Financial Data and Key Metrics Changes - The company reported fourth quarter sales of $576 million, reflecting a 3% increase year-over-year on a reported basis and 2% organic growth [11] - For the full year, sales reached $2.2 billion, representing a 7% reported growth, with organic growth of 6% [11][12] - Adjusted gross margins improved to 61%, an increase of 170 basis points, while adjusted EBITDA margin remained flat at 17.9% [12][15] - Adjusted earnings per share rose to $3.30, a 16% increase driven by gross margin expansion and reduced interest expenses [12] Business Line Data and Key Metrics Changes - The Recon segment achieved 8% organic growth, outperforming the market, while the Prevention and Recovery (PNR) segment grew 4% organically [5][11] - In the fourth quarter, Recon grew 3% and PNR was flat, impacted by four fewer selling days compared to the previous year [6][11] - The U.S. Recon segment grew 6% organically, with double-digit growth in extremities and solid performance in hips and knees [6][8] Market Data and Key Metrics Changes - Internationally, Recon grew 10% organically, with high single-digit growth in hips and knees and double-digit growth in extremities [8] - The company noted that the market for Prevention and Recovery is growing closer to 2%, while they achieved 4% organic growth in this segment [5] Company Strategy and Development Direction - The company is focused on three key priorities: commercial execution, operational excellence, and financial discipline, aiming to build a more profitable and capital-efficient growth engine [4][5] - A "One Enovis" operating mindset is being embraced to improve performance and standardize commercial processes [5] - The company plans to continue driving innovation, with a robust pipeline of new product introductions planned for the next 24 months [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term plans and positive trajectory despite a dynamic operating environment [13] - The company expects 2026 to be another year of strong execution, with revenue guidance of $2.31 billion to $2.37 billion, reflecting mid-single-digit organic growth [17] - Management highlighted the importance of disciplined capital allocation and the goal of reducing debt while supporting growth initiatives [55] Other Important Information - The company returned to positive free cash flow of $20 million in 2025, with a target of over 25% free cash flow conversion in 2026 [6][16] - A non-cash technical impairment of goodwill of $501 million was recorded, but it does not impact liquidity or future operations [13] Q&A Session Summary Question: Free cash flow conversion improvements - Management indicated that operational improvements and reduced integration-related costs will drive the expected increase in free cash flow conversion [21][22] Question: ARVIS growth expectations - The rollout of ARVIS is planned in phases, with domestic launch in the first half of 2026 and international rollout in the second half [25][26] Question: U.S. hip and knee business outlook - Management expressed optimism about the hip and knee expansion, particularly with new product launches like Nebula and OrthoDrive [30] Question: Cash flow conversion trajectory - Management expects continued incremental improvements in cash flow conversion over the next several years, despite some initial investments required for new product launches [32] Question: Market dynamics and Q1 expectations - Management noted that Q1 2026 will have fewer selling days, but overall business performance is expected to align with expectations [35][37] Question: Gross margin sustainability - Management anticipates further gross margin improvements driven by product mix and productivity initiatives [39][40] Question: Portfolio shaping and divestitures - Management acknowledged the need for ongoing portfolio shaping, including SKU rationalization and potential divestitures to enhance growth and margin profiles [91][92]