ENOV - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the Enovis First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

And now I would like to turn the conference over to Kyle Rose, Vice President of Investor Relations. Please go ahead.

Kyle Rose

Thank you, Marliese. thank XXXX joining results and our today everyone, quarter first conference morning, you us for on Good call. I'm Investor Kyle Relations. of Rose, Vice President

and the Matt Ben Joining today Chief Chief Chair Berry, on and Executive Officer. me Financial Officer; call Trerotola, are

issued our earnings of and is Relations enovis.com. this available Our earlier morning the in was Investor release website, section

call Both call, will presentation be found also will using be can slide the on a We archived the our be slide the website. website which of and presentation this on today's today. audio on later

language be differ we During the and in and some call, materially that are uncertainties, make. the might our about with in beliefs filings forward-looking our statements harbor set These estimates we'll subject SEC. from events today's making future earnings those Actual forward-looking risks forward-looking results and in including statements release regarding to any the statements and forth results. safe

not The forward-looking obligation only today, to as or of statements we speak them, as law. required assume intend by any update except do and

further and today's financial in during earnings the release call today be appendix the relating measures reconciliation measures our non-GAAP details information regarding the accompanying found to press referenced slide those For presentation. of in any can

turn that, on Slide Matt, With X. me it who let Matt? to over will begin

Matthew Trerotola

integrate X focus, and fulfilling rate for help our as company want work quarter, everyone, and with the global teams the forma thanks the welcome live recognize and first begin purposes. our pro Hello, hard before lives. strong but morning. we on we're use execute combined Enovis organization results, to managing every active that global strong our for to and a I a global I Kyle. discuss We of we'll Thanks, more to joining us who strategies comparative day Lima had a this Please efforts note into and to basis, fully organization the patients

updated to Lima include financials have Novastep. comparisons, prior our been and of the year-over-year For year acquisitions

are a Slide to our of plans XX% talk year. productivity of completed closed reported our start adjusted by EBITDA basis step improvements X% broader had inflation We integration impact about XXXX to acquisition start pro healthy transformational on strong X versus and points, We from significant seeing margin pricing start we've years. and of Overall, acquisition few and strong change the geographies and and January highlights. on the momentum We the of growth, Lima forma of scaling Let's momentum We the We reflecting some progress made growth Lima. carry from acquisitions a planned the completed on across year. XXX early the mix and very and Lima business year-over-year in the delivered quarter's combined expanded the set a units. comps. and in forward trends of strong our basis recon our past stable impact

integrating in first X% business. Slide market. early We've year against and In execution our encouraged forma hips resilient line XX% are XX% significant a a the negative combined U.S., recon, in with by prior in dissynergies knees, from impact grew teams. performance acquisition Pro in very we on U.S. X%, X, which Outside XX% including comparable X% reported plan. growth. includes grew flat X% global the core our X% strong year-over-year Lima in to the revenue Extremities Recon integration grew of and growth our in U.S. we Enovis and achieved growth delivered a progress quarter, recon of the

forward of year worked of projected our and within These to half anatomies we our full estimates XXXX. move We for opportunities second through integration we ramping growth To the short-term some geographies cross-selling our expectations the and look fall seen into the date, we have channels. across commercial as impacts as remain well intact.

excited the globally. seeing Altivate with we're Power products our and market-leading initial traction about I'm

to in with continue Europe. shale expand We market access the Ultimate our of in QX clearance small

of rollout controlled pipeline ramp cross-selling strong of our printed our we as a Revision have one key X.X Lima's the System, Knee, trabecular cones EMPOWR U.S. for innovation the continue of selling Revision and also EMPOWR use first titanium with opportunities. We XD Arvis of

launch the that week, very this for just year. XXX(k) This system with also I'm in shoulder our excited augmented to aligns component use Altivate shoulders. reverse of granite in clearance second our half received planned earlier of Arvis of well the timing flagship announce the

launch vitality high cross-selling to growth. team the fast-growing recon very are alongside business potential continue helping strong entering drive like arsenal us technologies Our significant and technologies with in These reload & half new that offer Foot to the XXXX growth portfolios billion-plus as opportunity great accelerate of up and great momentum new of the the second combined differentiated a the great set $X Ankle keeping XXXX. double-digit

