Envista Holdings Corporation

10/30/2025 | Press release | Distributed by Public on 10/30/2025 14:20

Quarterly Report for Quarter Ending September 26, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with other information, including our Condensed Consolidated Financial Statements and related notes included in Part I, Item 1, Financial Information, of this Quarterly Report on Form 10-Q, our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 10-K"), and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references herein to the "Company," "we," "us" or "our," or similar terms, refer to Envista Holdings Corporation and its consolidated subsidiaries.
Certain statements included or incorporated by reference in this Quarterly Report are "forward-looking statements" within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management's plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; future regulatory approvals and the timing thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Envista intends or believes will or may occur in the future. Terminology such as "believe," "anticipate," "should," "could," "intend," "will," "plan," "expect," "estimate," "project," "target," "may," "possible," "potential," "forecast" and "positioned" and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, the following: the conditions in the U.S. and global economy, the impact of inflation and increasing interest rates, slower economic growth or recession, international economic, political, legal, compliance and business factors, the markets served by us and the financial markets, the impact of our debt obligations on our operations and liquidity, developments and uncertainties in trade policies and regulations, including tariffs or other impositions on imported goods, 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, security breaches or other disruptions affecting our external information technology contractors, vendors or other service providers, 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 impairment charges for our goodwill and intangible assets, changes in accounting standards and subjective assumptions, estimates and judgments by management, 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, and other risks and uncertainties set forth under "Item 1A. Risk Factors" in the 2024 10-K and this Quarterly Report on Form 10-Q.
Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Forward-looking statements contained herein speak only as of the date of this Quarterly Report. 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.
BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements present our historical financial position, results of operations, changes in stockholders' equity and cash flows in accordance with GAAP.
OVERVIEW
General
We provide products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, as well as to improve the aesthetics of the human smile. We help our customers deliver the best possible patient care through industry-leading dental consumables, solutions, technologies, and services. With leading brand names, innovative technology and significant market positions, we are a leading worldwide provider of a broad range of solutions to support implant-based tooth replacements, orthodontic treatments, diagnostic solutions, as well as general dental consumables, equipment and services, and are dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity. Our research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 30 countries across North America, Asia, Europe, the Middle East and Latin America.
We operate in two business segments: Specialty Products & Technologies and Equipment & Consumables. Our Specialty Products & Technologies segment develops, manufactures and markets products primarily related to dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products. Our Equipment & Consumables segment develops, manufactures and markets products primarily related to dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumables; and restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.
For the three and nine months ended September 26, 2025, sales derived from customers outside of the United States were 51.9% and 52.3%, respectively, compared to 51.2% and 52.1% for the three and nine months ended September 27, 2024, respectively. As a global provider of dental consumables, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.
As a result of our geographic and product line diversity, we face a variety of opportunities and challenges, including rapid technological development in most of our served markets, the expansion and evolution of opportunities in emerging markets, trends and costs associated with a global labor force, consolidation of our competitors, trade restrictions and tariffs, and increasing regulation. We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend in particular on our ability to expand our business in emerging geographies and emerging market segments, identify, consummate and integrate appropriate acquisitions, develop innovative and differentiated new products and services, expand and improve the effectiveness of our sales force, continue to reduce costs and improve operating efficiency and quality and effectively address the demands of an increasingly regulated global environment. We are making significant investments to address the rapid pace of technological change in our served markets and to globalize our manufacturing, research and development and customer-facing resources (particularly in emerging markets and our dental implant business) in order to be responsive to our customers throughout the world and improve the efficiency of our operations.
Key Trends and Conditions Affecting Our Results of Operations
General Economic Conditions
In addition to industry-specific factors, we, like other businesses, face challenges related to global economic conditions, including sustained inflation, increases in interest rates, fluctuating foreign currency exchange rates, slower economic growth or recession, trade policies and regulations, customer channel inventory realignment and continuing supply chain disruptions. Dental costs are largely out-of-pocket for the consumer and thus utilization rates can vary significantly depending on economic growth. While many of our products are considered necessary by patients regardless of the economic environment, certain products and services that support discretionary dental procedures may be more susceptible to changes in economic conditions.
