IART - Earnings call transcript Q2 2022 | Integra LifeSciences Holdings Corporation

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Operator

Good day, and welcome to the Integra LifeSciences Second Quarter 2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Ward, Senior Director, Investor Relations. Please go ahead, sir.

Chris Ward

Thank you, Leanne. you conference the call. thank quarter LifeSciences and earnings XXXX morning for Integra joining second Good

& Glenn Officer; Joining are Officer. announcing President Officer; our Jan on Earlier De Chief me the a file quarter Witte, results. and call The today, we at which Second second during reference Chief will are Earnings press Chief XXXX release available presentation, Call Carrie Anderson, the financial the and this issued morning under integralife.com Presentations Quarter XXXX Events Investors, we named Coleman, and corresponding Financial Operating release and call, Presentation. Executive earnings

the well products. Before we be cause SEC. current otherwise revenue in turn filed Jan. measures in press to is foreign the Exchange And today's can and will include differ as all now measures. both I of this release. remind the financial found Form today divestitures, Also, days during call SEC that, will over on the in that revenue report begin, Integra's to financial first excludes any Unless Reconciliations X-K performance. may franchise-level organic effects year, the growth. in to Act based materially growth growth disaggregated be with are Report our exhibit actual many with results non-GAAP discussed to prepared release, which reference discontinued and call on are filed comments statements. ACell today XX to an the stated, reported the rates organic could of you lastly, for we'll as of And certain considered acquisitions, non-GAAP Company' revenue the that including made would I statements the forward-looking with make and like remarks, our currency; Organic Factors of

Jan De Witte

you, morning, And good Thank Chris. everyone.

we waters choppy the the and performance supply second plenty of started by chain, the disruptions our protecting past start me of first capitalized markets, on our growth summarize within months, our in highlights six environments our and building in reviewing strongly second margins. nicely with macro recovery over four. our despite the momentum. quarter slide business To first our quarter procedures quarter the in while half And year Let on off we

international Second headwinds. supply quarter instruments private the revenues with performance, the our mid-point our our strong saw X.X%. business. and constraints above in continued quarter our We persistent strong with currency with organic were range, growth just strength of $XXX I'm this half our within yielding first million, resulted China north partners label pleased And guidance foreign and sales Europe, in X%. in growth of as in we Japan, from of quarter, first organic heightened orders overcame of and our business, performance along US particularly

the course pre-COVID the to quarter, levels. procedures of to hospital closer Over second move activity continued

the mid-point current in Our yet fully adjusted of achieved business. of $X.XX revenues this challenges, share at and our result not over per order delivered as neuro Nevertheless, range. back top above supply guidance ongoing a as end increased reflect levels market momentum, of revenue particularly QX, we our numbers the earnings do

our to deliver half tend of initiatives. and profitable environment the key to communicated We half retain while margins We're relatively the inflationary and during chain year-over-year, we line supply advance the first this back adjusted importantly, what ability with April focus in team's strategic held to with pleased flat as very in Just our growth, year. call. continuing we challenging earnings our the navigate

Speaking of initiatives. launched second key quarter. products strategic new the We in two

caused designed to with to blood an US. by product with safely is capability Coagulation the our Aurora the This brain in address Evacuator First, we introduced our used evacuate hemorrhagic Surgiscope be stroke. Aurora in

our under system, advanced Haoju external exclusive by highly catheter EVD system Integra launched China. first cerebrospinal Technology fluid commercialized distribution in by is Medical China drain intercranial and we products. Shanghai and Neutus Bactiseal the to in is an is complementary and manufactured Company pressure our ventricular management of Neutus EVD arrangement. in The Second, device monitoring the used The our

lower streamline our resilient a sell and we conforming expanding we such the also continued bandages. care portfolio as of business business. life-saving solutions, our sponges, While margin of consists agreement to This In second Care portfolio dressings quarter, growth to Wound enhance in order slower Traditional to signed the profitability. gauze and wound definitive

on to in achieving will minutes, Integra's focus and targets. enabled second of We and expect profitability the divestiture. Carrie updated past years a France our and and are this organic end core the we facility market 'XX sale business series few our detail taken The to closed neurosurgery the product support impact transaction close guidance in a Care expanding production in facility us one portfolio, move closer our this steps to of of to expected the of optimize Traditional two over In the long-term us existing by to in transferring our reflects which product in we have of surgical of that tissue quarter is has regenerative further manufacturing and in Wound leading margins, August growth products instrumentation the of Switzerland. our process

in certain scale efficiencies. outsource finance In customer to back growth order capture and quality, future to for service activities cost plans customer addition, announced enhance and we build office

being that's a of end work Jersey in the transition by and that this certified named organization have expect New great recognize a be to and building proud completed XXXX efforts in in China. We're of one to in workforce the places our work place to the extremely engaged diverse best year. We resulted Integra

pleased guidance. beyond. With to half turn lot of Carrie year solid and recognizes also second of focus to a growth bottom quarter Carrie? be us organic second the which reflects the call mix opportunities guidance updated a to that, out second and our the full second turn of So, going year as but tightening ahead now, deeper we there's who with towards performance, our half our and We're end, into the our at the I'm challenges close quarter the will give first half. performance in and

Carrie Anderson

And I'll slide Thanks everyone. financial highlights brief on start five. quarter of good a second with morning, summary our Jan.

