Envista (NVST) 3 May 232023 Q1 Earnings call transcript

My name is David, and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to the Envista Holdings Corporation's First Quarter 2023 Earnings Results Conference Call. [Operator Instructions]

I will now turn the call over to Mr. Stephen Keller, Vice President of Investor Relations of Envista Holdings. Mr. begin now may you your conference. Keller,

Financial Good With us you. Chief Officer; our afternoon, our and call. the Executive Chief Yu, Howard joining for and today and thanks President Thank Officer. are Aghdaei, Amir

The www.envistaco.com. of I on information slide audio of and Investors today supplementing the earnings section until during presentation financial website, SEC by the quarterly call point Regulation on want Presentations. section all and to our will today's the our other measures any out non-GAAP to reconciliations call Investors our under release, and call. archived archived our portion be will that the Events of this required later call remain It next the available G the heading are relating provided website

During remarks specific Unless or describe we impacted impacted XXXX performance. of decreases The significant factors period-to-period quarter first most year-over-year. metrics noted, materials in otherwise and related will references year-over-year year-over-year references of increases are the accompany that factors to describe financial these additional metrics that supplemental to the performance. financial the presentation, some in

available and describe the have in submitted During and approvals pending only markets. are devices certain may products certain applications regulatory that call, certain we

we are not forward-looking forward-looking statements to the as statements except to differ assume from occur update forward-looking may make number in where law. regarding securities of laws, the forward-looking events These any set meaning These we Actual do statements including as a date also made, that forth will obligation make or including of of might filings. those today. future. required We statements only results statements believe, risks and we or materially SEC the within the subject are anticipate in that federal and they developments statements, uncertainties, any forward-looking our by that speak any

With like over to Amir. call I'd that, the to turn

you appreciate call. us to first taking Welcome join quarter to We you, XXXX today. Envista's Stephen. the Thank earnings time

priorities. macro Despite a we progress volatile make continue to strategic long-term backdrop, our against

the Technologies to in challenging in by anticipated, large continue higher segment interest down Specialty Further, quarter Russia. rates proved we weakness X.X%. Products capital and uncertainty. our equipment & strong growth with first China sales see core As was offset business, driven much in challenges our lingering of our and The economic by

the market of long-term on accelerating focus margins we growth, operating dynamic, to expanding portfolio. continue goals While is organic and transforming our our

the reengineer System, Business improve our patients customers, processes Envista for daily EBS, goal of capabilities, shareholders. operational our and our uses team productivity their and drive Our existing to delivering with principles continuously

We're making democratizing investments, focus dental and purpose lives of digitizing, by professionals partnering on improve patients' dental personalizing our care. with to

first to it environment color Before I operating progress on to results more towards our our to in then and take more want provide discuss quarter I over current priorities. detail, this to Howard opportunity a the and offer turn our update strategic quick

pride At customer-centric. Envista, on we ourselves being

at impact Our regularly of of leadership our offices, patients. them that engaged at customers we concept their operatories I training The EBS their and/or with at their the with team [Gemba] and events. meet systematically and means point

understand to real that in short- needs of long-term the what is goal Our are our we is time meeting and ensure and happening customers.

oral grown they the continuously spending health, continue time Patients spent understanding at health on Gemba, patient prioritize from we overall demand that to As have the and we and of hear procedures. resilient. dental community dental remains between overall link

offices. their by treatment grow see to workflows well remain long-term their group and hear that in as their opportunities capabilities opportunities further their We optimizing their investing institutions significant offerings. private both They see expanding the the as about owners practices, prospects further of specialty excited business DSOs enhance dental and to clinicians business digitize and and They market.

the create remains long a interest community to of volatility of risks uncertainty rates, is we degree term, recession of dental the lingering world. the by expected and as XXXX. around move This the driven risk geopolitical confident the throughout a higher are they short-term While various also uncertainty mindful occurring in the

I the insights that was Patient offices area think people care. of acceleration One worth demand soft is became as see as China an we QX out Starting comfortable navigated the reopen more dental of into the and slowdown. in its more country is part very additional in way demand providing seeking market. Chinese did March, in early patient the through COVID-related

expect we Overall, volumes throughout XXXX. in patient accelerate China to

deprioritize spending volatility and expect spending may we on available lockdowns. other to they the pandemic travel less were as some term in we to consumers that care short them leisure or However, dental some the believe during do their focus activities

to VBP the playing regards as largely today, expected. out program With is

reduction in have We prices the into market. seen private well significant public spillover sector as anticipated as in the the

