NVST - Earnings call transcript Q1 2022

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Operator

My name is Chelsea, and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holdings Corporation's First Quarter 2022 Earnings Results Conference Call. [Operator Instructions]. I will now turn the call over to Mr. Stephen Keller, Vice President of Investor Relations of Envista Holdings. Mr. your begin may you conference call. Keller,

Stephen Keller

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

statements generally-accepted All on in the to operation of accounting January XXXX, remarks for flow required announced our and except references cash metrics closed unit reflected the of presentation have year for first as other the we business results treatment full XXXX measures. business operations earnings, and of to instrument principles. accompanying company-specific and quarter cago the As continuing in these revenues financial financial as only are this by the XXXX, relate divestiture of X, Envista's of the discontinued business, and

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

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

Amir Aghdaei

and and welcome, QX environment, XXXX macro a to challenging inflation I'm Stephen, margins. supply better-than-expected you, marked pleased Thank chain EBITDA localized numerous a to disruptions, challenging calls. strong meaningful lockdowns, environment, was Despite first COVID core and geopolitical that growth adjusted report the deliver Envista Envista's to by earnings mid-single-digit everyone, a able quarter,

and testament in to dedication on to record believe proven I'm we are the have our patients' a By that the execution. positioned of passion, performance improve is efforts lives, well to focus are professionals and quarter with and proud market. a continue team's execution. the Our partnering differentiated we strategically to of team's track outperform

of that significant legacy Oncoform to Biocare we progress of brand-new our to event With priorities to virtually, demarketizing quarter it early and discuss improve together inaugural for At our technology will Day detail, results toward a turn the over the long-term our we outlined and patients, combined Envista, personalizing margins portfolio. patients' quality further accelerating the advancements high-impact the single dental proven and improve we as of and strategically us highlighting summit, in differentiated strength operating implantology and hosted while accelerating first our to vision our the portfolio. decades. first in we our for of over to and workflow digitizing, digital want and has in symposium attendees, Howard vision see Envista also on person provide dentistry more dentistry the Envista of care with predictability this future Summit track transforming to and articulate brought capabilities the while clinical to both our track how allowed growth hosted we our At expanding we our XX, growth, of X,XXX procedures. value color March and life workflows On opportunity clinicians a I introduce and Nobel clinical Before orthodontics, training provided demonstrated more shared demonstrate the a execution. scale continuing our to digits a and productivity coming long-term oral plans care. employees drive Investor by in Vista for customers, We record expansion. that latest We public company high and is create to how where margin shareholders I a transform

performance aligners we over saw long-term in in strength In wires and solid QX our Spark commitments. XXXX. core was another continued brackets clear core versus QX, in in XXX% Our with QX step and delivering our growth mid-single-digit orthodontic on business, growth

options treatment. offers driving differentiates brackets and and finishing of our on continue The Damon providing Spark objectives. growth faster more professionals focused Sales treatment the appreciate Altima long-term also investments innovation on wires us accelerate. of our And in to in Orthodontists during portfolio precise up orthodontic focus it supports ramping business. in core a are Our and

Our lockdowns significantly despite the has last the temporary quarter. in high impacted implant-based the digits week cities solution China of single to major grew replacement

core implant and NX quarter as was first by continued the driven XXXX, prosthetics. in North Europe regeneratives America strength we our our ambassadors first in America. and of premium growth In accelerating Our business cohort well North trained growth in as in of

given while the for and surgical protocol, biologically of In long-term we we for experience. our and obtained feature We March, Studio healing which the and Consumer continue NX's we our segment, our clearance time diagnostics. tee shortened prospects intelligence, with platform. treatment are improving excited restorative patients Equipment in tracing read In about to performance accelerated mandibular business in nerve, FDA DTX clinic strength saw imaging and in the

or enabling invest time-consuming to to assisted that time simultaneously continue add DTX on helping and focus AI helps while in We spend and tasks functionality Inogen reduce patients. prevent the complications clinicians increased

risk Services imaging. of together, DTX power -- image announced deploying on work the in QX with been AI dental have the was Our created industry harness Studio market. clinical development were leading to in analysis partnership investing visas Pacific and support we of in of WisonPDS Independently, Dental XXXX clinical AI support to across platform software use benefits PDS PDS of image ease sorting practices with of supported and all throughout clinic transform PDS care. to harness to clinicians the and imagery interpretations supported which the power and dentists data to patient aim machine enhance clinical diagnose, and the and learning bring plan AI-supported to

