XRAY - Earnings call transcript Q1 2021

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Operator

Good day and thank you for standing by. Welcome to the First Quarter 2021 Earnings Conference Call for Dentsply Sirona. [Operator Instructions] I would now like to hand the conference over to your speaker today, Kari Dixon. Thank you. Please go ahead.

Kari Dixon

good and Tamia you, morning everyone. Thank our to first quarter call. conference earnings XXXX Welcome to an are you release would remind I like that website www.dentsplysirona.com. presentation to our and related earnings the at call available at slide press call

moment Before read statements release. the press to we earnings take our forward-looking please begin, a in

future performance subject certain certain We results. base risks statements and we During that our financial today’s make call, are current and reflect and events expectations and uncertainties. on assumptions statements to predictive views that about future these

most important information financial recent independently now our on based with our our used cause allow provide measures Executive items the financial and to I of Form like the Our call, between about XX-K lists results useful of our non-GAAP performance be from risk actual the non-GAAP reconciliation investors release periods of with some performance business, may financial differ for predictions. in management call between most to by to to where respect Officer. conference Please over our operating will our press enable to and could with results. In vary results. today’s factors We comparison financial that, supplemental certain the that remarks that results Casey, of And refer business would non-GAAP business. transparency turn key GAAP Don greater for metrics Chief believe

Don Casey

joining of for and all and us morning. you, Thank all thank you you safe I this Kari well. hope are

safe shown we commitment in pandemic patients improved. strength and proud our now a to team the key the initiatives. this and all customers be real kept We Their remarkable. for delivered patient has how have operating. globe. have our today’s a and workplaces on will are our underlying things. thank progress very recovery, is market performance privilege continued gradual Sirona They I employees and and support the recovery. They company with highlighting to quarter. on kept three continues Dental Dentists It want organization. been to a has during this its And our of to have Jorge I and Dentsply as customers have have resilience show focus On are volumes around call, performance of the our their pleased attractiveness. part to making

the The call quarter. our the for with on followed for That a be priorities plans. focus operating first updating by our is revised and will results a we will our XXXX, guidance growth long-term finish

last in non-GAAP for Other flow operations by up Adjusted million. actions call was performance are up operating the prior we EPS quarter, of our reached continued first our an the $X.XXX to disciplined turn the quarter, in XX% positive cash team will we margin in taken over the year. year. To up resulting from versus be basis In XX.X%, organic of an points Revenues adjusted the X, versus Slide XXX with pleased to first performance now to moving expenses, details Jorge. I $X.XX, quarter. billion, of Now provide XX.X% around helped on the $XX generate basis.

Jorge Gomez

Don. Good Thanks, thanks us. for morning, and joining

a financial non-GAAP on will As this my be remarks reminder, results. morning based

internal results, stronger-than-anticipated a reflecting delivered to recovery results first overall dental we In financial start were global & Consumables quarter, owing few These in and with comments. ahead a Equipment. expectations, demand. Let me on the strong Technologies growth our both of

be that we uncertain, to to will adapt on macro well We our but and multiple expect the execution scenarios. environment against positioned ensure our focus ability remain

of point portfolio the our momentum business a provides the We starting executing fiscal confirms in benefit for strength of performance are dental gain QX the our are seeing year. our global solid and customers. markets the and utilizing teams our traction, for well, the

detail. more in QX at look Let’s

mentioned, Don organic last business growth year. the strong XX.X% revenue of delivered versus As

Our reported versus in XX.X% last growth first quarter of XX.X%. posted year. growth the organic Consumables was

is Equipment, X.X% immaterial. & as our $XXX grew of our a Technologies resilient all Equipment profit versus XX.X% driven underlying reinforce necessity PPE with product categories last sales. strong organic year, sales led dentistry These implants. and mix. reminder, Imaging was primarily a Sales growth This As rebounded by across outcome business or trends. quarter. million of favorable Gross in was view the results by

impact. next It shipping items in shipping few and we chain that execution our higher largely supply offset costs, higher saw supply the quarters. chain persist costs for other is While the initiatives inflationary and likely the will

possible. address these continue will as Our challenges effectively as to teams

numbers, Before specific forward. I you underline change will that presentation the a start going to SG&A discussing I like would see

for and As our innovation spend investments we to on we ramp R&D report SG&A. will P&L growth, separately up from continue

You as would continue have will this expect was on through see Spending the R&D in our to we million, quarterly year. see, results, in this face trend made on quarter we the the our $XX to we statements. financial and change of progress X.X% up

As making a spend benefit we strategic the maximize by priorities return on strong more investment. in invest R&D, are of we mechanisms alignment the ensuring have we to the and right significantly the sure with

business We many to are that focused ability has on for innovation drive opportunities a scale growth the meaningful and impact the remain.

operating a QX, our across strong the teams in SG&A enterprise. Regarding discipline demonstrated

by the year. declined On versus in quarter. and Also, benefits ratio last SG&A volume-related SG&A absolute operating XXX approach SG&A the the were The basis leverage, or million year. our sales, of projects. prior restructuring X-year in percent cautious we QX increased from spend productivity reflects reduction our to on basis, investment improvement X.X% first benefits from XX.X% in a $XX As an points versus

of we investments, Going we those which pace will the accelerate discuss will forward, later.