impacts as public While the in program it's up indication long-term Envista. implant the China that we too the growth XXXX, increase soon that we will share engine we about to the remain be patient sector optimistic our after growth business, again our additional once of Overall, demand and believe should sure for is China positively VBP demand. pick a for early long-term and be

event, over sold-out to at Vegas February, in Summit. dental Turning a progress. professionals X,XXX QX hosted our Envista In we Las

clinical care. customers high-impact to in and clinicians provided dental introduce lead and digitally to During to long-term of well educate with advancements latest ability the type our orthodontics, us enabled These ultimately allows endodontics the enhancing events community, as our as growth. in to the procedures engage learn, event, training implantology, we dental drive

perform core China Russia. to in Orthodontic double-digit and positioned challenges delivering well, uniquely growth the Our continues despite business

in a Orthodontics Orthodontic in system innovating system. demonstrate move more to efficient convert improving as to inroads powerful North this commands our the and by Ultima and America community. we both customer is commitment way teeth innovative team for price and This solution making Our Europe premium

new year-over-year up for growth. as In perform doctors, XX% delivering active Our the business in over growth Spark record a Aligner us growth well, added continues sequential and as quarter, beyond. setting strong we continued to number of XXXX a well

for both declined Russia in the by in tooth China. significant low replacements declines solutions Our single and quarter, implant-based down digits dragged

in businesses Europe and driven market we execution. we in are believe implant commercial outperforming that by the Our disciplined Europe, well, performed

benefiting are And are a focus our comprehensive growth for in both replacement. seeing materials. we on result, providing solutions as regenerative tooth solutions from implant-based We digital and

we and business performing Osteogenics well, execution on acquired year management. benefit we focus to is starting The last from EPS commercial are driven an lean and

to franchise Going at expect implant market. or we forward, our the above grow

the in and our growth. lower improve businesses as operating remain and volumes structure of EBITDA to long-term points quarter basis decline XX.X%. temporary as optimize declined on our Each primarily EBS focused investment to driven margins Adjusted is anticipated by in XXX was using first productivity. A the well

at in study Our Equipment business E&C Consumables, work. a provides & case EBS

have geographies our IOS further reductions. the accelerate. While segment quarter, a driving expect confident systematic adjusted price focus segment the through that sales optimization, expansion and by nonstrategic and this on E&C increased of E&C the declined for scanner continues profitability margins the basis equipment profitable we XXX and cost long-term to cost stabilizes increased our structural driven businesses of was controls, profitable operating margin large market points. more less deemphasizing to temporary expand increase intraoral We're and business in The as and margin

adjusted our We the to greater move guide we than full to XX% margins as expand year. of EBITDA we expect throughout And year XXXX. remain margin for deliver on track

invest growth our We to further a deal will remain and differentiated optimizing We long-term volatile focused more with building continue for growth-oriented macro to while operations on environment. stronger portfolio.

our line most and $XX continued with acquisitions, expectations, delivering in to perform Osteogenics DEXIS the Our of quarter. greater than in IOS recent combined sales two million

DEXIS the our followed businesses core points QX, in both over XXXX. growth business by in through growth our IOS XX move are included be to QX. Envista of we As contribute will to Osteogenics Combined, basis expected in results

We're excited and the strategic committed we're further inorganic see to manage cultivating While pipeline a improve opportunities we and opportunities. driven our a partnerships approach approach today, disciplined investment our moves capital that new are EBS to deployment, have of utilize pursuing additional to robust to about we made M&A constantly we portfolio.

financials through the details provide performance. our turn first now quarter segment will Howard to our to call more over go and I on

Thanks, Amir.

represents a sales quarter, of the quarter growth, declined rates over contributed X.X%. first of exchange X.X% first $XXX.X a of of the Core sales In on Acquisitions by currency delivered million. X.X%. negatively impacted This basis. decrease foreign the we reported quarter while XXXX X.X% sales for

core weakness that China, impact driven Spark decline business. general of in Technologies large equipment. and China result and The was in demand segment primarily as the sales is X%, of It in strong Russia year-over-year Aligner our performance in Products noteworthy the weakness grew by excluding as & Specialty our well the capital for Russia

first the the in decline both due the Ukraine. as performance at of prepurchased conflict and primarily anticipated, in declined strong overall clinicians of The Geographically, in to inventory Russia we Russia was XXXX as unusually substantially China. in start quarter

managed the was In China, down country through as demand the COVID-related significantly slowdown. in quarter

demand mentioned, very quarter. Amir first recover but of part in the As was started the the in to later quarter, slow

expect in as growth double-digit markets mixed. single-digit China, other well We were saw in We markets accelerate high other China of Russia XXXX. activity throughout to Outside in emerging and growth as Europe.

