Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to ZimVie’s Second Quarter 2023 Earnings Conference Call. Currently, all participants are in listen-only mode.

We will be facilitating a question-and-answer session towards the end of today’s call.

As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Marissa Bych by Gilmartin Group for introductory disclosures.

Marissa Bych

joining for all you today’s call. Thank ZimVie June XX, today, released financial ended quarter the for XXXX. results Earlier A copy of company’s the press release is as as website, available well on sec.gov. zimvie.com, on the

filings that I’d recent due to this begin, that statements. from differ forward-looking SEC and variety results include Please refer make the those we Before SEC most indicated call remind of you by and comments management like company’s the during with risks may uncertainties. materially Actual will forward-looking uncertainties. a of periodic a discussion filed to the reports and detailed these for subsequent to risks statements

addition, these are the Relations earnings In website. certain of measures include to deck will release and/or the company’s included within the comparable this today Investor discussion measures the the investor found most on call financial section Reconciliations non-GAAP financial issued the measures. directly of on GAAP

and otherwise. today, disclaims of contains any as information, is events, financial or time-sensitive only conference revise or intention projections law, any X, This August required to obligation, except update or forward-looking of whether information new call because by accurate future statements, as broadcast XXXX. or live the ZimVie

Officer Vafa With Jamali, turn over the Chief Executive that, I call of President will to ZimVie. and

Vafa Jamali

and our to we of afternoon innovation steps commercial In continued you and against deliberate us. thank most profile. quarter, Good improve objectives vital all while to second progress the joining for our drive steady operating execution, taking

best long-term reshape critical market the into portfolio potential. further innovation as and the most platform we work Our continues our to actively to imperative our be with growth lean

continue and Abutment. launched solutions, quarter and Encode TSX to including we our Healing traction build this second recently PRO in dental Emergence with Implants, the TX our On the note,

in into European markets We have TSX reach the market. Encode TX Emergence well expansion launch additions been of expanding these the the PRO to of and Asia-Pacific as the the the region, of This portfolio globe. around includes as premium actively

Particulate Bone We also bone with Plug. RegenerOss and solutions, products of continue CC the X the to addition Graft rollout new new Allograft graft RegenerOss

the X we and the these launch, at comprehensive of offerings. dental graft shared broaden As presence time solutions the in biomaterials suite market expand ZimVie’s of our bone

having new the and this we existing the team believe is DSO customers of engaging the adoption new-to-market success on launches, and cadence outpacing heels of in partners products sales are that growth of pace of overall market. our Our and

to Turning areas our of other dental progress in portfolio.

a April, prospective dental feedback in Dental we in at far. As we announced receiving we Gardens and a at have and educational training the on facility. we It’s opened great science been institute Beach hosting month, now the pleasure have posted thus great current been state-of-the-art our recent Palm institute and customers training have dental

dental above In X,XXX in clinicians our at core going areas a XX clinicians market courses I in ability year ultimately we As XXXX. in product of our different in perform XXX weeks pleased to with remain position over many and hosted hosting confident our or forward. today, We am span in opening. with of roughly events anticipate this and over hosting since XX short additional summary,

our spine to Turning business.

XX spine been We international growth markets. was clinical truly months, our success importance differentiated showcasing with are our rewarded the evidence spine of incremental for for Mobi-C’s accelerant also clinical portfolio growth the was portfolio noteworthy dossier and of success Mobi-C. An driving in evidence within here. in O-U.S. I’ve the past

for an replacements. the panel, historically have underpenetrated drive and government cervical rating These Mobi-C as the strong early European British the disc helped developments been particularly in quarter. received region under-adopted second relevant performance, which ODEP, French from highest and quality reimbursement is clinical Europe’s

differentiated non-fusion commercial in in spine to on both announce idiopathic to our we’re for Tether, that and countries treatment device excited efforts expand also Building are Asia-Pacific. spinal continuing our the Europe our key U.S., we the scoliosis for presence of outside in The

