ZIMV - Earnings call 3 2023

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Operator

Good day, and thank you for standing by. Welcome to the ZimVie Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Marissa Bych.

Marissa Bych

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

management that include of to statements. I'd remind like those Before materially may a risks forward-looking comments forward-looking indicated we call you variety by Actual begin, the that this during will differ to uncertainties. from results and make due statements

filings SEC for most company's recent report and the these subsequent the and SEC detailed to refer Please risks a filed periodic of discussion with uncertainties.

found this In contains discussion the of section live the will because the financial financial financial deck any required the addition, information, website. conference on non-GAAP events company's comparable and the revise today update as as measures. ZimVie directly of broadcast future of on or or measures the to today, information call by obligation, measures Investor call otherwise. release only disclaims include within statements, X, or whether except included investor earnings these or as forward-looking Relations XXXX. certain This to are intention GAAP accurate Reconciliations the most of new time-sensitive law, projections November issued any

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

Vafa Jamali

across and ever-emerging with to board. the thank new products flow long-term best are continue driving both better DSO innovation traction actively with launched and year reshaping platform, In acquisition us. and In legacy existing our over the new to DSO to our our on customers. engaging customers penetrate our our the potential. you markets for In improving joining afternoon, all for sales efficiency strong dental, parallel, continue our driving customer generation. Good progress and third success cash our partners quarter, operational channel, team make we We've growth past and further seen we have portfolio

field The biomaterials the the The most profit with common Plus of in we've a cadence recent name delivers site the of Biotivity A/C barrier. in variety from pleased now A/C for derived membrane, tissue introductions. dental the nicely coverage growth year. portfolio rich of bioactive received regenerative factor new used Biotivity from that's offer part Biotivity human very which conforms also request a being procedures. The to We're now Membrane, placental is a

solutions. Turning summary, lab our With position and dental In of pleased includes prosthetic remain offers Azure Azure more portfolio areas in perform confident set year core our product designed the lab-focused above solution product at market. a to multi-platform and comprehensive effectively the market workflows. our digital XX cater to very This I'm into components in selection solutions with restorative into integrate dental, in to ability ahead. to or the

success driving within We're incremental our Turning also spine business. portfolio. to Spine our

we've implanted Mobi-C also. the to to a across further access smaller quarter, is This report Our Mobi-C and our Mobi-C the more height expanding FDA of pleased improving approval Earlier look that in new to device for footprints. I'm I the position usage we announced allows needs, U.S. forward patients with adoption. approval anatomical and address first for X seeing

device. for deepen an Continuing expand e-clinical we clinical to also patients at arthroplasty This pleased patient groundbreaking cervical cervical recently treated to share Tether adjacent with FDA Mobi-C, I'm differentiated milestone of will X,XXX study The Biotivity and to launch received that arthroplasty. event we with study the approval further fusion. is crossed a suitable for Mobi-C population truly

we adolescent X therapy with to scoliosis, future. the this patients Tether diagnostic idiopathic is solution As patients for center and reminder, look surgeons XX Over pediatric The using a the market-leading high-impact patients. that treating BBT into with forward a perform more systems,

to agreement partnership Brainlab our development cooperation co-marketing. include Finally, we advance to continue recently has our expanded

operating engage work optimize We with allowing to and solutions continue where customers, reducing us exposure. We'll on key implant in surgeon compatibility on enhance and our win. we and to markets navigation continue innovate existing and the radiation operating trauma spine can while workflow our positions around accuracy systems, between achieving Brainlab to growth and and in their spinal actually ultimately

operational Turning to our continued improvements.

As inventory I physical past meaningful corporate made footprint receivables. mentioned through overhead working quarters, reductions and in we've to our while excess

our making prepaid is still $XX payments, this by nearly that optimization, interest our down which of progress we're the continuing more cash for principal position to there cash Although have leverage to excellent on pleased We're provide topic million will we shortly. and debt XXXX further pay quarter. balance in I'm improved balance and our position room detail sheet a

large to that very ERP operational cloud-based to announce our of centers modern new have heavy concludes This LTSAs I am to and related moving conversions. completing we our over XXX to spin-off, lift, all completed applications transitioning excited platforms. data Finally, over service XXXX XXX and a

