NVST - Earnings call transcript Q2 2020

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Operator

My name is Stephanie and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Envista Holdings Corporation Second Quarter 2020 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session [Operator Instructions]. I will now turn the conference over to Mr. of President Vice Bedford, Investor Relations. John Mr. may you begin your conference. Bedford,

John Bedford

non-GAAP relating and SEC everyone www.envistaco.com. Thanks, and and call are other later joining President would archived until and like be and the our Officer. will us website quarterly call, Investors financial out will release, remain will Chief are all call. Hello, Investors Regulation Yu, Amir section the provided during this Executive Presentations, call required to our Howard our measures information on the portion our to today for today’s today call available I under of The this on next any us the of and thanks of on Stephanie. available. also our slide our the Financial supplementing Officer replay G of the reconciliations With the Aghdaei, archived website, by heading that point be Chief earnings section A call. presentation and audio Events

devices metrics XXXX approvals in certain applications all have regulatory financial may available of year-over-year. only are remarks noted, to During references describe period relate for products which impacted in references pending the and decreases that We factors year-over-year significant factors The some Unless and quarter the describe year-over-year the describe company's performance. increases are second to performance. specific otherwise will financial more impacted supplemental these period markets. that materials of submitted in or to or certain materials we and also to and presentation, certain supplemental additional all metrics

regarding the that do call risks and those of believe statements except and any forward-looking statements that, in we forward-looking SEC These During of the as to may in securities forward-looking including obligation date forward-looking set made the update any will are that we filings any as meaning and speak will only assume developments laws, or from a the uncertainties, future. to the number forth materially differ call, the occur to of by our events or we we federal statements statements subject or anticipate These within not make statements make turn like Amir. statements required I'd are over might With law. results actual forward-looking to today. they including that

Amir Aghdaei

Envista’s Thanks, second call. welcome quarter earnings to John, everyone XXXX and

Before year. of work the tremendous begin half to my I first in for we call, like our the would express the gratitude employee’s

efforts forth been and committed customers While you stakeholders. a put it operating customer for do such challenging has key centric, our leading and that I'm hardworking humbled a for our the for and Envista, grateful environment, Thank you all team.

occurring continue support employees for and progress our as business. quarter. for are a the had We dental work social encourage we an which affirm Additionally, and reform a to of globally, create our to during patient diversity the of making steady environment goal markets, that recovery commitment the and selves authentic their inclusion our movements the priority

to declined has over July. businesses of in accelerated reopen, our and XX% offices June result beginning growth which a As improve to April and continued dental through core in

financial we term We priorities record employee’s we have top have infection focus demand to for in visible and businesses on service we thoughtful the our quarter, our products. are continue is prevention exceptional our to strength. near experienced orthodontic providing preserving redefined of at day customers, focus, employees, and our of Envista’s the taking approach, implant Safety health. most mind and When every our the our the improvement to and a safety began the on second

is to and the continue office areas unsafe. world, in where to who are of agile, Our work workforce returning will able has an so remotely to those incredibly been do

sanitation procedures our virtual daily of While which move to programs manufacturing at our we customers and We allowed a are everything within to the and distribution following platform. to made and it new education We're training disruption business. to appropriate our has priority do. check and minimize protocols, employees adopting the undergo to environment forefront us continue centers embracing, a

During year, completed for in force, the our in converting part in This results, and than shutdown. the new our several acceleration COVID-XX courses generated June. beginning experienced was customers professionals. trained hundred into first are educational half our more our we accelerate particularly We're growth business, education leads the to of successful now customers customers. to for mobile XXX,XXX see of the where trainings new during These to sales we thousands help double-digit due DSO which efforts

team With across metrics provided on with the they procedures customers have different resources the restart procedures needed to recommendations and infection their to help our guidance the ensure businesses. world, sanitation prevention

financial and strategic reduction, expenses, combination million by operating cost hundreds partners year. customer in permanent generated This initiatives $XXX in furloughs, recovery our a to our consumable and extremely has target promote temporary temporary also practice by XX% quarter. exceeded in positive flow of been a from management partners restructuring including significant generating our and the position has cash liquidity recovery. collaboration reduction over support compensation investments. charges We spending or improve combination and leads restrictions. help discretionary and developed aggressive products. practice with excluding the and We approximately operating positive in offering while capital preserve of our exceptional year strong driven was ability efforts working reduced to These which other program, The feedback actions enabled partners, with their strength, packages customers our dental our new took to us cross It other for maintain our to

we're are able to the reshape ensure reduce advance near-term that cost, priorities important strategic priorities, portfolio. Our the our growth to and structure

a private sector of to to lead outbreak The we the sector. in long with quarter, half Envista China, stronger our these investment growth the to a approximately During overall new our objectives, term Starting customers business. China implement is will advanced team our onboard and maintained in overtime. the targeted and our which and private train implant to program, through investments align we orthodontic

orthodontic business the in which than As including grew sector, XX% believe private a result, double growth digit more outpaced at rate second we the in quarter, the our market.

