BREA,
Calif., Nov. 1, 2023 /PRNewswire/ -- Envista
Holdings Corporation (NYSE: NVST) today announced results for the
third quarter 2023.
For the quarter ended September 29,
2023, reported sales were $631.3
million. Core sales in the quarter increased 0.8% over
the corresponding quarter in 2022.
Net income in the third quarter of 2023 was $21.5 million or $0.12 per diluted share. During the same
period, adjusted net income was $75.5
million or $0.43 per diluted
share compared to adjusted net income of $82.5 million or $0.47 per diluted share in the same period of
2022. Adjusted EBITDA in the quarter was $123.5 million compared to $127.6 million in the third quarter of
2022.
Amir Aghdaei, Chief Executive Officer, stated, "In the third
quarter, we delivered positive core growth and an adjusted EBITDA
margin of 19.6%. Our Specialty Product & Technology
Segment delivered low-single digit core growth as Spark
outperformed, overcoming the negative impact of both Russia and the continued weakness of higher
end specialty procedures in developed markets. Our Equipment
& Consumables segment declined low-single digit, as solid core
growth in consumables was offset by the planned rationalization of
our traditional imaging portfolio. We continue to utilize the
Envista Business System (EBS) to streamline our operations and
improve our cost position, delivering 50 bps of sequential margin
improvement in the quarter."
Mr. Aghdaei continued, "While we remain confident in our ability
to execute our long-term strategy, we are revising our full year
guidance for 2023 to reflect the increased macro uncertainty and
the importance of making investments to drive our long-term
strategy of accelerating growth, expanding margins, and
transforming our portfolio."
2023 Guidance
Due to the continued uncertainties in the macro environment,
volatility in the North American distribution channel and our
continued investment in our long-term growth initiatives, we now
expect full year core sales to be down slightly and adjusted EBITDA
margin to be between 18% to 19%.
Please note, we do not provide forward-looking estimates on a
GAAP basis as certain information is not available and cannot be
reasonably estimated.
Envista will discuss its quarterly results during an investor
conference call today starting at 2:00 P.M.
PT. The call and an accompanying slide presentation
will be webcast on the "Investors" section of Envista's website,
www.envistaco.com, under the subheading "Events &
Presentations." A replay of the webcast will be available in the
same section of Envista's website shortly after the conclusion of
the presentation and will remain available until the next quarterly
earnings call.
The conference call can be accessed by dialing +1 (800) 267-6316
within the U.S. or +1 (203) 518-9783 outside the U.S. a few minutes
before 2:00 PM PT and referencing
conference ID #8206745. A replay of the conference call will
be available shortly after the conclusion of the call. You
can access the replay dial-in information on the "Investors"
section of Envista's website under the subheading "Events &
Presentations." Presentation materials relating to Envista's
results have been posted to the "Investors" section of Envista's
website under the subheading "Quarterly Earnings."
ABOUT ENVISTA
Envista is a global family of more than 30 trusted dental
brands, including Nobel Biocare, Ormco, DEXIS, and Kerr united by a
shared purpose: to partner with professionals to improve lives.
Envista helps its customers deliver the best possible patient care
through industry-leading dental consumables, solutions, technology,
and services. Its comprehensive portfolio, including dental
implants and treatment options, orthodontics, and digital imaging
technologies, covers a wide range of dentists' clinical needs for
diagnosing, treating, and preventing dental conditions as well as
improving the aesthetics of the human smile. With a foundation
comprised of the proven Envista Business System (EBS) methodology,
an experienced leadership team, and a strong culture grounded in
continuous improvement, commitment to innovation, and deep customer
focus, Envista is well equipped to meet the end-to-end needs of
dental professionals worldwide. Envista is one of the largest
global dental products companies, with significant market positions
in some of the most attractive segments of the dental products
industry. For more information, please visit www.envistaco.com.