Brainlab our partnership. advancing we’re Finally,

in the ZimVie portfolio deepest and global our planning, of solutions. with a provide March, of level integration As technologies patients a industry-leading we products development reminder, announced spine Brainlab’s and agreement Brainlab between and spine-enabling imaging, navigation, customers robotic-assisted for to

and Today, to in while and continue between to our spinal work radiation achieving compatibility reducing we on operating navigation exposure. us enhance and spine workflow room X-rays systems, and trauma intraoperative implant accuracy Brainlab’s allowing the

look some now you. successes are deliberately customer customer coming at forward collaborating We I sharing in the quarters level, much with more and to

and markets around will we and optimize forward, we’re engage customers, in existing our to to solutions ultimately, position continue positioned our our where with innovate on Looking key surgeon win.

improvement. cloud-based continued we servers from platforms. TSAs excited transition announce Biomet. separation and applications XXX with to Zimmer the we related operational parent, our core to parent, XXX over over former to modern now Turning to largely all the our IT these to refreshed have datacenters that our systems, In I’m completed and moving transitioning agreements

conversion finalizing last We Barcelona this fall. also in finalize our conversions with to ERP the are set

In our addition, receivables, reductions and overhead. physical made we’ve footprint, meaningful to corporate

inventory plan at have optimizing work laid are These guidance. time of are the in the included we actions to do manufacturing surrounding out accordance output. and We in financial levels more XXXX spin optimizing our and with the

to over outline turn to Rich now our performance. I’ll the call financial

Rich Heppenstall

results million, reviewing second outlook third-party decrease and and of net $XXX.X Total our the begin of afternoon, on good second were for by constant a of close for quarter a basis X.X% updated quarter everyone. we’ll decrease XXXX. full-year currency. by a X.X% XXXX providing and Vafa, reported XXXX sales Thanks, in our I’ll the

second million in net constant currency points reported of and sales period. to growth dental’s $XXX.X in on the when basis prior-year compared to Moving our both key Global XX segments. the quarter, representing third-party were

was relatively in dental well and acceptance for position soft the execution implants a us quarter, second continued the new longer-term. whole market commercial our Although, of as solid the market the very

see QX to continue versus offerings, digital which the high-single-digits we our grew period. in Additionally, prior-year strength in

by strength weaker slightly by X.X%, declined the in U.S., digital slightly of of increased $XX.X sales dental third-party our million of currency, $XX.X Outside across million particular, solutions driven TSX of biomaterials, sales. of are by In dental market and driven by launches. Implant a strong X.X% acceptance and product in U.S., our net on we In X a see implants, growth by reported sales digital. PRO the TX offset pleased market, families: and to third-party basis net implant constant all X.X% our

procurement, quarter net our market X.X% decision period. Zimmer the attributed compared Second by $XXX.X were a driven previously when The of to million, were a basis, prior-year global volume-based decrease by currency sales that China exit and on was a to spine to in and in third-party reported constant sales spine X.X% decrease primarily competition continued offset Biomet. decrease following

by As Tether with in core to the performance we balance our pleased Vafa intimated, are our portfolio Mobi-C led of spine Europe. growth and relative

Tether. In improvement by spine of partially XX and ZimVie the by in million is by of Mobi-C grew net in China $XX.X Zimmer is our points impact Biomet a are X% by basis and but now third-party of million sales. $X.X constant sales sales decreased be prior pressure by decreased of sales the The currency. estimated year spine third-party offset previously $XX.X driven million U.S., decision relative versus $X.X by X.X% net offset U.S., on core spine, a in Outside recognized basis, reported competitive million, to that to of exit

reflects of prior when million margin million QX in basis XXX increase XX.X% year of in gross period. from gross profit segment to adjusted quarter The a inventory resulting to XX.X% margin of partially to mix. prior $XXX.X Adjusted gross of compared charges versus our the in operational sold products of our dental in reduction XXXX. compared product an $XXX.X year Second points increase further higher spine our is cost manage segment inventory by better in driven of initiatives to by due offset

