NVST - Earnings call transcript Q4 2020

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Operator

My name is Erika and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holding Corporation's Fourth 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 call over to Mr. of President Vice Bedford, Investor Relations. John Mr. may you begin your conference. Bedford,

John Bedford

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

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

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

Amir Aghdaei

Thanks, and earnings fourth to welcome everyone John, Envista's call. quarter XXXX

truly discussing Before historic has year. wanted I by what been our start reflecting result, to an

who is five While center at through been navigated has customers last in X,XXX months core teams, ones many challenge dental were professionals. our by the ones that more we leave commercial keep manufacturing the this a of and and XX to have production the of well in the sessions values alive over was training frontline return among Envista's in running to our one keeping of pandemic. and education distribution do. and This Customer evident first in was centricity who to all than ways, for we successfully middle teams, and held XXX,XXX our

spread the critical liquids we of this fight we're in thank care in and we're At and and tremendous proud you your where to our quality XX help productivity million Envista, patient assist in customers, improve and for to to oral our more access services critical COVID-XX make XX healthcare XXXX. the of predictability to globally. practices greater again To create to of to community We shipped professionals role are than wipes units products broader creating outcomes. dental XXXX, of products committed To and our customers, comradery sacrifice that your health. healthcare our efforts improve In effort. supporting offices we better We dental committed oral in with the employees than provide disinfectant medical countries. in and and in more help setting to partnering

and Turning we increase increase in core revenue accelerate profitability, cash an a back to growth year made journey have in flow X.X% finish outstanding adjusted progress the we expand our possible delivering free and X.X% to XX% our This made to and better a was and growth, by results, had build the EBITDA. Envista.

you of Let the important me details. take through some

the quarter. more expand with Aligners than implant grew been quarter. XXX and growth the fourth continue strategic the of points significant a to Spark contributor We in has Clear The Infection and revenue our Prevention basis business business more fourth growth NX revenue in contributing the Prevention basis year more areas to than system growth contributing point Infection the XXX of and a the throughout combination XX% than

move of the beyond growth protocols. many of we a becoming this will with business the we the high increased believe healthcare area pandemic, part a As procedures standard disinfecting remain

We in flexibility XX% more Currently, than XXXX, outside the have us provide infection will geographic increased expand revenues prevention the capacity in drive which U.S. the U.S. to footprint our of

to share. worth disinfectant this segment, Reception more adding designed presence market and we launched and six resources than XX our sales secured product in than million market, market has quarter, market is has than kill Last new are several dental contracts medical the been with which CaviWipes the kill minute to pathogens NAV. more larger multi-year over with a have networks less time in than delivery XX% $X a times a greater X.X, one more step team we phenomenon build integrated simple two for we Additionally, a long-term process. surface and

an values growing growth the five orthodontic had wire and another of orthodontics. mid-teen outstanding straight quarter is and grown Our is in bracket of strategy Innovation with part approximately our XX%. business one important at core another

TruGEN case. new and unique bite greater launch start more by intraoral help scans aligned better features images more patients. for It These CBCT by integration control doctors Release cases. with and and XR details planning the and more treatment orthodontist complex finish clinical comprehensive that material of of create gives help For was XD XX with rigid improves of for marked provide the with open finishing turbos ultimately this Release that outcomes Spark to update will added our more the by doctors. aesthetic diagnostic also also to Spark, a control capabilities posterior XX featuring the

With we resulting addition share strategy when in in we we XXXX, times treatment surfaces long-term the several the and adhesion manufacturing there manufacturing optimize are orthodontists are and the pleasing In better three of of have part abutment also capacity new actively to outcomes aesthetically prescribing and enter Spark. quarter, than is launched Today, year. Innovation important TiUltra soft surfaces our These a to tissue comparison an who now more results. more in and to are the lines new more to expand new X,XXX in U.S. our implant clinical our our Xeal implants. fourth in bone integration the applied

clear the XXX while the the more steps, that in products our repeat much significant to accelerate have be been be easier in over creating We clinicians in We and Envista innovative in product NX, system, change for XXX,XXX to choose in slower them both tissues, we of portfolio move implants structure fewer boost basis momentum These NX sold reducing to product more as from orders. clinicians we in X,XXX for reducing NX these by treatment million The and adopt featured comfortable in into made With of Europe time, to We point priorities designed spending. less with at total and adopting protocol product will XX% damage soft with feed on the than anticipate abutment is clinicians with than more our bone revenue a person patient. these $XXX eases, than these than new trainings. a more more also and to as growth experience a surfaces the in and treatment XXXX. XXXX. we by anticipate and board XXX result actions the a contribution introduced pandemic to use. placing annualized more progresses possible speed which NX's to Spark permanently operates NX surfaces cost we this of took should has anticipate U.S. implant XXXX and are

