XRAY - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Dentsply Sirona Q2 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we will host a question-and-answer session, and our instructions will give at that time. [Operator Instructions]

I also reminder, this conference call maybe recorded for reply purposes. pleasure the my Mr. over now is to conference hand to It Sweeney. John Sir, you may begin.

John Sweeney

good Welcome website remind morning, quarter and are slide you, Thank everyone. this to conference earnings release call I'd presentation the related XXXX on to call. like www.dentsplysirona.com. that to our you available press and at earnings second our

statements And We these that before that statements and uncertainties. make in that our statements And we and cause the read forward-looking differ to could most we'll list predictions. of views and current begin, But are recent most our financial call, press future reflect please during the release. about Form to XX-K certain performance actual results conference on events take certain predictive base our assumptions our some a moment from future risks factors subject risk today's to earnings the of results. expectations important

Casey, the Now Officer, with turn I'll Dentsply that, to program Chief Sirona. Executive Don over

Donald Casey

John, and growth, and pleased simplification. quarter plans of includes you second restructuring our and on improvement on the with we us performance call. our joining Overall, remain the earnings core are focused that delivering elements Thanks, organization margin we for thank

growth with the Second strong feel sales outlined good expect back internal new we year. the about half the product reached quarter in X% last growth deliver in-line to our we of target November. We lineup which

and is efficiency our make improving has structure goals. progress simplified our headcount us new enabled against Our significant to

drive and initiatives. approximatelyXXXX us hires more heads with the growth giving flexibility Today strategic to be we selective reduce [ph] to new by FTE key

XX.X Operating prior income XXX an improvement almost our basis contribute which at XXX basis for operating Second quarter gross to the was quarter. margin points disciplines levels, in adjusted compared in came points to margin up year. XX.X%

executing executing our we made bears Our second in we the have the testament restructuring. to progress level [ph] in along bears margin level to strong made our have testament progress quarter margin

Our create of growth, which with discipline at flow prior results management adjusted to sales EPS up strong clearly as $X.XX, compared cash spending million, million leverage, to operating was year. an prior $XXX Operating a significant XX% demonstrate up $XX and compared drove year.

was over who I'll our quarter. And it to overall, a Nick, it financials. will hand now So review solid

Nick Alexos

you, Thank Don.

below slide at accounted Looking that for of basis. prior diverse as down portfolio performance and was were consumable to products clearly a the eight, growth compared X% revenue expectation for consumable to second revenues X.X% XX% our are the This the for In segments $XXX and sold our million, ex-precious represents internal X%. our down quarter, an metals globally. year consumable of of long-term second growth X.X% on business quarter

issues drove the Let me that highlight decline. key

geographic Our seeing But by results. consumable business tends very basis. variation annual in steady quarter-to-quarter we're the an to on be market

a flattening we this, focus reduction program to have analyzed place retail address we trade in of will To driving leading we've saw and activities. a a in this, few had we a sales Consequently, that now a promotion disciplined approach As impacted more consumption, wholesale-oriented quarters. sales. net versus retail over on our wholesale put

our have that very a back rate. also positive the bring half believe will retain in be line X% next help to will up the continue this normal and consumables a back run to that performance our year. that We to growth outlook towards note on X% we of product strong year market I’d new a

control offset consumable The due low declined XX.X% compared margin more of our initiatives. volumes operating together in exchange, which an prior to was margins income to the as and reduction points Consumable unfavorable basis than XXX cost year. foreign

which Technology revenue. and our accounted we nine slide for of On Equipment highlight segment, XX%

by X.X% our the on million revenues initiatives. healthy basis, driven year, but $XXX T&E internal a success up versus focused were of prior quarter X.X% innovation growth Second an

our show healthcare quarter. positive of year-over-year results product equipment during All the and categories, implants digital, instruments, T&E

which from [Indiscernible] from X% launch saw positive implant up benefit mid-single its growth continue the Our growth came in products The CAD/CAM strongest the impression digits digital continues digital Primescan and to system. successful performance continued scanning our up quarter. of

Technology Equipment margins of ongoing successful basis XX.X% driven were up to compared shaping and XXX cost income and the initiatives. volume by portfolio quarter and the our and points prior year reduction operating launch as higher Primescan

U.S. million XX, prior year with slide our on down compared business revenues sales down we On growth basis. $XXX X.X% basis. and X.X% performance to a look the our internal at regional were on

strong Technology and in decline our We destocking. by year. and dealer Consumable inventory digit experienced the our prior as prior driven to sales Equipment compared year segment mid-single CAD/CAM growth of impact sales

European revenues and the X.X% compared increased to decline by $XXX internal double Europe on by up a prior basis. internal were down sales. boosted X% IDS consumable offset slight million T&E revenues year event in digits

prior Rest down to X.X% X.X% growth as basis. we was T&E as year, of world not but were Primescan million on regions countries. up these shipping high the the yet other of some revenues internal compared to not because $XXX are

of result, the technology. of a seeing new and are customers As we Omnicam slow their purchases anticipation

world. We shipping XXXX. flattish rest in start later these the to revenues of Primescan expect in to Consumable markets were the

X% and growth our a excluding but but dollar technology P&L have were billion internal Revenues precious in internal X.X% basis strong X% consolidated equipments. X.X%, $X on an up metals on down sales driven on by up non-GAAP growth We down XX. slide

more environment. prior $XXX.X XXX profitable the was favorable containment gross points Gross cost basis profit to or up million compared driven exchange in by a was as improvement year. The XX.X% initiative a

million Total compared operating down year. or to prior were X.X% is $XXX.X expenses

basis percent was sales XXX as SG&A compared year. points XX% a down to of prior As

SG&A XXX headcount as our and portfolio shaping of by including a reduced initiatives initiatives containment reduction, cost points. Our over percent sales basis

headcount anticipated our Don spending The discipline key be forward. we by As headcount going already our approximately income a STE earlier, driver XXXX reduced noted and have to [ph]. of growth

companywide settlement impact to gross and compensation in year-over-year was the margins. expense increase of is there which a million, performance-based In in second the $XX there out quarter,

function paid. performance challenging is a in of program goals. a in a incentive long-term resulted challenging three-year XXXX a tied comparison also business reduction this XXXX with with results performance Further the of compensation in incentive expense a very low This to being

fact margins that These to [ph]. an give to income XX $XXX.X demonstrates absorb our delivering compensation able the of programs and significantly factors target. margin these we're cost expenses operating our commitment while margin improved improvement our The of and operating operating million

rate The mix jurisdictions. more of with updated higher tax impact a for date expected year full the year up. on tax view the was due to in our earnings catch XX.XX XX.X, tax rate the replacing earnings the in our Increase is change in and to quarter

quarter in was quarter. XX% the Second compared $X.XX adjusted almost EPS up to $X.XX prior

