NVST - Earnings call transcript Q4 2024

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Operator

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

James Gustafson

President Thanks Call. We afternoon. company. our me Keel, Chief for Eric Officer; interest joining Earnings XXXX With our Paul are Quarter Financial Fourth today Chief thank Hammes, our Executive and Envista's in Good and you Officer. your for

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

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

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

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

the Paul. turn call over will to I that, With

Paul Keel

afternoon, today's a welcome, We'll you thoughts taking in and steps guidance Good improve of on time us off and Jim. to I'll quarter our on everyone. with the for opening appreciate results, call. us the Thank performance to you, XXXX items today. summary we took join our kick five XXXX. fourth We cover some

to turn it detail. the with us over through I'll then Next, closing to we'll I'll questions. Eric open for in up remarks take things more it numbers and some up your wrap

operational our delivered in further with America, quarter turn. EBS. an our QX Slide each X three We core another XXXX has and results, continued We business, focus margin margin on summarizes of for for XXXX been and improvement around our areas of I'll improvements Results expectations. customer growth We X% supported things: like working gross in saw implants line XX%. in in again which in QX North capital touch EBITDA and and Spark performance outlook. us. share were including had and particular gains service a improvement by adjusted

the several the was stable. dental market but been has As for now soft past quarters, case the global

geographic specific remains macro in markets high. some We are and headwinds seeing volatility

XXXX, In and performance terms flow, Specific support transition came guidance prior delivered we on cash free we refreshed a EBITDA $XXX against million generated that, both year. X.X% XXXX And ranges. over XXXX their at team, XX% adjusted call. increase just year in for for in QX reinstated leadership growth core negative was of We to respective over within to and a numerous of our performance, actions improved XX.X% the took year of the full our us.

provide X% the visible to dental we're yet high something for of core and in across X% To and additional no changes XX% and metric With XXXX, X% XX%. per come guiding $X.XX adjusted similar between macro year, adding to which share. transparency, of a expect growth underlying in third this $X.XX growth we guidance in and margin we're market around margin EPS, XXXX, EBITDA approximately uncertainty, to

note. final Two to items

is of And second, $XXX completed to has gross generate restructuring of First, announced moving up share our our forward. savings million $XX roughly years. annualized we that next the authorized repurchases expected earlier recently over million Board to today, X

a priorities. is company, this While for And our an feel our this shortly, appropriate something as allocation Eric business. new addition is we is Envista highly explain will to cash-generative capital

with in In areas: we May, I sharpened our in growth, three you call and said my focus operations first people.

items our Three with Let on progress respect in you me that update growth. a to regard. give quick

growth took the the We're see benefit where across $XX invest incremental businesses of improving margin highest an Nobel First, in decision area QX. like second we we growth with continue year investment beginning and this Spark in to to accelerate to our Biocare. million make is returning to progress. the a Nobel to

we've and margin Excluding quarter-on-quarter impact digits gross double deferral, year. grew the across achieved the net from improvement in consecutive XXXX Spark

shared to half Spark we've As turn new second activity we driving platforms, DEXIS next-generation new on-demand, new profit sensors XXXX. third, positive increased the platform. expect in across we business operating are product having Envista, including previously, and And several this the CBCT of launched

is from that Business improvement entire our On continuous the to operational front, continued methodology across enjoy the System, we Envista to foundational progress contributions company. strong our

by customer in and consumables plants, Spark in in Some and without service scrap the and a double-digit XX%, setup improved our over kanbans overstock use Nobel or half productivity of cutting one unit levels. costs Biocare inventory through include double-digit reduction examples dynamic XXXX visibility driving of largest from gains impacting times

we're doing $XXX EBS, I the buyback share work mentioned earlier. leverage support Alongside million flows operating cash program to and supports strong that productivity and capture price the

we engagement refreshed senior leaders, development. made dental our meaningful operating world-class investments global respect experience. quickly by with to talent and in with people, three knowledge market Finally, onboarding team and deep all We

including host XXXX. in decrease contributions incidents progress recordable we We of a continued our feedback participation project, over of a employee and our priorities, made and Smile XX% in support And safety the surveys. on with $X people other record Envista foundation million philanthropic of

market touch our it down turn roughly QX I single growing was to and flat to implants well low consumables digits. relative market diagnostics digits, Before the in as dental with total, performance over Eric, and as ortho In the up, mid-single global flat slightly therein. on I'll

in implant participants Our implementation single industry business Nobel territory. and Challenger, for also sometime drawing grew low impacted market positive was China this down slowdown digits in year. in a both VBP growth sharp with as Orthodontics inventories preparation began by

aligner wires Excluding in double market Spark. digits, China, and grew continued resulting gains for business was our low brackets our and single business digits, up share

QX did our We markets, key business as experienced in China IOS again contracted growth in negative business. contracted including imaging sector as diagnostics The our several and well.

demand, we not While rates in we evidence yet our support increased to lower of compelling expect book. order are this diagnostics seeing interest

basis Finally, a in our was same. patient was quarter-on-quarter, the consumable slightly were roughly quarter. levels our service and inventories positive Channel sector sell-out the dental mostly the remained and flat general was performance but on traffic flat to stable high,