Trade Policies and Regulations
Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to certain markets. For example, trade tensions between the U.S. and China have led to increased tariffs and trade restrictions. The U.S. has significantly increased tariffs on products imported from China into the U.S. and implemented new tariffs on imports into the U.S. from other countries, particularly from Canada, Mexico, and the European Union. In response to these proposed tariffs, some foreign countries, including China, have instituted retaliatory tariffs, which impact our products, while other countries have threatened retaliatory tariffs on certain U.S. products. It is difficult to predict what further trade-related actions governments may take, which may include trade restrictions and additional or increased tariffs and export controls imposed on short notice. While we expect to largely offset the impact of the existing tariffs with mitigating actions including supply chain adjustments, pricing strategies, and cost management, we have already experienced an increase in cost of sales attributable to higher tariffs. To the extent that we are unable to offset the tariffs or if the tariffs or our countermeasures negatively impact demand, our business, financial condition, results of operations or cash flows will continue to be adversely affected. Any future tariffs and trade restrictions may also adversely affect our business, financial condition, results of operations or cash flows.
Foreign Currency Exchange Rates
On a period-over-period basis, currency exchange rates positively impacted reported sales by 1.9% and 0.8% for the three and nine months ended September 26, 2025, respectively, compared to the comparable periods of 2024, primarily due to the weakening U.S. dollar against major currencies. Any future weakening of the U.S. dollar against major currencies would positively impact our sales and results of operations for the remainder of the year, and any strengthening of the U.S. dollar against major currencies would adversely impact our sales and results of operations for the remainder of the year.
We also hold certain receivables and payables denominated in a currency other than the U.S dollar. Movement in the related foreign currency rates in relation to the U.S. dollar may also impact our results of operations.
Pricing Controls
Certain countries, as well as some private payors, also control the price of health care products, directly or indirectly, through reimbursement, payment, pricing or coverage limitations, tying reimbursement to outcomes or (in the case of governmental entities) compulsory licensing. For example, China has implemented volume-based procurement policies ("VBP"), a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumables.
Russia-Ukraine Conflict
Russia's invasion of Ukraine and the global response to this invasion, including sanctions imposed by the U.S. and other countries, could have an adverse impact on our business, including our ability to market and sell products in the affected regions, potentially heightening our risk of cyber security attacks, impacting our ability to enforce our intellectual property rights in Russia, creating disruptions in the global supply chain, and potentially having an adverse impact on the global economy, financial markets, energy markets, currency rates and otherwise. While we are experiencing volatility in sales from this region, Russia's invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the three and nine months ended September 26, 2025 and September 27, 2024.
Israel-Hamas War and Related Conflict
We continue to monitor the evolving social, political, and economic environment in Israel and in the region for any impact to our operations. We maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand. While we have experienced some volatility in the region, the Israel-Hamas War and related hostilities have not had a material impact on our business.
Assumptions Related To Aligner Treatment Plans
Our aligner business, included in the Specialty Products & Technologies segment, enters into revenue contracts that involve multiple performance obligations which include optional aligners at no additional charge. Our treatment plans are comprised of the following performance obligations: initial aligner shipment and the subsequent shipments of any optional refinement aligners. For such plans, we also consider usage rates, which is the number of times a customer is expected to order additional refinement aligners. This usage rate is the basis for estimating the amount of transaction price to allocate to future performance obligations.
We continually review and update the usage rate and other related assumptions. Future changes to usage rates and related assumptions may impact the pattern of revenue recognition for future treatment plans. The process of estimating the number of times a clear aligner customer is expected to order additional aligners after the initial aligner shipment requires judgment and evaluation of inputs, including historical usage data in order to predict future usage patterns.
Seasonal Nature of Business
General economic conditions impact our business and financial results, and certain of our businesses experience seasonal and other trends related to the end markets and regions that they serve. For example, sales of capital equipment have historically been stronger in the fourth calendar quarter. However, as a whole, we are not subject to material seasonality.
Non-GAAP Measures
In order to establish period-to-period comparability, we include the non-GAAP measure of core sales in this report. References to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to GAAP, but excluding:
•sales from acquired businesses for one year from the acquisition date;
•sales from discontinued products; and
•the impact of currency translation.