build new increase in is capacity mid-single disinfectant implant and rate Our in we beginning grow June. June, momentum completed at XX%. by business the a positive to CaviCide infection which two of our digit business, prevention our for installation will In production of branded production late lines month

second anticipate year, XXX which infection drive in Envista. the basis of first digit revenue other of is lines in half and growth the at Our more half help points grew the double approximately year, business XX% growth we the that will rates of for than

adapt production continue add to will to We additional mitigate more to and stringent to spread continue designed procedure globally. as expect customers wider demand capacity

NX of CaviWipes against we innovative and can lower time solution implant to less registration is the techniques including than in product results XX look new In to key Nobel delivered delivery, major the system more team Our milestone treat patients. CaviCide protocol This of Shaper, received our XX-years healing after Biocare from speed allows for to disinfection treatment a COVID-XX. the and Europe. Osseo experts our confirming discomfort June, to by use implant EPA planting in two of patients perspective clinicians workflow Customer development. easier-to-use like with faster an which for that a instruments, innovative ultimately forward

select NX key we Similarly, rollout including valued more received Spark to the cases, clarity, than than expert, Aligners second who XXX has now a continue one and have offers. workflow XX will with stain be that continue clinical by over excellent the product well treated outcomes, move more completed customers We each. who of half cases as a Customers to resistance, our other the the Clear customers into softer to customers, year. XXX

COVID-XX lines, case and several a train we half substantial effort shutdown, moving capacity the second the new our to of which the During into manufacturing will made new year. install providers increase

make than of more in Spark we anticipate We will of are customer products the Collectively, XXXX pre-COVID Envista double the growth. current Plans in pleased will place growth rates, we are Normally, contributions the Envista’s in that in end X% XXXX. expect rebound to exceeding the meaningful by year. are both second base the NX and case levels. now which half submission by contribute to of

which annualized secure planned targeted basis on We also structural actions outlined QX, improve cost in million generate we $XX savings. substantially the headcount to targeted will permanent the $XXX million operating progress are on have made and action margins. substantial completed which than of more than more we our of savings Today, reduction,

represented second quarter, third exit fourth These Last & simplification to XXXX the and from cost Brazil the program reduction will approximately prior the be their X% intention the Crane COVID-XX of our of of portfolio, and and the we of completed the end second anticipate actively businesses end consolidation being the orders in Pelton together, anticipate permanent quarter. declining in and quarter, EBITDA exited businesses continue North by our business announced near we the had total of America. our margins remainder to quarter. in We're breakeven were treatment these This the taken revenue. and unit the outbreak. by We will managing in and the footprint

seasoned and a adding a set Board executive to broad with joined Shepherd, the Gail capabilities experience, Directors, board. of extensive Finally, of expertise our

our Envista Howard, the have both three hallmarks helped successfully process been to it system, details months have and quarter. who further discipline, challenging, provide our turn exceed our us improvement I priorities. while will commitments furthering strategic will the last continuous navigate While mindset the and of business now on

Howard Yu

Amir. Thanks,

Within a saw XX.X% the but demand developed declining favorable X.X% Second rate. foreign with major Core X.X% the longer adversely COVID-XX declined XX similar Geographically, down Western quarter, were remained basis U.S. lower were our within improved sales businesses. pandemic. quarter and at from as slower and $XXX than products XX.X%, were in approximately from period. discontinued impacted, and also demand quarter, decreased to U.S. Sales pricing. X.X% rate for from points and sales the approximately lockdown and a as most XX%, acquisitions due U.S., million. the within we both through geographies a the Western due primarily under in more conditions Europe, sales positively at southern the to UK specialty markets improved Europe The to Europe currency from impacted

on rate. the Emerging we quarter impact down We markets India which finished in This more as an consumables helped first orthodontic our digit XX%. impacted emerging the the the rate, business, was performance, a Middle declined to grew outside digit actions mid-single than from EBITDA digit was of in and improvement China down grew with of breakeven is implemented a COVID-XX than shutdowns, sales our the and quarter mid-single mitigate from by more improvement at decline to related led China business, rate, which which XX%. volume. a double the Turning office at the markets, which were adjusted East most sales cost partially at

