Enovis Announces Second Quarter 2023 Results and Raises Full-Year Outlook

Continued strong momentum with second quarter sales growth of 8% and strong EBITDA margin expansion

Organic growth of 17% in Recon and 4% in P&R

Reported a second quarter net loss from continuing operations of $0.27 per share with adjusted earnings per diluted share of $0.61

Wilmington, DE, Aug. 03, 2023 (GLOBE NEWSWIRE) -- —Enovis™ Corporation (NYSE: ENOV), an innovation-driven medical technology growth company, today announced its financial results for the second quarter ended June 30, 2023. The Company will host an investor conference call and live webcast to discuss these results today at 8:30 am ET.

Second Quarter 2023 Financial Results

Enovis’ second quarter net sales of $429 million grew 8% from the same quarter a year ago, including 9% organic sales per day growth, and reflecting a 0.7% sales days headwind which was slightly offset by currency and recent acquisitions. Sales in the Reconstructive segment grew 18%, with 17% organic growth, and the Prevention and Recovery segment grew 4%, both organically and as reported.

Enovis also reported a second quarter net loss from continuing operations of $15 million and adjusted EBITDA of $66 million, or 15.3% of sales, an improvement of 110 basis points versus the comparable prior year quarter.

The Company reported a second quarter 2023 net loss from continuing operations of $0.27 per share, and adjusted earnings per share of $0.61.

“We are very pleased with our first half 2023 results of high-single digit growth and strong margin expansion,” said Matt Trerotola, Chief Executive Officer of Enovis. “We continue to make progress on our strategic goals and have robust operating momentum in both of our business segments. As we look to the balance of the year, we will maintain our focus on innovation-driven share gain, operational improvement with EGX, and compounding impact from M&A.”

Second Quarter 2023 Business Highlights

Strong double-digit Reconstructive growth across anatomies

Gross margin improved yr/yr for the fourth quarter in a row

Recognized as One of America’s Greatest Workplaces by Newsweek

2023 Financial Outlook

Enovis updated its financial expectations for 2023. Revenue is expected to organically grow 7-7.5% from the prior year versus prior expectations of 6-7% growth, and adjusted EBITDA is forecasted to be $262-$270 million as compared with the previous outlook of $259-$267 million. The Company also updated its full-year adjusted earnings per diluted share guidance from $2.18-$2.32 to $2.22-$2.36.

Conference call and Webcast

Investors can access the webcast via a link on the Enovis website, www.enovis.com. For those planning to participate on the call, please dial (833) 630-1956 (U.S. callers) or +1 (412) 317-1873 (International callers) and ask to join the Enovis call. A link to a replay of the call will also be available on the Enovis website later in the day.

Enovis Corporation (NYSE: ENOV) is an innovation-driven medical technology growth company dedicated to developing clinically differentiated solutions that generate measurably better patient outcomes and transform workflows. Powered by a culture of continuous improvement, global talent and innovation, the Company’s extensive range of products, services and integrated technologies fuels active lifestyles in orthopedics and beyond. The Company’s shares of common stock are listed in the United States on the New York Stock Exchange under the symbol ENOV. For more information about Enovis, please visit www.enovis.com.

Forward-Looking Statements

This press release includes forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Enovis’ plans, goals, objectives, outlook, expectations and intentions, and other statements that are not historical or current fact. Forward-looking statements are based on Enovis’ current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Enovis’ results to differ materially from current expectations include, but are not limited to, risks related to the impact of the COVID-19 global pandemic; the war in Ukraine and escalating geopolitical tensions as a result of Russia’s invasion of Ukraine; macroeconomic conditions, including the impact of increasing inflationary pressures; supply chain disruptions; increasing energy costs and availability concerns, particularly in the European market; the impacts of the completed spin-off of ESAB Corporation into an independent publicly traded company (the “Separation”); the potential to incur significant liability if the Separation is determined to be a taxable transaction; the ability to realize the anticipated benefits of the Separation; the financial and operating performance of the Company following the Separation; other impacts on Enovis’ business and ability to execute business continuity plans; and the other factors detailed in Enovis’ reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q under the caption “Risk Factors,” as well as the other risks discussed in Enovis’ filings with the SEC. In addition, these statements are based on assumptions that are subject to change. This press release speaks only as of the date hereof. Enovis disclaims any duty to update the information herein.

