collapsed. delayed,

the X by guide On that a combining ] Horizon's surgical freehand offer implant Pro the in side, by simplify the in [ kit. it's surgery surgical get new U.S. the workflow This launch is surgical we kit

optimistic quite are We on that.

Netherlands, bringing on value basically, of Spain, a side, the in in Italy, good On the market button U.S., some States. area United the kits new launched lot in ZyvometicMTXXX membrane and implant to rollout much the in in of activity ] France, [ there. more there's going And XX-degree

on A of from the amount of happening, was sales the It's the on side, the go actually clinical number so in our list. the management by biomaterials quite part it the Camlog excited as analytics we portfolio workflow. The in the optimistic enterprise On through as the implant into view software advancing relates with AI, revenue particularly to cycle activity an going Dentex huge. the from ] And we're the market the lot there. side, introducing I SIM software as U.S. can't and in of as have -- whole the now. about point a the very side, a U.S. be a will of huge American market. launched acquisitions, job is We're of launching the in is lot, pleased although a innovative acquisition, activity biotech, we're right side of well U.S. very Latin from Brazil Horizon's the [ products that tough

as say, acquisitions as new So products. the more the the product introduced see more pipeline introductions, and of software doing be been on as quarter. And some progresses, the some will quite And or year introduced well I overall, specialty well, of are you'll have side of would services activity them. already all this value-added on and really the the

side, So have I more has to think on of to the lot we to product we if and Graham. speak very idea businesses. He good close have a is I information that mean questions these Yes. a

Operator

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

Jason Bednar

guidance. Ron, revenue to start wanted on the

really can Just the a we we bridge moving a to pieces rate. hoping try core peel to apart as of growth organic few

get hole the that to am your talking And then if a the markets? we another estimating within got I you acknowledge a for 'XX. a more from you year? core right bit points, with organic cybersecurity starting growth recapture little if your local on a internal can for contributing probably with are so, what You've to The we easy instances maybe little to incident, acquisitions assuming organic end versus X% of those? cybersecurity FX help bit Are few business we're what in X% you're the X% I points, or adding that growth X% maybe and are growth few little that bit is a comps range guess

Ronald South

generally estimates your say, are, yes, are Jason, I accurate. would

the think We from points us get normalized another do of cybersecurity growth XXX about we a basis pretty on would come expect of recovery to acquisitions as just or close that can more percentage X level. points well. And points X basis to growth

point. So for could -- X to between, that get accounts X X X.X there somewhere FX is to points XX. point say,

gap. remaining to So our of reflects cover business of core that some well piece which continued down accelerated services, would that kind be, as growth, in narrows as the kind internal in technology obviously, and the specialty in that what growth growth businesses value-added

Jason Bednar

it on of XX% does it of core we're the a -- on account your remarks, that. what your I'm where to starting on the where Okay. Investor terms like I trying you're caught just follow-up range get if having for you're accounts, for at the out how at? XX% like recapture. account talking about Day, guidance a misunderstood I from Just I But maybe or way What the into But growth, X%, for? X% does you're you unless at maybe prepared low of it maybe we the here. quick gave ranges end time in guess X%, back. that's hard figure

Ronald South

I growth referring think the Well, core you would be specialty. to might include

direct the that's we be of Investor Day we rates. end are low to rates of growth last that. year, going on communicated had did that but kind market part to market So of the growth those

So our outperform we to to becomes of part us -- assumption. of it's try and that growth market that up to part our

Operator

& Chase JPMorgan John of line the from with comes question next Stansell Company. our And

John Stansel

margin Just wanted assumptions into here. to of the look some

the And dollars XXXX? I Is look EBITDA level, EBITDA Now single-digit cybersecurity got looking growth. of probably adjusted seeing like think to when for way we're a core how kind basis at midpoint. it, on we to low that normalizing with margin you're the core growth, just base about points call then numbers on expanding, at you've when expand the XX think right the you've about think provided, we adjusted profit

Ronald South

Yes.

general starting I point, think John. it's a good

in comes from some recovery the pressure there of have -- I to be cyber. is did for margin the delay, from year. that still staple, think there projects the half that as back will some We

e-commerce For global platform. example, our

the So I making a margin cyber of that recover begin course the incident, bit to being margins think up and from pressure. as we're investments continue we'll in create that some of begin over are see incurred improvements year little the as to But now we in little those Other of 'XX. ramp those bit a on, the revenues goes year. the to more costs

