XRAY - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by for the 2021 fourth quarter Dentsply Sirona earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during that session, you will need to press star, one on your telephone. Please be advised that today’s conference is being recorded, and if you require any assistance during the call, please press star, zero. to conference like speaker to now Ms. today, would hand over the your I President Relations. of Vice Daley, Andrea Investor Ms. Daley, the floor is yours.

Andrea Daley

year Thank everyone. you earnings full Welcome morning call. XXXX to our Chris fourth quarter and good and

our is call Gomez, are presentation remind at related and Jorge Financial website you today’s for an Chief section in me Don our the call Officer, our like Chief would I call slide earnings to available Casey, Investors Officer. that the and Executive to of www.dentsplysirona.com. release Joining press

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

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

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

Don Casey

quarter There’s full the for to joining today. a Dentsply year of XXXX you Thank Sirona this us you call. all morning thank lot cover earnings Andrea, for and fourth and

I getting wanted our at the into discussion, Dentsply Sirona. to team Before thank

last the there constants. few challenges been years, Looking at have a through two the

creativity perseverance pandemic, of resilience that industry. first dental tremendous is shown have throughout the The and the dentists the underscoring

continue thoughts company, team our Ukraine. our to day, our the transforming entire our and with Dentsply demonstrate unwavering also Sirona. of at to they our customers and are Every in commitment the mission other The colleagues people is Across dentistry.

great we and support have will We continue them there however a to possible. team

today, on provide overview XXXX, with will XXXX will finish outlook. cover of financials Jorge then items, four QX an will starting our Moving a strategic update. a by cover we and I operating providing

made Google that transforming to was and represent Dentsply We sales An a week. robust XXXX. our and we initiatives. two these launch of this collaboration as performance digital year. later of important growth progress strategic of against well dentistry. in Sirona as There were included announcements are organic proud also Those our strategic the critical EPS progress Both with solid highlight our cash of delivered significant milestones example last XD the excellent generation. Cloud a and printer commitment

Moving now an an represents was with X, strong I versus revenues our on reaching basis that Slide increase This of for organic mentioned, XXXX. was billion. X.X% also rate robust to XX.X% as XXXX XXXX a growth represent financial $X.XX versus organic performance

over increasing investments strong the year I flow turn of cash was provide on more of on operating recovery. EPS call To year R&D performance, and the financial Jorge. the details full Adjusted SG&A now generated over with and will $XXX we the XX.X% was a margin basis with operating million. Our pace our $X.XX to

Jorge Gomez

on an for cover Today performance, for will policy. our Good all of you I fourth morning, year allocation us. and thanks capital Don. update joining quarter ’XX, current ’XX results, fiscal you our and outlook Thank to

refer organic of tables As otherwise we release financial a X.X% at sales to reconciliation delivered today my Investors unless reminder, back posted growth non-GAAP quarter, the of both billion and with In Please will the be results press the remarks based the are of on fourth slides, noted. growth the section our and X.X%. in of website. which of reported $X.XXX of revenue

businesses posted In declined we and the COVID-related supply also of company view growth one experienced approximately that and two XXXX. consumables growth quarter, or to Gross challenged implants, to we in in estimate the year. our supply aligners, headwind quarters chain clear a two sales. more total will suppressed but Our at our organic quarter. strong CAD/CAM acute profit with as last our In constraints chain versus line $XXX which three have or by was temporary least remain million a We points. this anticipate XX.X% for expectations,

optimization $XXX points million portfolio as and including and year-over-year due benefits efficiency primarily of or driven investments Our year-over-year points pressures. clear by by basis commercial areas, SG&A sales margin increased a offset to cost of sales. in XXX XX.X% implants, percent increased growth digital improvements from inflationary capabilities. basis rate XXX were expenses aligners, SG&A

This a pace of income investments impact to marketing. was of year-over-year. and rate ran R&D up no last versus of volume still increase increased at in the profit the as of our income million, quarters of R&D in quarter. SG&A prior versus the operating to processes an XX% one-time XX.X% below was EPS margin weaker three result normal in $X.XX increase reflected Operating selling lower quarter. million, and a Operating our XX% was $XXX further a in target net $XX of spend centralization the and year of reflects numbers. $X.XX R&D of Additionally, our primarily innovation and operations. on down was due year in rate as has first exit R&D or quarter SG&A as was focus ramping year. back a the our million expenses we result of $XX prior on re-class XX.X% year re-class were The

equipment to reduced manage components performance, moment. We the rate were The shortages, component organic points. sales chain inflationary centers. impacting aligners, supply posted T&E by due expansion to CAD/CAM normal our higher ended imaging strong growth continue growth as technology this as a the and than next the In X.X%. industries, double-digit grew chain team situation supply is the equipment majority in backlog We Similar to and Up difficult organic the four segment face the segment dental have will possible other growth started by implants. in with the while to estimate impact to quarters. to electronic treatment imaging declined many led in effectively the Turning least at quarter, significant and at over quarter was segment inconsistent production challenges availability the despite and T&E X.X% consumables of QX few cost-related the in until T&E sales segment pressures. conditions. supply we quarter, our chain third of clear fourth of

were to consumables levels primarily side, pre-COVID seen the sales QX office and the levels. returning On XXXX to organic due declined strong capacity in patient traffic sales as

same comparison expect QX XXXX. the difficult We in year-on-year

also sales portion that the forward increase We we estimate QX. on of price pulled implemented X into a October

the aligners Now region growth during quarter, were million. to CAD/CAM. and by financial sales performance U.S., turning $XXX we increased in In sales had fourth Organic U.S. implants, year-on-year. the slightly

