Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. Welcome to the Dentsply Sirona Second Quarter 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. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Daley; conference Relations. Vice like speaker to now Andrea today, President would hand over the your I of Investor

Andrea Daley

you, Earnings morning, Sirona good operator, to Thank Dentsply the everyone. Second Call. Welcome XXXX Quarter and

Joining Officer, Financial Glenn Executive Campion, and today’s me Coleman, call for Simon Chief is Officer. Chief

an remind website the and Investors of press our slide are presentation I’d like earnings call in to related www.dentsplysirona.com. available at you that release to the section

on new Additionally our historical available for is website. our segment financial also data

announced not we identified of material a Yesterday, financial the that a financial misstatement issued weakness company over control statements. reporting, in the material result internal company’s previously which did in

XXXX. of For company’s filed on current more report X, X-K refer information, Item XXX the Form August to on

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

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

our filed recently cause subsequent some most lists filings important Form the in differ any updating most SEC to from factors results of that XX-K actual risk could information and predictions. Our

provided items based today’s replay be the comparison of today’s believe release for company’s A of financial non-GAAP and the between our unless call, prior on investors vary refer our by operating enable our with for respect the will information section the business. our non-GAAP are available of press may of metrics business, webcast greater year certain the be GAAP used Investor noted. independently and quarter key to following will reconciliation our to allow website otherwise non-GAAP about remarks Please call call. on management results results. results. Comparisons in the to supplemental Additionally periods We financial useful financial on business that with transparency provide measures financial performance where performance between

will now I to that, with call over Simon. turn And the

Simon Campion

XXXX you, will Today, QX us all start our a and providing thank by QX by updated results for Call. finish Earnings operating cover Andrea, our Glenn strategic of the update. for I and and I’ll outlook joining XXXX will performance. overview then Thank providing you recent this morning an

our both on we were this for with delivering and more leadership X% second commitments externally above which Starting priority out delivered quarter strong These the expectations. over top financial growth, first Slide sales We year half results the X. pleased a our exceeded team. growth. of results, our a than organic rounded internally X% otherwise, and commitments, organic well and Fulfilling remains in

QX our and by momentum and in half segments. adjusted the EPS, in performance cover highlighted increasing half the in new moment. on first full raising net are Glenn organic year XXXX we year, all a which the the of was outlook for the of confidence Based four the will in growth organic sales, back year sales

right is path, shape to and continue over sustainable execute results. We to and the are business we in the long transformational We on believe our strategic driving term. deliver beginning progress our The we making are take on the initiatives. improvement transforming to performance

Sirona several Wellspect reflect and business from a the did options the As the explored keep interested portfolio of of not parties. business our review the to thorough healthcare decided shared, about had inquiries we adequately as have the these previously alternatives, Wellspect received After in we value Dentsply business. other

data we’ll now share the operating the of performance model updates. incorporation Wellspect and We have of our part as investor into commenced

discuss group. We each and performance in country one have quarterly held initiated business for second and reviews business recently with to our strategy Europe

an and accountable, plays with and deeper Connected is Spending also a us employees our robust. in into culture. feel performance business dive meetings local While we time which Technology with engage high there, building R&D the These customers. to teams we the Solutions the reviewed critical give pipeline, opportunity role

plan. we Councils Europe, continue restructuring Workers in conversations in to Additionally, engage with productive and the regarding positive the

also We sustainability continuing our deliver commitments. to on are

and dentistry developed Academy. through for complement the course, assist developed conducted launched dentists to Dentsply was effort. sustainability. Kit sustainability in first on educational in their international curriculum Sustainability Dentistry the have study The to in an We XXXX curriculum Sirona in Dentsply developed Sorona response resource the the team To a

results to discuss And greater turn over it now I’ll quarter Glenn? detail. in our Glenn to second

Glenn Coleman

update quarter you Simon. morning joining our for Thanks, provide on and XXXX us. an on outlook. Good thank I’ll results second all and detail our Today, more

we results bottom delivered As Simon top line and mentioned, above expectations.

highlighted performance four tax favorable organic Notably, in expected lower second than quarter another margins was represents rate, delivering better drove and which The second with a of on EPS. growth quarter segments, all quarter our adjusted by coupled commitments. the

begin Let’s X. on Slide

$X.XXX representing revenue Our was X.X%. reported sales billion, second quarter growth of

to the Japanese double our strengthening the in On Pacific versus Foreign Aligners $XX strength sales Russian U.S. grew led than the based growth larger business X.X% currency sales continued was negatively currency yen Asia by in impacted of due led million XX%. China by digit ruble. a expected constant which dollar by broad basis, and and grew and

lower and the was headwind. due by On was from declined margins. were higher well restructuring in margins goods despite Adjusted and cost Year-over-year cost year-over-year headwinds $X.X inflationary margins management. EBITDA FX by due and commercial than second were a EBITDA a investments, of reductions $X.XX offset and $X.XX continued basis, expected from higher EPS effective XX.X% EPS were price the increases better lower driven infrastructure largely to our partially and quarter sales sold, to impacting our operating leverage expectations adjusted cost above by program.

