NVST - Earnings call 4 2023 | Envista Holdings Corp

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Operator

My name is David, and I will be your conference call facilitator this afternoon. At this time, I'd like to welcome everyone to Envista Holdings Corporation's Fourth Quarter 2023 Earnings Results Conference Call. [Operator Instructions]

I will now turn the call over to Mr. Stephen Keller, Principal Financial Officer of Envista Holdings. Mr. your begin may you conference call. Keller,

Stephen Keller

and today is afternoon, Officer. thanks and for me With call. the Amir Executive joining Chief Good Aghdaei, President our

want non-GAAP other Investors available information be release, section by The www.envistaco.com. our SEC the quarterly are our today's Investors I all until relating on and archived provided required portion out this under on to during call our our G the presentation & will today call any section later call and slide measures audio supplementing will earnings reconciliations the Events Presentations. Regulation point to financial the that of of website website, next heading remain of the call. It the archived

some impacted XXXX. quarter factors more company-specific describe remarks or decreases describe of financial Unless in supplemental year-over-year materials these relate During the year-over-year fourth to factors The noted, to the metrics that of year-over-year. that impacted period-to-period are otherwise to financial increases And metrics additional references performance. we significant performance. in presentation, references will the

may certain call, only we or certain available have certain regulatory describe and the products approvals are that and in markets. applications During submitted devices pending

the meaning including We will make that future. the or the forward-looking statements regarding may federal securities anticipate also laws, events believe, of within statements we developments or occur in

forward-looking required any might filings. made, we obligation only statements the results any number are that not of and date that including uncertainties, assume as we Actual today. statements forth update as and by materially where except forward-looking risks our to speak These forward-looking law. they of to forward-looking statements are do SEC a subject These those set from make in statements differ any

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

Amir Aghdaei

earnings appreciate call. you, Thank today. XXXX taking welcome time to fourth Good Envista's you join We the afternoon, and quarter to us Stephen.

free in million a while long-term modest are continuing and cash than our adjusted our macro of to enhance We margin full our the flow we sales our volatile with and accelerate and year delivered backdrop, we line greater with decline growth strategic our delivered margin. XXXX making improved generation expectations, priorities. finished strategic in against priorities In for to our XXXX invest a progress an Despite XX.X%. long-term $XXX EBITDA

environment. Before for some outlook, XXXX performance context reflect think we on East in macro America as as with well operating impacting dynamic, XXXX. as and operating and continuing well the in dental risks our in our the current Globally, challenging environment the to solutions. Ukraine uncertainty remains as the important Middle volatility market channel underlying create created as the as Conflicts demand provide about geopolitical well distribution the a North to attacks future it's cybersecurity I

have of team near-term moderated they well has performance. our navigated collectively, challenges While these each our

we into while our move are we value creation positioned long-term potential believe we to executing As well navigate XXXX, short-term uncertainties model.

patient orthodontic including While of throughout full-arch higher-end cases see weakening to a procedures, and implant did see we dental better we continue for both XXXX, resilient demand adult restorations. traffic

investments near-term in equipment clinicians both DSOs about and clinic-level practice thoughtful and Private remain inventories.

longer invest Envista long-term care. our key drive to proactively personalized continued the practice, our initiatives ensuring seen portfolio. team clinicians that our them them digitize the we focused in high-quality has areas this provide accelerate Despite care help margins dental and term, short the their created the productive pressure driving prioritize confident and they term, more in will patients will can are and on volatility and While that has that throughout we growth, XXXX, transform progress making

clear where a wires for year. portfolio, the more This and focus All gains. long-term create digits opportunity case with a double ample and orthodontic advantage significantly performance brackets on business is competitive market a and global the cost-comprehensive year. including stable orthodontic our business for sustained declined Our share growing orthodontic full outpaced performing for specialists starts well, and the aligners

During consistently added the The positioned doctors, revenue XXXX. leveraged year, EBS, with new doctors business and case business increased Spark we this year-over-year to Spark volumes grew existing and over we formula the and System, drive double growth growth, XX% per our Envista case. to delivered are Business by

as geographies. In America in XXXX, at declined single above challenges or business low implant market other our North offset growth digits in

