Good morning. Welcome to the Avanos Q1 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one on your telephone keypad. To withdraw your question, please press star and two. Please note, this event is being recorded. I would now like to turn the conference over to Scott [Galovan]. Please go ahead. Good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to Avanos 2023 First Quarter Earnings Conference Call. Presenting today will be Joe Woody, CEO, and Michael Greiner, Senior Vice President, CFO, and Chief Transformation Officer. Joe will review our first quarter and expectations for 2023, as well as provide an update on the current business environment. Then Michael will discuss additional detail regarding our first quarter and 2023 planning assumptions. We will finish the call with Q&A. A presentation for today's call is available on the investors section of our website, avanos.com. As a reminder, our comments today contain forward-looking statements related to the company, our expected performance, current economic conditions, and our industry. No assurance can be given as to future financial results. Actual results could differ materially from those in the forward-looking statements. For more information about forward-looking statements and the risk factors that could influence future results, please see today's press release and risk factors described in our filings with the SEC. Additionally, we will be referring to adjusted results and outlook. The press release has information on these adjustments and reconciliations to comparable GAAP financial measures. Now, I'll turn the call over to Joe. Thanks, Scott. Good morning, everyone. T hank you for joining us to review our operational and financial results for the first quarter of 2023. Our first quarter results were generally in line with our expectations. As we noted in our year-end earnings call, our quarterly results for 2023 would likely be uneven, given the timing uncertainties associated with our transformation plan, including the pace at which we rationalize our product portfolio, eliminate SKUs, or accelerate cost savings. The demand for our products remains strong. A lthough supply chain disruptions have improved, with our backlog coming down $1 million during the quarter, we continue to have a sticky backlog that has limited our ability to fulfill our demand levels. Coming into the year, we anticipated that 2023 would continue to present supply chain headwinds and pockets of product availability challenges, that as we got to the back half of the year, many of these headwinds would ease, and we believe that still to be the case. As always, our primary focus is on getting patients back to the things that matter as we meet the needs of our customers. For the quarter, we achieved sales of $192 million or -2.9% compared to last year. Excluding both the negative impact of foreign exchange, and the $5 million impact related to our previously announced decision to walk away from revenue that was not meeting our returns criteria, organic growth was unfavorable 0.7% for the quarter. Separately for the quarter, we generated $0.27 of adjusted diluted earnings per share and greater than $26 million of adjusted EBITDA, w hile our adjusted gross margin was 66.4% and our SG&A as a percentage of revenue, 41.6%. These results support the transformation priorities we laid out at the JP Morgan conference in January, and which we will expand upon at our Investor Day on June 20th. Now I'll spend the next few minutes discussing our results at the product category level. On a constant currency basis, our digestive health portfolio grew over 10%, bolstered by our NEOMED business, which posted another strong quarter with over 36% growth versus the prior year, as we continue to take advantage of the strong demand for NPIT conversions in North America. Our legacy enteral feeding product line maintained its global mid-single-digit growth behind the continued expansion of our U.S. CORTRAK standard of care offering. Our respiratory business declined by a little over 6%, with both our closed suction catheters and oral care solutions facing tough comps due to the Omicron spike in early 2022. We anticipate that the respiratory health business will grow 2% for the full year of 2023, with normal seasonal ordering patterns returning during the second half of the year. In total, our chronic care business grew greater than 5% in the first quarter, excluding the negative impact of foreign exchange and low growth, low margin product care categories we are no longer selling. Turning to the pain portfolio, sales were down 10% for the quarter, with soft results across our surgical pain, GAME READY, and 5-shot HA product categories, each of which were down at least 10% versus the prior year. Our interventional pain products categories grew by 1%. As noted on the year-end earnings call, we continue to experience supply headwinds within our surgical pain category. We expect these headwinds to remain a factor throughout the first part of 2023. Alleviating these supply chain challenges is critical as macro dynamic factors impacting the use of our surgical pain products during the past two years, like hospital staff shortages and overall reduction in elective procedures, have subsided, and we are working diligently to take advantage of this improved landscape. Separately, our HA portfolio experienced a weaker than expected first quarter. However, this softness was primarily concentrated in our 5-shot or GenVisc product. The 5-shot market has specific pricing and competitive challenges that are not as prevalent within the 3-shot market. TriVisc, our 3-shot offering remains in line with our long-term orthopedic call point strategy, and is performing as anticipated. Volatility will continue to be a factor throughout the year as we face strong comparables from last year, and continue to experience the related swings from entering the ASP reporting environment in Q3 2022. Despite the volatility, we believe we have the right strategies in place to capitalize on the opportunities present in the HA market, including continuing to provide best-in-class service and support, expanding market access through both our direct patient and