Q1 2025 Henry Schein Inc Earnings Call
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Speaker Change: Good morning, ladies and gentlemen. Welcome to Henry Schein's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session. Please press the star key followed by 1 on your touchtone phone if you'd like to ask a question at the end of the call.
Speaker Change: I would now like to turn to introduce your host for today's call Graham Stanley Henry Schein, Vice President of Investor Relations and strategic Financial Project Officer. Please go ahead ma'am.
Graham Stanley: Thank you operator.
Graham Stanley: To each of you for joining us today to discuss Henry Schein financial results for the first quarter of 2025.
With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Ron South Senior Vice President and Chief Financial Officer.
Graham Stanley: Before we begin I would like to state that certain comments made during this call will include information that's forward looking.
Graham Stanley: Risks and uncertainties involved in the company's business may affect the matters referred to in forward looking statements and the company's performance may materially differ from those expressed in or indicated by such statements.
Graham Stanley: These forward looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein filings with the Securities and Exchange Commission.
Graham Stanley: Included in the risk factor section of those filings.
Graham Stanley: In addition, all comments about the markets, we serve including end market growth rates and market share are based upon the company's internal analysis and estimates.
Graham Stanley: Today's remarks will include both GAAP and non-GAAP financial results, we believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business enable the comparison of financial results between periods, where certain items may vary independently of business performance and allow for greater transparency.
Graham Stanley: With respect to key metrics used by management in operating our business.
Graham Stanley: These non-GAAP financial measures are presented solely for informational and comparative purposes, and should not be regarded as a replacement for corresponding GAAP measures.
Graham Stanley: Reconciliations between GAAP and non-GAAP measures are included in exhibit B of today's press release and can be found in our financials and filings section of our Investor Relations website under the supplemental information heading and in our quarterly earnings presentation also posted on our Investor Relations website.
Graham Stanley: The contents of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast may five 2025.
Graham Stanley: Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Speaker Change: Lastly, during today's Q&A session. Please limit yourself to a single question and a follow up and with that I'd like to turn the call over to Stanley Bergman.
Stanley Bergman: Thank you Greg good morning, everyone.
Stanley Bergman: Thank you for joining us.
Stanley Bergman: Let me begin by saying that we are pleased with our first quarter financial results as well as the momentum we are seeing heading into the second quarter.
Stanley Bergman: And remain confident.
Confident in the fundamentals of our business.
Stanley Bergman: After a rather slow January which was a result of weather related events.
Stanley Bergman: And March sales performance was good.
Stanley Bergman: And within our full year guidance range.
Stanley Bergman: As reported.
Stanley Bergman: Sales growth was significantly impacted by the strong U S dollar.
Stanley Bergman: And I would like to remind everyone that last year's U S equipment business was impacted by a deferral of sales from the fourth quarter of 'twenty three into the first quarter of 2024.
Stanley Bergman: Making for a difficult year over year comparison.
Stanley Bergman: Once we adjust for the effect of the strong dollar.
Stanley Bergman: As well as PPE and Covid test kit sales.
Stanley Bergman: Sales growth was approximately 2%.
Stanley Bergman: With sales growth accelerating throughout the quarter.
We are advancing in Cabo plus one strategic plan, which has been refreshed for 25 to 27.
Stanley Bergman: With a team with a team focused on growing.
The distribution business through increasing operational efficiency and enhance the customer experience.
Stanley Bergman: Growing our dental and medical specialty businesses and corporate brand products and further developing our digital footprint and digital solutions.
Stanley Bergman: We do remain committed to our long term financial go up high single digit to low double digit earnings growth.
Stanley Bergman: Continuing to successfully execute against this strategy.
Stanley Bergman: Our last earnings call during the call we announced the establishment of two main Henry Schein business units.
Stanley Bergman: The global distribution and value added service group.
Stanley Bergman: And the global Technology group, which is led by Andreas the Genie.
Stanley Bergman: And the global specialty products group, which is led by Tom Postbank.
Stanley Bergman: This past quarter, we began to operate the company through these.
Stanley Bergman: Business groups and I'm pleased with the leadership and the performance of both of these business groups.
Stanley Bergman: So here are some highlights from the first quarter.
Stanley Bergman: Advancing the bold plus one strategy.
Stanley Bergman: Continued to launch several new products and solutions and our specialty products and technology businesses.
Stanley Bergman: We broadened our home solutions platform with the acquisition of its centers.
Stanley Bergman: <unk> national distributor of continuous glucose monitors tomorrow.
Stanley Bergman: We expanded sales of specialty products throughout distribution businesses. Those are the specialty products that are now being sold through the Henry Schein.
Stanley Bergman: Distribution sales organization.
Stanley Bergman: To implement restructuring initiatives to right size expenses in our distribution businesses.
Stanley Bergman: Corporate functions.
Stanley Bergman: And to consolidate manufacturing facilities.
Stanley Bergman: And yes, the global E Commerce platform in the UK and Ireland is now fully operational and we are on track to begin a phased launch in North America during the third quarter of this year.
After exceeding our strategic goal of achieving 40% of our operating income from high growth high margin businesses. In 2024, we expect operating income from high growth high margin businesses to continue to grow steadily.
Stanley Bergman: We now expect these businesses to contribute over half.
Stanley Bergman: Of our total operating income.
Stanley Bergman: By the end of our strategic planning cycle of 2027.
Stanley Bergman: These businesses include specialty products value added services and technology.
Stanley Bergman: Additionally, operating income in <unk> chip in excess of 10% of our total operating income is attributable to our corporate brand products.
Stanley Bergman: Turning now to a review of our key businesses.
Stanley Bergman: We'll start with the global distribution and value added services group.
Stanley Bergman: During the quarter, we believe the U S and international dental merchandise and equipment markets as well as the U S medical market.
Stanley Bergman: Well overall stable.
Stanley Bergman: And that we gained market share.
Stanley Bergman: Sales growth in our core dental and medical distribution businesses.
Stanley Bergman: Did accelerate following a slow start in January which as I noted. This is primarily the result of weather related events.
Stanley Bergman: And our growth in March was within our full year guidance range of 2% to 4%.
Stanley Bergman: U S dental merchandise sales grew low single digits.
Stanley Bergman: Excluding sales of PPE.
Stanley Bergman: Product pricing was overall in line with last year.
Stanley Bergman: Sales growth therefore afflicted.
Stanley Bergman: Volume growth.
Stanley Bergman: We also recently implemented a new Commission plan.
Stanley Bergman: We expect will drive sales and profitability growth.
Stanley Bergman: The U S dental equipment sales growth.
<unk> impacted by the deferral of sales from the fourth quarter of 'twenty three into the field.
Stanley Bergman: First quarter.
Stanley Bergman: 2020, full so moving from the fourth quarter of 'twenty three into the first quarter of 'twenty full making for difficult year over year comparison.