of ramping R&D our to expansion margin to $XXX up basis on represents to long-term in XXX certain categories, and compared sales to marketing measured investments infrastructure are XX.X%. medium- Operating been points we have spending grew our we support It growth over digital While profit last resources, plans. in and XX.X% million. a and year

margin with operating combined growth. mix, As explained investment on leverage gross earlier, spending sales sales from and than rate lower at our a the margin rate increasing profit benefited our

year year. higher of of XX.X%, in by in was and creation debt XX.X% double-digits $XXX to strong. and in Restorative. increased in decrease categories market levels versus performance Moving prior consumables both year. led non-U.S. These world quarter on, and was of the quarter. Europe. versus Non-GAAP recovering tax The first increase strategies was business a Consumables rest compared results U.S. – Consumable pre-tax was quarter well. million, the first Growth and income function were optimizing million, $X net an last The the in in of resilient XX.X% the Sales up the interest other quarter, which non-GAAP The reflecting year the the the grew rate expense was versus reflect versus strongest U.S. the prior mix. and has changes prior progress the $X.XX, been and Sales EPS a XX.X% all the Endo tools. performed demand ongoing grew improving promotional is in also business the

relationships We delivering incentives dentists, with are our clinically strong products relevant for with strengthening them.

demand. and impacted reduction X.X%, a as to We are, meet of seeing anticipated by by discontinued favorably in up ramp X.X% to they of a course, sales also divestitures dealer due orders purchases Currency products. offset rebound

is XX.X% the T&E Equipment sales Moving going year. our well. results, grew The on prior the to segment very versus Technologies imaging of new launch & unit Axeos

difficult in the negatively As CAD/CAM comp expected, was impacted sales strong resulting XXXX. the in by digital QX, from early dentistry

Our Aligners quarter, well Clear the and Byte very the are franchise SureSmile teams trajectory. the in growth overall and about performed excited

X.X% run-rate in sales annual versus acquisitions of strong by Rest can was in Organic was in sales growth Endo estimates offsetting indicate sales quarter the of our reflecting U.S. will region $XXX million, a reduction well On during as sales fourth of growth revenue benefit sales. X.X%, million portfolio year, in Currency X.X% year. sales compared deliver growth the a world of the performance sales Organic sales X.X%, $XXX mostly year. the representing growth X.X% offset growth XX.X% Our recovery by that and due were from was products. to excess to the XX.X% Aligners of Consumables as with $XXX XXXX. first were versus by our discontinued XX, impacted Slide were Clear a organic the favorably demand. million, year. of you see growth $XXX prior divestitures driven Technologies million, last Organic of versus Equipment. XX.X%, by a strong sales last in of European last & decline XX.X% quarter.

cover another of million cash improvement shareholders to cash million, short-term operating year. through In expired like deployed on the acquisition $X first We last of million quarter and I’d this $XXX renewed. $XXX committed total XXXX, and buybacks Datum. returned fund Approximately $XXX versus Next, dividends April to of cash $XX The credit of a to company and first credit was quarter million share $XX flow were of our million a facilities flows. and $XX hand strong million not billion. facilities in of finished with the

strong a Our metrics provide a capital solid and for sheet balanced foundation credit balance allocation.

for continue business. will We in shareholders investing return growth while appropriately to to the cash

expectations XXXX. recovery We me let quarter. on were market our to than a for first see the update Now, in provide an financial pleased faster anticipated

in healthy optimism by cautious with the of volumes These year. demand positive remain time, At certain vaccine for continuing seeing in provide rest we the us positive patient the the the second driven geographies. quarter, conditions with market into procedure confidence We trends and are given rollouts. the momentum same

there Based be our that, the underlying market may growth revising on XXXX. fiscal While we intact. near-term long-term dynamics dental of for volatility, are remain the outlook

expecting an This the to rate an sales equates XX%. to approximately XX% to range. We fiscal $X.X a the organic provided growth range perspective, now range billion equates sales XXXX From in XX%. be to growth sales approximately of to to of rate organic are billion XX% reported $X.X reported

potential non-GAAP compared two costs $X.XX. $X.XX availability approximately full from prior are of to of semiconductors. and year are the $X.XX $X.XX shift range regarding ‘XX investment this of fiscal worth includes spend This to remainder that disruptions into year. EPS new for outlook $X.XX There of highlighting: COVID-XX is shipping to the now of risks the certain outlook QX to and supply outlook Our our

the lessons of increases mindful learned some especially restrictions. are countries this are with experiencing that about virus, considering cases, intervening governments with We in

call a our share like update to back efforts to I would the we Before Don, quick turn around ESG. on

reduce improving with and a Board team employee are improving reducing to Directors, a engagement. In for growth an legal top effort website. and close oral mission are review and with of ensure available that our environmental our flag to access on sustainability health we aligned the ESG our posted on care costs. We Sustainability They am program sheet and facilitate risks, with first-ever our It April, objectives globally. cross-functional of strong chairing continue purpose believe line while scorecard. collaboration section of regulatory to to In I members contribute can can our ESG

We metrics. of as and our I are track excited data. analyzing share to am we with develop ESG you measuring findings additional more our and

almost great I associates turn Finally, globe XX,XXX the the and dedication our Don. now ongoing results. I around for to thank will their With want back that, call to

Don Casey

XXXX now around strategy outlining operating Thanks, perspective to Jorge. and some I beyond, like by would provide priorities. our and

