The paragraph introduces the Q1 2025 Dentsply Sirona Earnings Conference Call, featuring Andrea Daley, Simon Campion, and Rich Rosenzweig. Andrea Daley, the Vice President of Investor Relations, starts the call and provides pertinent information about the availability of the earnings press release and slide presentation on their website. She highlights the importance of reading the forward-looking statements and mentions that the call will include predictive statements about future performance, which are subject to risks and uncertainties as outlined in their SEC filings. The call will focus on non-GAAP financial results to provide investors with additional insights into the company's performance, with reconciliations available in the press release.

In the earnings call for Q1 2025, Simon Campion discussed the company's recent performance, financial results, and 2025 outlook, as well as its foundational initiatives and strategy. As a multinational company, they face challenges from global trade and tariffs but have plans in place to mitigate potential impacts. In the first quarter, Dentsply Sirona saw organic growth in two of their three global regions, exceeded sales expectations, and improved operational efficiency despite a 4.4% decline due to a 4% negative pipe impact. Imaging showed growth across all regions, and Wellspect Healthcare achieved growth through new product introductions and effective execution.

In the third paragraph, the article highlights the company's growth in Europe and particularly in Germany, which is their largest European market. The company reports expansion in EBITDA margins and EPS growth due to improved operational efficiency and cost savings. Despite spending 60% less this year, sales exceeded those in 2023, underscoring their focus on innovation to improve clinical outcomes and efficiency. They conducted a customer survey, revealing stable patient volume in major markets, though U.S. sentiment showed concerns about economic conditions. Dentists are interested in improving efficiencies, while Japanese dentists see digital equipment as a significant opportunity.

The paragraph outlines Dentsply Sirona's strategic focus on driving efficient, effective, and profitable dentistry through product innovation and connected technology. Despite market uncertainties and currency changes, the company remains optimistic about its 2025 outlook for organic sales and adjusted EPS. Dentsply Sirona highlights its proactive balance sheet management and recent business advances, particularly in innovation. The introduction of CEREC 40 years ago marked a significant milestone in dentistry, which continues with the DS Core ecosystem's development, launched in 2022, to enhance digital connectivity and penetration. The platform, with over 42,000 unique users and 50,000 connected devices, processes over 100,000 lab orders monthly, indicating its growing traction.

In Q1, the platform added new capabilities, including DS Core diagnosed, which integrates cloud workflow with CBCT and AI-powered 3D rendering for better patient communication, currently available in Europe and pending U.S. clearance. Primescan 2 was also enhanced with improved functionality and faster SureSmile simulations, pending FDA clearance. These enhancements aim to improve scanning experience and patient engagement, facilitating better connectivity, workflows, and practice growth through increased treatment acceptance. Regulatory clearances efforts are robust, with multiple 510(k) clearances received or pending. Additionally, the company launched revamped websites for improved customer engagement and a cohesive experience.

The paragraph outlines Dentsply Sirona's efforts to enhance their e-commerce platform by integrating self-service features, AI-driven customer engagement, and streamlined processes. They are addressing customer pain points through direct engagement and an in-depth assessment of their U.S. customer base, aiming to inform future customer-centric strategies. Additionally, operational updates include the appointment of David Ferguson as SVP of the Global business unit to manage the dental product portfolio, progress on ERP modernization with successful rollouts in the U.S., and initiatives to optimize the global supply chain. The company focuses on a thoughtful, data-driven approach for strategic improvements.

In the reported quarter, the company completed the closure of a manufacturing site, bringing the total closures to 10. The supply chain team is continuing to optimize the network and improve efficiency. First-quarter revenue was $879 million, a 7.7% decline year-over-year, with sales declining 4.4% organically. Foreign currency negatively impacted sales, and Byte contributed to most of the decline. However, there was growth in equipment and instruments, SureSmile in Europe and other regions, and Wellspect Healthcare. Although sales declined, adjusted gross margins remained stable, and adjusted EBITDA margins improved by 220 basis points due to lower operating expenses and an $8 million Byte customer refund adjustment. Adjusted EPS increased by 3.7% to $0.43, aided by higher adjusted EBITDA margins and a lower share count despite a higher tax rate. Operating cash flow was $7 million, down from $25 million a year prior, due to cash collection timing and higher inventory. The quarter ended with $398 million in cash and cash equivalents, and the net debt-to-EBITDA ratio remained at 3x. A bridge loan agreement was made to pay down short-term debt.