our specialty pharmacy business, and targeting long-term stability and reliability in pricing for our customers. Important characteristics for the orthopedic market in particular. Now moving to an update on our 2023 priorities and transformation efforts. We have four key priorities for the next three years that will optimize our go-to-market opportunities, and meaningfully enhance our financial profile. These priorities include, strategically and commercially optimizing our organization, transforming our portfolio to focus on categories where we have attractive margin profiles and the right to win, taking additional cost management measures to enhance operating profitability, and continuing our path of efficient capital allocation to meaningfully improve our ROIC. In the first quarter, we executed well against these priorities as Kerr Holbrook announced his new sales and marketing organization, among other strategic initiatives. Our margin profile was enhanced versus prior year first quarter. We executed against our portfolio optimization strategy, and remain on track to deliver at least $10 million in current year operating expense savings. Additionally, we continue to review our capital allocation priorities, including strategic M&A and opportunistic share repurchases. We look forward to presenting additional detail regarding this transformation program and the related three-year financial targets at our Investor Day on June 20th, to be held at the Convene 101 Park Avenue location in New York City. Now I'll turn the call over to Michael, who will continue to lead these efforts in his expanded role as Chief Transformation Officer and will further discuss our first- quarter financial results. Thanks, Joe. Before diving deeper into these transformation efforts, I'll provide additional color to our first quarter results. Total reported sales for the first quarter was $191.7 million, a decrease of 2.9% compared to last year. Adjusted EBITDA for the quarter was greater than $26 million, compared to $23 million a year ago, with EBITDA margin improving 200 basis points versus last year. Adjusted net income for the quarter totaled almost $13 million compared to $12 million a year ago, translating to $0.27 of adjusted diluted earnings per share versus $0.25 a year ago. We ended the quarter with $96 million of cash on hand and a leverage ratio of 0.8. As Joe already noted, we delivered on both our gross margin and SG&A as a percentage of revenue targets. Our gross margin for the quarter was 56.4%, a 50 basis point improvement versus the prior year, primarily driven by the positive impact of our manufacturing efficiency programs. We anticipate second quarter gross margin to be slightly improved versus the first quarter. Separately, SG&A as a percentage of revenue improved by 140 basis points versus the prior year, primarily related to our cost savings efforts to streamline the organization and reduce our external spend profile. As with gross margin, we anticipate our SG&A levels will be largely similar during the second quarter versus the first quarter, with material improvement expected in the second half of the year as our cost management transformation efforts begin to accelerate. As we previously shared, 2023 will be a transition year, given our product portfolio rationalization and cost management initiatives. The first quarter was an example of this unevenness, with slightly lower revenue than anticipated across some of our product categories, while profitability measures were either in line or exceeded our expectations. In summary, we are pleased with our first quarter execution in total, and remain confident in our ability to meet our previously announced guidance for the year of earning between $1.60 and $1.80 of adjusted diluted earnings per share, while delivering at least $60 million in free cash flow, excluding the one-time cash cost associated with the restructuring efforts expected to total approximately $25 million. Finally, including the current year impact of the approximately $35 billion annualized impact of product portfolio rationalization, the company anticipates organic revenue growth to be low single digits. Now, turning to our transformation priorities, which are designed to shift our product portfolio over time into a higher growth portfolio, leveraging our cornerstone product families in digestive health as well as our orthopedic pain and recovery-focused products. In addition, these priorities will right size our cost structure and enhance our operating profitability, allowing us to generate significantly greater annual free cash flow over the next three years, while meaningfully improving ROIC over this transformation horizon. As already shared, we expect to realize approximately $10 million of savings in 2023, while anticipating $45 million-$55 million of gross cost savings by 2025, most of which will be achieved in 2024. I will end with reiterating what I shared at the end of my prepared remarks for the year-end earnings call. We are excited to embark on our transformation journey, and are confident we will improve on each of our financial metrics as 2023 progresses, w ith a slow start for the first quarter, followed by acceleration in the back half of the year, similar pacing to what we experienced in 2022. Operator, please open the line for questions. We will now begin the question- and- answer session. To ask a question, you may press star and one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster. The first question comes from David Turkaly from JMP Securities. Please go ahead. Yeah, great. This is actually Danny on for Dave. Just a quick one on gross margin. You know, it was a nice increase during the quarter, and you noted some of that benefited from manufacturing efficiencies and improvement in supply chain. I guess our question really is more around looking ahead, how should we think about benefits to gross margin for the full year? More specifically, how much of the improvement should we expect from the exiting of lower margin product lines, and other portfolio rationalization efforts versus continued improvement in the supply chain that you've seen? Thanks. Yeah. Thanks, Dan for the question. We still