We exclude sales from acquired businesses in order to provide accurate year over year comparisons. Sales from discontinued products includes major brands or major products that we have made the decision to discontinue as part of a portfolio restructuring. Discontinued brands or products consist of those which we (1) are no longer manufacturing, (2) are no longer investing in the research or development of, and (3) expect to discontinue all significant sales of 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. We exclude 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.
The portion of sales attributable to currency translation is calculated as the difference between:
•the period-to-period change in sales; and
•the period-to-period change in sales after applying current period foreign exchange rates to the prior year period.
Core sales growth should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. We believe that reporting the non-GAAP financial measure of core sales growth provides useful information to investors by helping identify underlying growth trends in our on-going business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers. We also use core sales growth to measure our operating and financial performance. We exclude the effect of currency translation from core sales because currency translation is not under our control, is subject to volatility and can obscure underlying business trends.
RESULTS OF OPERATIONS
All comparisons, variances, increases or decreases discussed below are for the three and nine months ended September 26, 2025, compared to the three and nine months ended September 27, 2024.
Three Months Ended
($ in millions) September 26, 2025 September 27, 2024 % Change
Sales $ 669.9 100.0% $ 601.0 100.0% 11.5 %
Cost of sales 299.7 44.7% 283.7 47.2% 5.6 %
Gross profit 370.2 55.3% 317.3 52.8% 16.7 %
Operating costs:
Selling, general and administrative ("SG&A") expenses 284.4 42.5% 270.9 45.1% 5.0 %
Research and development ("R&D") expenses 28.3 4.2% 25.5 4.2% 11.0 %
Operating profit 57.5 8.6% 20.9 3.5% 175.1 %
Nonoperating (expense) income:
Other income, net 1.4 0.2% 0.6 0.1% 133.3 %
Interest expense, net (9.0) (1.3)% (11.9) (2.0)% (24.4) %
Income before income taxes 49.9 7.4% 9.6 1.6% 419.8 %
Income tax expense 80.2 12.0% 1.4 0.2% NM
Net (loss) income $ (30.3) (4.5)% $ 8.2 1.4% (469.5) %
Effective tax rate 160.7 % 14.6 %
Nine Months Ended
($ in millions) September 26, 2025 September 27, 2024 % Change
Sales $ 1,968.9 100.0% $ 1,857.7 100.0% 6.0 %
Cost of sales 892.8 45.3% 857.5 46.2% 4.1 %
Gross profit 1,076.1 54.7% 1,000.2 53.8% 7.6 %
Operating costs:
Selling, general and administrative ("SG&A") expenses 851.4 43.2% 858.3 46.2% (0.8) %
Research and development ("R&D") expenses 81.9 4.2% 72.4 3.9% 13.1 %
Goodwill and intangible asset impairment - -% 1,153.8 62.1% NM
Operating profit (loss) 142.8 7.3% (1,084.3) (58.4)% (113.2) %
Nonoperating (expense) income:
Other income (expense), net 3.1 0.2% (0.4) -% NM
Interest expense, net (26.3) (1.3)% (36.5) (2.0)% (27.9) %
Income (loss) before income taxes 119.6 6.1% (1,121.2) (60.4)% (110.7) %
Income tax expense (benefit) 105.5 5.4% (1.4) (0.1)% NM
Net income (loss) $ 14.1 0.7% $ (1,119.8) (60.3)% (101.3) %
Effective tax rate 88.2 % 0.1 %
Non-meaningful percentage change related to year-to-year comparisons are designated as NM.
GAAP Reconciliation
Sales and Core Sales Growth
% Change Three Month Period Ended September 26, 2025 vs. Comparable 2024 Period
% Change Nine Month Period Ended September 26, 2025 vs. Comparable 2024 Period
Total sales growth (GAAP) 11.5 % 6.0 %
Plus the impact of:
Acquisition (0.2) % (0.2) %
Currency exchange rates (1.9) % (0.8) %
Core sales growth (non-GAAP) 9.4 % 5.0 %
Sales for the three months ended September 26, 2025 increased 11.5% while core sales growth increased by 9.4% as compared to the comparable period in 2024. An increase in sales volume coupled with the timing of deferred revenue recognition related to our clear aligner treatment plans positively impacted sales by 6.8% on a period-over-period basis, while sales price increased by 2.6%.
