Earnings call transcript Q4 2022

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Operator

Good afternoon. My name is Chelsea and I will be your conference call facilitator. At this time, I would like to welcome everyone to the Envista Holdings Corporation's Fourth Quarter 2022 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]

the to turn now will call Mr. over I Investor Envista Holdings. Keller, Vice of of President Stephen Relations Mr. Keller, begin. you may

Stephen Keller

Good on afternoon slide Chief and I required financial G release, us available Howard today the thanks our want for joining Amir Regulation any non-GAAP Yu, that Investors by our the to Aghdaei, point measures are President our Financial today's and Chief during Executive out and the relating are and call Officer; reconciliations Officer. call. earnings the our call supplementing of SEC presentation and information the provided website, other section to all www.envistaco.com. With

The website will until our audio on our later archived today be next quarterly under remain archived call. Events this portion They call the will Presentations. of the Investors section heading of and

As in financial business XXXX, January treatment results instruments closed business of XXXX. accounting accepted divestiture reflected both are required X, as of units principles. the our The our XXXX statements operations and as Cabo for by generally this announced on we discontinued

in these remarks company-specific the to other flow for and only business, references metrics Envista's the accompany measures. relate of revenues the financial earnings, to cash presentation except continuing and operations All

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

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

the With call like over Amir. turn that, to to I'd

Amir Aghdaei

team performance. Stephen that to on you, afternoon us pleased good everyone. you the I'm full-year today's and appreciate taking for Thank report to time strong to delivered call. another the Envista the We XXXX, join

sales core margin achieved basis represents up the for point XX XXXX. was This expansion and X.X% over Our adjusted growth full-year an of in EBITDA of EBITDA a adjusted XX.X%.

portions experienced challenges primarily expected some economic in Ukraine to COVID a and to rates slowdown by business outbreak This the in interest our the and We related in environment of conflict quarter. depressed uncertainty. and issues capital driven in lingering was equipment higher the fourth China, for geopolitical continued the in to growth related related

important is in our outlook, solutions. it the demand dental As context underlying XXXX, we for our as as I provide to on future performance well think some reflect about

[ph]. is well as America What [entire time North incredibly DSOs of consistently spent we clinicians their collectively overstatement As significant with time. the of clinicians, real It are to amount the group I practices, they in I X,XXX institutions, calls, private is my have shared leadership practice excited happening over the prospects and time in not I the professionals team field as XXXX, on have hear spent say our that dental about and previous that in is what a across an for in Europe. market] to meeting understand long-term clinics

opportunities the their expanding their significant and to They opportunities capabilities, offices. to their enhance optimize business specialty their by investing and sees in treatment grow digitize [indiscernible] It workflows, offerings. their

interest long-term, possibility are headwinds the confident of they uncertainties, the increased by driven clinicians short-term geopolitical in of mindful the and recession, global rates, remain risks. While general economic

traffic appointment to bookings specialty and monitor procedures. for We patient continue

demand volatility going continued resilient, So been XXXX. but we has do patient far, expect into

dynamic, While global Envista the chains, think it's market and important out challenges geopolitical remains I despite deliver, point the to to inflation. continues volatile that supply persistent

operational us potential daily System, underpinned Envista and tools, and culture stream for processes, daily Business to as EBS management We EBS principles ease We productivity. deliver solving the uncertainties, problem our identify customers mapping deliver Our our by such leverage value capabilities, our or deploy and continuously process risks enables EBS, existing and drive opportunities to shareholders. reengineer and chain improve commitments. to supply continuously quickly

is Our the times a improvement reflection face strategic customer direct differentiation in the ability of results continued centric continuous our to our transformation culture, uncertain of and our portfolio. of and produce

progress priorities long-term fourth we against I our margins, XXXX color made discuss in to expanding over detail, Before turn want our it results transforming our of growth, Howard our quarter operating provide more to to and in the portfolio. I on accelerating our more

our across the driving as growth XXXX, continues to started to partners, Spark pleased progress in leading commercial we cases the announce significant made we in XXX,XXX our over our have performance. world. XXXX Core In We're XX% around orthodontics portfolio. over that Spark together execution orthodontics in business deliver was with industry