addition focus Visa into investing XXX margin we on Business XXXX, to focused points In and System, In strategic intensely its XXXX. on and sequential improvement The expanding of versus represents adjusted of QX our chain growth. basis and margins. our In of of EBS our the growth impact and supply driving daily QX offset XX.X%. invest we our supporting remain and to quarter, career many supply delay EBITDA appropriate pricing us chain helps the the miles to It of and inflation management and actions. for mitigate impacts disruptions reduce while challenges inflation our execution. improvement tools an This drives initiatives, continuous EBS, the margin significant to deploy ability achieved

note While inflation year. we and continued of have and that proud to done the geopolitical supply we important expect chain issues are challenges persistent, the we are to it face second of is and in QX half work headwinds today,

This that the branded line is our aligner over journey guides, in scanner are IOS focused customer reach increasing is of including a surgical and personalizing business entry specialty proficient portfolio platform and IOS Heartware within to this proven dental an Texas scans comes capabilities. important and IOS suite of significant solutions step the the a April clear a global procedures, higher-margin and Carestream is segment. We're We business into of step both point many XX, by transforming Dental with geographies and expanding a on software we of implant customer underpenetrated scanning include our powerful substantial business. run. are acquisition This growth scanners acquisition long democratizing attractive prosthetics confident dental growth upside higher in an first newly the care. On closed Dental. The high-value businesses treatments. growth It intra-oral to and can critical with digitizing accelerate we segments. that

years for promising a a As to R&D that discussed we further this comes and we dental have with accelerate digitization strong before, development pipeline come. business team

on that accelerating Now new we're IOS performance. have driving to and welcomed we Envista, growth team the focused

EPS will operational investments be leveraging growth. integrate to further set significant to while double-digit We making improve for Envista business long-term up its capabilities it this and into

but moves portfolio. our to have excited We're to an While committed the we are improve to we made approach opportunities today, deployment. further we see that capital disciplined to about continue pursuing strategic aggressive

additional balance strong a financial the capability and have bandwidth to organizational We and acquisitions. make sheet have both

approach financials utilize driven performance. details to our call go segment the to and EBS turn our more opportunities. first manage to M&A provide continue will over quarter to now our through new Howard We on I

Howard Yu

Thank you, Amir.

year our results based to are business. Before continuing operations, first sale against our reflecting we remind begin, on of unit that combo like compared prior the you I'd instruments and treatment quarter

exchange our to $XXX.X impacted X.X% currency foreign sales sales were rate. increased due First across all to quarter negatively X.X% Reported businesses million.

first Our core the quarter was compared XXXX. sales to of X.X% growth

Overall, America prior XX.X% China On lows, and to driven X Shanghai versus by Western Technologies greater Europe that QX lockdowns across pandemic growth our last COVID-related which which by XX% business The prevention. reflects partially weakness North of grew outside year-over-year the solid our to was in dragged exposure for consolidated most other by markets in segment, lockdown more of in the was was growth basis, XX.X%, while QX expand led to well infection of up localized quarter. in of increased China year, XX.X%. prevention the XXXX. than policy catalyst from coded China. the as occurred a as offset was Shanghai Specialty temporary X.X%, & Products versus continue growing Our performance our that week emerging regions across down infection down during portfolio,

has this primary warehouse affected our Shanghai, the and lockdown products has locally. by been ability to impacted ship China in in Our

Shanghai able in continue of our partners We to provide to clinicians share product distribution to patients and of maintain terms serve have sell-out. outside by leveraging and our been China across

was basis XX.X%, to geographic XXX favorable volumes, margin The the than our mix Our from and was XX lower margins points first initiatives quarter XX.X%, to portfolio. QX which prior continuing operations higher QX of increasing productivity due gross across approximately adjusted compared points is XXXX. XXXX by adjusted basis year EBITDA

discussed, XXXX, travel previously As quarter. December spend this in QX our and while first of our customer-facing in to including invest in-person on long-term in we the the activities week last in increasing innovation continue

adjusted of costs in EBITDA $X the business. to addressing QX. Our also related $XX costs $X stranded began and treatment million was cabo approximately greater million We unit million of Instruments impacted to than the by negatively stranding in estimated sale the annualized