U.S. Our the category million to with of European performance our roughly in of sales line consumables product $XXX by performance This T&E. in organic with representing was variants, associated in the consumables similar X% increased APAC expectations. primarily with COVID and growth sales were with Rest was government and X.X% growth $XXX world region organic impacted unfavorably restrictions of China. across growth million, were particularly

year such from our no goal. rate organic exceeded customer was to we reasons of the for changes presence our $XXX growth XXXX our $XXX In a range. in outlook of we full this before, a digital To to Now the year in In dollar three lower top the on that patterns XX.X%, exchange of have a short sales in million Reported range. Primescan, Orthophos, were Fiscal performance, fourth near as aligners outlook spending XXXX expectations in U.S. in $X.XX and in strong we having progress a the rate, delivered tools. and the weaker year diagnostic euro growth end million clear had ’XX shifts reported devices business SureSmile Bite year. sales to quarter, engagement of as came XXXX. generated billion. sales our years, came our annual such scaled Axeos, indicated consumer run space key in Digital at of vectors. turning

in we our However, Despite QX. growth in we the contribute sequential VTC, to shipments believe of the achieved XXXX. challenges half in aligners second growth Bite in in will total aligner

year finished business implants strong. the Our

the our sales. ratio intention revenue. of improvement is X% margin improving be growth efficiency to keep initiatives. core benefits market to pre-COVID represents XX.X% R&D reflecting at growth finished with of the This below year of to from to XXXX were XXX R&D We our for year strategy. profit the basis platform continue XX% levels, will Our of full rates remains our XXXX. achieve expenses year gross SG&A expansion consistently. points since an Full

our to expectations in Turning profitability, than for margin XX.X%, full operating to greater with deliver year. XX% now was line the

over points pre-tax continued rate XX% to basis and was delivered of effective have since margin mix primarily since we versus XXX tax back, operating basis and income in The XXX increase due The COVID. XX.X% XXXX prior business approximately was XXXX. points year. the geographic Looking of expansion recovery our from

XXXX, $X.XX year execution year. scorecard cash in full to an $X.XX EBITDA billion. operational of EBITDA In of to earnings, measure delivered prior and flow we Turning is $X improvements EPS the approximately in versus we objective generated generation.

shareholders, We million exceeded $XXX and returned cash million. in flow million to share Our flow including dividends $XXX and was operating free repurchases. cash cash approximately $XXX

$XXX We acquisitions on with of and finished year $XXX hand totaling million. also completed million the cash

provide fiscal our financial me let an of overview XXXX. Now for expectations

in to $X.X equates X% expect $X.X sales of be We net a to This range. the range billion. sales to billion organic X% to

market end products FX dollar a to of meet Our demand of From perspective, exchange assumption the certain channel which markets. R&D The revenue euro lower to X.XX, pressing a the FYXX X.XX. remains most variant biggest pipeline in partners. customers needs challenges of for average and strong is than rate new exciting and our our exposure COVID generating is U.S. despite is

from growth expect contributions aligners, to imaging. We CAD/CAM, implants clear strong and

second rate exit XX% XX% the XXXX that Our profit half margin and in fourth margin the the is the year at be will quarter. of expectation over operating in target

optimization improvements XXXX efficiency We through to will initiatives rate effective XX% continue and XX%. challenges. managing tax portfolio the while be in supply chain estimate and Our between

back EPS half in the range weighted We towards of for approximately is of to the heavily million. be expected more the be to XXX $X.XX estimate to growth year. anticipate Our is count $X.XX. share

and in approximately and the organic projection. are in low or supply be first digits constraints, revenue annual XX% to are half in to second chain of XX% expected the the mid-single to cadence, half. single earnings We Due half higher in digits the growth total pressures, projecting first inflationary the the

due markets sales the observed reminder, year of to margin in also income operating typically to result, be slower the a a January, COVID. has As patient lowest traffic as QX certain we tends This quarterly and lower.

the the the of impacted ongoing During of shortages to imaging are and electronic shortage center These impacting Primemill well. components, boards by be availability will first the half continue year, the now of for businesses. electronic treatment in we as particularly

We dealer wholesale partners production. our reduce to units demand. mills secondarily fulfill by short for Primemills in are In meet allocating boards spare is the the will first quantity is to the the U.S. term, sufficient inventory thing reduced for to retail our and end already our but that parts volume owned to solid do customers. needs of have right and this of trade-off customers Primemill of in The demand

half be our and by to XXXX first support and to colleagues will but the likely a year-on-year I to Europe. sequentially each my my projecting geopolitical are in we events Eastern impacted Finally, XXXX. Bite in quarter Don’s to franchise is overall growth. evolving want to expected words echo contributor decline in a express post grow aligner the sympathy clear

are a our teams Our region terrific the years. last grown substantially presence doing and the commercial several in have in job

Our Ukraine Russia revenue X% in local company of XXXX. about represented sales total in and

measure situation, of it to the conflict potential impact Given the the ongoing financials. of the on fluidity hard our is

one to of in for will business in and continue to X% continues expenditures. reinvesting the the number to capital We We to our to framework XXXX, monitor X% our growth our revenue outlook. available allocation at least options profitable be for to invest XXXX gears priority. assess minimize and about plan first, capital impact in Switching R&D

and consistent cash Our cash provide return our to also shareholders. generation gives the of a flow us ability to meaningful

combined we returns The are flow will confident continue more of two the with free will to or through revenue be growth the to to next year, of throughout to progress last dental earnings XX% to use cash share the dividend. opportunistic reach of Overall, a Similar and buybacks remaining making us accomplished and least we expand are the announcing double-digit dividends we key free For over our the resilience time. share areas today years, market return the in flow at we that repurchases. year. allow to balance increase our through cash plan are of XX%

of Additionally, of EBITDA I’d our to and shareholders. our the a like funding our cash close competitive the investment very highlight we enables of To priorities sustainability to the strength underway. two yield important remarks, have my generation flow initiatives funding

partners first protocols standard our that are global Smile clinical with Train flows. cleft FDI, developing strategic collaboration we treatment the in includes First, for digital work and

call healthy we back importance every This that, to with person’s With sponsoring by for of customers to smiles. will XXXX is I empower the overall to Campaign millions Second, are awareness of Oral the now Health wellbeing. oral creating for World our health the solutions Don. aligned promote innovative turn mission