prior through of to as capital, to year $XXX dividends prior of the to $XX $XXX million by repurchases. with the decline primarily and through Operating year quarter. and total working returned the impacted AR million second in cash compared commercial operating AP infrastructure a was flow which the year-to-date timing compared in was and dividends In combination million due of higher The shareholders was to share and a with expenses returned million we associated investments. quarter, $XXX changes

Starting partially retail segment tech Solutions segment particularly softer quarter the U.S. macroeconomic the offset said, on by lead second with organic our across Slide grew and demand Technology X. with to turn in equipment, sales by X.X% improved driven broader mid-single Europe. times supply our performance Germany in CTS, declined sequentially. in certain Within by Europe, for improvements business Connected now along That the high challenges demand region. chain me underlying demand digits to or CTS, shorter the due in primarily CAD/CAM lower Let in

business by and centers driven Europe. imaging improvements in grew The Equipment single digits, & treatment in Instruments high

and of products as quarter. across As patient in grew portion in Europe. stable Dental in categories a softer driven in the by sales pre-buying well includes U.S., all activity X.X%, preventive the demand solid attribute Essential which demand in the partially by We to product Europe Organic Asia the segment, traffic Endo, Resto offset first softness Solutions Pacific. in

and and segment, XX% from by Moving X.X%. regional consecutive to the digits grew over expansion, for double and offerings differentiated benefit share grew both SureSmile continues the sales Orthodontic Aligners gains, grew product organic Solutions Byte. SureSmile and driven growth to Implant fourth market outcomes. in new quarter

revenues customer expect rates year driven high basis, digits. a by Our but lower to which better digits, continued improved to customer business our direct-to-consumer and full brand grow On aligner single also conversion we Byte drove costs not acquisition Aligners grew profitability. higher double only

well Implants quarter, and value demand by as shutdowns. in COVID a to in for recovery growth returned due to from the related China highlighted growth implants as volumes VBP

quarter, the we in year. but gradual declined implants remainder U.S. the Our to expect improvement for of the see

the with X.X% segment, Wellspect up Healthcare across all sales grew three with growth wrapping And organic regions.

we product expect launches. recent will half second the planned new Wellspect, the to in year, growth For which and see faster include of

the CAD and U.S. inventory turn quarter to Aligners, of the million averages. to X sequentially remained performance levels financial solid by sales this, offset inventory double World DS demand. end X.X% CAD/CAM in advance levels driven in in organic increase in approximately in to quarter Essential imaging second by distributor $XX U.S. demand and let’s U.S. Dental Slide for Now the to digit driven a in growth retail by declined Because equipment levels lower of products expect relative implants. we QX, quarter low region. sequential September. underlying stable Cam inventory by for distributor partially at sales of second grew see discuss Distributor of historical Solutions

Essential to in the X% market Dental we were Europe, in for sales which These Solutions. due timing SureSmile by CAD/CAM region. Turning declined organic to implants continued sales declines headwinds offset lower growth partially attribute orders and of unfavorable macroeconomic in the to

for more key in our saw which also Germany, country. softness pronounced pressures business a in We is market due to recessionary demand the

and China also equipment driven the XX% grew and sales organic region. growth four world growth in of across posted in by saw quarter, segments. all the we solid strong demand Rest Australia

updated With outlook that, Slide We’ve of discuss X to our let’s our of XXXX. well XXXX. half to for remainder move as as full the the for updated our first in year to performance confidence increased year the our reflect outlook

uncertainties most seeing traffic our in the in improving outlook half, macro execution cloud recognize stable improving. economic to second we While are the is we and key patient markets

a the billion. This now for million $X outlook increase billion. a the range sales net represents the is midpoint year increasing to are which new of We of $X.XX to full at our $X.XX billion $XX at range

to increase X% outlook. estimate compared from which to sales prior and margin we of growth organic show We X% in be greater XX% expect expect flat full EBITDA than our prior growth We to year all grow of segments. our an to to four range unchanged approximately is

we’re While the be margins we headwinds half. of stabilize margin and second gross half continue with headwinds face to gross year the first the seeing to these consistent cost impacting expect in

year of improved Given pleased in also also translation second be our EPS FX raising adjusted we’re the new mind by that to headwind. midpoint our Overall, the line outlook performance, includes outlook $X.XX a adjusted raising expected to the consecutive to quarter. EPS the for a $X.X we’re range top full at $X.X $X.XX. outlook than better Keep

more on performance XXXX. confidence path gives that achieving EPS the of right our we’re towards Our even target adjusted first $X in half us

approximately of X%. For expect and to the growth growth above be QX the below X% with we QX year, X% organic second sales growth half

an story. due For A to be lower earnings the turnaround in year-over-year third mark milestone to third quarter would in quarter, we expect return our EPS to grow adjusted sequentially seasonality. mid-teens the important growth but

turn over Simon. that, the to With call I’ll back

Simon Campion

Glenn. you, Thank

to on update X. the Moving on starting strategic Slide

order must reaffirming more a better focus strategy, lab and experience secure product simple, and treatment dentistry workflows, to exceptional clinic to an an engaged patient trust fulfill customers start and by digitalizing Let patient on through experience connected outcomes. innovation our and and strategy, deliver delivering workflow In that customer and our workforce. me service to we transform journeys dental driving diverse by our and

remain we as We are executing strategy making focused objectives. progress meaningful on our intently the on

