ZIMV - Earnings call transcript Q1 2024

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Operator

Good afternoon, and welcome to ZimVie's First Quarter 2024 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 from Gilmartin Group for introductory disclosure.

Marissa Bych

Thank you all for joining today's call. Earlier today, ZimVie released financial results for the quarter ended March 31, 2024. press well available as the website, the of as zimvie.com, on copy release on is company's A sec.gov.

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

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

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

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

Vafa Jamali

had Good pleased all joining afternoon, an and for and far, active with us. thank thus We've XXXX progress. you I'm our

and sale the reshape Immediately to spine. the cost We've a begun million to promissory of sale, following refocused a $XX of recent pure-play for debt $XXX company delivering $XXX our portfolio. and paid sale and organization cash our already million profile spine million promise comprehensive following a the $XXX of actions With business dental profile our including rightsize note, of our concrete in the as in with taking our we down industry-leading total million consideration, financial on business. we're

to for rightsizing reducing confident legal our manufacturing costs executing year, corporate we're further in next the to expenses solutions, future of that addition continued over profile those as while differentiated reducing I'm deliver In our shareholder for adoption the corporate expenses of in our margin operations. invest improve also our of the improve infrastructure, for we efficiency and years We're scale in very the actions improvement such solutions follow. providers, pathway and we're our and the patients confident continuing this as value. to and business to continue IT company to excited also optimize for

$X As and we to we as full first enter our and components implant, market. billion biomaterials company, this leadership solutions, leaner, quarter all grow more man dental the a digital our in focused position have

innovative strategy implant grounded driving customers the expansion market in Our whole. a of dentistry while gaining as outstanding, is delivering in support market the products to share our of

led our restorative tools hold best-in-class our TSX TX TSX and Our PRO traction. and both rapid implant and by is abutments PRO and and demonstrated implants launches surgical also strong dental recent most implant premium portfolio have TX commercial components. and

history This includes Our tissue of results. our biomaterials solution. Puros leading and new wide portfolio a well-documented regenerative bone membrane, clinical includes graft the products with portfolio substitutes allograft selection of products

procedures aesthetic implant foundation implant a in create to and outcome. used for also are desirable provide products biomaterials Our the the

Our solutions and scanning end-to-end replacement digital solutions for includes software. surgery dentistry tooth procedures, including guided portfolio digital intraoral

workflow, surgeries. many perform what they benefiting By Practices on best, in these our workflow recognizing typically digital solutions time more accuracy more implant than cases that implant don't. digital efficiency are and our solutions, that using greater enhanced adopt customers their focusing from do practices procedural performing

chair outcomes, patient In patient excellent satisfaction, practices great in addition, restorative time, small especially customized seeing these operations. reduce are

complete We workflow. digital performed cases estimate only are that implant XX% about today of the dental using

adoption. providers incredible sets, of and guided which our can further to continue surgery an As on a yield benefits training result, growth and the our opportunity see we software

delivering are portfolio, technologies. In our dental Carlsbad, advantage Palm and to workflow in Across our of the Florida, Medical Switzerland. bring in Beach patients, adoption and our our dentists programs, we commercial Gardens, clinicians, training aiding are from California, lab. the training and the and greatly across industry-leading value education institutes stakeholders, education stems we

regular to didactic with and programs the We also in hands-on educate hold and clinicians field the implantology. grow field

We deliver our our healthy, training, the business. basis to coupled form efforts the net will growth with solutions differentiated efficient, expect in practices, that high-quality for to comprehensive long-term

a focus operational on With progress. little

across team our spine business. improvements X focused has to of past those operational material the worked years, immensely were our within business. Over hard our execute Many improvements

business, and forward, automation, As we'll focus manufacturing the including of chain we move of much on take dental efficiency plants. optimization, to improving supply a our playbook same that our

of result development mentioned. satisfaction. is we customer improvements driven to platform by That these said, margin a I drive clear our previously reflected and and or our be expect should the very will that research plans, innovation be As commercial to efficiency costs. reduce not improvement reduce

and performance detail. I'll in the review greater to over Rich forward now turn line our outlook financial to

Richard Heppenstall

XXXX. begin everyone. good first XXXX results commentary Thanks, by will for outlook Vafa. I'll full reviewing afternoon, the by And year and our our providing close quarter on

spine As segment discontinued our financial in in XXXX. on finalized operations statements. our X, reflected a business April is reminder, we spine Thus, our

we of which Like XXXX filings, operations, of and spine and business. continuing business discontinued which legacy corporate the Please dental operations. between from refer our financial results our majority includes comprises costs did the discontinued XXXX the we QX began XX-Q QX for financials have bifurcated our to time at financial operations, our

