XRAY - Earnings call transcript Q3 2021

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Operator

Good day everyone and welcome to the Q3 2021, Dentsply Sirona 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 be given at that time. [Operator Instructions] and an operator will be happy to assist you.

As a reminder, this conference call is being recorded for replay purposes.

Now, it is my pleasure to hand the conference over to Andrea Daley, VP Investor Relations.

proceed. may You

Andrea Daley

presentation And at Quarter Brian. remind everyone. to section and Welcome that available call Thank the dentsplysirona.com. in Earnings good Conference Third Investors slide release, press XXXX earnings our to to Call. our the an are website you, of call, morning, related www. I'd you like

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

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

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

Don Casey

to growth future. dental and we recovery Earning Call. operating, morning our how you be joining continue this quarter Dentsply thank are prospects for Sirona's of all Thank we the market, third the for in pleased with and in for you, Andrea, the Overall, us

business we good against this pre a most are level our momentum, the was year, mindful looking that remainder -pandemic XXXX, the variable. importantly both remains strong and have the seen showed this across and at versus the units regions. of pandemic growth During in growth XXXX And quarter, top-line but key

the acknowledge quarter, details in into focused pandemic part and they disciplined our strategic Dentsply Before they to group. of and of goals. to the we Sirona did committed want phase, privilege for to I how delivering recovery customer, entire remained the be have the get operate, making progress this in on team. Throughout is now the It the a against

now to Moving X. Slide

I robust financial represents revenues the performance As mentioned, our This with basis. on quarter in $X.XX XX% was a strong billion. third increase organic quite an reaching

ago. call XX% a is around SG&A the I versus more an prior increased increase quarter, innovation. flow was and To the $XXX to EPS commitment as to non-GAAP a well our market, Cash Jorge investments as XX.X% the versus That was the in quarter. details margin our the year to Adjusted operating over $X.XX. R&D provide reflect Our $X.XX recovery for was turn in now will CFO, million year Gomez. as

Jorge Gomez

us strong morning Good discuss our fiscal XXXX. quarter to and of year in Don. to joining you, for you Thank another all thanks

the organic against performance both based of Compared makes refer sales. which XXXX of also grew slides, in at growth business both organic regions. XX.X% be XX.X% was results and XXXX, we reported it the it quarter posted growth reported This GAAP confirms pre non growth. In today in Please I we third - gauge difficult robust unless levels. the the the of of third or of are T&E and reminder, growth versus sales XXXX sales a organic -COVID As will Investors out want business have the and delivered the of consumables million section pandemic, to in deliver our otherwise the seen and sales website. XX.X%. of revenue growth Because point XX.X% The grew both that reconciliation to to we of by my back strong across revenue profit XXXX. recovery growth noted. quarter, to release press driven $XXX &E. remarks in financial the the XX.X% and Gross baseline segments trend steady all across posted tables

margin businesses remains reflecting more steady, Our contribution our a mix. from of rate a all balanced and normalized

headroom optimization QX, Looking expansion -COVID XXXX, deliver years. of back, have basis few margin portfolio efforts since baseline simplify the attributed last the to the organization on points we pre gross our XX over to

cost, labor As of a challenge know, chain industries. be and availability you all the global components, environment across continues in to of terms supply

have a the to impact at and minimize operational So continue to been various to and pace work our demand far, we customers normal strategies P&L. able to our to on meet

Now, XXXX increase third as -COVID pre turning or quarter, we SG&A expenses initiatives. million benefits $XXX This reflecting to had levels, ratio In of the sales. improvement of from our XX.X% efficiency Quarter-over-quarter remains below SG&A. the marketing, up in support strategic aligners, to $XX in and growth and plan year-over-year ramped spending particularly QX XX.X% clear R&D to investments, the on our million. including was SG&A capabilities. we plans implants, areas, sales digital

of level to investment are to increased as continue delivering we innovation customers. to and solutions committed this expect our great We

a the see few later. pleased Don as As are of healthier heightened a our to pipeline, the over years, own emphasis on result much solutions discuss last will R&D we

profitability. to year. Operating last versus million profit $XXX million to Turning $XXX was now margin Operating grew XX.X%.

delivered QX, have pre basis of since margin we XXXX, XXX -COVID expansion back, Looking baseline. the points operating

last expense from in we margins to investments due Net increased exchange mainly fluctuations. expanded foreign and sustainable initiatives. our meaningful fund which have also business, versus the and long-term growth essential are impact made year, We have to interest other

in recovery tax of our quarter, mix to the our effective prior-year to due rate continued geographic Regarding the XX.X% primarily quarter, -tax and in from from increased income taxes pre COVID. XX.X% business