Stanley Bergman: We can see we do see consistent demand for both traditional and digital equipment.
Stanley Bergman: Practitioners continue to invest in their practices.
Stanley Bergman: We are also seeing the number of new practice build outs Inc.
Stanley Bergman: Increasing.
Stanley Bergman: Our U S medical business growth.
Stanley Bergman: Sales growth was solid for the quarter.
Stanley Bergman: Reflecting increased patient traffic to physician offices for respiratory illness as strong performance by our home solutions business.
Stanley Bergman: Some acquisition growth.
Stanley Bergman: International Dental merchandise sales was strong in Canada, Central Europe, and Brazil, offset by some softness in France.
Stanley Bergman: Similar to the rest of the country sales accelerated throughout the quarter.
We'd like to stress and when reviewing our international sales.
Stanley Bergman: That investors take into account the swings in foreign exchange.
Stanley Bergman: International Dental equipment sales grew well in Canada and across most of Europe.
Stanley Bergman: The focus on.
Stanley Bergman: New product launches at this year's <unk>.
Stanley Bergman: International Dental show in Cologne in two to three D printers, and intra oral scanners to help improve dental office workflows, and we expect our sales to benefit in future quarters from orders taken at the show.
Stanley Bergman: Foreign exchange did impact.
Stanley Bergman: Our sales results in U S dollars.
Stanley Bergman: On the value added services sales side.
Stanley Bergman: These sales decreased in the quarter, one as a result of lower sales in our practice transitions business sales in this business can fluctuate from quarter to quarter. However, there is a strong pipeline of active transactions that we expect to close throughout the remainder of the year.
Stanley Bergman: On the global specialty product side.
Stanley Bergman: The global specialty products group includes of course implants and biomaterials.
Stanley Bergman: As well as endodontics, orthodontics and orthopedic products.
Stanley Bergman: Sales in the first quarter reflected continued growth in implant biomaterials.
Stanley Bergman: And some acquisition growth.
Stanley Bergman: Sales up implants grew mid single digits in constant currency.
Stanley Bergman: Big swings in foreign exchange.
Stanley Bergman: With strong sales growth in the dock region as well as in Latin America.
Stanley Bergman: Driven by both.
Stanley Bergman: Premium brand.
Stanley Bergman: By Horizons catalog as well as our ESR and value brand.
Stanley Bergman: We estimate that the U S domestic market for dental implants was slightly down in the quarter.
Stanley Bergman: U S sales were in line with market growth and reflect continued rollouts of the buyer rising star.
Stanley Bergman: Clinical implant and smart shape.
Stanley Bergman: The smart shape.
Stanley Bergman: Alright.
Stanley Bergman: As well as growing sales.
Stanley Bergman: In implants in the United States.
Stanley Bergman: Overall.
Stanley Bergman: In the markets. We serve we believe we continue to gain market share.
Stanley Bergman: This quarter and Thats for implants and biomaterials.
Stanley Bergman: We continue to launch new internally developed products and are in the <unk> business and are pleased with our underlying growth.
Stanley Bergman: Wow orthodontics.
Stanley Bergman: <unk> small components of our specialty business.
Stanley Bergman: Product.
Stanley Bergman: Yeah.
Stanley Bergman: <unk> were down year over year as we continue working to restructure this business.
Finally, our orthopedic products generated solid first quarter sales growth and high single digits.
Stanley Bergman: Let me conclude my prepared remarks with a discussion on the global Technology group.
Stanley Bergman: Songs.
Stanley Bergman: We had rather strong growth in practice management systems.
Stanley Bergman: <unk> ascent entirely cloud based solutions as well as in revenue cycle management products.
Stanley Bergman: These were partially offset by lower sales of certain legacy products.
Stanley Bergman: That we are sunsetting.
Stanley Bergman: The consolidation of these products is having a short term impact on this segment's sales growth, but has enabled us to reduce operating costs and achieve strong operating income growth.
Stanley Bergman: While positioning the software portfolio for better customer experience.
Stanley Bergman: Going forward.
Stanley Bergman: Practice management software growth was.
Stanley Bergman: Driven by a 20% increase in cloud based customers and we now have 9500 customers subscribe to dentists ascend and entirely and are making good progress in advancing these cloud based systems into Dsos.
Stanley Bergman: We also continued to enhance the functionality of our practice management software with a new dental imaging subscription plan that automatically attaches images directly to insurance claims for faster payments.
Stanley Bergman: Yes. So here is some comments on the tariffs.
Stanley Bergman: Let me conclude my remarks with these comments.
Stanley Bergman: Several years ago, we began diversify and diversified in moving sourcing of corporate brand products too.
Stanley Bergman: Two.
Stanley Bergman: What we anticipate it to be lower tariff countries.
Stanley Bergman: In addition, most of our specialty products are manufactured in the local markets.
Stanley Bergman: We have been working closely with our suppliers and customers to address the impact of current tariffs.
Stanley Bergman: For a more for more price sensitive customers, we will continue to offer corporate brand alternatives.
Stanley Bergman: We believe our current and future actions with our suppliers and customers will.
Stanley Bergman: Effective in mitigating this impact on our financial results from the parent.
Stanley Bergman: Tariff situations.
Stanley Bergman: We are monitoring the situation carefully.
Stanley Bergman: As of course, we cannot predict with tariffs will change the game.
Stanley Bergman: Of course tariff changes.
Stanley Bergman: Have been quite volatile.
Stanley Bergman: And nor can we comment well anticipate if they will have a significant impact on the macro economic conditions.
Stanley Bergman: So let.
Stanley Bergman: Let me now turn the call over to Ron to review, our first quarter financial results and discuss our 2025 guidance.
Stanley Bergman: Our financial guidance around please.
Stanley Bergman: Thank you Stanley and good morning, everyone.
Stanley Bergman: As usual today I will review the financial highlights for the quarter and we'd like to remind investors that on our Investor Relations website. We have also included our financial presentation.
Stanley Bergman: Additional detailed financial information.
Stanley Bergman: Starting with our first quarter sales results I will provide details on total sales total sales growth as well as constant currency sales growth compared with the prior year.
Stanley Bergman: Global sales were $3 $2 billion, but sales down 0.1% compared with the first quarter of 2024 sales growth reflected a one 5% decrease attributable to foreign currency exchange and a one 2% growth from acquisitions.
Stanley Bergman: As Stanley mentioned, excluding the impact of PPE and corporate test kits constant currency sales growth was 2.0%.
Stanley Bergman: Our GAAP operating margin for the first quarter of 2025 was 553% and 81 basis point improvement compared with the prior year GAAP operating margin.
Stanley Bergman: non-GAAP basis.
