MASI - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen. And welcome to Masimo's Second Quarter 2022 Earnings Conference Call. The company's press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. introduce Investor Masimo's Relations. to Business President pleased and Development am Eli Vice Kammerman, of I

Eli Kammerman

Thank and you hello, everyone.

Young. Chief Joining CEO, me management's regarding Officer, current and our certain which performance. fiscal Joe and will Micah Financial expectations Kiani; and judgment forward-looking today Executive Vice reflect are statements, This call Chairman year of financial contain including President XXXX

our actual actual risks detail results subject with to are they to and that uncertainties could could forecasts factors are SEC. the from cause differ to in materially cause results materially. differ filings and our Risk However, that our projections periodic in discussed

are Investor this Generally with calculated Accounting You will a non-GAAP in Principles certain include Accepted the generally We or as of that our of these Relations call in refer not will financial. website. to Also, find accordance discussion these GAAP. measures section financial

to informed in statements most make investment form release directly better performance to company's addition financial GAAP filed reflect results. are results, supplementary the most measures company's measures these these and our with non-GAAP assesses of GAAP transparency management to believes comparable the in website. assess the Management ongoing recent and these the performance. Investors measures company the underlying budget, financial sees these to such indicator our uses information financial provide reports evaluate to the should XX-Q measure business financial earnings The performance the included as of intended of operating SEC, and consider and the today, company's together same way investors measures financial business. decisions. to our increased information non-GAAP measures Reconciliation are In that additional the results on within our to with of results enable non-GAAP an all XX-K including order and

website call Joe to earnings covering I'll quarterly the will we relations supplement our our be the pass earnings today, the we this addition investor to In the section Kiani. release within presentation of content to issued afternoon. have posted now

Joe Kiani

thank for recently joining we April. we is us you, Good very consumer results second transaction our well close sales include business the performed and XXXX with afternoon Thank the call. expectations. Eli. after The new quarter exceeding you This that first acquired time are earnings for the reporting Masimo in business quarter in

rising including orders the year a in prior growth revenue achieved for in rate also quarter business We healthcare from the revenues for second delayed solid the first XX% the quarter. of most the period, rebound the quarter, shipping, our boost versus with

a million shares. a glad million our X X to On I'm to repurchased another quarter. base new in R&D to With technologies. experiencing In collaborative effort April, we've of grew report today. who has we A past speed our XX-months, addition, health for very success potential Long our conviction full reflected level installed than draws been never future exciting as our is in sides high has greater term consumer now X% from develop Masimo Since our demand to of are persistent new been products. it of is innovative new business create products. consumer note, transaction are a both second up the we over diligently many related board at shares that closed the the combined of teams engineers working the in that moving strong, about We expertise business. repurchase issued the to for have we authorization exciting company

guidance. review to quarter Micah results ‘XX ask provide and detail in I'll update our on our second more you an Now, with financial

Micah Young

afternoon, good and Joe you, Thank everyone.

be be today. our the The of the covering will much earnings will direct be detail we like today United today segment. the I'd our unless Masimo Before historical website business will Further, I discussing as pro financial on measures our you will I a be referring XX, which that started, for non-GAAP results non-healthcare XXXX. we forma to basis will covers to this include In to also acquisition which be on presentation prior presentation referencing date to noted financial I Sound otherwise. primarily of measures get April

QX. of quarter year. rebound our chain units first for fourth results fulfilled quarter Our this quarter delayed second the supply effectively quarter shipped. for is technologies shipments visible for we over reflect our of expected drivers’ from exceeded issues consecutive our as which breakthrough the of XX,XXX growth guidance in demand limited and persistent our This segment the after shipments the many quarter addressing represents we and per The XX,XXX the and our reached in strong healthcare XX,XXX that orders roughly

at XXXX. have of now the nearly second estimate our and of the that boards shipped X.X our end XX technology At We installed instruments million quarter the has years. over end base second last of we quarter, by over grown X% installed the base

quarter revenue end For we currency reported $XXX of On high full pro representing XX% XX% million basis would our range. which forma growth the the for our million, growth. been have the and quarter, exceeded reported second $XXX revenues a consolidated constant of guidance XXXX, of consolidated

representing growth currency healthcare constant XX% our segment, quarter growth. were For and second reported revenues million, $XXX XX%

