Envista Holdings Corporation

Hello, my name is Ina and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to Invista Holdings Corporation's second quarter 2025 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, please press star, then the number 2. I'll now turn the call over to Mr. Jim Gustafson, Vice President of Investor Relations of Invista Holdings. Mr. Gustafson, you may begin your conference call.

Good afternoon. Thanks for joining Invista's second quarter 2025 earnings call. We appreciate your interest in our company. With me today are Paul Keel, our President and Chief Executive Officer, and Eric Hammes, our Chief Financial Officer. Before we begin, 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 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. 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 our results. Unless otherwise noted, references in these remarks to company-specific financial metrics relate to the second quarter of 2025, and references to period to period increases and decreases in financial metrics are year-over-year. During the call, we may describe certain products and solutions that have applications submitted and pending certain regulatory approvals or are available only in certain markets. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events and 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 may 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 will turn the call over to Paul. Thank you, Jim. Good afternoon and welcome, everyone. We appreciate you taking the time to join us today. On today's call, I'll kick us off with some opening thoughts on our Q2 and first half performance, as well as a brief strategic and operational update. Eric will then take us through the financials in more detail, and I'll wrap things up with some closing thoughts. As always, we'll then open it up for your questions. Slide four summarizes three things. Year-to-date results, progress executing the value creation plan that we laid out at our March Capital Markets Day, and an update to our 2025 full year guidance. Let's begin on the left with Q2 and H1 performance. Q2 was another solid quarter for Invista with strong revenue and EPS growth and good margin expansion. Core growth came in at 5.6%, aided by some customer buying in advance of expected price and tariff increases. Adjusted EBITDA margin was 12.4%, up 240 basis points from Q2 of 24, supported by good growth and G&A productivity, and offset in part by transactional FX losses related to the softer dollar. Adjusted EPS was 26 cents, the result of the EBITDA growth that I just mentioned, coupled with the lower tax rate, which Eric will say more about in just a moment. Moving to the middle of the slide, we delivered broad-based growth across our portfolio with both reporting segments and all major geographies in positive territory. Equipment and consumables was up roughly 7%, and specialty products grew just shy of 5%. In the same way, we're continuing to make progress on the operations front. In addition to continued reductions in spark unit cost and design cycle times, we're off to a good start on implementing the tariff mitigation plan that we outlined on our Q1 call. And we continue to move forward as well on our people priorities with sustained improvements in employee engagement and development. Moving to the final column, given our performance and good momentum, we are updating our 2025 full-year guidance. We now expect core revenue growth of 3% to 4%, up from 1% to 3% previously, and adjusted EPS of $1.05 to $1.15, up 10 cents from earlier guidance. Adjusted EBITDA margin is unchanged at approximately 14%, although EBITDA dollar expectations increase as a result of the stronger growth guidance. At our capital markets day in March, we laid out a value creation plan consisting of four components, guided by our purpose, centered on our values, focused on our priorities, and framed by our 2025 guidance and medium-term outlook. Let's turn now to progress made in the first half in support of this plan. Beginning with growth on the left side of the slide, we're working to accelerate ours through the four pillars we discussed in March. Better accessing untapped growth in our core markets, extending our rich history of new product innovation, penetrating a prioritized group of attractive adjacencies, and amplifying our organic growth with a creative M&A. In terms of better accessing market growth, we saw further gains in H1 on the price work that we began last summer. This helped support a meaningful increase in sales and marketing investment to accelerate activities like our various brand campaigns and global customer education programs. For example, we held several high-impact customer events, including a highly successful Nobel Biocare Symposium in late May. With more than 75 globally-renowned speakers, close to 50 masterclasses, two live surgeries, and nearly 1,700 attendees, the symposium celebrated the 60th anniversary of the invention of dental implants by Dr. Brennemark and Nobel Biocare, while also looking to the future by unveiling several of the latest innovations in digital dentistry. We also hosted several other global customer events, including ortho and implant events in China, with close to 1,000 clinicians participating in each. In addition to ramping sales and marketing, we increased R&D by 14% in the half. This enabled a number of important new product launches, including Spark Retainers, Spark ByteSync Class 2 Corrector, scanning solution from ImplantDirect, and the next release of DTX Studio Clinic with additional AI features, enabling doctors to go from image review to implant planning in less than 90 seconds. On the adjacency front, we drove further penetration in both DSOs and emerging markets. With respect to the former, we have now installed DEXA CDCTs and DTX AI implant planning in all 1,000 plus sites of one of the largest DSOs in America. This milestone represents a significant advancement in digital dentistry, enhancing diagnostic accuracy, supporting clinical collaboration, and greatly improving the patient experience. With respect to emerging markets, we delivered double digit growth in the second quarter across our Latin America, Indo-Pacific, and Middle East and Africa regions. Rounding out our growth update, we closed two small acquisitions in the first half, both at attractive EBITDA multiples to further accelerate the organic efforts we have underway. On the operations front, We continue to enjoy strong contributions from EBS, our continuous improvement methodology, that is central to how we deliver results, develop our people, and advance our culture. By way of example, we reduced G&A spending by 15% in the first half, while maintaining customer service levels above 95%. We also announced plans to expand our manufacturing footprint in China. with a new site in Suzhou that will produce aligners, implants, brackets and wires, and some diagnostic equipment. Consistent with our local for local supply chain strategy, the primary focus of this site will be to support growing China demand. Finally, with respect to people, we continue to advance our high performing continuous improvement culture as engagement and talent development continue to climb along with our growing momentum. Having now covered the high points of the quarter and the first half, I'll turn it over to Eric to walk us through the details.