ZIMV - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to ZimVie's Third Quarter 2024 Earnings Conference Call.

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 disclosures.

Marissa Bych

Thank you all for joining today's call. Earlier today, ZimVie released financial results for the quarter ended September 30, 2024. press well available as the website, the of as zimvie.com, on copy release on is company's A sec.gov.

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

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

Vafa Jamali

us. joining Good thank for afternoon, you and

quarter, delivering and across another of digital strong innovate biomaterials the we team Our implants, to million of executed revenue $XXX as portfolio continue solutions.

decreasing the included and both profile continued improving significant sequential products sold year-over-year of This on business. the the basis we improving of make operating quarter, the for to cost During our quarter. manufacturing efficiency, a our progress

our down $XXX and including In $XX a $XXX end debt million. leaving net gross in cash of with million $XX a debt million when of quarter of million addition, debt, balance us paid we

in make digital investments order expense to allocation profitability carefully teams, business. to training profile sales product our sessions. several continue and opportunities the our and our we improve about expanding and of today. thoughtful the some We're think R&D the fill portfolio accommodate market the physicians in see after programs, in capital continue to more on incremental both planning gaps symposia investments also to that interest capitalize our this sold-out dentistry We we Meanwhile, in making to

updates in Florida. the Southeast a offerings, discussing affected the I comment like Gardens, the of large including product on our Palm would United Beach to of on hurricanes recent portion headquarters our States, Before near that

did we the or associated early any to impact with quarter experience or storms. operations material Fortunately, not our financial third in these fourth results quarter

to best More that were the employees were go affected. our impacted. importantly, local our our doing support wishes all We're customers our that to and best community,

portfolio a with provide now me Let dental update, implants. starting

further, we the seeing are improving the overall we conditions. dental growth. resilience market we trends dental certain practices have in we of In American quarter improvements should We are in capitalize develop drove year-over-year these ZimVie market, regions, that to to are see as another beginning North confident on and U.S. of the advantageously health positioned modest and market

of Following a up seen these remarkable have adoption launch of quarter's of Gentech as components, offerings restorative our from last portfolio U.S. part of expanded we our portfolio.

is our and market, and providers. continued portfolio's We products. growth introductions, believe outpacing our premium quality TX the we have are to working market our share Pro implant implant received to and Additionally, of positively be through latest TSX expand the innovation by

are implants by dental patients reminder, pocket. out a predominantly paid of As

to and We more allow and thus market dental underpenetrated deliver remains implantologists financing this exciting. United to growth. effective opportunity arrangements favorable patients to procedure we environment Given implant believe for the world. dynamic, continuing a that around solutions and in drive interest The implants may innovative the rate access lower for look States forward

to Next, biomaterials. shifting

is we receive future grew what these portfolio to indicator healthy provide quarter, a bone surface a substitutes the implant with insertion. structures a biomaterials suitable in reflecting rate Our at of implant leading for or to Patients future diseased believe damaged procedures.

in as to for As biomaterials a such, should growth indicator serve implants. leading receive patients

Finally, adoption fuels portfolio of our growth practices. digital offering solutions greatly efficiency procedure dental increase and that by the

our scanner digital Our the our complete adoption XX% iTero X.X of increasing quarter, software in the introduced over fueled portfolio, excluding and sales, by RealGUIDE Medit grew partnership. recently third

software. Concierge [indiscernible] we to the further By procedures the in labor adoption on [indiscernible] further adopters, [indiscernible] feedback and continuing our the XX% investment our uptake financial driven performance our making this detail. of grow to our XX%, drive meaningful the from training and to and very on solution. With to outlook are medical review by digital underpenetrated office. and education drive this market portfolio service future. positive our effective, for quarter from We're large grew the and also into sales is launched [indiscernible] part adoption force, cost aims faster surgical for guide We'll I in Rich over into we the software X.X recently continue Our focus to to product RealGUIDE continue innovate further Implant greater line we'll launch will continued a growth reflecting positioning sales, in efforts, and platform which to provide receiving updates. value now and the more and turn of forward grew our