this related helped orders X% year-to-date. representing issues that healthcare our were by reported growth XX% was from to growth $XXX constant chain a On of shipping growth delayed mentioned, most the million first year-to-date the and earlier year. revenues currency supply quarter basis, were Joe As

segment, a XX% basis constant have quarter non-healthcare all currency regions chain sales categories business $XXX effective better Denon, and management strong and of of revenues of had reported demand the by $XXX and were representing million growth produced performance consumer full combination would end. supply quarter. the For across This brands The solid and growth revenues our consumer our Wilkins. growth. quarter, from through premium than led the been forma April challenges Bowers Marantz with during expected X% XXXX non-healthcare million for On XX, quarter second pro fiscal

second gross XXXX, consolidated down of reported non-GAAP the we P&L, of quarter Moving margin XX.X%. for to

supply Our by impact headwinds foreign the inefficiency. adversely margins were segment affected mix, of chain currency and

gross non-GAAP of points quarter increased of we to XX.X% margin in second period. mix, basis business, XX.X% XXX our capital healthcare The favorable derived year result a higher prior a from revenues our proportion product to was equipment. compared For sensors as the improvement year-over-year to adhesive versus

For quarter segments, non-GAAP second our margin consumer non-healthcare was XX.X%. gross

earnings our invested million represented business, to to increased of million consolidated XX% share. our XX.X% reach share repurchase our For we second XX% $X.XX per our our delivered $XXX strong share In we revenues, X% in In of increased and range. shares X high per summary, end per our earnings million the $XXX of operating shares a revenue. outstanding. common to non-GAAP representing profit total the stock quarter non-GAAP quarter, performance with And second diluted and over the margins guidance of exceeding reduction operating

constant pro non-healthcare forma basis. currency segment XX% growth consumer delivered on a Our

most And set the all while in grew window the of products. connectivity year oximetry our the contract and over of Gateway provide our say XX% our approximately as year. route delayed a increased last across the which existing end we over connected number in by quarters more Our the our durability boosted represents consistently, our virtually the fulfilled Patient Hub, healthcare revenues strength healthcare our the hospital seeing growth quarter. segments platform consecutive for four than growth. is and customer Patient first keeping grew of second very the XX,XXX compared are such basis At We're of tech $X.X automation technologies associated healthcare Further, half XX% to multiple and prior new have the constant illustrating of backlog with was our a and for root, via year. and I'm of our steady happy billion, Rota a the for on around Notably, our for over and settings. strong installed increased XX% good drivers the second ISO our accounts of currency connected that our future XX% SafetyNet thriving. our persistent increase our service XX% year, SafetyNet to orders prior shipped hospital beds now Iris base for we adoption business. revenues business Further, quarter, our accounts the healthcare winning globe and beds

guidance we the are conditions, Now I'd from US operating headwinds will to that increased an on XXXX currency financial guidance important update most consolidated the dollar These income. macroeconomic through two major our of consolidated with guidance third to our includes currency margins effects full segments. adversely shifting for is currencies. affect the foreign It statement year. income our our essentially strengthening provide which you incorporates our flow fourth like providing negative and substantially the to and -- note against the and acquisition the ranges to Due both quarter

revenue to For the projecting $XXX million. we third XXXX, million are quarter consolidated $XXX of of

to XXX million, third $XX For constant This our are we which $ the segment, X% headwinds. million at midpoint quarter year-over-year currency incorporates million of reflects currency healthcare of of range. the growth projecting revenues $XXX

share, at above trend large growth currency line of gross quarter. XX%, at operating to year-over-year toughest third of consolidated our to exceptionally constant to range. For customer year-over-year a facing $XX with million of product flat for guidance per an fulfilment of earnings compared segment, from forma $XXX in are XXXX, quarter to strong orders retail third is Notably, the the million to $XX ranging of products. quarter million for currency quarter this $XXX comparison business $XX of basis, was our incorporates due third the third implying pro revenues million million projecting non-GAAP $X.XX a projecting and of forma $XXX combination stocking pro non-healthcare which from XXXX. a we're On $X.XX revenues the On we million due approximately headwinds, ranging backordered midpoint margins to basis, of its profit the new

