ZimVie (ZIMV) Q4 2024 Earnings Call Transcript

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ZimVie (NASDAQ: ZIMV)
Q4 2024 Earnings Call
Feb 26, 2025, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to ZimVie's fourth quarter 2024 earnings conference call. Currently, all participants are in listen-only mode. We will be facilitating a question-and-answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Marissa Bych from Gilmartin Group for introductory disclosures.

Marissa Bych -- Investor Relations

Thank you all for joining today's call. Earlier today, ZimVie released financial results for the quarter and year ended December 31, 2024. A copy of the press release is available on the company's website, zimvie.com, as well as on sec.gov. Before we begin, I'd like to remind you that management will make comments during this call that include forward-looking statements.

Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please refer to the company's most recent periodic report filed with the SEC and subsequent SEC filings for a detailed discussion of these risks and uncertainties. In addition, the discussion on this call will include certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP financial measures are included within the earnings release and the investor deck issued today found on the Investor Relations section of the company's website.

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This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 26, 2025. ZimVie disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. With that, I will turn the call over to Vafa Jamali, president and chief executive officer of ZimVie.

Vafa Jamali -- President and Chief Executive Officer

Good afternoon, and thank you for joining us. 2024 was a transformational year for ZimVie marked by many achievements. Through the sale of our spine business, we became a pure-play dental company, fully focused on our portfolio of dental implants, biomaterials, and digital dentistry solutions. We delivered $450 million in full-year revenue.

As part of our commitment to the customers we serve, we innovated across our portfolio to fill product gaps and capitalize on opportunities in the market. In addition, we materially reshaped our operating profile by reducing our corporate costs and introducing manufacturing and supply chain efficiency initiatives. As a result of these efforts, we improved adjusted EBITDA margins by over two percentage points for the year. In the fourth quarter alone, we generated over $21 million in operating cash flow.

We used the proceeds from the sale of our spine business to pay down debt and significantly delever the business. I would like to thank our team for the diligent execution to make this possible, accomplishing all of this despite softness in our end markets. For 2025, look at us to drive even greater progress, culminating with a line of sight to positive GAAP operating income for 2025. Our commercial growth drivers for 2025 will include strengthening our commercial team, continued focus on medical education and training programs, and expansion of the product portfolio.

On the topic of our commercial team, I'm very excited to announce that we've appointed a new vice president of Americas sales. This is our largest and most profitable market. Scott has been with our organization for over 15 years and has a deep knowledge of the industry, strong relationships with our customers and DSO partners and he is data-driven. This is the approach that we need to access the best market opportunities and for optimum performance management.

He's already hit the ground running, and I'm excited to have him lead our sales organization. Moving on to education and training programs. These are courses offered at our world-class Palm Beach Gardens Institute with an aim to drive adoption of implant industry. Our programs continue to be in very high demand, therefore, serving as a core growth driver for our commercial strategy.

Looking at our portfolio. Our key objective remains to prudently invest to fill product gaps and capitalize on opportunities in the market, creating a holistic portfolio supporting every step of the implant process. While we focus on commercial execution, we will continue to work diligently to improve the overall efficiency of our company and to manage capital allocation effectively. Rich will talk further about these priorities.

We look forward to updating our stakeholders on our progress to increase cash flow and improve financial flexibility in order to further reduce debt and reinvest in the business. I will now give additional details on each piece of our portfolio, starting with our dental implants. Our premium implants continue to be positively received by clinicians and patients. Our portfolio is led by our TSX and T3 PRO implants, which we perceive to be the highest-quality implants on the market.

Our clinically proven implant technologies address common concerns in modern dental implantology, one of which is peri-implant infection. That occurs in up to 20% of patients and can jeopardize long-term implant success. A study recently published in the Journal of Biomedical Materials Research, a leading journal in the field of biological medical sciences compared the innovative coronal surface technology of our premium implants to other leading brands. It showed our T3 PRO and TSX implants have bacterial adhesion levels that may offer up to 20% lower risk of peri-implantitis.

Better patient outcomes are obviously better for the patients, but also, they're better for the economics of the practice. We've also seen strong demand for our recently launched portfolio of GenTek restorative components. This demand validates our strategy to continue expanding and improving the commercial reach of our product offerings. We aim to bring additional products to market in the coming months, which complement the existing sales bag of our field reps.

