Envista(NVST) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Earnings Overview CEO Commentary Envista's CEO Paul Keel reported accelerated growth across all businesses and key geographies in Q2, with increased investment in growth, operations, and personnel, leading to significantly improved year-over-year profitability and an upward revision of the full-year 2025 outlook - Envista achieved accelerated growth across all businesses and key geographies in the second quarter[2] - The company increased investments in growth, operations, and personnel, significantly enhancing year-over-year profitability[2] - Based on strong first-half performance, the company raised its full-year 2025 guidance[2] Key Financial Highlights (Q2 & H1 2025) Envista achieved significant financial improvements in Q2 and H1 2025, with net income and adjusted EPS turning profitable from prior year losses, and substantial growth in adjusted EBITDA and adjusted EPS Q2 and H1 2025 Financial Highlights | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net Income | $26 million | $(1,152) million | $44 million | $(1,128) million | | Adjusted Net Income | $44 million | $19 million | $85 million | $64 million | | Adjusted EBITDA | $84 million | $63 million | $163 million | $150 million | | Diluted EPS | $0.16 | $(6.69) | $0.26 | $(6.56) | | Adjusted Diluted EPS | $0.26 | $0.11 | $0.50 | $0.37 | - Second quarter 2025 sales reached $682 million, with core sales growth of 5.6% year-over-year[5] - Second quarter 2025 adjusted EBITDA was $84 million, a 34% increase year-over-year, with an adjusted EBITDA margin of 12.4%, up 240 basis points[5] - First half 2025 sales totaled $1.299 billion, with core sales growth of 2.9% year-over-year[5] Cash Flow and Share Repurchases In the first half of 2025, Envista's operating and free cash flow decreased year-over-year, yet the company actively executed a significant share repurchase program H1 2025 Cash Flow Comparison (in millions USD) | Metric | H1 2025 | H1 2024 | | :----------------- | :----------- | :----------- | | Operating Cash Flow | $89 million | $133 million | | Free Cash Flow | $71 million | $116 million | - During the quarter ended June 27, 2025, the company repurchased 4.8 million shares for approximately $82 million[4] - As of quarter-end, $150 million remained available under the company's share repurchase program[4] Business and Operational Highlights Envista achieved positive growth across all major businesses and geographies in Q2, with continued operational efficiency improvements through the Envista Business System (EBS) and significant progress in employee engagement and development - Positive growth was achieved across all major businesses and geographies, including Nobel Biocare in North America[5] - The Envista Business System (EBS) continued to deliver broad contributions, including sustained Spark margin improvement[5] - Employee engagement and development continued to improve[5] Full Year 2025 Outlook Envista raised its full-year 2025 guidance, with increased expectations for core sales growth and adjusted diluted EPS, reflecting confidence in future performance Full Year 2025 Guidance Update | Metric | Current 2025 Guidance | Prior 2025 Guidance | | :----------------------- | :------------- | :------------- | | Core Sales Growth | 3% to 4% | 1% to 3% | | Adjusted EBITDA Margin | Approximately 14% | Approximately 14% | | Adjusted Diluted EPS | $1.05 to $1.15 | $0.95 to $1.05 | Company Profile & Investor Information About Envista Envista is a global dental products company with over 30 trusted brands, dedicated to improving patient lives through industry-leading dental consumables, solutions, technologies, and services, offering a comprehensive portfolio across dental implants, orthodontics, and digital imaging - Envista is a global dental products company with over 30 trusted dental brands, including Nobel Biocare, Ormco, DEXIS, and Kerr[9] - The company helps customers provide optimal patient care through industry-leading dental consumables, solutions, technologies, and services[9] - Its comprehensive product portfolio spans dental implants, orthodontics, and