NON-GAAP MEASURES
All "Adjusted" amounts including core sales growth and free cash
flow are non-GAAP items. Calculations of these measures, the
reasons why we believe these measures provide useful information to
investors, a reconciliation of these measures to the most directly
comparable GAAP measures, and other information relating to these
non-GAAP measures are included in the attached supplemental
schedules. We do not reconcile forward looking non-GAAP measures to
the comparable GAAP measures because of the inherent difficulty in
predicting and estimating the future impact and timing of currency
translation, acquisitions, discontinued products, and any other
potential adjustments which would be reflected in any forecasted
GAAP measure.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release are "forward-looking"
statements within the meaning of the federal securities laws. There
are a number of important factors that could cause actual results,
developments and business decisions to differ materially from those
suggested or indicated by such forward-looking statements and you
should not place undue reliance on any such forward-looking
statements. These factors include, among other things, the
conditions in the U.S. and global economy, the impact of inflation
and increasing interest rates, international economic, political,
legal, compliance and business factors, the markets served by us
and the financial markets, the impact of the COVID-19 pandemic, the
impact of our debt obligations on our operations and liquidity,
developments and uncertainties in trade policies and regulations,
contractions or growth rates and cyclicality of markets we serve,
risks relating to product manufacturing, commodity costs and
surcharges, our ability to adjust purchases and manufacturing
capacity to reflect market conditions, reliance on sole or limited
sources of supply, disruptions relating to war, terrorism, climate
change, widespread protests and civil unrest, man-made and natural
disasters, public health issues and other events, security breaches
or other disruptions of our information technology systems or
violations of data privacy laws, fluctuations in inventory of our
distributors and customers, loss of a key distributor, our
relationships with and the performance of our channel partners,
competition, our ability to develop and successfully market new
products and services, our ability to attract, develop and retain
our key personnel, the potential for improper conduct by our
employees, agents or business partners, our compliance with
applicable laws and regulations (including regulations relating to
medical devices and the health care industry), the results of our
clinical trials and perceptions thereof, penalties associated with
any off-label marketing of our products, modifications to our
products that require new marketing clearances or authorizations,
our ability to effectively address cost reductions and other
changes in the health care industry, our ability to successfully
identify and consummate appropriate acquisitions and strategic
investments, our ability to integrate the businesses we acquire and
achieve the anticipated benefits of such acquisitions, contingent
liabilities relating to acquisitions, investments and divestitures,
our ability to adequately protect our intellectual property, the
impact of our restructuring activities on our ability to grow,
risks relating to currency exchange rates, changes in tax laws
applicable to multinational companies, litigation and other
contingent liabilities including intellectual property and
environmental, health and safety matters, risks relating to
product, service or software defects, the impact of regulation on
demand for our products and services, and labor matters. Additional
information regarding the factors that may cause actual results to
differ materially from these forward-looking statements is
available in our SEC filings, including our Annual Report on Form
10-K for fiscal year 2022 and our Quarterly reports on Form 10-Q.
These forward-looking statements speak only as of the date of this