was than revenues an comprehended what $XXX approximately This $X headwind total reported to QX prior a X% million currency $XX quarter increase in point representing million was foreign in basis guidance. exchange unfavorable year, of was Second impact. by FX XXX when was points higher April XX million, growth the impacted on Reported basis rates or compared a of basis. our

products, and growth the the finished digits. double-digit [ph] at about delivered delivered X.X% per the flat quarter and in adjusted growth and discontinued margin our performance growth, global the end organic and China guidance nearly saw of X% the with Japan X.X% organic in approximately were prior near at with the the share high at year single quarter, and versus We Global pleased FX Excluding $X.XX. was we X.X%. quarter. to earnings Technologies our CSS in impact in Tissue low - international growth XX% top Europe our markets, of expectation Adjusted EBITDA which for and grew

sites neurosurgery organic quarter, six, grew of year. management X.X%. increased quarter high sales QX segment. dural by the slide energy and and by ability $XXX increase quarter single Instruments larger valves, low Sales our sales recovery. in to long-term I'll sales grew driven single from Total our by is in broad with in you year an for Global and digits. expectation high CSS growth grew neuromonitoring X.X%, growth was organic were and were office disposables. CSF Reported Within both in digits back turn better growth Europe on our basis while of capital revenues and than CSS to by to CSS markets instruments which in full of single to growth review increased capital driven mid-single the and digits, mid-single in low digits of limited million, single of up access neurosurgery, driven programmable with second in and our expected Capital closer revenue came prior led care. If up hospital by an indirect quarter the CereLink. led and in performance sequential our demand growth related by Asia. keep International repair by CereLink digits higher digits, the impacted be advanced expected in in the CUSA orders Sales X.X% second

growth. As growth, China, mentioned single-digit with earlier, low Japan in delivered performance was which high and double-digit strong in

in whose quarter China, revenue have in through captured reminder, placed rolling prior and a we the continuing our guidance distributors, believe, year the China impact we range. lockdowns. have orders in We to sell of As adequately third full lockdowns been

Technologies reported Tissue slide to prior organic with Tissue Technologies on of our segment over seven. growth million Global the Moving $XXX year. revenues X.X%

we in for ACell, sales quarter. first increased expected reconstruction single favorable private results revenue plan reported wound sales grew to first in In sales what timing which the within We to reconstruction compared than additional reported our XX%, X.X%, by the We for colleagues to the wound to hire growth QX in orders. to digit in is better Integra XX contributed results the which half, ACell. the Second high franchise, and saw sequential quarter. first completed driven our SurgiMend. quarter Skin strong attribute similar label the sales of franchise,

range, label half. private in to their organic the moderate with year more international SurgiMend our basis expectation full this in long-term closely mid-single Integra XXXX, low the increased Technologies on organic inventories for line our and And double For finally, business, an driven sales to and by digit Skin. Tissue digits expect growth growth partners manage as we second

first prior shared to that line during Final eight. month our six margins in expectation second that would adjusted those slide earnings period and were components. now the year. April results gross our for half call, and review with key adjusted half margins EBITDA the I Recall be flat I'll to P&L relatively first expectations. Turning my quarter

margins generally material higher about price gross for labor freight, and operational inflation chain we improvements. and our we margins implemented flat be purchasing year, to given XXXX. prevalent headwinds, margins To have the protect manufacturing EBITDA think we to inefficiencies, macroeconomic supply and and other As compared and expect adjusted the margins full initiatives adjusted including increases,

closure cost end about a in are manufacturing this focusing in also projects the of and of France outsourcing of organizational margins high-cost that the will site opportunities back-office larger beyond, planned talked activities certain and earlier, the Jan year. including two on by XXXX We the benefit

quarter conversion update XX cash to month was period. structure $XX $XX If XX% basis, nine, Free million. brief the cash prior a our you I'll capital XX sheet, slide the flow. in to Operating balance was reflecting million was trailing spending compared flow flow higher a turn cash provide flow cash on free on and and capital month

our support to and liquidity ample long-term with strong short remains sheet plans. balance Our

June As our million and our $X.X X.X the of and XXth, including remainder available cash total under had The debt leverage revolving liquidity of consolidated was $X.X total ratio times. billion, $XXX net was company facility. credit billion, in

Turning our to adjusted earnings update share slide consolidated revenue XX. guidance. and I'll per

organic year our For range a raising an the XXXX, the X.X% growth slightly range we X.X% of to expectations low to to from full X.X%. updated of end are of X% prior

we with We our high first performance, why at our the are leaving of are end revenue pleased half guidance X.X%. range which organic is

of Full point to reported FX and sale prevailing due business. will and XXXX $XX adjusted September basis the However, billion, primarily driven an the of updated million of impact to second at The the of the half, TWC unfavorable now basis is range a guidance Japanese $X.XX additional billion months on there XXX impact FX rate impact constraints $X.XXX TWC to impact $X.XXX TWC to unfavorable reflecting continuing to still for expected year and is and four points is the million the revenues divestiture half and EPS to and incremental the from Xst FX or XXX uncertainty. the the removal parity of $XX the updated be year. for cautious lows. to approximately supply US approximately by for Full beginning of The last full business macroeconomic reasons for year-over-year, given about Euro, a be are to year. chain the close $X.XX $X.XX headwind year XX-year $X.XX, second a dollar guidance an yen revenue be reflecting revenue

