ENOV - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Innovus Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kyle Rose, Vice President of Investor Relations. Please go ahead.

Kyle Rose

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

Chair the are and Joining this Berry, and Trerotola, Ben Officer. on Officer; Chief Financial me Chief Executive call Matthew morning

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

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 in today's today. audio on later

[indiscernible] be differ we During this and in and some call, [indiscernible] 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 today. results and in including statements release regarding to any the statements and forth results. safe

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

further and today's that, financial me in during X. earnings the turn release to call today, will be appendix the relating measures reconciliation With measures our regarding non-GAAP information For the accompanying found to who Matt, begin press referenced slide those any presentation. of in details can Slide over let on

Matthew Trerotola

us morning. for this Thanks, joining Kyle. thanks everyone, Hello, and

exceeding of and the We on comparable our integration year significant progress medtech fourth future X% long-term XXXX currency the Slide XXXX trajectory. of a the growth we reported and year commercial on our X. exited basis. Enovis was XX% toward goals, strong on made we and growth In tremendous start with goals, of transformational quarter, constant X company. Let's high-value excited and a strategic progress our of on about all I'm for operational Lima a

and confident we'll EGX adjusted with have in mix the we're Overall, change XXXX. driven the pipeline exit teams Lima deliver in place pleased acceleration EBITDA and the impact trajectory, XXX productivity in basis our margins step that We are impact healthy have expanded new Recon, we of trajectory, from improvements. commercial our by execution to product points, and exit reflecting the XXXX

Recon, including Hip On Slide double-digit in reported segment. on Knee grew and X% XX% Extremities In comparable quarter, X. the with growth growth. XX% we basis global U.S. in and delivered in to U.S. XX% Extremities growth revenue in our both global In grew Knees. a quarter X%, recon the Hip Recon

through expectations. accelerated line our the in Our quarter, with U.S. business

the product we international, we We're business the integration cones recent knees, new leverage healthy while to continue our new impact as from impact and of commercial approaching exciting growing XX%, across with augmented very launches a from recon our portfolio. of and product cross-selling. we systems broader We're a period In Recon grew and shoulder. execute technology plans. fourth the of across exited ramping and shoulders product and Glenoid [indiscernible] momentum revision We our a power quarter launches

knees, implants of Argus will launches new initial hip including complemented enabling in and of We the an be planned also have in aggressive by next These opportunities. product and Arves key of generation in shoulder. the launches ramp technology, in rollout the cross-selling

business. key Slide has our part X. of a been Recon Lima acquisition to Turning building The great

team. kickoff incredible in confident in and X-year weeks growth in goals Prague success. combined and to been exceeded team's our goals energy ago. to We deliver our excitement The substantial profit revenue year the We got was few It the have robust remain organizational channel of and executed have successfully the a plans acquisition financial and integrations. positive huge feel long-term our first strategic and join value. see commercial sales has to I the a annual and on

I was and is cultural the the This tribute and teams growth also leaders. the well-executed clarity to of the talent impressed of the plans. the of well a fit as the cohesiveness integration with so process as

our Turning a growth and environment X. stable P&R, to reflects disciplined execution. X% market In Slide

market-leading We XX continue EBITDA a portfolio year innovations drive to by priority to driving we in gains EGX tools to points shaping. strengthen as mix. and improved segment year-over-year operational improvement points our by margins positions XXX basis strategic and new improvements, this leverage expanded continue full of consistent securing basis

pleased off performance XXXX and in is our the XXXX. with momentum we start. a I'm Overall, to built great

our new and commercial We have teams lineup of year innovations to important of our poised another across are business, deliver a robust growth. above-market

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

Phillip Berry

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

report to up of X% negative sales currency XX% basis. pleased headwinds. prior up year versus comparable million, points constant $XXX approximately the quarter fourth currency included are We a on of XX Quarter and basis

from the Hip We in earlier business are main integration recon seen our growth our and Knee encouraged our results with across executed and the in growth year. with we've efforts anatomies positive accelerating business in grew segments recon XX% extremities. channel as across double-digit our globally Overall,

growing Our growth X%. underlying in P&R remained stable

year-over-year. year to benefit the to mix progress above by includes improving high cost favorable initiatives coming on margin This global addition growth the business the continue gross adjusted of We million. of and goals XX.X%, in XXX was $XX Fourth of our quarter up our of end basis segment was We our great realize $XX margins. points that our driven X made Lima. mix Lima million

year. same these versus of grew XX%, quarter adjusted basis result our EBITDA last quarter delivering fourth XX.X%, of a As margin points a XXX benefits, the up

