DENTSPLY SIRONA (XRAY) 3 May 232023 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Dentsply Sirona First Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being recorded. And I would now like to turn the conference over to your host, Andrea Daley; Vice President for Investor Relations. ahead. go please Andrea,

and earnings everyone. call. operator, first to quarter XXXX good you, Welcome morning, our Thank

Chief like Joining our section Campion, earnings the Executive Coleman, call Dentsply for press website Sirona's Officer. me today's presentation in Chief at Officer; call release and are and www.dentsplysirona.com. related that available remind of you to is slide Simon Financial an I'd to Glenn Investors the

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

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

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

to today's Additionally, certain financial in transparency the our that financial remarks performance vary by non-GAAP believe based be to that, with allow turn We used between call to business. now comparison useful the the management between on release information press business over key results. of with independently measures Simon. may call, financial where non-GAAP and business, periods enable our investors results of Please our supplemental metrics respect financial with on results. And for greater non-GAAP items for of refer reconciliation our and operating GAAP will I provide performance will about

a a update. will growth. quarter X. XXXX strong sales finish start Glenn our QX an on I of all and us with Today, delivering QX to for pleased earnings this by providing then joining morning you, Slide overview I'll our updated begin than more organic strategic Thank XXXX XXXX performance, and results X% operating providing and We will thank for call. our were Starting recent cover you Andrea, by outlook,

some our by quarter, and Byte with The returned Consumables grew the Aligners in top double-digit growth. strength line region growth Aligner U.S. driven World delivering and to the U.S., of businesses, in headwinds China. addition due of Our Consumables growth to we performance and SureSmile Rest XX% was nearly CAD/CAM orders. Outside in dealer the in flat timing Europe, saw in in to the favorable while some of

In over on addition EPS. revenue to performance, we delivered also adjusted

and strategic As our we our a top increasing is internally transition confidence have performance in organizational team. for are QX our on commitments combination noted, trajectory this we priority externally repeatedly through of objectives, the our transformation our fulfilling our The progress this leadership is making and year.

we end As sales cover in a XXXX our raising EPS. organic growth a low are adjusted sales, outlook which result, Glenn and now for net will the moment. of

it's The time It XXXX. way on In was trade by there with customer participated vital the Cologne, a Sirona was in reputation industry. transformation more in attended from into approach to very Dentsply this that proud QX, the we XXX,XXX first our than Germany of since with the at I'm for of the countries. dental impressed I presence event. power professionals show well commercial IDS our with think plans. associated success execute is engaged we this in customers. We patient-centric team our as leverage our to was and clear greater XXX

day. our to in palpable our this team and swagger their future, long-term to investors, customers, think and company short- I together a and courageously for expectations. and Additionally, the further to believe company delivered from Hearing a believe Board bring engage X members other and boldly back, top to some get to across our brought summit weeks ago, on we motivated and leaders reinforce every leadership CEOs our impact, to best

to customers are for the with place to that change pleased customers, in. for we in, clear, for and very work to engagement our to with shareholders make employees with and Dentsply Sirona and better purpose a partners. beginning to achieve traction Our I for is invest work am employees

We which critically our all for momentum company, of is built and stakeholders. our outside important positive have inside

commitments delivering cleft-focused We ever protocols the through are proud have treatment also digitalized first on and Train, are our to that the Smile been FDI ESG with for standard world's announce developed partnership our cleft global largest and organization.

and approach by are the of care these stages giving to contribute while of back oral funded expected over And greater communities. improve has date to the surgeries that, have which dental with treatment comprehensive initiative cleft to our of Smile digital partnership excellent example significantly ongoing current detail. can with upon builds Glenn? providing These This transforming for accuracy vision it we improve to patients. Train, clinical of efficacy and dentistry across globally to health our with is an turn a over I'll for professionals financial an Glenn X,XXX global how we protocols to all

all outlook. Sirona organic with and approximately more first you I'll joining Simon. for growth of outlook very on Good start Dentsply strong our and exceeding XXXX you, thank provide our a X%. first results our sales Today, on X.X%, update Thank morning, quarter an of had detail quarter us. XXXX, to

Aligners. $XX and driven in quarter growth million first outperformance the Consumables line The by on was top about of stronger-than-expected

work critical delivering EPS. our Our have is work Though the innings investor early we're commitments results we on do, transformation drove to consistently of adjusted rebuilding also still believe confidence. our top line to more and better-than-expected in that

on let's Slide begin So X.

which first revenue was reported $XXX sales million, X.X%. Our of growth quarter represents

negatively XXXX. currency compared by first sales Foreign approximately of $XX as million impacted to the quarter

organic currency, U.S., Latin and the with Excluding Europe the impact in X.X% America. foreign strong performance sales grew regional from

our to by and EBITDA basis, X.X% at year-over-year XX.X% headwinds, outlook basis overall. of inflation Aligners. On XX%. margin points a Excluding sales was from least grew margin XXX profitability organic continued improvements mix consistent and of contracted partially exchange favorable China, EBITDA offset Consumables foreign in with due

investments, we better due sales $X.XX with to quarter in decline from expenses headcount headwinds. organic higher of outflow to believe quarter. and driven million commercial as $X.XX by as the SG&A to payable the accounts commercial this prior events inflation year trade year. primarily by which timing. increased tailwind in drive a $X.XX later the to first offset in in and due both receivable EPS XXX changes a $X.XX of and capital, $X.XX was was in currency basis will Operating of attribute of working compared performance accounts cash This foreign was Adjusted and to an to the We percentage sales. $X.XX strong EPS quarter sales below-the-line primarily investments quarter points partially the customers, flow $XX unfavorable

was expenses and investments nonrecurring remediation and as such operating with associated flow also Operating costs. increased by commercial charges, cash impacted restructuring