press release and except to the extent required by applicable law,
we do not assume any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events and developments or
otherwise.
CONTACT
Stephen
Keller
Principal Financial Officer
Envista Holdings Corporation
200 S. Kraemer Blvd., Building E
Brea, CA 92821
Telephone: (714) 817-7000
Fax: (714) 817-5450
ENVISTA HOLDINGS CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ and shares in
millions, except per share amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Sales
|
$
631.3
|
|
$
631.1
|
|
$
1,920.9
|
|
$
1,908.3
|
Cost of
sales
|
268.0
|
|
266.4
|
|
816.3
|
|
799.7
|
Gross profit
|
363.3
|
|
364.7
|
|
1,104.6
|
|
1,108.6
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
257.7
|
|
264.2
|
|
796.7
|
|
801.9
|
Research and
development
|
22.3
|
|
26.0
|
|
73.6
|
|
75.5
|
Operating
profit
|
83.3
|
|
74.5
|
|
234.3
|
|
231.2
|
Nonoperating (expense)
income:
|
|
|
|
|
|
|
|
Other (expense)
income
|
(32.1)
|
|
0.3
|
|
(24.7)
|
|
0.9
|
Interest expense,
net
|
(15.4)
|
|
(11.6)
|
|
(49.5)
|
|
(23.9)
|
Income before income
taxes
|
35.8
|
|
63.2
|
|
160.1
|
|
208.2
|
Income tax
expense
|
14.3
|
|
13.6
|
|
42.9
|
|
43.7
|
Income from continuing
operations, net of tax
|
21.5
|
|
49.6
|
|
117.2
|
|
164.5
|
(Loss) Income from
discontinued
operations, net of tax
|
—
|
|
(2.0)
|
|
—
|
|
5.1
|
Net income
|
$
21.5
|
|
$
47.6
|
|
$
117.2
|
|
$
169.6
|
Earnings per
share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations - basic
|
$
0.13
|
|
$
0.30
|
|
$
0.71
|
|
$
1.01
|
Earnings from
continuing operations - diluted
|
$
0.12
|
|
$
0.28
|
|
$
0.66
|
|
$
0.92
|
|
|
|
|
|
|
|
|
(Loss) Earnings from
discontinued
operations - basic
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
$
0.03
|
(Loss) Earnings from
discontinued
operations - diluted
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
$
0.03
|
|
|
|
|
|
|
|
|
Earnings -
basic
|
$
0.13
|
|
$
0.29
|
|
$
0.71
|
|
$
1.04
|
Earnings -
diluted
|
$
0.12
|
|
$
0.27
|
|
$
0.66
|
|
$
0.95
|
Average common stock
and common
equivalent shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
168.2
|
|
163.1
|
|
165.3
|
|
162.7
|
Diluted
|
175.2
|
|
176.9
|
|
176.3
|
|
178.4
|
ENVISTA HOLDINGS CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in millions,
except share amounts)
|
|
|
As of
|
|
September 29,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
824.2
|
|
$
606.9
|
Trade accounts receivable,
less allowance for credit losses of $16.0 and $16.2,
respectively
|
417.1
|
|
393.5
|
Inventories,
net
|
278.8
|
|
300.8
|
Prepaid expenses and
other current assets
|
120.6
|
|
123.4
|
Total current
assets
|
1,640.7
|
|
1,424.6
|
Property, plant and
equipment, net
|
304.0
|
|
293.6
|
Operating lease
right-of-use assets
|
126.6
|
|
131.8
|
Other long-term
assets
|
152.9
|
|
153.7
|
Goodwill
|
3,458.2
|
|
3,496.6
|
Other intangible
assets, net
|
1,001.4
|
|
1,086.7
|
Total assets
|
$
6,683.8
|
|
$
6,587.0
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
115.1
|
|
$
510.0
|
Trade accounts
payable
|
168.6
|
|
228.3
|
Accrued expenses and
other liabilities
|
433.7
|
|
471.4
|
Operating lease
liabilities
|
29.4
|
|
27.0
|
Total current
liabilities
|
746.8
|
|
1,236.7
|
Operating lease
liabilities
|
112.3
|
|
121.4
|
Other long-term
liabilities
|
150.5
|
|
151.3
|
Long-term
debt
|
1,381.0
|
|
870.7
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $0.01
par value, 15.0 million shares authorized; no shares issued
or outstanding at September 29, 2023 and December 31,
2022
|
—
|
|
—
|
Common stock - $0.01
par value, 500.0 million shares authorized; 173.2 million
shares issued and 171.3 million shares outstanding at September 29,
2023; 163.7
million shares issued and 163.2 million shares outstanding at
December 31, 2022
|
1.7
|
|
1.6
|
Additional paid-in
capital
|
3,749.7
|
|
3,699.0
|
Retained
earnings
|
848.6
|
|
731.4
|
Accumulated other
comprehensive loss
|
(306.8)
|
|
(225.1)
|
Total stockholders'
equity
|
4,293.2
|
|
4,206.9
|
Total liabilities and
stockholders' equity
|
$
6,683.8
|
|
$
6,587.0
|