$X.XX $X.XX quarter. in versus Turning to EPS prior the earnings, was year

the all had $XXX strong an categories. performance Technology and & of of portfolio, our our posted all XXXX, Overall across product strong notably, XX.X%, across and Consumables which year. grew segments Endo segment third XX.X% growth business. Equipment segment the most represent quarter to was growth a increase Moving and of versus Both million, prior of organic priorities versus all parts Consumables XX.X% The for respectively. strategic in a regions sales and categories, within the of rest

quarter, This our platform innovation ProTaper launched endodontic Ultimate, more major first business we thus X been have in the reactions, far, in Endo positive. launched Market than years. very

products. are reduction X.X% business market due recovery. through The Additionally, our the sales particularly the Currency well to resilient preventive the a offset discontinued QX. favorably divestitures the executing and by impacted has the of rebound in continued U.S. in consumables teams by in consumable been X.X% and

and our results, category organic devices strong XX.X% grew prior we the all digital for as in a such categories. T&E capabilities sales growth XD driven regions We're in most to from XD units within Moving observing There trend Primescan this product Axeos year, is imaging dental upgrading equipment a versus was trend as implants. with digital such are seeing offices continues by and onto segment to Growth and high unit. a markets. growing on new digital be technologies offices. strong all and momentum Demand increasing the in notably dental global overall equipment and

and market domestically dentist and directed aligners most In its franchise a drove contributor is our quarter. SureSmile, expansion strong the key to categories year-over-year to channel, continues aligners The a aligners the internationally. clear faster grow business continues growth this growth Our than strategy.

recently vPro received offerings. been launched the new its The addition, of differentiator upcoming software has In the user positively SureSmile significant market another be to experience we key by enhancements. due launch will for

a on with the acquired recall, As to We ropel we when SureSmile this COVID year, rate goal to the experienced track recovery run for half it largely attributed strong utilize in SureSmile for the very channel our in dynamics P you year. is and first DTC indicator in is well. softness earlier meet After QX. believe intention to seasonality. may our as XXXX,

in such growth high And as through with Byte the is a position there we're the dental customer run new aligner category this not annualized DTC is we goal experience the half year. rate of differentiators, and year, provide rate exciting for Byte high its the focus strategically possibility is Given engagement in and this on achieve an the second seeing industry. fully for journey. may key run for entire with customers

as of by Lastly, X.X% to as within offset impacted due reduction sales products. T&E, acquisitions a X.X% of by from a well benefit X.X%, currency divestitures favorably and discontinued

region in sales despite third variance U.S. Now the of a financial quarter. COVID last by performance levels versus close late also spike during were XX.X%. quarter. last Organic were $XXX U.S. that million, I'll a sales reflecting year. was to XX.X%. growth year $XXX at European growth sales growth growth T&E. year. Organic versus turn of or growth the volumes XX.X% year. remain Organic million, entire million, XX.X% product lines of sales XX.X%, and to both sales pre to sales, were T&E for demand versus across of in throughout fiscal XX.X% world the was The the segments, region running normal XXXX. our growth delivered has $XXX sales levels last consumables U.S. business majority continued APEC Rest at consumables of growth -COVID are recovery the Similar in and was better. the dental a in

to a million operating generated like flow of $XXX cash free of cash flow. third cover cash million. Next, $XXX the we flow XXXX, In I'd of and quarter

acquisitions, generated On cash deployed in million, long-term fund $XXX paid and strategic basis, $XXX of cash free million hand on and this and mature $XXX Year-to-date, million Propel we including million we have we During with paid cash Orthodontics. in quarter, a July. finished flow. more we our $XXX in dividend Datum than year-to-date quarter flow We $XXX regular debt have the to operating of million. which

returned buybacks. million a share $XXX shareholders to and through We also have of dividends total

balance strong. sheet position remains financial Our and

continue to strategically. to We are capital well-positioned deploy

me our we performance financial trends, expectations our increasing market on Now follows. solid of our year-to-date, update and for XXXX as the XXXX. let Based the estimates provide are for current an business on

budget half year range. This expect increasing $X.XX assumption lower revenue outlook to to billion fiscal the based range is revenues range. than rate XXXX, range year last and to narrowing second of we USD to EPS, is now in XXX, We are are respect This increasing quarter's EPS 'XX XXX. a tightening new for now new and $X.XX than up billion the to our the of our assumption the outlook of be lower the euro We $X.X bottom by the on of is year for With estimates for $X.XX. fiscal assumption XXX. our

weaker proud remarks, we're making current to in reflect exposure, new outlook revenue share our Overall, euro a for euro long business, our that headwind and earnings represents our To to close my net the sustainability confidence. we're our our we're journey. progress a very on XXXX with on pleased P&L. the Given momentum

a I sustainability. am just As you to broad is published DS may goals. with we that accountable share months remember, sustainability Report we report we and indicated taking range XXXX that also XXXX to happy be ago, strategy few of advance weeks our ago our and our commitment steps our It a few substantive World, were transparent stakeholders and a respect at our strategy with to and goals. to Sustainability

measure the our children We're for will Train metrics a the and X healthy Smile nonprofit we our very is visit help the partnership that across world. actions year verticals. children forward, to each pillar, with close; cleft with and pallets organization. healthy planet, our worldwide. business. we support sustainability miles healthy within provides Going surgery health you healthy X X of on the Smile and checkout Train opportunity into our this for sustainability million our corrective smiles, within and I to oral to by quarter To to organization committed website a progress encourage improve sustainability enter hub excited lips

commitment sustainability our are We back our will will the now to that, With Don. to to long-term that stakeholders. turn convinced value I call deliver

