XRAY - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 Dentsply Sirona Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for today's conference call Mr. Sweeney. John

sir. begin, may You

John Sweeney

the you our Kevin joining and and for call you morning Year presentation and related to at and today. Welcome www.dentsplysirona. good the that remind us I Quarter available Conference everyone press to release XXXX slide on thanks are Call. Thank earnings website our Full Fourth com.

and any and in today will our financial measures there Our before reconciliations please discussed press earnings we earnings forward-looking press be take to our numbers in release call deck. But a release. of the our earnings presentation read in are and statements provided begin non-GAAP the moment

and call views risks statements on we reflect we'll conference of predictive certain certain our assumptions today's and about statements events to performance current future subject expectations that are that results base During the future and those make financial uncertainties. and

actual most Chief our of factors turn Our of that XX-Q lists I'll Casey, that, over most some the Sirona. cause Dentsply to Officer and Form now call recent to important risk Form And with results Don our Executive differ XX-K could predictions. from

Donald Casey

minute start, you wanted John, call. thank earnings us to on To year some provide Thanks, on completed. and take our joining for perspective of all a the and just I we

Dentsply on growth, in we announced financial program Based for going and of consistent plan. and We the that discuss Looking this deliver a deliver and Company the better to provide we road on guidance November Company improve making were need Sirona that the in shareholders. employees back improve our against against taken update restructuring a to clearly performance analysis, dental position we On comprehensive XXXX, deliver XXXX to out laid on to while that aggressively on and the and will put restructuring our for progress the results an performance important our partners, path. at completed our are strongly better XXXX, have our disappointing, steps customers, areas believe we plan. in-depth map we've forward. market, call, executing we you worked have our we To will against analysis

fiscal at looking our by performance for start year XXXX. Let's

see inventory Slide our side. Consumables Technology you X, odds revenue relative our the this [ph] on As Equipment was in segment, on significant, can in dealer & decline stability saw

Our drove an reflecting lower adjusted income margin top flow Operating EPS adjusted $X.XX. generating flow strong $XXX year, of cash during was line pressure XX.X% Dentsply Sirona. of underlying margin of operating the capabilities million and and cash the

to the in XXX discuss We I on came turn at that, were were Turning income Nick? this during XXXX. quarter over to margin will quarter. fourth substantial compared XXXX financials for dealer basis an who the now the of Slide year XX.X%, will achieved now and points was prior to adjusted EPS Alexos down outlook , With Nick internal and on the call operating Adjusted which flat we performance, revenue basis. despite the the of revenues $X.XX destocking that level X, experienced about billion, $X.XX.

Nick Alexos

our Thank and down results XX-K week. shut to accounting immaterial everybody. review XX-K related you, that initiatives. of be will Form consolidated our morning, today's next anticipate is as controls Don. and after our announced And our a business internal We is The to we the additional shaping filing business XXXX good we time being sales discontinued of that portfolio filing needed part We net deadline. Form

across X, Slide to two segments, & Consumables If we and Equipment. you Technology report go

This at recovery to in XXXX basis now that revenue diverse segment & serving the by operational stable accounted Consumable The were steady points, basis. to Consumable important up Consumables our our compared fourth which is margins European also up and Venlo, X.X% partially as Consumable quarter. growth for up provide of X.X% portfolio compared revenue drove of prior QX, accounted performance on internal the markets. XX distribution overall and If to the driven an Our issues Distribution In Center we we XX, Slide fourth for more the in million, the of in XX% facility quarter growth revenue at go segment, Netherlands. increased year, effectively $XXX segment Equipment of Consumable XX% fourth margin. revenue the revenues highlight a our for products Technology our represents was European quarter. customers

businesses. $XXX had Our planned includes revenue and HealthCare an $XX our $XX of net and to down discussed, T&E reduction X.X% revenue this for to were QX significant opposed year-over-year unique reductions down versus implant of Wellspect dealer has inventory a in X.X% we In revenues on We previously year quarter and internal million technologies in million, some $XX the and of during segment segment, T&E growth destocking. million fourth basis. year equipment numerous million. had due in fourth destocking the prior dealer year for quarter as the stocking prior

in fourth would destocking of growth have quarter and both X.X% years, 'XX. stocking T&E the posted Excluding in the

margins imaging additional the the by of end positive XX pricing, year-over-year user implants points. basis by These the quarter, XX.X% part Slide of an that businesses the in destocking margin, operating Technology that making goes saw performance. are points solid cost XX the regional of particularly through our as XXX we and on mid-single savings HealthCare from margin business with basis the reduced product offset basis Equipment level Net by compression quarter. partially retail up result margin were in inventory seen our - & a compared points; points; encouraged XXX Wellspect and by to some equipment particularly margins up in the the marketplace, our other we by portfolio prior-year X.X%, in our reductions have are following significant in shaping fourth our quarter, growth factors. business were reduced the also margins T&E basis in our and XXX US. margins reduced mix differential. sales We that was our In digits. growth had The

$XXX see, million, As year mainly destocking & down XX.X% sales can on Technology the were down an US compared to in due internal quarter, our the and to businesses. Equipment you in prior inventory growth basis XX% revenues

world addition, on internal revenues year prior saw from up forward we This as internal recovery XXXX. growth year from center. revenues treatment the declines a was in In X.X% prior of pull sales the driven benefit a were our compared in million, Venlo Europe. was our Rest And an X.X% benefited prior business due X.X% in compared a result in $XXX addition, by basis. Consumables to to basis. distribution prior consumable to in US, from up to some $XXX also of there an degree strong year, million, up X.X% year, of on as strong QX European revenues were and of difficult and business the a and the comparison quarter some up

stocking, equipment growth metals XXXX can platform international but faster X.X% a precious allows down our you our excluding markets. on basis. basis. fourth from benefit Slide us in net quarter destocking quarter, had roughly global effect. million billion, growing to of non-GAAP year-over-year As again, Once $X.XXX an fourth internal Revenues see, is financial on flat were $XX XX the summary a the

