Thank you, Darwin. Good morning, everyone. Thank you for joining us today for our second quarter 2023 results conference call. I’m Derek Leckow, Vice President of Investor Relations. Joining me on the call today are Matt Trerotola, Chief Executive Officer; and Ben Berry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the Investors section of our website, enovis.com. We will be using a slide presentation on today’s call, which can also be found on our website. Both the audio and slide presentation of this call will be archived on the website later today. During this call, we’ll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the safe harbor language in today’s earnings release and in our filings with the SEC. Actual results may differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. With respect to the non-GAAP financial measures referenced during the call today, the accompanying reconciliation information related to those measures can be found in our earnings press release and in the appendix of today’s slide presentation. With that, let me turn the call over to Matt, who will begin on Slide 3.

Thanks, Derek. Hello, everyone, and thanks for joining us today. We had a strong second quarter with high single-digit organic growth, margin expansion, and good progress against our strategic goals. Before I get into the results, I want to congratulate our team for being recognized by Newsweek as one of the best places to work in America. We have positive energy and momentum in our company and a talented cohesive global team that gets stronger every day. Let’s go to Slide 3 and talk about some of the Q2 highlights. We grew organically by 8% with 17% growth in Recon and 4% growth in P&R. That gives us 9% daily sales growth for the first half of the year. We continue to see some market tailwinds on the Recon side, and we continue to outperform the market by quite a bit. We had another strong P&R quarter as well in a healthy market environment. We expanded our adjusted EBITDA margin by 110 basis points, reflecting the mix impact of strong Recon growth, gross margin expansion from our price and productivity progress and continued moderation of inflation. We recently closed two acquisitions at Foot and Ankle, and we’re also delivering strong growth while scaling the full set of acquisitions we completed in the last few years. Overall, we remain on track for a great 2023 with strong momentum toward our strategic objectives. In Recon, on Slide 4, we had high double-digit growth in the U.S., led by over 22% organic growth in knees and hips. Extremities grew 15% with well above-market growth in both shoulder and foot and ankle. Outside the U.S., we grew over 16% organically in a resilient market. It’s still early days, but I’m excited about the international growth opportunity as we leverage our market position and begin to cross-sell our market-leading power and AltiVate products in some large markets. We have a strong pipeline of innovation as we continue the U.S. rollout of the EM-POWR Revision Knee and have some key new products launching in shoulder, hip, and our Foot and Ankle franchise. Turning to Slide 5, I want to take a moment to discuss the impact from the key Recon acquisitions we completed in the past few years. We closed Mathys to globalize our surgical business in July of 2021, and two years in, things are going very well. We’re exceeding our plan and seeing very strong double-digit growth, meaningful EBITDA margin expansion and good traction on synergies. We see great opportunities ahead as growth synergies ramp, and we continue to scale the business. In Extremities, we built a leading position in foot and ankle that is now growing organically well into double digits and has scaled from no profit to double-digit EBITDA margin. With the recent acquisitions, we expect to exit the year at a $100 million global run rate with a clear path for double-digit revenue growth and strong margin improvement as we continue to scale. In P&R on Page 6, our 4% organic growth reflects a healthy market environment and solid execution. The business is performing in line with our strategic plan with the average growth for the past six quarters, a bit under 4%. We have a strong pipeline of innovation for the balance of the year and next year that should support continued growth in this range. We also expect P&R to generate solid cash flow in the second half of the year as we rightsize inventory and continue to get the benefits of the productivity muscle we’ve built with our EGX business system. Now I’ll let Ben take you through the P&L details and our positive guidance update.

