NVST - Earnings call transcript Q3 2024 | Envista Holdings Corporation

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Operator

My name is David, and I'll be your conference facilitator this afternoon. At this time, I'd like to welcome everyone to the Envista Holdings Corporation's Third Quarter 2024 Earnings Results Conference Call bruise. [Operator Instructions] I'll now turn the call over to Mr. Amit Bhagwat, Vice President of Strategy at Envista Holdings. Mr. your begin may you conference call. Bhagwat,

Amit Bhagwat

our and Earnings Call. afternoon, President Chief Eric thanks Paul for XXXX Quarter and Hammes, and Officer; Third Envista's Executive Financial With our Officer. joining Keel, Good Chief me are today

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

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

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

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

to like call over that, With return I'd the to Paul.

Paul Keel

from us today. taking appreciate as quarter kick I'll performance In opening afternoon, it join what well time welcome, and take at today's some up I the then we'll will everyone. with third closing for remarks, off the will Good open through to Amit. we're numbers Eric more Q&A. you, our seeing We it the with call, broader as detail. come some and you Thank back then the in market. on end thoughts us

Slide X although QX as to due last impact in from a Spark is in earnings results our we expected. the we that summarizes that performance. to would QX similar said The detailed headline reported larger principally deferral be On lower, last our came underlying call, change QX, expected on in call. be results that performance to was revenue

the transpired. lower driven what principally results quarter-over-quarter. about than while by for and underlying this same impact, results indeed Reported is were the QX, was QX deferral larger This were

about maybe to Our consumables. flat. gained than providing this in underlying We a implant, orthodontics or growth in gap our under better more We'll QX grew having early share share investments growth broader a narrowed, evidence impact. in the was market generally similar the a bit the and although an are We was and market, say held positive diagnostics that in just moment. which

quarter, core with a what year as to reported to X% Consistent full shared return margins. XX% we are growth negative coming our EBITDA QX we growth negative adjusted X% QX guidance of on expect XX% to expected, With reconfirming to reported we in last basis. and

into touch and market the now relative bit a performance. QX our dental go on I'll in deeper

arch. generally implant overall market the tooth again mentioned, up procedures segment, though, single was just I flat. in QX As full slightly was The with outpacing

third above volume globally, in digits growth of accelerated posting QX single our implants with positive tooth modestly while volume was a our low arch business single quarter-on-quarter growth premium growth. quarter full down digits. consecutive and Our mid-single value grew Overall,

orthodontics from unchanged QX. The to saw growth flat largely positive quarter, slightly the in segment

underlying was were in than traction both clear is Spark digits gain in Demand this up better the double well aligners. launch. in continue doctors share as Spark number to stages QX we a as bit the and ordering post performance generating of on Our shipment good early as

CBCT bright The mid-single generate our with DTX remained a and North although of for our surgical worldwide well treatment digits single diagnostic the down of of support business half in again platform. soft, scanner share over including additional gains. spot, new outgrew In number basis, we where functionality also sales On once QX. platform, a digits new was additional Diagnostics introduced this, we planning our DEXIS segment again low in market. software a contracted, intraoral we enhanced our quarter, a relative offerings up the in America,

The flat roughly to on was consumables sell-out was same. slightly and positive segment performance basis, a the our

levels call, last partners chains operational global deliver service for As our earnings with supply efficiency improves capabilities stability with strengthens capital inventory. discussed channel our for to lower on our This high currently operating allow us channel and stable, strong us.

expected. summarize encouraged plenty for we us, the QX To by performance, ahead in of know enthusiasm came change commitment across and work organization. I results improvement of We our that our as to have see I'm but

us now Eric the I'll over details. through it take turn to to

Eric Hammes

Paul. Thanks,

been forward. it care X over say shared have a value our industry. deliver chance many professionals Envista creation to health with deliver purpose to dental off, so moving I've months. analysts the how great team how for part meaningful lives. you, back First coverage It's it's the of meet to personal on Envista to to can build perspective common and the broader a our on is partnering for be of to investors, I in specifically, passion had be help past and wanted exciting improve a to just and of stakeholders great I

X.X%. quarter, declined to quarter currency QX for $XXX exchange our sales sales for turn impact delivered the In now Adjusting third results. Let's core million. of the we the of rates,

declined were impacted dynamics Technologies QX in significant quarter, the X segment to segment & Products X.X% Consumables last X.X%. & outside drivers. of Specialty sales Equipment Similar by normal business and Our declined