ENVISTA HOLDINGS CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in
millions)
|
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
117.2
|
|
$
169.6
|
Noncash
items:
|
|
|
|
Depreciation
|
26.8
|
|
23.9
|
Amortization
|
75.9
|
|
78.2
|
Allowance for credit
losses
|
3.5
|
|
3.8
|
Stock-based
compensation expense
|
26.2
|
|
23.1
|
Gain on equity
investments, net
|
(3.6)
|
|
—
|
Gain on sale of
property, plant and equipment
|
(2.0)
|
|
(1.1)
|
Gain on sale of KaVo
treatment unit and instrument business
|
—
|
|
(8.9)
|
Restructuring
charges
|
0.7
|
|
5.5
|
Impairment
charges
|
0.3
|
|
5.8
|
Fair value adjustment
of acquisition-related inventory
|
—
|
|
7.7
|
Amortization of
right-of-use assets
|
19.9
|
|
17.7
|
Inducement expense
related to exchange of convertible notes
|
28.5
|
|
—
|
Amortization of debt
discount and issuance costs
|
3.4
|
|
3.0
|
Change in trade
accounts receivable
|
(33.0)
|
|
(76.5)
|
Change in
inventories
|
9.4
|
|
(35.9)
|
Change in trade
accounts payable
|
(53.2)
|
|
11.3
|
Change in prepaid
expenses and other assets
|
5.4
|
|
(21.7)
|
Change in accrued
expenses and other liabilities
|
(26.1)
|
|
(109.7)
|
Change in operating
lease liabilities
|
(25.6)
|
|
(23.4)
|
Net cash provided by
operating activities
|
173.7
|
|
72.4
|
Cash flows from
investing activities:
|
|
|
|
Payments for additions
to property, plant and equipment
|
(50.0)
|
|
(58.8)
|
Proceeds from sales of
property, plant and equipment
|
—
|
|
1.6
|
Proceeds from sale of
equity investment
|
10.7
|
|
—
|
Acquisitions, net of
cash acquired
|
—
|
|
(696.2)
|
Proceeds from sale of
KaVo treatment unit and instrument business, net
|
—
|
|
59.8
|
Proceeds from the
settlement of derivative financial instruments
|
1.1
|
|
55.9
|
All other investing
activities, net
|
(11.6)
|
|
(18.5)
|
Net cash used in
investing activities
|
(49.8)
|
|
(656.2)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of convertible notes due 2028
|
500.2
|
|
—
|
Debt issuance costs
related to issuance of convertible notes due 2028
|
(13.5)
|
|
—
|
Principal paid related
to exchange of convertible notes due 2025
|
(401.2)
|
|
—
|
Proceeds from
borrowings
|
323.5
|
|
0.3
|
Repayment of
borrowings
|
(288.8)
|
|
(0.5)
|
Debt issuance costs
related to other borrowings
|
(4.5)
|
|
—
|
Proceeds from
revolving line of credit
|
—
|
|
124.0
|
Repayment of revolving
line of credit
|
—
|
|
(54.0)
|
Proceeds from stock
option exercises
|
7.5
|
|
19.9
|
Tax withholding
payment related to net settlement of equity awards
|
(7.8)
|
|
(8.9)
|
All other financing
activities
|
0.2
|
|
—
|
Net cash provided by
financing activities
|
115.6
|
|
80.8
|
Effect of exchange rate
changes on cash and cash equivalents
|
(22.2)
|
|
(2.1)
|
Net change in cash and
cash equivalents
|
217.3
|
|
(505.1)
|
Beginning balance of
cash and cash equivalents
|
606.9
|
|
1,073.6
|
Ending balance of cash
and cash equivalents
|
$
824.2
|
|
$
568.5
|
ENVISTA HOLDINGS CORPORATION
SUMMARY OF FINANCIAL
METRICS (Unaudited)
($ in millions,
except per share amounts)
|
|
|
GAAP
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Gross Profit
|
$
363.3
|
|
$
364.7
|
|
$
1,104.6
|
|
$
1,108.6
|
Operating Profit From
Continuing Operations
|
$
83.3
|
|
$
74.5
|
|
$
234.3
|
|
$
231.2
|
Net Income From
Continuing Operations
|
$
21.5
|
|
$
49.6
|
|
$
117.2
|
|
$
164.5
|
Diluted EPS From
Continuing Operations
|
$
0.12
|
|
$
0.28
|
|
$
0.66
|
|
$
0.92
|
Operating Cash
Flow
|
$
95.5
|
|
$
46.7
|
|
$
173.7
|
|
$
72.4
|
|
|
NON-GAAP
*
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Adjusted Gross
Profit
|
$
364.3
|
|
$
373.5
|
|
$
1,111.9
|
|
$
1,126.3
|
Adjusted Operating
Profit
|
$
114.4
|
|
$
119.5
|
|
$
336.2
|
|
$
354.3
|
Adjusted Net
Income
|
$
75.5
|
|
$
82.5
|
|
$
219.5
|
|
$
253.4
|
Adjusted Diluted
EPS
|
$
0.43
|
|
$
0.47
|
|
$
1.25
|
|
$
1.42
|
Adjusted
EBITDA
|
$
123.5
|
|
$
127.6
|
|
$
363.7
|
|
$
379.1
|
Free Cash
Flow
|
$
77.1
|
|
$
19.7
|
|
$
123.7
|
|
$
15.2
|
|
* For
information on non-GAAP measures see "Reconciliation of GAAP to
Non-GAAP Financial Measures" below. Also see the accompanying
"Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures."