Thanks, Matt. Hello, everyone. I’ll start my remarks on Slide 7. We are pleased to report second quarter sales of $429 million, up 8% versus the prior year. Our growth was fueled by strong demand for our products, solid commercial execution in both of our business segments, and stable market conditions. Additionally, our second quarter sales results include a 70 basis point selling day headwind and a 50 basis point positive contribution combined from foreign currency and recent acquisitions. Second quarter gross margin was 58%, up 200 basis points. The growth was driven by leverage from higher sales and strong Recon mix. We continue to leverage our EGX business system to capture efficiencies in the supply chain and take ground on price versus cost, which we did again this quarter. Adjusted EBITDA margin was 15.3%, up 110 basis points. This growth was driven by gross margin expansion and partially offset by growth investments in R&D and other expenses. This builds on a really strong first quarter, resulting in a first half adjusted EBITDA margins up 110 basis points versus the prior year. The second quarter effective tax rate was 18% compared to 9% last year, primarily due to a one-time discrete benefit lowering the rate in 2022. In April, we executed a cross-currency swap, effectively lowering our interest rates. This resulted in interest expense of $4 million in the fourth quarter. Overall, we posted strong adjusted earnings per share of $0.61 or 22% underlying growth after normalizing tax and interest impacts from the prior year. We’re very pleased with these results and the momentum we’ve built through the first half of the year. I’d like to thank everyone at Enovis and all the team members for another quarter of outstanding results, well done team. Moving to Slide 8, considering our Q2 performance, we are raising our organic sales growth outlook for the year to 7% to 7.5%. As Matt said, the Recon markets continue to be stable, and our P&R business has grown in line with our expected levels. We expect a slightly more difficult prior year comparison in the coming quarters, especially in Q3, but we are confident that our Q2 results will lift the overall growth performance for the year. The full year sales outlook has been updated to include recently announced foot and ankle acquisitions and the current foreign currency rates. We expect acquisitions to contribute roughly 1% growth for the year, which is 2% in the second half. Based on current FX rates, we expect about 1% to 2% sales benefits in the balance of the year as well.

To summarize on Slide 9, we had another strong quarter, leading us to again raise our full year guidance. We grew 9% sales per day in the first half, and we remain confident in our strategy and our capability to build a sustainable high single-digit growth company. We took another step forward in expanding our margins and have a clear plan in place for continued margin growth. We continue to accelerate the company through M&A and have demonstrated strong execution of recent deals. We have a robust funnel and we’ll continue to look for opportunities to shape the organization in line with our strategic goals. Now we’ll move on to Q&A. Darwin, please open the call for questions.

The first question comes from Vik Chopra at Wells Fargo. Please proceed.

Hey, good morning and thank you for taking my questions. Congrats on a great quarter. I had two questions. First one, one of your competitors said last week that they’re seeing an impact of the price increases that they put through in their bracing business. Can you just provide an update on what you’re seeing on the customer price increases that you put through to help battle inflation? And then I have one more follow-up.

Vik, thanks for the question. Yes. I mean as we’ve shared previously, we’ve had multiple waves of price increases on the P&R side, including in bracing, and that’s part of what’s helping us to have some of the good gross margin traction that we’ve got, and that’s been from pricing directly into the clinics and the channel. There have also been some reimbursement increases that have provided some relief as well. So we’ve been working hard to start to pull back some of that inflationary pressure and stay ahead of further inflation.

Great. And then you had another strong quarter in Recon. I’m just wondering if you can talk about how much benefit you got from backlog we captured in the quarter and perhaps talk about your expectations for the rest of this year? Thank you very much.

Yes. Thanks, Vik. Yes, we’re certainly pleased with our performance and confident that it will be very strong share gain within the industry. Definitely, the whole first half of the year has been very healthy in Recon. So there seems to be more capacity for surgery that’s enabling surgeons to work through some of the backlog and demonstrate oversized market growth here this year. The comps were a little bit softer in the first quarter. But even in the second quarter with healthier comps, there was some nice tailwind from the very healthy year this year. It seems like there’s certainly plenty more opportunity for that kind of backlog-related tailwind to continue in the coming years. But I think this year, like last year, in the third quarter here, we’re seeing a pretty heavy amount of vacations in the elective surgery area. That’s something we’re certainly hearing about publicly out there. I think you’ll probably see some of the backlog clear pause for a little bit as we go through the summer months and then the opportunity will likely accelerate through the latter part of the year.

Thank you. The next question comes from Matthew Mishan with KeyBanc. Please go ahead.

Hey, guys. Thanks so much for taking the questions. This is Brett Fishbin on today for Matt. I just wanted to ask a question on P&R, pretty good trends there. But just curious, given how strong the Recon segment has been over the past few quarters and the market, if you might start to see a little bit of a lag benefit incremental to the current trend over the next several quarters, and if that could present some upside to the guidance range?

Yes. Thanks for the question. Yes, we’re certainly very pleased with the P&R results, and that’s in a healthy environment. If you remember, the P&R segment we’ve shared before has a number of different drivers. While elective surgery is a portion of what drives the business, it’s also driven by trauma and sports injuries and other elements. For sure, in the first part of the year, we’re getting the benefit of some extra elective surgery volume in that P&R business. As far as whether there’s a lag, I think that this year, inventory is a little tighter. So probably the extra tailwind there is being realized in the quarter versus with a lag. That’s why I said the P&R markets were healthy in the second quarter, and we feel comfortable that we can continue to grow our P&R business within the 3% to 4% range for the year, as we’ve talked about, likely closer to 4% than 3%. The 4-plus range that we’ve been in for the past few quarters is on the strong side for the P&R markets.

