Cantel Medical (CMD) 5 Mar 202020 Q2 Earnings call transcript

Ladies and gentlemen, hello, and thank you all for joining this Cantel Medical Second Quarter 2020 Earnings Conference Call. All lines are in a listen-only mode, but later you will have the opportunity to submit a live question over your telephone. Instructions will be given at that time.

And now, to get us started, I'm pleased to turn the floor over to our host Mr. Matt Micowski. sir. ahead, go Please,

and good Senior Chairman On Accounting Corporate Fotiades, of Officer; and Growth Senior Vice Chief and Executive Capone, Seth have President, Brian President, Vice President call and Chief Chuck Controller Officer. Executive Chief President Executive Clifford, Diker, the Shaun Peter President, Operating morning, you Chief Officer; today's Yellin, Blakeman, everyone. Officer; we and Chief Vice Thank Vice Board; Officer; George Financial

issued company for the morning, press of release year results this Earlier financial the a the fiscal announcing quarter second XXXX.

supplemental In to can addition, we the Investor have posted with in non-GAAP website today's a along This references, reconciliations Relations Cantel's of presentation presentation, section call. presentations. on found be complement under

would call Such Exchange to this filings the forward-looking projected. actual results I that and without may uncertainties, All statements. in with like may and only forward-looking involve the the everyone conference materially Commission. risks those statements and from company's statements differ and reports limitation, are including remind Before predictions we detailed contain risks begin, Securities

forward-looking statements concerning supplemental in contained release. information Additional presentation and our earnings is

financials, differently the financial Shaun Reconciliations earnings making company non-GAAP directly measures. The today's then today. to measures We're going get of and release. with most press we'll a measurements GAAP to bit call is these things be on comparable are little financial provided financial into today's to George's will references also in begin do remarks. to going

Senior President to I'm and pleased Blakeman, CFO. that, introduce Vice to Shaun you With

have morning, to simplified remarks. prepared quarter, good first Similar I Thanks, and everyone. Matt, our the

you financial deck are drivers. have with course, during Q&A. to results, along. for available can And, additional The financial the in significant standard color added most questions earnings any the on cover on we follow may of you the noteworthy details reported Focusing

dilution organic an growth minus second M&A X.X%. Dental sales segment a of on the growth, and a XXXX an The basis, X.X% contributing strong on constant basis continues year with expectations. currency organic in QX with organic of and for its XX.X% year-over-year growing versus of our Net and line X.X% FX XX.X% increased in in performance quarter year-to-date, the prior year-to-date XX.X% X.X%

in an expectations approximately a Life X.X% Sciences, basis are with pleased and outperforming quarter In the grew Cantel, basis the months. flat is growing first on an X% its first full on basis. and were organic Hu-Friedy with organic trajectory in on few sales year-to-date we

in was Purity stabilized through prior remain by we our year-over-year our believe Overall, The fiscal year results High this Canada. Water business driven guided. business in as this remainder reported of relatively the decrease divestiture has the previously flat of year will and

decrease the customers. to Dialysis segment, revenue, specifically deliver related an in we In to our ability product saw our to unusual

had which was to manufacturing upgraded, ability being bicarbonate ship Our the line, be liquid process and few make a taken which in to offline weeks. unexpectedly, for of our impacted product

to Operations restored with actively have are levels and customers. our working rebuild been inventory we

as the loss roughly we the of catch quarter and half get expect We year, million with to back revenue the in $X.X deliveries. up our of second

by segment, quarter, X% year-to-date organic X.X% increased a In the Medical on growth in basis. the

platforms to cabinets the and relatively basis, drying decreased of U.S. in in performance currency equipment X% capital than on softer growth capital a second While quarter Europe. slower constant year-to-date, was approximately with contributing rationalization flat AER capital

in expect improve causing rationalization future. the loss, margins the will we revenue While short-term a

valve rates regarding basis. Sequentially, our grew Recurring on shipment a service revenue, for chemistries, and and which in kits initial and includes X.X% were quarter stable launch. the and valve pleased performance year-to-date the cleaning with we consumables, X.X% are approximately