and company. us flow XXXX, best put bank $XXX focus adjusted business our allowed consecutive commercial Here flexibility since the our the to performance where of bracket orthodontics Consequently, invest We we support initiatives our position where financial in key headcount more than workflow-oriented greater attribute manufacturing in with we to and in wire simplify a implants into to million consumable position than becoming of continuous have to initiatives growth see have Spark $XXX Spark of $XXX during businesses. helped rapid any enhance has million been substantial capital In repaid to now increase traditional original for portfolio. capabilities the we us cash margin market to into deploy both These XX% second two generated the quarters our we debt cash a free business plan. Aligners conjunction and plan of expand public to our XX% and more dental in to drive EBITDA we helping more more Envista ahead million. if both and The recovery in of the nearly grow compliance further agreement the February help million resources is build help quarter. financial transformation of Clear with EBS, than improvement, terms have the accelerating a We and to above which XXXX reposition the XXXX, orthodontics. use $XX

than strategic to is over With more I the business exits this year, today. revenue to go areas financials of within details. turn our through XX% will now it Howard our these in more

Howard Yu

due quarter impacted unfavorably dentist quarter increase Sales increased currency some from Thanks, the quarters to approximately to first relative patient with discontinued from a in sequential million. open offices sales volumes experienced improvement of impacted positively imposed from X.X% Globally, lockdowns the $XXX in products. acquisitions increased an remained prevalence and X.X%, third most X.X% declines sales the government X.X% Amir. despite and XXXX. COVID-XX. stable Fourth sales X.X% of three and were Core to

growth rate policies consumables grew rate equipment digit Europe robust purchase digit North developed in single product pent-up with the and and performance. designed mid Infection a digits single increased was partially grew grew all our categories by at strong demand, disinfecting more low Prevention America Our demand Western due business and digit to markets, double to performance mid orthodontic XX% rate. emerging a businesses. procedure led consumables This Japan single and of with our sales healthy In than new for capital the at experiencing with markets and traditional incentivize China equipment. infection led mid in digit business. grew single by prevention our way volumes products. Geographically, driven at government

sector, The In territory. has Our focused more revenues as had half decline investment a the recovered of more more COVID-XX strong and patients key to accounts, for to than increasing our in we public second other sector. have access help XX% specialty remained and positive due China, finished throughout and XX% will the Outside the and our outbreak Private premium the new in private grow than implants XXXX settings. XXXX. emerging on DQX, success year the weak of in which than care sector quickly suppressed products, Spark public business demand. us year return public orthodontic which formulary markets increased as more been

profit and reduction and points product XX driven cost in were the NX more of driven XXX our productivity adjusted inefficiency from reduction were Our partially Spark. savings was than points increased growing XX% by global XX% increased and Adjusted by by initiatives, by Profitability reduction margin in million million. savings which due primarily largely to XX.X% structural increase substantially offset building in our of quarter. basis to capacity These mix $XXX basis spending personnel operating led favorable XX.X%, for with EBITDA an of adjusted actions, to footprint. margin which gross $XX

approximately basis on XXXX include increase of forma $X.XX to approximately quarter fourth XX% period year a of million. expense in to an prior Our interest $XX incremental diluted compared same is adjusted EPS pro the of the

free million fourth an generated than we in $XXX the year, period $XXX full than the XXXX. the cash million in comparable flow For of X.X% including of more more from increase quarter,

ratio income to our approximately net a XXX%, earnings. strong of XXXX quality testament Importantly, free to was cash flow adjusted our for

which and the February. to our we interest accelerate credit mentioned, original expense reinstatement Amir As agreement, terms lower beginning of our able compliance of will substantially in were

segments. Now turning to two our business

sales segment Technologies revenue & Products core Specialty X.X%. Our while up X.X%, were increased

acceleration strong grew volume Our mid-teens driving in remaining and and grew at orthodontic sequential from and clear significant both new with with rate business Brackets aligners. approximately performance. XX% and reduction wires contribution the backlog wires brackets

more New procedures income taking of of patient more aided flexible volumes continue by school consumers and aesthetic schedules. work advantage and to discretionary using be on their