We will cover of now. both these

revenue impact our the recognizing in initial recent our as of both earnings change change. from Spark First, revenue. revenue the impact a the on significantly $XX combined from reflects the This we call, recognition as deferred Together, change QX. case deferred our previewed lower as million as timing revenues our was net higher well last of result QX were

note, the As to QX. eventually a The grew deferral a meaningfully Spark has or the impact change, deferral business. change reminder, no tailwind our flows Spark revenue this to be in positively XXXX. economics the on of impact our turn QX change from Spark net and in will cash in lower underlying without Important

as channel quarter, decision inventory. Second, to we outlined the last took draw down

distributors Paul In addition more benefits matches to that end closely the previously, with our sell-in to sellout to this our customers. also described

in While to supports overall notable resulting our supply sell-in, year-to-date. resulted approximately a in a revenue chain in million $XX Envista, it year-on-year this for $XX million QX reduction healthier of our both partners lower and and

North The we impact as channel down other came biggest brought some markets, inventory but also I'll in in America, shortly. explain

show additional these on will changes a in moment. X We of impact details the

the market inventory. digits. Europe mid-single digits be America Most for Spark change our dealer by can net our lower declined single high West the decline declined deferral and business North of accounted developed and Geographically,

declined in this driven double sales. market. digits, inventories business Our China channel mainly diagnostic We're by lowering weaker low also

of prior was Our margin adjusted XX.X%, XXX decrease third basis points versus year. a quarter gross

the lower margin X.X%, is EBITDA than quarter year. was adjusted for prior XX.X Our which percentage points

similar this to XX% versus and last diluted last year. compared free Free $XX up bridges cash of in margin third prior to of we our million, was adjusted provided QX And compared $XXX million quarter quarter. transparency have year. To flows finally, to quarter the the Our X delivered additional bring of flow year-to-date cash in EPS were $X.XX million quarter, $X.XX XXXX. QX $XX dynamics in to in revenue we

of revenue, accounted deferral look Specific a to for $XX year-over-year Spark change reduction. our each. take million approximately Let's the at sales net

to deferred expect of revenue recognize We next months. over XX the all this

only North of stable. nearly year-over-year which The sell-in. accounted result reduction. next sequential inventory to impact million QX channel was our XXXX meaningful QX, year, dealer was this from inventory note, $XX the of was revenues in America, to this realignment higher for Important QX of in sales on position From the

bridge have portfolio, from this for year of This note the pricing and and quarter. This is area of in on our of revenue of QX. brands seen focus good growth our continuous businesses is our by we underpinned this from of contributions strength item Another contribution Envista, innovation. to an our is leading and the the several the quality

margins as bridge for the driven year. margin inventory margin our Adjusted to EBITDA Spark dealer change realignment. XX.X relative well at QX. period as last look the percentage a by deferral reduction was same consumables the Half points declined of revenue take net now Let's

points of X.X continued accounted growth reduction investments nearly for Our margin year-over-year.

in the making several implants largest business, into businesses. portion went we investments of other premium our are While our smaller

our investments All of are portfolio. across these revitalizing aimed at growth

improve to a primary X value losses. continue have was headwind effects. FX more significantly, in we margin points example, which our we in nearly of investments our Most also impact as QX, America helped transaction from North For experienced growth. In our accelerate innovation, from pronounced implants result offerings XXX through of

points offsetting addition, we solid In delivered price gains net the headwind expansion these this year-over-year. was performance. headwinds, of Partially productivity a from X.X quarter compensation incentive and margin

year. segment the & versus Technologies segment Turning Specialty declined in Products Core prior now to revenue X.X% performance.

growing impact. quarter Without digits driven with to by Spark in effect, slowing orthodontic Spark this mid-single orthodontic take Consistent revenues share third deferral active the Our net saw digits. doctors broader but business with declined revenue double growth grew Spark case aligner digits. segment, low the continues double the

growth driver continues key for to Envista. a Spark be

Spark in declined as and price weaker business other by China Russia year countered wires versus and our growth growth We brackets and businesses. brackets positive in both markets. realized Our was in slightly wires prior demand and strong

versus quarters. past market in arch close, we value trend growth implants volumes have growth In as remain improving mid-single-digit flat in Full prior Single seen and over our Nobel. relative implant North demand remained resilient the gap though was America, helped weak, our continued mentioned Implant case an case several to treatments by business stable year. previously. to

in business Europe, Our was up was in China soft premium implant period. slightly the while

primarily to and quarter, and deferral impacts Technologies down In Specialty from of an decline our net addition X%, margin the points Spark was the percentage business adjusted XX.X FX. Products by driven in had to third investments year. growth our change relative This prior operating

Core by & decreased the Equipment versus Consumables quarter segment. our Moving X.X% sales prior to year. in

declined decline by North Our weakness mid-single outside This digits. was driven America. of Diagnostics business

for see experienced encouraged grew market, diagnostics diagnostics while to market share. that Both Europe remains weak. quarter, are and North declines and global our sharp strongest largest as the America, a third market China straight We increasing also

