Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enovis Corp (ENOV, Financial) reported a 21% year-over-year growth in the third quarter, with a 6% increase on a comparable basis.
- The company expanded its adjusted EBITDA margins by 220 basis points, reflecting productivity improvements and successful integration of Lima.
- The Recon business delivered 57% reported global revenue growth, with U.S. recon growing 9%, driven by new product launches and cross-selling opportunities.
- The foot and ankle segment is on track to surpass $100 million in revenues, with consistent growth well above market rates.
- Enovis Corp (ENOV) is positioned for a strong finish to 2024 and anticipates an exciting 2025, supported by a robust lineup of new product introductions.
Negative Points
- The company faced integration-related revenue headwinds, with an estimated $20 million to $30 million negative impact.
- There were disruptions in the U.S. market due to hurricanes and IV fluid shortages, affecting the fourth quarter outlook.
- Interest expense increased to $11 million in the third quarter, compared to $6 million in the previous year.
- The international market growth normalized, which may impact the overall growth trajectory.
- Despite strong performance, the fourth quarter guidance was lowered, reflecting market uncertainties and integration challenges.
Q & A Highlights
Q: Can you discuss the synergy expectations for Q4 and into 2025?
A: Matthew L. Trerotola, CEO: We expect another step down in synergy impact in Q4, with a clean start in 2025. The cross-selling benefits are beginning to offset previous impacts, and we anticipate continued stabilization.
Q: How are you thinking about Recon growth for 2025, and what headwinds or tailwinds should we consider?
A: Matthew L. Trerotola, CEO: We expect the negative drag from integration to clear as we enter 2025. Our guidance will consider market growth rates, execution, and new products, with a consistent focus on overcoming this year's headwinds.
Q: Can you provide more details on the Q4 guidance, particularly regarding the impact of IV fluid shortages and hurricanes?
A: Matthew L. Trerotola, CEO: We have factored in disruptions from storms and IV shortages in early September. While the market has normalized, we remain conservative about the extra days' impact and expect a healthy finish to the year.
Q: How is the integration of Lima progressing, and what is the outlook for international markets?
A: Matthew L. Trerotola, CEO: The integration is on track, with 90% of revenue channels outside the U.S. integrated. We don't foresee significant dis-synergies carrying into next year, and international markets have normalized.
Q: What are the key growth drivers for the foot and ankle segment, and how do you see its competitive position?
A: Matthew L. Trerotola, CEO: Our foot and ankle segment is strong due to a comprehensive product line and dedicated channel. We have flagship products and a robust innovation pipeline, with margins improving and opportunities for bolt-on acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
