ZIMV - Earnings call 4 2023

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Operator

Good afternoon, and welcome to ZimVie's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych, Gilmartin Group, for introductory disclosures.

Marissa Bych

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

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

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

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

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

Vafa Jamali

and portfolio, helped serve. us which thank We had in invested our differentiate markets significant joining we afternoon, you Good us. We make for further accomplishments in to XXXX. the gains

operating efficiency our restructuring improved initiatives. we well, cost As through and reduction

time to necessary to businesses a XXXX agreement look sale We portfolio. we in the consideration, move both company to Capital an pure-play addresses structure in sale. have million quite with we H.I.G. a believe leveraged major optimistically these have and we the believe industry-leading of total to executed between business the as comprehensive of very elevated steps concerns an major began and we elegantly X during now with synergy addressed overly More rates. and dental sell to lack of interest that this concerns We spine and our significantly, heard: complete and capital $XXX spine advance one dental

not differentiate to patients about while to excited for of and we and optimizing more shareholders. invest could the drive this company solutions continue our providers as for I be value structure future

Let me start closer sale. our specifically spine at with a portfolio ongoing look the actions,

December definitive a appreciate million great of half entered XXXX. agreement completing $XXX sell as first partner an a On to close. we the XX, H.I.G. into We confident look spine this consideration. having transaction H.I.G. We on-time Capital total our in to in business remain in for we in towards sale both Capital

down in This will end our sale debt. substantial our paying of the our outstanding itself solutions, attractive a reposition while one dental also for company of to portion provide opportunity exclusively markets, most

We under are sale. million net to committed X of post having $XXX year debt by

see both the being given we which and in profile. our taking costs Therefore, of sale, in out the reflected work corporate particularly opportunity costs, need cost in continued our our we our to overhead are organization. stranded Beyond have rightsizing lot and currently profile, operations a of an do

adjusted We annually thereafter. address and improvements to with have at to expenses, we the sale plans EBITDA execution post remain a corporate concrete year already certain delivering initiated committed X XX%-plus of margin

global in would the future, As immense like the effort business for mostly contributions of we thank employees appreciate your portfolio their of hard continue the forward. I to spine position wish you the work. success our and to through all great and improve We going optimization process,

dental. to Flipping

dental leaner, implant are $X focused company digital and markets. we spine, we position pure-play to market-leading As biomaterials billion solutions in a positioning more with transition to become sell the

to portfolio highest and high-efficiency, market's the a implant, digital strong includes holistic of the the every implant innovative for support biomaterial for workflow. high We are offering easy-to-use a which process. to foundation products, committed premium built step -- quality This implant and solutions implants managing

of are cadence invest of this to pleased XXXX portfolio. in our One software XXXX. And strong we continue top was to hardware into for innovations our priorities and

we recently, next-generation in lab-focused and one implant launch TSX in international largest portfolios. Most Japan, prosthetic our biomaterials markets. the of solutions that milestone Biotivity and restorative of We preceded and launched Azure our with our

over and us workflow and on for innovation new focusing that by the our to Look market year opportunities complement entire bringing improve products further clinical drive to next business.

achieve several to our An operational desired plan to company. change scale make this and a to size year as update. We

is experience extensive Fortunately, has this an area in. our team

the years, business operational where X of it the improvements get improvements team spine past the delivered were Many today. several focused to our business. is on Over those has

we that we As our take manufacturing on supply move automation, dental and forward, playbook focus improving to the our business, will the same efficiency of optimization including plans. chain

attractive an of to and Instead, With momentum we taking a costs our team corporate out business. offering. clear be room Therefore, even importance enjoyed our should always it wholly resources, efficiency innovation be improvements see of reduce focused management focused reflected has and will on or commercial margin we be that grow development increased business, realize the that and behind we We have to business profile. the dental recognize research we'll to significant margin our costs. not profile Our further. that commercial

of these leverage see we as on. months address, take goes will expect increased and Many costs margin to to year the several

ZimVie the until full continuing bear the expense is operations. However, sale will for discontinued both the complete, corporate and

ERPs and more sale time closing. detail provide around We the will TSAs the of associated with on

publication gears a congratulate embrace our our take business. the over switch on and of team the I'd ESG like to Rich, a to Now report. recent and moment responsible before employer We inaugural accountable line to and turning being

curiosity of having Our initiatives is spectrum mission core entire and authenticity, lives global growth our to championing further accountability, our daily mindset. team of the ESG living that across dedicated a restoring by value

common global a as ZimVie's reputation towards citizen, our good we spans establishing a leader. goal commitment true life corporate a workplace shared and Our site destination the work as sciences

