Envista Holdings Corporation

My name is Catherine and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to INVISTA Holdings Corporation's third 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, press star the number one on your 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. Stephen Keller, Vice President of Investor Relations of Invista Holdings. Mr. Keller, you may begin your conference call.

Hello, and thanks for joining us on the 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 all available on the investor sections 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 Invents and Presentations. It will remain archived until our next quarterly call. As announced, on September 7, 2021, we reached an agreement to sell our CAVO treatment units and instruments business. For the current quarter, the results of this business are reflected as discontinued operations in our financial statements as required by generally accepting accounting principles. Additionally, the financial statements included in our third quarter 10Q and to be included in our 10K for the fiscal 2021 will reflect the CAVO treatment units and instruments business as discontinued operations as required by GAAP. All references in these remarks and accompanying presentation to earnings, revenues, and other company-specific financial metrics relate only to the continuing operation of INVISTA's business, except for cash flow measures. 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 third 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 that have applications submitted and pending certain regulatory approvals or 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, anticipate, 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 may 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 the call over to Amir.

Thank you, Stephen, and welcome everyone to INVISTA's Third Quarter 2021 Earnings Call. I want to begin by thanking our employees for delivering another outstanding quarter. Every day, our employees partner with dental professionals to improve lives and expand access to oral care. The dedication and passion of our employees is what will drive our long-term success. In the third quarter, our continuing operations delivered core revenue growth of 10.2%. compared to the third quarter of 2020. We grew significantly above pre-pandemic levels and continue to benefit from the repositioning of our portfolio, our improved commercial execution, and our long-term investments in innovation. Our Q3 adjusted EBITDA margin was 19.6%. Taking a longer view, Our year-to-date adjusted EBITDA margin is 20%, reflecting the underlying profitability of our business. Before I turn it over to Howard to discuss our third quarter results in more detail, I want to provide more color on our progress toward our long-term priorities of accelerating growth, expanding our operating margin, and transforming our portfolio. Since our September 2019 IPO, we have focused on accelerating our growth through organic investment in innovation and commercial execution. We continue to make meaningful progress across our businesses. With a uniquely differentiated portfolio, our orthodontic business continues to deliver strong results. We're the only company who offers clinicians a full range of orthodontic treatment options enabling them to provide better, more personalized treatment plans to more patients. Our clear aligner business continues to grow rapidly with sales expanding over 130% versus the third quarter 2020. We're expanding our geographic footprint, increasing our active user base, and further penetrating DSOs. The Invista business system provides the tools and processes to deliver this rapid growth while ensuring an unparalleled customer experience. So far in 2021, we have reduced the time from initial scan to case shipment by 40% and continue to improve our customer onboarding experience. Since launching Spark in 2018, we're on track to start a total of 100,000 new cases by end of the year And further, we are well on our way to achieving a $100 million run rate in early 2022. Our premium implant business continues to accelerate, delivering double-digit core growth versus the third quarter 2020. Our innovative TiUltra and Zeal surfaces continue to perform well and are driving our growth with 30% of our implants sold globally now featuring our new best-in-class services. Our commercial execution is further driving share gain in global premium implant segment. We're focused on supporting our customers in Q3, providing over 300 training and education opportunities, reaching over 7,000 clinicians globally. Our imaging business performed exceptionally well in the quarter, delivering core growth of over 20%. Dental professionals remain confident in the outlook for their practices and remain focused on investing for the long term. Our imaging offerings combined with our DTX Studio clinic software solution provides our customers with a seamless imaging workflow and integrated digital experience. This September, we were honored to win Celeron's Best Class Award for our DTX solution. This is an example of how we are transforming the dental industry into the next phase of technology, expanding access for patients and delivering a seamless and productive workflow for clinicians. The investor business system and our focus on continuous improvement is a foundation that deliver both our short and long-term profitability. Our team leverages our EBS toolkit to reduce structural costs, consolidate our footprint, improve productivity, and drive operational improvements. Across our businesses, growth margins improve 230 basis points in the third quarter versus Q3 2020. This is despite some of the inflationary headwinds, we have seen a shipping cost as well as in petroleum-based supplies and chemicals. Today, our daily management and focus on execution allowed us to mitigate many of the significant supply chain disruption that the world is increasingly experiencing. Since the start of the pandemic, we have taken aggressive actions to transform our business. We took over $100 million in structural costs by de-layering our organization and consolidating our operating profit, our operating footprint. We invested significantly in our long-term growth by utilizing our EBS tools across our portfolio to drive commercial execution, and we continue to build sustainable competitive advantage through innovation. With the announced sale of our cargo treatment unit and instrument businesses, we also made material progress toward our long-term goal of reorienting our portfolio to higher growth and higher margin segments. The divestiture shifts our portfolio from a 50-50 split between our two segments to a 60-40 mix in favor of the faster growth and higher margin specialty products and technology segment. As a business, we are now more focused on high value and higher margin consumables, imaging, and digital workflow solutions with over 60% of our business now sold directly to clinicians. By exiting the treatment unit and instrument business, we expect to increase our core growth trajectory by 50 to 100 basis points, while expanding our long-term operating margins by 30 to 50 basis points. We plan to use the net proceeds from the sale to accelerate our portfolio transformation to an aggressive but disciplined approach to capital deployment. We utilize our EBS-driven standard M&A and market work to manage our robust pipeline of inorganic partnership and investment opportunities, and we are actively cultivating new opportunities. I will now turn the call over to Howard to go through our third quarter financials and segment performance in more detail. Thanks, Amir.