X.X% of in million growth growth of to plus expect third $XXX quarter, approximately representing X%, to reported to we range X% and reported revenues the the million, $XXX approximately X.X%. minus organic of For

to Adjusted be revenue the the $X.XX. EPS QX the QX close expected for divestiture guidance planned $X.XX outlook. Our end August, to as an updated in is TWC of as the reflects assuming impact at currency of of business well of the foreign a range

a growth to Now provide recap I'll and turn the our drivers. call back of to margin catalysts XXXX brief over Jan

Jan De Witte

Thank you, Carrie.

slide. slide the to final XX, turn Let's

greater and margins reflect navigating half first agility resilience Our to ongoing of environment than diversity results, our new increasing a X% protecting growth capture the well in team's as choppy tough waters, and delivering in organic the as our portfolio opportunities. our

In half, range. advance rate key towards addition first we our to X% solid organic catalysts growth build growth a to X% long-term the continue delivering a to and in

international in business, First, delivered half year, markets, organic the our growth X% we reflecting Japan. our particularly deeper the above first in of China penetration in and international

our me about indicators be global base more the both business. roadmap international and out project, set opportunities and their continuing Through steady range early strong global growing advanced These success that Technologies our a now to in a our now. across in opportunity CereLink, with we're positive. and about new of which the multi-year the year, XX markets to limited, intracranial while have user of products, trajectory for excited some XXXX within pressure CSS heard With Asian EMEA the countries will the platform, six last further our interface. drive show planning. being immediate ago monitoring for and talk further Customers into market late long appreciate is future launched new several months for You installed of analytics products year important translated growth CereLink. Tissue the identified accelerate commercial adoption sales we potential [ph] growth intuitive to revenue building our markets. momentum these contribution in an is are

the second and our reps are mentioned new invasive focus progress ACell new new up minimally the surgeons wound earlier, momentum. As the change Carrie with brain surgical a ACell. commercial reconstruction to and first neurosurgery these intracerebral and Aurora, in we sales believe added building expanded standard-of-care users, drive effectiveness our step over Surgiscope XXX in year will of the we we're new pleased We with technology our ramping In of force sales the on their treatment half quarter, for a hemorrhage.

an registry was The shown coverage further expand to Aurora with conjunction MIRROR adopter well functionality the US. our our for base with are early We continuing Aurora. in We're the build cases in have the through in evacuator, Surgiscope, promise validating sites, launched MIRROR reimbursement works initial PriMatrix. out to and coagulation device of continuing

profit secured by largest of now five for and three focused coverage PriMatrix. on US payers, have remain We the we further population growing the

committee regarding users we questions We analysis XD, FDA KOL meeting. finally, also and panel is add optimized our with progress continue value our to nerve our during approvals. engagement engineered steady breast regeneration data SurgiMend repair And early nerve win productive product further experiences, first PMA and raised for October mid-gap continue through the to address time making NeuraGen requests and

remainder inflationary on of driving pressures margin chain In for the beyond operations catalysts, as our margins addition and year focused to abate. the supply XXXX, securing accelerating expansion our on we're growth and keenly and

take office in actions facilities, channels our to portfolio, while optimize and sales manufacturing efficiency operations. We simplify to our continue back and driving

costs realization And while are long-term keep with improvements. price back and focus suppliers in margin manufacturing plants. our maintaining We we're working with increasing and reducing pace to levels, on managing to our our order input drive our demands

and inflationary the year that in of levers long-term of efficiency global deliver pressures conclusion, challenges. a half a broad been the as of we In our the has We face will term profitability short on of first supply solid set the targets. and have are we confident subside, myriad

not Integra challenges demonstrated while to has positioned these leadership. first expect well macro continued weather waters flow. profitability and of we growth, We our portfolio uncertainties. in cash given consistent to steady believe talent yet continue and are And or strong our we're I the products, solid deliver are with we not engaged to and

the you line And Operator, will please so would open open I with the floor questions. for for Q&A? that,

Operator

sir. [Operator Instructions] ahead, question Steve first with Lichtman from Oppenheimer. Thank go take we Certainly. our you, Please And sir.

is line Your open.

Steve Lichtman

EPS it I looks on ongoing didn't want morning. guess I inflation pressures. touch change to like just Good thanks. inflation, guidance Great, start, to from

at versus your estimates finding months, it you over few you stayed at offset were basically has look has you inflation gone in the the guidance up P&L? what would headwind XQ, As now where the the same say for last you're or

Carrie Anderson

initiatives, Hi, inflationary doing we're Steve. pressures. as before, generally, I'll inflationary haven't any cost of that's a and would bulk seen number take other the for that say the get call. news those I through correctly, that pressures, I that actions we're taking. mentioned I worse. read largely are improvement managing the think price elements, is them you good of would purchasing whether we I say guidance and that we Obviously, that initiatives

energy we new that that margins bit in keep least With have, improvement, to better the are areas, the we to year the a of two is continue exception actions on probably that think flat. introduction, us our from continuing margins, the part that initiatives we're a continue I general this do think the well at portfolio of brings year. the have in which balance, levers our to margin cost and to allow as couple certainly, freight relatively which product as of a I between But costs increase earlier

Steve Lichtman

on hospitals Okay. terms are in or that changes from US, Great, And pretty on the your you perspective, capital things steady in thanks. then are environment appetite front? there any just second seeing my of question, particularly the from [ph]