$XX.X of development third-party of expense as sales. million research net X.X% percentage and was Adjusted a

education-related XXX of Second expenses quarter due sales general sales, period. infrastructure differences newly XXXX than basis newly as was higher last million lower net prior-year was medical XX.X% we time the our or year, selling, company. this This a and were and company, expense still points marketing- independent increase and $XXX.X that structure. corporate higher adjusted Note to and expenses, net our third-party of building ZimVie in a spun was year-over-year administrative

average sales Adjusted earnings XXXX basis prior-year and period. net from and offset discussed, is second quarter administrative primarily higher XX lower selling, The share decline per of points quarter the reflects weighted count a million costs EBITDA was to decrease in modest XX.X Adjusted second share due EBITDA million as of net $XX.X previously third-party of XX.X% in a margin. diluted was general, higher sales XX.X% fully the or margin gross of in $X.XX on the shares. in adjusted by

on assets our of financial on we on our to to the capital, capitalize and on and In sheet progress working strength Touching our QX, the of continued liquidity, new initiatives balance disciplined framework. application debt. make

more the first much in do gross in December to have XXXX. seen half year manifested have the these but $X.X that have reduced we charges margin, of a net We higher themselves in in and by inventory million areas, since inventory-related have reduction

and QX. sheet spending ended well-funded equivalents, with to year-over-year. by cash flat to capital balance on We $XX.X $X.X assets In roughly of reduce our addition, us allowed have million million the further quarter second

a reminder, revolver As credit $XXX million remains undrawn. our facility

revised our XXXX to outlook. turn now full-year I’ll

of sales revising $XXX we We XXXX subsequently outlook. are our $XXX to financial and range from XXXX to are Starting million. are our progress with we pleased million to in full-year full-year $XXX our the up previous million our be $XXX revising of making net range guidance are with revenue, million, expected

our at Looking segments.

spine dental to impact high-single-digits [X in of our versus We decline exit relative sales to flat approximate inclusive continue XXXX, XXXX low-double-digits or an to to to point] in China expect low-single-digits decision negative the the sales [ph] percentage expect XXXX to net be the grow market. XXXX. from to now We net

months periods. expecting our additional expectations, seasonality during pronounced historical To some we are third transparency impact the more into versus a revenue summer quarter from provide

dental As net lower quarter, down historical of second low-double-digits roughly in be today, third we our versus with sequentially year-over-year, the seasonality. sales this quarter reflecting to flat expect

EBITDA to Moving adjusted margin.

in guided. margin same XX% EBITDA net sales, the of adjusted previously the XX.X% be full-year expect We of to range to as

continue our performance, opportunities we’ll and year-to-date execute optimize balance to are We pleased sheet. income with and our financial on and uncover to statement XXXX

of guidance $X.XX XX.X count expectations performance, EBITDA down revenue, range share per as and top seasonality QX, just commensurate Consistent million end share QX earnings the $X.XX our revenue and diluted we year-to-date the share. fully of on per of of range raising increasing per earnings expect bottom revising we sequentially $X.XX guidance shares, per per to a to share margins adjusted For on our to previous impact versus share our $X.XX with our are be with and mentioned. of share QX,

I’ll to turn With Vafa. that, now back the over call

Vafa Jamali

our pleased our to streamlining as in progress I’m with Rich. on XXXX date, as execution you, objectives. Thank well

durable to portfolio underserved business we ahead additional our to patients. Although, and I’m presence great the our have work confident ultimately the assets bring in which of markets, our growth, in return to strength value in end

efficiency and year and As our that back we our of evolve the this we half commercially, continue in results execute look showcasing teams, product deliver improve of the platforms, forward the will to the work beyond. to

will we that, With up to open it questions.

Operator

you. Thank

now Today’s question We the Marcus will of line session. Please [Operator Robert instructions] from first question-and-answer from conduct JPMorgan. comes the proceed.