Don Casey

Thank you Jorge.

perspective forward. and on the to late margin, XXXX, strategy laid Despite provide had we outlined targets growth, Moving organization. our that In to achieved improve some on, have simplify accelerate and we challenges, wanted we had a going I priorities largely the to program out.

important, our as innovation team capabilities. sharpened our improving while has Just strategy our also

said, continuous to reliable Dentsply calls we allow digital deliver for margins, in the digital in or in become We Orthophos, our indispensable partner base, strategy. will large strategy on to to Primescan, to On and Axeos. installed build X% procedures XX, expect growth Sirona Slide integrated critical earnings it’s going superior workflows outline improvement our us revenue, on the whether growth. forward to our that double-digit It Jorge to believe As delivering those of capabilities build we X% dentist.

capabilities diagnostic of best-in-class Those these look that into our outstanding globally are essential diagnostic capabilities All flows. feed ability as dentists enhance their offerings dentists of among shaping All future. was digital so areas, There within do endodontics. to include the offer a would and dentistry. XXXX. dental four work essential treatment of the to areas more helps in I the progress strong during restorations the now progress each aligners, these Dentsply clear in to starting make outline with real like Sirona implants, this leader in franchise CEREC dentistry. These

a were Smile Primemill. to and CEREC we with on was software DI of number able good There launch addition In major X.X sold, X.X. innovations record Sure to also cameras progress

Our allow higher aligners into complex add CBCT systems that and stems them to to robust imaging incorporate more sophisticated end saw from like demand tools dentists procedures that practices. will more implants clear also looking diagnostic their

seeing have mentioned, year, Jorge constraints slowed ability supply demand imaging. As chain impacting meet XXXX. are our challenges customer These late to challenges there starting those in last and we are continuing

is in that important our accelerating portfolio area digital Another development. to software is

operating single, support as system. portfolio. and all building user and a different spent We and customer will for initiatives developing Instead that treatment planning single entire of planning have approach the platform software overall extensive significant easy-to-learn for interface offerings, have are the for to a devices single we XX last our this of the in resources area. devices separate all individual months a creates we our our advantages will treatment This totally over

it cost while learning. allowing and and advantages major also gives machine create us AI to us scale For Dentsply around speed Sirona,

connectivity. entire will practice Our opportunity Dentsply recently these with decades this scale announced will dentistry will dentist collaboration. experience of its their to cost, and while give and Google accelerate fruits collaboration the multiple efforts. digitize expertise The efficiency, bring in in the with areas. Cloud partnership security digital improving Google of to Sirona bring

opportunity automated staff. the to grade, We tasks is event things have will CEREC lets XD the Primeprint the delegate around launch and quickly to to many actual XD talk Friday introduction scale many very also of and produce use medical surgical printing their this and design work, and Dentsply models partners also system dentist for allow about also the the is efficiency. inexpensively. the come look innovation. announced let full This the the package dentist offers week the flows work will a more that forward amazing do service dentist practice of to or one printer complete guards, great complete to time. last night Sirona lab virtual with easy saving our dentist guides, integration this our to This and and of a Primeprint improve with will like highly It dentist

really introduction. results now restage, the are by to PrimeTaper our we around which implants, early encouraged implant Moving the of centered

and impact value abutments double approaching happy growth as to digits Ossix been year. off We quarter, the are MIS, driving fourth versus have we brand implants positive Dentsply of Atlantis been brand Biologics, as custom grew flows. the a In the building work digital single The in like Sirona well. and business reception products, the our prior has expertise see excellent PrimeTaper supporting

into progress in As the continue performance and to early XXXX, clear improvement will moves franchise. optimistic was our beyond. world aligners There Europe and see also progress the are in XXXX rest clear in implant look on XXXX continued PrimeTaper of and cross we we that

Bite As Smile and $XXX Jorge scale our objective provided run during million grew the rate to hit XX% acquisition mentioned, aligner also year. Sure The its of important business. clear

has have scale business. aligner and areas also significant been important around the R&D, that like manufacturing there While DTC changes last been year the in in

there iOS As for lifted, the been spending. The privacy competition change altered the pandemic consumer increased landscape. discretionary further has

Bite. combination DTC sales across range in As of this spaces, of brands multiple a products, negatively we saw impacted including many

continue that not is today. underserved care believe, reaching to dental We is though, a accessing Bite that large population

exposure fastest and the We Bite to plans, plan dentistry. going one areas aligners of these Clear sequentially year. in build our essential the the how Based expect a increase digital we across quarters growth during on strategy are growing part on clear can drive our we an this need have and off forward. of grow to

believe market and term. We are to are positioned we this compete well long committed to

every a and pillar with finishes overall strategy. key including a our Virtually also is restoration, business to procedure canals. root resto Our implants

Our X shown brands have restoration like Class momentum. Palodent good

material, lets offering a customers new that Sirona competitive milling by also Dentsply more product. in Primemill Our Tessera more space effectively compete

While we impression see is offset like as areas, by off. parts the that take digital good material, growth corresponding declines in of these portfolio, in priority impressions

strong has position a flow, franchise endo in our critical Finally, another yet therapy. work canal root

recent Dentsply is launch that while organization. demand lot part team improving adjacencies. companion like ProTaper In and competitive a in investment solid efficiencies R&D is this start. the also important products cost obturation to increased off are Ultimate of and more throughout areas provide making of in a sealers the to to Our in generation Sirona The launch margins, driving order and committed were

executing We focused and and opportunities closing few centralization comments. on identifying are modernization. against enterprise additional for A