basis by million XXX profit revenues have So X.X% on total as pressure, excluding our would $XXX.X margins points points. was basis. negative XX.X%, basis the down reduced increased an have this by compared our internal prior-year. Gross mix, business, particularly or to in Pricing factor, XXX imaging

increased In during of and expenses, of $XXX.X addition, of we down had businesses in $XX savings and were from margin prior prior-year targeted operating XXX EPS $XX result $XXX.X as into activities points basis. higher impact XX We margin capital to a non-GAAP Slide build-out QX, year negative newly the lower year basis compared investments March. down the of XX.X%. our related cash as for the $X.XX, balance from were that QX was flow the achieve due to or reduction points had year-over-year, margin anticipate expenses. of that our the due $X.XX to reductions R&D did IDS million operating initiatives basis down and will is in flow inventory operating include million. flow gross of expenditures are R&D portfolio up equipment announced the ahead to part quarter. our to flow restructuring QX and SG&A declined constant Cash profit our in which resulting a free Total million XX on of million, was XX.X%, $XXX.X quarter of additional quarter. X.X% basis our points our and adjusted million, fourth and cost the organization destocking cash Adjusted X.X%, a shaping expenses costs for our The in of XX principally from SG&A We new expenses restructuring program. XXXX. in the currency

free XXXX cash million the exceed reduction, achieved this quarter fourth of XXXX. a note, levels strong, lower that from contribution I finished we with XXXX. during flow Our our with $XX quite that for we inventory far inventory would goals

free flow For $XXX the million million. achieved after of CapEx operating the approximately cash cash Company $XXX.X and of full-year XXXX, flow

capital to taking flows look to in flow out opportunities additional forward, anticipate continue cash we cash we strong working and our incremental As have drive of XXXX.

on guidance Moving on to Slide XX.

XXXX from plan. $XXX rates the headwind A initiatives. Once are XXXX to billion. for destocking or X% This the guidance negative will XXXX, remainder a be provided anticipate a of the revenue part due shaping to favorably year. an again, million, that range portfolio of XXXX in revenue million will XXXX X% $XX a Furthermore, X% to of revenues. we previously $X.XX million reflects on to recovery our restructuring with reported for XXXX in noted reoccur achieving $XXX the of X.X%. assuming was internal destocking our exchange underlying X.X% Longer-term, XXXX internal XXXX. billion a revenues current impact to foreign consistent rate target there of expected not have to about is dealer rate $X.XX as over impact Our of announced that growth by It X% should XXXX growth is

Our in positive initiatives, adjusted margin from FX to about impact. a XXXX portfolio gross and XX% revenues, XXXX, from savings profit trimming, restructuring roughly improve in will reflecting higher XX%

earnings call. in we prior XXXX expect We year, to to operating expenses you below achieve as our last committed

approximately operating also recurrent of of XXXX, cash. compared the XXXX versus XXX full-year to the the revenue reflects net savings points in range Taking one-time million an $XXX Our expenditures restructuring restructuring we for profit plus margin million and XX% anticipate XXXX. gross leverage of margin improvement for XX% to operating basis guidance of as expense in the $XX expected XX.X% growth,

one of in range XXXX this XX.X%. Biannual see key factor the dentists adding phasing respect we assumption adjusted an guidance Show, XXXX, quarterly $X.XX held is to Dental hold $X.XX[ph]. this a growth, for IDS rate is With show. And to XXXX the the QX our their us International typically tax for in until all slowing off purchases Our which as March. to In the revenue years brings is together, EPS in IDS,

our Overall, timing to impact anticipate As Thank year. past through higher and the Gross to first the margin year third our a revenue as and our the I pleased is the of with ramping that, to result, up move we also of we other quarter and of Don. of globally. will second of new both back move be investments of our will first the accelerate restructuring and exceptional the quarter, year. benefit in quarters the anticipate as and of This is will prior restructuring I a due savings call the We quarter, SG&A the the related of in the anticipated first lowest shipments SG&A now the restructuring the to in appreciate the I'm timing employees in lower products. fourth of progress XXXX positively work the With and be initiatives our XXXX. turn timing quarter. levels through versus we which in to IDS first you. savings, of result expenses

Donald Casey

Thanks, Nick.

our on discipline, achieved operating for plans, those revenue that I you earnings Slide focus now significant XX. guidance improved discuss will and As XXXX move see, can with shows leverage. we to To

laying at the call, mentioned focused organization with a starts goal, us plan Company was we're improving The our as to going future. for view simplifying allows of during simplified critical we're leadership compelling organization. with a while addition restructuring of and going that have visibility beginning our of and Further leadership I record growth, the in we operate for moving the out world-class simplifying XXXX was that margins accomplishments a to one organization vision building plan of XXXX year and a The of company act the one team. the to of leadership foundation of enhances Toward how change. where milestone creating the on structure. for focused significant priorities singular, was have important a also comprehensive results. As This accelerating An is the the track one This organization significantly team, delivering experience XXXX, upgrading on blends, in both our accountability. in talent. structure, and we to a that

and leaders, Newell senior Officer Chief expertise bring Our a experience respectively. Segment commercial in Petersohn, and of Officer their Chief Bill Walter roles lot and of Commercial

of thinking Key, around also our from benefiting Dan our We new the are Supply with Chain Officer. integrating addition Chief chain supply

