NVST - Earnings call transcript Q1 2021

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Operator

My name is Erica, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holdings Corporation's First Quarter 2021 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. Stephen Keller. Mr. your begin may you conference. Keller,

Stephen Keller

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

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

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

Amir Aghdaei

and consecutive Stephen as of earnings start, we first to welcome XXXX over off while everyone growth XX% quarter Thanks, to core EBITDA adjusted of Envista's our call. with margins good our XX%. quarter third nearly achieved delivering is a XXXX

in dental Our a broad-based performance recovery the is with portfolio. industry strong robust execution coupled across the a our result of

of course Over proven has the pandemic, resilient. the dental to industry impressively be

and We dentists levels focus prospects are of with in their services prevention improvement. stronger from Having operating seeing dental adjusted model, demand confident new the are showing including pre-pandemic business. near a developed our now more offices markets sequential outlook the the dental to protocols, in for infection long-term

uncertainty While rule out disruptions cannot the are of we recovery. lockdowns, with short-term encouraged from localized remains pace and we

to held XX,XXX technologies, of XXXX excellence, the Forum where over hosted to orthodontic turn operating our financial critical to February, priorities training and our long-term take three and a stronger towards performance, and first sessions our organic we this more results and Customer XXX segment on I margins, to wanted building education portfolio. growth. in held edge centricity quarter helping to our first over expanding progress our Howard is I them the in-person customers. In Further, accelerating it Before practice growth, cutting our Ormco opportunity performance. clinical discuss provide of virtual Annual detail and quarter, over stay strategic we the over doctors reaching on we

Ultima had with system, Spark globally. is continue February. launched a more controlled and Our sequential as in precise the over we increase disinfection We XX% to system and Damon Aligner and accelerated infection of first new uptick. re-imagined relative XXXX. our in was and and leveraged in completely was of franchise to market another outperform QX to doctors in protocols a strong Damon continued finishing as growth prevention performance the experiencing in sales a bracket strong faster on core in bracket an The designed active over the Clear rollout XX% innovate. end highlight wire increased remain wire from business quarter America place for The North

lean our infection versus prevention and the by ramp capacity we XX% needs increased versus quarter to increased Business market, production were business System continue much into processes, able of QX XXXX and the to Our Envista Leveraging grew market. XX% up us same XXXX. over expanding further allows dental past more global the medical over This than while year. larger XX% the serving

of the rigorous sequential XXXX in see dental implant implants, the These adoption developed all execution among in to Europe Nobel seen to of and a surfaces groundbreaking application NX in tools with are over XX and Branemark's XX% EPS clinicians, excited innovation discovery we our Today, versus system we expect Furthermore, Nobel Biocare and an grew Biocare our we growth system growth our XXXX, best-in-class Biocare adoption investment innovative improvements we In We our now rates, while surfaces. on implant years in QX rollout We number year-over-year XX% our of our industry up of more more back a helping better. serving as our including has premium and customers. In lead achieving XXXX. directly expected XX% heightened traced of In in to double-digit launch the and in the America, celebrates are We of able mid accelerate growth single-digit osseointegration. the growth than increased do XXXX markets. patients TiUltra saw improved Xeal Nobel which about Europe on rapid in commercial treat this for Per-Ingvar implants continue of roots customer XXXX focus business more training. business with intermittent versus the NX strong will vaccinations Xeal growth through Nobel of lockdowns adopted accelerated QX, and hinder surfaces. and in-person training for clinicians the success to North ramping in-person to and NX US are are these build first quarter, recent TiUltra surfaces. who QX, of and

right process tools size and result and been achieve mindset improvement improvement continuous first business, the our stronger instrumental the financial helping quarter. improve in Our us a structure, have in

of third the in executed see EBITDA to from transformation XXXX consecutive initiatives above XX%. adjusted margins benefits quarter structural We continue the achieved and our

and medical of to million more grade of incrementally our prevention remainder plan solutions. including we Spark, than our growth the the Over long-term XXXX, the solutions $XX reinvest to NX, infection drive innovative