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

Richard Heppenstall

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

seasonality exceeded summer be of QX impacted performance to we we than slightly our sales businesses mentioned and our the these months, QX normal expectations. conclusion higher earnings our in expected for As towards by call, the

in X less million when of Global prior third third-party driven entirely our the of XXXX constant Moving a by selling year XX on as segments. points to XXXX. representing the in Dentals QX versus period, quarter, to $XXX.X were net basis compared QX day in decline growth sales currency and of key X.X% reported

the market the in flat new to premium implant global acceptance quarter, year-over-year contributed a sales third dental of in the to execute While relatively market was implants aggregate and continued soft well commercially basis. on we our effectively

X.X% basis market, partially by and X.X%, constant implants, by of by X.X% driven partially digital XXXX. solutions and by and less our sales U.S., across net million dental selling Outside sales. offset third-party less dental million in day $XX.X ongoing strength implant by declined the QX slightly U.S., third-party a in biomaterials of of digital the In weaker day families, net on X driven offset sales X dentistry, in of X $XX.X product our all of increased currency, reported selling by growth a

new XXXX market Our particularly XXXX, PRO quarter. TSX TX of impressive product third trend their early launches during in and the and continued acceptance and

spine compared were continued driven to a primarily by currency and a in prior global sales competition net when the of X.X% in was decrease quarter basis $XX.X decrease constant Third X.X% The year decrease reported to million, on third-party Biomet an our following less procurement and the China recognition in market, exit both that to and Asia previously and Zimmer by partially spine EMEA the offset decision were sales X volume-based selling attributed our growth Pacific day, regions. of period.

selling of by in X.X% The and net million with performance the of we relative basis in balance a decreased to of our XX.X%, portfolio pressure commented, core third-party day spine pleased U.S., $XX.X X.X% of U.S., by less Europe Outside net Mobi-C the the Vafa sales Spine competitive in driven constant are in and led spine Pacific. decreased core relative and improvement and $XX.X our sales partially spine growth Asia Tether. third-party currency. In Mobi-C a million and by on by Tether As and offset reported by X

our best-in-class XX%, Tether evidence XX% growing to outside respectively, of third continue and the quarter. during Mobi-C differentiated clinical by leverage U.S. the and

adjusted of year prior cost products XX.X% XX.X% quarter period. to of at sales Third sold of compares sales in the

from sales of in our our reminder, QX benefited of a XXXX, the cost contingent with liability parent. As of a settlement prior

progress to X.X% sales. ongoing continue as charges. million as and cost pleased a we of We manage reduce products expense research of development sold and inventory-related percentage our represents are to look better with to $XX.X third-party of inventory Adjusted

lower Third quarter general versus selling, sales XX.X% XXXX year was third-party expenses million period. $XX.X and administrative the of prior of net adjusted $XXX.X or million

SG&A due of net or sales, from count third and less third XXXX, quarter EBITDA benefit the offset was period. and with restructuring fully from shares. restructuring containment due in to measures. of partially and decrease in lower on parent XX.X% is liability QX million million prior our in quarter our savings cost lower the from The was to from of prior a Lower savings reflecting Adjusted $XX.X The primarily XXX adjusted year-over-year a cost in share year XX.X% EBITDA by of margin share announced are contingent the points of per net net third-party average containment. sales. $X.XX initiatives weighted of earnings sales Adjusted diluted XX.X variable decline the XXXX previously in basis expenses expenses

Net million $XX.X $X to the the million, monetize Regarding of initiatives debt. working inventory capital the capital, liquidity on progress payments our prepayment required loan million and $XX in million frame $X cash principal at debt. application work. financial a quarter, we reduction $X $XX improved In our on we our QX, strength and accelerated balance disciplined our million, In in to working of added in over of including million reduction assets on and end sheet receivable. accounts a by a including term

Although business our financial continued we our have of we is profile, focus further opportunity yielding to are improve the progress. the operationalization on pleased that

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

and our ahead, relative expect expense given debt dollars the by to note to in million couple a XXXX, of XXXX environment Looking we rate interest that please increase current balance.

