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
|
|
(39.9)
|
|
(66.0)
|
|
Change in trade
accounts payable
|
(46.3)
|
|
44.5
|
|
(20.3)
|
|
Change in prepaid
expenses and other assets
|
16.8
|
|
(11.7)
|
|
(11.5)
|
|
Change in accrued
expenses and other liabilities
|
(25.5)
|
|
(133.0)
|
|
34.3
|
|
Change in operating
lease liabilities
|
(34.5)
|
|
(31.6)
|
|
(37.5)
|
|
Net cash provided by
operating activities
|
275.7
|
|
182.7
|
|
361.6
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Payments for additions
to property, plant and equipment
|
(58.2)
|
|
(75.7)
|
|
(54.7)
|
|
Proceeds from sales of
property, plant and equipment
|
6.1
|
|
3.3
|
|
11.6
|
|
Proceeds from sale of
equity investment
|
10.7
|
|
—
|
|
—
|
|
Acquisitions, net of
cash acquired
|
—
|
|
(696.2)
|
|
(2.1)
|
|
Proceeds from sale of
KaVo treatment unit and instrument business, net
|
—
|
|
73.9
|
|
312.5
|
|
Proceeds from the
settlement of derivative financial instruments
|
1.6
|
|
56.0
|
|
11.4
|
|
All other investing
activities, net
|
(22.6)
|
|
(18.6)
|
|
(16.0)
|
|
Net cash (used in)
provided by investing activities
|
(62.4)
|
|
(657.3)
|
|
262.7
|
|
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
|
(13.8)
|
|
—
|
|
—
|
|
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)
|
|
(475.7)
|
|
Debt issuance costs
related to other borrowings
|
(4.5)
|
|
—
|
|
(2.3)
|
|
Proceeds from
revolving line of credit
|
—
|
|
124.0
|
|
—
|
|
Repayment of revolving
line of credit
|
—
|
|
(124.0)
|
|
—
|
|
Proceeds from stock
option exercises
|
11.3
|
|
21.8
|
|
19.5
|
|
Tax withholding
payment related to net settlement of equity awards
|
(7.9)
|
|
(9.1)
|
|
(7.2)
|
|
All other financing
activities
|
0.1
|
|
—
|
|
0.1
|
|
Net cash provided by
(used in) financing activities
|
118.9
|
|
12.5
|
|
(465.6)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
0.9
|
|
(4.6)
|
|
26.0
|
|
Net change in cash and
cash equivalents
|
333.1
|
|
(466.7)
|
|
184.7
|
|
Beginning balance of
cash and cash equivalents
|
606.9
|
|
1,073.6
|
|
888.9
|
|
Ending balance of cash
and cash equivalents
|
$
940.0
|
|
$
606.9
|
|
$
1,073.6
|
|
ENVISTA HOLDINGS
CORPORATION
SUMMARY OF FINANCIAL
METRICS (Unaudited)
($ in millions,
except per share amounts)
|
|
|
|
GAAP
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Gross Profit
|
$
335.9
|
|
$
366.2
|
|
$
1,440.5
|
|
$
1,474.8
|
|
Operating (Loss) Profit
From Continuing Operations
|
$
(202.8)
|
|
$
88.0
|
|
$
31.5
|
|
$
319.2
|
|
Net (Loss) Income From
Continuing Operations
|
$
(217.4)
|
|
$
73.5
|
|
$
(100.2)
|
|
$
238.0
|
|
(Loss) Diluted Earnings
Per Share From Continuing Operations
|
$
(1.27)
|
|
$
0.42
|
|
$
(0.60)
|
|
$
1.34
|
|
Operating Cash
Flow
|
$
102.0
|
|
$
110.3
|
|
$
275.7
|
|
$
182.7
|
|
|
|
|
|