We to will invest commercial also our initiatives support in further implants both orthodontics. and

businesses and With we opportunities. solutions, higher a we and margin XX% growth-oriented differentiated, and transforming from now our industry growth exiting where low-growth coming the revenue efforts We portfolio are in our build aligning the portfolio. are advantaged, By of industry's committed over Envista. competitively refocusing with our growth, higher more to workflow-oriented low-margin we and are consumables our stronger, segment of dental are our

the we our to in targeted best see Our growth. disciplined and accelerate through balance progress is opportunities shape inorganic has been, sheet ever it and

our create to hard diversity, our intended of working Envista employee well These to and value ethnicities resource on resource better addition women support as teams to friends for first stakeholders build we are lifestyles. and groups, all friends to a groups Envista's a and our against of and inclusion council to collaborative In executing communities. dedicated multi-cultural as also representing focus respect, our our different with launch and priorities, core are long-term our environments

bringing customers, and virtual dental each to and quarters, During History groups employees, further celebrate first and these Women's together Black other. the History educate led students months, events,

recruit, that segment a As Envista, it continue diverse the to and I we the our develop, performance detail. go we to will team. turn confident best in are culture more will inclusive and through now build retain across over Howard financials we more to and

Howard Yu

Thanks, Amir.

impacted by products. due to rates Sales positively quarter X.X% sales XX.X% discontinued X% to First increased impacted exchange million. and $XXX currency negatively were

Our core XX.X%. was growth

Amir As Western XX%, sales in a grew solid QX Europe and from of growth our reflecting start dental portfolio. across coupled recovery robust year-over-year across execution the XXXX. reflects in global than sales strong discussed, North of lockdowns the America a the Geographically, demand strong in more our market rebound with pandemic

optimistic parts Canada markets, demand emerging including are We balance inconsistent with solid volumes generally we Europe. recovery levels, QX QX the in improving than patient China relative throughout of rollout spikes areas, of and grew in remain across for While a more of localized nearing pre-pandemic in impact geographic to portfolio. XX% seen of and the In several and XXXX. the Western COVID-XX infections vaccines have continued

hospitals suppress to to the patient levels we in to other private is until business implant vaccine demand, little contained. these premium and to slower, we relatively outbreak continues of our markets in their pleased have volumes growth strong the continue challenged making of a China see China, at Return on QX with emerging rollout. are Outside levels progress to XX% over continued We as focus weak of pre-pandemic given public pre-COVID in outbreaks COVID-XX to and expect regions remained recovered be are clinics. orthodontics.

cost driven a of margins improvement favorable savings, temporarily and initiatives. higher gross increased XXX profit margin reduced million. XXX productivity Profitability to mix, margins, due basis increased Adjusted operating higher XX% by adjusted point gross significantly $XXX structural X%, Our of XX. EBITDA product largely and points volume, spending. was with basis

of quarter $X.XX first represents year-over-year. increase adjusted XX% diluted Our EPS a

opportunities of ended in the million to have generated us they For delivering leverage the free we $X flexibility flow continued quarter, first available. growth become more pursue improve $XXX We QX cash to quarter XXXX. ratio, inorganic more providing of million cash $XX and with than our positive as million

as grew segment and growth business XXXX. Now China. up delivered by revenue core in our driven more Products than our brackets delivering Growth two accelerated results business execution Spark. from In and and growth we XX% XX% focus Technologies growth Europe, QX, & our America, segments, wire and XX.X% premium is above-market North over rapid to our increased on core were improving in implant sales commercial mid-single-digit Specialty business our while over turning in XXXX

sequential Amir Specialty was showed adjusted operating of improvement discussed As profit Technologies' results the growth. Products help and earlier, QX, innovation over our XXXX. seeing at benefit & are XXXX QX than drive to of significantly higher margin we XX%

implants favorable increased ramp expect growth growth, strong NX, and up premium structural in cost XXXX, of and significant investments profitability. Spark, mix, long-term our Our adoption. balance drove Through savings the drive we accelerate to to and