The market opportunity for dental implants remains under-penetrated and exciting. We look forward to continuing to deliver innovative and effective solutions for implantologists globally. Next, I'll shift to biomaterials. Our biomaterials portfolio continues to gain recognition for its quality, growing 2% during the year and adding many new customers.

An implant is only as strong as the foundation you place it in, and our biomaterials portfolio provides clinicians with multiple options to create the ideal conditions for a successful implant procedure. Finally, I will highlight the ongoing success of our digital portfolio. Excluding oral scanner sales, which are distributed products, 2024 was a record revenue year for our digital dentistry business. Our ZimVie digital solutions, excluding scanner sales, grew over 10% for the year and finished strong, growing over 20% in the fourth quarter.

One of the most exciting areas in the digital portfolio is our Implant Concierge service, which grew 14% for the year. This exceptional growth rate is due to the significant savings the service offers clinicians, reducing hours of labor from dental office workflow. We look forward to continuing to expand the commercial reach of our Implant Concierge service in 2025, and we'll have more exciting updates to come. Surgical guide sales have also been strong, especially following our 5.4 RealGUIDE software launch, which drove RealGUIDE growth of 39% in the year.

Our extensive experience in this area has created a massive library of digital images. The digital reference library allows our software to provide one-click nerve detection and automated bone and tooth segmentation. This is a major benefit to clinicians, greatly increasing the safety of the procedure with great accuracy and less times. Advancements like this are why we are bullish on the long-term prospects for driving more users to adopt implant dentistry.

Overall, we're confident that our advancements in digital technology complement our top-of-the-line implant and biomaterials offerings, positioning ZimVie advantageously in the dental implant solutions market going forward. Let me now turn the call over to Rich to review our financial performance as we look forward to greater detail.

Rich Heppenstall -- Chief Financial Officer

Thanks, Vafa, and good afternoon, everyone. I'll begin by reviewing our fourth quarter and full year 2024 results for continuing operations and will close by providing commentary on our outlook for the full year 2025 and provide our expectations for the first quarter. As a reminder, we finalized the sale of our spine business on April 1, 2024. Thus, our legacy spine segment is reflected in discontinued operations in our financial statements.

Please refer to our 10-K for our financial results from discontinued operations. Beginning with our results for the fourth quarter 2024. Total third-party net sales for the fourth quarter were $111.5 million, a decrease of 1.4% in reported rates and a decline of 0.9% in constant currency primarily due to declines in U.S. implants and in oral scanners, partially offset by growth in biomaterials and digital solutions.

In the U.S., third-party net sales for the fourth quarter of $64.4 million declined 1.5% compared to the prior year, driven by weakness during the last two weeks of the quarter in implant sales and lower oral scanner sales, partially offset by double-digit growth in digital and growth in biomaterials. Outside of the U.S., third-party net sales of $47.1 million decreased 1.2% on a reported basis and was flat in constant currency. All three of our major product categories, implants, biomaterials, and digital, excluding scanner sales, grew in the quarter. Fourth quarter 2024 adjusted cost of products sold was 35% as a percentage of sales, decreasing 240 basis points versus 37.4% in the prior-year period, driven primarily by manufacturing efficiencies and cost reductions, partially offset by an unfavorable product mix.

Fourth quarter adjusted research and development expenses of $5.8 million, or 5.2% of sales compares to $6.5 million, or 5.7% of sales in the prior year. The decrease was primarily due to lower third-party fees associated with new product development. Fourth quarter adjusted selling, general, and administrative expense of $57.2 million was flat to $57.4 million in the prior year. Other income of $2.7 million primarily reflects income from transition service agreements resulting from the sale of our spine business and offsets stranded costs that remain in SG&A expense.

Fourth quarter adjusted EBITDA attributable to continuing operations was $18.4 million, translating to a 16.5% adjusted EBITDA margin. This reflects a $4.5 million increase and 420 basis of margin expansion versus $13.9 million, or 12.3% margin in the same period of the prior year. Our strong adjusted EBITDA performance underscores our ability to drive optimization in our cost structure during a time of transformational change and a challenging market environment. We believe that this hard work positions us well for continued value creation as our end markets continue to show signs of stability in what is widely viewed as a cyclical trough in our industry.

Fourth quarter adjusted earnings per share attributable to continuing operations of $0.27 per share on a fully diluted share count of 27.6 million shares reflects an increase of 170% from $0.10 per share in the prior-year period. Shifting to our results for the full year 2024. Total third-party net sales for the full year 2024 were $449.7 million, a decrease of 1.6% in reported rates and a decline of 1.2% in constant currency versus the prior year. In the U.S., third-party net sales for the full year 2024 of $266.8 million reflects a decline of 1% versus the prior year.