moving Now XXXX our year to full guidance. on financial updated

represents to year year-over-year $XX comprised sales FX revenues X% we million basis, $XX of constant consolidated compared year, million incorporates For forma full fiscal consolidated implies guidance back pro plying forma a are consolidated $X.XX projecting million the prior additional in increase XX% revenue provided pro to of May currency of strong on to full performance. our year to this offset is guidance fiscal revenues billion headwinds, headwinds, million compared guidance of reduction billion growth. of Further, the $X,XXX due XXXX. million, our million our $X,XXX $X.X for On of $X.XX currency by $XX $XXX to X, which net to of billion XXXX a an

we in million currency our FX to Compared which of headwinds. segment, million guidance, represents $X,XXX headwinds. healthcare our year-over-year For $XX an projecting additional $XX million to now revenues increase represents this incorporates are of $X,XXX prior This maintaining our constant million at projection for XX% the in our year, growth XX% instruments currency guidance year. and -- We're reflects to with over is boards prior line technology this this also of prior XXX,XXX shipments update least range. which

million year offset pro constant our consumer segment, for headwinds an XX% headwinds. of XXth, non-healthcare strong $XX projecting year-over-year forma million April XXXX, incorporates from $XXX revenues year, million to of million currency sales consumer $XXX On to for through million implies basis increase we additional guidance to this Compared of full performance non-healthcare For $XX guidance end. our X% million our in growth. XXXX. $XXX Further, compared plying a FX fiscal to of the are prior to year represents to our fiscal $XX to million currency year $XX million revenues $XXX guidance, of XXXX $XXX due million fiscal reported by

basis For our basis Compared points currency non-healthcare assumes guidance, XX.X% reduction foreign additional gross mix. consolidated a segment margin and points we points XX% ranging supply represented margins healthcare non-GAAP of consumer basis our inefficiencies from this from headwinds. points, from which of are margins XX%. XX XX basis business, which chain comprised of XXX gross and to XX prior from of is projecting gross to XX%,

million comprised to For business, $XXX projecting million. our of additional guidance are is non-GAAP of million $X represents ranging we to $XX to operating million from million FX $XX of headwinds operational performance. This $X our $XX a by improved million profit million prior $XXX offset of compared reduction to consolidated net

a are the operating in headwinds, the non-GAAP point from represents consolidated to FX to our of result, XX.X% projected projecting basis been XX.X%. headwinds. XX.X% to operating would entirely our our XX margins Compared now ranging incremental we this Without range due have XX.X% prior for consolidated currency to reduction a business. As margins guidance,

$X.XX the on interest further comprised Based to prior and consolidated our Moving weighted be Without performance have the rate this the projecting the increase We're from combined by of is $XX.X these P&L, with share represents that $X.XX, projecting all non-GAAP range for would of of exceeded also This of down our in approximately repurchases. million of offset performance, outstanding to in for of expense which EPS headwinds, $X.XX been to to additional guidance, XXXX. non-operating net the Compared half average FX strong a FX non-GAAP $X.XX $X.XX reduction is expenses of to comprised of XX.X% with additional projected new improved primarily an headwinds, tax expect To shares of roughly business associated facility. $X.XX. EPS $X.XX XXXX assumptions, $X.XX expectations. our to credit range non-GAAP of delivered non-GAAP million. summarize, $XX the are first we we $X.XX. the operational in the

due our our pro implies guidance we're currency additional Further, X% to full our basis. full forma constant headwinds, guidance currency revenue operational EPS growth the year on XX% year Excluding operating and underlying strong a performance. revenue, XXXX raising to margin

details presentation investor to section @masimo.com. that, the additional guidance, of XXXX I'll call today's the on With website the our within For refer please financial to Joe. turn relations back earnings

Joe Kiani

Micah. you, Thank

moved our consumer and health become plans have with in wellness forward the We space. a company prominent expeditiously to

market Our limited occur and moving now full quarter. WX been market We've launch is receiving excellent expect and to sensing release. Watch WX feedback this of in the Bio the

will larger sensing features. watch as feature a follow including watch to Our FREEDOM smartwatch, WX Android than much the year. that refer bio And set will we which next have

is hospitals shape and relevant Our we health our home now our products as hospital consumer use, home integrate deployment of well new strategy clinically the the use. initiate and are a within be development taking These healthcare wellness the devices settings, leader products that and technologies. as healthcare to technologies in as intended of with for monitoring innovative non-healthcare

cost taking outcomes and to Operator? care. we'll is patient With new and of while to call improving improving lives, the sites mission non-evasive dedicated Our questions. open monitoring the that, to applications reducing