|
ENVISTA HOLDINGS CORPORATION
SEGMENT INFORMATION
(Unaudited)
($ in
millions)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Sales
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
$
399.5
|
|
$
395.4
|
|
$
1,226.5
|
|
$
1,200.2
|
Equipment &
Consumables
|
231.8
|
|
235.7
|
|
694.4
|
|
708.1
|
Total
|
$
631.3
|
|
$
631.1
|
|
$
1,920.9
|
|
$
1,908.3
|
|
|
|
|
|
|
|
|
Operating Profit
(Loss)
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
$
61.4
|
|
$
62.3
|
|
$
188.2
|
|
$
206.6
|
Equipment &
Consumables
|
43.9
|
|
44.7
|
|
124.8
|
|
120.4
|
Other
|
(22.0)
|
|
(32.5)
|
|
(78.7)
|
|
(95.8)
|
Total
|
$
83.3
|
|
$
74.5
|
|
$
234.3
|
|
$
231.2
|
|
|
|
|
|
|
|
|
Operating
Margins
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
15.4 %
|
|
15.8 %
|
|
15.3 %
|
|
17.2 %
|
Equipment &
Consumables
|
18.9 %
|
|
19.0 %
|
|
18.0 %
|
|
17.0 %
|
Total
|
13.2 %
|
|
11.8 %
|
|
12.2 %
|
|
12.1 %
|
ENVISTA HOLDINGS CORPORATION
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)
($ in millions,
except per share amounts)
|
|
Adjusted Gross
Profit and Adjusted Gross Margin
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Gross Profit
|
$
363.3
|
|
$
364.7
|
|
$
1,104.6
|
|
$ 1,108.6
|
Restructuring costs
and asset impairments A
|
1.0
|
|
3.4
|
|
7.3
|
|
10.0
|
Fair
value adjustment of acquisition-related inventory
C
|
—
|
|
5.4
|
|
—
|
|
7.7
|
Adjusted Gross
Profit
|
$
364.3
|
|
$
373.5
|
|
$
1,111.9
|
|
$ 1,126.3
|
|
|
|
|
|
|
|
|
Gross Margin (Gross
Profit / Sales)
|
57.5 %
|
|
57.8 %
|
|
57.5 %
|
|
58.1 %
|
Adjusted Gross Margin
(Adjusted Gross Profit / Sales)
|
57.7 %
|
|
59.2 %
|
|
57.9 %
|
|
59.0 %
|
|
Adjusted Operating
Profit
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Consolidated
|
|
|
|
|
|
|
|
Operating
Profit
|
$
83.3
|
|
$
74.5
|
|
$
234.3
|
|
$
231.2
|
Amortization of
acquisition-related and other intangible assets
|
23.9
|
|
27.9
|
|
75.9
|
|
78.2
|
Restructuring costs
and asset impairments A
|
6.8
|
|
9.6
|
|
24.7
|
|
28.1
|
Acquisition related
expenses B
|
0.4
|
|
2.1
|
|
1.3
|
|
14.6
|
Fair
value adjustment of acquisition-related inventory
C
|
—
|
|
5.4
|
|
—
|
|
7.7
|
Contingent loss
reserves F
|
—
|
|
—
|
|
—
|
|
1.0
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(6.5)
|
Adjusted Operating
Profit
|
$
114.4
|
|
$
119.5
|
|
$
336.2
|
|
$
354.3
|
Adjusted Operating
Profit as a % of Sales
|
18.1 %
|
|
18.9 %
|
|
17.5 %
|
|
18.6 %
|
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
|
|
|
|
|
|
|
Operating
Profit
|
$
61.4
|
|
$
62.3
|
|
$
188.2
|
|
$
206.6
|
Amortization of
acquisition-related and other intangible assets
|
15.7
|
|
15.4
|
|
47.3
|
|
44.7
|
Restructuring costs
and asset impairments A
|
1.7
|
|
4.5
|
|
9.5
|
|
12.7
|
Contingent loss
reserves F
|
—
|
|
—
|
|
—
|
|
1.0
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(1.7)
|
Adjusted Operating
Profit
|
$
78.8
|
|
$
82.2
|
|
$
245.0
|
|
$
263.3
|
Adjusted Operating
Profit as a % of Sales
|
19.7 %
|
|
20.8 %
|
|
20.0 %
|
|
21.9 %
|
|
|
|
|
|
|
|
|
Equipment &
Consumables
|
|
|
|
|
|
|
|
Operating
Profit
|
$
43.9
|
|
$
44.7
|
|
$
124.8
|
|
$
120.4
|
Amortization of
acquisition-related and other intangible assets
|
8.2
|
|
12.5
|
|
28.6
|
|
33.5
|
Restructuring costs
and asset impairments A
|
5.0
|
|
4.2
|
|
14.0
|
|
12.6
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(4.8)
|
Adjusted Operating
Profit
|
$
57.1
|
|
$
61.4
|
|
$
167.4
|
|
$
161.7
|