Carrie Anderson

longer see largely I say and came to mid start But Yeah, selling cycle. some single that in in digit we it certainly, here. would I capital expected color I'll range. still Glenn can where add

little second in out of quarter our bit first larger the in still a was actually So quarter. cycle trend little that to capital where smaller saw is bit extended the performance that compared capital a We better prevalent. reversed selling

in So good second holding generally still in maybe up. on that capital related some coming some through And the to quarter. more timing - of as overall, CUSA demand CereLink but larger on But well anything on second the quarter. the

a I certainly, full necessarily that's we for as selling and guidance year to at think cycle capital don't our into overall this I is about that that, year still shortening factors reason think the and full point. be see that cautious certainly

anything increase So improvement but there? to bolus we of as year, of not second capital Glenn, move looking half at wanted a gradual capital. to the in the add you

Glenn Coleman

capital feel funnel is would about cycles You as But selling really the did that the though both on strong. say highlight of digits International outside grew mentioned, quarter. Japan. bit really would small the well coming in I a capital know, with just actually But performance US, had and funnel, are the front. that, good a We've from large we I strong Carrie lot just the even double longer. the

business, probably Japan capital ago freeing our really growth so, years remember and X.X additional the we're we direct You about for that of the up we've our team dollars up government nicely strong some business took built capital. or and some is in in seeing

capital. the on just performance did see not So, highlight would the to of We strong international. I but internationally growth US, extent the in

Steve Lichtman

guys. Got Excellent. Thanks, it.

Operator

[Operator are our go Fargo. Wells you. Vik question with Please Thank from taking next Chopra Instructions] We ahead.

is Your line open.

Vik Chopra

the And thanks morning. much for good Hey question. very taking

I this M&A, guess perhaps with Can the you. update at had follow-up. one including transaction Thank So larger you're us then in portfolio on on valuations? time, thinking especially And about you a how pullback give M&A I optimization. a an

Jan De Witte

you, Vik. this I'll Thank take question.

of where have broad in over scale. increase So, our CSS a business. our organically finished the And we our and broaden we and a Technology think pathways set scan Tissue position both can the care and opportunities broad of that in today inorganically months, past we strategic couple

in time, So, sheet. balance view definitely where our a this we capability, have have we leveraging M&A of want point opportunities a very leveraging of at in to go, good our We number side.

there where, the the attractive, multiples In some of think not look phase still bit yet. in a while of we're transact I the willingness timing, terms is to that

So that's change. couple months the something I to that of next assume start over may

Carrie Anderson

strong to lots is and total flexibility X.X that allocation. think M&A Jan's M&A will would just of sheet. balance still our on point balance about add that priority target X.X times like debt being net remain the us was consolidated capital sheet But Obviously, I a provides at we a on that ranges on and we our as active to ratio for very X.X. And top

the range, have at of to we're is that into so, end which that XXXX. we move And half great second flexibility the into low as and

Vik Chopra

And how quarter much. segment you. Carrie, just about Thanks Thank we behind second maybe should for now Great. think us? with by growth so follow-up, the one you,

Carrie Anderson

generally, for the say, range. would full will that segments I corporate year, be Yeah. likely both in

probably was XX% about bit, my second label I think see you half, as the standout, before to private moderate for things some a I growth, will QX. in and I a mentioned both QX prepared think as remarks, obviously,

moderate will bit we that's the both a corporate CSS I expectations. digit move still bit mix, better But to say, will half. to doing its little for and range as half in bit So generally, of going little the to with single of that in in move be first more X% of them bit lower into or CSS with X% second TT generally, pluses sorry, the little would average full a and and range corporate year. second instruments thing the But the little for less. Same quarter that doing growth minuses being average a organic a probably that mid

Operator

Ryan we BTIG. Please with Zimmerman taking our ahead. from And you. Thank go next question are

line open. Your is

Ryan Zimmerman

X.XX, divestiture, sitting, appreciate know, thanks know, but higher the [ph], I account at X.XX leaving for street think, you're for and Good little for morning. out. when a which you guidance something room, you a for account I the bit the color higher Carrie to if that FX we could. about comes bit about the divestiture, third the fourth the and But a and around guidance, implied when you between for guidance the I you if you on moment, question, and of third is quarter. come quarter little kind talk from the And implied the Glenn. Jan, still are think that, line in you're closer taking to streets FX the but of in the quarter looking we want think I

to around [ph]. I math [ph] X.XX X.XX-ish think maybe my

the kind So or the and help us of of understand, implied the coming quarter? business the as guide contribution contribution the out about in growth Carrie, organic third takes puts think fourth you now into quarter the

Carrie Anderson

Yeah. to have know, full at full capabilities cautious. of are reasons left think the guidance, be again, lot optimistic And of you to top growth, our still in our a terms to year guidance we But be X.X% reasons I and that's to we year why on capture and be organic our there end the growth. markets

we our know, supply quarter you - as you into in think year the specifically uncertainties. about guidance, back as say many end of persisting and full the quarter of usually would As kind still year, that strongest year from the that of fourth hospitals. I of would macro is third Ryan, the fiscal constraints quarter, obviously for

So, I will of capital year. that the still believe quarter the strongest normally it's

so, other right the got Jan I talked continued products we've well. in business, tick NeuraGen it new direction. like XD, of And to expect as normal up obviously, And that some the of about, in capital see momentum the that moving areas would ACell, in

these lockdowns. and things the of stability emerging to fourth some think I of China those of out of combination the quarter as move we from So kind more

the I momentum move well quarter. things, bode fourth as think, for continuing we those of All into

Ryan Zimmerman

business squeeze about old two think I'll of quick of TWC that ones of impact of the rid of then in profile the that divestiture? with What's the if Technology of talking see divested now? a the we TWC business you now business. here. off business, Tissue divested business, legacy legacy think as And getting we result just, the you're AWC kind kind growth books Science Derma you margin part that should what - as the which And that is are One, about about Okay.