yet high our imaging America, chain up share the to business. weighed as note supply our higher incremental quarter faced our the declined by important of in North first that effective its imaging strong we relatively traditional and business with of a sales not interest we're It down exposure mid-single XXXX is In digits, management, to performance had picked impact rates. through

primarily mix adjusted down sales Our Russia margin decline investment basis growth. was to prior unfavorable prior continued and XXX long-term year. China points due attributable Solutions and in which the our first in from is margin in XX.X%, lower slowdown Specialty to volumes, The in quarter -- of gross was gross quarter

points of XX.X%, EBITDA QX which adjusted XXX basis Our was versus represents margin XXXX. decline

combined quarter. increase comparable interest drove Our the $X.XX the lower The the EPS in the higher from interest an reduction rates quarter $X.XX to expense the in compared adjusted prior operating of period with was margins, in in diluted year. EPS in

combined Core in continuing Specialty grew quarter, grew XX% than X%. rapidly. revenue business Spark by Products first the with Technologies our Orthodontics expand more our segments In to &

single replacement quarter, and business the in both Russia. digits Our implanted negatively by tooth China impacted declined low

to investment long-term operating China well down was the in and of first Russia is from continued XX the sales as due QX from quarter. in primarily growth. Adjusted lower the the This profits drive XXXX, to as points segment basis XX.X%

Core slowdown decreased The & well quarter XXXX. as the sales. modest in sales Equipment was compared Consumables decline due first to segment. equipment our consumable decline Turning XX.X% of in sales as to our a to QX volumes in in continued

in conflict of across Our including rates, partially the performance traditional digits in well by rising COVID-related strong attributed geographies. and volumes Ukraine. lower most headwinds, to as interest double quarter the geopolitical QX inflation, The imaging lower China caused challenges with as the in business uncertainties XXXX growth declined was macro in

and can continue geographies we in build markets margins long-term sustainable over to us a both and to long competitive Further, where term. deemphasize allows nonstrategic we our concentrate the growth accelerate This efforts advantage.

with DEXIS IOS for and to to new in make business performed long-term in success. line expectations we set the continue Our this up business investments quarter,

remain beyond. our core to outperform we the DEXIS in We optimizing and on improve in expanding contribute to global workflow. to will them sales this solution overall reach IOS distribution. solution in market, continue remain is and our to help focused anticipate The IOS business our Clinicians and interested positioned XXXX investing growth their very well

solutions sellout consumables growth side, restoratives distributor with Prevention we Globally, by of and to strong endodontics. our solutions, single Infection digits market. offset that from relative the believe weakness consumable declined outpace the the On low continues we in

accelerate & XXXX the versus points action. EBS XX.X% Channel is profit Consumables basis XXXX. margin we XXX and lower first adjusted the was inventories in of of This demonstration sales to margin in this throughout remain QX operating in quarter business improvement expect the despite XX.X% healthy, XXXX. of of Equipment volume

profitability. to improving Equipment productivity, our note we Consumables the deliver of of & and while focused It positively to important to business will margins. contributing growth move further price a relentlessly support structure We our is on operating the inclusion business XXXX, through optimizing that fully our managing integrated as also driving and protect IOS

the pursue of first million supplier cash. flexibility have right $XXX than quarter the seasonality of weakest incentive the free become payments assets Overall, the impact opportunities we appropriate for more $XX.X flow cash generation available cash with to consumed the our we growth free quarter at and quarter, QX is and In to inorganic is valuation. million ended and sheet plans. annual owing of our Historically, the when strong, additional balance in

outlook I turn call and to Now Amir the of discuss comments. balance the will over provide to closing for our year the

Howard. Thanks,

the for strategy and confident Looking our year full deliver forward, to in our our we ability XXXX. remain outlook

We expect full core the digits XX% EBITDA sales over margins to year. grow and to achieve low for single of

benefit core stabilizes benefit higher growth anticipate XXXX our and well impact accelerate have and to discussed, China of acquisitions. margin throughout as of as also organization XXXX Margins as throughout of the we a we shift our anticipated portfolio cost we products. reductions to accelerate are streamlining as As our we from toward the mix from

While anticipate the as world confident for some interest important as uncertainty. impact our it related continues continued do rate to to of situation geopolitical are we lingering in navigate volatility XXXX, in note and conflict, Ukraine the the that we outlook the confidence economic through increases continued quarterly to China consumer well as is

our culture targets. helps focus continuous and long-term manage Our improvement progressing EBS while us against volatility this

remain the priorities same. Our

portfolio and through We will growth, capital expand margins accelerate our operating further transform deployment. disciplined active our and

a replacement. be Orthodontics leader both positioned to implant-based are We in in tooth and well

offerings, and personalized Our them complete plan dental professionals productivity to empowering our of each solutions predictable patient. treatments the including deliver and diagnostic while clinical improve imaging for will and

our Our and professionals focused dental long-term our improve for on partner lives delivering patients' care. customers, our patients, employees value to dental digitizing, and shareholders. purpose is We're demarketizing to with personalizing by