North digits single Our sellout grew America in low consumables in business quarter. the

mid-single digits positioned we continue and this fourth America, is Our business Russia. the Europe strong, North believe grew double in be quarter. in to distribution of relationships grow well and consumables Outside in digits to

segment partnerships in XXXX, Our sales versus margin XXX lower adjusted points for declined our volumes, FX operating and and continued coverage. this distribution basis QX by driven mainly investments the

we generated million In the ] free cash third over last [ flow $XX quarter, period the comparable to $XX of year. compared million

QX, repay prior turn in million back working allowed free $XX details bolstering flows to cash I us loan $XXX expenditures. million now performance, up covered were the of will the sheet. Having to and or management strong year-to-date capital our stronger Paul. our our million, flows of XX% balance U.S. year-to-date term lower QX dollar-denominated Our call over cash by further capital driven $XXX improved over The year,

Paul Keel

Thank you, Eric.

XX% core we're the and we charges at growth X% guidance As EBITDA outset, that reconfirming year margins, adjusted of full covered inclusive the to of onetime negative X% negative and noncash earlier. XX% mentioned to

to of QX. it up open wrap before I'll expect closing thoughts questions. up for couple a to your we in We growth return with

is now But coming normalized. of our but market are mixed is evidence 'XX sentiment of Consumer compelling an we customers. hear yet rates has turn First, and dental down positive in and post-COVID soft total, 'XX demand There market don't enough some are as the stable. overall Interest well. the signals. from surge largely

our Second, still expected, as our QX results below longer-term but potential. a solid start came in

thoughtfully the maybe and for this, prior place our building full year are importantly, the we we're systematically as blocks with on performance putting in and moving slides. consistent And Third, guidance, most improved fourth, forward. reaffirming outlined

deeper For to additions example, in our roles QX. QX our and in leadership we organization announced team senior in filled important important other

locations performance, our to are culture of key what system, call of we our foundation businesses. improvement. of redoubling X senior Every week, as held and continuous business We Kaizen last and colleagues. covering CEO more team commitment our a Envista the is as an than of We X which X priorities, XXX role active played inclusivity my well the member

North orthodontists stepping are of customers XXX more event in clinician China, welcoming more up improve circle in component centricity, XXX over front on customer clear lives doctors in to focus to India. than a first American being DSO remains Ormco the we with to than And values Envista's do. with and center our our everything engagement we Forum a to even professionals partnering aligner XXX event and further,

thanking the for support by we're customers, across And from my close encouraging XX,XXX strong shareholders. we I'll around progress enjoy same the last months. way, for the our made the grateful in world we've colleagues the partners and X also

And with for it up we'll your that, open questions.

Operator

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

Elizabeth Anderson

of for improving to execution? out about working gate, a see you other that the the in out guidance different in this to that delivering situation? kind those of nice Or you areas function Can this be first quarter markets cap the talk whether of seems last sort on improving? really like you of quarter parse some noted Great gate be cautious better of through helpful. Hello? improved If it's places you is pieces, of could first with outlined was that guys kind a where You than kind just of us quarter. would

Paul Keel

now, Can you hear Elizabeth? us

Elizabeth Anderson

Yes, hear you I now. can

Paul Keel

Okay.

that. for Sorry

thanking us as the for well as the you question missed You encouragement.

again. We So worth saying it's it. appreciate

above was to Let's regrettably, see, you do first respect contributor QX. remember about then in market don't guidance. performance asked take and our a Why X to I'll market, things. X? ask third. If the you asked expectations then I Eric the the And execution about With to it I not correctly,

As about growth and time to our know the that post-COVID the slower historical we still than sort a slow, slower run-up. than of remarks, all bit X% talked prepared market dental remains X% in we over quite

down Now couple very at to of evidence soon. unmet still People improve a an tangible coming there of course, forward. of patient and to just improvement is interest will that high. rates anytime moving imminent upturn then, signals may point enough are present, early there demand things expect isn't But or

are With respect X If good. resharpen was the years the spin our lost to context, say fundamental Envista, I'd building can beginning credibly broader from years we at consistent just of It's that pretty know first couple we to execution a of we Danaher, to been where say, all focus really execution, though, in think delivery. the some I we're core that past put things across on blocks the we following edge.

guidance more my closing comments, goes So trying And is systematically we're what as this execution. our in on. level, we across thoughtfully foundation, I a year, and EBS the talked improve up to about reinvesting shore at things to sustainable the growth like think list resetting relaunching

company. And Envista, the across first in demonstrated of my that couple good we've as how knows consistency deliver. to judgment, public a years with

on any building us guidance? at worked you consistent Eric, new So for same that that has on the we're very capabilities, thoughts do with really time have maybe, we're that, rhythm previously. focused that rebuilding And execution