XXXX shows the was in cash Free second was for versus down million quarter versus capital XX $XXX.X the XX.X% expenditures prior year. year the second of million quarter ago. year. $XXX.X from second quarter versus activities $XX.X operating flow Slide was of up XX.X million XXXX a cash prior with as up expenditures cash XX.X% flow from in operations flow Capital

investment price highlights back second that current the in under our During authorization business outstanding have quarter, cash million share buy strong belief This our program. our flow levels. our and represents good confidence at repurchase we the XX we Dentsply Sirona a repurchase shares utilized to

to we our underscores long-term the our XX% buyback our of to quarterly are move we addition, Together $X.XX, company. return and program, increase with a our that cash stability shareholders. flow dividend your from capabilities are commitment our In today, in belief $X.XXXX to announcing in dividend the increasing this generation quarterly highlights cash

and Dentsply Sirona. call with Finally, the the my our this full business. commitment my and passion globe investors our I the their quarterly insights last for for is and to across thank team want to analysts

vision the regarding strength transition the made. want and Jorge This during shareholder. is we've company of also tracking with successor forward working and changes I prospects. with and thank a for Gomez to Don a the the exceptional look and company performance I continuing then my all to insights his

that, and over will Don. turn back the With I to call

Donald Casey

Nick. Thanks

cover Vice August. Sirona will the announced first late effective of executive important Jorge and of CFO Dentsply off recently We an me Executive in President appointment. Gomez assume role Let

Jorge His industry. bringing knowledge successfully of believe right role track I Treasury, skills care record with the experience Relations, an the executive finance, of operations. business include global of of will technology bring managing is talented transformation. mix Investor health well a as financial the in-depth and we information and solid he With global tax, office a as

Dentsply to Prior Cardinal joining Sirona, Jorge CFO was with Health.

Group. also many had with other roles he with that Smurfit-Kappa and experience Before Motors responsibilities organization. that General within increasing has He

to Jorge people with I'm Dentsply several blends of for worked Sirona. excited passion business for judgment his bring and commitment, years, Having with unique

as [ph] organization. goals. Moving set, XX, core making on update provide was against simplifying built three plans around the to slide I brief and would the growth, are revenue we progress restructuring like a restructuring That our to improving, we've

the been products on restructure. Slide commercial months. components XX operating update provides well structure streamline our groups as major regional as of a six that close in to new detailed our We've

of the head a As XXX the organization and old change. structure, this major history over represents years

in to this prior We to manufacturing, help us quarter. single talent a start key points where to as second off class in is fast chain XXX brought a reason manage group procurement. a and and basis world margin to supply have and planning year consolidated structure create the logistics, This gross improved is compared

will that that able U.S really the the under from But we a results be still we are that are look for force in few set new before to made comfortable this out out group. to-date, have It the progress comprehensive We of a against we sales that KPIs we rolled at effectiveness outside. program leadership direction we've recruit months with the and seeing. we're the progress

major rolling next at other the months. be S&P that will over program We XX RCOs

us have more R&D, will going has impact year we portfolio approach we which helped taken the it to business forward. disciplined believe a and Further, much this

we activity new items activities, our one, portfolio a stronger SureFil in had TruNatomy other new uptick and and leading seen the product Primescan, these way. on like real products Based we've today a with

progress seen the around We for activities divestiture subunits. shaping business four our of have also that closing portfolio includes

this progress management you reductions faster than headcount. have XX, will our we've slide as moved that our against to headcount see program Turning planned. as well expense made At point,

now the fashion to disciplined do are a with where to in we We add very phase our in head initiatives, of backs going selectively entering and so line. XX,XXX growth mid-XXXX target we by but are XX,XXX will critical

targets firmly Sirona, restructuring our revenue for long-term XXXX deliver we X% growth on XX, confidence has goals of Dentsply by and our to XX% believe financial hit that eight track slide forward. and we these and our going we into months in growth XX% increased EPS XXXX and of On double-digit delivering to margin X% reiterate we're

guidance cover slide year for let full on me Now of XX, our XXXX.

the in our our raising range changes a guidance As release, XXX model are XXXX first. adjusted for press we include XXX. you saw to to near EPS by in to The

the raising lines. operating to year. from are We and to by is to XX% in XX% our for the gross efficiency XX% This XX% SG&A margin guidance driven profit

for up million to billion Second is And target revenue growth as to XXXX expected $X.XX finally, our X%. points range basis noted our guidance. XX as our now be of reiterating the of previous XX.XX% compared rate are internal X% to rate guidance we $X.XX and tax to

One to different compared as the to would is compensation of I highlight like that impact prior point year. our performance-based

all know result earned. compensation year XXXX the a company difficult you low and level was very of a As for incentive as a was

more Further, been margin the an plan. a increase part to KPI restructuring a revenue This incentive in is of performance progress result this program terms year critical growth, and achieving that of in XXXX outlined expenses tied level. EPS accruing an will robust against compensation were against incentive specific there as now expected improvement to we're In growth. historic in expansion

impact company. budgeting to These cross process and our employees are incentive great incorporated designed compensation section a for programs entire and of were alignment in broad

million our accrued $XX was a sale by we XXX in expect Despite to in the XX% XXXX. an XX to expense basis this, XX% of As second year-over-year result in we approximately EPS margins quarter. of annualized have points and expand performance, compensation which of increase

segment. expect we our revenue in to T&E's respect quarters, strong growth segment improve in our the and remaining consumable With growth

occurs will shift revenues a it resulted quarter in the That quarter while -- WTS be XXXX. in of XXXX. of fourth a with the third Along the that third into from of

will revenues internal a single quarter on digits basis. up an As result, the low we expected third growth be

the levels. from anticipate be SG&A slightly For to down to quarter, third flat QX we

second year, at Looking the of operating and of in with half quarter, first the margin XX.X% first in margins OI our the the in XX.X% quarter.