As the severance a a outflows quarter, have reminder, In for accelerated costs we million we remainder $XX of dividends, significant share to returned for and we million still first through cash announced the repurchase the year. restructuring program. to $XXX of shareholders expect cash our and

in the reduced share at April. in The end quarter shares Our ASR. terms ASR March receipt the primarily was was driven count completed the of by under initial the of the of

performance our in Aligners, The T&E prior T&E U.S. well strong grew CAD/CAM in Equipment, in organic Consumables me particularly X. in growth as XX% Let while in organic over led growth the turn grew sales quarter business, up as X.X%. segment our year the versus was segment segment now Organic in to in by sales the growth strong the sales quarter X.X%, or Technologies & Slide on our

from clinical These third benefit SureSmile volumes grew SureSmile strong improvements Implants, to were the in regional continues and Byte. in new partially Imaging growth offerings differentiation. by Aligners both offset and and quarter, double-digits Europe particularly by and lower Instruments. product driven for consecutive in expansion,

direct-to-consumer only line Byte, Our also profitability. but drove saw and higher top costs, Aligner rates revenues trends, also consumer conversion higher better not strong growth spending by despite customer acquisition which driven customer lower brand, slowing

U.S. Our dealers U.S., grew demand to the quarter quarter, inventory mid-single primarily quarter, Canada. in exited and had expected declined growth our by the high offset Instruments lower mid-single by strong with at partially CAD/CAM digits business levels. business performed which down single The was XXXX lower & digits line the in was Europe, due in but the as digits and was the wholesale in imaging driven Equipment by in in Implants projections. in demand

China, work the through to in VBP. including continue We impact of headwinds

traffic reduced return trends year-over-year, this China saw to year. are improving, patient to growth and we expect later we While

and to sales also grew Organic products. in particularly consumables. Retail restorative patient XX%, strong, for The stable most impacted saw geographies. was year Moving which year preventive quarter the demand current approximately consumables the for traffic period, by primarily prior to Omicron variant. strong was to across demand attributable comparison

discuss and by financial turn quarter XX.X%, organic CAD/CAM. higher volume let's U.S. first Slide by to sales X region. Now grew in Consumables, Aligners to driven performance

which equipment, and in we continues to U.S. interest While see patient for higher traffic be market. attribute in lower recessionary did demand Imaging -- stable, rates to concerns the the we

CAD/CAM expectations we dealer million on levels the sequentially grew laid in inventory with the earnings out $XX our call. quarter, February U.S. Our consistent first

expect We of slightly to inventory the to be year and dealer end fluctuate lower the CAD/CAM by levels. quarter-to-quarter current levels compared

to growth approximately Turning of partially in both Aligners. grew and sales the year. Rest primarily flat organic X.X%, to world prior was Imaging demand versus due softer strong growth sales Europe. were by Organic This Consumables offset for equipment.

the as across and as In lower Excluding of impact continued we China, implants Imaging a rest VBP. headwinds strong China, sales of due grew expected, demand organic led as X.X% sales strong quarter Consumables. to equipment world had in portfolio and by for well experienced the

With of increased in our as XX quarter. discuss our updated better-than-expected to outlook that, the full let's XXXX. as to to We've our year our updated remainder the first reflect XXXX. for move Slide for outlook confidence well performance

flat range. projected low of X%. sales to of to basis the increasing end range a a by net be increase year the now $XX to low billion, XXX our represents billion up point organic $X.XX to with new end our We're outlook previous range full of This million $X.X to sales

a environment, traffic key stable we're in to improving seeing challenging operating While in we patient still markets. are macro

foreign to addition, rates unchanged largely compared our currency exchange outlook. In prior are

to most impact And We net of rates, our which for greater we was on than FX FX estimate as XX%, full point year. quarter. the the full remainder of expecting EBITDA in prior be sales, such, unchanged to basis outlook. will a XXX year headwind Based from be current first a the margin minimal expect realized still year we're

outlook brings by year also low-end, EPS on sales the Given year, adjusted $X.XX $X. the our better-than-expected $X.XX to which to performance to full EPS our start organic range we're adjusted the raising

of XXX million, EPS includes previous outlook share a includes average updated approximately The the mentioned weighted count ASR. which

we the year recovery year-over-year benefit and sales QX EPS On of a quarter, quarter. expected decline increase basis, For second a the first as a the prior in organic better over order demand environment. slight included capital back to the expect sequential and is some sales adjusted equipment

of half period. first anticipate While organic year in the the sales performance, fluctuations we the prior we quarterly over year growth to our show expect sales