Glenn Coleman

It's morning. Hey, Good Ryan. Glenn.

excluding portfolio the again, our about single Care still that the TWC mid business, our talking profile MediHoney, say So, as in digit to our I in would And we're Derma products the business. range. is such Advanced core keeping of amniotic we're Wound

a could call higher, I way the So, some out digits, frame cases, in it bit would little the be growth. mid but single that's

we of it divested was, One was business reasons not TWC the why number the growing, one.

gross are can very and as XX% the margins mid-XXs that low, is in Second range. - of you think

us. gross positive did a it that's to And was and accretive it. somewhat EBITDA margin be so, why perspective, dilutive have It would obviously divesting dollars, from it by

I think XXXX. whole, some our to help rates of to costs we years several that back out go-forward indication we've ago. the business some our bought metrics, still and help do profitability Derma portfolio you the good got it overall work growth with on get the should But about for stranded hopefully gives Sciences the a

Ryan Zimmerman

Thanks question, in for taking the guys. I'll back hop queue.

Operator

go with Thank you. And Wuensch Citi. we Joanne ahead. are taking our from next question Please

open. Your is line

Joanne Wuensch

can the for taking if us Good where question. morning. you was reconstruction? you update PMA the for for is give interested on an I thank SurgiMend And breast

Glenn Coleman

any Joanne, what going the probably with regarding with it's FDA until FDA. like. Glenn. the to the more work we year. our questions would the I What can continue say about you updates have of guidance And end we're to thanks, PMA submission. We or give questions expected really, items Hey. not is approval their the looks on Any some open

and later we'll So a probably working have other update don't give FDA detailed update. with real this more I year, the than any you we're

Carrie Anderson

we have indication ability still we of specific But and general in And a you plastic reconstructed it can nice promote indication out know, impact and breast. coming do therefore, doesn't Obviously, cannot SurgiMend. growth a surgical for SurgiMend. sell to very our see

Joanne Wuensch

much. very you Thank

Operator

ahead. Truist. And go with question Thank our take you. Please Sam we next Brodovsky from

open. is line Your

Sam Brodovsky

here. Hi. Thanks for taking question. Sam on Rich for

P&L? Just the tease than think timing the pricing that scale, out I bit. How sort bit think a first to into should of increases terms want of pricing inflation commentary getting that? about just should about And a little lower in one, being we the of kind we of little maybe mirroring or

Carrie Anderson

earlier So, actually took the year. in we pricing actions

for prepared undertook work as was a budget be that we going and to of trends this So pressures there. knew our present that in inflationary those those body we the for XXXX, were fall

the went in as to very effect. price of of basically to which with half year. the increases, teams the additional into leaders all increases put So, we worked those price on And a closely round cases, our moving move back some we're of commercial in

So different have to have is form that it's prices, same price, doing margin you affect think increases, a ability level it you're as the discounting process. list opportunities to that of a goal the prices. change continual you of about off getting of list the opportunity, end can those gross price number raise which is additional we And to ways obviously

the ability raising term new have - can't longer better introducing years. prices up. to a those think have that multi-year of three go new are some open customers, you prices, well. as enterprise that that those products contracts contracts, portion margins brand On to contracts They two for to about higher You of new have

for there so when opportunity those opportunities look that for price. up renewal, is obviously, not But at the the to that And contracts are to contracts you renewal, up volumes. increase even have obviously come we're looking at

ensure that's so right the you a you're doing addition, in contractually most to stop initiatives. you that it on hospital there. It open purchasing But I to up have an doesn't and cases, also volume entitled in also you're audit to, - and those to that were opportunity mentioned, that negotiations. have getting as is with volume that the there you the commitment So

continuous move supplier within our the pushing to those our more door, looking in belts, factory, the for gain go factories inefficiency. increases volume we whether And to hired come obviously, reducing our improvement, those black synergies base, other supply improving of belts more waste green back working as have there. also into to factories, leveraging suppliers manufacturing So opportunities yields, in things, to price all it's after

those brought the of margins. bear all things our So, kind of are protect do we to to that on

Sam Brodovsky

Thanks second us. then for And from that Carrie. one

the target whether line, what end of longer be how year, may or changes achieved LRP Just it's can and top target of end thinking goals, more quickly any up, what from term the may either being? they in bottom the the beginning or around up terms

Jan De Witte

one. this take I'll here. Jan Sam, So

and strengthening heard how key business, it's is of And divisions. range to with translating me that's get some focused deeper. be going translate this giving probably the or our microenvironment, sharing really and into profitability, mean we're our and levers The say have targets that I of levers, year very strategic next at COVID the whether growth time, about those when the a point timeline yet, into increasing jalopies the lot we X% I in exactly At end confident valid breadth updated [ph] in year, has remain it's second feel that in that get two the scale to a trajectory. we the I be bit, in we'll long-term now, does and plan. guidance our you 'XX the X% international, views year, the I of some - beginning the the longer and We're there? broadening the whether on understanding As timeline of our question looked range longer beginning the affect how a half not that the initiatives year. more of to of today, views the when

Carrie Anderson

Yeah.

