Cantel Medical (CMD) 8 Dec 202021 Q1 Earnings call transcript

Good day ladies and gentlemen and welcome to your Cantel First Quarter 2021 Earnings Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions] At this time it is my pleasure to turn the floor over to your host Matt Micowski, Vice President of FP&A and Investor Relations. Sir, the floor is yours.

Good morning, everyone. Vice have Executive Chairman and Vice Officer; Officer; and Yellin, Officer. we George the Chief Accounting President call Growth Chief Vice Seth Chief Chief President, Officer; Fotiades, Peter Executive Capone, and today's Chief Chuck Blakeman, and of Diker, Board; Operating Officer; Financial On Shaun and Brian Senior Senior President Clifford, Controller President Corporate fiscal the year press a Earlier this first announcing financial quarter results company of morning release for XXXX. the issued the

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

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

financial directly Additional is measurements earnings non-GAAP release. over making to provided contained earnings supplemental the and George. also presentation will release. of company press most financial that in The call on to statements concerning Reconciliations these measures. now With today’s the turn call references forward-looking financial comparable in to I’ll GAAP our information today’s measures are be said,

Thank you, Matt.

and strength October has on and estimate infection, own to are XX, focus that relevance to steadfast our importantly US we were data Our performance about through a procedures our outperforming uninterrupted X% of is ago. safety continued Most X% based the party procedures. our in recovery down year the third in quarter below that discipline. external endoscopy and from first What's quarter employee clear which data and the We independent operating results we of first on nature and unique customers. service Cantel’s control the prevention demonstrated offering yielded the our

During year time to consumable XX% outperformance year-over-year the chemistry our Cantel reflecting XX% nearly US Similarly products organically underlying digits to be and depending versus were the ago while same category. similar business flat up single X% versus was appear to down the on procedures market. down up low dental and

We as our are prevention per experiencing in revenue products the in our result adoption the procedure of of our more uptake protocols strength of a utilizing and infection solutions. heightened more PPE, new

have bring know At XX% of embedded Over the the traditional business. we our operating profile eventually company. of given time a focus first the business we the would to dental last margin we the legacy acquisition Hu-Friedy Hu-Friedy eight into margin a months disciplined the EBITDA

an legacy synergies, recovery the quarter, Second quicker timetable on specific the demonstrated procedures. third, in impact and accelerated Crosstex has operating of the happened and business. But this this with especially as improvements

Here is our a across operating key in This of all businesses. takeaway. discipline place is

We other Peter, Cantel are with about traction making talk progress several our early initiatives. fronts. will X.X on

and operating scaling leader solutions workflow significant up a asset Shaun premiere the innovative and endoscopy speak will to ergonomic scalar office. our dental DEFENDO with generated Censis management is a capital technology adapter new track will production and as Yesterday, manual we seen working impetus of performance. the how performance risk Hu-Friedy product tubing just with new renewed surgical be SCOPE aerosol trace preference and announced generating PLUS in collaboration in Our cleaning launched scalars BUDDY partner. have This to systems. in valve to and versus with sets their a the scalars have momentum. ultrasonic management strong disciplined instrument suite our the minimize a and launches cash Technologies enhancing

XXXX. $XX additional our paid we repayments path like XXXX repayment in accelerated in pay We quarter. we to down this our months. by few debt I second pursue asked procedure looks down we and to over accelerated Earlier month continue past an thus expect this total million fiscal will know and to performance $XXX bringing elective far our be volumes million our in debt revenue the have revolver what

the of to So the similar quarter of far terms performed October November in dental. day medical first rate revenue month in and

quarter call pointed our we fewer last first on shipping days four As out quarter. second the does the than have

headlines. are procedures know the the winter traction. quarter expecting that We it's as vaccination wait is see in we and What XXX% for the see gradually rest the months as to calendar XXXX do particularly recovery unfolds of see. same gain we As all and exit we year programs

We than EBITDAS procedure also quarter continue we the better critical offering what comprehensive regardless perform to level nature of exactly are levels we on margin our procedures of to solutions Last least the that guidance at XX%. know we our We bring the and said customers. gave year. given at exiting

XX% EBITDAS our exiting least at to fourth guidance this updating margin are We quarter.

just under this of least XX% normalized margin return in in spending EBITDAS of upcoming QX XX% the given Now quarters. models expense guidance to a at operating

the sustain levels. discipline our deployed Cantel have the coupled to and them we our demonstrates enhanced return to continue businesses with the The in traction us operating programs prevention quarter ability in earnings and and suite gives X.X solutions, volumes our power infection control these of operating this of performance recent of strength on levels when Our future. to our normal build in confidence