digital imaging technologies, addressing diverse clinical needs for diagnosis, treatment, prevention, and aesthetics[9] Investor Conference Call Details Envista will host an investor conference call on July 31, 2025, at 2:00 p.m. PT to discuss quarterly results and provide the 2025 outlook, with a webcast available on the company's website, including replay and presentation materials - Envista will host an investor conference call on July 31, 2025, at 2:00 p.m. PT to discuss quarterly results and the 2025 outlook[7] - The conference call and accompanying slide presentation will be webcast live under the 'Events & Presentations' subheading in the 'Investors' section of Envista's website[7] - A replay of the webcast and presentation materials will be available in the same section following the call[7][8] Condensed Consolidated Financial Statements Statements of Operations Envista achieved sales growth and significant operating profit improvement in Q2 and H1 2025, reversing substantial losses from the prior year, primarily due to the absence of goodwill and intangible asset impairment charges Condensed Consolidated Statements of Operations (Selected, in millions USD) | Metric (in millions USD) | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Sales | $682.1 | $633.1 | $1,299.0 | $1,256.7 | | Gross Profit | $369.9 | $326.6 | $705.9 | $682.9 | | Operating Profit (Loss) | $46.3 | $(1,153.3) | $85.3 | $(1,105.2) | | Net Income (Loss) | $26.4 | $(1,151.6) | $44.4 | $(1,128.0) | | Diluted Earnings (Loss) Per Share | $0.16 | $(6.69) | $0.26 | $(6.56) | - Second quarter 2025 sales increased by 7.7% year-over-year, with a 3.4% increase for the first half[13] - Second quarter 2025 operating profit was $46.3 million, compared to an operating loss of $1,153.3 million in the prior year, primarily due to a $1,153.8 million goodwill and intangible asset impairment charge in the prior period[13] Balance Sheets As of June 27, 2025, Envista's total assets and stockholders' equity increased, cash and cash equivalents rose, short-term debt was eliminated, and long-term debt saw an increase Condensed Consolidated Balance Sheets (Selected, in millions USD) | Metric (in millions USD) | June 27, 2025 | December 31, 2024 | | :----------------------- | :------------- | :------------- | | Total Assets | $5,664.4 | $5,350.5 | | Cash and Cash Equivalents | $1,110.6 | $1,069.1 | | Total Liabilities | $2,525.4 | $2,415.7 | | Short-Term Debt | $0 | $116.0 | | Long-Term Debt | $1,445.1 | $1,278.3 | | Total Stockholders' Equity | $3,139.0 | $2,934.8 | - As of June 27, 2025, total assets increased by $313.9 million compared to December 31, 2024[16] - As of June 27, 2025, cash and cash equivalents increased by $41.5 million to $1,110.6 million[16] Statements of Cash Flows In the first half of 2025, Envista experienced decreased cash flow from operating activities, increased cash outflow from investing activities, and a significant rise in cash outflow from financing activities, primarily due to share repurchases and convertible note repayments Condensed Consolidated Statements of Cash Flows (Selected, in millions USD) | Metric (in millions USD) | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------- | :--------------------- | :--------------------- | | Net Cash Provided by Operating Activities | $89.0 | $133.4 | | Net Cash Used in Investing Activities | $(25.9) | $(16.6) | | Net Cash Used in Financing Activities | $(104.0) | $(2.3) | | Net Change in Cash and Cash Equivalents | $41.5 | $96.2 | - Cash outflow from financing activities significantly increased, primarily due to payments for treasury stock ($100.3 million) and repayment of 2025 convertible notes ($116.3 million)[17] - Changes in exchange rates had a positive impact of $82.4 million on cash and cash equivalents, compared to a negative $18.3 million in the prior year period[17] Segment Performance Sales and Operating Profit by Segment Envista's two main segments, Specialty Products & Technologies and Equipment & Consumables, achieved sales growth and significant operating profit improvement in Q2 and H1 2025, with a substantial increase in operating profit margin for