Recovery X% growth environment is X, led stable to grow continued bracing continued on our global disciplined In growth by business our in and and this strategic laser growth Slide boosted with rates. Overall, line plan. Sciences organic execution. a P&R, market reflects above performing market double-digit

additional our product new the next team. electrotherapy is clinical Recovery of and new for OA Sciences spine products includes knee bracing robust products Our brace the generation ROAM, pipeline called and

use XX improvements cost. improved year-over-year we basis tools EGX traction margins price consistent sustained as Adjusted and to versus continue PNR drive in to on EBITDA productivity points

details. Ben the let I'll you take through Ben? P&L Now

Phillip Berry

everyone. Hello, X. begin Slide Matt. Thanks, on I'll

prior compares first of growth basis. report XX% million to to pro sales versus up strong $XXX pleased the of X% core and X%. are prior organic year forma We a year quarter This on

our the have executing Our collaboration been We've the January really pleased against. far Lima so and begun integrate that with integration been acquisition X. extremely global our hard to that and teams working plans teams we've closed high-quality

Our underlying to still efforts and of PNR in plans. continues our recon integration ahead growth are solid original while early, be and slightly our

mix, from year-over-year. driven growth points cost which leverage. the leverage and XX XX.X%, includes up Lima basis addition was of segment adjusted gross The by quarter First favorable sales, margin was higher

first XX.X% adjusted up EBITDA basis Our margin XXX QX quarter was XXXX. versus points of

to XX%. year. was First quarter's last per earnings effective Interest $XX million tax versus XXXX. $X.XX, XX% year. compared quarter million Overall, growth in share earnings versus the adjusted rate expense of prior the is strong $X for XX% This posted we was

currency Foreign had of in an unfavorable impact exchange approximately $X.XX quarter. the

Turning to Slide X.

slightly our single-digit to raising P&R the are organic strong billion of X% prior to billion. now to previous growth. above contemplated recon range growth, We and reflect This year. pre-Lima our We guidance expect growth in double-digit guidance $X.XX the range, low the revenues which $X.XX is start

results. in our forma go As we forward, reporting XXXX, will we be pro

guidance to pro X% and growth to includes X% translates acquisition-related impacts. Our approximately forma range increased updating

In Recon, single-digit the year. growth outlook forma pro the translates high to for

annualize expect the from higher year We began this realizing half benefits as prior second in and to we comps and new product cross-selling growth accelerate launches.

mid-single reflected continue We in guidance. our as to P&R was to low original expect the digits growth in stable

adjusted expect our $XXX the $XXX performance. in We to a EBITDA million range includes based million, of to on which increase QX range the modest

$X.XX. depreciation, per of we in interest expenses, prior are guidance. remains other share increasing adjusted and result guidance earnings consideration, share operational tax the this as strong count and rate Taking a to first results unchanged and into our quarter, Our to for $X.XX all our range from the

growth XXXX had a acquisition shape X, and of To with Lima. to summarize, continue the to solid towards Slide scale the start on we accelerated and business

in on progress executing and remain strong our about excited plans, our creating the against successfully financial first delivering integration are quarter results. focused and momentum We

hand start it over to I'll back Kyle Now to Kyle? Q&A.

Kyle Rose

start Instructions] operator Q&A. we'll the hand time. to With [Operator the have that, it to over

Operator

a question start with [Operator this Instructions] Fargo. Wells from we'll time, At Chopra from Vik

Vikramjeet Chopra

to keep I'll one. it

if And estimates, our X% please. So drove million you upside? $XX ahead We based And integration? -- what called estimate you can on with elaborate really X% our that, math, to Limon the then of regards also you talk we you're the just integration. the came on impact can negative from in seeing grow out to about what about opportunity