making than key more differentiator second in in first total loyal contributor for has Spark to Damon brackets, it quarter growth of system the creating conventional comfortable XXXX, year, year. case our on more half because the the quarter second it shipments been of half a performance teeth efficient outcomes. have in the was significant in to more Our remained XXX% alone. than also with while patients, a Damon in comparison system comparison the and more Doctors XX% forces other the creates to growth to with in increasing the lower the in half of beautiful fourth

increased where the second implant by clinicians China, low-single education being rate at driven weakness our QX conditions DSO sequentially in trained digit DSO due expanding to and rate programs In remained clinical is China, declined Nobel like a of customers emerging Biocare's China. consecutive were at in program a North in education in offer were challenging. number for America areas improved markets a also our affiliated outside business our large mid-single more treatments. focus business. business The This digit has have to XXX markets doctors and with growth differentiator from been our of the than for Our in revenue able offset China leading quarter. implant part by performance developed

management dental variety and Summit Women's workplace. other and the leaders diversity courses and to learn of we practitioners first Leadership to female Here hosted inclusion enabling each clinic Forum promote help from in a dental the and

our and brought and Awards, where industry were County technologies, Crown. which Awards as which best by profit Townie also quarter savings products Annual reliable Nobel aligners the Dental increased recognize to implants. operating offset This partially of business, clear notable by Townie's XX increased adjusted in global system, structural our voted implant primarily basis cost recognition the to dental from due peers. products points Bridge award their Specialty margin XX.X% in most investment Biocare Choice received program, The implant from reputable & and

expect increase XXXX our and NX and As Spark. commercial to activities in of capacity further Amir mentioned, and we investment to adoption accelerate

& consumables products than the way throughput digit prevention Equipment have sales X.X%. of about prevention with our to improve actions the Our grew at better segment discontinued while efficiency $XX teams of a the These more manufacturing to truly low-double in process impacted working X.X% core sales quarter. needs. more disinfecting meet with increased infection XX%. positions by rate to EBS Consumables growth Traditional increase embraced Demand comparison still remained XX% adversely decreased leading XXXX, infection X.X%, The in our tirelessly sales third daily of the and and by has robust million. than helped increase production customer products backlog with

sequential a from quarter declined Our endodontic third businesses restorative slightly performance. and improvement the

prior try higher of the standards due categories XX-day has unconditional customer return many electric done Our a where a our geographies. imaging our large to This driven equipment satisfaction warranty terrific relative stand policy better by capital products Smaller the our quality flat demand in first with with embodying our pieces customers our hand was of team value can of that improvement hygienic significant centricity core equipment job no quarter. to certain an and new performed our new behind product programs than risk-free. includes all In products. business hassle in year business, of equipment of

addition tremendous radiologists offerings. a clinical of a portfolio, providing is BeamReaders oral our help points of by We surgeons and the the adjusted better to reports patients. training reports create competitiveness product consumables XXX XXX increased and BeamReaders our are lower which strong who through Equipment details better into partnership profit more reduction with treatment for XD radiology XX.X% our and both tailor in We their also plans XXXX the driven through operating that Envista mix margin team to favorable some furthering product clinicians basis basis margins to growth infection impacted of job by of drove continue operating of reduction in environment. the to you it programs, cost I’ll margin to measures. business, will on business, now team cost turn Amir than of improvement. our in exit current walk points our equipment sustainment back products operating prevention executing the the by anticipate and

Amir Aghdaei

Thanks, Howard.

position We believe are in XXXX progress our a very entering of are pleased with and in XXXX we strength.

more quarter basis our priorities second strategic points to than our contributed top XXX growth. consecutive line the For

the concentric outbreak cash pandemic. future XX% and of we XX% the segment reduction business, large Additionally, permanent and EBITDA performance revenue products. the to cost much above consumables second delivered specialty workflow to help our for adjusted portfolio and savings double-digit our of areas since to the quarter, This required better part time returned our China accelerate will margin accelerate exit of $XXX programs. partially us for today doing the growth positioned investment into execution It as redeploy margin our business first margin lower clinical consecutive is in focused enhancement million our our our of with growth. growth and After the

our it been. our balance has We the to inorganically possible expand position ever upon sheet is foundation expect strong best as in

