Summary of Henry Schein 2025 Conference Call Company Overview - **Company**: Henry Schein (NasdaqGS: HSIC) - **Date of Conference**: September 24, 2025 Key Industry Insights - **Macro Environment**: The U.S. is experiencing a reduction in interest rates, which is expected to positively impact equipment sales and the establishment of new dental practices, particularly by Dental Service Organizations (DSOs) [4][5][22] - **Patient Traffic**: Patient traffic in dental practices has remained stable, serving as a key indicator for merchandise sales [3][4] - **International Growth**: There is a slight uptick in international business, especially in Mainland Europe, following a period of energy price increases [7] Core Company Strategies and Performance - **Sales Growth**: Promotional activities in Q2 have started to yield positive results, with double-digit growth in customer engagement and sales [11][9] - **Customer Retention**: Efforts to engage episodic customers through field sales consultants are aimed at increasing market share and customer loyalty [12][14] - **Field Sales Force**: The addition of experienced sales representatives is ongoing, with expectations of ramping up to full productivity within 12 months [15][16][17] Financial Outlook - **EPS Growth**: The company aims for high single-digit EPS growth in 2026, with various macroeconomic factors influencing this target, including interest rates and unemployment [19][20][22] - **Cost Optimization**: Henry Schein is undertaking value creation projects to optimize gross profit and general & administrative costs, with expected benefits starting in 2026 [23][25][26] Market Dynamics - **Pricing and Tariffs**: The company is navigating the impact of tariffs on private label products, which may necessitate price increases while maintaining competitiveness [31][32] - **Implant Market**: The value implant market is growing faster than the premium segment in the U.S., with DSOs increasingly adopting value implants for straightforward procedures [34][38][46] Medical Segment Insights - **Vaccine Demand**: The flu vaccine remains a significant product, with expectations for normal demand levels. The COVID vaccine is less impactful due to low margins [56][58] - **Medical Business Growth**: The medical segment has seen a 6% growth, driven by pharmaceuticals and point-of-care diagnostic kits, with a notable home health business growing at a faster pace [64][65] Technology Business Performance - **Growth Rates**: The core practice management systems are performing well, but peripheral products are dragging down overall growth. Consolidation of brands is expected to improve growth rates [66][68][70] Capital Deployment Strategy - **Share Repurchase Program**: A $750 million share repurchase program has been announced, indicating a strategic focus on capital deployment while remaining opportunistic regarding M&A [71][73] Additional Considerations - **Market Expansion**: The company is optimistic about the expansion of the market for dental practices, particularly with the potential for new practice builds as interest rates decline [5][6] - **Customer Engagement**: The focus on educating customers about profitability and operational efficiency is seen as a key driver for long-term relationships and market share growth [12][14]

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Group 1 - The company expects a significant increase in net profit for the period from January 1, 2025, to June 30, 2025, with estimates ranging from 165 million to 210 million yuan, representing a year-on-year increase of 48.72% to 89.28% [1] - The net profit after deducting non-recurring gains and losses is projected to be between 155 million and 200 million yuan, indicating a year-on-year increase of 54.86% to 99.82% [1] - Basic earnings per share are expected to be between 0.28 yuan and 0.35 yuan, compared to 0.19 yuan in the same period last year [1] Group 2 - The company has communicated with its auditing firm regarding the performance forecast, and there are no discrepancies between the company and the auditors concerning the forecast [1] - The strong performance is attributed to the growth in export business, which has significantly boosted sales and revenue, alongside an optimized sales structure that has allowed the company to gain market share despite challenges in the domestic bus market [1]

Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $87 million, down 4% from $91 million in Q4 2023, reflecting lower volumes due to industry softness [22] - Full year net sales were $509 million, down 10% from $566 million in the prior year, primarily due to lower sales volume [26] - Adjusted EBITDA for Q4 was $4 million, down 63% from $10 million in the prior period, with an adjusted EBITDA margin of 4%, a decline of 670 basis points year over year [25] - Full year adjusted EBITDA was $80 million, compared to $88 million in the prior year, with an adjusted EBITDA margin of 15.8%, up 30 basis points from 15.5% in 2023 [29] Business Line Data and Key Metrics Changes - In-ground pool sales for Q4 were $44 million, down 5% from Q4 2023, while cover sales were $31 million, down 2% [22] - Full year in-ground pool sales were $259 million, down 13% year over year, but above the estimated 15% decline in in-ground pool starts in the US [26] - Liner sales for the full year were $180 million, down 8%, and cover sales were $131 million, down 7% [27] Market Data and Key Metrics Changes - Fiberglass pools represented 24% of US pool starts in 2024, up from 23% in 2023, indicating increased market penetration [7] - Approximately 17% of Latham Group's total fiberglass pool sales in 2024 were in the sand states, which account for about two-thirds of US pool starts [12] Company Strategy and Development Direction - The company is focused on expanding market share in the sand states (Florida, Texas, Arizona, California) and increasing fiberglass pool penetration [11] - Key priorities include expanding the dealer base, targeting master-planned communities, aligning product offerings with market demand, and addressing marketing campaigns specifically to consumers and builders in those markets [13] - The company plans to launch new fiberglass pool models tailored to the preferences of consumers in the sand states [13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the operating environment, noting that while industry conditions are challenging, they expect to outperform the market in 2025 [20] - The company anticipates that new US pool starts in 2025 will be similar to 2024 levels, but they are prepared to ramp up quickly if market demand increases [19] - Management highlighted the importance of strategic investments in growth initiatives, particularly in fiberglass pools and automatic safety covers [11] Other Important Information - The company ended 2024 with a strong financial position, including a cash position of $56 million and total debt of $282 million [30] - Capital expenditures for 2024 were $20 million, with projections for 2025 to be in the range of $27 million to $33 million [36] Q&A Session Summary Question: Breakdown of the 8% sales growth guidance - Management indicated that the 8% sales growth is expected to come from approximately 3% from the full-year run rate effect of acquisitions and about 5% from organic growth [43][44] Question: Feedback from dealers in the sand states - Management reported positive feedback from dealers, with many indicating that their backlogs are flat or up compared to the previous year, and noted a 40% increase in leads from the Goosa campaign in Texas [48][50] Question: Exposure to tariffs and impact on business - Management stated that the tariff impact is limited, with around $15 million in material buys from affected countries, and emphasized their diversified supplier base to mitigate risks [59][60] Question: Effectiveness of the sand state strategy - Management acknowledged that fiberglass penetration in the sand states is significantly below the national average, presenting a substantial growth opportunity [75] Question: EBITDA margin guidance and tariff implications - Management confirmed that the guidance includes considerations for tariffs, with a focus on maintaining gross margin performance through operational efficiencies [121][130]