anticipate, as we said previously, we will have a 100 basis point improvement on our operating margin for the full year. G iven the uncertainties of the moving pieces, we weren't sure if that was going to come from gross margin, or from our SG&A as a percentage of revenue or our total OpEx spend. I do think as we move through the year, the 56.4% that we started with in the first quarter, which we were very pleased with the overall execution that you pointed out, should land higher for the full year. Great. Thanks. Just one follow-up, just on free cash flow. It was an outflow of about $11 million this quarter, and you had called it out as a focus for 2023. Just, you know, cadence throughout the year on what we should expect going forward, and any other considerations there would be great. Thank you for the questions. Yeah, so t he first quarter for free cash flow is definitely going to be the lowest. W hat we ended up with for the quarter was going to be dependent, upon how much execution we had on the transformation and cost savings plan. A s you'll see in the one-time cost, in the non-GAAP reconciliation, we spent about $7.5 million in cash in the first quarter for those activities. Of course, revenue was a little bit softer than we anticipated. The combination of those two had free cash flow a little bit lower than we anticipated in the first quarter. That will be our lowest free cash flow quarter for the year, putting aside some tax payments that we may have. We should see an improvement in free cash flow through the rest of the year. Great. Thank you very much. The next question comes from Rick Wise from Stifel. Please go ahead. Good morning, Joe. Just to start us off, so far this earnings season, we've heard a lot from much larger companies obviously, talking about, just in general, the macro environment, still challenging, but less of a headwind, supply chain stabilizing, stabilized, et c. It'd be really interesting to hear your perspectives on, you know, is that really happening, you know, in the world of Avanos? How did they trend in the quarter? You know, what are you seeing so far in second quarter, and sort of how does this all wrap into your outlook for the year? Thanks. Yeah, Rick. I mean, a couple of things, and I noted the other earnings calls as well and a lot of the larger companies have the broader portfolio, to your point. They did inside of those comments say that they still, you know, made it clear that there were some issues. For us, specifically, you know, ON-Q and some catheter availability is hurting us there generally. We really had it across the board though, even in our COOLIEF product line, our ambIT product line, somewhat in digestive health, although we did move a lot of that through in the quarter. It's definitely gonna improve. It'll still be with us in Q2. We do agree that the second half is likely going to be much, much better, given that these things are going to disappear for us. Again, you know, for us, we probably had $4 million-$5 million more that we could have pushed through if we were all the way clear on our backlog. I think the other thing too, Rick, to add to that is, you know, our confidence in reiterating our previously announced guidance is high because we do think the storm clouds are clearing. You know, some of the things that we missed this quarter were very specific to us, our raw materials, our input costs, but we think we have visibility to those things clearing, giving us confidence to being able to still achieve our full year guidance outcomes. Y ou know, you've been following this for quite some time, we do have a portfolio that unfortunately starts as Michael has outlined, slow, with Q1 being the weakest. Even if you think about last year, we sort of progressed as each quarter went and then a very large third and fourth quarter. Yeah. No, that makes sense. Thanks to you both. Michael, maybe this is a question for you on the interventional pain side. If I'm doing the back- of- the- envelope math correctly, I may not be, please don't hesitate to correct me, i t looks like what I would call the base ex-OrthogenRx pain management business, i t was down sequentially 25% versus the fourth quarter. I know that seasonal sequential, you know, figure whatever, down 5% or 10%. Is that the backlog? Is that component? Is there something else going on? Ma ybe I missed your language, i s pain more uniquely affected here or you're seeing less of a recovery? You know, any extra color would be great. Yeah. N o, that's helpful. It's a couple things. It's one, what you just hit on, which is, there is some component and access to material issues there. In particular, GAME READ had a very strong fourth quarter and a less- than- optimal first quarter. A big part of the math that you're doing is GAME READY attributed. In addition, standard RF was also down. That was more attributable to the availability of product. COOLIEF was by and large a push 4 Q to 1 Q. Primarily our RF and our GAME READY are the pain points, no pun intended, for the weak 4 Q to 1 Q transition in interventional pain. Got you. Just last for me, Joe, I hate to keep being the one, what can I do? Asking the M&A question. I know that you had hoped to have at least one transaction announced before the upcoming June Investor Day, if I remember your words correctly. We're a month or so away from it. Any additional color on the M&A front and you know, just bring us up to date on your thinking? Yes, we do feel like we're going to be able to talk about an additional bolt on for the orthopedic pain business, something that would help us in the ambulatory surgical center strategic area. It's also possible that we'll be able to say some things more explicitly about the portfolio, that would be a significant change for us. We feel pretty good about that. You know, a lot of times we hit it and it's hard to predict these things, but we're working very hard to make that happen because I think that'll be very key for the Investor Day. Thanks again. Yep. As a reminder, if you have a question, please press star then one. I don't think there's anybody else queued up, operator. Yes, sir. There are no more. [audio distortion] Oh, sorry. Hold on, Matt. Yeah, Matt