the adjusted margin gross And adjusted factors. these to also second profit was EPS declined adjusted diluted negative and during $X.XX. quarter operating Our our due quarter margin

management which public $XX We Given reducing spent our restructuring temporary Bazillion treatment did the we job and of and the of into company non-cash able million initiatives, & an our unit portfolio. on costs our related to principal operating and excellent on is focused was adjustments savings and exit focus structural positive the quarter were and combination incremental And related charges we our to in impairment items, progress team inventory our in the cost meaningful able spending. $XX measures, asset in Cash of coming achieve are positive rate million minimizing including Crane our $X permanent of of cost quarter reshaping anticipate strong the a Approximately businesses. the with controls, generate liquidity. $XX to these on QX, reduction million. during operating the Working benefit a being improving was burn and preserving the cash of still expenses flow some cash inclusive environment, reduce million. to capital spending substantial yet Pelton

end proceeds of issuance $XXX Our of improve helped the QX. the convertible million strong our cash net $XXX cash debt to dollars to million combination from management position with in by

the we in good and are half flexibility maintaining XXXX, year to second to strategic believe to position growth As into while initiatives. continue we cost we of fund move through and the consider a our deleveraging

revenue significant pandemic. down now Specialty of businesses, & June, demand to orthodontics to our the seen Of COVID-XX. implant major XX.X% segments, were in business two our impact during declined while of Technologies initial from in treatments sales Turning to to due due part that phases core most our has the and were the the segment delayed XX.X%, Products April improvement

the into Ormco DQX bracket our highly business quarter, introduced the successful market. China system During our

While the more successfully pandemic forced example great have X,XXX live virtual attended a plan by This our doctors. how teams the launch, than product hosted of the the is introductions, cancellation furthers introduction and team China a adapted improve XXXX. XX% to product share revenue since to helped our environment products nearly meaningfully new the which new as cadence Ormco’s operating of a of new up

well is surgery placement. software, more The increasingly implants an saves portfolio implant a the placed current operating implant system efficiency which in more navigated day visit. patients can by solution, both time the consistent product and same efficient protocols. more implant planning NobelActive implant restoration a implant time that immediate to implant using prosthetic positioned and our even Clinicians providing allow clinicians Our to prevention have the infection temporary is when ex-guide help in be and loading environment, and same to DTX important due a pioneer consuming is leading solution where in

can business, imaging demand by well were encouraged the improve easy is exceeded far and resilient in April from image planning expected, particularly has imaging solutions revenue streamlined reduction June early in in operating consumables investment decreased our XX and for while to by wipes day capacity anticipate our solutions improves This We Europe. in connectivity workflow Technologies professionals profit infection launch of implant decreased and will at our to sales bundling decreased of more the was Specialty X.X%, have treatment partially to equipment maintenance the by adjusted XX.X%, sales the visits. our the in need similar than XX% business In for consumables number we systems. through half of and with our adjusted together part solutions, segment, and efficiency patients for rate which imaging use as dental success an operating it deliver to in in equipment for the We half prevention to of in environment. back efforts. double the consumables improvement for help to medical offset adversely their placement, workflow our the supply. of Amir a disinfecting these the consumables our by products operating impacted declined XX.X%. several also walk will as negative in been reducing one in With year. profit of cost exited Equipment same due of the products U.S. workflow. you both our in had than our as who reduction will revenue anticipate commercial to products some million only North and record increased Products which user clinical America sales sales segment only core the have seen more impact which our and than due DTX more now true Since operating sequential restorative Core X.X% growth Western we current digit the performance XXXX. customers Discontinued lower demand details products grew end quarter system, in I'll margin March, due as In backlog we and to replacing We and have lower by which software designed were solutions. software, to office to margin think a approximately second offer quarter. discontinued and cost the treatment efforts. year, streamlines acquisition, equipment our first half offset demand revenue, partially and and X.X% execution second in adverse sales X% our diagnostics, and of turn

Amir Aghdaei

Thanks guidance provide the the quarter. last we trends Howard. issuing quarter, for by given created and not business Similar the additional current formal pandemic. I uncertainty the want third into we're move on to business to some expectations as commentary our