Turning consolidated margins. to

basis XX.X% basis second gross of XX.X%. expanded quarter XXXX, XXX by by versus contracted XX margins gross while margins XX.X% non-GAAP year-over-year the GAAP points Our to in to points

gross helped include Operationally, GAAP some our driving Hu-Friedy our profile, amortization reminder, accretive was of in the which year-over-year the inventory to As pressure. margin to offset the lower step-up bulk a related the of Hu-Friedy, margins in Medical. volume pressure

operating mainly the op million. Hu-Friedy year-over-year driven basis, million. Moving for increased to decreased profit. costs profit a $XX.X approximately came On of million, year-over-year Restructuring-related were associated $X.X approximately GAAP by XX% acquisition at profit quarter. in XX.X% expenses the operating $X down to million to $XX which non-GAAP

rate prior was year to benefit Moving tax effective compared to period quarter rates. costs our as XX% and effective XX.X%. driven offset of Hu-Friedy compared for of year the operations. to as the result the benefit international Hu-Friedy's loss a to pretax XX.X% was related tax and Non-GAAP by our This a the the the by earnings impact primarily prior rate tax non-U.S. rate as GAAP came XX.X% at in of of of in quarter acquisition. rate of mix the

year-over-year As XXX.X% minus decreased result, a earnings share GAAP to per $X.XX.

and In addition expense acquisition higher interest dilution result of our as borrowings to to also the related we to related related acquisition restructuring profit the charges, Hu-Friedy. discussed increased commentary earlier GAAP to incurred of a operating

includes to costs. pressure Non-GAAP X% other $X.XX, earnings increased share due approximately SAP to investment of per and year-over-year $X.XX which year-over-year increases in

came million, adjusted EBITDAS at in up $XX.X XX.X% Finally, year-over-year.

operations $XXX.X in I will million. and We related with capital. cash Working move to in quarter working cash flow in of capital the inventory decreased decrease to sequentially, onetime a by flow million million on and came $XX.X equivalents a cash balance items in and at couple primarily driven sheet key and items. ended Hu-Friedy. XX.X% now the from Cash $XX.X

Excluding acquisition of capital these X%. items, the onetime decreased working approximately

also of cash we this million modest capital post with quarter. worth stabilized back and We the in see pre-SAP CapEx of working inventory $XX.X receivable is believe operating flow line noting rates of right approximately promising SAP It direction. steps second and historical and it's our Accounts provide have to of a the in million addition the benefit net Hu-Friedy that Hu-Friedy. in $XX was positive quarter

at million, quarter ended Gross Moving while the net $XXX.X at debt ended $XXX.X to our debt debt million. profile.

was adjusted pro X.XX, net a of Hu-Friedy adjusted Our to four EBITDAS months times. On results. X.X basis, includes ratio which was forma to debt net debt EBITDAS

end at the be the reminder, our a filing of As we XX-Q week. will

going for his now over I remarks. to am hand to you George

on be following has Shaun. Thanks, along you am We today going business strategy more presentation. to believe evolved to start compelling and with the for slide XX Cantel's than those I that of relevant ever.

and With infections the system, healthcare-related of novel we its instrument both solutions uniquely Dental provide and to to the management suites. acquisition workflows Hu-Friedy for reprocessing positioned prevent complex in GI are

we we brands; and both recognized Dental; of provide that in and a key second long-term providing a like education of clinical training of our technical in circle to both and factors: in Three has our supporting relevant businesses, First, in are Endoscopy both It and can products have finally sites have above-average global breadth growth. protection strategy. we leaders longevity drive solutions and care. complete businesses, We

So the focus in is execution. on excellence

on focus our now specifically takeaways me more by segment. Let

the product significant Protection first, XX third, state current segment, introductions. future identified second, promise of in solution areas key or and Complete growth. our systems; larger slide Circle These have of at the three Ambulatory our delivering lead Surgery and Looking new Centers of hospital are for which ASCs; accelerating Medical areas, we imperatives driving to on

endoscopy GI the and Beginning half ambulatory ACSs, of taking with setting believe today place procedures growing. over we are in

broader Cantel large and to channel have base and sell of the has portfolio. a Cantel consumables focused been While has AERs others ASCs, it installed where not a

proposition, know those a sales. opportunity U.S. that the require XX% Today, but customers day ASCs to providers, This are risks we and represent our and value MEDIVATORS approximately will the the significant. Medical of of different the meaningful. by We market potential face is is these acute challenges believe every that similar faced model presentation sales so the