XXXX Eric summarized through Having and I'll guidance, turn XXXX to QX, now it details. us to the take over

Eric Hammes

impact impacted X%. XX sales we basis fourth Currency points. for of sales Paul. increased the of currency, rates quarter exchange Thanks, million. the the negatively by core in sales $XXX delivered year-over-year quarter, Adjusting In

& and segment segment declined Products Our Specialty slightly, Consumables increased Equipment year-on-year. & Technologies X.X%

net delivered across of strong another deferral change. from the positive growth our Paul Spark As portfolios growth, and we both implant excluding quarter of our impact delivered noted,

on channel In by business this our although growth posted in the was addition, when QX attack low the a our of partner. strong in cyber was consumables impacted XXXX quarter, comparable sell-in off our

are We also saw China, just diagnostics a orthodontics and reasons competitive our for significant both dynamics in in our business slowdown mentioned. challenging the where the in business, Paul

versus year, benefit. basis by transactional helped Our margin nearly gross prior foreign adjusted increase fourth of the XX.X%, quarter an exchange was a XXX points

in adjusted Our the the for prior points $X.XX margin was year. than XX.X%, last quarter down XXX $X.XX, Adjusted quarter compared was of fourth to which same quarter lower the EBITDA the was year. basis EPS

Finally, cash two break million XXXX. in in flow help and bridges $XXX of our million free the $XXX up a provided full total We cash year, down results. QX versus to free for we XX% year-over-year delivered flow in

Let's bridge. turn sales the first to

For in change change I'll net we year the a Spark a the high strengthening. approximately was the with year-over-year $X in of consistent for sell-in Consumables million a were million. dollar will $X deferral This million basis, call. up turn the more QX revenue, say into deferral was teens is which the provided about The quarter full mentioned. the of in guidance fourth the for exchange headwind headwind This rates revenue in XXXX, a On $XX tailwind accounted quarter. in moment. due to about earnings reasons a

in million the comparison estimated Our $XX impact from favorable year-over-year sales. is

from for impact offset consumables Excluding grew businesses in this This our sales our our flat the of resulted growth China. dental Spark, digits. declines net in businesses and business year-over-year. another and single remainder low growth Diagnostics quarter in includes The implant by impact,

of Turning efficiency to We decline drive XX our from areas from headwind an margins. XX the of the The XX to another a in in in commercialization, other earlier. adjusted a the coming our to and Biocare in in a several margin EBITDA core clinical the continue positive points. to gain was gross where inclusive points bridge. net dental Spark resulted consumables business QX investment impact the saw EBITDA of growth the point was of largest Nobel deferral capabilities had we basis quarters, basis net our productivity and as We quarter basis strengthen margin Investments Similar continued basis noted we of operations. portion change of in XXX benefit improvement R&D. in adjusted points

dental in also smart are R&D, sales and implants, Challenger coverage. like investments consumables We areas making commercialization

from in in low gain includes Lastly, year-over-year XXXX and payout compensation This point a currency basis incentive transaction a other comparable. we XXX EBITDA adjusted increase margins decline items. the against foreign had a

a revenue Specialty points In segment to Core business, orthodontics number declined XX in the Technologies in performance. Turning takes year-on-year. were Products puts basis segment quarter. the there and & of the

Spark the side, mid-single due and to however, positive were XX% On Wires, down quarter China as in the described, preparations. perform continued well. declined to Brackets Paul VBP as digits

orthodontic to We market continue couple for expect of the next quarters. be to slow the China

in up Europe. Implants both Excluding delivered digits quarter and improved growth. solid in North of performance brackets China, were the decline America and growth low with wires of another single

our for growth It's growth earlier, do Nobel for third but noting saw our in Spark margin almost of our addition down XX.X%, from straight driven Products and straight decline trajectory. in orthodontic XXX America. arch Challenger said encouraged fourth business basis marked an had consecutive investments fourth positive of of a quarter, more year-over-year. In as that the operating here, Paul the full was by the good deferral China business. quarter, what Technology to quarter improvement Still premium worth the decline signal category quarter points the & our This in Specialty Adding for North growth change we're also in net as well the implants by to to this the adjusted impact volumes.

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

a of for mentioned driver on main sales consumables this dental the the increase I business. As year our prior bridge, comparable was low

diagnostics quarters several China, high felt to declined of North geographies, after This continued low-cost macroeconomic driven markets. by sharp America experience declined developing competition three across was also Our digits straight declines. business mid-single single by digits. decline in particular, growth. and in conditions

teens grew the high year-on-year. consumables business in Our

declining our year-on-year, other Our strong, and with market. prior sell-out were flat Emerging markets especially with saw quarters the was overall but Russia, businesses, China relatively as sales. consistent

adjusted by investments operating higher partially mainly increased QX consumables transaction this basis XXXX, Our XXX gains, the and versus driven offset continued FX volumes in business. for points margin by segment

of flows $XXX QX as to were previously, comparable last cash cash $XXX the million mentioned period flow we generated strong year. million As compared over free

full Envista up The flows capital QX. were working driven lower well team Our nearly capital improved million year prior management over in free executed $XXX $XX by year, and million, cash expenditures.