Thanks, formal our concludes Amir. That comments.

for ready questions. now are We

question [Operator Elizabeth Anderson Evercore from take our Please go Instructions] ISI. with first We'll ahead.

is line open. Your

that's us and for similarly much April, of quarter. so thanks first the U.S. understand is quarter and pacing versus and of guys, so the far Thanks. trending the doing year example, your Hi about progressing how commentary of Could appreciate sort in how for question. both the then for help the China you first the how that's versus I Europe? sort

China, and Elizabeth. more March, support people and starting and you, have offices opening dental in Thank beginning seek to a we seen more are dental care. of

as we be which better ramp completely two just XXXX far is almost in same QX, place There's - some anticipate This this. saw after to than take that anticipate was the COVID. go in saw QX I we want China through going place. but for we was to the that So down. But basically to we it what uncertainties, year, clarify a in is not we in shut months, ramp

to home XX% one not had care had asked our and them of own come they we well-being. stay work take COVID At of point, and to people, their and

So, and see for we part lot performance a of growth, and of in QX, we performance. impact we through better as expect better IOS core to China. Resto expect comp April a imaging, as touch see on go becoming to have we better the the year becoming to China our and Endo

and in the while So what expectation we we uncertainties what have the confident ahead We're see growth is seen we some through is and to had of improved We're us. dealing core going expected both QX. in margin sequentially year. April of as continue that go with

U.S. so quarter? very versus in That's the Europe first in second And it. Got quarter the helpful. how versus and the trending far

really a or had have performance six We quarters. in Europe good the seven in past

our think business, been as position, We very have implant our our well. and business, that market have above nothing business mentioned it. that and fact, in continuously well performing, we implant as we In point had on on our Europe seen changed of we Ortho performed view our the both have

really business. ortho put business, better in Our work had our EBS do of execution expand to And with Spark Aligner with on ability geography-by-geography, specifically and business a has Clear a country-by-country, that also to Europe. the much lot has at that run

we five have the continuation is what performance. the that first So in of seen a four, of quarter weeks far so

base of a We small North base have America, to imaging. really a compared small

been years, consumable it's equipment but and Majority the above our is base. growing in smaller has Europe the also market several for U.S. above growing of past in a market capital in our imaging and

we well. of a we the see, to pocket. challenges quarter some throughout And in go Europe So We're around we specific that are year. execution U.S., overall, perform continues very the rest In we expect for have performance the as better addressing those. forward and to fixing

you Thank it. Got much. very

from ahead. go with We'll next take question Jeff our Please Baird. Johnson

open. line is Your

kind most implant did the up Russia? I of afternoon they We we and thing of job, you. globe. think, and haven't Europe, I out one across Amir, Thank understand nicely numbers market. above were giving Good a And of heard potentially us guys. the China in I the think got of adjustments good then you

But an think the anything from those I challenges maybe from implant quarter? addressing one about business how or business American implant in of on standpoint North the or didn't we Was this U.S. hear the one that of was businesses a that the domestic performance execution standpoint. - some should you're

to value If years we want we at I of some the approach. first you, multi-branded back. - back, looked We had couple Jeff. We Thank a take said around back challenges us go implant. on

customer our So organization. we Nobel, we fixed experience after, premium specifically that. business Then the went on we delayered around around

I eight to the seen place structure better to quarter-after-quarter, similar Europe a U.S. the improved We a perform past go very quarters, continue mentioned put we and as forward. have for better just and in or in process as going seven continuous We're in we performance

If you management more lot have done incredible have job, look implant, back, at and the we the an team our a incredible team done customer-centric. job value becoming going an

we're our the little obvious, our around result care to energy it's revamping take a some America going customers, similar with approach portfolio. our And and implant. North is in Put solving going of operational of in the to bit issues longer, taking value see but a

list. detail work, those pockets and trying following that sure have We our same education training solve premium with in model of we done priority U.S. top and to that is in orientation, make at of Europe, customer-centric issues, have the challenge recipe implant our the EBS

challenges the performance in We as we the what expect we throughout year. know of where of see us is. and are implant and throughout We on There year. some fairly had North in responding the better And America performance America improve the performance all know source we go would as problem I And well. would that signs to improve. we our go have executing are expect to North

