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Hello. My name is Vanessa, and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holdings Corporation's Fourth Quarter 2025 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. Jim Gustafson, Vice President of Investor Relations at Envista Holdings. Mr. Gustafson, you may begin your conference call.

Good afternoon. Thanks for joining Envista's Fourth Quarter 2025 Earnings Call. We appreciate your interest in our company. With me today are Paul Keel, our President and Chief Executive Officer; and Eric Hammes, our Chief Financial Officer. Before we begin, I want to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.envistaco.com. The audio portion of this call will be archived in the Investors section of our website later today under the heading Events and Presentations. During the presentation, we will describe some of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted our results. Unless otherwise noted, references in these remarks to company-specific financial metrics relate to the fourth quarter of 2025 and references to period-to-period increases and decreases in financial metrics are year-over-year. During the call, we may describe certain products and solutions that have applications submitted and pending certain regulatory approvals or are available only in certain markets. We will also make forward-looking statements within the meaning of the Federal Securities laws, including statements regarding events and developments that we believe, anticipate or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'll turn the call over to Paul.

Thanks, Jim. Good afternoon, and welcome, everyone. On today's call, I'll kick us off with some opening thoughts on our Q4 and 2025 performance, our progress implementing the value creation plan that we communicated in March of last year and our guidance for 2026. Eric will then take us through the numbers in more detail, and I'll wrap up with some closing thoughts before we open it up for Q&A. Let's start with the value creation plan that we shared at our Capital Markets Day early last year. In our view, a good plan should be both achievable and aspirational, timely as well as timeless. A good plan should authentically describe who you are today and who you're striving to be tomorrow. Centered on the 4 foundational components that you see here, we think our plan does exactly this. We're guided by our purpose of partnering with dental professionals to improve patient lives. We're centered on our circle values of customer centricity, innovation, respect, leadership and continuous improvement. We're focused on our 3 key priorities of growth, operations and people. And our plan is framed by our medium-term financial objectives of 2% to 4% core growth, driving 4% to 7% EBITDA and 7% to 10% EPS growth, all underpinned by free cash flow conversion of 100% or better. Today, I'll focus on the strategic and operational progress that we're making in implementing this plan as well as our financial performance relative to our medium-term objectives. Let's begin with Q4 and 2025 progress on the next slide. Slide 5 is organized by the 3 priorities that I just mentioned. Beginning with growth on the left side of the chart, ours was widespread. All businesses posted positive growth for the quarter and year and all outgrew their respective markets in Q4, resulting in continued share gains across the portfolio. Consistent with what we've discussed on previous calls, increased new product activity and clinical training are contributing meaningfully to our accelerating growth. We trained 30% more customers in 2025, and we generated close to $100 million in revenues from products introduced in just the last 12 months. I'll touch on a few of these new products on the next slide. And looking to build on this momentum in 2026 and beyond, Q4 marked another quarter of double-digit increases in R&D investment. On the operations front, we continue to enjoy strong contributions from EBS, our continuous improvement methodology that is central to how we deliver results, develop our people and advance our culture. We reduced G&A spending by over $35 million last year or about 10% while maintaining our world-class safety, quality and customer service levels. We took action in 2025 that we expect will result in roughly a 4-point tax rate reduction in 2026. And supported by strong cash flows, we put in place a $250 million share repurchase program in early '25, a first for Envista and returned over $160 million to shareholders across the year. Finally, with respect to people, we're working to advance our high-performing continuous improvement culture. We refreshed our management team in mid-2024, bringing in new leaders from the outside to supplement a strong core team that was already in place. 18 months in, we're working very well together and stability and collaboration at the senior ranks have cascaded across our organization. We saw record participation in our 2025 employee survey with broad-based increases in employee engagement. We've redoubled our commitment to talent development with better than half of all management promotions going to the existing employees last year, a 40-point increase over 2024. And in addition to taking care of our customers, colleagues and shareholders, we've also stepped up support of our communities by reaching more than 19,000 underserved patients last year and donating over $2 million to charitable causes through our Envista Smile Project. New product innovation has long been the lifeblood of Envista. Having served dentists now for over 130 years and with more than 1,500 patents to our name, we've had a hand in several of the most important dental innovations over time, including the invention of dental implants, the introduction of both self-ligated and conventional orthodontic bracket systems, the first panoramic radiograph and the now ubiquitous endodontic K-file. We built on this strong heritage in 2025 with key new product launches in all major businesses, and you see some of those listed here. Four major new product introductions in Spark last year supported that business' robust growth. New platforms in both premium and challenger contributed to multiple consecutive quarters of growth for our implants franchise and our fastest full year performance since 2022. In consumables, launches like OptiBond 360, SimpliCore Composite and CaviCide HP helped propel above-market growth for that business. And we enjoyed another strong year of new product launches in diagnostics with an entirely new intraoral scanning platform as well as novel cloud and AI features for our market-leading DTX Studio suite of solutions. We have another strong wave of launches lined up for 2026, and we look forward to sharing more about these as they come to market. Now having given you a flavor for where we're investing our time, attention and resources, let's turn to the output from all this work. We'll begin with Q4 results on the left side of the slide. We posted another strong quarter, delivering good revenue, EBITDA and EPS growth. Core growth came in around 11% or something closer to the mid-single digits, excluding certain factors that Eric will explain shortly. Strong core growth converted to even stronger EBITDA growth of 22%, driven by Spark turning profitable in Q3 and continued good execution on price, tariff mitigation and G&A productivity. Adjusted EPS was $0.38, up more than 50% from Q4 '24, supported by strong operating profits, share repurchases and a lower tax rate. Moving to full year performance in the center of the slide. Core growth for 2025 was 6.5%, again, broad-based across the portfolio. Adjusted EBITDA was up 26%, resulting in a margin of around 14% or a 2-point improvement over 2024. And EPS was up over 60%, aided by many of the same drivers as Q4. All of this contributed to strong free cash flow conversion for 2025 of 114%. Rounding out the slide, you'll see our 2026 guidance in the column on the right. This year, we expect core revenue growth of 2% to 4% and free cash flow conversion around 100%, both directly in line with our value creation plan. We're guiding to adjusted EBITDA growth of 7% to 13% and adjusted EPS growth of 13% to 22%, both above our medium-term objectives. To summarize my introductory comments, Q4 capped a strong year of progress and performance for Envista, positioning us well for continued improvement here in 2026. And with that, I'll turn it over to Eric to cover the financials in more detail.