rate. recently Across As our has an you tax GAAP flexibility. Envista of underlying we've tax million repatriating worked the GAAP at accrued many improve past good capital financial We on impacting executed of incremental balance know, our earnings to States rate United was and $XXX tax quarter, a deployment in obligation to sheet This and the over per the fourth share. excellent strength. cash international X quarters, low

priorities. a we three have reminder, As capital

meeting and in long-term First, gaining creation. we value organically, demand, that in drive innovation including aim business growing to share invest investing will our growing

help Second, us accretive M&A attractive returns our target product reach. that and on provide opportunities we to improve will and global capital continue risk-adjusted to portfolio

share authorized priorities of we XXXX. million aim the repurchases Directors return announced cash Third, between from up end to with first Board our Consistent this, will surplus today now these that of to $XXX two in to we shareholders. and

and to margins start XXXX guidance, of X% of X% As core Paul EBITDA $X.XX mentioned at EPS initiating approximately we're to XX% expecting growth, $X.XX. call, the the of adjusted

through go which better helpful we all in our guidance, you few of me assumptions Let our to the business are underlying a understand expectations. hope for

in our does assume significant guidance deterioration improvement market the not matter, dental First, for in that XXXX. or

assumes about to lands On rates The flat headwind clearly a XXXX, year to as EUR uncertainty with how represents USD Our FX situation guidance is X revenues. the ending X.XX. fluid dollar XXXX a stronger tariffs, U.S. year-on-year namely this X% situation with globally. to

be we dynamics. XXXX. have Canada, the Mexico China some that to bracket in us wire global anything China, greater China exposure, the chain that benefit quarter. there's and As XXXX the to supply included respond of anticipate saw have half with we tariffs anyone first in VBP from we just allows Until with and dynamics but orthodontics who the a on slow for related we implemented point operates not anticipate in clarity flexibly guidance. We Therefore, landscape, some our to in shifting to be in we in market tariff at sales balanced in past

the year-on-year quarter. with deferral recognized Spark change, about the be a expected second with we first of the amount in expect to benefit headwind the largest a quarter the half, in third deferral in modest as impact For the X/X net XXXX

U.S. investments be this of note, commercialization a offset from for will high working and XX% business. the tax by in long-term rate growth loan. restructuring forecast The intercompany tax be we're significant to XXXX. Please expect We at savings majority on rate the a to with relative our R&D is tax driving this annualized We recent on in aimed benefit partially to decrease rate benefit related deductibility XXXX. factor recognize and We our expense contributing in is it. the cap gross our to strategies high million effective $XX this main history, interest a of benefiting to

commensurate mentioned, to expect finally, next And X as in the the XXXX. impact a with we across buyback execute years

the we As slightly growth our we core totality guidance half year-over-year the look stronger growth XXXX in at second and down with anticipate assumptions, in half. first the of QX slower

Paul. With that, I'll turn the to call back over

Paul Keel

Thanks, Eric. a few thoughts your with I'll questions. wrap closing up open it we for before up

is we of time. mid-single-digit the evidence remains an not while the First, Put another secular same, market demand more strong attractiveness uptick currently typical yet this over growth do way, dental in of the of to see slow market range that is but stable.

margins full Second, and came Core quarter fourth in promised. as year our QX results ranges, and as guided. and within expected to the fell returned we in growth growth

XXXX margin. stable X% consistent and initiated to conditions, with trajectory and we EBITDA XXXX growth Third, X% our market around XX% guidance

program described XXXX economic coupled repatriation repurchase that we the than engine This, is share Fourth, this that cash generating consumed. Envista in we strong, announced with of more the Eric support work afternoon. the earlier,

the necessary putting we're forward. and in place importantly, building systematically continued improvement thoughtfully moving fifth blocks maybe and And most for

committed around the together. by grateful from appreciate with questions. support and it encouraged we world. for thanking the customers, making we're same And that, the your up open progress we XX,XXX and strong close and in we'll our partners our I'm way, by our I'll capable enjoy colleagues shareholders. And my the

Operator

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

Elizabeth Anderson

for details quarter, the the on for and the all guide around 'XX. Congrats thanks

of outperform of year? that as sort that risks of you rate us tell expectation bit in as initial we've little been about -- sort little think guidance with us line the where more came you to versus what about any indicating guide expecting. Your sort could and more the 'XX what of Can a run you've been we a bit of sort sort talk and

Paul Keel

Elizabeth. for the Thanks question, Sure.

the I'll growth do Let me for the recap to thing and maybe side, guidance, same for quickly I'll and the then the framework cover Eric the upsides on ask margins.

the framework remarks. prepared It in on straightforward. guide, for we things our the three pretty discussed that So same centers the

talked takes we XX% out for fairly across growth year. consistent underlying normalize First, That's and X% when various that the and in the top we've margins you about. puts EBITDA in the line saw 'XX,

expected fair conditions macro there market bit as the at uncertainty dental the XXXX. XXXX events And for thirdly, be reminded importantly, of have moment. similar broadly Second, recent us, then are a to to is

all margin of gets X% So that put XX% and to growth guide. to together, those three the you and you X%

