Enovis CORP Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a transformational year with 23% growth on constant currency comparable basis. Lima integration exceeded year 1 goals, and adjusted EBITDA margins expanded by 210 basis points.
• In Recon, delivered 59% global revenue growth in Q4, with U.S. growing 7% and international 13%. New product launches (revision cones, knees, augmented Glenoid systems, shoulders) and cross-selling driving momentum.
• Lima acquisition was a success, exceeding revenue and profit goals, with channel and organizational integrations completed. Confident in 3-year financial goals.
• P&R grew 3% in Q4, with stable growth, operational improvements, new innovations, and strategic shaping, and EBITDA margins expanded.

Segment Performance

• Recon: Delivered 59% reported global revenue growth in Q4 2024. On a comparable basis, it grew 10% in the quarter, with double-digit global growth in Hip Knee and Extremities segments. U.S. Recon grew 7% (10% in U.S. Extremities, 8% in Hip Knees), while international grew 13%. Revenue contribution: Significant, driven by new product launches and cross-selling.
• P&R: Grew 3% in Q4 2024, reflecting a stable market environment and disciplined execution. EBITDA margins expanded by 130 basis points year-over-year.

Guidance

• 2025 Revenue: Expected range of $2.19 billion to $2.22 billion, including constant currency organic growth of 6% to 6.5% (high single-digit in Recon, low single-digit stable in P&R) and negative currency headwinds of approximately 1% to 2%.
• Adjusted EBITDA: Range of $405 million to $415 million, including 50 basis points underlying margin improvement and 10-20 basis points of cost synergies from Lima integration.
• EPS: Forecast range of $3.10 to $3.25. Positive free cash flow expected in 2025. Q1 2025 revenue range $555 million to $563 million, adjusted EBITDA range $97 million to $100 million.

Risks

• Tariffs: China supply chain mitigation efforts in place. Mexico P&R manufacturing in Tijuana under Maquiladora, potential $3 million to $4 million per month exposure to 25% tariff, but teams expect to offset within 18-24 months.
• Integration Risks: Ongoing operational and cross-selling integration projects, but confident in execution.

Question and Answer

• **Q: M&A strategy post Lima in 2025?

A: Matthew Trerotola stated focus on small bolt-ons to accelerate business, complete Lima integration, and start deleveraging.**

• **Q: Q1 phasing and Day's contribution?

A: Phillip Berry mentioned extra days in Q1 offset by Q4, some Days-related contribution, and Matthew Trerotola noted U.S. Recon had late-year acceleration.**

• **Q: Pricing assumptions for 2025?

A: Matthew Trerotola said Recon expects 2% downward price pressure, while P&R is generally flat with potential for positive/negative price in specific areas.**

• **Q: Lima integration phasing in years 2-3?

A: Phillip Berry stated year 2 to see 10-20 basis points of synergies, year 3 to realize remaining through project-based work.**

• **Q: Tariffs impact and mitigation?

A: Phillip Berry and Matthew Trerotola discussed supply chain adjustments, multiple sourcing, internal plant shifts, and price/reimbursement changes to offset impacts.**