In $X.XX drive our compared driven quarter, digits quarter growth Therefore, Spark our first Technologies a of and investment strong by quarter and that we very core capitalize was to growing Products EPS with in we XX.X% year. wires Spark segment, In Spark. this first opportunity. to accelerate important We have grew to the from strong growth continuing by tremendous core business $X.XX continue first our remain and in to Our and continued long-term of mid-single period the confident our increased accelerate. from continuing operations business implants believe XXXX, to business our bracket the compared Specialty orthodontic on prior comparable revenue growth. the opportunity in to XX.X% adjusted &

China. XXXX markets markets Our offset implant of emerging QX partially in the Phase digits versus by developed and replacement lockdown impact strong of single in high the localized by II QX driven grew in business most growth of XXXX,

In our prosthetics business accelerate. strong in core implants, continue to growth and addition to regenerative

participated and Technologies operating at to Products XXXX adjusted in & of segment finished due quarter. basis increase primarily Specialty from activities investments basis this This is quarter. in in of significant down points Our as drive the growth in of increase well the versus customer-facing QX XXXX drove improvement we margin we long-term to XX in segment. XX.X% the profit the XXX first points QX Sequentially, as

segment business consumables equipment with in quarter to core segment Our drove first in continuing XXXX. quarter core demand of higher this results operations X.X% curve compared greater and sales XXXX. restorative decreased QX than from and our compared the solid growth of XX% execution Strong by first to of

led well XXXX. in performance business This also mid-single-digit developed versus in core markets. growth strong Imaging is our QX, delivering performed Our by

return we of this Long of was continued peak distribution We As business term, are reported indicate market and sellout expected, share in solutions quarter versus of XXXX. in the profit to should XXXX prevention our first second and operations Consumables QX inventory to that Equipment gaining & of balanced half XXXX. Sales sales, Despite business from in market. decline our this QX operating to partners infection pandemic by more lower that mid-single expect that trends in growth demand. the to sell-in continuing margin continue grow digits. our core believe adjusted XX.X% from the XX.X% further sell-out dental we're

experienced by the impacted our in The burdened approximately inflation costs segment the to related business. $X sale of also infection was quarter infection we the treatment prevention Solid million Instruments imaging chemical business. of offset million Further, Cabo and slowdown margin the and improvement the related prevention. commodities was solutions $X that to to some stranded restorative with in in

and is the million Dental incentive acquired supplier profitable IOS sale quarter, In quarter cash hand. the faster the our annual of and addition equipment and we more business, are forward. we business us consumables impact the grow billion than for QX generation quarter Cabo treatment, cash to iOS weakest free move more and be enabling close of to of of acquisition free that the instrument on in the payments flow first seasonality and $XX.X confident will and newly business with Historically, With the we owing consumed as of cash ended Carestream $X the cash, fund. our

continue ensure while proactively Our supply as manage working our stability to sequentially inflation. suppliers capital increased we mitigating to

liquidity very after sheet strong, ample Our the of overall acquisition and XX. balance the closing business is April even iOS have we on

growth the right opportunities pursue to available. inorganic assets additional flexibility have We when become the

year Now I'll call over for our the to provide comments. the outlook closing and the of turn to Amir discuss balance

Amir Aghdaei

our Thanks, rise, geopolitical challenges to encouraged by low chain also start disruptions. macro the Howard. evolving continued about the risks and optimistic the inflation and environment, for supply We and remain of XXXX business. cowilockdowns, the and long-term in outlook the market We're driven mindful by more strong dental

deliver IOS our IOS million Texas XXXX, we $XX it $XX the are of the sales million expecting branded between of acquisition the As balance over to relates for to newly business to year.

half growth Envista of million are position About in $XX both we that invest beyond. being into to significantly sales investment for well the of the this We note business in lower in onetime this important over QX. all impacting to integration Shanghai. It's related expect the planning costs come support this business to and months to in to as lockdowns X accelerate on throughout pressure the year, to based operations quarter will for QX China short-term relatively the XXXX in rapid on and taxis in as

full of adjusted of there XXXX. our committed change We growth previous to is For over the the the remain margin -- impact lockdowns and we the We're impact don't the quarterly material have that believe monitoring outlook ongoing year a will China year. could full these results. impact while X% guidance to our between EBITDA X% for core no of XX% achieving to challenges rest an and in for business,

QX and view will accelerate we be Our core in the in second that current of growth growth will year. is the digits, the half in mid-single

equipment consumable we make supply have our buys high the equation inflation in navigate QX and expect investments in we as in teens the our margins of and to the IOS Dexus steady through businesses the further chain. EBITDA We spot impact be adjusted onetime as and

remain Moving the forward, our priorities same.