Adjusted Operating
Profit as a % of Sales
|
24.6 %
|
|
26.1 %
|
|
24.1 %
|
|
22.8 %
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
Adjusted Net
Income
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Net Income From
Continuing Operations
|
$
21.5
|
|
$
49.6
|
|
$
117.2
|
|
$
164.5
|
Amortization of
acquisition-related and other intangible assets
|
23.9
|
|
27.9
|
|
75.9
|
|
78.2
|
Restructuring costs
and asset impairments A
|
6.8
|
|
9.6
|
|
24.7
|
|
28.1
|
Acquisition related
expenses B
|
0.4
|
|
2.1
|
|
1.3
|
|
14.6
|
Fair
value adjustment of acquisition-related inventory
C
|
—
|
|
5.4
|
|
—
|
|
7.7
|
Loss (gain) on equity
investments, net D
|
3.3
|
|
—
|
|
(3.6)
|
|
—
|
Inducement and other
expenses related to convertible notes exchange
E
|
29.0
|
|
—
|
|
29.0
|
|
—
|
Contingent loss
reserves F
|
—
|
|
—
|
|
—
|
|
1.0
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(6.5)
|
Tax effect of
adjustments reflected above H
|
(10.4)
|
|
(10.4)
|
|
(25.5)
|
|
(28.4)
|
Discrete tax
adjustments and other tax-related adjustments
I
|
1.0
|
|
(1.7)
|
|
0.5
|
|
(5.8)
|
Adjusted Net
Income
|
$
75.5
|
|
$
82.5
|
|
$
219.5
|
|
$
253.4
|
|
Adjusted Diluted
Earnings Per Share
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Diluted Earnings From
Continuing Operations Per Share
|
$
0.12
|
|
$
0.28
|
|
$
0.66
|
|
$
0.92
|
Amortization of
acquisition-related and other intangible assets
|
0.14
|
|
0.16
|
|
0.43
|
|
0.44
|
Restructuring costs
and asset impairments A
|
0.04
|
|
0.05
|
|
0.14
|
|
0.16
|
Acquisition related
expenses B
|
—
|
|
0.01
|
|
0.01
|
|
0.08
|
Fair value adjustment of
acquisition-related inventory C
|
—
|
|
0.03
|
|
—
|
|
0.04
|
Loss (gain) on equity
investments, net D
|
0.02
|
|
—
|
|
(0.02)
|
|
—
|
Inducement and other
expenses related to convertible notes exchange
E
|
0.17
|
|
—
|
|
0.16
|
|
—
|
Contingent loss
reserves F
|
—
|
|
—
|
|
—
|
|
0.01
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(0.04)
|
Tax effect of
adjustments reflected above H
|
(0.07)
|
|
(0.05)
|
|
(0.14)
|
|
(0.16)
|
Discrete tax
adjustments and other tax-related adjustments
I
|
0.01
|
|
(0.01)
|
|
0.01
|
|
(0.03)
|
Adjusted Diluted
Earnings Per Share
|
$
0.43
|
|
$
0.47
|
|
$
1.25
|
|
$
1.42
|
|
Adjusted
EBITDA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Net Income From
Continuing Operations
|
$
21.5
|
|
$
49.6
|
|
$
117.2
|
|
$
164.5
|
Interest expense,
net
|
15.4
|
|
11.6
|
|
49.5
|
|
23.9
|
Income
taxes
|
14.3
|
|
13.6
|
|
42.9
|
|
43.7
|
Depreciation
|
8.9
|
|
7.8
|
|
26.8
|
|
23.9
|
Amortization of
acquisition-related and other intangible assets
|
23.9
|
|
27.9
|
|
75.9
|
|
78.2
|
Restructuring costs
and asset impairments A
|
6.8
|
|
9.6
|
|
24.7
|
|
28.1
|
Acquisition related
expenses B
|
0.4
|
|
2.1
|
|
1.3
|
|
14.6
|
Fair
value adjustment of acquisition-related inventory
C
|
—
|
|
5.4
|
|
—
|
|
7.7
|
Loss (gain) on equity
investments, net D
|
3.3
|
|
—
|
|
(3.6)
|
|
—
|
Inducement and other
expenses related to convertible notes exchange
E
|
29.0
|
|
—
|
|
29.0
|
|
—
|
Contingent loss
reserves F
|
—
|
|
—
|
|
—
|
|
1.0
|
International tax
credit G
|
—
|
|
—
|
|
—
|
|
(6.5)
|
Adjusted
EBITDA
|
$
123.5
|
|
$
127.6
|
|
$
363.7
|
|
$
379.1
|
Adjusted EBITDA as a %
of Sales
|
19.6 %
|
|
20.2 %
|
|
18.9 %
|
|
19.9 %
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Core Sales
Growth 1
|
|
Consolidated
|
% Change Three
Month Period Ended
September 29, 2023
vs.