Richard Heppenstall

year for by our we'll results by XXXX. outlook and Vafa, I'll our afternoon, everyone. XXXX good Thanks, reviewing quarter providing the commentary on begin third close continuing operations and for full

third U.S. X.X%, continue soft, portfolio sales sales quarter third-party $XX.X net for was third-party XXXX of prior financial discontinued the decrease Thus, Total our X.X%. currency. The in of scanner our currency segment Spain. XXXX. digital financial the finalized an refer the is rates X, sales for in U.S. X.X% by products, third-party we discontinued Spine constant decline of by in driven operations X% and constant our reflects by net a from in the Please business sales. and As statements. our of quarter million, increase remain sales of results $XX.X to a with year oral and primarily a and a XX-Q reflected for the in Outside versus sales, excluding the decline and third of a spine dentistry biomaterials. to in net grew of decreased in our basis on April million were X% of the operations. Beginning of of When million Italy In sale of reported slower impact $XXX.X reminder, X.X% on reported market period. restorative the which of U.S., driven Japan timing orders

XXXX versus cost decreased XX.X% Third adjusted the XX period. was products prior quarter XX.X% sold of basis in points year

sequentially basis XX More cost of importantly, of XXXX. products from quarter sold second the adjusted decreased points

the $X.X are and to to sales primarily continuing resulting sales expense. direct income timing service $X.X million million, or count signaling $XX.X transition of been prior innovation. the X% sales $XX.X per and income EBITDA following of some in expenses was million force. Other we quarter [indiscernible] third attributable X.X% EBITDA related efficiencies continuing year $X.X and QX million and million of now initiatives in the off. compared expense cost offset on million that was the of a XXXX have We research investment compares our sales, to XXXX the to $XX.X attributable $X.XX year period. Adjusted increased are adjusted administrative in service that share Adjusted time compares we of year of our development per share shares. reflects arrangements margin general for XX.X includes earnings million to sale in $XX.X and manufacturing to adjusted operations remain from margin or paying spine from stranded prior XX.X% the SG&A QX professional sale costs prior diluted of XX.X% million been product in share fully U.S. in our our have on of to pleased certain that new business of focusing adjusted of a operations XXXX the agreements in or due

committed to continued the investment solid of to commitment underscores third the our execution in benefits manufacturing Our further of the initiatives efficiency these expand long-term performance financial our sale and of plus of utilization year of remain some Spine. position in objective XX% the of for U.S. quarter completion achieving sales X post We and to our R&D us margin EBITDA growth. to

sheet. balance the to Turning

of the end was cash consolidated As third quarter the ZimVie operations of continuing million. XXXX $XX

a note sale not yielding approximately million, debt $XX our our initiative holders of During include the $XXX of to the net our the quarter, debt. net the of seller $XX principal resumed loan Note holders approximately Spine million Gross including million of term the business. debt of third million, $XXX from of debt debt shifting we quarter on does balance by cash. the was the value end from repaying equity at

to which continue $XXX credit revolving continues remain our maintain we undrawn. Additionally, million facility, to

the XXXX. year for outlook our full toward Turning

year are previously. to We $XXX million full from to narrowing million guidance $XXX $XXX million to our $XXX revenue range million

narrowing full to margin the XX.X% an $XX for in range XX.X% XXXX. adjusted are EBITDA the range resulting We sales million, our $XX million adjusted EBITDA year also guidance to full of to in of year

sale adjusted we year EBITDA earlier, XX% a or post April mentioned also committed X of As XXXX. to margin X, plus remain Spine

the compensation are to And adjusted EPS be narrowing share-based approximately lastly, XXXX. expect expense our year we for We million $X.X full guidance.

XX.X share on per earnings With shares. diluted a to over that, million now the $X.XX Specifically, count share we fully turn and generate call share adjusted Vafa. of to expect back $X.XX per I'll between

Vafa Jamali

investments progress quarter on profitability profile make to in Thank to grow. improving made in while and the in steady you, innovate continuing the business We our third goals Rich. our

team With a to it diligently. great continuously We I'll have up also questions. open who's operated that,

Operator

at comes Our Instructions] from question Company. first Saxon & Needham David [Operator

David Saxon

quantify the recovers? quarter, be And how overall briefly slip? start of U.S., do in like cautiously internationally, the then might specifically by results sounds the sounds orders does just the fourth grow to you I'll do the pushed on you quarter. Or -- some be third It recovery I'd thinking to guidance kind back? come U.S. guidance. optimistic. in Or assume market you're Maybe that? love about the like can those can in just And hear confirm, it you driven then quarter? fourth actually international they like And the orders saw will Maybe