January the we of forward and the consistent half with term month dental the We the results and healthy optimistic for trends are continue Looking second with backlog near XXXX. entered solid outlook cautiously of a market. recovery

in performance the stable conditions in our the strong fourth rates remain in Geographically, the which case pre-COVID North quarter, first we In America, over have quarter. Equipment equipment by to remain incentives will placement of volume. the performance new below below strong maintain expected and In About economic will XX% revenue study pre we in stable complexity significant quarter. emerging XX% to as & to we orthodontic our be while reduced performance to did strong we Europe, restrictions. of yet the drive for make first a infection continuing from in that seen driven China, levels from certain activity procedures, government has makes remains up in anticipate For dental prevention the Western higher relative our outside prevention also we where weaker dental moderate. have pandemic anticipate benefited levels there implant to seen markets infection believe market, fourth disruption with business a revenues January China, in while continue the and up consumables, as China have Northern In a is starts imposed quarter rebound some but to double-digit Consumables due growth activity.

moving dentist first open vaccination begin half momentum progresses. is expectation offices distribution the through improving Our that remain see we forward the and to as

this quarter term. We we as margins demand revenue. stable, we is growth but will patient have and historically that into priorities, be of help first to higher immediately anticipate also as majority case about address that pent-up now us believe reduce in near margin, the offset volume Turn behind will of complexity operating and invest higher strategic percentage a sequentially in operating expenses our lower continue

the optimistic issues to worldwide an predictable with growing implant We NX under a long-term and in more identified transmittable will Spark procedures and the like lead and a workflow dental our procedures. prevent the these and market healthcare dentist integrated remain a believe lines day. Innovative to also more diseases growing There's are space industry. patients being enable products to need of caused The their with productive decline specialty, every education. performing difficult for need front has orthodontic the preventative healthcare be disinfection visits, which a prospects digital enhance in clinicians across to oral training to in we significant about more return in when growth fully penetrated the at pandemic could solution

financial a priorities and remain growth, XXXX consistent, building accelerating our Our Envista. improving profitability better

capital discipline, prevention achieve at We specialty, our in to thoughtful by China, work portfolio deployment. investing maintaining repositioning goals growth cost will a for infection and accelerated our

to We are diversity while that improve leading for in into all also continuously to our committed destination leveraging a building EBS increasing Envista do. we talent,

opportunity to the for and committed patients. to and more organization as and of and XXXX the life and our have ultimately the beyond. purpose of oral about of productivity treatment proud making readily predictability We're goals made we industry an available improving quality people, dental confidence in to are further We excited and XXXX these we care options move improving advance progress of into

John Bedford

That Amir. Erica, our Thanks, concludes we're now for ready questions. formal comments.

Operator

Johnson Instructions] Your with [Operator first Jeff question from is Baird.

Jeff Johnson

Thank the Congratulations afternoon good year. morning a the revenue your start Amir, to geographic close on helpful. details line or with and to I details really product wanted solid outlook, the you. Good guys. very

are I be year below. we a the XXXX exited year like roll you're on slightly basis. should core XXXX You not but a levels I full with your in Is guiding, comments, it line bit up XXXX still sounds your levels. about If XXXX above XXXX thinking in XQ revenues? below maybe little that in how all revenues know maybe

Amir Aghdaei

We're really in we you, with Thank QX. Jeff. pleased where ended

work have in a lot a of can done, imagine, and put portfolio ourselves place. in We this you reposition better as

Our equipment consumable digit, mid single flat. is is

Our point are XXX a of over priorities adding performance. growth top-line basis

as to was prevention as ortho obviously expect role we we on million. in and markets we government execution have China QX, $XX not big, surprise doing well, us, Putting of about uncertain. in those in been seeing infection remain really outlook different specialty. played pandemic double have go but it portfolio dynamics in be. this we guidance very have second place we positioned as that expectations change can situation it extremely ahead good given Currency over equipment better we what what in the all ourselves exceeding because changes of together, But this the XXXX. really Developed a a place incentives in board. a What we were the in that second the we is a are QX, continuation to us XX% the above in us what this that consumable, puts opportunities better excited some are specific a at about incentive to in its wanted you of looking half where But of other COVID over it provide we well and forward. see in of tell We specific as difficult growth. and equipment a as exactly enter the Geographically, for growth is And Japan. we and Germany we see year. half have of the we point repositioned is in and on a saw time, digit and except hand,

Jeff Johnson

All It for think the follow-up, right, side, your then that's as there. at to non-GAAP were just XX% below the quarters upside you company-wide where XX% or XX%. would even me or bit that's is helpful. of fine a there on in And investments a Thank its so. two $XX operating margins, only you. the million maybe I year Street XXXX. some a operating I that the incremental with basis. now, is should at feel on just specialty about sitting Street like margin, If second Howard assume at a all point the margin you of on be would feel anyway,