Sales for the nine months ended September 26, 2025 increased 6.0% while core sales growth increased by 5.0% as compared to the comparable period in 2024. An increase in sales volume coupled with the timing of deferred revenue recognition related to our clear aligner treatment plans positively impacted sales by 3.3% on a period-over-period basis, while sales price increased by 1.7%.
Geographically, sales for both the three and nine months ended September 26, 2025 were positively impacted by higher sales from North America and Europe; partially offset by lower demand in China.
COST OF SALES AND GROSS PROFIT MARGIN
Three Months Ended Nine Months Ended
($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024
Cost of sales $ 299.7 $ 283.7 $ 892.8 $ 857.5
Gross profit margin 55.3 % 52.8 % 54.7 % 53.8 %
The increase in cost of sales during the three months ended September 26, 2025 as compared to the comparable period in 2024, was driven primarily by higher sales volume and increased tariff costs. Gross margin for the three months ended September 26, 2025 increased 2.5% as compared to the comparable period in 2024, and was driven primarily by higher sales volume, including the impact from the timing of deferred revenue recognition related to our clear aligner treatment plans and an increase in sales price, partially offset by unfavorable product mix.
The increase in cost of sales during the nine months ended September 26, 2025 as compared to the comparable period in 2024 was driven primarily by higher sales volume, higher costs due to the unfavorable impact of foreign currency exchange rates, and increased tariffs, partially offset by the absence of impairment related to certain long-lived assets from the comparable prior period. Gross margin for the nine months ended September 26, 2025 increased as compared to the comparable period in 2024, and was driven primarily by higher sales volume including the impact from the timing of deferred revenue recognition related to our clear aligner treatment plans, an increase in sales price, and the absence of impairment related to certain long-lived assets from the comparable prior period, partially offset by unfavorable product mix and higher costs due to unfavorable impact of foreign currency exchange rates.
OPERATING EXPENSES
Three Months Ended Nine Months Ended
($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024
Sales $ 669.9 $ 601.0 $ 1,968.9 $ 1,857.7
SG&A expenses $ 284.4 $ 270.9 $ 851.4 $ 858.3
R&D expenses $ 28.3 $ 25.5 $ 81.9 $ 72.4
Goodwill and intangible asset impairment $ - $ - $ - $ 1,153.8
SG&A as a % of sales 42.5 % 45.1 % 43.2 % 46.2 %
R&D as a % of sales 4.2 % 4.2 % 4.2 % 3.9 %
The decrease in SG&A as a percentage of sales during the three months ended September 26, 2025 as compared to the comparable period in 2024, was driven primarily by higher sales, partially offset by our continuing investment in our long-term growth initiatives.
The decrease in SG&A as a percentage of sales for the nine months ended September 26, 2025 as compared to the comparable period of 2024, was primarily due to higher sales, along with lower bad debt, amortization of intangible assets, legal settlement costs, and general and administrative costs; partially offset by our continuing investment in our long-term growth initiatives.
R&D expenses as a percentage of sales for the three and nine months ended September 26, 2025 is consistent with the comparable periods in 2024.
Goodwill and intangible asset impairment for the nine months ended September 27, 2024 of $1,153.8 million consisted of a $960.5 million goodwill charge and a $193.3 million intangible asset charge. Approximately $707.8 million of the goodwill impairment charge related to our Specialty Products & Technologies segment and $252.7 million related to our Equipment & Consumables segment. The reduction in value was due to adverse macroeconomic factors as a result of weakened global demand, a sustained suppressed stock price, higher cost of capital, and increased raw material, supply chain and service costs, which contributed to reduced revenue forecasts, lower operating margins, and reduced expectations of future cash flows. The intangible asset impairment charges consisted of $101.1 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment and $92.2 million consisted of certain finite-lived patents and technology and customer relationships within the Equipment & Consumables segment and were primarily due to a reduction in projected cash flows discussed above. There were no goodwill and intangible asset impairment charges recorded for the three or nine month periods ended September 26, 2025.
OTHER INCOME (EXPENSE), NET
Other income, net for the three and nine months ended September 26, 2025 primarily consists of net gains on investments held in a rabbi trust, while Other income (expense), net for the comparable periods in 2024 consists of net gains (losses) on equity investments.