Slide XX shows objectives the the XXXX strategic shared year. of I with first at you start which and beyond this

annual three, Our strategic enhance implants on two, commitments, tactical margin a sustain culture. and five enterprise Aligners digitalization, objectives and to, performance four, accelerate are deliver win and create high growth core and in five, and our profitability, one,

our to We and progress model expand regularly against objectives, and continue into which operating business performance we begun drive has translate to monitor to these leverage already and measure better performance. believe

an on XX achieve with half commitments Turning annual year. have our than consecutive the of we the we objectives. exceeded first for update expected our to commitments, better delivered goal a margin to quarters and growth Starting where now our have and Slide

consistently to While on confident deliver work much do, increasingly are there we to is our in our commitments. still ability

the announced plan. model new In we and February, operating restructuring

We and largely outside progress complete meaningful with have in transformation Europe. made reductions work, of workforce with regions the urgency on acted have

in Our execution. to well SKU advance continues the pilots place in U.S. and Europe to rationalization a with and oversee team project underway plan

in other are of U.S. to in profitability other network there locations with four to and simplification operational in network. and opportunities transferring the Additionally, enhance locations through already initiatives sustain the midst our

our to accelerating both remain success and on externally. focused critical we internally is and digitalization Enterprise it

team We are design the project and multi-year already assembled implementation ERP advancing the with phase underway. our or internal blueprinting

add DS continue capability to to Core. also We

practice of improve the include quarters, more range communication functionality services dentists, two of labs added been and CAD/CAM and to new past and the broaden workflows the efficiency the patients, between enable to SureSmile has Lab. Over efficient

combined Winning engagement growth, another we in traction gained business growth is in customer In important and now QX, deliver operational of the the performance highlighting one Aligner this Byte new double into are patient higher Aligners another segment. and rates, cost. to line quarter objective. top strategic delivered In structure, Implants and customer digit conversion businesses momentum acquisition enhanced with and continued effective category. the lower have these

channel. differentiated SureSmile continues market the growth to particularly GP in and through drive recognition our offering,

our enhance of geographies. demonstrate markets countries, certain key Our in we benefits the now to of offering and representing to investment and opportunities SureSmile our footprint is continue evaluate XX available most in across globe the

our clinical the of feedback underinvestment more in education In have Greece, investment peer-to-peer clinicians area. QX, period together three very learning event In prolonged we hosted brought we Customer hands in reactivated on after Implants, of in a which for than the Summit XXX was from this Athens, Implant positive. and engagement. days

for will during has headwinds to program continue than The has seeing and strong to shown recognize more exceeded offering coming full In gained Implants MIS In business volume on the now is some we that in the the expectations online we work China, Globally, we volume the are our growth. offset the VBP traction green with in our and Additionally, the pricing do. new the consistent shoots a Implants of implementation number implants since accounts year. business value focus performance last quarter. more rollout. U.S., there incremental expect

Lastly on long-term foundational to like and create driving Dentsply objectives achievement This for high creation culture to work is to we value and doing I enable the would of our importantly, here stakeholders. all Sirona. strategic touch other to a critical performance are at

back and we the operating and other evolve It putting everything compliance to implemented and and meaning shape, model customer clarity, of ourselves each run efficiency gives new to forefront. KPIs diligently take with the the at providing hold continues center the the to do accountable. Our business at

because and of role these We’ve as created to newly the Regulatory joined SVP team. things quality also You to us the they principles. expect core model I the continued to leadership can quarter, a and elevating Last keep out that team. operating new out within announced our build leadership team, stand hearing a from Affairs Quality

driving the an recently along new of play in instrumental performance brought Sirona. team rest will Dentsply Most with in culture who HR in mid-July, high throughout leader the a we leadership role

also culture the and during quarter. our helped the our Charlotte the winning compliance. us We and leaders to meeting, drive hosted in on align top ethics transformation, further XXXX, XXX since This objectives DS operational our reinforce and first commitments

few let on a Now with XX. me slide remarks close

As year. a is XXXX transition reminder, a

However, another in quarter of provides our improved confidence increased which represented execution, outlook. QX

making are warranted our and an As on as and progress pursue pivot organization, initiatives we goals. we believe significant strategic to we’ll transformational our

positive XXXX. Dentsply in with earnings increasing coupled more of conditions, the of combination normalized targeted position market these Sirona revenue with to meaningful to adjusted factors The Achievement grow Dentsply marking the also goals, profitability. can will Sirona in line EPS deliver position while of improvement with $X

cutting ROI we While invest we released these funds to growth. a about business in of have drive with talked focus lot to our recognize criticality long-term of some a on smartly the costs, leveraging

we it’s not actively earlier, clinical products said I must in customer also invest the just bringing market, and about engagement, education sustainability. As great to

event. We and at look this Day Investor our our map in announced, sharing about Charlotte. details more Xth strategy previously on As forward will road be November to

that, will questions. open with I for And it up

Operator

you. Thank

while now compile roster. question-and-answer Instructions] session. Q&A will by the the Please [Operator stand we conduct We

Anderson question with first with your proceed ISI. Elizabeth Our from Please Evercore comes question.