Spark work to number In [new clinicians, XXXX, develop customers. Spark] individual standard to utilization doctors doubled onboard our of [ph] clinicians and active manage of new we systematically of improved further funnel rates EBS and the flawlessly our leveraging nearly toolkit

allows capitalize is the nuclear promise. disciplined this to market widely the as in seen Spark aligner leading on execution system our and us

addition in our and business growth digit despite performance weaker wires This XXXX. growth relatively our saw in In Russia, core in wires. single growth and also brackets delivered normally and China was traditional low outsized Spark, brackets traditional which to we for

and in Our to ability and bring orthodontics outperformance wires innovation mature to our by driven a commitment relative to brackets industry. effective is our

more efficiency. improve with by Our precise orthodontics continues to finishing allowing share and reduce product providing to capabilities, Damon office Altima them rapidly time go

to support through journey and customers We education. ultimate the tools with have bring standard and targeted them effective developed

it markets. supplier end, testament and of To value the only the business in orthodontics in new markets. we wire for wires of chosen China's commercial multinational emerging emerging execution. process. are to that be to a the that partner innovation, pleased choice [indiscernible] as orthodontic and be brackets professionals brackets over Outside reinforce to all is on markets, during is are position focused we we solution provides in With volume-based imperative procurement This our our our that XX%

confident our Long-term, broad offerings. in are we orthodontics

to expansion further help Our and both from portfolio of uniquely differentiated is drive benefit positioned treatments and globally. orthodontics

implant-based solid XXXX, in in delivered volatility premium both despite seeing two drivers mid-single-digit core and for normally strong Russia, business. result, continues solutions as performance growth in our and this well. materials. strong business replacements, Europe, providing Led we in to relative we We to growth by for regenerative significant from implant-based Turning China focus tooth benefited growth on a our comprehensive solutions are our digital perform replacements, and tooth for solutions important

business an execution in to business is July that is a from off is focus acquired and integrated to driven we The of now benefit management. on strong starting and EBS XXXX Osteogenics fully start. This

commitment market. implant to continuous continue through or execution margins a Critical We to our and disciplined franchise to strategy expand the expect improvement. is strong to above operating at focus our long-term our grow on

significant aligning EBITDA also XX systematically improvements results expansion businesses as driving of growth long-term productivity, in making margins. delivered chain in disruptions. We we XXXX, point in of discussed intermittent both meaningful our Each well of achieved these are down while basis operational adjusted inflation, our as facing and driving investments a As and costs. our prices supply

our organizational optimize flexibility macro experience to we while In with structure the customer in the to addition, to creating deal continue more improve uncertainties environment.

business. costs million continue to than to XXXX we further look for year eliminated in our was the the structure another During of and half of second streamline of XXXX, transformation important organization. more $XX ways our

more further dental overall shifted a segments market. growth of the unit, sustain XXXX, to and the higher In portfolio more We both dental at divestiture growing, we and the and and from growth can slower profitability reducing of create lower while we This exposure segments competitive our treatment business. to transition benefited profitability, instrument improved advantage. cyclical our where profitable

Given our we that exposing we positions two dental segments the transformation market, year, us the closed acquisitions higher move forward. of to drive In while the us us past position puts stronger much growth a important portfolio as strategically in the industry. of economic to the uncertainty, digitization within

more acquisitions XXXX As us long-term. promised, delivered accelerate in enable revenue will to than [$XX growth core our million] [ph] and

investment see our we have utilize and and deployment. an that of approach new moves today, portfolio. we an pipeline approach partnerships its inorganic cultivating to our manage strategic made to to pursuing the We're opportunities. further about We M&A to capital committed robust disciplined active, improve opportunities but are driven excited actively EBS we're While

go over financials performance. provide through to I fourth our segment the turn our will to now details call quarter and on Howard more

Howard Yu

Amir. On by increased Thanks contributed negatively exchange quarter of X.X% growth fourth in X%, were foreign basis, impacted due while the quarter the in X.X% to to rates, $XXX.X reported acquisitions million. a sales currency quarter. Sales

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

reflects in segment. in and a Technology slight by Equipment segment Our our mid-single-digit Specialty decline offset year-over-year growth Consumables solid growth our and Products

in Geographically, our in very developed more driven grew Western modest X.X%, offset Europe, strong growth North markets by America. by growth

Russia emerging Taken while QX, low-single-digits. significantly in declined and other together, grew China markets

prior decrease year. of was XX gross adjusted quarter operations the basis fourth points, Our margin a to from compared continuing XX.X%,

in pricing. decrease inflation driven and somewhat was growth strong by gross of by margin Spark, combination The a offset of

expand driven quarter to is we by investing XXX growth. throughout of actions continue XXXX. took to our our primarily while were higher margin cost to initiatives than QX, further margins adjusted by XXXX. Expanded productivity In XX.X%, undertaken that was the for and organization for margins the EBS Our we ensure QX which can points EBITDA streamline basis team

adjusted products to was the offset represents Russia. Europe the in of This Western from and continuing our increased X.X%, Strong fourth technologies significant year. China fourth compared $X.XX XXXX. XX% of declines the EPS year-over-year. comparable in revenue a growth and by was quarter prior Core in $X.XX operations, to quarter in specialty compared period Our increase

in quarter than fourth business continuing Within this XX% segment, outperform. orthodontics Spark the with grew our to more year-over-year