I appreciate the color. And then just a quick second question here. The international trends remained really positive as well with 16% organic performance in Recon in 2Q. Just curious if you could bifurcate internationally how much of that performance is attributable to underlying market dynamics versus some of Enovis’ efforts around brand expansion and cross-selling efforts in Europe? Thanks so much for taking the questions.

Yes. We’re really pleased with the international results, but I think it’s certainly common knowledge in the industry that there are some tailwinds in some countries like Germany where there’s quite a bit of tailwind. We shared that Mathys was historically about a mid-single-digit business, and our plan was to accelerate that business to at least high single digits and really work to push into double digits. I think that we’ve seen substantial acceleration of the Mathys business without the market tailwind, certainly into high single digits, maybe low double digits. Then there’s market tailwind on top of that that’s taken it well into the high teens. The opportunity for us in the coming years is, as the market tailwinds subside, we have a chance to ramp that synergy and remain very confident we can grow that business in the high single digits. The potential to grow in the double digits is becoming more promising as we’re getting to see the kind of reception we’re getting around the world and the capabilities and energy of that team.

Thank you. The next question comes from Kyle Rose with Canaccord Genuity. Please go ahead.

Great. Thank you for taking the questions and congrats on a strong quarter. Just wanted to talk a little bit about M&A, both historical and then the opportunity moving forward. Obviously, you put a lot of focus on the Recon side. Help us understand just how we should think about the focus of M&A to Recon versus P&R? Also, just the overall appetite for the organization for smaller tuck-in deals versus larger Mathys size transformative deals, particularly given we’re seeing a persistent higher rate environment here. Just any help there would be great. Also, could you remind us where we’re at in the rollout of EMPOWR Revision and the overall contribution you’ve seen through the first half of the year? Thank you.

Yes. Thanks a lot, Kyle. M&A, certainly, we’re really pleased we’ve been able to do as we’ve shared some of the highlights here on the call. Over the past handful of years, the vast majority of our M&A has been done in the Recon space, expanding into attractive adjacent markets and bringing great technologies into the business, but we have done some smaller things on the P&R side that have been very constructive shaping deals. The laser acquisition that we made is driving some very nice growth within our P&R segment. Our deals have been mostly small bolt-ons with Mathys sprinkled in as a larger strategic bolt-on. The opportunities that we see in the funnel are similar to the kind of profile of what we’ve been doing in past years, certainly more on the Recon side than the P&R side, but certainly some good small opportunities on the P&R side that can help us to shape that portfolio in a constructive way. We are definitely excited about the capital we have to deploy and the possibilities for what we can do with it. Regarding your second question about EMPOWR, we’re extremely excited to have the EMPOWR Revision that gets us into a sizable portion of the market that we’ve had really limited participation in historically. It’s a great product. It’s been well received in the market, and the ramp is going to be accelerating here in the back half of this year and into next year.

Thank you for taking the questions.

Thank you. The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.

Hey, guys; Thanks for taking my question. Congrats on good execution here. Maybe my first question is on the guidance, Matt. The first half organic was pretty strong at 9%. I think the annual guide update implies maybe a moderation to maybe 6% or a bit above for the second half. Similarly, on EPS, you beat the quarter, I think, versus the street by $0.10, but the EPS raised by only $0.04. Maybe just talk about the assumptions for the back half? Any macro assumptions? Or is it just a conservatism?

Yes. Thanks for the question. I’ll hit the growth part of it and then let Ben talk about the rest. Look, from the start of the year, our guide has implied a stronger first half than second half based on the comps. As you’ve seen, we’ve had some significant tailwind in the first half, like others have, in a kind of extra growth Recon market around the world. Our update to the guide reflects that strong first half, preserves a perspective that we’re going to have very tough Q3 comp, and probes a little more vacations in the summer and other things. We’ll be able to kind of accelerate through the final quarter of the year. The overall growth for the year will be in a very strong range and will put us in great shape versus our strategic objective on the growth front. Ben?

Yes. Vijay, thanks for the question. As we think about EPS, really, what we’ve done is we’ve flowed through the operating beat into the back half of the year. If you look at where we kind of came in during Q2, we had some benefit from the interest rate swaps that I mentioned in my prepared remarks and also we executed and completed the foot and ankle acquisition deals to increase our debt levels for the back half of the year. That will be a bit of an offset to the benefit that we’re getting from the interest rate that we saw in the second quarter. So you factor that into the back half of the year, then that’s what the EPS gets a bit normalized.

