Envista (NVST) 7 Aug 242024 Q2 Earnings call transcript

My name is Stephanie, and I will be your conference call facilitator this afternoon. At this time, I'd like to welcome everyone to Envista Holdings Corporation's Second Quarter 2024 Earnings Results Conference Call. [Operator Instructions]. I will now turn the conference over to Mr. Stephen Keller. Envista of Officer Financial Holdings. Principal Mr. begin. Keller, you may

our position be call. Good is and that Regulation today today Investors the It call to non-GAAP website leading and provided today Officer; today's Eric assume heading the presentation the this our by Officer the Events website, earnings and reconciliations Q&A and handle the want remain I afternoon, other thanks call quarterly the for the of call section prepared information supplementing and will the will who later financial and With portion Hammes, G Chief the required Paul on SEC Executive The be release, audio of are of remarks. during of call the on Financial to tomorrow, under Presentations. until www.envistaco.com. will will call. section me Chief joining of our any Keel, the relating available at President I end our archived next archived point our the all to measures Investors out slide

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

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

developments occur the including securities of meaning anticipate future. the or statements may within federal in statements forward-looking make believe, also regarding or events we will laws that We the

results forward-looking those These to we risks differ update Paul. a over today. might any that make filings statements required statements, I'd set materially not to forward-looking speak call actual number and made, are and forward-looking do With we including that, to only as statements of These obligation any in to statements from our by of law. the any assume forth forward-looking SEC like uncertainties, except are the and date they subject turn as

Envista Thank the hour appreciate join welcome We'll in start and us and then to for the Second over thoughts market. us opening Call. I'll the and first taking will and for numbers cover quarter XXXX. reserve a afternoon, dental minutes half you Stephen. it then to the Quarter on XX strategic with through XXXX back the Q&A. the time turn later We come X on or today. Earnings outlook walk update XX to Stephen I'll broader you, Good with the so and my in next some with last days on items to presentation Envista's

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not our would a vast much reflect say recent that our also that With potential. point, our less full I starting does as capabilities performance

expectations. XX% strong was flow EBITDA up below margin core in was and of free XX%, of While cash our X% negative quarter, growth adjusted the

a Stephen include explain As of and onetime number will moment, noncash a these in charges.

company business taking Even of underlying in are levels, for of as swiftly more. position we moving performance line with better of the we QX. these performance capable such, this And our though, believe are an Excluding items, these impact at forward. the implies action we to

end, and and investments profitability We're important to long-term in X that manufacturing drawing improve growth. Spark built end-user Nobel even Biocare. roles we're To investments. technology to continuing making most us closely distribution and profitable in executive demand, by these business, our support our We're critical return make connecting largest businesses. QX. investments, We're down in growth we the channel inventory of more to excited potential

will actions On EBITDA this, year are in negative concentrated negative I our core and to basis. are the with QX and margins. expect growth low we reinstating that to XX% will detail growth adjusted a Absent QX performance the The to all modest we return more QX. believe of in Stephen back of year on XX% be P&L full line and of to to X% teens we charges guidance and business growth underlying impact later, full X% that noncash margins the mentioned and onetime in

As with you days business productive XX will Envista May and on the recall, and been I X first my encouraging. joined have both

recognized. focused company, few areas: pleasure to from time and lion's past great of opinion the respect our direct the the Stakeholders strong, As business close is partners. customer With my want our first, business in the the more colleagues QX X/X operations. had know our I call, meet I've of us. is of portfolio with X expect and that dozens leaders months I share and key our over and previewed will to they on to a of primary is customers, quality connectivity Envista and With earnings even well customers,

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are both we a the which improvement just know The opportunities seen be I've are culture, in and better we must today. means XX is we tomorrow first days continuous actionable. than Ours meaningful

predecessors still our as history, are across come days have For as our XXX-plus our far and brightest this ahead. year

the of have are system largest EBS around readily terms I capable of and organization us. to important our most Envista differentiator for world operations. disappointed. sites is not business and visited of apparent. in been already, Finally, expected a an find the benefits have I

footprint. However, supports capabilities even impact do This here, is remains our strong And do. what company. into we I said companies extend what consistently slide. across Vista what our a most my There and global across more XX first is EBS the I've to good convert days can there fundamentally is of results. opportunities the to seen good of on previous

dental in Before I total, global quarter. it. as turn performance the dental it we as a we Compared on like low say commented market demand In digits well the driven to estimate moderate and relative few that growth, about by in and over XXXX 'XX. single continued post-COVID its of market have within rebalancing longer-term factors and softness grew macro this relative to QX the interest let and me that rates, in higher others Stephen, words confidence our market late surge following the market consumer

of positive, and steady larger solid several in traffic patient enjoyed On remained growth the quarter. our the customers

Looking with and at tooth positive full outperforming in better single procedures was premium slightly QX than sector-specific conditions, the flat implant arms. faring value market to

While we we underperformed quarter, our the performance. market improve in the overall to took second steps