Elizabeth Anderson

on was the quarter of had could guys. year? rest if so little much see in the Hi how quarter. the for step the wondering you progression I of gross and sort you obviously the thanks up You the talk a margin about over of the Congrats question.

basis XXX previously points talked quarter. for I about maybe think third you the

very maybe about sort Thank or if it if So line? and could could sort you of on if just that about you talk quantitatively takes puts of the talk much. you talk about you can’t

Simon Campion

question. Yes, Elizabeth, the thanks for

XX.X%, year, something you first we from at around the sequentially to the bit look QX a little If higher QX. did margins, of gross half

in year. pretty the consistent be to the it of half back expect We

just with the pressures. year we’re I of inflationary say second-half would still So And very what year. half we consistent saw in the the first of with dealing

I year. we’ll into are improvement they I next think in think subside, good the a starting but is moving news see to margins gross better

much meaningful to margins QX -- in see expect we meaningful quarter, expect the in fourth meaningful our QX margins I’d go in then margins, in EBITDA then to increase QX. from EBITDA increase sequentially up a more and QX to improvement On more from do and so really slightly a EBITDA

that’s EBITDA back much in the in and larger margins, jump of So restructuring we a half because kicking the year. expecting the are savings of

Elizabeth Anderson

of can and it. U.S. cetera Can progressed quarter. Got in about, of would changing Thank a very you. sort on up, and talk also know what and has was et as your That rest your comments helpful. talk the follow July in you macro the I China? know ever China China currently the appreciate sort excitingly comments you helpful. and about about And I this the year the be been you’re had of how obviously lockdown, Europe world seeing the I

Simon Campion

Yes.

significant did In saw in say from off off, mind. July, the no trends, what I terms July have is especially July but second just June growth of the a drop in in would sequentially we coming in of keep We changes quarter. big month Europe. of some

in QX So the it’s at growth. largely year-over-year our We bit a little when be you by look driven in down organic well, QX Sequentially, expect to of we factor terms it’s Europe. less seasonality said than guidance, up X%.

So environment. see trended a exactly our in down line with sequentially stable But slightly but, continue you up that of patient numbers. make your even challenging sure to in volumes expectations in July consider external year-over-year spite

would that revenue basis our I you month somewhere still see our to it’s of well math reflects quarter we QX again EPS, would year-over-year, do good saw July the business XXX than see. But say on I say on one we the then what which organic just a to growth QX for and if QX. mid-teens guidance growth in expect would good and do for month Ortho again that was guidance sequential really performed July, the so would X% just in And see. be that, to the is for number in less suggest on down and

We’re $X.XX just to number $X.XX. finally that would talking positive EPS And say about numbers the color, I around based upon is probably year-over-year.

hopefully So a little that QX. of gives bit you color on

Operator

for by our next stand Please question.

comes Michael question. your Please question proceed next with with of Cherny Bank Our from America.

Michael Cherny

till but and this All we how the start if sure can Analyst thanks question. Maybe color early the on right, you Day wait can the growth to we if should for, morning in about something on how in the we good year four just taking segments. any not should across and I’m that’s or of too I segments give the is think guidance is there should run remainder about whatever want guess use outlook for the segments?. embedded time rate we frame I new the and long the term, term, medium for think

Glenn Coleman

do just is expect segments. four given to did organic segments that comments haven’t Mike, we than, Yes, I this Glenn. specific on would the see in of each we growth guidance say we the other make

all just color would obviously the fastest from a at are willing this growing Ortho look I point. of to the segments, So you faster say, one When Implants and say obviously perspective, at growing we’re that’s segments.

So growth. positive that four trends point, would segments. we’re you’d all be this at faster seeing one to see expect where across But

other and than a and probably We for bit to look expect the growth go Implants Ortho three segments. faster

Michael Cherny

off start. I few terms especially very or the the bases. to of thinking the I quarters of last guess it. quarter lies more current guess Byte where side, the improvement? rates, where you but happy you different think well, the see, Got most variability room been further opportunity on helpful but versus where over on this as then do now, you for penetration lot the but How maybe the areas reported obviously winning areas and most on you’re competitive Ortho growth side, in have still the And I’m there’s a dynamics It’s the professional touch

Simon Campion

Yes. morning. Good

Ortho say again I well very and performed well. would So, performed in extremely SureSmile it particular, globally,

performance countries. the GP on. SureSmile on and in over in where excess we’ve XX% of in in growth Europe the Europe been a arena. had now tremendous and We’re winning we’re That’s XX focused

scanner our Ortho penetration in We of we too. scanners process reps the as also equipping with focus are on

our and be. So SureSmile has component been a continue business, is to critical of will

to additional expect We some the tools back launch of in simulation year. half the

of the they launch and roll another We Byte also will which the drive Byte of Byte but more the patients channel just feel the the end is on into to restorative which space. year for other quarter actually not side Plus towards solid so can patients, growth we preventative become also the help as we GP for aligners, GP care and in expect

an of evaluate global a in opportunities a of business commercial continue to as lot said to for intense we we So, prepared remarks, investment our invest area Aligner channels on basis. our in focus, and

Michael Cherny

All right, thanks.