I of those side. there. are But thing XXXX, opportunities other to Jan's inflationary hidden Obviously, levers all FX comment margin the of in The because of the some pressures the and are margin the is on would add headwinds. some

those the so as driving evidenced margin as hard big today, working levers, hopefully, that pressures on so some at not we the to things margin expansion. of by start those footprint. longer is call projects, as about margin what that you'll so team abate, our outsourcing see talked those Integra I our off And but really term to work continuing fundamentally SG&A you see inflationary divestiture, initiatives on And that back opportunities the really in pressures, some of optimize driving well moving say inflationary day-to-day of by office manufacturing Obviously, on plant activities. fighting an would just France, expensive kind as TWC like the closure and

in long-term that will driving able start are pressures take as that that hopefully those see All on those expansion abate. inflationary to to provide the be you'll margin of those hold margins focused things

Operator

Thank right. question Miksic Barclays. take go from Matt All We ahead. Please you. next our with

open. is line Your

Matt Miksic

in. for so Thanks much fitting me

Wound on I Care could. follow-up the business, I a had So if question

there to of that kind you're the Just work expand coverage. doing

expect starts I the us business if it show affect inflection follow-up. to you then And that one to Just help during how when us and or could, just if here, you longer understand over the an remind term? XXXX have

Glenn Coleman

the Good Glenn. for Thanks morning, It's Matt. question.

obviously, are So incremental of when the better general get we of ACell we talk first ACell referencing for really some year, but XX more And to the We're about our added coverage the field reps, the expanded sales took part force. resources. wound about care as for actions portfolio. portfolio. of the sales These half we

good we We from second added momentum - which in users sign. positive over in around color news already is sequential QX, prepared the very actually a into here some second from with the is ACell quarter. seeing new remarks gave are so, And QX improvement QX in the XXX the We our quarter.

wanted really that's training QX. we're think year, probably is and reps. a later this on-boarding these still I full lot positive, the thing They of though, productivity until around

ACell, sequential really I first saw you with expect good versus momentum performance have half a also tell second better half now So performance. nice would we improvement.

on we feel quite the whole, about Tissue a about had overall even strong really feel overall we quarter business. And the good on So, which the it. ACell business, good really

up of performance ACell. stronger So including strong the second expect Tissue putting half up put we've with second the year our numbers in business, here, quarter the

Matt Miksic

sort in investors folks and it general. think just a on years And of asked question that, have question driver. drivers is, over just I growth growth standout that looking from Great. for and same other portfolio have the the And follow-up comes the just may gotten one

- point out management look we're you'd be in operational say about? growth as you and this to you execution. the But acquisitions slide, an can appreciates what to this you've pointed excited XX everyone portfolio driver that that think important XX, the for months and in I the solid just in next something management delivered and delivery the additional maybe

Jan De Witte

things international, I mean, Matt. markets. it's excited is current about But we that Yeah. shows our more neuro market in presence, to tissue past more the work Europe build we done opportunities have take of mean, not but we're Europe standouts one, track several several the expand and months there's a But are technology about. business, just in over where we've even one I in where our good I'll all record. our more business. the about - outside

see them, And on that's as term near you all to NeuraGen countries market it's have we and are there. either opportunities share okay. China, key opportunities or focus are the catalyst one, So markets. CereLink, new XD, Aurora, you'll several in ACell, us the adjacent in specific whether capture call then Japan, specific definitely And which capture really

commercial get make the focused sure it's we get first year, see We as get markets, so us behind momentum around into the this KOLs more to - inorganic aspect behind side, we where growth in adjacencies accretive look these is opportunities accretive divisions. two products. year well. we We to real to, of next execute the our third on And continue then the And users. for

Glenn Coleman

items Yes, the we're obviously, would challenging other very dealing supply. add thing I is some in Jan only with

benefit nice be delivered. are think go back expect procedures again, from for other in will at much that like this as think improvement XXXX And us. rate these and But us a back order be places tailwind next we year. we'd have versus be year. more improvements in tailwind world again, situation, we'll Certainly, don't of many in of nice a parts then see these orders year. into And customers as ultimately more our to expect the we that getting And normalized we so, for our XXXX of we I look to will I while of a this China

Matt Miksic

much. Great. Thanks so

Operator

take Please question sir. We of Craig from next go you. Bijou ahead, Thank Bank our with America.

open. is line Your

Craig Bijou

just of the couple question. morning, Good Great. everyone. follow-ups. Thank you a Maybe taking for

a said think orders QX. they back Jan, on back relative orders, larger got than little were you Specifically bit to that I

So thinking wanted and to in from guys chain you still back the maybe second are QX? to you where in expect willing would even quantify you be the that. orders then half? were see increase back pressure they how to supply And if orders about Do

Glenn Coleman

Hey I'll Craig, it's this one. Glenn. take

remains is a demand positive is supply I very but challenging think strong, really the customer environment. it

quarter second in the And producing we're And normal but orders we back so, essentially surge we meeting slightly higher not the QX. it meet procedure capacity from the demand, requirements did recovery. versus yet to describe see way enough we're is,

And still see we see if so say elevated year, expect improvement, it's to gradual. I'd do to back half going any second be we order the of And levels.

on and going in orders, reductions if So, through I significant it certainly probably be don't million But any to And higher improvements slightly this rest then at just would situation. anything It's to XXXX. I the in the than out number in expect But our elevated would significant doing just be year type levels best to back the we're we $XX of see gradual. be QX. QX. think through called whole, manage