As the fourth change stronger timely DS to a quarter. we of third quarter margins world the in spending, the result anticipate first resemble margin of performance the and XXXX quarter in with

similar a would entire To were and we the expense in other and it, and X.X I it interest a team. QX quarters. quarter, Dentsply rate which was in to like run Sirona fourth solid expect third Net thank million the call

The shown customers we with demonstrated way over We've results. execution and has commitment innovation that are improved recognize very few tremendous to and go. for deliver happy disciplined patients, our is still shareholders. really employees a last company our to there real And we what delivering quarters the we've long achieved, while can

progress not said line, a update change will continuing and that that progress. look are we do have of we in to straight company. We a lot within our to be the But forward you on managing

He in has this role Dentsply over past commitment months. call has for Nick certainly the the with Nick his pleasure earnings making he to a peers. working company been unmatched better to role. a mentioned, marks when and than his since Sirona the key It As played today final business, real his Alexos. team XX Due took

grateful are wish him endeavors. and work well for his future We on his

it for with that, questions. And I'll open up

first [Operator line the Evercore. will Thank you. come Elizabeth instructions] Our Anderson of question from with

Your line open. now is

Elizabeth Anderson

Thanks. to in the about talking the get excellent channel. little quarter? an It Good guys. you in of helpful consumables be color what morning, the behind bit were channel a would was It

Donald Casey

us Sure. today. the Thanks Thanks joining question. Elizabeth. for for Thanks

and You a specifically know, why walk on through of thinking know, quick don't back inflows then step with and kind consumables I channel outflows. just the deals our take you and

kind we back and second we're of where you the in we and you a Obviously, first look saw, step when at questions. the ask quarter, consumables. not happy with quarter, couple yourself comfortable numbers are And

the talking the I think fundamental mean And, is dentist and looking basis? fundamentally there and market the a to see a global know, we patient first do changed lot a in we is, retail has we been on at don't you shift of count, feel marketplace. trends

consumables if first XX categories not our or did whole resto months, our two innovation. is And, preventive lot think the have without a innovation. things. showed record our in when analysis segment, you're look us you particularly really track But business I at innovation mean endo the last and the over big of business we I like

see the excitement; the don't opportunities see grow. to force You sales you don't

of was mentioned, the steady. thing saw a second The that are we amount as think Nick we quarter lot pretty to is movement, movement, there But is consumables quarter. fair a of

resulted QX. QX that very things worked to back saw we in [indiscernible] go we reliable XXXX, to in the how in QX, saw things our we QX, and off time you If had then a questioning a where ship like you patterns. program the of were so dealer that aggressive shipping were going inventory order kind and difficult of be shipment, things And saw different we into in partners you

to starting seeing much we great at how our ago, I dollars. we our now activity. we lab business, approach promotional we're a about, what very to take some saw looking disciplined deal year is mean, not a we're talk aggressive And not a a business, more believe anniversaried literally we because that are

sustainable focus to going progress are And on to that wholesale. for deliver on things focus versus retail really we that, want

So, reps dealer at our really say, how we're with level? do we to your partners focus to the dentist working incentivize

force We level wholesale we those really on our do to our programs level. talked the talked all focus -- marketing the retail we sales and reorient about versus how to

flattening of what the quarter-to-quarter. two believe into year, there's little of And as half going occur. we we get is, things And a when be bit will that, do the to you ultimately back

will of wholesale normalized pattern. we First, the retail kind have

TruNatomy digital we that very shot short business, venture one, products. lab that our terrific backhand about excited we in we've think And have our us, give we're of we come whether more will new I beyond. mean, got lineup a business out think it's have real importantly which anatomy to in business for a a

we the a innovate so, to disciplined year. how we back we'll importantly, promote, really get how four beyond, at we normal And about XXXX businesses of more more look And level. the that approach as that in much through consumer and look particular the we we and return focused get innovation and we the drive growth to we believe half and across as more think segment, opportunities, really excited a

you're going shipments. slight what our we a in really believe result working we retail a seeing in a equalize is hand are promotional yeah, shift So hand, what to philosophy in bit we of is and wholesale that with right dealers as our our now that's look to shipments little flattening our

Elizabeth Anderson

had is on about as think very throughout would you the as we nice think about line, that's obviously should that that uptake then the aware of year we call particularly out you in Perfect, pacing be there think helpful. gross And line the the you rest of? we margin a anything year-over-year,

Nick Alexos

our Nothing the that to on you're of It's speaking. expect versus going through seeing stable, relatively we the gross level Nick particular, rest QX margins be year. the

Elizabeth Anderson

very you much. Thank Perfect. Okay.

Operator

Thank with you. Kreger And John from our next question will William come Blair.

is line Your now open.

John Kreger

It much. very your sounds little doing a businesses dental thanks better. Hi, bit implant like

X%. trended fact about what's you last has over in said And think that Can Is talk the you it how in driving it? I year? better?

Donald Casey

Gene before they John, real business implant a four the couple to perspective, shift brought in Hey, from as operate of veterans, group really his our and and question. our we for we're pretty own each one strategy. we significant on a very strong Implants, made name of implant things were is starting business. a thanks a Yeah. kind our have significant pursuing We Dorff brands, leadership their

we beginning starting those to need in promote to feel and a out importantly, of at look an marketplace at from focused perspective, we're really basically, look and brands. efficiencies, manufacturing we the more how that in by go the We innovation more taking So, consolidate get traction terms mapping to where beginning to brands that and of approach each R&D

to we category think is that to and you want business, for growing, has at levels. get a year which that next the past and really is path that clear quarters. two I that, the business positive we We what business, we can do least couple tell or over have to want get we how positive been the

opportunity the And out. a us the to we and blocking tackling team, start that portfolio believe taken gaining we brands, to that to decline we're that put opportunity an R&D feel as something and potentially consecutive that approach that aspiration category quarters we go positive starting point, together to seen still done. an expand to growth, some to achieve credit several more we gives have disciplined at the where we've year-on-year the But, that to growth, share starting what see really they've to least we're is

John Kreger

quick GP Great, how one Are doing the Or oriented there? of -- are your doing seeing follow-up, they similar you these thank trends -- how more And then are specialty kind are businesses better is you. your versus other? than one businesses?