In disposable particular valves. large AER the of our health Today, hospitals, and is with leadership single-use position. having great in success we value the valve had penetration have products platforms systems significant individual in clear Cantel our demonstrating in

of one-third these on customers portfolio. of our However, average, the entirety utilize only

of understand health see deliver better Complete of are uniquely our value our know and to positioned systems. attractive presence systems and to to processes demonstrate C-suite one C-suite standardize This health opportunity Cantel, Circle demand As for their of is we requires the to an customers that across the of leadership. extremely to level we with we facilities, more large needs opportunity clear Protection their a the we

quickly improvements focused to and of and continued Finally, have this address product efficiently and faster the balance growth right A introductions this a investing is unmet procedural we our products market risk, pipeline longer in healthy term product our vital the need affirm with investments. development do needs to new category between We lower can must we in restore program. product new endoscopy. and maintain cadence leadership to in GI

the in Hu-Friedy and to between pace to overall integration is this Dental cost exceeding opportunities. of expectations, on XX. fit our execution the our Moving the The synergies raising confidence of segment and Crosstex and strategic ability realize combination Slide and

entity, known respective brand is of the company Recently, the In rolled the a new parallel the combined Dental bringing an we HuFriedyGroup, integrated which single for of field organization, out with is an have rollout new portfolio the milestone as the under important now entity, all this businesses. which business. businesses combined together our our for selling the branding launched

Sales time. the the was meeting bringing attended commercial for energy of first teams in together early and our organization National Dental in excitement combined I palpable. Texas February, The the

for seen integration, what we execution. their is have the it by team in While days and this still early leadership commend are dental encouraged we

XX, organization, customers. the our longer expect supply program looking with us our to over actions the low to we've Hemodialysis restructured in the confidence agreements refocused taken revenue Slide new water performance On flat near-term the and Recent have product segment. business Sciences development growth single-digit Life major and We give multiyear term. our in

actionable of our pathway Endoscopy improvement complexity and two-thirds by platforms our and initiatives. working almost simplify years. is three overall a over Finally, our overall the to supply for through clear we business reducing efficiency a have chain, number operating In next increased capital business, there by requirements AER opportunities

our are SAP In in U.S. addition, we the corner implementation. turning

So updated made we manufacturing XX lines months. that over in can next playing its improved with anticipated begin and investments of consolidations spectrum We've also yield the margins functionality. rooftop to are recent offense

So learning, our host a as this opportunities drivers for of business of that the see executable critical we be growth a XX next will months. over result

our resources mobilized to drivers have and in X.X. call an these CANTEL the we We growth execute initiative organization

Sciences; product expand that components and summarized entails seven simplification finally penetration procedural Cantel. details Europe; across Life Expand protection; accelerate improvements into circle Peter of infection is pipeline; penetration procedural XX: deliver HuFriedyGroup; products into going the the integration to performance in new which drive business and fast of and track consistent procedural adoption of products operating Slide to of of significant go-to-market of on greater ASCs; are drive X.X, CANTEL full these products speak

With that, Peter.

that drivers I'm propel on Slide will core going Thanks, XX. George. our future. to in are segment Medical There with begin our growth number four the

first specifically This reallocating this ASC is products to to in expand and TAM endoscopy penetration is $XXX total To commercial the The of team to approximately assigned a creating sales resources. programs-tailored, ASCs. an of ASC of have are do ASC address million. U.S. the value proposition we leader

training drive the drive influence major two-thirds Complete market IDN with the We adoption is this, greater of we've XX approximately clinical of specialists education of To hospital systems. the within partnered level. item and U.S. to to total with second un-penetrated. account Cantel's address $XXX estimate C-suite and greater million Protection TAM left the healthcare at nearly of directors expanded The key in Circle them our added

for a previously, third penetration products Europe is As Medical. we discussed have driver of expanding key growth procedural in

have a and established AERs strong We in very chemistry. presence

However, underpenetrated. historically PRP is

to We commercial products opportunity and total have in teams to to and to to the of effort. training, are provide Europe sales support estimate million, executives senior accelerate EMEA be days $XXX our programs, enable approximately still commercial growth. sales management this sales procedural two European the dedicated early assigned overall we We

improve development dramatically the fourth cadence. introduction PRP to product is Finally, accelerate capability and

pipeline. our have new as expanded on R&D We the team excellence Houston the This center procedural for product operation will of PRP dedicated of products. exclusively development reestablished focus

And quarter. launch them early of next our signs the of over XX with Adapter expect the We progress two half launch valve PLUS and the in BUDDY the have SCOPE the we Cleaning products category. second in PRP to nearly new dozen with months seen of

