Envista Reports Second Quarter 2026 Results

BREA, Calif., Aug. 5, 2026 — Envista Holdings Corporation (NYSE: NVST) today announced results for the quarter ended July 3, 2026.

"We built on our fast start in Q1 with continued good performance in Q2," said Paul Keel, CEO. "We delivered growth across both our reporting segments and all major geographies. Our focus on operational excellence, underpinned by the Envista Business System, contributed to further margin expansion. Based on our strong first-half performance and continued momentum, we are raising our full year outlook for core sales growth, adjusted EBITDA, and adjusted EPS. We are well-positioned to deliver another year of progress and performance."

Second Quarter Financial Highlights

• Sales were $731 million, with core sales growth of 5.0% over the second quarter of 2025.
• GAAP diluted EPS of $0.33 and adjusted diluted EPS of $0.41 (+58% year-on-year)
• GAAP Net Income of $54 million and adjusted EBITDA of $108 million (+28% year-on-year), with an adjusted EBITDA margin of 14.7% (+230 bps year-on-year)

Second Quarter Business Highlights

• Growth: In the context of macro uncertainty, both reporting segments delivered positive growth, with 3.1% core growth in Specialty Products & Technologies and 8.5% core growth in Equipment and Consumables.
• Operations: Ongoing contributions from the Envista Business System (EBS) supporting 70 bps of adjusted gross margin and 230 bps of adjusted EBITDA margin expansion.
• People: Continued to advance our high-performing, continuous improvement culture through numerous customer, employee, and charitable events around the world.

Net Income, EBITDA, and EPS (in millions, except per share amounts):

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

GAAP Net Income

$ 54

$ 26

$ 92

$ 44

Adjusted Net Income

$ 67

$ 44

$ 126

$ 85

Adjusted EBITDA

$ 108

$ 84

$ 207

$ 163

GAAP Diluted Earnings Per Share

$ 0.33

$ 0.16

$ 0.56

$ 0.26

Adjusted Diluted Earnings Per Share

$ 0.41

$ 0.26

$ 0.77

$ 0.50

Cash Flow:

Operating cash flow for the second quarter of 2026 was $119 million and free cash flow was $105 million, compared to $89 million and $76 million in the second quarter of 2025, respectively.

Share Repurchases:

During the quarter ended July 3, 2026, we repurchased 2.4 million shares for approximately $59 million. At the end of the quarter, we had approximately $283 million remaining repurchase capacity under our stock repurchase program.

Outlook:

We are updating our guidance for the full year 2026:

Current 2026 Guidance

Prior 2026 Guidance

Core Sales Growth

3.5% to 4.5%

2% to 4%

Adjusted EBITDA Growth

11% to 14%

7% to 13%

Adjusted Diluted Earnings Per Share

$1.50 to $1.55

$1.35 to $1.45

Free Cash Flow Conversion

~100%

~100%

Please note, we do not provide forward-looking estimates on a GAAP basis as certain information is not available and cannot be reasonably estimated.

We will discuss our quarterly results and provide details on our outlook for 2026 during an investor conference call on August 5, 2026, starting at 2:00 P.M. PT. The call and an accompanying slide presentation will be webcast on the "Investors" section of our website, www.envistaco.com, under the subheading "Events & Presentations." A replay of the webcast will be available in the same section of our website shortly after the conclusion of the presentation and will remain available until the next quarterly earnings call.

The conference call can be accessed by dialing 800-836-8184 within the U.S. or +1 646-357-8785 outside the U.S. a few minutes before 2:00 PM PT and referencing conference ID #73468. A replay of the conference call will be available shortly after the conclusion of the call. You can access the replay dial-in information on the "Investors" section of our website under the subheading "Events & Presentations." Presentation materials relating to our results have been posted to the "Investors" section of our website under the subheading "Quarterly Earnings".

About Envista

Envista is a global leader in the dental industry, uniting more than 30 trusted brands—including DEXIS, Kerr, Nobel Biocare, and Ormco—under one mission: partnering with dental professionals to improve patients' lives. With a heritage of category-defining innovation, our brands have shaped modern dentistry: Nobel Biocare introduced the first dental implant, Ormco is a pioneer in both traditional and digital orthodontics, DEXIS has long been at the forefront of 2D, 3D and intraoral imaging, and Kerr has supported clinicians for over 135 years. Our high-performing culture is underpinned by our CIRCLe Values and the Envista Business System. Guided by these, we deliver a comprehensive portfolio of technologies, consumables, and services that empower clinicians to provide confident, efficient care—today and for the future. Learn more at http://envistaco.com.