We overall EBITDA in well least progress be we challenges are -- Brazil remain external Australia. we're We margins such capital as environment, and quarter expect second at China, markets confident my the macro the in Wrapping the as certain as particularly making. with will XX%. up equipment. comments, on cautious

move on urinary reporting. care and HealthCare, detailed Simon. aligns turn that, And The new X structure our with will structure. greater to the our which call, that Let's provide quickly and financial now reporting Dental transparency our with the Orthodontic upcoming fourth market to Essential in are; will Implant Solutions, we'll back quarter, in new believe operating new which and model second for begin Solutions. changes will to Starting in solutions include revised segment. call Wellspect I'll structure we the on to earnings segments, last bowel Slide structure. using the The touch we a dental our Connected dysfunction segment operates Technology be and XX segment continence

you, Glenn. Thank

update, Slide on our Moving strategic starting to XX. on

product we fulfill experience customers secure journeys to that and better to transform simply, our diverse strategy, and connected exceptional Said strategy, experience Dentistry focus lab on to clinic innovation and must and customer more workforce. driving digitalizing patient deliver outcomes. I by reiterate and workflow dental through patient our First, trust an a simple, delivering our an want service workflows, and to engaged and treatment

reliable our will continue shared the with year. intently we execute and we Slide progress. on at repeatable I the strategy, be and that of XX, delivery this services and strategic good XXXX manner, beyond we a of our On on you making you objectives products As focused improving see start to are and the in predictable,

and and sustain & tactical annual in we as high-performance core eye are growth to to We are which progress growth our return we on make This one, profitability. a north. have focused true on four, margin create to: X on our our five, and industry strategic and profitability; accelerate two, Implants is commitments; culture. Aligners enterprise on enhance And objectives three, digitalization; fulfilling deliver increase win and these our commitment objectives,

a objectives. and fulfilling with operating Turning plan. on annual our margin our in update overarching to our outside focus new commitments, of on growth achieve our workforce us our progress start, model XX commitments. showcasing provided complete to work. good February, QX for Slide Starting goal and with with In progress regions we Europe. we made In announced QX, transformation on largely the meaningful reductions a restructuring

in are to councils workers' on discussions plans. active We with applicable our align

this to for success, received look network profitability, our have our some and simplification We significant and critical operational executing on sustain selected project already Enterprise we next-generation ERP and for and platform. opportunities multiyear enhance identified we have we progress the implementation Board and is approval in other to As made regard. digitalization opportunities. have are

this in strategic other a SureSmile objective the have only we offerings harmonized fewer performance line market. strides Byte. double-digit one seeing traction refinements we we of launched which benefits, differentiated which contributed connection. U.S. full are win improving With to all growth, Aligners our growth the include With of to this also clinically quarter. performance. not enabled implants, continued have are clinical with compared another are with business Byte this solution & resonating on operational quarter and DS time range and the product, in now shorter on digitally made and Implants, with EV SureSmile, in to significant the in On delivered strong but premium OmniTaper of We great QX. a past in both treatment top These customers

has will our acquire While in that VBP securing to opportunity growth business. us in support a volume headwind will September, allow for the been position us a China process in since an incremental long-term winning

objectives to driving of for achievement to our are create other We This and is culture. also high-performance creation long-term value working stakeholders. strategic a enable to critical foundational our

out putting gives at shape, accountability. clear new guardrails we have lines us at with operating and set organization. we the the the customer the efficiency operating forefront. that right and expectations measurement the taking This meaning is model It and KPIs everything the to do to of with Our providing clarity, center of compliance enables identified rolled across back and model

we we part of the SVP affairs. our center our to elevating are within also and role This individual customers of of hired of a leadership ensuring be the announce am key I excited have part and be that quality do. that organization, quality of as everything model, we team and new operating at are my will regulatory to new quality will and

the to normalized plans our As will with on that a team, we line more remain also Dentsply market while have strategic objectives. progress transformation our made We profitability. confident combined with market solid conditions, increasing revenue Sirona in position grow

earnings improvement to can $X in XXXX. of deliver meaningful targeted these with Sirona per share enable of factors adjusted combination Dentsply positive The earnings

off few with Slide a year XX. remarks let me is The strong start. to on close Now a

a remains we are While a with we challenging increasingly what can XXXX transition optimistic macro year about deliver. environment,

we reason, low-end are that raising year our For full the outlook. of

hard right us plans confident are making more work are decisive the at transform is We committed the plans are to our There company, to but Sirona, place improve strategic transformation into on company the progress our and objectives. to we beginning. the just putting is our on and our This boldly significant path. and performance. Dentsply its motion ahead taking we We company of that action

it has look of to belief forward be questions. aided this that, our and in support with collective sharing upcoming details And I Day that Investor leadership. for at Board November the in all you we Later experience, open instilled with on been our year, more our the by Progress will the Charlotte. X up will

[Operator from of Instructions]. Anderson line And first question the comes our Evercore. Elizabeth with

then sort towards about you especially would also wonder Can that One, of is you low-end kind sort was of talk first the of given real your quarter, you raised be sort the like everyone's expect about about the this And people sort into from worries can And the the of Aligner market. And saw as talk to of secondly, can obviously, profitability. about kind when be you continue April, margin that Where the you drivers shorter-term that? just to contributor, trends we're the the quarter dental helpful. volatility. if of either seeing about talk of nice in positive corporate or you outperformance of end that of -- guidance. a a

think trends Relative not in in trends I much. March, saw February. we Glenn. it's so to and strong quarter, the January Elizabeth, really

than So environment. March we first bit to weaker was seeing we're stable look But as the little actually very forward a a X April, months.

good looks April well So as here.