Let’s move XX. Slide to

have superior by delivering Dentsply dental strategy We built outcomes consistent past that over professionals. excellence, years. grow diagnostic priorities Sirona Our and and improve been treatment patients term essential products on believe integrated planning will and that workflows the easy-to-use X for long

and confident organization driving revenue of is delivered. the growth, of done, be scale. work that goals will still a the to simplified that creating be are outlined lot our margins advantage but There’s past a margin priorities we have team in and Our cost-saving takes improving

us, really growth. now For accelerating focus to turns the

enhance Dentsply XD More are recognizing These combined practices XD as scanners their been essential digital where Dentists an willingness and an in has areas devices, utility office training capabilities. digital implants. part by the the aesthetic or workflow. invest their enabled Dentsply complex have a improving increasingly the involve digital strategy to of of growth a for increased that there. offer sophisticated areas refined by has for is both the of complex essential increasingly diagnostic more been DSOs aligners, uniquely There patients. planning, more leader. practice. by participating dentistry, suited growth these procedures. is economics easy-to-use Our this when and imaging evolution Sirona This areas clear their in implants of thrive things Products the with like to market, better higher-growth these and better dental in areas Sirona higher-growth to to driving look to dentists become of good aligners market. leads and been lets practices treatment This like equipment also their restorations the clear incorporating patient continued of and strong to in highlighted reflect is specific segments and space. Many efficiency the like to

digital SureSmile, make Sirona essential has consumable base suite planning that we digital deliver can and real And well-recognized company ecosystem. our products, tools and like digital of CEREC. form with installed We Imaging essential workflow many critical largest products treatment these a very procedures. other impression we our all Dentsply portfolio with and with Atlantis, treatment the of that dental, treatment large strategy expertise solutions that of our of major customers. SIMPLANT optimistic in management center Sidexis, business, are a bases digital both The full The cornerstone components powered When and by for the to us of have critical businesses foundation installed combined workflow of assets deep one in in has combined the have planning going forward. a names

to that ourselves. have by or addition targets measure that meeting will for delivering we set exceeding strategy, success against critical our In we

Our targeted X% forward. to growth X% plus is at going now

We margin of are committed the goal XXXX. end the ‘XX to improving by to reach our

organization plan. saving Delivering and adjusted to our will target saving cost Our $XXX the double-digit of our growth, allow organizational efforts to restructuring create hit of simplification the us sustainable through on and allow end margin for the target value growth around EPS us million shareholders. and goals will scale

components innovation, plans: global commercial Moving to of improving acquisitions our there Slide and are capabilities. XX, growth our three organic

to resources innovation. and investing capital accelerate are increased We time, organic our financial human

procedures individual This versus product. has and to our better to focus workflows approach Our meet allows needs. us on been innovation customer revamped

investment critical implants, be procedure will and our centers of we continue new will during areas aligners, opened said, innovation, to increased in endodontics. in has a excellence Jorge this I that expect like the directed consumables future. workflows R&D around in be been As last world. increased other significantly the complement call, XXXX, clear trend faster-growing into resources restorations to To mentioned center further commitment and demonstrate Charlotte to to year our innovation our The

Dentsply the the in growth greater exited. and and clear profitable implant months, slower traditional categories. also increasing and lab market work Datum parts eliminating give areas. the exposure to of boost respectively, growth, our past portfolio Sirona were added presence orthodontic deployed will We faster XX Byte platforms, aligner less Our a analog growing to capital while and In higher our businesses

pipeline effectiveness. of of to Dentsply scale digital Our team technologies. our Sirona the has solutions also and XXX continue has commercial X,XXX have in innovation Critical investments our like enhancing a network is extensive There good our to innovation pipeline. will that opportunities made commercial globally. to workflow ability rapidly over it. several and take to people an allow salesforce.com investments globalize tools us to of over been These include enhance advantage countries full

over rolled improved this with Sirona is one year. have excellence out our We to force training And our globally sales Dentsply program company our being customers remainder the as allow comprehensive program to approach of solutions.

our demand program mentioned, been more to Jorge there focused. good shifting has be retail on promotional also made progress As

addition, by last in over education engaged program In supported that an in will education year. event our clinical DS these highlight dental over has a of efforts X are extensive clinical efforts professionals The million XXXX U.S. the the be World, major all

past component. online a major that well years will be with few over major announced this a introductions live displayed. On have as as We our XX, hybrid this event year are Slide the

is implants see upgrade. critical of and products Primemill, excited about endodontics. major of where SureFil we software seeing in our launches several and The are major back Axeos very benefits half efforts one, We areas, XXXX, will XXXX in the those a with including also team SureSmile like

Moving our Slide important acquisitions strategic overall are growth to plan. XX, to

acquisition in clear supply has expected non-GAAP areas to well, critical and Byte we As very for XXXX. months, we integration accretive in it on performing track. about and Byte EPS like now our R&D. to are are aligner future. our we The mass very business a is X chain is has that business the bright to long-term and financial targets believe important had happy That report also given be is

total the run to continue XXXX. We exceed $XXX of end to business our expect million by rate aligner a clear

Datum This pleased platform. well. We the with as our the is also acquisition critical helping are implant integration improve of

dental XX, to closing, underlying attractive. it that to fundamentals make Moving resilience demonstrate and in the Slide strong continues market the

We will gradual across uniform are not should pleased this Despite remains in quarter. all a with our It performance that recovery some globe. of the the this the and the be uncertainty there to overall around noted pandemic dental see impact continued market. though, improvement the we expect be continued

quarter, to company many support rate. believe back recovery. operate on more will drive Sirona that as I expects forward. positioned throughout capitalize the And increase growth that year to And pandemic Thank to the continues, Kari. is call We the recovery will our well that, lessons to seen to efficiently are investment during this growth we the there have going help continued As initiatives the you. turn us learned Dentsply the with

