Envista Holdings Corporation

My name is Erica and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Invista Holdings Corporation's first quarter 2021 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key on your telephone keypad. I will now turn the call over to Mr. Stephen Keller. Mr. Keller, you may begin your conference.

Thank you, Erica. Hello, and thanks for joining us on the call. With us today we have our Amir Agday, our President and Chief Executive Officer, and Howard Yu, our Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during a call are all available on the investor section of our website, www.investico.com. The audio portion of this call will be archived on the investor section of our website later today under the heading Events and Presentations. and we'll remain archived until our next quarterly call. During the presentation, we will describe some of the more significant factors that impacted year over year performance. The supplemental materials describe additional factors that impacted year over year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics relate to the first quarter of 2021 and all references to period to period increases or decreases in financial metrics are year over year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During a call, we will make forward-looking statements within the meaning of the federal security laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'd like to turn over the call to Amir.

Thanks, Stephen, and welcome, everyone, to INVISTA's first quarter. 2021 Earnings Call 2021 is off to a good start as we achieved our core growth of nearly 30% while delivering our third consecutive quarter with adjusted EBITDA margins of over 20%. Our broad-based performance is the result of a robust recovery in the dental industry coupled with a strong execution across our portfolios. Over the course of pandemic, the dental industry has proven to be impressively resilient. We are seeing demand for dental services in our developed markets near pre-pandemic levels, with the outlook from dental offices showing sequential improvement. Having adjusted to the new operating model, including a stronger focus on infection prevention protocols, Dentists are now more confident in the long-term prospects of their business. While uncertainty remains and we cannot rule out short-term disruptions from localized lockdowns, we are encouraged with the pace of recovery. Before I turn it over to Howard to provide more detail on our first quarter financial results and our segment performance, I wanted to take this opportunity to discuss our progress towards our three strategic priorities of accelerating organic growth, expanding our operating margins, and building a stronger portfolio. Customer centricity is critical to our long term growth. In the first quarter, we held over 450 Virtual and in-person training and education sessions reaching over 23,000 customers. Further in February, we held the annual OMCO Forum where we hosted over 1,200 doctors, helping them stay on the cutting edge of orthodontic technologies, clinical excellence, and practice performance. Our core bracket and wire business continue to outperform the market as we leverage our strong Daemon franchise and continue to innovate. The new Daemon Ultima system, a completely reimagined bracket and wire system designed for faster and more precise finishing, was launched in February via a controlled rollout in North America and is experiencing a strong uptake. The SPARC or Clear Aligner performance accelerated with over 50% sequential growth in sales relative to Q4 and an increase of over 30% in active doctors from the end of 2020. Infection prevention was another highlight in the first quarter as increased disinfection protocols remain in place globally. Our infection prevention business grew over 20% versus Q1 2020 and increased 70% versus the same quarter 2019. Leveraging our InVista business system lean processes, we were able to ramp up production and increase capacity by more than 70% over the past year. This allows us to continue serving the needs of the global dental market while further expanding into a much larger medical market. We expect to see double-digit growth for this business in 2021. In premium implants, our Nobel Biocare business is seeing improved commercial execution through the rigorous application of our EBS growth tools and a heightened focus on customers. We saw a strong year-over-year growth of more than 30% versus Q1 2020 and mid-single-digit growth versus Q1 2019 with sequential improvements in our developed markets. In 2021, Nobel Biocare celebrates 40 years of serving customers and helping treat more patients better. We trace the roots of Nobel Biocare back directly to Per Ingvar Granemark's groundbreaking discovery of osseointegration. Today, we continue to lead the industry in innovation and are excited about our N1 implant system and Ti-Ultra and Zeal surfaces. In the first quarter, the number of dental clinicians who adopted the N1 implant system in Europe grew 30% over Q4 2020. While intermittent lockdowns in Europe hinder in-person training and adoption rates, we expect the rollout of N1 to accelerate as vaccinations increase and are able to do more in-person training. Furthermore, we are ramping up our investment for an accelerated launch in North America, which we will build on our recent success of our Ti-Ultra and Zeal surfaces. These innovations, these innovative surfaces are achieving rapid adoption and growth among clinicians with 20% of all Nobel implants in the US now including these best-in-class surfaces. Our continuous improvement mindset and process improvement tools have been instrumental in helping us right-size the business, improve our financial structure, and achieve a stronger result in the first quarter. We continue to see the benefits from the structural transformation initiatives executed in 2020 and achieved our third consecutive quarter of adjusted EBITDA margins above 20%. Over the remainder of 2021, we plan to incrementally reinvest more than $30 million to drive the long-term growth of our innovative solutions, including SPARC, N1, and our medical-grade infection prevention solutions. We will also further invest to support our commercial initiatives in both implants and orthodontics. We are committed to build a stronger, differentiated, and more growth-oriented Invista. By exiting low-margin and low-growth businesses and refocusing our efforts in higher-growth, higher-margin segments of the dental industry, where we are competitively advantaged, we are transforming our portfolio. With over 80% of our revenue now coming from consumables and or and many more. With our workflow-oriented solutions, we are aligning our portfolio with the industry's growth opportunities. Our balance sheet is in the best shape it has ever been, and we see opportunities to accelerate our progress through disciplined and targeted inorganic growth. In addition to executing against our long-term priorities, We are also working hard to build a better NVISTA for all of our stakeholders. With a focus on our core value of respect, our Diversity and Inclusion Council launched NVISTA's first employee resource groups, Women and Friends, as well as Multicultural and Friends, dedicated to representing representing different ethnicities and lifestyles. These resource groups are intended to create collaborative environments to support our teams and our communities. During the first quarters, these groups led Black History, Women's History Months, virtual events bringing together employees, customers, and dental students to further educate and celebrate each other. As we build a more diverse and inclusive culture across Invista, we're confident that we will continue to recruit, develop, and retain the best team. I will now turn it over to Howard to go through our financials and the segment performance in more detail.