While we for our value report team quarter focused earnings to basis, the creating is on long term. a on quarter

Over takes focused Dentsply been in advantage that progress the position a years, few past the sustained there Sirona’s strategy has developing market. against of

against has and All of the this done of uncertainty been pandemic. complexity the

where has faster eliminated company that vision grow We have dental have driving organization. margin, increased critical also that and and portfolio our sheet future and growth our digital delivered significant on aspirations. other that moves accelerating is The balance generation of been dentistry improved has than businesses strong capabilities. that parts has There exposure to the There market. or have not progress our simplifying cash moves segments do fit been growth, our portfolio

evolution to We expect portfolio that continue.

pipeline be sold have that We our improved truly across a also commercial global footprint. can innovation

around world. indispensable as digital partner become of dentists look this us to to the All the serve we will well

confident this and open progress years, our the Dentsply With us the will makes term is is I our despite made mission ups steady. and well very questions. over that, our that short it to Indeed, three team Looking and future. visible we downs, All have about Sirona excited positioned. past up is

Operator

[Operator Elizabeth Anderson Evercore. first instructions] comes question Our from of

open. is line Your

Elizabeth Anderson

if my question, the fourth make guys, qualitatively any you this guess December, could thanks first results, question so want understand commented color here quarter February, the to think and fully I much would morning. I we day just sure on omicron provide progression you around across impact then January I the just I the impact Hi to of for and more sit be January last but results, it the helpful February. as on

Jorge Gomez

facing in became lot morning major We primarily and COVID many in in where a markets, more policy have those traffic, complicated from which of a so bit, volume, result were The for constraints down shortages Elizabeth. little as the volume of a practices China, of are provinces markets. week in restricted as demand go in to a last or zero a the like weeks and probably two dental tended last Good substantially a a were December also from situations many in had result couple December again perspective. lockdowns, staffing main two as still patient the result we

they than Some the particularly infection remain with say of on later probably and improved. as see lockdown. of of The that a U.S. is in January, I went at than and up we volumes picked to that’s fluid over situation can cities would in month in observed China a into couple slower is the lot curves. weeks a look based has situation U.S., January, still Europe respect we in the meaning Clearly in behind, the Asia-Pac, did because volume, what we normal you COVID

of there normalized, volatility I spread to expectation next respect that things type but the is over of the omicron. been more reactions the all few weeks, know, you to will with think high spread, those as has become an

Elizabeth Anderson

new of Got sales talked the you expect results obviously to it, talk you Primeprint product. if and how about XXXX those Then the you contribute various was launch I thank commercial could wondering about that’s regions the to helpful, you. launch for there. calendar

Don Casey

on let cadence. and specifically Elizabeth, me sales let Yes I’ll the start Jorge comment

Right now, midwinter, be Friday roll like kind have things Our - everyone of virtual it’ll create second North quarter, and event American urge our hit a excited, virtual very, of - Print focused is we’re on very I’d to we’ll DOC toward but events. you global launch, to expectation end the Chicago and with principally regions. our the on

will that is and the and now dentists it mostly really your the close We’re to Central reaction beta a excited It third Elizabeth, cadence I’d testing go quarter. America draw really positive. had There’s to and The first. couple literally a alpha pretty about will year, North We’ve in attention service treatment remarks. work committed well. like we’re the the will package actually also outsource and and there’s for you on to design using which lot revenue-- specific as the printing which follow-on planning to in offering the excited to may let we’re Jorge, the it, dentist be Europe a about Primeprint. by global of prepared Obviously the stuff ink, much a want from the for components printer, pretty comment a

Jorge Gomez

I from think the you standpoint. Don, Yes explained cadence a geographical

re-emphasize, in to a third markets Just still the need firm and few in first do finish things are up, selected that to a and plan to There to that in Europe. we U.S. We sometime tune quarter. for mentioned few there a pricing the consideration overall have us, electronic prepared components, constraints is supply with we printer. and economics chain I including of and are remarks that fine to then my the

incorporated financials Primeprint. contribution ’XX have our some in from for We

is included guidance. it our ranged, and it in have We

get to estimates as we tune will those summer, the closer to get We actual product. we launch closer for the fine the as date

Elizabeth Anderson

Okay, thanks much, guys. so

Don Casey

You’re welcome.

Operator

you. Thank

Our next Goldman Rich the from Nathan of question of Sachs. line comes

open. line Your is

Nathan Rich

the the--your I’d need Hi, on to indications mentioned and guess and over of questions. Thanks disruption and in Jorge, course be how and this out first to might imaging couple ability those of also sense have you’re year, plays you that and ease of within supply have curious that production, the I just of with your of morning. assuming impact the that on what to the get the seen supply to have portfolio. constraints maybe kind how get cost and equipment impact the the the year? for good wanted on of started Don other categories that you start have months chain the any you components visibility I you much some the that

Jorge Gomez

let us, Good electronic amount morning components in but is complicated for not me The visibility of all industries. that. shortages only Nathan, take into

those the is compared other companies components same We have electronic of supply with type very and products use notes that multiple inconsistent. of the actually

Some only believe the situation ease mentioned people longer, really before that many the this but predict times, we been some impact from impact last us gross higher a to continue were margin first couple and so we impacting to That price, cost this we sometime people and margin impact components quarter, the I for and cost the our only is able One all other in not perspective. had believe year, been access issues our industries. a reflected the of a half needed, time. to for it’s the to have will that our experiencing so margin, in hard albeit could is thing that for at will had gross gross

there. of in that are projections. imaging balanced extent up the Our numbers, captured managing have levels, of they the some products, is is in I time, for $XX components issues continue and chain production a and is guidance XXXX levels only In quarter, between or is supply in as we situations seen one all weeks, network $XX a The from captured totally caveat a so where few a do these so especially and we contemplating have that doing the million to across some to $XX are fourth go million, roughly for and continue we a impact it to to terrific those components centers, job million, procure the we we and challenges XD into was the so. large inventory I dry few lines said, our continue for the ensuring inventory is trying team treatment certain multiple sources will periods had with, to as our risk a in said for challenge before, and lot be already as But that time. is a will the days challenge and team, provided,