HX their than aimed training XXX our top local courses alone. We in at in customers have our significantly networks more referral supporting programs delivering local training increased

off. and national We addition, also aimed the investments attracting era, In performance new improved. than doctors. developing participate had market to to year-to-date, customers our these are in we've at believe pay relative more X,XXX starting

QX, The in up as sales important on to both and Still basis, we grew new second grew these growth segment. new well consecutive Our in momentum orthodontics continue implant business our sequentially. win as in to and a this segments. market is consumables share build in as customer quarter from rate both more customers we flat Nobel global a and gained also saw low value single-digit of year-over-year dental for

quarter side, a and with traditional portion revenues. of as sales in Spark a solid slowed wire for On emerging our in markets. ortho bracket we're now deferring the case saw growth particular larger strength Reported business uptick the

dental As Indeed, interest or digits, impacted impact described we portion earlier. true environment change and rate of mentioned the in higher QX, believe case filing, down quarter. a in over our no business. the we was in the of deferral contraction our the balance has at time. on Spark treatment the grew in case economics the start segment This cash a above flows only of by revenue the I market mid-single market the the major starts Diagnostics experiencing recognized

digits the as price-sensitive geographic single in the of we exiting quarter high contracted impact priority, business lower saw continued markets. Our more some

take to In us an to but world-class Stephen attract at enact start. we're the I'm improve moving summary, forward. impressed turn With numbers. the it ability do, with to and to months organization needed it's talent for have X been still much moving trajectory to with is an encouraging how promising a off the pleased over our as quickly We in to changes overview, me I'll our that through first Vista. to

Thanks, Paul.

in comment recorded the would noncash impairment intangible that I reviewing assets charge second goodwill we Before and to like quarter results our quarter. detail, in to on second related a

in interest value future driven of to the of carrying operating the businesses price, margins consumer confidence revenue, effects their certain stock by resulted and fall the part higher As to our below decline have rates Paul mentioned, value. for contributed market with general reduced our fair expectations moderate softening, These has coupled in cash estimated in and parts flows.

the and Therefore, charge we for recorded goodwill a $X.X in billion noncash intangible impairments quarter.

business Specialty Adjusting in sales for results also decline and reflects were core our consumables typical impact in We of delivered by offset the the & quarter. drivers, the million Technologies the by segment. to two equipment growth our segment, Outside in of currency declined of unusual for sales rates, our dynamics. in quarter $XXX Products sales quarter impacted Turning XX-point X.X%. This a exchange second

on best shipments. Paul have revenue timing deferral of our rates are of is Spark as the proportion The and estimate we deferring mentioned based the in future of on current increased increase earlier, cases. aligner First, we usage new

and As Spark change a that we impacts estimates to customers. impact the to the better reflect align empirically note is to creating number our of results. experience, actual reported revenue timing grow, use adjusted It important cases on our matching this by of only near-term continues to completed revenue,

This underlying with business the impact the it flows associated change cases nor impact to of does of performance timing cash does doctors. the sold not

Second, was a by distribution reduce channel. to QX decision Spark's reported American in in all North the impacted revenue, changes revenue in inventory consumable addition strategic deferred to the

weeks we partners. to have years, number worked distribution of last Over of reduce hand few the on the our

we to strong further XXXX. we for at the distribution peak own American half high channel roughly better the performance business QX We had customer decision the levels Given our both of this is that believe closed the our inventory in and and channel inventory partners. service consistently operational and rates, reduce took with North our in

with digits both dealer a better and America Nearly declining inventory. performance on creates quarter. near-term forward. this increase realignment the and in driven impact Europe growth North for the of and While the the Spark Envista all positions decline moving in mid-single of in was it by Geographically, deferrals margin,

Excluding these developed mostly. markets impacts, grew

business low the high a against market versus sanction single the double-digit very low declined Our digits second in emerging of grew digits delivered quarter, in prior XXXX. strong China quarter year. growth impact single in QX Russia

near-term us. there good in Russia, for China are been While has volatility markets and these

are We we positioned these markets. and been here customers growth have critical in profitable continued serving for for long-term long time, a well

volumes year. costs Our Spark and channel margin by less technology was of the mix reduction, onetime inventory points prior lower driven in with a adjusted associated decline investments decrease gross was manufacturing. The with compared second quarter XXX XX.X%, favorable to basis associated

the quarter margin adjusted components will points in which XXXX. than the XXX lower The Our I of you for of XX%, in moment. through a walk basis was QX was EBITDA this

to adjusted prior compared $X.XX year. second was in diluted Our the $X.XX comparable quarter of the period EPS

the was delivered Our free versus in a cash XX% flow, we of million year. quarter prior spot cash $XX.X a flow as free increase bright

have in our $XX bridges dynamics XXX EBITDA by From or our growth additional quarter to regarding impacted transparency top revenue the roughly the perspective, line provide increase results we a Given the adjusted points. further in Spark unusual core deferrals and basis reported in quarterly X results. million margins, both added negatively

the over operationally, XX to We in expect Spark. months. we commercially revenue and make progress next recognize all to the deferred continue

additional saw we increase XX% X quarter, in greater a the we active countries. launched Spark doctors. In And in the number than year-to-date, of have Spark

levels in realignment inventory peaked expect compared the where half second With to we to it than in our to a quarter as volumes Spark last sales half. of XXXX, engine channel we than continue the year. expect consumables see as move to now sequential less When $XX sell-in the by through the reduced for they inventory, greater to in dealer the million term. growth over growth be We comes impact long of Envista

additional long X we and the for we growth the. sell-out pricing growth match these share driven Outside in contribution consistent term, solid expect major leading to a to Further, opportunity more dynamics saw of closely, by sell-in gains. more to

can see driven adjusted down are by A the you EBITDA reduction was not over As little our XXX from basis were to quarter points in onetime expected this the X/X repeat. that costs margins year-over-year. bridge, of