I of Let growth. market as the and me the rate will most to what with outlook. move begin we our then sales impacting And important factors trends see

and infection have in we're Encouragingly, not first see governments. given practices monitoring time procedures But increasing the watching of closely for infections in forced federal we dental protocols. in the area needed and that rate in nor changes local to We're the well remains been areas elective for as have especially values factor -- rise with the state the prevention can The close the the velocity are of U.S., yet demand. patients infection COVID-XX significant is patients nor seen an have as number office we see, recovery. response to returning maximum the to this concern U.S. of each additional of offices,

also these the supplement counteract patient per conditions day, clear this maximizing office a in visit, especially take see number to reduction counteract of trend per day and been patient color visits. recovery in DSO near-term. actions caused available Clinicians, doctors that it's using the more on visits we dentistry customers maximum the focused have have While patient impact, revenue procedures extending per may including versus appointments of started hours a to amount to which help is

results QX QX, steadily sustainability while and into are improving monitoring been our of to have this recovery. Finally, we the

our are the offices. demand the partner's to reopen, patient's up half, offices position, and of inventory dental economic occurred the shock willingness return long-term to in effect first analyzing pent as that We

trends and China. Let focusing me America, on now comment North the on two our regions, market current largest Europe

trended quarter, with performing of business patient levels. quarter, positively July. we mentioned the the China, pre-COVID which earlier, best X% second improving the As of volumes, was XX% approximately in of month continued our has have approximately through sales to the in region

France patient are traditional improves, business. XX% our demand as gains as largest of volumes than for from as a a representing better anticipate at XX% orthodontics are be of America, the anticipated, we up for experiencing as to will season. of and clean improvement easing a the as and have about to of share and benefit demand should we July. lead patients our We our China we Over Europe, for restrictions and enter divergence the implant orthodontic for and procedures Austria, delayed meaningful quarter. into the a to areas optimistic performance. business, continue returning orthodontic now, consumables we In cautiously In continue been demand Western Customer's in demand stronger we from wide our in our performing combination quarter We the previously experience move business, rebound. in third region are pent Germany, product best continue implants, North second outlook to Scandinavia,

we demand high by as demand have the government encouraged in nations order remain the including of the global remain believe the Finally, COVID-XX rest will dental market quarter. the during India In Brazil world of conclusion, rates infection progression and we're will challenged, under lockdown's.

equipment. forward. we uncertain lower We're the and progress teamwork, as ethic. consumables tireless our was financial our well to strategic is After solidarity and reduce with the of performance investments, Our significant made and on structural for cost navigate in growth employee’s the customer well efforts new through positioned Brazilian by The These us these and success, businesses, than and improved believe made committed portfolio Spark we revenue our more our we including execution Pelton better going positions progress XX% to from exit NX & Crane our and possible cost unit normal, remain of times. track, for our priorities have our during quarter work position. treatment

John Bedford

That concludes questions. formal we're our comments. Stephanie, Amir. take now ready Thanks, to

Operator

[Operator comes line from Instructions] Evercore. with Anderson the Your first of Elizabeth question

Elizabeth Anderson

just seeing. terms you're tough great on in demand a of in a that Congrats the pretty I questions guys. a Hi, of had environment. couple performance trend

or And there provide there practices of quarter? they of equipment If that and think you on sort Thanks. you sort off purchases. pushing is say details you the the that business. then part Are the to how they're seeing just bit a of how about consumables, consumable ended sort like little the equipment can core something get helpful. detail equipment I'm to like part, of more you still about would and trying would Any XXXX? interested are you on be business think

Amir Aghdaei

Yeah. Thank Elizabeth. you,

So let's the start with consumable.

of at also trough, they consumables the and can started it imagine, can have the -- day-to-day dropped imagine the saw managing inventories that And you significantly. started and As started our have. through setting the closing you like demand partners flow as end for they the us just whatever as that we they working cash they need March, capital, offices

mentioned, big we the traditional as as gradual well that So begin progressed geographies on though, dental more as consumable, with. in But experiencing perspectives, driven through more that rebound of we in we was look to which to as starting double-digit starting low as throughout the over in came that the was not, slow with business to saw was needed for traditional grew And other normally increase that which our as support, think July. quarter, did both as overall our at different saw on going paying more throughout provide in we dental customers we improvement impacted. continued and is aspect by increase In of maintained trough a XX%. saw and a June, inventories line the China medical, part April our continue side. But we in through a of has we demand May, from the as the three quarter. business, traditional I who dentist part it really and mentioned, and consumables, smaller our steady business primarily infection, the to in grow the of consumables prevention, and not it and business, continue restorative, and Even medical forward. the And as

driven by put back was We did four of whole can with that seen varies that that outcome While have optimistic, encouraged we and to what inventories recovery a work. really seen for we declined, to internally. geography, get to tell two in we demand quarter. support we And to cautiously a by throughout of work continue increase partners dentists arm have specific optimistic you geography saw we demand are and lot it a the of the significantly set with by This past I that from months. but product the increasing our