Our and the double-digit Despite modest market. business Western macro low-single-digits was outperform in in wires dragged Europe. grew volatility, continues down China are by but America, bracket that decline to confident in business we a the orthodontics and North our more declines

and focus portfolio orthodontics orthodontics our comprehensive our specialist. on value the Clinicians

Outside business led Europe. versus driven was China, replacement tooth and growth Russia by combined. by implant-based in low XXXX This digit year. performance in single we declined decline QX solid China in and double-digit QX positive prior modestly of Our the Russia decline delivered of primarily of

accelerate. Our newly business regenerative Osteogenics to the acquired business, continues including

to due and basis This continued was period as Specialty the decrease year, currency headwinds. XX%. of operating Products Spark well the and in long-term the to segment our prior XXX quarter, For and same fourth drive as sales down growth, an versus profit primarily China Technology adjusted our had points in some a in investment

segment. compared strong growth our Turning sales due volumes to decreased Core QX very to business. of offset QX our in was to XXXX. in in by slowdown and by sales X.X%, The Consumables continued decline equipment the in consumables Equipment

Our with declined volume traditional most business in double the lower quarter digits geographies. imaging across

and driven The the attributable as to long-term. in both was strong can long-term rising advantage. to macro geopolitical we demand, by margins deemphasize pent-up the geographies markets as growth and Further, in competitive well our uncertainties. where partially lower concentrate we us growth China to COVID over related sustainable in accelerate XXXX, including inflation, interest rates, challenges and performance QX efforts allows headwinds, non-strategic This of a build continue

iOS solutions be and distribution. investing in to remain We The this core reach success. make accelerated improve outperform the well a optimizing quarter to investments XXXX the business expect set continued we expanding and for global to their Clinicians market positioned up to business in fourth new is our focused in this remain and iOS iOS our contributor interested help Our workflow. overall growth them very in on our we solution long-term DEXIS to DEXIS beyond. and business to

our in with & growth Restorative in more grew most consumables the side, markets. strong X% than Endodontics On QX

to well-positioned or are growth. we delivering above and results at execute to continue continues team Our market

long-term have increased XXXX, trends. As and more the of double-digits forward business now The QX grow our with normalized of will QX business moving to pandemic in related levels in-line this softer in believe prevention XXXX. spikes demand we inventory infection expected, market compared and

the Equipment XXXX, and of XX.X% in versus in was fourth XX.X% adjusted margin XXXX. quarter Consumables profit QX of operating

a by our improved favorable strong continued was relentless as driven Our margin on and improvement pricing, well mix productivity. focus driving sales as

contributing equipment As and the of to we XXXX, move also our integrated our inclusion our will fully consumables into iOS while the profitability. more positively of business, further growth business support

cash. In with ended $XXX million in the $XX.X free fourth quarter, cash flow over year million we we of generated the and

the markedly cash than payments factors, to operations, costs of and prior support one-time discontinued the divestiture, our and including elimination long-term higher lower associated with For our due transaction to free cash year, acquisitions flow expenditures our with timing was of several flows year, the associated initiatives. tax growth capital

last of significant the our free in made primarily net committed we goal capital. our working in excess of discussed earnings improvements As driven mid-term in remain delivering sequential in progress by cash fourth flow We to quarter, income. call,

invest As focused appropriate initiatives. liquidity balance we and our we have investments. move into long-term on cash continuing the XXXX, flow, growth long-term strong ample in Overall, flexibility we to remain pursue free to sheet driving and our while remains

our on I'll XXXX as now to the as Amir outlook, comments. closing well update an call over turn some to provide