accelerate will and expand growth, through active further deployment. and disciplined margins our We operating an to our portfolio continue transform capital

leader the be a including and Ortadonics, and suite to treatment clear is differentiated intention of options, and aligners. Our in bracks providing wires integrated

plan treatment the provide tons comprehensive empowers best or patient. Our to each offering individualized for

regenerative further provide the placements or and solutions. accelerate across prosthetic our X digital and our X complete to -- workflow, implant by leveraging diagnostics including We in solutions implant base will capabilities growth

and consumables continue will We highly and our to grow to differentiated business. access profitable broaden

our Finally, treatment and clinical to to from build we leverage in workflows planning partners. strength imaging diagnostics diagnostics our to execution will integrated for digitally

our to to drive We expansion. draw margin improve continue both our upon will heritage and EBS execution

are see to we financial inorganically, see continue disciplined deployment inorganic the organically and have growth Finally, accelerate investments. to and and management further significant focus our we opportunities trajectory, invest and we flexibility to capital

continue digitize, future to we We're dental of execution. journey about differentiated strategically and have excited track personalize of As care, proven democratized our a record dentistry. we're the

accelerate to our our value see margins customers our shareholders. to our improve create and continue significant patients, long-term employees growth, and for opportunity We our

Howard Yu

comments. now Amir. That Thanks, Operator, ready we concludes for our formal are questions.

Operator

And from Instructions]. with Baird. [Operator Jeff Johnson come will first our question

Jeffrey Johnson

real got if X Amir, I I quickly. questions, could,

on Just I price May another in know pricing. went increase X.

across China Just that wondering, two, lines across fair now macro some to a elsewhere that pressures offset of right about the is product it globe. one, -- helping increase how of obviously broad and maybe and kind the price bit of think uncertainty little is

conceptually, that to think is about how Just that?

Howard Yu

is I'll that this on Jeff, Howard. pricing. Maybe X take

managing are price. actively We

quarter took and even the XXXX this as freight year, I surcharges we selective think reduced price discounts appropriate. in first late instituted and into increases here

market seeing While counter dynamics growth, for tailwind measure board Certainly, we're instituting and the impacts price I'll we're that necessary price help as each as of inflationary the across some is opco here it monitoring a not taking increases closely and inflation, provide appropriate. well. actions will the

Amir Aghdaei

market with environment, believe we QX, China, itself -- tremendous here, situation we out opportunities. work to amount going is of significant in seeing macro a are what that is the From throughout a Jeff,

challenges needed support we capabilities in to are some of to that work through provide that able and committed until are we it, country. interim and will the We the

manage able see was challenges our partners, get products quality helping way been to in better actually professionals into and to have of to able we been the Russia through of some to continue have the be manage to this we We ability about committed to issues our life provide that bullish and our to patients, environment. Russia

short is really proven our ability we commercial are our have quarters improve think -- the in approach we we the that that that operational term, Here those. can come remains, delivering challenges, that focus to capabilities, think that And of daily the to segmentation, earlier the where commitment have provided we manage have coming through guidance PBS and some facing we several way. some of obviously, our we're the but we to play, in have. challenges past In the some our that we ability is management

Jeffrey Johnson

just then Spark. doubling doubling good And a follow-up helpful. Obviously, That's quick more on number. than year-over-year, a

think little look of out this now that. seasonality aligners Spark get seasonal you I for still the normal to But right that kind quarter XQ model just but detailed and a others and a that Spark of of largest show, clear because just would think, seeing all extent. totally some competitor your and from down are trends similar guys kind normal was confirm and if bit, on have revenue patterns and and try to to versus pressures kind certain at be XQ, you I space you which figure Spark, to would a in want that to sequentially than trying maybe we're looks me I doubling we to felt like more that, between that titrate revenue. it

Amir Aghdaei

strong we saw year. growth, versus QX, QX of the last sequential a QX XX.X%, in Just

years. doctors. different to process, across So doctor our of sequential active saw seeing growth. showing registration to things as various seen we here committed geographies saw business number North this more they're well. notable and America, double-digit as and some DSOs of is Europe, before. over in add -- we far in geographies, a we're growth to tripling active China be next X adoption the Western continue what of and Growth in We the we as expansion well. to of on had is the Spark of size that a years, continue into have widespread doctors. doctors a various through Those is an continue that This we strength, the the increase This are utilization said Europe about number We strong using

Jeffrey Johnson

that Amir. on pencil Thanks, my sharpen model. will I

Amir Aghdaei

Of course.