XXXX year to turn our now outlook. I'll full updated

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

sales double XXXX, at continue in versus segments, the net we XXXX grow the XXXX our single net or continue low digits low XXXX. Spine expect expect digits sales to be to to in decline versus to high digits we to flat single to Looking and dental

adjusted Moving margin. to EBITDA

the of fully XX.X% our are range We earnings margin XX.X $X.XX as same share, to guidance of count to our of EBITDA share XX.X% we to guided. to previous per $X.XX narrowing earnings of to and adjusted year on the diluted per share of regard guidance $X.XX shares, adjusted share per expect the million range sales, share range per With per previously $X.XX be share. revising a in adjusted net range full

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

Vafa Jamali

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

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

our we As in results improve of commercially, the product platforms that showcasing evidence we to to and look all to deliver. execute the company forward of hard continue our were

up open questions. to will it we that, With

Operator

first with from JPMorgan. [Operator Instructions] Robbie comes Our Marcus question line of the

Lilly Wyttenbach

at upside, relative own expectations the This A to is least for Lilly actually of Spine. on Robbie. lot came from our

talk indicate that particularly can stabilization in any trends competition? So progress seeing the could And what you're signals a you moving you forward? potentially about there, of terms in seeing are

Vafa Jamali

Vafa question, the for here. Thanks Right.

us We are work growth have we are seeing to the the the primary recovery get international and the plans EMEA in Mobi-C there. primary APAC Spine drivers both believe points in can recovery. We that performance. and But contribute the Tether drivers still are to internationally, we've on for that supply do in got Those and for U.S., some sales improved the the sales most EMEA.

Richard Heppenstall

here. again Thanks question. for Yes. Rich This the is

comment of to that that Just to add Vafa made. kind

year. of that look exiting only international approved around Tether And in business our specifically, only products, Europe, down X.X%, EMEA, for grew and before international, international our uptick Mobi-C in reimbursement. our when disc China almost region, particularly grew actually decline in impact was at we've EMEA also the Tether And impact region included year-over-year If that then our about is our you And France Tether, also by flagship business for our that in had look the mentioned and XX%. the Mobi-C the Tether. market, quarter. XX% you by we've about is replacement cervical the in EMEA But great in at in

environment. U.S. So the we're stability see in to really starting U.S. point, -- to for Vafa's some

So shoots to take root. continue those green

Lilly Wyttenbach

good to side, on softer flip That's it. dental a our to was then bit hear. compared the numbers. Got And maybe little

So and called a weaker you out dental this -- market quarter.

And how back So that what into trending of year? the the drivers of that? see are you do half the

Vafa Jamali

Right.

market the we implant that States. competition, relative see what slower well do to we're United dental feel we So a but in the doing

not the It's sale is actually softest in that do but existing seeing internationally? where class it's driven. We're So that on user the dental doing on part, Rich, U.S. we're front. well macro new doing We're customer. customers, see in primarily well softer we

Richard Heppenstall

Yes.

first by But with we strength, foremost, the we're the business, driven U.S. Vafa's And particularly year-over-year, side. pressure dental to selling our use actually actually Europe and is macroeconomic in dental And it's less we year-over-year. day. the point, So largely we've similar had in one performance largely dental on seen pleased

XX% Our X% grew EMEA in and about and dental business year-over-year reported almost in currency. in constant

our for digits really portfolio. digital It continues us. grow And so pleased with we're double to

biomaterials year-over-year, of think to do which, on pressures, our Our competitors flat that flagship we're our other year-over-year well. basically offerings outpacing macroeconomic a the market. are we implants continue And some despite the in basis,

Vafa Jamali

Yes. within we're We well that think positioned really portfolio. dental

in our the place So our customers. competitively price a to share market portfolio, good be very, with when very we and return, should our respect

Operator

Matt from comes the question Next line of from Barclays. Miksic

Matthew Miksic

sizes NAV, get seemed disc spine. I that of you competitive based opportunity patient environment with an color. at in the part when you've have wanted European get think patient". this and have So of for who like of opportunity of maybe U.S. would I -- following just all described because say is don't other this out the to a the you been is we to the by roughly expansion that It on follow-up. market for -- describe X/X addressed these on I looking would it rolled because folks like have are at I a after the patients of appreciate on know in get market significant this market? a the actually inflection to one new U.S. sizes. replacement the was for Can to you a market of been is we is you, new this at "You the what, sense U.S. the cervical disadvantage fuse unaccessible these a more you've up current sort XX% and question was the sense like saying, the love size U.S. say -- open to population And these up? Or how possibly to going this kind the I'd you big you for a think of

