BREA, Calif., Feb. 7, 2024 /PRNewswire/ — Envista Holdings Corporation (NYSE:NVST) today announced results for the fourth quarter and full year 2023.
For the quarter ended December 31, 2023, reported sales were $645.6 million. Core sales in the quarter declined 2.0% over the corresponding quarter in 2022. Net loss in the fourth quarter was $217.4 million or $1.27 per diluted share. The net loss included a $258.3 million non-cash charge related to the impairment of goodwill and intangible assets. During the same period, adjusted net income was $49.7 million or $0.29 per diluted share compared to adjusted net income of $91.9 million or $0.52 per diluted share in the same period of 2022. Adjusted EBITDA for the fourth quarter of 2023 was $100.5 million compared to $138.3 million in the fourth quarter of 2022.
Amir Aghdaei, Chief Executive Officer, stated, “Despite a volatile macro backdrop in 2023, the Envista team delivered full year results in line with our expectations. For the full year 2023, we saw a modest decline in core growth and delivered an adjusted EBITDA margin of 18.1%. Our Orthodontic business continues to outperform, growing double digits for the full year 2023, with Spark Aligner growing over 50%. We further delivered $223.6 million of free cash flow for the full year, representing an increase of more than $100 million over 2022.”
Mr. Aghdaei continued, “We are committed to our purpose of partnering with dental professionals to improve patients’ lives by digitizing, personalizing, and democratizing dental care. 2024 will be a transformational year for Envista as we focus on improving Spark profitability, accelerating our North American implant business, and optimizing our operating structure using the Envista Business System. Long-term, we remain focused on delivering value for patients, our customers, our employees, and our shareholders.”
2024 Guidance
For the full year 2024, we expect core sales to grow low-single digits and to deliver adjusted EBITDA margins of between 16% – 17%. We further anticipate that our margins will accelerate as we move through 2024. Our guidance takes into consideration both our investments for the long-term and the continued uncertainty in the macro environment.
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 and provide an outlook for 2024 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 800-225-9448 within the U.S. or +1 203-518-9708 outside the U.S. a few minutes before 2:00 PM PT and referencing conference ID #7305894. 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. Our 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
ENVISTA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ and shares in millions, except per share amounts)
Three Months Ended
Twelve Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Sales
$ 645.6
$ 660.8
$ 2,566.5
$ 2,569.1
Cost of sales
309.7
294.6
1,126.0
1,094.3
Gross profit
335.9
366.2
1,440.5
1,474.8
Operating expenses:
Selling, general and administrative
260.2
253.6
1,056.9
1,055.5
Research and development
20.2
24.6
93.8
100.1
Goodwill and intangible asset impairment
258.3
—
258.3
—
Operating (loss) profit
(202.8)
88.0
31.5
319.2
Nonoperating income (expense):
Other income (expense)
1.7
2.2
(23.0)
3.1
Interest expense, net
(13.9)
(14.5)
(63.4)
(38.4)
(Loss) income before income taxes
(215.0)
75.7
(54.9)
283.9
Income tax expense
2.4
2.2
45.3
45.9
(Loss) income from continuing operations, net of tax
(217.4)
73.5
(100.2)
238.0
Income from discontinued operations, net of tax
—
—
—
5.1
Net (loss) income
$ (217.4)
$ 73.5
$ (100.2)
$ 243.1
Earnings per share:
(Loss) earnings from continuing operations – basic
$ (1.27)
$ 0.45
$ (0.60)
$ 1.46
(Loss) earnings from continuing operations – diluted
$ (1.27)
$ 0.42
$ (0.60)
$ 1.34
Earnings from discontinued operations – basic
$ —
$ —
$ —
$ 0.03
Earnings from discontinued operations – diluted
$ —
$ —
$ —
$ 0.03
(Loss) earnings – basic
$ (1.27)
$ 0.45
$ (0.60)
$ 1.49
(Loss) earnings – diluted
$ (1.27)
$ 0.42
$ (0.60)
$ 1.37
Average common stock and common equivalent shares outstanding:
Basic
171.7
163.3
166.9
162.9
Diluted
171.7
175.3
166.9
177.6
ENVISTA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in millions, except share amounts)
As of
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$ 940.0
$ 606.9
Trade accounts receivable, less allowance for credit losses of $17.3 and $16.2,
respectively
407.5
393.5
Inventories, net
258.8
300.8
Prepaid expenses and other current assets
137.4
123.4
Total current assets
1,743.7
1,424.6
Property, plant and equipment, net
309.6
293.6
Operating lease right-of-use assets
125.1
131.8
Other long-term assets
180.5
153.7
Goodwill
3,292.2
3,496.6
Other intangible assets, net
954.0
1,086.7
Total assets
$ 6,605.1
$ 6,587.0
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt
$ 115.3
$ 510.0
Trade accounts payable
179.5
228.3
Accrued expenses and other liabilities
455.7
471.4
Operating lease liabilities
30.3
27.0
Total current liabilities
780.8
1,236.7
Operating lease liabilities
109.9
121.4
Other long-term liabilities
142.4
151.3
Long-term debt
1,398.1
870.7
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued
or outstanding at December 31, 2023 and December 31, 2022
—
—
Common stock – $0.01 par value, 500.0 million shares authorized; 173.3 million
shares issued and 171.5 million shares outstanding at December 31, 2023; 163.7
million shares issued and 163.2 million shares outstanding at December 31, 2022
1.7
1.6
Additional paid-in capital
3,758.2
3,699.0
Retained earnings
631.2
731.4
Accumulated other comprehensive loss
(217.2)
(225.1)
Total stockholders’ equity
4,173.9
4,206.9
Total liabilities and stockholders’ equity
$ 6,605.1
$ 6,587.0
ENVISTA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in millions)
Year Ended December 31,
2023
2022
2021
Cash flows from operating activities:
Net (loss) income
$ (100.2)
$ 243.1
$ 340.5
Noncash items:
Depreciation
36.0
31.8
40.8
Amortization
99.6
106.0
82.8
Allowance for credit losses
7.1
4.8
5.6
Stock-based compensation expense
30.7
30.5
28.2
Gain on equity investments, net
(3.6)
—
—
Gain on sale of property, plant and equipment
(5.4)
(1.9)
(2.2)
Gain on sale of KaVo treatment unit and instrument business
—
(8.9)
(11.7)
Restructuring charges
1.3
4.7
10.8
Goodwill and intangible asset impairment
258.3
—
—
Other impairment charges
0.2
6.4
18.4
Fair value adjustment of acquisition-related inventory
—
9.5
—
Amortization of right-of-use assets
27.0
24.3
28.3
Inducement expense related to exchange of convertible notes
28.5
—
—
Amortization of debt discount and issuance costs
4.6
4.1
23.3
Change in deferred income taxes
(37.0)
(29.0)
(59.0)
Change in trade accounts receivable
(17.0)
(71.0)
(43.2)
Change in inventories
35.1
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