Thank us the Just second how that of guiding, you. XXXX? of but Street XX% you the understanding least full you're that exited should you between we number kind not year half in the can think XX% at about toggle

Howard Yu

Jeff. Hi. we the where we're the year Certainly, the Thanks ended question. half. second pleased and Sure, with really for

Northern it some be relates feel about there talking given still as a so And as XXXX considerations ways that some million the much we have do as to bit we as and the that those one use Jeff, China we range. the And better well the jump cost maybe though Amir will there's is margins, to adjust well. roughly the – the as there talked than geographies, But for if about as with investment certain situation as little off referenced, of a XXXX some think fluidity to we're as $XXX inflationary we the pandemic, of corporate you savings certainly. the well. levels, out and we is Amir puts point us in indicated, it with As about indicated, number EBITDA costs

part again where think the putting the in that that's EBITDA, range put out higher about the we're that guidance, we're mid-teens does us we're without that is looking overall at So thinking. of formal teens, rough thinking the I as but mid I of that think what

Jeff Johnson

guys. Understood. Thank you

Howard Yu

Sure.

Operator

Stifel. Your Block next question with is from Jon

Jon Block

Hi, just afternoon. How point about up you just out. some in those run that expense of it's important I put I'm be Thanks. believe maybe also that And different do just clear one-time clarification. questions. we to EBITDA off. CapEx? one-time? Jeff going XH obviously there's take think look, where a and some in to Howard finer sorry. million left Good So investment those stuff over in approach. million, think $XX I'm rating $XXX actually And was is the pick to all there, NX Spark, to for what But or was around we XXXX million. of The investments specific well guys. I'll $XXX I called a

Howard Yu

through or to that the the I'm is P&L. question knocking Maybe second part Yes. off the running be that going $XX million part first of

So that well and there, Jon. as manufacturing it's expense on a helps as the so hopefully OpEx bit primarily little

and do a that part the have the we overall. around little the say latter I more bit think earlier I than visibility of QX year year would in

say, numbers the bit you that about cost XXXX a as on completing about healthy XX%. then of, $XX have a think a of basis. million And volume a on excess and QX, we as so for the to quarterly to And in point, take effort. maybe talked relative savings of we jump off that very fall we'll if a that we savings gross QX talk little That's let's through indicated, in

as at asking kind near-term. So that of side. we then that term, get and the more And was think relative what we and what broader to helps Jeff I through think, EBITDA well very we're perceptions answered on had his looking us what

Jon Block

Okay, got pivot brackets phenomenal it. for was just and one, Fair enough. was number wires And – again. I'll the second

Clear has and franchise. here called but It's wires amount you of guys growth just Aligners, all dollar XX% are brackets that growth. out funny, think in been Spark on and we core really I a good focused

And geographic wires players So like is you well you specific you of some think maybe you What going just growing? exiting single-digit maybe, well, one the do spend market to Amir, maintained if growth Is it seems to can above growing? can high and How it time a Thanks. market? brackets? Is forward think from standpoint? are what due do be the market?

Amir Aghdaei

growing and pandemic. Jon. process, wire been mid Thank To digit to Yes. our bracket business has you, start this single prior

that the billion at growth before $X low single it was that growing single we If digit segment, digit continuing on the pandemic. you and were to that mid segment, flat, look at

team job Western in Europe in half many growth Our double places growth, at had digit look share in done in half really you high we the is a has second Russia, a and single second digit taking incredible QX. and China, growth

in very really started performing have We U.S. the well

figure being a bit this is we out spend What having effect, time, little of a to pent-up little from? zoom where call more saw demand a have So people I money is combination performance here. This bit. is more a coming bit that a in

an in this us and area. space momentum That combination significant and coming exposed puts really to position and on XX% forward. to lot of this happening Russia number it is wire do what that a bracket differentiated the innovation new outstanding really as bracket go U.S., outside in differentiated geographies. It's of training in into because is we we to has differentiated. really China Damon of of business because as continue the It's Our other business continue education is

we wire. that the and is and understand by after to are sure the committed continue are meet this of provide. a going it requirement there to business. We in invest the part bracket this to make that We segment And people think going large we value

Jon Block

Thanks the I guys. appreciate color.

Amir Aghdaei

Thank you.