Operator

for by stand next our Please question. you. Thank

from next comes Jeff from Johnson proceed. question Our Baird. Please

Jeff Johnson

Thank into of on $XXX on saving you. in Glenn, over it morning Good the can you little on million rate sides. of here the several your P&L? continued the years, one touched is the on recently bit But just answers just guys. a far Congratulations progress. run so out cost planning the next remind you us what you’re that

And more to education, down training reactivated as on the is Implant the progress starting ERP of clinical here I of some some importantly, you’ve think happen. doubling that

maybe year term? savings in in these three two intermediate initially year the and to bulk we Thanks. of savings Just of of come by it investments should added some the least here be one how next those expect phasing the much one, remind us, two, versus offset of three years, that $XXX short does over million at the and in

Glenn Coleman

for thanks Jeff, comments. Hi, your

so I to of to plans by mid-XXXX, First, of with That $XXX savings would next savings year. on the our say million. million be most would will track annualized we’re restructuring come $XXX realized

of a program. system, restructuring Implants, million. to the business, we about lot whether achieve a ERP qualities, said we a lot America savings to education, infrastructure, North of your and But back $X.XX commercial be what the are investing $XX that point, name few. compliance of the into we’d XXXX, it For in That’s DSOs, was about investment from clinical

only consume in of would $X.XX restructuring that terms $X.XX this flow would year programs, about in investments terms those $X.X the the of program. of We through restructuring the basically the said

in of get headcount that outside and some been essentially have And we additional the taken In of headcount savings of back year. a terms we across to the get are, few through. multiple workers to Europe in obviously are terms actions have complex in non approvals where also council the those we’ve half all countries the got of

But on the progressing as whole, expect. we is would everything

guidance, If you look half midpoint dollar the a from in so, back half of to versus first in the terms improvement second-half in back is at $X.XX half of thirds in half. we seven the EBITDA the Over did of back EPS of the year. suggests XXXX first our kicking come of restructuring margins year expected the and EPS the which half in improvement of the EPS, the year meaningful for the of savings of the year, both that two in and

clearly savings, yet In you be going out will So to nice but restructuring you laid what look as haven’t we next we at move year, pull and expecting meaningful we next forward the then year of is be XXXX. color offset this hopefully to should obviously investments that a through see we’re increase. a when gives year, that on how lot by there of another much

Jeff Johnson

sign is economy great. savings your be flow ask can little the have I expect of think would your maybe, Europe, on investments obviously next there? But economic maybe hopefully to savings those not then my doesn’t leading up through. this a guarded, just, follow to question this count right and update cost what’s looked to on All but as you the the the percentage more that cost of were comments indicators a and your I year, just quarter follow up, so more less of want do state as

a from of Is business right sizable the but of just it’s maybe Just in the a a the months? next maybe concerned is this you issue Obviously, patient because pretty you about so Is could that think standpoint? Sirona an are now? see right really Germany sluggishness have like land all consumption how Europe exposure the demand How with equipment about you to equipment, general to to there? Germany’s Thanks. something twelve Europe think that looking six lay what now macro? legacy

Glenn Coleman

Sure. thanks. Well,

So equipment and also survey in we and did declined other indeed would around from other Germany is has Germany. muted last is Jeff, those watch the two also, survey. stable, a say us Zealand. sentiment prior about around their patient with ran customers that deteriorated in half sentiment got responses of sure volumes, for the we has just and Europe, is about And I versus is for quarters, from like capital we say the our XXX Especially came Italy in New out I’m the stable, and others is France geography Australia and is They’ve let’s the countries but Europe, stable. UK

is else Australia, stable sentiment primarily with negative it’s we found and New Germany centered everywhere that improvement very modest survey modest our to around centered the in that around, really So we improvement. Zealand

Jeff Johnson

you. That’s helpful. Thank

Operator

Thank stand by next our for question. you. Please

Please Our with Caliendo proceed. next Kevin question UBS. from comes

Kevin Caliendo

my taking question. for Thanks Thanks.

maybe you’re the and in force. on had China, talk Implant You Implants. side Implant a kind bit made talked what the earlier right that you’re in I markets seeing about winning some of between in the clients Implant winning about accounts now? you Can some differences in sales and investments in the little know new dynamics the Europe U.S., you

Glenn Coleman

I we’ve we now it. went team mix. shining China. the we would head other in person team degradation very light into we’re only early of in that will China year training, now all price we Greece have also the us the this the together QX The with sessions is in e and which sales not in so a positive strongly like start we on year. as favorable is winning there mix me the in let back volume China. we believe tremendous in session offset made Kevin, part China, in those as also in into XXX U.S. with so the quarter and the Clearly sales investments had Yes, implants. of the MIS for part say We in We in for invested got the that

away from we’re company would this. from would family over customers are that. early we now as it’s have education that in the business Implants stepped customers that reengaging. had a had with view call these say, sentiment investments family, away, And in too the particular I last we on We I Implantologists trends positive of from years as of and but stepped past as from clinical I is it’s think winning, number say of the and had away -- themselves the type we the it’s, the a and any result moved to I get shared

are this on green of in engagement that the shoots I prepared number of a And referral the remarks visits the each basis mentioned their the the challenge monitor of we of terms customer have making, and in because here. the they and positivity are our also It’s implantologist. customers dentists from not religious on reps, every Obviously, that that’s of just we some from month. calling there part

and the get do growth year dentists which Glenn expect his for the is that heavy in said in we have in well, see progress implants. to as QX need and also faced. climb their to QX as expect We referring But we to remarks,

thinking the direction right from in heading way job the we’re we it’s feel, a -- we long but have we’re So, done.