Eric Hammes

Elizabeth, again, thanks you the Paul. for good Thanks, Yes. and to question. from hear

give I'll X then view and So comment I'll guidance, QX. I'll just on on color of my things. comment maybe on

So but say, consistent we would bar, we aim performance regarding I to level. to set achievable deliver motivating first at but off, also want guidance, a

of So strive our both. and a course, is for balance balance, strike to between

process depth additional in think today. reiterated I think of well. our has way good insight be better also We here that that step. we our and internally, capability a to good level forecast in good underlying providing on you provides I working also and our see guidance say QX, And just performance space. been that would to improve received We a guidance that to the the underlying reinstatement foresight. us I we then underlying core financial know looks a that understand as hope the what that helps Obviously, financial foresight our like margins. are growth all recent to the been also was credible we've

one, by areas back in would aligned We play we on quarter and globally of thought. Core the of And much with or Specific Nobel, say what points. Diagnostics to obviously, weakness. North we we've I Most of prepared like particularly of a better. QX, characterization was the been America, that comment, noted that encouraged the sellout sequential expectations it. of our of slow still pockets, several Paul's couple but we I consumables trend remarks. dental our America were the out seeing improvement. in ortho then market slightly think stable how is just North growth did see

Operationally, well we as well in QX. performed

that. think I X great and of generation flow price free cash were examples

step is rebuilding back Envista. of to So you on growth will, getting margins so net-net, value and absolute to good obviously reported QX do, we that our positive know creation, credibility. need the We getting was a something if improved

Elizabeth Anderson

Got it. just And maybe quick follow-up. a as

sort reductions that talked Maybe You of how in? opportunity would of one, of about guys you inventory dynamics, are and comes that If that Q-over-Q where of doing that helpful. through that. far improvement opportunity we you in on capital guys sort also inventory of be that sort is the and change working comment are like that could sort with the

Paul Keel

don't balance levels? how can in sheet our the inventory our of Why here then on general flow. terms Yes. and out normalizing that in I talk approach take specifically channel the cash Eric plays inventory about And sort of

added relic its taking the COVID. sharp So the kind of and channel a buffer supply demand and to inventory, while been inventory a of COVID piece, many parts the people work first post supply way down. uptick in In that's this is interruptions then chain, of

multiple markets. inventory, about it We that's as channel his out pointed But understood. and in American Eric I specifically think well North exists talked comments, in

contributing think market participants still and dental sheet? the market, inventory -- But dynamic, there's do have similar so is be of our balance to go. there's to still specifically the And that some buffer slower that in to some that talk you the rebound might a want Eric, normalize. to other We about that work

Eric Hammes

couple Yes, points. of just a

think $XX the Elizabeth, million year-over-year, So in the I cash ground our up things up maybe put million, flows remarks, year-to-date stake prepared just in a almost on X to of XX%. $XXX

I about strength net impact, just We that read to little a it's that's think as deferral think underlying Envista. the a I performance. sort as at value of point, just know of through think bit underlying the but starting challenging Spark of you our the sort shows guide helpful a creation

-- the most driven year, by year-over-year look say, at we capital capital capital there. working Last year at But direct our turns still would we This is this roughly sort Most we're inventory. we market, time, strong X.X. foundation. deliver improvement, and opportunity within ourselves of capital of question, as our CapEx of position a turns made so is groups about at X.X. been improvements in solid working that and have I capital To about We but to would peer year-over-year, see upwards good, we've were working at in compare that and disciplined current working say the to working your as performance I we that. flat

Operator

our next from Jeff question take We'll Johnson Baird. with

Jeffrey Johnson

as quarter. Spark $XX to Congratulations was $XX quarter. million wanted last the million on this the deferrals, well I on focus quarter,

like talked think, provisions there and quarter, quarter I the when last it Eric, no intra-quarter were I in last catch-up rate. you deferral sounded anyway,

quarter, million just of So quarter? were cases this number was I'd performed one? there any $XX start catch-up in that deferred I number was the guess Or provisions out with, this one, that

does understand. to rate deferral anniversary change per from think down And like so rate kind would XX% takes set to on maybe do case, little on it XQ? crystal obviously, and you XQ quarter, ball of Spark I which much how in did don't seems I a when math more two, how many I almost revenue don't and deferral of I XQ back have XX%, cases importantly, then then you're the even XX%, of you the Number but deferring just that X north I that, quarters a through. this think a

be deferral on would what So out to maybe is. those just the answer X the questions helpful hear

Eric Hammes

Jeff. Yes. Got it,

just on Spark solution. to with kind start So everybody level and the of overarching let the aligners just for me business, by an comment setting of this aligned be first is

So for things. note treatment well. We Spark solution. starters, this consists to a X know that Important complete you of sell as

of refinement, That's it will, your the of So and to refinements needed initial the recognize aligners portion in initial we initial on because of consists We on it's important. of aligners refinement question the if case. of if experience you It's that that it consists a the the will. shipment. important then the the recognize then revenue after portion you of a if come, shipment the shipment revenue