Thanks, Paul. In the fourth quarter, we delivered sales of $751 million. Core sales in the quarter increased 10.8% and FX added nearly 400 basis points. As Paul mentioned, Q4 was another strong quarter for Envista with broad-based growth. It is worth noting upfront that our Q4 growth benefited from several items, which we do not expect to recur over the long term, namely Spark deferral and lower 2024 comparables, which I'll say more about in just a moment. Excluding some of these items, our Q4 core growth was closer to the mid-single-digit range. Q4 adjusted gross margin was 55%, a decrease of 220 basis points versus the prior year due to a significant FX transaction benefit in Q4 of 2024. Our adjusted EBITDA margin for the quarter was 14.8%, which was 90 basis points better than the prior year as benefits from volume, price and productivity were partially offset by investments and the prior year FX impact just mentioned. Adjusted EPS for the quarter was $0.38, up $0.14 compared to the same quarter of last year. Our non-GAAP tax rate for the quarter was 30.3%, slightly better than our expectations. We saw a beneficial trend throughout 2025 in our non-GAAP tax rate as a result of our strong business performance in the United States. As we've discussed previously, U.S. GAAP limits the amount of interest expense that companies can deduct to a portion of their taxable income. Our U.S. earnings have improved on several fronts, namely growth, Spark profit and G&A, all enabling higher deductibility of our third-party and intercompany interest expense. This drove the lower effective tax rate in 2025. Rounding out Slide 8. In Q4, we generated $92 million of free cash flow, down slightly from last year. The year-on-year cash flow decline in Q4 was primarily the result of a working capital improvement in Q4 of last year. Our absolute levels of free cash generation and conversion were strong in Q4 2025. Now I'll take you through our full year financials. In 2025, we delivered sales of $2.7 billion with core sales for the year increasing 6.5% over 2024. Similar to our trends in Q4, the business performed well throughout 2025. Our core growth was aided in part by the Spark deferral change and softer 2024 comparables, all netting to an underlying core growth of around 4%, in line with both our revised 2025 guidance and the medium-term objectives Paul covered earlier. 2025 adjusted gross margin was 55.1%, a slight decline year-over-year due to the impact of transactional FX penalties in the first half. Our adjusted EBITDA margin for the year was 13.7%, a 190 basis point improvement over 2024, with volume, price and productivity, all delivering well throughout 2025. Adjusted EPS for the year was $1.19, up $0.46 compared to the prior year as our growth and profit improvements were aided by a reduced tax rate and the share repurchase program we started in Q1 2025. Now let's turn to 2 bridges to help break down our fourth quarter year-over-year results, beginning with sales. Core revenues grew 10.8% in the quarter with positive growth in all businesses. We had good performance in both volume and price with a small tailwind from the Spark deferral change. Adding in the benefit of FX, a $25 million tailwind and 2 small acquisitions that contributed around $2 million, reported growth came in at 15%. As I mentioned previously, Q4 growth did benefit from 2 notable items we do not expect to repeat over the long term. The tariff price increases of 2025 are the first. We generated about 3 points of price in Q4 with tariff-related increases accounting for approximately 2/3 of this amount. Favorable comps are the second. As you recall, our China business experienced a high double-digit contraction in Q4 of 2024 due to VBP preparations and other market-specific factors. In addition, our Diagnostics business was down high single digits globally in Q4 2024. All in, prior year comps yielded about a 3-point benefit in Q4 2025. Turning to the adjusted EBITDA margin bridge on Slide 11. Volume, mix and the Spark deferral benefit combined to deliver a 330 basis point improvement. The previously mentioned price actions helped margins by 260 basis points. We had a net gain of 100 basis points from improved productivity with continued strong performance within our supply chains as well as year-over-year reductions in G&A. Partially offsetting these gains, gross tariff expense was about $10 million in the quarter or roughly 160 basis points. We continue to reinvest a portion of our productivity gains back into sales, marketing and R&D to support future growth, which amounted to 170 basis points in the quarter. And as mentioned before, year-on-year FX was a headwind to margins of 270 basis points as a result of the FX transaction gain in Q4 2024. Turning to segment performance. Revenue in Specialty Products & Technologies grew nearly 16% year-on-year with core sales up 10.9%. In our Orthodontics business, Spark was up high single digits before the additional benefit from the net deferral change. Brackets & Wires were up double digits year-on-year, aided by the low China comparable in Q4 last year that I mentioned previously. Excluding this, Brackets & Wires were up low single digits. Our Ortho business continues to capture share as having leading offerings in both Brackets & Wires and Clear Aligners provides us a distinct portfolio advantage. On the implant side, we grew mid-single digits globally, led by above-market performance in several geographies, including North America. Growth was especially strong in both the digital and regenerative segments of this business. Customers are looking for solutions that support both clinical efficacy as well as practice efficiency, and our products are helping meet these needs. In Q4, Specialty Products & Technologies posted an adjusted operating margin of 16.2%, up 470 basis points, driven by good growth as well as the year-over-year impact of Spark profitability. Volume, price and net productivity were all positive in this segment and consistent with prior comments, a portion of the gains were reinvested into commercial and new product development activities. Moving to our Equipment & Consumables segment. Core sales in the quarter increased 10.7% versus prior year, including high single-digit growth in consumables, where we delivered broad-based growth across the portfolio, including solid price performance. Diagnostic core sales was up double digits globally with high single-digit growth in North America. While our Diagnostics business did benefit from a soft Q4 2024 comparable, Q4 of 2025 was our third consecutive quarter of Diagnostics growth, driven by strong commercial execution, new product introductions and improving trends in the North America market in the second half of 2025. Adjusted operating profit margin for the segment was down 510 basis points, driven by continued investment for future growth and the prior year FX transaction benefit that I noted earlier. Now let's turn to cash flow. Q4 free cash flow was $92 million, a decrease of about $32 million when compared to the fourth quarter of last year, driven by very strong working capital results at the end of 2024 and higher CapEx in Q4 of 2025. For the full year, we delivered $231 million of free cash flow with a conversion of 114%. Free cash flow dollars were down year-over-year, primarily as a result of lower incentive bonus payments in 2024 related to 2023 performance and higher CapEx in 2025. Our balance sheet remains strong with net debt to adjusted EBITDA of approximately 0.6x, providing welcome stability in the current environment. In Q4, we deployed approximately $24 million in cash to repurchase 1.2 million shares of stock. On a full year basis, we repurchased $166 million or a total of more than 9 million shares at an average price of around $18 per share, making strong progress against our $250 million 2-year repurchase authorization. As Paul mentioned, today, we're providing guidance for 2026 using the same measures we introduced at the 2025 Capital Markets Day. Core sales growth of 2% to 4%, adjusted EBITDA dollar growth of 7% to 13%, adjusted EPS of $1.35 to $1.45 and free cash conversion of approximately 100%. Slide 16 provides additional detail on key assumptions underlying this guidance. First, we expect the dental market in 2026 to be similar to what we've seen this past year, continued stability with the potential for modest improvement across the year. Quarterly sales in 2026 will cadence a bit differently than last year and that we have 4 more selling days in Q1 and 4 fewer in Q4 relative to 2025. Specific to this effect, we expect stronger Q1 core growth and slower Q4 growth. The straight math on the days would imply a 6- to 7-point shift in growth, although with about 1/3 of our business going through distribution, we expect this to be closer to 4 to 5 points of additional growth in Q1 2026. We will update you throughout the year on how we see the progression playing out. We're assuming December ending exchange rates for our guidance. With the dollar ending 2025 at EUR 1 to USD 1.17, this would imply a 1.5% revenue benefit from foreign exchange in full year 2026. The impact of the 2024 change in the Spark deferral will continue to subside with about $15 million of remaining tailwind landing in the first half of 2026. We expect pricing to moderate across the year as we lap the tariff-related price increases implemented in Q2 of 2025. As the tariff environment has proven to be difficult to forecast, we have not modeled any material changes to tariffs in 2026. We incurred about a $30 million tariff headwind in 2025, and we expect around $40 million from tariffs currently in effect in 2026 due to annualization. We were able to offset tariff impacts in 2025 from a combination of price increases, cost reductions and supply chain adjustments and expect to cover tariffs currently in effect again in 2026. And finally, on the tax rate, as a result of improving U.S. profitability and the resolution of the intercompany loan that we discussed last quarter, we expect our 2026 non-GAAP tax rate to be approximately 28% of adjusted pretax income. Now back to you, Paul, to wrap things up.

