IVC - Earnings call transcript Q1 2022

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Lois Lee

Joining me on today's call from Invacare are Matt Monaghan, Chairman, President and Chief Executive Officer; and Kathy Leneghan, Senior Vice President and Chief Financial Officer. Today, we will be reviewing our first quarter 2022 financial results and providing investors with an update on our full year outlook. To help investors follow along, we have created slides to accompany this webcast.

For those dialing in, you can find a link to our webcast slide presentation at global.invacare.com/investor-relations. Further information can be found in our SEC filings.

are like forward-looking that that, statements nature, matters I'd we today's by begins, address make may about that Matt to during note call, their Before uncertain. the company quarter materially our Actual future today to in webcast on the slides uncertainties, various the those to first in I you statement our and due refer from earnings and cautionary results statements expressed second release. differ may included page our of

considered website. free are be discussed net please in and the For information, to today's as webcast the non-GAAP I adjusted slides turn an notes the reconciliations explanation Matt our earnings in the such that appendix slides related financial in of sales, items of call constant cash EBITDA, and and Monaghan. to constant in currency our release currency will call see the SG&A, now over flow the the on posted

Matthew Monaghan

Beginning our backlog revenue of started our the and pandemic-related we strong on across health and good X, you, as seating and and care traction mobility led and Thank growth, strength products regions with as new customers all continued encouraged improve. morning. by Lois, lines elevated We're gained Slide demand to high-value strong portfolio. product by access of continued with XXXX sales reflecting

environment. instituted higher our product and moving valuable products in price in quarter. drive engine, clinically increases would in the quarter orders Our we've fourth discontinued challenges our that the locations. gross aggregating stop To demand. ranges margin strong to the steps costs, like emphasized optimize anticipated taken as our and address of support offset products our during we which compelling At to value noted didn't time, produce impact customers innovation parts we've COVID, has first more shipping this, 'XX new to continued we negatively can't We've temporary same to current release, and and

year in time increasingly that line results We seasonality will the of further business Overall, and be quarter actions quarters. the with we sequential benefit shift to expect of this mix expectations, impactful anticipate results. the our and improve mitigating in our of to action. lag reflecting the addition, In take were first operating actions pricing

Slide can deep our projects business our better the and core areas. strategic a identified our X. yield improve to Turning to be After serve of in classified assistance and current with experts, to X broadly third-party results. customers review These processes of better and opportunities we've to

are to and of restructuring million This annual of streamline to completed, Overall, $XX savings. paid approximately in restructuring million announced benefit by our actions we run $XX million especially simplifying administrative provide be costs of through at million in funded leveraging as an and XXXX once approximately XXXX taken processes. an anticipate will XXXX. run by are on basis costs approximately organization, year-to-date and First, expected last to early operations we've actions to of approximately $X May a and taken basis. the lower technology benefit be a annual week, eliminate million noncore rate Actions $X we in least incurred $XX rate

We a simplifying track to costs the serve. have organization while record lowering strong of

year. are of SG&A the half expected decline meaningfully second to expenses result, a in the As

significant we categories. and chain product North drive expect product have more with gross products Combined through $XX a which drive is benefit reduced complexity pricing continued XXXX. in to uplift offset the critical the in customers of with compelling cost, lower turning expected Europe expected approximately higher COVID, clinical of The to in higher the Second, expected and we to new of We're supply remainder all we to year. to will ranges our for a foundation value profit costs, product for received strong launching by $X America is environment. in year. parts actions this line been the across a favorable with incremental products million efficiently. clinical us year mix. This mix, benefit product sales approximately on net deliver growth. the focusing These of still the can give are million and well results. our Even is value achieve sales remainder This narrow We solid anticipate and sales

IT, simplify spending. further other our to opportunities expense SG&A organization to to are addition, In expected administrative reduce related and

prior turn free for these the us achieve a expect improving sequentially over guidance detailed drive summary. adjusted I'll flow will full actions to cash and call financial financial now more the enabling We results higher EBITDA Kathy year. than year with to

Kathleen Leneghan

Thanks, Matt.