Stanley Bergman: Operating margin for the first quarter was $7 two 5%, a 14 basis point improvement compared with the prior year non-GAAP operating margin driven by lower operating expenses, resulting from our restructuring program.
Stanley Bergman: First quarter 2025, GAAP net income was $110 million or 88 cents per diluted share. This.
Stanley Bergman: This compares with prior year GAAP net income of $93 million or <unk> 72 per diluted share.
Stanley Bergman: First quarter 2025, non-GAAP net income was $143 million or $1 15 per diluted share.
Stanley Bergman: This compares with prior year non-GAAP net income of $143 million or $1 10 per diluted share.
Stanley Bergman: Adjusted EBITDA for the first quarter of 2025 was $259 million compared with first quarter 2024, adjusted EBITDA of $255 million.
Stanley Bergman: Turning to our sales results.
Stanley Bergman: The components of sales growth for the first quarter included an exhibit a to this morning's earnings release.
Stanley Bergman: So I will provide the primary highlights of the main sales drivers for each reporting segment, starting with our global distribution and value added services.
Stanley Bergman: The global distribution and value added services group benefited from acquisition growth of 0.9% mainly from the acquisition of our centers. Our most recent acquisition of the home solutions space.
Stanley Bergman: Constant currency sales, including acquisition growth grew by one 5% after excluding PPE and Covid test kits.
Stanley Bergman: U S dental merchandise sales grew <unk>, 7%, when excluding PPE products and U S dental equipment sales declined eight 9% or.
Stanley Bergman: Our sales growth was impacted by a deferral of approximately $20 million in equipment sales from the fourth quarter of 2023 into the first quarter of 2024, making for difficult year over year comparison adjusting for this U S. Dental equipment sales sales growth was flat versus the prior year.
Stanley Bergman: Regarding U S medical distribution after excluding sales of PPE products and Covid test kit sales grew by four 7%.
Stanley Bergman: Home solutions business had another strong quarter with total sales growth of 23%, including 9% internal growth.
Peter: International dental merchandise constant currency sales grew one 1% Peter.
Stanley Bergman: PPE products did not have a meaningful impact on our international dental merchandise sales growth.
Stanley Bergman: International dental equipment constant currency sales grew four 3% driven by strong growth in Canada and solid growth across central Europe.
Stanley Bergman: Finally global value added services sales growth was impacted by the timing of transactions within our practice transitions business.
Stanley Bergman: Turning to the global specialty products group constant currency sales growth was four 3% benefiting from acquisition growth of 4.0% primarily attributable to try Matt you orthopedics products business, we acquired last year.
Stanley Bergman: Getting into the second quarter. This business will be part of internal sales as our <unk> acquisition annualized in April.
Stanley Bergman: In addition.
Stanley Bergman: Our implant and biomaterials business experienced good growth in the first quarter, especially in the DAC region of Europe, where sales increased high single digits.
Stanley Bergman: The global specialty products group.
Stanley Bergman: Also includes the endodontics business, which had slightly negative growth this quarter as a result of a supply chain issue with our edge pro laser product, which has now been resolved as well as the orthodontic business, which has negative sales growth and as I mentioned last quarter is being reorganized to support future profitable growth.
Regarding the global Technology group, while total sales growth was two 9% operating income grew 24% versus the prior year.
Stanley Bergman: Reflecting strong expense management.
Stanley Bergman: Restructuring expenses in the first quarter were $25 million or <unk> 14 per diluted share. These expenses mainly related to severance benefits. We now believe we will achieve annual run rate savings at the high end of our $75 million to $100 million goal by the end of 2025.
Our first quarter cap GAAP results include $20 million in pre tax proceeds as part of our cyber insurance claim which are excluded from our non-GAAP results. We have now received all of the proceeds from this claim which totaled approximately $60 million over the course of 2024 and the first quarter of this year.
Stanley Bergman: Regarding share repurchases, we repurchased.
Stanley Bergman: Approximately $2 3 million shares of common stock during the first quarter at an average price of $71 58 per share for a total of $161 million at quarter end, we had approximately $718 million authorized and available for future stock repurchases.
Stanley Bergman: Turning to our cash flow.
Stanley Bergman: We generated operating cash flow of $37 million in the first quarter of 2025. The first quarter typically has a lower cash flow that other quarters in the year and we still expect operating cash flow to exceed net income for the full year.
Stanley Bergman: Let me conclude my remarks with a discussion of financial guidance. At this time, we are not able to provide without unreasonable effort and estimate of restructuring costs associated with the restructuring plan for 2025.
Stanley Bergman: Therefore, we are not providing GAAP guidance. Our 2025 guidance is for continuing for current continuing operations as well as acquisitions that have closed and does not include the impact of restructuring and integration expenses and other items detailed in our press release.
Stanley Bergman: Regarding tariffs as Stanley said, we believe our current and future actions with our suppliers and customers will be effective at mitigating this year's impact on our financial results from the current tariff situation.
Stanley Bergman: We have the widest selection of alternative products, including corporate brand products given.
Stanley Bergman: Given the ongoing uncertainty we continue to monitor the tariff situation closely and we will provide updates to our guidance as appropriate.
Stanley Bergman: So today, we are maintaining our 2025 financial guidance.
Stanley Bergman: As a reminder, our 2025 guidance is as follows.
Stanley Bergman: We expect non-GAAP diluted EPS attributable to Henry Schein, Inc to be in the range of $4 80.
Stanley Bergman: The $4 94.
Stanley Bergman: And it is expected to be more heavily weighted to the second half of the year.
Stanley Bergman: 2025, adjusted EBITDA is expected to grow in the mid single digits versus 2024, adjusted EBITDA of $1 1 billion.
Stanley Bergman: 2025, total sales growth is expected to be 2% to 4% over 2024.
Stanley Bergman: Our 2025 guidance also assumes an estimated non-GAAP effective tax rate of 25% and net foreign currency exchange rates remain generally consistent with current levels.
Stanley Bergman: With that I'll now turn the call back to Stanley.
Stanley Bergman: Thank you Ron.
Stanley Bergman: Operator.
Stanley Bergman: We have some questions.
Stanley Bergman: Thank you.
Stanley Bergman: Now be conducting a question and answer session.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Telling them indicate your line is in the question queue.
Speaker Change: Press Star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you and our first question is from the line of Jon Block with Stifel. Please proceed with your question.
Jon Block: Great. Thanks, guys good morning, Ron.
Speaker Change: Brian I guess I'll just start at a high level can you talk about the dollar.
Speaker Change: I'm just guessing its a decent tailwind to the initial reported revenue guidance of 2% to 4% year over year.
Speaker Change: Is there a figure or a metric to provide and then similarly, how do we think about that.
Speaker Change: But it flows down to the bottom line I'm guessing somewhat.
Speaker Change: Accretive there, but any specifics would be appreciated and then I'll just ask a follow up.