Turning to operations. continued

offset net of market portfolios. decrease implant a the in biomaterials U.S. quarter XXXX iTero in third-party XXXX million, decreased for of up by strength sales solutions net in and digital In by of and sales constant in first basis decline weaker quarter net currency. rates and X.X% of of $XX.X reported a by our capital of Third-party reported driven U.S., $XX.X sales, a lower on the increased X.X%, Outside million partially X.X% million, and sales were a first the X.X% $XXX.X for currency. of the third-party constant

remains competitive seen We recent the market serve. stability strong dental we over core markets OUS the have and in in quarters, position our

XXXX mix absorption. due product and cost of compared prior sold quarter manufacturing products adjusted First was unfavorable the year XX.X% to lower in to of XX.X% sales period

We expect time benefit cut X.X% prior year. as QX and over improvement the sales or duplicative recover. adjusted sales million a we in development efficiency product expense of as in implant cost, of sales organization, reserve more streamline $X.X mix compared or XXXX products from improve favorable $X.X X.X% of sold to manufacturing million the of cost

margin. EBITDA million the XXXX per share compared operations in XX.X attributable driven on adjusted expenses reductions a largely $XX.X earnings quarter share general million to first IT of the Adjusted was in count of QX XXXX $X.XX to a $XX.X continuing and of in prior adjusted continuing or shares. $XX.X operations sales, expenses. to and attributable legal XXXX EBITDA share was year million fully-diluted by million XX.X% administrative a

resize as We of XX% financial on year achieving to are with performance very plus as company. EBITDA X our margins are reposition pleased a our XXXX plan we the dental to objective pure-play of first committed delivering ZimVie sale. remain financial our quarter post and in We spine

earlier mentioned X. following balance very the sheet Vafa our of of with on position million repayment the of April pleased As are the we debt $XXX in call,

debt cash balance of XXXX, million a $XXX a consolidated debt gross yielding balance balance $XXX of million. approximately of of and X, a April net As had approximately ZimVie approximately million $XX we

undrawn. $XXX we are revolving maintaining remains facility, credit which addition, million In

a will to will to deploying capital cash the to our resources and meritocracy, about basis, be think we allocation reduce on as a to go-forward continue fund flow business, the we we business further return That being initiatives. operate continue deploy the As highest said, priority excess to debt. will

year XXXX. Turning now full towards the for our outlook

expecting markets, softness compared of believe year at accounts our experienced to an We XXXX. We reflecting revenue $XXX implants that the year-over-year to in our guidance XXXX to are QX midpoint some appropriately for increase be in and end $XXX the in in fiscal million for the modest particularly the million, decline X.X% and we U.S. ongoing of range

that are strength when very positions end for differentiated markets and stabilize We executional well product improve. confident us and our our portfolio our

Specifically XXXX. second looking the of at quarter

X% be sequentially market, X%, the lower by patterns QX similar Given largely current the expect our we seasonal implant XXXX. trends and XXXX revenue U.S. in to in to sales to

range EBITDA of million, to EBITDA in $XX year fiscal XX.X% XXXX to the million $XX expect in in margin range sales. adjusted of We the adjusted an XX.X% of resulting to be

guidance adjusted EBITDA our increasing to with pleased QX are in we implies, performance As our that have generate we expect to sold we and business. now date, spine the

committed As to X, remain XX% mentioned by earlier, we XXXX. margin EBITDA adjusted April a plus

of of be pay our range compensation XXXX. million expense million million, inclusive Turning expected be in interest down approximately a be to for our profile. the to expense the to of to is we H.I.G., $XX the to XXXX the we will $XX portion substantial now quarter of debt payment with interest seller in note million expect interest accruing expense $XX.X action kind year. recent full on first expense and interest for our to $X.X of the $XX.X million Share-based Considering

share generate per share We share expect adjusted to a of XX.X of million $X.XX shares. per count on to earnings fully-diluted $X.XX

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

Vafa Jamali

I'm progress pleased ahead of year. about look excited And Rich. throughout company. a and while us us. significant ahead forward you, Thank the had organization the by equally the on as ZimVie prospects with completely you success energized I'm we've value. over past we've reshaped as an year, shareholder our the the opportunity I'm updating as to delivering of always, dental pure-play I

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

Operator

Barclays. first Instructions] Matt question The comes from line of Miksic [Operator the of