America, North collectively digits grew our Excluding mid-single for implant business XXXX.

a steps brand, aggressive performance community implant capable in and strong and portfolio, we our a leading issues have strong We specialists North foundation, team of a have Leveraging to the our passionate address dedicated a around taken product world. America.

in XXXX. level We're and North model growth leveraging marketing, XXX and resulted leadership North expected is point America. has share in our making gains and X to which in business growth playbook, of successful by return development and sales the market are European past years over training the community The education investments to in end thoughtful and to reinvigorate America basis

Equipment isolated progress mid-single of Turning segment, for we cybersecurity digits attributed Much consumables and both the that disrupted distribution issues of business decline businesses. be full deemphasis North XXXX. markets nonstrategic in the our the and changes, to American products year the our for products. Despite diagnostics we to declined channel & in made can Consumables these the our

a exited We delivered the saw year. our XX% growth strong core environment Diagnostics year. price DEXIS the growth and IOS volume of as for stabilizing In business, a over we

platform, of the we products. larger capabilities XD in media focused expanded Our with integration successfully traditional a at diagnostic LX, DTX X launched market and field Clinic performed geographies, software. features XD seamless or our innovative through next-generation our in our scanner view CBCT Studio OP above XD OP and The imaging solutions the

workflow, doctors patients. The provides more LX augment planning their and flexibility improved and diagnostics allowing XD OP to of treatment

solution suite. deficiency XD detect including root side, at intraoral and restoration. DEXIS the software helps DEXassist in integrate On the imaging canal carries, findings of the XD calculus, deficiency in periapical the filing -- existing software an also loss, X discrepancies solution features margin to practitioners x-rays radiolucency, AI we DEXassist XX released The into to pathological bone

XXX processed consumable during over or images at globally perform as We running now business geographies. the platform. categories computers XXXX DTX we highlight the our have million have market XX,XXX a the remained above in product and in over on and Sellout most software

distribution the channel expect of stabilizing, North we With rate market business at this single American to grow globally. long-term the above digits growth or low

strategic our of and our XXXX, in result margins rapid lower expected, Technologies in conditions, to Spark. Specialty segment investments sales growth a and As adjusted volatile declined due EBITDA the our macro our as of

while fleet below improving, As still we Spark have average. are margins, discussed,

and investments long the focused that performance we We support growth for consistent Spark Our believe margin our are margin with is improvements. American of XXXX intention in expansion North both the term. investments will making our over implants balancing both and

production We portfolio we improving improve to excluding rationalization, the drive managing drive systematically improvements, down margins and we sequentially leverage of controls our impact of automation. and continue proactively the Spark aligners footprint optimization, points price to reductions. deliver basis and XX as operational price process structural across are EBS the volume-based cost expense pricing. price, cost of are Further, positive

have efforts expenses our organization, sustainable markets, in advantage. our most where and our concentrated our the streamlined we emerging areas competitive we reduced Across

to By is of for priorities portfolio. primary continue of most providing and better, dental. growth-oriented comprehensive implant and One the our orthodontics build we attractive to to stronger solutions segments more portfolio our specialists, a shift

clinicians their and creates optimized been competitive digitize advantage has we business as Solutions workflows. Diagnostic Our help

most and our growth. are transformation. future X acquisitions our Our throughout and and for saw strategy DEXIS key well acquisitions, recent ongoing accelerated IOS complement positioned XXXX Both to growth Osteogenics are

of to capital disciplined approach We and to to are partnerships new inorganic approach are M&A EBS-driven deployment. cultivating robust a pipeline pursuing a constantly committed opportunities. utilize investments our and We manage

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

Stephen Keller

Thanks, Amir.

assets QX. our rates to and impact reviewing million was the impairment that discount impairment by fourth would higher quarter like the of comment interest rate, the the quickly increase volatile detail, to environment. and on I goodwill we recorded in sustained an primarily macro of in Before related driven results more This noncash result charge in a $XXX.X intangible

currency quarter fourth fourth the $XXX.X X.X% XXXX. sales of declined Sales were to by in sales the core down foreign to declined quarter compared rates. our X.X% On reported of million. exchange X% a due the to impact basis, quarter And