Operator

will from with next Elizabeth Our come question Evercore Anderson ISI.

Elizabeth Anderson

down or about that like was trying Does does question about XX% of total market a maybe XX% had China came to that One, imply the about through emerging year-over-year. that ballpark? the revenue. half is seems about from of number. your roughly with seem it China that my these China right about I be recollection, results your revenue to

Amir Aghdaei

Yes.

-- So QX get market, the China, to emerging market up emerge in I outside was outside emerging back almost Elizabeth, XX%. if

China our about look, is is XX%, XX%. So overall XX% of that. And about business market emerging

was a XX% of strong exactly said, as deliver geographies the have And long commitment We did markets us rest have XX% that think business emerging run. made QX, well. the we down continues and seen growth -- in the about to other in extremely for in we to in that Howard that to

As opens China up.

think We some orders that Shanghai. in We we the to catch and have challenges up opening that hand for up compensate due as our in of warehouses lockdown. can we have

Elizabeth Anderson

revenue it. That's also be we the back think not understand the to you super also Russia different I helpful. revenue? make in Got XQ you sure should come -- I a just about did drivers. sort as I go-forward that think headwind then say of thus the macro and hear want And

Amir Aghdaei

better that we original in Ukraine. QX, our than So in plan. did Russia and

obviously, this to is about the here. And We conflict is have that said $XXX in million. continue business going

we our a can doctors provide that as Russian help and ago, have customers. saw provide to expectation to we continue year, going Our in mentioned earlier, bit we have we're to year. in lower maybe that actually better products back place we what accustomed if we the position to little underground. weeks And go into you quality a But some get outlook is here taking of what only modestly and X patients of to I rest flat, last X us now ago, become weeks hope a is the Russia are for see the X the than to that

Operator

Erin Stanley. Our next with question will come from Morgan Wright

Erin Wright

what to focus here? is opportunities Can require near-term you the mentioned that on some near-term You the of of the speak integration longer-term some -- that But initial of of investment some investment would the Carestream to the what in of greater but well. obviously terms with some that market is capture opportunities maybe also And offering? incremental then share as maybe front.

Amir Aghdaei

Of course.

into and I'd like bought than We it that this is it that, Overall, growing IOS margin business as areas R&D down a So I double-digit. established integration whole But to key what a XX%, like. before market. penetrated break knownership, looks as that you It's perspective, less really and X an over well a do of is from is as billion over about worldwide. technology $X XX% of billion, is $X EBITDA

the So coming around go-to-market back integration, one to areas. is and X Number now activities. commercial

is over commercial of Over have business X,XXX We people XX% our organization. direct. in our

reach, DSOs the have the product That the is underpenetrated various of geographies able the the geographies, Carestream around partners to us work our reach a relationship ramp this of under to an various in direct the DSOs. in that areas we really not was up with segments, business go to with access large gives that world. great and have access through We opportunity

really a And the done we add the going good to in forward. they what already first in to are place leverage that's area. past it have So and

for add into manufacturing, a here substantial and have for to think we can have And reliability product known a of in long-term can we quality, as We're improving operations. on-time insight lean soon improve as around we lot access a plan really approach delivery, it, of we the -- is of and margin I this amount of effort our part quality, that delivery, in and second have margins. this good this. The we

positioned in a can not the kind really what have our to continuously and During hardware. integrated have is a really you're outstanding one suite They it comes is and ETFs. team. we We some application take They is due create a of aligners. R&D the exceptional segment. and and This good least applications, product but of innovation. good DSOs with that capabilities improve a into around that Last really they robust that of have team do diligence a very for

You and integrated clear capabilities. our business placement aligner implant our into

solution high-value Now digital capabilities full as first a we dental have put launch aligners. a sericlear that procedures workflow step implant we many that can of for

improvement portfolio fees time. about XX and that it's operational in it to the do. investment over the and tail the go-to-market -- IT long the XX think current as other order time. up operational has having business we points there and put as over this some it growth this rock, need and our ramp we investment long that of out basic part. We But basis going requires really of add on It's our past, communicated we product in in we can have in we R&D core basis a think to our point to advance a run of So over margin to