NON-GAAP MEASURES

All "Adjusted" amounts including core sales growth and free cash flow are non-GAAP items. Calculations of these measures, the reasons why we believe these measures provide useful information to investors, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these non-GAAP measures are included in the attached supplemental schedules. We do not reconcile forward looking non-GAAP measures to the comparable GAAP measures because of the inherent difficulty in predicting and estimating the future impact and timing of currency translation, acquisitions, discontinued products, and any other potential adjustments which would be reflected in any forecasted GAAP measure.

ENVISTA HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ($ and shares in millions, except per share amounts)

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Sales

$ 730.5

$ 682.1

$ 1,436.0

$ 1,299.0

Cost of sales

323.5

312.2

638.9

593.1

Gross profit

407.0

369.9

797.1

705.9

Operating expenses:

Selling, general and administrative

296.3

295.3

593.9

567.0

Research and development

30.4

28.3

60.4

53.6

Operating profit

80.3

46.3

142.8

85.3

Nonoperating (expense) income:

Other income (expense), net

2.8

2.4

(0.1)

1.7

Interest expense, net

(8.7)

(8.0)

(16.1)

(17.3)

Income before income taxes

74.4

40.7

126.6

69.7

Income tax expense

20.7

14.3

34.2

25.3

Net income

$ 53.7

$ 26.4

$ 92.4

$ 44.4

Earnings per share:

Earnings - basic

$ 0.33

$ 0.16

$ 0.57

$ 0.26

Earnings - diluted

$ 0.33

$ 0.16

$ 0.56

$ 0.26

Average common stock and common equivalent shares outstanding:

Basic

161.9

169.0

162.9

170.7

Diluted

164.1

169.9

165.3

171.7

ENVISTA HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ($ in millions, except share amounts)

As of

July 3, 2026

December 31, 2025

ASSETS

Current assets:

Cash and cash equivalents

$ 1,125.6

$ 1,211.7

Trade accounts receivable, less allowance for credit losses of $21.8 and $22.5, respectively

436.9

429.6

Inventories, net

290.9

288.1

Prepaid expenses and other current assets

104.6

97.2

Total current assets

1,958.0

2,026.6

Property, plant and equipment, net

295.7

296.8

Operating lease right-of-use assets

146.2

142.1

Other long-term assets

230.4

228.1

Goodwill

2,353.5

2,358.2

Other intangible assets, net

613.3

627.2

Total assets

$ 5,597.1

$ 5,679.0

LIABILITIES AND EQUITY

Current liabilities:

Trade accounts payable

190.2

191.6

Accrued expenses and other liabilities

578.6

622.0

Operating lease liabilities

38.5

39.0

Total current liabilities

807.3

852.6

Operating lease liabilities

113.2

110.4

Other long-term liabilities

164.0

161.4

Long-term debt

1,436.3

1,448.3

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.01 par value, 15.0 million shares authorized; no shares issued or outstanding at July 3, 2026 and December 31, 2025

—

—

Common stock, $0.01 par value, 500.0 million shares authorized; 176.4 million shares issued and 160.6 million shares outstanding at July 3, 2026; 175.4 million shares issued and 163.8 million shares outstanding at December 31, 2025

1.8

1.8

Treasury stock at cost; 15.8 million shares and 11.6 million shares at July 3, 2026 and December 31, 2025, respectively

(333.7)

(224.5)

Additional paid-in capital

3,906.1

3,882.6

Accumulated deficit

(348.0)

(440.4)

Accumulated other comprehensive loss

(149.9)

(113.2)

Total stockholders' equity

3,076.3

3,106.3

Total liabilities and stockholders' equity

$ 5,597.1

$ 5,679.0

ENVISTA HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($ in millions)

Six Months Ended

July 3, 2026

June 27, 2025

Cash flows from operating activities:

Net income

$ 92.4

$ 44.4

Noncash items:

Depreciation

20.8

19.9

Amortization

36.2

37.8

Allowance for credit losses

5.8

4.0

Stock-based compensation expense

19.7

16.8

Gain on investments in rabbi trust, net

(1.9)

(1.6)