Kari Dixon

will now Don. you, Thank we And for Q&A. open

Operator

[Operator from Sachs. Goldman Instructions] comes Your Nathan question of Rich first

please. question Your

Nathan Rich

doesn’t assumptions for this the Jorge. the you that in Thanks. quarter. have market starting the you strength in you definitely sounds strength of out Good the performance your despite do balance of year? you the plays and based highlighted morning the quarters changed Maybe How improved you look saw seen you with in have broad think like Don it first and revenue future first quarter, anticipated, really than It quarter. over the more like kind the the revenue

us think cadence the – just revenue just over help of the year? balance you can about So

Jorge Gomez

Listen, – guidance comments. because in we you execute, some Don about we and decided if optimistic were believe Good we Nathan, the start to the ability we quarter ago, recovery and back, in add provide our dental markets. a morning let me to then will go

I the year. us QX of a than for that. the better we in gives what confirmed rest thought. It think that bit came little confidence Clearly,

As revenue a And for us actually of that. the it. than our – revenue when expected think $XXX in we than the range million, our was quarter result, increased $XXX by bottom less you the not it the about million of first was better

in level second that of that changes based first still did a the patterns. reflecting also the the That We of going and higher are be all other consistent historical is the the guidance. change, higher the that to we with bit our confidence we little than of on year half. with half our So, think is rest year

the in what than past, the think that time, the higher see first I much total year. XX% little we typically not go be if half you is but several years, This you higher. think first the back to a bit of going half is is that,

So, about are we talk our optimistic raising are mindful all risks net-net, for in but prepared our of, factor be opportunities, are and optimistic But the are into about that guidance. we of overall to future. risks we about have why we That’s year. the that we more revenue are the the that. remarks, There

Don Casey

are feel discussion presence we was think category I add as it’s But numbers offering we again, the would only of – demonstrated add. to uncertain. more thought we to performed. the are rebound little and we guidance, be is back I the in thing And time. about came recovery Nathan, our of places as to the mean good we coming. is have watching that trying kind only about I And we mentioned. pretty a just thing what is, other how are we would Jorge’s how the change in Brazil look, and were and pace guidance first, the Yes. India, the can. last Look, as we Look why that’s transparent We we willing a get significant quarter good. Jorge as have certainty we we the alone where

how the performing. We gratified with are company is

Nathan Rich

some strong of Jorge, mix the I at margins I And help gross us a moving follow-up if those just very ask think helpful. multiyear highlighted You you of performance. a you maybe reached pieces levels? just just XQ, sustainability kind and around That’s think on about high costs. margin, so in shipping Could could

be would interested of that how your just the get So, thoughts to on, year? the out balance plays over

Jorge Gomez

with Nathan. question, margin quarter. rate happy Clearly, Yes. had very the gross the Good in we

a rate to you from because, we that certainly – quarter-to-quarter. growth great we As the consumables margin of Consumables fluctuate XX.X% don’t mix. quarter. similar In significantly rate guide in contributed the to both know, gross the SG&A, strong QX, margin had

the with there So, rate. are on other gross things going margin

in of couple over our portfolio we are the those benefits many in we you restructuring fluctuating optimization the of the seeing rate, also and if temporary or of are initiatives So, gross In executed will. last years. margin nature initiatives that have nature,

rate margin important. it SG&A of I that operating is on very what same for and rate prefer operating margin think the gross the margin based And this to fluctuations end our margin on year, the the you the So, based have terms think of delivering at at delivering I because much track we But XX% to in time. in to year. is, the we the can committed captures we of in profit on rest profit expectations tell that are the gross good – margin very QX,

for that metric. us, is, important most So the

and but XX% good strong SG&A, there will fluctuations targeting gross margin As between operating a move again, be things around, margin. profit

Nathan Rich

Thanks Great. much. so

Jorge Gomez

Thank you.

Don Casey

Nathan. Thanks

Operator

comes of Elizabeth question Anderson next from Your Evercore.

please. question, Your

Elizabeth Anderson

there is for the sort we think a trade-in I have – there? through you wanted sort of in guess Thanks post I digital ex-U.S., tough any programs obviously so the rest got about guys. besides the you you programs anything if revamp for the of World then easier. how to should DS have else just had going comp in know COVID? dentistry terms But are year? September. of Like you on much what Obviously, question. cadence the of things and thinking Hi the

Don Casey

accurate. DS had you the tell much think it have One I would you pretty hoped. Elizabeth, we program is I like performing

think learn So, did the again is in half half of to some back year, will of probably the what into tweak there the there. we we get year? we reflect that the opportunities As first we

we around not, And directly is beginning it’s that You correctly fact that. important business world. the captured aligner whether to do component the trade-in of clear an the then the are program really digital or

We obviously, mean and addition. happy practice very been how But SureSmile has obviously, dentist very And tightly SureSmile a think, how really that have clear pretty easily. with Byte with runway aligners Primescan, been I performing happy in the we front been are that’s terrific integrated of has feel with and we performing. we that. lets that, integration is

optimistic think are We be that, pretty way that’s that business is addition going with a CEREC. nice we and gaining accelerate nice presence steam, to to our and a

we So the SureSmile the juice will gets that’s on we that an look, the have. tell bigger think excited promotional obvious about are I going And think offering, quarter as Primescan. think about well are excited to are quarter, and That to quarter and stronger, I cadence, as think not reflect you reflects we certainly what back we we but benefit. what to about am pretty to we quarter half, you

Elizabeth Anderson

sort and to the there, digest your sort to in your have signs Byte – just us give acquisition more what a you of little efforts terms now time And of are thoughts bit on where Perfect. offering had as integration the between point of saying first and integrated updated dentists can seeing an sort of there? SureSmile, of they are the you