I outperformed but February, trending-wise, quarter here. in even lot the of So obviously, April we in, and positive would A January that we're came trends seeing say,

a that's the overall. the strong, in recovery quarter, improved it clearly, very categories. was procedure very trends the much when the outperformance traffic, first Consumables, good board Consumable all you So were across in and about in pretty think And sign was favorable across pace

when digits. performance was We Endo up business did saw business. double was really you well. So some up good in have our U.S. both and digits and our as double consumables Resto Preventive Europe, actually the look easier We at comps

Omicron So way. year the obviously, impacted negative first last quarter I in a of mentioned

and take So price year, put forward that we May. growth will effect year increases some the last this have year-over-year helped that rates. And in

growth in pre-buy dealers of put cases we delighted consumables. certain consumables. with were whole, the on up XX% a saw a probably in we on But some So to almost bit

thing the we're and Relative the customers. And looking we're I an helped targeting And customer Byte really the is increase costs the important to at really is think reduce Aligner the business. drive around how profitability. key this and quite increased funnel seeing our rates, profitability, our So positive. trends overall the most were in to customer conversion quality of which there acquisition

when it in performance, here. Byte, but also we that So our continue to was a you we particular to go see organic clearly, of Aligners EPS, we on expect and in a at due lot the stronger-than-expected as business, our forward outperformance improvement did look nice

question Baird. [Operator Jeff of Johnson our comes next from with And the Instructions]. line

And Glenn, there on question from maybe just up XQ following the Elizabeth.

in up increase growth in some price the the a third April. first, negative put forward, understand talked you're your look in what I but are stable about comps, quarter. stack fairly guidance I pulling solid on your actually organic quarter, X.X%. maybe you saying just you And when and at Just business I second to guess they also X-year

So quarter a of on to from you're one whole other lot the up to come the not going of volatility against. comps going kind

change in by wherever that would X, X what you're second a full, up guiding quarter? that to So business it, call end points X,

Yes.

So EPS. question. sequential did expect Jeff, On thanks we for mention and a to basis, we increase see both that the in revenue sequential slight a

because being performance consumables. did some But for strong of keep year's see really in the prior timing mind, somewhat it quarter related is year last back of quarter. in in first comp the our recovery toughest Some We that the order second quarter. quarter

this We're year look being is market, at as very when the example. an overall, spending, And last Imaging larger especially we equipment year. favorable cautious on more equipment versus

a year growth. the year. of we We to organic the guidance, expect about initial on keep guidance. first to our quite our February, based sales be year, going first bit see a performance to feel our half decline at look in we cautious environment. what outperform good half we're overall see So said But the half continue comments do and for in Equipment mind, of expect growth first upon we our in the of when do the We of just do to on expect organic we in back the to

growth see a again, business given given very know sequential we on be to still we're momentum that improvement in the basis. a the in I expect year. the Equipment cautious And macro we're continue on post second Sam, perspective our an because very we to slowdown. Having quarter, said do And it's But to we're strong from a in also going business, in we if add year-over-year seeing to being Ortho cautious and you early expect and environment do to our anything. both China want don't what a the have. that, recessionary

do started world and in high-end And equipment all the We've surveys. in you our also invest to spend, around survey U.S. Jeff, surveys. doing and we April X,XXX willingness bearishness in Australia, there technology from customers dentist Yes. completed some own equipment. to particular, in capital and we still have their some is that in about capital your a the just relation

our So beyond. move factor consideration QX that's in a into we as and

one number business, That's overnight share and me depending heard back then you follow-up be Implant that, yours X.X% might little I right. what share But a other then have Simon, All below maybe question. helpful. business. been implant just first, I'm helpful. ex I the on was just saw I don't if get surveys maybe China? growth And up X%, ortho guess, just you sure that. to, each mine, put on the And implant would can Straumann their I maybe think I But that you'll and

your quarter from What's the rate there report? of getting with Straumann sure single-digit single-digit low path organic what that kind high other to what closer path back I'm one market back a the kind almost to of Straumann's decline this So setting is quarter? to is growth is

for Jeff, thanks the question.

X with excluding back that's growth being business, due markets. in line single expectations. is to not road U.S. for to get to digits, The implants Our surprising really comes It And our low us. down the China, to from largely us down. was

I to implants even VBP good the recovery our we're first. the the a month China. April challenges China, total business all The we know the stronger for And quarter. as recovery of down nice XX% first really is of in and in news us relative being were QX seeing in in exit China think in So obviously, we we

want reflecting see signs much I'm So yet full but because in on China, the we China. especially to bullish points data in too are more before that in I numbers recovery there, more Implants but get year volume of I not some optimistic, are the

we good about feel So that.