Robert Marcus

congrats the a Great. and Thanks questions, taking quarter. for nice on

Vafa Jamali

Robert. Hi,

Robert Marcus

start, it outside was the in the outside which the line. to my and spine mean, outperformance, dental versus looks U.S. I U.S., lot Maybe forecast, and outside the rather than dental roughly a the from at U.S. like U.S. of particularly, came least

the seeing trends next driving outside through maybe year? as year we and And into growth So, think line the the of there outsized those U.S., items versus two some to you’re about the what’s speak move we should rest estimates? the how of

Rich Heppenstall

again. is Robbie, Yeah. afternoon. This you Hey, Heppenstall. Nice talk good Rich to to

start with and of it So, an O-U.S. out spine with I’ll dental, I’ll then perspective. round from kind

pretty on kind our digital versus the growth our implants and our grew product EMEA offerings, actually pretty And all our particular biomaterials of so, was region, we also categories including And grew. strong it internal we actually our expectations. major that of side, And good very saw then nicely three region. solutions, dental growth in in

across that dental Europe we in side. we our serve of some in saw So, the recovery Europe on geographies many fundamental

were with So, pleased we that performance.

of side Mobi-C spine was weeks only of that growth, And the getting On country. through by device things, that ago cervical there and is Europe. made a it the from that French a particular reimbursement rest And was started regarding we’re we’re reimbursed of disc announcement France in an few Mobi-C lot the France, to actually traction in government. of particularly in permeate the actually the

is And also expand is so, growth our in then geographies, Europe actually as And growing Mobi-C secondarily, nicely in accelerating. Europe. multiple really we to Tether, geographically

particularly strength, foundational some seeing uplift in we’re our on so, core spine that’s And EMEA an really the products side. in

Robert Marcus

And quarter, in then, good a Great. the again, upward showing EBITDA helpful. improvement. Really

know some improvements in should trends EBITDA you’re some on But You as make about planning of as the of to sales. target improvement and for there. talked think we How guiding about your continued lot. expansion about inventory these think we move ability we for should your not a margins to that forward? And XXXX mid-term how to in expand you’re I EBITDA Thanks your but now, and ability? near- confidence

Rich Heppenstall

problem. Yeah. No

So of the end last a in did at QX, call our earnings announce restructuring. we

particularly A changes particular And where so, the into the the it announcement, of in of some announced geographies. few year. start latter a lot kind to to is of probably XXXX XXXX. we we in carry expect see the also real of forward And of some will months benefit in we that that loaded, this made benefits itself of back-end restructuring

And to that benefit an that carry on first into think the we will XXXX. relative hand, annualized restructuring forward so, there’s

inventory that actually limiting And the implemented that little purchasing we’re of you’ll see and despite expanded reason a amount we on for dental of margin bit really that side is the in the Secondarily, taking. excess spine that controls in mix QX we within business. obsolete is QX, the around again have product a headwind charges

a continue business to able expect we that kind and we strength to and O-U.S. as encouraged margins as so, what’s of year. be O-U.S. we’re by on Tether But, to obviously, our dental the going exit baseline continue the be And on, and top-line. able the to Mobi-C expand despite of effort

Robert Marcus

Great. for taking Thanks Appreciate questions. it. the

Operator

you. please. moment, Thank One

the Barclays. Please from of comes question proceed. next Miksic line Our Matt from

Matt Miksic

in some you, trends Thanks Vafa, about, kind wanted trends to market in right And as in question. you what color the X quarters, follow-up. you about spine Hi. terms the quarters, you give in pressure are that so I driving to some taking to way us of maybe much you organization for seeing the it, that could might what things the then, talked sense describe the the Can competitive that just I for side? I quarter, and talked quick in that’s that X things of guess, follow-up particular, if in are on of in have of on stabilize And the types spine. some X and points give competition? one

Vafa Jamali

Matt. Sure. Hey,

that Mobi-C seriously, of the in we So, and really, is had heavily not And which core both the side, Tether, most most we differentiated arguably this more on our spine spine, decided really to spine, more which is forgetting the invest and our platforms. assets. is part competitive also

we’re very, One spent we energy, are at where think where And biggest addressing But Brainlab, added areas technologies. going was impact, of our securing with platform concern. great that a places really the and enabling place resources. to space a I think think areas I I technology very, I that the really overall, which with So, do as be technologies get against compete are we you enabling are have that’s good where others state-of-the-art there that really, think we very we competitive. the looked how devices, there to is very the And that match. a the the do

