ZimVie (US:ZIMV)2023-05-04 15:51Financial Data and Key Metrics Changes - Total third-party net sales for Q1 2023 were $225.1 million, a decrease of 4.1% on a reported basis and a decrease of 2.9% in constant currency [9] - Adjusted gross profit was $156 million, compared to $149.3 million in the prior-year period, with an adjusted gross margin of 69.3%, an increase of 570 basis points from 63.6% in Q1 2022 [28] - Adjusted EBITDA in Q1 2023 was $32.1 million or 14.3% of third-party net sales, reflecting a decline of 10 basis points from 14.4% in the prior-year period [29] Business Line Data and Key Metrics Changes - Global dental third-party net sales were $120.2 million, effectively flat on a reported basis and increased 1.8% in constant currency compared to the prior-year period [27] - In the U.S., dental third-party net sales of $69.9 million increased by 2.3%, while outside the U.S., sales of $50.3 million decreased by 3.8% on a reported basis but increased 1.1% in constant currency [73] - First-quarter global spine third-party net sales were $104.9 million, an 8.1% decrease on a reported basis and a 7.8% decrease in constant currency compared to the prior-year period [73] Market Data and Key Metrics Changes - The impact of exiting the China market is estimated to be $2.4 million or 2.4 percentage points of consolidated spine growth [10] - The spine business continues to face competition, affecting sales performance [73] Company Strategy and Development Direction - The company is focused on commercial execution and innovation, with plans to position the business for growth into 2024 and beyond [4] - Recent product launches in the dental segment, including the RealGUIDE software and new bone graft solutions, aim to enhance efficiency and expand market presence [5][24] - The partnership with Brainlab is expected to enhance workflow and accuracy in spinal surgeries, indicating a strategic focus on integrating technology with product offerings [7] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the operational improvements and commercial focus, indicating a belief that the company is on a path to stabilization [39] - The company revised its expected 2023 net sales to a range of $835 million to $860 million, reflecting a positive outlook despite challenges [30] - Management acknowledged the need for prudence due to external factors impacting the business [49] Other Important Information - The company prepaid $10.5 million of debt in Q1 2023, indicating a commitment to reducing leverage [12] - The dental business is well-positioned to grow and generate cash flow, supported by recent product innovations and customer engagement [6] Q&A Session All Questions and Answers Question: What does the sales cadence look like for dental and spine for the rest of the year? - Management indicated that while Q1 was strong, they are cautious about predicting sales for the rest of the year due to various factors impacting the business [17] Question: How does SG&A expense relate to revenue and what are the expectations moving forward? - Management noted that SG&A expenses are expected to remain higher than the prior year for Q2 and Q3 2023, but they anticipate improvements in gross margin to offset some of these costs [11][36] Question: Can you provide insights on the dental market performance relative to competitors? - Management stated that they believe they are performing at or better than the market for premium dental implants, attributing success to their commercial team's efforts and product innovations [40][59]