Vafa Jamali

I'll Rich. and pass start to I'll on David. it Thanks,

feeling we America that growth in in returning are think fourth about the quarter. I North optimistic

and Italy of international bit for better that a a Europe. then waiting something will regard this of macro coming that. I the been anxiously better feeling little to rest of that's orders, timing So with growth was in resume and and [indiscernible] believe it With was Japan we've quarter. bit

the. and pick rest in likely resume will of would you So as Europe it is There those Japan -- right a a then Italy bit that And now asked. we're orders Rich? think of that feeling. macro I the pressure would up

Richard Heppenstall

points to commentary. data of to couple just Vafa's Yes, add a

business revenue So first U.S. profile. of XX% and the our foremost, overall us for is

Obviously, the with we So really grew sales, that you fact X.X% exclude mentioned U.S. of we're pleased David, call, the the as quarter. on in third generated. actually the impact that iTero When we

result in a result. the quarter, grow And expect top that so the of pleased for in U.S. we're we're believe business But and the end really our to that toward peer where executing we with to U.S. also the as fourth continue encouraged we group

really continue with well force forward. that and U.S. positioned also to invest to we're we U.S. we're as So pleased call, the going in mentioned in how our continue path during the sales

last Vafa side, the of a year bolus this the impact in year. a timing the was orders compare in Japan There We of had year-over-year OUS obviously that On of orders. QX -- was right.

the that impact we about business we and also also too, on grow EMEA softer in quarter. or distributor business the a Vafa which us. Europe, forward. mentioned, had, And can for looking European the was return that is be to for in DSO there rather little then that Spain was and quarter, put we expect based was fourth in for growth the to then As $X of million U.S. in Japan guidance probably orders that us. -- choppy We fourth Italy, are to timing bit to correctly business, a lost But we've

David Saxon

the on started talking you you just lead it's this so I side, believe talked then where quarter, I mean And believe it dynamic. whole last a helpful. you restorative was That about Okay. indicator. about

patients way that? early those patient kind the So funnel backlog? maybe seeing actually and it Any that Or to is get I'd love started too the to hear, have of to for you size implants? return

Vafa Jamali

haven't accurately. it We able been size to

think is do back. probably is gave U.S. I'd the pockets market. is disingenuous profitable So that, a we work, if indicator leading coming I the and are you most our be of we But seeing a biomaterials especially particular U.S. Remember, number. good that in

activity of lot a funds it us. there, for perform we as So

So exactly we see numbers haven't quite indicator. do still is they quantified to the numbers I quite and back. don't that come put just think it but to it, where parse how actively I haven't seen But it. those leading fund. are we I a in the trying

David Saxon

And for right. And Rich, then the just All on Okay. P&L. Okay. then lastly

working So higher. also gross like sounds margin estimates at on to is my This was some relative efficiency you're SG&A higher. was It initiatives. least.

-- can then mid- that gross forward? going and of call it, sustain And going on you? forward? kind normal takes does Is should of, And think the side, there? So kind about SG&A kind talk of that puts about you this how we for margin

Richard Heppenstall

Yes.

and over mentioned right, quarter-over-quarter year, Toward in end the So we're And year-over-year the the as firstly, with of underabsorption some margin. point points. lot had financial David, we to gross additional call, XXX P&L facilities. of the main XXX of basis performance manufacturing on quarter, a we've obviously of on pleased improvement sequential increase driver really was a been basis in we in the last the as EBITDA the flexibility

moving We of balance talked in manufacturing all of our about which in sitting -- kind cost our at in has then a those in we're manifested of so from all an organization high-runner bore benefit we also and the sheet than production to started were the on about flushed themselves location, resized production started full the been format in has also XX% how our Valencia right Valencia. Valencia, quarter. And Gardens through. plant of of organizational resizing really been we -- and that running initiatives have products production the TSX and variances third -- now did

talked business the to our of am lot give And get a as for to the going to in been Vafa the 'XX, a Vafa be talked we Vafa feel you business being meritocracy. of and was And quarter. position detail to continue. one, and currently where And similar then is we've a the going into I that down so about things do about is. will have where historically we in are we're that quarter, range P&L expecting but these had where I to some this on of And really we've good in and positioned. it third it frankly, type the haven't down gross the stay margin And to I plan fourth to about further things.