INTEREST COSTS AND FINANCING
Interest costs were $9.0 million and $11.9 million for the three months ended September 26, 2025 and September 27, 2024, respectively, and $26.3 million and $36.5 million for the nine months ended September 26, 2025 and September 27, 2024, respectively. The decrease in interest expense was primarily due to lower debt balances and interest rates.
INCOME TAXES
Three Months Ended Nine Months Ended
September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024
Effective tax rate 160.7 % 14.6 % 88.2 % 0.1 %
Our effective tax rate of 160.7% and 88.2% for the three and nine months ended September 26, 2025 differed from the comparable periods in 2024 primarily due to the impact of nondeductible impairment charges for goodwill and intangible
assets in 2024 and primarily due to a change in the indefinite reinvestment assertion related to the restructuring of a foreign subsidiary with certain intercompany loans in 2025. We anticipate the restructuring will have a beneficial tax impact going forward.
RESULTS OF OPERATIONS - BUSINESS SEGMENTS
Specialty Products & Technologies
Our Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
Specialty Products & Technologies Selected Financial Data
Three Months Ended Nine Months Ended
($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024
Sales $ 431.5 $ 381.7 $ 1,276.9 $ 1,205.5
Operating profit $ 48.1 $ 12.3 $ 131.0 $ 62.5
Operating profit as a % of sales 11.1 % 3.2 % 10.3 % 5.2 %
Sales and Core Sales Growth
% Change Three Month Period Ended September 26, 2025 vs. Comparable 2024 Period
% Change Nine Month Period Ended September 26, 2025 vs. Comparable 2024 Period
Total sales growth (GAAP) 13.0 % 5.9 %
Plus the impact of:
Acquisitions (0.3) % (0.3) %
Currency exchange rates (2.1) % (0.9) %
Core sales growth (non-GAAP) 10.6 % 4.7 %
Sales
Sales and core sales growth for the three months ended September 26, 2025 increased 13.0% and 10.6%, respectively, compared to the comparable period in 2024. An increase in sales volume coupled with the timing of deferred revenue recognition related to our clear aligner treatment plans positively impacted sales by 9.1% on a period-over-period basis, while sales price increased by 1.5%.
Sales and core sales growth for the nine months ended September 26, 2025 increased 5.9% and 4.7%, respectively, compared to the comparable period in 2024. An increase in sales volume coupled with the timing of deferred revenue recognition related to our clear aligner treatment plans positively impacted sales by 3.8% on a period-over-period basis, while sales price increased by 0.9%.
Geographically, sales for both the three and nine months ended September 26, 2025 were positively impacted by higher sales from North America and Europe; partially offset by lower demand in China.
Operating Profit
Operating profit margin was 11.1% for the three months ended September 26, 2025, as compared to an operating profit margin of 3.2% for the comparable period of 2024. The increase in operating profit margin for the three months ended September 26, 2025, was primarily due to higher sales volume, including the timing of deferred revenue recognition related to our clear aligner treatment plans and higher sales price, partially offset by increased tariffs and our continuing investment in our long-term growth initiatives.
Operating profit margin was 10.3% for the nine months ended September 26, 2025, as compared to an operating profit margin of 5.2% for the comparable period of 2024. The increase in operating profit margin for the nine months ended September 26, 2025, was primarily due to higher sales volume, including the timing of deferred revenue recognition related to our clear aligner treatment plans, higher sales price, lower bad debt expense, and the absence of impairment of certain long-lived assets from the comparable prior period, partially offset by increased tariffs, higher costs due to impact of unfavorable foreign exchange rates, and our continuing investment in our long-term growth initiatives.
EQUIPMENT & CONSUMABLES
Our Equipment & Consumables segment primarily develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumable products; restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.