NON-GAAP
*
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Adjusted Gross
Profit
|
$
338.6
|
|
$
371.6
|
|
$
1,450.5
|
|
$
1,497.9
|
|
Adjusted Operating
Profit
|
$
89.6
|
|
$
128.2
|
|
$
425.8
|
|
$
482.5
|
|
Adjusted Net
Income
|
$
49.7
|
|
$
91.9
|
|
$
269.2
|
|
$
345.3
|
|
Adjusted Diluted
EPS
|
$
0.29
|
|
$
0.52
|
|
$
1.53
|
|
$
1.94
|
|
Adjusted
EBITDA
|
$
100.5
|
|
$
138.3
|
|
$
464.2
|
|
$
517.4
|
|
Free Cash
Flow
|
$
99.9
|
|
$
95.1
|
|
$
223.6
|
|
$
110.3
|
|
* 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
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales
|
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
$
415.9
|
|
$
398.4
|
|
$
1,642.4
|
|
$
1,598.6
|
|
Equipment &
Consumables
|
229.7
|
|
262.4
|
|
924.1
|
|
970.5
|
|
Total
|
$
645.6
|
|
$
660.8
|
|
$
2,566.5
|
|
$
2,569.1
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Profit
|
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
$
43.9
|
|
$
62.0
|
|
$
232.1
|
|
$
268.6
|
|
Equipment &
Consumables
|
31.5
|
|
52.0
|
|
156.3
|
|
172.4
|
|
Other
|
(278.2)
|
|
(26.0)
|
|
(356.9)
|
|
(121.8)
|
|
Total
|
$
(202.8)
|
|
$
88.0
|
|
$
31.5
|
|
$
319.2
|
|
|
|
|
|
|
|
|
|
Operating
Margins
|
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
10.6 %
|
|
15.6 %
|
|
14.1 %
|
|
16.8 %
|
|
Equipment &
Consumables
|
13.7 %
|
|
19.8 %
|
|
16.9 %
|
|
17.8 %
|
|
Total
|
(31.4) %
|
|
13.3 %
|
|
1.2 %
|
|
12.4 %
|
|
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
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Gross Profit
|
$
335.9
|
|
$
366.2
|
|
$
1,440.5
|
|
$ 1,474.8
|
|
Restructuring costs
and asset impairments B
|
2.7
|
|
3.6
|
|
10.0
|
|
13.6
|
|
Fair
value adjustment of acquisition-related inventory
D
|
—
|
|
1.8
|
|
—
|
|
9.5
|
|
Adjusted Gross
Profit
|
$
338.6
|
|
$
371.6
|
|
$
1,450.5
|
|
$ 1,497.9
|
|
|
|
|
|
|
|
|
|
Gross Margin (Gross
Profit / Sales)
|
52.0 %
|
|
55.4 %
|
|
56.1 %
|
|
57.4 %
|
|
Adjusted Gross Margin
(Adjusted Gross Profit / Sales)
|
52.4 %
|
|
56.2 %
|
|
56.5 %
|
|
58.3 %
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Operating (Loss)
Profit
|
$
(202.8)
|
|
$
88.0
|
|
$
31.5
|
|
$
319.2
|
|
Goodwill and
intangible asset impairment A
|
258.3
|
|
—
|
|
258.3
|
|
—
|
|
Amortization of
acquisition-related and other intangible assets
|
23.7
|
|
27.8
|
|
99.6
|
|
106.0
|
|
Restructuring costs
and asset impairments B
|
10.4
|
|
9.5
|
|
35.1
|
|
37.6
|
|
Acquisition related
expenses C
|
—
|
|
1.1
|
|
1.3
|
|
15.7
|
|
Fair
value adjustment of acquisition-related inventory
D
|
—
|
|
1.8
|
|
—
|
|
9.5
|
|
Contingent loss
reserves G
|
—
|
|
—
|
|
—
|
|
1.0
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(6.5)
|
|
Adjusted Operating
Profit
|
$
89.6
|
|
$
128.2
|
|
$
425.8
|
|
$
482.5
|
|
