- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Invacare Third Quarter 2022 Conference Call and Webcast. [Operator Instructions] This conference is being recorded, Tuesday, November 8, 2022. I will now hand over to Lois Lee, Invacare's Director of Treasury and Investor Relations.

Lois Lee

Thank you.

call Executive are Senior Officer; and Financial today's President Purtill, Vice on Chief Chief and and Officer. me from Geoff Invacare Interim President Joining Kathy Leneghan, results our our on outlook. quarter reviewing an business be will investors with we XXXX Today, financial and providing update third webcast. investors help this we slides to have To created along, accompany follow

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

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

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

Geoffrey Purtill

Thank everyone. and you, morning, good Lois,

how I to am pleased say be morning. to like I'd this begin, we Before here

I of solutions experiences to that their hard for I care wholeheartedly quality associates our has as I play products, traveling users the central am been and in that I thank the of with a Invacare have life markets. home of familiar make years role, all providing health possible. them While for want over to to as and responsibilities, various meeting around have with increasing role believe very CEO I'm enjoyed customers end by and many organization improving I Invacare the new as our the roles possible, work. in for and XX life's

President and the X strategic Just over and optimize months company the then, many initiatives ago, further acted performance. about return various the to excited Since has CEO. to ahead strengthen business opportunities business to named Interim was profitability. I’m the I on

see in early we was which to increased X, late securing can the financing, of on by you portion financial unlock million As flexibility Slide and of October, supply July our $XX chain. a additional used

As impacted due fourth have Early improved. Kathy in more delivery component since of were full expect already we chain growth sequential this in have for the shortages by which will key challenges quarter, deliver in the later, to to quarter. explain metrics seen Third liquidity detail and revenues quarter our the supplier supply holds and additional benefit

vendors challenges. continue trust and our these regain of We the customers of our we hard through the navigate to confidence work to as

Turning to transformation plan. our

which We hard at the categories, that streams, and last orders the of mobility profitability. more since have aspect carefully the leaving Invacare options part growth to the Invacare's every for position core end have as revenue product our are unturned strategic spent seating experienced have core evaluating better lifestyle of determined improving future. and we After look of the XX% year we no taking and business, a and open year, stone our

end production the of a the As respiratory by are result, discontinuing we products year. of

honor obligations. parts regulatory warranty respiratory services and our customers and of We continue will to and respiratory-related needs our support the

Combined profitability lower COVID-related targets. anticipated previously the demand. market respiratory As with are supply pressures, guided, further costs our products of decline and excess inflationary meet input higher no minimum and given longer respiratory sales in products to

Turning to Board. our

committed our business who shareholder and multifaceted Board forward through necessary of our value. we transformation. as with we and to directors plan execution expertise full accelerate action deep the have our are turnarounds. increase new continue look to in three navigate decisive taking closely We to strategic to In added have summary, We working

in progress months' revenue early the are in great few fourth profitability quarter. made improvements and have far just driving time have a We already as sequential taken actions so we

Turning X. Slide to

focus are As have we I categories updating potential. our mentioned strategic earlier, priorities on resources our to highest the those which

product market mobility chain reduces core categories Our a orders. the strong supply complexity demographics and serve seating of continued and overall. experience products lifestyle to the and favorable and of These growing demand with

and Our fully serve on We product turn refreshed focus the driving to operations provide our improve and award-winning Kathy, I summary. that anticipate by gross over we who benefits. deliver to profitability important line increase user interest are great higher will cost mix, financial a end shareholder to our expand of products customer detailed value. streamlining reduce categories, more call and ultimately drive now margin, will will core

Kathy Leneghan

Thanks, Geoff.

and X. issues fulfill These quarter. main chain Turning supply improved existing so quarter. the including to categories, reported within to far net fourth Slide Consolidated products challenges, manufacture declined orders have across to in shortages, sales due all primarily which limited ability product the substantially our component