Equipment & Consumables Selected Financial Data
Three Months Ended Nine Months Ended
($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024
Sales $ 238.4 $ 219.3 $ 692.0 $ 652.2
Operating profit $ 41.5 $ 38.6 $ 109.5 $ 100.7
Operating profit as a % of sales 17.4 % 17.6 % 15.8 % 15.4 %
Sales and Core Sales Growth
% Change Three Month Period Ended September 26, 2025 vs. Comparable 2024 Period
% Change Nine Month Period Ended September 26, 2025 vs. Comparable 2024 Period
Total sales growth (GAAP) 8.7 % 6.1 %
Plus the impact of:
Currency exchange rates (1.4) % (0.6) %
Core sales growth (non-GAAP) 7.3 % 5.5 %
Sales
Sales and core sales growth for the three months ended September 26, 2025 increased 8.7%, and 7.3%, respectively, compared to the comparable period in 2024, driven primarily by an increase in sales price of 4.7%, coupled with an increase in sales volume of 2.6% on a period-over-period basis.
Sales and core sales growth for the nine months ended September 26, 2025 increased 6.1%, and 5.5%, respectively, compared to the comparable period in 2024, driven primarily by an increase in sales price of 3.1%, coupled with an increase in sales volume of 2.4% on a period-over-period basis.
Geographically, the increase in sales for the three months ended September 26, 2025 is primarily due to higher demand from North America and China while the increase in sales for the nine months ended September 26, 2025 is primarily due to higher demand from North America, partially offset by lower demand in China.
Operating Profit
Operating profit margin was 17.4% for the three months ended September 26, 2025, as compared to an operating profit margin of 17.6% for the comparable period of 2024. The decrease in operating profit margin for the three months ended September 26, 2025 was primarily due to unfavorable product mix and increased tariffs, partially offset by higher sales volume and sales price.
Operating profit margin was 15.8% for the nine months ended September 26, 2025, as compared to an operating profit margin of 15.4% for the comparable period of 2024. The increase in operating profit margin for the nine months ended September 26, 2025 was primarily due to higher sales volume and sales price, and a decrease in amortization of intangibles, partially offset by increased tariffs and higher costs due to the impact of unfavorable foreign exchange rates.
LIQUIDITY AND CAPITAL RESOURCES
We assess our liquidity in terms of our ability to generate cash to fund our operating and investing activities. We continue to generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity are sufficient to allow us to manage our capital structure on a short-term and long-term basis and continue investing in existing businesses and consummating strategic acquisitions.
Following is an overview of our cash flows and liquidity:
Overview of Cash Flows and Liquidity
Nine Months Ended
September 26, 2025 September 27, 2024
Net cash provided by operating activities $ 167.7 $ 204.1
Payments for additions to property, plant and equipment $ (29.0) $ (25.2)
Purchase of investments held in rabbi trust (9.6) (32.6)
Proceeds from sale of investments held in rabbi trust 9.9 8.8
Proceeds from sales of property, plant and equipment 0.5 -
Proceeds from sale of equity investment - 0.4
All other investing activities, net (7.4) 1.4
Net cash used in investing activities $ (35.6) $ (47.2)
Proceeds from stock option exercises $ 2.5 $ 2.0
Cash paid for treasury stock (142.3) -
Tax withholding payment related to net settlement of equity awards (5.0) (4.0)
Repayment of convertible notes due 2025 (116.3) -
Repayment of borrowings - (100.0)
Proceeds from revolving line of credit 115.4 -
All other financing activities - (0.8)
Net cash used in financing activities $ (145.7) $ (102.8)
Operating Activities
Cash flows from operating activities can fluctuate significantly from period-to-period due to working capital needs and the timing of payments for income taxes, restructuring activities, pension funding and other items impacting reported cash flows.
Net cash provided by operating activities was $167.7 million during the nine months ended September 26, 2025, as compared to net cash provided by operating activities of $204.1 million for the comparable period of 2024. The decrease in cash provided by operating activities during the nine months ended September 26, 2025 is primarily due to timing of cash collections, inventory payments, and vendor payments; partially offset by higher net income.
Investing Activities
Cash flows relating to investing activities consist primarily of cash used for capital expenditures, acquisitions and other investing activities. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology systems.
Net cash used in investing activities was $35.6 million for the nine months ended September 26, 2025, as compared to net cash used in investing activities of $47.2 million for the comparable period in 2024. The decrease in net cash used was primarily due to lower purchases of investments held in the rabbi trust, partially offset by higher net payments for purchases of property, plant and equipment and higher spend on certain investing activities.