Thanks, Eric. I'll start by circling back to our value creation plan. While we're still in the early days of unlocking the vast potential of our company, our first year executing the plan has us pointed in the right direction as we delivered above-target performance on all 4 of our medium-term financial objectives in 2025. As noted earlier, we're guiding to continued progress in 2026 with core growth, EBITDA, EPS and free cash flow conversion all at or above medium-term targeted levels. A few closing thoughts as we put a cap on 2025 and turn our full attention to 2026 and beyond. First, across most of last year, we described the dental market as slow but stable. On balance, that's still the best descriptor, although we are beginning to see some signs of market improvement. For example, the North American diagnostic market returned to growth in H2 and Q4 was the third straight quarter where all of our businesses posted positive growth. As we're a top 3 player in all of our categories, the breadth and consistency of our performance should be a positive signal for the broader market as well. Second, we feel good about the progress we're making in implementing the value creation plan that we shared with all of you last year. Underlying growth in 2025 was consistent with our medium-term plan, converting to even stronger earnings and EPS gains. Third, the full year guidance that we shared today reflects our confidence in building on this momentum here in 2026. Guidance for core growth and free cash flow conversion are right in line with our medium-term objectives, and EBITDA and EPS guidance are above the medium-term plan. Importantly, I'll close by noting that all this progress is made possible by the commitment, collaboration and deep capability of our global Envista team. We accomplished a great deal together in 2025, and we've only scratched the surface of what's possible. We're excited to build on this momentum here in 2026. That completes our prepared remarks for today, and we'll now open it up for Q&A.