As further and the there levels mentioned, another X/X declined include impact by a the digits QX moving investments relative to decrease in manufacturing, After forward, case deferrals inventory, not XXXX. revenue dealer Spark we roughly although in to higher drawdowns Spark in double will driven inventory. these where improve anticipate quarter. In increase of the the costs unit was dealer year-over-year of further in of the be do impact

down it near result road. an fully of Spark over Deferred products. equal sell-out tailwind months in revenue P&L will and deferral offsetting headwind the the XX term, normalize consumable in Spark a sell-in provides be should in and our while next with recognized line Similarly, the further will

As basis quarter business this productivity. from should profile other at and items business. delivered discussed are marketing and The aimed we on of and high-margin are points successful provided of basis continue we regard, investments sales [indiscernible] previous for on of are make investments. points to delivered on education, these few price returns in calls, this R&D strategic train net and XXX in result the centered implant investments, we all note, in expansion margin the XXX of particularly attractive A

second segment Core to performance. by Specialty revenue of to in Technologies Products the increased X.X% & compared quarter now XXXX. Turning

Spark mid-single increase orthodontic Our delivering revenue. the digits, business with grew despite deferred growth in

and single second Russia declined the world. of in in we brackets parts more quarter. Our in wire grew robust balanced saw as low China growth with tepid the digits and business mid-single other solid digits demand Implants

we a of performance growth, Our improving value modest implant in business continuation posted QX. that saw

restorations Our weakness and full market. in in market premium North implant large business underperformance the continued American was impacted the by continued

making. mentioned, Paul as on However, the we starting benefits are we see to are investments

relative to improved, the protect business performance existing continue rate. win has and accelerating Our new customers at to market an and we

Specialty of basis driven adjusted revenues & X.X%. costs onetime the of For previously. XXX profit and had Technologies was the second quarter, in investments, our prior versus segment by year, operating This deferred same described an points impact the Products period down the

XXXX. by the our XX.X% in Core the second Equipment sales segment in & Consumables compared to second quarter of quarter decreased

stabilizing. Our declined large decline business nonstrategic The driven are a of in high solutions. outside demand North effect combined the American single by macro North was the primarily conditions business Diagnostics weakness grew deemphasizing digits. decline saw driven markets by is America. muted Encouragingly, and and the in quarter, geographies our Emerging as

in With build sustainable efforts, markets we can refine these advantage. [indiscernible] focus we to energy where our and continue and maintain competitive

channel digits drawdown Our in consumables in in inventory the driven business America. double declined by North quarter, the

attributor Most in & Consumables to quarter operating partnership was margin to our XX.X% with in profit XX.X% XXXX. versus directly As with and related the and QX was diagnostics XXXX continue in sell-out. distribution our in second partnerships the some drive of adjusted of discussed, we our patient volume and discrete marketing. remains decline resilient, along demand mix, to strengthen Equipment investments of

both with Equipment marked should year-over-year & expect in growth business challenged in QX due E&C and as and show a QX to our sequentially, deliver Conversely, year-over-year improvement growth margins the position We comparisons. XXXX we and to beyond. remain to Consumables and

cash prior improvement the generated versus of In year. a we quarter, $XX.X million, flow second free XX%

of cash a our flow was improving collections to I'll over underlying we business. that better call cash believe free the and primarily indicative solid turn by is update. flow and improved performance of Paul the strategic now our for Our driven management, increased vendor

you, Thank Stephen.

members Acurio we as Hammes, for XX, few CFO; Over Veronica Nobel earlier. and sketched slides, Nilsson orthodontics. full of of the bit X as of new detail additional highlight areas announced President Biocare more focus the next us Stefan President a of recent I'll our On on in appointment, July executive executive guidance year share background go I team. our HX as out on into particular Eric the and

Rockwell Eric XM's of Chief Officer, to and Director business, Prior a President senior operational revenues. as for including roles, years represents leadership Finance the joins XM us Accounting of CFO at held Tim's care company's health X/X Orthodontics International, Vice XX of spent financial variety division of of of which where over Finance served he from for SVP Automation, Eric XM roughly where FP&A. Rockwell, and he