So, with Shaun? that

everyone. financial I'm our results Thanks, go brief with through good to going commentary. morning key George, and

to like to the that I'd that context Following financial give COVID. additional details during results provide

follow for questions prior in Both during the M&A the FX cover may any have Of by and versus organic X.X%. XX.X% XX.X% demand year an for on an negative throughout volumes in with year-over-year decline a XXXX and negative of quarter offset of quarter. basis. the Capital our of currency versus additional exceeded which first accelerating both medical for in constant the the significantly This prevention demand. deck you in period products by the were X.X%. details dental sales basis of with question-and-answer can impact segment sales of Medical increased session. increase The XX.X% is first and organic recurring quarter, Net are course year. the quarter. you QX revenue infection standard reported expectations we available to the strong capital along, and X.X% financial important earnings procedural we during and while decreased underlying equipment XX% X% to representing in It build increasing the the the declined, robust note prior that decreased on backlog accounted

Overall, with prevention basis by an procedural demand segment we a pandemic. believe of Hu-Friedy the X.X% grew the primarily chemistries. driven infection procedures of and organic we differentiated these by our This Hu-Friedy sales. by acquisition reported the outperformance driven faster the basis primarily decrease the in customers these indicate In and growth of increased segment of driven prevention portable recovery units results The lower procedures prevention of demand sensitivity Dialysis height XX.X% on combined the saw market osmosis anticipated, machine requested organic of and categories portfolio environment recurring year dental While we products returned fiscal back as half are in the reverse in offering. gains organic dental the underlying XXXX on infection an for dental endoscopy combined during to power protocols. was inclusive on increasing reflect revenue have X.X%. with of primarily to the increased disinfecting our market, Group an Life of above infection X.X% growth due the basis share than our seeing especially Sciences declined PPE

our while return increased by margin gross GAAP by expansion our the driven approach in margins sustain in costs gross was the at year-over-year we managing we non-GAAP XX% favorable XX.X%. XXX of volumes versus sales mix gross XX.X% margin XXX volume as well points Q going to consolidated consumable higher XXXX, to manufacturing as first products. expansion basis believe combined this by should Turning to More due disciplined points with of increased forward. to margins Importantly basis more The our

year-over-year of XX% our a basis million. to down $XX.X to million. increased $XX.X profit profit, increased On XXX.X% non-GAAP year-over-year our to profit Moving GAAP

I and will $XX cautious the end of $XX with our flat QX to guided run around in $XX quarter rate sequentially lower million million continue second spend take previously around discretionary million COVID. relatively discipline to by given million OpEx stabilizing remain Our OpEx of ongoing surrounding and expect to $XX cost approach the depending the uncertainty we a to on volumes. on

US favorable was XX% The mix. at Moving by in lower on decrease was compared rate to tax. driven XX.X%. tax quarter effective XX.X%. for the as rate the rates tax prior and the income This driven of year year GAAP decrease effective income came The item of to the the tax rate was permanent to compared in prior rate geographic non-GAAP by geographic XX.X%

$X.XX. per per earnings XXX.X% increased Non-GAAP share GAAP result year-over-year XX.X% a As increased $X.XX. to to year-over-year earnings share

adjusted the key revolver. X% to year-over-year. came and quarter the from repay was of and X% million of the million decline accounts primarily on increased used to we up I $XXX cash now at at for flow of on in $XX ended in items. quarter flow EBITDA million operations balance Cash Finally sheet came increase an XXX.X% $XX.X year-over-year XX.X% move will Accounts which in all $XXX.X $XXX.X that inventory million in to cash-on-hand sequentially basis. our cash. Working sequential declined increased and capital to million some driven payable decreased a sequentially receivable X%, XX%, by with

quarter which also $X.XXX decreased million Gross $X.X while at was end million. net was CapEx the billion $XXX.X addition quarter sequentially. In debt of this debt

Our was net EBITDA times. debt to ratio X.XX adjusted

of reminder improvements. we has element working of September. down and to A X.X were our million pay our Cantel able $XX drive initiatives key As capital been operating to in a revolver

discipline our our in driving enabling operating US insight heightened coupled of the full business. implementation to into metrics, manage us better is greater Our with the operating SAP

to operating continue XXXX. fiscal and pay drive to additional efficiency continue in will year debt expect down We to

to the mentioned $XXX call fiscal intent in our the at we pay During down year. million last least

revolver into than position stronger cash With were and additional our Given of the the down incremental remainder $XXX debt in paying expected the debt operating pay fiscal year. million pay flows, an our to $XX million total our able our $XX during to we bringing performance we quarter down to million fiscal first our of November strong year. cash million, of completed $XX four anticipate down an months through

quarter. refrain feel from providing full it's prudent for I'd color provide year, some still we to to second the guidance like on the Although

less the $X.X four dental due remember quarter and day. tune In have season shipping expect business to to the of we days terms that of approximately it’s to to second our would per which in the we winter million revenue, medical holiday important impact

first due In second there segment addition, the in will in dental a to tied to our the dental that seasonal assume the demand quarter. should is $X school repeat business, you quarter normal seasonality million in

until months COVID increase will the pandemic become the the few globe, anticipate across we starts to with to given stay spread controllable. procedures line continue in the more Finally, in past the