[Operator Instructions] We have our first question from Brandon Vazquez with William Blair.

Congrats on a nice end of the year here. Can you -- maybe let's start at a high level, just talk to us a little bit about guidance. What are the potential upsides here? What are the risks to guidance, especially as we look at the top line and the bottom line, especially in the context of what is some pretty good momentum, I think, even when you back out some of these moving pieces exiting the year?

Thanks for the question, Brandon. Why don't I cover the growth part of your question, and then I'll ask Eric to cover the profitability component. Maybe I'll just begin by reframing core guidance for the year, 2% to 4% for 2026. And a reminder that this range is directly in line with the medium-term financial objectives that we communicated last year. And the high end of the 2026 range maps well to the roughly 4% underlying growth that we just delivered. I guess I would also say in terms of context that since we've not observed any material change in the underlying dental market, 2% to 4% feels like a good jumping off point for 2026. Again, noting that we expect relatively faster Q1 and slower Q4 growth due to the billing day effect that we just mentioned. Now having set the frame, let me answer your question, a couple of upsides and then maybe a few risks. I'd say there's 3 upsides worth noting consistent with your question. I guess I'd have to start with our momentum. Not only did we have positive growth across all the businesses, we had accelerating sequential growth across the 4 quarters. So carrying that momentum into '26 is naturally helpful. And related to this, with all of the businesses positive and generally accelerating, there's 2 businesses in particular that we don't typically say a lot about that I think do have upside this year. The first is Diagnostics. The overall diagnostics market, as we mentioned, turned positive in the second half of '25 after 3 years of contraction. We're a large player both in North America and globally. And while it's still far too early to say with confidence that, that market has turned, if indeed it does, that would naturally be upside for us. The second market that we don't say much about is our consumables franchise. It was up high single digits in '25 behind some really good work by the team on fundamental things like price, new product introductions, DSO penetration, et cetera. We have been intentionally investing more in our consumables business of late, which could yield some upside. Let's see maybe the third upside I'd mention, Brandon, would be price. As we said in our prepared remarks, our guidance assumes that we return to more normal pricing levels, call it, 1 point or so per annum once we lap the tariff-related increases that we took mid last year. There's just too many moving pieces to put it in our guidance, but it's not hard to envision scenarios where inflation, both general to the economy and specific to dental, continue at elevated levels here in '26. We've been working hard at improving our price execution. And so if inflation stays at higher levels, I think we'd be positioned to take advantage of that. Now giving you a balanced response on the growth side before I turn it over to Eric for profitability. I think 2 risks warrant mention. The first, of course, you'd have to start with macro volatility. No one gives a confidence interval along with their guidance. But if we did, you'd have to expect that it'd be unusually wide for this year for the reasons we all know well. Factors like tariffs and interest rates, consumer confidence, et cetera, all impact dental demand. And as we saw pretty clearly in '25, there's a real possibility of some or all of those recurring here in '26, which brings me on to a second risk worth noting, that being China. China now represents about 7% of our total sales. While VBP and ortho and implants are very likely in 2026, the specific timing is difficult to forecast. There's been a number of delays. Based on prior experience, we feel like we generally have our arms around the impact of VBP across a 12- or 18-month horizon, but the specific quarter-by-quarter effects can vary quite a bit depending upon government timing. So in sum, 2% to 4% for the year. I would say -- I would shade the upsides a little bit above the risks, but there's plenty out in the world right now to keep us cautious. Eric, do you want to say same on the EBITDA side?

Yes. Excellent. Thanks, Paul. Brandon, thanks for the question, a good forward lean for us to talk through. So maybe just before the headwinds, tailwinds, what I would just start with is the fact that our profit improvement and our margin improvement in 2025 was pretty solid, double-digit growth in profit, almost 200 points in year-over-year improvement in margin. And I think if you just follow our bridges as we provided through each quarter and now fourth quarter, what you saw in 2025 is good growth in productivity, more than offsetting tariffs and FX, all while being able to invest for future growth, which you saw more predominantly in Q3 and Q4. So a good year for us, good equation in total. Just as Paul said, just a reinforcement on guidance, we're guiding to 7% to 13% EBITDA growth in 2026, so slightly better than our Capital Markets Day guide or outlook, which was intended to be an average year. We do think it's important to focus on the dollar growth versus the margin percentage, although, of course, we manage both. We think the dollar growth aligns better with value creation. We know our investors like to see that, and it allows us a little bit of flexibility on trade-offs between growth and margin. That said, if you take our guide and you back into margins, you'll get a guidance that implies about 50 to 100 bps in margin improvement in 2026. Tailwinds, I would say, would be core growth. So margin improvement based on the strong gross margins that we get. Paul talked about the fact that we've got a good momentum right now in terms of growth heading into 2026, and we see that as a tailwind for margin rate. Productivity, just like 2025, we'll continue to drive productivity. Factory productivity, G&A discipline, we'll just put another focus on that this year like we did last year. We've got good momentum in Spark, both in terms of growth and profitability. And I think we can expect more of that in 2026. And then FX, while certainly less predictable as a forward projection, we do think FX is a year-on-year tailwind to our margins. That's mostly because we took losses on what we call transaction balance sheet revaluation in the first half of last year. We have a hedging program in place, and that's why you've seen sort of a settling and more of a neutral inter-quarter view of that in the second half. And then if we just flip for a moment to headwinds, I think we gave a pretty instructive view of tariffs in our guide assumptions. About $10 million per quarter is the run rate that we've been at in second half. If you just annualize that, it means we've got about a $10 million headwind next year. We'll continue to offset that with the actions that we've had thus far. China. Paul mentioned sort of the uncertainty of China. He mentioned the 7% of our revenues. But I think in general, you should see China as a margin rate headwind, maybe a slight profit dollar headwind just based on how we expect China to play out in terms of growth and profitability. And then lastly, I would just say investments, just as we saw in 2025, we'll continue to invest in R&D, sales and marketing. That will certainly be at the pace of our business performance, right, how well we grow and how well we fund that investment by delivering on productivity. You kind of take all that together and the cadence for the year probably looks like slightly lower margins first half, slightly higher second half, most of that just being defined by the revenue profile of our business.