Loss on equity investments

2.0

—

(Gain) loss on sale of property, plant and equipment

(2.7)

0.3

Restructuring charges

0.9

0.2

Fixed assets impairments and other charges

0.9

1.4

Non-cash operating lease costs

18.5

17.2

Amortization of debt discount and issuance costs

2.0

2.2

Deferred income taxes

—

(0.9)

Change in trade accounts receivable

(14.5)

(37.2)

Change in inventories

(0.9)

(23.5)

Change in trade accounts payable

0.1

(10.0)

Change in prepaid expenses and other assets

(7.3)

(4.3)

Change in accrued expenses and other liabilities

(32.4)

44.5

Change in operating lease liabilities

(23.7)

(22.2)

Net cash provided by operating activities

115.9

89.0

Cash flows from investing activities:

Payments for additions to property, plant and equipment

(27.4)

(18.2)

Purchases of investments held in rabbi trust

(3.7)

(1.0)

Proceeds from sale of investments held in rabbi trust

1.5

0.9

Proceeds from sales of property, plant and equipment

0.9

0.5

Acquisitions, net of cash acquired

(54.4)

—

All other investing activities, net

(0.1)

(8.1)

Net cash used in investing activities

(83.2)

(25.9)

Cash flows from financing activities:

Proceeds from stock option exercises

4.0

1.5

Cash paid for treasury stock under the stock repurchase program

(103.0)

(100.3)

Treasury stock purchases related to tax withholding on equity awards

(6.9)

(4.3)

Principal paid related to exchange of convertible notes due 2025

—

(116.3)

Proceeds from revolving line of credit

—

115.4

All other financing activities

(0.4)

—

Net cash used in financing activities

(106.3)

(104.0)

Effect of exchange rate changes on cash and cash equivalents

(12.5)

82.4

Net change in cash and cash equivalents

(86.1)

41.5

Beginning balance of cash and cash equivalents

1,211.7

1,069.1

Ending balance of cash and cash equivalents

$ 1,125.6

$ 1,110.6

ENVISTA HOLDINGS CORPORATION SUMMARY OF FINANCIAL METRICS (Unaudited) ($ in millions, except per share amounts)

GAAP

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Gross Profit

$ 407.0

$ 369.9

$ 797.1

$ 705.9

Operating Profit

$ 80.3

$ 46.3

$ 142.8

$ 85.3

Net Income

$ 53.7

$ 26.4

$ 92.4

$ 44.4

Diluted Earnings Per Share

$ 0.33

$ 0.16

$ 0.56

$ 0.26

Operating Cash Flow

$ 119.2

$ 88.7

$ 115.9

$ 89.0

**NON-GAAP ***

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Adjusted Gross Profit

$ 402.2

$ 371.2

$ 795.8

$ 709.5

Adjusted Operating Profit

$ 94.5

$ 71.1

$ 183.9

$ 141.7

Adjusted Net Income

$ 66.5

$ 43.7

$ 126.5

$ 85.2

Adjusted Diluted EPS

$ 0.41

$ 0.26

$ 0.77

$ 0.50

Adjusted EBITDA

$ 107.7

$ 84.3

$ 206.6

$ 163.3

Free Cash Flow

$ 105.1

$ 76.4

$ 89.4

$ 71.3

---

For information on non-GAAP measures see "Reconciliation of GAAP to Non-GAAP Financial Measures" below. Also see the accompanying "Notes to Reconciliation of GAAP to Non-GAAP Financial Measures."

ENVISTA HOLDINGS CORPORATION SEGMENT INFORMATION (Unaudited) ($ in millions)

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Sales

Specialty Products & Technologies

$ 471.0

$ 445.1

$ 928.8

$ 845.4

Equipment & Consumables

259.5

237.0

507.2

453.6

Total

$ 730.5

$ 682.1

$ 1,436.0

$ 1,299.0

Operating Profit (Loss)

Specialty Products & Technologies

$ 60.1

$ 45.3

$ 106.6

$ 82.9

Equipment & Consumables

45.9

36.1

92.7

68.0

Other

(25.7)

(35.1)

(56.5)

(65.6)

Total

$ 80.3

$ 46.3

$ 142.8

$ 85.3

Operating Margins

Specialty Products & Technologies

12.8 %

10.2 %

11.5 %

9.8 %

Equipment & Consumables

17.7 %

15.2 %

18.3 %

15.0 %

Total

11.0 %

6.8 %

9.9 %

6.6 %

ENVISTA HOLDINGS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) ($ and shares in millions, except per share amounts)