Fourth relative year. earnings We course X in for in to we Overall, versus XX% quarter versus year. over million to of quarter XXXX. Interest the lays execution XX% with the compared per XXXX posted than was $X $X tax last $X.XX, of adjusted was million out an XX% expense share rate results effective our increase better prior commitments. guidance our in the or year. of delivered Slide line our

noncash financial a goodwill the recorded delivered Additionally, of of at have commitments, technical year. we against end the impairment our while we consistently

in While to impairment due a passed triggered. was at $XXX the test sustained fourth price value of goodwill million during calculation quarter market our our our a decrease the and fair share capitalization, of annual beginning

not to on covenants any any Enovis' cash operations. does does future debt it impact impairment have This have nor liquidity, impact flows,

are our the very operational XXXX. track confident X the of We a we've against communicated strong and still and has optimistic financial progression execution in since our demonstrated Slide in record long-range performance. details quarterly believe commitments plans yearly spin

growth our results Overall, global of our year, our results segments. the business business. X.X% and execution Recon highlighted in with X% P&R by both by underlying strong Recon the gains reflect in in second comparable Our in stronger half revenue X.X% notably share was in of driven

mix margins EBITDA and as operating our adjusted we supply chain. from demonstrated benefited XXXX throughout Our improved productivity in increased sequentially

we year, for to investing margins future and the For by improve XXX managed headwinds growth. points external basis managing while

XX. Slide to Turning

strong of XXXX year growth and organic of with and in range digits. another single to X% expect high be revenues We includes to the constant low single-digit billion revenue billion. $X.XX currency execution in P&R stable of growth expect Recon X.X%, the growth $X.XX This to in

approximately expect We headwinds of currency X% to X%. negative

XX expecting segment are addition basis million driven XX in of our range $XXX in adjusted the recent cost we includes $XXX year the margins, by to from to of This of in basis to million. to Depreciation On M&A. XX million, Recon investments of along the synergies points with underlying integration range efforts margin improvement, $XXX $XXX growth and X Lima. expected be of million is EBITDA

adjusted expect and $X.XX $XX estimates, expect an count $X.XX. to adjusted range we the of other tax and rate XXXX. expenses forecasting in share these of XX% to a earnings of to interest $XX approximately million Along We million and range are million be $XX of approximately share in an per with

unique cash a selling and million million expect QX to to of range million be of phasing days. with assist in a and accounting to the in XXXX the calendar, of year leading $XXX revenues free we positive will to flow perspective, $XXX EBITDA fuel variability investments supporting $XX growth. the adjusted XXXX Additionally, while $XXX due million. year of expect phasing in our in integrate to Lima year, From a To we range another

second evenly the the in and normal the expect of impact weighted revenues seasonality. days the fewer as offset to be quarter We across half fourth half first

a of the revenue to ahead out been with have play to coming margins a Historically, year, XX% to XXXX, to moderate XX% half expect with the XX%. the of that dynamic weighted we XX% expect EBITDA approximately slightly margins. of seasonality range to to in similar the year. to In year We second second closer EBITDA full half of

some to tariffs. like give I'd Lastly, on perspective

that materials tariff small supply concerns Regarding reinforce working chain several number China, for have we we mitigate China. redundancies with currently to to years the for ongoing products our of source from alternative and suppliers and been

China. current guidance from on contemplates impacts the XXXX the Our placed tariffs

For in P&R significant manufacturing Tijuana. has business Mexico, our a footprint

structure Our and has exempt been facility tariffs. from falls historically trade under a Maquiladora largely

For sake goods works [indiscernible] $X a once of to to XX% into million of that its the , we way through exposure per a all tariff would crossing represent estimate value United applied month the million the States the border inventory. $X it

remains dealing to fully included costs. implement to XX the we guidance. we be increased offsetting the actions XX fluid, post-COVID we not on teams monitoring within in to able the our period, tariff would experience inflationary U.S.-Mexico offset and months potential is situation events tariff believe Based with our as our This XXXX The would impact any immediately are closely. start

year see updates visibility X We a XX, the transformational momentum summarize, to the into on outcome solid in XXXX. we gain in will of further appropriate we and the of XXXX continue Slide first provide To months as as had situation.

over long-term excited to powerful have mix should and a Overall, We another profitable improving the are innovations that our goals. ramp we growth business for new expect our XXXX be pleased be to XXXX. year about progress continue against established of foundation product with and

Matt. it back pass I'll Now over Matt? to

Matthew Trerotola

demining me, Enovis, with more I friends. has tourist trips After next XX responsibilities. XX phase Thanks, a and spend this to with career few to It's focused My sites. kept our in on see year a my wife I've the to years work and to time Colfax family supported over where hole decided years family get Ben. finish to and leading I of to now personal on and later time comments. for almost move board retire travel want actually

that to leadership companies. There's this building we industrial opportunity believe what on at and for Enovis. diversified for momentum be a acquisition powerful, is focused I've businesses. across accomplished, am success. great grateful the very into I a Lima track time a have cyclical X our here is of great proud transforming growth transition had a I very public The

company. confident my tech be improvement continuous successor At Board this will scaled point, has into I'm strong leaders our I business and we we team build our and smooth a place, shares who model process. our revenue, completely has that Our of a right continue will plus will and for who and outcomes. active is able to to a med culture billion and talented tech for of forward The will of to secure an to initial our EGX continue executive committed and and have innovation share our patient $X distinctive carry CEO deep lead to transition growth who seasoned company next to the still until passion Enovis strategic a search values. then goal med have am in the success we find and company powerful