Operator

question from next is Wolfe Your Steve with Research. Beuchaw

Steve Beuchaw

any were interest of just would expense because programs quantification be if on think Hi. on on thanks specifics of couple for for And you the of February? I'd my rates helpful. that of Germany, love a then Good I get did XXXX in hoping cash super And those to impact And have the in year? of afternoon any flow? we time that terms things of in the can. decline between implication quantification that here. impactful that? come math, a second of terms little would you is flagged you. and interest the little half we dollars the in about own Japan, talk I to balance growth there a referenced don't the what on you thing the There that Howard, What's get the could One, is second in the call the that some bit in are up of delta what Thank on in was trust

Howard Yu

Sure.

of So $XXX interest, related as payback of million relates debt. to Steve, to the the our this is it

And so, we down. will stepping think that the interest be

million then QX, in be subsequent effective million about I here will that. to will $XX think February. And it's for and about for quarter $X each be this

And so that you to it a that on provides cash some as hopefully thoughts basis. relates

Amir Aghdaei

VAT that imaging risk saw equipment, capital the pieces, talked pieces, we hand they put day imaging in in we to of things in specifically a a in pieces, as equipment for bit were they the of the a as I where improvement really is part that of which far as lot about help Steve, better. Germany, And amortization customers, latter this of of lot electrical, that saw also – our as as we works program equipment Also place. commitment program in in reduction demand serious specifically and space year, on little well far XX electrical – a saw hygienic, Japan guarantee. place and a specifically investment those no program last in put smaller different both lot And in and around a kind our more side. As hand better

We the portfolio. by are that really repositioning we encouraged have done work in

last has year. team and in a in really those this more saw space. job executing of as that some centric we latter Our great And lot mentioned becoming a half done customer of I program

Steve Beuchaw

in higher some pent-up about much talked pent-up demand. the color, demand, talked maybe places, acuity of talked about you But that. Q&A your through Thank some follow-up. And there here prepared you've just areas being about remarks, in also very for in you've one different Amir, remaining demand. the in working you and Okay.

I it's different So think right? in categories, different

Amir Aghdaei

Right.

Steve Beuchaw

a very hard. it's net then I hard, Is – right? And you know do could get and to think it net us or queue. know does for just I'll of any much. in back it Can it sense headwind tailwind you I give Or of but synthesize try it's try demand sort you backlog, Thank you washout? a XXXX? kind

Amir Aghdaei

looking at happy maybe do I've And continuously, Yes, it. this to been Steve. Yes.

with me and So just let consumable. equipment start the

the to Xst Our XXXX down January inventory of by of from year is XX%. end

that to out about extra just there important were down, think so that's no is inventory sitting factor So inventories there.

sell-in plays we infection talk really sell-out a role this we when that inventories of match what level when – that prevention important that are other. And So the a backlog. and around then other pent-up is each element kind demand, talk off about about of

as mentioned, we added We have have done we capacity. –

hasn't We QX And QX; have XX%. in that the We're grown infection of same stopped. momentum with setup. prevention into our we've set over walking

as of $XX ortho here, is issue By a out, we We not pent-up got saw had QX. much a QX, as backlog it way we a forward. little of have million worked in really of that think and the bit over our we you an time in demand go its to business,

So in think don't as you our base together of XXXX. walking much pull We demand business. pent-up is an issue it

hopefully your lot year. opportunity additional new to go go go standard offers Normally hygiene. in a let's when businesses standard this a little checkup. bit a to of half second of of a normalities visit see for hygiene you get we That for through Now, cases identified specialty as dentist

what see half of a what for you gives to bit half, a we second that hopefully XXXX. and first in second little we half in saw fear seen what we've of in the expect So

Steve Beuchaw

That's excellent. Thanks, Amir. Have great a day.

Operator

next Your from Erin Suisse. Wright is question Credit with

Erin Wright

a segment about and the mentioned think purchases What multi-year How contributions infection well. infection some to guess the of we you progression beyond are I business? in here? as Thanks. more kind margin can about be and that recurring if up in should that, describe nature? as of well the prevention for you should profile prevention. or XXXX contribution how on and the durability We quarterly speak contracts thinking And as follow we have within that

Amir Aghdaei

Erin. Happy Hi, to do. Yes.