Elizabeth Anderson

Can helpful. that macro the in pretty you. Thank operating -- in environment. is state obviously obviously pretty cash quarter also, balance good the was you your I impressive cash That's has flow mentioned a given and the

back through the you year, allocation of go do you versus As think capital half how you M&A other make potentially perspective? could de-levering the on decisions some about or that

Amir Aghdaei

want Elizabeth, about on that sure because I to asked piece. your well, equipment make equipment you as answer question I

So, we let me answer time had to be that to going and then Howard allocation will ramp, already answer minimum it's we say the equipment what M&A. and we orders some take cancellation. is that was this. slower equipment really that saw our in question surprisingly saw that and about hand place I of are was some take can the go We capital and It that were going for the anticipated encouraged as will and forward. the we And

forward. provide going to services continued We these

an basis our imaging, much. continued our of have large is trend. we resilient imaging did contractual been to as not saw ongoing services on Imaging continue, has Our in not really that get impacted a that specifically and equipment, based portion we and has that

moved coming back. quarter, we saw it the As we through

and to make equipment, these a through have seeing are be hand, above, not if second XXXX. pieces, $XX,XXX expect half we people other and slower do to the the ramp and On you that as we're ramp throughout those investment, it larger mentioned, the capital seeing

maintenance. go expect are use during equipment than that see portfolio, XX% a today people less things The larger that limited day $X,XXX our need did as that our forward. people consumables to reshaped the are for portfolio we we XX% slower remaining of of really And the or recovery installation was are it, we we that they need quarter that One every and Howard? equipment.

Howard Yu

sure. Sure,

really this ahead strong a strong largely So, than less right at anticipated go took capital liquidity. We $X cash flow, let better me have free preserve is that we a really and than cost working of Elizabeth. million. and actions decline a management function answer, to you’re did And

more earlier, plan about of quarter had mentioned into Amir revenue cash and points was $XXX in one the I the decline. for our cost that those mitigate focal And the impact than As on us management helped exceeded talked million the the actions, a the then quarter. also some of coming

remaining I it these the to the the way think XX% portion here the continue cost and actions. We're As about be we'll priorities to second centered our relates of there, half leveraging, executing near-term year. in around on of finish

we'll readout for full cost year. actions. focused leverage And underlying And recovery we'll initially the those the year so, see as continues driven by that we'll on the then, next take our on we're still dislocations out term, then M&A take strategy. part and business. look reducing -- more ahead look And intermediate and well. as And long environment is go a current of major advantage any to we'll of certainly our And this of coming

Elizabeth Anderson

Okay, you guys. great, thank

Howard Yu

Yep.

Operator

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

Amir Aghdaei

Jeff. Hey,

Jeff Johnson

for XX, you? A you a a continue that guess that And guy just headwind off I and But any I you. I improvement point ask Do continue thoughts throughout period? we a a exit what first simple in of are starting lot rate. wanted to Hey, both accurate? But turnover of XX. talked see you July operatory time the to September the level on gave for know high structural simple quarter. guys. ballpark June about Is momentum least detail. numbers we of some don’t concerned we good And would or it little gating lot at heard XX, July you and have think me, is be question, it reasons kind as that us at in How this to to down is the we think might appreciate hit that. kind afternoon, are kind kind you I think April, you that helpful? June should of a of May, Just say improve August, continuing. Amir, about of like of July,

Amir Aghdaei

category Yeah, through if got better that product mean watching by than May June. Yeah. saw very to pent than we see little watch June improvement XX% the May. we the And XX%, better improvement down more Jeff. continue then, it and I month demand were -- better carefully. month a carefully April, we Thanks, in you're purely right, through driven April. to than were and of is geography, product made by and very up better category gradual in we geography have we bit seen by minus gradual this minus But

so what have July, And we July seen June. performance have in we seen than far in better

cautious provide to And expectation the transitional June today to are to Our seeing forward. move been a to consumable continue beginning we not fully we going set visibility have reason visibility in it’s we provide not What our better forecast and that's have -- recover limited. is until to expect up.