helpful, the think what I of think couple And I you of consumables up and maybe that's morning areas a by exact And of this specifically about heard highlighted single-digits. then double-digits offset Endo and low of I'd just in there, in other clarity, were It's that right, thank Resto Resto strength comments competitors point the of kind All challenges opposite is we they appreciate you. on what your your one both. down from Endorsement? some

and what much in with did is on take Endo areas are Dent what supply down, market I guess, so you asking if not and I extent, How I'm So but a is How something then don't between and your those you low up single-digits be seems taking just they it better. and Resto did, the would a assume like lagging I difference, mid-single-digits were by I the know, XX-point market guess, stabilized. or that wondering? what they there

good Yes point one look really good a proxies from question, got take we've Jeff. of at of part that, to view. A

of it. on year, last compare versus Howard the touched you If QX year of this proxies

are managing through somehow ourselves We place. that, trying a better get in to

really the a have a we're can And sell-out. at that take We if confident sell-out, and the I have at at the distributor sell-out, sell-in information sell-out. look level we feel the really for on good look we

situation, situation what at while our versus it we out are think so, selling, a team back. we we We of what And in really we that this is compensate looking in ourselves, the signed situation is QX. got differently. And sell-out what's look And of the a inventory have temporary we of habit done very like? removed

in you're the growth. saw infection have back prevention in business momentum growth the overall this have low We see We our we seen and that get to confidence going specifically continue to think what past. that the is we Resto-Endo, is to also single-digit

a been outperforming have touched as Howard really market We and the good from perspective. on it, margin

go to confident worldwide in business. consumable that I America we as the it, result in we not we the result year our through disputing are North get I'm expect on able know well but as that are as we the QX.

helpful. you. Thank That's

Morgan next Please Stanley. We'll take ahead. Wright question our go from with Erin

line open. Your is

you traction cad and how And an that DEXIS us Okay on generally, would update thanks. business this characterize across you in iOS give kind expectations your Can and so of environment? the you're far? sort demand seeing to business trends of the relative

Erin. you, Thank

go-to-market practitioners, - of category we Ortho it's reason So that here in are wanted who offices. sorry, hybrid lot general so than Endo, people to implant categories. this in Endo, do the approach XX% other iOS, underpenetrated, and be penetrated more less on a I'm because Ortho - offices than

also gain, So, into the iOS is having what who underpenetrated. an reason to but beginning digital anybody be in more in to is of of office, that a opportunity gives the we diagnostics, we seen got know the the - walks workflow have approach. And market wanted we to there a we also at move you productivity an

can it their but put background, we as entire we offering workflow. a accelerating that So they the have we with really very but that do have what with only seen, did, that of are clinical They Ortho business, and a they business pleased, part what not sell as customers. our together hybrid not that product, business. have we independent implant to offer That the approach also products, and to is

seamlessly. that demonstrate to able been have we IOS works with Spark So

XD others. on crown, same-day printing Our the really and with IOS well barriers worked screenplay and

nicely ramping expectations. is is median that So portion up pretty

much The rest some a as a that execution and channel not had geographies. presence channel. empowering in through of of geographies been in really presence Carestream other has good really

have and imaging we DEXIS are engaged we them. So our traditional channel, activating

place with like five, in partners we partners have marketing that we sign with focusing Europe. look the U.S.. top training, a XX, really in and activities contract funnel events, then the and taking on the And after you XX do the what six building and top pleased travel, ramp. model is co We're are activation The

we getting QuarterX getting so We're It's – was growth than think are this it's and Osteogenics to as the momentum of important going an part built mentioned, better ramping trajectory XX beginning basis this, those see up. growth be up. points – up. We're margin. It to far. going QuarterX we fleet accelerating We're ramping average an be IOS over to above a our of year, plus important part, is

we're pleased to That's work product better done, even it use the picking up, continue get with and going we're categories you really to better, execution. what can is expect margin, better So from to and have EBS we higher us.