John Stansel

probably allocation. above capital deployment at XXXX, long-term guide M&A. you then And on the cash for were looking Great. just

way repurchase is we guide. potentially it like as share capital that then relates it you're there in about in deployment, guide think Is incorporating we think about there there As any to is a not think shift you XXXX, the sounds paydown. overall us would particularly deployment? to the anything debt there should about And around capital

Ronald South

don't share -- -- us Last normally It's in us have wider our be I billion year do of repurchases. there. not to run for we We would kind to expect guide. million we a million we'll in suspect the we'll with in year included preserve capital There some M&A $XXX little incident. continue did something $X traditionally, rate historical after than do, will not XXXX. the some Yes. that to repurchases. be share closer of to was just $XXX I on in less QX cybersecurity

philosophy capital do general debt we debt carrying than we We some more we have have more of paydown. terms you historically. do In are have, the -- allocation, mentioned around

be accretive some of than So try contemplating a better believe repurchase, us. that down we'll to capital is additional that on mix pay we that alternative the will share we if as more is available then than if accretion debt to it we use an other options the think to

Operator

next line question with the the comes from Stifel. of Block John And

Jonathan Block

of maybe plus that , Taking to apples-to-apples of $X.XX, XX% back stick But adding XXX XXXX. the normalized So a of tax get in sort of $X.XX. I'll to for XXX, to $X.XX opinion, XXX And the I'm the in the midpoint sort Ron, XX%. my theme. residual that's the your I XXXX,

accretive that revenue X%. X% the growth single-digit is low around to question in don't you internal you've the did land but that growth, 'XX. should arguably got be I acquisitions to might solid. EPS some or you've know year-over-year So And got prior

on revenue it, more that provide of bit internal growth. like arriving call low year-over-year, you solid a I'm mid-single-digit single-digit growth at normalized little So can EPS context sort what to why low in light just looks of

Ronald South

Yes, John. I agree with with I math. your your numbers. agree

include well within necessary investment mentioned the our making numbers the in things future estimates. business, for we is investments 'XX had business, I believe in growth to from As some be some we're ongoing as that before, as that reflected earnings the deferred do and that's

Jonathan Block

Okay.

you but When the But a the think growth -- So that 'XX. these some I mean then XX. to sorry, long that we just to shifted specific in second term providing be a the I is take I into I'll about of account. follow-up be of ask arguably, taking might out to your 'XX, mean, of perspective, I'm LRP numbers, 'XX right, question And maybe and answering today, about 'XX? at guessing sort beneficiary long-term in we of right? stuff the XX XQ Like second from ask some when and just is consideration, to then have and mean, that guidance trying exit what as all question of investments the that just XX $X.XX that you're right. want I'll get residual once.

equipment the got an you net headwind, a but of consumable of and the You've majority tailwind, got that is big residual XX $X.XX impact. the

Ronald South

the confirm part John, your yes. I'll confirm question, Yes, I latter of won't

for what in that that's a your time and ago, got get correct. our Investor to Day as growth position -- we're were of being our 'XX. working as long-term revenue X% for You've the And goals being X% said at XX possibilities at at that do is And understanding year we of to we growth into we X% of to that yes, look what ourselves that EPS XX%. point

Operator

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

Jeffrey Johnson

but when into looking growth X% all then X% X% here, and X organic range, Jason account kind that you we been But where fundamental think math ask of to John, you well. I a hopefully, you're do kind question currency. asked me of I it kind was X.X kind and but you're to the group of want at year said the Let this out things tailwind a currency. core just that take that's kind of threw And have cyber X% a on that. X%, of to not stuff then on as our a kind rate fit think deals X X to as of well. X% maybe make a just point a organic, mentioned there sure I follow-up and headwind just talking have point on as to a model X-part or bigger does or

Ronald South

normalization, percentage We back have also revenues. the it's taken an a believe, mean I the account are on shooting points on of Jeff. kind best goals And that's into -- the backing our is out out we tailwind on X internal to in standpoint a, terms slight cybersecurity currency, you yes, acquisition. of for internal I is what from X when a

is guidance in that revenue would So range. net in left be to that X the X residual