To question have the didn't your we first change. any of X,

went You change no change called it There in catch deferral to rate. QX. up. no timing as There we was our was our QX in from

your $XX we be away. about just than And similar will then on I So there. To We we in QX. about million no It so you QX. million confirm quarter, forward view, progression change had can to just to in call QX. $XX a lower be right that the it, by will had level, on told QX point dollar you QX. give a today,

why so in reason the makeup the quarter timing of main our of large the was is of the on The deferred sort revenue. third impact the because

related the was recognition. So of the initial about X/X QX to impact

X/X timing change was but about from major revenue. of deferred the no QX, So

the to we last when made we're the period the So deferred recognizing revenues over. that a also change change quarter, made we

And so QX why larger, call a in outsized it, such that's had year. impact we this of

as forward mean, you kind on of there. a can to your sheet math I your won't the deferred And from that I'll case own. sort view Hopefully, balance you rates, one do our We point let do and on of then that that based maybe helps on revenue. publicly. one disclose just just our

see all the strong think cash And months, of the of a We -- XX that for that just you I catch flows this in the then economics this itself the that none will the fact quarter. the important in on our in XXXX. of business. part this Again, in have portion up economics of really commented of impacts next

Jeffrey Johnson

and I'll going of great. happen, you one they I that, on follow-up as the refinements in think queue. ask Historically, matched, when can If later That's be down road. back all to get deferrals to we just said, then they're typically

So helpful, to by is while the on things refinement back and be it that revenue which income that. offset comes tends costs statement, like

this you a especially was X/X any more to when likely that that incremental back will flow kind a split refinements you're so through revenue to that, way matched X/X, deferred and it is to it it, million, said be say, $XX flow higher at margin? at when of the on Or normalized by there statement? comes Spark of you through income is the likely of let's described it Is out more So it costs on margin whatever point, is? in period

Eric Hammes

Great Jeff, follow-up, thanks. Yes.

going I portion is the down over -- back lower also through to similar seeing but as operating revenue profit gross of it significant dollars. way comes the So impact a margin that's the the be think XX year-over-year, think same about both next dollars and to revenue as the revenue drops That's we're months.

Operator

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

Erin Wilson Wright

Great.

So you've ago. X I at company, now guess, kind been months the of

easier landing guess, so And terms has how -- initial been or what's light what of are of should about you margins kind of think are necessary growth of guess I'm in with I I come to need and where into make some as trying head in to how see kind XXXX the anything at incremental here. And we traction starting of necessary investments investments. into to what we you're the is investments here XXXX? to terms to harder And get some address

Paul Keel

good a It's question. Erin. thanks, So

of X then that point short XXXX. I -- me it played been there answer forward and no, Let the surprises while. question market on The have ask I writ-large have any a minor and largely around or would as and say, as Eric looking been in the kind things is expected. answer first use part for a generally out a have first the few for months, with of adjustments, the

challenges. and knew we I think so opportunities the the And both

first was our structurally continue changed. to Specifically, thesis has will remains be in been, that's seen it's X Nothing always that suggested attractive and I've the market. months a

this suspected also EBS, portfolio, having and bought then the for businesses. been lived the through past first breathed that we true. they X quarters, the together, now Danaher good for Same System Danaher had the and they when outside, that's put through made From with Business these better

of we that's have is have. For to them a capability clearly But making keep very sure, better. that the nature continuous we improvement

So out. that's played

bit course, people discipline the my X that that years in are years. of in, speed. were a with as operating how the we the fill. would of really looking leadership eroded or past earlier touch the both been from that pleased knew we're remarks, over well I the I from of up folks focus some Coming knew those -- company suspected as then there a quickly had senior caliber good that consistent gaps with attracting lost I've that outside, I some had that to the first the may to And getting I have say,

focused that, been we're that has the with think we're transparent being on you I rebuilding and it. case,

operating we're your growth is rebuilding the in but also in that for of the question, second our the what imply our of rebuilding just reinvestment not things focus on longer-term rhythm, and developing EBS to Now one XXXX, talent. does relaunch

All those of those take energy, of and resources, investments. return are attention high all but

have to principally Nobel Eric will margin specifically get businesses than and get growth into over we've investing the pay match asking easy business additional million $X-ish itself. more to time if But more is to probably to mentioned, we we in that, the The to gets dollars businesses we that high growth, to that gross we been the but grow. accelerated. gross also. In You're math margin as it's back market market back had for X% X% that that generate putting a we're will to get about other quarter X%

before. So seen more Eric real. work make and favorably, And to this I often plays it movie out than it there's not, done have be but to

