Henry Schein, Inc.

Good morning, ladies and gentlemen, and welcome to the Henry Schein Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in the listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the call, please press star followed by zero on your touchstone keypad. As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Graham Stanley, Henry Shine's Vice President of Investor Relations and Strategic Financial Project Officer. Please go ahead, sir.

Thank you, operator, and my thanks to each of you for joining us to discuss Henry Shine's results for the 2021 fourth quarter and full year. With me on the call today are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Shine, Stephen Palladino, Executive Vice President and Chief Financial Officer, and Ron South, Vice President Corporate Finance and Chief Accounting Officer, and who will be assuming Steve's responsibilities as Chief Financial Officer at the end of April. Before we begin, I would like to state that certain comments made during this call will include information that is forward-looking. As you know, risks and sedentities involved in the company's business may affect the matters referred to in forward-looking statements. As a result, the company's performance may materially differ from those expressed in or indicated by such forward-looking statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission, including in the risk factors section of those filings. In addition, all comments about the markets we serve, including end-market growth rates and market share, are based upon the company's internal analyses and estimates. Our conference call remarks will include both GAAP and non-GAAP financial results. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable the comparison of financial results between periods where certain items may vary independently of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational or comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliations between GAAP and non-GAAP measures can be found in the Supplemental Information section of our Investor Relations website and in Exhibit B of today's press release, which is also available in the Investor Relations section of our website. Lastly, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 15, 2022. Henrik Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Please limit yourself to a single question and a follow-up during Q&A to allow as many listeners as possible to answer a question within the one hour we have allotted for this call. With that said, I would like to turn the call over to Stanley Bergen.

Thank you, Graham. Good morning, everyone. And, of course, thank you for all joining us. Let me take this opportunity to thank Team Shine for the team's extraordinary effort over the past two years. Despite the impact of the global COVID-19 pandemic, we are pleased to report excellent full-year 2021 financial results, including an outstanding fourth quarter that exceeded our expectations. Our fourth quarter results were driven by strong internal sales growth in local currencies of 6.3%, when excluding sales of personal protection equipment, or PPE, and COVID-19-related products, as well as prior year sales to Covetris under the transition agreement, and acquisition growth of 4.3%, while also reporting operating margin expansion of 30 basis points. So we're pleased with our sales results, and we're pleased with our operating margin expansion. We have updated our 2022 financial guidance based on this latest view of our businesses. Stephen will provide additional details on that topic in a moment. We have also completed a strategic review recently of our businesses, and we're excited to recently present an update updated 2022 to 2024 strategic plan to our board. We update our strategic plan generally every three years. The 2022 to 2024 strategic plan was very well received by our board. The updated guidance reflects the execution of two key strategic priorities contained in the strategic plan. First, continuous operational improvement in our distribution businesses, leading to exceptional customer experience and profit improvement. This is complemented by increasing the overall contribution of our technology and value-added services businesses and our dental specialty products, which have higher sales growth and higher operating margins. So specifically, Our technology and value-added services businesses and our dental specialties product businesses together for the full year of 2021 achieved internal local currency sales growth of over 21% combined with operating margin of 20%. Together these products and services represented in 2021 13% of our global revenue and about 36% of our full-year operating income, with a combined sales run rate of over $1.7 billion and growing at low double digits. Before I turn over the call to Stephen, I would like to comment on an announcement that we made in early last month. For the past 35 years, it has been my privilege to work alongside Steve Palladino. Steve joined the Henry Schein Finance Department in 1987 when the business was approximately $125 million in revenue and has served as our CFO for the past 20 years. Steve has been a remarkable leader during the pre-IPO period, the period leading to the IPO, the IPO, and in the 27 years since, Steve led in a consistent and most credible way, balancing the needs of our constituents and resulting in 13% compound annual growth in stock price since the IPO's post-spinoff of Covetris. In early January, we announced Steve's planned retirement from Henry Schein which will be effective as of April 29th. Of course, it's bittersweet to bid farewell to a colleague who has worked right down the hall for three and a half decades. However, Steve will remain a member of our board of directors and will become an advisor to Henry Schein. All of us at Henry Schein wish Steve the best in his well-preserved retirement. But he's still going to be part of the company. We have a deep bench strength in our management team across the company. And as Graham mentioned, on the finance side, Ron will be assuming Steve's responsibility as our new CFO. Ron has been our Vice President of Corporate Finance since 2008 and our Chief Accounting Officer since 2013. Ron will be supported by Olga Tymenchenko, who will be assuming the role of Chief Accounting Officer. Olga joined Henry Schein in September from EY, where she was a partner in accounting advisory services and has a deep technical accounting knowledge. We actually worked with Olga before when she was at EY. Ron and Olga are complemented by Graham, who has been with the company for almost two decades. having rotated through most of our businesses as the business chief financial officer. And, of course, the rest of our outstanding finance team will continue to provide outstanding services. We are confident there will be a smooth transition from Steve to Ron. Ron is joining us on today's call. With that, I'll turn the call over to Steve to review our financial results. and discuss our 2022 financial guidance. Please, Stephen, and thank you again for all you've done for the company, for all our team, and for our shareholders. Thank you.