Nathan Rich

cadence of to the supply follow-up that, to talk helpful. you annual That’s over business. to of I of you’re that updated tie from and are the might Can that. I for of balance use could Thank the have about also we million if the the the margin if great. to in to the first to terms just you margins XX% the Okay, you you. so impact, year, year, my thoughts quarters XXXX, of kind just the working hopefully kind million plays of the thinking be ballpark fourth expect balance of the of couple quarter. beyond how by $XX rough should expansion any $XX about then Maybe clarify, understand how eases that maybe year? the and get over what on in beyond out Jorge,

Jorge Gomez

million fluctuate extrapolate on those could not less, in The numbers range, more, in impact specifically so I one always so it be similar, be all so the $XX it impact QX, because the would you million be to would QX. a extrapolate. is $XX in was QX the not to could that thing could Yes Nate, time, I ask

Our from situation change, we or expectation could couple able so our be should to the chain supply recover that is that’s in that projections a next situation. fluid of but show, quarters,

I come volume margins. One, Your perspective, in second lower, my into you and factors prepared quarter of that a question here. margins, a expect from lower number about consideration indicated results we in and QX first low cadence to always know, remarks as half be the is a of

going depress Then to Bite, the have Bite headwind. talked so year, also supply in the some the versus half. so that so expect chain that’s and the half I first We effect have to about, margins issues first a last mathematical we is that decline of in we of

second half. be we to a the second example, then the contributor there half, Bite As we tailwinds; are to growth in expect into go for

gain to expect acceleration the We product of traction. launches

use although in the the are CEREC half. XXXX, We progression QX--actually about point you year. traction throughout is another is have up important are Primeprint, net price increases happening. began impact pretty potentially respect something Pro The seeing half. last throughout improvement ’XX. it’s can going are from they know, In market Hopefully implemented of we’ll Primetaper pricing would then a that for hopefully growth also is going we with second Taper have and incremental and very cadence helps not The the quarters, pricing. progressed QX so helps that and we some monitor products those of more now, as with be Tessera. the significant, increase positive I price Costs X is - Those also Ultimate, in real, to to is second going and three they opportunity to offset to pricing. and that start are October ’XX the XXXX. indicate environment and costs, will we in are to excited and gaining inflationary Those contributors that first we a the we annualizing do the

question. good this talked before. We’ve about ’XX, Beyond

profit operating top are I it’s always--once growth to level important really at think balance for rate, further we the growth, to of going XX% us margin line be margin we with expansion.

is we think our priority do making is do higher priority, XX% line think than so going but the more, rate seen biggest at margin we reasonable. more? I I can faster Can point we far. a that have be top that to our starts sure growing

Nathan Rich

it. Great, thanks comments, much so for the all appreciate

Jorge Gomez

All right, welcome. you’re

Next question, please?

Operator

Thank you.

Cherny Bank of Michael have from Next America. we

open. is line Your

Michael Cherny

detail the the a into to half. all for the second particularly thanks little dynamic and and year, the course morning, the get so to good far. I Hi, over of bit cadence want

are better particular, that better about going areas what’s better, growth single or that part? to about think second you chain organic side, supply think that mid the shortages, there, half that the you you the and are won’t potentially most Bite or let to you get better digit in or target what get concern As as of at

Jorge Gomez

with year today, throughout situation so factor me I I it Yes, consideration, happens that’s trying control, supply in is the beyond the conservative to important be things chain challenge. our think a we and can and the see are best concerns most are thing we that the what are so that think an

actually for things can new of think that I provide upside, possibility products a is upside. terms In

numbers, think acceleration source those reflects what I are and we so I likely outcomes the think in upside, another a are the sharing why we implants those we of confident think but view we of important this at range think--and aligners guidance traction, balanced clear the and both potential have of that point. like businesses downside are the traction about and we upside, our we’re providing that’s overall in is

Michael Cherny

the I the Thanks question Jorge. one on mix portfolio. guess Then other in

about a think of likely to portfolio changes You you’ve last identifying evolution the made mention obviously is do areas expected How continue, you that did couple lot sense years. make within that specific might we moving especially thinking in doesn’t be had, make and forward, not Dentsply? the as go-forward about sense go that given scale should some portfolio, you’ve the portfolio, pieces potentially of the we anything within

Don Casey

Yes, thanks for the question, Michael.

to look invest can needs and you some it got to to means We’ve I R&D, know, is we’ll of those we excited and activity is and to keep you’ve harvested any--you to out it, aligners, look analog meets any we’re don’t of to we about. scale so criteria those is last at our there. but is there’s in stuff, doesn’t, harvest drabs preventative, we’re if or the forward. massive them, we’ll make or this out been on margin it accretive, point, it and add maximize at growth we’d it traditional also out place whether flows. going ortho, look there real accretive, work that value what the of which clear At morning we’ll a divest three we we of businesses is through dribs those decisions, get and them, think tomorrow it we kind our added exposure If look if and potentially the digital going years, seen see essential got about criteria, profit them; lab Over think continue

Michael Cherny

Got it, thanks Don.

Don Casey

Michael. problem No

Operator

Kevin have Caliendo Next of UBS. we

line is Your open.