Matthew Trerotola

missed the I to very of the X% the Vik, X%. question there about end

Vikramjeet Chopra

Sorry, you growth thought from integration. negative I X%, was saying X% the called impact out we

color that would be any appreciated. on Just

Matthew Trerotola

absolutely. Yes,

terms through saw the our expected, the I really, driving yes, integration good and of start So core market progress high as a as on about the solid environment talked very performance the in front quarter about settings, which market talked we've year, clean we super rates. was we the that mean, year utilization as there both environment, well good last business to in in a various

year this was and storms normal probably think a market I environment with things. more and different illnesses

that I And year. a in think that's growth so bit market little than softer softer point resulted last a

performance but impact, continued we've strong drive the to And market. certainly against so an that's

that integration, But integration quickly as in cases working business planned choices And the made, in then certain we've to outside as work about shoulder talked also And we've hip the business loss that the countries and U.S. we've side. choices as agents behind. about in there's we've on It's the impact countries. some in have but U.S. through impacted expected. led kind have that the we we that quickly do it channel through cases, other here made well and to that some the significantly, been along of so as we along, to was can leave that's on and the the talked have first work other it in And the U.S. some had has and as impact and impact in have side of knee that then year tried

a little path and look to is with bit year quarter the to exit the the forma arc. And business a the little a very a the got strong comp strong, but so impact the very give so with business on the underlying softer we've talk about underlying integration can in tried accelerate and strong that clear growth but pro great we've certainly of also is execute and -- you that through see you a market, a growth, still year

Operator

Johnson question And from our Jeff comes next from Baird.

Jeffrey Johnson

I I to big the me don't help guess, Matt, math. a you here, just but So want softball on give

the to Easter did I growth, is in Recon X been with Is less dissynergies? conceptually closer we recon should X% those selling that about XX%, to of you be it to think X those fair XX%, also end XX%, how X%, day think of selling one had at the would you points about days. have quarter. for this? thinking not that if dissynergies the If

Matthew Trerotola

to think Yes. it, way the Jeff. about right Yes, think that's I

Jeffrey Johnson

the just on called side, X% out then extremities you growth there. the And Okay.

dissynergies, shoulders Enovis, the Obviously, shoulder talk you there whether product growing about had the as that core as core competition the You just ankle. well. most just kind selling in growth, to well. Obviously, in in and did foot can underlying Altivate is But impacted of your that's the that days you of point that?

kind just and integration the So selling of in market and you market ex performance of noise shoulder days? some shoulder the from how this kind your do perceive of

Matthew Trerotola

shoulder our some second half have and ourselves in the the opportunities here and and in great of share shoulder. work Yes. good excluding we probably augmented in to we that quarter the opportunity ramp shoulders growth additional see still terrific year. gain here the above-market of of a through launch of are kind The that give impacts, really year even integration [indiscernible] a great strengthen a the further. range terms in in us we second going the in in to driving weapon cross-selling are as late

said be gotten comments, because launch the in of I in this And phase. we'll year. Arvis much cleared as shoulder. then And have won't in early in while also we've terms impact the that my revenue

our continue continues very leader and -- -- commitment the of our message to just it think I about our in the an a to innovation there. be be leadership market to strength strong send shoulder to

Operator

Jefferies. question next from from Yang Our Li comes

Young Li

like on benefit I in as bit second a early U.S. All within these OUS more of you to categories you Great. can more products about seems little solid. integration pretty timing choppy in as see a the key hear bit of as seems the half guess talk we'll and opportunities wanted period, through about get right. it Maybe I some the little well cross-selling. cross-selling

Matthew Trerotola

tremendous there. global got sure, for the sales really had specific Yes, really far the Yang. to that the and few. cross-selling to have for on recon I for Thanks over conference Actually, in mean creating we're about the question I the I'll mention -- a And how Yes. cross-selling already gotten teams. we opportunities. see join opportunity. London was our extremely excited aggressive it team

the in we comes sell kind custom bring the about to then into talked has. aggressively and market. First, that Lima market products here revision premade U.S. opportunity immediate more of U.S. the

a of those, to early little we there, those. And so it's nice on see gotten on ramp days already and a started we've the the down year but back bit expect half

product. not expect there as situations our pretty can core are there nice the to be see SMR shoulder, also some The flagship, attractive, And we excited quite but shoulder a our -- Ultimate and is well. about we cross-selling kind teams SMR our where specific of as the are really

of the Second, the outside still driving early in terms [indiscernible]. U.S. days

the just We map have started to ramp cross-selling. up as

now come with is landscape of market and we Mathys broader important so as a And We've to some with large [indiscernible] many or Altivate. which shared, the shell. U.S. a very [indiscernible] in got just portion much And Altivate, got years great access, I our opportunity a with small on across channels. cases Ultimate additional for and

And so cross-selling boost a opportunities. access give on really broad market that helps to those there.