Amir Aghdaei

Howard. Thanks,

our outlook. growth we dental market remain attractive, underpenetrated in has long-term The and trends. is forward, a and confident strong Looking strategy

strategically differentiated have track proven and execution. is record business we of Our

in have on ability growth EBITDA XX. to high-single-digits expanding our long-term over by financial of conviction XX our We deliver our margins to accelerating to XX.X% and targets adjusted

situation create energy minds uncertainty sentiment and the crisis The risk confident related expect expectations COVID-related XXXX as likely patients clinicians. targets, macro the geopolitical volatile well China's the Europe, of of While as Despite the of be conflict and dental demand on to recession Mounting volatility. we also we Ukraine heavy mindful in environment. in of are resilience global our we the the will be and market, to consumer additional remain both are the choppy. for a to long-term associated

expect In-light we of margins deliver EBITDA low-single-digit to this and adjusted over XX%. macroeconomic for core XXXX, background growth of

we higher throughout and margin streamlining as we organization impact of the well from from as the acquisitions. expect our to cost and portfolio We our throughout of as benefit our accelerate products. accelerate growth XXXX as to stabilizes core our toward the are also XXXX Margins China shift of benefit reduction, anticipated mix

a a margins, long-term balanced and our dental about Our for while full-year our economics reflects We're the with volatile managing environment, and guidance remain and pleased the our industry. results more expanding optimistic invest future XXXX through of view continuing to transforming of growth, portfolio.

the same. Moving remain forward, our priorities

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

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

each the offering for Our to best empowers modality orthodontics comprehensive provide treatment and patient. every

implant growth our replacement capabilities. solutions digital accelerate utilizing by and leveraging to across further implant-based regenerative franchise workflow, will premium provide the our full We premier tooth by our including in implant diagnostics prosthetics offerings

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

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

dental invest improve we Given efficiency, will the see culture lean heavily in our drive cost. market. improve and execution, uncertainty, the in both opportunities to We significant to macro EBS and near-term inorganically organically

and is we and centered and inorganic made of this reflection our we to the have capital deployment and trajectory industry. We XXXX growth disciplined accelerate a The flexibility and that culture our investments. direct in improvement our the quarter focus and have continuous financial further to dental via commitment management customers progress

purpose professionals journey personalizing, Our our We're to and partner improve by is in to lives democratizing dental and excited with growth beyond. patients' digitizing, about continued dental XXXX care.

Stephen Keller

our formal That concludes Amir. comments. Thanks

We questions. are for now ready

Operator

Bednar Jason with And Instructions] question we'll Piper [Operator take first from you. our Thank Sandler.

open. is line Your

Jason Bednar

a any as the have I in Hey, more your to background it's others talked were in remarks, start, and noise in you seems of the to pretty they if their your here. spend and consumer seem your on might Europe dynamic environment be good are prepared health opening close getting visibility, today. or the and I know really dental lot Amir procedures? but as U.S. visibility further with you Howard. demand alluded expand now to outside in dental impression spot positively Europe a north and end Russia okay willingness I advance of like could on Amir, just fearing us your to afternoon, consumer Apologies it comments the discretionary you're right but for market Maybe start dental improving. Implants might based mean help you to. to I and really dental the China about think not on then the most just on in alluded today of U.S. to in remarks perfect you here of

Howard Yu

What in have around continuity have, Through we in continue Russia patient done, in Jason. remain visits there seen what China to traffic. see started that we the patient on we Thanks, to the softness persist. continue same challenges is to specialty seen the the volatility is that in have have macro have we the and see resilient. businesses, is reviews to that bookings QX we demand seen, perspective we The and remains that and that QX and all seems has

and In – large pressure tremendous by and large new interest as opening also there's investment imaging amount the as equipment rate is of well related. offices, inflation DSOs from

has to year, growth through further a be the as the growth run, going commodities have industry capabilities we tremendous In as some our and faster but situation. a we XXXX. manage muted, of confident QX long we feel see expect stable And these to to through of a a get volatilities We lot runway. that more go this to amount become proven stronger we're through of

Jason Bednar

headwinds to those EBITDA solid of had right. can margin in with of if its in think margin part speak you whether you're Sorry think EBITDA margin All – or where about you would I magnitude guide also us through able margin? absorbing? vein, Howard, help profile absolute then have the impact throwing you for in the few considering been that. a be here you VBP I guide Spark to And headwinds] guys the might margin VBP. terms questions. the was for EBITDA here, on again of pretty thanks pressures? there [ph] for from pivot in terms Thanks [profit of taking in Maybe What over to on thought those along terms then we're incremental the but that that at XXXX, without together, the

Howard Yu

problem, No Jason.

a relates of me here. VBP, quick let it little provide ahead go as framework and So, to bit

our and in For $XXX is a business over on private sector. is collective bit side of or business That's ortho a focus of and as on million us, most implant XX% – $XX faster opportunities the the that's a about side, little there see we actually on more segment specialty million the million the side. China about that $XXX with that million, being our innovation. to our differentiate $XXX business Remember XXX we over growing over