Outside of the U.S., third-party net sales of $182.9 million decreased 2.5% on a reported basis and 1.5% in constant currency. Full-year 2024 adjusted cost of products sold was 35.8%, a reduction of 40 basis points versus 36.2% in the prior year, driven by cost reductions resulting from the relocation of products between our facilities and more efficient manufacturing operations. Full-year adjusted research and development expense of $25.0 million, or 5.6% of sales compares to $23.3 million, or 5.1% of sales in the prior year due to ongoing product development needs. Full-year adjusted selling, general, and administrative expense of $237.7 million compares to $240.5 million in the prior year, driven by decreases in employee-related expenses, third-party fees, and information technology expense.

Adjusted EBITDA attributable to continuing operations in 2024 was $60.0 million, an 18% increase or nearly $10 million higher than $50.8 million in the prior year. This translates to a full-year adjusted EBITDA margin of 13.3%, a 220-basis-point improvement versus our 11.1% in the prior year. Again, I would like to emphasize that our full year 220 basis point improvement in adjusted EBITDA margin on lower sales reflects many quarters of work to optimize our position in our markets, improve our cost of goods, and drive operating efficiency. 2024 adjusted earnings per share attributable to continuing operations was $0.62 per share on a fully diluted share count of 27.4 million shares, 182% increase over the $0.22 per share we had in the prior-year period.

Now, turning to the balance sheet. As of the end of the fourth quarter 2024, consolidated ZimVie continuing operations cash was $75 million. Gross debt at the end of the quarter was approximately $220 million, yielding net debt of approximately $145 million. As a reminder, our cash balance does not include the $60 million seller note from the sale of spine, which continues to compound interest.

This note matures in October 2029 but could be received earlier under certain circumstances. Additionally, we maintain our $175 million revolving credit facility, which remains undrawn. Now, turning toward our 2025 guidance, beginning with our expectations for 2025 continuing operations. We expect 2025 revenue of between $445 million to $460 million, reflecting a 1% decline to 2% reported growth.

Please note, when considering an 80-basis-point or $3.6 million headwind from the impact of currency and a $1 million impact from one less selling day in 2025 versus 2024, our guidance reflects flat to 3% constant currency growth. The low end of our guidance range assumes the dental market remains the same, while the high end implies a moderate market recovery in the back half of 2025. We plan to continue to generate operating leverage and expect adjusted EBITDA of between $65 million to $70 million, reflecting an 8% to 17% improvement over 2024. We expect adjusted earnings per share to be $0.80 to $0.95 per share on a fully diluted share count of 29.0 million shares, representing a substantial increase of 29% to 53% versus 2024.

Interest expense following our significant paydown of debt and inclusive of accrued interest income from the seller note is expected to be in the range of $7.5 million to $8 million. Share-based compensation expense is expected to be $15 million to $16 million. Capital expenditures are expected to be in the range of $11 million to $14 million and include costs to transition our Oracle systems in the U.S. to the cloud.

Now that many of the expenses associated with the spine sale are winding down, we expect to generate operating cash flow of approximately $30 million to $40 million in 2025, more than double the amount of operating cash flow generated in 2024. Additionally, we are rapidly improving our bottom line, and we expect to achieve positive GAAP operating income in 2025. Moving on to our expectations for the first quarter. We expect net sales in the first quarter of 2025 to be in the range of $112 million to $114 million, inclusive of three headwinds.

More specifically, the impact of currency in the first quarter is $1.6 million, the impact of one less selling day is $1 million and the termination of a reverse transition manufacturing agreement with our prior parent is $1.4 million. When normalizing for these headwinds, our Q1 expectation reflects a range of minus 2% to flat growth in the first quarter. We expect adjusted EBITDA margin in the first quarter of between 14% and 15% of sales. Before handing the call back to Vafa, I also want to touch briefly on the topic of tariffs.

Our team has been closely monitoring recent government commentary and actions and analyzing potential impacts. Our current guidance assumes that our business will not be materially impacted by tariffs. We will continue to follow the situation closely and provide updates to the market as needed. With that, I'll now turn the call back over to Vafa.