In addition Business EVP Operations XXX including $XX experience, with Governance roles, and sites in Country and spanning Chief of several over operating Eric billion held of manufacturing to has and his responsibilities Officer production. also EVP senior deep Transformation, finance Enterprise accounting annual

been the in Eric's Envista, Asia, At same in and improvement many express who with experience dental and deepest for culture. interim we served and Envista, knows Keller like and to while has I the welcome search markets growth worked that is Stephen he time global, U.S., His my Eric to them capacity would on focus we an having career to having a in continuous Relevant years. entire CFO. permanent lived while and a around businesses a for to our in Europe capably worked gratitude

his say the words us today CFO to I'll with appointment Eric, of to welcome as him on call, ask is prior a Eric As tomorrow. few Envista. to introduction

exciting thrilled I'm join such time Envista the for to an company. Paul. Thanks,

to months and and to our customers, Envista's stakeholders. decorated our the come, grow many unique real creates coupled I foundation all I this leading brands with value create people, to the in history the to you, most shareholders. the for strength in colleagues of see Our the and at Like and forward compete, of opportunity of weeks partners look time attractive meeting In our our dental, segments win. my of

Eric. you, Thank

well Stefan Dental, forward, us more largest the years. knows service years. He Stefan, centered as as to well Nilsson he joins was on dental be more organization. specific for on in CEO even and growing us our opportunities revenues firsthand who for be building. we're to to from leadership, X many highly as his customers than over understand of Colosseum distinctive Europe's Moving where needs was customer himself for as is Under positioned strengths Colosseum the few doubled competitive. are Envista which

optical leading brings marketing that, operations, general of Prior Brazil, based to before Envista. and of to Eric roles provider. in at California, spent Like Zurich. Colosseum, Eric, around based CEO was be Stefan at while here Stefan and a in Stefan Nestle years over depth be a variety relevant at in Nobel HQ the And in breadth Veronica GrandVision service reach, management will and our Underpinning Southern global XX world. he Envista's will headquarters

operational all at excellence the realize of Veronica demonstrated all America. potential business. the the Global more And Veronica Latin roughly more see world. of she like years Director knows XX of including Stephane, Medical and tech med was specifically to business She Like Acurio lived operational the Like Eric, and and roles SVP President and commercial, and worked Envista. Greater $X Director of and Eric distantly for region, largest most and Envista XM Managing and Healthcare that, China Asia needed brings dental increasing various Eric restorative financial dental America exciting of to and Stefan med Taiwan. held XM Prior of Development X commercial, to including Stefan Latin XM Business of VP over the U.S., here Healthcare division. Business she's broadly. leadership Solutions in XM's on tech and business, in Care's billion than recently we experience. the responsibility, Oral

QX, in people. particular touched we'll first the half, to Having our second where intensify in and operations look forward progress let's areas: Growth remains our now growth, focus on priority. X our

growth play company consumables we selling faster and the leading earnings expect We'll high channel top meaningly as in is position, return growth to to in line With our see margins in key out that dental to cash even lower QX accelerating this a flow. with inventory. the expansion

volumes. see we are on our squarely this implants associated see where the number and off to in fastest-growing We'll focused making in Spark, same pay clinicians the as our business, case investments continue and expanding remains attention the of we'll ordering

Moving on operations. to

invest cost more our we opportunity We can, can to we structure, to have optimize where where we so save want. continuing

highly more grown, As the Spark to absorbed. margin overall faster dilutive compression has is still the we've margins, it

headwind scale, most further the of And to continues part As to A investments and people success will far accretion. continuous enormous world-class this and unlock earlier. ability of through our to by possible. make advance mentioned we that to so this sustained will the of able volume The get Envista amplifying hinged progress Envista our are team the performance good in together. improvement. is all we benefit attract importantly, point margin this the culture driven quickly the on fact technology to leaders that inclusion are company the upside

delivering our And XXXX this commitments. on updated all with begins

turn let's So to those now.

the As X% are mentioned detailed to we that year of reinstating of margins, XX% and core earlier. onetime at X% negative XX% charges inclusive guidance Stephen adjusted negative outset, noncash the growth full EBITDA to and

now We in P&L forward. to larger in will for Envista actions improved The of before moving are to on today's the QX. impact return QX even a performance growth be projected covered acting call position

would modest EBITDA low teens expect onetime of impact growth Excluding year. and charges, margins and the core we noncash the the for

momentum build this on XXXX. we into will as We move

it before your up thoughts for For closing questions. we open

but First, proven short-term any this XXXX, drivers I'll stable with attractive has at Dental here growth time, meaningful that underline rates. period an over long-term softening is a in seeing market of again grown GDP-plus are market we

Envista the defensible exciting has market. dental segments and leading position the built in of Second, most

cash strong embedded well growth business to characteristics, balanced, Our markets. high steady And margins self-fund by portfolio by category both a structurally in well as the us geography. our allowing flow has as and is

in should the XXXX. then we actions return carry momentum swiftly The forward access Third, into bottom accelerate growth. line opportunity, needed the to top are and taking and and us this QX we allow QX to growth need to actions to taken QX do and to more in

create opportunity more we've importantly, by most significant in grateful encouraging us in our for the strong we see are same the first even colleagues key our way, enjoy months. my from in we support shareholders. stakeholders. the we're we clearly to partners of together my for for And propelled customers, applaud front X made I the value and Finally and progress

comments. will That your and Paul. questions. now I formal our take you, concludes Paul Thank