The over couple in U.S. share is lost Implants of underinvested. and the business, the other years we've last we've part

as add organization we add in commercial more more to our investments significant And resources, reps. spoke made we've previously, about

We have a is the out. in training which of we're significant be of another going program that here. all reps, coming Implant fact, to in rolling to step our forward We've month in Charlotte May, got

Our territories are now second and China. U.S. filled. And I am starting expecting to both in here see the in better Implants the performance quarter

So single down yes, if were we the pull you down implants, in low China. digits out

from think point as business in forward, talking I do move we to you our growth showing improvement should be want Simon, implants and sequential add forward. we about this anything?

implants comment just in more China. Jeff, one Yes, on

to we been of as terms We Dentsply have pre-VBP China Dentsply offered result not Sirona VBP. by implants Sirona be offer in in of in a continue were in offered that the selective the post-VBP. by China products China All that

haven't use forced they So on any customers product can choose whatever and corridor. been particular

Next Wright up, Stanley. Erin have Morgan from we

core sense equipment? us of How should shaping we could is IDS? you Can you're be broad broadly demand is you trends how up? things on primarily segment? quarterly at the how how there speaking, progression? the about U.S.? the if book timing progression distributor that and across some across give CAD/CAM how And quantify in think And just seeing and Was the about dynamic should the traction equipment quarterly thinking And the order we

is distributor of related lot U.S. to A timing the business. the Yes.

as So that we the throughout is about CAD/CAM. were reducing And for specific we to talked levels U.S. our inventory dealer XXXX,

And so XXXX very good exited we a in position.

demand dealers. essentially demand our so wholesale to And retail seeing now translate at we're

pickup. a see did we But good

was versus gains, talk in you we business. timing, our just DI and when year Overall, see more volume year a look levels. normalized it's this gains last the quarter when inventory we seeing did about good really low So at volume

around such higher-priced CEREC are in recessionary minutes. could business environment, maybe as effect the back performed Our the just our higher a in concerns in interest we Simon it's circle quite and on the Imaging. Obviously, having mills well to with that really the And the quarter. rates equipment few

on we're were in so down cautious. being equipment. And Imaging our very the We quarter

being we're forward. So go cautious we as

more more ultimately, upside equipment. to to continue relative there's probably data to going cautious positive we're downside I But But until than we think, our see be in points. forecast

So you to any want with that, make additional comments? Simon, do

Yes.

So just two comments, Erin.

offers sequential now Europe, We a and on particularly discussion And month-over-month marketplace And of to in Connect, lot opinion Primescan then we improvement traction as in speed are is printing. Crowns getting a know, impact dentist much important than for market on the lower quicker, crown, XD we there's staffing printing durability. in has milling that mill strength think continue of milling the customers, we which, you here more the is of today. saw quarter. when levels for in where noise be about versus the the particularly the

favor, range of is for have very printing accuracy broader of where much example. we the and millings' a milling in aesthetics the then versus And colors,

the with on on basis. versus here a be go-forward will milling respect we foot printing to So front XD

the continue our patients we're We the portfolio. and market-leading for have best option is believe to that milling pleased mill to in

the And of Germany interest lot customers. of IDS pleasure the how it's in was had my first around. in see I on core go joining Erin, your question entire on for IDS, momentum And past our this did our -- good digitalizing I a and workflow then, DS customer we software,

for out getting DS. interest good orders progress of coming and on Connect really Primescan our So

enthusiastic and a that And about so were lot of received customer we the we feedback at convention. really progress

here? portfolio on of just proceeds optimization. could are if extent at we to more now the Where you and to just ask I one Great. -- the speak use there with derationalization And are can divestitures,

Yes.

Endo. the So on SKU Resto piece, progress Erin. and very good take rationalization I'll made We've

progress. We haven't eliminated any SKUs, that's a in work

to As available very But as and thoughtful if to diligent noted when we now, different we be data test we've all are to beginning noted can about the we before, reduce markets us where and we have SKUs. in have, and we're SKUs. going specific we eliminate

sites note this question. we begun we and let those network notified. take opportunities some And optimization, those part take seen been opportunities the to remarks, other prepared past couple of sites did As that we our of Glenn have in have then I'll in for and have quarter, a

Yes. in significant our we a Obviously, in asset. our talked last earnings Wellspect amount call, of about interest

evaluating asset It's to keeping bottom what divesting, of be terms different to alternatives another in that and of top So we're line still could very which performing very well, because is both relative attractive. be asset, do the with line. could it one

paying on We no also we've around shares. have significant the point So that. concluded our extent asset, say made of we use go of expect that divest Wellspect. not decision do would this proceeds would that on been buying the more no again, towards out decisions back that coming were down at any likely the obviously, portfolio But I time. of made in To possibly divestitures review. debt rest to evaluation and

just Having a not It's one said review and done as an a mind, ongoing of keep that, do. process. that part portfolio in assessment we

part as point do time, our no But and this So include of a your expected. we continuous portfolio. the And you in significant go operating questions. divestitures evaluation model, for we've further cadence there's around, regular it. initial of Thank for at

Brandon [Operator Blair. Instructions]. And our Vazquez William next question comes with from

times channels deliver the about little sorry, refinements what or if I'm Aligners. able the you a fewer guys is it to to shorter that talk First, what I you most you compared competition? about curious clear -- Maybe specifically to about And to treatment seeing these -- and allow just wanted are could where technology ask is bit your success?

and Sure. comment. to others I'll maybe some start ask then

think big XX% Byte, business not look think part we SureSmile, driven with had I businesses, I at quarter, double-digit growth improvement, X particularly year-over-year. in both off, obviously did I starting Europe. and aligners see is expansion, but record regional only a sequential a of our a the first by the So up If SureSmile

have do product. clinical also our We differentiation of

And to require X context, give out no you in Aligner space. is X some deal of the big cases revision, a which

really differentiation And especially increased driving we're showing with clinical that so share, GPs. the is market