Vafa Jamali -- President and Chief Executive Officer

Thanks, Rich. Over the past year, we've made significant progress on our goals of improving our operating efficiency while continuing to innovate for our customers and creating value for our shareholders. We are well positioned in the global dental implant, biomaterials, and digital dentistry market with a strong presence in the tooth replacement market and market-leading positions in certain geographies. To conclude, I'd like to share my optimism for the year ahead.

In 2025, our focus will be driving expanded adjusted EBITDA margins, earnings-per-share growth, and strong operating cash flow. We will continue to invest in our business to increase our product offerings and expand our geographic reach while optimizing our expense profile, ultimately delivering great value for shareholders. I look forward to providing updates on these activities throughout the year. I believe our team is well-positioned to execute upon each of these plans.

With that, let me open it up to questions.

Questions & Answers:

Operator

Thank you. At this time, we will conduct the question-and-answer session. [Operator instructions] Our first question will come from David Saxon, Needham and Company. Go ahead, David.

David Saxon -- Analyst

Great. Good afternoon, Rich. Thanks for taking my questions. Let's see.

I guess I wanted to start on some of the comments you made in the script, Vafa. When you're talking about the U.S. performance, you noted in the last two weeks, I think it was implants, you saw some weakness. So, I wanted to just understand what drove that.

Was that just the holidays? Or anything specifically? And then how did January and February shape up?

Vafa Jamali -- President and Chief Executive Officer

Hey, thanks for the question. So, the way we saw it was up to the middle of December, we were actually tracking to be actually at the upper range of our guidance. So, we felt pretty good. And then our POs really dried up for the last two weeks of December.

And we did some extensive reviews with the region manager teams, and they said there was extended holidays, people just giving their staff the time off for the week, and it was more than before. This is probably the second year in a row we've seen it, the end of the -- end of December not being as strong as previous years were. But this one was a little bit heightened. And I think that once I've listened to a bunch of commentary from different parts of the business, it feels like it was extended holidays that really caused that, being the timing of New Year's and Christmas.

January came back. So, January was stable again. So, December -- first two weeks of December was good, and then January was back to normal again. I think some blips in February.

Nothing material. I think I hate to call out weather right now, but that's what we heard. But I would say much more stable now than the last two weeks of December. And it wasn't anything.

It wasn't share loss or competitive behavior, it was just truly a shutdown of offices that we experienced in the U.S.

David Saxon -- Analyst

OK. Great. Thanks for that. And then I just want to understand kind of expectations for growth by product category.

I would assume kind of implants and scanners remain kind of the drag. But are you expecting like biomaterials and digital ex-scanners to grow for the year?

Vafa Jamali -- President and Chief Executive Officer

Yeah. Rich, do you want to take that one? I think it's about similar to this year. Rich, you want to --

Rich Heppenstall -- Chief Financial Officer

Yeah. Yeah, David. Yes, happy to take it. Yes.

So, the way that we're thinking about it, about 2025 by product category, even though we're not guiding is digital has great momentum, right, as Vafa mentioned in the script. And we grew again by double digits in the fourth quarter. So, that business continues to perform well. Our biomaterials franchise continues to perform well also.

We've got some really good offerings. We have the new product introduction about a year ago, I believe, on biomaterials, and that business continues to do well. So, on the other pieces that you mentioned, I'll talk to oral scanners first, and then I'll kind of switch over to implants. On the oral scanner side, that product for us is distributed products.

So, it's low-margin product, where we continue to see pressure in the fourth quarter. We expect that to start to kind of level out probably after the first quarter, kind of get back to a little bit more normalcy. But our real focus is going to be around implants. And Vafa kind of alluded to a change in sales leadership that we had in the U.S.

at the end of the year, kind of beginning of December. And one of the things that Vafa and I found was that we have good products. We have an effective well-covered sales force. But one of the things that we weren't doing and found this after we sold spine is we could be more data-driven from a sales execution standpoint.

And so, you'll find that the implant market is still pressured, but you'll find a heightened degree of focus around implant growth in 2025 that are more data decisions that actually leverage the full power of the entire portfolio, including, of course, the strength of the implants.

David Saxon -- Analyst

OK, great. Thanks so much for taking my question.

Operator

Thank you. Our next question is from Kevin Caliendo with UBS. Go ahead, Kevin.

Kevin Caliendo -- Analyst

Thank you, and thanks for taking my question. Guys, I want to talk a little bit about the implant market. It doesn't sound like things got materially better. Obviously, you talked about the end of the fourth quarter and what happened.