[Operator Instructions]. from question will ISI. And our first Anderson Elizabeth come with Evercore

Like on run Congrats math the through the guiding the about midpoint year talk the like of looks we half year math. a Can little something rate $XXX and as half number the that million, actual in I'm to there right the business it back about forward. you're that the as business? of the is the altogether I the starting rest my of for XXX-ish know -- actual about like think like the rate the we a go that? year. more of range bit you of like are me Because to is we of that of EBITDA the the here, I'm run like the onetime like think as EBITDA items back in on but quarter, thinking doing

to is question, the it for Elizabeth, Thanks right and the place start.

margin recap. for and more moving announced pretty reported and We XX% we positive pieces growth core as to in QX. said, the let margins X% quarter, underlying me of number XX%. announced EBITDA in in onetime So the growth the you quarter. Adjust and like similar reported a was of were, performance noncash of what impacts, negative EBITDA core There X%

we've year growth reinstated XX% to to of a on and guidance core on basis, negative full negative EBITDA basis. XX% a reported Now X% X%

full deliver XX-ish percent EBITDA and margin normalized on onetime growth basis, noncash X-ish the similar excluding But effects, similar expect a percent a in the core for to we year.

the I'd QX, QX again Conversely, one quarter, will reported results. will that final the will times in in half be the in underline less looking Now the by the QX the quarter. of second and impact this show impact at larger be than

back importantly, we where in return With I And momentum quarter QX, So still reported above demonstrated Envista growth go strong is company. XXXX. in I'd our to fundamentally heading underlying to most to results our began, expect capabilities. allowing a into to performance below build was our us the

required improvements we our those of many So to underway of are what sight have improve actions to already. are clear trajectory. line And

direction. we're We to pointed do but the have work here, right in

Got it. context. helpful That's super

So I guess you like and the it's implied is you How implant business, like are guys look on forward key on are XXX we which on about you gives think go an thinking guys, that as helpful. do appointments, the math, of particularly it what dental actions we sort about on things whatever obviously, the a of macro a priorities and kind But kind you're maybe of about know macro I couple might like that particular? short-term near be basis versus trajectory? year as those where the is see thinking you things business longer-term is. that the like in term do

a question. good Also

the of have underlying and characteristics business. market the to margin you begin with implants, with So

a the little procedures slowed in growth for full category. Right the now, value and better. has particular premium this bit a growth proven So is has done

both we're we sides We moving And forward. noted, expect our those business. both of seeing on as accelerate to improvement of

side. and we growth had the on the a of to market gap the premium in growth value quarter, period consecutive second shrunk Our side overall on

Second of that margins. part equation, of course, is

about things like of expanding these businesses growth is as it effect has earnings, of growth, One that all an the you margins. we on accelerate incremental the

seen over QX accelerate implants. has than continue enough. $X near-term to QX We'll impact to know that investments margins, we've a we'll this That's across pays get when while you all that growth, a quarter. and the growth time million So it And in more the on continued began make itself. about in for

Morgan from next Stanley Erin Wright Our with will question come

I getting balance what quarter, terms term? think guess, in about type terms of in times for about you a dental GDP thinking guess, does like few there? how that rate plus in market growth mentioned is underlying how the fourth entail year You of long-term getting market thinking rate, the are then the growth of near growth the a that And you you're to the in to sort of I of here

the dental around guys XX market years I as I've now. Yes. and you for, in mean call it, know, been

seen time. so and we have And ups during that downs macro

two contractions more in fact, happen will witness of hopefully our pronounced In period. that lifetimes the that

is macro, sensitive other currently. but from you're immune same dental categories. is so than we that, And less it to seeing thing know not the the I And think

Now our we'll XXXX, second in drivers talked quarter how how And dependent to growth in bit XXXX than half, would played I I mostly respect changed. macro. -- fourth in of a in benefit any growth the have market not expect out the we it's be, is to function that well. out. a play better improvement with and of about on that's the we'll return be from onetimes perspective, to the it's not dental. a from just as the long-term

I And can could and normalized participate kind Okay. of perspective. Spark underlying geography about of just And the to a would market kind from for could kind follow-up traction a you speak on the then you growth in talk for you markets what one you underlying be dynamics different competitive if ask of that that Spark. just in various

Yes.