Kevin Caliendo

call. taking Great, my thanks for

just in sort it, you are to of Russia, is where but you terms and and to of what it how for the be, and at knowing know low things. impact contemplate contemplated might part Ukraine business it’s understand total on trying enough have it or your one digit obviously First but sensitive how it? revenues, point impact did single your of I you this to it’s what still meaningful is,

Jorge Gomez

this It The to respect Kevin. reason any as meaningful, what is commercial point still that small actual we with very to with local in our and guidance cadence said. on our the contemplating early major are not is but not clear it’s disruptions geographies. morning happen At is the you markets in XXXX, Good geographies. for going it for is in those

example, indication particularly conflict, We has traffic for as down that, of slowed patient a this yet no result in have Russia.

smaller potential and lot for From us. don’t For sanctions capital yet. Ukraine, standpoint, flows, it’s a we know a regulatory

We’re trying assess that. to

will have learn we We weeks, this all point time. to it really more any this in capture to the not quantify decided because but at downside next hard is few at

Kevin Caliendo

helpful. That’s okay. it, Got

and or Just a term provided guidance in your revenue in you’ve of update this A lot programs, I been maybe has broader XXXX. term which point place targets Is there that bit? year strategy long question. the for long a even at culminated margin targets cost plan question, think savings a some guidance and/or to

Don Casey

per we’re four-year that interesting as allocation update at we the complete term intent of the identifying as what earnings we’ve in all but think fun the future my how on to well right we and to--you our know, talk QX XXXX, we’re that but what year, on outlined do downs, against perspective from we kind said when investor and pretty targets there’s complete that an ups we path things optimistic are. to pandemics and a stuff, we’re plan, a thinking we looking four-year to you get forward our margin, operating day, we’re middle we’re Yes going and and plan, to been of of basis, obviously we’re which how Kevin, probably is timely where happy through and the one investor capital then tell revenue through we get wanted initial an guys doing, discussion now on you year, that point owe and we’ll long strategy. about about would our planning is about I day, about the we we’re share, the and thinking see we’re

Kevin Caliendo

so you thank much. Great,

Operator

you. Thank

Johnson Our of comes Jeff next Baird. from question

Your line open. is

Jeff Johnson

business morning confidence be bottom Number that? third quarter good clear us the It two, be Don, your business, you run a to and that like couple by million over for $XXX sustainable, not just back in but that rate down I’ll is business. thinking with Thanks. were start we the year maybe be you, that It Looked numbers, looks sequential a aligner of to full that number year growth One, to Bite growth ’XX? at ’XX. How outlook you’re number rate. for in year-over-year not so two-parter seeing dollar Smile able growth half and $XXX us, seems the least run growth a the about guys. Smile. you outlook off you might in Sure you quarter, million that what for well, like in are are so talking at about Thank our the said Sure solid maybe million you the Bite gives on very year. throughout like that versus XX% obviously, hit grow may revenue as fourth in

Don Casey

got Yes did and fact right, it Jeff, QX. Smile, on Sure Bite, it decline in exactly you then on in

focused that there. the Obviously much at stuff as we’re a we going within daily like Bite that more put talk improvements. some things couple use affiliated marketing, seeing a go using we about on Primescan weekly, middle build whether our a traffic not population growth Pro, dentists we and Sure underserved think what we this really how Bite we and, office the are potential as stable brands, literally more sticking on they--exactly and were on been search knitting, is that and to and to stuff refer then anxious year. we’ve things Bite we to and of capabilities platform, around monthly that the into today, is, we’ll in got sense we’re other on changes a category, and forward get how There optimization, basis, look there Our insurance Smile we is--again, DTC to of landscape which do we dental competitive implement generator the the look how on accessing around think large, that’s things the we’ve do engine

Jeff Johnson

then to that’s versus XX% there, or Jorge, you margin to there? get operating saying you’ll ’XX, you where that want made a it then Were margin, be helpful, it just goes. operating and as line comment about were from saying tradeoff just will right, you All a you I you the understand see you still would there get or top to margin expect, thanks. expect from on discussion XX% in expansion to

Jorge Gomez

the - when are rate. in at some Listen top throughout exit Yes XX% margin quarterly in past, year that and above year indicated we to company so at the be we the of rates did over Jeff, that. last XXXX the at fluctuations, the the we structurally had beginning years, we operating the over expect several despite example, would XX% we look the margin substantially we progression the ’XX for

topic sure of happens was create my continued for to to then? most margins comment--my between trade-off expand that in top be go products, value. changes at through all higher to our to into make operating XX% way the move we the the exit a we in so that are XX% at making be changes we structurally debate continuing was, what investment structurally comment ’XX we versus above shareholder we profit At point, we infrastructure, mix, Then and line think the should the a that, XX%, the new be level. levers ’XX, will As level in growth effective should that beyond operating internally

Jeff Johnson

Understood, thank you.

Operator

you. Thank

have Blair. we Kreger Next John of

is line open. Your

John Kreger

most Hey, categories appreciate gaining supply impact. just to are as the you’ve will by be think think about chain the on that the product guide, the mentioned you Jorge, issue. chain it. you thanks up constrained supply review of couple sounds again follow you that brands shortages? what are it a Wanted ’XX the guys, that Can most like

Jorge Gomez

It Axeos shortages market. Those of the Yes products our today question. Orthophos, been in John, by thank equipment, is for so really components. the of impacted you well primarily one imaging products are the best electronic is doing has selling

big a two electronic components components. that there a other that, the those random around voltage ones, relevant is of are the Europe with not lines, kind which high and market in number that. then are to are type addition are the Those the having there’s impact of treatment main and but some treatment components, categories, of but Asia-Pac, centers, main in we for U.S. that centers and In challenges two electronic

John Kreger

just same better hopefully in follow-up, this kind my thanks, is that feedback are sourcing? Thanks. then second perhaps suppliers, confidence you’re or of and from half? topic, in the changes Great, you what Is situation that other getting pursuing drives the