Moving to Dental on slide XX.

consumables to-date penetration as now dental capture and execution Hu-FriedyGroup. to we progress perspective, encouraged schools. integration on the are and known accelerating the are commercial combined and our with focusing hygiene management drive go-to-market system portfolio strategy our instrument well continue fast-track process to the the as From into business of of dental combined look and a We rates, penetration as

synergies are XX enable we to date front, margin of Cantel an months. profile integration the are where actions approximately accelerate the by of will cost On realization that possible. XX% We we in looking progress EBITDAS these realize Dental encouraged to to estimate

to continue through cash generation thru and Sciences, our Life delivery on We low energy next-generation estimate we're single-digit growth our focus and In consistent going delivering to of pass pricing machine. profitability. the optimized

to addition, operating with are to XX% streamline mid-teens margins we possible and structure and our diligent focus will business maximize looking on to revenue. believe where flow cash the profitability of In this consistency. business, We and deliver XX% cost of simplify that

number slide out On that business will we drive believe XX, operating improvements simplification. our we have significant mapped areas and

targeting In million end million of cash $XX approximately of terms $XX fiscal of incremental XXXX. flow are by to working capital, we operating the

we EBITDAS to to looking estimate XX% are XXXX. profitability In rooftop addition, sheet product margin year fiscal to Putting together, continue opportunity rate our this efficiency. consolidation and and drive all strategic balance we exiting get to undertake rationalization

I it hand George. back now will to

Okay.

slide to moving So XX.

point I Medical of year. to the we in its this that segment The fiscal the anticipate is modestly to revenue first second thing, improve out growth want half

Next, single actions XXXX, we the Sciences the year the X.X believe of estimate digits. XXXX. half Life to included we enable low in percent, in X% of specifically, that to Medical the historic be rates half be to X-plus In growth company second range fiscal will the return to Cantel second and to X% Dental in

total Looking slide the of EPS We year better XX, hard taking the look current guidance the updating future reflect EPS impact we of on projected non-GAAP guidance, coronavirus GAAP year, procedures. potential are some are XXXX a and our and $X.XX. China to the this In in remainder at of $X.XX have current $X.XX we anticipate to to environment. after at still $X.XX from fiscal evaluating impact

are that, With we to ready take questions.

for ahead. and first this you take go [Operator thank at morning. our Raymond We'll Please remarks go from Instructions] Larry Keusch Gentlemen, your James. question ahead

open, line is Your sir.

morning, Okay. everyone. Thanks. Good

quarter equipment the capital Just a couple side? you little Could drove itself, that talk just just Maybe questions referenced of here. within capital with X%. a starting what about dynamic you the bit decreased equipment that

and like kind X. was, Yes sure, our from in to as softness there year-over-year on Larry. rationalization the machines at the basis, be particularly the beginning a year color This Germany something thought is EMEA and we'd of AER of contained is Cabinets Shaun. going region. five well again, was of Most process as the U.S. our And more

and that realization machine. was And then when the really come -- the we became costs we go got -- into to the that actual analysis down one

QX And so external far that that's we of beginning right at largely we now. perceive been But a little our be as year. bit in more regions, of had unchanged a as the these to bump than in the anticipated competition

in a obviously quarter there of of abnormally products? utilization at seeing on some looking just And a cabinets, not drying you're somewhat to the into out be competitive XQ? types high this change clear you anything as -- dynamic you're but So, just of an so you or from had that pulled shipments and these

I'll one. that take Yes.

Our quarter was relatively first strong.

solid quotations. terms was Closure of was expected. shorter activity in than quarter Second

are expecting year half the on stronger a of We cabinets. back

as As no competition, new far entrants.

we've got better a we've that think activities cabinets looking bundling year. half place the package we're some opportunities I bit got some at with to in our of various back the in programs and

wanted a the settings? that about two $XXX act you the that around clarity. Okay lot off. get acute States? the ASCs ASCs more questions from there perfect. two being built to I Or and being United then like And just is jump million. built that more Is care total ASC, in out I up talked the up guess are that of ask when and I'll some TAM just look

of second you. out? total, today and out think XX% you question of former TAM understand the the when to that's on we and a again like If that been that just is, it Thank is consider the already the drivers how look target then want just push margin EBITDAS pushed really the about ASCs And should acute kind settings? the that's year of care