& our offset with Equipment in While was solid growth our Products segment. mid-single-digit Specialty decline is in decline Consumables by strong this segment, Europe, more America. double-digit in our our Technologies supported by year-over-year & in developed growth X.X%, Western double-digit North by a by declined Geographically, offset than markets growth

fourth greater grew in markets emerging than the quarter. X% Our

VBP-driven the and Our fourth margin compared to points decrease and a unfavorable currency prior gross mix, quarter decrease XX.X%, product was of result The XXX gross reductions of lower volumes in the headwinds. basis price was year. margin adjusted

were adjusted mix investments gross XX.X%, which was XXXX. margin Our by points and anticipated the than lower turnaround driven implants. lower American and both XXX adjusted quarter the margins QX geographic unfavorable The lower EBITDA and in for North is Spark basis EBITDA in margins,

by was quarter our growth quarter & in emerging by fourth Specialty Core segments diluted Products prior period in Western Our to to in compared declines and $X.XX compared markets was adjusted the fourth Europe year. revenue Strong $X.XX offset in the X.X% EPS of the America. Technologies of comparable North increased XXXX.

continuing our business grew segment, nearly the orthodontics outperform. Spark Within with XX%, to

our the that Wires with market, performing are is commissions especially business well. Brackets to emerging our our value Overall, growth, markets the on comprehensive portfolio business focus orthodontic and confident Our delivered mid-single-digit outperforming we continuing with & orthodontics specialist.

our our implant strong the quarter signs Overall, in of performance in with offset year. growth North the China QX implant quarters we the improving modestly of was as declined Our is relative X business stabilizing America. to business underperformance first fourth in see by

discussed, to commercial investments we to exit EPS our market significant growth as as we North in capabilities leveraging standard business this level America have we work As making XXXX. return and get to are

the adjusted American the period fourth our in basis Technologies VBP the XXX investment was impact XX.X%. implants. of the operating mix, down of pricing & For Products the prior in an Spark decline continued with unfavorable points versus largely China the year, investments targeted program, profit had quarter, in same segment to and This due Specialty North

Equipment our sales XX.X% fourth to & QX segment. by the XXXX. Core to in quarter Turning compared decreased Consumables

in the channel. consumables orders North distribution declined business to QX, Our primarily American timing in due of

It we customers much important while distribution note QX cyberattack largest reduced by QX. in our is sales channel were and orders to have end levels that stocking sell slowed inventory distribution throughout out down, into of of well. discussed, performed experienced channel the to partner As the visibility

throughout we sell-out market forward, that growth stabilize to to saw and is in and business move of we through America, continue the drive consumables we solid Outside inventory North expect most normalize our above our Moving geographies. growth or sales in to levels XXXX we at year. as

concerns and around global Our equipment macroeconomic business the to quarter also equipment. environment declined in year reduced the imaging fourth rates large relative higher the for as prior demand interest

this in a stabilized, America and quarter, in the challenging our markets conditions quarter. performance combined modest large decline macro nonstrategic solutions. in of the North deemphasized more the dynamic, driven and decline effect by Despite in has showing the saw geographies a Emerging

in refine efforts build competitive we maintain to our focus our those concentrate is markets advantage. intention where sustainable Our and a can and

this short and a in this term, to of to it long growth term, business. create the improve the growth While will modest us headwind core margin profile allow both will

price IOS XX% in driven a unit fourth stabilizing Our grew quarter, demand environment. greater than business by the and strong

to driver continue integrators our help DEXIS partnering are focused expanding long-term growth digitize a as office. with their IOS We on reach, and Envista global clinicians our to and distributors our see system for

In implant driving solutions. orthodontic IOS addition DEXIS for to the our growth and end-to-end enhances solutions Envista,

by operating decline & sales The XXXX. Consumables lower was of the XX.X% was This and expected consumables is the in the XX.X% margins XXXX quarter temporary. profit fourth QX in Equipment quarter. was adjusted versus to driven be in primarily of decline anticipated margin in of

costs, we and discussed to segment. took operations improve this in our our As we actions focus have have significant throughout our reduce XXXX, streamline

cash delivering over were Overall, improving year than free goal quarter, Long cash and we flow of to improvement with in accelerate segment million full positioned are In flow for free of million cash term, our to million pleased generated XXXX. excess management $XXX committed margins. and net in delivered in the of flow flow year. our income. our cash This this greater and is flow the operating free a $XXX.X $XX.X improve annual the free of of represents we growth fourth full free progress cash long-term