Got it. And that's super helpful, very comprehensive. So maybe I'll ask a quick modeling touch-up on so some others can get in the queue here. But Eric, as you think of the tax rate, you guys have clearly done some good work there. Is there more work to be done? What's kind of the expectations of tax rates to go lower?

Yes. Great question, Brandon. So I mean just kind of taking everybody back, we finished the year just under 32%. We put in our guidance assumptions, just to give you the sort of the answer on our EPS equation. We expect tax to be this year, 2026, around 28%. That's fully inclusive of the resolution of the intercompany loan that we've talked about. That is the majority of our 4-point tax rate reduction. Future benefits, I would say, would primarily come from one of three things: continued U.S. profit improvement. We still pay third-party interest, that's interest on our debt, and we have a little bit of a deductibility cap that we still have there, which pressures our tax rate. Continued U.S. income improvement will just help to absorb that effectively. The second would be any kind of paydown in debt. So if we choose to capitally deploy our balance sheet towards debt paydown, that may help our tax rate. That's also linked to that interest expense just mentioned. And then the last would just be if we have any geo mix benefits and the ability to improve profits in lower tax jurisdictions. But I would say the 28% is a good view. It's obviously showing a lot of year-on-year improvement. And most of the mentioned items on favorability would be minor at this point in time.

We have our next question from Jon Block with Stifel.

Great color on '25 and the '26 outlook. I think the only thing that I was a little bit unclear on and sorry if I missed it, but just the detail or assumptions on VBP for ortho and/or implants. In other words, sort of what's embedded in the '26 guidance regarding those variables? Is it one? Is it the other? A stub? Again, I know it's a moving part -- or moving parts to it, but just curious on how you guys are thinking about that going into the year?

Jon, thanks for the question. Yes, we didn't say much about VBP because there's really not too much new news to report, but let me recap what we do know. We continue to expect a first round VBP for ortho and a second round VBP for implants sometime in 2026, but specific timing has proven to be difficult. In our guidance, we assume a second implant VBP to occur likely in Q2 and the most probable timing for the Ortho 1.0 VBP would be the second half. Just to give you guys a little bit of a context for why the timing is so uncertain here. Recall that there are dozens of medical VBPs currently underway across China. To increase the complexity, some of these are specific to one province, some are cross provincial, some are national. And most of the large hospitals participate in multiple VBPs. All big hospitals have an orthopedic department, urology department, cardiovascular, dental, et cetera. So it is a complex thing for Chinese authorities to manage and why continued shifts in timing are certainly possible. But hopefully, that gives you a flavor for the timing piece. Just as a reminder, the way this typically plays out is we see a quarter or two of negative order growth in advance of a VBP go-live as the channel draws down inventory to avoid a restatement penalty. And then you get the opposite of that once the VBP gets announced, you get a quarter or two of order acceleration as the channel replaces that drawn down inventory at the new price level. Hopefully, that gets to what you're asking.

No, it certainly does, Paul. That was very helpful. And the second one, I don't know, I feel like you guys are almost being a little modest. I mean, look, I get the 10.8% core is not the new run rate. Hopefully, none of us are going to go ahead and plug that in the model and we get it. It had some benefits like you mentioned an easy comp. But you guys knew about the easy comp. Your '25 guidance was 4% top line and it implied, I believe, around 2% core for the fourth quarter of '25. And again, you knew the easy comp. You probably knew most of the stuff around price. So where I'm just going with this is like what deviated to the upside for you guys, for the company in the last 3 months of the quarter to put up that close to 11% versus the implied 2%. And again, I get the variables that you are calling out going forward. But it still seems like a notable step function from where your heads were at 3 months ago.

Well, Jon, both Eric and I grew up in Minnesota. So we think of modest as a complement. The 2% to 4%, I think you understand why we see that as the proper jumping off point for 2026, lines up exactly with the medium-term guidance that we gave roughly a year ago and lines up pretty well with the underlying growth. Embedded in your question, we certainly wouldn't want anyone on this call coming off feeling like we're signaling that Envista expects a slowdown in our underlying performance or that we've come anywhere close to realizing the full potential of this business. We've now posted 5 consecutive quarters of generally accelerating growth. And today, we indicated that we expect to build on that momentum in 2026. We're committed to rebuilding our track record of consistent delivery. I think this is now my seventh earnings call, and it's probably Eric sixth. And hopefully, you're seeing a pattern develop both of steadily improving performance but also credible transparent reporting. And that's what we're aiming to build on here in 2026.