Don Casey

It’s Elizabeth. interesting,

I are the aligners, business aligner be patient or office to not, think thing. aligner research clear who having demand that’s good going they Byte people People to like clear our people were some don’t. who we when general in is a clear whether like another the don’t. some people don’t there and necessarily dentist Byte, the brand driving were told are who So, mean at going looking us

whole a are are seen SureSmile. from said, lot haven’t seeing good and on movement of we look, that being benefit But months We in, that. X they

that begin going facility of things We about are excited us and the to see and a they beginning most dentist manufacturing opened times, really SureSmile a Byte And And like benefit what the them when to improve customer continued offering you bring wait are and are that’s office. on taking we actually service guys delivery side. means. large into a to to

important, and of go that and how note, hard that. about we when half Again, the it us, have patients in becomes are for seeing we and in chain the Class And eligible into necessarily critical eligible For and offering that X universe, excited million unique little the X, pretty How into supply a a if Class we dentist. we Look, dentists about treatment. Class beyond than can again, Byte it’s are are other Byte R&D side a are we for office, the visitors part excited. be. top integration we the we just is treatment one is them going? think are – less And when get working a front mind most of what really we who X how X in about on but not important on Byte, been Byte going thing the about that deliver where is of half mentioned of we did acquisition, to it’s work mass aren’t mass we critical

is on to our look, sudden, that of think on, beneficial franchise run that delivering reaffirming bring clear the to to an a learn fact there Byte, Can rate are a of SureSmile? could something And we put that that’s $XXX that we year. innovation basis aligner in tell, from the and you going excess All that’s us. – exit be on we as Byte? if can is and we we stuff put bring from you can you as proved million Is going we SureSmile to on And there Byte SureSmile? learn can to

So pretty on our bullish – we are we clear you aligner business. are can tell

Elizabeth Anderson

That’s helpful. very Thank you. Great.

Operator

from Peterson next JPMorgan. Your comes question of Tycho

please. question Your

Tycho Peterson

hearing us pulse levels. wondering last good are of pre-pandemic you offices a on I kind being back if Hi, from back morning. check go practices? dental could if think about I Don, just give XX% you what talked to to you quarter,

then And in am now, on ramp at think numbers based front curious this routine? how you anything are versus then about work mix as you So, about seeing I talked more the single point? And purchases. in or just rebound are you orders of terms lastly, they levels? we pre-pandemic at inventory on stocking above complex the dealer dealer

Don Casey

Yes. Tycho. Thanks,

of yesterday talking, in of to I First, magic also may came you, I that. was than out the look, the bit different a XX% would that different practices would tend kind level. the more tell parts little tell think you, it’s be ADA we at world. higher productive and

Japan, around bit than of it that competitors. place If businesses are at we level. is In you traffic dental the parts are the world they in others, then pre-pandemic of above what depressed, there right that is kind for of some volume America. across There see look a uneven. implant bit look of all places, we thing little at But little a are XX% Asia that’s volume patient said, no really levels. That gets exceeding absolute the and the like now kind but in see lot continued driving close. being you us better are Pacific, And Europe the Europe China, you a they North look

patient that it’s learned we more able be over and to we the trend they do And be – the that lot learned. they last complex what is to do can generating to doing more are the talk mean really equipment. aligners they I And revenue to clear we add procedures implants. complex I that’s way, trend a continue to little they – nice, good in feel because see talk these for minute us per more can that can year higher they dentists during more interested tend because by the a pretty need I You long-term they that stay saw see. starting procedures, than pre-pandemic, it’s and you face-to-face, complex a be digital a that recognize bit to people to a

learned absolute tend might to the the don’t they So, interesting. all just we go of orders, going learned. the level aggressive right think pre-pandemic It you of I I to they – back then do of they we dealers, really is And to while going near, bit the tell terms getting I a get like the little levels. would over but Tycho, inventory need. pandemic how to that. that it’s now have inventory dealer more we are in are much think course hold

seeing upfront? much the need supplier. right those very we are they don’t How to know, but are And what We want but back, guys, How is, all are we are to I trend happy pretty much don’t do a to way come speak with back? are for carry now. they the I We good efficient – we what orders. going yes, seeing

Tycho Peterson

Two points. said helpful. up the That’s XXX quarter ones you basis I weakest last had margins, the think quick Jorge originally on would margins, quarter Okay. operating for obviously, first the have

how talk rough then that two savings? R&D, it you on And bit you how much divisions? versus you can of about the split out, separately, So, a us can cost now a between that little mix much sense just of was breaking is give are

Jorge Gomez

typically, below is experienced in quarter. last And QX. We points quarter also weakest what said a we be few margin going said perspective, from to operating Yes. the we QX the Yes. revenue that was profit a that Thanks, Tycho.

As and we we planning was realized and we that quarter. faster the overall to bounced what of quarter, thought than were and in first the industry investment coming quarter, to we the spending the expecting revenue. as have first as closer were our And amount board, manage cautious said seen were we faster. across a we we the end investments certain in back industry getting think needed for the were back in prepared And the for I we you remarks, patterns this of

So first higher what in normally see see structural would to think quarter. the a We much that we as QX continue margin than was as from that, the you typical I clearly result well. in a made rate changes have of benefits

very plan by close are achieving lean much we efficiently. we of the of the track So, beginning savings In committed continues that the restructuring further and to to million. end very $XX operate the realized ‘XX, quarter, ‘XX. to we savings the to And of delivering company in on first

of we so those contributed the – in typical because factors quarter. is very limited. incur happening think None and to I to and expenses all rate not there a events is used margin strong profit of traveling people yet that that are spend very that operating are

As we a we we margin believe rate. forward, look healthy will maintain

get end rate into year. the XX% very much are track by the on this We of to

We already to they didn’t some specifically quarter. first my in I the in remainder that $X.XX executed linked shifted least – mentioned know the the first of we how those year that entirely first we from projects on, investments into we and are have will the but to shifting make are were we in $X.XX executing make very prepared not quarter. remarks quarter we the are at

So, a performance describe that’s the from perspective. how I would rate

segments. helped profit part and think – the we X your much, rate I the equipment. margin consumables is side, the consumables on leverage for QX second that much than segments how about rates strong The question margin and rate. and the very Clearly, tremendously that the higher the was technology operating gross mix and with strong in both operating margin have of in certainly the was rate

go year, healthy. As the little year. kind throughout question, balances indicated, to the mix Don in improve technology we bit. should actually throughout expect prior cadence the of remain the equipment consumables and and as rate that And But a of the the we our

So hopefully, answers that your question.