Jeffrey Johnson

you the because FSCs sales to a AE the products getting those with the FSA opportunity something can fundamental the those the detailed kind move weren't that the as the handed mean, being big we I those products just and of that being to even big an to off and sales surgical is Yes. question Fair GP some force wanted at this specialty then just Or some a of think really of it's specialty as the actually sales sold were out just is is incremental I of enough. same comped from I in Endo but level? it now GPs guess, stuff. the obviously, reps FSCs, now on? Edge into And the already of incremental Should ask of stuff some get opportunity? way --

Stanley Bergman

Jeff. question. good Very

the very entered That's rather of Endo in Canada through portfolio positive. Schein the the in products on Endo of is [ ourselves. United Henry the distribution States, yes, States side, as historically the a nice the endo specialty ] So we and in will in through United [ ] And net sold be particular, field Edge why product limited. selling

into sales were this. to within think the on of By also further Henry have as line surgery the Schein's that offered Henry force course, product oral namely I side, Aspiro capabilities, of perhaps specialty horizons general launched Syn community that some biomaterials AC States. But would the United then that by the and say the will company equipment ] progress [ with we even be On our there the for the materials. States, nice they in not should for sales. And the some the focused is namely we biomaterials had access United with collaboration, rips providing I make [ ] implant and Schein,

national exciting. this create something somewhat, sales is to is much in of sales in expect meeting very more for but sales summer the in after how specialty taken these educated year have both this the the leads sales Sales I team So our off as force areas.

Operator

the line And from Leerink Cherny the question with next of Partners. Michael comes

Michael Cherny

terms about being you think Relative point, you your incident overall but variation -- back opportunities downside going the from about on off in a of role, share? biggest How taking Stanley of be and the line, at but to traditional the do as not especially see high-tech equipment hold back kind could both the drive your only where to point talked the And on only up where of equipment? the cyber flattish best not on jumping traditional recovery 'XX of market. the

Stanley Bergman

they better efficient Very that role operate a practice that -- buy good practice. question, of so think operate continue with Michael. our Also, on I we a side. the more more practitioners a helping And can so clinical they efficient

quite our at order unique. workflow, We've that Day made believe progress quite I of in that, we that our clinical Investor which that covered bit a to think in have area. do is and So

to scanners arena. printing leads sure that in digital equipment, in greater units So sales XD for in the the

well XD but today, connected as particularly flat relatively XD imaging imaging, as printing, is those software. all mill as to chairside our areas the well think as X in I XD,

position I the markets where in internationally, States, both the of management quite advance really helps Canada particularly United we it's that our think and software. all us the on in digital practice offer side. strong,

the a think, in share market overall, we market. think gain I will So I growing to digital side, rapidly continue,

of brands continue States forward share, for and a international because traditional United been edge that the where couple market of in are some the We've abroad. of challenges There the Western years, both our to now of think selling of the share. lost and brands. side, market namely the here have we're On in doing lower-priced with Europe, we pricing parts some national more I

share. not bullish market it it selling COVID But market that business equipment our and same business. sure off. It's we post service the in and are paying the the stabilized, was we down throughout brings systems in it is well. We've is equipment brings doing we overall, that world, not quite and are area time, the that I'm can comfortable period has profits. So invested what about software the price. very the down our At during grow

Michael Cherny

just quick follow-up, X And related if can. I

pricing being about a scanner at that's You don't like you think gets on to headwind growth. pricing we're industry-wide? the mentioned iOS us surprise I feel if on earlier anyone. Do bottom the not, a there? And what

Stanley Bergman

we were but thought clear. maybe not we I mentioned,

I see bit will stabilize. less think year, in a a and there I being we X feature we the possibility of We're more the I systems think the these -- feature only using additional dentists will But little of beginning said is the introduced part into Having of know, will we that, expand are friendly, United full XX% half that what States. don't of think dentists market. -- I scanners. the

dentist use one. every think should I

and I to also think expand our that and the there's replacement space. that want market. integrate a so also the opportunity is patients software systems Plus huge growing growing that is business with

less introduced, they said, I lower-priced features, maybe as bit if only digital space X the is gotten whole to a think lining is bottom we've You months very we're very, a first close X, erosion side, it, more, And expand I little And probably price combine of the year. the market. and will exciting. that think the with the the product to on I