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

Amir Aghdaei

We remain growth confident is dental Thanks, long-term attractive, strategy in outlook. our Stephen. and underpenetrated has market and trends. The solid

record track differentiated in a dynamic a proven Our business is strategically we of have and environment. executing

value meaningful create to ability the our in over long conviction have We term.

near While industry, more cautious dental the we be future term. to the remain backdrop confident of in us current in the the causes

For cases dental and including to adult remain investments We DSOs new full-arch in expect restrained. remain procedures, XXXX, before and to demand restorations practices large somewhat making expect clinics. higher-end we private for further orthodontic cautious

full the core margins EBITDA year XX%. For adjusted deliver grow XX% expect to low sales to and XXXX, we of digits single between

We further our anticipate through move will as accelerate that margins we XXXX.

into the focused term the and uncertainty and environment. Our long consideration foundation continued on we our In build guidance in value investments are creation. X priorities a takes macro short-term main to our improve execution for both for long-term XXXX, the

simultaneously sequential First, of We business integrated treatment and clear driving doubling including specialists Spark options, with orthodontic improvements. while by a aligners. anticipate our we and by suite further will and orthodontic margin accelerate our providing XXXX brackets business wires differentiated

on we provide of reaccelerating our implant and franchises the across both solutions full growth focus leverage regenerative premium Our and including prosthetic the business. second is will implant of implant workflow to Globally, offerings. our value area

utilize will capabilities digital premier We diagnostics continue create win to differentiation to our customers. and and

and In and America, XXXX. commercial path a our community. aim further refresh through exit clinical investments support growth making our marketing, growing be We training we as education the and clear North invigorating are with approach see market execution, to to improve to we improve our targeted

we structure. utilize EBS optimize As year, our we forward cost further will move this to

for We XXXX. reduce being million $XX expect impact an costs full additional in to year structural by annually realized the

across drive We streamline Our XXXX investments the we of believe in G&A as further transformational year will operations, be and will expanding continuous functions improvement a organization. our continue to corporate spending allow for Envista our with culture to us margins. consolidate balance our goal growth

Day we of transformation prudent execution Given we a comprehensive diminish our allow our to full stress Further, update to the the revisit this provide to dental Investor recent focus, a name future to of about of of I that Investor permanent believe long-range postpone and timing our not more industry does leadership future would improved us XXXX, the Postponing and want it's process of decided changes desire Day drive excitement have leadership CFO, reschedule. Envista. team. this because in this to the change will our with targets. and of our to our

purpose focused democratizing Our and our delivering dental customers, long-term partner dental digitizing, to patient personalizing value and professionals to shareholders. care. We improve remain patients, employees is our with lives on by for our

Stephen Keller

Amir. concludes That Thanks, formal comments. our

questions. for ready now are We

Operator

[Operator take Elizabeth We'll from Evercore our first Anderson with Instructions] question ISI.

Elizabeth Anderson

our operating off came Maybe disappointing mean to that start with I you the operating we in recently margin guidance for pretty about were expansion. talking look this margin XXXX. And guys XQ, if view. at in as

giving that a where about So are expansion thinking that about then what can and you guys you between the talk point of sort more happened current guidance bit us what tonight? you're

Amir Aghdaei

question. Thank course. Thanks the Of you, for Elizabeth. asking

in around the that, what is economic really not than that rate, we dental inflation, our As we seen be On specifically it to expect any we we consumer move quarters. of and capital the uncertainties, cautioned On XXXX to long-run past management. to think specific, became To do time. is on through be would the macro one interest apparent think for inventory sentiment, quarter, be closed are some have high-end not several QX different DSOs and over and going We growth in and one. geopolitical demand several the clinicians certain that environment, top us key factors. as expectation, change about do below we procedures spending, we

our backdrop, that has mix. that in with So impact

profitable really look highest, if of macro at some most that impact different backdrop in businesses a geographies. our you it, So take of

our growth are accelerates Spark, we change time. mix that seeing over today that in addition, In that the

of we outcome did risks. opportunities series planning. a scenario looked We the at the of that, As and