And Mathys at talking is I products allergy-free this room excited team the it. the about. in probably a side, Mathys process the conference kind actually revision Mathys team very are really of and on is about that side Lima Lima products excited then Lima until of was is third team the between opportunities the cross-selling I that -- that thing There's and exciting. about actually the interesting number that on underappreciated the

of really and And of EMPOWR has outside the U.S. some there's kind things in sort longer beyond larger the of so and teams organic Altivate between just terms those opportunity. energy come that

in stride get funnels the of into and built. the that lot up we'd now down sets year, synergy ramped lot to see market, start start and year. we'll to to next a expect opportunities, into the back now. instrument half training right did the the March, get of hit We full them of get meeting a So starting in ramp of kind great And this the going

Young Li

keep All just right. to one. it Great. That's comprehensive. I'll very

Operator

The coming Blair. from Vazquez question William Brandon is from

Brandon Vazquez

I'll ask X upfront here.

can The keep as the integration, rest any on integrating SAP Lima the out us well about then the there they and a And just Are those is of that? integrate trended business follow-up you maybe color just still? you to guys especially things give Lima integrations, you eye quick logistically, needs some us the quarter of through how as to should first in an are as we little as -- margins, is are here, happen expect you can the what What trend the talk some bit ERP how for? like gross of you well? to year, milestones

Matthew Trerotola

the as through in another on Brandon, we're the of implementation the different outside milestones, I of channel key talked the way far of biggest has decisions been integration some as good ramping commercial side. so the working U.S. the and has far a integration focus key been those some the here, moves and the of more been so the up as and in piece our as through cost them, U.S. took of the cross-selling, about, some far. put in the did And team in team U.S. we quick terms get that the very and U.S. have teams after thoughtful actions but to we starting quarter quick the we that cost to U.S. as into outside but the There tuck we opportunities, come, X first together

we've thing far. been done another So so key that that's

are look but that. some terms there a of we're systems, in to approach we As do thoughtful things very forward, on taking step-by-step IT

well big systems So big a of will of that's be ERP scary how terms more interchange systems kind kind step-by-step there's giant align we of integration to making in SKUs step-by-step work big that and the thoughtful a way a et coming no issue, connect, And not and kind our of changes cetera. any approach. of of in and kind big, versus but could systems, thing

some good innovation product early of pipeline. just get type getting things how movement opportunities, then but of of that to multiyear some that. a thinking years finally, are that on work are the of lot it years around things. the lines a us and come be, done will couple pipelines of and going about over synergies together innovation we've cost pipelines movement again, process the a got be making of product thoughtful merging And choices and some to will after operational also in-sourcing step-by-step coming We've

great So we've this. talent managing got great a process, on focused

to stay that. going of So We far, important top on it's know very things well.

lot are about to there's So a very now. right we certainly come, feel good we where but more work

Phillip Berry

of margins, year. we points that last ahead especially Brandon, the gross And to of We through in of see with slightly all businesses Yes. kind we of we've accelerate would as on the the course that course some throughout the the XX expect basis the year, both quarter. continue there the get aligned were have, EGX that things year been I about progression talking would to on here. and gross margin. leverage capabilities we decent

Operator

question George from Next Stephens. from comes Sellers

Unknown Analyst

foot maybe quarter. to the on the to ankle shift and Congrats portfolio.

consumer a that some and And health your maybe You just other are a additional of the what environment versus color think the macro perspective you that Could called some maybe the portfolio? we of about strong as as from driving how such out performance? portfolio should on the that give the are then bright spot. some well? devices of competitive you seeing devices And lastly, nice on specific in

Matthew Trerotola

Yes. Yes, sure.