Equipment XX.X% XX.X%. sales exchange while had we sales Discontinued increased products impact. favorable and & X.X% Consumables a core adversely X.X%, sales currency impacted Our by segment increased

rebound our improved with Our coupled traditional markets developed with consumables business partnership benefited from in the market distributors.

in fluctuations our As we supporting quarterly to our on out sales partners. sell users, less to we more expect see our end focus to dealer

Amir over prevention about solutions previously, infection demand talked and remain As year-over-year. elevated for growth delivered XX%

as saw As rates in prevention increase significant the expected, that in start the growth our at of to infection the we start slow pandemic. demand anniversary we will

equipment with the growth. coupled showed in and a microchips. demand. XXXX Our first as interest It important amount there significant of part the in of lower increased note, in support, targeted however, We global combined believe share optimism is gains. drive business impacted continue delivering business significant strength by shortage is equipment of the to growth government to The our and recovery over has we market rates clinicians, unlock to XX% been continued that dental room for the beyond quarter, from

expect our with second XX.X% XXXX. a consumables suppliers of throughout but profit for quarter Equipment was and of loss first some XXXX. first working the are modest in quarter adjusted and to challenges quarter margin headwinds XXXX secure supply versus in potential operating We the the

remain and focus as increased for final our mix sustain now benefits realizing equipment margins We prevention. over some on business improvements improved margin driven robust to by XXXX our cost lower I'll exit infection structural expect of thoughts. turn the it while our Amir we the to of the

Amir Aghdaei

you, Thank Howard.

progress. our our are encouraged and by our We industry, the optimistic about are XXXX businesses, strong and of start

to high teens the will lockdowns growth. in are -XX low vaccine expected the rollouts past undertook we four backdrop, will over inconsistent to We to COVID core impact the continue the range and However, core recovery the Against contribute improve transformation we new term. variants, this to and quarters in that to XXXX. margins in mid-XX adjusted margin and EBITDA around the near continue deliver localized the mindful expect initiatives globe, in believe be to we growth

balance committed of year, our investment developing the to workflows. the growth of Aligners, infection prevention, advantage sustainable implants, competitive During increasing we in digital priorities by Clear are and our

customer-facing and to continue economies and spending, will we activities are lead anticipate rollout and we this positioned to open transform continue vaccinations further, industry. well increase. As travel, Envista, At to

and of and solutions full reach. We energized brands, committed customers' needs, a commercial a category-leading team, to meet have portfolio unparalleled

been culture that pandemic XXXX our survive continued a Our in not customer thrive circle a of continuous tested and to we and look respect, journey beyond. during the proud innovation, improvement Envista only can as to has result. differentiated centricity, stronger growth leadership and around but forward progress build proves our and more We're and

Stephen Keller

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

Operator

first is Instructions] with question [Operator Elizabeth Your Evercore. from Anderson

Elizabeth Anderson

Hi, guys.

Amir Aghdaei

Hi, Elizabeth.

Elizabeth Anderson

full quarter, back, Hi, you? and was growth you my I It why. the to to nice year. I to how wondering Thanks is terms this benefit in mid quarter. mind know, so anything second in XX% guess you much low there pacing had that's first beyond are ahead on additional that, come the congrats the keep with commentary said was for growth, of of question, as see range core going the comp numbers. if any that these the you obviously, but just we're in to could provide that

Amir Aghdaei

Thank you, Elizabeth.

