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Envista Holdings Corp (NVST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 printed as a “solid start”: revenue $616.9M, adjusted EBITDA margin 12.8%, GAAP EPS $0.10 and adjusted EPS $0.24, with core sales +0.2% YoY; guidance for FY25 was maintained (core growth 1–3%, adj. EBITDA ~14%, adj. EPS $0.95–$1.05) .
  • Versus Wall Street, Envista beat consensus on revenue ($616.9M vs $606.4M*) and EPS ($0.24 vs $0.205*), and was modestly above EBITDA ($79.0M vs $76.4M*); FX, Spark deferral, and China Ortho VBP weighed on margins but were offset by pricing and productivity gains .
  • Equipment & Consumables grew, driven by Consumables strength, while Diagnostics contracted; Specialty Products & Technologies was modestly softer given Ortho China VBP and Challenger implants, though Nobel Biocare and Spark grew .
  • Stock-relevant narrative: tariff mitigation plans (supply rebalancing, supplier actions, price capture) and H2 tailwinds from Spark deferral unwind and China Ortho VBP completion support maintained FY25 guide and set up second-half margin/volume improvement .

What Went Well and What Went Wrong

What Went Well

  • Consumables and Nobel Biocare delivered positive growth; Spark and Brackets & Wires outside China grew, underpinning segment resilience .
  • Margin defense from Envista Business System (EBS), price capture (~1 point, +$6M YoY), and record Spark unit cost reductions offset FX and mix headwinds; adjusted EBITDA margin 12.8% aligned with plan .
  • Management maintained FY25 guidance and emphasized operational progress, engagement gains, and high service levels (~95% on-time delivery) as confidence signals .

What Went Wrong

  • FX was a significant headwind: ~170 bps adverse impact to adjusted EBITDA margin and ~$8M revenue headwind; adjusted gross margin declined to 54.8% from 57.4% YoY .
  • Diagnostics contracted high single-digits within Equipment & Consumables, and Ortho in China softened due to VBP preparations; Challenger implants dipped after four growth quarters in 2024 .
  • Free cash flow was -$5.1M vs $29.3M YoY, reflecting typical Q1 seasonality and prior-year incentive comp dynamics; operating cash flow was ~$0.3M .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$601.0 $652.9 $616.9
GAAP Diluted EPS ($)$0.05 $0.01 $0.10
Adjusted EPS ($)$0.12 $0.24 $0.24
Gross Margin (%)52.8% 57.1% 54.5%
Adjusted Gross Margin (%)52.8% 57.2% 54.8%
Adjusted EBITDA ($USD Millions)$54.9 $91.0 $79.0
Adjusted EBITDA Margin (%)9.1% 13.9% 12.8%
Operating Cash Flow ($USD Millions)$70.7 $132.4 $0.3
Free Cash Flow ($USD Millions)$63.3 $123.9 ($5.1)

Q1 2025 Actual vs Consensus Estimates (S&P Global)

MetricConsensus*ActualSurprise
Revenue ($USD Millions)606.4*616.9 +$10.6M (beat)
Primary EPS ($)0.205*0.24 +$0.035 (beat)
EBITDA ($USD Millions)76.4*79.0 +$2.6M (beat)

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentQ1 2024 Sales ($M)Q1 2025 Sales ($M)Q1 2024 Op MarginQ1 2025 Op Margin
Specialty Products & Technologies$408.7 $400.3 10.8% 9.4%
Equipment & Consumables$214.9 $216.6 16.6% 14.7%
Total$623.6 $616.9 7.7% 6.3%

KPIs and Bridges (Q1 2025)

KPIQ1 2025Commentary
Core Sales Growth (%)+0.2% Consolidated core growth; E&C +1.7%, SPT -0.7%
Price Contribution ($M)+$6 ~1 point of growth via price execution
FX Impact on Revenue ($M)(~$8) Dollar stronger vs Q1 2024; intra-quarter weakening
Spark Revenue Deferral ($M)(~$4) Neutral in Q2; tailwind in H2’25
FX Impact on Adj. EBITDA (bps)(~170) Transaction losses from remeasurement
Productivity Benefit (bps)+150 Spark unit cost, G&A reductions
Price Benefit to Margin (bps)+80 Price capture across businesses/geographies
Free Cash Flow ($M)(5.1) Q1 seasonality; incentive comp timing
Net Debt / Adj. EBITDA (x)~1x Balance sheet flexibility