So, is to give to I it QX slightly continue think higher going number. don't but we're than a number,

Craig Bijou

believe on ramp that year-over-year. follow-up Glenn. recognize ACell, productivity there. means the sequential obviously, saw in guys maybe I you, you And single kind longer term, could refresh you and maybe I get for that ACell. half. growth you ACell second Thank single with the And half of Glenn. wondering to it's Can that Got on digit digits in of the about the it. strength Obviously, a mid think for the was if guys kind growth we maybe the of should thoughts second high you how for specifically? growth rate

Carrie Anderson

Glenn start in, comments I'll and with add Yeah, that, some can Craig.

that from year reported expect from $XX think growth. I expectation last million were growth stabilized we mentioned, organic for high I being their would to that organic And single technologies, to growth it goal in remember, QX tissue then would sequential So, the year-over-year. the as growth of And that and long-term some such single continues half. $XX we growth. that be of we support that then Glenn year compared kind digit see in million already has the high think first we high first there, there it year, And digit And should second in building did that from QX into I whole – be growth show as level. long-term the level. digit should the X% And we X% QX, QX, what QX. And XXXX, in from that then momentum to half would obviously, full at rate single about for QX

Craig Bijou

the Great. color. Thanks for

Operator

next Matthew take question we with O'Brien Please Piper our Sandler. Thank you. from go ahead. And

line is Your open.

Unidentified Analyst

Hey, hear me Phil you right? Can all this for on is Matt.

Carrie Anderson

Yes.

Unidentified Analyst

seeing and some me OUS lockdowns, fitting maybe questions. headwinds I of there? how specifically in just remarks, does environment you on your in alongside China side, one. my this to capital COVID understand does this some in what these mentioned here specifically Thanks that but recent for spikes? could headwinds and given Thanks. recessionary how And in you're look China, prepared in given it the I'll characterize keep taking you

Glenn Coleman

Thanks, Phil. is Glenn. This

early way first So of down foremost, the We obviously, performance relative I in think, still the some being these single and lockdowns. were I injury I to China, high quarter. If rates, in when strong China, despite traumatic the and second at you highlight at the digit would look growth. procedure was just quarter challenges growth brain look in

procedures can in procedures, we're to lockdowns, of June. XX% XX% So, then April it May probably with that and XX% the think almost of you of normalized in improved as normalized

in impact, You sell results that our distributors full we logistic providers. do the some points Carrie made the and through don't see earlier, though, of

some impact lockdowns. And in strong so see But in we'll are QX. with China these with that our impact, are even we kind to for lot seeing a of QX growth already so committed orders of and really QX,

momentum so, and do obviously part have feel about to capital really capital big the of I is And good we so there. A continues well. that

in when pathway. from now years still have about that not several CereLink long capital market, talk launched in Just the in keep be China, mind, because regulatory of will we we that

talk continue probably we which well. outside CUSA by more huge the opportunity we us XXXX it's is continues the and with forward, in next profile likely about growth revenues US growth that look going and hear a decade. of for the China, to our market be more largest see But as capital, do and quite over when to about from we to really, is So coming we that

to with that's for seeing but the China headwinds for grew organically challenges, of the you've out all strong really now the got growth business, frame I with translates obviously, to right international international its the lockdowns, team the this we that first for X% these even And and still have the our kind -- OUS of way So great say on overall. half over and a we some total environment. of in that, that's what X% kudos with the want to question. acknowledgement year, really quarter the challenging growth Thanks work them my I call, our there. members did the business been Maybe on second give and gone with

Unidentified Analyst

you. Thank

Operator

take our from go we And ahead. Bedford next you. Thank question Please Jayson James. with Raymond

line open. is Your

Jayson Bedford

okay? hear you Can me morning. Good

Carrie Anderson

Yes.

Jayson Bedford

Okay, I questions. if thanks. of I apologize But these. couple missed

seeing last maybe you just on on It First, Are level question pressure. US softness environment economic more the dovetail the wage the side? order any on just But to the capital just the flowing of higher on growth capital that's side, the in XQ. solid environment. on wondering given here was sales

Carrie Anderson

see, as is in say, our into came which guidance larger that, capital as is US, to the even and both we it factored continue in selling CUSA again, longer internationally. to where did what I capital expected we certainly our would say would very I well that, cycle. expectations, nicely

just we've It's longer The guidance, has So, competitive cycle Jayson funnels to landscape your has changed. are for funnels impact, need you selling been account that done and The it's changing. that. point, in are to the but very, there a yes, an your not that very full. not putting

I But the in still accounted the we've cycle tick normal there patterns would capital up the normal balance year. in think the expect of that the selling guidance, our within quarter. there. fourth certainly, move for through of as I are that extension we

Jayson Bedford

On That's XX%, okay. quite up Okay, clear. strong. private label,

Thank maybe I this. talk year. favorable quantify rest you mentioned wondering I'm just you. of order the think timing. it for growth label then was if And private about the