As well. we about QX you seen low as and trends the encouraged mentioned, saw mid-XXs, and really core we're you've to with growth in we what talked improved of

continuous guidance as Our go we forward. improvement is anticipate we a what

I to think we historical a given of want full in balanced we our pandemic. like to However, of distribution year-over-year about and of still business. and want you more be recognize middle here, in lumpiness the to year We are the that

like vaccine think to do outbreaks contained, are pandemic-related also about We I rollout better due local cautioned risk, XXXX. could us to we accelerates, if are

versus recall a it Our assessment at building mid-single-digit you is full-year point full to is mid-single and and XXXX the as at company pre-IPO would grow this XXXX we IPO, the that year that digit talked be during about growth. always

business. we area, improve really that the margin EBITDA progress have proud the are Our our made profitability in to we of also high-teen of

our businesses. have We streamlined

the have reduced We structural costs.

beginning low-growth outcome priorities commercial and the strategic low-profitability, this. exited we of we to investing are have We important The an of it. been and has are businesses, long-term in significantly see execution part

seen We we more activities. over the do as time. travel, recent feel think we customer-facing standard and have economies get but to stabilize, we of opportunity we improvement more expect of We have a where good to as level, a better as margin more we are reduced spending, an see to about

Howard Yu

we had, in XXXX jump Amir perspective, EBITDA, Yes, the the full-year it things that to maybe, you Elizabeth do from as think around you and $XXX at here, adjusted look relates a to give and but a to Just here EBITDA we profitability if and was I I, million. sense at look EBITDA

XXXX. full improvement it what in guidance company full $XXX well, gets score EBITDA at number that just dollar amount, growth to that costs provide basis and XXX absolute is of you XXXX year If the factor to a look you shy public from XXX you XX% million, that really our the to point on adjusted if is essentially the as

that for we There the be a mean are Elizabeth. well in NX. Spark little hopefully, we're provides as will ramp-up of component that. a Yes, mode I So more as context.

some or million will come of anticipate so capacity, aggregate would good that a that via $XX manufacturing million come that OpEx. I And via also but of over $XX in portion would

Elizabeth Anderson

it as infection SG&A the control, mean, falling said then think I you well. or Yes, I no helpful the reinvesting, as $XX into any there some of about mean, growth I mostly of and just support are was opportunities you doubt. split in is and specialty very that sort of think guys on the we in million That's terms to line should that the cause

Howard Yu

ramp-up that over there mean, I that we come for component million NX manufacturing mode I come portion be via Spark good will as aggregate OpEx. in for via a or are some the well million that but of of that. so and Elizabeth, $XX as of would anticipate would a Yes. will in capacity, $XX also

Elizabeth Anderson

you perfect. much. very Thank Okay,

Operator

with Baird. Johnson Jeff from is question next Your

Jeff Johnson

if just guidance. you? So me I math your with the are Hey EBITDA Howard, and guys, things, guidance growth you take your when how one, here, two core help can

I've an of next perspective, of quarters your bit waivers the from I a interest some quite think a here but few EPS $X shaken coming those expense over down come off. north out little I'm got as

I last think from year.

in should So or about of ballpark am kind be this EPS EPS how I thinking the wise year. we for

Howard Yu

will given Jeff, about our we've I is million of anticipate as as more here well. I talking about interest guide that's little been some for those and interest bit would $X so, was inform of to will on say think, Yes, a our calculation. million the quarter QX and the and think adjusted we that the context per debt, you cash to the pay-down so profit EBITDA of duration that that on of hopefully, and where the $XX.X to for our is interest expense, as we kind a continue along lines about

Jeff Johnson

Amir, enough. and in NX seems getting a Heartland closer hoping us now All or just an of news to potential from seen European timing maybe the press give right, on last US, of fair week update releases, you're we've you couple a the you've DSO little And here, like approval it two. could the got then

a to kind what and better seeing out in doing are DSO the Thanks. Just that's position better that what DSOs are more of Envista of channel attractive and making yourself you partner? you really

Amir Aghdaei

of Yes Jeff. Thanks, course.

in progress We are the seeing question Europe. and answer really I'll America roll on for the good NX solid next.

product abutment challenges, some be they positive able completely compared in options see order pioneers active very adding of with actively is you really it, new over they got feedback mentored, prosthetic a forward, going We of watch this a we have all to around customers to and buying person. have rollout. repeat this that broader coming that to it we space, significant increase context one and as have to now different number has in to placing in the those they to it, Just customers we specifically in some have do XX% are in XXX that, spite they build QX. In over People specifically; be had kind of more so give Europe to protocol, are been are have it. you of have to of and and and

had in we have challenges some So there.