Adjusted Operating
Profit as a % of Sales
|
13.9 %
|
|
19.4 %
|
|
16.6 %
|
|
18.8 %
|
|
|
|
|
|
|
|
|
|
Specialty Products
& Technologies
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
43.9
|
|
$
62.0
|
|
$
232.1
|
|
$
268.6
|
|
Amortization of
acquisition-related and other intangible assets
|
15.5
|
|
15.5
|
|
62.8
|
|
60.2
|
|
Restructuring costs
and asset impairments B
|
4.5
|
|
2.0
|
|
14.0
|
|
14.7
|
|
Contingent loss
reserves G
|
—
|
|
—
|
|
—
|
|
1.0
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(1.7)
|
|
Adjusted Operating
Profit
|
$
63.9
|
|
$
79.5
|
|
$
308.9
|
|
$
342.8
|
|
Adjusted Operating
Profit as a % of Sales
|
15.4 %
|
|
20.0 %
|
|
18.8 %
|
|
21.4 %
|
|
|
|
|
|
|
|
|
|
Equipment &
Consumables
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
31.5
|
|
$
52.0
|
|
$
156.3
|
|
$
172.4
|
|
Amortization of
acquisition-related and other intangible assets
|
8.2
|
|
12.3
|
|
36.8
|
|
45.8
|
|
Restructuring costs
and asset impairments B
|
5.0
|
|
7.1
|
|
19.0
|
|
19.7
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(4.8)
|
|
Adjusted Operating
Profit
|
$
44.7
|
|
$
71.4
|
|
$
212.1
|
|
$
233.1
|
|
Adjusted Operating
Profit as a % of Sales
|
19.5 %
|
|
27.2 %
|
|
23.0 %
|
|
24.0 %
|
|
|
|
|
|
|
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
|
|
Adjusted Net
Income
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net (Loss) Income From
Continuing Operations
|
$
(217.4)
|
|
$
73.5
|
|
$
(100.2)
|
|
$
238.0
|
|
Goodwill and
intangible asset impairment A
|
258.3
|
|
—
|
|
258.3
|
|
—
|
|
Amortization of
acquisition-related and other intangible assets
|
23.7
|
|
27.8
|
|
99.6
|
|
106.0
|
|
Restructuring costs
and asset impairments B
|
10.4
|
|
9.5
|
|
35.1
|
|
37.6
|
|
Acquisition related
expenses C
|
—
|
|
1.1
|
|
1.3
|
|
15.7
|
|
Fair
value adjustment of acquisition-related inventory
D
|
—
|
|
1.8
|
|
—
|
|
9.5
|
|
Gain on equity
investments, net E
|
—
|
|
—
|
|
(3.6)
|
|
—
|
|
Inducement and other
expenses related to convertible notes exchange
F
|
—
|
|
—
|
|
29.0
|
|
—
|
|
Contingent loss
reserves G
|
—
|
|
—
|
|
—
|
|
1.0
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(6.5)
|
|
Tax effect of
adjustments reflected above I
|
(14.2)
|
|
(9.6)
|
|
(39.7)
|
|
(38.0)
|
|
Discrete tax
adjustments and other tax-related adjustments
J
|
(11.1)
|
|
(12.2)
|
|
(10.6)
|
|
(18.0)
|
|
Adjusted Net
Income
|
$
49.7
|
|
$
91.9
|
|
$
269.2
|
|
$
345.3
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted
Earnings Per Share
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
(Loss) Diluted Earnings
From Continuing Operations Per Share
|
$
(1.27)
|
|
$
0.42
|
|
$
(0.60)
|
|
$
1.34
|
|
Goodwill and
intangible asset impairment A
|
1.49
|
|
—
|
|
1.47
|
|
—
|
|
Amortization of