And your expectations for this year are that it's stable. Your guidance basically assumes it's stable and the high end assumes it gets better. What does that actually mean get better? Is it in terms of total volumes? Is it in terms of total mix? Like are you seeing any improvement in the more comprehensive cases, the half arches or full arches or anything like that? Are you seeing any signs of that coming back yet?

Vafa Jamali -- President and Chief Executive Officer

Yeah. I think the pressure is a bit of the more expensive cases so the case you just mentioned. And that's really where the recovery needs to happen. And that typically is done at the specialist level, Kevin.

So, like that would be the big volume movers that are very loyal ZimVie customers would be where we would see that growth. And that hasn't fully recovered yet. Where you do see implants kind of moving along are the singles, the onesie-twosies where it could be done in much broader number of practices than a purely specialist. So we are assuming that if there is a recovery, it will be the back end of the year.

And the way we've guided, as we've said, if it stays the same, it's here. And with some moderate improvement, with moderate improvement which will have to include the specialist volume that you just mentioned. So, that's really where we need to see it get better. And I don't believe that it's back to normal as we see here now.

Kevin Caliendo -- Analyst

OK. We had anecdotally heard that there was more availability of financing out there for aligners and maybe for implants, and that kind of helped a little bit in 4Q. Did you see any of that at all? Was that in any way impacting the market in a positive way or just too small to matter at this point?

Vafa Jamali -- President and Chief Executive Officer

I think it's too small to matter right now. We would want to see some material change in terms of the overall interest rate. Those would be probably the biggest drivers for that expensive cases, right? So those are the ones that I'm saying that can drive a whole lot of change in sentiment in this industry. And for that to happen, I think you do need to see a little bit bigger change than the onesie-twosie, albeit they're in good space, and they're great that they're doing them.

But they're not impacting a big enough swath of the population, I don't think.

Kevin Caliendo -- Analyst

Got it. Last one for me. Just on biomaterials, 2% growth. I think when we spoke in November, you talked about starting to see a little bit of an uptick in demand, which gave you maybe a little bit of optimism there.

And I'm just wondering if that was -- if that continues at all, you talked about the demand in January on the implant side. I'm just wondering if you're seeing anything in biomaterials.

Vafa Jamali -- President and Chief Executive Officer

So, that's moving along nicely, which means there is implant volume out there. The piece that would give me great optimism where I'll jump on the roof and wave a flag would be when I see the specialists return to full volume. And that's the part where they would be -- they would also be using biomaterials at a much greater rate. Again, I haven't -- we haven't quite seen that come back robust enough yet to be able to call it.

But I do believe that the one thing that is in our favor is that these are patients that at some point will require an interventional procedure. And that buildup, like we saw in COVID, will come back. It's just been very, very difficult to time it. But I think the fact that biomaterials is being used, there's volume out there is not the very large multi-implant volume that drives a lot of growth.

Kevin Caliendo -- Analyst

Understood. Thanks. Thanks for taking those questions. I appreciate it, guys.

Vafa Jamali -- President and Chief Executive Officer

Thanks for the question, Kevin.

Operator

Thank you. Our next question comes from William McMahon of Barclays. Go ahead, William.

William McMahon -- Barclays -- Analyst

Good afternoon. This is Will on for Matt. Just a really quick question on the full-year guidance was in line with the kind of greater than 15% EBITDA margin expectations. But as we're kind of thinking about the cost efficiencies for 2025 from that sale, what are kind of the drivers of margin in 2025? And then in terms of cadence, should we expect that to kind of improve throughout the year, starting with the first quarter?

Vafa Jamali -- President and Chief Executive Officer

Yeah. Rich, do you want to take that?

Rich Heppenstall -- Chief Financial Officer

Yeah, yeah, I'll take that. So, I'll start by saying that in the fourth quarter, actually, starting in the third quarter, right, we saw gross margin improve, right? And so, we saw gross margin tick up in the third quarter to, I think it was about 65%. And I think we end a little bit higher than that. And then in the fourth quarter and we kind of alluded to this on the last call that we fixed many of the manufacturing inefficiencies that we had done some of the things -- cost-saving things that we were otherwise planning on doing.

And we executed again to 65% gross margin in the fourth quarter. As we think about 2025, we will continue to kind of track in that $65 million -- 65% gross profit range, assuming the mix even stays the same that it is now. And you'll see -- largely speaking, you'll see a little bit of a step-down in opex in probably more in the SG&A side. And that will -- there's a step-down after the transition service agreements with Highridge Medical, yes, Highridge Medical fall off kind of in the early Q2 time frame.