Donald Casey

excited most Well, traction, in where at obviously growth program of good thing have is time gain we're U.S. where opportunity getting a -- that we a overseas we look, starting about spent ortho we're we're SureSmile business, -- an we've lot our principally a our a the point to opportunity, -- from expand very that John feel today. what's to

about So, see we're good starting traction to that. there. We're excited

kind serve. of When hold business, our endo we're and

of fourth conversation community, specialist community what less having the preserving with of very good things really very TruNatomy, does. the where excited a you're to I about is think in the our procedure the mind quarter endo that's invasive your have an us role is a about one anatomy important to that really opportunity we're which the

process implants businesses new that, do us, believe opportunity a us of shine so, really we with really clinical ortho bit a that's moving gives we what the and we way. really that's, educations So, that products it an of to feel really, and and to well, important in kind right and especially thought different little as

faster we fourth very, think focused hold and moving we in quarter which product but our we're on serve, We is than endo very is new the that mind, today. once some -- that it in momentum, coming getting business is get

Nick Alexos

some are implants just of both they this, John, know T&E ortho digital and to may just segment clarify, a technologies. you as And our relate but to

as are mentioned consumable The the Don others segment.

John Kreger

Nick. thanks, Thank Great, you.

Operator

our And next with Peterson come you. will Thank from question Tycho Morgan. JP

Your line is open.

Tycho Peterson

minute think consumables but the Hey, Don. you trading out go market your some good versus out want a call recovery we ending laid innovation, know know, you for strategy highlighted as to appreciate about maybe shifting the what I program of TruNatomy the back go you of you to these I coming you how provided on is before dependent morning. to SureFil, things and IDM? much

Donald Casey

wholesale story. of it that think this Look, alignment half back in that becomes, finished and I year. innovation that's opinion, the really retail is of in And my the an after

field, leadership I'm U.S. spent And the and been that first and we I on a ramping couple event. optimistic will our quarters programs reps to tell this time team in direction. deal which get marketing right the that program, the kind amount year our fair revamped to having in good effectiveness really tend our we're- think the a I reps feel of retail of also you - has of excited, step of three excited, really that's months, the focus up terrific in we've we're think be I that's I the going last

Tycho Peterson

XX%. year, going exit maybe this Obviously, year on guidance then And XX% to for next at as for margins, Nick Okay. is one you're well.

that we to could So, additional about think something reinvestment we happen there next there about there that dynamic is how do a is cycle is recovery? have year, think margin

Nick Alexos

year get will we a of the say to Yes, of range do XX%. this or our we I into XX% the previous strategic end of investments right through some savings we been Obviously, realization guidance, earlier. the to year. XX% XX% to given the guidance would cost Tycho, XX% to that versus us say expect make We that is be quarter, would target a exit now, good revised didn't had of

the end no And on clearly, And our have through building feel better there view given year-to-date year, we next guidance for we the our feel year, for year clearly XX where we cost XXXX. savings we targeted next the change that are, with is get very rest year. good to of into to momentum

Tycho Peterson

for maybe Okay, and Don. one then last one

Just but SureSmile? has curious know what I field? it's tracks the just on can comment like been in you early days,

Donald Casey

that Yes, launched. say in our us, for get And been first were we're up know, we're I that's of little trial you system able they getting think to some ortho we I different we're want GP to at the software an want getting competitors, what some the finding is level, obviously and that [ph] whether a understand of know, crown event we're pretty is the the actually bit would they than to you understand excited and important that.

getting trial So, getting we're know, traction specific a set necessarily where the they're with we're good there, system. GPs, you with not

many do more you there. you on know, it's is how a they we offer know, As, want bit they running GPs to getting clear programs of in can stay with little multiples traction their So, do liner where be the ortho, kind so set, focused office? one we're not

focus now. probably We're now. opportunity. you seeing Tycho, we're tend to the North to right that looking right know, expanding the SureSmile, North beyond American area American we You know, And be as also forward

know and started not future. going approvals in Europe, that and optimistic into So, start the to you too we're distant in seeing Asia that we're

Tycho Peterson

you. Thank

Operator

Thank Johnson our from Baird. will come with question And you. next Jeff

Your line is now open.

Jeff Johnson

a morning Primescan start Good I'll was question. guys. thanks. Yes, maybe Don

big base in installed kind think U.S. globally. about users talk Just both obviously to of a when you very availability be program able service, you can and and might product you have the upgrade of

Does later that year. year? nice be could go that catalyst into for So this a next

or shifting DI the And conversation? versus the Primescan direct to maybe regard all is Sure How at relative system with sales going DI are sales? Thanks. full

Donald Casey

for us now, team, be to with to the quarter take Look, stuff Right get to our and, to fully for very some Jeff. happy we're in again far meet able to able demand Primescan demand going it's they're QX. out so thanks, fourth Yeah, to Primescan. credit manufacturing

is to we're manufacture has demand Q! exceeded exceeded all as this again, the to be can't been demand the to we good, stuff demand expect demand. an -- exact, and manufacture fall, get you into we exactly But able has I is service our But ability our give to where ability that so on going out

look, at year. point demand consider aware really in that, October know trying not manufacturing is DSO, to but what an we and offers to manufacturing we program, we We're to to that base, I we something an that you're is, we head know is do understand going think open as come upgrade it. by really a so, want ended we exactly ultimately, that And we've and we we're we a the from been to out where way whether on is are there's understand an has program about before that really program. this upgrade got large until which really have Based into this installed of base this, what excited reluctant upgrade go perspective, and get our an base be

has now, been you, and surprised we the also perspective full bit systems, the right of been of the said, performance that DI very I’ll force an is sales outside I tell But the full focus space. have being gratified selling little you a thing systems. are has we would tell of out That from selling us that being

was DI [indiscernible] we of had lot haven’t experience When product, been a there space, the really we've launched seen we driving of there. side, good and results the we've

Jeff Johnson

luck. Okay, off, Nick, best enjoyed I've then you. working with that's And you I meant helpful. to you. of Thank wishing just lead

maybe some here. So the side. consumable go near issues, and or where wholesale term the maybe discussion in on Don, of your a heard, question Don, as I consumables for kind of of the you