Now terms in of upside that, would potential I in to note particular. three

to orthodontists are margins. have majority start a of treated we consistently and to strong You'd particularly with share vast cases taking Spark, that, that have by gross where the expanding ortho position. Add

in far making. is that been but have that momentum positive the like side. Implants doing we're year recognize is positive we the continued Spark We the the good the upside, feel a of the So that have one work turned QX. potential progress outcome we trend, and another growth investments having on and the from expected across we're point

So we like another we strong a where point I'd America. in leadership think have to our progress position, North there. And diagnostics. then particularly area third, It's I

course, for that needs dental market back. but of Every with XD, a Now been will pressure while come now, sector, and/or begins under a XD procedure has new diagnostic equipment. intraoral clinic scan. Every the

well. constructive market course, if currently as So expected, quicker of that than Envista would returns be for as that,

Eric, turn you thoughts side. maybe the for margin it over I'll on to

Eric Hammes

thanks the Yes, question. Elizabeth, it. forward-leaning Appreciate excellent. Paul. for Thanks,

profit and would things I margin. terms opportunity in So three say of for

rate. margins strong point our to call portfolio. with degree, First, every to about, profits diagnostics. for just of margin anything growth, volume, connected us Spark, here the Paul's do, is Everybody that talked the the upside And growth, helpful is I can would on back on grow -- growth we implants, relative got we've of across aware core a to course, gross Paul and on of comment price

possible one be would upside. growth So

would I be Second would profitability. Spark opportunity, overdelivery say, on

we progress about cost multiple talked We've we've made past gross quarters the largely multiple that improvement, good about I great by technology in of shown our think that against that global We've kind talked network many of we've quarters a margin here. foundation sequentially. down think I of really driven manufacturing of quarters for automation an And of cost. is opportunity. manufacturing the backdrop have the platform of

there be further Spark upside there if course, can will of that's have profitability out We us. XXXX. investments in our stepping for XXXX. in go for we capitally faster, But up our commitment We,

prepared I on in I that then think remarks restructuring. announced area on can we costs. We G&A. an embedded third focused think be the It's point would there's the there. around our guidance, but And out that G&A would It's mostly do we talked more

side, risk our on terms the risk It's On of recent interest in FX We It risk about off margin pause on FX, of guide. a points or macro rates, to maybe guide also all and and of points about hits our we're took seeing saw, what That's examples in consistent maybe in just the the strong with Paul's landscape comment outlook. again, again, as there. many did, our extending growth. strengthening QX. of basis just of X dollar It bit these tariffs, there's sort a rate. us with the in gives us XX some headwind but announcements political are

there, the question, for thanks I'll the Elizabeth. lean. kicked for us off So and forward Again, pause getting

Elizabeth Anderson

more that about wondering down detail go-to-market expectations It of sort implant was year. of business? helpful. for That's Yes. in areas in was investments, low a obviously strategy? whether little sort do business. growth the or can about single-digit How think the could development what you you that this drill that if to us sort And was incremental to bit the of on your super return product give I see maybe on really nice also the we

Paul Keel

the the premium we're So quarters of seeing We growth couple as sure. side. we talked of for business then Challenger. QX the I on in helpful like for regards. about positive and the both Challenger four in well Spark, growth a that's the implant guess that as Like successive momentum

growth. see we're putting changes the confidence But that second, bearing it fruit. gives you the us that investments like So in first, positive we're to and making are the

business. trickled in side. these the So had We're doing down of the in clinical than a to leadership approach into in change We're commercial our We course, activities game some putting go-to-market change the more Nobel. a way the innovation stepping on on just That up more North side. our money of things are America. our

'XX. those helped also of they All things but quarter, build the heading in momentum into here

Operator

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

Jonathan Block

when I one, size VBP. China the you heard in the thought I cadence XX% are I'm industry that I'll you a correctly, Eric, pre-VBP know, Maybe I with for as anything business? hit brave. somewhat don't drawing think China from million you And to wires more 'XX. maybe And the done the of that $XX was of brackets a sort voles the and be decline $XX and down? wires just to participants they're down to of million. 'XX on first brackets try drew perspective Where you're into around And beneficiary guessing

lot a So there, but I'll pause.

Eric Hammes

Yes.

good, Sounds Yes. Jon.

see depth heard VBP year-over-year and QX. repriced right. inventory, about channel somewhere kind or of as, about think the in and purchases, you for I we'll think sort our mentioned won't of the sitting of customers reduction a call continue view size of version normal we it, is that prepares, that a but that of get So prepared has in level But market their midyear. XXXX in XX% preparatory way of business. I We remarks the a with fact QX to QX it procedures in that China that the our about That's version a as slow so is to wires. addition perspective. to of saw the in QX, talk brackets to the in

out it how there, that's last we're VBP. years based the through in implant about basically can in first And the play we're China We saw we in it down So move thinking and business VBP over year up it next on hope will will the but modeling the it half. our Lots how be around. of second year. half we X net-net way think as brackets wires next that is about variables be comes

Jonathan Block

implant certainly than helpful. maybe your there. growth pivot we other certainly Congrats I'll portfolio market the close Paul, gap Very for question, quicker to Okay. seem to the thinking. And were

to step I a two what's growth touched take digits. embedded perspectives. around I think bit single don't this I back, embedded But for I to already think the implants, a XXXX upon mean show which Envista's think just what's the One, low in guidance? market you've gotten there. maybe you slides relative market? growth from for