Kevin Caliendo

this know you a and you’re does you your in think, stuff first your coming R&D R&D World maybe world got up, when ask -- you at in is perspective, would forward? or the looked them put I do projects over, anxious -- all of I think can we’re going need and of that R&D changed some say to of is the want were you place forward? How World of to DS come where to running some from you I rid were -- that you up the of that pipeline and you an going model. DS see If took you focused you would how guys that be quick follow-up. much sort DS investment where Like

Simon Campion

So our year tenure I into a would say, here.

have is done that products longer is of launches. in the but within accurately that, terms assess install The timing don’t make so assess on R&D, a return processes can we the the accurately in it the of around life changes You than potential sitting what and we street year. cycle commercial

are that programs we and focus consolidated have efforts ROI. our fewer the built we they around on so, have processes that we around And R&D

process now months. be, and be have in launching I for next robust valuation over products response, mentioned of an will as number we the early We a we will new

sight get and and QX. of QX some on into further DS at then You’ll them World

-- R&D see So, say, work the months, that progress is much no side for it’s, more would will kicked have on the projects light day off a several here of but in next and the have the we will I it’s robust. process very

Kevin Caliendo

Thank you.

Operator

you. question. by stand next Please for Thank our

Please with Block Our question Jonathan from comes proceed. Stifel. next

Jonathan Block

your you elaborate versus taking outperformance the six, a ask bit Thanks can that But and more decent give it, most expectations morning. Good The first and pause them, as detail I’ll clip. little Glenn, you the up seven that and when I Aligners guys. maybe call for but one be business the was I’m the implied deviated think Glenn, well ago? mentioned, you are of XXXX really the guided you’re to and XH follow-up. as what areas upside, half obviously might of overall the months guessing a my whatever by then of

Glenn Coleman

and say, Yes. in Pacific. been regionally, I Asia would it’s the U.S.

U.S., expectations. than initial the our have better consumables done in So,

obviously, our China. has Pacific, has we encouraging haven’t year. of mentioned retail for stronger outperforming the the for think robust been half well. the back I CAD/CAM pretty In that’s China some we certain so even as expectations now which demand numbers, yet seen been Asia equipment, also in

if China continue So well initial will. actually do will you outperform budget, think to and our I

of helping treatment better our there. as well chain. and supply recovery global and that, imaging and the centers work is to overperform doing improvements in We’ve that a and lot seeing lead us good on so in team reduced by really ops We’re significantly times that’s

areas really strong well, And areas is us, and for the really Aligners. of double-digit are Byte growth so those those and the which mentioned with Aligners SureSmile would to do coupled be earlier, both what continues so outperformance. you

in volume as ortho doing there overachieve. outperformance sales is profitability and half a restructuring of helping these savings year from higher better We well. the front, EPS than the On slightly had of because rate. The the benefit a the then tax the higher got first we obviously expected us lower

look to first on how the we and how looking the the back with the of whole, very And So we at forward year half the I year. pleased that’s we’re think started in it continuing half.

Jonathan Block

maybe can Okay. about results two want of other to good the there? scanner there Great Simon, try end be if some lower talked some jam seen what’s ask in you you’re And you think and to on color, do then strategically bundling going it, question. Aligners. need, prices where on I a sort in quick you you with thanks strategically, with for call try to the another ones. that. you’ve when Are you I’ll And -- of scanner, words, maybe the out

dollars, just You they call flattish, where started guys. going line than it, margins time those terms now return maybe Thanks so And you’re EBITDA those organic X%, but the to investments? being greater in are of XX%, on the and talk where sort remain, year additional at dollars? of us the about are earmarked

Simon Campion

Yes.

year. on and biggest unit we’re fact, did six scanners on Connect We in time with a September in second we frame available. sales So great QX last with scanners, on in side, really the PrimeScan And in PrimeScan, technology think in strong Connect the the we had PrimeScan scanner premium on I obviously a quarter quarter launch scanner mills. had

adapted So PrimeScan on we Connect. price the some

resonated. an say, So would that’s that not, upper scanner mid-value I has

pleased and in are continues market as the focused traction I in to And so in traction Japan the we Europe, DS Core we scanners are are quarter, with be will capability a to forward. the any throughout and DS our and be we cloud. incremental brought business that aspect moving obviously new important continue Core year We technology QX new next really into of will that leverage bring we bringing marketplace. with and next-gen where we’re integrated this on to year but intently We had out mentioned, scanners, not pleased in the that

around equipment, the and So scanner that’s where other Glenn let and part. I’ll handle we’re

Glenn Coleman

on updated the Jonathan, have Yes, the not guidance of year. the we beginning since our margins, EBITDA