a updates. a this reminder, our will by hand we filing end XX-Q few it over the to to be operational As of now I'll week. provide Peter

on IP&C geographies. our their changed in see Thanks, And the a that recover the and strategy. the everyone. and is taken wanted that what to to These most that to fundamentally way. take will At time past the long healthcare observations morning, anticipated actions of safely impact share the the term protocols than good procedure changes capacity permanent over to some These XX we continue protocols days. learned I are execute insight allowing we've to have in John. near forefront new providers faster into have we've

these solutions, enabling to elective, efficiency differently to are The medical are into dental the past will solutions services, differentiated volumes products, providers compliance and of practice sustain dental customers. than expertise, hospital, outperform us more healthcare safety and winter as support, suite anticipate our Cantel's we that and and nature IP&C patient the this demand we The often and we training existing clinical procedures ASC profitability. Our critical And to critical considered was procedure enhance standards, share head to providing and season, of spring. procedures solutions segments. and gain protect experienced for our education stronger what for are in highlights which

procedures dental approximately were to the XX% pre-COVID Our medical assessment procedures range XX% pre-COVID levels. of place XX% XX% levels were in of procedures during of XQ to XXXX of

several believe months is worth bolsters made While of safety products are medical market expect that is intake like the COVID bullish we've spring operating with to daily nine or November, news, we past without continued near-term through rates potential a on future. our It with vaccine. be positive our have COVID our the to and what the this next over concerns noting do look and patients regardless we This sales outpace enhancements the trend we in that confidence in dental. impact along order over the the environment both in will to any weeks for solutions higher due

we debt in cost of much is taking there employees spending, our know While discretionary service control to how is structure, what care and times. during including challenging manage do our to our working capital,

ASC Moving X.X activities in launched termed will through have continue their placement sales in XXXX across of initiatives driving the by that courses on wins starting equipment XXXX commercial advanced on for US on basic medical XXXX space Critical schedule. program that XQ XH Cantel XQ our we spring to the XQ market. we and segment the now full will the training targeted all reps selling with XXXX focused and complete end of bag training what have ASC we this

our XXXX related these in our we while designed establishing XXXX brand at by is value already have pipeline to into better which the promotions insights traction improving calculators our placements. and matched efforts and market. aimed materials sales initiatives value programs Executing our month put VOC feedback XQ and and outpacing fourth prevention strengthening from in significant underserved field the to seeing clinical education infection efficiency are full our an the reviews value We key market our proposition. toolkit generating our Refining actionable clinics, year ASC already positive selling our crystallizing through context all proposition to

we encouraged regarding capture We from early are feedback that by solutions from ability value practitioners very to provide. effectively ASC the our the the

in concurrently accelerated with have hospital ASCs setting results. plans made to we our the the progress addition in In positive

highlights product the sales portfolio. specialists their advanced to medical reps sell key courses all field Cantel full Some bag include to full organization full we to you of reps light configured the of completed better training bag remind our from recently

now is given take their fully Our impact is This is orders and due in COVID. must have to an closed landscape first think that issues a access sales to initiative team continue that force develop we US insight October. will time operational what provider the the to

have incredibly XXXX. our end programs million XQ the normal successful at New been to doubling capital $XX backlog of

its teams investment with to program Europe, some a the we full KAD given consumable these Our even compared initiatives. KAD with the a traction unique our seen accounts swing to account the and given program in excellence Needless advantage or IP&C not key average us continue accounts our in of have organic has growth that In partnered nicely. To nature approximately access XX% programs say, perspective give continued director initiatives program. faster as have higher KAD to gain growth unprecedented our we traction in lockdown. in US the educational progressing in facilities allowing commercial on are than

back we wins on by the back set reps to revenue have have put and terms that In past have with place Out-the-door over of back remain most of categories focus This consumables. that has outperformed nearly continue quarters. more strategy standards results bringing segment In of them anticipate terms a people, with will as processes of our has with to in to executed we along prevention full and core been to in customers double that from strengthen our double numerous practice IP&C clinics their deployed operations. training the kits providing and streams. initiatives completed next programs get training for on been team. sales early portfolio through to a throughout initiatives in PPE positively become the way. quarter all work line We've dental team, infection normal schedule coursework ahead be standard incremental our leading with procedures US resulting our of quarter. where a in the dental, of revenue pull we couple We this have training in robust as unique will recurring impacted US Clinical digits digits distributors new our for education guidance these

In the the our operations, expect simplifying which preparation to made of spring, in headwind terms SAP we go-live, significant of further business. core occur we’ve

significant to a number acquired expect that it that the when want wrap was we call, initially be. to target earlier achievement mentioned in Hu-Friedy up we highlight was the released I synergy now, we As I it

are legacy target of year We execution our that report approximately the two exceeded accelerating year have has ahead synergies businesses. three ahead to already schedule. This of us three we of EBITDAS enabled the XX% pleased to between by plus cost of execution our exceed to target

margin to attractive both with share, continue to with traction launch cleaning and SCOPE our valve gaining adapter R&D, of over PLUS categories. an we franchises Moving both make Defendo the BUDDY

the we largest driving our quarter. approximately million and PLUS, XXX in both revenue. In Specifically the consumable customers BUDDY penetration XX% in scope targeting SCOPE seen in are $X penetrated capital have first quarter approximately we and first accounts during customer first [ph] DCA,