One on margin this couple look consumables a some segments And, like revenue kind that a quarters hear at for to out things. it's address competitors. seems We're on thing of I closest really you points probably your bundling rearrange now some of hear starting and of competitors good more ago XX just is of didn't some pricing of the like you the and XX% products. than higher like operating have that guys

bundle So, feel do about do that? just or and stay seeing things have can of going we're think business, the pressures on you other initiatives that feeling side bigger to of the the Thanks. are you like positive consumable some how from other DSOs given forward, pricing groups any kind like of you you buying

Donald Casey

been thanks, feel good price be I horse to But been here. believe, Yeah, price, to pretty consumable QX, to innovation. and we've up got I about hold mean the -- we've Jeff. don't we to in as beat a able we dead We've about we segment, move

digital And it's one to out data, going your innovation, lab venture things with the about a about shorter to to look really mind designed innovation this when center, in that pushing all our price. and one, space, talk the about talk we're and bill, digital talk we represent get of we we significant program we're

DI with of this really of terms is better solutions have protecting the do point to using I think we equipment, whether that's, use whether the really outcomes. and consumable working our in the the mind, in procedure and faster to digital way program So, bundling dentist I big that's opportunity CBCT complete outcomes and ship provide and don't as facilitate, at procedure the as forward, moves a my bundling, business. defensively

better. way really the And that's products specialty products how working get we our that program we We consumable believe the that if in diagnostic or a win. we either dentist it practice helps can better, think with

product situation as become whether feature don't solution bundling than view the company. company much -- practical benefits, of to a a company procedure’s individual as as, the that's put consumable more reason and is So, an that I together we much

look an offense, about will to in mind, and helping and there's things then it's defense more but about my less it's better much procedures. opportunity them do So, appropriate, when we bundle

Operator

of next Jon our Stifel. question And will you. come from line Thank the with Block

open. now is line Your

Jon Block

also quarter. IDS you sort that last you Great. had some versus buying out Thanks, some shopping sales, and it, solid European Don, but guys. comments you of called of had

your So on that saw, follow about Dentsply a thoughts Sirona have I've believe talk was broad quarter the and do you maybe a you that if IDS it results? it does tail follow was then got third based, And can more the into through specific, Primescan up.

Donald Casey

Germany, to we much Austria, solid Switzerland. dark our with see to follow-on what we'll hard event we going particularly very is a global figure IDS the which we region where take dentists to and Okay, out interesting good, measure purchases. seeing how trying positive IDS is is because and event, in Jon, from purchasing what to good become see did beyond And It's to is results. first, talked were and XXX,XXX on a DAC obviously. the we're T&E was region, we go going and

So, think that IDS, I come IDS shop to things the doc, dentist two to learned at world buy. we is comes that this the

And prime it's all impact us been were offset and gotten out kind Primescan, recently. has that interesting it when the we also We've they the Primescan. particularly problem approved all very is about positive, Primescan Primescan, Now, have excited in Japan the of approved. have Asia, for just of we saw they but an didn't with that's

world And so, if then we result, been you've T&E less a the IDS. rest in as might a shopping and have, of we saw they hadn't seen

Primescan attended that and from use the all the So, very shopping I had come word omni we different we and the to and a when may to view go thought out. Primescan saw feedback as And we they we great is going Japan to back we great positive wasn't we much But we going dentists as and sell want IDS didn't traffic, result, as had Primescan results, were the event. of to, is have purchase there. anticipation because

good us I Europe. it's a very think for in again, Central So event that IDS show

of we able expose terms forecast we a But preemptively. like were how them be SureFil, TruNatomy to thoughtful have to We stuff IDS to just that about able just had to were now. business we we great expose dentists from two think we're -- to in years we look,

-- my So, of a kind in global was mind, like launch. it

of time those going lot a when region, more be sales perspective, global to approvals tied specifically IDS saves is a show by of that launch up, a function from event. us when the then to And are

Jon Block

helpful. Very more And it. second Got a clarification. of question, the

quarter. XQ consumables, 'XX, initial gave be And that the for seeing guys. you sort plus the But months a third is Nick, I or return think than better in the consumables you're you So, to to ago? there Thanks, headwind FX growth out, be X of cumulative relative XQ. then will collective just clear, in to guidance called expect you

Nick Alexos

about million. bit guidance them $XXX a the what it's Yes, and I gave it's there year-over-year, call we more FX is just a last little than click the FX on

the I year-over-year the continued and Sterling, million in on more UK given that of dollar, $XX versus might of U.S. million $XX headwind. the think the some strength weakness literally $XXX million be day-to-day or

next comment think into get on general building the and the to year. I I the we positive number, consumables certainly expect strengthening year, is, of momentum back end a into the

Jon Block

guys. Thanks,

Operator

Steven Barclays. will next And from you. with Valiquette come line Thank the our question

Your open. line now is

Steven Valiquette

forward Nick morning, wish luck the of career. best let me and Good Don, Nick in his moving also

Nick Alexos

Thanks.

Steven Valiquette

This few My diminished remarks on for mentioned supply things your the the any sales planned notion Primescan it in in tying here the notion But have of around Primescan which a impact a mid-XXXX, in high-class didn't the basis. to together. the Omnicam. demand problem and outstripping really that question you had, in border is seem net results of stronger just demand is negative the XQ whole

the just last I America? Thinking seeing about we in is demand maybe the regionally. there and Thanks. delta regions, Maybe Primescan, about that kind meet the maybe is just you're question the -- Are demand? a guess supply other in talk had Primescan? question. of a on for the between we North regionally able tying into to this demand more of delta to But

Donald Casey

a Europe. we've now, where demand. playing done Look, right to and meeting that demand good Steve. on job up Thanks, is in catch principal America the feel We area, North -- trying we're we're supply pretty

right the we We now, based have issue. decide once we have approval, U.S. when going recently approvals to principal but disparity in launch, Asia it's been a got And we're it's Pacific. to

orders I orders are progress. placing and - making are and it's the getting aren't that months, we're able mean, people we're customers to between when waiting and time not serviced And deliver shorter shorter. those order to getting who is actually

haven't be it and beat an wouldn't for the somebody we takes drums, careful months. of because force to go sales be to want out order -- we the But yet we in really let's that and terms deliver three turned lose really able to

basis, day So, what still to by able but it's again, can't quarter it. is anticipate, good we for feel And should or -- we give getting but global be the future. that we I day at demand still we're the it's meet a the you in week, on a fourth better little, exact

Steven Valiquette

both a perspective, seeing theoretical may perhaps Is far orthodontic patient that an we're just be the and throw which software it and think as software on softer clear Okay, liners, that question, to there you that's industry. base theory. consumer that quick leading phenomenon the it industry visits just in then overall, maybe incredibly GP you consumables, is curious do the across are just out a just and high-volume in playing directed, gains [indiscernible]. that's role or and any off from I am seeing,

your get Thanks, thoughts around Just that.