So good a Foot had strong & quarter. Ankle

was the Foot there the maybe market less second I environment & Ankle, to and comp of environment a and good healthy think year of we that's market in a quarter. a strong as start healthy here continuing it a start kind little

there. got we've key -- technologies that the a team Our of number drive growth

The the we minimally has we're excited products family mail on family. market. into as are participation the or in [ that into large additional bring to that Our been invasive that ] bunion and space we about now forefoot acquired year growth last well, in in nice alloy Novastep [indiscernible] very sheet technologies DynaNail product based strong, and metal continue alloys, that driving

technology real we've we've is is changes of we the about, grow space. gotten great that the plating our plating that and as we've to We've our across also stabilized And Star going protected on leverage next which really bring products, the here well Star apply well. fascinating new technology and plates some with think talked talked the generation that of Arsenal got ready as I think some devices are IP -- has boost to that around reload a there. about -- the now And made as I that

ankle. across something to very And almost become channel strong continue pay there. and a That our our deeper has channel. the that's agents aligned exciting to of aligned. few get developed importantly, we technologies with to we of more years number over going a market us that and We've got we've that going lot to the did now to aligned get technologies But growth XX% these work of great that's going of really acquired few our fully is and taken the of distributors a past lot dividends, past these fuel role to to our into foot continues have our key And channel that great years a So played product And products. know then part broader over a forward. and all the just team. in a

Operator

the from Wittes Jason ROTH MKM. from And coming question next is

Jason Wittes

about the we what a Or quarter? know run impact does should year? So through or was -- we this that is quarter question be of quarter. -- impact thinking X% the negative for about how just positive X% how the impact by is do this to the year integration. I it the

Matthew Trerotola

$XX our we've quickly. I of year, we we the trying as I more shared say, impact as of expected at I to we've recuts of of been that's X% Lima, million million, to about, this But would than X% course. get did talked the the guess interact $XX think when

through that flatten the of contributions quarter last us that apex started then on in that other maybe see as I increase pretty year the as these side half, we get cross-selling late from where coming at the the from expect second things. to as the that well. -- think to impact the have even the little and probably go of some of we And probably is kind so as likely beginning it some or also impacts it of the of really to I the a back bit integration would now would nice we're year. side right things get and we And

Jason Wittes

the the in helpful. Okay. then really That's shoulder. quickly, And for of just terms launches very

for typically how In the they is thinking can X-month on how roll X- to of Or you -- numbers? out a quickly should terms of what an timing the those rollout, have we process? that kind be impact and about

Matthew Trerotola

Yes.

we've market So the participation very kind Augmented the to into to market already leads product and year, then got the a of very would aggressively quickly. to back of of in expect half the -- we in be Augmented of sets lot the Glenoids, There's we able will Augmented in early Glenoids get ramping But ramp instrument of the and broader. will be process we've destocking Glenoids. obviously some that fast

are And think got shoulder very that's and more but we important. We in Glenoids been really Augmented using surgeons that more their procedures.

so selling not our And opportunities that that some to surgeons, Augmented heat going turn but on only the up existing Glenoids. with our surge offer in same-store offense it's think we capture really will

will impact that very a meaningful and this-year one. a So be

much that to technology, big the we exactly next a it's kind feedback and kind a to year getting market want what's get going we're Arvis, more we impact cases difference would and sure it make shoulder. of of in and doing beyond make new getting be to start clear of

create crystal be vision going see to augmented sure, planning, our analytics that predictive the presented plan sure, great And great in in iterative surgeons can the year for using XXXX half reality that functionality. of good so to from the preoperative our more us But interoperatively terms and guidance. there be for taking be then gives clear a are And with of second iterating launch we'll able to feedback. broader bringing of in some

that is able guidance in to we're the ready convinced next time for tech that's it. going being really And data the interoperatively at to shoulder a the wave to market capturing as procedures. for those do shoulders enabling exciting a then that, surgeons that be That's are very use