Don Casey

Thank you, Jorge.

priorities I provide some perspective and additional our on, Moving strategy to around wanted forward. going

in XX presentation. Slide to the Moving

combination to Our priorities allowed few long-term delivering grow activities. results. the a years, and These over consistent revenues on which very last us organic of through remained X% priorities has X% consistent stay inorganic focused to to have are

goals, to Essential our our scale third The of the better in to XXXX. consistent dental sustainable leverage the to as When we we priority. drive is the these organization space. growth. the and to deliver XX% efforts double-digit is one second largest these companies EPS, meet margin by Simplifying

made against of Growth increases with we've objective those the Moving to against progress made this We've to some important detail priorities. deliver to X% X% to overriding being our XX Slide priority, progress is long-term. topline the goal.

pandemic, the XX% year to performance in year-to-date, to XXXX, This organic delivered growth strategy noting the quarter, growth XX.X% our last kind our for It's of and the entire us In addition growth also XXXX. we priorities. that an was for the of prior have period the Increase worth gives confidence versus X.X%.

They on world. growing franchise, focusing and our faster growth digital X will out in innovations the and leading include areas. We driving role clear critical rapidly accelerating areas, on by our major aligner capabilities keep in growing of our building dentistry, building parts delivering

over priorities these moves markets. increasing growing the portfolio and last Our years have the our exposure faster dental in of areas reflect resulted few also to

Turning to the next priority expansion. around margin

we of margin XXXX. by confident the that end XX% are deliver will We goal the

We are the reshaping efforts. of plan, well restructuring realizing the as year portfolio benefits X as

as Our use deliver simplifying efficiencies experience. our are outlined work. in as savings to on under Program have of headcount automation A and of These how digital $XXX the Comprehensive million team great Enterprise organization also to we us we Modernization tools significant example improve working that this XXXX. across we and Jorge's well the customer and the increases continues track both deliver structurally, helped the the is in on that efforts Company efficiency leadership

XX, outlined. is impressive products addition, brands the improve Looking built dental imaging and XX starts excellence, and treatment and with on It Axeos. newest to our diagnostic foundation practices. integrated essential outcomes planning, in digital that easy-to-use Schick, strategy out patients On footprint a Galileo, superior large Dentsply outlined for to future, our Page like Sirona's workflows develop on is with Orthopos, global major Page

franchise CEREC robust chairside is DI another both that component foundation. large critical in our includes Our digital and

diagnostic their strong have dentists are incorporate more as globally of noted, better major the dentistry These of practices. and pandemic, Dentsply into Primescan investment upgrade diagnostic Jorge a By powerful Dentsply results our both businesses more digital of Atlantis, of the they and digital these all looking adding to us Sirona by tools momentum As practice imaging, their like largest is these with dentists out progress for their coming These of procedure. Treatment like XD SureSmile. treatment complex brands with at assets sophisticated look Sirona can patients. foundation procedures which most and entire We the more take aligners. is clear providers this in the This as implants planning for of one map while these one helps this increases are the also artificial cases to CEREC, to engineers important digital planning treatment, like can efforts creates Cedexis, continue Simplant, for Adding treatment an elevating the lead advantage confidence. are complex accelerated dental faster tools revolution. us. now supported opportunity the priority and planning drive confidence, efficiency out planning their helping XXX innovation, of capabilities, over expanded that intelligence. in software leading within of will and areas today. area

simplifying can our Endo. to in we delivering critical practices. to final is have of ways innovations major areas in display. is on that based treatment Moving Rather lifeblood several innovation transform on see Page than and from innovations products, their workflows key XX, the customers several could Implants were delivered XXXX launching like and approach our our our DS just in World, diagnosis At

last the Sirona. comprehensive Our example to ability truly across that partner real to the of us great procedures address essential fact was of implant advantage re-stage practice. announced the is the work key look unique month. this as become our The so we A procedure to entire to business many of gives we the Dentsply a

of Primescan while adding to X Dentsply includes to things Dentsply single to For the performance allows that digital tools a us, It is screw for real edentulous name, new it's digital not program for and also multi the comprehensive a and Sirona allow of advancing to to Simplant refresh, abutment. just breakthrough tooth about a deploy It replacement innovative implants. implant in Implants. capabilities. bringing It enhance to the scanning, to with dentures. brand moving and Sirona Lucitone approach help includes about planning It support us workflow actually together simplify entire launching starts a education all a treatment dentist. assets continuing It rethinking

DS The about product that really EMEA well-known U.S. built initial team momentum area. representing we product. kind reviews. And believe a as self-tapping than includes it The we also cleaning that to the a new the to endodontic best-in-class in continue This of rapidly MIS therapeutic launch a is load, space, procedure across a innovation the is transforms excited building At PrimeTaper. and file, an dentistry. is have product great value here growing a is in this procedure. mentioned, We're launched franchise. bone growth products also Ultimate It's with a system has launched Jorge important and immediate adding ProTaper business OSSIX. of to implant this the in We excellent off integrated also major our World, innovation this more critical in

new As well Ultimate of which it the call significantly. as system, bioceramic new the simplifies excited trifecta, ProTaper a we sealant. a system the obturation are about as Early system really the includes users that procedure

accuracy major launched interface. leading so around as CEREC takes our well also X.X it powerful that a and as category CEREC X.X SureSmile its in it X.X. have progress new like major totally product SureSmile user new a and We makes X.X, to makes levels. speed is Primescan software upgrade feel