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

Kyle Rose

start let's operator, that, the Q&A. With Instructions] [Operator Matt. Thanks,

Operator

from comes Fargo. [Operator Chopra Instructions] question first from The Vik Wells

Vikramjeet Chopra

should Matt, career, about strategy the integration saw then just M&A had XXXX? missed. first a be please. follow-up, congratulations please. And successful one I in for about in definitely guess me, Lima. wondering I we a is M&A questions post successful How We your Two a think XXXX. on you'll

Matthew Trerotola

the Vik, comments in to the start the lot off a had the dramatic is we've big years, Lima first, [ our Lima for great M&A momentum Yes, impact including here, From a XX and I an and past a and has ] gotten standpoint, as for on shared. our acquisition thanks really kind support. done portfolio

the bolt-ons. and in of delever work a go of funnel way, ads doing be great where start little more terms And the we're small a complete focus be channel businesses, the year in to focused of but time, 'XX be technology going a sure attractive is to path the certainly, the bolt-ons other bit. things We of company about accelerating terms certainly still 'XX will be have in small of over some of on we we'll on but forward ideas to bolt-ons. helpful Lima that making kind in the is to going and in on acquisition

Vikramjeet Chopra

the And pathway my know it's in to What variables to of that I guided a year. are is the this XXXX. then growth follow-up to Recon year? recon you Great. there? early in you get get double-digit there single-digit some question, But high growth could

Matthew Trerotola

Vik. able to that growth our goal strategic single business consistently deliver the in that single-digit we to company deliver more. to our Recon, any in is going always at us our Thanks, long-range multiple We've for look that we're goal. the or been able high a to be high or puts decided demonstrate. strategic to that driving and position certainly double-digit in growth we in is the right to believe digits, we've given our And that we of that Yes. have business. quarter we've the drive paths think historical got, positions recon When technologies the year growth We be

But might given along quarter-to-quarter given anatomy gives positives any at it rooms time, negatives in the come same any at for the the in that year. and point

the markets a were double into you have high might had built normalize up business. the digits we while year year. against digits exited we in a bit, ramp of against If within back the we double-digit little look we the And business the bumping up or And last healthy as outside to the that at the the also momentum some U.S. a pumping chance the cross-selling business exit stretch year, single back year. U.S., down to just

push to double that. excited the be at year digits single-digit aggressively there's the sure, point we'll against certain growth even within for to the strong and into have high So and executing opportunity

Operator

comes from ISI. next question Evercore The Vijay from Kumar

Vijay Kumar

questions. a organic. talk it little is from it Did the this QX dynamics What up maybe strong? cat QX, I wishing QX, as have there? of U.S. Matt, contribution? transition. looks is One, you you light, XX% best Why had almost couple maybe the phasing was on the . guide I think a it Day's so any implies recon about

Phillip Berry

take I'll Vijay, Yes, that one.

have So we we'll if the the offset at way extra that in you will quarter. fourth days company the that quarter in look the be run first

we of So to part describe as the what I that we which expect my X quarter tried to we'll extra think in where back is part the the year second of first X will to comments in realize this about year, in days come early the earlier.

we'll really feel start. we So like a overall, get off to strong

as will that building as say, Days said, some related. Matt be we've I'd of got But momentum otherwise, that Some nice that's well. in the business

Matthew Trerotola

finish to talked to things and U.S. the November a call December recon like year. a to good had the that on from the On strong the shortage October and storms it year. and the headwinds expected the of in We some strong and about front, in U.S. some we accelerate we last to finish had that, that IV the

that U.S. that look that's year. U.S. some something quarter so in still hit Recon the there's you headwinds number that integration when first remember last one, at And for the

those headwinds to a slow there it a but then still and quarter, the the strong start to of was start. so through finish Secondly, quarter, we're And lapping integration kind will

we comfortable exit so rate of at quarter the line feel guidance it the the that in very and And is that we've with least given. with

Vijay Kumar

expansion margin my points XX, maybe through follow-up maybe Ben, assumptions? XX maybe the that my XX, basis at what math the shouldn't be thought Is that of XX basis expansion, I think I margin 'XX. assumed looking for . of the guidance. like And And walk we're about synergies points right? margin looks margin when LRP on fiscal

Phillip Berry

I XX Vijay. XX we've to expansion given think that improvement in Yes. of basis of guidance margin versus XXXX. the is We'll the at have here math, points But that terms to look

and from to -- X that's XX XX So better side. core XX points call operating Lima getting leverage basis it, and normal our basis mix also as of on the synergies then about year points

XXXX. So we year for improvement expect strong another look company to we as margin of the

Vijay Kumar

EBITDA about... margin, the margin, adjusted you Ben, that that EBITDA Sorry, that's right, speak

Phillip Berry

EBITDA margin, yes.