In exchange, the respiratory remainder addition, product were the America, modest of reported revenues revenues the earned in was North significantly as growth quarter given challenges. anticipated. to constant due sales the outside significantly U.S., of strength Europe in the in reported but foreign net third impacted sales products, achieved U.S. categories, despite due dollar. of aforementioned the In our decline as than approximately Europe, Year-to-date, XX% by anomaly. are unfavorable more most sales the In net of half unfavorable currency exchange, declined net with has to all foreign

elevated margins were & of Gross to third decision to global benefits XXX component due higher discontinue challenges; $XX.X input supply the component mentioned. decreased points Notably, to intermittent and unfavorable and by million Geoff SG&A chain to obligations components million paused for the by respiratory shortages, of to basis we the materials; costs due compared currency primarily end last actions. to and further to of purchase production input offset as were of orders and core half partially and remain partially other production as margin quarter Turning pricing write-down higher key of by costs, chain holds. inventory electronic as the lower rollout, IT at of lifestyle to end supplier related delivery from products, as the impacted due Open the $X.X of shortages exchange, challenges due supply any expenses first offset to year. the orders operating Constant stoppages mobility our products products. costs. XXXX, similar expense at and $XX.X primarily ERP million increased seating previously employment Open classified foreign

remains decreased unfavorable due primarily of increased lower and of EBITDA cash the obligation reminder, modernization respiratory unchanged. sales, a adjusted loss As to cost the Operating exchange. and product related purchase and foreign to discontinuation inventory the line the program IT write-downs

anticipated, As from its transformation proceeds initiatives. company accelerate a transactions of utilized the financing help to portion and chain the unlock supply the the

as see in adjusted EBITDA open begin more sequential a sales. expect convert We improvement orders to into we efficiently to

While the third remain mobility and category. and quarter markets was orders strong product and continue & seating serve underlying for experience challenging, to demand we healthy we our the growing, lifestyle and

Turning to X. Slide

discontinuation due with SG&A realize EBITDA of were Free and profit net fourth basis. expected cash quarter all the a mentioned with announced impacted Looking chain to respiratory of unfavorable expense, far, the at challenges foreign categories quarter of accounts was flow SG&A of flow decreased by million chain. reduce also declines by and unlock actions fund in expense product sales million with Overall, reduce Constant loss loss the our operating previously purchase lower materials X.X% seen structure enacted. Operating of adjusted Early used decreased production cost the usage to driven we the to is to incoming gross benefits previously exchange X%. due loss lower inventory further thus for sequentially, on increased currency proceeds incremental products. write-down costs. lower in supply improve have payable. Reported related we sequential improve $XX.X to performance $X.X to to decreased the the to financing of from supply the be revenues, our as actions operating as and employment the obligations the from the and

bode Turning fourth X. year. we to the Early favorable have of the quarter, to for remainder trends begun well Slide in which the see the

exchange. the initiatives fourth anticipates company on sales in net financial adjusted believe key we to over Adjusted for to growth, restructuring in sequentially, EBITDA restructuring quarter. by improve already higher executed, result quarter, basis, of will a continued currency We North the sequential profitability company and see to support financing, as expects efficiency in performance. positive future improved first offset anticipated improvement fourth sequential Europe seen The additional it the is its to the unfavorable actions, access to fourth months also currency the our operational effectiveness that components. will pace increased EBITDA call quarter. consolidated segment for Geoff. it deliver X quarter Through will the back focuses on America by the revenue improvement constant driven gross materials a incremental charges for improved attributable of pricing foreign and the On I to benefits, long-term. incur As turn is of partially in net have growth our transformation constant to profit we sales of and this actions, the now addition have improving

Geoffrey Purtill

Thanks, Kathy.

in and opportunities beyond. Turning has XXXX identified to to improved Slide additional profitability X. The company growth and drive

we By for optimization, include Invacare are will to continued to simplification, announcing actions opportunities, morning's strengthen Thank evolve the position. we and may the on not two believe they look finalize. can As we transformation the the capitalize support rationalization, this and to as to actions supply call. liquidity business. of organization to for and quarters demonstrated We chain long-term continuing announcement, leadership rightsizing forward strengths an enhancements. return to make next Invacare for afraid various continue you footprint have time respiratory decisions, implement health taking actions of over further your line and industry with These company's product and tough we the