Erin Wilson Wright

about a on there just market that weakness right seeing China. you're strength XXXX? now, and thinking were of follow-up What you're And versus just into areas how heading quick

Paul Keel

to mean China, always and talk term. have I long near Yes. you

one that long think easier. quarter, is like us a well market. attractive it second having just presence fiscal remains big firmly a quarters, who of as as term, you the We're time see term convicted much players centuries [ in as frame China. long can't without very in The winning Global ]

So term long continuing we're aggressively and the to invest on there. focused

that BBP specific macroeconomic impacts all right high balance then then high is with Near volatility. volatility. the to China. term, know. volatility, There's now, I dental, And would what volatility geopolitical in have we we which

too the to far undeterred. We'll that tough will knowing But near bit be down will XXXX, term, in we're ahead, in I road little pay a investing continue off. Erin. it think market, turbulent. the So that see But still it

Operator

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

Jonathan Block

Great.

I where sort think to It's point to to is investors is another certainly focal of moving quarter growth, market the relative for which tomorrow. the you going implants be flat encouraging. narrowed gap

compelling the So then particular me? alluded the in maybe or are we implant just couple of those stood answering and a just pardon then a wind those exiting a I'll implant do geographies improvement, about In investments? Or follow-up. returns? cease think as ongoing how those XXXX? into any to that Paul, $X prior And XX the sort down questions, you million But see of question. ask out you do other for And turnaround words,

Paul Keel

All right.

market, In growing we. in Let starting the with that part continue me your market with have of we to line sequentially, X the Europe, take are there geographic question. and parts as perform the is

East has you has good inferred America in good markets, gap them. question, and your both China the markets quite and X we markets, us. Europe effect. read us been North bit America correctly in is both Volume bit. closing. up it as and Latin been in a market has down those bigger Outside bit, a harder of that a for gap are to meaning grows grow because and BBP for little of But the been priced net-net, favorable quite Our

of it all businesses continue Looking the -- invest profitably that right of half all investing implant portfolio. to the XXXX, can in to question, continue just in not the which business think of We growing forward we and in make to your happen. but to grow, second we have to in segments, our have we in good you intend

proves the if true investments. Now here, are those self-funding thesis investment

what category good made time. over and a an such interesting that's makes so has And Medtech investment such dental

secularly you keep can to category, to that can growing fueling and businesses it's If you growth. afford grow, get these a

that, the of players well-known our strong a done rebuild. exactly working to some Now it's market have in very and model that so we're

Jonathan Block

helpful. guess which I then improvement. just question, margin And Got it's a is theme, Very the second overall similar it.

I didn't anything growth. you've had about good realization, margin called I might I you mention out Spark, for or thought Eric hear but heard So improvement. some have price

positive Spark's there are to the can able in gross moving when margin? So think about might metrics to or point to to EBIT margin, be you Spark line any regards trend we

Paul Keel

the These schedule, confidence. you're And us an important. approach outgrew it's very I'm doctors, the And profitability. market. of think, had do me in I'm I improvement We continue predecessor cetera. This, et straight to double-digit following Spark. quarters equation, talked Eric, Yes, correct. wrong, asked about growth EDS gives side margin improvement We we the ordering and growth about that here. glad of of well, if that improvements executed you gross my are margin an manufacturing organized gross X correct

continued confidence in the margin we improvement good So of Spark. have

sometime operating positive. as it cross we we to said, expect XXXX, And over in margin into

Eric Hammes

I important. Jon, I'll is point another add think, just to that,

of would Paul business. We was volume on. to have Spark course, spot said in the love growth everything So

less walls more growth the rely design on our volume and Spark expect on, in end-to-end our and forecast business. and But margin have supply We internally process. manufacturing it, we of to efforts much volume four our the chain, importantly, the call improvement

If margin will of in we that can that of right? we but operator, be, be, to by us. course, a my in hugely that's can view, right we being beneficial, volume, as So improvement, in operations tighter get mentioned, have get front place the Paul great an as just

Operator

question We'll Cherny from take our Michael Leerink with Partners. next

Michael Cherny

can you I the calling if again to Maybe on the Nobel. out you've come focus investments back I made. with appreciate

investments level that you to this blank thinking with push are the beyond given forward, you're how are going came business here? the What and about think slate, of a of a you portfolio? you As right investments to you've teach how forward? the going pulls investments bit forward you the think what duration the from you returns had And of going those scale early scale Nobel about as not product or will the about

Paul Keel

about parallel. the things X in right We Thanks, think question. Michael. Yes. It's

growth, about hand go the So we about productivity think accelerating X we think glove. improving and and in

growth. that pay have of for part when these to and you Part of it your So of nature grow. comes from they productivity the comes from high-margin businesses

investments sort the growth to we we us generated them. where margin of forward, incremental rebalancing from gross as for was that dollars a So look restart exceeded the a year year this

almost of Eric point funded on net quarter, the fund earlier, continues helped waterfall those that accelerate, And which performance. operating be of to now X some fully from growth productivity, to expect as are As our showed our we investment. in we it getting investments the

Operator

We'll Kevin Caliendo with question take our from next UBS.

