ZimVie (ZIMV)2024-02-29 02:52Financial Data and Key Metrics Changes - Total third-party net sales for Q4 2023 were $113.1 million, a decrease of 2.4% in reported rates and a decline of 3.6% in constant currency [34] - Full year 2023 total third-party net sales were $457.2 million, essentially flat year-over-year, declining 50 basis points [34] - Adjusted EBITDA attributable to continuing operations for Q4 2023 was $13.9 million, representing a 12.3% EBITDA margin [36] - Full year 2023 adjusted EBITDA was $50.8 million, reflecting 11.1% of third-party net sales [36] - Adjusted earnings per share for continuing operations for Q4 2023 was $0.10 per share [60] Business Line Data and Key Metrics Changes - The U.S. third-party net sales for Q4 2023 were $65.4 million, a decrease of 3.2%, driven by a weaker implant market [15] - Full year 2023 U.S. sales were $327.3 million, declining 8.4% [18] - Outside the U.S., Q4 2023 third-party net sales were $18.9 million, a decrease of 11.6% on a reported basis [18] - Adjusted cost of products sold for Q4 2023 was 37.4%, compared to 34.8% in the prior year [16] Market Data and Key Metrics Changes - The dental market was soft throughout most of 2023, but the company exited the year roughly flat compared to 2022, indicating resilience [35] - The company expects Q1 sales from discontinued operations to be in the range of $89 million to $91 million [40] Company Strategy and Development Direction - The company executed an agreement to sell its Spine business to H.I.G. Capital for $375 million, addressing concerns about synergy and capital structure [5][6] - Post-sale, the company aims to become a leaner, focused pure-play Dental company with a commitment to a 15% plus adjusted EBITDA margin one year post-sale [7][26] - The company plans to invest in innovation and operational efficiency, particularly in manufacturing automation and supply chain optimization [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2024 as a pure-play Dental company, focusing on differentiating solutions for patients and providers [25] - The company aims to reduce net debt to under $200 million by one year post-sale [26][63] - Management acknowledged the challenges in the macroeconomic environment but remains confident in the performance of their premium implants and digital solutions [39] Other Important Information - The Spine segment is classified as discontinued operations as of the end of 2023 [14] - The company ended 2023 with a cash balance of $87.8 million and gross debt of $508.8 million, yielding a net debt balance of $421.0 million [63] Q&A Session Summary Question: How is the company addressing opportunities in the implant market? - Management noted that they have gained market share despite a slower market and emphasized the strength of their implant portfolio [69][70] Question: What is the status of the agreement with iTero regarding the new Lumina scanner? - Management confirmed that the agreement includes the new scanner, but sales will not begin until Q4 due to regulatory delays [72][74] Question: Can you quantify the stranded costs currently being incurred? - Management indicated that stranded costs are largely in SG&A within the corporate sector, with ongoing costs related to the separation of the Spine business [76] Question: How does the company plan to manage its net debt post-sale? - Management discussed the complexities of the transaction and the need to balance cash flow with debt repayment, aiming for under $200 million in net debt [92][96]