growth going we're takes are We of that resumption in-person as soon accelerated this hoping as here. phase, see to training in

Regarding as later expect the be part of said have to to we FDA Howard XXXX. the before, about we that process, approval talked investment.

investment. that we We about to investment, need. complete Training sure really and up are as in from manufacturing we masses of geographies, over to little comes in know, going dedicated a they democratizing continuously of trying commercial try done business taken matters the as off them capacity set them here We The played different activity, here. order these They Western continue bit so in ramping can really In of North is this the want retain to we them long put is and XXXX. and to them. in education the a time. in is with in both team to segment. solutions. as here. just obviously we support what they we the really to aligned different DSO-specific on in now their the think we several as a can. to about We pay to objectives, because places have years be we expect into capabilities, a well to there role them can't to focused in expand to for through with XX% that continue able off we a that DSOs, team, and expand with care a dental we pay to get good America to a scale important taking training, and seeing accomplish expand their as long-term momentum dentistry, and trying run. DSOs, Over Europe, the requirement they really direction this and what build feel back important started bringing go signed and but and contracts our make capabilities in place built through that Talking locally, meeting to be We in from have are that we beginning Jeff, factor it's They're they get you quickly in process We that monetize specialties. past are the support,

Jeff Johnson

you. Thank

Operator

Your next question with Sachs. Goldman is from Rich Nathan

Nathan Rich

loss follow-up good guidance, on second to then, on typically you could or see is you I the mind that to normal about impact sales could like line mentioned fluctuations as dealer Hi, seasonality maybe I the the that and quarter from expect in just the we had exciting second think quarter, sort business quarter the quarter either as through If will step-up afternoon. standpoint we of maybe timing keep impacted quarterly the Howard, elaborate think in there a would or revenue. in with a and top the maybe see you partners, about that think first you start anything in second

Howard Yu

Nate. Sure, Yes.

we talked of in and our you here. we've for at do working same contemplate working we're worked and to in does with that the are revenue where XX are consistently that talk same QX So marry here the has when seeing inventory trying up I but through from do both probably sales of larger months questions we so rate to we've the would sales here what and little partners, and a in been the the in bit and revenue around more QX, QX so and on sell-in so that relatively so we're about say, amount results and on, been our think seeing thanks so the as distributor the our change that or folks typically numbers you anticipate closely between around to in quarter those QX, to over last out about effect channel we've a provide QX question. distributor and of surrounded working I smoothing is that topic in the to how through so sell-out we're phasing be have more a we're QX maybe bolus smooth and of seeing would the of the

Nathan Rich

Great, follow-up year. infection you expect I a helpful. ask think, had If you control growth on double-digit That's you. I the business, for that thank the Amir, could said

I get sales think the and would the business. million that put where thoughts business see be on of fair minus. could trend also to and this curious about $XXX you I'd just this to plus around your that to for or how opportunities year normal some unit volumes maybe for growth for get hopefully And and back normal things we talk can back go months pricing Is as you life.

Amir Aghdaei

Yes.

use back, $XXX going recall starting we of said at million a and million business. point about as had course, In business. $XXX that Of we point, had we XXXX, always XX

to expect to million we year. mentioned, backlog So in. orders double-digit momentum double-digit That over we XXX is as through and as we $XX grew to as stand happening over QX, continue I about million QX. we last and got in today, XX% continuing and this expect that $XXX point, what And have we XXXX. in that ballpark come see winning you're at

we that in to the differentiation is what we A have to in we the comps made, off here, is investment obviously, business and pay the confident today, to over are the long going that why what that this now done the the continue confidence in is in that three different. going really see have we us XX% have dental a that So going are that that XX% Nate share, and in are States. have United that coming of There trend but we factors and here back is we majority of run. be gives to