Donald Casey

That’s mean, I, obviously, were we pretty patterns the interesting business state closely. not they're in think we Look, I not but really Steve. question, robust, are the underlying decline. the watching consumable of retail

in the the months, resto So, over But, two it's something principal consumable, and preventive what it's not be four five, feel we think it’s last months, two, way, line X.X. the it of we to a we and zero on straight to to draw the were that to tend one could been again, that last areas maybe it. kind by retail, we impacts demands a if to pretty steady, think XX quarters, not, it's XX

could people But, around really more functional looked that be on not going whether money static line a change. dentistry, on a that's of and thinking whether that's Kind be that clear put ironic, factor, at. to it's a function to spending their of

Steven Valiquette

color. Got, language I But appreciate of out a lot the theoretical thrown there. Thanks.

Operator

Thank you.

America, line with Bank next Our of will Michael Merrill Lynch. from Cherney question of come

line is now open. Your

Michael Cherney

companies wholesale any about Thanks with other Is are milepost, retail that and nature, you're over this and dynamics temporary past, transition gone what associated there as that on thinking confident about so it, to think in more may looking that time? much, versus cost side that feel pass back in certain side. transition consumable forward you the through have just the circling the with the and is will

Donald Casey

for for cost for like the buck the that, and question. a we're just now, a think to Thanks, Michael, with basis, we'd bang From to programs. there's the associated cost the going marketing more not get that

So, I there don't cost. see being a

to we growing we we key holding that's is want our And like share, that. a think then lot and retail at. the looking think should we're wholesale milepost that see look the we And, is milestones really that think X%, we're

Michael Cherney

not planning in have just any really the is to potential now? more desire interest go or And right that's, direct, something that

Donald Casey

job the XX a we with it's There feel for consumable consumable to side, I look But advantage continuing in through go dealer dentist with working we and to think likes we the is listed them. had now forward interesting think of do a dealers, ability terms to dentist a to great sit they we talk to and good us. our pretty products. the dealer, right on an access

Michael Cherney

And discussed. then dynamic just this the quarters impacted one more quick you've know consumable one, I in

how could is all to put relative you for that component, also as comp in about consumables be mentioned do were the trending play? the if comp’s think I going to adjusted normalize forward. some as think are this, there factors you you And you dynamics, feel that

Nick Alexos

below particularly we talked overall; we that we're we're trending I that think back and into us things promotions putting in market shift think the products and where we will But the I should the kind would and of positive that new the the where be. place, about, say going to XXXX. of get is level some

Michael Cherney

so good Okay. and for much Nick. Thanks, color the luck,

Nick Alexos

you. Thank

Donald Casey

Thanks, Michael.

Operator

Thank come line Erin Suisse. you. of question And will Wright from with our Credit next the

line Your is now open.

Erin Wright

thanks. Great,

excluding consumer some external some those new several help curious side just the actually some and did mentioned the innovation and of You Is on dynamics. dealer factors. story of of times channel those underlying product some launches of trend, excluding I'm the kind

percentage consumables How a how should thinking and more two product Thanks. basis? broadly, just think annual the about be on about consumables should And enough some annual couldn't we or we launches of these point from new add guess, to an to I longer-term that? contribution be growth

Donald Casey

consumable products to Thanks have be I tend been. question Look, think to more Erin. the back half the much

in event went Europe out So American comps and quarter, late TruNatomy I, limited were the QX of third it with we of fourth broad in to dentures the a was digital more in in really terms -- what North in quarter. the shorter really how space, rolls kind mid we

be think we year. So, big the was of underlying a an much don't I basis, half as in bigger QX the think go it to we contributor I a on -- it'll contributor back forward

believe you point that, gainer, should as will in able we I to products be the business. a that potentially higher be our consumables tell new or

our innovative So, if I overtime think really we you to I that think and we products adding at formula business, the be margin can consumable ought base accretive. that mean, is look growth be

going should given an think think plus, we that and you way us have there. for guys we X% outlook the patients we're get in the we to overtime that and, be that So,

think So have to are factor measure you in to to year-on-year. the have going yes, do do new we I what -- products yet think

is And, new look, product not on there. there you if a look XXXX, going versus XXXX, lot at

a is like If more consumable technology you XXXX be the a on it's look like consumables positive of XXXX, a and going side, bolus, build. launch to not are versus where -- it's this big

good to we're So, talk something it think about, those we us to they're force, it'll product. excite products anxious to sales really gives dentist out, get because

at we really feel -- contributors. that look as we those be we will XXXX, So,

Erin Wright

most to GP testify? there, you just term. And great. meaningful how opportunity then or for there's strategies wake still near whether what the also think then meaningful and up you combination or think will is you ortho when early focused a that different over And know the on do and guess SureSmile, approaches those from more aligners, Thanks. do it's you? consumer out or clear financial direct And to perspective? for I opportunities longer be I focused Okay, it's varying there. did

Donald Casey

a of quarter-on-quarter-on-quarter. have. think mean, one we I the opportunities factor bigger we SureSmile think become growth Sure, will that's we bigger

kind a larger there's that's remember, significantly ortho of there, base business a SureSmile. Now than

business doing. So, offset what was dose sometimes what be SureSmile base might ortho the by

will actually and three running. are, how at the to getting now I you In really on where tell we SureSmile, that focus is opportunities up of and we're we're trying looking right base terms ex-U.S.,

push Dentsply advantages out footprint. as well fact is conversation Primescan, based CEREC opportunity sell Sirona, our That's doctors out and gives great we as to as global to customers now at The opportunity a go SureSmile. prospective one a the as Primescan the right an have have of we with us a

after last right GP relevant the North on our America, capabilities the issue side, launched that ortho we space. seeing the very optimistic we software. traction the are to product GP particularly the be attributes now in within we're But and going was And, SureSmile more given that's

a The ortho little today. they add space a system. is it's takes a than discussion a about or whether GP bit system have replace system And to that a that want a longer doesn't potential

think it's long-term. GP We was, ex-U.S. But later. quick in see partnering it just us. with it Erin, product think than will So, is I think -- traction with I more Primescan. then sooner we've a optimistic we're And got great

Erin Wright

you. Thank Great. Okay.

