The introductory paragraph of the Q4 2024 DENTSPLY SIRONA Earnings Conference Call begins with the operator welcoming participants and noting that the call is recorded and initially in listen-only mode. Andrea Daley, the Vice President of Investor Relations, introduces the key speakers, including Simon Campion, Herman Cueto, and Rich Rosenzweig. She directs listeners to the company's website for related materials and reminds them to review the forward-looking statements disclaimer in the earnings press release. The call will include predictive statements based on current assumptions and expectations, subject to risks and uncertainties as detailed in their SEC filings. The discussion will focus on non-GAAP financial results to provide additional insights into the company's performance.

The paragraph is part of an earnings call presentation for Q4 2024, led by Simon Campion. It highlights the company's financial performance and strategic updates. The focus is on recent business growth, including a 2% organic sales increase in Europe and a 13% rise in global imaging sales. The company noted that Wellspect outpaced market growth with a 7% increase, while SureSmile saw a global rise of nearly 4% and over 20% in European growth for Q4 and the full year. There was also continued strong performance in Germany. Additionally, the company has strengthened its Board with the addition of two experienced leaders, Dan Scavilla and Mike Barber.

The paragraph discusses the strategic actions taken to enhance business performance, such as the reintroduction of Orthophos SL and improved sales execution, resulting in sales targets being exceeded. Despite a 3.5% decline in organic sales for 2024, this met expectations given Byte's impact and pressure on CTS. Key product launches, including Orthophos SL and Primescan 2, drove growth in imaging and scanner volumes. The SureSmile business saw consistent growth in aligners, while innovation in Endo products led to competitive gains in the U.S. Wellspect experienced strong regional growth. A January survey indicated stable major markets with slight improvements, but elective procedures remain soft.

The company is focused on driving efficiencies and workflow improvements in line with their strategy, predicting a 2% to 4% decline in organic sales for 2025, partly due to Byte's impact. They have strategically shifted Byte resources to enhance the SureSmile platform, aiming to boost direct-to-consumer demand and improve e-commerce. This includes simplifying product offerings and enhancing the software interface, with improvements expected by mid-2025. Additionally, they are exploring strategic alternatives for Wellspect HealthCare to unlock stakeholder value, having invested in innovation and growth, leading to significant market opportunities and strong financial performance.

The company is focused on sustainable, profitable growth through strategic evaluations and initiatives. They've made significant progress in their transformation journey, achieving milestones in 2024 and maintaining momentum into 2025. They emphasize reshaping their organization for efficiency and improved customer engagement, aligning with their 2023 Investor Day financial goals. Recent operational updates include completing Phase II transformation activities and launching a virtual U.S. sales team, which has actively engaged with over 8,000 customers so far. Additionally, they deployed the largest phase of their ERP system in the U.S. in November, supporting future developments. On the innovation front, they launched the MIS LYNX implant in the U.S., enhancing their value implants offering.

The paragraph discusses the achievements and developments in a company's product line and digital ecosystem in 2024. The company received 8 FDA 510(k) clearances, with 6 innovations, including Primescan 2 and LYNX, already launched. DS Core adoption grew by 15% in Q4, with over 37,000 users. The launch of Primescan 2, integrated with DS Core, improved practice flexibility and patient service, boosting subscriptions. The company also emphasized clinical education, hosting numerous global events with over 7,000 participants. Financially, the company recorded $370 million in impairments within its orthodontic, implant, and Connected Technology segments.

The paragraph discusses the financial results and challenges faced by a business in the fourth quarter. Weakened demand and macroeconomic pressures led to significant charges, including a write-off of a bike trademark. Revenue was affected by $29 million in customer refunds from Byte, impacting adjusted earnings per share (EPS) and taxes. The remaining business showed better-than-expected performance, particularly in CTS sales in Europe. Fourth-quarter revenue was $905 million, with a decline in sales partly due to the suspension of Byte aligner sales and EDS distributor order timing, leading to a year-over-year impact of $62 million from Byte. Soft retail demand in the U.S. was noted, while growth in Europe, Global Imaging, SureSmile, and Wellspect helped offset declines. EBITDA margins dropped due to a lower gross margin, mainly affected by Byte, though efforts to reduce operating expenses provided some relief.

The paragraph details the financial performance in the fourth quarter for different segments of a dental solutions company. Adjusted EPS fell by 41.3% due to lower margins and higher taxes, while operating cash decreased by 45.6% because of working capital timing and refunds to Byte customers. In the Essential Dental Solutions segment, organic sales decreased by 3.4%, although patient traffic and Rest of World volumes were stable outside the U.S. In the Orthodontic & Implant Solutions segment, organic sales dropped 28.7%, mainly due to a significant impact from Byte, though SureSmile aligners and implant prosthetics saw growth. The Connected Technology Solutions segment experienced an 8.2% decline in organic sales, with global CAD/CAM business performing poorly except in Germany, where growth was seen. The equipment and instruments business, however, saw slight growth.