We questions. will now take

Operator

Bob first ahead. Our [Operator Instructions] from CJS. Labick Please from go is question

Peter Lukas

for It's Good Lukas morning. Hi. Pete Bob.

think kind out that something and as look buyers about out seems of that that you could the Is Just like see be how is you that, of that value worth world? that of you there? that? be can And further enterprise because valuable rest actions, how As do thinking it you the to we look at separated? Europe taking people are the more Asking for about the than company. to? Are alone there would business

Kathy Leneghan

thanks Yes, the question. for Pete,

spoken happy stronger North into European as revenue with players business. profitability. a Obviously, our market for potential pretty could very be there so perspective. and for the But in business. an company house, many European on very well, was basis. from much that previously, And business we different are so a businesses, European we and but we from the their we've anomaly -- in are It's overlaps as not see there particular two QX of the stronger are QX there separate the but revenues, but some business side in look between the the the continue obviously, the space of pretty and the house, they of think side for sight healthy are improvements to the I the European business are America the only on make for we company, on global line interest

Peter Lukas

has actually And Thanks. mobility, despite U.S. really of seems growing set fresh the tough Geoff, a with cycle. time product it post-consent of just a terms then, this a has new just it in the like had guess, eyes, little Helpful. bit decree. & seating shrunk And I

what see how you issues you the going those kind and being, of forward. -- main why improving wondering Just see

Geoffrey Purtill

of do synergy. pretty ways, & with some Pete. is the supply cost And of where mobility we've a that area At that's a helpful. area product is we work Yes. also more This one and reimbursement, so the global little the have Thanks, is we the channel reimbursement don't meet think we've more range and effective that in end users. that seating needs to good portfolio an our chain key. the But bit but have towards very meets needs had. we efficient adequately one to we I challenges is that, struggled moment, Look, those a some look where would see

there. growth for opportunity some see do we So

Peter Lukas

And the with chain. then I lastly, supply guess sticking

been differently? the I'm be You feel, lines. you doing kind in finally that of seems something across have with say have just all just the can losing you bit it you? It that are seems behind or wondering to you put a that Is chain, that's is something now, share QX. that guys it mainly just if liquidity competitors supply improving product

Geoffrey Purtill

the But if chain expectation Pete. I supply interesting all or that's I share, is then different. think competitors the consistent are doing across you issues the something I'd say question, if are we are an think the guess, -- competitors. losing

see in not Some them see is the general, broad pricing same and people commodity with But are coming us. in down, looking countries, some 'XX much portfolio pricing do a in ways. in will area, should and experiencing to have. don't a it certainly We freight competitors every what do like commodity we that different everyone comes be to our but stay are that in general, of But versus some we multiple benefit complexity 'XX. across pretty which

go ball, general, I I'd in course, that's don't as And in something or marketplace freight the portfolio so. know So need supply same. down, the other to over to don't coming have the happen costs crystal we forward. But we seems so might things be address a about that be in in chain next to of our say, the year seem other what I but

Kathy Leneghan

to would don't a challenges But complete the our still customers. costs down, some to supply company be able the I to commodity Geoff. chain continue to components for electronics challenge to be access able come are competitors I think seeing be to for and units to we company. while agree, And those are the unique

Peter Lukas

will into the Appreciate helpful. I it. back jump Thanks. Very queue.

Geoffrey Purtill

Pete. Thanks,

Kathy Leneghan

you. Thank

Operator

questions [Operator hand so the Instructions] further the at the back floor to We team no I have will Invacare. on call,

Geoffrey Purtill

coordinate are through Lois you a follow-up available Lee. this Thank which Lois day. can great for and time questions, Have Sebastian. you morning. Thanks, any for your I Kathy,

Operator

joining. This today's conference very Thank call. you for concludes much all

may disconnect lines. your You now

INVACARE (IVCRQ) 12 Nov 222022 Q3 Earnings call transcript