nearly increased Turning in seating sales products, of mobility consolidated XX% power lifestyle sales X.X% Constant demand results. double-digit primarily led net and by our with to as of on XX% sales strong. and remained Slide a in America mobility growth increases wheelchairs. North achieved increased net trends seating Europe attributable growth X.X% result products. Reported to and currency X and

variances. respiratory For the demand was including that sales year. declined similarly continued these largely components. sales as benefit of freight were first as costs of higher offset the in costs, to quarter I absent availability last delayed as and by chain increases disruptions the of would due saw more remind Gross quarterly costs but price than net as inflationary we material of profit input unfavorable well products, you strong supply a percentage

of higher unique year is last the Asia our a and quarter $X,XXX or us, steel price the example, mitigate approximately in to quarter first the These essential the Xx than equipment market of Invacare. shipped lifts critical $XX,XXX supporting from of container. price costs, year last For of competitors. Similarly, price but X.Xx paid costs the we the in was this the beds, year Due implemented more for products That which were is only also like input our macroeconomic and same cost to have input nature significant been by the the not wheelchairs. U.S. not in cost. for shipment we issues are is increases provide, a and container XX-foot quarter first to for to products first products

In addition, emphasizing as during mix progress clinical provide year. which value, prices higher support the anticipate we sales we products higher favorable selling that

While muted of of benefit with effectiveness prices, by the gross reflected at the selling the timing profit and contracts. was pricing fulfillment the higher backlog orders average old and customer

time, We and temporary a year undertaken the effective during expect actions nature of margins. have more the also issues At the impacted positively more we become as the to progresses same increasingly margins impact quarter.

to absenteeism, release, previously As fourth related Omicron coupled available operational lack the during inefficiencies. guided XXXX of quarter with components our led

We mix we continue optimize as inventory. low-margin primarily temporarily rollout to our product costs any currency increased unfavorable consideration Previously, classified further expenditures. of as the restructuring saw quarter strategic and of sell expenses we product have will to classification as XXXX this due higher the related Constant portfolio costs by we operating second SG&A and capital change. to these of as addition, would to the continue ERP classified expense with In company. been expense levels off actions paused SG&A be IT anticipate implemented through

remains the IT cash cost unchanged. program of the modernization Importantly,

especially the are structure Matt realize actions, is benefit to forward, anticipated half for strategic the our second the expense As going we of cost mentioned, to decrease which as year. SG&A reduce expected of

the directly orders North now are example, via customers enter in available orders in tools For our processed more automatically of system. e-commerce America, SAP than as XX%

additional expect serve to both portion to a Early customers orders and reduces be and of system. and decreased addition, and more e-mail automatically gross has the In while due as and intervention if the SG&A experience. tools become and feedback fax uploaded the or manual disposal. the large were EBITDA from enhanced costs significantly profit our been can customer associates higher we by quotes of reduced received with their efficiencies Operating loss favorable, familiar to at now This lower amount expense. they has adjusted improving

cash payable. for million also million, quarter. usage be was The the restructuring the We approximately year Free year. the company generally half flow generates in $XX.X first to million the in seasonality and half operating as payment generate with historic primarily remainder $X in charges rebates million, of with customer quarter the and to was $X.X the line and cash taken the of annual cash the are of savings rate restructuring consumes actions the $X the the realized first of quarter second run This expected loss to recognized the of over accounts fund in of in year.

actions We improve to realize working of benefit expect and of the capital year. restructuring free profitability remainder the in amplified with to this the as be and pricing the trend to cash cash along effective and flow the of converting we continue benefit

improve guided, throughout we free flow As to sequentially expect cash XXXX.

