Envista Holdings Corporation

My name is Chelsea, and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to Invista Holdings Corporation's first quarter 2022 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 and then 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.

Good afternoon, 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 reconciliation 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.vistaco.com. The audio portion of this call will be archived on the investor section of our website later today under the headings Events and Presentations. It will remain archived until our next quarterly call. As announced on January 3rd, 2022, we have closed the vesture of the Colorado Treatment Unit and Instrument business. For the first quarter of 2022 and the full year of 2021, the results of this business are reflected as discontinued operations in our financial statements, as required by generally accepting accounting principles. All references in these remarks and accompanying presentations to earnings, revenues, and other company-specific financial metrics relate only to the continuing operation of this 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, references in these remarks to company-specific financial metrics relate to the first quarter of 2022, and the 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 impending certain regulatory approvals or available only in certain markets. During the call, we will make forward-looking statements within the meaning of federal securities law, 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 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 the call over to Amir.

Thank you, Stephen, and welcome, everyone, to INVISA's Q1 2022 earning calls. Despite a challenging macroenvironment and localized COVID lockdowns, numerous supply chain disruptions, meaningful inflation, and a challenging geopolitical environment, I'm pleased to report that Envista was able to deliver a strong first quarter marked by mid-single-digit core growth and better-than-expected adjusted EBITDA margins. Our performance in the quarter is a testament to the team's passion, dedication, and focus on execution. I'm proud of our team's effort and believe that we are strategically differentiated and have a proven track record of execution. By partnering with professionals to improve patients' lives, we are well positioned to continue to outperform the market. Before I turn it to Howard to discuss our first 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 margins, and transforming our portfolios. At Invista, we see significant opportunity to improve patients' quality of life by digitizing, personalizing, and democratizing oral care. On March 31st, we hosted our inaugural Invista Summit where we brought together the legacy Ormco Forum and Nobel BioCare Symposium with a brand-new technology track to demonstrate our clinical workflow capabilities that improve the productivity and predictability of clinical procedures. With over 1,700 attendees, both in person and virtually, this event allowed us to articulate our vision for the future of dentistry while highlighting the combined strengths and a scale of the investor portfolio. We provided high-impact training in orthodontics, implantology, and digital workflows, and introduced clinicians to the latest advancements in dental care that will transform dentistry over the coming decade. At the summit, we also hosted our first investor day as a public company where we outlined our long-term plans for accelerating growth to high single digits while continuing to drive margin expansion. We shared our vision and how we will create value for patients, customers, employees, and shareholders, and further demonstrated how INVISTA is strategically differentiated and has a proven track record of execution. Our Q1 performance was another step in delivering on our long-term commitments. In Q1, we saw continued strength in our orthodontic business with solid mid-single-digit core growth in brackets and wires and over 100% core growth in SPARC clear aligners versus Q1 2021. Our focus on providing orthodontic professionals with a portfolio of treatment options differentiates us and supports our long-term growth objectives. We're ramping up investments in SPARC and are also focused on driving innovation in our core brackets and wires business. Sales of Damon Ultima continue to accelerate and orthodontists appreciate faster and more precise finishing it offers during treatment. Our implant-based tooth replacement solution grew high single digits despite the temporary lockdowns in major China cities that significantly impacted the last week of the quarter. Our growth was driven by continued strength in our core premium implant business in Europe and North America, as well as accelerating growth in regeneratives and prosthetics. In the first quarter of 2022, we trained our first cohort of N1 ambassadors in North America. We're excited about the long-term prospects of N1's biologically given treatment protocols, which we believe will shorten time to teeth for patients while improving the surgical and healing experience. In our equipment and consumer segment, we saw accelerated performance in our restorative business and continued strength in imaging and diagnostics. In March, we obtained FDA clearance for intelligence mandibular nerve tracing feature in our DTX Studio Clinic platform. We continue to invest in DTX to add assisted intelligence or AI functionality that helps reduce the time clinicians spend on time-consuming tasks while simultaneously helping prevent complications and enabling increased focus on patient. A development partnership with Pacific Dental Services, PDS, announced in Q1 2022 was created to harness the power of AI in support of clinical image analysis across the dental market. Independently, Envista and PDS have been investing in industry-leading work on AI-supported clinical imaging. Together, we will deploy INVISTA's DTX Studio Clinic software platform throughout all PDS-supported practices to bring the benefits of AI-supported image sorting and interpretations to PDS-supported clinicians. INVISTA and PDS aimed to harness the power of data and machine learning to transform the ease with which dentists use clinical imagery to diagnose, plan, and enhance patient care. In addition to driving growth and investing into our strategic initiatives, we remain intensely focused on expanding our margins. In Q1 2022, we achieved an adjusted EBITDA margin of 19.7%. This represents 120 basis point of sequential margin improvement versus Q4 2021. The investor business system, EBS, and its focus on continuous improvement drives our execution. It helps us to offset and countermeasure the impacts of inflation and supply chain challenges while supporting our ability to invest for growth. In the quarter, we use EVS and our daily management tools to mitigate many of the significant supply chain disruptions, delay and reduce the impact of inflation, and deploy appropriate pricing actions. While we are proud of the work we have done today, it is important to note that inflation, supply chain issues, and geopolitical challenges are persisting, and we expect to face continued headwinds in Q2, the second half of the year. We are focused on transforming our portfolio to higher growth and higher margin businesses within dental. On April 20th, the closed acquisition of the CareStream Dental's intraoral scanner IOS business. This acquisition is an important step in our journey of digitizing, personalizing, and democratizing dental care. IOS scans are a critical first step to many high-value specialty dental procedures, including implant surgical guides, prosthetics, and clear aligner treatments. The newly branded line of DEXA's iOS scanners is an attractive entry point into this segment. This business comes with a proven suite of scanning solutions that include both a proficient hardware platform and powerful software capabilities. It is a substantial global business with significant growth upside over the long run. We're confident that we can accelerate growth by increasing customer reach and expanding in under-penetrated geographies and customer segments. As we have discussed before, this business comes with a strong R&D team and a promising development pipeline that will further accelerate dental digitization for years to come. Now that we have welcomed the new iOS team to Invista, their focus on driving growth and accelerating performance. We will be making significant investments to further integrate this business into INVISTA while leveraging EPS to improve its operational capabilities and set it up for long-term double-digit growth. While we are excited about the strategic moves that we have made today, we continue to see opportunities to further improve our portfolio. We're committed to pursuing an aggressive but disciplined approach to capital deployment. We have a strong balance sheet and have both the financial capability and organizational bandwidth to make additional acquisitions. We continue to utilize our EBS-driven M&A approach to manage a robust actively cultivating new opportunities. I will now turn the call over to Howard to go through our first quarter financials and provide more details on our segment performance.