Hey first question is Larry, on take I'll the ASCs. Seth. this

size volume from So the done procedure a bottoms-up ASC and perspective. market really that's

that the for care the of setting. entirety in that we points the that think our understanding with volumes acute our is price what procedure is the right be associated place what take a of and the to ASC adjusted may in different setting setting at value that applying Looking portfolio from

the think I second a you around sub question the ASC good have segmentation one. is within

and hospital Our X/X the best ASCs of of understanding between consolidators now the the owned split corporate is right X/X, about X/X, independents. to then sort

And think opportunity that. obviously I is slightly within the set different

segments. We analysis sub strategy continue our to our and each refining to those target of that of be

analysis the which we of hospital-owned ASCs and two Obviously, assessment believe that penetration ASCs are really opportunity the the the IDN work the volumes segment. the in is we within which think attractive market largest based or of there in first our the have that size procedure would setting. categories But our most But continues the there. that are corporate-owned bottoms-up ones place take of a on

EBITDAS out the and here and efficiency question progression as that the far year SAP candidly quarter. reflects pre-go as fact with it the basically back Larry, in we're just operational getting our look one And performance to is live about third really and

in mentioned corner, feel we're couple bites to on the starting of sound remarks, SAP. turn As we the we like

SAP about $X.XXX last our in levels. service and raising while partner from now call a prior quarter boutique Just partner then smaller local a between replaced we've with our saving

call business in say are We've place talent X in out pre-go the it to over lot our over internal four four now. the performance. the and filled I most to stronger of functions I'll areas finished get last live Tier Most months our reporting have a Most the would back done We last with months. SAP -- run to stabilized.

and this the with you you When about capability lot first or reporting statement, the does about sort a in $XX receivable effort would of think million How got this $XX cash quarter. manifest around is we in million and of hoc accounts it second of ad basically capital cash of got put SAP. how I launching operating you and flow. time as worth of great we say at working flow see that the the We training inventory worth look deal quarter do itself?

that valuable we folks to data our are live better be are to carry in particularly be XQ able I just would that start would to some will things and think quarter. we us results having would efficiency I being who drive putting third piece as quarter yet logistics that to in performance obviously honestly to called Chip us last coming much pre-SAP attribute and understanding a will our system to help that to get as would to that in a productivity And And XXXX. impacts. visibility and module not then There's to this teams and important get edge and some the here and expect ERP over and go back in here

one I'll and capital and the to that the of second where these to thing deployed as a we We've yet the year. of that. money add are as well materialize Okay. benefits expect which from number into move done we things spent we've half get now just next the to

assembly have not And business. were all improvement our first going Italian benefit the facility. Dental new in rooftops over of half our next our filling and in opportunities lines We materialized -- put in electromechanical of yet months. in XX are margin these rooftops in in forward consolidated our Minneapolis Europe. We've those will We've in consolidated the

are well. So contributors think those I as

you for Okay. Terrific. answers. the Thank

ahead. line Please the from Matt go Mishan KeyBanc. hear at of we'll Next

Your line is open.

for questions. you the thank And Great. taking

expecting operations of I that, in as you about you're I downtime? think, And far if missed but talk as first, can what I Italy? kind your apologize

Yes.

electrical sell facility in where largest Rome AERs outside is of of that close we to city our primarily bulk where do do models we of it's Europe. So our of of mechanical chemistry and manufacturing. other And for located FCO. well our it that's that in we a Pomezia assembly is the a manufacturing is couple And just called most

next is the facility. that we of from but over for And is EMEA chemistry that's exported are some BHT market, moving supplied of Pomezia out of the here our it months. the U.S. of bulk manufacturing couple where is the There most our

you… Are

Yes.

create relates As our to it looking things warehouse move buffers get we potentially to case of how finished in in -- at we the goods our worse a coronavirus, some are Italy. inventory Dutch-based to

open? there? facility are downtime the Is still experiencing Or you

is. It

We working seen at offices If disruptive a have dental And And of our business have I in basically obviously, Milan. marketing folks home. sales people side sales sales not and downtime. understand home. it's at of certainly north the it's we've work as it to since to -- allowing our been small we've in from on not primarily office got from

is is of investment EPS Okay. the that revenue of in And much guidance. how X.X? then revision to kind change much How in And kind expectations? new CANTEL of