Tycho Peterson

activity since helpful. I the Byte, before your of Don fair there a That’s know that deal? with it Yes, last in then closed you on one does. off been amount is for pricing hop promotional relatively one in line expectations I And market? has

Don Casey

hasn’t really a lot diligence. were it doing – whole what It’s we when moved Yes. versus saw we

Tycho Peterson

Okay, thank you.

Don Casey

Tycho. you, Thank

Operator

Credit from Wright Suisse. comes question of next Your Erin

questions, Your please.

Erin Wright

Primescan? thinking how for we in full embedded terms chairside taking how environment? sort And first stand-alone is upgrade questions. for for changes are of you’re system more one for cycle? adopting seeing expectations Thanks about you in this be any My should my the versus about Primescan And in what’s XXXX Great. practitioner thinking of

Don Casey

to with of Thanks, approach evolved Primescan. Yes. obviously, We’ve kind Erin. CEREC, our and

you’ve was than it following that that, for to longer and critical X I believe us know years ago, look a we you to marketplace. continue been over If us, differentiator and us was the all about it’s Chairside chairside.

units, seeing we years and DI that is we ago. not trend are more were stand-alone felt a there interest in X We competitive where

a full there. of kind selling there the of we we’ve – good chairside, bifurcated chairside, our obviously, with reasons one approach Primescan, instantly that’s but unit and there growth software we was come become the were So didn’t that that is a with seen let it

So do up to over art then chairside. aggressively those people us DI form the is we and time, for our driving presence continue shift how

over chairside installed sell XXXX But the So we’re after we expect of probably that, the as an right beyond them DI to see advantage go the than faster we we is out where of and base in and look then business creating chairside. what growing side that. doing can – back the right effectively

you So a little of But fast CEREC lag see how and chairside grow over of in bit grows. it course nicely the may – quite to aggregate, we XXXX a in beyond. expect

Erin Wright

traction offerings accounts? on gaining Okay, provide the digital dentistry great. there? then DSO seeing you Are some can at of you And traction potentially those greater an been have this the point? update DSO strategy in How

Don Casey

the We around XXX names. of as we’ve you well offices DSOs XX very, more doing not something in group of with again, then the to XXX we – been in the of necessarily – and pretty group more as that XXX both of a kind some obviously, Primescan kind lot well SureSmile. in to people digital to against entries to have impact. been tend DSOs, But of very are of with the North are Yes, household a them to we’ve much We kind these didn’t of practice our a particularly feel interested well you midsized like workflow, be larger – competitive that is DSOs DSOs. we’ve done offices And very almost – some think think SureSmile. American tend of a there as

So when do is Heartland, – do well bang, what that done margin update all our went on out in and it not strategy compete But necessarily we grow in calling rate what to a how at bang, you and we’re DSOs line. on our from way change growth way went building in feel strategy, then our we’ve say good bang, win, Aspen, such strategy, pretty and no on at we big there. down and the okay, the without a

Erin Wright

Okay, you. great. Thank

Don Casey

will put Erin, me us. it this Let grow year-on-year way, for DSOs

Erin Wright

Perfect. Thanks.

Operator

Your Stifel. Jon question Block of comes from next

please. question Your

Unidentified Analyst

my Hi. taking This Trevor Jon. on is for questions. Thanks for

balance margin, operating guidance improvement the with for starting your no implies Just material the the year. of

margin the the to the any the changes exiting just with or cadence about thinking there? quarter be fourth still we should So strongest of year

Jorge Gomez

Thanks Yes. question. the for

and of in the depending be on investments going As depending will what we’re is year. of quarter-to-quarter I before, indicated we our for level what the other margins reflecting XX% that to numbers that’s on are fluctuate Overall, the mix, around and things. the we’re cadence remainder expecting

we we We’re to to Starting make a the balance which want short-term, trying deliver to line, us. in are. of number want top for things the we with –

to ensure X% rate actually X% top want we that to also make the targeting. we hit line to We are investments that growth

they and to will happen going require investments, that’s throughout So the year.