Financing Activities
Cash flows relating to financing activities consist primarily of cash flows associated with debt borrowings and the issuance or repurchase of common stock.
Net cash used by financing activities was $145.7 million for the nine months ended September 26, 2025 compared to net cash used in financing activities of $102.8 million for the comparable period of 2024. The increase in net cash used was primarily driven by stock repurchases and the repayment of the 2025 Convertible Notes which matured on June 1, 2025, partially offset by the borrowings under the Revolving Credit Facility and the repayment of the 2028 Term Loan during 2024.
For a description of our outstanding debt as of September 26, 2025, refer to Note 11 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
We intend to satisfy any short-term liquidity needs that are not met through operating cash flow and available cash primarily through our revolving credit facility.
Cash and Cash Requirements
As of September 26, 2025, we held $1,133.9 million of cash and cash equivalents that were held on deposit with financial institutions. Of this amount, $325.0 million was held within the United States and $808.9 million was held outside of the United States. We will continue to have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities as required and support other business needs. We generally intend to use available cash, internally generated funds and our revolving credit facility to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may need to enter into new credit facilities or access the capital markets. We may also access the capital markets from time to time to take advantage of favorable interest rate environments or other market conditions. However, there is no guarantee that we will be able to obtain alternative sources of financing on commercially reasonable terms or at all. See "Item 1A. Risk Factors-Risks Related to Our Business" in our 2024 10-K.
Generally, cash and cash equivalents held in these financial institutions may be withdrawn or redeemed at face value, and therefore minimal credit risk exists with respect to them. Nonetheless, deposits with these financial institutions exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits or similar limits in foreign jurisdictions, to the extent such deposits are even insured in such foreign jurisdictions. While we monitor on a systematic basis the cash and cash equivalent balances in the operating accounts and adjust the balances as appropriate, these balances could be impacted if one or more of the financial institutions with which we deposit our funds fails or is subject to other adverse conditions in the financial or credit markets. To date, we have experienced no loss of principal or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our cash and cash equivalents will not be affected if the financial institutions where we hold our cash and cash equivalents fail.
During the second quarter of 2025, we borrowed from our Revolving Credit Facility to pay in full the $116.3 million in principal amount outstanding on our 2025 Convertible Notes which matured on June 1, 2025.
While repatriation of some cash held outside the United States may be restricted by local laws, most of our foreign cash could be repatriated to the United States. During the first quarter of 2025, we transferred approximately $320 million in international cash to the United States.
Under the Tax Cut and Jobs Act of 2017 ("TCJA") and the associated transition tax, in general, repatriation of cash to the United States can be completed with no incremental U.S. tax; however, repatriation of cash could subject us to non-U.S. jurisdictional taxes on distributions. Additionally, we have determined that unremitted foreign earnings are not considered indefinitely reinvested to the extent foreign earnings can be distributed without a significant tax cost. As such, we have recorded foreign withholding tax liabilities related to the future repatriation of such earnings. We continue to indefinitely reinvest all other outside basis differences to the extent reversal would incur a significant tax liability.
On February 5, 2025, our Board of Directors authorized a stock repurchase program, allowing us to purchase up to $250 million of our outstanding common stock through December 31, 2026. Stock repurchases made in connection with this program totaled approximately $41.5 million or 2.1 million shares and $141.9 million or 8.0 million shares during the three and nine months ended September 26, 2025, respectively. Refer to Part II, Item 2 "Unregistered Sales of Equity Securities and Use of Proceeds" in this Quarterly Report on Form 10-Q for more details. The cash outflows associated with the Company's stock repurchases are classified in financing activities in the accompanying Condensed Consolidated Statements of Cash Flows.
As of September 26, 2025, we believe we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States.
Contractual Obligations
There were no material changes to our contractual obligations during the three months ended September 26, 2025.
Off-Balance Sheet Arrangements
There were no material changes to the Company's off-balance sheet arrangements described in the 2024 10-K that would have a material impact on the Company's Condensed Consolidated Financial Statements.
Debt Financing Transactions
For a description of our outstanding debt as of September 26, 2025, refer to Note 11 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
There were no material changes to our critical accounting estimates described in the 2024 10-K that have had a material impact on our Condensed Consolidated Financial Statements.
Envista Holdings Corporation published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 20:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]