VBP is the sector. public impacting primarily

this goal course of VBP to expand know And as so, it And of at a therefore we we will treatment in access spillover the into is do sector. well. of costs DSOs be and point, overall. the involved private bit little expect certainly reduce as

outcome So, bidding the it's as and it implants, being national program, relates we today, where to out. is rolled a VBP of and sit currently it's complete, the

well. have as brands both in won our Envista, categories

will a And it vendor, expect it's but that side for selected that pricing course of so, as we on reasonably that being drop. going us probably a be to the about be XX% to relates recognizing favorable

there. ortho of the far, that XX% so side, than market much it's provinces. less smaller VBP think only has impacted about collective On XX We the

wires the We being said side. be to that Amir pleased with We headwind there in roughly. in selected outcome is multinational we're think of both selected reasonably only were, pricing the XX%, cases, certainly And the going bracket comments, to the there. as on the a these about and win

are on investment the I'll the mode. by growth Spark currently and next our Your we're encouraged margins, address business. Spark is very question that question. momentum maybe Clearly, seeing in around

invest to continue we'll so, And there.

of duration that continue Clearly, I to in our dilutive we're business XXXX, the is to going to today. For be think mode. investment margins

sequential relates dilutive we that thing as duration for investments will to above that of it can is productivity We certainly and investments the it the well. our margins that quarter-over-quarter automation are be likely is and up average, very today longer-term off. one but XXXX seen think that The that encouraging we fleet paying as is the have get

see we're And so, continuing to improve that quarter-over-quarter.

Jason Bednar

from Maybe real expected deep just margin mean, Thanks. Okay. sizing quick. on impact VBP? I any

Howard Yu

basis know you than you say math think, it's I'm XX about the do I more going that, if to points, maybe roughly little that, could a on be.

around take plus. – And it so $XX million that's somewhere

Jason Bednar

helpful. All right. so much. Thanks Very

Operator

Thank you.

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

line Your is open.

Elizabeth Anderson

you America about know so more sort talked I more little on that much could maybe for guys. my underlying first you quarter is and about the North of just, question trends I obviously the Thanks a if Europe. so Hi, first just that question. in guess seeing far? you're focusing the but talk maybe China, bit

Amir Aghdaei

you, Yes. do it. Thank Happy to Elizabeth.

We let's QX, had anything continuation. continuation what little expansion that orthodontics, And a of have changes segment-by-segment. a you Quarter-to-quarter, about our remain consistent. we're seeing QX that our Spark to talk bit we on that of little have bit business of a versus step-up. feel, give view In we so far not XX% seen, a

and Europe but seen we major in Bracket China wires we Russia, in America and as in trajectory North emerging change trends in specifically markets, any or continue to haven't saw and yet perform, of walking hasn't double-digit through really volatile January. and QX. quarter-to-quarter QX, that very and a changed bit you a Give us feel, in Russia decline for China was is little a in

those to well execution implant getting it our and and the is is we and outside performed commercial geographies, two In well operational continue have perform getting side, better.

we that we back to As couple of you in some a and to if in activities ago, improvement commercial decided execution Europe. recall, go around make go our changes later years market have you

move and the we Howard positive better IPS outperformed be have we're going continuous that's a The that forward. we lot we been we toward QX same forward a to the with approach U.S. and A in XXXX. sell-out progress and now talked continued those business see We're thing that has and business we to going growth consumable a move America think about the as a a doing improvement. And and market. outcome as in North and think changes, high-single-digit in sell-in visibility really of at a

been business, of want the part we business last And imaging as QX, of imaging. I haven't highlight things iOS, we business of as our services yet step-up and mentioned, we of a side business seen in that seen that continuation is several doing about throughout our what the annuity About have any Howard in is we of past quarter-after-quarter to one-third change a but And and step-up the years. couple walk continues QX. have into and

ramp we Putting all together, we as that expect growth, of expect, certainty specifically throughout throughout the higher to as year, year. and front we higher the a China, what come slower focus part of in year, the our margin see into the walk

Elizabeth Anderson

see comments That's margin the maybe very also growth. operating gave that we us flexibility do Obviously, I sort I that, that of just you. potential you guide, more as About for of sort the a sensitivity Thank guidance curious your how follow-up, of with there? of to would the, Howard. get [indiscernible] low-single-digit macro to is helpful. sort if about you core be were to the, the this guess and

Howard Yu

Yes.