Donald Casey

Erin. Thanks

Operator

question line Rich Thank will from come Nathan our Sachs. next Goldman you. of with And

open now is line Your

Nathan Rich

out these with what some disciplined that as can Can activity maybe of would then forward? think going and on for be just Don, more you particular Thanks the entails are in there about And mentioned that quickly promotional we the changes call the the you be quarter? to kind need categories any you the underperformance consumables that talk in drove questions. go of forward. about how implemented

Donald Casey

kind teeth, a it. [indiscernible] Yes, lot in there lab the bounce, at But business basis, business goes of in QX, equipment some and of that a it's both it's underperformer there. kind business hinted without U.S. a of we our but and is was our an heck of

comp prior that QX based And anniversaried. was a significant that not been we some we're the led done tough in year that programs orders and some in that to on had up against were

approach, of in out some some that QX, the going a And we this it's of then we half couple saw to take the in that QX, of come in quarters. think QX, we again, in terms in year. some saw we and disciplined back And of

How program more incent that a be oriented. And, focusing with do dentist, where impact launching, there and, of be to we're dealers, on it programs new maybe we're little you really a do get rep? we're the what how get products that means spending that corporate it about incent really excited you working dealer some our the wholesale bit versus our and like, just is might we'll reps make it's on the sure let's

Nathan Rich

Okay, and the half terms and just your of what know, for to the year, are, three just as over quarters. XQ magnitude just the between expectations of next expectations the improvement, back think, year clarify, XQ, your in of we you

Nick Alexos

to thought my try section. Yes, and I that spell out in we

the [ph] much big this the be QX TS -- and we're than think it's products a QX QX to holding QX, that more look at event, QX is year would we biggest a event was of to tell we the them, it's new face last big issue year. if I a look, be kind going QX going think event. margins, we're at And So, and you, to you than is QX look we

prepared how the that's you well waited know, And kind of we So, of then remarks out. the as pulse as other stuff.

obviously You know, feel bigger we QX. that QX is than

Nathan Rich

just markets about talk as Asia Can you process in pack, getting of capacity your Appreciate on getting demand for think thinking of these you we If how that. follow me size versus I of some of expansion okay. thought know, the place. program quick should know, So, about into kind as And kind be the of this is upgrade up the at one priorities you How up and just we Primescan? an about, managing kind there? geographic ramps point? you are could backlog in

Donald Casey

we're it Yes. is just to how demand And think basically, that now the meeting meet demand. is you it's way fast about right

going a that, while have us there's take like, saying You we're there. it's okay, dentist a know, Primescan, little you a get you to can't just know, not it's to

North a with here. base that interested significant product. we installed then the been we've prioritizing, opportunity I the America mean now right large line And has priority, in got very we're I mean, have a is

to that believe an still dentistry is XX% is we continue We pushing. really U.S. can that XX%, the area

and to really make other move U.S. will that taken that will the is regions. sure So care of,

story But focused America of who it's there. a now. really KOLs, North let's going let's on know, important But you the into to right people know, they are get were Japan, you creating also get some into to

answering an asked is we program? you this we the upgrade as look get a as the you time, on upgrade And, an what are question going want that. an the pretty just, and That's get manufacturing you think upgrade really demand manage not from know, it. been capabilities the do It's at to really going backlog. then, it, to we're we've we and program, base where when versus consistent question all understand are Say with how we we program. And we are what guys comfortable is gigantic to get until

Nathan Rich

question. the for Thanks Great.

Operator

Couillard, Brandon Thank come will our Jefferies. question you. And next by

Your now line is open.

Brandon Couillard

Thanks. Good morning.

you emerging to contributor was market backdrop Now feeling in then on whether positive is portfolio growth pricing touched continued you're the the just quarter about how that a overall? and the the just and for

Donald Casey

was Imaging positive.

Right approved now, the and were we the event. at segment. businesses, compression the that If seen the think U.S., everything last we've you talked products get over imaging the T&E in look positive anxious price We're a of we months. XX-XX of the QX, some quarter across to we about as fourth a IDS in lot

that into or forecast and guidance. we budget Now built our our

not significant we're [ph]. then seeing innovate So, expectations what and changes are, versus

Brandon Couillard

A follow-up for Nick.

be year? for for figure then have still up year-over-year an expect 'XX. flow operating to cash D on updated And You us the in CapEx

Nick Alexos

we cash Yeah, to street, got the our onetime $XXX get we cash the and year, CapEx go And will to Imagine expect Brendan good purely be XXX million us told year. in that out guidance flow that flow, a very XXX. to we cash terms tightly. be then of will this as about our restructuring for out

will that second the be half. The majority in

to will as operating operating well. flow But good working in that on of our from So terms an is be one charges. time working the standpoint, And year-over-year. we're going income clearly cash capital be

Brandon Couillard

you. Thank

Operator

Thank you.

come will line [ph]. of from question next Our Steve the Busha

now is line Your open.

Unidentified Analyst

Certainly, the you, for last there. all Nick, Thank couple all of over years. the your wish help you best

Nick Alexos

it. Appreciate Steve. Thanks

Unidentified Analyst

that had Don. couple Nick. questions, one one But for quick just And if Don, as far I are a for As wonder I

Nick Alexos

we're up. early breaking third and you're say, Steve, word getting every horror XXs Like movie? Hey

Unidentified Analyst

on we'll trying But better here try the again. -- Well, of I'm to those. do fan a

things. half, you first guess for hoping the in apply it assumption on any do of market was is, you think the Don, could couple I a there your for changes back I end outlook. So, One in terms are

that few and spiked one of Europe hasn't You're out Germany.

had in a anything good quarter you clearly really see You Europe, there.

on update us force was sales just give you're an I seeing efficiency Second, progress. hoping you could how

the You've made changes some how to sales force significant operates.

on perspective how changes those be are to So, just some going really helpful.

But guidance very you, just outlook Nick. clear on quick you one tax some could The the one as would Thank roll you you. how up that rate. then And the to wonder out commentary went if I future in give medium-term things happened. for perspective some years and why for be speak great.