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

Richard Heppenstall

afternoon, everyone. quarter fourth outlook then Thanks, and I'll our close XXXX. on Vafa, and by by reviewing we'll begin our XXXX for providing results, commentary good

Before wanted since business, quarter, segment spine for our statements discontinued to reiterate I into definitive the details our spine as XXXX. delve signed now I as to classified that financial end the of the a of we operations in financial agreement sell the is

we operations, result, which our and dental operations, the will fiscal and discontinued includes financials as of year comprise QX As corporate a the business. exiting majority which XXXX continuing bifurcate and spine

sales sales XXXX the fourth third-party XXXX of net net in XX a in with of with quarter XXXX constant declining reported X.X% X.X% million, declining was and sales $XXX.X a were XX of currency sales were $XXX.X third-party currency. negligible The Total flat million Beginning for basis total year decline continued points. Full of impact points essentially in net decrease operations. third-party versus of constant foreign XXXX. basis on year-over-year, rates exchange

macroeconomic In offset implant million to the driven of market fourth the sales partially strength for net weaker $XX.X decline third-party the in a and weaker solutions U.S., as by mentioned. U.S. net due Full of modest quarter previously decreased implants slightly X.X% XXXX in year challenges, of X.X% sales by biomaterials our by U.S. by million $XXX.X driven portfolio. third-party XXXX digital of represents

in net X.X% U.S., points and a currency. year decreased third-party constant of reported the Outside X.X% in basis reported $XXX.X on points outside the of and Full sales $XX.X XX by U.S. basis by million was and basis million respectively. of higher constant sales currency, of XX

and we pleased portfolio execute While sign that the a compared the aggregate begin in through leaves commercially year to a improve. to to well in are challenging dental most our environment have the ability of to XXXX, exited 'XX, market conditions market and us XXXX positioned dental as was for roughly of strength flat soft definitive stabilize

lower for of products of Fourth volume over XX.X% quarter to in increased slightly by products implant XXXX year. basis XX.X% XX of XX.X% XX.X% year sold sales year adjusted Full of of cost year compared driven the the the XXXX prior of adjusted period. points sold prior cost

We expect back product mix, of efficiency half the sold from duplicative a benefit improving as of organization, and cutting in streamline out year. products improvement particularly in XXXX better the in the cost costs, we manufacturing

compared and administrative general to adjusted prior development year. adjusted to of million of XXXX and research sales, $XXX.X SG&A XXXX QX compared is $XX.X the of expense flat of million expense million $X.X in to $XX.X the $XXX.X $X.X QX expenses adjusted million prior Full XXXX XXXX SG&A in million. million year year.

support third-party quarter to XXXX EBITDA adjusted a our to only net note operations the Please borne which majority million Full also by operations' Adjusted adjusted not reflects dental our in XXXX previously EBITDA EBITDA XX.X% corporate includes of but of cost and costs, $XX.X EBITDA $XX.X dental of continuing business, spine businesses. continuing was the of year market-leading margin. represents attributable fourth both the XX.X% sales. million of

classification, the our fourth prior to framework. reporting for weighed EBITDA XXXX and quarter operations' margin our continuing Given the adjusted down compared appears

XX% sale after address of remain X adjusted spine our structure. margin post as sale will to Going We resulting over EBITDA year forward, the working an and disclosed. we spine, of previously cost confident be delivering in

for earnings per per operations was on shares. XX.X QX $X.XX of per share continuing attributable count fully of XXXX adjusted share to adjusted of earnings a XXXX million diluted operations share Continuing share. $X.XX share FY per

operations, constant discontinued X% net a and Total the decrease includes on fourth XXXX currently in constant a a $XXX.X currency which XXXX million sale. reported a on a and decrease both third-party of million, basis. spine to third-party business were total currency. year quarter decrease $XXX.X for sales Moving X.X% reported represent Full sales net basis XX.X% of on the for up of

third-party XXXX by pressure. In continued of net fourth competitive driven the X.X%. year sales $XX.X of U.S., U.S. XX.X% decreased XXXX $XXX.X million sales declined by Full quarter million