Aligner franchise. have slate also news our of We full a for Clear

also Innovations we Hyper vibration brands, across by are pay will manufacturing pipeline both dividends innovations going a improved launching technology, in we term. the also, the progress the the space that We, in around going XXXX there whitening our future. the new that discussion forward. have innovation, finish this Byte to bring As and in forward the X products the market SureSmile the have robust To businesses. maximizing and would will I we vPro, that in investment offering note we're near very both include and comfort. major in for R&D Byte was

our gives going confidence Moving now To to forward performance summarize, for us Slide the XX. year-to-date strong of XXXX. remainder

We into the good momentum leading have future.

results against Jorge disciplined 'XX our key operational Our market team's the reflect our our strategic Based of performance underlying we against outlook. earnings on raising the our progress and dental said, are goals and as priorities. resilience this,

believe quarter-to-quarter to well-positioned and is that Going we with that, dentistry we also will the growth discussion, Sirona the sustainable to call open now deliver beyond Dentsply going forward. And transform questions.

Operator

who session and everyone follow-up. question X is the of And Q&A our that come please Instructions]. you Evercore. first from [Operator ask X line yourself you. to participating we to question limit the in kindly with Thank And Elizabeth today, Anderson will

line is Your open. now

Elizabeth Anderson

revenues I DS were -- some people about installation. Hey, questions morning delays into had -- know was fourth go thank recognized on your and the and and just you the shine detail shipments, your wondering in and much guidance question. in guys. what's so Good a off you getting of of know, -- I for -- the quarter. if some to when segment could for wanted so at us equipment, some just bit called little were some implied you what with the I perhaps World T&E etc.

So I just want to of Thanks. make sure I'm understanding that it. portion

Jorge Gomez

most morning, sales along lot we a lines remarks, those great our great T&E fourth is said happened timing for in sales prepared relative the have There going to Primescan, there quarter excitement. Elizabeth. the seeing general. World demand of the is Thanks for what of was great we're Good and for The which imaging, we actually what of We, fourth Yes, DS of momentum. question. great demand in quarter. Axeos is the into for in

quarter, CAD growth we for in for in for so fourth are our guidance imaging And substantial and the general. including the

be that business, business is to So that in of the strong. the part performance continues

Elizabeth Anderson

to maybe you slight the Thank and that you. SureSmile. in that, clear market. to about Can go aligner. maybe into over seeing maybe a is the think then was just I there switched of how know you're And said if maybe you you driving weakness sort contrast what DTC it That's Okay. helpful.

Don Casey

DTC And we're have consumer spending aligner clear sudden, question. as not for a things. we're space, choices the a benefited just businesses -- of going you phase, they're of recovery are on in and where across obviously the And income. Thank DTC people vacations this the consumers entering of pandemic. but The discretionary number kind seeing all segment terms from of other

core we're seeing clear is are aligners aligner and So some is are we've entry we a DTC among space forward we'll seeing we target we think those that of look, going Dennis both got we entry clear strategy bit first look what and a competition audience And little think obviously think we're a we have and discretion. segments. and for seasonality spending to, of look, in on growth DTC see director predicated we've our

bit X in I and a at we basically the in you would -- -- today more As second X we XXXX, fact as discretionary would to this of significant and when it this think is quarter lot future. down again, a all a tell growth consumers sales reflect into got it a what the QX we've X seasonality. of Clear we be little bit and independent sit stuff, we the in our had Aligners We obviously, -- franchises expect looking providing continue of on that prepare of SBU, we was we of if saw were spending. little would other that

Elizabeth Anderson

on focus said, SureSmile, you say do but would comments seeing those -- DTC type trends similar that I or mostly diverge know anywhere? with you you're you that those the And market,

Don Casey

Byte and areas We begin that very bit Part expect that we pick the We're continued results. other we we are ways. that Now, made see to products in progress pretty we in mean, at very, that, continued is have couple X. -- first channel a growth think that SureSmile. Part expand consistent to places I to a It's opportunity up. is we have as SureSmile perform U.S. there's divergent. Byte direction, the they're different begin The U.S. that mean, thought. also X Asia we are we're to well. the believe that the on plans coming DTC to as outside outside demonstrated and to little is to looking optimistic doing in push for doing it I new continues this

got we to really the we people So really Obviously, think that Byte, to great think is we when is want that things play eligible remain things the of optimistic that a one is that and in And going regions. Byte those role we participate product about then a we've not Byte. have dentists can everybody would that go over professional. come with Primescan relationships right and into SureSmile. other for be into They believe referred our with and to

So gives the a play a Byte to is areas. different grow to us strategic of that number in us opportunities

Elizabeth Anderson

very Okay. Cool. That's much. you very helpful. Thank

Don Casey

Thank you.

please. Next question,

Operator

Thank you.