Adjusted Gross Profit and Adjusted Gross Margin

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Gross Profit

$ 407.0

$ 369.9

$ 797.1

$ 705.9

Restructuring costs and asset impairments A

7.3

0.3

10.4

2.2

Fair value adjustment of acquisition-related inventory B

0.5

1.0

0.9

1.4

Tariff refunds C

(12.6)

—

(12.6)

—

Adjusted Gross Profit

$ 402.2

$ 371.2

$ 795.8

$ 709.5

Gross Margin (Gross Profit / Sales)

55.7 %

54.2 %

55.5 %

54.3 %

Adjusted Gross Margin (Adjusted Gross Profit / Sales)

55.1 %

54.4 %

55.4 %

54.6 %

Adjusted Operating Profit

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Consolidated

Operating Profit

$ 80.3

$ 46.3

$ 142.8

$ 85.3

Amortization of acquisition-related and other intangible assets

17.4

19.0

36.2

37.8

Restructuring costs and asset impairments A

8.9

4.7

16.3

16.1

Fair value adjustment of acquisition-related inventory B

0.5

1.0

0.9

1.4

Tariff refunds C

(12.6)

—

(12.6)

—

Litigation settlement D

—

—

—

0.8

Acquisition-related expenses E

—

0.1

0.3

0.3

Adjusted Operating Profit

$ 94.5

$ 71.1

$ 183.9

$ 141.7

Adjusted Operating Profit as a % of Sales

12.9 %

10.4 %

12.8 %

10.9 %

Specialty Products & Technologies

Operating Profit

$ 60.1

$ 45.3

$ 106.6

$ 82.9

Amortization of acquisition-related and other intangible assets

15.3

14.8

30.9

29.4

Restructuring costs and asset impairments A

6.1

0.1

10.5

4.3

Tariff refunds C

(12.2)

—

(12.2)

—

Adjusted Operating Profit

$ 69.3

$ 60.2

$ 135.8

$ 116.6

Adjusted Operating Profit as a % of Sales

14.7 %

13.5 %

14.6 %

13.8 %

Equipment & Consumables

Operating Profit

$ 45.9

$ 36.1

$ 92.7

$ 68.0

Amortization of acquisition-related and other intangible assets

2.1

4.2

5.3

8.4

Restructuring costs and asset impairments A

4.2

1.2

6.2

3.5

Tariff refunds C

(0.4)

—

(0.4)

—

Litigation settlement D

—

—

—

0.8

Adjusted Operating Profit

$ 51.8

$ 41.5

$ 103.8

$ 80.7

Adjusted Operating Profit as a % of Sales

20.0 %

17.5 %

20.5 %

17.8 %

See the accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial Measures

Adjusted Net Income

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Net Income

$ 53.7

$ 26.4

$ 92.4

$ 44.4

Amortization of acquisition-related and other intangible assets

17.4

19.0

36.2

37.8

Restructuring costs and asset impairments A

8.9

4.7

16.3

16.1

Fair value adjustment of acquisition-related inventory B

0.5

1.0

0.9

1.4

Tariff refunds C

(12.6)

—

(12.6)

—

Litigation settlement D

—

—

—

0.8

Acquisition-related expenses E

—

0.1

0.3

0.3

Loss on equity investments F

—

—

2.0

—

Tax effect of adjustments reflected above G

(2.8)

(6.2)

(10.6)

(15.0)

Discrete tax adjustments and other tax-related adjustments H

1.4

(1.3)

1.6

(0.6)

Adjusted Net Income

$ 66.5

$ 43.7

$ 126.5

$ 85.2

Adjusted Diluted Earnings Per Share

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Diluted Earnings Per Share

$ 0.33

$ 0.16

$ 0.56

$ 0.26

Amortization of acquisition-related and other intangible assets

0.11

0.11

0.22

0.22

Restructuring costs and asset impairments A

0.05

0.03

0.10

0.09

Fair value adjustment of acquisition-related inventory B

—

0.01

0.01

0.01

Tariff refunds C

(0.08)

—

(0.08)