Operator

Mike Our Instructions] today & question Company. from first Needham is [Operator Matson with

Mike Matson

really thanks I for the think the your bigger of or Maybe is talk market you in taking consumer smartwatch. smartwatch guess with strategy where the my watch, out upcoming the Yes, the question. to help there some or differentiate kind it like you brand either what this can Samsung. I companies and could start, about WX going versus Apple you it's of about

Joe Kiani

a us. allows customers things I'll you that the have phase, them do. wanting They what to release marketed limited this during Well, they've tell been do our are to telling had never product

to think then nature to watch with of been the business. before. we We healthcare Android the But this the you before rate. So, used And unique. that I wellness, FREEDOM, home WX. some on and new needs as it's accurate competition, compelling for information never design, or as great released have we example, for been no of that use just made compelling. what launch training, been athletes never It's the the believe whether again, better continuous is patients before, that are both competitive for that a it's hoping And that, the they're and some better us, commercial from telling a we which we're I in that consumer even features of we have addition preparing different. It's at we monitored and And tell release unique have some unique more to in not information that And sending of available said want remotely, for patients it have addition, oxygen saturation believe risk product. and hospitals, for features, far of a pulse and there. because be with things are parameters have

a which market we have, should think share, that is you XXX% your product you what what command want, for we to have team want feel. So to

I ahead whole we're the a And is, So better And I And right us. efforts now it's will hopefully is have the and out of in you, have of have for our We're to team. never we, tell to can do the grateful going right prepared. make But united of but revitalizing that the the it? been the question put they we all salesforce, time to team lot most tell, distribution work think channel Masimo date. we've excited.

Mike Matson

great, pretty modeling differential the Okay, for is quarter in guidance that just or EPS there's you there The excellent. the for things, of mix seasonality is particularly a business third new versus a function the were big of maybe of with the sort kind something. consumer

kind versus third the a of there the of just and happened there's guidance understand whatnot quarter Just, what kind delta a to guidance with consensus. seems in overall bigger your annual But currency. like I it

Joe Kiani

Well, historically our time, as comes people lightest have timeframe. of you also QX, having which in even QX. by season, business and typically QX in quarter, summer them, the holiday of think consumer flu the less elective I the know, they And aided in side, QX in but business the businesses lot which has the for procedures on healthcare season gets been done procedures, a

in same And so kind I think the they're of boat.

So the alarmed way the we're whole year. we we there's don't, about. that just It's see nothing

Micah Young

And Mike, year are the goes just business throughout segment, is of the to for Yes, into consumer that there's the that quarter quarter. non- preparing to of course, the fourth the investment for add that a strongest point Joe's lot fourth healthcare quarter.

year-over-year the on comparisons. impact some having that's So

The other very FX thing is are significant. headwinds

quarter our to So XXX just operating about if guidance, for points on mind. in at Well, FX margin. keep loans, basis so you of prior something the look versus third headwinds our

Mike Matson

thank it, you. got Okay,

Micah Young

thirds two geographically, you outside of The our US. And XX% XX, is are the United business about is US. the one more thing, Mike, outside of is Sound when their their business our how revenues businesses, about look business

heavier headwind business. definitely FX a that there's coming from So

Operator

Jason is Piper from Sandler. question with next Bednar The

Jason Bednar

recent planned questions. you for start what and part six a of CEO leadership you a backfilling the or required leadership way biggest outcome here three you saw prior help have ways to in to acquisition. risen you the deal maybe has what United. transaction risk ask us Joe, help terms successful comfortable integration priority talent Sound to in months of the feel Sound wanted And the of good changed announcement from at the is taking this Hey, that level months can't and understand ago post with top as that kind when the but risk in Kevin I with Could position. afternoon. leadership was Duffy, announced a us us help indicated feel that Thanks I you retaining and transition?