North the more we We a spending. we the to to do the well to also create have thought here, now America to provide there the takes as cautious between that back in expansion take format what really long-term a invigorate And G&A it put to for need growth can realign in as go considers be that the value; that we feel to and implant background. we Spark look at all need investment growth; the we what organization that margin the guidance on good

how the basically throughout and improves on we put are to assumption guidance well Of of forward, if think the go an growth place. And quarter. we in the perform year, we as environment will opportunity as course, we see That's that every acceleration have margin better. as our we year, assessment our throughout

Elizabeth Anderson

Got it. That's helpful.

So XX? think new guide? and the the this in -- sort possibility we long-term expansion margin you do step with longer-term how I know of about down

Amir Aghdaei

Yes. as That has portfolio. in but shift years growth, don't our impact. creating past about changed. know, by have long-term has that a you expanding really we pretty And radically consistent, value created expanding that X, we by framework have been think in margin, steady We the X.X

of what is, dealing The here information. leadership a we're with new we have one, in realities

soon hopefully to CFO, be named. Our

president the over leadership make we wanted time. place. our placing sure are We that implant And we Nobel, a solid in team have to

We there those to show that and back wanted valid. and guidance about; long-term key tangible have resizing growth, that we portfolio growth also Nobel wanted show Spark over about We infrastructure. view and back around and think to come the as discussion X and still have that on progression as our results priorities time, we then provided. margin; to is the margin our We well progression growth; show the talked

postponing when are and structure we to place that that it, conversation better ready we are team better provide have insight. decided conversation. we be back until as canceling We We're we have should about postpone in capital when not it. in to place to momentum we the a to talk need come the why And well. That's

Elizabeth Anderson

me. one one for last it. Got And

You just have to that? like you any around announcement time put you CFO shortly. a said parameters Would potential

Amir Aghdaei

on it. We're working

We working on I mentioned. have been it, as

very some see to candidates. continue We strong

to have goal the quickly that in as as name possible Our is future. near

Operator

from We will next Johnson our Jeff with question Baird. take

Jeffrey Johnson

E&C Amir, new talked and both the of with around now. included few some margin answered primarily for I relative, wanted asked, things the quarters gross down you've those the on of founded -- overly margins the to through of question, None this about least you few But really Elizabeth past the to kind Elizabeth flowed margin. that follow your quarters. stuff at last quarter for really dragged operating answer couple specialty dealing that up been

With next drop-through margin, and in rethought in the the dental maybe gross in prepared it strategy all could mentioned implant going going the versus to about is like that over your we North there it on Is American your the that quarters? some on change operating you've side. times me gross of investments targeted be business pricing the remarks, flow-through for pricing happening the how on here, implant several some think if And few any of do premium on? that margin sounds

Amir Aghdaei

Thanks, Very good Jeff. question.

then Let talk the pricing we specifically. about me first, that will answer margin

such putting important When mix, put in there mix the XXXX were a and that plan about also we as role in put plays is place. So sort mentioned, we here. we place, together in assumption that I long-term an of the the in plan

The margin. out, pointed in our mix these the shifted As over challenges, you are the businesses China most that challenges, impact correctly the have has Russia time.

have, in of they is are it X/X & of a our business been at Brackets And of business impacted that it, that that challenges. geographies where we the these take outside one Wires, geopolitical has the most are is middle United in those you most the the If which profitable States. look

at going take would you in term look forward. So not consider that not change a and we that, near

volume-based our we to We business have that, XX% significant XX% have growth. has price despite direct China. impact that structure. have margin fact purchase reduction the in we in of implant responded It our to and on seen the considered impact

on a of Despite grew QX margin But what this average, one more almost got until has able it were very fact it shift VBP our it mentioned out, thing, higher, Spark. were now I various stabilized. have IOS. declining And to our take business. that's should and quickly prices is grows, we the the below good that, momentum know I structure. We least: about the that faster stable execution. year, have the the not pieces XX% and get last price. that'll impact that but we a We actually look the last The in that significant If like. in

changes. change assumption that, made would hope With not we that radically that an And nothing let's assume radically. macro let's