Our investments paybacks later. restructuring a require deliver. them that projects continue – quarters have of will few some to Those

profit with that’s to operating some QX and XX% the throughout consistent our for those average, for If over perspective, from On of XX%. to is year, we that a the out it’s possible achieving go what goal a turns contribute revenue are will very the things margin year modeling goals as fluctuation be ‘XX. all So, that be of this year. into quarter and our consistent we with is high

get make have to So year, XX% are next there some to this to investments year. we

have we the to for priorities company. of so those And balance all

Unidentified Analyst

just you difficult then But quarter into category off dentistry, relative just saw April? a expectations noted and things in XXXX the helpful. maybe on comment And you comp. exit the coming the can to a digital you decline in on performed how looked That’s Great. quarter maybe how

Don Casey

well. strong dentistry were performed a not kind unique we where XXXX, going limited of We and perspective. we’re April, digital on were situation a Well, World of but DS in to we very in a comment supply had QX chain somewhat from a bit little

lot recovery the terms are So in from being for where in pretty we just in, what basis, is digital comp a the a again, from QX of procedures movement out All that XD. that said, doing – seen relative of well. isn’t of the to dentistry tough I thing XD, is and more dentistry pretty Remember, we say, feel there literally digital was we’re lot interest all global interest QX, pandemic us. complex would seeing a that dentists feel we’ve into a coming on And with CEREC. we creating more

XD cone beam. For us, and talk it XD, about imaging also

a You’re those easier in and works the lot that complex guys. interest the pretty diagnosis seeing and for make a assets planning lot more well digital procedure treatment

look, by a planning. demand that’s being you’re seeing And aligners, in as sophisticated digital and overall, of diagnosis much move, see see clear treatment as a these implants result, powered more you lot as dentistry. So you solid digital good

that And specifically some case of that’s was XXXX. unique comp obscured a in to QX around our

Unidentified Analyst

Great. Thank you.

Operator

question of next Baird. comes Johnson from Your Jeff

please. question, Your

Jeff Johnson

Good morning, if Don, couple you. clarifying could. I questions, a guys. just of Thank maybe

that’s in that First, quarter, be of couple Byte be revenue $XX just than they accurate, may to could struggles math on Byte, our there. which sometimes thought math, million suggest quarters our would get but I a this over sooner

acquisition review sites costs looking things very and then support we the that. Byte has noticeably mean some things two, we of So just and cost there? there, also at think one, that. customer like And accurate the about good. that’s like very, been I ballpark on the And and are feedback but structure consumer not

accretion that on on if perspective update from an Thanks. you’ve an more here from less bullish the you’re that on cost forward? side, bullish, maybe you’re expecting and deal what going the Just seeing been EPS

Don Casey

Yes, Jeff.

good and talk look was they we bought nightly a – had team we reason on very, very product. impact. Jorge We They deal very long-term a we a will the thought revenue a customer-focused and and that with then as great really, first, and in Byte, and those question. we the Look, customer-focused, reviews. split out a about really there I’ll we Byte – remain had that something at is culture financial of I’ll hourly let terms and basis. team Literally, margin

that be come necessarily to office, a out reaching how tends of about feel the and we’re dentist to a our the that high create the think dentist. brands Promoter specific in important necessarily relationship Scores we with we has really again, it’s a yes, how Net we and is, a as mind maintain have little So into we do which us population to do we don’t they segment want, younger, not

So financial supply think real those one we a chain patients, that and Class do eligible how – opportunity maintain as think a we and is revenue X, that in we want feel It’s a give put we’ve to them terms in, correctly to patient, to from is then team, we what Byte go operation were attract Jorge. And And and with turn we perspective, technology. get strong we City. one deploy reasons about they for Byte our we specific we are really out got there. the that I’ll that visit in fantastic we a of of the manufacturing to a relationship excited But operation going Salt Mexicali. great We’ve when we of do. over to that, in about treats out think we we Lake built that expectations, – that’s world-class Byte go

Jorge Gomez

Listen, for very, Don happy as Thanks very the the with – said, we of Jeff. performance Yes, question. we’re Byte.

We business our We are the happy tracking were with case. opportunity. about

working on and things of Integrating effort it’s total the clear So months, reaffirm for revenue Byte only excess this X some franchise $XXX the from organization. relatively integration. companies, companies year. with what for are right? Perhaps, our the Is the that investment early of owned keep upside? time, takes just happy start we’re takes million it to takes of We for I and have there We but especially entire it we’re new like to seeing. that. in us young, counting aligners a lot need on views for

balance with very direct-to-consumer and to on all We all much of learn have a business things, we happy, things So the lot we’re to track balancing of net-net, those case. things. about business, our very of need those

Jeff Johnson

that big commentary, be upgrade to thoughts isn’t the XX,XXX future driver growth, Even upgrades two, at going XX,XXX a have to installed but CAD/CAM or agree chairside Don, we’d your Primemill over year all the longer across company still as going – driver chairside think be a on then, I Thanks. And maybe a I’d forward? you growth the CEREC that be if going next can for big assume just Primemill bigger term even you. opportunity. isn’t meaningful Primescan or Thank growth think I the or globe. all your pretty still or if opportunities? is But and fading follow-up to probably DI isn’t is

Don Casey

North chairside And scanners look, that we’re Jeff, a evolution to growth don’t tend is I seeing is in America are now a of to of practice and standard want places. other lot to of going de think ahead say where I a world. what way that engine. of – parts be the an Europe around becoming kind But not are facto, Yes. even that, offices

launched really look, the In terms into dentists, is are very, in individual of we’re dentistry chairside bummer I economics of very the go we early absolutely But Primemill. mean it Primemill, sell. something still kind we that pandemic. us full of and that’s to the and for then attractive we the

because we’re DI a that’s we reasons we as the opportunity say is of mind. in as let’s in one are terms some drive So upgrade our of great comfortable

benefits sell on go and dentist chairside. DI the let’s of then Let get comfortable with them the

with the this. accurate, actually bullish mean and excited Jeff, Primemill. super now and to integrated in our we’re show system. first a opportunity in, I speed. under total hour know, had delivering – you crown a as very given we blocks look, Primemill, chairside means basically on about we’re really we’ve I mean an the what Tessera And So got that full we’re well-made scanning with I that actually

very would the I look, So very you, process. early in early tell Primemill, game,

experience winds over first be. overall time. for We there single-visit are dentistry something don’t bullish me, far and line this the the really believe or that compelling X-hour what patient on And with economics necessarily a will knocking down like scan to not door on Primemill very XX% mills digital really time, Primemill by their XX%, they up the expand be somebody And them the really, look, our too are dentistry, we starting because very, can if sell footprint good. the buy

Jeff Johnson

Got it. Thank you.