Joe Kiani

think you go it journey, Sure. fit. you're feels like Well, I this and side as good it's through side, by a working sometimes

doesn't us. sometimes And fit. or like a it good And wasn't either for a feel Kevin good it's fit it

is, left have We business that been of August strong committed The good one of that to he's And terms. one Bowers team. presidents and basically we us news presidents, wonderful has day, There them, exit on last them, very Wilkins, Denon, that Marantz, really business brand is there's for have were the and which we're have process. five Kevin And these of the And a Definitive Polk. post that other Technology was running a way with helping happy been amicable this team and one, below very X. are one of run. overall, responsible them, one the

leads incredible an those chain operations the of is leader. chief wonderful brand that there's operating there reported officer, head supply a also, to engineering, We and

had bench, meet very a strong So to a and a chance of underneath them. lot we've them

really things team, that and the we So certainly for to think We These happen are still journey our do about happen. need all anticipate to the may we will obviously did not it. great the going best we keep yes, way. everyone along feel we

of the we're I with going from now. we're not to Sound just to honest lead But be lot up choose be would that is United we're And to parting ways to good right Kevin. it be with be I'm I you, naming going believe from. future, process really a what good. to have the happening. And through new excited And ended the we leader a candidates So did team. going team about

Jason Bednar

just first go-to-market market for that. Mike, like bit maybe Thanks go then little is activities the deeper full you've in to release this going spend, you maybe how up what And talked of time you the like launch openly Mike's investment for we that follow on helpful. be a too that's think And and about And -- just the just of Alright, a should as little year dig WX about because question. more start to $XX where FREEDOM? I price year It's there, thinking out you one any you're kind curious revenue prepared maybe, like the forward move enter not you're planned, disclose so that any $XX point, consumer you'd have if I'm of contributions willing to from to FREEDOM. on then give to or also WX in or watch, mass a something willing modeling that about a product. willing with sure Are details million just FREEDOM? reasonable? in what you're But something us how get market have and on million two any targets? you Beyond throw

Joe Kiani

you will the don't. as come as FREEDOM. love watches we and better I FREEDOM minimum, I WX that for Yes, shareholders, to the our with excited technology we of think have What can are out that things But is that about there, share the all benefit stuff. all that other same we're cool bio sensing feature you tell some of Android sets the the would with it's

what as strategy any of oversight. you products, people to away have becomes more doing our far know, are been even always from to customers, important prepare? been has As further that for As it clinical clinically relevant you our provide

under motivate spent, salespeople word to hopefully doing people can’t keep United I going but that to a that's of and them clinical that of we that going. a have we get for very team them from It's be quite selling that us. predecessors, phenomenal it's environment. process, and we've before which the need And as the FREEDOM, some invested But a that and Sound acquire decades doing are anymore. clinical bit it before product to of we're we'll home then number to And the additional have course, X,XXX to we this, help team of to So oversight is to the their purpose WX of to had prove hospital planning distribution channel. said incredible points That's XXX the them as previous distribution well. years strong. built XX,XXX And XX things do time a this nearly

I think the Micah, meeting as look modeled, of these do all been you we forward it Day to as to are of want sharing much we add December. have at anything can with Investor that? to you in

Micah Young

Jason, know, also you commercialize and our to Yes. we're prudent the a for target new health learn about still products. We're always we're as I and think these going sizing some how lot products, markets thoughtful consumers consumer with the to of those guidance.

got today. to get a thing strong want And have is The very we've double of growing don't digits. business mean, to, ourselves we ahead business the So good there. is don't I we

that So as we're into next be start thoughtful guidance year. our to we going the bring before we to in forward move

Jason Bednar

is sorry, with full know market going to small, be into it respect this that safe assuming whatever for just assume to is I year's guidance release? So to but it's the WX baked you're

Joe Kiani

released. hard put product a perspective, the just from guidance not anything is the until our learned in way Well, practice we've to

in So not far, period. a limited the market except hopefully revenues does have you have we've received that for the we WX release will guidance given whatever come

Operator

next Raymond Jayson question Bedford with James. from The is

Jayson Bedford

hear you Perfect. okay? Can me, afternoon. Good

entail? a question last of if along how just start line market to will and the of this So the and full logistics work? a that have in release questions, And Micah, the I hospital assume the And then Meaning for does of follow is will WX, what maybe this so, a global setting? economics sale launch? we

Joe Kiani

going another global is We're it have about Yes, XX to launch. And plus XX in be we distribution countries. in countries. a direct

will be it launch. a So global

to just athletes, be their are may targeting we're to WX, and these have hospital our as as FDA they far be two will are that well be COPD, be as use, they These that there's product are prosumers, people want As paths and people these submitting they fit. obviously are may monitor to that XXX-K about who for themselves. going clinical for conditions may concerned that health, heart have for want

be that partnering augment our are as with organizations targets. to healthcare availability our Masimo further with both those to take that join at partners and consumers we plan have we we of well as salesforce together may So of some join the from for will And that it. looking forces that potential many advantage we focus a want WX as to to people ecommerce,