incremental of investment really None it's X.X. in related any to

R&D, traces As mentioned, operations. we're there. about me. we're change of the -- the in anything or or organization reallocation EPS business some Peter excuse the of is allocation doing X.X nothing talking resources, Medical really largely there's an in about in sales coronavirus most and the reduction for The for we're talking Whether impact revenue China CANTEL allowance so part potential it's our to incremental

ex-Hu-Friedy, year you core depreciation look going increases while on business if be add And merit operating flat. And relatively I'd looked that's SAP profile the headwinds inflation. at from the is to full our offsetting our just expense benefits

expenses that in company is quite XX operating most So like to meaningful months. investments it X.X, we the be lean incrementally is about reality there's CANTEL our a never think last of going to managed add and And lot. a the as necessarily not redeploy the has

is Medical. product to Medical? or one on there I grow level to the for X% right Right. the of -- Why faster is Or and for side? the both expected it is And much is then mean, procedural other? side growth the just than moving reprocessing

Yes.

going growth going the is below driven. to little of bit The XX% of and faster not the implying that going to it's being always being opportunities side just capital because necessarily tend rate is be of procedural penetration always blended average. portfolio the with vehicle whatever or the part think Obviously, reprocessing procedure be the than to portfolio a I a is. to that grow

Okay.

I'll seen change the question less material the I procedural dynamics last just lost that procedural this guys side you you it's on contracts -- of jump side. have Have So just in competitive out. And were the Or you that than area? mean, in area. you've then a as matter you winning and before? actually is

we pretty to that. shrunk. growth take is have continue still to headroom headroom franchise us few procedures I by. faced think within tougher There's things. run the We've ASCs, harder it's valve argue a I I'll a is Look, Yes. offsetting to penetrated And and that it's come hospitals that for move we've a penetration to had and if kind but to grow would combination of the losses, some bigger had hospital the hospitals we've market that is account from the deeply. but the get challenge fantastic two of of key look

Okay. very you Understood. much. Thank

Thank you.

we'll from at ahead. Mike hear Next go Needham Please Company. & Mattson

is sir. Your line open

Thanks.

regard you guidance, to the impact coronavirus. include with mentioned updated the Just that did from you some

in revenue supply expecting just the So baked limited you really much in to for impact demand and and/or how And is EPS you're that? can quantify for that China? you to

hi, is Yes, Shaun. this

Medical we're around months. is chain. feel there anyways. we've about a Supply it's supply it a than in. million EPS the again top-line there's $X for side, it's we've lot the few procedures of well the baked the covered on that So impact be more exposure pretty side downfall And on would of into the half on around the about And baked certainly like chain for China $X.XX side, we second procedural not

other in assuming -- hospitals, put long we're that's we any specifically. turned that the is last know globe going pressure or market don't to off really how given procedures China pressure is the Chinese number But around the and the meaning not that has we

know market then But the argument can improve guess what the come point? and reasons, I segmentation the about for where is that lower give of value some competitive it tailored mean, thanks. specifically Okay, Is us on do do so out try can and don't price that setting but you're I size can if it specifics bundling? you I Is to talk of understand them to you with proposition about to I that kind there. some at to willing planning somehow you're ASCs setting? your there And products you in to the a opportunity discounting? the

Well, look we're we've invisible revenue on I in I talked million as annually $XX before, ASCs. today. not ASCs we about mean of do worth mean, about

chemistry towards Now through more and slanted that it's AERs a obviously bit pulls obviously the there.

their really in we But ASCs. contacts feel accelerating protocols and can C-suite cases in the acquisition with that the the many more our ASCs consolidation and forcedly IDNs we the place in now having like with right are CAD that's larger of structure these influence that that time is

in have and transforming can It's we're many own looking into like have are do is full that bag as And we we penetrating We that ASCs. not there in portfolio products think sell that. opportunity hospital a of as we that same well in -- the same the the an products assuming we the have it's changing and have validate track a But procedural of we're math we the feel that our the do built of and would best as to market hospital. subset externally industry. ASCs. place because that sales Now a or the team record

that. And add to just if I could

on And customers. ASCs have focuses return critical of for prop portfolio. well demonstrate slightly value to ASC to that those different as our throughput that to the tailoring message going factors adoption our we're the prevention message be are going and of on efficiency a that think value to investment as overall key in the really that's how demonstrate be I and we infection is as much on