Our balance shape. really sheet good is in

is Our stabilizing particularly the is in gross margin and sales U.S. higher

has And we're successful proceeds and what some of have of place initiatives the on XX over is we're the we're so last invest months sales force. doing some us taking innovation, driver to U.S. in continuing those from a really gross that which sales also we and for in then been the margin,

in to making that third the we drive in as result. we the so at expect we're long-term And sure kind invested we quietly sustainable going sales growth. that of to quarter. look can force a And continue

balance value we areas of of that sure those term. out income best we're make the to business getting that make statement long we'll in sure so the the all the And across

Vafa Jamali

David, Just driver big to add mix I to, is for think, margin a too.

you implant see mix So there. improvement as also improves, the should

Operator

[Operator Miksic next Instructions] Barclays. Matt comes Our at question from

Unknown Analyst

how next give one in exiting few But like you're year? maybe I some apologize apologize, year calls and first, can covered on background I going volumes here. And have -- the of get if us already, wanted color to maybe of QX? maybe feeling I be haven't just quarter what the here. it I a to quick confidence the in entering for of Well, on jumped just and just some I any and in a follow-up. to you're on noise is the sense -- you I wanted different the And congrats you

Vafa Jamali

we And we're We've to return profitable. the largest Yes. North that are growth. way and And most most ending. it's retained like right? American the the comfortable the is the market I about us seeing for guidance, So the and year to said, is health -- the

us So is more the the of XX confident many respects, this Rich? moments months. relative in past one to for

Richard Heppenstall

I this we in the We Matt. Yes, Vafa think for -- right, sequentially quarter. think second grew than the U.S. is did I better --

I the for of the of So are positive that's some timers. quarter we like OUS us. said, had issues a in kind And one that then

also that to we So business expect grow. the U.S.

but guide. we're range so the narrowing -- And pretty had We broad a before.

next a we're And you And so XXX the this think I the year for gross drop on But speaking, prudently obviously at where being interest good to if it balance we a look guide we for is ZimVie, business we're full the place, the narrowing to proceeding margin XXX invested landscape with fit. We're later I our the and TSAs is just that on debt. to pretty I rates see in year, cash going to and that mean, that we paying us right? kind on think of basis. stabilizing sale is next think will particular down a date. spine then of are call healthy, and SG&A starting have at in are qualitatively puts HIG year not are up I The well. is

to position going There's to we're going to And this that but we particular get really on to not that. feel obviously guide like into next run a so we're we're before still good year, some we roads call.

Unknown Analyst

And and it where though. the it install haven't of you of go. how if them. That's feel how but Yes, appreciate you apologies then hear the to love -- that and and you progressing utilization of that's metrics helpful, already about can side I'd how -- sort shared you of this, and guide digital you've covered the if of just sort color. real again, I course. already business think

Vafa Jamali

is underpenetrated uptake that because much We digital very us. for highlight Digital most we significantly. a and has is market for been in The this enabler a that still growth, we serve. that think real pretty see markets real

growth both business. know essentially RealGUIDE constitute a Rich, Implant portion of major had So in we and digital I the both from Concierge,

Richard Heppenstall

Yes.

a a we which like the you business, So sales digital XX% iTero the we'll just exclude -- that right, then comment, healthy what but our guide grew to at right, it's and back We're year-over-year over digital a XX% global on a of up kind specifically, from from as and basis [indiscernible] software a that of piece on drag. up was basis. real further carving classify is faster because that, been

-- we're continued and and highly business that with differentiated So pretty that we're is sticky, pretty pleased so progress.

Operator

This now concludes I the to back turn like question-and-answer to would it for session. closing remarks. Vafa

Vafa Jamali

making, Thanks to we're overall very we starting the feel we're before, much. about to turn. Like feeling company, good the progress the I market the improvements is said and that

So quite confidence are the about bit we [indiscernible]. and in where a we're have right now better feeling

So appreciate rest and everybody being of a on the great you day. the call wish

Operator

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

now You disconnect. may

ZimVie (ZIMV) 30 Oct 242024 Q3 Earnings call transcript