Speaker Change: For the first quarter, John we did have a headwind versus prior year of about one 5% from foreign exchange.
Speaker Change: What we've seen happen in the rates. Since then would suggest that we should be fairly neutral versus prior year more or less.
Speaker Change: As you can appreciate very difficult to project the foreign exchange rates right now.
Speaker Change: So.
Speaker Change: Our our sales guidance takes that into consideration at this point in time, so we're not expecting.
Speaker Change: Any further significant variance and impact on growth.
Speaker Change: Forward when looking at the foreign exchange rates.
Speaker Change: Versus last year, but we did have a significant headwind in the first quarter, primarily driven by the euro.
Speaker Change: Our biggest exposure foreign exchange wise as to the Euro and was primarily driven by the euro.
Speaker Change: Okay, I guess, just a follow up sort of clarity question, there I get <unk>, but obviously the dollar weakened meaningfully in March and most companies with $35, 40% to 45% International sales are saying that it was.
Speaker Change: <unk> reported revenue guidance by 100 to 200 bps. When we think about full year. So im sorry, im sort of asking more when we think about the original guidance you gave of 2% to 4% is there a way to quantify dollar on top and bottom line and I don't know if theres follow up but.
Speaker Change: There, but just to pivot.
Speaker Change: Sales for the second question would love more color on.
Speaker Change: Sort of the environment you called out I know you said February and March improved maybe that wasn't surprising but the ongoing momentum that you cited in the PR.
Speaker Change: Implies April and that would be call. It despite liberation day volatility that we've seen in the markets and what that may or may not mean for dental so would just love any clarity or color you are able to provide a what youre currently seeing in most specifically to April thanks, guys.
Speaker Change: So I think thats good.
Speaker Change: Very good question I can address what we're seeing now of course, we can't address future sentiment.
Speaker Change: With the consumer is going to be thinking going forward.
Speaker Change: But.
Speaker Change: April was again, a pretty decent month.
Speaker Change: Overall, we believe traffic for our dental distribution businesses continues to be stable globally.
Speaker Change: In the U S.
Speaker Change: Specifically dental merchandise seem stable.
Speaker Change: We didn't see much price adjustments.
Speaker Change: At the beginning of the year.
Speaker Change: Sure they'll start coming through of course because of tariffs.
Speaker Change: And we saw some modest growth in volume.
Speaker Change: Our medical sales reflect increased patient traffic reflected increases.
Speaker Change: Traffic to patient offices respiratory illness.
Speaker Change: If you look at the dental and medical markets in the U S. It's pretty stable right now.
Speaker Change: We just had our thrive.
Speaker Change: Customer <unk>.
Speaker Change: Meeting.
Speaker Change: Well attended I would say there were more practices than in the past with few fewer attendance per practice, which means dentists are watching expenses, but the mood was pretty good and the sales were okay.
Speaker Change: Attended a DSO.
Speaker Change: Leading DSO meeting.
Speaker Change: Saturday and the mood was okay with us.
Speaker Change: On the equipment side, some build out new.
Speaker Change: New practices build outs.
Speaker Change: Existing practices build out so I would say there is strong evidence that the market in the U S is stable.
Speaker Change: Likewise in Canada of course, when you go into Europe, it's very much dependent on the market per se.
Speaker Change: Australia.
Speaker Change: It was a little bit cautionary given the election period, but.
Speaker Change: Overall in Brazil is.
Speaker Change: It's stable.
Speaker Change: And so I think overall the mood is okay.
Speaker Change: Could change at a moment's notice.
Speaker Change: It's the macro environments change.
Speaker Change: So.
Speaker Change: I can give you more specifics that anyone has.
Speaker Change: Quest on the implant side, but.
Speaker Change: But that's sort of the general mood.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Jason Bednar with Piper Sandler. Please proceed with your questions.
Speaker Change: Thanks.
Speaker Change: Good morning, everyone.
Speaker Change: Maybe I'll start with a quick follow up.
Speaker Change: Maybe to Jon Block's question.
Speaker Change: Ron are there any.
Speaker Change: Adjustments to the inputs into your guidance there.
Speaker Change: Youre, making today, even though the output isn't changing and then I want to clarify on the tariff comments today I think you said you're confident mitigating this year's impact or is that an acknowledgment that there will be direct impacts on your business from tariffs or the mitigation comment more related to how you expect to navigate price adjustments from suppliers.
Speaker Change: Yeah.
Speaker Change: I'll start with the first part of your question so.
Speaker Change: Regarding our guidance.
Speaker Change: Im assuming Jason that Youre referencing sales guidance and then from that the other outputs and whether it be EPS, EBITDA et cetera, but our sales guidance.
Speaker Change: Most of our of our sales growth is expected to be internally generated.
Speaker Change: With exchange rates, where they are right now and taking into consideration. The first quarter headwinds. We had we now expect foreign exchange to be largely neutral for the balance of the year.
Speaker Change: And so that's the 2% to 4% that we are expecting acquisition growth is expected to provide less than one point of growth for us. This year. So it's our sales growth is largely internally generated with reference to the tariffs when we say mitigated we're really talking about mitigating financial impact so were.
Speaker Change: We've walked through.
Speaker Change: Several different scenarios internally in terms of what could happen from a tariff perspective, but.
Stanley Bergman: As Stanley mentioned before.
Stanley Bergman: Began diversifying and moving the sourcing of corporate brand products to lower LOE.
Stanley Bergman: Lower tariff countries.
Stanley Bergman: We're in a unique situation, where we are the importer of record for some products for those products that we manufacture for some products that we are selling under our private label or corporate brands. But then we also buy a lot of as Youre aware by a lot of products from third parties, where were not be importer of record.
Stanley Bergman: So.
Stanley Bergman: We have plans in place and we're working very closely with our suppliers as well as with our customers to come up with with various means of mitigating any kind of impact from the tariffs and we believe based on what we know today that we can mitigate those effects.
Stanley Bergman: Now.
Stanley Bergman: What we have to kind of wait and see what kind of potential price increases, while we get from our branded suppliers, but I think they've even indicated in some public remarks that they are doing their best to not not pass along those those price increases so.
Stanley Bergman: The answer to your question is our by maintaining our guidance. What we're saying is that we believe there could be some effect of this but we can mitigate the ultimate financial effect of it.
Speaker Change: Alright, that's very helpful. And then for a follow up Stanley you've seen a lot of different macro situations in your career at fluctuations in the economy and our dental market. How does the tariff uncertainty from the past couple of months back up and even if youre not seeing foot traffic changes in the Opex I think a lot of.
Speaker Change: We're anticipating that maybe that happens at some point, but right now consumers don't seem to be changing but what about Dennis behavior because Dennis.
Speaker Change: Oftentimes our consumers themselves.
Speaker Change: We've seen the AIA data around dennett sentiment take.