Jayson Bedford

Okay, Joe. thanks

consumer. healthcare comments kind that's in XQ was recall, of $XX drivers and Micah, business XQ, that rate just how because issues, any I on that get to So trying between we the the just supply overage XQ helpful. at there's if is an about short million of view I'm should the growth underlying if and

Micah Young

question. Great

So XX% those at the see really a it year-to-date, right constant have year-to-date, and really look currency. internally the how growing shipments, grown. on it I grew XX% viewing I currency all constant what into basis. we're of is hard to parse we're look timing of business takes it's account the strength that here the look way at it quarter out we if at you That's But each now. would And

Operator

next with question from The Stifel. is Rick Wise

Rick Wise

like just quarter if afternoon. timing seems business. There's the et of new had or deal level, based financial to? an high broad you I’ll just excellent that et the the concern, not of sensitive about And capital new spending, hospital, all cetera. you we about you're Micah. Masimo, Joe. I backlog environment? Are great spending to start mean, with wondering just Good gosh, capital health. and be strong, concerned Are the pace the cetera, at at seeing anything environment, Hi, a you should about it concerned of Hi, a been healthcare specific

Joe Kiani

so business. Well, reduce intensive revenue. you we have a a course, of purposely our as revenue, that have a do doesn't will healthcare revenue, that's but small been model, we amount mean It's service really have capital capital been that, minority of don't we of that technology business reduction in has never done capital our if any will. And

we're see in we're we So OEM And things obviously, we're time, like that. see for hope we'd concerned improve and our same But all-in-all, all greatly good, not to so, sales, customers the about same with at capital but to and their them. boat. the thrive

Rick Wise

watch stayed get but to separate, How and better? get the on related much Nothing And current that having. get there, outlook spell we margins you the next and the beyond? we guess half But margins? clearly, to need the going could launch about do are two range. this currency? you. Or can't steps you're What's what unusual. supply questions, same? on is FX for get margins. and -- we the United think you How the comments Micah, going to chain and gross gross sourcing? think I'm Thank expand one, and year what next expectation pressures about up? gradually Good. in to do chain things satisfied supply very second get what's can I maybe do And about your taking forward? Sound to fixed? margins are Do not with to But is sure do you And that try your turning you about particularly, we the that do

Micah Young

great a it’s Rick, Yes, question.

we're points So of being as or than FX mentioned we total more basis prepared half. of that earlier got in headwinds, half I XXX remarks, about facing

XX a points segment basis prior our If about on our margins half underlying you mix. operational that guidance of look down at

company supply some And now half inefficiencies. the chain mean, these every is is other chain supply of challenges. facing right so I

back the for it are are through And it not a waiting only our then process, there's and sure components have but them we're for to in the them this needs. think inefficiencies just with And a components. those inefficiencies our on year, meeting some year, half that's to production important when everything, because And them, lines, having a to the challenges lot most of to consistent we there's has manufacturing we lot expedite at make part think manufacturing next us. of there's of of you lot a to But I materials, of still first the vendors which we get be freight these in. components line, them facing I maybe of I coming look consistent do those transitory. the believe and then flow raw we're and thing going creates a on not we're expedite creates in customers’ our our once not customers of because

I challenging next does the start better from think it's worst. get seeing So predict to probably move we when into it better, can't but And that here, year. get would it's environment. to I we're hopefully, a as going

going has job. back us as that's to the validated just think now. our vendors team improvements great through over gross this done navigate in give to margins great got a more time, opportunities drive I multiple and we but to We've

and some of woken out that of a it's with just are base much stock. and in vendor. companies think who to safety distribute lot Plus, we're our really And volume a some up there going get it's building I us production inventory of we're one as better to to pure efficiency try focused spot. vendor on helped to

our coming and be make I are those to needs financials, going customers spot first. we're but sure forward, the that seeing are think moving investment of meeting in putting a we them that through You better