Operator

Robbie comes JPMorgan. from next from question Marcus The

Robert Marcus

moving hopefully, And on to away. bet your retirement, a see echo the congratulations more go, lot it enjoyable I'll life the makes but

me. for question First

this seeing question, in market, joint the and to maybe in talk guide how it ended it how started? what's the U.S., in on about just extremities versus and large you're of And play versus the You 'XX subsegments? touched you OUS, you're take sort could for last briefly but in XXXX expecting different out what those

Matthew Trerotola

Thanks for appreciate Yes. comments, the that. Robi, I

starting year, wasn't Let saw a We bit that through me we But growth. start a last front OUS the a outside like with comps. normalization and strong market above half to the just then was market, in little is QX, really strong given but strong growth with happen U.S. saw market we broad We of felt of about OUS, that QX surprising comment strong there grew which finish. maybe the

beat And really of side, that we was Recon on had strong we the the QX -- and that finish driven U.S. outside off

it to plan set -- OUS on comps a the so did like some seems year, worked and for down. a when be backlog got there. assume there We've our And of based this strong hasn't demand up we of out strong lot markets continues been those we that normalization

the year our an have the But ramp at market and there. still of It's very, bit so good because of to very we we of more strong there's opportunity growth than start a the the of to for have year a same synergies gap in outside and time, little healthy a a us U.S. of deliver outside been had synergies, the last

previous softer up bit the against a strong bit like at market, to of normal sort on look a year cleaner much When year. maybe of year year But little felt U.S. a the again, you the we're comps. last normalize sort little year. a We based still planning that started for the

slower of was were product the hitting of had we breakage year to there integration little was well a start key innovation that through the bit and so as a then we working planned market us as growth was few in that terms a transitions there. some And

the markets As saw we the improve. we work through year,

the year more for the the of position the and market drag growth half versus we of even second saw share headwinds. and of the markets execute had And through versus of -- we also some started market We our our gain integration outgrew the the the our strength half those to back with more but comfortably improve. year, still year. pretty in the

good has taken but that, products feel about still have as arc new here the coming revision that really brought really Hip. products there the Hip, key some And ARG, in year we've we of with cones the knee. half up business we a and in shoulder the bit we're lagging in in So in our ramped first

confident the back we share, their those and team here then across years products. all lapping in many our obviously feel and gain for ability on So key XXXX in integration to on commercial we focus integration on some as the strength the after of The offense before share based new of had headwinds. anatomies XXXX being

Robert Marcus

follow-up just free see expecting flow Maybe cash flow for positive in ended you're It up million, XXXX. negative quick debt. and on $XX cash I a Great. million XXXX. $XX about free

course progress to about of degree If 'XX of terms you and over could and speak 'XX the in exiting thinking debt? the of the that

Phillip Berry

that of Lima, here together. putting over get we're across that EU, MDR investments we Yes. as XX% the items the some to business we're investments then a I the well heavy making very clear conversion and mean pathway XX% XXXX flow as CapEx time growth we through subside Thanks, still cash of behind some get will Rob. free to as start integration-related to we investments see of as

strong here XXXX. a step direction the positive make and in we'll in So

you'll in a year integration-related XXXX, down and expenses with next to costs regards in step then big EU MDR. And see

will help of to that us longer-term to So that towards start XX% XX% really drive acceleration goal conversion.

build to guidance XXXX, quarter the conversion and it levels course the clear around are of other So specific the positive. over will not giving what say will be than

be about Xs get at now. down into And end leverage, the the and in under we're able get X. year, low as be X.Xx -- in say we the terms to of we'll I'd of to XXXX by

Operator

Johnson The Jeff question comes Baird. next from from

Jeffrey Johnson

congratulations a happy little Matt, probably even. on a jealous [indiscernible] I more am than

And think we've updated future. to number assuming But on or a something. the right the a me in between more for couple feels to still any pricing last XXXX? been So just reversion maybe would the stable mention like good to topic, did jumping assumptions here. now, thoughts been environment two, It And luck spoken of out, see little guys you've think calls of that a Is one? percent is in there you actually than what's embedded the back down that your I going kind pricing X-ish there. I've help guidance, we're reason that? but just love number times

Matthew Trerotola

Yes, Jeff. Sure.