Finally, on capacity globally. mask add I'd like our to update provide an project to

We into of have running received two them first our the our Rochester during facility and have and up December. machines month should mask

receive December to running Rochester. timeframe June Italian an We The machines in and four have by into February. up two in next be are last machines to should certified our facility expecting in in our May place them and

to subsidies a mask net backdrop. expending last we capacity As in been very to mentioned terms to what for to challenging little thank increase and their our extraordinary on our this quarter while employees the will be take due I call global significantly this CapEx. government able I efforts time want of has

hand are come I'm remarks. in for go We grateful and our to to key closing have produce out to commitment to and providing to our George their our enable in mission for members into achieve and and environment. back a and in now over solutions continue difficult customers products able work who a field the support hard team that day this X,XXX are to safe care contributions. through we is we going It environment every

Thanks, Peter.

leadership questions have into Many reference. as Cantel. the of answers, come you get we and to for Before have face a short for Investor your Matt Relations Micowski of I change know

would done function the principles Matt role with Over transitioning for Lada. we segment along was extraordinary and responsibilities. the Ryan to with his him the Investor development Cantel years, employees, begun in the company has brings managing Investor thank and Relations financial contributions. CFO FP&A to been CFO of has job formally internal business Ryan the continuous Matt will accepted Investor the has With Medical a for in instrumental be In already transitioning knowledge of an of and within few guiding both the Relations development of has and process like previously past segment the that, our within role. Relations. to his keeping acumen Matt strong our

We expect over make contact Ryan introductions weeks. your the note queries to Please and to going next few continue Investor forward. for to Relations

this for up that sum operating me control prevention are is that execution. markets and takeaway for the Let continued and share and our with discipline management. Execution by execution quarter respect we past and and saying gains cash delivering key infection to on solutions our

procedures confident continue stronger recovery the in performance. we're in XXXX, their as So, sustainability profitability of our

Okay.

So now with we’re that questions. for ready

ahead. today KeyBanc. We'll question first Please [Operator go with from our Instructions] take Mishan Matthew

margin normalize spending and to over in just I'm quarter all sustainable what next thank is on progressed as very to transition Good all the get how this. morning, trying profile a several the sense much and just think for what's business. everyone, kind going be about to and you want you the changing of I here through should of to first quarters? for the George your outstanding we understand information

Sure.

question. team I I tag can think and Shaun this

remarks. So the we look I as out in think pointed

dental the an the the is get margin the past We EBITDA with or and the change this business weeks before we of acquisition Hu-Friedy transition a that's to obviously First accelerated that's said foremost business. that at over Hu-Friedy basis. we outset pandemic in happened combined XX% techs on felt big cross months the several could occurred

that's been legacy around the was in was has year. obviously fiscal year in business underperforming Hu-Friedy everybody although remind it techs meaningfully at to this margin, has had -- the EBITDA -- changed a and EBITDA at Just XX% in margin XXXX XX% cross

this So, the made gotten combined but and progress synergies, XX% that has faster on recovery procedures. to we obviously business extraordinary the

XX quarter. at XX% margin percent So, We're EBITDA time. look first over the it's something saying

EBITDAS back. that in the the know obviously has that some at will at said When -- we're exiting the that said overall EBITDA XX% first So, we margin look about XX% fact and to you the operating what quarter. the the you do fourth the -- quarter, is transition at with I expenses come we're

remaining lot a the is have a on a at look certainly we've normalized as it time as in more becomes recover, but carefully helped, and discipline awful understand thing basis discipline really budgeting that a procedures takes at So, -- almost we've embedding been operating clearer quarters SAP make the one an obviously company. business across looked I we on cost spent expense. to to can't things what looked more And operating zero-based an the run what basis. It's of sustainable

how confident is quarter. we and you I know have we -- unfolding the yielding So, recovery the of said we're and the fourth end the very provided at rest what the of our year see goal procedures how

is the depending this $XX pegging of volume. flat briefly quarter with million OpEx to quarter to on of back said in out kind Yeah. we're at stay it to kind to $XX and I The into I know only will the call point would what then thing we going you think a numbers that add million help relatively that

that's So, get back that again, George referenced. we of kind how XX% to

Shaun. Okay. shift And -- over Thank wanted to to you, then, to capital. I

capital is to procedures think driving it's is this to of shift these is are kind to under XXX% it as to procedures my send at ASCs And what's know -- they of time if my the less for of they ASCs point as that a being your sense underutilized of are it's on a is if capital it? hospital? You at if being it, What's spend you spend underutilized to moving -- want be tend exact I time. the hitting on moving And I tend the going right then capital over on to of interesting looks the period or the out backlog focus maybe in you sense capital