QX, if be return we say, you where the commercial come, North We’re be likely And most felt I on that improvements America investing, look in return top believe, on start probably EBITDA year, but that XXXX. DSOs side, are to should XX% at track greater here investments on to later we’re in there. would implants, The margins. this already seeing I the line will the than

have DSOs do faster the corporate growth overall full year for the in expect average XXXX. We to

the investments education on probably on the don’t payback we immediate in Endo returns The to we’re have investments implant would we’re on now see to us multiple take but making you promising. to to going the looking profitable clinical XXXX. have we longer, a that’s get but investment that, take long-term make So expect The years that side, will an see those again, sustainable, business. side, for ERP if that an to

just to And additional U.S. given the some made outside commercial areas I in we’ve say, the strong would certain the and programs start year, certain investments R&D

returns where forward the have see returns to additional the So I’ll be XXXX, we’ll definitely And Japan for that light will a for reps but commercial on example, because footprint opportunity. in green some Ortho nice add see just in hit go XXXX. a team, we and given actually overachieving, our I’ve XXXX. in we’re and

going do We the in I’m for both here of really but up year. better to the still in line and terms EBITDA really terms things hitting setting in be of want us half and inflection an performance margins some top EPS. for back of so to commitments year year XXXX while And us our next

for we’re year. performance question. I And for to think good your we commitments setting next do had start could better year while we’ve and Thanks for hitting our this the full and so what given year, this seeing more still up ourselves

Jonathan Block

you. Thank

Operator

stand Please for question. you. our by next Thank

comes question Nathan Sachs. Goldman Please from with proceed. next Rich Our

Unidentified Analyst

Good on just the into wanted morning. I dig China. in we for XX% Sara saw this growth to Hi, Is Nate.

volume half versus be traffic traffic improvement of year. of throughout curious expectations much how then how the trending China your I’d back underlying quarter? a So of that And compares? for and sense uplift get was over the was to the VBP just the

Glenn Coleman

Yes.

for. sure have overall volume So China, that Simon me XX%. the Implants in some of and you’re think, business our China we’re in just in going to to increases and to consolidated I we strong QX year-over-year the terms I’m situation. put represents implants. But above actually performance perspective. lot XX%. made of was the VBP And level not first detail by X% about Sequentially, QX foremost, our did even that of We summarize earlier. a our of of sales to let try had that driven comments growth grew growth into have from asking faster really these

now the us very price We full a volumes erosion actually is the offset overall. expect year that which basis, will positive for on

at except As second those growth had QX really we move all I for to forward, on quarter. see across healthy least and coming a the perspective growth quarters. both here, product QX double-digit would We quarter to you implants expect just imaging. some categories, in give saw of strong really out growth China, in of And

So seeing gains the China, what and on the CAD/CAM momentum the terms in the VBP COVID of between public one on whole, area recoveries, side both side, we it’s we’re the about in the cautious both that equipment good in and private imaging really we we’re still have and share between but on is being feel there. our

Simon Campion

China, server levels about I quarter-over-quarter survey-over-survey. but over would – just our we from had reasonably They on are add quarter they the six yet Though where -- three -- XXX data their respondents. next over are to bullish the improving survey not patient are on offices are or their months. full,

Unidentified Analyst

quarter. year? this the if on business strength saw are the discuss thank And exclude And the back like imaging, you of we underlying throughout the half imaging the from how you performance? recovery just helpful, then thinking supply you. impact, But can we Really about then in

Glenn Coleman

imaging. treatment those we’re well still year, improvements as of rest on were Europe times. strong, growth double-digit it the we mentioned and centers. was and no, at imaging as the Both If robust really Yes, cautious A of had the performance categories. Rest pleased shortening the of lot we look both with supply in lead of chain I earlier on World the

imaging into pressure now, third right I’m quarter built expecting that’s quarter, say, would I guidance. see our to still the in the So some and fourth in and on what’s

in not year going cost we’re to the will the when forecast likely back equipment rebound, including on high impact of look we you we’re performance. markets, the It’s the the second forward. first the cautious be half of reasons half our of of expecting why year in the see financing, a of some to think so, one So Germany, to going this of is guidance to relative down at half half-to-half flat certain year

be we’re Thanks cautious so on environment for equipment be the to your overall. that’s better, very us. to And if But see for we signs until better turns now, being upside question. right that going out

Operator

by our stand you. Thank next for Please question.

Lin Our next question Blair. proceed. comes William from with Justin Please

Justin Lin

the good Hi, on think, EPS for points touch I want headwind, factoring morning FX raise bit. guidance to questions. guys. my X guidance a little of I The essentially Thanks taking just kind the of beat. through Can you passes behind thought you’ve maybe raised that, obviously, just the guidance greater than the in here? quarter beat process talk the much about yourselves your

Glenn Coleman

second Listen, I Yes. this think guidance raise. our is

point, here are higher headwinds We’re second pass the the seeing FX we now. We through To outperformance in right quarter. only did year. your the halfway through

to we’re increased we guidance relative be of need So the providing. we’re if back at that And you about again, this look to of the in certain ahead ourselves. getting year, where are range half those absorbing careful there areas

we’re the look you market, cautious at there. if Germany being So, Australia,

coming see I to of DS have momentum the World. out we want

have event, upside some the that we team a to September hoping expecting We’re of U.S. out great and from I’m actually coming event. get the

a ,we having but investments company. to of get in lot still things needs got bullish on in before it to foundation a still across business make the where we see EPS, the still So, infrastructure be year to we get this have of the solid to some terms to too

some to position us of do I mentioned think like going to And better year. for try I will take overperformance that even earlier, I’m things some and this next

dollars I’m a coming gave for better so some go up region as later here example, we to have reviews review, Coming the this and similar regionally. leaders we planned Simon probably areas last line year. to And conversation. out certain opportunities, Pacific, and next at get an Asia of additional planning these more mentioned performance top and on sales doing I’m in having looking we’re And that month

of probably the benefits But performance, investments forward. is and to the first us can moving position some both very the top do of whole, on the actually one more half the on top year. for happy year of margins, line we better we’re us So we’re EPS, next overperforming with line, EBITDA