on Recon had get expect year past. the So of amount similar side, price some to in downward been each things we to yes, to back do how

to And on so price sort we we assumption. of find new opportunities and side. pressure planning assumes yes, we to performance think a to price to the that, that's have that, way of created a certainly, downward X a plan can appropriate or new products better on we're than everything for doing point And but get the a look that recon

other that out zone looking price. that get more built price we've be up where some things we'd places then sort side, can that there the driving in work positive of areas to the as the business. P&R And talked be little a we negative then can of kind we that got muscle costs in is there price. then normal on environment coming are system there's or that and consistently, inflationary side. environment price about price there to continue overall, of good if think bit in There's of think really of COVID might On we an flat back we've And business the a where that are P&R keep through we us flat side a a

Jeffrey Johnson

on the you had. collar can Hip Hip enough. your it the U.S. year, your in launched do as I should remind comments in side thought well? Knee you Fair me, expectation And U.S. right. are do just a business, And just go hearing and the this the And Just procedure stem is specifically the out the kind there? is All has using what surgeons Matt, about then that of that hips collar now that able Or being win empower new more product? on your product surgeons the accelerate? stem business your with to expectations,

Matthew Trerotola

Yes. Thanks.

the the will Our new Hip colored and here. of STEM year be first half launching impact in

So the performance on the stretch of last the year does not Hip new include the benefit products. of

that's so because And of products. we where see half second healthy year, good those last the one anatomy didn't that of acceleration

don't some We able expect the be XXXX be first that those to go offense and here the And as Hip we that of to recapture out we'll lost. products surgeons we that we'll procedures also on bring able both in half we we in of each other. have knee product. of point use holding amount that until Knee. surgeons have at got our back alongside this And and our a Knee We've be would and of actually that fair surgeons use don't Hip that Hip

have still opportunities of we So there. to fruitful the opportunity out fill kind

do performance through U.S., We've very the that U.S. we as expect Hip. outside move procedure. well very year, hit got the U.S., well anterior above our we we that outside that Hip direct And into well back with marketplace. In do kind of this products a the fantastic work in will

cross-selling, with certainly is our there And and the but over there's healthy. strong outside still do so even performance opportunities to U.S. time better

Operator

Vazquez Brandon Blair. from comes William from question Next

Brandon Vazquez

too guys here, nitpick but using, wording is Lima it sounds are First wording is much to not like integration you that largely complete. integration, on the

fully more opening best little where left it long about you're on come this that hit seems point? kind how for with to this about you So results. started to that that, And on need bit takes? opportunities what it through is about accounts? -- talk anything existing accounts here? are What just new It of the what milestones into -- the here there more last is cross-selling And be guys Is also to deeper the like seeing going you a complete? then Or at products? the this are

Matthew Trerotola

Yes.

integration. Lima a the are So risk And worked countries We through channel something certain that key completely of the outside fantastic first which through the integration, comes amount worked there's of the all of is that countries of majority that U.S., in the in complete, a large lot it pieces we U.S. the with the vast think has outside U.S. I

that road teams combination the maps, channel that's what's that team. in, is the worked year [indiscernible] first been a the product et we so integration, team the to do leadership The very have has done, through done. And the cetera, of sales and which thing of combination to of coming in important clarity are them been

great done So to of complete, excellence we had those there's important largely and terms now combined and on ramping, say projects X And and when just that super things whole We execution development lot but a in improvement get they period to are we've project transition certain right then and of operational a year create some a with also the a some amount of of projects. transfer projects opportunity and year. of first cross-selling back-office risk.

leaders the get to plant at cross-selling, to of long-term is different those but out because of full the clear the a company. rest get opportunity. their profile just important are with important those important ramp They're the cost products the disciplined very, get to projects very value. executing And of very risk dramatically the They're of

we're exists confident the balance of that opportunity those at big so can get that execute the here. And and through we

technology, that opportunity cross-selling there's a of it's the the other acquisition. great we've a shoulder and big got macro -- -- In Lima U.S. -- bit we the our little world after Mathys a our now acquisition, before a beyond those runway big places selling great cross-selling, more is of around have the sort opportunity even we started now after AltiVate and around terms Power Arvis and Knee

Custer, Mathys some and something some the they where underneath going with revisions sort Lima that's same opportunities selling country-specific get the customers, because out great because to into yet country-by-country Lima launched. to all approvals, them date pace now can't of the some kind Mathys how the outside out. line there's places customers some shoulder are that, PRIMA hit time, sold came of get will to there And that approvals over Mathys At into has plays are had places some with we ceramic U.S. time Lima that and of positions that's where Mathys play we product Lima and them to in can that we're with but the decisions things anatomic of between that and and great

points a we're So of a point that already the had We ramping U.S. exited impact ramp also a opportunities we growth handful in enable the of to still U.S. market And high outside different be impact and opportunities within over digits cross-selling pushing from within outside of normal then there's U.S. a to or also year us as environment so lot the growth single will there U.S. are that growing digits, the and outside double time the U.S. of the