But impact. a to Let's will the get forward. not assume lot question your going back coming about geopolitical better

has customer education. around not premium community a our the here or has experience. in degradation North reduction been not seen about We and has has price. discussion is been impact. It That have around America around training specifically a It clinical been on price been It and case. It has community. the around not been

we XXX is this Europe. We in we the a took a America. comparison, of York, exactly XXXX. saw model business. a premium to going quarters Price and factor it's in And in North that to not think in not growth. XX factor be We in saw major replicating it was share side our on do of basis what We New corrected points

Jeffrey Johnson

did deal ago, [ come NX your guess, scaled go point. back there KaVo you several benefits years hasn't about had getting when above I ] right. I if were that All you at Kerr That's out, take there. right this some mix market when comments fair. was here

Active, product an is Nobel market. You're on think, really, which relying the I primarily in older

So an product? these older doctors how do you reengage with

and lifting going growth sets Should of a out, newer we just out coming be that? market use end market in purely will going doctors Active? help North drive back feature that to there's about getting because new the back and Nobel Is there's product come the heavy to this get to by that market? back 'XX coming to American growth Just what's trying of and them the to to out the reengaging path

Amir Aghdaei

is our just XX% digits business of North specifically, North months North That mid-single of America XX% XX% define same America. done is outside answer with that, outside X been but to growing I America, will In past, specific. have one the the product. About has a probably I really seen, is want should we doctors not have as what the performed in product important well not how And have we performed interviewing comparative pricing, our our of detailed hundreds our in a study thing we most as that have have product, analysis done here. we coverage.

I dentists that you If those little helpful. XX,XXX. of here, think placed detail would are dentists. in less I'll There XXX,XXX which groups America, XX% There than give bit in more North are may, by of a be in I X of category our implants are of X%

XX% Let's depend specialists. say of network. These them referral a are specialists on

they're big have X target return. coverage, experience. The that management, to a one-stop about And groups, diagnose, impact, they provide requirements, a very GPs premium okay? is about major Both solution. work customer or order which they with Customer our placing in-house They prosthetics. plan, for that about plan, labs are other definition wide labs has experience provide they have they and XX%

hit is that the time. the training over changed mark, training, and Clinical really model has

You've got range clinical are training, wide a a lot to not the advisory And local last through advocates. provide at media, of these social team online through least, of but level.

what they the And and have customer show and teach you that that's results clinical support. experience, call and advocate advocacy or an of definition have training go-to-market, other If and community: impact. coverage it people, that individuals to we education, will

haven't building been clubs, to need A learn. them, a study what that specialists network. challenge we DSOs, job out figure you us, and those, to support by. at acquired this referral and we for of good really launch look with to lot a has those a been done have these take work you training provide and If

have We referral sure in is and relevant. that need local went then the rebuilt we and took this model Barcelona. local that went mean decision replicated of network We We even mentioned the kind Madrid. to We've training make growth. at what local level. to is we went level, don't I they So education to to Europe. We level. This at go And We provide Paris. seen the to we the exactly countries. did I

the continuously. growth same North have thing We seen exactly We're in America. doing

product on saying education. recognition, to responded from we I'm that brand, what pricing, speak. I'm in are the change do issue. our irrelevant. we to on as That's not we an what are from that -- your our not commercial we That's place a What I marketing suggesting, after. not Jeff, it's from is that good doing training what we from execution we quality, product, operations, need and are question

Operator

our Wright question Morgan take We'll next with Stanley. Erin from

Erin Wilson Wright

And are you on And cautious quarter remain you which are what obvious. or throughout environment, basis is you said monthly the a see But underlying demand did on the year-to-date? how -- there areas any of deterioration or signs at there's of in anything stabilization market front looking where that out pockets that you're disproportion in terms the of call certain to stabilization? on either or