The paragraph discusses the quarterly and annual sales performance of a company. The quarter experienced the highest sales in six quarters, driven by the relaunch of Orthophos SL in Europe and APAC, and strong commercial execution. In Wellspect, organic sales grew 6.7% due to positive contributions from new product launches across all regions. U.S. sales declined by 29.9%, mainly due to Byte, CAD/CAM, and EDS timing impacts, though partially offset by growth in Imaging, Wellspect, and Endo. U.S. distributor inventory levels decreased by $45 million sequentially and $15 million year-over-year. In Europe, organic sales increased by 1.8%, with significant contributions from CTS, SureSmile, and Wellspect. SureSmile saw over 20% growth, especially in Italy and Spain. Germany had its highest sales in seven quarters due to improved imaging performance. Conversely, the Rest of World region saw a 2% decline in organic sales. EDS experienced high single-digit growth, particularly in China. For the full year '24, total sales were $3.79 billion, indicating a reported sales decline of 4.3% and an organic sales decline of 3.5%.

The paragraph discusses the financial impact of foreign currency translation, which negatively affected sales by $34 million due to a stronger dollar. CTS and Byte were the most affected, with CTS experiencing declines due to competitive pressures and higher interest rates impacting capital equipment purchases. Despite this, improvements such as the Orthophos SL relaunch were made. IDS faced a decline in lab sales, partially offset by growth in implants, especially in China. Positive performances included growth in SureSmile and Wellspect. EBITDA margins decreased by 80 basis points, mainly due to lower volumes and product mix, although some operational expenditure savings were noted. Adjusted EPS was $1.67, with operating cash flow up 22.3% to $461 million and free cash flow conversion improving to 83%. The company ended the year with $272 million in cash, a net debt-to-EBITDA ratio of 3x, and attributed some increased debt levels to Byte suspensions. In 2024, $376 million was returned to shareholders through share repurchases and dividends, with $1.2 billion remaining for future repurchases as of the end of 2024. The paragraph ends with an indication of a 2025 outlook presentation.

The company anticipates a decrease in organic sales by 2% to 4% in 2025, partially due to a negative impact from Byte sales, suggesting a net sales range between $3.5 billion and $3.6 billion. FX is expected to negatively impact reported sales amidst challenging macro conditions, notably in equipment. Growth drivers like SureSmile and Wellspect are expected to partially offset declines in CTS. EDS growth is projected to align with stable global patient traffic, aided by new product launches. Improvements in commercial execution, particularly for CTS and Implants, are anticipated from 2024 actions and 2025 plans. EBITDA margin is expected to exceed 18%, improving over the year with investment timing and restructuring savings. A higher annual tax rate is projected due to changes in geographic income distribution and declining trends. Adjusted earnings per share are estimated to range from $1.80 to $2. Q1 is expected to see a high single-digit decline in organic sales influenced by Byte and CTS headwinds, with improved margins expected throughout the year. Adjusted EBITDA margin and EPS are expected to align or slightly exceed Q4 2024 results. The company provides an adjusted EPS bridge for detailed analysis of key contributing factors.

The paragraph provides a financial and strategic update for the company. It begins with details on adjusted EPS for 2024, starting at $1.67 and adjusting for various factors like one-time items, sales impacts, and tax rate changes, resulting in a net 5% growth on an FX-neutral basis, despite expected currency headwinds in 2025. The narrative then transitions to strategic initiatives, highlighting the closure of manufacturing sites and distribution centers to reduce the company's footprint, the SKU optimization in the endodontics and restorative portfolios, and the progress on an ERP rollout to improve customer experience and organizational efficiency. The discussion concludes with progress updates on ongoing transformation phases and reinvestments, with a nod towards long-term EPS objectives set in 2023.

The paragraph discusses Dentsply Sirona's challenges and strategic initiatives. Despite uncontrollable macroeconomic factors impacting organic growth and making a $3 adjusted EPS target by 2026 unattainable, the company is focused on transformational work and foundational initiatives that positively contribute to EPS. Dentsply Sirona plans to drive sustainable, profitable growth by meeting customer needs for innovation, clinical education, and workflow efficiency. They aim to launch over 20 new products by 2026 and enhance digital connectivity through the DS Core platform to improve dentistry workflows and patient acceptance of treatment plans. Additionally, the company is investing in a virtual sales team, e-commerce, and customer service to boost demand and customer experience.