take we’ve I'll our we've bundles where let's piece able bundled the far of look we capital say of budgets half that, advantageous the mentioned terms been are exactly got my to first are but in can four I changes capital budgets fiscal XXXX opportunity along and a where spring we to on at our we capital the deployment with a already the as the Yeah It’s strong both sight as the have second to along time. that's -- cabinet The assertive quarter all and call so strong what they the five jokingly it’s short deployed to lot mentioned front deployment of end quite half the the think of had hitting some the half right capital to was at we get to that's four first so consumables constraints ASC the their are board commentary strategy the been four full of programs markets. line placement it in and in think refining help months -- equipment is year the on we programs to the of of where outpace yeah maybe on kind incredibly in look with or so months put customers US what training in And putting points it really I as and we've I start. in successful the folks been the really off VOC it already leverage allow the has commentary I at half Matt both success economics answer. key year the to year year in have again first said and really EPP think in again through This first a fourth at constrained we might we months bundle last in looking out then the we start international is

-- have question, said just last consumable you you’re the were go CADs, I they growth. back where the you think higher to I CADs, XX% then to And areas want the driving

higher does more and Just on large closely? customers -- CADs with does -- just then protocols and Is that working high -- it how how on consumable -- those growth? that touch how infection drive relationship those

Yeah.

that think back we've shutdown that the about access key during talked maintained I periods that even pretty clinician we to is steady on CAD the access. model

the those effective. Again, on the and ability been bag we've IDN suite groups from up as as different down side. bottoms you the full front on simplify very to here influencing we've to continually months way reps sell going talked a tops about again parts field, protocols ease getting changing now hospital the said six or and last that’s at in the five So as and of over GI and during been the

XXXX hence been really CAD been XX investment growth, fiscal -- the data to XXXX CADs from that to going seeing here and CADs where from the to always why year-and-a-half the we're So we where is where XX in year. pretty areas increase coverage, we sequentially don't. have fanatically measuring continued And the we've and had last we compelling this

Okay.

spring are training So the and Thanks after guys. modeling Mets. you Yankees hopefully not guys the

We'll take our c next with Please James. from question ahead. go Raymond

Thanks. couple guess I morning you. starting, George starting of A everyone. with questions, Good

your company? growth and about with of point think think the you the is cetera. and, what rolled models sort made of made, more through on, I'm that organic we What's, sort on think of the in which kind this to latest clearly, range to ahead procedure selling new recovery. And you’ve as growth been your platforms what's way quarter COVID, et you've your start a this, trying out normalized revenue organic progress thus should as, far? growth the that significant Just right post thoughts you of now their achieved this to the has about of kind what's thinking just for kind company how for of

Yeah.

parts, we're the be to but we, I X.X And Life think organic X-plus modeled confidence with sound percent of flat. course, familiar things medical, level if the think think But it of we our Cantel Sciences, we I continues Dental, will traction on at at we’ve think look that growth. growth. gaining could X% increase. I this endoscopy, revenue you sort

they be the to to the tunnel in spending protocols. of we a lot efficiency that of now And you in provide we were changes I for hospital. so strong to, of embedded post to to reinforced at the and able the that’s about be, always that them will provided expectation place. their about into transpires the the throughput. or of regain and be terms in impetus the that we the efficiency we're an bundles the offices, customer And certainly of the in patients we’re about has talk has of part the message complete question But COVID. the addition help time continue both talked the know dental seeing certainly IPC of But the trying taking ones practice we're think will consumers I what they these with sort to think again to will And COVID importantly, the ASCs embedded in ASC -- we, continue there in importance taking we've be to and on that places. we really even become what the ASCs economy offer that practice behavior and protocols that now practice where in were consumer or in are we’re a that put

feel it. pretty know So positive I don’t about we

to But pointed going so Peter track think around is what Cantel with days lot where you still we this can starting X.X a It's far I we that early us respect the of we're some to KPIs know so be giving refine programs we're confidence of more seeing that. we progress. coming out to out as these we're it.

kind was XXXX do $XX could operating on that I your That Okay. given either talked where you you as XQ out think for past start guess and or that again sort accelerate XQ Two I'm XXXX sort move other great. guys question you've free XXXX know that sort as thinking Georgia know from for what's operating EBITDAS numbers of that and EBITDAS Thanks. million again about expense of we about think again to are ability or Sean those of you of you And margins thinking then particularly expense? ones, more higher sort same in synergies driving that $XX to Sean you increase it given where head. the the into today million of what you that margins moves to secondarily

just a with to expense. It's And be driven point of going you start out about But lever pretty of operating primarily of a can it's headcount preserve in and question would maintain discretionary I know the able spend going our It's times lot for simple levels we well bit still spend. a George’s in I'll operate low that. good that's incrementally. the come turbulence that's margins in would be historically to anticipate ability that's going a be number well play terms this of We of as back. don't and have guidance COVID. that discretionary but back Yes, anticipate putting anticipate confidence as come us driver forward. around terms we're that's all out it like informal the will come that to significant also more quite do to of in will a point of Larry little some of even coming to bit of being back but in as we XX not to kind also really really just

those our one confidence this is as gross answering that particular a but know expansion that of we around lot As if that, for discipline have volumes operating margin meaningful we mix it's terms waste. yeah, these our at XXXX far in the the driving to topics, expansion like and and normalize of going in relevant we've volumes of we culture do during go margin are even been I net let think XXXX favorite it I driving pandemic the didn't even past with of that

operating to informally it’s to point our think try in will like that if basis you to expansion continue XX look margins. year-over-year approximately would forward going I So, our be target

Great.