Jon, I'd give you just a couple of other points maybe to consider. So we look at the full year 2025. So fourth quarter was good. I take your point fully. For the full year, our sort of normalized growth rate is about 4%. Any quarter could be a little bit more dynamic. Two things did stand out in our fourth quarter growth, maybe differentiated from what we saw going into the quarter. One was the shift in the China ortho VBP. So remember, we were talking sort of going into that call about a December VBP implementation. That meant that the ortho bracket and wire market for us and generally the channel was just stronger, material enough to move our growth by a point or so. And then we had a very good growth result in implants. We saw mid-single-digit plus growth, very, very strong in the sort of the broad digital portfolio that we have. That's everything from our prosthetic from treatment planning before that to some of our equipment and guided surgery. I wouldn't call it a surprise. Our teams have been out there. We've been investing in it, but it was certainly a better growth for us than we anticipated at least midway through the quarter.

Our next question is from Kevin Caliendo with UBS.

In the fourth quarter, implants were up mid-single digit in both premium and value. Do you think -- how do you think that was compared to the market? And just kind to get a sense of how much you think your new products actually contributed to your growth, meaning was it Envista's new products? Was it the market? Was it your positioning already, you're capturing more share? I'm just trying to get a sense because we have new products again coming next year, and I'm trying to also gauge how much of your top line growth might be coming -- or you think might be coming from your new product launches?

Yes. Thanks for the question, Kevin. We think that global implant market is growing mid-single digits, call it 5%. We were a little bit north of that in Q4, which was good for us. That's the first quarter since I've been here where I think we did outgrow the market in implants in total. So that's also now 5 straight quarters for premium growth and generally accelerating quarter sequentially. So building good momentum in implants. Maybe 2 parts of your question you asked, what do I think is going on with the -- what do we think is going on with the market and then how do new products play into that. The market, I would say we don't yet see any credible evidence that the market has changed. We'll learn more in the coming weeks as our peers report, but we don't think market acceleration was a driver of our acceleration. We think a couple of things played into our advantage. The first is, again, we made a significant investment in this business in 2024. Put $25 million in to the commercial front end to customer training and then into new products. Now a year or so past that investment, we certainly see a return on the commercial front end of that and on the customer training. I made some mention of that in my prepared remarks. I don't think we yet see the new product impact of that. We have a number of products we've now advanced through our pipeline that will launch in 2026, and we'll tell you guys more about those as they come to market. But I don't think that new product piece was in the 2025 result. The other piece I would point to, consistent with the broader Envista is that we did take price in 2025 and the tariff environment aided that. So I think we were advantaged in 2025 by a little bit of extra tariff price.

And that you don't expect to continue. Is that -- that's sort of what you're saying, right? There isn't necessarily any of that built into the 2% to 4%?

Correct. Our guidance for this year assumes that the midyear increases from last year carry forward for the first 2 quarters, then we lap them. And without any further information on tariffs, we've assumed that market dental inflation returns to kind of that what I consider more normal point to 1.5 points in the second half. So I think it was Brandon's question to kick us off. We do see pricing as an upside, but it's not in the guide.

Our next question is from Jeff Johnson with Baird.

Can you hear me okay?

Yes, Jeff.

All right. Sorry about that. I'm driving. So if you hear any crashes or anything, just ignore it, I'll put you on mute. But -- so just a question on Spark. This quarter, the high single-digit growth. Obviously, it's still going to be above market. But I think last quarter, pre-deferrals, you were up high teens. Just any change in competitive positioning and/or market trends in the quarter? And then, Eric, maybe you can help us just understand, last quarter was the first quarter you swung the profitability on the Spark side. Did we see further improvements on top of that in Q4? And how should we think about the gating over the next 3 to 6 to 8 quarters or something like that on how we get to that fleet average that you've talked about someday getting to on the Spark side?

All right. I'll take growth. Eric will take profitability. Yes, we think we outgrew the market again, that's many, many consecutive quarters now that we've done that. Now with the 2 biggest players on the ortho side having reported pretty decent numbers, maybe that suggests that the clear aligner market is getting a little bit of a boost. Maybe that helped a bit. And we did have a very big new product year in 2025, and we had 4 real new product introductions and several of those were completely incremental growth. So our retainer offering, for example, that's all incremental, no replacement. So I think all of those things really helped us. I haven't seen or we haven't seen any material change in the competitive landscape. In the orthodontic segment where we compete, there's 3 main players. All of them are good. All of them are competing aggressively, and I think that's good for customers and ultimately good for the market. Eric, do you want to talk about the profitability side?

Yes. Just a couple of points, Jeff. So I mean we talked last quarter about turning profitable. We won't give you kind of specifics on the call here, but we were certainly profitable again in fourth quarter at consistent levels with where we were in third quarter. So nothing of a dramatic departure. And in part, it's because now we're sort of getting into this period where every quarter sequentially will depend really on underlying Spark profitability improvement, operations, unit costs, design and less, of course, about the roll-through of the deferral, although both have contributed to the profitability path over the last year. We were down year-over-year in unit costs. So we've, I think, given sort of a view in past calls about how much did we have our cost per aligner down year-over-year. We were down mid-teens year-over-year. We were modestly down sequentially. So a little improvement quarter-to-quarter, but mostly year-over-year. And then as we see the cadence for the business going forward, I'd say you can depend on 2 things. One would be just the annualization, if you will, into 2026. So the business sort of reaching profitability. We've told you that third quarter, fourth quarter was a good like absolute level of business to depend on. But that means that next year, we've got just a nice carryover from that improvement trend. And then fleet average is still the best way to think about it on an operating level, and our improvement will come from really sort of the 4 things we've mentioned, right? Continued focus on automation and manufacturing cost out. Growth will be a portion of it, but it's not fully dependable on it or dependent on it. Portfolio, as Paul just talked about, we've been very focused on new products and making sure that we have the best play both for customers but also for profit levels. And then design costs. We've been bringing our design costs down consistently. That's aided actually by one of the products that Paul mentioned or had on the slide rather in the earnings call, which we call StageRx. That simply helps us translate efficiencies from the front end at the clinician level into our treatment planning and design and then ultimately into manufacturing.