Officer. Stellar as addition of the Technology am our I Additionally, Chief announce happy very Cort new to [ph]

organizational have depth win provide marketplace innovative Sirona our our unique We the when leverage Moving to we we XX, and our that believe and customers breadth strategy in solutions Dentsply Slide globally. our priorities. provided will for to

we simple three forward, I've Going organizational growing have simplifying revenue, the margins organization. improving mentioned, and which priorities,

groups have where So and grow to commercial our enhancing consolidating simplification, feed out commercial growing we focus order simplified and supply have capabilities the details organizational continuing some XX R&D, by a organizational we and productivity those to of our five our and our SBUs we and review structure. product that into operate, structure important let's priorities. created regions In chain support single leaned regional the organization on

Consumables segments, We will two in & Technology Equipment. report and to continue

However, first into there Technology from changes, segment. instrument products is segment. our By ortho Consumables quarter innovative moving our Consumables technologies. lines. making to in XXXX, developing business our Equipment and Innovation in to changes the significant businesses the how from business these approach have our group lifeblood to And Technology and & beginning of solutions is Equipment better are been synergies a prosthetics moving way between natural we we and unlock &

CAD/CAM R&D will a efforts approach process pace. to looking this A to will and reflect means initiatives more breadth It innovation that is now in synergies opportunities. also to larger align top-down the the resources allows focus our start means advantage biggest the take we great portfolio category. in begins across unique new create us to Our between developing of with It faster a our process. management of on the area. example impactful This we organization at

year, past are our the and to our we've in Chairside Over competing committed now the overhauled DI both strategy growing franchise and vigorously space.

quality introducing that a we in PrimeScan, launch with PrimeScan our across are of strong are products able This starts by lightning spectrum. us approach. We to a R&D process accelerate entire complete portfolio gives The leveraging the open dentists focused entries of have is that the to a digital more product breakthrough And is to leads easy from streamlined CEREC is fast, truly that platform. and use experienced high overwhelmingly restorations. impressions. positive. Chairside takes we've faster received this This PrimeScan and feedback

digital all manufacturing that now system used could have CAD/CAM lab-based DI the major that quality a be by high impressions we create can So systems.

enhancing system any with competitive fees for are charge we this that we improves with have Omnicam We makes per fees. DI performance do and later it other that systems, when new scan extremely year annual not software not any particularly $XX,XXX, and you which factor do in also offering

software enthusiastic SureSmile year. software through that we reception ramp clinician clear the solution. SureSmile introduced planning we're and superior system At launch Chicago complete SureSmile rest and capabilities new move to aligners. deliver clear aligner The very our software. as of planning will treatment manufacture. SureSmile This about talk was to XX, the state-of-the-art clinically Slide aligners to Moving Midwinter, with the controlled the we a aligner combines optimistic

of capabilities At our execution In enhancing year. addition improving has of commercial the been the a this heart major to innovation, our area over sales is SFE. or emphasis last force initiative

a that common structure customer Our platform comprehensive view us common incentive to the program SFE move involves strategy enthusiastic. a been implement rolled more and national create This Dentsply also the analytical at a to call has a CRM that of planning to an high-value Dentsply performance focuses creating a is to portfolio It that built and is dentists. to recent approach evaluation. targeting, around Sirona's meeting and the on program sales segmentation very the all customers, allows bringing breadth Sirona's reception much across forces, identify out

We will also of parts continue invest growth world. in high the

chain Turning important to our entire centralize our supply operational is company. across to priority, second an improving margins, initiative the

and already Supply demand mentioned expertise this for planning, our the areas. management of addition We create Chain a integrated as started our and to Chief institutional all knowledge distribution we're efforts manufacturing, has We've of that leadership. get job have Officer includes single to supply Dan team responsible supplementing new Dan done with to that lots well other Key chain as procurement leading critical our logistics, and as global and

our part said, to X% we that roughly headcount employees are down XXXX, of the improvement we margin targeting will consolidation XX,XXX to net of employees between had programs, reduction bring by XX,XXX efforts we X% and As November and a and in SBU RCO from XXXX. XX,XXX us

of we've end and track achieved on are We we tracking are work restructuring XX,XXX effort of in achieve end Council and XX,XXX less the have this with outcome. continue XXXX. Works to headcount made of At since fiscal difficult reduction target to the best determine ahead we very with this our And an goal plan accordance the point, the to XX,XXX and of than employee of by to plan employees XXXX. our will decisions announcing at our

way, margins shaping. improve through are to working portfolio we Another

cost reduce thus We are complexity. underperforming taking to exit opportunities and advantage businesses and of

our losing organization. on and We [indiscernible] significant money, which the been it's a of drain was are discontinuing in business the process

we surgical shaping that software savings. a on venture is divesting cost also we a CCAD respiratory candidates a ongoing focus additional a an and and with We and This developer line improving as top joint portfolio are assess was non-core. was exit which with for business effort growth

will months. We additional announce coming the shaping portfolio in activities

delivering So is and accelerating in growth focus margins. we on out the laid organization improving simplified while plan summary, a market

With we we non-financial we XX. visibility KPIs. progress are Reviewing November, the provided Slide these progress on some are it plan provide making, and to that in comprehensive, this these and is metrics against imperative the

in the new majority steps start significant with and been RCO we completed operating the the the have We we've under First, in January. the consolidations improved structure since made SBU of and progress consolidation. these

portfolio R&D software the US early we've at force to education. and continue come way drive is in consolidation GP and IDS effectiveness in Our program PrimeScan, Ortho with under much later some had our our wins sales to We've implemented more and March. clinical

discussed, decisive businesses our actions way. we've exiting additional are As under shaping portfolio, in steps we've and clear taken three underperforming

XXXX. reductions through on working headcount X% and are We Again, is of the schedule. end to of to target reductions our that full the X% are before achieve ahead