Don Casey

Thanks, Jeff.

Jorge Gomez

Thanks, Jeff.

Operator

Your Jefferies. comes next from Couillard Brandon of question

please. question, Your

Brandon Couillard

Where morning. for showed just mixed some first Don, look we of while, Hey, thanks. Good EBIT think share share? think the a the you share it’s bag at been areas comp notwithstanding. do some do And Which bit still lagging? a business, category? up losing you’re which picking are areas Consumables or you that but maybe a improvement quarter in if in you’re gaining

Don Casey

bit Again, components as business business, our business. and just the resto think, Yes. tell have a our out resto endo the preventive a little of Consumable kind businesses been, I for of doing our break would you well. business, our business, the we you some – and lab background, to preventive

large very performance we’ve and Our the been with which very, endodontic over is two happy business, profitable, the very last quarters.

our a allow denture Lucitone, think going like We some right be you important a to ingredient, is think us think accelerate an digital was which printing XD look create pick stuff And back for lab half we up significant business, we the kind which to out One, There that got lab lab analog the we program, the opportunity bit year, introductions there. When of in on grow time, business. will optimistic leaves that at of over We’re this very components. digital we will to challenge have our there. has which of piece, of we kind momentum been that’s little us. then of growth a some two to business. us

we we precision? what on in so business But the businesses. the the with preventive kind the – were we held and with hard data, serve in of gain did One, on we how tell, think first great And on pretty well but terms answer quarter. performance this some share? lab, the that are of quarter, of syndicated it’s we of we We then think had all rest endo. happy to it resto in degree happy So some with did wouldn’t we we do question if we can be where

Brandon Couillard

as a can more the over the average implants, this quarter, while in you And faster segment, little a growth out in line do to implants franchise year? think specific since you than the T&E that then that switching on can within rate be you positive spiked grow first or the of corporate

Jorge Gomez

are implants quarter in time, the of one is spending the performed of where Brandon, a Yes, progress. we investing business a making well lot lot area money,

we was QX not quarter. be, want are where We to but good a

with for now We have us. before, number key is are not are to that everything there category. is some point, are a right – yet at we And we lot approach of priority opportunities. the and aiming as growing That doing we is indicated a

portfolio. a have great We

going a We but we number it’s about completed growing have We that contributor. a very brands to valuation business. be that acquisition which a but conviction excited is small, it’s trying are that Datum just early of the And It’s of very this about our acquisition. of to we are optimize. quarter, on, main

the that have progress of parts are in we with so portfolio, direction. capabilities on right the the work and bullish Atlantis in very other We moving with

Brandon Couillard

Thanks.

Operator

Your final Piper of question comes from Jason Bednar Sandler.

Your please. question,

Korinne Wolfmeyer

Jason. Korinne is for Hi. us squeezing taking in. Thanks for This on

users Has you to those spent demand? have said you you too on is on early any on been many the to the building sold on then to of up the do upgrading? that tell existing So first, question, insight that? how that, following versus Or that users meet new are able early it Primemill year additionally up capacity. And been have still

Don Casey

Then right So to Primemill DI. been sell what have full now attracted to upgrade. easier been users first, would Typically, that chairside. say into yes, see, we actually We’ve new full. an I we go has principally you happy it’s

say people Primemill We’re upgrade a the has little But new and chairside them selling upgrade. then an far, DI by been you bit down line. mostly I’d so attracting to

back about If replacing, actually you years old. the X product that that’s look on it’s

mill I innovation. very, needed were ‘XX, really And We about a we things, at QX World. DS It in the while took time. our demand we feel that tough a we actually, QX – good And feel of would very us about capacity was a we say to reasons a that now, right XXXX. this characterize capacity. had which time have up, very constrained. to So was in big from over good one Right ability to now, comp clear meet period. is introduced

Korinne Wolfmeyer

attractive parts we’ve And on on Thank then Axeos, one, promotions last going seen pretty in the you. one some certain world. of

of a the into We competitively that launch? quarters here demand are just been we’re how then and wondering, are has those couple now driven

Don Casey

been has demand good. Axeos, On

took I we new And if we coming a our by were product into put a it’s mean you capabilities, software a First, with but really that of the in – it’s we really really, little good good field think really, at the way, product. a behind look the wide product. actually that at new best-in-class. Axeos, look is bit we the business,

to parts, they to different Commercial to. are terms the as large, Walter market promotions the region to a world. Chief going approach opportunity to individual a one But put by of We of that pricing. around get lets by In in we Petersohn pretty Officer, where respond disciplined we’re we want look, region, the have one point there and and have our move are great competitively need the place, don’t Jorge that things creating things

terms a on pretty bid we terms to floor a a are But look, process. basis tell can think to in want all through – first, is with a discipline of sophisticated better. DSO of big how So on pricing going again, we’re we’ve a Yes, product, I sell competitive differential Are you, we places runs or entire more be typically that if company. that we throughout would great regional promoted things the It’s on there goes that establishing got we promotions? excellent the make business, in Axeos. to a

thanks. So

Korinne Wolfmeyer

you. Thank

Operator

Thank concludes And conference call. today’s you participating. this for

now may disconnect. You

DENTSPLY SIRONA (XRAY) 9 May 212021 Q1 Earnings call transcript