And Jeff, we'll send you a transcript. So hopefully, you're not taking notes while you are driving.

Our next question is from Elizabeth Anderson with Evercore.

I was wondering if, Paul, as you said, this is your seventh call. And I think there are obviously a lot of immediately like fires that have to be put out and then you sort of -- and then you did a great job stabilizing the business and sort of getting it to where we are now. As we kind of think about the business and the market maybe being a little bit stable, I know you've talked about some new products and things that you're excited about rolling out as we think about 2026 and beyond. How do you kind of think about like where your focus areas are like heretofore? Is it sort of continuing to refine sort of things that you've talked about for? Is it new vectors of growth in terms of maybe either organic or M&A driven? Maybe just sort of at a high level, help us think through that as things are moving -- everything moving in the right direction and you're kind of thinking about the next leg.

Yes. Thanks, Elizabeth. Both Eric and I grew up in dental. We were pretty familiar with the Envista portfolio before we joined. We had bid against the assets when we were at 3M and then we competed against the business. And so we had a pretty good understanding of what a strong fundamental business it was. And as I think we've talked about on previous calls, there were a couple of pieces that were disrupted in that kind of '23 and '24 time period. And I put them into 3 buckets. The first is I felt we had inappropriate guidance in the market. And being a highly accountable company, we did what good companies do when they miss, which is anything they can to not miss again. So we were chasing the quarter, which caused us to cut back on investments, which then gets you on that kind of downward spiral in a high-margin business like this. If you don't invest in growth, you lose growth and then you lose gross margin and then you lose ability to fund future growth. So the first thing we needed to do was get the flywheel turning back in the right direction and the $25 million investment that we made in 2024 in retrospect looks like it did that. The second thing related to that is we're a 130-year-old company. And if you go back over time, every period of sustained growth was because we had a heavy focus on new products, not just development but also commercialization. And so we've been very intentional, not just in Q4, not just in 2025, but I think every quarter that Eric and I have been here to make an aggressive but measured investment in new product development. Some of that has already hit. We talked about the Spark piece of that. Many of those programs were underway before we arrived. But we have more in the pipe that I think you guys are going to hear about in '26 and beyond that should be encouraging. And then the third, Elizabeth, was organizationally. There was a lot of turnover at the higher ranks in the business, and that cascaded down through the organization. So at the same time that we're hopefully rebuilding confidence with the investors, job 1 for us is to rebuild confidence with our employees. Fortunately, these are good, high-quality products, and we never lost the confidence with our customers. So we had that stakeholder in decent shape. But I think over the last several quarters, we've rebuilt that confidence in our employee base. You can see engagement going up, and you can feel the energy around here. And so looking forward to what are we focused on now, we just put out the new plan a year ago. So we're squarely focused on executing against that. The 3 priorities of growth, operations and people. And we now have a building sample set of when we deliver against those priorities, it's reflected in the financial output. So the plan seems to be working. And as they say, we'll keep working the plan.

We have our next question from Steven Valiquette with Mizuho Securities.

Sorry, on there. A couple of questions here. I guess, just first on really more of a geographic question. I guess really across kind of global dental orthodontic market, some of your competitors are highlighting better end markets in Europe and APAC, but still suggesting challenging end markets in North America in various product categories. But you guys seem to be posting pretty strong growth in North America really across all your key product categories. So I guess I'm just curious, how you think about this way or not, but is there a key variable you can point to in your go-to-market strategy in North America that's leading to these results, whether it's DSO relationships or something else? Or is it just strong execution across each key product area that's just adding up to overall North American results? Just any color if you think about it that way might be helpful.

Yes. Steven, if I understood the question correctly, it's about any geographic differences. So let me answer the question for Q4 and for 2025. In Q4, no, we did not see any major differences by geography. We had strong growth in North America, in West Europe and in emerging markets. And then I think Eric mentioned, we had extra high growth in China because of that comp from Ortho VBP preparation in Q4 '24. So 2025, Q4, we saw strength across all regions. The answer is about the same for 2025. We weren't as strong on a full year basis in China, but North America and Europe were very similar. And then a couple of emerging markets were double digits as well. You're on mute.

Our next question comes from Lily Lozada with JPMorgan.

One on margins, you showed a lot of SG&A leverage. So can you talk through some of the sources of leverage you saw there in the quarter and how you're thinking about SG&A as a driver of margin expansion in 2026? And on R&D, that's been pretty consistently increasing as a percentage of sales. And so should we think about that continuing to outpace revenue growth in 2026?