As our running task announcement Slide progress do recognizes and management the you the ground to team financial keep On we've line. entire the plan. size expect restructuring November straight after said, our expectations of our we will can and measured for not momentum we see, going. this our outlined in XX That ahead target hit we a in

this thereafter. XXXX We of of market to and Consumables XXXX growth, in XXXX, a our X%. making, grow progress even will view at we maintain forward. project this segment We of of going or and these In at will some to a Considering substantial launch X% with will the maintain partially year, by end year inventory innovations. result XX% of we resolving destocking above returning as X% with growth result Dentsply operating terms that our growth the & improvements the this more of focused of revenue to by additional be factors that execution. revenue XXXX Equipment Sirona XX% X% are X%, steady margins anticipate with Technology or target and will we of on have our growth

expense on saving with discipline, EPS cost growing to our strong accelerate leverage. term revenue expect in And shown guidance, near we We in we've with as act EPS growth opportunities. XXXX the as

maintain to going an grade to us Additionally, investment utilize it's important for sheet rating best our enable balance to forward. us

management on These talent increasing providing are years, is because in is We company level reaffirmed committed metrics market. with executing. transparency have an and this great attractive our that detail world-class Board a of past few the over ultimately next successfully plans operating this of my to months our team and belief few

and employees the with are leaders around Our sense and a of strong urgency globe working purpose.

progress on up to the And update our will we on and We will continue progress actions deliver with to forward our decisive We are XXXX. take confident to commitments. to throughout we needed look it to questions. made in have that, we open continue

Operator

first Our Brandon with question Instructions] comes Couillard Jefferies. [Operator from

Brandon Couillard

morning. Thanks, good

Donald Casey

Brandon. Hi,

Brandon Couillard

front. clearly, Don, quite the of you progress making be seem to bit a on restructuring

secondly could of additional if just magnitude outlook, could on the later from the the speak portfolio year? the quantify guiding confidence you of XXXX. of you shaping? the level curious Nick, of of to the the and to particularly for opportunities impact Just sort for OpEx planned street this And in your perhaps speak And above sort

Donald Casey

Brandon, it's customers our internal, Obviously, to us for to on the partners, our investment and our critical XXXX That's deliver community. to feel commitments. Sure. to both we

that are when commitment. set So that we to it on that we year, critical the deliver this felt able was we guidance

it. we a doing in of So confidence high have level

there. Now we And to I we from as of perspective, of shaping, of a year, lot head quarters. A and IDS, the say kind the been the savings and that have over doing really expect over R&D did look was to fruition a happen that, couple happened to lot that cost of work of as portfolio comes into work the we lot next we we've do. an out it

and for to the that critical really and about it's feel and year did, know we set us Obviously, to we we said, look we very of why guidance. lot where do. being executing. this a we good work So that's going we recognize guidance there's forward But a

Nick Alexos

How Hi, Yes. Brandon. are you?

of is mentioned, in with being mostly million and $XX along XXXX in about million $XX trimming. to eliminated, $XX the that of savings, that portfolio we goes trimming, there's terms of million portfolio revenue OpEx In as

that's impact 'XX our opportunities We continue to year-over-year but versus look 'XX, at in the guidance.

Brandon Couillard

mixed there's you some to speak quantify Thanks. data you're US the And at of the in on what market? Do Dental consumables US in you market say the of points, the Venlo also far fourth I'd the seeing as impact least could stands. recovery then sort consumables as And been quarter?

Donald Casey

Yes. the Nick split I'll answer that interesting. first. Brandon, answer we'll second, one, It's the I'll

consumables US where forward seen off Our bit versus a of prior was QX mentioned down that had It's we business comparator XXXX down a year. QX pull little that XXXX. in the we into script, some

of that So going what's some on. is

over specifics, believe on we pretty about pretty the the So consumable the business, a good forward. where actually some And a beat to have as we've is innovation good we positive that go of impact got that believe we performing. pretty while should don't XXXX in in consumable we that year, lot get a of into the business feel course want total we good

Nick Alexos

And what $XX of our in shortfall. points to XXX And the that XXX we feel consumables. QX, in have was for on in all most roughly we've QX, a of that it. said less of We it Venlo, basis million rate about points effect, terms been in growth basis excluding Brandon, would quarter, not covered

Brandon Couillard

Very good, thank you.

Donald Casey

Thanks, Brandon.

Operator

question Our Baird. Johnson comes with next from Jeff

Jeff Johnson

okay? me guys. morning Can hear you, you Thank good

Nick Alexos

Jeff. Yes, are you? How

Jeff Johnson

each think see on the the well. way next today. the the headcount we then right years that's from an obviously on little in right maybe maybe bit XXXX, year obviously reduction as I'm this Obviously, mentioned kind about we quarter points a about of Question guide. starting and points Don, for should you, a of well, the of XXX slide But annualized as Congratulations at help just you've benefiting basis few margin the little midpoint XXX end the or XXXX this years, is guess you, the of on now, kind about rebound got outlook. and us, deck the year basis helping few schedule ahead effect, Nick. probably to reiterated commentary the thank basis, the next of you think and XXXX -- with I of you.

conceptually, couple just So the about performance, years? annualized margin think to next how few the of

Donald Casey

the Jeff, key Yes, would obviously, start with drivers, I growth. revenue

As is with XX% in We're drives of we being the we targeted are past, operating that, your said leverage. margin on targeted the margin accretive would but in very our that up XXXX made to operating good -- some getting we to seeing revenue I improvement. see operating level. up that We've gross say as through further continuing that headcount, well. that expense flat, progress so 'XX to

So when going consider of trajectory thereafter. get kind be you operating the XXXX, XX%, can into XX% same in margin you to years the

Jeff Johnson

All right, wanted raised that's go And helpful, thank you. point you back one to to Don, I PrimeScan. on

monthly going things club annual You that. there's no fees, -- Does be said no that completely eliminated? mean that like or scan to fees fees, CEREC fees with or total the

Donald Casey

the that, Jeff, reference -- specific that are was we to on Omnicam. in to Now, be

what up announced Omnicam we've coming we X.X. So we're that with call

we offer that spectrum be that of So able to -- and -- a products. relatively believe have complete to we

-- our PrimeScan down revenue everything to you the fully have from it X.X; will PrimeScan, could it all So way in and stays traditional with can plug just with you loaded, mill software that and Omnicam model. so

Jeff Johnson

Okay.

blabber point, I it CEREC fees anything So the no -- I X.X want? to at use that's I talking can as the club not and much X.X and just the $XX,XXX want door understand out the or to would the that you're have as

Donald Casey

Yes.