So the the is it Or out more top to within same? the trying assumption just guide? of line figure what's

Paul Keel

Yes. specific I'd with be guide we I gets market. mean what specific and is to to lying if I said categories think that down going in that shares our market happen

Elizabeth's all speaking, leading does 'XX But We're patient the to that of in with, while a reasons the you're gain or course, we'll of all turn speaking, generally be our all relative in broadly to If expecting Jon, market, own order that the consumer rates, while familiar implant guide. But shoots more uptick quickly, market continue we for in just green our book. in in market in the think interest a upside that, levels, tangible change they're dramatic business of an and indicators we're the not implants seeing flows favorable, 'XX. I well not confidence, employment would that to us, addressed for be will the momentum the constructive call. that

market the conditions, XX% an that happens XX% in to guide. If upside. quicker, same that would So conditions, be

Operator

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

Unknown Analyst

] Cherny. for Mike [ Ahmed Muhammad is This on

it think it operating I and mentioned. in does First, when impact about you Spark margin profitability become how total to will XH, ask I want profitable

kind what's the like on immediately So of contribution in and term? also like the long then that

Eric Hammes

Yes. I mean Michael, for think question. I -- the thanks

disclosed think a previously, Spark about us. business for is million I $XXX we've

XX% about of sales. So it's

point you of gives points basis benefit So the Envista at there. XX improvement level. math the of easy Every is margin

probably So of that's think about to thumb, rule a way good it.

Unknown Analyst

driven you does diagnostics Is for market depressed? being Envista? And more Is getting is there visits the need numbers the innovation? like would but it by sort a Any I the it does bottom assume point know guidance helpful. better soft, said that for out? of driven it. by Got be color what

Paul Keel

softness? the Sorry, nut the Michael, was causing Or market you're what's asking the question? of what

Unknown Analyst

the do -- is because due I what need a more What of Envista, for does for Or diagnostics? of the more assume innovation? for more to out? weakness said -- weakness is bottom And visits? -- point sorry, kind to guide numbers is the it due

Eric Hammes

that. Yes, take I can

I was down in we being mean, down a reminder, digits. diagnostics XXXX talked our Fourth high mid- digits. high single quarter, about just So to as business it single

We expect say, the low of type Diagnostics clearly that's business flat better, And to growth. be factors. single-digit multiple to

XXXX. significant the as we've So improved And but in if we many has market you also from bit gone little the fourth had the we favorable quarter, don't expect a market that call the year. through the recovery on know will, then some of comps, participants

So of we to -- few exited a geographies was that help the profitability the business.

as a it to market Paul deliver this we're effectively that year. a rate growth then remarks his again, better Elizabeth's opened is next would trends hope versus But gets Some of a us the assuming we exited in modestly those XXXX. things bit in year. And to better help we flat how will little question,

Operator

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

Jeffrey Johnson

double slide I deck, down ex release deferred which think you But with above your Spark In the the press to deferred up clarifying that questions Spark, the about kind could. trying digits here. the of kind market, double headwind. of of couple I'm just On Spark the in relative I a here just market, guess revenue aligner if obviously. clear understand is digits revenue. Spark's on just I Eric, So market was performance and message to talked

that that's clear quarter? the you in growing to or X cases connect to pricing something two, points Just if broader that can think up were market? are e-mail X mid-single like those sounds out, relative your cases In was or one, performing dots Spark digits, you up ASPs do ballpark how confirm accuracy? sent you for I were just And aligner it mid-single Do digits. up the

Paul Keel

thanks. Jeff, Yes,

Let are there me your just lay out -- of in numbers a lot question.

and add lay over me just out turn color. to Eric then it I'll the Let to facts

double double and grew in And doctors revenues ex think Spark, and deferral The in you margin XXXX. That now correct. on now, also quarters gains. ordering of neutral said successive of digits many grew gain in neutral, share XXXX. number QX So market for digits think or QX both growth we was and I that's above-market

clarifies that is add to to more hopefully, you anything it. Eric, So there wanted that?

Eric Hammes

I maybe it, just Paul. another got leg you No, to Jeff, think that.

next go of for $XX million the X/X last XXXX, the guidance of about same the guidance months. Spark as number couple year. gave then accretive deferral in we sort headwind, So the this detail considerations, into giving or the assumptions turns XXXX we We've the of that's been

big So of change first second just there with little the around bit no a half. half, color

a First of little bit be half headwind. a will

half that in numbers the gets the Second same effectively to be tailwind, beginning. will mentioned a us and you

Jeffrey Johnson

Yes. connects. That Got all it.