Comparable 2022
Period
|
|
% Change Nine
Month Period Ended
September 29, 2023
vs.
Comparable 2022
Period
|
Total sales
growth
|
— %
|
|
0.7 %
|
Plus the impact
of:
|
|
|
|
Acquisitions
|
— %
|
|
(1.7) %
|
Currency exchange
rates
|
0.8 %
|
|
1.2 %
|
Core sales
growth
|
0.8 %
|
|
0.2 %
|
|
|
|
|
Specialty Products
& Technologies
|
|
|
|
Total sales
growth
|
1.0 %
|
|
2.2 %
|
Plus the impact
of:
|
|
|
|
Acquisitions
|
— %
|
|
(1.4) %
|
Currency exchange
rates
|
1.2 %
|
|
1.5 %
|
Core sales
growth
|
2.2 %
|
|
2.3 %
|
|
|
|
|
Equipment &
Consumables
|
|
|
|
Total sales
growth
|
(1.7) %
|
|
(1.9) %
|
Plus the impact
of:
|
|
|
|
Acquisitions
|
— %
|
|
(2.0) %
|
Currency exchange
rates
|
0.1 %
|
|
0.4 %
|
Core sales
growth
|
(1.6) %
|
|
(3.5) %
|
|
|
1
|
We use the term "core
sales" to refer to GAAP revenue excluding (1) sales from acquired
businesses recorded prior to the first anniversary of the
acquisition ("acquisitions"), (2) sales from discontinued products
and (3) the impact of currency translation. Sales from discontinued
products includes major brands or products that Envista has made
the decision to discontinue as part of a portfolio restructuring.
Discontinued brands or products consist of those which Envista (1)
is no longer manufacturing, (2) is no longer investing in the
research or development of, and (3) expects to discontinue all
significant sales within one year from the decision date to
discontinue. The portion of sales attributable to discontinued
brands or products is calculated as the net decline of the
applicable discontinued brand or product from period-to-period. The
portion of GAAP revenue attributable to currency exchange rates is
calculated as the difference between (a) the period-to-period
change in sales and (b) the period-to-period change in sales after
applying current period foreign exchange rates to the prior year
period. We use the term "core sales growth" to refer to the measure
of comparing current period core sales with the corresponding
period of the prior year.
|
Reconciliation of
Operating Cash Flows to Free Cash Flow
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 29,
2023
|
|
September 30,
2022
|
|
September 29,
2023
|
|
September 30,
2022
|
Net Operating Cash
Provided by Operating Activities
|
$
95.5
|
|
$
46.7
|
|
$
173.7
|
|
$
72.4
|
Less: payments for
additions to property, plant and
equipment (capital expenditures)
|
(18.4)
|
|
(26.9)
|
|
(50.0)
|
|
(58.8)
|
Plus: proceeds from
sales of property, plant and
equipment (capital disposals)
|
—
|
|
(0.1)
|
|
—
|
|
1.6
|
Free Cash
Flow
|
$
77.1
|
|
$
19.7
|
|
$
123.7
|
|
$
15.2
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
ENVISTA HOLDINGS
CORPORATION
NOTES TO RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
|
|
|
A
|
We exclude costs
incurred pursuant to discrete restructuring plans that are
fundamentally different (in terms of the size, strategic nature and
planning requirements) from the ongoing productivity improvements
that result from application of the Envista Business System. These
restructuring plans are incremental to the operating activities
that arise in the ordinary course of our business and we believe
are not indicative of Envista's ongoing operating costs in a given
period.
|
|
|
B
|
These represent
acquisition related transactions expenses and integration costs
with respect to business combinations.
|
|
|
C
|
Represents the fair
value adjustment related to inventory acquired in connection with
acquisitions.
|
|
|
D
|
Represents gains or
losses on equity investments.
|
|
|
E
|
These costs primarily
relate to inducement and other expenses incurred in connection with
our partial exchange of our 2025 Convertible Senior Notes.
|
|
|
F
|
Represents accruals
for certain legal matters.
|
|
|
G
|
Represents
international tax credit related to a ruling from the Brazilian
Supreme Court.
|
|
|
H
|
This line item
reflects the aggregate tax effect of all pretax adjustments
reflected in the preceding line items of the table using each
adjustment's applicable tax rate, including the effect of interim
tax accounting requirements of Accounting Standards Codification
Topic 740 Income Taxes.