Specialty Products & Technologies Segment Sales (in millions USD) | Segment | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Specialty Products & Technologies | $445.1 | $415.1 | $845.4 | $823.8 | | Equipment & Consumables | $237.0 | $218.0 | $453.6 | $432.9 | | Total | $682.1 | $633.1 | $1,299.0 | $1,256.7 | Segment Operating Profit (Loss) (in millions USD) | Segment | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Specialty Products & Technologies | $45.3 | $6.0 | $82.9 | $50.2 | | Equipment & Consumables | $36.1 | $26.5 | $68.0 | $62.1 | | Other | $(35.1) | $(1,185.8) | $(65.6) | $(1,217.5) | | Total | $46.3 | $(1,153.3) | $85.3 | $(1,105.2) | Segment Operating Profit Margin | Segment | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Specialty Products & Technologies | 10.2% | 1.4% | 9.8% | 6.1% | | Equipment & Consumables | 15.2% | 12.2% | 15.0% | 14.3% | Non-GAAP Financial Measures and Reconciliations Summary of GAAP and Non-GAAP Metrics Envista provides a summary of GAAP and non-GAAP financial metrics, with non-GAAP measures like adjusted gross profit, operating profit, net income, diluted EPS, EBITDA, and free cash flow, aiming to offer a clearer view of long-term profitability trends and operational performance Summary of GAAP and Non-GAAP Financial Metrics (in millions USD, except per share amounts) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | GAAP Net Income (Loss) | $26.4 | $(1,151.6) | $44.4 | $(1,128.0) | | Adjusted Net Income | $43.7 | $18.5 | $85.2 | $64.3 | | GAAP Diluted Earnings (Loss) Per Share | $0.16 | $(6.69) | $0.26 | $(6.56) | | Adjusted Diluted EPS | $0.26 | $0.11 | $0.50 | $0.37 | | GAAP Operating Cash Flow | $88.7 | $93.1 | $89.0 | $133.4 | | Free Cash Flow | $76.4 | $86.3 | $71.3 | $115.6 | | Adjusted EBITDA | $84.3 | $63.0 | $163.3 | $150.2 | Adjusted Gross Profit and Margin Reconciliation Envista calculates adjusted gross profit and margin by excluding restructuring costs, asset impairments, and fair value adjustments for acquisition-related inventory, providing a more comparable view of core business profitability Adjusted Gross Profit and Margin Reconciliation (in millions USD) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Gross Profit | $369.9 | $326.6 | $705.9 | $682.9 | | Restructuring Costs and Asset Impairments | $0.3 | $16.3 | $2.2 | $18.0 | | Acquisition-Related Inventory Fair Value Adjustments | $1.0 | — | $1.4 | — | | Adjusted Gross Profit | $371.2 | $342.9 | $709.5 | $700.9 | | Gross Margin | 54.2% | 51.6% | 54.3% | 54.3% | | Adjusted Gross Margin | 54.4% | 54.2% | 54.6% | 55.8% | Adjusted Operating Profit Reconciliation The company calculates adjusted operating profit by excluding non-recurring items such as amortization, goodwill impairment, restructuring costs, litigation, and acquisition-related expenses, to better reflect core business operational efficiency and profitability Adjusted Operating Profit Reconciliation (in millions USD) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Operating Profit (Loss) | $46.3 | $(1,153.3) | $85.3 | $(1,105.2) | | Acquisition-Related and Other Intangible Asset Amortization | $19.0 | $22.4 | $37.8 | $45.0 | | Goodwill and Intangible Asset Impairment | — | $1,153.8 | — | $1,153.8 | | Restructuring Costs and Asset Impairments | $4.7 | $23.8 | $16.1 | $30.7 | | Acquisition-Related Inventory Fair Value Adjustments | $1.0 | — | $1.4 | — | | Litigation Settlements | — | $4.7 | $0.8 | $4.7 | | Acquisition-Related Costs | $0.1 | — | $0.3 | — | | Adjusted Operating Profit | $71.1 | $51.4 | $141.7 | $129.0 | | Adjusted Operating Profit as a % of Sales | 10.4% | 8.1% | 10.9% | 10.3% | Adjusted Net Income Reconciliation Envista derives adjusted net income by making multiple adjustments to net income, including excluding intangible asset amortization, goodwill impairment, restructuring costs, litigation, acquisition-related expenses, and their tax impacts, to provide a more accurate measure of profitability Adjusted Net Income Reconciliation (in millions USD) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net Income (Loss) | $26.4 | $(1,151.6) | $44.4 | $(1,128.0) | | Acquisition-Related and