And can you in Okay. years the other about a side. I just, you're one That's guess, through hasn't there? the you've share It anything so. brand. X.X you picked the up DEXIS then this year the last talk like really that product One, you or owned seems that that acquired in diagnostics chatter coming out picture Carestream iOS question asset there with Hearing a might that out little bigger helpful. internally developed have new much

that whether or on iOS participate Just not market? help better you thoughts in there this any might

Paul Keel

Yes.

questions in there a diagnostics. of So let's to specific couple see,

sensors, of new to First, There XD up CBCT new iOS lot launched a There platform. we -- the on new version and also functionality there you XD of the were year. have on introductions sensors, the introduced side. current was a additional last been we picked some diagnostics product

up and side. And on lot correct. innovation keep the a of a you're diagnostic picking you the to work The innovation up. of category, yes, market, in the lot got iOS is So chatter

additional So of that version we functionality, forward. moving be iOS will additional introducing

right, your Jeff. usual, per is GX So

Jeffrey Johnson

Anything is that current differ say yet? how that, you Or the to from Yes. you as Paul, as want care it can far on stream? might talk something don't about

Paul Keel

will of up. there IDS. shows We got Well, be a couple We Chicago coming up. dental got coming

So soon. we'll more be saying

Operator

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

Kevin Caliendo

shocking, some we're from is commentary, kind I think guidance guidance. very now that. so in the it's be to been -- that fact I I Analyst of want X job And with to been providing has be a say And month happy a you away or been I confirm Paul, there going you've consistent an wanted with think One, have surprises. haven't Day, don't and for to been I months. suspect your kind the long-term of lot but which investors to of

long-term we And that And what the plans Day when in there be not are about or terms have about feel comfortable specifics, or about like anything of worse about making long-term together you of at better this company? market? either any surprises think Analyst you two, the for but putting projections what should -- expecting sort how been -- you

Paul Keel

for Kevin. question, Thanks the

Let's see, there. had in two parts you

fact. X First, X in any surprises first expect today, months? the then should And the Markets from month Capital Day here in second, what you for

So no and been dental for to of you're in we X I first because it Both around and beliefs. months, the decades, have and right, surprises. major three Eric back principal came

is attractive First a market. it is that secularly

that chain aside favorable of have the market growth drivers of the year crisis, economics. long-term the and all -- X And value grows. maybe the always All global from after this financial post COVID of, aware much or levels we're pretty

them number the one. Point portfolio pieces position, of two reason jumped a market all great a one and it's third number of the to market was point is better, of which made So is opportunity. good businesses. has the of can Envista be good we Every

that's continuous moving performance see people could improved day, to where here turn and embedded at You look into really the improvement culture every at want and can you you mindset forward. that Envista better each just how get the potential

a So interested you're folks good We speak four this of guys things. that who in us told to you CMD. are to backdrop, fortune on as had with lot call. And that next the month's a us to brings

that. together put responds that directly to agenda an just we So

what's First kind want your in with So that? our of on creation that. here. to question, is thought does know how embedded people start do you value I'll it how -- And long-term operationalize

they'd two Secondly, deeper like ortho. investors told and a implants into dive businesses, our us biggest

question, So the then we medium-term targets. you'll hear market reinstated that from owe in Stefan on your front. And and embedded third, from Veronica also

plan, So course, Eric team. including will the broader financial to you agenda on the the some Xth item, wrapper like of fourth exposure management March medium-term guidance. The with up is guys finish to the would

also newer Envista, group our have both we'll colleagues. to folks longer-standing some are who So but of full there, the

plan. our that's So

make a release New York sent until we March Stock Exchange guys can press hope today, out noon Xth, it. we X on and you all

Kevin Caliendo

that. appreciate I

you seeing Looking there. forward to

Paul Keel

fun. be Yes. It should

Operator

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

Erin Wilson Wright

on some So in terms the in there trends. quarter think, sell-out versus were side, consumables the I and equipment pieces, moving of sell-in

progression we year? think across right of some about of I balance what are of year-to-date? that segment sort quarterly for think you And that's of the now that the a just how kind But of sort from perspective. do seeing comp

Eric Hammes

Yes. Yes, perfect.

talk your I'll if point a question. margins growth So in about embedded I'll just bit that's on the and little piece, hit the then

pretty been we've we've think I many last through So as transparent quarters. the gone

the distribution, make consumables Nothing So we there move through is the to dramatically the business as the here maybe to quarters. to channel. changed point in really relative first relative

quarter management our had lean So that to inventory say, levels, And lean performance, see very would overall third service positive delivery from I fourth our second levels. even strong quarter capital working we with consistent relatively is quarter, because inventory we've to distributed partners. performance with as

drove sell-out So in the portion and of line about good show we being $XX with of consumables line been which move we as number revenue consumables cyberattack the to the due million. distribution in It's see to within with It last it's had digits, dental E&C then, in primarily where one. Most single on low Underlying, the that business. channel. year's about bridge, flat quarters, that's a the last our revenue is and market. talking roughly we're that the several point we

from we comes mentioned were on A basis the So margins, kind year-over-year. the of volume We I a just points XXX number lot up year-over-year margins, also basis. were the point about that then of up that's on sequentially. that two. And

a We transaction pretty also significant gain. had

strengthened, dollar that as partially our exchange, was by the us So net provided and comp. incentive offset in monetary gain basically a assets the

further So pause if any let into. see dig and questions there to me there's

Erin Wilson Wright

Yes.