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Core Sales Growth (%)FY 20251% to 3% 1% to 3% Maintained
Adjusted EBITDA Margin (%)FY 2025~14% ~14% Maintained
Adjusted EPS ($)FY 2025$0.95–$1.05 $0.95–$1.05 Maintained
Non-GAAP Tax Rate (%)FY 2025~37% (implied in Q4 commentary) ~37% (Q1 reiterated) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroLimited tariff detail; focus on turnaround and core growth; FX headwinds evident Detailed tariff mitigation: shifting supply (U.S.→Sweden), supplier actions, price/productivity; net FY25 offset expected with H2 recovery Intensifying focus; mitigation plans in motion
Supply Chain & EBSEmphasis on EBS and operational improvements; free cash flow strong in Q4 High service levels (~95% OTD), productivity gains (Spark unit costs, G&A) Operational gains continuing
Product PerformanceQ3: Core decline; Q4: implants and Spark improved Consumables strength; premium implants positive; Ortho ex-China positive; Diagnostics softness; Challenger dipped Mixed: strength in core categories; select headwinds
China VBP (Ortho)N/A in Q3; Q4 setup for FY25 Procedure VBP underway H1; supply VBP to follow; soft H1, benefit in H2; strong Brackets & Wires share Near-term headwind, H2 tailwind
Pricing PowerNot explicit; Q4 efficiency gains ~1 point price growth; nuanced by category, market, customer type Improving capture
R&D & InnovationQ4 commentary: improvement, Spark margin progress R&D up ~8%; training >15k customers; IDS optimism Investment and engagement rising
M&A AppetiteWatching multiples; prudence Accretive M&A prioritized; private multiples down; balance sheet supports optionality Constructive stance

Management Commentary

  • “We delivered core growth of 0.2% and adjusted EBITDA margin around 13%, both in line with our expectations, as well as adjusted EPS of $0.24.” — Paul Keel, CEO .
  • “Our adjusted EBITDA margin for the quarter was 12.8%… margins were hurt by the net FX impact, but helped by G&A productivity, price, and further improvements in Spark margins.” — Eric Hammes, CFO .
  • “We launched a tariff task force early in Q1… we have good, albeit not complete flexibility to navigate the current environment.” — Paul Keel .
  • “We are maintaining our 2025 guidance of 1% to 3% core growth, roughly 14% adjusted EBITDA margins and adjusted EPS of $0.95 to $1.05.” — Paul Keel .
  • “Our balance sheet remains strong and stable with net debt to adjusted EBITDA of approximately 1x.” — Eric Hammes .

Q&A Highlights

  • Tariff exposure and mitigation: largest exposure in U.S.→China premium implants and Chinese inputs→U.S.; mitigation via supply shift (U.S.→Sweden), supplier network rebalancing, price/productivity actions; guidance includes tariffs in effect; confidence lower than Q4 but expected outcome unchanged .
  • April and early Q2 trends: broadly stable vs 2H24; April “off to a pretty good start” without mix shifts (implants/aligners vs lower-ticket procedures) .
  • Pricing power: ~1 point price benefit in Q1; ability varies by innovation, category strength, geography, and customer type (DSOs vs individual clinicians) .
  • Spark deferral unwind and restructuring savings: ~2/3 of $45M Spark headwind expected to return in H2’25 (most in Q3); ~$20M restructuring savings in 2025; G&A reductions continuing .
  • China specifics: China ~high-single-digit % of total revenue; implants the largest piece; currently shipping under higher tariffs with supply shift underway; inventory held in China .

Estimates Context

  • Q1 2025 beat revenue, EPS, and EBITDA consensus: revenue $616.9M vs $606.4M*, EPS $0.24 vs $0.205*, EBITDA $79.0M vs $76.4M*; the beat reflects price capture, Spark productivity, and stable end-market demand despite FX and China VBP headwinds .
  • Prior quarters: Q3 2024 beat revenue ($601.0M vs $590.3M*) and EPS ($0.12 vs $0.088*); Q4 2024 beat revenue ($652.9M vs $645.9M*) and EPS ($0.24 vs $0.218*), showing sequential improvement into Q4 and a stable Q1 start .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 delivered clean beats on revenue and EPS with guidance maintained—positive signal amid macro/tariff uncertainty .
  • Near-term margin headwinds (FX, China Ortho VBP, Spark deferral) should abate with H2 tailwinds (Spark deferral unwind, VBP completion) and ongoing productivity/price capture .
  • Consumables strength and premium implants growth support the portfolio while Diagnostics softness and Challenger variability warrant monitoring .
  • Tariff mitigation is actionable and underway (supply shifts, supplier rebalancing, price); track cadence of the U.S.→Sweden transition and any incremental pricing actions by category/geography .
  • Balance sheet (net debt/EBITDA ~1x) provides optionality for accretive M&A as private multiples compress, which could enhance Challenger and Diagnostics positioning over time .
  • Watch Q2 narrative: management expects neutral Spark deferral effects in Q2, with step-up in Q3; monitor price yield and FX trajectory given intra-quarter volatility .
  • For trading: maintained FY25 guide plus credible H2 setup could support multiple stabilization; upside catalysts include explicit H2 margin expansion, tariff offsets materializing, and clearer VBP benefit flow-through .

Appendix: Additional Q1 2025 Press Release and Non-GAAP Reconciliations

  • Envista’s Q1 press release reiterates financial highlights, share repurchases (1.1M shares for ~$19M; $231M capacity remaining), and non-GAAP reconciliations (Adjusted Gross Profit $338.3M; Adjusted Operating Profit $70.6M; Adjusted Net Income $41.5M; Adjusted EBITDA $79.0M; Free Cash Flow ($5.1)M) .
  • GAAP statements and segment detail match 8-K exhibits (Sales $616.9M; Gross Profit $336.0M; SPT Sales $400.3M; E&C Sales $216.6M; SPT Op Margin 9.4%; E&C Op Margin 14.7%) .