But a of the results reported us business category single-digit related mean, than I clear Spark, next the revenue. aligner the growth is grower. bit be time. deferred better the to the impacted. We've a over that will increased because of underlying category the quarters, impact high for in be the growing won't are clouded couple For been of In

digits. the at and we of number was we us was we ordering commissions, example, for in submitted of to look at number high cases strong the digits addition ordering cases. look in up the of number clinicians up submitted The double growth of growth, For and quarter the single look the core

good So the growth we have to growth for accretive Envista. believe on side, we'll Spark continue

profitability. is comment second on around The Spark

to dilutive that highly margin us from Now perspective. a remains

conversely, compression, and terms accretive. will in had quarter costs will funded absorbed we've part income the as progress we quarter. over Eventually, flow, double our business good that for in down costs. becomes of to here that years, that we per the or out Spark several building grows turn the cash And business in Unit more aligner turn us, costs to accretive. entirely tailwind have operating past a and So margin digits of were unit the aligner

you. Thank

will Block with question from John come next Stifel. Our

seems relative The closer past investors that you in are quarter. was guys that division improved it like suggest Well, experienced that implants. to data what there the growth to some market points

the being premium to right portfolio confident if the confident are So like back achieve you back market that. so, mix something I to question line maybe feel have the time the portfolio of that guess current investments do get you are you hope growth? And market get which you is, the to growth, to value, to sufficient

question. the John, thanks for

positioned of and So these first, our on X to We're good are globally yes. portfolios. in value categories. portfolio, well compete The combination Nobel both businesses,

QX, of Second businesses. thing the previously my either the months management in what in I been not these that's back here say QX, did and in in intend we the across is to now continued start caused team the having year. view, is do working in, invest to sufficiently money same And back we business putting half the would X for that of

us with starting give that to also shared indicators off. leading you we're at pay results we convert into But pointed You the to looking those guys. are got the investments confidence that now that we that to

to I timing, sequential we call again, don't when 'XX. of turn I know to hope we're where yet terms second improvement but make carry across half the in In position momentum a positive, that and into that will can

But far hey, that's the XX% year, top point, to Very sort think, in you margin. mid-teens heard line think when a little the it. you gears when I allude bit. of out And shift I helpful. about you invest X% a Got and the your modest called XXXX think growth for this EBITDA in numbers margins. And might normalize thought you to to I maybe you commentary numbers, away. just

in land look modest the when it, that growth, something call things. that use far and we mid-teens, is where for 'XX, XXXX to road something the numbers we In have don't there too for other think So normalized words, is that that down we about for? might

steps. So let me take it in

fairly expenses. adjusting you noncash EBITDA did math, that's what performance. to core QX. and the XX% underlying year, about normalized work what in normalized So our And and QX. in the the for It's characterized full again onetime reported That's for the through if we yes, say I we're X% about guiding growth

goal emphasize in into to is growth point here again for not carry hopefully we're 'XX half culture. our and #X. improvement with and come giving want XXXX. guidance is our yet will the that's then Point momentum that. So on QX #X But consistent reported of to back be in We'll to get better, results that second continuous difficult to do kind

Our from Johnson Baird. next question with Jeff come will

of that you product implant of market years U.S., market, in back Europe started a from part insight of the off implants your has get In given into has Implant my that don't maybe don't a very MDR business couple understanding alpha moving of business it. some talk of over the the lot come about or often. I much older maybe away value comments been X earlier. Paul, that Direct issues somewhat ago. made think going has years has your to We We some style the last so. the

the implant you think today? you up, value the I areas? the is guess, starting trend market of have some the years, do beef at to over way if portfolio kind So do right next in And least that's few that how

Yes, important it's segment an us. for

let unpack me questions. your So

that question You we'd benefit then think weather Implant and we a moving from Direct about portfolio and bolstering currently forward. AlphaBio had

mostly with That high So well correct Direct. it's to first, businesses. is of has Alpha America. X North you're of Implant quite the respect on at our Direct outside AlphaBio say been is Stephen, us. grower and America. looking performing double-digit North Implant to grower -- now want right low for Bio, I slower actually I'm mostly single-digit,

portfolio, we'd respect to the good a with number and dental question one. right Question like bigger. category in it implant our make certainly to now, that's it's faster one value of So growing #X,

look build in already on with had first luck that the place. you we have platform know, we've the nice M&A. accretive over to guys Our is as years some good organically But

that the will as remain in well. toolkit So

then And on helpful. just back over business. That's the right. Spark All

$XXX we've maybe usually On the sorry, month there? deferring? or deferral we up, an the extra ballpark doing changes refinements all cases. it's rates have tougher ballpark, do down maybe for a seen And that very got you you're going that. then somewhat these in What's defer the in those cases, firm of deferrals, -- and number it we've you Are very, driver increased per to past, you're And case and you're the in guess, tougher to is I increase the and, added acuity some tougher road the because as revenue one? that

is on does And rate far breakeven Spark maybe how business. deferral two, second my push question -- out profitability that I the my forgot increased --

end at think we I out thought push Does could the point, end of on be you by oneX or this it maybe further get to 'XX. of Spark 'XX. year a

call last in Stephen's seat. is hot This the

that easy. I'm to going get to pitch Stephen. him one going not So I'm too off let to

I basically mix forward. we also on of It's then we more segment, Jeff, products. the data that X get rates. But kind in focus right more comprehensive so you're in of is mean, But out going usage things. the additional you're the mean I more the Yes. us Obviously, kind deferral. more deferral about I expect projecting overall orthodontic that's having mean right do the driving cases. amount. mean monitoring we importantly, deferral what's the about ballpark terms increased different I And right the really of

growing, do little as to prudent the cases we -- a And for think defer we it we're more that where look the it's revenue in future. we at bit will be expect

at. we're where is that So

this impact it In profitability. does does have of obviously, profitability, look, on a -- short-term terms have

we again, impacts as what think, continue some of of rate. I improve lap these you on deferral to the think see profitability will kind I us