Matthew Miksic

one shifts follow then were mix comment as about year. little rest take of more describing you the what maybe kinds sort So to improving been throughout this just and I have in follow-up. And color far or on year up of could sort maybe, you so on the mix have help I of if of the actions what a your and can catalysts Vafa, mix drive

Vafa Jamali

Sure.

a both it are Rich, have where feeling portfolio, seeing think, you could us on It's the we it color most. of geographical the is on us. we're where So and an little mix perhaps bit specifically. we're give seeing I impact

Richard Heppenstall

story actually revenue items. to our boils QX down for two Matt, Hey, Yes.

capital is one of first on sales some pressure The which we're experiencing the side.

right, that distribute, margin quarter was we is year. which the us, iTero lower prior the lower so in versus for And

release, but also area digital. including and we're The in is quarter, from U.S. around seeing we're across grew for plus specifically X% U.S. sales our of also in -- on in rest challenging U.S. quarter. the of implants, a implants. mean inclusive iTero But the rolls noticed you market other And implants. for portfolio, continued growth But currency the U.S., press both we're and biomaterials to that as the I so largely European around constant example, the strength seeing over organization down we're strength seeing the X% it

Vafa Jamali

been pricing for pretty actually also has Matt, stable us. that, With

think I what from unlike different been So which we've others, we're been has relatively about pricing down from heard what stable, we've X%, reading.

Matthew Miksic

That's year, that right what year great. first -- now, path you you're the talking just am of guess timing printing? EBITDA, to XX% on buying about year? that's as full the I be quarter to read next April And X understanding again, to I then we to of Or next what should expect as that,

Vafa Jamali

that to that continue quicker XX%. Correct. at the be we We're doing to like be we'll improvements kind seeing everything of and period, to And at make we get can to to always, it. will end of

Matthew Miksic

Okay.

will you helping map operationally, And that like sort a just mentioned, maybe more or an as get bit about little the of of year. drivers think obviously, if XX%, you commercially, talk some path or either faster. on of key execution having I'm to the you internally that things sort you the time of impact there mix, detail be sure this could

Vafa Jamali

Right.

and you else, running So bigger. we if you Imagine largely, was mean, a a I that. if look were collapsing holding our at really down with divisions we break have where at a central had have corporate we're group a ZimVie of couple -- where like more infrastructure to we that costs, company then

So there's And already there. of a that an portion we've large element out. cost of taken

next IT which we next buckets, those the our then taking two costs, are and probably legal piece is the ones that And costs and are biggest at you out. look

from. purchased services paid, fees mostly are those So

Rich, transition price and are funded Spine, that the out. we've a which And the we rate. a And which example, -- laid also at licenses will missed agreements, where when lower subscription H.I.G.'s of we know exactly that well. on buffer of much basically anything is we out cost IT by have on then those will For the kind of services renew come when some do help basically plan that, on also top also acquisition I of as we service that? got

Richard Heppenstall

Yes.

finding pretty well think commercial parts of perspective, there's though sticky execution challenges is from of mean, perspective that products, I that the even our Just and in like with the of within I quickly to we're around one our the digital, really particular market. known commercial strength right? your execution customers. But some are I things commercial comment, a think macro down a

don't really too a seeing often like but just the we like We're so seeing same-store talk And it sales, basis. on we're not a necessarily about decline sales same-store customers organization. in leading

stabilizing talking commercial feel so execution the to we And towards really strength the part though so position half. year, the the is and back our of us about and is of our portfolio going industry as well for the back

Matthew Miksic

Okay.

some than flows? maybe digital might takes subscription line internal implants. that Is of and it softer maybe cost less procedure some just of in maybe of see So the way? of it a sort to at kind more little and sounds puts characterize of bit a we the way And rationalization, procedure fair is programs. a sort like the So episodic revenue as fair

Vafa Jamali

purchases slow somewhat Undoubtedly, of They're they no allocation XX% buying if Yes. and procedures line, the capital down, But seeing be close reduced. as the that's growth customer. surgery we're will those for go. guided to

there. seeing high very getting very, And we're a great rate that subscription. renewal great, So for adoption we're

elements So through going we're think customers. we of like point end the on that. a implants we're think to said, pulling And more us. the I that Once have good returns, market pretty recovery I our for all to

pretty that the So got I'm confident right feeling we've portfolio.

Operator

This in the does participation your program. for you conference. Thank today's conclude

now disconnect. may You

Vafa Jamali

you. Thank

ZimVie (ZIMV) 8 May 242024 Q1 Earnings call transcript