Brandon Vazquez

one Okay. quick And follow-up. maybe

Just you with Do with manufacturers you you terms what guys tariffs? have of mechanisms of simply that? offset a to little guys action to other on you these? tariffs, it for Just through Anything locations? do share -- tariffs, can the you pricing in power the that moving can are push historically color. any here Is for

Matthew Trerotola

to management, I to things that and just mean, Yes, some some term, chain inventory supply the create short there are things inventory Well, try in around sure. positioning space. like obviously, in

of strategically, kind supply have, that's are supply more thing. a More things Ben been sort as chain tariffs. of mentioned, as with there of years, possibilities China we there's our the more China and few last So short-term

China our bit China of to complement We've supply. of for create to outside done sourcing opportunities quite a opportunities multiple

where opportunity. from things so source And is shifting we an

out looking multiple our within standpoint. from so additional also We network, network to is opportunity chain within and other the P&R plants plants have supply source more internal P&R of a an

make inflation changes And COVID are of from was P&R. through lot through shocks in reimbursement quickly kind a and some within after and changes we worked through our and coming can price more tariffs inflation then costs. way less had about our our there ultimately, big there We kind when exogenous system, we of price of

are Medicare, working can the things. information information to the And they and changes example, and and and some for then provide that adjustments, to there other the to contracting make of see inflation longer, reimbursement then so through understand take insurers needing the providing

playbook got of a had time. from And quite to to a back. some few do be got So bit good we We've years it we've takes that a trying what transparent here. experience we're

as possible, business mitigating but as of believe take long-term ultimately, the not do. on impact but the we we health that would our be that some things quickly time, based it would could We'd

Operator

Danielle UBS. from comes from Antalffy next The question

Danielle Antalffy

your for on that congrats nice I also jealous, you. very you. but retirement. Jeff's happy sentiment working am And Matt, I echo been it's with

sort if for on, the a and don't know starting more -- a you I sales so bit if on you question I ramp, what's to XXXX synergies can reflected guidance little Just of mentioned that. if color could, you the on give

relates And to question that same even in what's continuing source much, high growth? of of single-digit guide? as of the recon product it if sort that that launches, in upside? already reflected reflected qualitatively the quantify how kind can new Is ramp XXXX you a is Or

Phillip Berry

question, the for Daniel. Thanks Yes.

We're that's I conservative be think within of pretty our we out little but I'd from like the perspective, business. that tends more the side as about with thoughtful, we overarching feel say, trajectory confident in said, up a of a set and some guide we on front us. have we maybe think opportunity trying that's momentum to the also, to the

feel overall, right. hit But of can launches. through have Obviously, product the exactly momentum through a cross-selling you opportunities sequencing we the can't on we new that plan of everything like build lot to we

place able on and Some capitalize to in place in time inventory it the the sure of regulatory making be takes to approvals to a that to be behind able got execute you've little really it.

to I'd drive XXXX. try bag, we see to allowing us to guide say drive than having capture we still more over those, had overall, here in But cross-selling our above we the as some would our new to time. launch that opportunities starting opportunity that products to well contemplates in But say

Danielle Antalffy

medium next say deployment you thinking could it, how be than there, the call Matt, big think versus And a very particularly the here. term But the But acquisition question lower already comment, months for you guys months? to just Lima great. the appreciate there appreciate maybe Okay. over next for the lot anything think the X acquisition and answered stock a more ago leaving. your out then XX next, look to anything about can was about guys over has you strategy XX I X you would changed you. XX helpful. how you I capital was with how for it anything That's when you And years that about the months over And

Matthew Trerotola

going I for the leaving, I'm of to and continuity Thanks comments. have advising but to my and strong the helpful will be Yes. immediately, not working hard be on transition. be backside with your And successor

so on And that and creation accelerate going that compounding a as executing. been as Board build to a was value to company the that on the spec was we're find our we've and strategy someone path

in do And industry acquisitions so this med very we've shown that tech space. successfully can the we in and

a smaller done done added change company. that ones we've have step of the ones to also to lot of the And have that that have more value value lot We've added company. significant larger been and a

go-forward we do expect part shareholders. on key basis a so be do we our what for of to And compound and and to a grow build value acquisitions

that the we're more of our the still on great with that to things and the Certainly, in said we're into attractive the and wanting terms there X, bandwidth make of sure on sheet the a balance starting time, based in where moderate But be earlier, or growth opportunities, kind also we're over period, other responsible as working based next I great Ortho, those but will within have are and opportunities ortho there. on, in year and within we're segments right? going space. We to segments innovation then delever deeper our

in whether space, that logical in applications also terms other it's the ortho have technologies some set from we got drive the in in capability we've value that other and certainly could company. of moving the tech a would of be med apply adjacencies, of in that And or surgical areas

in strong so margin to company we and continue build to And terms strong the growth improvement. expect of organically

to to over use start up and time some with that also cash company. that time the of delever bit expect shape ones to and and and over continued small the flow trajectory ramp We larger the improve continue acquisition curve little

Operator

The next question & comes from Mike Needham Matson from Company.