then metrics And to retention give, and strong, of I you market one growth quick Spark but you Okay. also targeting? where a across you do any any have to The around you across market rates, front get on can Spark. customers? or now metrics in reorder where And you that rates hope is your guess, terms on specialty that share stand

is So year-over-year, our up XX%. business

indication So in had We XX% a of really doctors. that number the we QuarterX. cases a of the number doctors new record good of that is received, Spark of using number active

get the XXXX. to work geography. So this, number people, XX the territory. teach a them, of X, up, We of with specific have that group we and good in are make next we then small ramp them, way we them approaching are geography, to go them, A go at we been a really people, time. added they next place, since small help the We sure

did replicated ramped has we that This very for worked in Spain, reason had in taking so the in France. we well. We're geography. next into take up really because model what we quickly that The Europe us

that From about it almost took mentioned XXX,XXX, zero years. XXX,XXX, months. we this signing cases, of nine to number So one from months, that to and indication XXX,XXX ramp, you of case us the cases. approaching we three we cases number what XXX,XXX up. us dentists in took XXX,XXX before X.X close a here, are to to it seeing it that XX,XXX And are are really gives good we

then up signed they volume continue and the go get And existing up. after dentists with to

number we doctors, and number very the that production output. of shipped active submission, closely, a overall of cases manage So

measures of double-digit growth, of All these, those are one quarter-to-quarter. every

Great. Thank you.

take Block question with We'll Jon go next our Stifel. from ahead. Please

is line Your open.

up. couple questions, I'll them A guys. break then of Thanks

maybe in of this I was sort prepared And I from private. from and largely first a expected the The to said remain that on public wrong, thought to you is pressure expected your take you remarks, have couple but public And spill of had VBP. thought that competitors. to you different a within over I

and for as is clarify growth, for full maybe importantly, to VBP where expected are China year. with tack out And a you on growth we low single-digit and that, about specifically Ortho. just to you guys in can the as So VBP Thanks. maybe more think core we when playing specific

Yes. Happy do it, Jon. to

let frame So of kind what before. have on we just me said again based this

We of Ortho business. and implant of in $XX about China million have million about $XXX business

of on private sector We years we of have started private focus moved and a our moving our business to a of most private XX% sector. more prior three today almost ago is to energy business COVID, Almost our the the on sector.

it that over exactly this has bit we have side. spill of knew We and out played to side, at pretty expected and going on to private going start So that's on a a is much a just it's to public but anticipated, little frame. you the give the what

implant So now let me talk about you I tell Ortho. and about the

winner, on the both business well volume. and our as in thing are the initial as the of at means, the least What should current we said on as we which pricing the well the what is counting value expect higher on selected volume. are impact on we we side, one as premium it? the But are So counting as

business we would So If that incremental expect be that volume, expected. forward. is get exactly out an that we far we can going higher playing so as is

of that up it. the full think -- ramped is spillover We impact and this to continue has we the are see beginning

than of has part momentum business been and large that as so some and less of and in the And is to of by. that Clear and side, much We far, to our a establish China, been going only We is business, the always as impacted how business geographies implemented. On we our We wanted XX% the on non-Chinese don't work. get has to in wanted executed standard it's it's a part multinational side XX%, of prioritize. Ortho intentional. of -- process. a the been Aligner have business because approved our accepted VBP oncore But degree,

So impact the term on is this we is profound some least short to have putting impact, at in it is the but all side, together. expect that as implant going going to the be back as not

communicated going line in well business to XXXX. that have been the our $XX this about impact in is has million as top have bottom line a in We as

we otherwise. that anything tells us far, So seen haven't

and million see $XX will will both on provide the If headwind, in $XX XXXX compare we long-term as private in margin additional purely get -- we increases That and the volume, well consider format. on great. That million then sales based access is unpacked positive margin. of for this we on a any impact as care people, the it medium, and XXXX And versus side. public over to sales

lot be There But supposed apologize this it's this quarters recession But right of long. question, I I got is second six Okay. was I great. get That weakness had or it's a quarter, the the your like was row. back it, time We've IPO, interest a in it's it's advance to a We've corner. the a rates. SP&T the what color. minus plus is around business, a down for direct business, and of not because right? GDP [indiscernible]. got overshadows if business? And Every the to a And potentially pandemic. in little for go E&C, We've

a X% negative it comp. down XX% quarter, off was This

to divestitures had You some it. strengthen to try

guardrails is then it? believe, forward? to stay I through low what as coming opinion, XQ positive And on, looking better sticking now, of want forward, growth. as part in but beginning in are guide, being You're were single-digit from negative you that's DEXIS investors this lab. tag guys organic Howard, guys. we XQ ramp the imaging put know just into you would you frame business maybe to Can just just soon a back the IOS for around the going you the but headwinds away about Can And Thanks year. specific April, I that. or think is

course. Of

if differentiation of you the becoming the and in We process that are been it and pretty a more that dental and now of more because this becoming Howard recognized John. there over lot So competitors in let aggressive they price that and some more more lack more those in are this, I've this categories X add me much at space areas. around early becoming look -- And I years. difficult. commoditized, differentiation,