DSOs. a winning with our that's part story. We're so big also of more growth And

the space So we've couple a got as in wins of DSO aligner well.

of All out have of really growth SureSmile. us to coming is enabling that strong

that I mentioned customers side, customer a and I earlier. better Byte the we're of driving On think job better rates targeting much conversion doing

rolled plan with entire In app, we've Byte throughout engages to our a is My customer our addition, giving them process. full treatment customers, the out which

rolled we've customers for treatment which side. on HyperByte, direct-to-consumer speed the is helping And also out of

whole, obviously, are comments? underpenetrated is of GP And the market in Simon, areas capturing very still direct-to-consumer the some market the dental further fast-growing in more in we do you on to make an share fastest-growing one So space. space. area because the a aesthetics are this and want both still

Yes.

the -- quarter. investment we that But with there, had DSO in just about digital that the made partners and business in some in of before one DSOs, the that spoken winning ways of through some So scanning are and we've aligners. growth we nice first we've headcount is our adding

and we begin traction DSOs first their aligner some business, Primescan place regard had a robust quarter. product way. our So drive to the to pretty had business from we've that in SureSmile our where particular, then meaningful We the of in enable in good more in traction

a for go can back I second. then China Got to it. And

at the a you If to side big side market. I at into private you look had spilling -- all. price exposure Are that of more cuts the private know

price the little through the of of half Like offset of relative into volume year? think guys heard a mix to back bit with reviews on kind as how growth know declines? I we to volume trends are increases that. help expectations, we've these your especially looking you I happy move

Yes.

mind, our into are So the business keep of in And sector. seeing yes, private the China in is the price we in spillover most sector. private

XX% seeing about, significantly we is here sequentially volumes, better getting and VBP anywhere we're price month and happened. the in are that's XX%, a in what's the talked reductions space, April. in winner from fact, to in it's previously news good of we seeing are a we As pickup The and

offset We're the in want But I term too need in reduction to again, picking I don't I don't the more the definitely, in very by price points April. and Implants. proof I get before see But excited we're what the because up points second volumes expect are more for volume seeing yet more to short month of bullish. here. quarter become data encouraged the to the

So be up. in will overall business I do China down total expect even flat in should the though Implants China or be

that once down call despite full offset price end this reduction. to volume a of being I should basis I think the the year, first comment China the previously get to last XX% But I in made on quarter. And year flat a we the expect be

I be think what now I'm right China of months. seeing given couple last should is now my year, view right this growing in the

So we're question? we had more bullish question. on China, but still Operator, cautious. Thanks another for your

Yes.

question line the Our of with comes from Stifel. Block next John

industry Equipment, high growth? how so much the growth Aligners, because you growth I general you when cetera. industry deviates return depending do to dental just Glenn, your weightings really Implants, view guys ask And level, company, for that industry or for on see the Simon et Great.

industry period do think time like. So your think what you what there? you portfolio, And when to we then that expect of get growth do about looks over

Yes.

the So particular, on printing within John, Clearly, we maybe faster some the is X% to average, would aligners clip. also the X% back X% are of and the to growing in XXXX. hotspots in getting mills are it's But XD growing there We've that a I at spoken of then it's $X range by about say range. areas the have in that, Simon. Consumable in before business. EPS X% to we think

is that we on we previously And we've to we're growth commented back time that As in 'XX. to getting of getting track $X believe frame key market that. in that a to to driver noted, EPS

kind it. the that frame are of about we that's So thinking time

to ERP We as As get through. through before, have work transformation we've have to we get noted well. now

this ability to to rate. much done Sirona get back here hard do is confidence there Dentsply increasing But work there. to we to get in that are So and move to -- us for market is growth our our

be a I out I the quarter that last for might the called And year-over-year, a believe Glenn change. then were for drag little you. $X.XX the $X.XX bit investments second quarter But more think the think one, I don't you

on cadence? call is it flattish color would is result XQ function a as in that out, another laid to year. that those so any for dime specific the we In Glenn, $X.XX about think of sort of year, that cadence a turn investments? words, do XQ sort of of be, of just the unchanged sort the more How other for exit or I is this the EPS there And follow-on accretive? the as So the and XQ

had the the Yes, the and don't was DSOs program, why those in that second remainder of of guide do the restructuring systems, America restructuring So But right? on for only want it obviously, cetera. starting throughout to in fund we the now reason say specifics to or too we we have investments EPS keep our mind, ERP to et whether with North expect quarter I sales, should offsets much commercial give to investments part it be investments, commercial compliance, continue the year. to

to in yes, are So of perspective see kick the year. from we investments back headwind going for commercial in should to us start a the meaningful more restructuring the with the much But be rest this of be the and savings half year.