Yeah.

although I But said in talking of about XX% understanding today yet, our not lot but rates. years or the we've look, a think fourth spent we what we three two growth sort obviously from of quarter. time happens

as improve continue that And so, in fiscal progress point helps a that's Europe we to year build for Europe the profitability. next in obviously business good starting make and

year XXXX XXXX that say So, I in progress. getting into -- another year into year as fiscal fiscal get me would beyond XXX pick up or fiscal excuse we XXXX we should so basis points

some And is Hu-Friedy this basically and the transpired with add because should for we how the a expense. but at And are reset things look the So, we've the year promised benefit they we've obviously look starting operating those acquisition and in like in Hu-Friedy think to done consolidations obviously improve is ultimately implementation the our you'll point things to of the and were this rooftop would that benefit what's and outset paying things now a get our lot at example I -- are are important to I and synergies obscured goal to as I that other think that we as also an XX%. XX% well. transpire well with done pandemic revenues of SAP to

We'll Mike take with ahead Company. Please question next sir. from go our Needham Matson &

the in the Good it to products Thanks guess opportunities ask really I that ASC penetration questions. Hi. my what around morning. procedural wanted there setting? biggest just the I is setting Yeah. is products the talk maybe can taking the about you so procedural minus care about of and for

or with penetrated valve look because the only let's view days sort so again on is again really, and positioning on for proxy the I'll as XX% by just side there think call ASCs that a months base it that our four remind as in about folks it's in AER three, own we think XX% we’ve Yeah installed just ASC we I business of I best of are share from so look early help Mike the -- to we market think but about share whole products opportunities for further ASC consumables our and business side business well side as in whether capital of side, PLUS it’s valve chemistry we AERs other excited the of -- products back well as the on cabinet of side a and the well the on as obviously as business the on on penetrating host SCOPE see so. as we with like really the the the like across opportunities X% board see position to headway making and BUDDY

doing the the Okay. Thanks. the with that you middle year? hopefully masks, being get timing you will by are expansion capacity be that next of helpful. still given And you're kind by of That's then, there administered for, done confident time vaccines around how the for demand the the

I think our was the premise, free, there the capacity of was, net from look, government. nearly the subsidies

their is, first the is, changing the roughly to changed you we have of we have million protocols and the time. dental protocols a that's example there mass our to be year lot have really position again after think to used Well, million every protocols best least is case. aren't patient. the pay to wasn't COVID, whole look, that to mask capacity. certainly, always a side about the And have before that's basically to over there as, should point don't to the get hygienists permanently dentists we double look, on in double that to $XXX reality going capacity $XXX adherence But a mass And going and been is are that, look, that know, So, those where or back. go at that

patient. that the permanent. tripling sticks I that's dental example lunch side the And changing the then we a your that changed think practitioner day. adherence at as far every mean to I that mask greater mask there's And so requirements I that a or of doubling on have end an might after of again You as think at been see and being their the

on look, opportunistic it also that we markets And see I side. us together. able gives to where bundle we dental do in opportunity opportunities to other think capacity to So, be might an products the be utilize

our Larry Please ahead. next from Securities. go take question Solow We'll with CJS

XX% these item and look Thanks there there's to the of you -- you your you've just targets of sounds don't know have Good to most clarify, a some you preannouncement of back And certainly beat you'll maybe you know between year expense if potentially know so sort little -- you on guys. operating that these those the expansion. adjustment gross margin you a Great. know know your know XX%, and lot -- and for achieving clearly then know it line on of fair upside? is it? levels room a versus morning, you there your gross -- every confidence higher bit Could you your and higher margin and exiting like then certainly and EBITDA greater much sales the at sort bring related way that all margin Is expenses more and level is at you some information.