Michael Matson

out ask synergies. I call one on the in I hear the want didn't fourth quarter. impact the synergy to you

any largely you XXXX? in would are at then this us And helpful. you could give dissynergies they point? Or assume that over do if . be So

Matthew Trerotola

dissynergy last So quarter, impact the about -- but on the fourth so of that all of positive we but been had some we to about The year, little was synergies well. dissynergy QX, also about those X% gross we'll is the we'd peak in was along. QX as but a as positive progress net enough talking bit have I in expect we reality have synergy think we've dissynergy out

their year of did of has the we no I then that integration wave end the excited year as and the to teams has and -- taken of kind be the questions this of dissynergy sales the half as position. we're a U.S. last in momentum synergy net kind that that. year. and the that has about first conference super And of the year, got building work nothing balance There's new starting we are and our hold Nothing about the changed through on lot we'll The through channel changed. that of well year, seeing, of momentum from

businesses, confident mentioned U.S. in is with business. trajectory. we're start business comments includes that the a surgical good our that so has U.S. our healthy that year a in healthy We started our on and the And out

year, and And the expand should we net expect in so both to outside U.S. U.S. the position you the to start see and this synergy work through

Michael Matson

And day just it. topic. selling Got on Okay. the then

You days extra X had to in the first quarter. X

I day you would just any and QX same selling X days a it extra -- quarter same X, for mean, then other in the basis? it year-over-year on in a there could this differences modeling. I as if year? the Or last it QX -- can think give is year in give quarter you are terms be through X each is basically us just quarters, the helpful difference first next of

Matthew Trerotola

between a to provide QX, can and looks trade Mike, like. impacts view are of the we the Yes. QX all and But you it's what most QX. quarterly QX with mostly regards but to

Operator

comes question Cronin next from The from Caitlin Canaccord. .

Caitlin Cronin

And year. to great congrats you Congrats to go, sorry on transition. finish a again, your but Matt, the see on

in briefly a this about the integration, goal X? to you X touched but and talk earlier, rest years the of could goals have guys on X-year these the for reach Lima you phasing So

Phillip Berry

we line think looking work with about million regards we're as cost think of over Yes. -- bit on it's plus, we doing I our you still Again, the project-based of $XX in to $XX year as very comments, operational Thanks, regards also opportunities. my sight. the energies seeing at type our one, little path mentioned from million Matt million Caitlin. end to X What now with $XX a much to heard in were to that

So capture those of realization coming But value. you there. of remaining and some to to execution But in That's the in X up can year facilities drive comments, terms some my of making and a expect from XXXX. if to we I points of investments move we lot of synergies. line see opportunity equipment into of impact more we scale basis here clear another different so heard sight, then a XX XX good XXXX in think opportunities

growth our has single-digit to cross-selling global And and broader we for continue now of then think around to secure recon Matt performance. high leverage us a on strong help to the see comments potentially good side, more portfolio upside products made opportunities I to drive on and several

Caitlin Cronin

more XX% quarter what the really your the That's Or was it Foot for great. led any forward? color or and Ankle that And the the on then growth in shoulder and extremities then outlook the during And on business Ankle? quarter, Foot going growth? and

Phillip Berry

Yes.

best healthy quarter. of kind growth fourth or really back shoulder, in at click range overall, market it's our the see try the there double-digit to back tell. in And you the sort we above can if AltiVate and of through performance, that in So a

year launch ARG of with us what's good coming and impacts the have shoulder integration in are about on through behind a very getting feel there year. expecting we the to this so going some strong And and

deliver continued Ankle to of growth and strong Foot market.

and in many in in strong about very Food we've quarters was Foot the above Ankle then was growth we year. market continued through comfortably strong And QX very QX double-digit path had continuous strong market, growth above that. Foot Ankle. double-digit ankle are excited Our this innovation & and and of now and

innovation, all growth team formed large a aggressive using they with We've that building great going that's a keep of can, and and to and gain and great now aligned share is just products channel growing. our that about that that of It's portion channel. driving a there got has very aligned

Operator

Wittes from next Roth. comes The from question Jason

Jason Wittes

potentially of of congrats how of maybe and first natural the And sensitivity on Matt, it it on transition hedges currency that, the terms you're is most But as in the mix. off, business to you addition to curious how here could seems up like going in the I'm touch set be given But in terms well. in flows through P&L. towards on the your terms if financial euro hedges just just P&L.