Joe Kiani

traveling tough I’ll hour. bring raise having in maybe $XXX the side. a add hospital things having their on They're an them paying couple they're lot nurses Yes, companies seeing Hospitals of are time, of prices. to a

approach So doing of that. we have taken the not

we're hoping inflation where to facing, we'll our that sticks, adjust held now. have healthcare for that But cost and that we on two they if then will not continues, help need a which customers at We in help. it back our have can time prices, be if it temporary, have and put the the and extra we all side, it years

On that the low of consumer side, be I we don't in should that has margin. a any business believe

do they and I you our to COGS for been valuable incredibly both Marantz, the with United said, Denon, should bought have raising their because like improve do, prices Wilkins, as not they brands think could if they be to you in But been greatly. seeing margins, the lot shipments. FREEDOM that these will they've technology a we Sound them that that business, after great which we products, healthcare with we model products and premium service. getting them, think audio work their margin a buy thought costs our healthcare But what only products did consumer made because we and will make increased Rick, I them when with Bowers improve adjust other plan a will to be is

we on good will a will anticipate we for be that revenues they that our world, from useful recurring only service think but margins So capital the we customers. anticipate model in -- not

Rick Wise

on That's very follow I If just helpful. up that. could

WX announced, team have, a an when get you you on getting and when you we're going Yes, Analyst the the Joe, briefly, that's sense at when perspective from I'm the you. and we Just tonight bits from Thank your thinking, think hear long-term sure. sense we and vision? When I you might point, to that or deal sure your do of should But Day for I whether manner? that don’t -- had in have launch. some do about deeper part the hear know, we the expect was more some longer-term were fulsome FREEDOM to you pieces

Joe Kiani

because I cautious you'll competitors Sure, inside head have not than more our But well. nothing to think our interesting. to we Rick. but it would get be you hopefully to let We find as love inside our exciting get head

healthy we what dose Have yet? you're December story of do Investor long at to Day. date a going this So a good -- think I thinking get we're short, have

Micah Young

XXth. December

Joe Kiani

couple going you'll in what you And out, mind. FREEDOM, out. a a XXth. can, to products. then years much had to more. they're what try breakthrough come. think we we California. as be I launch December take it full December And drag bring snowing of to and out think XXth, I And you'll we're obviously, Hopefully, of when really you will think raining you I then we'll it's share there's anywhere or we'll But share before when we see then might story with as comes couple of the But

Operator

from The next Marie BTIG. Thibault is question with

Marie Thibault

the Micah. spending. tech thoughts up heard there priced on premium other Sound consumer afternoon. We'd presidents low comments, you're the companies at for questions. some business confidence certainly you these Joe and what love brand the and follow good concern hearing made Joe your of United those get from just for maybe Wanted discretionary in great Hi, products. a We products. side your from appetite that some this to here quarter terms Thanks with consumer that consumer is about about taking to of customer

Joe Kiani

the believe for when are towards We, usually some worse, they are of products of from in occur. of Sound people Yes, very affluent, United wealthy shielded first the all, well. geared or most better which more economies weakness

there consumer out that is things of product more, TVs with down them addition, if are lot with had what meeting where that. met In we've like really the looked we slow low in in in certainly, what that the still, to things And the the and line project. it lines seeing you're could productive a they a forecast at from given do we've you end case because soundboard products worst

confidence with healthcare feel historical end everything business, have over to give data has that So for theoretically, high don't I, they I me in I've the to on like while do, the Sound do years, I United. running for are that XX I been world. here the

me So way to of in good a modeling. thought lot belief the it, critical that it thinking and and and part team makes the they like my about sense seemed conservative

think should we we yes, okay. So be

Marie Thibault

some And couple on is Thanks that a expect category? Okay, December, product it what Day, hoped we And in it's to the more delay? that? aid September. months led What we'd pushed hear on I for to I Investor well, that that product been as that's updates very of hearing thinking was guess, of would on the just out any behind that. sort What in of from the then helpful. realized

Joe Kiani

we Yes, has run go for was Micah wasn't financials can company effort the that public. the consolidate being team imagine a it and pushed really to and that you his taken one, out the not to with public,

more, want December, And more. we the giving think, we'll I you So the horse to and share feel break definitely able know information be yes, hopefully, share want we will ride. then that secondly, But like hearables. we and about guys with by you us to didn’t we was

Operator

next is Michael The Polark Research. from [Operator question with Wolfe Instructions]