orthodontic want pent not seen up and disallocation improved well implant down, buy see and lot very we sure versus has a carefully. inventory. one-time demand a gone the that and as As watching this better We're inventory both things seen we in QX. than watching a we recurring, few mentioned We're one-time as we cautiously is what to have rebuild versus have make the are can buy a we've optimistic And as inventories We're continuation. July we in watching piece we expected. as far to

been I inventories down, So over XXXX say XX%. by would since have our

at I we direct, we of business and taking our is So, that I've backing this neither number over up, not of that And what that have our our and to are carefully of patients, on been good for short-term And this it last since and area. hoping seen in trend all watching aspect continue to place we we nor off we’re XX% be least, a we priorities. that watching in optimistic the inventories have have appointments not the is every really down. are number never surprised. long-term to level Sum of and cautiously feel very but are say

Jeff Johnson

$XX you. And the like me neighborhood how to that expecting thank to Understood, love your just of in of on kind I'd year. to expectations. seems to you're now pre-COVID compares Spark, maybe million maybe it million for $XX hear the somewhere

about that's in think I line.

that $XX maybe million base of XXXX? little about a how surprised to thinking in a I'm and million that going maybe $XX you're into So by But way. off kind good implications building in XXXX

Howard Yu

thank Jeff. you, Yeah,

better strong, the what set improvement from million that year, we should points was internal and basis an be That You're was to XX absolutely and did plan we about patient see. and Obviously, We $XX doctors that do stain this the of compared seeing, We're resistant January, for should communicated. we're have have to the we million XXXX. we this February and growth clarity, it started correct. both comfort plan. really $XX us that internal have really expectation pleased what than with patient, that

We trained we we been have than here What past significantly we we're for number trained done reason We our we the of the when added XXX in have doctors they the growth, XXXX. of are we the perform and we queue. in more the cases year. what the capacity. and we we did more more capacity So or and than coming. that have confident customer we enough built basis did months, more of enough, customers in to seen XXX have now added did, we January at size XXX we're active think for four And are three think that in end QX. have than can Spark demand can by base there, in now, -- deliver of the is it in can cases and getting back Right is, point double

over building that capacity, $XXX in a objective. to line you over quoted, that the product We're accomplish the ballpark. get is our building So to few the the numbers million goal we’re infrastructure years. next the And it's to

Jeff Johnson

Thank you.

Operator

is the question Tycho with of from JPMorgan. next line Peterson Your

Elena Jouronova

for wanted taking I questions. to Thanks prevention Hi, infection with on for start business. Tycho. thanks. our the Elena is a This

in the You XX%. it the double-digits that than noted half more in said And year. first grew quarter, you first of recall the I

given then, the capacity? XXX upside half So added decelerated it's points if been back whether just trending year the in see the XQ of it you in how or could the basis wondering and to tailwind

Amir Aghdaei

Yes, absolutely.

as capacity, year, and substantial business most of, we they we $XX -- We're the infection we prevention in was wipes last And in first million, now, disinfect online backlog. a disinfecting started will think QX. over XX% million growth. So $XXX We double-digit right make liquids adding generally have a QX capacity out viruses. over we’ve be saw kills products growth like and half, and a

business. in mix and XX% XX% the of medical, is is this the here important factor One of is dental. About

at So ramping the of of the and beginning a a the quarter, dental the ramp half now we up. as quarter quarter, we is through saw got lot And medical. of to way end the

that is demand could $XXX this something think for so. good difference to dentists because or in there answer got can the half, and or making and hundred there, that new EPA question, mentioned, customers, approval to And is opening, safer, to basis us XXX patient, we very to we the product, the a making difference, that really up be is comfortable million confidence your in safer gives the we year a expand we continue capacity points has second And additional feel environment business traction. making next operate. office So as is about

Elena Jouronova

the helpful. And gradual in has through whether change light the July? question quarter. on in U.S. then, the mentioned pace one improvement patients very to increasing that's there the thinking in velocity in Great, of you a infection been rate offices But of returning

Amir Aghdaei

a we U.S. China, regional as we we not various dynamic what we hand that negative one on experienced significant are they're doing that ADA watch data regional various statistics, ongoing what taking every the closely impact question, understand good really any place internal watch that make level very have really we are and similar we level. basis. The watching showing that But place, to we at today. services, Yeah, an chairs in on sure surveys are taking that Outside the is the

in geographies the perspective. demand of put correlated and what a As controls areas that you place. we were recall, in back areas And there are that the some are these it new uncertainty of carefully, watching they we that managing But seen watching that from that with forward. indicates anything we haven't have number moving COVID we cases the seen rise thankfully, are

Elena Jouronova

Great, thank you.