—

Litigation settlement D

—

—

—

0.01

Acquisition-related expenses E

—

—

—

—

Loss on equity investments F

—

—

0.01

—

Tax effect of adjustments reflected above G

(0.01)

(0.04)

(0.06)

(0.09)

Discrete tax adjustments and other tax-related adjustments H

0.01

(0.01)

0.01

—

Adjusted Diluted Earnings Per Share

$ 0.41

$ 0.26

$ 0.77

$ 0.50

Adjusted EBITDA

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Net Income

$ 53.7

$ 26.4

$ 92.4

$ 44.4

Interest expense, net

8.7

8.0

16.1

17.3

Income tax expense

20.7

14.3

34.2

25.3

Depreciation

10.4

10.8

20.8

19.9

Amortization of acquisition-related and other intangible assets

17.4

19.0

36.2

37.8

Restructuring costs and asset impairments A

8.9

4.7

16.3

16.1

Fair value adjustment of acquisition-related inventory B

0.5

1.0

0.9

1.4

Tariff refunds C

(12.6)

—

(12.6)

—

Litigation settlement D

—

—

—

0.8

Acquisition-related expenses E

—

0.1

0.3

0.3

Loss on equity investments F

—

—

2.0

—

Adjusted EBITDA

$ 107.7

$ 84.3

$ 206.6

$ 163.3

Adjusted EBITDA as a % of Sales

14.7 %

12.4 %

14.4 %

12.6 %

See the accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial Measures

Core Sales Growth 1

Consolidated

% Change Three Month Period Ended July 3, 2026 vs. Comparable 2025 Period

% Change Six Month Period Ended July 3, 2026 vs. Comparable 2025 Period

Total sales growth

7.1 %

10.5 %

Plus the impact of:

Acquisitions

(0.5) %

(0.6) %

Currency exchange rates

(1.6) %

(2.8) %

Core Sales Growth

5.0 %

7.1 %

Specialty Products & Technologies

Total sales growth

5.8 %

9.9 %

Plus the impact of:

Acquisitions

(0.8) %

(0.9) %

Currency exchange rates

(1.9) %

(3.4) %

Core Sales Growth

3.1 %

5.6 %

Equipment & Consumables

Total sales growth

9.5 %

11.8 %

Plus the impact of:

Currency exchange rates

(1.0) %

(1.9) %

Core Sales Growth

8.5 %

9.9 %

1

We use the term "core sales" to refer to GAAP revenue excluding (1) sales from acquired businesses recorded prior to the first anniversary of the acquisition ("acquisitions"), (2) sales from discontinued products and (3) the impact of currency translation. Sales from discontinued products includes major brands or products that Envista has made the decision to discontinue as part of a portfolio restructuring. Discontinued brands or products consist of those which Envista (1) is no longer manufacturing, (2) is no longer investing in the research or development of, and (3) expects to discontinue all significant sales within one year from the decision date to discontinue. The portion of sales attributable to discontinued brands or products is calculated as the net decline of the applicable discontinued brand or product from period-to-period. The portion of GAAP revenue attributable to currency exchange rates is calculated as the difference between (a) the period-to-period change in sales and (b) the period-to-period change in sales after applying current period foreign exchange rates to the prior year period. We use the term "core sales growth" to refer to the measure of comparing current period core sales with the corresponding period of the prior year. During the first quarter of 2026, we updated our methodology for how we calculate changes in the sales price from period to period. Changes in sales prices are now calculated by comparing the current quarter sales prices to the full year sales price average from the prior year as it better reflects pricing trends over time.

Reconciliation of Operating Cash Flows to Free Cash Flow

Three Months Ended

Six Months Ended

July 3, 2026

June 27, 2025

July 3, 2026

June 27, 2025

Net operating cash (used in) provided by operating activities

$ 119.2

$ 88.7

$ 115.9

$ 89.0

Less: payments for additions to property, plant and equipment (capital expenditures)

(14.9)

(12.3)

(27.4)

(18.2)

Plus: proceeds from sales of property, plant and equipment

0.8

—

0.9

0.5

Free Cash Flow (FCF)

$ 105.1

$ 76.4

$ 89.4

$ 71.3

FCF to Adjusted Net Income Conversion Ratio

158.0 %

174.8 %

70.7 %

83.7 %

See the accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial Measures

ENVISTA HOLDINGS CORPORATION NOTES TO RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

A We exclude impairment of certain long-lived assets, executive transition costs, and cost incurred pursuant to discrete restructuring plans.