Speaker Change: Lower here alongside broader consumer sentiment in the U S. So I guess, how are you thinking about and its behavior.
Speaker Change: Market.
Jason Bednar: So Jason.
Speaker Change: Okay.
Speaker Change: Early on at the moment, we don't see.
Speaker Change: The huge negative.
Speaker Change: We don't see much at all.
Speaker Change: Bookings on equipment.
Speaker Change: Pretty steady actually.
Speaker Change: Little bit robust I would say.
And.
Speaker Change: In line with the kind of.
Speaker Change: Backlogs that we saw pre COVID-19.
Speaker Change: So I would say its relatively stable.
Dennis: Stable Dennis.
Speaker Change: Investing in their practices.
Speaker Change: This is obviously quite large investment in the digital on the digital side.
Speaker Change: But traditional equipment is pretty steady.
Speaker Change: We are seeing new practices open.
Speaker Change: And Dsos.
Speaker Change: The dsos that are well financed expanded with the de novo side. So.
Speaker Change: At the moment, it's pretty stable.
Speaker Change: I would say, it's a little bit better.
Speaker Change: I can't give you specific data.
Speaker Change: But it feels a little bit better than the general consumer sentiment.
Speaker Change: The medical business.
Speaker Change: Is quite good.
Speaker Change: We did have periods where the.
Speaker Change: The early part of the year the risk for three.
Speaker Change: Yes.
Speaker Change: Sensitive part of the challenge that this year.
Speaker Change: From a sales point of view.
Speaker Change: But better.
Speaker Change: So.
Speaker Change: Ah.
Speaker Change: This all leads us to conclude that the markets that we serve as stable as I mentioned.
Speaker Change: Actually what I would just the color I just gave it relates mostly to the U S, but as I mentioned earlier on.
Speaker Change: When you go outside of the U S. It's very country dependent.
Speaker Change: And.
Speaker Change: I would say the majority of the countries that we serve it's okay.
Speaker Change: From a tariff point of view, specifically as it relates to specialty products.
Speaker Change: Most of the market most of the products that we sell are locally made so theres no real impact I think on the implant side.
Speaker Change: The U S market.
Speaker Change: But weaker than maybe a year or so ago.
Speaker Change: So that's being made up by in our case strong sales.
Speaker Change: Europe, particularly in Germany, we did not so much in terms of specialty products in Asia.
Speaker Change: We do in Japan, but not in China, So those big variables that we see.
Speaker Change: Maybe some of the other implant companies as it relates to Asia is not a factor at Henry Schein.
Speaker Change: I'd say, we started out the prepared remarks, the stability and I think my sense is that still the case.
Speaker Change: No one knows with the broader economy will hit but right now.
Speaker Change: It seems okay.
Speaker Change: Our next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.
Jeff Johnson: Thank you. Good morning, guys, just maybe a modeling question Ron for you if I could guide you talked about the high end of that $75 million to $100 million in cost.
Speaker Change: Cost take out now that you expect to hit for the year, which is <unk>.
Speaker Change: <unk> number.
Speaker Change: What were you at run rate wise coming out of <unk>, just as I think about how to layer in maybe that $90 million to $100 million in savings over the next three quarters. What's already been included in the <unk> number. Thank you.
Speaker Change: Ladies and gentlemen, please standby, we're experiencing technical difficulties will resume momentarily.
Speaker Change: Okay.
Speaker Change: Gentlemen, you may resume.
Speaker Change: Okay.
Speaker Change: Gentlemen, we we may continue with your a collar on a different line.
Speaker Change: Hey, guys did you hear my question or did I, thanks, Daniel into silence.
Speaker Change: Okay.
Not yet.
Speaker Change: Dan.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes, we are.
Speaker Change: We are working and we will be resuming momentarily.
Speaker Change: Jeff.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, thank you for holding a gentleman. Please continue.
Speaker Change: Alright can you hear me okay guys.
Speaker Change: That we kind of think yeah, Jeff mainline lockdown, but youre working on to back up now so we can hit.
Speaker Change: Alright, great. So I don't know if you heard my question or not but I was basically just asking a simple question of how much of that $100 million in cost savings that you now expect to see in the P&L. This year within in the first quarter and how should we think about run rating for the rest of this year does it kind of build throughout the year. Thank you.
Speaker Change: Yes, Jeff so the $100 million savings that we're referring to would be kind of.
Speaker Change: On an annualized run rate basis, so there won't be a $400 million of savings in the 2025 results.
Speaker Change: But we had achieved kind of coming into the year. We had we were in a about a $60 million run rate as we came into the year. So.
Speaker Change: If you just take that piece of it.
Speaker Change: And divided up by the four quarters, you can get some feel for what the first quarter benefit may have been.
Speaker Change: Then of course on top of that we continue to take.
Speaker Change: Measures and taking certain initiating.
Certain cost saving opportunities over the course of the year as well.
Speaker Change: Understood Alright. Thank you and then just we saw the 8-K on Friday. It looks like mass has now joined the board I don't think I've seen if Dan has yet joined the board just one can you confirm that maybe I missed an 8-K somewhere there in Q.
Speaker Change: Just any updated thoughts on kind of maybe strategies the board.
It might take the company direction wise.
Speaker Change: And then the new board members join in any kind of updated thoughts there. Thank you.
Jeff Johnson: So Jeff.
Speaker Change: That is correct, Matt joined the board.
Speaker Change: Dan joined the board and when we get final approval in Europe for the.
Speaker Change: Okay cause investment.
Speaker Change: As it relates to take Us Roe.
Speaker Change: Of course.
Speaker Change: We've said this in the past pick a recognizes that Henry Schein is.
Speaker Change: Well managed.
Speaker Change: Great.
Speaker Change: Opportunity.
Speaker Change: Recognizing the challenges we had with the pandemic the cyber incident.
Speaker Change: Some of the macro issues that.
Speaker Change: That we experience.
Speaker Change: There are many opportunities that we are examining in general okay.
Speaker Change: <unk> is working with us supporting.
Speaker Change: Our opportunities to create value for shareholders.
Speaker Change: And particular.
Speaker Change: Particular, the boat plus one strategy and some related activities around that.
Speaker Change: We are working with there.
Speaker Change: Internal group.
Speaker Change: To a great two on the initiatives.
Speaker Change: We believe.
Speaker Change: We'll create additional.
Speaker Change: Profitability sustainable profitability.
Speaker Change: The company.
Speaker Change: And.
Speaker Change: We will be able to provide further information in.
Speaker Change: In the quarters ahead, but overall the level of.
Speaker Change: Collaboration the ideas that are emerging.
Speaker Change: Not mostly to support our bolt plus one strategy have been very very positive.
Speaker Change: So.
Speaker Change: It's been a good partnership.
Speaker Change: Of course <unk> has just joined the board now.