Kevin Caliendo

going is. to little these And your what thinking than I'm a I'm not your is bridge positive. -- items of they some of as might provide it be. about see to helpful XQ. these we can would be wondering for Really line for adjusted certainly optimal. the for I as for commentary had less baseline 'XX, to sort about at looking productivity that what you're talk what certainly generally how it appreciate of And but the about into you just know but based just guidance, sort was know that maybe just still a the deferral some maybe thinking going might maybe how and as how it's think to EBITDA a we us. really bit. just change things margin be just going enter better be XQ, imply in Net And XQ XQ, exactly of XXXX. they bridge to bridge on speaking, the how It's to as change into about you not in Spark The prices you and all how positive. will it in specifics, are XQ Can

Eric Hammes

the thanks Kevin, it. question. Got for

so there's quarter range. the yes, guidance So on right? is the all a and good So result only and and will, a do the guide X the use left, math quarter we you bad, third can if

I starters, is as feedback the we of would deferral. look and think for I say Spark material most probably what So forward, it's the

that we talked move we $XX million from about to that the And heavy just here in in similar about as a fall for to revenue as So a item move it chance remind use to bottom that line, as that which $XX XXXX year-over-year QX revenue group in QX. impact from Jeff's expect to has we revenue that's QX Spark, bridge, QX biggest the another fairly million single we from I'll do XXXX, we through it, the to question, comment, the QX call impact my QX.

I parts, major moving seasonality. Other think

typically So QX. a we quarter have revenue volume seasonally, in and absolute better

out within also called call that of other our, we bridge loss adjusted EBITDA We transaction on it, had a items, QX. larger

If you FX, estimate be way but to that have we more quarter. to fourth or let expect a know, muted me guess certainly in

go sideways, we're is about over have as turns about in investment we of we To from providing just future. comment obviously can thing that months, for be you not XXXX. the in biggest mindful prior largely to the Be to any we today XX how get going QX not Spark into the months. think impact as level question, not the to end quarter But talking XX fourth positive Paul's a of [indiscernible] And XXXX levels then estimate revenue the as we'll that it's that to talking consistent we're guidance investment prior of

Kevin Caliendo

Fair making. enough. ask now you've that little differently. a quick been if I you're asked Erin can a follow-up. it investments that there, And about, to about going ask I'm the

some maybe you you've portfolio, -- Is that your But products, could there. opportunities? portfolio invest there think were do you and looked that might product certain to want there do somewhere are rationalization? divest there's happy you've areas there think and product the at comments what anything lines, or Now been outside, with product Is that certain originally, your you SKU I around there there like now? you to acquire more that implants

Paul Keel

and this Short on it's the significant thing And X if walk happy the your you XX any years, I've it, though, and longer make clinical off tech you this me are to and short working on that portfolio needs moving category. good. always our I'll the forward, And portfolio. to always changes we has forward. if eyes company now one. learned matches. med long term. up We're one don't term, take take time always long, the And moving no we for is near-term longer intention and over coming answer medium Let term, it moving categories customers forest term have have. with forward. dynamic in the And a this that the too into for are Competition day is is math there's been

of So honing portfolio, refining lot and and we're into our we constantly put that. a energy

Operator

Brandon next [Operator question from Vasquez Instructions] Take our with Blair. William

Brandon Vazquez

the to understand working. what implant are talk bit bit help about just on of a Maybe to stick implants wanted and a little I us comparing things maybe little aren't a second organization investments on a the for specific starting significant today off? as investments And pay made have really right? I and follow-up to to what where well. it was implants what a year had are you ago, Like just

Paul Keel

the we impact and think are medium-term horizons, immediate I a return; follow investments those and X The see have are the which those from; middle most term. along that a already different Yes. third that in that tier, longer those then are time more group effect can of

group first The commercial investment. are

that near-term vacant America, category. North the in about, as refilling The is think, customer to lion's we year-to-date investment. is this So territories, the of connected talked been of events, market we cetera. in And share closing gap investments directly et have doing with the that

patient and that more is for clinical starting that. -- see run term nature, bit improvement education or to the in regard. middle a in different we events customer The of We're

years the the of is third implants developed of In a get a category, and Biocare, to in Stefan product remind for it can Europe. the years generate the we in also be couple new to the I'd then to people lead development. couple product comes selected He market. And the the industry. momentum gentleman that that largest built Nielsen, Nobel then DSO from

market. clinicians both implant customers a unique a and operators that's need, our And powerful very on multisite been understanding of from has what addition he solution. to so perspective an the And very

pleased so have to onboard. And we're Stefan

Brandon Vazquez

America as digits. Okay. in Great. said were that up, I implants value deck, mid-single I in well, then slide on believe, implants think it And North the

or and Just how that doing making segments closing implant well guys side commentary the so you value? as side if for the that gap value Just in curious X premium more North how any the you and is the comment between as is side on the are Nobel comments performing. the could on both is America, they're