Operator

coming is Evercore Vijay question from from Kumar ISI. next Our

Vijay Kumar

you about right? Lima answered performance, acquisition-related if some assumption what organic have think I it this, Lima, there like but flat. be was apologies was Because be -- excluding Lima the original would feels the was in was on Lima Lima, would in walk felt Matt, disruption the us through in Can that impact on on business. what's integration-related and the the was why base performance in quarter? came not Lima's and base you the just impact business,

Phillip Berry

Yes, you Vijay, I'll don't that one, mind. take if

the decisions really work contemplate were of making how we participation something that we going for and got we predict to making as couldn't portfolio that integration get as of thinking selective business that it As we the that. guidance Lima, from territories which we kind we do knew really channel about be are the was to was going our to good in alignment sure we've come

as to we play it with in seen coming acquisition. seen that out and that we the in guidance about was impacts to of legacy the of on revenue as start regards the you've we've legacy think contemplated gave result kind Mathys business. how business a amount the as the But some So all of Enovis of

So we it's to to pro the the show kind view of all-up view include happening. forma most of really fair think what's all-in

And of the dissynergies of the best discontinuations then within is the of which to business, X% we've some what X%. provided came and some view our that we've said

the the of organic performance traditional definition. core of kind strip underlying of business a look you kind for out if kind and So of

little a into well. if been bit a that a as days have little quarter add of in Our selling then consideration boost to the business kind for is would you view and of Recon you over take our organic that

that's So of kind we're about thinking it. how

that the U.S. where in some the of core the brands in of to hard a it's Lima more product still together, as legacy distinguish between coming think business. that's reported really overlap But performance are versus well. difference Underlying in channel, doing and countries particular, the bit about the we little have

So appropriate we pro most technologies. our still think give strong the to But forma why see we core overall, that's it's performance in view.

Vijay Kumar

some here and know Ben. Matt, is hip the comp sorry, Understood, getting there just knee sticking on recon, tough. questions -- I U.S. this Was And flattish with any the cost? integration here underlying just you you the recon? impact impact X%. within the about say when excluding that Was the U.S. can integration on Ben, was And recon at X% clarify on

Phillip Berry

the impact. Yes, Yes. excluding integration

So underlying view that we X%, and like-for-like little would our a of impacts. performance, be take at look over would out kind those

Vijay Kumar

Matt, And sorry, on the... Understood.

Matthew Trerotola

impacts growth up and I your knee Picked sure, Look, last for our integration are mean, XX%. there. there. Yes, year was and hip some hip there knee question

And there. single so And be if for period, for comp hips over math, above legacy longer strong would XX% extremely look mid-single, high there's by maybe the this year you XXXX. the our a maybe an business and industry time And results above the digits XXXX.

the we So given comp. the and think to picture I the have integration, without on that effect in or of would softer knee in knee. certainly with strength of terms expected hip the the an is and comp hip a And QX quarter be growth

an business shrinking and year. the a knee did as was was primarily all and while shoulder in it exited that Lima business, in that a small-like have and small was a the U.S. last there in that business Lima, the primaries not and here effect Second, we is shrinking, it we're focus at it

lost a integration Lima And knee in accounts well and bit knee and a that an hand well. there's we've so of and having and of effects there's as for tug that as and hip some hip little as sure, then they're impact the and business surgeons and part shoulder on are integration, knee the specific in

from year, much the forward. but [indiscernible] comp then tough get there, through Now comps the forward if we another normal. more there look

revision Lima the also the keep comps. start stronger will ramping we through the got side ramp revision some coming have able clear that access to as and on move now more these integration some as additional the pipeline We've aggressively also give of we Arvis to provision. us year even accessories broader to We to through expect through well. effects as be and have to we we got We've our

And the move plenty move more normal confidence hip to as and knee that range growth will of a through year. so our we've we back got

Operator

Needham. from We have Mike Matson a question from

Unknown Analyst

] and backlog of for up Joseph a kind the think there knee. larger Mike. Do on and hip there's normal for guess? [ hip is procedures, you still I Maybe This backlog, a follow than just on knee

Matthew Trerotola

Yes.