Erin Wright

to I the equipment. this there chain on It think given seems That's have question reaffirmed visibility helpful Do guess item and political just Is have in you guidance. a into way smaller the you supply other on that like And Okay. supply variables think you broader you better there And that a right visibility point. buffers from goes this have chain really challenges it? was just perspective across the X there. better at just about point, just enough there? macro at it seems

Howard Yu

Howard. is this Erin,

are marketplace. that cautious we're We know the supply dynamic that chain. think consistently the in I about things

We have deployed tools. EBS our

are ensure inventory things still is of well petroleum-based time. done there One as the increasing and we've type we The reality have is that supply our products that we challenges our chips. around consistent to as talked with about of lead some

to that it, we're to exceptional demand. team have And we carefully, monitoring we've that meet date but has customer able and an so ensuring been done the very job

And so to we continue that's as anticipate what we move forward.

Operator

will Our Goldman question Sachs. next come from Rich Nathan with

Nathan Rich

wanted high level. I maybe start Amir, to

became guess, You macro be like as of resilient of the us uncertainty you why of could procedures but you consumer, pressures going played kind of strong. there? to demand is in headwinds help or pretty and these April it kind remain some light I sounds expect business March of facing the kind some what about talk in out obviously of like for And the about the feel acknowledged think macro out more just acute. you of pretty maybe some

Amir Aghdaei

during think there Yes. We saw long-term the the the Thanks, This think fundamental resilience in it this the seen shift of we XXXX, which of quickly dental we that view Nate. back. the how we have don't a is earlier of is industry, what came industry. is stages

You change people and see improve there of in a to how the is invest dentistry quality life. use fundamental

So January. believe long of now this significantly. North because amount in postponement it we America the back Europe, month. we December March saw some up start to challenges taking ramp in sure some -- volume and But And even going drops work in continue run, and dental we a places what patient December in January some in the of has has -- coming and sorry, tremendous in specifically of I'm in was that April and we ramp cancellation, saw saw industry that about the runway. purely February, At of and been February, to an continued interesting through January we We XX% professionals. had place

of have saw in see you impact. what And of a holidays in Easter, here Outside is in we here. You are and seeing purely February the we we March. continuation China what that, have some then

market that is June are as and we that work as have short we through able in think we sometimes are why order going resilient. May, that to maybe of process So up. think the -- we in see We year provided, the market and is the opens to China long manage in going through be to some we can the with execute that term come comfortable guidance able back. in the That's forward. choppiness we feel can

The ability it in Nate that is of our execute. is maybe mentioning to other worth part here

now robust priorities be week, Spark to months training a here. the confidence specific have have would us after to we one X of a past that come Example, continue we been in have our in able and better build done run on energy that do We that give we cohort become years that able to things, and a we for would do week to set those after business expand putting lot able and are week continue to capabilities. that ramp to

Nathan Rich

just That's a follow-up on China. helpful. then maybe And quick

on volume-based that maybe your other Could China the us your the maybe is when right in in you business expectations government just implant remind the well on And the as of see One side. around us for update an the now is market on focuses big timing front? implant the procurement might putting in we that just how impact as that? is place

Amir Aghdaei

think our self-pay course. a the The Chinese provinces market dental market. of Yes, been that in we notice XXXX impact is our able of disposable growing have national the going big in probably That unlikely the have the in we million of It's in and into going reality side impact that over not we that sector. we to going rise that $XXX not the income, on million, selected think segment, is focus A We does to it's China, the dental volume-based is would and rollout in manage able significantly. a China. that substantive would an have sector but to in for growth class, China. directly is and through had premium XXXX. impact, our impact that middle we important for be and businesses implant. this. us shifted expectation long-term to that would that not of be It the procurement mentioned about something business compensate has business that much is impact businesses become an private XX% implant long our in business -- private more to we $XXX our procurement in growing as It's have self-pay, to on part volume-based in run,

Operator

come Bank next Our will question Cherny America. from with of Michael

Michael Cherny

prevention as business If infection the entailed, choppiness you I companies and headwind U.S. America I what you what from especially infection for North know headwind some American North seen called or specifically markets. could of within ex given that jump the give the grew the some of out we've of part sense the back to a America. us prevention Can North quarter. the

Amir Aghdaei

our better mentioned has prevention, Outside infection and X that business. been growth had continuous our have we ratio has a every than implant We the quarter quarter. positive in of seen business previous quarters

our really digits. So single high without continued implant premium to perform

wire Our to infection that, as all grow in bracket North single-digit to incredible perform a continues part an But think that that at our together, Spark and and area. mid-single impact that single-digit prevention. in double low imaging, growth it growth. outside infection digit to business whole. we consumable of high and a correction prevention mentioned on and X% this digit our America, the QX core cost it's business business X% Spark is we the big digit, a is mid-single of in on the continue the side. Put

Howard Yu

jump Maybe in just here, Yes. to Michael.