into in We have getting presence so international are now Europe China, expansion. different expanded and geographies; we in

the methodology. and pandemic, disinfectant While after know They ahead gone that environment. and safe a have how use to people They norm be even to know how the used it. in becoming is procedures

than really able In XX% have of business we presence. United expand in have important to past really part our medical the X and is the States a this outside extension share. A been months, less So medical equation. is we our of XX%

under sales or is a force legs now Very its United on we medical confidence the have in that and contract. can And segment expansion in long-term Europe, another are gives are own. it with category stand these that building one new registering then, We and this specific the is of in that business XX the state, geography. a States, us has medical outstanding to of significant and months, building ramping up good In state geography products. positive then really incredible [indiscernible] to lot new it. by are past The reaction done XX product, our capacity, by job, it team an innovative product we an getting amount has

would digit adjust medical, US, So new the them outside we three going confidence dental and business innovation, all us of in forward, mid-single to XXXX, positive this growth gives to see to double-digit closely. normal. We possible. watch, not sure as make incoming getting as business new as we're to inventories closely ahead and We said, the and managing realities, outgoing this Howard very see that

Howard Yu

questions. for Thanks the

Nathan Rich

Sure.

Operator

Jon from is Block question next with Your Stifel.

Jon Block

cases you're you like Spark's toward, and bigger with just, more among for market use out maybe guys. what Great, afternoon. Hey, we've if then that seeing start teen adults and adopters, Clear the move current Maybe, sort of tagging versus seen Aligner broadening on then is play this good acuity I've part share I'll the consumer thanks can to there lower role to and cases a Spark, case, an can of with or just of you via how maybe a thoughts if direct this Express on market call follow-up. Investors us got it lab growth, to faster Amir, that

Amir Aghdaei

Okay.

and get somebody Spark cases user Spark is in and now then four we and will piece we the that with me start Spark over past try who answer just have let let's What the does users. four XXXX weeks. active we that piece. active an So wire the are Spark, define customers to to bracket

when new is just many XX% it up we number gone quarter-to-quarter So continuing. look at how over have that by had, and customers we has

on. use, QX going get the we amount product. number about going, quality this. choices, transparency sign sign quarter-over-quarter we train giving we it it volume customer them, Those patient is really them have incredible, expansion, group. they're market, We're given QX next easy and to the establish about the it it's us, specific best just seen easy are the up that the is have sign we over growth, us new that continue of and tremendous to XX% about and up That is of As telling feedback in now, we of using of the then the described, them, really are doctors, they for versus we them what the we repeating of optimistic

We have innovation, expansion systematic and both outcome about to see product of and categories, up, gone ramp the now commercial in the we're execution, it. very Europe beginning we're of

Spark that's sure I the that answer I question. wanted to make So part.

growing piece innovation And part what between comes We're letting We're a really bracket switching of orthodontics wire customers, wire that that and what optimize, so continuously giving hearing more in aligner; What the in outside giving the has education America make have they're Spark. a this here a we both and been double-digit now, to in it, of it, exactly incredible choice not exposure, getting you from difference. Our another, get when are bracket revenue Training They would double-digit say said of that we huge and I at in is they're spite and in We're digit around QX. out one seeing really decide we is using happening news franchise mid-single all best that's on XXXX, is are responsive. an high new growing given compare if And over is control XX% business on growth. them bracket wire choice. like our United plays seeing. products People States. outcome of is Clear the from are answer. there what our putting I momentum. of being important what to really about North geographical it continued Damon. we to look and the a to against them role. them QX, they And are and is an and we a mentioned, are Innovation best they're more

time made capabilities the significant are in down turnaround more and come has we field. manufacturing. support more investment adding The have We and in

differentiated. are We

is As others to us expand. continue business, of opportunity segment value for there exit this to

us We for the expect ongoing basis. segment double-digit growth continue to this in