Operator

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

Jon Block

your market, think of is that the the thoughts sustainable mentioned the results there. what at call do that quarter. the love in about just Amir, pent Good got afternoon. in to you the on fourth aim second third thoughts is results guys. of for into yielded backlog backlog the that What Thanks, would going then I it's depleted and backlog quarter a rate guessing I'm industry's demand. it tailwind, quarter. you your up up. likely the But think are And follow improvement point? of I Sort

Amir Aghdaei

difficult Thank On restocking. a We It's know is a really course. We have of to feel taking put up XX% is abruptly pent number what played as has really many on place. Yeah, it. you. that, business they over mentioned of for our demand I doctor role. sides, definitely think a offices without direct, closed good

going of We have inventory on, a the good side feel for on partners. our what's

And so saw that first a we doctor was side. the thing on

for are On of person. by been compensate using are the and these traditional the very patient, April ramp March, in needed they we see to to in teledentistry and and wire, and implants, customer They're need seeing the that it, what we positively seeing. patient to surprised orthos a side, they lot we pulled have May, bracket encouraged see but all

for that up us June. up. Restoration a what We're our other for talked seeing improvement put measured But and customers, our they're We temporarily. in and ramping rate telling the rate procedures they’re back seems from monitoring expect the forward. to is own is it have our exit were moving that quarter expectation third they that

far encouraging, so really July, optimistic. it's what seen we cautiously in have been And

up of feel will as to that it number think and something give that to hard the or able sustainable well order June as it. but QX of play continuation a answer here role I is pent QX. in Repeat to and July, demand to a a question be on buys, put in in patients, number us

Howard Yu

think, I in just Jon, jump to here Howard, maybe as is well. this

I taken actions cost the feel forward really make of think that, be of well. positioned us environment around lot we’ll comfortable, that going a the that we've regardless

feel And we that so that's else good something about.

Jon Block

there. within you your have on and mom how so color DSOs. fragmented long coming more those if it. Got see entities think second the high the a versus term gears, shift for pops well with benefit Thanks, and positioning consolidation guys could I sizable maybe be Thanks your guys. we helpful time growing color DSOs Any question, of I'll COVID-XX? level a are position within accelerated out a as

Amir Aghdaei

of in in puts to eight strand last training were to above of we us seeing a important of average recovery an and fleet Nobel Yeah, our with so move procedures forward the it's revenue DSOs to really we momentum. as we mentioned plan. see before, more it's particularly a Absolutely look part grow a to double area a expect are starting feel completely RFPs in, with position ramp lot about just and DSOs really implant June to house. bigger seen the sort It months, We the a quarter, DSOs really levels a of put six over during the won of it’s that March to some to recovery energy around We digit. recovering we've from keep June. different for to June, good the in in the keep of and

the years is we watch that is the as of the by that as that geography. carefully them something in very And top we're encouraging sign repeated we the we have XX things seeing that States, ramp, One recovery ramp seen, United well. by mentioned,

start us July, ramping on that are something on all back seen As on acquisition, at what to far as the comment DSOs That’s They are up we But up. are consolidation, hearing the in further the and to the ramp are working they beginning I of put or our of back they that that really point, Try their very June it. in they addition with carefully. some watching of beginning Nobel have at it But Nobel put what partner again. cannot asking either that they're us put hold considering hold. quarter. they was some we really March, so of

Jon Block

Thanks guys.

Operator

Your comes John William next from of line Krieger the question Blair. with

John Krieger

Or manage where to the could up? likely stabilized, very downward Thanks watching sense try they channel. to inventories. to the topic partners see this more stand? Amir, wanted back is come their as we of also go sounds I pressure closely of very much. your like about you're to in flow? you some Have your back It cash some What

Amir Aghdaei

But John. it, data. good. in of is out very since and inventory place is Thanks we the of part one been sell have share the position yes, aspect have Inventory best Yes, tracking. been other that

really good partners. looking the position through. at We're large share. at We inventory. We have and feel sell for a our look at We're looking key the

$XX look from is prevention. years us in infection ago. As our growth inventory get I that back inventory on consumable X%, correction. equipment help three has over sales and mentioned, at XX% declined that correction a that so through of Year-to-date work impacted capacity working through over and what we If partners, inventories can help we're additional impact customers that X% really backlog It's million is I most work. to because

Now of that we I point inventories, off. that level view, getting to think to our have from expect question of

that is is the We indication inventory And some in product that coming I a in are some to that seeing what they're sell in and sell $XX around demand has this out. the matchup partners, is in July that XX% over categories, orders to there. saw XXXX. want through July some numbers are that over point out million order we That's put specific in good coming through a respond down. reached since a now to and level,

John Krieger

NX. That's follow-up and to one And Wonderful. great. one Spark and relates this Thanks.