I the if think sense, look opportunity at synergistically. it And again as we ASC Mike makes in almost argue I'd

to there's the in our think business Dental lot can to learn of behaves that the the a the Dental ASCs more ASC think I hospital. I that ways similar we things suite from almost than

there's between how safety some IP&C think be practice pushing side. to I well are issues on So folks the those Dental issues good of the cross-pollination as the efficiency some going as

sense. like from Okay, mean in And And Medical by in it then seems this growth reduction even makes in second in thanks. -- platform dramatic. out two-thirds. that on your you're quarter. calling revenue That impact the That pretty AER is the sounds already I

So the impact until do forward about done? least growth think just how at going on that's we

write-downs from would going be mean, excluded et a there but your to inventory have cetera assume still with I restructuring costs, expenditure? be cash could adjusted I it are then And numbers associated that?

answer it. I'll Look

a Seth Matt level which the talk AER little ones, in or keep including acquired Puricore can at mind to we've the Just all a platforms restructuring. with or mean we more of acquired come Germany, about which in I is one U.K., Peter the had. in BHT bit we high things legacy

we any really work haven't So done any of kind. restructuring

on we XX% sooner, this focused honestly beyond as longer And something why have could to focus and for to short-term impact Germany can going is term, opportunity we today to And improve a a but like are the margin. obviously part is some in to is is, laser-like it forward there it quite of -- get we of term. significant done now. short that this kinds at that have needed we to contributor have perhaps our least these may opportunities, which margins And get but think EBITDA we're

Okay.

I would for it's say difficult just us. very

of group sort overly out team trying been to and organization defense trying reconfigured they've an our more base. complex to that charged of get an legacy we've sustain onerous R&D We're throughput AER historically. As of that of

with the time is us new a a products be more to one more obviously, better of velocity funnel, this efficiencies, So, And more keys on there's it with getting to and far platform, on driving to on rationalized to the get and sustained. out spent efficiency more in just offering. plant inventory lot a better more whether more less sourcing order on throughput for is product of execute rational better leverage agreements

Okay. lot. Thanks a

from Sidoti Mitra line the we'll Go [Operator hear Next ahead, and Ramgopal. please. Instructions] of

How on question. from look first you just the comfortable be follow-up that that it you are more offset AER you will wanted than I able on hi. the simplification AER Yes of -- more side? Good penetrate to with the ASC the to lost the morning. to platform as revenue

more Yes, pick for for of with up share I center, one hospital, call offsite the ASC/practices think the actually would global end feel it simplified like lose share. at footprint one the AERs day I'll the us a of we to not enable it

requirements versus disruption. there us today. long-term, it's a for growth might But if short-term we that be to meets So, think get having a can footprint simpler I global again some driver

George with legacy ,a a of came which BHT base. basically which AER, along various Medivators with ISO rapid product our is machine As our our the of own products out mentioned, PuriCore machine line large IMS acquisition, product

dollar a what we Yes, I -- mentioned development a mentioned next-generation Peter both people which resource more opportunity R&D thing facilitated mean what Peter before focus I on other before platforms simplify is is the is a think and -- the resource the these much our platforms. key resource point, a from the to more

And meaningful these much cybersecurity. get there place become next-generation some update going to terribly things All can for more If are opportunities in better that's much these software vital which platforms AER forward managed. focused. obviously and we

should Okay. that focusing No, nice Hu-Friedy. margin expect the the Life Obviously, to help you the look you then business, associated some on Sciences just wondering you've as highlighted simplification structure that's in obviously for ways captures I'm on for front. Medical the great. expansion. with on get you And synergy the AER cost

margins And terms offset savings. might going adding you potential products? cetera improving out given have that if et new some be I'm are to any sales, also especially And rolling cost of maybe to in any other just you there, wondering initiatives

was additions wondering I if So, net there's might any we just be expecting?

the up sourcing of Yes, think it's will the and is we about what back but the some we think are upside company look specifically and areas offsetting volume we've time to I year we've the into year come half this it's how -- in one of even of taken that's picture. our be when of sort the pressure half of the different some within the back capability built

accelerating as chemistry even of as A our going good be business savings on side side. the is that to well AER of on the sourcing piece

will over So, we've good as I got activities carry into those And that some well. think there. XXXX

part Thanks. story. me. always Okay. the a And been acquisitions of have then Obviously, big finally for

on if with evaluating about always just we was And You that a know clearly a X.X have should lot I plate now opportunities? how pause probably I but expect the your think initiative. wondering we should that you're on front,

the We're internally. to lot we reasons role helped is of Growth one Seth always you Officer, opportunities point opportunities. Chief a at answer this the this on evaluating got to Well, of why -- we've of question. But of part

that I talk things -- about some you publicly you you're you're the mean focusing on? Seth talk that can about let I'll of