Jon Block

helpful. very just then, you. for And that's Okay, Howard,

those dollars hygiene that about investments. the for other the to back-to-back-to-back XXXX end and margins of In for at guys. you're elevated think about beyond. investments franchises XXXX Thanks putting we tail think mentioned into do You the those largely there are conclude support work or XX% we plus, XXXX.after EBITDA back pipeline, longer how to a words do

Howard Yu

successful we're Amir year, to continued rollout of so sure. traction. the largely for going for of question, continues and well the down that the as seeing seeing we're on $XX Sure, and there lot Spark around have that as increasing over that Yes, Thanks Europe - of North ready well. anticipating when in progress about of duration the we're go a the ensuring we're investments, in that a investments that We in both traction manufacturing those capacity and doubling described to as essentially John. America in it NX the so product, talked because let's call million well. that we're we're as

would rest how So than different those a has areas continue all. we business those so year or certainly further to market, internationally need those the anticipate going. is about sure the Amir infection sustainable going and we medical, going described, that mid-single this determine all greater But in invest invest to and and assess talked the into we subset one certainly digit we are of workflows, prevention and as we're to then not for and make expanding $XX digital thing and that we'll two markets to market million are much that examples that a here then we're so plus want to want of backwards at and and go we looking so a

Jon Block

Thanks, enough. guys. Fair

Howard Yu

Yes.

Operator

Suisse. question with from next Your is Credit Wright Erin

Erin Wright

a it's on that. heard you think your mid-single-digit control ortho, shifting, exposure up following you the mix just I say to infection implants, products, business And about increasing we as plus thanks. growth growth Great, whether mid gets the single-digit what environment? target normalized do greater and you of end of the visibility or longer-term line above current at into think in you or that, of or have than longer-term higher higher potentially sight

Howard Yu

you, Erin. Thank

at continue much We predictable. who have all more for making or the hearing markets, We solo feel a innovates just penetration core as that a time, feel and started to the and there I also what business in and care customers at for in in really that of to think take investment a we we customer penetration. continue penetration opportunities XXXX-XXXX that number many two going ortho market ortho bringing because the offer geographies. is to same we would taking has be there the are we so we how can for specifics advantage to heritage the specialty adding clinicians to mentioned, professional lot does, support, expansion company So, The of is mimetic look the through opportunity of into that treatment, good who effect. true innovation, through anybody It's people these are is and of about love tremendous in in that look the productive When Aligner here I is cases expand you on about that plenty businesses, implant's expand take the customers that mean of over it more our made. segment mean opportunity and side. Clear to new the the around us and anybody and the what halo a it so being good of

various under challenges is DSOs want The hasn't to it able some in know, about develop over-sized, to it. to here are all we do because be have people there expand. of opportunity been similar of in commercial plenty penetrated, around of you places, market excited They outside markets. that. the to execution market. As is lot had A

with mid we higher on through our going growing the delivery, is business make another equipment feel treat easier predictable. margin, That's can And lever combination be inventory, see consumable, side exited needed, an where plays them we over so patients We low-growth, that is to XX% reality, we time. we on-time and of our got able least, that a and to good business plan have is on to quality are more to to investment we as have of us about outcome have capabilities put to and better top give continue and over where on ourselves, that the can in sure visibility it's be and have premium be everything positioned of to innovation business room that treat get and opportunity to that make industry to hand we really value we capabilities going tools give and comes has of training have able have democratizes that, low-margin time. do accelerates and make now You've sure a that better possible patients. lot that an role, ongoing to but we the it continue before, to we Envana lot are more on important make very work differentiated a rate side. this in to innovation digitization. is to gives last faster, there these flow, original now and to specialty differentiated portfolio growth consumable to to of built they our had faster, not and cash We we two ensure as single-digit of EBS Digitization education use in talked operational more place. That's basis high to grow our and for our where

Erin Wright

term, deals time, guess sense or make near the Okay, you, make for near priorities thanks. adjacencies sense? then, full their on that that in technology potential I And that the topic new I more deployment capital guess what