Amir Aghdaei

Yes. Thank you, Erin.

well things you we business. really know, XXXX, of lot as that QX as QX So it's a didn't in as XXXX of whole mentioning a couple have China, of worth

of in saw that's that a COVID forward Zoom we the QX, year. we And on. is of what in and of of what and months we of this, throughout at QX Boom it China, it QX that have and for lack We volume, we VBP patient in counting saw then in and are First, a XXXX that more seen this the least better carrying was we this word, saw have have itself the stabilization then first we U.S. assumption

are patient is Outside seeing of what the stabilization volume. that, of we a

see. what can high-end because patient per adult in they That's the challenging with these us, past We really restoration, been several that of impacted lot months. this that's And that's relationship to $XX,XXX have large what that has $XX,XXX good procedures, a we for DSOs. what orthodontic how number postponed. of we a DSOs cases, tell see. Spending is of is And full-arch get a

QX, the radical So year, saw what another. have in a change is or not with way seen far, what during one we consistent we

Operator

our question take with Block We'll from Stifel. next Jon

Jonathan Block

is XX tomorrow first so like now months basis that. pricing, guess be the February will of gross going. we but margin lower everyone and and haven't And the XXXX. softened, one I up for Amir, ramp bit longer picked all doesn't know sound points is dental that. one. or margins XXX EBITDA right, the with be Analyst were a ago, of all changed, Jeff And we're dealing you've has But up but to at on dealing I everyone where as at the has I least follows IOS again, that. morning. about Day, trajectory of with It little Spark going got It had know in Elizabeth 'XX, think XX% really And VBP I I sort about

And are other margins companies close magnitude. compressing, dental down are being none that to the coming anywhere XXXX EBITDA of revised have yours like to that

just what too I'm worked in decrementals implants? it is of and all more you regards to what on specific those jammed to lot specific So could challenges Is down Is so seem being -- it maybe about extreme is, that's this consumables the the is when Envista a up getting are Envista. arguably industry? dental help because

Amir Aghdaei

realities a place you're of about sure trying guidance what that And I we is and we to in that considers thoughtful course, of Yes, understand the that where we it, challenge coming see a in are place. from. make definitely, this we are put

where where of 'XX, we up aware 'XX, well are ended in 'XX. we in We have started

QX. becoming bigger significant where be. you So growing of and equation, a exactly growing. we ahead rapidly to And back I mix That we're such you ended faced. that, equation. impact considered that not have about, that talked to really have we about where year what of The ahead needed has part one year up Spark a Stephen in back go if one. to by what dynamics take Jon, It's is QX. want we is us talked in our

mentioned I that happen. been were is a not business mentioning faced And with in margin. is taking share. uncertain we of single but Wires it's It share because digit & wasn't business VBP the digit, growing we only coming going business I'll reason worth Two, picture. double This we China, sitting the as we it That in have Brackets is it that, rapidly And high X/X again, -- has developed been is picture. is the the in really It our the been expect. that not the outside market. when not rapidly, because to is not have business growing it's repeat back is as which high taking with

want be again assuming year, are not this surprised. be of to to half thoughtful We we second

it's that is volume to path like impacting Russia that us are, changing absolutely mind because to Nobel, it this know the The North take turn going some we we're China, challenges areas going exactly my on This and time. America in high-margin but know the is where There no we question is the around. radically and really mix.

We able have to in be layer over get growth to here some order investments market to to that time.

to combine any put say of going on assumption you macro. that, in I'm not You make place, you all

about we The to this. margin in dealing, to able communicate and the that be reality place is thoughtful promise. the sure absolutely, of in If growth be make in the to deliver we changes, that. first what come we the We past then what we'll one to today, and that realities measures back is we right months are. the place and that on are are deliver We we a see and we we it put put on several wanted set can what it. But what realities guidance saw

Jonathan Block

one but parts XQ And just Stephen, moving with a be notably. helpful. lot of maybe GM the very a That's quick just compressing for Okay. follow-up. this might you,

year. GM the going going business. So the if of in you're next to like basis think say about to from XXX between still just of we sort Any margins are because sort sort XX of down and investing be ] points [ the obviously, breakdown OpEx to EBITDA year-over-year way of midpoint the that,

helpful. color be between would any those So

Stephen Keller

Yes.