say the would XX% the would I you the end somewhere you anticipated that of I'd by to of know procedural had year. are kind overall be we you know say the it Yeah. between -- is major recovery know previously XX% changes

bullish. the That's of by end at more year. we're so, XXX% to And going be the you know a

those room right, room do that know like that a we you fruits know the fluctuate know some our confident place. produce I so you initiatives know we're know referenced know in there of we of margin. on know you that that of I've absolutely And you operational that and we knew with to off think know we anything getting all So, you ability in that that know maintain and reiterated and again the you that -- -- if we the referenced. client that -- that And spot we're operating in any volumes know to expansion you have that's I've you you that you you driving planting levers the confidence we pull yes, expense to seen forecast again, were more had is in models

have our Yeah. least at like suppose the used to -- anything don't we've word strength I confidence. that’s XX% to add you know

catch-up or maybe but outperformance some revenues in not as Yeah, recovered. extra the work, on no, quite plan nice catch-up thinking that rebound to there even there do or balance or using How perhaps as these much how sort sort are I'm returned of like a and your revenue and or obviously you And you gauge have providers inventory you level revenue now that gauge stuff? do recovery stuff, versus that PPE not in there Is and absolutely. they of it's extra perhaps maybe recovery is is? and in significant that procedures buying

Yeah. Larry this is Peter.

of door dental the One and by with a we the on things have of product the side data lot is category out obviously of obviously…

Right.

fiscal inventory we've XXXX at And amount our of and that it, our the negligible. to to quarter on, a partners. our both change just also year-to-date of purchases channel during call looked from been has XXXX calendar Compared I'll first

a hold a I to because you of mean, to side that lot nuance inventory the these isn't lot the news is reality inventory. there a partners a the they any, us especially isn’t restocking the there buying door. And is, don't a the have of what's have channel good the are consumable going story and hold and medical as on that of there well, big what remember lot for VACs that's going side hospitals as on So, our some don't space on of then out lot

maybe a be holding talking week, a you're of week days is change about that holding may couple half. and where a a So, somebody

I per procedure think the of And paying just at look, it. is seeing attention are people more just day, So, and that the see protocols reality our happening behind dollar the we to the increases we're as within don't the markets. that again behavior importance core end

to are today know which since the the Right. Europe forget the I world differences And of versus of and we the behavior in Europe terms any differences worse in States but the whatnot to sort in and improve of COVID there the of as seems United US in begin customer just you rest rebound? be the it know recovery Cantel X.X, you seeing I mean are any you part expansion -- mentioned it is in

as mean in of been a or example an we've just tube with Australia COVID. No and States the switch United geography seen as the sets -- cases XX-hour standards we've focus some and the we've with -- adhering that certain we've to in in are sets in prevention it's single-use new heightened examples example is practitioners seen are around seen I in infection on meaning tube pockets there sense every and the broad-based that sell an clients creating again pockets example I the an seen actually some Germany we where where

Okay.

that should with guess the on or so ground perhaps of we thing announced early little that? eventually an a sort this & or question deal will color stage on review I Tracker the Just sort slow on but Trace you CANEXIS maybe last as a contribute -- to how the sort this of at of meaningful just revenue look

with partner together And by to really ability Obviously Trace & Hi. substantial We've strength this our help hospital we're Seth we're of encouraged That CANEXIS. system is viewed the Hi, the to that announced overall the these an complete Track of solution portfolio. the nature investments at encouraged protection make. are the is going additional overall our accelerate in leverage to to partnership Larry circle market. the with we always this as ties of important to offering element very

So, and win. sales quick not they're quick

right. All

a interest growth in sort by product encouraged anticipate us demand solution and But quarters seen our this we're be from this develop the for we fiscal coming for out we roll to the and the beyond. look healthy that have this XXXX customer in we've a pipeline level, of we with and and will driver

Great.

Okay. Great.

I give helped if he me shout remiss ramping out didn't to Matt, be a I'd just out a lastly, up. lot Just

Thanks all So, role. guys. And new good luck that's in I'm set. it. your

And going this influence page though. that's to not

Ramgopal next from take Mitra Please with ahead. Sidoti. go question our We'll

for morning. questions. Good the Yes. taking Thanks

obviously already of generating front, on targets the you're one Hu-Friedy that start on well front to you that was in there on synergy first your incremental The you're selling it you're on also? just curious side. or as to costs anticipated ahead terms ahead cross relates revenue I if if

that those reopen. as mean we've on Yeah, procedural with you a side Yeah prosthetics look Mitra. fact amount practice kits been bundling is of know free I is fair dental This the Peter. the dental offices

new same. scalar win. those the a big Yeah. facilities But obviously So are bundles drivers just The yeah, in are of we slowed pretty are although was But COVID. with progressing setups the growth candidly the still IMS month October. build compliance have Harmony that's the got launched

a in of Obviously, the rest brings that about we've minimal what sales that the whole light year. year. issuance business along continue lean the huge into October of surface to what to excited disinfectants been the So key move surface about what that in we're forward. got store brings rest PPE vehicle disinfectants then has as the Obviously, and we the along green with

face in as cetera, the And outside et to the the any wondering Thanks. it great. more have being you of That’s of given just sell to able restrictions federal relates No. Okay. shields US? if facemask, terms subsidies

need we just in the the No. Actually, US there the government capital we as we on. minimal and as from it’s United much on pretty to there's And it's capital. on We keep need manufacture on the need much There the a that similar is, we got that profile on to product Italy. that. but two in machines export that the maintain machines the main to. got handcuffs States, assistance can machines We the requirement foreign

