Envista(US:NVST)2022-05-05 00:32Financial Data and Key Metrics Changes - First quarter sales increased by 3.1% to $631.4 million, with core sales growth of 5.4% compared to Q1 2021 [22][24] - Adjusted EBITDA margin was 19.7%, representing a decrease of approximately 185 basis points from Q1 2021 [25][17] - Adjusted EPS was $0.47 from continuing operations, down from $0.49 in the comparable period of the prior year [25] Business Line Data and Key Metrics Changes - Specialty Products & Technologies segment saw core revenue increase by 11.2%, driven by strong growth in implants and Spark clear aligners [26] - Orthodontic business grew 18.7%, with brackets and wires growing mid-single digits and Spark continuing to accelerate [26][13] - Equipment and Consumables segment core sales decreased by 3.3%, with strong demand in restorative business but a decline in infection prevention solutions [28][29] Market Data and Key Metrics Changes - Western Europe grew by 17.6%, while North America increased by 2.4%, impacted by infection prevention exposure [23] - Emerging markets outside of China grew by 15.6%, while China saw a decline of 14.3% due to COVID-related lockdowns [23][24] Company Strategy and Development Direction - The company aims to accelerate growth to high single digits while expanding operating margins and transforming its portfolio [12][19] - Focus on digitizing, personalizing, and democratizing dental care, with significant investments in technology and training [11][20] - The acquisition of Carestream Dental's intra-oral scanner business is expected to enhance growth and operational capabilities [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from inflation, supply chain disruptions, and geopolitical issues but remains optimistic about long-term growth in the dental market [33][19] - The company expects core growth between 6% to 8% for 2022 and aims for an adjusted EBITDA margin of over 20% for the full year [35][39] - Anticipated sales from the newly acquired IOS business are projected to be between $35 million to $45 million for the remainder of the year [33] Other Important Information - The company achieved an adjusted gross margin of 59.2%, an increase of 20 basis points compared to the prior year [24] - The first quarter saw a consumption of $16.3 million in free cash flow, ending with over $1 billion in cash [30][31] Q&A Session Summary Question: Pricing Strategy and Impact - Management is actively managing pricing, taking selective price increases and reducing discounts to counter inflationary impacts [42] Question: Spark Revenue Growth - Spark revenue doubled year-over-year, with strong sequential growth of 17.3% from Q4 to Q1 [46] Question: China Market Performance - China revenue was down approximately 14% year-over-year, but management remains optimistic about recovery as lockdowns ease [50][68] Question: Integration of Carestream - Integration focuses on go-to-market strategies, operational improvements, and leveraging R&D capabilities for long-term growth [55] Question: Supply Chain Visibility - Management is cautious about supply chain dynamics but has improved visibility and inventory management to meet customer demand [60] Question: North America Growth Excluding Infection Prevention - North America experienced low single-digit growth, with strong performance in implants and Spark business offset by declines in infection prevention [71]