X. to Turning Slide

CARES the free compared both prior guidance year XXXX full our year. EBITDA benefit reaffirming in with are the loan excluding adjusted cash in of the improvement and forgiveness flow to We Act

of In effective are addition, improvement quarters anticipated with key in both the I to we higher we the the to products year portfolio, restructuring X benefit introduction actions. mix sequential continue net for the anticipate new of Matt. pricing will X% actions to year, as to favorable the product to last and of in are over product of be down and as pricing costs Reported realized. year the flat benefit call sales turn metrics compared X% to the now optimize partially offsets the last by offset

Matthew Monaghan

Thanks, Kathy.

we to by reactive to associates who worked and we're to hard taking Before serve how past reset environment. customers. delivered ensure persistent progress we conclude more in In care work continue many actions conditions Despite flexible like today, make easily. being solutions vital market challenges our so to years, few to address health XXXX, and I'd ever-changing we we the thank the to our

in we support these changes As for remain for generate your for expected value. updates time and will Nadia? now transformative We'll to look this drive XXXX Thank morning's actions durable to we other forward you take and continued progresses, the results confident profitable beyond. taking call. on providing questions. greater growth year shareholder and Overall,

Operator

first our And KeyBanc. question Instructions] Mishan comes of from [Operator today Matthew

Brett Fishbin

know given Can a do on the little restructuring and through you Matt. the modeling is Starting for you of Brett expect when XXXX, on just clearly it lay out there's different purposes? just X just today expected remarks, XXXX This you've bit in Fishbin components realize savings you touched into our off, the announced. programs I for to but

Matthew Monaghan

you. obviously, on year Actions X-K continue a and on with things have in you operate to to how us lower all we've the so Kathy, goes math then actions through why on of tools roughly of revealed that will fourth practically announced to year don't can bring the achieve will timing? into anniversary that will do the But through the for efficient precision that left year-to-date that we cost. this help can started, what's actions you first Brett, the it with quarter and precision the allow see evolve to based more XXXX. quarter and be that little Kathy, this

Kathleen Leneghan

Yes.

see the those for that given QX. implemented in benefit small to the majority timing were we've periods. be Actions in in QX, would would working actions So taken and North benefit The in notification company. well we already Europe, employees benefits QX as a given just employees are North the notification announced, as versus would quicker for both and America America. of of The very of when and in cease just Europe timing seeing

improvement structure year. that we've we the spoken and of as as going half see that's would would majority the the what's as of the to savings second of restructuring SG&A year, and primarily, half year, the be second well this about announced margins in the for drive the So in reduced previously,

Brett Fishbin

to I freight right. with status kind chain And some Or thinking level then seeing quo and materials. and costs any the is just of still appreciate it early the started of improvement quarter? of the first see around color. Have All there you're April in about versus you supply that elevated May?

Matthew Monaghan

If XXXX us, of but just of quarter for it's The volatility. we are and rate and elevated change. changes. improvement of more been stable, first What then can those really customers the prices absorb tough the and important honestly, a our markets in kind XXXX, generally was is

and XXXX little. a Ukraine the after improvements down even looks invasion little and I and on fuel customers talked in our deal cost, more some I gone back to We of temporary think issues We've work out that with slowed have cost with diesel can before think, us like the predictable. costs affect helps little higher further a suppliers. to a availability meaningfully bit things more seen But We've it's up. steel where that see and everyone.

So that things. about feels than price specific actual more better volatility the of

Brett Fishbin

All right. for And then lastly me.

there. improved other that directional hitting you a profitability the with dynamics confidence you key moving of in alluded out lens working to about But of Just thinking I the the of specific capital year-over-year, anything some drivers as free the gives just maybe thinking the guidance think one cash around some improvements pieces, moving there of is call you flow pieces. would about

Matthew Monaghan

can Maybe joint answer. me join here Kathy a on

our year. the sales I volatility capital management, that inventory in seeing those inventory early see what get results with tools of are giving into helping for operations improved finish us that in of new year lower the functionality you the we this of process looking favorable is for working tools and North in results suppliers the for add? that think with are material part deployed. we're you'd year would implementation as confidence and we and and Kathy, the up America got planning of the We've SAP AR

Kathleen Leneghan

Yes.

key a cash is improve we We by anticipate last driven the improvement of in profitability, and year. that cash flow free anticipate the the seasonal the improvement portion flow. turn season a That primarily we do have a cash inventory. sequentially -- will is will of X year. very balance that capital, quarters have but to we a the of free We have investment I do our in for the do significant also in sheet, in inventory working still that an think

Operator

comes our And next from question Labick Securities. Instructions] of CGS [Operator Bob