Justin Lin

gaining haven’t practices. may the really talked see Got That’s to mill, relative feel whether about helpful. seen it. guess to very for while, product XD sort any talk how of in Prime traction about your we you’ve short-term your for you is a I and like. Primeprint a I mills Can printing some doctors expectation hit replacement as

Simon Campion

Yes.

strong opinion. customers cetera, et and and opinion, we’ve offering, a with have potential it facilitates and your the I’ll sharing we mill our our think a in complementary. offering. that’s and it we of see a strong Printing crowns, implants, temporary been great more customers resin second with offering And but does cetera, capability printer and resonate, printing crowns, as not, So et for the does question, We extremely milling Justin. permanent have start part

with Now doing are performance, I we respect the our to would okay in marketplace say today.

for some new in new as space bear technicians or to with other advantage of to that got expose to through very is we or expect it we materials, we it’s level doesn’t our months nine fact material to a that other -- materials the or out it’s DS roll that in vendors a will well. it’s clinicians and up device as next on the playing in Core office as new that to capability efficient. invest technologies six compete field this we we to believe safety continue We linked competitive profile begin to fumes We bring marketplace. great think ability these Our and sense that the the and resins the the

certainly complementary and to customers, be future the for that think with We be coupled and about manner. it technology bullish complete meaningful in printing. will offering of will are we that milling we our So, to continue it’s DS Core driving

Justin Lin

you. Thank helpful. Very,

Operator

by Please you. question. our final for Thank stand

final with Petusky Research. question Michael Our comes Barrington from

Michael Petusky

throw Thanks for the I’m question. sort to think philosophical bigger-- And a morning. of question. out going good Hi, I

chair over at have of not -- sort and sustainable number year business. So point. in able almost that chair have people you’ve Simon, been value-creating in value the decade create a momentum past for a the a been of Obviously, this sustainable sustainable to

you can have that obviously, is to I you’ve three what mean see, maybe you’ve things my we’ve things hey, predecessors not see and here’s these been are now ran the sort some said, you’ve chair looked of I things sort "You curious, some into almost Just or or what, at problems in know a that where are why as year okay, that, predecessors two have done." think a executed there that able business, this been this and I historically, are quite get you of learned at point Thanks. where why we not can?

Simon Campion

know want what are if did I we they on to what predecessors Well, rather I I’d focus -- what doing. on don’t do. did and not comment

Michael Petusky

Sure.

Simon Campion

at So I’ll at we’ve this about morning. pick some of this that this the spoken meeting call things or

ERP. The R&D, us, clinical is reinvested, capability around particularly, in investment gap think, grab infrastructure we and around prepared thorny I So, discipline building big that around in for and we’re R&D have it Number commercial that process. monetizing significantly to bush two, innovation, education, and the space. uncovering one,

that or drives have ERP We fourteen thirteen inefficiency. this company massive in systems

project. remarks, -- in as the we have So that we we kicked noted prepared off

the around We in phase. a vendor the integration selected blueprinting we have and we’ve partner, the team we’re it, have built selected

network, we’re are did same but a of full levers, regards. manufacturing have and are others all don’t did plate lot levers making reducing that we not -- in our I We network, have a distribution and know, or the our why we our pull we progress there are so pulling

Australia building We transformation, elevated CHRO In to and New changed the in addition brought out a leadership cultural we’ve new leader, we’ve team and in we’re Zealand. out the quality. the

We’ve center do. of we put the customer at everything the

at know meeting. In is every important that think which extremely addition to and culture single -- we is which ethical we driving we and drive a of behavior, compliant

was XXX the presentation the compliance. had meeting the on in at and top that fact, ethics first agenda leader In we Charlotte,

So It’s we around. are really important. not screwing

Michael Petusky

right, so All good. very Thank you much.

Operator

Thank like turn remarks. you. this At the would Simon CEO, to showing time, I closing I questions. conference for further now to no back over am Campion,

Simon Campion

for call. thank some we to today’s reiterate your you take like before I and on you, Thank to moment all would attendance points a just close. key

this commitments Sirona. Firstly, of utmost importance our Dentsply is delivering improving at feel execution that We team. on to operational the is

transformational make advances laid and continue objectives out. to on the We strategic that we’ve

last We careers. the who And and express then and our thank into I part you. cost of that Sirona the investing are, the their underway. Dentsply business, to particular, to thanks And the necessary finally, in business well their departed in in the we organization them the is phase transformation of employees want all have to quarter Thank next funded wish employees as for we’ve behalf savings management initiatives. spoken all dedication about, by has team, back our to want which our in on been

Operator

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

now disconnect. may You

DENTSPLY SIRONA (XRAY) 3 Aug 232023 Q2 Earnings call transcript