The paragraph discusses Dentsply Sirona's efforts to enhance their implant portfolio by increasing digital connectivity, improving customer education, and refining messaging based on deep dive reviews. They are focusing on enhancing sales force skills and partnering with a third party to reduce G&A costs, aiming for alignment with market benchmarks. The company is harmonizing policies to improve customer experience and has initiated an evaluation of Wellspect. Despite challenges in FY '24, they have progressed with transformational initiatives. Their growth strategy emphasizes innovation, clinical education, sales execution, and customer experience, aiming for a scalable and efficient cost structure by 2025 to unlock their full potential.

The paragraph is a segment of a conference call where Elizabeth Anderson from Evercore ISI asks about Wellspect's strategic alternatives and new product areas. She inquires whether issues from a previous strategic review, specifically the manufacturing overlap with dental businesses, have been addressed. Simon Campion responds, clarifying that Wellspect and the dental businesses in Sweden are mostly separate and led by a distinct leadership team. He mentions that Wellspect recently launched a sleeved intermittent catheter addressing a significant unmet need, contributing to growth. Campion refrains from disclosing further innovation details for comparative reasons. Following his response, the operator introduces the next caller, Erin Wright from Morgan Stanley.

In the paragraph, Erin Wright asks about the confidence in margin improvements and the timeline for reaching industry margins with the help of a third party. Herman Cueto responds by explaining that the first quarter will have the lowest margins, but they are expected to improve throughout the year as they address impacts from Byte and implement foundational initiatives. He mentions that back-office transformations, not included in their 2025 plan, could result in benefits by 2026 and 2027. Simon Campion adds that the company is working on harmonizing systems and processes following numerous acquisitions and a merger, which have resulted in disparate systems.

The paragraph discusses the company's recent efforts in harmonizing areas such as R&D, quality, and regulatory to increase efficiency, although there is still back-office work to be done. Erin Wright inquires about current dental utilization trends and their future implications, particularly in relation to EDS and consumable demand. Simon Campion notes that patient volumes are stable globally, impacting EDS, with some optimism in Germany despite ongoing staffing shortages. He emphasizes the need to highlight the efficiency of digital and workflow solutions to address these shortages. Additionally, Brandon Vazquez from William Blair asks about strategic decisions regarding the Byte brand name, suggesting it might be integrated into SureSmile.

The paragraph discusses the commercial strategy for Byte over the next 12 to 24 months and its implications for the profit and loss statement (P&L). Simon Campion explains that Byte has two main components: the aligner product and the team's capabilities in demand generation, e-commerce, software, and patient experience. Since October 24, the company has been focusing on leveraging Byte's capabilities to create demand and funnel it to their SureSmile platform. The R&D team at Byte is working on improving the user experience and interface of SureSmile's software, which has strong back-end features but a weak front end that hinders new customer acquisition. The company is now focusing exclusively on the SureSmile product.

The paragraph discusses the challenges of reintroducing the Byte product into the market from a regulatory and cost perspective, and the company's plan to leverage Byte's capabilities in other areas like aligner and chairside dentistry businesses. Herman Cueto addresses the financial implications of Byte, referencing a slide that outlines past performance and adjustments. He notes that some sales and treatment plans will continue into 2025 and possibly 2026, but Byte is expected to be a significant obstacle to Dentsply's growth in 2025. The paragraph concludes with the operator introducing the next question from David Saxon regarding implants.

In the paragraph, Simon Campion discusses the disappointing growth performance of their U.S. implant business over the past two years. To address this, they're implementing a three-phase plan to digitalize their implant business, enhancing digital connectivity on DS Core. They've focused on reinvesting in clinical education tailored to local needs and simplifying their complex messaging to both customers and sales teams, many of whom are new. They're also improving their sales force's capabilities through added training and expect better performance, especially given their success in China.

In the paragraph, David Saxon asks Herman Cueto about the company's goals for general and administrative (G&A) expenses as a percentage of sales and their current status. Herman explains that while they aren't providing specific benchmarks, the company has areas within the back office that exceed industry averages. He mentions plans to simplify the company and reduce duplicative efforts, which will potentially unlock value over time. This transformation will take time, but they anticipate seeing some benefits by 2025 and beyond, especially following big acquisitions which often create overlapping processes. The paragraph ends with an operator handing the call over to Jeff Johnson, who asks about the company’s cost-saving goals of $80 million to $100 million by 2025 and requests clarification on how much of those savings will be realized by the end of 2024 versus 2025.

In the paragraph, a discussion revolves around a $0.13 benefit per share, translating to a $35 million to $40 million pre-tax benefit, potentially linked to 2025 cost savings. Simon Campion explains that they haven't disclosed specific allocations of savings for 2024 or 2025, nor how these savings would be split between reinvestment and direct benefits. However, significant reinvestments have been made, particularly in a virtual sales team to reach untapped or distant customers. This initiative has engaged with over 8,000 unique customers and conducted more than 40,000 calls across the U.S., creating demand and working alongside field sales teams to identify new opportunities. Although specific financial breakdowns are not shared, the investments aim to bolster overall business demand. Herman Cueto adds that these actions are included in their guidance, noting his recent 90-day tenure.