Jeff Johnson

All right, you, thank helpful. that's

Operator

comes with Our Nathan Rich Sachs. Goldman next question from

Nathan Rich

that like the you that from new tying for contribution products can guidance, X% market of maybe how and about us back a how just Thanks that for for viewing of you talk can a of Don, kind guidance maybe big give to X% in just what do opportunity product have growth? that you time? the questions. and you're you internal could PrimeScan embedded to sense And think PrimeScan SureSmile the be over

Donald Casey

Nick up, business, Yes. got the and PrimeScan. not that of of look some to sufficed say, consumables. But I'll We'll some details in it's new the We terms one our we've just provide split good what it at assumptions ortho are. products

be to going a pretty is number. new there that product believe we So solid

practice you And biggest Now, not really to that But it's new skill or sure somewhat fast. and a I'm is pressure like the it's four years, you're becomes that in, the number. to we're come office blood to that really have we to of just scan. on they three, that's really on to actually make to it game easy it's that going sure going us, give Because if happen. we be going said, speed just in think could have GP, and ease of probably take you hygiene, lot somebody And product PrimeScan, a there, that accuracy interesting not product went not going to a I'm of the that a exact being to we're PrimeScan, on part use where using this. for deliver additional your see finally, a you're changer. to to able going take practice And dentist have the literally going feature to with we're not

system. with and with sure exocad all and we've we've an thing we The now people labs, an it's make worked system did and open that open others that second PrimeScan with is like we made to connect

how us opportunity change to to opportunity it an with practice this technology office. at finally company, we the And in this gives camera, of when us dentists of think CAD/CAM it had But gives a we we've to think kind as real look, you expand PrimeScan literally a the in leap significant that past look So generational Chairside. a if the history opportunity. begin only not in area,

opportunity it got So sure and of for a obviously, that make worked the got we to and ready think work up great hard go done. to we've want We've Midwinter done major so in great IDS. that for team Benson pull us hard a that's reasons that's this acknowledge to I and we've and the Chicago it's a over one they've that's product

Nick Alexos

And okay.

base a number multiple terms mentioned the X.X% to clearly, products. the Equipment destocking, In significant growth of the Technology going pipeline in & new about we give of has block addition just We're business. the figures, segment, is of Don times, to not the as that's in in but is additive have revenue, that specific good a recovery to which

Donald Casey

Yes.

Nathan Rich

that. I Thanks. Nick. appreciate And then,

you on quick just Do like Just maybe us in pricing kind the issues of segment? comment pricing, we've lot the you in are like guidance pricing with XXXX? follow-up the feel point that of it your Can margin. at for of Technology we EBIT this one of the the imaging is a and where behind competitive you seen point? And feel update on kind any do embedded what's in you side a maybe that's just business, on

Nick Alexos

end of the and that US say that in in markets. full-year is respective price Yes, guidance are some year. our the imaging a core the I our markets, We would made in XXXX back competitive significant adjustments for products their reflected pricing now principally in we think in

reflected appropriately in our it's guidance. So

Nathan Rich

you. Great, thank

Operator

next Kevin Our question comes from of UBS. Kelly

Donald Casey

you? Hi, are How Kevin.

Kevin Kelly

Good, thanks.

important is guys on a take? that Can was the of PrimeScan, growth some of product providers talk I about getting long you your expectations? to How like of and does mute. little of Align how Sorry. that How that the other and sort bit work? the process validated in of the terms does by

Donald Casey

We're Yes, you to board. Kevin, have welcome. on happy

Kevin Kelly

Thanks.

Donald Casey

of in terms look have two PrimeScan different what registering, we at Obviously, aren't in are you what we. and ways to

really of in That's the to and through the a product launch over rolling the the globally as major European year, result is -- Asia. right course that we've There kind in thing. will rest markets PrimeScan being of important now out and some US hurdles the First of are some get we launch regulatory got that in first world to markets. this for our we can what we of get

are with best the terms of and we where -- on ask it's the that Align, Align probably to PrimeScan is. folks where In

other And system mills open data open accepting furnaces in an committed and impression committed our been terms system. are to of an from we've to digital We devices.

So, think important. of that's Align digital we team. we source impression is important for material believe now, the And an that right Omni

in a -- but a forward. those right got of has working so been for partnership we see with now, that. on good that's So relationship both go we guys. have answer us, as We're good specific we'll on we've Omni it, don't a

Kevin Kelly

by And could market how in bit little is or I talk being little that? you it understand segregating are mostly there talk about used opportunity a you product a the What sort this you or fits it the the can -- -- of opportunity, helpful. the That's competitively SureSmile? different bit how pitch GP that a an orthos a really envision or is is to Is can just you marketplace. either can we in about so

Donald Casey

Kevin, we does protocol talk Yes, say, We treatment let's a significant that. -- about where root believe those think work. comprehensive and you treatment one we, yes. Look, ortho protocol to that's of asked guide a have complete questions. crown that very it's two opportunity just We that in we

period offering aligners brackets treatment brackets then get involves for traditional enough the hybrid treatment with short is. a putting clear and but finishing treatment a than also where actually clear for do band aligners ortho and is what's aggregate cases in the significantly so time shorter traditional bands job a and our called that done, some of a hybrid of We isn't on to what

that's offering our believe protocol competitive very and makes So in that the the first hybrid our us we offering, clear ortho treatment aligner space.

prime crown getting over back. treatment ready launched literally think our we we've where it's We best a the also pretty a with of a what by that coupled programs PrimeScan opportunity a now that go Dentsply the We set we -- to market. right treatment we PrimeScan, with together. example root our that to piece and system. of will of seamlessly software our way, anybody best to up software. is use there the opportunity think It's we on and we planning, of guidelines with is is We of PrimeScan, aligner, they're Again, think trying got this parts we've think when clear to getting stack going with GP great mean, terrific significant the GPs. digital equipment ease think believe we the I different with how and impression work got GPs to work that are of they're get for right Sirona great an

Kevin Kelly

the guys. Thanks That's great, so on much quarter. for help and congrats

Donald Casey

Kevin. Thanks,

Nick Alexos

you. Thank

Operator

And Peterson next Tycho with question comes from JPMorgan.