Operator

And line question from of Sachs. comes with our Goldman Nathan next the Rich

Nathan Rich

think wanted you're single-digit cybersecurity or in the low it don't yet? sounds how extend it to of -- merchandise think not you that purchase have incident. that expect gap? a sales we type XQ. gap impact close I kind the described to company's back to beyond of related plans seeing ask seen residual still you customer as come you And And I should the about to about like a What

and kind of quarter? be second guess, kind of do So of I back sort to going recover into to quarter levels this the those volumes you, pre-incident order expect

Stanley Bergman

Yes.

So that's also -- these are good questions.

incident have who little bit on do resulted [ when pricing so, during a what for particular timing. So didn't website all and we We us look or products which data internationally, the for our a infill our to couldn't customers through customers not that data, media. have about or particular work where they our what market particular of and social access are we are shoppers, business really they ] and giving buy cyber in customers month happened website longer that through

busy business that I for starting Of again. course, by back active we're of we're field a quite not customers upon And representative are the doesn't and where that think if telesales products or not they calling area the have necessarily deep taking These in that to some deep is the representatives that pulled that even are that's bring back the a again. to go shopping or or telesales out we reinvigorate. representative a area sales had were area. orders, relationship. a relationship They whole have

not because do searching. our Google Our Google not -- ratings went customers to going down, obviously, we from to to buy were were us,

e-commerce. being worked on. have how involved started And business I to is we'll again, our already that's confidence back we that tremendous that in of get All in see is that. I that and think team

the feel may I of have [ and butter it the need As support back ] they're less larger more all or competition think -- customers, our mean, the period I -- from them to that they business. again. couple of turned relates have and more during a again. down okay of more is by largely think our everything large, I systems is their We CSOs to that customers, give and again. had many to bit a them and little But larger business satisfy back

it's months, don't I back X to least X So get normal. to we've customers. mean, maybe many take to think going lost to X at I the quarter, months

or Our that our very in was up recently claims We alternative of was an offer incident cybersecurity services incident quickly. for equipment for the came whether it's the the big a impacted we an didn't claims services processing. processing There impact providers of where by are industry X great, installation with part [indiscernible] us. through

the new what is I so It's call and didn't will day. understand I we think when strong very just COVID, And recover, so can't business. marketplace in I our and I exactly long. not mass, going to they you think, this in will today, brand -- just be people have tell the like think

Nathan Rich

the John's it quarter of significant the mentioned first -- just Great. I impacts And about seeing together in follow-up as just expectations. on that talk to of a think maybe put we a decline kind the first quick that part you And question see maybe February mid-single-digit consumables. the in Could business? Okay. on with think maybe like how of Is about flu and January, the that you cybersecurity residual kind business. just right was the of weather quarter on were in impact what of you'll the way in type sort to incident

Ronald South

illness. related traffic to January Nathan, patient Yes, there think related in related that disruption was January -- I some believe weather, a somewhat was we that was to somewhat to

diagnostic for in, medical As is the kits is usually did example, we business that increases we the flu some seeing -- which side the increased dental in of flip offices. us to cancellations a see in precursor

was January as some impact So there in weather. as illness well

would into we as improvements seen consider in more approaching I that have normal we're We out us leads traffic more believe to be a of a February what pattern to come February March. which

of our weather, I at of activity we think have lot residual there's there a are in of effect involved judgment terms we as consideration, have is look that into obviously, versus much there to cyber this factors been versus how other illness. -- and from take sometimes

exact 'XX. the -- QX the for to versus to our in we've of QX our reaching the we as also not So going those. is of because goals. the it's significant -- that have difficult kind will going There's effects said price last believe reach going we're each of QX impact most specify this year-over-year 'XX But difference impact year the be while in are of us QX is year. PPE to pronounced, we point be in versus the to of

headwinds as and year-over-year from well PPE other there's conditions. some market So

we overall year. that think in goals our we for reach line but quarter guidance first the our with -- do can So

Operator

time for of Blair. William question last X Lin from line have with the We coming Justin

Justin Lin

perhaps to assigned kind Can U.S. X the acquisitions what commercial any Shield But color implants, other would you execution you on of was and and realize fully think example you front investments talked on need the your SI about make remind acquisitions? us great. implants, I to be additional bringing