I years the less you still you at U.S. look U.S., think XXXX whether the than or again, since of look So cumulative is outside X growth the growth. significantly

does are And unserved that patients suggest there. so certainly there that

If backlog of at some I things really or outside U.S. was the last X indicative you environment rates. of a of countries that the that year, high enabled utilization first U.S. year, months that in look higher lies the in that X last And sort think and hot early there went

what so reasonable worked come. that backlog And in this then to off create there in of at it But about other the looking that been still I the This results results things the were seems we year later the understand was have than U.S. at in some a think where and posted. clearly years is a growth that maybe to can tailwind looking kind and be and our first last year. slower quarter

with was not flu and kind and -- there things. working were like think we off now. clearly, just And various understood constraining surgical of that saw I is through supply that And the were so said, storms being that or whether it worked different that backlog right I quarter effects

that so there of used being parts on And put pretty were given crimps year, were year that were the way normal that's to where some be and supply. -- any in there the

because that we quarters worse is available be and where there'll look worse you back better better a periods And environment sit and there bit the backlog and capacity is hot capacity constrained white can quarters, more there. have just periods be very a there'll and run surgical might is the be better, think that where into normal so months, and months,

Unknown Analyst

quick that Okay. sense. maybe another on Yes, then Arvis. Great. makes just one And

more have any appreciate anything anything guess, do else but you still I it's color helpful. far. or would great. ramp, be If so really would be I to adoption But add. understand early placements of in the yes, I terms metrics

Matthew Trerotola

Yes.

learn that people to how them in it kind we've that a of on the sure focusing of using a be I've surgeons in successful, marketplace that So of them as taking make we a use and it to as right by we it ramped We move high dozen are me, broadly surgeons, a making but that at utilization sure of it of in going really it's having terms will using on got got now before helping up us that the get it to terms and and need into shared we're to lot both all and few rates. to we using design. surgeons be to number of rates business of things also sort terms gain few grow

high high some If there, at technologies you them of that used make and some rates. Arvis that the we of not, being are used rates to out sure look is at and want some at are

that surgeons launch sure we and able first positive be a get into And so place controlled us good to we work beyond this a this couple that through I this year to impact dozen expect make our puts happens to of knee broader think year. Definitely a on business as in marketplace. work through have it as

then proposition work And terms to we that workflow have knee. from stronger to Arvis of also, beyond enabling and additional and tech stronger value opportunity years Arvis And knee on strong area. of the continue good hip impact and in making in technology to come of kind pad

the hardware feedback next and on year. On we a very good and just getting will of year. year. regulatory instruments the obviously, because little the shoulder working launch this adjustments be initial moving that, it need we to here here half we bit just in whatever for into cleared XXX(k), make sure but the been second the front, get We've that really with the make just started a software on to the

our we're of also can that there and 'XX we bring through that to technologies is kind good in a and on shareholder start the into then and going this beyond. there's year And get build strong

Operator

Kumar [Operator a question follow-up have ICI. Instructions] We Evercore Vijay from from

Vijay Kumar

here. for the Thanks follow-up

Matthew Trerotola

bonus, A Vijay.

Vijay Kumar

line expectations, with Yes, touch gross understanding the my your margins. right? margin. in Because I do. gross somewhere to the the margin Were Lima I margins in on want quarter. is performance gross XXs in

at well improved rate, looking this, margins came when the in contribution Recon flattish, gross sequentially improved, the above. but So dollar is margin I'm operating mix but from

about ramp? this the back So think give we about back performance for half? like and margin should how half in the margin just Does the confidence increased talk

Phillip Berry

number, that number number. the think you're an I Lima Vijay, GAAP IFRS with Yes, about thinking it's a U.S. is not

there's translate operating gross and into shift really So numbers GAAP historical margin if you Lima U.S. some between expenses.