I long-term Spark, the out we're the long-term to overall Markets can in through wrap of in the of with the of of the and do relative our going different profitability think terms that talk QX really we're really profitability up to think Day that of the I portfolio and long-term Capital segments. Envista growth we for planning outlook next year, growth where laying

Vazquez William question will Our Blair. next come with from Brandon

we can EBITDA I kind bridge, first, of bit margin reported. XX% points us just Maybe X the lot the on talk kind in think of a are about that guys you a about? but are. about XX% what EBITDA "normalized" bridge normalized of EBITDA just There's a you you're versus margin margins talking talking quarter. a the there. Can points the very helpful in slide little those

are points you margin rate, normalized what we the the going get a into consider would X think about to EBITDA especially run guys range as you So 'XX.

using. called basis non-repeat of normalize issue. to about We deferral of big can X/X of really in quarter and dealer about -- as that onetime our there's inventory that the the we that the costs. the you increased some really a the kind loss on cost we're X on onetime few bad to break that's side, look, We debt reduction. really for There X Then revenue Spark there's is I investments Spark repeat. That's accelerated except related not it's XXX well into it the points mean, kind as profitability -- it's buckets. to as -- need some made technology will things accelerate manufacturing we just

This longer-term in these investments American in of kind Nobel we've -- making of business. not this investment make. specifically but we're have everywhere, it's other are a Those sales the decision made implants, to profile there. because are specifically is in the margin we -- that you increased then ahead but And good -- that we getting know to North of flagged kind invest no of some that

for of X normalize formalize those with Obviously, a you we where when kind of on kind trying things, out XX% that's work margin. when of the bit art around come So of little it's you're that. EBITDA kind to

that, about headwind, also XXX basis just be ask annualize talking another margin one you're together points that needs follow-up here. as Yes. you Understood. a them next the right, I'll to of will mentioned put there that to that and year. Spark

the we So that XXX basis quarters quarter every for EBITDA couple annualizes. of as of think of it do next headwind margin points until

I high couple the section just Technology is what to used are half year more we're of other to op those back What right teens gets about X% number follow-up the next ago. like years. a margins now. they up of specialty that and think question of a in gets What be again Then meaningfully? mid- kind to

only related Spark. also to not is points basis reduction. to dealer XXX clear, be It's related inventory to just So

challenged into QX, normal. Paul a fundamentally, some kind start get margin. and as will related from start out be called they reported underlying performance. So bit those prepared that more you But normalize adjusted Those remarks, issues to EBITDA to these little to dynamics. the a as more towards of go of both during -- QX

the SPT costs onetime question the other The and these of -- sorry, lot around are a to was The impacting also segment. the margins, we're Yes. disproportionately investments specifically SPP the margins. making costs, that SPT related

And for so themselves pay again, the onetime the will then costs will not over time. And repeat. investments

again, portfolio, the QX QX a So little recovery expect more bit then the into across SP&T more being closer challenged a But QX getting -- but with being reasonable -- little we a going should margins. in to getting normalized.

you. Thank

UBS. Our Caliendo next question with will from Kevin come

question First here.

those look have premium talk you it sales sufficient rate long-term you like are today in going that from to to to a or Nobel products novel that the it made quarter, seems past R&D you that is to perhaps growth feel you there. more you take you 'XX was carry on market wondering this the most side. As do just investments product in perspective, and of I'm marketing investment

million quarter new Nobel per R&D sales development, into and Yes. or product marketing. as well so $X as covers The both

large, we and the have. of of And category, so implant pipeline. is strengthen highly We with to evidence-driven the clinicians. the a to good new writ good. a globally involvement portfolio lot portion with a similar But it's question, dynamic what that compete product is earlier Again, from

think always of forward, move quickly. investing I years market weren't it's So forward couple kept the in that, moving found the as we we over enough moving what forward. didn't as and And that we last

to trying imbalance. we're So rectify that

Helpful. those those to in your And do how in feel for work you'd change? like those today you dealers, About Do you follow-up, as you of where with beneficial? relationships partnerships gears. sit relationships? are think a do you kind see mutually business, anything switching you Or then

Yes. in X/X I the to direct. think right in categories, mean, is started business tend I place. of our go which you the specialty

glad folks don't that is them go invest some topic where really for distribution, to partners, that. less value counterpart We we you to to to my the as specific the And what of see with likely. bring. part peers. distribution partners. these of collaborative encouraged We And the central my by at we onboarding, was decades relationship the we're -- think I of from the it they then But with mean our been X/X is do. spoke to our they our to reconnecting and tell organizations. I does we industry, call We've general real to So I than market go all working partners channel with large X between

laboring from comes Partners. question with Cherney Michael next Our

Dan This Great. on is Clark Mike. for

Just wanted to circle back to end plant again here.