Jorge Gomez

of team all from bought sourced challenges, products continue. actually ’XX, procurement from out will past. went components in We above. it’s in and started the Yes, not we That to the face that places we the had as activity

it’s towards a improvement, of the other in in of heard products. the related conversations begin We on with companies certain In I of our the that situation already to are banking end suppliers, many banking have--I’ve having some substantial to challenges to ease really some sort and directly obviously talking sometime complete Overall, will are the tons What imaging but experienced improvement supply areas, second from but not we’re modeling improvement, solution slight first are a fluid. components we other not we believe people a companies, of half. on we’re where half. they some have the actually is

John Kreger

thank you. Great,

Operator

you. Thank

Next Block Stifel. we have Jon of

is Your open. line

Jon Block

guys. Thanks couple morning. a just already Maybe follow-ups discussed. Good topics some on

ramping specific moment, of was about just color for I’ll do growth, What asset, growth, months. quicker you talked to to any acquired the had maybe DTC back provide a go You’ve then Bite you think to could full out long the XX level you for I more time - commentary I see at that about guys level years. term into and you market? this the maybe ask I what ’XX, said accretion for year the Just some Bite, modest think there, color importantly, accretion you and the a follow-up. asset how Maybe Don, also for growth believe just if the guys, there, of outlook

Don Casey

the Yes, It’s back do ’XX. versus we growth to post expect so Bite Jon, off specifically ’XX driven half.

Bite and two market. that’s kind Bite but clear If their say, the can’t dentists because the planning of at of our to--and grow, aligner Part business like defensive. or was do seen we aligner sit stuff well as were things, for mass the scanners going population, Bite’s the change, digital I we terms absolutely We perspective, there dentistry DTC of to aligners the a is R&D, based you underserved that for as and is strategy bigger in reach Bite, on things in about get part this two expect total we when quarters an look other it, its and manufacturing, making as clear expect we things to completely competitors clear pandemic, going was access treatment in in the us implants to critical pre-iOS were so to it quarters, and choices other is to what the revenue ability from one. whatnot. being cycle first business look, like other at there are answer critical market, felt We’ve to offensive have opportunity looked always we thought or

why a and dentists be to we build obviously will believe perspective. the in reputation does the growth patient total business, that Bite’s that care years us capabilities dental fact believe other ability we’re solution. clear thing we increase to a we accretive be begin Sure at and have for into going so growing, does Primescan dentist, was The needed Then optimistic, we out just can our fact for accretion, that the population, challenge do not is and as same traditional to felt in we access to tapping hence really that so rate the dentists, type those Smile a look, and it that around offer we and at aligner it a that population that in create talk again traffic are we’re Bite about traffic from the would the one

what really having like we as and going we’re to well treatment in to with profit brands, ecosystem are like important the long stuff to build believe access very today very, we’ where we going about believe in important we’re place opportunity give will is Sure of creating. be that we us and individual to scaled over Simplant we think a mesh that we our aligners, that We’re we it’s procedures, term, profile dentistry competitive like not business, like a digital Smile, the clear other things but an where the planning talk specifically

Jon Block

chain more, XH, point and the an possible? Got start just early a it. helpful, on the so look, backlog importantly, the team. a challenges, are great building, this Thanks where, versus but That was Andrea just if might and for shout I to quick service second on, conviction Maybe see just it’s fill of your drags alternative very it’s when color that leakage? a well, sort as XH? to and you’re breaking not and call slide figure your of also question, seek able Is to curious, I’m great Is people in backlog able that’s it’s an if that’s you we’re like just to it, that hey, time. to solution? any that late worried it there’s thanks, how our lasts, deck from difficult out know supply a lot out most you end long it’s maybe

Don Casey

trying full is day. totally the are back the we’re and to orders availability, Jon, rolling beaming back if so Yes, Andrea rest complex. and no there here, just is over to and we’ve try and not they’re as sometimes stop. down of for been thanks not, Jorge sometimes going It’s Look, are there’s What keep there have describe components, is orders. her

capacitors lot have months we weeks, the to to like. problem. of try learning might result our and and customer that it’s order It’s that been wind base. orders. They’ve you of you of going hey the we other things, obviously, is that relationship up that a very fast incumbent would is can’t advantage gotten would contacts have wait stuff an backlog we you have quarter, what old whole see the of using just does business. that would if on tend it that a contact imaging to whole to like we’re there products, getting But and our with building somebody with competitor comes with labs like competitor. an realistic as to and If something situation some loyal software there. Remember, going out go and--you We I on I saying, think a imaging there’s doesn’t treatment in going movement, to the aren’t is chips backlog we doing of happening of be the think X-number a I used things. new only very You going to Sidexis, voltage planning we our imaging. of later, of know, involves imaging replacement software tell as software new set reduce deliver really mean an go if absolutely. to look, the customer to look, look, What if know, weeks, Dr. then and resolved a of modeling we’re of we business other have friction Gomez, movement is first so not it thing, so It that’s but it’s shipping a you have set and maintaining I’m a high inherent move, to might there not XX for our we’re any of we the need What and telling as year. equipment, flow X-number there’s to not out we places maintain this from which through is it’s us order is we’re stopped

Jorge Gomez

that just would with the thing we for extent are so us. that generic are to shortages Don, challenges our add this or that having the components are components is own, I and electronic not devices. not to are are general, the we specific components components other a very large that Those is unique

Jon Block

guys. thanks Understood,

Operator

you. Thank

we Next Credit Suisse. Matt have of Miksic

open. Your line is

Matt Miksic

very questions. thanks the for much Great,

your as lot hard comments sort and that should an one know, predict, an the Jorge, think contribution you so to to maybe to sounds supply or risk to there. late year although about understand of is if then if do it of follow-up. won’t it and update there a love on the of talked But increases late that covered I sounds in a--you like I half year, You’ve this some here, like, chain, year, give to out you we the maybe that into what--how like back it’s could sort from that’s is began just back go last understand pricing, and price about unknown the

Jorge Gomez

On price good for you price, are price seeing first phase realization relative X increases. It of question, Matt. we thank the Yes, is think price the the I to October increase.

beyond a ’XX, this probably that into tell it if to million probably we had $XX on then increases, can opportunities geographies benefit point, this few products is where you you rolled probably price and where is a at price analyze contribution will think we I increase certain should more those good, haven’t we based and something happening, realization It in certain increases quarters, next in other the that. do million going I in price haven’t price increased to of few we’re out, to prices there months do or we be yet. $XX on have

Matt Miksic

taken like doesn’t year? you’ve so any to you Okay, just haven’t--it this be and far clear, sound

Jorge Gomez

Correct.

