Envista Holdings Corporation

Good day, everyone. My name is Rylan, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Invista Holdings Corporation's second quarter 2021 earnings results conference call. All lines have been placed on mute to prevent any background noise. And 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, please press the pound key on your telephone keypad. I will now turn the call over to Mr. John Moten. Mr. Moten, you may begin your conference.

Hello, and thank you for joining us on our call. With us today are Amir Agday, our President and Chief Executive Officer, and Howard Yu, our Chief Financial Officer. I want 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 the call are available on the investor sections of our website at invisco.com. The audio portion of this call will be archived on the investor relations section of our website later today under the heading events and presentation and will 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 described 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 second quarter of 2021 and all references to period-to-period increases or decreases in financial metrics year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities 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 they are made, and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'll turn the call over to Amir.

Thanks, John, and welcome, everyone, to INVISTA's second quarter 2021 earnings call. I want to begin by thanking our employees for an outstanding quarter. The dedication and passion our employees show for our customers inspires confidence and drives continued innovation in all our products and services. After a strong start in the first quarter, we delivered another record quarter driven by continued recovery in the dental market and solid execution across our portfolio. For the second quarter, core revenue growth was 102% compared to the COVID-impacted second quarter of 2021. More importantly, our second quarter 2021 core revenue growth was above pre-pandemic levels, increasing 5.6% compared to the same period in 2019. The focus on our three long-term strategic priorities of accelerating organic growth, expanding our operating margins, and building a stronger portfolio continues to have an impact and drive both our short-term and long-term performance. Before I turn it over to Howard to provide more detail on our second quarter financial results and our segment performance, I wanted to take this opportunity to discuss our progress in these areas. Our focus on the investor business system and continuous improvement are helping us to drive long-term sustainable performance. Our SPARC business continues to accelerate as we focus on supporting our orthodontic customers. This quarter, we enhanced the onboarding of new customers and improved service and turnaround times. Our Spark capacity increased by over 30% this year, and we continue to invest for future growth. The adoption of Spark continues to expand with sequential revenue growth over 40% compared to the first quarter of 2021. Our core bracket and wire business perform exceptionally well, outgrowing the market. The Ormco team is focused on driving a strong commercial execution while leveraging new innovations, including the Daemen Ultima system. Case starts continue to be above double digits for our bracket and wire customers. A differentiated and a strategic approach of providing an orthodontic portfolio that offers both clear aligners and bracken and wires resonates with our core orthodontic customers, ensuring they can provide the best option for their patients' needs. Our premium implant business has achieved four consecutive quarters of improved performance. with over 90% core sales growth in the second quarter over the prior period and mid-single-digit core sales growth from the second quarter of 2019. We continue to see improved performance as we focus on commercial execution and drive wide adoption of Nobel, BioCures, Thai Ultra, and sales surface products. Progress on the N1 rollout continues to gain momentum in the market, with adoption in Europe up 38% versus last quarter. Furthermore, we continue to ramp up our investment for our future launch of N1 in North America. We see solid demand for our infection prevention solutions, as enhanced disinfection protocols remain in place and will be the new normal. We're excited about the opportunities for our new CaviBipes 2.0 product. It features a two-minute universal contact time, shows efficacy against a broad range of pathogens, including the COVID-19 virus, and increases our opportunity to penetrate the medical market further while enhancing our dental position. Our China business had another strong quarter, delivering double-digit growth primarily driven by demand for our premium implant and bracket and wire product lines. Our China team was honored to receive China Healthcare T-Plus Most Valuable Employer Award this year. This prestigious award recognizes our commitment to be the employer of choice in China. Our EBS mindset, grounded in continuous improvement, was critical to our profitability in the second quarter. Our adjusted EBITDA margin for the second quarter was 19% by up more than 1,800 basis points compared to the prior year and over 350 basis points from the second quarter of 2019. Additionally, we continue to target 50 to 75 basis points of annual improvement. As our profitability improves, we're investing in Spark, N1, Bracken & Wire products, and any graded workflow solutions to drive long-term growth and profitability. Our focus on innovating and growing in the most attractive segments of the dental market is key to the continued transformation of our portfolio. By investing in our specialty consumable businesses, as well as our digital workflow solutions, we are transforming Invista to be a faster growing, more profitable, and differentiated company. In addition to our growth initiatives, we see opportunities to accelerate our transformation through inorganic growth and are taking an active but disciplined approach to long-term capital deployment. We remain interested in investing in attractive segments such as orthodontics, aligners, implant, regenerative materials, and digital workflow solutions, including software and AI. We're building a sustainable growth-oriented company designed to last the test of time, driven by innovation, a focus on our customers, and where employees feel valued and encouraged to grow. We were happy to launch Envista's inaugural environmental, social, and governance report this past quarter. This report shares our blueprint for corporate sustainability, which aligns with our strategic business initiatives. Operational excellence is a foundational element of our approach to sustainability and a key driver for our success. Our sustainability efforts are enhanced by our EBS mindset, and we are dedicated to improve in each area of our business. At Invista, we embrace diversity and inclusion to drive our business success. We believe that innovation is accelerated when we have diverse thoughts and ideas brought to the table. To support these initiatives, we launched employee resource groups and created employee development programs to enhance the visibility and capabilities of our talent. As a result of our diversity and inclusion efforts, I'm proud to share that we have achieved 99% gender pay equality in the U.S. This is a significant milestone in our journey and embodiment of our circle value of respect. Finally, in our ESG report, we shared our vision to promote increased access to quality dental care. This quarter, we were proud to announce the InVista Smile Project, a new nonprofit oral health foundation currently in the process of applying for Section 501 status. We created this initiative to improve the smiles and oral health of disadvantaged communities by supporting increased access to oral care and oral health education. The project will collaborate with dental professionals and INVISTA employee volunteers to donate products, treatment, and oral health education to communities in need around the world. I will now turn it over to Howard to go through our financials and segment performance in more detail.