Paul Keel

say I'd X Yes. things.

has First, of posted X growth. now quarters you heard correctly. consecutive Value

in to North preceding American to accelerated. below our model implants, third we'll works the continue able Secondly, several Both be that and economics closing market more grow, to and again, us market, that nice a that a smoothly. but which that. piece the to progress making than go the then has We're gap, this seen in encouraged more quarter-over-quarter growth North when row does funding specific questions. premium. back do generate by value That's Still business to of which And gives where couple confidence the return starts America quarters really now we've will of Nobel, though, segments both. of to of we're quickly grow growth it, in for

Operator

our And question we'll take Vik Chopra Fargo. from with next Wells

Vikramjeet Chopra

bouncing was Congrats I but around. this on has a asked, nice quarter. Apologies if already been

trajectory market, So visibility just about the you follow-up. pressured been your about talk U.S. how next dental which in the thinking X then move questions into And as of market clearly forward I me. you're for has into a One, year? the maybe had What's dental a recovery

Paul Keel

welcome for Thanks universe. question, to the Vik, the coverage and

asked, been range. this X% not that X%, time, over any dental X%, is My things. normalized pick a forward, growth X-year global call dental guess of been X dental years. grateful looking it's a for I'd say globally. still typically And market for following people in lot on has the question best for many we're Your grower period, One, of have it. so market

early dentistry, them the watch both. Now but People dental a couple of things, I can that normalize. don't know when of watch. that's can a you look give look fully that In mentioned date, don't remained taught will market the give people number a at indicators or them couple give patient I've clinical from been traffic. I you at early stable. people the general perspective. They a

they at in starts case look in course, they'll and get consultations implants. Of orthodontics,

are sort flattish, yet. up of not those of picking All

there's -- category, typically of then tried both ads additional other the important financed. also macro for And of course, clinic rates some are the sector, equipment to out the gets On because of to correlated. leads a long how and GDP other indicators. market had today. over the I figure are rate think interest I'm decent And X indicators. course, are this but because much There's interest in financed but participants macro calls consumer GDP then, how We are growth. print good a that generally, not smart, confidence

think I is. on that's encouraging. point confidence starting depends your what Consumer

modestly. it's starting is ticked point If up July, your

got to your starting still it go. pre-COVID, point ways If is a

Vikramjeet Chopra

result of is, a shortages? into seen impact question from saline as And impact seen then second move XQ? any recent any hurricanes? have procedures Have the My you you

Paul Keel

the Is Yes. right, Vik? hurricanes? From that

Vikramjeet Chopra

Yes, recent from the hurricanes.

Paul Keel

have damage a of hard. their say, had et I'd customers it's have lot A and closed. the to cetera. had of lot have them lot A and clinics their in we been equipment, So yes, Florida of them Southeast,

that folks to get the in whatever out live can world, goes we part them trying to the for So do who of our We're help to again. them. heart going

customers, has a it's been Southeast a as business. effect the material not the But Envista And global as side. we're difficult for on our

Operator

will no the I the this are Paul turn closing at any remarks. for time. program or to on further there additional Keel line And questions

Paul Keel

in. We time. appreciate everyone, the for Well, you taking tuning thanks, Okay.

our to mentioned we in that leading QX a with addition proven to And largely our the with our is of over think expected. I pleased fundamentally pretty would of time. as good prepared what be a segments what earnings market -- that, more we quarter in coming company the we're we best on comments, say Envista call, good positions some in are has in broadly, results as about talked in As

this, performance, culture flow, high good margins, and Company and on has sheet, have underpinning we balance good centered gross of all a inclusion continuous strong cash a improvement. positive

success in more are foundation. of better now building the So focus from generating and performance our core and consistent on this is blocks place,

this Now guidance was at direction credible more a in levels. reinstating first XXXX step

this And and say, did a what of in steps we we Now QX. evidence here consistently in hope of do there's that many more to is we QX. second

all the X work pace a last Now capabilities, that, encouraged momentum do improvement on have eager we this build by still having level to our of consistent in are forward. order months moving much said the at and are to we with to perform over but

I'll continued us week. day up. Have again, that, for a And support. and a and it today with great and joining help Thank thank good everyone wrap you. for So your

Operator

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

Envista (NVST) 30 Oct 242024 Q3 Earnings call transcript