And so, what will happen is other income will go down to close to effectively $0 if it goes as planned, and then you'll see SG&A kind of coming down correspondingly. So, you'll see a little bit of a step-up from Q1 to Q2 in margin. And then Q3 will probably come down again in margin just because it's our softest quarter, softest quarter. And then Q4 probably goes back to where it was again for Q2, if that helps.

Vafa Jamali -- President and Chief Executive Officer

Hey, Will, one thing that's not contemplated though in here is just mix, right? So, when the implant mix comes back, this company is really positioned well, right? So, this is all predicated on the similar kind of dynamics as we've seen in the last 12 months.

William McMahon -- Barclays -- Analyst

OK. That's helpful. And that kind of goes into my next one, shifting gears here a little bit. On the last call, you talked about the plant in Valencia kind of running at full capacity, great for TSX production.

Can you update us on the trends you're seeing there? Maybe any idea kind of understanding where the market is and where you see it going in 2025 on capacity potential backlog, and then maybe plans for growth there in 2025?

Vafa Jamali -- President and Chief Executive Officer

Yeah. I think what we're really focused on is -- I'll start, Rich, and then you can take it. But we're looking at in-sourcing a number of third-party work that's being done into either Valencia or PBG, which is kind of the next step of just the efficiency drive. Rich, I know you've got more there.

Rich Heppenstall -- Chief Financial Officer

Yeah. So, Valencia, actually, we still have capacity. What we've done is we've actually trimmed the workforce to match the manufacturing volumes, but there's still scalability in that plant. We're not tapped out from a capacity standpoint if volumes increase, we may have to hire a couple of people, but we're not tapped out.

And as Vafa mentioned, the cost to produce in Valencia, and we said this before, it's about 20% less than what it is to produce in Palm Beach Gardens. And so, what we're doing is we're -- and we did that, as you alluded to, in 2024, we moved TSX production to Valencia. And so, we'll continue to look for opportunities to transition volume manufacturing to areas like Valencia in 2025. But there's also a portion of our business, and that actually frees up capacity in Palm Beach Gardens because there's a portion of our business that is a little bit more specialized in nature that we currently sell -- sorry, currently buy from third-party vendors.

And there's in-sourcing opportunities to bring some of that business in-house to drive capacity utilization and kind of the cost arbitrage in Palm Beach Gardens. So, you'll continue to see that. These projects take a while to actually effectuate themselves. So, they'll probably effectuate themselves toward the back half of 2025 but again, position us for 2026.

But that's how we think right now about the footprint for manufacturing.

William McMahon -- Barclays -- Analyst

OK. All right. Thank you. And then if I can just sneak one more in here.

In terms of the product launches kind of coming up and the question on digital dentistry earlier. As we're thinking about kind of R&D and the investments that need to be made there, is there anything you're thinking in terms of color for how we should think about that kind of going forward and that places pressure within the EBITDA margin?

Vafa Jamali -- President and Chief Executive Officer

Yeah. I think that the amount of spend that we have right now is correct. So, I don't see massive variation there, which is I think part of your question. Is that right, Will? Like, do you see a blip coming up? Like is that -- was that part of your question?

William McMahon -- Barclays -- Analyst

Yes. So, just if there needed to be some sort of outside investment there.

Vafa Jamali -- President and Chief Executive Officer

No. Because we've been pretty continuous in terms of the operations, in terms of the R&D investment, especially when you think about the digital and the enhancements, we've been pretty regular cadence of innovation. The spend should probably stay about the same. And then what we've done is we've allocated a certain amount of dollars.

And as one project drops off, another one comes on. And so far, we've been on time with our launches. So, that would indicate to me that you should see the same level of spend but a continuous kind of pipeline of new products coming out. So, we don't anticipate a requirement for new money.

William McMahon -- Barclays -- Analyst

OK, very helpful. Thank you, guys, for taking our questions.

Vafa Jamali -- President and Chief Executive Officer

Pleasure.

Operator

Thank you. This does conclude our Q&A session and today's conference call. [Operator signoff]

Duration: 0 minutes

Call participants:

Marissa Bych -- Investor Relations

Vafa Jamali -- President and Chief Executive Officer

Rich Heppenstall -- Chief Financial Officer

David Saxon -- Analyst

Kevin Caliendo -- Analyst

William McMahon -- Barclays -- Analyst

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