acquisition-related and other intangible assets
|
0.14
|
|
0.16
|
|
0.57
|
|
0.60
|
|
Restructuring costs
and asset impairments B
|
0.06
|
|
0.05
|
|
0.20
|
|
0.21
|
|
Acquisition related
expenses C
|
—
|
|
0.01
|
|
0.01
|
|
0.09
|
|
Fair
value adjustment of acquisition-related inventory
D
|
—
|
|
0.01
|
|
—
|
|
0.05
|
|
Gain on equity
investments, net E
|
—
|
|
—
|
|
(0.02)
|
|
—
|
|
Inducement and other
expenses related to convertible notes exchange
F
|
—
|
|
—
|
|
0.17
|
|
—
|
|
Contingent loss
reserves G
|
—
|
|
—
|
|
—
|
|
0.01
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(0.04)
|
|
Tax effect of
adjustments reflected above I
|
(0.08)
|
|
(0.05)
|
|
(0.23)
|
|
(0.21)
|
|
Discrete tax
adjustments and other tax-related adjustments
J
|
(0.06)
|
|
(0.08)
|
|
(0.06)
|
|
(0.11)
|
|
Net (loss) to adjusted
net income share adjustment K
|
0.01
|
|
—
|
|
0.02
|
|
—
|
|
Adjusted Diluted
Earnings Per Share
|
$
0.29
|
|
$
0.52
|
|
$
1.53
|
|
$
1.94
|
|
|
|
|
|
Adjusted Diluted
Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Average common stock
shares outstanding - basic
|
171.7
|
|
163.3
|
|
166.9
|
|
162.9
|
|
Assumed exercise of
dilutive options and vesting of
dilutive restricted stock and performance stock units
and assumed conversion of 2025 Convertible Notes
K
|
1.8
|
|
12.0
|
|
8.7
|
|
14.7
|
|
Average common stock
and common equivalent shares
outstanding - diluted
|
173.5
|
|
175.3
|
|
175.6
|
|
177.6
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net (Loss) Income From
Continuing Operations
|
$
(217.4)
|
|
$
73.5
|
|
$
(100.2)
|
|
$
238.0
|
|
Interest expense,
net
|
13.9
|
|
14.5
|
|
63.4
|
|
38.4
|
|
Income tax
expense
|
2.4
|
|
2.2
|
|
45.3
|
|
45.9
|
|
Depreciation
|
9.2
|
|
7.9
|
|
36.0
|
|
31.8
|
|
Goodwill and
intangible asset impairment A
|
258.3
|
|
—
|
|
258.3
|
|
—
|
|
Amortization of
acquisition-related and other intangible assets
|
23.7
|
|
27.8
|
|
99.6
|
|
106.0
|
|
Restructuring costs
and asset impairments B
|
10.4
|
|
9.5
|
|
35.1
|
|
37.6
|
|
Acquisition related
expenses C
|
—
|
|
1.1
|
|
1.3
|
|
15.7
|
|
Fair value adjustment of
acquisition-related inventory D
|
—
|
|
1.8
|
|
—
|
|
9.5
|
|
Gain on equity
investments, net E
|
—
|
|
—
|
|
(3.6)
|
|
—
|
|
Inducement and other
expenses related to convertible notes exchange
F
|
—
|
|
—
|
|
29.0
|
|
—
|
|
Contingent loss
reserves G
|
—
|
|
—
|
|
—
|
|
1.0
|
|
International tax
credit H
|
—
|
|
—
|
|
—
|
|
(6.5)
|
|
Adjusted
EBITDA
|
$
100.5
|
|
$
138.3
|
|
$
464.2
|
|
$
517.4
|
|
Adjusted EBITDA as a %
of Sales
|
15.6 %
|
|
20.9 %
|
|
18.1 %
|
|
20.1 %
|
|
|
|
|
|
|
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
Core Sales
Growth 1
|
|
|
|
|
|
|
|
|
Consolidated
|
% Change Three
Month Period Ended
December 31, 2023 vs.