So, looking we're Elizabeth, improvement. always as continue are our continuous to to look productivity EBS to Even we softer have for well. line, going top efficiencies, when we improve and

fourth pretty that fine the and in we second comments, in As did tune as even continue the substantial in prepared the structural actions well. to on Amir the some side quarter indicated half

growth for us drivers you we the what us. so, see obviously can to and operationally need do still long-term And expect to protecting

further Spark and the have growth in to we of will gains future. deploy tenant and it and will in where that but one drive context operations as other certainly a to innovation mentioned that relates we continue that of year-over-year. EBS areas get that certainly, that continue in a the we there, the We're but invest We be ensuring fundamental to productivity focus, going

Elizabeth Anderson

it. so Got much guys. Thanks

Howard Yu

you. Thank

Operator

you. Thank

from Our question come Baird. will next Jeff with Johnson

line open. is Your

Jeff Johnson

rate, if Western and stood again. a Thank annual your ask Two to upper over the you. growth, is period not on compound of so stack growth rate a the in things to Good guys think row evening, European into growth even quarter just both in This I three-year your compound strong low-double-digits. annual now them. quarter want that me your second is not up a out I single, guys. growth three-year One,

I couple you've to think over well timed the last wins had over Europe. DSO with acceleration Spark like some sounds quarters pretty in of it's that

So, one, anything the can services it I say I more ex-Spark outperformance for your – there dental demand market, is about Is still Europe? what there solid you consumer guess, in mean, part? underlying or is on the Western

And kind back two, that how year? normalize of that that market anniversary in to a through Does sustain, couple come the kind you this or think once those growth elevated about Does wins of down? back of that then that half you of European end DSO growth can the, growth?

Howard Yu

Thanks, Jeff.

is But of you answer is has execution. just the that to me So, simple we to continue. with do it growth a let going lot walk through why feel that confident

well I'll walk next carrying very a small as started systematic geography. implant, of for over growth child the if the the orthodontists geography our back a and you recall, through you part business as a We number and and by as both of ortho go us you As to do such business. to how Training a go time? change approach sustainable countries and systematically move level we you poster became next then of and level and Spain really create ramp the them

is DSO, is it's but mentioned Western Europe lot lot a a broader broader a it DSOs. than yes, [indiscernible] factor, You

execution And very If a sales capabilities they digital success that and product, they're wasn't wide ramping number and the that up. it's individual support, as That you call training place. our implementation education we of we plan. after look have signed it in clinical what at only program practitioners is to put up well the as

to to shape, went model, and on have from side. to replicated and momentum so France the the that European lot we go by Spain beginning more room took geography, we and specifically that see we and side we're ortho so to forth geography, We in next and geography and a taking on

the Our door and him always with a had has performed capabilities well. given the great him to that orthodontist in to to additional and relationship successful. make always had us open bracket wire Europe We opportunity show

really on important we an have that an incredible the peers this experience. see really about some also And that other as and product, We to really team our go you They recall, as role see ground mentioned changed that own they a On ago, years company. products side, partners market their the had have company to we challenges plays they implant customer around activities. show two what I responsibility before, do. can

to close give standard and languages, We of order continuous quarter based management XX X Prague consolidated Center outcome built you we management, a improvement, every daily in time really of our X we to continued model And broader to and period, approach. positively. it had our a a contract has Envista about activities, the on [ph] XXX the the a call low [Prague] just and two-year that people lot experience to with at of implant from holistic consolidated work, changed to different a customer more our perform feeling

partnering the market, a supporting and using momentum at creating and [indiscernible] side, has continued with gain geography, The a we gain standards of have such great again distributors, done consumable take share dynamic the a a on team the look On to the heat putting consumables small training Europe. in job and in place, understanding geography we have by map share. EBS,

replicating approach, are in grow. U.S. you to what all across going of you see that comment long-run. when in momentum through confident push go So, a gives in we to we're and that that of that of taking see some feel XXXX, XXXX, Hopefully same to we little and will And bit a hoping XXXX as our businesses. the our we going confident broad confident performance We're and that perspective those is a we're U.S. those you the And Europe is XXXX. capabilities continue we're in we about make pay-off is that

Jeff Johnson

Endo/Resto That's very two the number is checks, missing I stood that right. other All I'm market's Thank that to my fast. you, in Unless businesses. think nearly then up really that growing don't Amir. helpful. number the And in those X% something me out

has of stepped margins] up second I of pricing? proxy of efforts like share pricing And the for at that seems use up much how kind [E&C if So, as much least XXXX? it a in that gains how versus business is really you picked [ph] half that your is your

of you we price XXXX? in you as support those price same just that? anniversary in level mid-XXXX thinking Thank So, are how increase the you or price of Can you. increases, how XXXX about should again increases some about think

Howard Yu

Great.