Peter Lukas

It's Pete Bob. Lukas for

year. One, your do pricing, terms pocket? a Are of discuss North how take reimbursement the American and Just to then rates if can more of little works? volume QX in in you a that start Or and bit you discuss And X-part for price of and going pricing with kind could up? detail assumptions that question. in comes out you

Matthew Monaghan

first you of part don't the why Kathy, that? take

Kathleen Leneghan

Yes.

be given would of company that year discontinuations for well offset That benefit revenues. We we've eliminate products roughly longer And as we would guidance X%. to does as or of on America more in probably side I anticipate the to taken North be be certain in reported the mentioned, down so that consolidated pricing revenues profile. product be to do North would true that we it concept no would basis. X% So on for as the Europe in on are the basis, X% being the have include regards same America. would in actions by that house. That that revenues as X% a threshold a well, anticipate discontinuation meet down the consolidated But a to would

Matthew Monaghan

And have depending then country reimbursement the flexibility levels, been on There's inflation. uplift minor States. some the shown and category moderate continue for United the in or some account product to

We a give the a world basket generally. it's absorbed on adjustment around have customers place with in Otherwise, us the based in factors. agreements pricing that certain marketplace of

the in over total that the is reimbursement for that reimbursement monthly the for fleet, something They'll put time indirect. customers a then of Some durability, get direct period a or fee a get and product, don't day] it like so where gets more product which is reused product. in for and per rental cost the long a [use care, they

Peter Lukas

on need get And much and pricing. Great. how often get in with in do -- And how sticking pricing just you products? How do the to reimbursement? you do the changes prices see often set parity

Matthew Monaghan

a price costs. depends local differences. when customers, the quarters, lot able we've we've we to the the process and between margin Well, and lag translate we're mechanism see reported in compression the And simple XX-ish that day few see higher you normally level that's a can had just really past of this quarter input to when changes our of that's into of on

to so efficient costs to be to to offset materials addition would those need imagine customers, you to effective do the in we take that we basic cost for finished enough goods actions more in and the in pricing So equation. we how that's convert our

increases steel, I all dialogue the from and seeing, is agencies think customers constructive No diesel, all we're plastics, of seen immune with forms. this we've one cost works. transportation very how reimbursement on that

total when ownership advantage of because service of or just their last I unreimbursed And cost can so an demonstrate more think in product refurbishment competitive. lower matter And and they're is to tend fleet conclusively it's is Invacare pretty the and that a time. with less puts normally buys remaining over longer someone less we reliable Invacare

our So that's allows growing hold equation for and to with the to value strong engaged be keep to company that continues us the business. customers

They're the the addition, supply designed new to supply in really a we out that meet they In through value the margin continue profile. chain, to modern clinical more chain have compelling effectively exchange and setting. roll go products

that's So equation here. the

Peter Lukas

more, if could. just I one Great. And

product the us revenues? examples you portfolio of some changes that can bigger made, give and that In margins few terms of changes a impacting the of you've maybe are

Matthew Monaghan

looking typically at are range We of their clinical value. range each in

have They less fewer price So in if low and steel things more for less valuable high amount same took clinical in example, end do a products, end the we more and a But on which roughly a bed have beds, in bed also it. a customers. and bed, has for you way. average, of for customers or more

when in or or of solve a So problem price XXx the high-value low-value the to price steel passing have you bed, different in marketplace. by the that bed a have might which on a triples, doubles

those an it's to the opportunity adjustments end. easier product at us So in every talk those for And category. customers making high to about are

these and inflationary working to and complex sales concert can seating things and delivered market value complex products team mobility be in that We align the clinicians in and have solutions saving times. simple simple to and simple aids, higher really everyone and naturally and in the our and beds, complex respiratory are

Operator

questions. back remarks. to [Operator I'll any over the Monaghan Matt for no closing call Instructions] further We hand currently have

Matthew Monaghan

on available are your good I morning. coordinate can which the Nadia, day. Have Kathy, this and a and questions, thanks, Lois for Lois you Thank Okay. everyone, call you, any follow-up time Lee. through for

INVACARE (IVCRQ) 14 May 222022 Q1 Earnings call transcript