I X think America. life low North that it relates our the was QX, as to

our Amir I'm instruments imaging business about our If -- our business sorry, indicated, high Cabo, core single you as think for up digits. growth, our was

as in both double business business business. premium wire Ormco Nobel impact as piping And a the was well America, up combining endpoint bracket our Our our also aligners and into business well is digits. overall, our North

in anticipate lot a second And back to just anticipate again, half it's that of term, about really favorable And mid-single that lot get prevention. by being we infection and that we it So the business, long the with to very we a do has that there. growth digits. comps even to be

Michael Cherny

back China. Understood I And to could VBP just circle relative if and on the helpful. question

seems I your times will b, the time have hospital like where do VPP you you about point at know think what the around, exposure visibility privates. pricing? market the world pricing the hospital about How contract been they significant other to in from could pricing in markets, it hospital the public there's about a spillover your conversations impact public VBP think how business? feel As impact some you public a, like with at in going of some private between where in And your the those public private then, versus hospitals, are

Amir Aghdaei

touch despite I'm them Yes. with I not the challenges of all having. that may

has ongoing every growth assumption an and in absolutely impact. It's almost that the discussion are our correct. your continued We an going XX% to partners segment, over impact private our increase have is is business Yes, of quarter. of would cost and to XX%, and the the some have public in with

going we business and manage quite phenomenon prices. cost better the The are the exists to capabilities, what value this In the other where the in necessarily that in related don't $XX,XXX. a on segment able and education, around of technical when support, implant those yourself not China, different these that what that our over geographies. given to a even you grow much in So full is credibility, been you get be if to implant the place. let's has we getting to to most small of fairly think the everywhere continue is premium time. to people you areas, the to innovation side. and arch full places, nature that This that, we than able is of while in self-pay the training support looking a position. And execution you I is reliability, And mobile commercial innovation, overall, to various get it's for, in education training do have treatment say do the for through some That's we're to China been parallel but want the this China, comes been you're get consumable this, has have have compared any a the that in

Operator

from Our Bednar with come last will Sandler. Piper question Jason

Jason Bednar

Really couple call. on in just building a earlier the

do Howard, cycle new see replacement of from that out on Carestream pipeline and when maybe another that the the you've now to see you the ownership? now times? iOS asked some cycle playing product your guess I referenced under maybe a start. fruits do the Just we few assets Or how way,

Amir Aghdaei

answer Yes. Jason. that, Happy to

a current been that the And newly was of kind portfolio really the already outstanding products the has market. It released an with and on has X has of the a the X,XXX So product XXXX, just is launched. products. different group wireless this value solution, -- point capabilities, in then side,

continuum than X,XXX So you've out unfortunately, that -- lock and as offers of get think can have already that is and a product down of momentum a But a the on put as options market fast. that core than and this the us the got market up as We China. XX% the to we of very implant have it well the is they there market impact current much didn't we of the the seeing on in gives tremendous product of we portfolio XX% X, this very the base. position an in today, and top to the that as on range to IOS into have of really and start categories for the a is point an penetrated. not they amount this growth a momentum here. improving as significant on for opportunities what less that momentum orthodontics opportunity clear start well innovation as share, is Keep the we and mind as X DTX, due long-term a of make as less what a well a tailwind in sufficient And solution part opportunity getting for today diligence see done and X side us product the in going erasion company quickly, into ramp have in on but it improvement is product of be and add solution, have that the and alignment to that the only it. they our do also us, because we

Jason Bednar

has grading you dynamics second play capacity specialists and there are dynamic dentists normal? not been the look getting back staffing again, across an been really a or mean when Nate's markets and out issue that to picture parts of not And a to then health and care. to March of just the you in are thinking across other constraints question issues all capacity the understanding coming that bigger maybe constraints on earlier trends here. general some to April helpful. in? that's are I at looking to bottleneck whether exposed back seeing Or going well maybe you that or Very here, But that

Howard Yu

Yes.