Speaker Change: And then hopefully in the next few weeks.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Mike <unk> with Barrington Research. Please proceed with your question.
Mike: Hey, good morning, I, just wanted to ask a question around.
Mike: Internal growth in home solutions, and 9% seems kind of strong and I was just curious I mean is that mostly getting deeper with existing accounts are there sort of new account growth. There and also I was just curious what the actual revenues were if you would be willing to share that.
Mike: I didn't catch the last part of your sentence.
Mike: Question, but.
Mike: Our momentum in the home solutions business has been very good.
Mike: We're expanding our footprint.
Mike: We're adding more referral sources.
Mike: And.
Mike: Managing and reimbursement quite well, we have a very good team and this is an area of growth.
Mike: We expect to continue into the future. So we're very pleased with our home solutions business, It's a natural fit.
Mike: With the Henry Schein coal.
Speaker Change: Physician referral business.
Mike: So I didn't catch the last part of your.
Mike: The revenue base.
Mike: Yes.
Mike: On an annualized basis.
Mike: Business is now approaching something I believe it's around $3 6300 $60 million.
Mike: Year, but quickly growing and approaching $400 million soon.
Speaker Change: Okay, great. Thanks, guys.
Speaker Change: Next question is from the line of Allen Lutz with Bank of America. Please proceed with your question.
Allen Lutz: Good morning, and thanks for taking the questions one for Scania Ralph.
Allen Lutz: Why do you think the U S implant market is a little weaker in <unk> 25 versus a year ago can you talk about what you're seeing there and give us an update on the performance of some of the new launches.
Allen Lutz: Here in the U S. Thanks.
Allen Lutz: Yeah.
Allen Lutz:
Allen Lutz: I'm not sure we can give you anything specific as to why it's weaker.
Allen Lutz: Other than to say that.
Allen Lutz: Consumer sentiment.
Allen Lutz: Hi, and dentistry maybe.
Allen Lutz: It may be but weaker I think for the.
Allen Lutz: More price sensitive.
Allen Lutz: <unk>.
Allen Lutz: It seems to be.
Allen Lutz: Relatively stable.
Allen Lutz: The basic.
Allen Lutz: <unk> that he used implants.
Allen Lutz: Used in lower cost procedures.
Allen Lutz: It seemed to be more stable than the higher end.
Allen Lutz: The bone regeneration business is quite solid.
Allen Lutz:
Allen Lutz: As it relates to products that take the probe conoco products we have.
Allen Lutz: Our focus right now on moving our existing customer base over to the new product.
Allen Lutz: Which is being well received.
Allen Lutz: We have the smart shape Ila, which provides what we believe is an innovative.
Allen Lutz: Advancement to supporting functions of healing abutments.
Speaker Change: Efficient taking.
This is doing well.
Speaker Change: So overall the U S market is slightly down.
Speaker Change: We believe with keeping pace with that.
We're picking up a little bit more market share.
Speaker Change: Bone regeneration area.
Speaker Change: But.
Speaker Change: Overall I think the high end then is more linked to the elasticity.
Speaker Change: The consumer sentiment.
Speaker Change: And at the <unk>.
Speaker Change: And.
Speaker Change: Of the cost of a procedure, that's part of the market seems to be rather stable.
Speaker Change: Thanks, Sally and then you said in your prepared remarks, you said, new dental practice build out is increasing can you expand on that a little bit do you mean that it is accelerating from where it was maybe in the back half of 'twenty, four or you're just saying that it's growing year over year. Thanks.
Speaker Change: I think in 24 that were not that many.
Speaker Change: Buildups.
Speaker Change: Both.
Speaker Change: De Nova and.
Speaker Change: With existing practices.
Speaker Change: And we are seeing.
Speaker Change: An expansion of the notice.
Speaker Change: Not only with Dsos many dsos.
Speaker Change: Our customers are expanding.
Speaker Change: And the DSO.
Speaker Change: But this is also with the.
Speaker Change: A smaller practices.
Speaker Change: Mid sized practices.
Speaker Change: Group practices regional Dsos.
Speaker Change: There is more activity going on than a year ago.
Speaker Change: Maybe it post for awhile, because people were taken it back with the higher interest rates, but.
Speaker Change: But I think dentists have now.
Speaker Change: On the financial managers of these dsos have come to realize that.
Speaker Change: Rates are likely to stay at these levels.
Speaker Change: Adjusting there.
Speaker Change: Purchasing and investment criteria of course, there are some larger dsos.
Speaker Change: It didn't have the quality of financing and that may not be growing there.
Speaker Change: Businesses internally as rapidly, but those that have good financing and there are a lot of those dsos are investing today and sentiment on the investment side seems to be okay.
Speaker Change: Our next question is from the line of John Stanfill with J P. Morgan. Please proceed with your question.
John Stanfill: Great. Thanks for taking my question can you just walk through in the case, where you need to pass on cost to your customer base in the in the dental space.
John Stanfill: What are the mechanics of that and how quickly can you pass on.
John Stanfill: Cost increases to your customers and how have the discussions with large practices has gone to date.
John Stanfill: Right. So of course at the moment, we still have quite a bit of inventory that we didn't have to pay the tariff.
John Stanfill: Chris.
Chris: We are working with our customers on.
Moving to alternate.
Chris: Products.
Chris: Rice is important.
Chris: The ultimate products could be manufactured.
Chris: Global National Manufacturers'.
Chris: Products manufactured.
Chris: Outside of the.
Chris: The U S that could switch to U S manufactured products. So there's a lot of activity on our national brand products. Those products that we are not the importer of record.
Then on our owned brands.
Chris: Yeah.
The.
Chris: Corporate brand side.
Chris: Uh huh.
Chris: Advancing and we have been doing this for a while the sourcing of these fronts.
Chris: Quite a bit is actually manufactured in the U S.
Chris: Most of our specialty.
Chris: Products are made in the U S is a little bit thats not.
Chris: But a large part of it is.
Chris: So.
Chris: We are managing the sourcing side.
Chris: We are working with.
Chris: Many manufacturers cushioning.
Chris: The impact of the tariff. This is on a manufacturer by manufacturer product by product basis, because we have a pretty good database.
Chris: On sourcing of products.
Chris: That database a few years ago in anticipation of this.
Chris: Then again.
Chris: There is.
Chris: Switching from one brand to another.
Chris: And.
Chris: At the end of the day if.
Chris: If we can't cover it.
Chris: With.
Chris: Sourcing country sourcing.
Chris: Switching products.
Chris: Sourcing moving to our own brand moving to lower cost brands than we.
Chris: We're going to have to pass this on.
Chris: To our customers and at the moment, we haven't had a lot of price increases we've had them in selected areas for example, in our Handpiece repair business.
Chris: The parts all imported.
Chris: At the moment.
Chris: And then we've had to move it up but.