Full U.S. sales in a basis decreased quarter XXXX in XX.X% by year XX.X% million third-party declined the outside XX.X% XX.X% reported of of $XX.X reported currency. million currency. constant sales rates on $XX.X by and constant and of Fourth in OUS net

sales prior Fourth Full XX.X% quarter at in decreased year XXXX of year XX.X% adjusted year. of basis XXXX the points prior period. in XX.X% adjusted products sales sold cost sold of of cost to products the versus of compared XX.X% XXX

inventory expenses a been gross higher management We margins. now of excess focus and about that have are and our reducing for number obsolete quarters better to on translated driving pleased inventory our efforts and talking have

general million to prior $XX.X $X.X XXXX in prior of research and adjusted expense the $XX.X QX selling, compared compared in the year. year. development to $X.X Adjusted of million and expenses administrative million million

a the of operations discontinued net Full $XX.X margin. Adjusted EBITDA represents sales. attributable discontinued third-party fourth to of was XXXX EBITDA year million operations quarter $XX.X of for adjusted of EBITDA XX.X% in million XXXX XX.X%

per $X.XX per diluted was XXXX share earnings operations QX share while a shares. XXXX on adjusted per full XX.X per share million year of earnings count $X.XX share, was discontinued for adjusted fully share

Over and excess of liquidity and inventory we balance the XX outsized $XX and the Vafa XXXX, plans on million, with pleased use our the reduced pay by to receivable debt. down I'm out announce monetize I outlined course to the Touching during cash objectives year. debt. net ago, almost and the flow laid sheet, $XX months accounts over we of to that generate the million by at beginning consistent proceeds

amortization ahead debt million We debt, months over ended we of $XXX.X $XX of a repayment principal XXXX keeping yielding required and our required consolidated $XX.X million of balance of ZimVie balance XXXX, of gross debt of ahead our prepaid $XXX.X a us In XX million schedule. million. net schedule, with cash

million As spine the debt with an debt by from further proceeds mentioned, the business to of having net the objective our $XXX of of XXXX. to of under reduce use we Vafa intend end sale

outlook of the half a Moving the to on on basis. which is of we're guidance XXXX, are onetime during to expected of our quarterly XXXX. our process for to our to for in spine going we the provide outlook not sale of intend provide Since some close do XXXX. business QX go-forward finalizing to specificity first We

million $XXX $XXX expect to be continuing the to operations We million. in of sales from range

with expect our portfolio at that strategic dentistry digital environment. a and We growth. premium to we market solutions of perform our macro and above workflow And or are position will very pleased challenging despite implants, comprehensive continue biomaterials

$XX from to $XX range to We expect of QX the be sales discontinued million. operations in million

majority continuing Turning business earlier, quarter Vafa both cost cost I also that margin support spine. includes operations a to supported historically our the first to to our profile. dental alluded corporate and exit but sale of it finalize the To associated business this the we overall at continuing when of it by until we end, a with look margin operations profile will spine itself, costs. the and lower carry has

sales operations X% to be of We the as result. expect EBITDA of to range XX% adjusted QX continuing a margin in

our removed sale continuing profile. of will margin to currently market costs us make spine, following be in allowing reiterate, operations To desired toward progress the

share, expense spine until With margin is regard QX result depressed profile to adjusted increased relative we as to and of earnings interest per a of be the expect complete. burden sale of lower

We of more adjusted guidance earnings will share following completion provide per the sale. the

expectations the to post for spine our sale turning close. for X Now year business

costs as see raising the for EBITDA half XXXX H.I.G. profile We finalize of our X are first at XXXX. And post X business the spine to year out to margin The in transaction. we we over substantial back completion and sale the Capital are our half to at $XXX to continue sale the XX%-plus following planned, achieve sales sale expectations our is adjusted post million. year the in annualized progressing of spine spine of to expect of reaffirming expect come and commitment to

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

Vafa Jamali

Rich. you, us, excited year. Thank forward updating you throughout of I prospects I'm and as progress about look the the the on to always, ahead

businesses in is ZimVie are carving up this scale transformation. in the setting efficiency of chapter. our operational as immensely experienced improving next position to team well businesses and we employ as Our And out to for excited new

With questions. that, it we'll up open to

Operator

Needham David first comes Our Instructions] the [Operator Company. Saxon question line from of of &

David Saxon

Great. I I to one And on start then, you. business. have the on a couple Rich, for wanted might dental

facing their business. in domestic some in #X Vafa, challenges they're the implants market, the So

volume a So from I think about what market that broadly, or I or are XX% hear hire you capture portfolio? wanted in softer share? Do opportunity either so. reps And implant part about thinking how you're how like about the thinking a can to perspective? grow dental it's you then looks to patient you the think somewhat of