Other Intangible Asset Amortization | $19.0 | $22.4 | $37.8 | $45.0 | | Goodwill and Intangible Asset Impairment | — | $1,153.8 | — | $1,153.8 | | Restructuring Costs and Asset Impairments | $4.7 | $23.8 | $16.1 | $30.7 | | Acquisition-Related Inventory Fair Value Adjustments | $1.0 | — | $1.4 | — | | Litigation Settlements | — | $4.7 | $0.8 | $4.7 | | Net Loss on Equity Investments | — | $1.1 | — | $1.1 | | Acquisition-Related Costs | $0.1 | — | $0.3 | — | | Tax Impact of Above Adjustments | $(6.2) | $(36.0) | $(15.0) | $(43.6) | | Discrete Tax Adjustments and Other Tax-Related Adjustments | $(1.3) | $0.3 | $(0.6) | $0.6 | | Adjusted Net Income | $43.7 | $18.5 | $85.2 | $64.3 | Adjusted Diluted Earnings Per Share Reconciliation Envista provides adjusted diluted EPS by making multiple non-GAAP adjustments to diluted EPS, including excluding intangible asset amortization, goodwill impairment, restructuring costs, litigation, acquisition-related expenses, and their tax impacts, for a more accurate per-share profitability measure Adjusted Diluted Earnings Per Share Reconciliation | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Diluted Earnings (Loss) Per Share | $0.16 | $(6.69) | $0.26 | $(6.56) | | Acquisition-Related and Other Intangible Asset Amortization | $0.11 | $0.13 | $0.22 | $0.26 | | Goodwill and Intangible Asset Impairment | — | $6.68 | — | $6.67 | | Restructuring Costs and Asset Impairments | $0.03 | $0.14 | $0.09 | $0.18 | | Acquisition-Related Inventory Fair Value Adjustments | $0.01 | — | $0.01 | — | | Litigation Settlements | — | $0.03 | $0.01 | $0.03 | | Net Loss on Equity Investments | — | $0.01 | — | $0.01 | | Acquisition-Related Costs | — | — | — | — | | Tax Impact of Above Adjustments | $(0.04) | $(0.21) | $(0.09) | $(0.25) | | Discrete Tax Adjustments and Other Tax-Related Adjustments | $(0.01) | — | — | — | | Shares Adjustment for Net (Loss) to Adjusted Net Income | — | $0.02 | — | $0.03 | | Adjusted Diluted Earnings Per Share | $0.26 | $0.11 | $0.50 | $0.37 | Adjusted EBITDA Reconciliation Envista calculates adjusted EBITDA by adjusting net income (loss) for interest, taxes, depreciation, amortization, and other non-recurring items, providing a metric to measure the company's core operational performance Adjusted EBITDA Reconciliation (in millions USD) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net Income (Loss) | $26.4 | $(1,151.6) | $44.4 | $(1,128.0) | | Net Interest Expense | $8.0 | $11.7 | $17.3 | $24.6 | | Income Tax Expense (Benefit) | $14.3 | $(14.5) | $25.3 | $(2.8) | | Depreciation | $10.8 | $11.6 | $19.9 | $21.1 | | Acquisition-Related and Other Intangible Asset Amortization | $19.0 | $22.4 | $37.8 | $45.0 | | Goodwill and Intangible Asset Impairment | — | $1,153.8 | — | $1,153.8 | | Restructuring Costs and Asset Impairments | $4.7 | $23.8 | $16.1 | $30.7 | | Acquisition-Related Inventory Fair Value Adjustments | $1.0 | — | $1.4 | — | | Litigation Settlements | — | $4.7 | $0.8 | $4.7 | | Net Loss on Equity Investments | — | $1.1 | — | $1.1 | | Acquisition-Related Costs | $0.1 | — | $0.3 | — | | Adjusted EBITDA | $84.3 | $63.0 | $163.3 | $150.2 | | Adjusted EBITDA as a % of Sales | 12.4% | 10.0% | 12.6% | 12.0% | Core Sales Growth Analysis Envista's core sales growth excludes the impact of acquisitions, divestitures, and currency fluctuations, providing a clearer view of underlying business growth trends, with positive core sales growth achieved across the company and its segments in Q2 and H1 2025 Core Sales Growth Rate | Metric | Three Months Ended June 27, 2025 vs. Prior Year Period | Six Months Ended June 27, 2025 vs. Prior Year Period | | :--------------------------- | :----------------------------------- | :----------------------------------- | | Consolidated Total Sales Growth | 7.7% | 3.4% | | Less: Impact of Acquisitions | (0.2)% | (0.1)% | | Less: Impact of Currency Exchange Rates | (1.9)% | (0.4)% | | Core Sales Growth | 5.6% | 2.9% | | Specialty Products & Technologies Core Sales Growth | 4.7% | 2.0% | | Equipment & Consumables Core Sales Growth | 7.3% | 4.5% | - Core sales represent GAAP revenues excluding sales from acquired businesses, discontinued