B Represents the fair value adjustment related to inventory acquired in connection with acquisitions.

C Represents the U.S. Supreme Court's ruling to refund tariffs imposed under the International Emergency Economic Powers Act.

D Represents the settlement of certain litigation matters.

E Represents acquisition-related transaction expenses and integration costs with respect to business combinations.

F Represents losses on equity investments.

G This line item represents the aggregate tax effect of all pretax adjustments reflected in the preceding line items of the table using each adjustment's applicable tax rate, including the effect of interim tax accounting requirements of Accounting Standards Codification Topic 740 Income Taxes.

H Discrete tax matters primarily relate to excess tax benefits from stock-based compensation, changes in estimates associated with prior period uncertain tax positions and audit settlements, tax benefits resulting from a change in law, and changes in determination of realization of certain deferred tax assets.

Statement Regarding Non-GAAP Measures

Each of the non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing Envista Holdings Corporation's ("Envista" or the "Company") results that, when reconciled to the corresponding GAAP measure, help our investors to:

• with respect to Core Sales, identify underlying growth trends in Envista's business and compare Envista's revenue performance with prior and future periods and to Envista's peers;
• with respect to Adjusted Gross Profit, Adjusted Operating Profit, Adjusted Net Income, Adjusted Diluted Earnings Per Share and Adjusted EBITDA, understand the long-term profitability trends of Envista's business and compare Envista's profitability to prior and future periods and to Envista's peers;
• with respect to Adjusted EBITDA, help investors understand operational factors associated with Envista's financial performance because it excludes the following from consideration: interest, taxes, depreciation, amortization, and infrequent or unusual losses or gains such as goodwill impairment charges or nonrecurring and restructuring charges. Management uses Adjusted EBITDA, as a supplemental measure for assessing operating performance in conjunction with related GAAP amounts. In addition, Adjusted EBITDA is used in connection with operating decisions, strategic planning, annual budgeting, evaluating Company performance and comparing operating results with historical periods and with industry peer companies; and
• with respect to Free Cash Flow (the "FCF Measure"), understand Envista's ability to generate cash without external financings, in order to invest and grow its business through acquisitions and other strategic opportunities. A limitation of free cash flow is that it does not take into account the Company's debt service requirements and other non-discretionary expenditures, and as a result the entire Free Cash Flow amount is not necessarily available for discretionary expenditures.

Management uses these non-GAAP measures to evaluate the Company's operating and financial performance.

The items excluded from the non-GAAP measures set forth above have been excluded for the following reasons:

• With respect to Adjusted Gross Profit, Adjusted Operating Profit, Adjusted Net Income, Adjusted Diluted Earnings Per Share and Adjusted EBITDA: We exclude amortization of acquisition-related and other intangible assets because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate. While we have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and related amortization term are unique to each acquisition and can vary significantly from acquisition to acquisition. Exclusion of this amortization expense facilitates more consistent comparisons of operating results over time between our newly acquired and long-held businesses, and with both acquisitive and non-acquisitive peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible asset amortization related to past acquisitions will recur in future periods until such intangible assets have been fully amortized. With respect to the other items excluded from Adjusted Gross Profit, Adjusted Net Income, Adjusted Operating Profit, Adjusted Diluted Earnings Per Share and Adjusted EBITDA, we exclude these items because they are of a nature and/or size that occur with inconsistent frequency, occur for reasons that may be unrelated to Envista's commercial performance during the period and/or we believe that such items may obscure underlying business trends and make comparisons of long-term performance difficult.
• With respect to core sales, we exclude (1) the effect of acquisitions and divested product lines because the timing, size, number and nature of such transactions can vary significantly from period-to-period and between us and our peers, which we believe may obscure underlying business trends and make comparisons of long-term performance difficult, (2) sales from discontinued products because discontinued products do not have a continuing contribution to operations and management believes that excluding such items provides investors with a means of evaluating our on-going operations and facilitates comparisons to our peers, and (3) the impact of currency translation because it is not under management's control, is subject to volatility and can obscure underlying business trends.
• With respect to the FCF Measure, we adjust for payments for additions to property, plant and equipment (net of the proceeds from capital disposals) to arrive at the amount of operating cash flow for the period that remains after accounting for the Company's capital expenditure requirements.