Enovis(ENOV) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 15% growth in organic revenue and a 32% increase in adjusted EPS for Q3 2021, despite a challenging environment [7][46] - Total company EBITDA margins grew by 20 basis points, with a 90 basis point improvement before the effect from acquisitions [45] Business Line Data and Key Metrics Changes - ESAB exceeded expectations with a 24% increase in total sales, driven by high single-digit volume growth and a 15-point price increase [36] - MedTech sales increased by 40%, with organic sales per day growth of 1%, impacted by a 2-point headwind from one-time sales in Q3 last year [11][50] Market Data and Key Metrics Changes - In the Americas, ESAB volumes rose by 11%, while EMEA and APAC increased by 6% compared to the same period last year [37] - The MedTech business experienced a 14% growth over Q3 2020, with organic sales per day growth of 3% excluding PPE [50] Company Strategy and Development Direction - The company is on track for a tax-free spin-off of its ESAB business, targeting separation in Q1 2022, with substantial progress in creating independent boards and filling key leadership positions [10][30] - The new corporate name, Enovis, symbolizes a strategic pivot to a specialty MedTech company focused on innovative solutions [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that the recovery of elective surgeries is expected to improve gradually, with a potential for market growth in the coming years as backlogged procedures are addressed [72][74] - The company anticipates continued operational improvements and margin expansion, despite challenges from supply chain inflation and inefficiencies [16][100] Other Important Information - The company is implementing price increases to offset inflation and expects sequential margin improvement in Q4 [17][56] - The integration of recent acquisitions is progressing well, with expectations for significant revenue growth and cost synergies [25][28] Q&A Session Summary Question: What steps are left to complete the split? - Management indicated that they are well into the process, with key leadership positions filled and capital structure aligned, expecting no significant challenges [60] Question: How is the MedTech recovery expected to progress? - Management noted a 5% pressure on elective surgeries due to COVID, but they anticipate gradual improvement and a return to normal levels in 2022 [72][74] Question: What is the pricing strategy in MedTech? - Management explained that pricing can be passed through in some areas, while others depend on reimbursement rates, which may take time to adjust [63][117] Question: How are supply chain issues being managed? - Management highlighted the use of CBS tools to improve customer service and manage supply chain challenges effectively [78] Question: What are the growth expectations for the MedTech business? - Management expects the recon business to grow in healthy double digits, while the P&R business is positioned to grow at or above market rates [111][112]