|
|
|
I
|
The discrete tax
matters relate primarily to excess tax benefits from stock-based
compensation, changes in estimates associated with prior period
uncertain tax positions and audit settlements, tax benefits
resulting from a change in law, and changes in determination of
realization of certain deferred tax assets.
|
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be
considered in addition to, and not as a replacement for or superior
to, the comparable GAAP measure, and may not be comparable to
similarly titled measures reported by other companies. Management
believes that these measures provide useful information to
investors by offering additional ways of viewing Envista Holdings
Corporation's ("Envista" or the "Company") results that, when
reconciled to the corresponding GAAP measure, help our investors
to:
- with respect to Adjusted Gross Profit, Adjusted Operating
Profit, Adjusted Net Income, Adjusted Diluted Earnings Per Share
and Adjusted EBITDA, understand the long-term profitability trends
of Envista's business and compare Envista's profitability to prior
and future periods and to Envista's peers;
- with respect to Core Sales, identify underlying growth trends
in Envista's business and compare Envista's revenue performance
with prior and future periods and to Envista's peers;
- with respect to Adjusted EBITDA, help investors understand
operational factors associated with a company's financial
performance because it excludes the following from consideration:
interest, taxes, depreciation, amortization, and infrequent or
unusual losses or gains such as goodwill impairment charges or
nonrecurring and restructuring charges. Management uses Adjusted
EBITDA, as a supplemental measure for assessing operating
performance in conjunction with related GAAP amounts. In addition,
Adjusted EBITDA is used in connection with operating decisions,
strategic planning, annual budgeting, evaluating Company
performance and comparing operating results with historical periods
and with industry peer companies; and
- with respect to Free Cash Flow (the "FCF Measure"), understand
Envista's ability to generate cash without external financings,
strengthen its balance sheet, invest in its business and grow its
business through acquisitions and other strategic opportunities
(although a limitation of free cash flow is that it does not take
into account the Company's debt service requirements and other
non-discretionary expenditures, and as a result the entire Free
Cash Flow amount is not necessarily available for discretionary
expenditures).
Management uses these non-GAAP measures to measure the Company's
operating and financial performance.
The items excluded from the non-GAAP measures set forth above
have been excluded for the following reasons:
- With respect to Adjusted Gross Profit, Adjusted Operating
Profit, Adjusted Net Income, Adjusted Diluted Earnings Per Share
and Adjusted EBITDA:
- We exclude the amortization of acquisition-related and other
intangible assets because the amount and timing of such charges are
significantly impacted by the timing, size, number and nature of
the acquisitions we consummate. While we have a history of
significant acquisition activity, we do not acquire businesses on a
predictable cycle, and the amount of an acquisition's purchase
price allocated to intangible assets and related amortization term
are unique to each acquisition and can vary significantly from
acquisition to acquisition. Exclusion of this amortization expense
facilitates more consistent comparisons of operating results over
time between our newly-acquired and long-held businesses, and with
both acquisitive and non-acquisitive peer companies. We believe,
however, that it is important for investors to understand that such
intangible assets contribute to revenue generation and that
intangible asset amortization related to past acquisitions will
recur in future periods until such intangible assets have been
fully amortized.
- With respect to the other items excluded from Adjusted Gross
Profit, Adjusted Net Income, Adjusted Operating Profit, Adjusted
Diluted Earnings Per Share and Adjusted EBITDA, we exclude these
items because they are of a nature and/or size that occur with
inconsistent frequency, occur for reasons that may be unrelated to
Envista's commercial performance during the period and/or we
believe that such items may obscure underlying business trends and
make comparisons of long-term performance difficult.
- With respect to core sales, we exclude (1) the effect of
acquisitions and divested product lines because the timing, size,
number and nature of such transactions can vary significantly from
period-to-period and between us and our peers, which we believe may
obscure underlying business trends and make comparisons of
long-term performance difficult, (2) sales from discontinued
products because discontinued products do not have a continuing
contribution to operations and management believes that excluding
such items provides investors with a means of evaluating our
on-going operations and facilitates comparisons to our peers, and
(3) the impact of currency translation because it is not under
management's control, is subject to volatility and can obscure
underlying business trends.
- With respect to the FCF Measure, we adjust for payments for
additions to property, plant and equipment (net of the proceeds
from capital disposals) to demonstrate the amount of operating cash
flow for the period that remains after accounting for the Company's
capital expenditure requirements.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/envista-reports-third-quarter-2023-earnings-301974642.html
SOURCE Envista Holdings Corporation