Carrie Anderson

digits that. digits. think as mid-single you for Jayson, I color year, go well, label, full that expectation can should remarks, in full I'll label private for prepared so year. you our share the my mid-single And did assume for but is certainly That reinforce private this long-term on back for Yeah. And I the

has half at XX%. been First

kind math that for half what to to order going on the constraints. the growth about can supply lower - implies in lower, the think the chain going second So, private mid-single label chain our go year. get moderate. But second do much constraints supply And discussions well. our obviously partners digits is Those as to impact often you is half. to and in of going for It's to

continuity levels managing everyone doing, they which stock ensure all that of inventory to doing own So safety are what levels, supply. have a at is, they is looking their

half, it some seen will think to in area. inventory, spine the that And as of orders expectation manage partners the and I more is the timing half full are benefit is first So, second closely what our about with we we've mid-single that a our moderate the partners for that's would to in of the lot digits private our expect the and why we label dental and year. in think

about And trends and that so, we with trends business. businesses, in spine go with as in you to dental - tend tend to label those market the they think align private

Jayson Bedford

dollar a Okay. order there to favorable amount And was the timing? assigned

Carrie Anderson

for Jayson, about No. that. as I it's third the comprehended in think quarter, certainly, guidance the But

private label which for that half growth mid-single for the digits year, in balance So, assumed the guidance for the year, quarter guidance of whole we've the negative the and moderates that we growth second the for about for our embedded as in private label third year the that range. think to implies is updated full

Jayson Bedford

you. Thank Okay.

Operator

question go take Stanley. next And we you. Drew Thank from Ranieri Please ahead. with Morgan our

is Your line open.

Drew Ranieri

just expectations kind are for out where question. you, what everyone. Carrie better for maybe your free to Hi, a the hoping sense of there. Maybe shake and of cash taking the for Thanks get should flow year

I think the you're flow running conversion. in kind XXs cash of free for low

longer to you future? the to cash But the think about the LRP into was something like kind and how free maybe term. XX% are just year this flow get thinking I over of

Carrie Anderson

Yeah.

had year, So that cash for we last record free say flow, I cash would flow.

prior lower expect but that, So, in I we to better than levels those at the be don't than as were year. XXXX, so

And they your move but operating about going think XXXX. in to cash where requirement our CapEx very constraints from by CapEx, also capital. for just flow, did own as flow, to So, XXXX, free up we is the XXXX higher some probably to as was I'd cash say capital decisions, similar on constrained

things, you you it order needed you getting weren't when to. when Just

capital some pushed that into So XXXX.

second spending the $XX to likely And full of compared so other we thing a about peak year. cash in to to half companies that's here million activity the the in in higher be for year, many of to think cash MDR half expect levels would the the $XX type of about the couple need the first start activity we into XXXX. that next over that lot from XXXX. flow of timelines compliant XXXX A to years, with peak operating to different be as from to XXXX nice EU think MDR. will range the capital spending things spending million, But That's and that it EU as considered. relates see flow to Higher all

that for many like requirements up cash the so, remediation for move And companies Integra.

Drew Ranieri

Got the you. new quarter maybe it. be Glenn. productivity the in about back XXX in second and this you And But ramp of users talked adding half. Thank ACell you're expecting might for kind that the

XXX overall the users curious, of you're ACell force? ramping we up And legacy ACell think about you. new cross-selling you're Just opportunity as Thank were do all? at looking sales how maybe kind those Integra users, they as maybe at the

Glenn Coleman

Yeah.

using of but the our are use our product, of now subset. skin I is I the current products, are There IDRT, don't have some subset users out, Care. them doesn't think many is of current there some split PriMatrix. that outside but actually Wound

is synergies, seeing a don't having a it's from expanded in have then mix. by users. split, this getting leverage think to some the cross-selling also I I we And our current are portfolio. benefit so, And but new certainly coverage

Operator

We are moving from Truist. to ahead. question the Sam follow-up go today. last That's Brodovsky with for a Please question

is line open. Your

Sam Brodovsky

for in here. me thanks Hey, back squeezing

could for Just one Integra care shift a a know skin on be the thoughts any the whether more new reimbursement broader care benefit could inpatient that site a on for substitutes focused, as PFS rule a be long-term the relates with proposed is little on industry? in but there I whether PFS new it of to wound and rule.

Jan De Witte

Sam, thanks for the question.

inpatient really, is, obviously that's with the physician first impact think or current small a even where and bulk not and rule for to office we outpatient And hospital minimal to very the our on the the foremost, I head. physician really only business us portfolio. setting proposed that's for having any have setting. do you is in nail It's presence a our the have so of very to offices,

broad if anything, think a be pricing there may field playing our portfolio, lower is the space. to leveled benefit given our in as I us this

we So, but business, I as us any change short-term on to our it for think view wound positive in our care it don't we a expect have business. impact

Glenn Coleman

the Yes. Sam, it's mainly further suggested. Maybe for Glenn as value, shift I point it one in being time, in for yes, physician quality said, the to paying outcomes add, at the real towards products of look But a is to if And outcomes. we at this thing which as the and strength defined type as portfolio look shift Integra. This quality of of I plays delivering and office. have our at

like markets I where affect us trend, long we the definitely the which companies while so, And in it's a directly help Integra. should term, play, doesn't it over think

Operator

Thank to with for speakers any additional the remarks. And back of over that, you. or closing call our panel I'm handing

Jan De Witte

XXXX second to quarter to our for like This concludes call. joining call. We'd thank Yes. earnings you all

our questions. You can or follow-up Investor website any you. follow with Thank to up on Relations

Operator

conference that your Thank for may Thank participation. and concludes you gentlemen, Ladies you And today's now you. call. disconnect.

Integra LifeSciences (IART) 27 Jul 222022 Q2 Earnings call transcript