Stanley Bergman

have have the to a I SAM at -- to force there acquired a specialty to think don't course, in had approval sales -- income bring acquired special don't invested investments I Justin, a that that force. States. going of expanding sales United United force in expect United already ] They than that of any actually the to we already SIM are [ they sales time the much specialty there's to from Yes, major I think generate accretive. our have the the sales -- they're has They invest more be don't they educating business, States, States. in actually or the their

fruit X the work the orthodontics. So Schein the going be biotech be going in aligners be to some the sites going us the of the I manufacture Henry There brand. moving on be around alignment facilities. is aligners of costing don't think We're that under to between issue. and for merging to We're world, going money operating that's an will and

I some that's all material and Schein baked investment of into investment the of systems from quite our in point there's bit the recovery numbers Henry of in So an not of the view. operational a mean, business. But entire in context the that. There's

Justin Lin

X it. just follow-up. Got helpful. And very That's

Stanley Bergman

us, business there's And by Shield earnings. home for care whole think, is drain totally the [ I not is certainly accretive care and just the be very a business health way, will health ], on a -- nice

Sorry.

Justin Lin

needs implants how and super demand business about doing. dental your is to [ relatively to growth endodontics right? business to macro is business And know helpful. accelerated specialty for I maybe curious some better still, ] but specialty your happen hear but outside the touched bit, guess I like small, that's Well, underlying a versus maybe expectations, of overall. in little how also You've on is your see ClearLiner that what getting

Stanley Bergman

Yes.

well, specialty First where of particularly less our good we very with quite of value. DSOs it's all, business. provide than It's XX% doing

to move I to other quite in But from of may the into customer think this again, I a and enables corporate a services all European related expect countries. need. a doing relatively much customer of small. France, that us number And it's the numbers point it's than the offer well products wouldn't and view go

specifically business. and DSOs our but it's I -- with And an our specialty as said, for large several and to are quite quite that growing adjunct it's software ones our with nicely, product it's And offering. So really good in But aligner software again, a field. happy business business. that's the

Okay.

me the Graham and into may questions calling let quarter thank clarify numbers So are business, quite these answer We and complex. recovery a confident first in part of you the quick know have, quarter. the the questions. everyone for to in Ron any enthusiastic I by stand the latter in. with remain relatively the fourth of

in the flu first the some challenges Of we had course, quarter. with

who read from number a newspapers. heard I that of think the analysts you've

canceled were medical visits far dental February visits in additional recovered with but it's okay flu that the see our can in, You in did in January, quarter. doctors so and

is recovery the going think well. I

quickly of our the but we have how and the team at Henry slightly claimers the get Australia software here stable. growing to customers customers gone alternative for but our Schein And both into with Wednesday selling, responded businesses having Zealand major in servicing through we particular, stable. and and great. to our is lot because not the really entirely we of are in I well, the our so missed impressed internationally. European installing. think as think we've to but quarter business, the and team define of our business to we'll is not on team remember have challenged was We most area business out that I are and that are equipment now Brazil quarter. sales which of really fourth on economy, a much One ability focused still claims, in equipment selling servicing don't methodologies of we're the down last clearinghouse fourth very back and New going was and challenge and quickly. service

stable new side customers And we the share, particularly in to implant think and expect yes, that will that market to I that, the specialty I well. We very a restored. we some fully our -- growth the And are be systems is relatively customers some market to believe would process. equipment endodontic orthodontic slightly doing growing. side, And back continue in will with, positive on us garner appreciate the grow. grow now in will think, businesses I that are side the the

the XXXX. taking I enthusiastic continuing home to including have a and that hold about business very market, ready and with you and care. And Ron in clarify with remain our are enthusiasm for workflow questions Graham the So digital our to a may strong medical position have. again, that, great

thank calling be So investor setup. that and have are of some call well. as to pulls that can guess, in. you think for back, much we'll some we'll into some there analysts but going conferences you very be the I And I months, in X

much. So very thank you

Operator

This concludes today's teleconference.

time. this your participation. at lines your disconnect may for you Thank You

Henry Schein (HSIC) 27 Feb 242023 Q4 Earnings call transcript