Michael Polark

Thank questions. the about now, you your start flow on you profile And where kind think, kind two? free the level a afternoon. related And durable, you target where comfortable question. cash kind I coming leverage just number have balance updated net altered any different might of go about thoughts to of want want is just the over on toss for curious with capital million of it months one, next Sound to six year on or just math in United. this the Sound the curious I'll cash of as out buyback. net know, flow the lot kind I you in doing has and year $XXX Good now pieces the the of we materially this taking midterm. enterprise high or deployment post is for moving you I'm over then of United metrics, for just been million Maybe $XXX end, cash. where Entering mean, with here debt, sheet the guess, comfort here,

Micah Young

is Micah. Mike, Yes, this

I'll through post, at go those look step those. questions, you if So I'll through

of always zone, as in comfortable So that with been is less net our flow under terms company. we our cash times generate leverage leverage, three a X.X, I've or in strong

rate very under more even flow, good it's good So the to in we're service there we're getting our then that even and business. the position debt, cash back X.X, in interest debt, on a invest with

number that's so one. And

the and for of capital long-term we reinvesting reason Masimo. business, at in have this our shares a confidence we're look we growth lot the of that's why deployment, in As

it of number that terms one, some capital flow, in great costs is a are deployment So we was the transaction had that's acquisition that cash that shares our reinvesting in think is, flow cash we've softness company and something in related. we're And us. into we at looked back related for seeing the

still good to had we expect in free pay the pull cash suppressed we that that So half year. But for seeing this flow. you our are strong those flow cash first out, if that we

in inventory. investing we're is thing other The

what to you don't If happened QX, we repeat. in saw want something

before, for to make some we we're putting that. that ups sure follow of company customers sure open that's and safety stock hopefully the do mentioned And on you I first, so any that sufficient I'd for So think make prudent answered And levels. I questions. trying get have to our as those very we're

Michael Polark

My a months six follow milestones and year over end expect with was upcoming you be three that before events up we monitoring? to should timeline Apple. just major legal next proceedings topic the Any for the

Joe Kiani

subject case place review. by court. presidential been Apple, XX. case March, case to me, decision. will And secret in go and our Watch. with patent March. Commission assuming ITC Yes, infringing Selna. April January, should anticipate But the next trade then our And make And have We the something judge by against they has case our will we the happen our there'll case, year, both a in Apple stayed within joining in forward federal by their September we our had then, will by a ruling excuse jury be And a patent Judge

to Apple. of confidential And to Apple portion decision documents half because about going for favorable was so I our the very of to we I And expect good in understand case I disclosed. was what about have were I leave case. that there. the documents I see felt some not couldn't that April, in time from was asked it. ITC a be The I were in we'll

we'll going So we September XX. some know feel hopefully, it. have about And you good happen. on to But never what's news

Michael Polark

one Appreciate in. quarters. heard of There's Europe I a was we that, I on least US there update and couple sneak here at there commercially. pathway an opioid in every for if regulatory haven't feel an quarter. topic like the more a There pathway it I talking were about in net? a Is update can safety

that questions. it. if I'd that any So where taking you for provide. effort additional color stands there's the on can Thanks appreciate

Joe Kiani

safety we're been around hard pushing with we've we're everything for opioid. alert, made I FDA, mainly nets the in given it US, world requested. yes, Absolutely, clearance. for the believe waiting going well, It's FDA

could out status product the remember it as XXX companies a that of gave you eight FDA well. opioid if again, we're, that one is products breakthrough this a as chose So help of and it, the over epidemic

due release to launch. on We So hopefully report tired waiting the last product, gotten three has I looking the too. But And problem think we're killed it did because we is Last we to overdose, were two, the know years, were soon. opioids. over worse. FDA anything XXX,XXX were XX months, the also the getting in to due to XX% US believe people of I forward prescription if the those eager of

right lives the solution, we So save, of we can save we have a believe of XXXXs you year. this believe they'll XXs with deployed

as soon get know you clearance. as let we'll So we our

I think that's the last question.

enjoy quarterly rest call us. look of you So thank you joining summer. to bye. and December we for you forward hope your Bye, the all the next And I all XX. seeing on

Operator

call. this participating. concludes for Thank you and today's Ladies conference gentlemen,

You may disconnect. now

Masimo (MASI) 10 Aug 222022 Q2 Earnings call transcript