So this business in XXXX million. was $XXX

beginning. about $XXX talked the adding it very to So million we at have

amount got that a grew we step We've XXXX, made In significant So $XX in capacity. of significant backlog. XX%, over mentioned is to million momentum forward build QX see as I continuing.

from XX% XX% So at is business, lot United the not dimensions. have in beginning lot segment, up, of you dental of a it States. there different that business now for that break of demand and year you demand, as imagine that it the over we was of ramped the let in over and and share a but down me this XX% of whole two is can has

The space, X market and than times other XX% than the XX% less we larger the share. is medical is and dental, medical the have

of to capacity we been standard a U.S. and market in opportunity a So I U.S. it's take much procedure the bigger We of is capabilities Disinfectant in pandemic, product business after all we procedure. build us gives Even be that player be outside U.S. have when step XX% Medical have. has because using significant say, a Everybody's standard commercial a going it. it sustainable? capabilities. back outside is the and becoming runway capacity an globally. to

resources We commercial have side. also on the added

think margin long I three part as an gives us opportunity to of at forward until Has with be level So above here. and growth more it's setting our we business going consumable overall a dimension to is this margin, least of double-digit in for different what in runway we important going those I average XXXX, go us, a so to fleet talked more for get about of portfolio in a be run. the a

Howard Yu

here is – second these just expectation would the higher we're probably that well. the Erin, maybe Howard, that given think, as of year third going a we bit. clarify We a have the first some into be would as to half this think I this of half, comps to the quarter little just bit in on roll

Erin Wright

the you how face your – will process. sales NX great. normalize your that ramp That's be so response there? business. to a kind are given implants but better Presumably repeat of how helpful. is kind when you far? environment, your there's and Do to I said that think how more Okay, in the initial of anticipate what's And we of ramp XX% normalized should doing that relative doctor traction of of to would expectations think that about that face really overall, and things

Amir Aghdaei

Yes.

him, of how saying that this here been of surgical can procedure in has doctors surgical X,XXX So teach group what ramp-up, have show and continue in is of you lot have countries and than challenge a XX that orders. to have X,XXX, we're a of the expected has the this different have of is is XX% want a order and given that really they as environment we introducing How a is going it's that placed do reality underground. imagine, we they to is to is them, repeat training. we little you to that that, those in. a bit placed with than given a do room, have him Upon XXX going what people trained that. XXX, It taking done, more better The place. it over

way Our to to what It to taken a is then need become this how change a us is really XX shift to is loading going I NX we the take over experts in it. this paradigm are new back doing and of a from really incredible when use comfortable, implant want is procedure. in our to What become teach industry an in they're hearing place other years people has industry. it. will It to things. protocols introduced be going standard. immediate ago; changed Nobel experts

is as pandemic get we to it about going getting part forward, forward. growth excited as this of important to go moves continue implant an as we hopefully execute be it, are the to and the U.S., in We our

Erin Wright

Okay, you. great. Thank

Operator

Your Brandon Couillard next is Jefferies. from question with

Brandon Couillard

kind of quarter of you think down I infection like Howard, business, consumables consumables Could and quarter had you core core the selling afternoon. looked what core growth fourth growth Good selling backing prevention strip the can days you If to quantify three for would end? look have or Thanks. the kind at the days. in the adjusting impact out contribution? less the

Howard Yu

Yes.

of not pandemic and as flows of equipment saw did the the that days number the think of play big which certainly So, sales, to days in it put the I relates and we had outweigh Brandon, in and government that We an stayed did sure, incentives we of within that impact mean, the light the I the of as or the things so of respective probably think some that ebb nature, quarter, place month that strong. overall. see

good standpoint, think a the really there. consumable we felt growth I about from

indicated Amir we in well growing both DSOs orthodontic as specialty rate side, business implant customers strong at really and as of the on back China the well. the in in saw double-digit growth the that coming larger as and the the business As performance like improved some

Brandon Couillard

as in a Thanks. well update broader far as rollout Europe Maybe that one U.S. in NX; give the for us an commercial me, back goes? on of Thanks. product of as just timing update introduction terms as for the

Amir Aghdaei

an got Yes. and that. up we any we lot and broadcasting opportunity to Happy office really to country have able we moment be show training in it of any places, it, Zurich are country do a Europe to of the doing office, be to adding our In we onsite been to out but remote do by have and Brandon.

across approval an we the by FDA. through geography we are with are In city, we the the that Europe, doing Europe. opportunity in aware we are are geography U.S. So process, city XXX(NYSE:K), we working by have the going

to do filing all of has get. and kind information question lot of that kind what feedback are we get we a We the that and with of

They U.S. lot of categories, of half, be rollout. is on a to a a and U.S part prosthetic, in that the of an going our broader are the they're we year and difference. same surface become be of that product of in later to at making place half new both on growth they're in various Europe going are time part second important have We counting abutment, continuing this introduction a to that in vectors a put product

digit an get XXXX, going and to is So XXXX of growth this mid-single implant half over business. be we our digit factor us to think for growth, in high-single time a second

Brandon Couillard

Thank you. Great.