get from generation opposed are existing the you Ormco Nobel? products. as will be brands, customers more that How with experience some you it of sales As new to older incremental, be with or these comfortable migration your

Amir Aghdaei

me back first, to Spark let NX. and this so I'll answer Yeah, come

really close a our current keeping are on We customers. eye

the and out confident are we're customer, so well improving, match, go target have place. lot no we aligner seeing forward. current bracket mentioned our wire, our through And Customers. improving bracket initial of as -- there is we're as that seeing Ormco and the wire ramp ramp faster coming The our Spark that Both sort as with tells it as our survey current aligner target clear a in and same for we switching obviously in taking is us we’re before, our well. is As

incremental to ramp. Nobel we it’s be A, get at meaningful a is that Our that then business impact specifically in in going growth, to our and is goal XXXX. that cannibalization implant that and cannibalization going NX, exceeds is be But our think essentially XXXX some our XXXX growth to to get We far and XXXX. level in of

John Krieger

you. helpful. Thank Very

Operator

Instructions] next from Nathan [Operator Sachs. is Rich question Goldman with Your

Amir Aghdaei

Hi, Nathan.

Nathan Rich

good looking of going could Hi, made making afternoon, Howard. uptake the obviously of If around, start with kind afternoon. I XXXX meaningful out kind you to comments seems with the and Amir here is the products Hi Spark pretty well. John new like contribution. good of in It a

top-line up a that what feel meaningful For year, the like early with kind the ramp year that launch? could of and respect of MX, what regardless traction type like? would the the just look approval Europe contributor what of expect that contribution and that of to of you're assume in next be U.S. should Do you the kind in we seeing based kind to of on kind U.S. next

Amir Aghdaei

Yeah, Nathan. very good. Thanks

Spark So the in and XXX in basis see we growth would registering Europe, for mentioned, NX half and combination started think geographies We we NX about different points year. that approved be, in this that as we of to marketing that have is Europe. second have of

that I later NX of significant comment be when We the both we We got are the in are I process impact a coming XXXX. XXXX in and hoping cannot from surface But procedures surprised completed. get pleasantly U.S., the and of going skin, meaningful, well be the our of of how approved Europe. part us for as really to in the And the quickly be would it world, would years. U.S. think regulatory that approved NX growth rest were would that would the in really as factor for in that

product, that with the force Growth to trajectory combination combination what part new expect of Nobel have have sales the You with plus what trajectory be of think growth America, well a here business done we trajectory. are we done we this sale in would Nobel to NX curve I an back what I with and get with element think seeing the encourage on as as now China really Europe in North important be another

Nathan Rich

mentioned as if Howard, start ask of kind of to margin, a as see $XXX kind company And cost run Could a seems in picture then, track normalized it how kind million of What on And back. achieve regardless margin kind the of should be could the how you a look think more would you revenues of position, permanent would comes on on good level progression saving. Great. sort as to of being see revenue about rate? type I out, margins targeting you up improve, we half of like year? of revenue then follow bigger we a the you maybe as of that that you're back the

Howard Yu

heard the as given be office cost of in I our on like, But just completed a was well. these we the think headcount question of move regards quality the around XXX% So, through sound. with entire will and to-date that Nathan, the the improving. cost that we're that portion first the I'm the we I footprint, regard back because question as actions to structural that margins way just excess taken. underlying well we we've is about in not to that as the feel changes, go that with furloughs And forward second we'll XX%. and off We we like again, both that is do feel And about temporary on easing finish here business $XXX half. The But million, largely forward exceeded that a around here, the the we plan really some million. actions, good cost $XXX overall of of the

starting And than then it share we did be QX. so able here, decrementals in have savings as will XX% And better XXXX. million here $XXX quarter to of the first near-term, the to a we and relates maybe decrementals of demonstrate in

the largely of continue well do as of we will off will range. bit be the as NX, XX%. than probably prevention the DTX. We a initiatives QX some the XX% outlined, in It of to be that going is closer light less in XX% into decremental has As key some these well the actions, in as think around invest ease Spark these QX little temporary to we that Amir infection likely as and

Nathan Rich

Great. Thank you.

Operator

I'd now like over back management. to turn the to conference

John Bedford

Thank today. Appreciate be the you. around we'll the the answer week everybody. Thanks, of questions. time for rest Stephanie. to Thanks, And

Amir Aghdaei

much. very you Thank

Operator

today's This conference call. you. Thank concludes

disconnect. You may now

John Bedford

Stephanie. Thanks,

Operator

you. Thank

Envista (NVST) 30 Jul 202020 Q2 Earnings call transcript