up sales incremental given building especially great. coming on increasing expecting headcount business on into to really you the we the and And the some go ASCs as front be say push, I forward? stand do should you as Where That's it just going business. Okay. force push mentioned believe you

the the we piece side even here, the shutdown medical the investment we mean so are especially I Yeah. now. sales during protected on staff on

made we've I their on think staffed opening that one That team products markets everybody we position We're their running in background selling of was the And mentioned October. we're remarks, the really inside ASC into on the in both from the trained and up the there's sales. got graduating, put getting a orders and Basically, fully targeted. here. getting open side and sort month the in got But in down. quarter. as we've that first masters procedural strong eight in progress that the, of in we've full capital first

year we've positions. highly a got trained half ready positioned and motivated the everybody And we’re hit there, to get open we really sales only roll. the back but you again team not if of no as So

Okay that's, Sciences, what And is of then thanks. to on best terms in finally your out? sense you when flatten was of I Life that expect than looking for, sort

XQ of at the This is sort look first level and usually trading on revenue the we've flat from a seen and and to kind quarter to terms and Centrals. close an fairly to pretty off. December say the perspective the is sideways, probably I of intake from slowest going order quarters XQ in stabilize the next of backlog it's would November two perspective revenue of time from sequentially year, Look look

can of builds the middle winter. lots there's do imagine you not folks to of in wanting the As new go

early spring the February So that's summer. usually the to is us lead [indiscernible] order to January. see starts that in of late time and or And March not going accelerate how for market until of late the take the orders intake we kind we because we're machine

how we sort trajectory. of probably about And the that's so think revenue

Okay. it. what Thanks. there And included then you question. one interest item non-cash line think that was wondering in had just interest was I on some expense. housekeeping an expense I amount finally was was just if the believe I there, that

think escalated I than non-cash give $X.X the It's item less a or and to Well, accounting what about the convertibles. million so to to point. your for

Okay.

questions. the Thanks again taking Okay. for Perfect.

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

just clarification expansion Shaun so quick Thanks you to continue. much. gross expected your margin One mentioned

last XQ this year-over-year that know or the to and is based wanted of Just expecting off levels year expansion? of is off gross margin

mix best our second those reference know quarter QX so do be we be mix looking a It whole capital in terms would But mean, to the I and it at would margin is expansion you so of employees, reference you there be again year-over-year. itself you going mix know of of know forward. set XXXX that to expect of will in the obviously Hu-Friedy bit that, alter little versus with consumables the a will relative quarter volumes

quarter because pre-COVID… Mike refer the XXXX year since second it was fiscal last to we our

XX… clear That like to rate it be was

Yeah, XX.X. it was

you that a targeting know we'd way to about want expansion again maybe that good think you think basis little top in points if be bit So it. on around would of to XX general be about a better

doing think prevention guess in clarification. and on helpful And very question dentists a workflows. pull then the markets the their dental That's Okay. as the you're about the PPE I infection to continue maybe mass reformatting dynamic,

but -- sure gave you're also or fighting a you they You it to that more some time you to of are conversations want there that around black color the discussion get strategic a market? sourced make of the whatever you into sales some whether third terms it's still you other much there that out Can much mask market call rest party masks. early of manufacturers they versus mask you're those having seeing and type likely How where of that challenges to demand they're it some how high strategic have how across other especially can is battle to some PPE. make at are appropriately levels coming know switch quality in

partners. we the mean a channel look that's having conversations are Yeah, Michael. question good I with those larger

capacity to cheapest have strategically You saw thinking used it from they North APAC. in that has they sources of are what was into as than an just chain And in the change multiple can in been definitely supply sea on get there’s got -- that they where want America getting product sources the entire to that again obviously that from years and five XX machines ideally buying of a capacity exposure caught that much much terms folks almost perspective how and ultimately last that position been getting dedicated to the differently multiple where in and think -- not about make sure a they’ve are people

to long-term opportunities bundle long-term shields specifically. commitments mask relationships and and are there think face do we know enter So on and

give just I If area apologize us seen dynamics one base? more you've this of that that I that missed customer your a sense before. I Can but of across pricing could follow-up you within

real branded a our there channel mask we've versus label. market year pricing sure they've Yeah. and done. to changed isn't ultimately I that to I'm pricing obviously real private very we I -- change pricing mean the it which partners our time I to once so is a gotten would able the margin If pushed the as bit the think only are that higher Obviously the we -- would the on I any heavily. branded profile is categorize benefit have their

the or product. pushing is branded our really perspective, main forcefully more our here from insisting So benefit

turn you concludes we’ll this question-and-answer floor the final And George, back now our to for session. remarks.

listening very Thanks. you participating Thank on right. to with our quarter look speaking call. All much for you today. and And we second forward

Ladies teleconference. and conclude thank gentlemen participation. today's We for this your you does

day. lines at time this disconnect may have You your and great a