Tycho Peterson

guys. what a more kind off, you talk to been we confidence rocky thanks, it's can Obviously destocking? Nick, start see won't years. maybe you two of gives to that just any Hey,

forward are it? through really to So going tail end we confidence what gives the that of you the

Nick Alexos

dialog and foremost, direct first their track communication Tyco. to and and their sales Thanks, Well, partners dealer inventory. have retail with we our really a good

hope about Second, directly got it's destocking to It's about been, after first and net be and to year priority talk foremost that to to with priority sales year, the can way. $XXX purchasing directly. have correlated the level it never speak And for retail XXXX. that million the a demand keep I shipments. our destocking where our we net have wholesale we just sales market throughout

an So put a of this be we that high degree issue us. be have will behind will confidence that

Tycho Peterson

Don, with with appreciate also you just then, all maybe Okay. and DSOs labs? How progressing dental talk And on then I Can your constituencies? color. those you're the PrimeScan. to both discussions

Donald Casey

Yes, thanks, Tycho.

the software any with system start labs. We cumbersome we to and any off and data went back. and that totally sure literally providers. cases to necessary with stuff our Prior digital we've labs a impression I'll and seamlessly make out made First use we're in accept feel in data wanted the integrate PrimeScan move right country to can to any now over right moving any that -- lab open. We lab bit this, the right to the it our can our lab was the -- little of some arrangement

that about and group. people forget we excited actually have sometimes we've very that conversations, a very, we're had lab So those

through and dealer we've as well. -- our been partners So working

first So there, tell, and can it how in believe saw you when we as think pretty it's a that know, you is. look, that's thing, PrimeScan, excited you we then, about pretty, Chicago, it we're saw strong pretty it, ultimately were and were the I when competitive you actually we're, product we

Tycho Peterson

for Okay. the between Nick, then is segment lastly growth Consumables, or of this we the a rates it at does it assets think swapping as and about all just change T&E forward And going wash?

Nick Alexos

impact, I a QX see the results. not material it's and and numbers restated there after would you'll -- our won't material actually be obviously, say

Tycho Peterson

thank you. Okay,

Operator

comes question next with Valiquette Barclays. from Steven Our

Unidentified Analyst

Steve. Hey, this [ph] on for is Jonathan Young

type as a know XXXX. the should of similar you should have happening what's Just guys to about relation But about in XXXX, to portfolio shaping you company's up in I the that of that in relation we be the think $XX are level of kind magnitude thinking that? forward, coming forward XXXX assume we move million mean, or initiatives, divestments I moving guys

Donald Casey

activities, you move to or pieces of not these we're they're business going Yes. Thanks, saying not John. of see, dental size I the mean can Yes, look, portfolio significant. of shaping kind Wellspect. traditional the of we're one

got I dramatic we to a look size that There that, more, $XX two doing. don't I under couple thing think if been finish we've the of look, So million. going we we of maybe probably another whole million stay think we've posted it'll see should out at you this think one about, acceleration forward. or $XXX

So don't XXXX expect changes in XXXX, huge

Unidentified Analyst

commentary path from you we current PrimeScan, targeting at upgrade been new more for Omnicam on what's for guess the the show, I plan users? just think Chicago users. do then and Thanks. providing I you users And great. were when existing an on new were when users Okay, versus

Donald Casey

decision, really program a reaction upgrade offering now, first, been have make may as users We an both users has quarter users. because the third The fourth right new well really, and that. positive, as not back in current current right or perspective Well, to from come offer now. the we're

upgrade of a we've to that's the gate we offering much a good Some being feel how on of have that that in the tell stock, you, don't right amount we plan. available, aggressive be going program. to contingent But limited, position be really feel on we production is given product somewhat we want out good we I got really got got an to right now, of PrimeScan of

is in emphasis come been that in And right new now with to with excited changes penetration this to The pretty for working to improve the users. way new mind, ability we're with let's users. we've dealer us So and have sell partners, that a our totally conversation those this product great for us have important what to the our products, that. we doing our we've we're said we business, the always up best Chairside feel really

Point look, with year. is, not to over program, are may users, two that's point time be that penetrate our we new guarantee back improvements will come see optimistic So a able this ability we to one. a but in we upgrade

been actually participate we extensively current full the -- say, -- we it. willing changer talk a launched to And have me, from the to probably CEREC really at the I talk price if this that. them been all we for of good lot will we and get tested before upgrade, this users to now. have and to now, obviously, game a the for pay KOLs And product product wanted there's is we quite doctors. want I get they're So going got right CEREC want they our reaction to to just, a saying

So --

Unidentified Analyst

Okay, great, thanks.

Donald Casey

Jon. Thanks,

Operator

Our with next question Stifel. comes Jon Block from

Jon Block

with big I start of I'll morning. recently turned the for implants. you And think, you that guys considering size It's good positive. Don, Thanks, the mentioned business.

agree 'XX? to more you So market implant closer and And growth I've And a can in of little then got creep to follow-up. X% you the about talk business X% we division sort a in bit growth that neighborhood? expect to can that that would market is

Donald Casey

Yes.

