Enovis Corporation

Good day, and thank you for standing by. Welcome to the InnoVis first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any assistance during the call, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Chris Hicks, Executive Vice President and CFO. Mr. Hicks, the floor is yours.

Okay. Hey, good morning, everyone, and thank you for joining us today for our first earnings call since we launched Inovus. And on the call today, of course, is also Matt Trotola, our Chief Executive Officer. Earnings release was issued earlier this morning. It's available on the investor section of our website, inovus.com. Of course, we're using a slide presentation to walk you through today's call, which can also be found on the website. Both the audio and the slide presentation of this call will be archived on the website later today. During the call, we're going to make some forward-looking statements about our beliefs and estimates regarding future events and results. These statements are subject to risks and uncertainties, including those set forth in the Safe Harbor language in today's earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make today, and these statements speak only as of today, and we do not assume any obligation or intend to update them except as required by law. With respect to any non-GAAP financial measures referenced during the call today, the accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation. I would also like to mention that the financial results we will discuss today on this call are adjusted standalone results to give transparency to the ANOVUS results in the first quarter. We have provided a consistent comparison to prior year results. So with that, let me turn it over to Matt, who will start us on slide three.

Thanks, Chris. Welcome, everyone, and thanks for joining us for our first earnings call as a MedTech company. We completed the separation of Colfax on April 4th by spinning off our terrific industrial business, Aesop, into a standalone company. And we renamed our company Inovus, a med tech innovator with a vision and capabilities to create better outcomes for patients. A great symbol of our new beginning was the ceremonial ringing of the bell at the New York Stock Exchange with many of our senior leaders. As I visit with our associates around the world, it's incredible how much positive energy has been unlocked through this relaunch of our company. We're really excited about the robust growth prospects we have at Inovus, both organic and inorganic. We're confident in achieving our 2024 goals of sustainable, high single-digit organic revenue growth, 20% adjusted EBITDA margins, and over $2 billion in annual sales. We will be compounding value for our shareholders from growth, margins, and acquisitions, all underpinned by our Inovus Growth Excellence Business System, known as EGX. Our journey to 2024 includes making significant progress in 2022. And on slide four, we share some of our key 2022 strategic priorities. We're a growth company, and you've seen our success over the past few years strengthening our operating, innovation, and commercial engines. The result has been faster growth in our markets, and we expect to continue to outpace the competition this year. Over the past 18 months, we improved our company by acquiring businesses that are accelerating our growth, and the integration of these businesses is on track to deliver the expected results, and we have the financial capacity to support more strategic growth in 2022 and beyond. We're using EGX to support top-line and bottom-line growth. Through continuous improvement of our operations, we can better serve the customer while improving margins. even during the current inflationary environment. The foundation of our success is our associates, and I want to thank them for their contributions to Q1. We will continue to invest in our talented teams to drive long-term, sustainable, competitive advantage. A moment ago, I mentioned acquisitions, and on slide five, we take a closer look at our progress and success. Our recent acquisitions include Mathis, which substantially expanded our fast-growing recon segment outside the U.S. and opened up many new opportunities for cross-selling our leading products. We also acquired three businesses to create a new fast-growing foot and ankle platform. And the LightCure acquisition expanded our P&R offerings into fast-growing treatment modalities and adjacencies. These businesses are achieving our strategic objective of increasing Inovus's growth and margins. They collectively had over 15% pro forma growth in Q1 with gross margins in the mid 60s, both significantly higher than our company averages. Our teams are making great progress on integration. We recently launched our Empower 3D knee and Altevate reverse shoulder products into the Mathis sales channel. We remain on track for the $15 million run rate of cost synergies by the end of 2024. I was in Switzerland last week for the celebration of the Mathis 75th anniversary. I was extremely encouraged by what I saw. Great excitement and momentum in the Mathis team and seamless collaboration with their U.S. counterparts. I also got to check in on the globalization of LightCure by our P&R team. We've added sales resources in key countries and have strong revenue momentum and healthy funnels. In our fast-growing foot and ankle platform, we've launched two great new products this year, the DynaNail Helix and the Arsenal Ankle Fracture Plating System to support continued strong growth. These examples clearly show how we use acquisitions to accelerate our strategies and shape our portfolio. We have a full and active pipeline of acquisition candidates and expect to remain active on this key dimension of our strategic value creation model. On slide six, we share some first quarter highlights, including a strong 21% increase in sales to $375 million, reflecting our acquisition successes and organic growth of 7%. Both of our segments, again, outgrew their respective markets. We also achieved 25% growth in EBITDA, and expanded margins, despite the external environment challenges, including supply chain and inflationary pressure. Overall, we're off to a strong start in our first year as a new MedTech company. Slide 7 summarizes our 72% first quarter recon segment growth, including double-digit organic growth. This performance is well above market growth rates, and includes 20% growth in U.S. hips and knees and 12% in U.S. extremities. Our knee growth was significantly above market rates as we continue to make strong progress in the ASC segment. Overall, recon was well above 2019 levels, reflecting sustained outperformance through the pandemic and a strong start to 2022. We have a terrific surgical portfolio that is gaining momentum scale, and strength. I commented earlier on the high pro forma growth in our recent acquisitions. The Mathis and foot and ankle businesses in recon are performing very well with double-digit growth this quarter. Sales volumes across our recon businesses improved throughout the quarter as COVID-related restrictions subsided. We expect continued improvement in elective surgery volumes throughout the year in most regions, but will likely encounter some volatility as governments respond to flare-ups. Our prevention and recovery business also demonstrated attractive growth, as shown on page eight. Our 6 percent organic sales growth was better than underlying market growth and in line with our three-year plan to create a consistent mid-single-digit grower. Part of our success is due to the 2020 light-year acquisition, a good example of how our acquisitions can complement and strengthen our businesses. We grew faster in U.S. P&R markets as some international markets still had COVID pressure. Our market-leading bracing business grew 7% in the U.S., including benefits from MotionMD clinic penetration. And our P&R business has a strong pipeline of new product launches over the remainder of 2022, and we expect to convert that into healthy vitality numbers. We're selectively deploying customer price increases to help battle inflationary pressure, and we'll continue to dynamically manage this. With that, I'll now turn it over to Chris, who will unpack our financial results a little further.