kind margin into So U.S. the the of GAAP the higher the XXs in gross underlying of more in kind of translation is XXs. kind it than is

the margins our some in kind kind mix were. plus of of the largely of of business of gross that I'd line expectations say, sales were some with what we're the where getting So

kind our the supply the the at company's earlier, I of that embed chain. we I as excited gross to kind of the kind shape margins. to to of to road to mean, will EGX our to to improve As the There's continue gross business still through globalization I in synergies really the to opportunity look And about as us go would of course help down the some there. margin of accelerate for opportunities mix we of potential see our said and of expect acceleration of year. opportunities way recon expand lots continue us right overall,

of acceleration we've like into we're So the a this I'd to QX looking slight But kind we margin. in in the closer seeing opportunity course we year, business through we mid-XXs of see go where the We be still the see that now, would to of a gross Recon get at time. the high just it over XXs, year. maybe kind well kind and right of, it steady relatively progress, call say, are said, as

Vijay Kumar

OpEx was was Because cost synergies, operating any execution like there the coming line above? synergies feels of timing slightly on in item, our it above impact plan? margin just Sorry,

Phillip Berry

we start. maybe capitalize we to we're kind kind able like slightly of able the the with quarter. versus aligned some expectation the OpEx we look of our again closed I mean away, we margin, like I structure expectations what thinking. with the our initial on said, is Yes. were expectations -- first we to gross org what as want kind between happy of were. And right deal, kind in our what we're the is said, which But were above for going to was synergies there's go-forward of mean again, really the we've kind of year. currently shift still like of well said where I within identify

Vijay Kumar

for saw terms Understood. different in what Matt, we one does presentation. you. of from Where an point? Are X.X, the I X.X? ROS? is are adoption of at maybe we ROS X.X And which inflection within the

Matthew Trerotola

Yes.

was as ways, lot launch, on the down many making EMPOWR hardware that making improvements knee it of our very with putting controlled kind number really instrument easier in feedback, after a a X.X it also sets we but made getting of software well. use and the So seamless in of it to we're

them to of to to was to up do a to X.X them but great able to we've a the a to there of a terms but make learn also it's how good ability fast using more of Arvis, we make to we sure got with going so up let's we've broader it get in to in And that ramp them what effectively and ramp as given we use that valuable, being going step-by-step and be feedback, of proposition the that XX, help value and of full help understand launch decided one, XX set then a technology, world to new doctors go then got it. the sure way just kind brand some definitely help it's to it to docs get

very work use do launch about it, in up surgeons The terms that's fast, surgeons also with there, and some launch. some what as we do inventory now about lot ready work learnings And then less of of more a good the I there's which said, right on it so knee through point are set was, how heavily, of but rollout as couple in as we the both field. how broader of, in we've year, terms target surgeons, Arvis, got why some a we're do we to a less using to but using for ramp this this them track if that ability of hand surgeons ones the surgeons, and a heavily. bring broader we're year. on learning heavily And this using of through X.X to around knee at and ramp the to broader how the excitement Arvis particularly we as heavily they any plenty dozen

high efforts. a But to expect and that to to a would good So but knee profit the revenue generate also conversion on number and start expand front. stream we recurring be facilitator growing small our knee

year ago improving focused good in second second that into getting think launch the launch, in making shoulder being into this first marketplace XXXX. year our of on initial On half the the just the that in where the been allows this of to us so getting terms front, product. a and by shoulder an of of was the kind We've or some of half year knee that and keep feedback revenue sure

to on that for been, right be about to clearance we always and as a right track announcement We shoulder in the a for continue happened. with technology strong just the there recently we're this offering that in with have service are shoulder with strong market very Arvis leader shoulder there

Operator

the that, Trerotola over And back would turn session question-and-answer Matthew like Please closing conference any go with I for our conclude remarks. ahead. now. to We to

Matthew Trerotola

Thank end Yes. the joining to start our by you for to members team us call morning. the a thanking for year. this I want strong

to a results and our across sharing for to sharing We excitement you we of today, our with for in and and listening lot in August. organization forward second our quarter have and stakeholders. committed momentum Thank delivering remain internal early look value external the you

Operator

presentation. you for today's Thank And much attending this concludes conference. very the

disconnect. a now day. may You Have great

Enovis (ENOV) 2 May 242024 Q1 Earnings call transcript