Can and yourself relates tariffs anything it your do to front? So about positioning as little on a better anything as terms that to quantify of position able well to you proactively of kind or that exposure bit, been in can you was too, talk really you helpful. potential offsets? have And

Paul Keel

say Maybe the with situation. obvious. things, side. is start We'll tariff It Aaron, three fluid Yes. on the a I'd pretty

as XX Canada the days, I things the our mentioned and and XXXX China relatively guess, small. That, the how on currently With we that and guide. play the to change at the today, Eric me that place until the any to might pieces it's hold second as piece of impact to course, I and in greater only out any there's don't Mexico remarks, thought, his in prepared brings include is impacts is front, clarity which want for stability that in just of one time. on to from could Envista tariff underline tariff-related

third, maybe we business, think the uncertainties, we're we're what included, most are respond a and by shifting so various to exposed your was, I global nut well then to of importantly, fairly definition, And while question any also positioned to tariffs landscapes.

supply. manufacture. And region of the architected long our region then country sources customers or with same local-for-local we country our we a we've local to serve or So from we aim mindset, in in where particular to meaning a try chains materials source supply

largest multiple manufacturing all supply product categories, continents. our on our of all chains have big So of

in make countries. make Spark For We and in et Czech countries, We in cetera. Republic implants in three example, different China. we different make in three Mexico, consumables

nimble the that think just to -- comes something That uncertainty able what we're the the I well. we're and that's while So moving good and that news to is high, pretty And executing with bad down good urgency is fairly at. to shifts. respond news is

Operator

We'll from Bank Allen take America. question with our Lutz next of

Unknown Analyst

couple Alan I had for This is at here. Dev BofA. on a Lotz

multiple Just margin on quarters expansion Spark, of there.

quite to guys quantify I'm trying just I have bit. think you discussed thoroughly. that that a

the the the unit way great. love Is that framing that of help year-over-year declines expansion, margin double-digit cadence costs of mentioned whether be Would the or you've in that think margin about would trying kind to to of there? right think quarter. improvement quarterly, pace the last in I some gross

Paul Keel

-- And So on in should we testing asking, a Now probably move technology the continued as Spark? unit Spark. strategy. plan But about not market that. improvement organized a some quarter driven model cost returns by you're math. on I improvement for curve. you're there's manufacturing double-digit previous would our you down there is my talked has has very think diminishing that cost should think No, date unit reduction I It on driven certainly been to an we but as every been improvement by help, you calls,

design have same lines across three the the the sites. of All

the and design where innovation plants. have we We a in roll plant then California it across the we out across lines, the pilot

also And similar equipment, leads lines, predictable sites. so but for to not to question. the in that similar flexibility all only filings was it leads similar that that improvement, Aaron's regulatory

moving require we're things if forward, positioned that. So response relatively do a here well to

Unknown Analyst

then And here the just That's cleanup question on inventory helpful. one dealer reduction.

of in that move year a that, $XX as considered maybe with sell-out million Or I we of in as a reversal forward? think $XX maybe XQ. that's or a moving million I'm there onetime in in is tailwind think should we just just in line 'XX? as Is consumables more growth out, that 'XX? was headwind figure it headwind XQ, portion full a to trying

Eric Hammes

Yes.

right the point. is the So latter really

weeks inventory inventory So of months the healthy channel the since in healthy. and the as see sideways. -- we QX, effectively inventory, we've distribution been We see as of moved partners our at that the

in no in we weeks to QX your So hand QX. And point, change and overall much be on in that into then that XXXX. in like or line very inventory would consistent dollars to similar, to

So we no, XXXX. deal no major comp when will, to with, real get you issues into if

Operator

Valiquette our take from Securities. We'll Mizuho with next question Steven

Steven Valiquette

with but margin a yet. just reported guidance the here, the of if XQ result. anybody year I'm 'XX essentially with for the So coming XX% the to wondering XXXX line margin of the I full EBITDA simultaneously guess touched on calls for EBITDA in listened I cadence couple in,

of get a expand sort this Just range step re-ramp? then that that quarterly curious you a whether will in tight down that does color be throughout EBITDA more it can to on want margin Just that, on further. Or year?

Eric Hammes

comments questions is talked remarks, and Yes. growth the specifically opening Great a bit couple -- half. question. of core lower did margin What in And in do talked cover we about we the we expect and cadence. a our slightly haven't we in about first prepared

half. We growth better core expect second slightly the in

lot saw bracket which we and is of our of purchases China fourth effectively has impact and VBP the overall on see in the us, we half. that progression an of was first out that rate. enough slower in based playing in wire market, growth Envista that, sizable For a how quarter, on what business is China And a overall QX version in slower and the

is tailwind deferral something So in next slower headwind a core half. the little we back Spark growth that second year a first bit the also half. better as second half, get

that half of talk on slightly margin, half we in in say specific And half because about guide. gross slightly have as won't the average just your the margin quarter we But second healthy margins question I margins will and the would have, first or then lower than the well. better to we

think the out it way play to easiest I for that's now.

Operator

We'll Blair. take William with our next question Brandon Vazquez from

Brandon Vazquez

to wanted I implants. start dental on

as Nobel improvements, but side, an year-over-year have guys that this at kind interesting seeing arch of factor a that made is had couple bit of you this of of encouraging. there. is bit Or of little seeing there on look nice a guys had kind improvements, been little hard I'm be you might that You quarters Or a exercise, good end here comment actually parse are maybe your you easier? had have really simply in growth in -- commercial cases curious the actually might if to improvements? a of suggested comps me a You full know especially which I can out, are are you improvement macro markets?

parse Nobel be curious going improvements could a those give I'm understanding how can just out into to 'XX. So of the if of durable better any you

Paul Keel

Yes.

drill can Let I me into down if see that.