Again, me want our Let little question. inventory perspective to changed had bit background. sell-in. you We our the a management, sell-out part the I of just of first and answer give

change marketing the our of tremendous We amount on what a set taking program on whole sell-out. and We and around of place insight put team have compensation of training. ground. the is We education

product If offer. you didn't business, look at our whole we have new traditional lot to of a consumer

of next have just at and you think done If price we what completely. consumable in combination well-executed, not the the in a is what And business margin, profile and look six geography-by-geography. and months we margin of be ahead well-differentiated, a has the forward. why feel opportunity factor in prices growth going XX we months, on, to in board have you that really that business across is it's exactly past touched that not is place revamp what put we an confident major High our

the and we to the expect the we going answering XXXX, see have we specific we would us targeted stay across And opportunity put that have XXXX? and as new just same think XXXX of very question, It's whole for ask of in to but differentiation. premium pricing have space the set as we in place, innovation, in had when customers value product do that categories what board, had when to an gives we're in a

muted. We price count the think price across see have on we innovation increases, did to bit we it's and continue not increases and board be little then differentiated. but mentioned a We to are I going as around

think have have in the is a maintain don't forward forward we IPS that to mid-single-digit the this change We're that So, something from what we consumable in a going seen in run. of going can we format more our past. high-single-digit that that long in and radical confident balance be we is now going to

Jeff Johnson

you. Thank

Operator

Thank you.

Our from come next Block question will Jon Stifel. with

is open. line Your

Jon Block

of Thanks, bridge guys. just rough start maybe afternoon. on with moving the Howard, a parts. Good I'll some

more bps bps? in way? that imaging price of to and revenue maybe but Maybe the XXX of talking just if bps calling XXX Spark, to, Amir, the sort supposedly XXXX. that right, major around VBP, this is that on way, could year, the comments talk contribution you please? a the want bps is maybe to XXX that, a with tailwinds, just about growth, Maybe point for anything other about to offsets, basis not that from talk comment XXX categories, you those to importantly, we're if revenue your other revenue Jeff's for the the low-single-digit Maybe you So, bps around XXX assumption question, XXXX, on growth else some growth? contribution headwinds, is could I'm out lands arrive good core based that then And the to XXX

Howard Yu

problem, Jon. No Yes.

points. our what As would Spark, being included there XXX innovation generate out was of it relates called in in to that basis we excess Spark

we've we as relates Spark, I dilutive fleet other some is that, headwinds growth and that In basis well Keep mind line. that like XXX in we top in things margins. innovation of over think that Spark to to again that done well margin as about currently of to as XXXX, XXXX. points our it average talk that help ahead when anticipate drive

work continue And the that to so, that, but we north we average. expect be of long-term, through fleet to

of there. bit there is so, And little counter impact a a

we business. of Jeff equipment coming pricing for asked and of this that full-year year, A consumables points lot had to relates it in as of coming the pricing. XXX of excess basis way the by As had earlier

continue we tailwind with that pricing a to so, associated will there think be broadly. And

that upwards impact million and as of both obviously line can VBP the think VBP we of be indicated Now, that's would before course, of and impact. top that we be $XX earlier, margin a

And is as so about well. going XX other the that way probably points basis

you. that bit of and And modeling a the math provides so, the little for hopefully

Jon Block

just [XXXX] business maybe a half VBP into a thinking imaging at good the of think that's XXXX your some focus the color, about where going great maybe when base component quick you of point drag, question? going of of year we imaging? revenue Howard, you're that's what a got of on normalizes, that, diminishes accelerating that great. was way tack call that is to sort growth just Yes, sort about the core XH I on, And throughout XXXX, and back it [ph] to reset in opportunities, of maybe obviously the the it time, Is sort quicker a that

Howard Yu

Jon, correct. you’re Yes, absolutely

of rather of that action very also that are XXXX. decided in can on it really specific started we to ask solution. integrated competing some premium more the was an has just we going to We are overall offering that and point took we we for areas than we a QX have in So, participate that differentiated and price

to growth, continued in new that mentioned this I is So, before is and higher correct of the have I that new going in starting base QX that That part investment, have we second think that – to and add business. the one-third QX, XXXX, over in we and is continue. higher done out seen we annuity business us year areas resources time. that is kind and and good But it assumption but redirecting to, of expect want half a that business of you attributed this changes of through consumable side, equipment to we point normalize has services this that your process of the margin performance redirecting our and and margin and have that to to

penetrated. to seeing We're part we in market And That's our add another that is become this of momentum. to the think core under QX. iOS business is growth going that

have We product. good really a

in to And great format business distribution back that this count in brand. up had different it we a to be going can have in that add-on able on order I past. bring have that's We we think relationship, a an the to be

Jon Block

Got guys XX.X% it, helpful. the you when question, Very I XXXX. you XXXX, XX% it. I just some margin EBITDA admittedly second adjusted got than questions, did annoying think modeling greater but mean then And for say in

you throw the be are last target that XX modestly accelerating Clearly, saying bps up, then to you but so, just pretty the at the would to it's Are growth start flat? is on got to And a maybe And but less the an bps up? still Thanks in you revenue saying annual basis? year? the be starting to you guys. it usually than one saying XQ, Are a green XX dart modest point.