The paragraph involves a discussion between Jeffrey Johnson, Herman Cueto, and Simon Campion regarding financial savings and the performance of the SureSmile business. They address a $0.13 savings highlighted in a financial slide deck, which Herman suggests discussing further off-line, indicating it's more of a modeling question. Jeff also inquires about the performance of SureSmile, particularly its decline in the U.S. Simon explains that 60% of SureSmile's business is in the U.S., with Europe being a significant and growing market. He notes that the business comprises not only aligners but also legacy products, which make up 20%-25% of the business.

In the paragraph, the speaker discusses the impact on the SureSmile category, noting growth in their aligners business with four consecutive quarters of high single-digit to double-digit growth in 2024. Despite some unique losses in the U.S., the aligner business is experiencing mid-single-digit growth. They also mention solid growth within their general practitioner (GP) business, despite a small orthodontic and specialist footprint. In response to questions, the speaker provides no significant update on a German tax situation, stating that discussions continue with German authorities and believing that the supposed issues do not exist. Additionally, the speaker notes no significant disruption or opportunity from one of their primary wholesalers being taken private, emphasizing uncertainty about its impact.

The paragraph discusses a company's ongoing collaboration with U.S. distributors, highlighting their strong relationship and continued partnership in the field. The company views its products, especially digital solutions, as crucial for customer efficiency and practice growth, benefiting both the customers and the distribution partners. It mentions the Byte wind down, Wellspect evaluation, and G&A benchmarking as logical ongoing efforts. Michael Cherny from Leerink Partners raises a question about whether it would be prudent for the company to reevaluate its portfolio in a broader sense, considering which assets should be retained and which may not align with long-term goals.

In the paragraph, Simon Campion, while addressing a complex question, explains Dentsply's strategy to enhance its business by streamlining its portfolio, including SKU rationalization and discussions around Wellspect. He highlights the company's unique position as a comprehensive dental provider facing both internal and macro challenges. Emphasizing the importance of digitalization, he describes how scanners are central to digital workflows in dental practices. With advancements like DS Core, Dentsply aims to support digital workflows and enable the use of their products, such as implants and aligners. Campion asserts the significance of embracing digital dentistry, which remains underutilized globally, even in developed markets.

The paragraph discusses a conversation during an investor call where Jonathan Block from Stifel asks Herman Cueto about a discrepancy in expected financial impacts related to Byte, a division of Dentsply Sirona. Block inquiries about a $29 million negative impact mentioned in earlier guidance and a $0.24 headwind, where his calculations showed only a $0.15 effect. Cueto explains that changes in the expected tax rate impacted the financial results, which accounts for the discrepancy. Block then acknowledges the explanation and inquires further about Byte's financial outlook. He mentions that Byte is projected to have a positive impact on the earnings per share for 2025 after adjustments and estimates Byte's revenue for 2024 to be around $140 million, considering refunds and a 200 basis point headwind to the company's overall growth.

The paragraph involves a discussion about a financial analysis and forecast for Byte's performance. It mentions that Byte is expected to see a decline in revenue by $80 million year-over-year but could reach $60 million in 2025. Despite the revenue drop, the asset is anticipated to be accretive to EPS growth due to variable cost reductions, especially in marketing. Herman Cueto offers to discuss the modeling assumptions and impacts in more detail offline. Additionally, Jason Bednar from Piper Sandler raises concerns about CAD/CAM retail softness, particularly with the launch of Primescan 2, and seeks clarification from Simon Campion on why the product isn't performing well in the U.S. despite the launch efforts.

The paragraph discusses the challenges and strategies faced by a digital dental supplier in North America and Germany. In North America, the company has experienced growth in scanner placements but faces a pressured macro environment, affecting dental practices' willingness to invest in new capital due to compressed reimbursements and high out-of-pocket costs for elective procedures. Despite solid performance in imaging, the company is disappointed with CAD/CAM results, attributing this to macroeconomic factors rather than issues with partners like Patterson. In Germany, the company encountered commercial challenges, struggled with high-end products in a tough macro environment and low-price competition, but saw success after reintroducing a lower-priced offering, contributing to market growth. This experience in Germany influences their global portfolio and positioning strategy.

In the paragraph, Simon Campion discusses the dual focus in Germany on the reintroduction of the Orthophos SL scanner and improved execution discipline within the Imaging team. He highlights the importance of training commercial teams across Europe and the U.S. to enhance their professional selling skills and conduct clinical and workflow conversations, thereby creating demand. Campion emphasizes that success is not just about the product but also about the capabilities of the sales team. He concludes by thanking the Dentsply Sirona team and expressing commitment to driving value through innovation, accountability, and disciplined execution to position the company for long-term success.

This summary was generated with AI and may contain some inaccuracies.