So, that’s we that there. area an address

users new Tether. With portfolios. Europe had those in we’ve in Mobi-C, and Asia-Pac procedures. But We’ve with Europe reinvigorated successful course, and some launching with also it had great we’ve success of success really

market to build the So reenergize there. what look market obviously and at on us which bring continuing is U.S. we the market, do to that the to out biggest

fortify work reimbursement satisfy We’re to R&D work going and a that’s lot technologies. those of really doing and a lot of

a competitive space. So, it’s

and the really, continue at the our year I using in the of gaps world well, benefit to We also of critical. And look frankly, some really differentiate some really, I think business. in area a now, really back some had good disruption into and opportunity to for next. the spine as filling got right which we’re balance this core to that get we’ve are

those be ultimately So, focused to to I’d get spine on the it that areas for growth. are

Matt Miksic

was was then calls, covered, so if and of folks, of and That’s I some lot Great. dental forth between apologize hopping there’s evening I I side, And just this this a be. kind helpful. other the on think back

to is maybe as concerns of the slowing has on some little may pending related dental a a business. pressure, implants seems be sustainability for you’re is color And, ironically, comp of consumer-driven any the up that key that growth color as and the think the and one there demand you were to the the things pressure on with Or that segment? Just of better. to of you everyone issue? peers the recession generally? that anything seem aware side things when it like Do be just picking like market kind Or higher, And are to consumer whether this bit. field any do in moving

Vafa Jamali

Right.

So, for right market the outperforming now, we believe premium we’re implants.

definitely So, that is the case.

more gaining are servicing we’re customers, we programs, the and training around filling we in So, are clock. our and

new believe users coming we do I So, have on board. that

think for new pretty was but market we whole, the we’re think customers, good as continue can on here as ago, believe that long bring a Regarding to kind lose shape. as I it’s, do softer than quarters of in not that’s customers very a hold and I temporary. and it few I sure, up And

platform quickly that to and perform of implantologist certainty really the could become pretty back digital hand. task just a solid just with good at to on they relative I that the innovation and back So, think as well ZimVie’s uptake has of the in far as which quite market we’ve done, the really are the premium both doing that market, concerned, is dentistry onboard implants the allows us on had

We’ve slowdown. I’m watching feeling a been for overall, okay. So,

the relative okay doing is volume per again, far, we’re but so numbers far, the user not anywhere say to per unit probably so competitors. near our our peak, And would

Rich Heppenstall

Yeah. And is Matt, this Rich.

quickly focus. commercial relatively grew basis to did we as mentioned, XX outpacing one speaking. the has and kind not you backwards, generally is of QX been a the compare think, our comment, implants really fundamental And around and of I and of business, think tough Just our dental market, was which strength, points execution kind year last for go we

Matt Miksic

you’re that this part of other then helpful. great. is, it to on sort one But some and ahead, implants? for from coming obviously, X.X the buying consumer was, just pockets of year maybe segments, X that I the And well of quarter so as market right, that? that a a understand last sort if out your this a you which side people’s whatever do market, strong pandemic. say, number of of market, follow-up and is there Is of the was year, comp. benefited perception? is in of a just working was the it topic one quick getting tough And not factors? think but know cash don’t is of that demand, out I about of executing was them, of Is just think And that to working? on something of matter much year, one That’s so that the Or really against that’s dynamic, ago just

Vafa Jamali

last where Yeah, QX bolus demand. QX came think that. saw we robust that last really of year We saw I really year, and of

beat us was And those kind quarters referring we terrific. really that So, is what what year. that to. I both should of make of But this fundamentally think that was confident you’re

built and platform that So we gone backwards we’ve itself me haven’t to believe lends a on on it. that

some on think I pickup that So, share probably part. our indicates

cash but probably, were from of those. So, I think boomer backwards pockets, we that gone those some haven’t quarters, do in because

Matt Miksic

the That’s Okay. Appreciate great. color.

Vafa Jamali

questions. Thanks for the

Operator

over closing Q&A I to hand line you. Thank Jamali concludes portion. will the That now remarks. the Vafa for back now

Vafa Jamali

of we your the Again, forward very look appreciate and continuously and questions for the improving we you much. Bye attention. to Thank really this business, performance now.

Operator

call. conference Thank participating. you today’s concludes for This

You may disconnect. now

ZimVie (ZIMV) 2 Aug 232023 Q2 Earnings call transcript