If example. at on giving I'm you number -- as imaging The China one the an example. you look side, and of take let's players

five to ago, is there and XX in how pricing that are place. players years what the many new years ago, taking Compared

from Unit, is in it's that's So place. reality, And Pelton carved walked reason Instrument the Crane. it we That's we reason and fact, KaVo out away & is what taken the Treatment we on done -- outside. more the put that is aggressively lot continue then we business. probably And past it. a XX of it, replace have to we in the equipment or What higher replace kind months so, we

So of think about about one-third business software? it, this contract is

of is annuity. kind that And

years, all some to X% have have Then or are building they been The as are replace and large But to before. knowledge has around de you renewal degree rapidly did challenges that you adding DSOs or taking novos seven are other is a over you de not place process as two-third capacity six paying that the X%. getting there product novos it. and or want either a that

work. impact expense value an on has it add, higher So higher CapEx

On not very been have we the differentiation is really what specific. the we that talked other when very clear, that geographies thoughtful, about

that this are you're some decline but improvement. try you're categories, seeing outcome, business intentionally, margin the We sure you're exiting some and geographies differentiated to profitable is product make seeing, that seeing the

At That's talking imaging side. and what remaining, are an have. of it want we no There from away and business, is it. point, see we it. closely. that is on workflow to the the the point we more to We And is that and to moving have would exit. There purely that then opportunity DEXIS create really a momentum build differentiation can and the growth to no build benefit on around more I'm some very getting business try capabilities

side, really On the good we high feel that consumables business, about margin.

had momentum. have We

QX an it on We'll is We anomaly. several outperformed more And in we get have the quarters. past think back of track.

it back. of a better not going these trying in to take improve do have 'X, of if far to paying inorganically, the have forward. going get a We're deal to done, what the we're XXXX, in we going around a it through is we're only to what some intentional And that it challenges than but to look in seen like. now situation. to going gone we you don't organically, long know This it. to place a little business And see shifts these stable the going how have We guardrail bit ahead have going are And 'X, looking continue We're Jon, we of continue going 'X it's it. term. with put it's we it forward. we portfolio

in in we decided geography order get we really of we're going moving be there, to it. up ourselves be high this have shift, have aggressive for that long set some digit, we said margin. term more have from the decision to away And single interim. And to portfolio to in to make not XX.X% XXXX shift this So we're we

second the Jon, you're we contemplate about guide Yes. and here guide. basis. growth the That I we risks. as opportunities improve here in profile as then quarter. year, with at and improve second basis. that typically throughout the quarterly feel environment we growth that, We low company the and And think core specific consistent consistent What in I quarter. we look will said to the well That's and at will feel full macro a scenario And on things give have the our don't still hey, year. a look We planning our being margin our good think on that said, single-digit will mean deliver we continue right, is

Thank all Thanks guys, I the appreciate color. you.

course. Of

Cherny go We'll ahead. from Bank Please our with question America. take of next Michael

Your line is open.

Afternoon though, exiting be year thanks year I'll guidance comment, the you'll low without it on Jon's is that for but full with last the taking quarterly follow-up guidance, questions. again able being give to in again, a single-digit embedded the E&C? quick with Maybe try growth in

the of product one to want order to of Orthodontics. business. build part business. replacement it segment be an important can be path iOS number down gone trying capability end-to-end I to the the portfolio that, to In you haven't tell of role. want on a implant adds player to the providing that Ortho itself, We the tooth the that base. the every guidance a with We in on overall the plays the outside number this digital side we're specific transformation, do We of But one player

consumable XXX over that, finally as about of role, we us really consumable we is But This our low well gone for in to important track are of itself, than worldwide, differentiated business. good use prevention, have record is offices years imaging plays organic to inventories good kind got a to an consider by and order and in really do single-digit In expect and of activities. We infection the inorganic hope as and business that, we XX% product. feel what we place, what the that's get. we really more

to year. a going of low really going do we changes that have when declining That would it's by second really the hard single-digit to to double-digit. And be it's we we -- expect side, that that. of performance transformative be imaging is business that you the this The the come part hope half on to difficult described stage

on that really have we have And at take have feel provided. need be what the to we place able this to confident you we point about guidance contemplated So, to good changes guidance the provided. and land based that we

that. appreciate I

I maybe performance flip the I'll quarter opposite so side of to complete Spark. in And and the the that guess being

Aligners number part? the talk education going about the you're of not new most into with record Can for that I net you are these doing talked these new the doctor about You adds. docs. assume using doctors

I'm wins, what So how correct that to strong key these or of please that continue to does displacements, drivers numbers? up in if but wrong put are process growth me go? the incredibly guessing lot go there, you allow education and a And I'm these