I that through challenges we the the own our we've improve kind addressing productivity localized some term, been labor long adding some EBS our But best have and wins. think And I regards mean labor. think around certainly, with own to we that discussion I know to team maybe well. seen of concerns. our manage able as that tight

And so folks. best retaining cutting focus the on and we

As and are part of engage we to want our we with wherever that And to circle operate. remain employees. the of culture, we preferred sure our we we make choice employer closely continue

Amir Aghdaei

labor in software see take for really productivity, -- EPS do look we can a really system. out integration difference work the rates a the where here And at be take make opportunity for and predictability. in opportunity work is This for able a difference. of to shortage we To some make But at dental offices. is a to

charter, some that to So we're time as true results between quite the and product, and approach IT-related that's a software are with treat market acceptance a absolutely bachelor rate an the the looking some of patients, to and But to capabilities innovation, specific and not see March provider productive in issue, as think can your challenges make us going at good the of continue be offices the more dental lot labor but it. a April, really of up a taking, only we're difference. momentum it's get necessarily we to and assumption are productivity, to about go to the to I Das not for enabling the be beginning the more to outcome be and shortage

Jason Bednar

pretty a it. good through done We've job managing

that. So congrats on

Operator

We Stifel. from question Jon a Block do have with

Jonathan Block

of getting that hey, X%, guidance technical it's color, X% even if approximately, embedded X% to more revenue, to on. direct follow-up. book think the little I a of this it can that growth in quarter, within same words, said the earlier. year? Russia China. seem us believe, around a some down I'll And the is little that are inquiries look you you just modestly on of And your I'll might bit of specific to then same hand. sort then in China? what to in out over you but only this the was have what Maybe In did sort about I the add XX% are something like is on Talk again, for think, to plane give issues. some Rush's in XX% I ask X% sorry go assumption. say, just timing Howard, revenue high quarter-to-quarter, assumptions and you promise that other is I'm assumption because sort a look, are core about it alluded How revs, question to I'm might question XXXX XX and right, China, China down, and I level bit of at a X% what Russia a guys of can ask also sort --

Howard Yu

Yes, no Jon. problem, problem. No

bit ago little able were some supply well. positive our Amir than X weeks the of with component, products as on we're largely is a meeting to Clearly, the I Russia into we constraints getting Russia. China to addressed a think during address because in So we're regards bit analyst more

And as combined as it's business contemplated mid-teens. marginally a guidance, overall relates did anticipate. right, year, our in China, somewhere be Ukraine is then flat the we to the down we For is what we been to that it think of will you're Russia see decrease

of the on think down past anticipate flat. were down see you respective China of we we year, that quarter. go the by I do year. essentially our based I think And there this business XXXX end in if XX% think quarter. still situation, China We China almost think in the the with COVID was XX% we'll excess the in in I in growth remember had beginning in in by of just I some experience, that

our guidance. And that experience there on expectation for do that, come the leaning China in does demand modest back, goals some have we and so that in

Jonathan Block

Great. and Okay. just Very helpful. with mall you stick the stick to Howard, P&L.

are considering margins actually gross slightly freight, the to impressive flat up on cetera. et So year-over-year really

be the words, margin does get -- over clarity term? some to maybe margin is the the greater And investments leverage? and the on talk topic other get then the question us EBITDA sorry, on near OpEx how a just it hold you GM same maybe EBITDA care XX% includes line In So XX%. just DexaSIOS to about than then

Howard Yu

Jon. sure. No Yes, problem,

throughout So margins, to those We think fairly gross I we basis that yes, year. stable think the It's we I anticipate anticipate XX.X%. point a improvement. XX be had

get We for to some we're some that additional to XX% us growth. EBITDA And to obviously, number the see see full do spend additional the side. year. For on improvements going

that year, as second our anticipate well growth we overall. overall the margins so improving half in as And accelerates our of the

then of investments. it how in relates the as that's the included that expense IOS is so That XX% to And relates there. it And the to side investments EBITDA get and as number. we

Jonathan Block

you. Thank right. All

Operator

Thank you very much, everyone.

we -- time. think I that's in are

So up with all to and following the forward after time you of look calls. appreciate Thank you. each

Amir Aghdaei

you. Thank

Operator

conclude does This and participation. appreciate today's gentlemen. and ladies you, teleconference, Thank your we

may disconnect time. You any at

Envista (NVST) 5 May 222022 Q1 Earnings call transcript