the cadence, expect So sequential in when slight a in to we look EPS at EPS do increase see QX. we

large mind, in restructuring when later get his having through in is had remarks much a council a in, QX in which the Keep performance part savings still why the Simon and prepared savings And restructuring happen come what around better see of from. is to where Europe, the then those approvals year kick workers' QX. this of lot we in a should the reason savings

in we're is work the reasons in don't that timing pushing We make any we get that or want have to sure out. those still work of ongoing. EPS So delays one conservative our issues guide why until It's discussions. through that we still being

be EPS finish, achieved So exceeded. of But that's still much that in or I our think that's work be we'll more can front us. once confident

open. is Bednar Piper Sandler. comes next Jason with from Our question Jason, your line

of we good trying elements might to wanted where impressed -- growth. really patient 'XX stability. underlying consumables what a easier started the on offices It have come to retail we back closures Omicron have I against exclude that A commentary to around you to year, maybe onetime sense of happened those comps reconcile to was like trying nice been to that here. some traffic then last demand, might but growth start also weather-related I'm mentioned maybe get if and

points just increase, price again, and all buy-in, how maybe sell-in if performed So those versus into of you you wrap answer, consumables? maybe mentioned for the the your May just considering sellout then could ahead

improved the say, easier of easier some Yes, buy-ins comps of you and is is probably comps some probably about of true overall, the I the year-over-year relative mid-single half and and exclude some it demand QX timing other underlying if price just digits would QX. versus to real and half increases

just wasn't it's across just It geography. of but wasn't So It part strong, one business. board. one very in the consumables in our

pleased mentioned the to growth across really see are across earlier, I As Endo, preventive, we restorative, globe. the

really some a sign the So back I patient think relative it's a comments around coming U.S. just good because comment. to traffic these is of comps

thinking of look than bit little things think But helpful. it Yes. side, of implants you're this investments but looking quarter, like also to we Sure. to watermark and I'm the at is in least the I thinking. were maybe tied was it adjusted deviation at what low That's some operating on VBP, is then a when the operating this in making for look how XX.X% -- was Maybe for were we at, sure segment, the margin it aligners. T&E the we does for some Understood. a down. quarter, other lower segment probably one operating margin clear about other It relative stepped profitability?

And are understanding pace about T&E I improvement the so, how you methodology. here? your guess if Again, of margins changing you're thinking for from reporting

want segments products currently are however to that you the or the question guess, I that answer category? in that with So

Yes. No.

impacted was I VBP. think certainly, profitability by the

were call have also reflected did numbers in an the are other impact. segment. I'll There in them -- that T&E nonrecurring that charges some So our

segment, expect So that point. I see better of your part business we were deliver changing But we're good improvements. to T&E and to our be although to we'll performance. our do going still able really absorb show should in the segments performance those

Ortho profitability improvements again, But progress in to Ortho underestimate expecting in sequentially going don't to better the Ortho. show want and year-over-year, I performance really our good we're business forward. strong did see

T&E our segment. watermark I for probably there's low expect your to a would point, So

You get as better we forward. can only move

follow-up. real you Any just quantification with Ortho sit profitability? run where on And quick currently

alleviate strides. We we in about that question I just I'd on still the overall profitable. whole, is get. making Byte say it. dilutive we're was But that to had profitable I would the corporate Byte to No. the we good questions tell feel just good just quarter no, typically It's really on you think margins.

we but So to progress on do, quarter. more making have we every each intend work and

nice way, a get but side not done real And a is performance working job the which the improvements. meaningful team line profitability on in going on also has just top going help leverage to this to

the America. line our with of Cherny next from comes of Bank Michael question And

This recent Are that recent result Clark of thinking through seeing any you as of market a banking demand standards potentially Dan the impacts on to for equipment just headlines? be lending hearing Mike. or is might tighter hitting

Yes.

on So it's quoted earlier customers survey I that those around the with the Obviously, world. Simon. X,XXX

from concern is, those capital we is While about did sentiment worse the making last has There investments. time there survey purchases about still not gotten in February. some since the heightened customers

all And a earlier favorable portfolio. to we'll caution then more and surveys part continue So about point we've our of to Glenn beyond survey some space. some commented your on in into exhibit that thoughtfulness environment, that our or to that until QX respect with put

And issues then clarification. a in just Are seeing instruments? you quick still supply and chain equipment

the chain any got supply worse at that would So all. say has status I not

slight In improvement. a would we say fact, probably

last still their supplying every they electronic middlemen although playing a month. -- components, who we year, reduced are each are We these role role, being had are is and

lot internal progress to a making our are We as respect of well. with times turnaround

the past, it. very say it has of about I a less are So in still concern watchful we been it's would but than

from comes question Rich the next our of Goldman Sachs. Nathan line with And

outperformed I'm million relative your your it outperformance to organic then quarter the line to And growth would $XX reconcile relative XQ on you guess by guidance. where trying to first to start. one initial commentary your I numbers about a top expectations. seems be. like Maybe just

think $XX I million. to $XX CAD/CAM be price It the about about seems inventory out stocking you called of the was million, the increase. ahead buying consumables

in the those XQ. does high end $XX million you're And guidance for case, right your Is the a headwind I either ballpark? of of guess, it the kind in that like into tracking that I of year. at are total seems And -- turn kind guess in

of So of kind in year is year anything improving to the on there throughout radar the we the like half sales it have that pointed you've the should this seems because year. back else