Mike. you, thank Yes,

We're of direct the in to to consumer. a focus is focused Spark, know on And Orthodontics, so, We're our not they area not a by them orthodontist. buy anybody teeth. and purely GP the in Aligners the are but we One-third and stop placed to how a are X,XXX come on worldwide. worldwide U.S. Orthodontics. of move Orthodontics about all XX,XXX XX,XXX, in today in

one Aligners. the adopted Clear first They're who

technology. It's answer. the it's So It's about is about it's combination changing the and not It's not about about workflow treatment. a good offices. Aligner It's Clear education. case, about

some geographies. have different key the in So approach speakers that have, we we

are develop they that We and have protocols, cases that their than have best teach able more practices. share to and people done X,XXX

We follow-up XXX the Envista training and We one We some sales other go a get share to that. bring Orthodontics, show technology. of places. them them. That's up to integration geography, we people the sign their with we We follow-up practices. the show value teach diagnostics, rally program best XXX, We we the to the these organization, two days. three of We of or in territories, for XX, for case. the We the go and how do first then offices. with them to their

them to them. to they continue six case we to they third the a provide personalized five monthly case. or them. to on provide know support network. support By We to get time We get committed, that We provide and are the we a basis,

We have past new XX% years. is been years. XX us for a not more Damon share, than have for same made in business for this This market this the space of grown digits successful group people mid-single business have several that

The are they haven't using them they products competitors or been set customer have same the it of either - people providing much. using that majority the group of of been to base. been have as different same And one

they and have having of that of Now combination treatment they have choice they in offices, a can offer. their a

to we choices. them. from Our a treating patients. them job What They're give is more hear lot

that their the and continue software That's them of the telling expand They're is product-wise, are we that create to we they go how very geography-by-geography. forward, differentiation that follow friends intend happy getting, here, support. and they're this in it as just technology-wise, people product we to they future, with product and the

you. thank Great,

go with We'll Please next William ahead. our Brandon take question from Vazquez Blair.

is Your line open.

taking Thanks the everyone. question. Hi for

you quarter first expectations of basis. hard in to of I performance to it the consensus, really because to don't little wanted on relative came guide quarterly but of your just kind a bit one, just, below give first ask own a course, The a kind

what for your your full numbers trended your So own guidance? and means you curious how to it fall quarter the where year would within of relative expectations

about a you feel, a basis. XXX give close to and just points negative bit have little Russia China a of growth So combination close of in about basis XXX to of QX, to

and So less we predict to take could little as business, forward. do looked it know we we expected. bit we had a exactly we turn and expect And entire at and part a look than what imaging what where what we forecast what The we feel it, go good the over. to delivered at really for a about

to Overall, from challenging. But But be incredible the higher is We that challenging, forward. far business of we not really on was had hard China from to anticipated and had it deal and to it's XXX-basis good this going going an We going expected. a that the it it's is is really that with had than Russia it. on expectation drop what rest be handle knew what just we but point expected. something perspective, significant was that

here. We And know little Russia is to up expect to of continues to time. do in ramp going QX a bit over China exactly unstable, we be really knew not what going there of just Russia Ukraine, last of keep place to anticipation that of forward. is of really mind, in took tremendous and stockpile buying war in because year, to in amount

only So Russia, of too, equipment we challenge, not bit little in a but had proxy on a in anticipating.

a March interest of changes, year. rate last you it If the started at take look about

to able QX were of we around of year. chain, deliver challenges an despite the supply the business incredible in we and continuously So had imaging last some deliver,

as a well. here role So in played really important proxies

if guidance quarter one kind kind of to at year, assume EBITDA then kind get year thanks. reaffirming a sequential cadence positive. than just exit But each follow-up. Okay, points maybe math another need on was number, And the The of number? greater of strong that doing the you just XX% full pretty two to you improvements, for as to or of the

was You'd a Is like solid, exiting to strongest quarters has maybe more XX.X% seems a year strong. that need Street. pretty is little one pretty and QX little EBITDA given this margin ever seen? not of be that That if this -- be correct? even bit your at directionally Consensus a below you've the

the going said we've to to we're is throughout what on the that continue year. improve margin Brandon, Yes.

you'll standard So QX execute require the we margins that north in year. XX% see half to will particularly those then and on we of EBITDA clearly, to get here the number plans adjusted improvement And to in that or second have move to us getting deliver. throughout as

Okay, thanks questions. taking the for

Thank you.

Okay.

time we're think now. of out I

us today. the connecting Thank appreciate really of much, to I you everyone you. balance So very you over with quarter. and joining the we forward Thank look

conclude you and program. Thank participation today's does for may This you your now disconnect.