Yes, I can take that, Lily. Appreciate it. So the first part, if you look at our adjusted EBITDA margin bridge, I'll just give you the high points on that one again. So overall margins improving in the quarter. I would say the quarter was fairly indicative of what we've seen in each quarter this year or most quarters this year and then for full year 2025. So volume benefits, price benefits. We delivered good productivity across most of our businesses. Our Spark margin improvement year-over-year was significant for us. And then as you mentioned, within kind of the bundling of SG&A, G&A, in particular, was strong for us in the quarter as it was for the full year, where for the full year 2025, we were down 11%. All of that effectively is helping us to offset tariffs and a little bit of FX penalty and then reinvest in the business. And I would say, if you sort of go back to the first question that was asked post-prepared remarks, our guide for next year is not too dissimilar. We'll continue to get margin expansion from growth and productivity. We'll continue to use that to invest in the business at the pace of our performance. And maybe the only difference into 2026 is that we expect FX to be a benefit just given the first half transaction costs that we had. And then sort of the third part of your question on sales and marketing, R&D, I would say, expect us to continue to invest in R&D at a not too dissimilar pace, improving each year and likely improving at a rate higher than growth so long as we can generate productivity, obviously, to be able to do that. Sales and marketing, probably more flat to maybe modestly increasing as an intensity. That's a nod to percent of sales, but certainly less so than R&D.

Great. That's really helpful. And then just another follow-up on VBP. I appreciate it's kind of tricky to call the timing, but I was hoping we could get a bit more color on how you're thinking about the impact when it does eventually come. I think last time you framed it as a net positive to revenues for implants. And so how would you characterize it this time around? Any color on the size of the business is being impacted, the magnitude of the potential impact and whether you're seeing it being a net headwind or tailwind after taking into account the potential volume impacts would be helpful.

Sure. Why don't I take that one? So again, there's 2 VBPs that we anticipate, the first VBP in ortho and then the second VBP in implants. So let me just comment on each in turn. So for VBP ortho, we expect it to look a lot like VBP 1 for implant. What we saw there was kind of a 40% to 45% price decrease that was then met with an equal inverse volume increase. So 100% volume increase to offset the 40% to 45% price increase. And for us, it was a net benefit to total revenues. So we expect something similar in ortho. Of course, there are nuances to ortho, and I'd mention 2. The first is -- in implants, it's easier for the market to expand volume. It's a faster procedure and easier -- easy for me to say anyway, easier to train a dentist to do it. So we saw a more rapid expansion in the patient demand. I think we're going to see less of that on the orthodontic side. It's typically an 18-month procedure treatment, so a little bit harder to expand. And certainly, on the traditional bracket and wire side, harder to expand that available supply through orthodontists as quickly. The other nuance worth mentioning is specific to us, there's both traditional and the clear aligner VBP. We're a large player on the traditional side in China. We're smaller on the clear aligner side. So the clear aligner question is going to impact some of our peers greater in China. Coming on to the anticipated second VBP for implants, it will be much smaller, we think, maybe in the 10% to 20% price decrease level. It benefited us greatly in VBP 1. Because those with large market shares going in tend to get even larger market shares coming out because in the case of premium to challenger implants, that price differential was compressed. And when the difference is smaller, we found more clinicians just trading up to premium. So we were a benefactor of that. Hopefully, that gives you a little flavor, Lily, of the 2 VBPs that should be coming here in '26.

Our next question is from Allen Lutz with Bank of America.

This is Dev on for Allen. I just want to maybe double-click on the diagnostic and equipment growth in the quarter and just looking at what that looks into next year. Granted this may be a tough one to parse out even in your seat. But just curious how you think about underlying growth for equipment, call it, versus more onetime-ish benefits. I'm thinking here sort of pent-up demand, maybe an impetus from the advantageous tax code recently or level of inventory in the channel. How do you see underlying equipment diagnostic market volume growth in '26 and then maybe Envista specifically?

So diagnostics, I'll talk in general. So equipment is a bigger category. Equipment includes chairs, handpieces, et cetera. We exited that part of the business previously. So we participate in 3 categories within diagnostics. We participate in 2D and 3D imaging. You're familiar with that. You sit in the chair, they take a picture of your anatomy. We participate in intraoral scanning, IOS, which is a different image capture technology. And then we participate in the software piece, the treatment planning as well as the image management piece. Those 3 categories tend to be the faster-growing part of the broader equipment. We had double-digit growth in our Diagnostics business in Q4, but that was aided by the easy comp from Q4 '24 that Eric mentioned. I think right now, I would call it a low single-digit growing category, and we have outpaced the market for the last couple of quarters. I would expect something similar in the first half of 2026, low single-digit growth, us doing a little bit better than that. And then we'll just have to see how that -- whether that growth catches and the market moves to more sustainable growth. So I'm going to hold off forecasting market growth in the second half for now.

That is all the time that we have for questions today. I will now turn the call over to Paul Keel, CEO, for closing remarks.

Okay. Thanks, Vanessa, and thanks, everyone, for tuning in. Maybe I'll just quickly underline a couple of quick thoughts to put a wrap around the quarter and the year. First, Q4 was another encouraging step forward for Envista with double-digit sales, adjusted EBITDA and EPS growth, and that capped off a strong 2025 with 6.5% core growth also converting to double-digit EBITDA and EPS growth for the full year. Second comment is that our performance was broad-based with all major geographies and businesses once again in positive territory and a good contribution from volume, price and new products. We also drove 2 points of margin expansion and returned over $160 million to shareholders. Third, we continue to focus on executing the value creation plan that we shared at our Capital Markets Day last March. And I think we are seeing encouraging progress on all 3 of our main priorities: growth, operations and people, which brings me to 2026. Our guidance for this year reflects our confidence in building on this momentum. Guidance for core growth and free cash flow conversion are right in line with our medium-term objectives and guidance for EBITDA and EPS are above that medium-term plan. I think that pretty much covers it for today. Thanks, everyone. Have a great day and a great remainder of the week.