Comparable 2022
Period
|
|
% Change Twelve
Month Period Ended
December 31, 2023 vs.
Comparable 2022
Period
|
|
Total sales
growth
|
(2.3) %
|
|
(0.1) %
|
|
Plus the impact
of:
|
|
|
|
|
Acquisitions
|
— %
|
|
(1.2) %
|
|
Currency exchange
rates
|
0.3 %
|
|
0.9 %
|
|
Core sales
growth
|
(2.0) %
|
|
(0.4) %
|
|
|
|
|
|
Specialty Products
& Technologies
|
|
|
|
|
Total sales
growth
|
4.4 %
|
|
2.7 %
|
|
Plus the impact
of:
|
|
|
|
|
Acquisitions
|
— %
|
|
(1.1) %
|
|
Currency exchange
rates
|
0.4 %
|
|
1.3 %
|
|
Core sales
growth
|
4.8 %
|
|
2.9 %
|
|
|
|
|
|
Equipment &
Consumables
|
|
|
|
|
Total sales
growth
|
(12.5) %
|
|
(4.8) %
|
|
Plus the impact
of:
|
|
|
|
|
Acquisitions
|
— %
|
|
(1.5) %
|
|
Currency exchange
rates
|
0.1 %
|
|
0.4 %
|
|
Core sales
growth
|
(12.4) %
|
|
(5.9) %
|
|
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
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net Operating Cash
Provided by Operating Activities
|
$
102.0
|
|
$
110.3
|
|
$
275.7
|
|
$
182.7
|
|
Less: payments for
additions to property, plant and
equipment (capital expenditures)
|
(8.2)
|
|
(16.9)
|
|
(58.2)
|
|
(75.7)
|
|
Plus: proceeds from
sales of property, plant and equipment
|
6.1
|
|
1.7
|
|
6.1
|
|
3.3
|
|
Free Cash
Flow
|
$
99.9
|
|
$
95.1
|
|
$
223.6
|
|
$
110.3
|
|
|
|
|
|
|
|
|
|
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
|
Represents impairment
charge related to goodwill and certain indefinite-lived
intangibles.
|
|
|
|
B
|
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.
|
|
|
|
C
|
These represent
acquisition related transactions expenses and integration costs
with respect to business combinations.
|
|
|
|
D
|
Represents the fair
value adjustment related to inventory acquired in connection with
acquisitions.
|
|
|
|
E
|
Represents gains or
losses on equity investments.
|
|
|
|
F
|
These costs primarily
relate to inducement and other expenses incurred in connection with
our partial exchange of our 2025 Convertible Senior Notes.
|
|
|
|
G
|
Represents accruals for
certain legal matters.
|
|
|
|
H
|
Represents
international tax credit related to a ruling from the Brazilian
Supreme Court.
|
|
|
|
I
|
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.
|
|
|
|
J
|
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.
|
|
|
|
K
|
The Company was in a
net loss position for the three and twelve months ended December
31, 2023, therefore no shares reserved for issuance upon exercise
of stock options, vesting of restricted stock and performance stock
units or assumed conversion of the convertible senior notes due
2025 were included in the computation of diluted loss per share as
their inclusion would have been anti-dilutive. However, given that
the adjustments noted in footnotes A-J resulted in adjusted net
income for the three and twelve months ended December 31, 2023, the
dilutive impact of stock options, restricted stock and performance
stock units and assumed conversion of the convertible senior
secured notes due 2025 is being included to arrive at adjusted
diluted shares outstanding.
|
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).
- with respect to Adjusted Diluted Shares Outstanding, allows for
the dilutive impact of stock options, restricted stock and
performance stock units and assumed conversion of the convertible
senior secured notes due 2025 as the Company is reporting adjusted
net income compared to net loss under GAAP;
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.
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SOURCE Envista Holdings Corporation