Donald Casey

opine, good Thanks, to look been underlying Sure. in always happy has as Europe, particularly actually, we our that But I'm okay. attest. my management Steve. end you we feel pretty would team demand market,

was to was a And little happen in couple People that QX, didn't. The going of some QX was going which had ripple challenge around. shifting for things a it on. inventory us, saw anticipating there were that a that a is bit on Brexit. spike when We ordering

Europe, QX. and retail the our world feel a the that the kind we world, and rest care in aligning good of lab of And just for to was wholesale demand sure again, that in we're underlying shipments we But back pretty Europe, half of year. We got in us and feel mind drag solid. of make around of in the the itself takes rest

couple a SAP, On SAP. on things

are we operating U.S. First, the in

out The over places talked about SAP we regions Germany, bit China, other course Japan, We the haven't and SAP will a next rule the ruled before. we've -- to little XX and this we of other months.

we've segmentation believe are a to been or going pretty First, we train we be did and trying be just conversation move products, even all had And able you everyone priority well. We've represent have what higher is do into one of sales the we're of to fluent. on focusing real going doctors. things to though these to them. force selling to That's sales may we about a be force,

they're are lines months KPIs. it experience to a you takes see non-financial Look, reliably for what things seeing so want on starting progress to trend My SAP with big in comfortable is we're see, making people territories doing who the of while. we reps with we're metrics. We're pretty to to six programs. What really measuring the

comfortable KPI you a guys quarter against in of out in, are to will you, some underlying or an report some from where the on financially. in for put you bones for position get I with perspective, And think two visibility some be we're to on meat do know, pretty a terms we better really that.

Nick Alexos

works the Europe, obviously, us, taxes our on a percentage income is we out we high the Central the XXXX as Steve, tax of for reform the expect year of earnings I them. reflects given against us current a coming think have balance target

and And points XX basis future. that. into tax reform certainly I'm one around the But is going that's good minus a the the not We'll benchmark, or they next probably can pretty evolving, plus predict take world question, please?

Operator

Thank you.

with Caliendo next Kevin Our from question will UBS. come

now is line Your open.

Kevin Caliendo

for Hi, guys, my questions. thanks taking

it consumables this retail percentage do shift to once over? versus currently So wholesale. you just And be what of understand is your what me expect told is

Nick Alexos

either Yes, in Kevin, way. what's end is the all market. it's that at Look,

are our versus So, buying dealers? know, through all who just, are one what retail, of one know, do dealers you, how you So, of the it cells it's, it's identifying. you

Kevin Caliendo

So, magnitude we of of shift to of what dealers what maybe like? of products are is go going talking in is percentage you dentist? directed the that What think shift -- out consumable are and your terms the the about of

Nick Alexos

and retail in terms to efforts, Yes. opposed Kevin of the this promotions. directly towards be to demand, we've was promotional we driving going reduced our on with targeted wholesalers working as more commented dialogue, just are directly into

redirecting effort. marketing just really it's So,

Donald Casey

trying at when growing We one want is X, wholesale It's the go next through X X%. retail to of stuff Yes. And, align, and grow We direct. see at relatively you quarter that, is underlying we're we're in think dentist, I not going to we'll all grow demand of know, see you to X%. if down our want dealers, just mean, retail what to wholesale basically, don't stable. the quarter

Kevin Caliendo

now is just It's such a Or question that of a there's question of of scatter it is Okay, question timing? it's timing just this interesting there and now, inventories? I just if understand of is that, a shot of...

Donald Casey

we're small about base talking Yes, thing, mindful, couple the say points would on be percentage to have business. our and down of of one you I up and

for lot So, in dollars really more a of each of products. each It's realignment of you of know, the it's have direct not markets a the market just to our stimulated. wanting

look it... a at it's So,

we between And when now. they purchase and wants selling in it, dentist And they there's want able now, of right of deliver to be being right can. difference as little to bit quickly when product. -- the what it a a as just measured and a we're it terms we're We reliably get

working know, have And what like and and But look, I would through But that's ex-U.S., right you to now. Primescan, more saw would we're and that's XX% I what we're you right working we improved the particularly know, through love now. every day.

Kevin Caliendo

install understand is I the enormous. base

to of line doing Invisalign, basically marketed able that. DSOs large penetrate, strategy contemplated, to contemplated what some available sort the they that offer doing but have Primescan For to big and you've went a were and that chunks now where to is Obviously, be iTero you have you? a to did to get and directly able with share liner of you

Donald Casey

DSOs know, we're some is I can of answer of this with know, I terms the all one and And to get important, you is mean, Primescan not look, the that and representing DSOs success together relationship and you is, us. available some first put really our program with we've the contemplating it. you good at absolutely with had It's mean, yes. time, do it's of the a you the doing have questions in we asked we're

Kevin Caliendo

be the like matters GP that the, would or what it itself meaning drive do would scanner What liner Would drive think for or it sale? you the the be more?

Nick Alexos

limit years question. Kevin, one we're about to have the to eight we're going past hour, to

Kevin Caliendo

Sure.

Nick Alexos

We'll get by offline

Donald Casey

through and can We'll we those of give run stuffs. you a call, some

Kevin Caliendo

the Appreciate worries. no guys. time. Thanks Okay,

Donald Casey

No problem.

Operator

session for gentlemen, Thank Ladies question-and-answer you. concludes and this our today.

So, Sweeney, now, conference back I’ll remarks. John to closing hand for comments over any or the Mr.

Donald Casey

really out close behalf these got thank Sirona, want and is but I and the all Nick my and, he I has he’s an know face the on to to in -- for prepared that are, wanted thank of John of did all and partner Nick, he Yeah, work here, absolute with all call, to in good guys this Dentsply last Nick's work remarks, and game right has I you were been you. on call, unbelievably do and spread mentioned a papers calls before you middle got

Nick Alexos

look move good our Have call. Thanks, to Don. as earnings through the joining quarterly Thanks and a everybody and we you next quarter us, for day. we forward updating

Operator

we This your Everybody thank conference. day. participation on conclude all program does gentlemen, Ladies and a may today’s our and you for wonderful disconnect. have

DENTSPLY SIRONA (XRAY) 2 Aug 192019 Q2 Earnings call transcript