Chris: Not that much in that particular instance, about 5%. So we're doing it at the moment.
Chris: Product by product basis.
Chris: The tariff increases have not been significant yet.
Chris: And we're hoping that we'll be able to mitigate a lot of this through.
Chris: Just outlined.
Speaker Change: Great and then if I could just add one more on on the medical distribution side.
Speaker Change: Can you quantify the tailwind from the elevated or seasonally different respiratory season. This year given the you said the market was broadly stable.
Speaker Change: I don't know if Ron do we have specific.
Speaker Change: Well I think what I can say is that.
Speaker Change: We did see better sales in our medical business in February and March than we did in January quite frankly.
Speaker Change: That also holds true for our dental business January was a very soft month as we've emphasized.
Speaker Change: In our prepared remarks.
Speaker Change: So some of that is the is the return to normalcy, but I think medical got a little bit of a better bump as well because of the timing of the respiratory illness season.
Speaker Change: And of course as the year progresses, you'll see that go back to a more a more normal mode, but having said that we are we were pleased with.
Speaker Change: Without the medical business did recover over the course of the quarter and the momentum going into the second quarter.
Speaker Change: Thank you. Our next question is from the line of Vik Chopra with Wells Fargo. Please proceed with your question.
Vik Chopra: Hey, good morning, and thanks, so much predicting the question so just to be.
Vik Chopra: Appreciate the comments on the tariff exposure, so far but I'm. Just curious if you can just talk about what was going to get process for us Rob our menu backyard, Neither Mexico, China and the EU and then I had a follow up please.
Vik Chopra: Okay.
Vik Chopra: So as it relates to Mexico, we have very little sourcing puts in a specialty area.
Vik Chopra: There is no impact on tariffs a big part of the.
Vik Chopra: Business.
Vik Chopra: Specific to dental business.
Vik Chopra: Rates too anesthetic, which is primarily manufactured in Canada and there is no tariffs on that.
Vik Chopra: As it relates to China, we started <unk>.
Vik Chopra: Rebalancing our sourcing some time ago. So it takes something.
Vik Chopra: Like gloves.
Vik Chopra: Used to source for the United States.
Vik Chopra: Gloves in China, we've moved that production capacity to Europe, and it moved glove.
Vik Chopra: Sourcing primarily.
Vik Chopra: The U S primarily to Malaysia as an example.
Vik Chopra: We are negotiating with our manufacturers in that area.
Vik Chopra: I assume our competitors will.
Vik Chopra: I.
Vik Chopra: I don't think its going to be a dollar for dollar increase.
Vik Chopra: As it relates to 10%, but they will have to be an increase at some point.
Vik Chopra: And so this is the kind of activity.
Vik Chopra: But as it relates to China, it's not significantly material.
Vik Chopra: We have about $100 million of product, where we are.
Vik Chopra: Imported a record some of Thats coming from China, but 12 $513 billion business, it's not that material.
Vik Chopra: Of course, the consumer sentiment right now in general seems to be okay as it relates to Dennis.
Vik Chopra: And I think there is some elasticity as it relates to general consumer sentiment, but.
Vik Chopra: But at the moment it seems to be okay as it relates to the dentist.
Vik Chopra: Okay. Thank you very much for that and my follow up question is I was wondering if you can comment on the dental capital equipment environment.
Vik Chopra: Given the current trade environment and risk to the macro have you seen consumers, sorry customers pause or extend timelines to purchase capital.
Vik Chopra: Either in the U S or internationally. Thank you.
Vic: Certainly Vic I think that.
Speaker Change: And Stephanie referred to this.
Vik Chopra: Earlier.
Vik Chopra: And I understand the purpose of your question because if we think that would be kind of the first indicator of perhaps a macroeconomic slowdown in the sector. If we began to see.
Vik Chopra: Significant declines in equipment orders and we've been tracking that very very closely.
Vik Chopra: We've yet to see any kind of.
Vik Chopra: Adverse reaction from the market our equipment orders are very much in line with our expectations.
Vik Chopra: When we look at them kind of on a year over year basis. So there is still.
Vik Chopra: What I will call healthy demand.
Vik Chopra: Is it super robust demand for equipment.
Vik Chopra: Probably not but it's healthy demand both on the traditional equipment side as well as an audit on the digital equipment side.
Speaker Change: Thank you. The next question is from the line of Brandon Vazquez with William Blair. Please proceed with your question.
Speaker Change: Hey, everyone. Thanks for taking the question, Brian maybe for you first as a modeling question I think.
Speaker Change: Everyone was trying to get around a little bit in the earlier questions in regards to FX implied guidance.
Speaker Change: Ask it slightly different than just say is there any organic growth number there was embedded into the full year guidance that you guys had last quarter versus this quarter like basically did the organic growth expectations change embedded within the full year guidance.
Speaker Change: No I would say there are largely consistent with what our original expectations for bladder.
Speaker Change: Okay.
Speaker Change: Then just as my follow up there were many of the other dental manufacturers were calling our dsos for kind of a notable strength in the quarter. Some of them maybe had been picking up at the start of the year in terms of advertising DTC spend are converting some of the backlog and even that you guys saw kind of notable strength out of Dsos and I know you touched.
Speaker Change: Starting a little bit, but just expectations from the Dsos I know they do a lot of the volume in a lot of the build out so how are they feeling right now in this kind of uncertain macro environment going forward. Thanks, guys.
Speaker Change: I would say that the.
Speaker Change: Dsos up.
Speaker Change: Stable to leaning positively in general there are a few that are doing quite well not aware of too many that are doing badly.
Speaker Change: If you had gone back maybe a year or two ago. There was some that we were worried about not really defaults, but that we were worried I would.
Speaker Change: I don't know of too many actually I don't know of any really in that category and maybe there's some small regional ones that may be unstable, but Germany, dsos are pretty stable and have adjusted to the higher interest rate both in terms of servicing their debt and also in the investment.
Speaker Change: Expansion, so generally the dsos are doing okay.
Speaker Change: Thank you we have time for one last question coming from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.
Elizabeth Anderson: Hey, guys. Thanks, so much for the question.
Elizabeth Anderson: Just on the back of Ibs being so Lee in March. This year can you talk about how you sort of thought about that show and so does the traditional maybe bump in particularly in equipment that we generally see in that business and sort of how you guys think about the likely impact for that for this year.
Elizabeth Anderson: Yeah the ideas.
Elizabeth Anderson: And so the exact timing of the Christmas holiday.
Elizabeth Anderson: The Easter holiday in Europe.
Elizabeth Anderson: So to kind of balance each other out I don't think there is a huge impact having said that what's happened with the ideas it's become significantly more focus.
Elizabeth Anderson: So for trading.
Elizabeth Anderson: Amongst businesses, rather than with customers from the customer side.