Howard Yu

points I spun when I'll to XX had the committed expansion mean we margin we company, expansion. Jon, points XX first. of margin became first a XX basis Maybe question And all, answer and know, basis of basis, to you as public

that we've points. we've been delivered company, think years public I plus three over the a basis XXX over

of margin focused the we look one things is very certainly, so, And at remain expansion and in on. that

unpacking mean, into I a relates quite going said, the here and there's a That of macros the it lot bit as the to year. uncertainties

as lay to And be prudent EBITDA we out it for so, we margin. want relates the what to

XXXX. north minimum committing here in to that well. did XX% do as we of at just And We're so, XXXX a in XX%,

to is I Russia growth our build will relates QX challenging. maybe then with that's we is to in year. accelerate want as throughout that your we're going second macros, prudent core, and I question and the the all think the year. on – at it it And be that that look, see to and going going through we to mean say China

We impact to expect revenue very to the the see seasonality. QX QX largest and QX but QX to of normal It's challenging. our as We be be quarters year, strong. not going going being is certainly

Jon Block

Yes.

get Just there. wanted to out that

Okay. Thanks very Appreciate much guys. it.

Howard Yu

Jon. Thanks,

Operator

Thank you.

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

open. Your line is

Nathan Rich

for that, your both around you're seeing looking margin Maybe course get at market? And improvement bit China a terms growth, probably pressures a equipment, afternoon. over to that take as to of Hi, kind what of, in I drive longer good is question, imagine wanted some I'd annualize. of but the how better a we're in of to, kind factor sense impact, major little on about in the those timeline on just the the you're VBP XXXX? accelerated targets? change Amir, of well thinking all of, Thanks realizing improvement Is the just for the building Jon's uncertainty just thinking the for long-term as near-term the questions. given

kind of specifics you terms think you be course over would any highlight to year there's helpful. the that that of cadence if of So, other, want in the

Amir Aghdaei

of out a communicated aligner are XX past going We put we We we XXXX. that assumptions. back months we going that XX.X%. our the The target there. of Nothing is to that those Thanks, in put time. We to that north Xx we really assumption made over some in in had XX.X%, view to margin targets along changed clear of way seen going the is have Yes. grow that our Nathan. improve that meet high-single-digit, those knew QX that XXXX, targets series continue had to challenges

well. that. coming of in around Nothing seen of have XXXX, toward that saw has challenges that have fundamental that up produced capabilities we view alive And this confidence us the continuous that producing gives improvement in we of changed all and the that company result QX, specifically momentum in that with exists we remains some despite in

of we that. some into contemplated VBP Russia, got China, you walking exactly We XXXX. So, have as highlighted challenges,

from develop case We soft worst made what growth And scenario, We case, go we that going a stay set assumption not quickly of mid-single-digit away. with are best above the that XX% issues landing. these EBITDA us. year They're to think really we scenarios a to going lingering is the based see something evolves, see achievable. we market available are think information today, based on it visibility as but that that If upside, through have the we targets how on achievable. is have we go will the today, we to

cost our DNA. have the opportunities. do We're to we The that plenty is see improvement regardless of in our what of And reduction in improvement, just margin to we environment. continuous going continue in

that what saw Howard with just communicated QX. You in did we

of ahead customers, make this path year to execution, our better become to it. with industry, and to personalizing, what We relationship commercial a improve strategy the difference digitizing our build a to opportunities we do plenty of meaningful to better down in democratizing, we're of us, of march committed and long-term have a

and have execute method able to We on. tools to be

Nathan Rich

you. Thank Great.

Stephen Keller

I I really appreciate [Multiple that. Yes, Speakers] think with sorry, it. with think that –

your Appreciate look to connecting interest much. Thank you. in at we you very forward events. you and thank with Envista So, future

Operator

Corporation's Envista conclude does This gentlemen. and ladies We Holdings conference your you call. appreciate results fourth Thank quarter participation. earnings XXXX

Envista (NVST) 8 Feb 232022 Q4 Earnings call transcript