We of consolidation that now bit little growth that we the performing XXXX, the leadership programs have on that, on our showing of growing year-on-year we step. combined creating think X%; that getting thing. implant we're right we exactly more lot that -- and think opportunities happy focused business do that have business on there. get that look, we believe job done the two a do our there. be at at market, historically a when innovation steps I'm is, we that better to you that, on we're all R&D business progress the R&D great of we're of much and implant is follow-up. breakthrough of marketing one to in is going been, one a and one. rest-of-business We well-performing starting to we make in of just took out we're focusing point X% let's Yes, process place. do moved a not and team sure Point new that implant have combining best look first implants, the In in our -- could we believe assets We've multiple terms First of leaders the we in in but look, the Jon, multiple

creating We steps to in that in or better is business. business. And how looking advantage that in a one have the business breadth market. implant the Whether do important implant Effectiveness create do program job lead is, happens we every to we at offices we we for an now create 'XX the implants critical Sirona leads depth be in talked ought which And how time, look, this commercially, US the why and and the actually in over with Dentsply think of we're and generation units very believe, in But of growth have we competitive have our program committed Force saw out dentist day. growing of do we're done on the about, and Sales support take to the 'XX, opportunity all we that other SFE other in that we we of we things.

better performance see to some on we're implants. starting So that we're happy

be a is think had that. to we you engine follow-up. long have believe a I way going go, but we think good I have our helpful commercial to I darn to over and pretty time a portfolio And

Jon Block

high-level pivoting just follow-up, The color. to that demand for Thanks creation. did. I sort of

Company. You guys mentioned for the initiative a have that's big

big product progressing first post is Don, how new that your so, plan. And that PrimeScan and is

creation So, the you're Thanks what prior approaching maybe initiative the was to versus demand approach? market on the talk guys. with you with PrimeScan can us how

Donald Casey

I Jon. Well, you, a I tell there's big let's take things, step would two mean, back.

job, hit said If one have very in is we we experts quickly. have a to didn't but when you we to go did force. leads ago, CAD/CAM do Patterson and I very, sales are year and a John and that like some clinical think a hey, things Nick out would great came hot that the back of And I [indiscernible]

that to that's and our the dealers happy the We're would is So actually unit. first how very unit I thing. it's addition say a with creation; been we've out very, gone positive a completed think demand performing. And

Sirona look The into. is sales by literally down dentist -- you launching about Dentsply Meeting it's out a Dentsply National X,XXX been CAD/CAM we're literally a they at over three single taught has I every was our rep second how to Atlanta, Every in single launch, Dentsply And had Sirona thing, launch. now PrimeScan. if weeks that in how given walk ago. in our we And rep not use every people to at PrimeScan Sirona PrimeScan, mean, at

of some on Here's PrimeScan, one information them open. single now is every

Chairside. have you Here the digital of dentist impression piece who does not a ask about is five a questions is not equipment can work

generated So for for PrimeScan. that PrimeScan the we Endo create it for well. way, and they by they're our if things, compensated or compensated or now And leads there other they're can are compensated leads are

that pretty change. dramatic is a So

And with to sitting time, that continuing The in. we of now these workflow, spent lot second believe treasure, really it's activity We've we digital to and to launch Jon, education. big trying education. on when to for up a We really products back talent, lot a clinical we demand creation get right we that love important where us put and above change our Academy. of we're you are down Charlotte

a this. capacity, on of whether expanding education So like lot it's spent our things Academy, our we time clinical

SureSmile to steps small taking but silo. platform the that not other PrimeScan and things we be opposed and significant overnight, on the as us enhance it will a and it's innovations ability on take again, and we are, like going to believe So to launch enable are DS we to great

Jon Block

it. Got Helpful Don. color. Thanks,

Donald Casey

Jon. thanks, right, All

Operator

Our next Suisse. from Erin Credit with Wright comes question

Erin Wright

integration there? Can role Great. and Thanks. your Thanks. remind your overall does progressing for what us to really this are And chain mean you update give your third-party the an how relationships just supply of distribution? distribution third-party you on us for you can And of commitment initiatives.

Donald Casey

Erin. Thanks,

of lot and a committed are I they tremendous logistics great we continue things, valued a our of and I dealer mean, do dealer think job. service which they a will they do to a to they areas. partner plus very of are start we've we SKUs our under-appreciated. a demand support, and got work, XXX,XXX First, different think the perspective that, from different creation I partners fact and be a go provide sometimes with a do partners in out the lot lot

the partners we dealer and remain So work well to them. to with we committed continue

As I a were them a ago. matter better today, year we're think we fact, with than of probably working

our to and a the In that multiple distribution, chain overall had corporate mean, somewhat supply we actually XX little running supply XX had initiative. a unit of manufacturing and a like terms what global comes Venlo. of basis. SBUs did Dan of when to Lancaster Key even we've integrations We infrastructure talking Erin, had I we well. pretty Dan if us close what to business on supply a us each their own bit chains. comes and things initiatives XX would with done Basically about consolidated or help with years healthcare like has chain within --

to to addition areas, Sirona going is bringing discipline been Dentsply our a individual he tremendous a that SBUs. and talent Group, he's in the to XX demand are planning So already opposed bring for distribution in as and

have XX-plus once the like we where So capacity, things. distribution looking what as start we network, where a capacity XX-plus things begin you us facilities to understand other the begin can need is network. that to facilities, as and does immediately you shed manufacturing thinking on at And about a you

going there's off XXXX, tell as you But this our the think when opportunities manufacturing. things for and chain. we bat of year. advantage advantage a in we from But there. improve to we're right and we together when we move feel put network. to are yes, things be that some SBUs team supply chain again, leadership synergies that there acting kind going So as take some we able an early we were think evaluating to significantly days think and the opportunity, distribution individual out obvious footprint of supply start procurement, And that can significant you the there I'll integrated And that of it's we take