Operator

Your from Anderson next Evercore. question is with Elizabeth

Elizabeth Anderson

guys. at Hey, the quarter if question. so the all? Can guys first on for you there's any us remind day's much selling impact Thanks

Amir Aghdaei

diminimous, I that fairly maybe as it's QX. factor our it's Elizabeth, day, and it so Yes. in, don't think relates expectations to a certainly on here

Elizabeth Anderson

of pronounced as there more through, see as about Okay, are any perfect. impact incremental there's we you of the offices, volumes a And drop on re-ramp you any, how helpful. and then that's sort talk sort think might is the to and And about, can at dentist drop have particular categories if others? versus continuing that through that,

Amir Aghdaei

think continue we hopefully to that volume year. So going to the is half patient next ramp up second of

place talked being better combination much time, point did you're Elizabeth NX, come cost the the and changing throughout that That profile. the have should that the and they infection changing Spark, mid-single those said having go XX% to year. the into portfolio with we margin we growth of in our we what saving, piece, margin over combination impact portfolio, basis a combination direct about really we digit now our more a better us us talked And about, margin specialty of have prevention, mix put pandemic. we that performance out done as of mix business we within of have would a our businesses better a going forward, that growth see then as XXX shift As consumer as have over better give about

Elizabeth Anderson

helpful. That's Thanks.

Operator

is Nathan question Sachs. Goldman next Rich with Your from

Nathan Rich

for afternoon. Thanks far. the that appreciate all so I call the you've details given Amir, good question. on the Hi,

you kind consistent kind seen, trying relative kind outlook, kind the to of XQ is Just putting to first a what you of about as guess, on kind the it incentive the out kind watching you're level, say worth to to programs. some how that quarter? you've I XQ? first well of called as pull everything I way in And and guess, quarter kind is was your thinking that high far equipment so of demand your China experiences end pretty fair together of summarize just then around together the that of in fair of a obviously the variability of comments wanted market you're at

Amir Aghdaei

Yes. have seeing exactly. far. not Nathan, right, We're absolutely it you so

tells there's We very QX us to We a radical be going haven't seen that to is shift. similar that think anything half. second

given in that get – digit been we here getting saw Specialty, equipment can that's that are the about. of far of changes was China patient mix a Second still up you radical term, – we but is go more we consumable, and it we or watching, more bit consistent. so that area can different in volume think situation a thing and seen; grow our get be longer basically one as QX, think the We not thought see to around a level are to of in double-digit, a a we was of equipment – high-single we what have flat moderation mid-single equipment the but was performance we that COVID little and overall half the was after digit, ourselves it kind in those these territory pre that levels is forward. and that slightly, we But talked we versus expecting the as any changes China and positive. continuation incentives

Nathan Rich

Got it.

maybe talk what in the in XXXX? in planning could expand in ask how you you've to Spark; the outside additional a you Okay. And And on about countries relative any to then wanted to performed the Amir, are that maybe then seen U.S. I to U.S.? markets you're Spark follow-up

Amir Aghdaei

absolutely. Yes,

was perspective. We from manufacturing a have it in China now, clinically both approved Nathan. It

more So are China is almost basis. dentist a in up weekly ramping we up and signing Europe in more and

throughout So plan geography have then expands. geography capacity we over by rollout the really Europe, as and nice a

through country next we before this And in that we want the to be over by said We we million make business position on couple have are in $XXX our are years. about to country, going and the way. of

we're XXXX, training capacity now. making those I that manufacturing, approval said well investment as had a Howard capacity a to process, in program. that as expansion and and mentioned again of is the case the combination feet, end as regional capacity double feet that going front in XXXX, investment the Xx of have We we on putting we're

this over are far so our from wrap continue positive and are we very to So, hearing time. up what customers we

Operator

time we that that have is And closing remarks the Management, please. for all questions.

John Bedford

everyone Yes. We'll Have a to Thanks, Erica. day, soon. speak great

Operator

and today's concludes call. this you for Thank participating. Ladies gentlemen, conference

You may disconnect. now

Envista (NVST) 11 Feb 212020 Q4 Earnings call transcript