Our Tycho next from with Peterson question come Morgan. will JP

line is Your open. now

Tycho Peterson

Don, after up just Thanks. quarter, but a I last to hate following beat-and-raise questions. on nitpick

see the out competitive. that targets gotten know You need $XXX the that year, so versus how about for you've laid out? do it's they million on aligners trending pretty competitive to have And million Obviously, a $XXX Byte where did you not are channels issue? targets there Byte for clear you

Don Casey

the issue. things. Byte, we're exact to soft. as major you A mean, not a couple on I we're numbers as of but Tycho, possibly be can. bit to transparent talking We want going we not give little a it's

they're Obviously, hopefully into have of to momentum -- been of aligners, in obviously the an that we significant what opportunity diagnostic you talk franchise, the competitors a that that's funnel. of with feel -- buying change really in it's issue unique the at feel where kit purchasing We it's from think really don't to the and don't kind the going like a kit, So there see we're more getting the a somebody funnel. the visitors. other serving ground losing departing on the watch so coming our and a this funnel pulse We people in to what seeing. what's then we're where feel involve lot to buying of We based different losing diagnostics. things. a market. than to entries we're on point, people a and process And We of purchasing competitive telling we're diagnostic is actually we we people narrowing guys much

Tycho Peterson

shortages? us just channel side higher levels, on follow-up the seeing Are supply then to you inventory you're little starting our you the on topping now? shipping dealers curious of a what on in Can running issue pass walk of give I'm supply you're what through into Are or. chain costs? a on just stockpile? And able you obviously right Okay. maybe terms bit seeing chain, in to

Jorge Gomez

take fact, Yes. I'll In that question.

As I indicated my remarks, in challenges. there are

-- far also I So this. said

It closely. for far impacted supply to in are our components. the great not doing terms reality find It us, materials. or certain monitoring that we something distributors. products manufacture in is is, ability team cases we have job our to it because So harder supply to been of The certain more chain very is is is expensive a now some to procure

that of all so managed have far. We

-- or haven't to we financials of this material been pipeline disruption situation what issues by have of first, point. upset some all price way than costs material elevated facing. supply increase impacted we chain older we October incremental announced and and some able is our seen effective changes, been not that supply helps are -- that price major to know, the that example, did the respect Or a that hard you we're we we a predict increase, at seeing costs cases, so it's this in point. at But the in to for -- not something any significant this are in of channel, or But with inventory some any we far, really, have a global So a upset. some as is

Tycho Peterson

to early? view inflation kind kind more tough cost driven customer in is perspective of changed having a the is or staffing side the then on digital your that your kind wage of too hiring in of days is I And Okay. towards these digitization. on mean, it automation time challenges digital

Jorge Gomez

of think so. are is we we our digital bit think dentist the motivates And ways happening. that that labor all of have in shortages them. X I Staffing and digital you including efficiency all of that in think becoming on offices challenging is momentum improving about is and Certainly, seen equipment, a I many the we many said, as that the little there s, their No, think practices. and are reflected that and strong scanners customers to automation, think I issues, have, space so and of units, our of dental industries XD

trend a for that been I think we about something this expedite there little is transformation now. accelerating going that to that while is have in really it's digital and talking

Tycho Peterson

you. Thank Okay.

Don Casey

Thank you. Right.

Next question, please.

Operator

Thank you.

Block Our next question Jon the of Stifel. line with will come from

is now Your open. line

Tom Stephan

is This Stephan Thanks Tom guys. the John. on questions. for Hey, for

to headwinds belabor just what on to Are go they Maybe bit abating a you elaborate macro believe Sorry you impacts in so, but you XQ. as on bit this, Can you're then Byte. did Apple have specifically out? changes And maybe Byte do XQ? the look on, headwinds to how starting to those And to iOS attack saw those today navigate back relative want called versus any challenges? the you a guys results? if

Don Casey

interact in sophisticated like first affiliates Thanks, engine Byte doing bought other -- the whether I'll they second our it's worked we how good digital change things how social very we've X of of mix part first and whether other purchased obviously so, impacts have about part, it's second. reasons the and through different go We way are we media, creating Tom, answer how really, and insurance answer how a I'll the Look, that or optimization, is it's things the or the that. we Apple with that. was really it. search team we whether things aspects question. the demand and use for Facebook

could people, and literally them with aren't taking about, our the other expend $XX to is talking and terms What QX this at had to is that I are seeing In feeling look, the look, are you kit. were things. and time? than QX? what we our vacation mean, we were people we've or QX we we've different looked you vacation and in. the number get a get pandemic our first customers you Hey, take of potential our since us step of headwinds and next well, Why in talked diagnostic customers

other we just working things, well, bunch do a said I in posted we raised, to broad-based out have we're we we're we the recovery so and the and we, and this the I watch confounded we're significant were that to through you've growing a on look it associated basically, it pent-up majority think of there things in we to pandemic in -- And that we think really I optimistic consumer a quarter somewhat and want Byte what's people in and and that where then about, to pretty portfolio that the stuff, X Obviously, it grow continue got to a was of there's of on we're Tycho point we're think change through the statistically, but we're into the people it with trying quantify for and still of to So third work by and thing payment government heading vacation, related spending school, the it. quarter going going growth about just kind the demand is future. areas. going seasonality that pandemic going in