specific -- -- that think would quite more assume issues I you guidance, can That's our That we gross QX with given where bit. margins Obviously, were assume the little for that our think year-over-year can you related in gross had our bit expectation. will QX. bit So be be down a to some I margins little a a lower. year, margin

margins think mix. due year, a bit for So down year, a it's I to little better the full the with for comparison

Operator

We'll from Sachs. question take Rich our next Nathan Goldman with

Nathan Rich

year. guess, as margin progression the I over think we the first, about

about you're the relative I the magnitude think starting. if the where company think where seeing by help targeting year the to talked year to us should that You you maybe guess about and we range about is improvement or can XQ. end through

Amir Aghdaei

Nate. you, Thank Yes.

just see let's that a little in work a here. of So kind bit if build and can bridge through a we

quarter, has So the margin quarter, to trend every It's spot every continue. coming up improved, expect every quarter. and we that

get to fleet As double the our it business X is it average. years, ramps over the to up to goal

got to to that place, take this every we see quarter. for progression So

of profitable part is equation Nobel one other that is the most businesses. And of Nobel. our

end year. We the to proxies get of by to expect that market a

making So for to be the throughout get the that QX. QX every performance to in QX. we as year, it start range we the the as whole to guidance progress going think than necessary. were quarter. see expect, with through and we respond better why in at is manage we We better And a And year. progression see this to if margin can that want start see margin take quarter to progression every to nominally as QX going we to we're opportunity enter we that's put we go place where on We we macro that improves, a year look

Nathan Rich

quick could follow-up. get outlook ask Okay. I a just And for your wanted on I if China. just more a Great. details bit to

that quarter in I you an like performance good It like of more the the had quarter first comp. You I year. easier of quarter. kind one have -- the was it against understand sounds in

as growth you could the just feel wanted how that, beyond just type guess I overall the what I maybe you'd about expect demand you environment But normalize? And comparisons in about of talk and brackets think half expecting I and sure wanted clarify, wires said year. the in may VBP also that you related caught be right. to I a the I you of to second make just China to

Amir Aghdaei

really So what China I in proxies XX% as good that's was XX%. years. entire look been our we that's you take digits -- that it. increased by saw double China growing about a role year, at business the has mentioned, play in if important But sales And a a of for indication QX, almost normally, flat. And

And growth. in QX, in XXXX, strong comp, here, because easier what expect so see a we we of

look a go to we of like, difficult of comes VBP QX, moderate implant comp here. in through have will to exactly more going in place, we're know we thing. QX but more As it's so what a that

is If a we Our model that going the it. that's VBP assumption will be doesn't to in discuss. is to half. ortho it planning have place happen, we are then, in different how second okay, the And for

purely that And volatility consumer and because a our have deal it are areas, slower housing you some taken for the of crisis, China. growth reason all and sentiment. what we with. What need we of hear, the an considering government intervention of of sure, issuance to to that China. expect in the we we not our spending in is be from We some hear team, I'm the eyes But

think We growth China We've to for and a Envista. got going reputation It's a great is be driver ramp. underpenetrated.

forward. that our equipment in need did Our consumable, positioned. and we stabilize did with specialty as to a is deal a find and business, and really these to this as well business model place we on get new We on implant, our short-term expect to issues just go we ourselves with better ortho, transform

resilient, major latest feedback The patient on have a China, be based seems change. that has demand have, information stabilized. we major we We're seen to that getting in any the not

in XX, a of have a can little here. bit to you X, As we're going Chinese February imagine, New break Year, through

back, to that is we're hope Our momentum after that see going to continue. they come

Operator

any back I'll for to comments. call And the now our speakers closing turn

Stephen Keller

you today. Thank really XXXX Thank us much. to very and we'll talk appreciate time spending look to forward it. much -- priorities, key to forward We next you for We talking our delivering on with look very you quarter.

Operator

now you and program. you Thank today's conclude does This disconnect. for your may participation,

Envista (NVST) 7 Feb 242023 Q4 Earnings call transcript