The only real men.
Elizabeth Anderson: The momentum that we can expect from the show is on the German side <unk> side, maybe and a lot of that is handled through our pre show promotions.
Elizabeth Anderson: We have good momentum in Europe.
Elizabeth Anderson: I think.
Elizabeth Anderson: And.
Elizabeth Anderson: What really came out of the show was the drive towards three D printing.
Elizabeth Anderson: Further digitalization of dentistry all of those areas, we've focused on and as we indicated.
Elizabeth Anderson: The equipment market is stable to positive of course, it can be lumpy.
Elizabeth Anderson: Of course this quarter, we had the <unk>.
Elizabeth Anderson: Flip between.
Elizabeth Anderson: <unk> fourth quarter and the first quarter of 2004, so were up against tough comparisons, but overall I would say the equipment market is good and as it relates to central Europe I think it's okay.
Speaker Change: Okay. That's helpful. And then maybe just in terms of I know some of your private label, you, obviously manufacturing ourselves and semi work with external partners. How do we think about that flexibility with potentially changing some of the sourcing.
Speaker Change: Countries et cetera in terms of how long that would take it that Chinese tariffs remain at their current elevated levels.
Speaker Change: Just two.
Speaker Change: Recap a little bit on our owned brands will be manufacturer that is primarily in the specialty areas and in those areas, particularly the implants.
Speaker Change: And orthodontics, which is very small and some endo, we are making in the markets that we actually sell largely making the markets that we sell so we don't see much of an impact there are situations like I described the thoughts.
Speaker Change: Example, with Handpiece repairs that we have to take up our pricing a bit.
Speaker Change: Got.
Speaker Change: It's not a huge amount.
Speaker Change: As it relates to <unk>.
Speaker Change: Corporate brands.
Speaker Change: Private label there.
Speaker Change: Yeah.
Speaker Change: We're sourcing now.
From manufacturers OEM manufacturers.
Speaker Change: We have.
Speaker Change: The moving products around the world for a while.
Speaker Change: There is a path thats coming out of China.
Speaker Change: But there are too many products in that group, whether or not ultimate manufacturers.
Speaker Change: The tariff doesn't come down the tariff comes down a bit I think we will be able to work with some of our Chinese manufacturers, but if it doesn't come down there are still work with us, but we'd have to consider alternate sourcing and thats been in the pipeline for for several years already so.
Speaker Change: There is a piece that we will be challenged maybe some of the commodities, but there are alternatives.
Speaker Change: For example, gloves.
Speaker Change: Turning to the <unk>.
Speaker Change: As Malaysia, I doubt, we'll be able to make a competitive price club in the United States.
Speaker Change: As a factory or two in that field, but it's still a very expensive. So at the end of the day. There are products that will have to buy with tariffs, but I think our competitors in all of us will be in the same boat for those products.
Speaker Change: So generally the movement has started to happen.
Speaker Change: <unk> work that still has to go on there could be some challenges for a couple of quarters, but in many of these product areas. We do have inventory. So we're working through those on a manufacturer by manufacturer product category by product category and at the moment.
Speaker Change: The economy remains more or less where it is.
Speaker Change: Foreign exchange.
Speaker Change: So more or less where it is I think we maintain our guidance.
Speaker Change: Thank you there are no further questions at this time I would like to turn the floor back over to Stanley Bergman for closing comments.
Speaker Change: Thank you very much operator, thank you all for calling in.
Speaker Change: We feel we feel pretty good about the business.
Speaker Change: We had a very good quarter.
Speaker Change: Asking again analysts and investors to understand the impact on a farm.
Speaker Change: Foreign exchange on the sales.
And if you take that into account with good momentum.
Speaker Change: And I think that good momentum at the moment is growing nicely.
Speaker Change: Nicely into the third quarter the second quarter.
Speaker Change: <unk>.
Speaker Change: Third month of the first of the first quarter March was okay.
Speaker Change: And as we go into the beginning of the.
Speaker Change: Second quarter.
Speaker Change: Looking okay good momentum.
Speaker Change: Equipment backlog remains strong.
Speaker Change: There's some office build outs of course.
Speaker Change: As can be lumpy thrive lives, which was.
Speaker Change: Las Vegas show with.
Speaker Change: Reasonably good attendance I've said good attendance as I mentioned was good.
Speaker Change: Momentum coming out of ideas with Germany.
Speaker Change: Oh actually the preparatory work going into the Ibs was quite good.
Speaker Change: That will result in.
<unk> sales again.
Speaker Change: Yes.
Speaker Change: Stable market.
Speaker Change: MP.
Speaker Change: To some extent on equipment side.
Speaker Change: On the high growth high margin.
Speaker Change: Upped our plan to go from 40% to 50%.
Speaker Change: The next three years I think we feel pretty good of that.
Speaker Change: The profits coming out of corporate brands at 10%, a little bit more than 10% looks good.
Speaker Change: Stable markets, we indicated of course, there are exceptions, some good very good markets.
Speaker Change: That's good but on balance stable.
Speaker Change: Our implant biomaterials business globally is good.
Speaker Change: At the moment, so we feel very good.
Speaker Change: Europe is doing good.
Speaker Change: In the U S is.
Speaker Change: It's not a growing market, but we think we'll continue to gain market share.
Speaker Change: Technology, we're very optimistic about that business both in terms of the.
Cloud based systems.
Speaker Change: Expense management.
Speaker Change: And we will continue to be committed to the.
Speaker Change: Long term EPS.
Speaker Change: Cash flow EBITDA goals, we outlined of course, we had a bump in the road with.
Speaker Change: Cyber incidents, which is largely behind us and so I would say the businesses in good shape morale is good we're happy with the management changes. We made we had to have close to reduce expenses.
Speaker Change: Take care of the line.
Speaker Change: Management.
Speaker Change: And.
Speaker Change: It's not unique to Henry Schein with businesses have to do we did that and we.
Speaker Change: We think will be the.
Speaker Change: Delivering good numbers on the expense reduction side, perhaps a little better than we thought through the early days. So we remain optimistic about the business.
Speaker Change: And we think.
Speaker Change: Yes, there is some elasticity as it relates to the economy in general, but it is not directly.
Speaker Change: As elastic as perhaps consumer sentiment in general is.
Speaker Change: And.
Speaker Change: In our medical businesses, Okay doing well.
Speaker Change: Our distribution businesses.
Speaker Change: From an efficiency point of view.
Speaker Change: Doing well.
Speaker Change: And the management in general is doing the job that we asked the team to do.
Speaker Change: Going into the year, So I think your investors of course.
Speaker Change: Susan.
Speaker Change: We're ready to answer questions.
Speaker Change: I'll have some.
Speaker Change: Group meetings.
Speaker Change: Our meetings with investors can call in and we're happy to answer questions. So thank you all for participating.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.