products, and the impact of currency exchange rate fluctuations[28] Free Cash Flow Reconciliation Envista calculates free cash flow by subtracting capital expenditures and adding proceeds from property, plant, and equipment disposals from net cash provided by operating activities, measuring the company's ability to generate cash for investment and business growth without external financing Free Cash Flow Reconciliation (in millions USD) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net Cash Provided by Operating Activities | $88.7 | $93.1 | $89.0 | $133.4 | | Less: Additions to Property, Plant and Equipment | $(12.3) | $(6.8) | $(18.2) | $(17.8) | | Add: Proceeds from Disposals of Property, Plant and Equipment | — | — | $0.5 | — | | Free Cash Flow | $76.4 | $86.3 | $71.3 | $115.6 | Notes to Non-GAAP Financial Measures Envista details the calculation, rationale, and reconciliation of its non-GAAP financial measures to the most directly comparable GAAP metrics, aiming to help investors understand long-term profitability trends, identify underlying growth, and assess operational performance, while acknowledging their limitations - Non-GAAP measures, such as adjusted gross profit, operating profit, net income, diluted EPS, and EBITDA, are intended to help investors understand long-term profitability trends of Envista's business and compare them to historical periods and peers[31] - Core sales are used to identify underlying growth trends of the business and compare revenue performance to historical periods and peers[31] - Free cash flow measures the company's ability to generate cash to invest in and grow its business without reliance on external financing, but its limitations include not considering debt repayment requirements and other non-discretionary expenditures[33] Legal Disclosures & Contact Statement Regarding Non-GAAP Measures Envista states that all 'adjusted' amounts, including core sales growth and free cash flow, are non-GAAP items, providing their calculation, rationale, and reconciliation to the most directly comparable GAAP metrics, emphasizing their supplementary role rather than replacement of GAAP measures - All 'adjusted' amounts, including core sales growth and free cash flow, are non-GAAP items[10] - The company does not provide forward-looking estimates on a GAAP basis as certain information is unavailable and cannot be reasonably estimated[6] - Management believes these non-GAAP measures provide additional perspectives to view Envista's performance, helping investors understand long-term profitability trends, identify underlying growth trends, and assess operational performance[31] Forward-Looking Statements This press release contains 'forward-looking' statements under federal securities laws, involving various important factors that could cause actual results, developments, and business decisions to differ materially, including economic conditions, market, operational, and legal compliance risks, competition, acquisition integration, intellectual property protection, and other macroeconomic and industry-specific risks - Certain statements in this press release constitute 'forward-looking' statements within the meaning of federal securities laws[11] - Actual results, developments, and business decisions may differ materially from forward-looking statements due to various important factors, and investors should not place undue reliance on these statements[11] - These factors include U.S. and global economic conditions, inflation, rising interest rates, international economic, political, legal, and business factors, market cyclicality, product manufacturing risks, supply chain reliance, IT system security breaches, competition, new product development capabilities, key personnel retention, legal and regulatory compliance, acquisition integration risks, intellectual property protection, and litigation[11] Contact Information Investors with inquiries may contact Jim Gustafson, Vice President of Investor Relations at Envista Holdings Corporation - Investor Relations Contact: Jim Gustafson, Vice President, Investor Relations[12] - Contact Email: IR@envistaco.com[12]