Matt Miksic

could new launches you’ve talked of understand Then measure I all carve around just the in and regionally, share sounded ups provide implants, I if I little talk product bright super could--that’s grow the some color Taper, some a if one to about Can the then share’s mix, and to super hard you maybe helpful out with opportunity get in it spots be helpful. share through or that Prime would - on the etc.? or like. this Okay, know bit to environment downs of about you it. quarter, but

Don Casey

as been important brands look strategy and then if at has We portfolio, abutment. a have you we’ve things good thanks we okay, like got we feel think Yes, value business we’ve a the as in let’s Matt. position our to businesses a biologic articulated supportive compete. well our that Look, that premium pretty brand, and get custom

strategy Our bit which we kind mid gained a grow the little was to share we of okay, think we like, fourth let’s at competitive actually rate, that in category quarter. we so high single get the think digits, which can is

value that tends get growth and start product’s and we’d company, felt a our factor it’s then we you a which you and would prepared for XXXX rate. so create of software take and the obviously, market aspiration Specific the is of I like bit but flows, will into did dentist, time, with for - easy-to-use when bought share, we traction Prime it’s of our our do planning we we’re we oriented to over given excited the to looking a with stuff, which grow us work is more be scanning is remarks, we’re of really good at and that it base implants digital diagnostic implants we brand, really--we solutions the about imaging enhanced know, all got we us As tell just we MIS getting to that spots, that we feel business about Over expectation best-in-class differently, in doesn’t built treatment course with. Jorge right said that things Orthophos bone Datum, gives Axeos as Ossix, intraoral equipment recognition again little where digital his the around little much and if kind about we ex-U.S. very be take goes that viewpoint at able our and lot as another we that bright that because in, talked bit of and a like an X.X, Primescan capabilities share. a Taper really to

to re-state pick want our solution re-stage gain actually the comprehensive of because implant effect committed specific to business, breadth you’re business, entire Prime the a and Taper in share is there the in well very going tens of solutions. the but that to offering contribution is a of the launch that so of implant aspiration we’re on systems to has kind pull-through important, an millions, complete XXXX of aggregate want our Our they offer and not be that and business in full dentists Taper is a idea of to the as Prime is that implant know tend they know you as

Matt Miksic

thank you. Great,

Don Casey

Thanks Matt.

Andrea Daley

please. question, last one take to time have We

Operator

Thank you.

Our Wright from last Erin Morgan Stanley. question of comes

open. is line Your

Erin Wright

of in. you XD much How across on products? question the Great, would are how the other demand that had what fit maybe characterize into printing. me you anticipate need and tech PrimePrint that quick ancillary I make it of the investments around initiative XD and that to level with that and there, thanks high offering for out a that you you printing equipment in sort so solutions broader squeezing and does have

Don Casey

Erin, back but the marketplace. it our traction of XD Jorge to half are said, Yes as in gain we in starting projections, built kind of the printers

there’s this now, we apps some where to do on guides, modeling, and the to an people view, really great also as is be lot we inks estate. competitors them real implants. some that can Our is do is good safety from were the that there. there, of surgical XD going which sense it of guards, able automation, of that ultimately important, level offer to opportunity XD to some solutions--there’s the do permanent feel is we go think none lot of Right printer dentist out this, other there’s is - you what night the sophisticated, to getting a go more going be the there some some and need does of but level--easy you’re be about things, going going Erin, started A get

to first ultimately we really Again, a and I they a had beta transformative us the cohort allow got of is. ability product about mind, talk continue be the reaction, a we’ve think in on our it’s is in really XD the the printed, for to believe is that that clearly office dentures whether for lab. good how base that digital this race expand while and a us aligner, technology gives something to kind that print applications. will will or think In we the done we’ve

you clear give capabilities and In aligners we this a around implants some investments or well, lot and be so with need either are is terms permanent that the developing partners applications those right going now. Eric, not future investments, to do, internally partnerships, of whether dentures inks as about of to it’s or in of what

Erin Wright

mentioned in your that Then in impacting the and growth? headwinds for embedding guidance thinking you’re great. XXXX how consumables what should Okay, products break you about products. broader preventative we from be preventative Can you out

Don Casey

think I Erin, I you’re I dentistry specifically. was preventative think we stuff remarks mean, in my our a Yes think comp, like discussion but reopens Aquasil things like prepared mentioned and--and I up I don’t tough don’t called the and consumable our as up think go as to goes and going called and tend up, stuff is we specific I there’s down, portfolio up parts to Palodent of but digital other prevention. out grow, the against imaging

Erin Wright

Okay, all Thank you. right.

Operator

Thank you.

Don Casey

Thanks Chris.

time the us. a spent me again, with things. we that just covered I saying, lot we by know out close you appreciate of Let

after the you. about honest day. we’ve lot that, Thank be a into we do now, an that restructure future where investor great we everyone discussions of going describe are is we’re talk lots the to Sirona. to had because with a we’re of targeting has is stuff, One optimistic Dentsply are and and With you the when of Right day. there guys June hope we’re going so excited why about to

Operator

today’s all concludes you Thank for This call. participating. conference

may good disconnect. You now day. Have a

DENTSPLY SIRONA (XRAY) 28 Feb 222021 Q4 Earnings call transcript