So maybe things. three

QX premium and in in Challenger, improvement a improvement both marked turning see continued both First, see we across the America did the business but to underlying North our positive for market, we globally. don't in and of year,

improvement, without are improvement driving and them, investments the we're business, doing, that forward. in making think So the that and the market, work we're but in moving we're that our across we confident will think continue improvement do we

portfolio. focus that we're is side say would of I the thing strength we second implant but across Nobel, seeing good a The that lot entire understandably on

businesses, digital also and very regenerative prosthetics Our were was up XXXX, business well. Prostera nicely solutions doing and our in both -- our

So across portfolio. that progression good pretty

Now better this levels moving of a we're implants, the we course, tide for return doing advantage strengthening us. positioned into to pre-COVID of work of faster will benefit do take be all XXXX, to if business, will get that rising in The it.

Brandon Vazquez

what helpful. Great. are operating back just bridge in profitability you where us today That's the Spark to a get side, little can to And on contributors bit the the half of on you main from XXXX? are to

Paul Keel

to is Yes. those in our within that our the I mean our return to manufacturing half mostly in base plan, what second guide profitability we is stand control. It behind I improvements mentioned.

a We one organized, manufacturing we those have roll consistent in and by steps, just way. of automation out pipeline steps, a one lean whole very

course. cost. the clear price market we can bit That's And so our accelerate, only it little additional to getting and additional unit well, as we business, of gains help. our on that share the only been adds in that recovers top volume, that of predictable have help. that, quickly, more aligner a main if improvements driver the of value, of have If And can it. On

So hear a job a pointed business. great And lot of think different vectors our the doing in positive enthusiasm The you direction. team for that a in I there. is just

Operator

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

Vikramjeet Chopra

your what And for you a about Just then guidance, you me. the one, can talk I versus end two gets that low to question, first follow-up the end had guess maybe the please. guidance? line of high top on on I

Paul Keel

to our a we low And in that would think goes it those guide could three, that us I about ways versus base before. end? gets lot the what's about, of the the as we What Vik. guide. the talked end better to revenue upsides go point I back Spark, same high of than to talked

think, don't but a pressure, talked has And in talk third, second then been category about we we the previous come under Our embedded because implants was back. a the position it. we lot about strong category, that question. And has that guess diagnostics was the I in thing we have to

diagnostic operate can't dental clinic without a You equipment.

dental a some type start can't without step. You procedure diagnostic of

breaking end version that get right you the the of to those some higher way So would of range.

Vikramjeet Chopra

Great. sales DSOs? just a question. That's my What they're capital helpful. And about the talking from as to and your environment. you segue hearing then talk there equipment are Maybe practices into forces out good follow-up dental dental

Paul Keel

I that. capital Is question to DSOs. equipment think the is sales

Vikramjeet Chopra

folks? Yes. your sales are you you Just environment. field? in What high-level from What on maybe commentary the equipment are the seeing capital hearing

Paul Keel

take just it. let of So me two parts

these we what biggest DSO Aspens, getting well. many hearing is are [ And of that. they say we hearing are strong think, DSOs several sites I doing world, are have from the me equipments. the and well-run The pretty and in categories. the Heartlands, stronger ] the The market, then are capital players, MBXs Let in companies. often they're about The what

the is So at they the population can levels of suppliers that relatively serve really need them small.

You coverage. need across product, And to can coverage, have consistent good multiple national do force if a helpful. categories, it dental sales you that's

big are opportunity for DSOs think us. we So a

diagnostic With side. equipment, capital on consistent it's we with the respect had to the commentary

it need clinic, DSO, need be You financed expand but to it a category. you to a happens it open to a

sensitive interest it's So to rates.

were helpful, fall. COVID That's from cuts been, pre-COVID. where there's are since they several during interest basis but rate Now the three still and rates interest what, hundred up points

a sharp to market. be going in equipment there I money out need there's we inflection still to see diagnostic think So cheaper the before

think With the are time. up I we that, against

all about of reminding participating we couple and close thoughts, with wrap for So of you the us. just and we why for I'm in a here going high-level up are everyone of things to see opportunity so questions. Maybe I'll your thank excited front

First, is at attractive highest dental level, fundamentally category. the a

talked and over for economics. structural about time high the gross drivers we've pretty attractive margins opportunity of long-term and the All the

leadership a best of in Envista is categories very company, attractive dental the positions in Second, that great some market.

on you And having me and we're here committed building across months, that that have on you're the culture been turn of to now capabilities know it's to elements in momentum to that the XXXX. Board Hopefully, both for clear performance. we then improved to XXXX, seeing X third, potential and I want that into

at it next Thank join us Day, week. we'll on month guys and you. great wish everybody Capital the that, a Hope a With the day up. can Xth Markets you good wrap and

Operator

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

Envista (NVST) 5 Feb 252024 Q4 Earnings call transcript