Erin Wright

should the new you focused in then that or you PrimeScan, is new the given areas other were able R&D to are on you're have other areas which pipeline, IDS, assume, And show? place, initiatives Okay, it more around great. through something launches expedite and we the optimization some that is product implants that on at development of see I the what at

Donald Casey

we is the to look, dentistry, that's our in really if ways you're and do we you whether Yes, you digital coming than trying over. both and best do SureSmile, with But, surgical do take in you mind want can that today, so to back step accomplish at will. that Chairside solutions digital it moving can like a big things Dentsply or to In Sirona, pushing guides dentists. bring one we're Erin, is things like in look a opinion place to really booths, PrimeScan, my when you different of what implants. And is, can

the out if felt in could -- pivotal was it's the So, progress that area And that we that first pipeline you them the to said acceleration. was we in was an to some we SBUs. we that see of could an begin the And that one shoot. believe there resources get that, major that technology we gave show the

begin XX, obviously, things enable with additional across on to lot we of move show. think some that pulled had implant the initiatives stars to is well really have new we're make IDS, those we fastener we've that a shelf it's focus if think which SureSmile go maybe one resources we in and But forward, is multiple one the is projects giving examples going happen the And to as going a there to the on and that XXX business, be system going portfolio and where But So the PrimeScan away, to we say that the be accelerate Azento. result. we've without see we happy XX, we needle as of In -- got enterprise. to -- our really the to Acuris be there, a for you're to those push obviously, from we think down in are able faster.

the So implants. in we're doing excited we're stuff of some about

anatomy, coming first the which for that some have show. and yet excited good Consumables, will a virtual product, that the haven't And remain in good featuring we've We we time about we in be that. got stuff announced Endo we

walks dentist going IDS. we to well, that of kind that such that at to of knows We of priorities. us And we've obviously, we're at have going for IDS kind IDS presence got optimistic make to lots on these reasons the these every But, sure over and are we're is, news. of difference So very looking a big big to we if that The kind a we significant might that's Cologne out -- you have a attractive do things that one again, be we're dentists very to focused IDS. have are of a come the some there. in enhancements good have to to as But to forward think be products we about head big show presence of at week.

So…

Erin Wright

That's great, thank you.

Donald Casey

what John, Erin. Thank got? you, you've

Operator

Kreger from comes Blair. John next question Our with William

John Kreger

you dental Thanks sense opportunities the the know Is over very is? broader years? guys about the step getting and you give think you internally Don, what if market, your But primarily I us next getting can you much. Where global back it been sort focused. have of do see worse? few biggest growth better,

Donald Casey

John, Because there's conflicting sent out. it's signals been an some obviously interesting question.

good slow we US quarter in really, to don't really in no see the You horizon anything the look, and going was really see that growth we that's outside our fourth -- down.

Latin in China. for our at progress Asia American, in particularly us, some we're some of look good you Pacific, If seeing

a if in that. lot you have little people that growing, around had implant bit we progress a opportunities business a XXXX. have to is are to about we continue think implants. I earlier continue optimistic by We we XX And we there's So mean, that. to at speaks mean of that to question look the aging. well olds see how there. be be And I million I going XX-year the

a with the that, very, of And we that at Equipment that by was quarter, have I be thought And know improve We to competition we strong. innovation. in to again, for the have the think with in think, that's overall seeing, the of of revenues when we'll if way, the And PrimeScan changes -- you're IDS workflow, I impression. to workflow. think improved lot our there's are very in We digital you what feel thought enhanced think it fourth you going is technology Omni look & going growth bringing see good for bodes dentists. we well underlying you those we'll pretty X. Technology going retail category. step the Because of the I case, start and kind of

So we way. continue at at look see and that's -- in which going long-term it. guidance growing is our aligners we in revenue space to technology the of and out about their at when we you And businesses. to look our that look in we Yes, I put that. very people aspirations if you very, thought, clear [indiscernible] November optimistic -- X% what the trends positive Boy, about those about space. set where implants, felt -- on side, X% pretty we growth we remain think good Again to continue that you if equipment

John Kreger

other consolidating you're much Can could how -- you. sales very that one focused do reorienting stand, and where sort Excellent. just tell done? the be Thanks. on does you if you us to I of more just Thank have do clarify. one organization. to know in you and I 'XX

Donald Casey

Yes. John.

You phasing. almost to want regionally look that as at

US, operating we're model. the new in So now

has we That everybody place, put and work, changes. So new communication, segmenting put kind we done now system. learned systems we our we've measuring changed CRM look, of we've the force being said, the we've into the -- changed our significant all everybody into target, place, sales

on months believe business. SFE will program let you with and what see. now, measure we're to that in a we impacting months have marinate significant of the in believe the also that model that in new opportunities people operating that of February, we have not course are You Japan be We and out, focus good. positively But right rolling is on 'XX. China Germany; we But report really six to course you over my coming the out see the this the opinion, felt we'll three Europe, before program. before be we US a correct under for to and just really of and in again begin But US, Canada, as we going particular really program

John Kreger

you. Excellent. Thank

Operator

further not to to at any turn questions I'm like John I'd showing call over time. back this Sweeney. the

John Sweeney

execution very seeing sorry, Thanks looking restructuring joining have much, to at we're you we about a we happy initiatives, you years And things -- our of with you, the everybody, XX it's the other showing innovation much forward IDS, we today. we many have very with that us thank you We're forward that PrimeScan. for encouraged the great are many of very have and show. We the And days. day. by of at looking -- to the very everybody look XX Thank Kevin.

Operator

today's concludes and so Ladies presentation. this gentlemen,

and may have now day. You disconnect wonderful a

DENTSPLY SIRONA (XRAY) 1 Mar 192018 Q4 Earnings call transcript