Vafa Jamali

Matt. Sure.

think our we specifically that LDR, acquisition innovated the portfolio continue I we concern portfolio innovate we to underlying with So Mobi-C. of to haven't needed since had and was to the the

So to there's things a couple adds there. portfolio. doing The size it of our we're just

with and the launch So puts it it at adds out. that more that's to competitively suitable come portfolio, patients newer parity

to At that's opportunity think for of be there. expand who fusion. we terms the that have So at same is able versus that's -- everything a we important we time, the the to market least to can offer happening eligible disc -- biggest in is still

And that surgeon the to next so allow are new with announced now hybrid will the put really, important which market really sizes we growth. the to a of disc along offering combination study, fusion a cervical are drivers these of newly

market the So a one that never competitive it we and patient and cervical improving but haven't number more put going us share. opportunity that the to disc serve become versus get the either more as a we is really the within competitive look but lose at on way versus hard sight of those, greatest fusion users of the the biscuit population after fact for

Matthew Miksic

What's dental. either just of better to like? And reps you more follow-up that Is just folks Got recruit you're pressure super I'm sure. then your it. pick on of to your a some I or there on some dislocation what's as helpful. there to or aware have That's and effect of being has deals there's of ability trying disruption one on spine your sort more on any because actions off major one dynamic or spine, to distributors of, other categorized been of lot or the as And sort distributors. --

Vafa Jamali

Yes.

talent lot to penetration. particularly into on situation And is States of particular now, channel in side wrong there span. on that's I there, have of of areas talent right when go announced out that sales to were we situation, So that to where a we that we a we hope of United a the recipient very excellent very, the the the be like lot improve or less our feel where

a something enough, that next a we're time, like things forward of we're of you will little net fast I disruption, with news that It of over won't but news we do suddenly. nevertheless, but So we look feeling sharing to be these take All beneficiary we'll while. and beneficiary be positive some bit think if there. the I a be

Matthew Miksic

into how play And answered of seasonality in dental. apologize great. -- come wins but I much That's a the market stabilizing -- you in that of play or potential in some color sense on just if just Any into just are then any sense around of a in that's growth way QX dental or the which last your -- either that's this may for the blowing in market to elements came finally improving question QX in moment. and whether dental, of maybe as

Vafa Jamali

Sure.

to start color particular us, -- have further on So and some it. Rich will just I'll

the we are with have. We customer that happy acquisition new

So well we're do with customers really we're doing non-implant well that doing to really starting implants. are newer and DSOs, with

bit very market EMEA. do working So us. would for But evident in in in that positive is of or how that's in Asia adding out. we I QX, which we QX feel is not is a Pacific we very, there experience probably and say conservatism that did U.S. that the softness to a seasonality little see

Richard Heppenstall

half U.S. always of and because what Rich. the Europe of a we've of And is portion business, vacations. to course, on dental Vafa is large almost obviously, Yes. is our their is lot vacations. just Matt, -- you it to this it and QX Yes, again. summer quarter, our business a said, of has of in talk Good to actually expand weakest

of a that see quarter did than the did second call being call seasonality that out end normal. little said, we so we bit at higher our And

business were, or what dental $X for given was expectations. expectations up million which a than believe, than actually put our maybe little XXX.X%, so The better quarter, I the our bit better

And have execution, OUS, of to commercial the frankly, seasonality, the particularly so going our which dental we was seen and is we the continues but to perform well, from. business positioning come thought seasonality where

we in that without of those seasonality regions. actually so performance kind And combat

Matthew Miksic

things great. I forward and that, the end of how more year. look that's about Well, Congrats hearing to progress through the on

Vafa Jamali

Thank you, Matt.

Richard Heppenstall

Yes. Thanks, Matt.

Operator

showing time. further this no I'm at questions

you, everyone, question-and-answer this Thank So does participation. the conclude for your session.

Vafa Jamali

much. very Thank you

Operator

Okay.

You may now disconnect.

ZimVie (ZIMV) 1 Nov 232023 Q3 Earnings call transcript