Vafa Jamali

dynamics David, we've we the benefited the relatively some in years prior. for And in in thank there Yes, competitive you market. we've than questions. from market frankly, some up a have share slower of the picked experienced

that, I So us. do positive that think for has been

think I that trade have all, don't the is portfolio we first of strength our to of we that down. -- implant

competitors lower-priced to that option trading aren't that we believe down implant, a So I have down have which market. moved the often that

We that. haven't to do had

categories the workflow, the implants very, very a And workflow have digital is the we've platforms from reason X the digital really new a been of and been primarily it, able business. our guided with really, hold premium coupled effective, growing that that solution in faster significantly marketplace to rest other than sticky is faster than

Now albeit a is that predicated our right thesis implants. base pulling through it's on smaller but entire now,

a one one. that workup, an an part think rate, And the much And of cost a about consistent only physician very more is in implants, or that part about new it's second or the the if is at whether the old it's of a opportunity XX% penetrated. and what give to you're the you ability is implant experienced

with think implant well. a make lot really I coupled work done the to workflow the we've So

make think strides had I more customers last we have We to So continue definitely there. we'll year. than

the we where slowdown than were And really market a place before. when faster. the they really, But returns, to are doing a is we're to of we're in confident bit going grow little be see good specialists that some just less the

your answers question. that hopefully, So

David Saxon

on the one digital the wanted portfolio. ask Yes. helpful, Vafa. I Super to part of

it that all, their so, expect agreement the one when for the And with just quarter selling start And So I'll factored into follow-up. that? does is scanner? you And line cover first at the guess, iTero, if have do I if to Lumina guide? new

Vafa Jamali

Sure.

with -- relationship, and are we somewhat their that does scanner. we will new it regulatory continue believe do have for delayed the I purposes. -- So it

it the have won't fourth year. we this So quarter until of

excited for I would QX can we us bit sales a we margin. about new when is the are but us. say but offering, low depressed, satisfies concern overall, digital is is that iTero the really for It cause is what a us a because scanner for our do not to that in available major really,

Richard Heppenstall

David, this is Rich.

what comment additional one Just mentioned. Vafa to

from to have released. one the customers upgrade to scanner and to that if scanner with access -- like is able existing QX frame, will new they be when one program said, iTero Vafa the that before our the buy anticipated the we the the a we time During get they new

a got there we've that plan So to new transition introduction.

David Saxon

us if of helpful. Super through Okay. Rich, help super kind they you haven't of with the with color. And bearing then you, quantifying sit, just currently and yet, model sticking kind just COGS I but stranded versus gotten helpful OpEx? costs where you're the to quite could

Richard Heppenstall

Yes.

corporate stranded infrastructure costs to obviously, in we businesses. largely support have, do that the we So use

So the where like generally from a can businesses we've it's corporate. kind a And of other. each then holding autonomously operated, got the largely that we've way structure operate

closure about costs they're of that then there as cost in as of uplift think TSAs. mentioned the carry margin. us we'll course, we're a we'll obviously, go-forward the corporate the some SG&A have is conveyed. period prepared until stranded some the corporate deal. So in largely of sector. -- we be number remarks, a we'll basis, a on we transaction way -- where which the in the And in there's on will headcount as that have thinking and And Then, about The will then give

There's in about then off, committed way And puts numbers that adjusted obviously, still X X achieving now, takes XX%-plus post sale. year of margin year EBITDA but post right out to we're obviously set the sale. and then the is -- it, we're in a lot is another obviously, the longer we're how what But once thinking it thinking inflection there's TSAs fall we've that point term. about also

Operator

Miksic question Instructions] line the comes of Our of next Matt from Barclays. [Operator

Matthew Miksic

follow-ups. of So a couple

debt. target the under net You $XXX million of getting sort in of mentioned

a you're would little it in a $XXX so lower. bunch and simple of about of lower in cash I you math a how bit and cash net the Can you've taking could. or million say and little could why? got -- get about your or follow-ups balance quick you thinking And looked like, bit that couple talk if debt You're a the of then holding on of getting debt this

Vafa Jamali

Sure.

include it's million that So seller million $XXX the not mentioned we Matt, note. does The Vafa. $XX

there. that's that, obviously, will we obviously, don't than pick if that So it, included million. include you just be better a $XXX But

and and that's looking offer that. for the spine that's else it, on we we're reporting what the at business Rich, between discrepancy anything So way probably the price the got we're there? that to

Richard Heppenstall

Yes.

addition than less Matt, in that Just number a we to is thing the that, did relatively mention with is debt to our the about H.I.G. million complex transaction relative $XXX net actually size. transaction in one