yet haven't pace For wins sort improvement going see you're here you're very forward some think talking in you off new that starting and long Paul, of an customer how to here about we given for starters, should been strategy? that Like already sales your uptick about early. the in of of rechange the

a Yes. this I implants. you high-margin like category accelerate in mean growth that's how is

of about things to sticky. specialty is it bad tends and pretty the be good that One the dental

it's decades. little them the customer back if of getting If your often more you customer, a for of side you them have a treat on and you well, a you do lose have work that is bit ledger. But flip them side the

longer-term proven your or because we business quarter, in why it's a wins that's it uptick underlying improving. but So about an spoke new wins has new customer that the product in is the also impact indicator

victory it. to in signal in we green listen, to payoff. on America. call But see it's benefit. shoots very And X things. premium I invest that meant we're this So continuing starting two, from yield far One, in North to was implants we're declaring

And about think come to it. making we what's Nobel investments these just like you're as line time sort where some see in then the implants, we improvements a might Got of of R&D market?

Yes.

on pass a take to now. that the going am I right think I of details

of timing so both well of we're that. two, We're new diagnostics I us, and business. pipeline. is I'd say sides product we're in But a it's going a on for a first, both reasons, workflows spending that connecting opportunity make as the understood. think, competitive fortunate have in of For time We business talk -- implants as so broadly, well But specialty an the to not digitization through we our the equation.

we mix a the between and little talked premium bit Second, about value.

We value. are under-indexed in

of So being and this, participate in we And pieces Again, area probably across that's we then a is third And think part the crown it. also the that we in on. more. of prosthetic another part could second all the solution there. we're bridge we're the focused unique where of category do that's

with next question Sandler. Piper comes Bednar Our from Jason

taking good to just to XQ. in benefits here start Paul, across I saw pricing see wanted side, organization that you're the you the the pricing on

for market a been time. You've market long dental around The long, that the is.

hear to evolution of the in couple You've industry your in where you within high-level just your the of do last you it's pricing of over seen shift free the the comment power view portfolio going pricing see decades. to E&C? perspective, I'd whether be the feel interested like have? pricing, And or SP&T

question. Yes. Thanks for the

we in We We So price for again, That's had, less consumables. price got growth is around implants just $X.X the that point med in to to and be I'll and a call ortho sensitive But in price that was differed call less more that, of than and less band million better positive point got a in it, segment. than by kind of of us. recap, positive for it certainly tech little the My categories. diagnostics. quarter. a in categories it, It other part, mentioned. most sensitive, category tight investment price in than I the tends pricing other experience

of more of to equation, why kind get But as this to us than of of to of call. probably a the core kind longer So learn But underlying the conversation that price I relative that is course, reconnect. case capture and the And question trying multivariate drivers a correct. your that's that's still whether for you I'm sort how price. inelastic of

there's here. do I more can think we

from flavor wanted those on little give Any the what that right. contributions That's you bit hitting a just making? All manufacturing to the investments. a of mean just are Spark details how the And focus benefits not can of Spark from costs you're now? you the investments just or willing then these as on helpful. I Okay. you'll if And follow-up, that's I with provider XX the CapEx, exactly taking doing maybe investments? us XX some months sitting the here if quantitatively, of we're actions or but not, what much these and process margins gross be for P&L just out And know do don't you're

Yes.

your So X to let's see, parts question.

very The this built building out cash business We first long-term for of success. and And is in place income for large a just we're this reminder, organically flow. a foundation we lasting entirely a business. and put operating

We have manufacturing place. footprint global in a

would the visited of as I I have referenced Both continents that those the two the two impressed of Second of been the is my and prepared drive facilities scale trajectory with that far I of as and thing so different say up capacity costs, in well in down comments. unit improvement.

our in unit cost in double-digit your the how in out play we does P&L, that business decrease to in specific Now about question had a Spark the quarter. just

on unit costs. causing at investment gross this on cover in perspective global the income profitable, us So what's that to reducing we continue business a large supply still operating need mentioned to but that And that's margin focusing is level, chain. I

So the margin shifts being from margin to dilutive accretive.

time the our conclude remarks. any does closing like I turn That questions it back you. have now to to Thank would for we presenters today. for

you. Thank

prepared market. Q&A, dental attractive leading positions our pretty is a good comments segments echoed in this noted in in and the best business we with of As the

this, flow Underpinning and positive gross strong cash inclusion high and have sheet. good have a performance, a continuous improvement. balance We we on of margins, all culture centered

my in at success the from elements are So foundational already perspective, most of of Envista. place

generating the investments the better foundation, QX swiftly in moving hires, consistent direction from the Our actions. we're executive focus now with as this is evidenced and the in growth and more and performance on strong onetime

apparent will P&L and more build joining the us continued allowing this us Thanks, as call your roll support. to become help the impact we across QX, on benefits continue into positive for the everyone, momentum While and work for in XXXX. of QX, should

conclude does this gentlemen, and today's Ladies you. presentation. Thank

disconnect. You now may