just got in. Let's let Matt ask his question. Brett Fishbin. I'm sorry. I think I had an issue getting into the queue at first. Just wanted to ask on guidance, on thinking about the cadence sequentially. I think you guys kind of hinted at a little bit of a softer first quarter relative to the low single-digit organic guide. Just wanted to think about the rest of the year, how it plays out. I know you said that the second half would likely be stronger, but also just maybe breaking out pain management versus chronic care and what you'd expect to see as a base case for the rest of the year. Yeah, so g reat question. Q2 is going to look largely similar give or take to Q1. There'll be some pushes and takes there, but largely similar to one. As we said, I think gross margin will be improved, given that we've got some programs that are picking up momentum. Back half of the year will be very strong, both on the gross margin and the OpEx side. What we'll do in Investor Day in 45 days is give a little more specific layout. You know, we'll kind of pre-talk about Q2, given that it'll be June 20th, and then we'll lay out the back half of the year with more detail, inclusive of some of these transactions we think we'll be able to get over the finish line to talk about on June 20th. All right, great. Then just a quick follow-up. I'm not sure if you said in the prepared remarks, if there was any change around the Orthogen expectations for the rest of the year. Does guidance still contemplate relatively flat full- year sales versus last year, or has there been any type of change? Thanks very much. No, there's been some change there. You know, we talked about really a combination, if you will, of 10% decline in Orthogen in the HA product, primarily in the 5-shot area, as well as the GAME READY and even the acute pain sector and the acute pain ON-Q being tied to supply chain. There is that potential that's kind of folded into ours, but we're still lining up to our full-year guidance. You know, one thing we've talked about a lot in this HA environment that we're in, is that there's ebbs and flows quarter-to-quarter, where customers go away for a bit, they're chasing the best reimbursement, and they come back. It's really going to all kind of even itself out by the end of the year. Just to clarify quickly, are you still contemplating flat Orthogen sales? No. Relative to last year? O kay. No, we're not contemplating flat. No. All right. You know, TriVisc will be flat to better versus last year or you know, meaningfully better to last year. Five-shot will be down versus last year. We aren't confident yet. We have a sense of exactly what that mix will look like, but in total, it'll be down versus last year. Okay. I guess, lastly from me, would you point to any product areas as a potential offset to guidance given low single- digit organic was unchanged and it seems like Orthogen might be a little bit lower? Yeah, d igestive in particular. We also believe there's upside in acute pain as we get visibility to the supply chain issues. Then international as well, we think we have some pockets of strength internationally that have not been fully accounted for. All right. Thanks very much for taking the questions. Appreciate it. Thank you. The next question comes from Drew Ranieri from Morgan Stanley. Please go ahead. Hi, Joe and Michael. Thanks for taking the questions. Just another on Orthogen for a moment. I hear you on the 5- injection and 3- injection market, but just curious maybe on the 5- injection, is the decline at all more of just a mix shift into the 3- injection? Can you give a little bit more color there? Then I had a follow-up. Thanks. Yeah. I think there's really two things. I mean, one is, some customers clearly with the reduced reimbursement in that segment, which a lot of it is non-orthopedic segment and i t's more of a pain center segment are leaving the business. The other component of that is that we had a competitor that had a special code in the first quarter. I believe that's going away in Q2 as they start reporting too. You have a number of customers that kind of moved over a bit to take advantage. We benefited from that obviously in Q4, but we didn't in Q1. That all settles out, and our intention is to maintain the base that we'll have of five, but we're growing and stabilizing in the three. We actually have another focus that is inclusive of additional 1099s, new structure, a new VP of sales coming in to focus on the orthopedic space, not only in HA, but in the ambulatory surgical center with some of our other products, and then the bolt-on that we alluded to in the earlier comments. Got it. Thank you. Then just another follow-up to one of Rick's questions on M&A. Kind of in response to his question, you mentioned there could be more of a portfolio move. It sounded like more of a divestiture than anything. Are we kind of hearing you right into Analyst Day that that could be something that's still on the table? Should we think about that as a multiple of what you're doing already in kind of the product rationalization for 2023? Thanks for taking the questions. If, Drew, we were to do a divestiture, it would be a multiple of the product rationalization, so t hat's a fair assessment. Gentlemen, there are no more questions at this time. Again, I want to thank everybody for their continued interest in Avanos. We feel the demand and fundamentals of our products remain strong. We are committed to obviously creating meaningful shareholder value through thoughtful and strategic capital allocation. We believe the 2022 results have built the necessary foundation to deliver the commitment that we have, and are confident the priorities that we've detailed in the transformation program, combined with our market-leading portfolio and attractive markets, t his all positions us for growth, margin expansion, and cash flow as we've outlined and as Michael has talked about in the transformation process. We do look forward to seeing everybody at the June 20th Investor Day, to be held at the Convene 101 Park Avenue location in New York City. Have a great rest of your week. Thank you for your interest. Bye. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.