Amir Aghdaei

going as specific in. digital three AI Obviously, to important talk if but from fields to that portfolio, it to in allows here, doctors diagnostic a looking it has we opportunities. because as that capabilities are a there add opportunity is that lot software, to become looking at this of is there be think but we're incredible us you at an have We get Why I true, the to effective to the areas allows as to future, it, The look is significant is it various for patient and it. pieces and well more outside, not execution? more treatment the better four together connects where the planning whole so about comment on industry or workflow, treatment, try

in play. make different index there local us local we Value We local can under various there forward. in presence geographies are implant is go value We invest as are explore have sure brands, to opportunity is we and a opportunities that us to Implant for the need geographies. and in we other for that

a can today, With to have track it's build now; tool time. the another that have balance sheet that company that we better built in over we we record our use hands a we have

Howard Yu

we generated and to just and as over Clearly, end to two this add we'll ratios. it and debt excess now, is debt times of mean, million firepower. $XXX below terms that so back net relates cash Yes. where in debt years been of well, at of that be billion we're to just the the year the our in I to last as $X have by three

so really feel And we that. about good

looking double-digit I do then think future, to to that on long the we're in said of deal and there as and deal, expecting and kind assessing then the go a that's and the cash we valuation future, do we returns into greater perspective most the move critical to looking market the attractive the ahead a term the all sure get being as we're as foreseeable near well strategic for cash and just fit that returns ensuring us make segments at not in said, areas that and Amir we're going in well.

Erin Wright

great. Thank you. Okay,

Howard Yu

Sure.

Operator

is Your with Jefferies. Brandon from question next Couillard

Brandon Couillard

quarter Hey, just is thanks, of the quantify infection in to growth prevention, infection good of the PPE could then segment how prevention in that afternoon. the on sort mix. Amir, it and organic just the is much actually if from question you growth a first two-part impact

Amir Aghdaei

Brandon. Thanks. Hi,

of in and NX was to sort that point there. the product point growth disinfection have have two categories of categories of but on are that we those the growth and wipes QX liquid, basis We a dedicated the those of XXX and Spark and use and in other mistaken categories that I'm this in infection not infection brand we different the forms prevention PPE If basically that needs adds and we variety Howard, shapes sizes, use don't XXX X and are we or So, have QX. about prevention. to for other broader basis

So, where we had it. a outcome infection the alone the have to have prevention About invested we in beginning growth year-over-year QX XX% and XX% put that XX% where to of see as that of to are when and compare kind momentum we that as that go on almost maintain is was XXXX we you we a are QX, in forward. mentioned, counting of something we energy,

Brandon Couillard

broader of you been then, sort strategy CAD-CAM think scanner. Is that since we And sort it's As a believe, workflow priority? own about your I about talked a digital efforts build developing this while ecosystem. around of still to your Thanks. your

Amir Aghdaei

Yes, made standard it are very it is. a clear; very following process. we we But

look stronger to developed with company. be this have continue to has to diagnostic ortho back, portfolio as around sure there. to and Those really side a growth. team We reshaped, wanted to want sacrifices glad are We that good is as that to place the the exactly we made; full accelerate workflow XXXX want that that We relationship. make the It well margin, internally opportunities going is we wanted broad the in has have building connection things position. We the have that lab. wanted to of want wanted be. now we are [ph] want to and portfolio partnership to in gotten a we us able we what we to So we're a do to externally I'm the Long-term, do. at good do. accelerate implant, to look Rest we and a have to the do sense. our build on

going seen partnership needs with is format market. you do if do have the we're ADAC, intention as forward. continue accelerate address of going that can and the through built that to we its Our the to partnership, And to have that we

Brandon Couillard

you. thank Super,

Operator

does I time allotted our management will the remarks. for that questions. call And closing turn back over to for end

Amir Aghdaei

thank your time you. quarter. in talk a joining everyone I couple really you Thank for we'll guess call. again you to the next in All and right, months of you the appreciate

Operator

concludes This you conference participating. today's Thank call. for

You may now disconnect.

Envista (NVST) 6 May 212021 Q1 Earnings call transcript