Non-GAAP Financial Measures

Enovis has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”). These non-GAAP financial measures may include one or more of the following: adjusted net income from continuing operations, adjusted net income per diluted share from continuing operations, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted EBITDA margin and organic sales growth.

Adjusted net income from continuing operations and Adjusted net income per diluted share from continuing operations excludes restructuring and other charges, European Union Medical Device Regulation (“MDR”) and other costs, amortization of acquired intangibles, inventory step up costs, strategic transaction costs, debt extinguishment costs, insurance settlement gain, gains and losses on the Company’s investments, stock compensation costs, and other income/expense. Adjusted net income adjusts interest expense for periods prior to 2023 to reflect pro forma interest from the Company’s term loan facility under the Company’s current capital structure after giving effect to the completing of the refinancing transactions in connection with the Separation, and it includes the tax effect of adjusted pre-tax income at applicable tax rates and other tax adjustments. Enovis also presents adjusted net income margin from continuing operations, which is subject to the same adjustments as adjusted net income from continuing operations.

Adjusted EBITDA represents net income or loss from continuing operations excluding taxes, depreciation and amortization, stock-based compensation costs and restructuring and other charges, MDR and other costs, strategic transaction costs, insurance settlement (gain) loss, and inventory step up costs. Enovis presents adjusted EBITDA margin, which is subject to the same adjustments as adjusted EBITDA.

Organic sales growth excludes the impact of acquisitions and foreign exchange rate fluctuations.

These non-GAAP financial measures assist Enovis management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete restructuring plans that are fundamentally different from the ongoing productivity improvements of the Company. Enovis management also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release. Enovis does not provide reconciliations of adjusted EBITDA or adjusted earnings per share on a forward-looking basis to the closest GAAP financial measures, as such information is not available without unreasonable efforts on a forward-looking basis due to uncertainties regarding, and the potential variability of, reconciling items excluded from these measures. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

Vice President, Investor Relations

Condensed Consolidated Statements of Operations

Dollars in thousands, except per share data

Reconciliation of GAAP to non-GAAP Financial Measures

(1) Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of growth due to factors such as price, product mix and volume.

(2) Represents the incremental sales as a result of acquisitions closed subsequent to the beginning of the prior year period.

(3) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

Reconciliation of GAAP to Non-GAAP Financial Measures

Dollars in millions, except per share data

(1) Net loss from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net loss from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $0.2 million and $0.4 million for the three and six months ended June 30, 2023, respectively, and $0.1 million and $0.4 million for the three and six months ended July 1, 2022, respectively.

(2) Restructuring and other charges includes $— million and $0.3 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively, and $0.3 million and $0.8 million for the three and six months ended July 1, 2022, respectively

(3) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union MDR. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.

(4) Strategic transaction costs includes costs related to the Separation and certain transaction and integration costs related to recent acquisitions.

(5) Adjusts interest expense in 2022 to reflect pro forma interest from the Company’s term loan facility after giving effect to the completion of the refinancing transactions in connection with the Separation.

(6) The effective tax rates used to calculate adjusted net income and adjusted net income per share were 17.8% and 19.1% for the three and six months ended June 30, 2023, respectively, and 8.9% and 17.1% for the three and six months ended July 1, 2022, respectively.

Reconciliation of GAAP to Non-GAAP Financial Measures

(1) Restructuring and other charges includes $— million and $0.3 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively. Restructuring and other charges includes $0.3 million and $0.8 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022.

(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union MDR. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.

(3) Strategic transaction costs includes costs related to the Separation and certain transaction and integration costs related to recent acquisitions.

Condensed Consolidated Balance Sheets

Dollars in thousands, except share amounts

Condensed Consolidated Statements of Cash Flows

Dollars in thousands