Understood. And Matt, maybe one on the augmented reality product that you guys had a soft launch in the first half. Where are we on the launch? Any updates on how we should think about Fab? Yes. We’ve been – as we’ve talked about, we’ve been in a limited launch, getting some great feedback on the product. There’s a lot of very positive feedback about the product, but also you use a limited launch to get feedback about things that could be tweaked a little bit to make it even better. We’ve been working through implementing those into the product, expecting to go to a broader launch as we work through the balance of the year. We’ve got very strong knee growth today without it. Certainly, it will provide – it’s something that can be applied to hip and knee, but we think it’s really going to help to fuel our knee growth. We’ve got very strong knee growth without it. As we bring that product in, that’s going to support continued very strong knee growth and also create a recurring revenue stream that will start to build from a small start but over time become a nice very high-margin recurring revenue stream as well.

Thank you. The next question comes from Joseph Conway with Needham.

Hi, guys. This is Joseph on for Mike. Maybe the first one, could you give us any updates that you may have from the FDA on the bone growth stimulator reclassification?

Yes. There’s no new information on the bone growth stimulator and we continue to view it as unlikely that it gets reclassified. Should it get reclassified, there might be some price pressure, but there would also be a lot of market opportunities that would open up in terms of the ability to innovate and get new indications in that product. So we’re constantly prepared for the possibility, but there’s no change in the status at this point.

Okay. Okay, thanks. And then I guess one more. Could you give us an update on maybe your ASC presence and the strategy with that in the Recon business?

Yes, sure. ASC continues to be a great part of our Recon growth story. I think as we’ve shared previously, around 20% of our knees are done in the U.S. in an ASC environment, which, based on our best information, is probably about twice the percent of the market that’s done in that setting. That’s been a high-growth setting. We also have continued to shape our offering to be very attractive to that ASC environment between our power knee as a great fit for the active patient that’s being selected in there. Our simplified instrument set and ARVIS being a cost-efficient, space-efficient, time-efficient enabling technology that is a great fit for the ASC environment as well. We expect to be able to continue to have good strong success in that setting.

Okay. Great. That’s all from us. Thanks for taking our questions.

Thank you.

Thank you. The next question comes from Dane Reinhardt with Baird. Please go ahead.

Hey, good morning, guys. Just wanted to ask one here a little bit on the margin front. You talked about the supply chain stabilizing. You’ve got price helping you a little bit. But as we think about next year, I assume pricing won’t be as much of a benefactor. So what are kind of the tailwinds next year as we think about gross and operating margin, especially if you’re keeping R&D a bit elevated? Is it really just kind of a mix story at this point?

Well, that definitely gets the benefit of the continued shaping that we’ve done on the mix. That’s one driver. It will be another year, as Matt shared in the prepared remarks, around the progress that we’ve made on some of the recent acquisition scaling, that continues to scale as we get into next year as well. If I think about where we are with regards to the price-cost aspect, we’ve built a capability in our P&R business now to be able to more consistently execute price increases. We’ll evaluate our options there to continue to reclaim some of the pressure that came into the system over the last couple of years. We’re working hard, leveraging our EGX business system to drive productivity in our raw materials, supply chain, both kind of the freight in and the freight out capabilities as well. Overall, I would say we have a lot of levers that we continue to pull to drive our margin expansion. Our building blocks are still very much intact in terms of the greater than 50 basis points expansion year-over-year, which is the mix of Recon, the scaling of acquisitions, and the operating leverage and scale and productivity of the business system. So those are really the building blocks and they still remain intact.

Got you. Very helpful. Okay, and then one kind of follow-up on Vijay’s question regarding the first half, second half phasing. I mean is there a chance that given the tougher comps you think Recon could maybe slow into the upper single digits as opposed to double digits? And then could you also remind us, are there any selling day impacts in the back half of the year? Thanks.

Yes. No, I think we feel confident we can continue to grow our Recon business in that double digits range, even getting into a little bit of a comp— a tougher comp range.

Yes. No selling day impact in the second half. Just another comment to add is that as we’ve brought in or will be bringing in the foot and ankle acquisitions that we’ve announced, there will be a little bit of pressure in the back half of the year for those as we work to drive the synergies and integrate those businesses into Enovis. So that adds a little bit of back half pressure on the margins as well, as we have the comp— a stronger comp in Q3 that we’ll be dealing with as well.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Derek Leckow for any closing remarks.

Thank you, and thank you, everyone, for joining us today on the call. We appreciate your interest. If you have any further questions, please contact me in Investor Relations. Have a great day.

Thank you. The conference has now concluded. Thanks for attending today’s presentation. You may now disconnect.