And so separating carve-out -- a up legal and within and there's a it's entities organization and the like. the setting basically

we're normal And what costs in to so separate time. some incurring those and the would a see transaction, we're transaction business still outside a of like costs real bearing normally you

on be and going as we'll debt more outlined. the but with repayment feel comfortable provide become So we inflow to we we're closer the $XXX And to that. focused cash less detail things that the clear, that progress million we have, we maximizing than close, do around get and transaction as

Matthew Miksic

Okay.

assuming and you in I think don't and was it? much generated last $XX this, outlays. got we But And -- generated, what I'm as cash, you be flow. there'll some year so million break know it how operating some in positive million I cash like into total. you've we cash as then the you mean $XXX got

any of or how can guess million of or that? Or I you $XX So $X any on cost $XX $XX or that outlay Is million that describing? sort million for transitional a million color sense give you're much? us

Richard Heppenstall

the actually additional with a or I the you generally stronger if a debt then and a us debt. that which than net mentioned $XXX you where just actually do announced -- was as million out how it said million call, is, is less of take position due simply that of on almost we you million bit be I Yes, But we about the upside ended of take probably $XX take year, ended, That to and for number. cash softer quarter the before debt we a net QX little little much $XXX you we could should think end the prepaid we way of seasonality. when into and bit in that deal,

spending we'll previously capital we information. we more mentioned a end But to the call, money. the from did disclosed. million a bit and provide I I continue really to in And as the $XXX good working still a said, should we're But little year position which upside of as on that be evolve perspective,

Matthew Miksic

cash, we cash will what crystal so fixed And like $XXX shouldn't Okay. have just of we that we done putting flows, some understand unique into sheet and it do million $XXX is with if deal. something might could you did -- there's against coming you're in so -- Is than clear thinking should then balance It charges in cash million but be your that 'XX to the you I'm -- aside be that this, and you nature you layout that's there that, what thinking 'XX, in. that be operating coming right? something when describe wow, the less be that

Richard Heppenstall

absolutely. Yes,

fees, types would expect. of spending. of carve-out there's fees, as have Obviously, those we're We you that things banker legal all costs

XX%-plus the we margin. we're costs then to going got organization -- mention, EBITDA be to other piece state RemainCo are And as is we that rightsize that we've approach some you incurring new that to Matt, the steady that didn't

that so cash. And some of to be going is

through that of and working Some why with plans. we're continue than still now, we'll of million those is information And number. which $XXX provide we're to be to right less more as work that going is that noncash, we kind through

Matthew Miksic

the that -- rate? X there something other just when time it year XX-plus deal the XX like Is or that X you getting forward, from metrics starts number, you the if another because following picking a the sort the -- following weedy say to words, Great. greater the and in net clock actually. into that And debt yes. profile, forward, is in -- those little was was or of in these quarter EBITDA April but I'm I I do year like and say the we -- things, could, if it sorry that then year think mean? in think to about X to is It about March X how How -- another XX-plus that, where was year XX-plus, sorry, think, a a run year

Richard Heppenstall

revenue. the and Yes,

So the the say that an XX-plus, is out on that we talked is a XX% as know you've work X we've rate of thing rate to as take as much basis long plus run that known basis, annualized run possible. and cost will about But I to to year post one enough Vafa will close. quickly look I

So a you on basis expect, it disclosed. to things it as materialize that's information we're become when But Is as forward, annualized -- basically additional to pieces an right about there's then as and thinking but right might things it we'll you've move now. of lot continue clear. provide how now. And some moving right,

Matthew Miksic

Okay.

aggregating And might you're that first quarter, but like XX follow that to mean X so you're is be maybe necessarily that's that be you're that it that year, print we that closes quarters might what first the expect your that goal, saying going promising quarter not in fair? where after Is plus. not to. I that, be like

Richard Heppenstall

up bit the little to yes, there's in doesn't where once bear the organization as organization closes, and and but be I costs the not systems go that most to depart right? for immediately with by for where reason the XXX%, is going all that the that a the an on and call be, is close everything we're Yes, is not still period David entirely of the will reimbursed -- be we're there'll going have of to the to all everything have H.I.G. because a TSAs, at mentioned deal to cost Then deal. because and this set going systems, H.I.G. part,

remaining out you be XX%-plus talked And to to right, our that that fall so going when job TSAs take off, gets cost, about. is which then that those to we

Operator

this no program. for your in does I am showing at you questions This further conference. Thank today's participation conclude the time.

disconnect. may now You

ZimVie (ZIMV) 28 Feb 242023 Q4 Earnings call transcript