Thanks question. for your

I exact overperformance each drivers consumables. I the big CAD/CAM, don't us. highlight would for X know the was the say Ortho Within for those yes, buckets. in So also outperformed has of I amounts would QX the also that CAD/CAM. clearly, and are outperformed. the But mill

underlying out of there of timing, demand, items to some called we've good, strong as relative but is yes, timing in though, So some the prebuys. the outside an consumables that example, of the

stronger was much helped So the patient traffic that drive to outperformance. consumables

the Our rest Ortho being take for share our versus We're cautious forecast. has absolutely year. upside the of more created

back right the not half year. the cautious to now, equipment we're show you environment. year We're projecting improvement versus guidance being around the of of in front sequential half the at our If look the obviously,

not erode, does probably environment improvements get And continue macro to then it China, see the better the to overachieve opportunity see I we're continuing in think leaves well. expecting range I or us our guidance better go implants opportunity to that. and think things expecting improvements But of to if in than And Ortho. there's with do to momentum end even upper if business, see to our obviously to

good of cautious, first the equipment around we'll So being in but year plays quarter, the the see got rest especially out. to we've here how momentum environment. your But point, the

you How of time forward? R&D of potentially bringing and Great. as that could a bear the dollars talked innovation thinking making the changes. you where maybe categories those follow-up maybe line and growth think some consumables to And those about And of and the you one talk just then, we kind market come equipment R&D. between you're focused of some we about? for allocation to on see about are the about on And can Simon, fruits

leads Business Officer, in brought Frank, we with our today, Nathan, who's . us Chief our Andreas who

Andreas give that I'll question. take an to opportunity So

Simon. you, Thank

on on point place. the more have putting the in and that allocations. to foremost, innovation I'd a to us investment side enables think I So and dynamic our first we're And resource new side that model operating

investment is clearly One areas biggest of our software.

to to continuing behind core our software DS clinical invest applications upgrade and enable platform we that as we're So stack. with next-generation

our we our behind and also solve maintenance, for secondly, optimization for patients execute as simplification our strategy, will significant on will up portfolio innovation then R&D dollars fewer And products more continue challenges to and which spent meaningful that customers. free towards be to resources invest

from question And the our from Vatnsdal line JPMorgan. of next comes Rachel

have just the here that customers' you in first CapEx visibility budget. So on on the

about today spoken have instrumentation. You've fair and the equipment a caution you amount around

you're in And budgets this customers? and So us pressured through as Canada. into And be equipment then follow-up, within just having CapEx walk you at you can with conversations XXXX. point, strength you the instrumentation to do flagged some expect a

can about Europe. drove talk U.S. what the relative the So you and strength just there to

willingness being if I say any that if done obviously in dollars out. constrained. But to I to put to with would the budgets So, details say certainly that constrained way as you don't capital is all all we've their our respect their -- read We've are certainly the are I surveys those spend is budgets. don't it have being the in own know work well.

equipment in spending. around customers X that we're survey globe, in X globe, that across caution discovered entire capital across the We the exhibiting

demand, have question is with go then data that as that on. but of respect well. some to So timing of also that's your the And to Canada, that on we some

can So on give greatest the that's that. color you we

on one quick Aligner. And then maybe here Clear a

noted you in and the grew double quarter. that SureSmile digits As Byte

us So driven much of been has can versus how performance Clear wins Aligners brownfield? walk that by in you just through greenfield

DSOs there Glenn our bring I offering. their and equipment SureSmile row we third our to earlier expanding SureSmile offerings seen as through, globally. Well, well, a in are in I that as growth SureSmile also expanded gaining they're and some include We've with Imaging noted on, our in traction as -- now Byte. noted also we the think, we've look, really robust quarter

present excess in XX we So are of now. countries

are likely worked the customer on end as Glenn are and programs up our bringing the noted sales we program the than that incentive funnel Aligners. passing ensuring our have past process or the in into through too, with more relation to customers to acquisition, sales in at Byte improved to sales rolling We've that we force then Byte. and And ordering SureSmile training and onboard been an

that of are the there growth Aligners legs we're to profitability. lot using a tool increased to and increased drive So

last Michael question from our comes And Barrington Research. with Petusky

missed extent of talked guys I seasonally of rest you're know about back, QX you free for mean for just the flow EPS is have of only about QX can, may I free cash but the sort cadence cash in to any you usually, you what always year? sort Could for but you rest expecting cadence this, of of weak, of expect the terms year? modest talk the have I bounces of but sort growth.

question. Thanks for the

of we the year associated payables. this of that that to of quarter had first not nonrecurring just obviously, think, first and I onetime a have lot timing We a restructuring we going payments foremost, was be and we think mind, and I QX, forward, outflow we unexpected. cash nonrecurring the from That on and in more go paid keep operations. year made. from had receivables as expenses in are items last with restructuring,

improvements see be performance typically on conversion. throughout both that, free lower free will than this Having So this flow cash a free we to conversion. year, overall, cash our flow year year and flow cash what you free see and on said cash expect do flow would

as go we get will better certainly it forward. So

the be that be associated to the normal XXXX. made the payments efforts quoted a that's and lower restructuring most But for savings with getting than will we've this year given years that have annualized

QX, sequential Is forward, X? to it growth be of fair it sort say should going X,

Yes.

for to Chief like Campion, Simon to Officer, I for now Executive Simon? remarks. our And that turn concludes it would back Q&A closing today.

would thank their to Sirona you, Dentsply who commitment thank their our questions entire contributions to left unwavering and Thank customers. this for organization you team, morning. your recently to our those I and employees company have thoughtful all including also for like the the valuable

deliver ahead passion our work team hard organization together. our Thank by I that has much belief brighter us, progress future have for energized and am that you. can this the and we more we of While a

today's This disconnect. the participation your in and now conclude for you program, Thank conference. you may does