Yes, thanks Mitra.

always continue at external opportunities. to going to we're think I look

going in X.X, But growth integration reasons I think we're were on here and as to I a lot organic Cantel of for we a are I with opportunities think serve number today initiatives. a that quarters existing with and pause while we outlined have the of internal lot a platforms. good business be on of think there dealing may see executable initiatives in our markets we focusing

a focus long-term. position back our the plan the of is focus and resources get attention growth my expect on a we have to to them So, execution internally the for that us ensuring right we of align the lot

the So, it's in work for that we'll to on but focus -- short-term, execution think is the future, us and there to the matter over role continue I internal for And as well. think on. of integration acquisitions play a a plenty I

Thanks great. the taking questions. for Okay. That’s

you. Thank

James. Next we'll happy at take follow-up Keusch Larry Please we're to Raymond a go ahead. -- from take

Thanks.

and accretion the first the if XXXX. we sort of On half been wanted make XXXX? half 'XX? 'XX of see Hu-Friedy, that improvement with to to the thinking here. second from we're targets. to that what's growth of say we XX% do of ones sort had guess, where to guided about in it? still ourselves half in you've stand sort does appropriately. as growth targeting of then think where that's think And EPS bridging What I implied about I the second sure to an you are way How want I just quick second the right about for two we Just is, just question

going a smiling Medical of might we in this someone for bets I aren't well for what answer And to confident not change. really that guidance they're because, when half. But They're the Look, is me pretty we position taking that it's XXXX. sitting base are at Larry. feel specific be step been programs here going to all obviously, these as think forward. give But ramp to you ask were have that period the consider in first look, being to a These ups. ramp kind we

the if the So, like as take Valve, these the goal. products at all you the the mean -- the SCOPE penetration, view on toward Europe focus are and on ramp-up the the ASCs, new that I launch Cleaning we of a things BUDDY look focus PRP

going other are next going months. The produce and and spurts out products, new new on only BUDDY in be along have SCOPE procedural than focus to six increased won't to the Cleaning for thing that -- happen may Valve come opportunity will the the sets but that of we're valve that products -- products not SCOPE that of BUDDY, those

be So little a those term. longer bit will

as ramp. think I a this can So, view you

we're half that being being around second X-plus percent. at talking about the Medical So, X% in in

half, first the it's middle the somewhere. in in Somewhere

for $X.XX our and think Hu-Friedy As effect. about tax as far Hu-Friedy, embedded guidance to of when Larry, is in it you that interest you can adjust

I Okay. right. while Great. That's last -- one just one. actually, you have All well

Just had sort the Again, you to the next calendar of I any to in be suggesting REVOX? position of fall year? begin that, update been a in take orders think you'd on

Yes.

scientific in think really that. I about Feel good key I think the right way mean here milestones that's December. our to still it. about really past

or leading phases. I'll product. taking think to in. One it or be orders nine One, in milestones will up the the in and or winter months design the of both -- fall the two I next call commercialized be two really parallel. locking the

materials So getting base vendor finish drawings established of bills and mapped assembly instructions. out

And material one orders other will on position ourselves we started hopefully now compatibility customers sort for already really as enough is to start where people in with positioned customers doing right with engaging enough has Thanksgiving from we're the of after sort path, or this of fall the to view. testing and the that be the products to parallel work sort being taking parallel around of

Okay. you. Perfect. Thank

closing have turn to it participation And leadership I'd At additional to signals for from further ladies questions all well no our remarks. and the your back gentlemen, as your you for we as thank we team today. time, submitting this or like any group.

and the we're able they initiatives, quarter's we the to X.X to of will very you And been each to about externally are. few do things have to mobilized on that. around Well, the for which also to which this referring we're you. can of are plan Yes, past next X.X months, we hopefully these on making call and CANTEL the by initiative. mobilize CANTEL on talk internal speak Thank to be is, progress we see X.X we these the organized this what company's but many organization under look progress focused CANTEL behind to forward

for on you, again being today. the thank call So,

all joining. update and business we this gentlemen, Ladies do does thank conclude and for today's you

enjoy your day. you rest lines the now your and disconnect hope You we that may of