Phillip Berry

Yes. Thanks, Jason.

we business, where cost euro-dominated is the are to the Mathys Lima a falls now are where we If revenue regards and for the more with globalized and you most the look at part.

place. in more have we So it of that a is natural hedge

do we Now manufacturing and Italy. in have Switzerland

to So Swiss-based the Italy. currencies euro got there regards with and you've

our naturally overall, regards with and cases how up with set European hedged operationally say we're we'd to businesses. So in we're most more OUS

other some some in talked of side you've the with We've P&R, there. got On in hedges we've us that place to the protect manufacturing got coin Mexico about.

how the think looks. that's regards about right things the rates to the on what right said to that on outlook they are I today, how full impact the you to range. based year now rates, in course current determined zone it's are we're over in if X% year. of So out But the with probably as impact, be But middle X% that play what seeing of currency

Jason Wittes

That's does that impact what of EBITDA? EPS is -- line in helpful. how And impact through X% bottom what the to on flow top on that X% the to terms line, or

Matthew Trerotola

our with regards impact have a major to wouldn't percent It margin on EBITDA.

a think it the as level margin. flow company through at So about

Jason Wittes

dissynergies. about about, don't that just by then mentioned synergies were about Was synergies. there the were going that Is offset synergies Okay. synergies. be think it off the know the that expectation is they're the And about And there that synergies but fully were quick well forward, follow-up, earlier I maybe those I versus then correctly, I they you you just know were just by to question X%, out? synergies, one if it? there look think but heard right I going said be -- offset to if continued was way may we some message just

Phillip Berry

had Jason, to that there, the clarify X% the some in business on of net about ramp cross-selling we by to offset recon So our a of up. fourth is as impact expected. started dis-synergies that quarter we But

with about of year, the still of quarter the dissynergies for over course the being better a of talked the fourth minus X% number year, recon business. the of got the but we as So that best progression

through you start the back read to year. of expect as some then wouldn't QX. to that's And out quarter, any where we of went impact As netting described that's you see in positive in impact the of QX, yes, first of to because, continuing more that But the ramp consolidation. cross-selling, some through be we're as going the we Matt in impact to the XXXX, to clear cross-selling start half that neutralized

Operator

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

Vijay Kumar

your guess, tariff -- the million tariff on implementation were free the back what is days monthly Mexico the think to go question, inventories, impact flow is delayed And impact related given million lag Ben, on the like to inventory on, the impact? -- the right, cash I to through? I $X the One if $X

a doesn't And fiscal inventory the levels of some you fiscal cash for impact number related flows planning for just free didn't to mitigate that hear conversion be -- to on and is, are cash 'XX. increasing I 'XX? impacts free

Phillip Berry

out in supply inventory what think and our way that in a progression laid to the our to need I going can I I think don't Vijay, that's the flow beyond. place, we from material sure is in perspective, but impact make we're XXXX cash here right Yes, doing to in chain we free increase

Matt going how to manage I tariffs, with aggressive be we we're described to As to regards with very mean regards them.

think Hopefully, after the in be offset. or be a to we'll cash to -- overarching if like to were levels I we we're way there'd position don't going going there. aggressively to that's But increase we'll delayed regime going capital some Yes, be in months actions impact have an free or outlook material probably mitigation X not, there so and the on a here. flow working But able our inventory our exemption turns would our X to previous P&R be X be to in inventory views on reaction.

Vijay Kumar

the But million I think plan, came year one Matt, expat, the of dissynergies my . to read expectation this, opportunities I million, tracking million revenues better. in it legacy Lima the ended the cross-selling driving on $XXX of $XXX Understood. correct from obviously, some Lima about well think side. initial for that Lima is Is million feel north it was $XXX coming versus the Enovis like what's Lima. on of components does perhaps for was you -- announced, of $XXX was the $XXX We when million, where

Matthew Trerotola

U.S., is beat a driven a Yes. outperformed the together last a outside the U.S. the just businesses between just was is million, year. our that X business big bit Yes, and a $XXX Mathys not little because And outside of the the but rest Lima put it's beat. remarkable currency, there's U.S. expectations our not legacy we swap much. It's outside which And

-- there. performance the total U.S., the what fantastic a number expected I really So than we start because, adds range obviously, had within guided. we the think of I meaningfully more the to And it's had within up think was

were discussion it's the think that's because and the some lean think the I gone where frankly, of felt visible growth integration that reality unfortunate fantastically Lima about I integration, the because of U.S. of created when just has impact that's integration lot the think I we in challenges And well. there brunt a

Operator

Rose for closing over like conference would the I session. turn question-and-answer Kyle back our remarks. concludes to to This

Kyle Rose

going set off. words say Matt here actually I the is us to think final and

Matthew Trerotola

want this you Kyle. I to by Thank and our their day team for out. us day members end call morning. joining thanking Thanks, in the excellence to for commitment

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

Operator

conference Thank The now today's concluded. has for presentation. you attending

disconnect. now may You

Enovis (ENOV) 26 Feb 252024 Q4 Earnings call transcript