Tom Stephan

just just on XQ, sequential will strong XXXX sounds it very implied World. guidance, DS the be maybe helpful. the growth. modest And then That's a top-line I like due think T&E to And Great. really suggests

on that, in and the general, there end should we the puts just, there? or growth the markets think consumables? how takes other on trajectory any of about Thanks. Are So side and

Jorge Gomez

question. Tom. Yes, the take I'll

increase I think the to -- sequentially. is there from good QX QX a

is growth the with a sequential is I probably you timing, always and we quarters, revenue price announced -- that question Xst, and points, always math, do a respect quarter-to-quarter. situations, -- there time X% is announcement, there October of Every movement this of for price good place. there's to annual we increase that -- we probably before a There this is make when we month-to-month percentage between indicated do, your jump. the specifically normally a so consumables, put about in possibility the points, So to from or mean, several that is X% I implied increase is

total macro but And organic is QX QX sales of anticipation sequential increase. like is, so there for XXXX. growth And consumable acceleration, the probably price possibility not things -- a material, the from point is was some timing-related. order indicating we growth. that What there's there of some that are into of are there that couple but a acceleration The rate that and

at versus total the just growth it's Those, look organic year. to you those XX% closer XX% growth, last from range revenue and XX% If to numbers. top-line strong are

Tom Stephan

it. guys. Thanks, Got

Don Casey

you, Tom. Thank

Next question.

Operator

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

open. is Your line now

Jeff Johnson

that business been the might morning, a but Don, to to the business implant hear, just quarter, I'd performing you Thank has maybe the year-over-year next business? that like have ahead been That's little even just business not market. though year, PrimeTaper the guys. the do for interested lagging be quarters optimistic over that feel quarter? the just you in and the last several of how you. third the when a pretty on third bit pressured expectations about launch Good just sound market you're in relative

Don Casey

we had we good first Yeah. Jeff, we're mentioned like mean, for look with feel positive exactly then a little of I've we question. quarter good grow, X the I On think the to grow the Part always value Part of segment, we starting some a for on the KOLs restage we're as number want are -- an if momentum time we lighter thanks pretty obviously to a at I we restage, a we ready bit that good feel want miss reasons. opportunity for you probably will getting actually that out to in first, the category? that a growing for feel effect. think and good pretty I was at imaging, and category. But got going I X, than a said, ton progress the with had Do spent did good we to seeing today. our is -- but have there. time very we category, we have we've

this to in that going feel confident think we at future, restage, we're and I we is level. very feel morning, with the happen quarter going growing. to now, saw restructuring we're be the And you tomorrow the we'll what growing get foreseeable category -- but not it's

Jeff Johnson

X each assume, when thinking about at own that. would something guess revenue ask probably from case with our Yeah. for product But least those X Fair a apologize And that I into Byte to some time questions, have maybe the test visibility, or we have in then to line, enough. I I you that. converts over

y to relative all, XQ, we decent be to that So some helpful. X number step-down XQ, color sequential update sequential in quarter, relative months probably you've on just would at XQ, versus X kind continue any that out an visibility off see just just or to quarter got of fourth stability of third

Jorge Gomez

the to with stay in I have to away we to year, for QX, for going softness Jeff, giving of Byte. I goal but transparent we the QX because that and our rate been in think saw we going QX, numbers there's million we're $XXX from respect think that pretty miss am fact chance softness the a that for run

explains that Byte. seeing right are -- with we basically So what now in

Jeff Johnson

at just million guy, just on that run mean, You're right now I about following XXX to up XX and Jorge Yeah, rate. a

we in Third how thinking should about at That be quarter. just of continues least the ballpark quarter of kind it. fourth kind

Jorge Gomez

the and to rates behind. said I've SureSmile run then on I much bites is a bit meet or exceed very think million little $XXX track us

probably So you're ballpark, I think close.

Tom Stephan

Fair enough.Thanks.

Jorge Gomez

you. Thank

Next question, please.

Operator

next H.C. And line come question will from of you. Thank our Wainwright. the with Yi Chen

now open. is line Your

Yi Chen

long chain fall and both Could you on the issue can manufacturing think on side and side? persist you. Thank comment how taking my the for you you issue logistics you question. the to Thank whether the supply expect on

Jorge Gomez

pretty supply industries all to last are Yeah. because, going again, dental Thanks manufacturing this is Listen, morning. this much issues something for industry, to globally. the the it's hard how to question. Good the long chain predict not unique impacting is

that piece equation. a are relatively big we of So big, small

a minimize impact. the lot lot trying to of to actions We certain work new identify doing components. of for a taking sources Procurement, great are

ensuring We access a some to supply on certain are contracts for renegotiating key that predictable have basis. we components

short-term So doing. that things that's all we're

more chain but related improve margins long-term there and think are are the I desire somewhat to our to efficient also products. related our some issues, more to that the be solutions of supply

were design manufacturing have sourcing based or So the in of products lot as that components time that reliability ensure ensuring -- stopping time like then cases job doing trying we trying going on the starting the -- the many before, a to the a I look from periods from -- ability is supply. and things these not to to components that manufacture that of to are the and right the the lines supply. We're now balancing improve supply impacted operations, patterns us for our our that to and for working make components predictable on sure of far that's And right team chain at efficiently consolidate. the a products. why and of great said so we sources. opposed unpredictable we help we we're at are to different for trying should of example, harmonizing We're There's harmonize source have we of certain multiple

Yi Chen

increase it. Go to quarters? the expect your in level coming Do inventory you

Jorge Gomez

closely can do worst our the internal so. and our ensure all-time to that channel. that inventory in the Inventory very levels thing process you is to is are move watch And manufacturing think but inventory. drastically objective, don't processes smooth I manufacturing No, any we inventory from in for to period-to-period.

all is days keep actually of relatively and and decrease frankly long measure at inventory that that's key stable levels So goal to closely. are internal track is the goal our goal inventory we times term very to

Don Casey

you. Thank

Next question.

Operator

Thank will you. And Piper Jason Sandler. our from Bednar come with next question

Your line is now open.

Korinne Wolfmeyer

on questions. is for Thanks Hi, the for (ph) Coreen Jason. taking this

would of And for here? remainder if the and Aligner into your investments plans be on of and color Clear helpful. should there here on next expect more more of we level year the for business DTC you the marketing I color year? some guess, provide broadly; So and can any What SureSmile first

Don Casey

SureSmile, potential Byte, different but include program optimization very things pulling at that's running On do that closely, acquiring SureSmile at a today obviously do an We're it. that. that customers. to that is we nothing On there's search follow the DTC, paid a see looking deal different, Sure. will creating levers done we some radically big how meaningful a some slightly helping really how I better in one we're different them Byte and levers. but you since really look of construct, of content from and overall P&L lot we've engine social about is mean, is obviously Byte about -- job the

we have very program We good affiliate a insurers. aggressive continue program and at a pretty marketing aimed to have

is the not been think that, of, other as mindful we And thing a and been us. runway on it anybody a we So like clear We've to for very volume, level we going we're expect -- disciplined, it. also that key really to of thing front a Byte less social means. of to But aligner single other unprofitable go marketing to good within looking that's about in don't change. the let's and think through make it a reliant broaden paid do very got for it's we're its exposure chase DTC what's way,

years. P&L, the products. franchise overall as this out see both P&L, as the look changes of we clear or individual over the next couple We the as construct within don't So quarter again, aligner as well total coming radical of

Korinne Wolfmeyer

been us. it? And just pull-through have from taken one been program? you of you. I speak so this far is that even I know how early, seeing And seen for last some Can any share the early activate? from it's mean, one there can to docs Thank advantage but impact then Helpful. many you've of you

Don Casey

Activate, can't Yeah. people all attend place actually Thursday activate. you well DS happy. your been with the a prior know physically in really because have It's of DS earnings Activate for here and to you DS, Academy we doctors we've happy really come And part are when and our parking find call going is

America. we North numbers, It's So specific going principally you is program giving and believe a well. without that

Andrea Daley

question, Next please.

Korinne Wolfmeyer

Thank you.

Operator

you. Thank

from Lane will Our with Blair. come next Justin question William

Your now is line open.

Justin Lane

Good morning.

target the growth here. takes XX% the for puts gave to you be might I math organic be XX% it growth is for understand trying thought T&E question quick think, something of end a the to The QX, what softer essentially initially just year, implies and I Just year-over-year me. in full that my flat would correct, high if of quarter.

the but Given early you QX, like that said into earlier. doesn't sound orders on case what based pulled

can will you helpful. color give here any be So

Don Casey

growth I think implied of you thank Justin, XX% to range, be from actually organic the question. know, the to if close -- the would go you end perspective, for X%. a are growth I an

Justin Lane

the Okay. Maybe terms spend. other my for be volume just I of could U.S., in would me in here. math second on regions patient question check outside any update what And you're seeing and

Just trying your from guidance to think a geographic including you're about what perspective. Thanks. in

Jorge Gomez

quarter, those major any in really there. we're nothing there And because be you. little regions to highlight bit you not those is, said way sales are material affected continues are than see earlier, Thank not There's deviation honestly, lockdowns. the a have markets for performed small from Zealand, of to where all But Do example, our in regional China shadow a seeing small that. few third I about a performance lockdowns really, which parts other For what of really markets? a well. New Australia, example, COVID

Jorge Gomez

for us.

the QX. we -- the from of in fourth continuation is in saw standpoint a expectation what So our regional quarter a

Justin Lane

Got it. Thank you.

Andrea Daley

please. question, Next

Operator

Thank you.

Our next with come from line Bank of question Michael America. of Cherny will the

open. now is line Your

Allen Lutz

themes? should supply Allen Thanks labor rank SG&A in those of order swing there, talk we I some rebranding, sort the for of taking the Mike. going rank by is guess, factors in of, to margin This order? mentioned morning. operating XX%. the for Thanks. good target Hi, about the about think for questions. at implant you You Can investments How the 'XX and changes.

Jorge Gomez

you. Thank

from I of is. cycle feel to P&L good be the needs There all contribution about grid we areas of them. all and a good there think to

with targets certain starting we growth. our been hit. top-line, about And we for target X% revenue that have the want explicit have X% So we to to

well margin still perspective, go. them and from savings perspective. do pursuing process, very lot modernization So and then as we well, then ways are enterprise an stability are call that opportunities for we SG&A a we That's to something there our harmonization, as includes factor. I an a margin long actively a important to And centralization. And with further trending that cost keeping is that in implementing what we a from a a steady gross have of gross and very COGS both been program have that have

I in should tons perspective think an possibilities manufacturing And there is our cost as footprint, of facilities, both further optimize opportunities our a improve well then to that general. from terms as of automation in base.

learn ideas think some interesting ways think of how I footprint doing new live there I with post-pandemic, as to the or rationalize are to business as well. software we post-pandemic

a thing things. is do of cost I to more so improve tying the trying from The The overall. perspective. that manufacture of materials, improve mention design to design efficient work the last and tons it's to there's product to teams continue great So cheaper would

all those feel levers together, the target. of important actively where are all good that's you So about add pursuing. XX% we we them that And are when

Allen Lutz

Thank Great. very you much.

Jorge Gomez

Thank you.

Operator

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

now is open. line Your

Nathan Rich

Hi. morning. Good Jorge, questions. the for Thanks maybe high level a question.

sense but lot thinking you're how being get the dynamic also on I I we XX% cost the has more investing we also how about You between pressures. guess thinking about into business, your you're head to obviously after of how in as you've that some historical balance highlighted to of dynamic now those do be path aggressively reinvesting opportunities, to of guess, going It'd the changed see go XXXX. a the margins? about of think inflation as that maybe forward, You you that great product added opportunities? the have think about

Jorge Gomez

think thinking don't our I changed has substantially. Nathan. Thanks, pretty Yes.

I the that going think this pandemic. of is now had facing a what we reinforcing beliefs into we're right lot

reflective of to important the have the to that of some trends. in near expect are is consumers future work. reinforcement they things great desire Don bring that. respect and from and and with What faster we have, I we in that the proud out invest really the changes ideas And so activity macro how in is and And that we to translating of market of lot of more increased coming that ideas strong are that of R&D pipeline, a we into have a number we indicated and Digitazation, our have the like behaviors to

it's faster. us this is think this we there do had excited I of great pushing opportunities faster we're just about we're and ideas to things is is and opportunities, all the reinforcing I before and again, to mean, really the are really So excited just move trying about frankly,

Nathan Rich

distribution a seen kind price -- a of Have seen inflation of distributors? partners? to in lot something feel and just very at it then on the little know you levels I you And and just I the all all said your you that of stock increases with I revisit. focus follow-up, be a quick wanted have coming. like think there's bit could you Do changed have inventory by at

Jorge Gomez

We levels don't manage and disciplined seeing point. our and so a track this We think that at inventory closely we so. in way that not we're

Nathan Rich

Thank Great. you.

Jorge Gomez

You're welcome.

Operator

concludes Thank question-and-answer our today. you. for This session

hand conference for to to pleasure comments Don Executive my the it's closing now remarks. Chief So over Officer, Casey, and

Don Casey

saying. which it. haven't and good we seeing something get We feel our summarize you're Are plus there's question question get. you a time long and platform. that a about great implants about broad quarter. a excited a is XX% really some talk for there's tremendous gave on and We Jeff very Yes. It's appreciated a very, Thanks always. we're all that long typically consumables, on questions we've we so beaten by much. us res. this with And doing rare fee as across implant when time. the And momentum stuff double-digit business we feel guys the thanks T&E about a really that growth, to time. innovated seen a It's Look, I'd you organic been

headcount. almost I we're we've were restructuring. the fact about We quarter-to-quarter So Basically feel terms we announced since as we years team pull at look we feel that when in the X we much phase kind margin just we simple get but what feel about good the I in We out functional. of the out. this, in a It that created good a bit would more very back recovery growth. day here excited only in about did then, and more we not that's ago delivered on And to targets 'XX the if that of pandemic, really our was future. organization, discussion. of, put the and little is into we the hitting then that already really mean, the X track you

guys the we're perspective the of in you World, kind world. we got how who all laying really and of out well-positioned sessions. to from in attend you become terms out, Sirona could to you look think those For Dentsply why DS of things thank see a to procedure some partner up say practices and the all and over it I'll essential one-on-one and catching forward close is

Operator

Thank conference and our call this you. webcast today. for Everyone, concludes

You a may good now disconnect. Everyone, have day.

DENTSPLY SIRONA (XRAY) 4 Nov 212021 Q3 Earnings call transcript