In the Essential Dental Solutions segment, organic sales rose by 0.4% due to growth in Europe and the Rest of the World, partly offset by lower US volumes. Orthodontic and Implant Solutions experienced a 17.7% decline in organic sales, with a $40 million year-over-year impact largely due to the previous loss of a US customer. Aligners showed global growth potential, but implants and prosthetics saw mid-single-digit declines. Connected Technology Solutions' organic sales fell by 0.5%, primarily in CAD/CAM in the US, though growth in equipment and imaging helped offset this. The Treatment Centers business also contributed positively with a major EMEA delivery. Wellspect Healthcare's organic sales increased by 8% across all regions, driven by new product launches, although upcoming comparisons may be challenging due to previous distributor onboarding.

The paragraph discusses the first quarter financial performance of a business by region. U.S. organic sales declined by 14.9%, largely due to a negative impact from Byte, and a decrease in CAD/CAM and IPS sales, although growth in Wellspect and imaging somewhat offset these losses. Changes in distributor inventory contributed to the year-over-year decline, with U.S. CAD/CAM inventory increasing by $4 million and imaging by $6 million. In Europe, organic sales grew by 1.1%, driven by Germany’s performance, equipment, instruments, SureSmile, and Wellspect, although CAD/CAM and IPS sales declined. The rest of the world saw a 3.1% organic sales increase, driven by imaging, Wellspect, and implants in China, but CAD/CAM sales declined. The outlook for 2025 remains unchanged, with an expectation of a 2% to 4% organic sales decline, partially impacted by Byte.

The company has revised its sales outlook for the year due to changes in foreign currency rates, now expecting reported sales between $3.6 billion and $3.7 billion, up from the previous $3.5 billion to $3.6 billion. They have increased their adjusted EBITDA margin outlook to over 19% due to favorable FX rates, while adjusted EPS remains unchanged at $1.80 to $2, factoring in tariffs and trade policies. For the second quarter, they anticipate a mid-single-digit decline in organic sales compared to the previous year, primarily due to negative impacts from Byte, with no expected foreign currency impact. Sequentially, reported sales should rise due to seasonality and sales related to IDS, with an increase in adjusted EPS expected year-over-year due to margin expansion but offset by a higher tax rate. Strategically, the company is focused on growth through innovation, clinical education, and commercial excellence, while maintaining a scalable and lean cost structure to deliver value and shape connected dentistry by 2025.

The company is enhancing its customer focus by improving clinical outcomes, workflow efficiency, and treatment acceptance rates while shifting to value-oriented conversations with clients. Its innovation pipeline is robust, with significant growth in new product development. Leveraging cloud-based solutions, the company accelerates software updates from years to quarterly, aided by AI tools to enhance efficiency. Recent enhancements to Primescan 2 and DS Core have increased user adoption. The company remains a leader in clinical education, with successful events like DS World 2025 in Dubai, and is expanding its customer reach and experience, particularly in the U.S., with a virtual sales team.

The paragraph discusses the performance and strategic plans of a company based in Charlotte. Their virtual sales team excels in customer outreach, driving sales, and generating leads. They have contacted over 21,000 accounts, generating nearly $1 million in revenue and several million in leads. The company continues to modernize its ERP system and plans further deployments in the U.S. and Europe. Supply chain transformation and SKU optimization efforts are ongoing. Q1 results exceeded expectations, but the company aims for more reliable performance and maintains a positive 2025 outlook. They focus on financial discipline, operational efficiency, and enhancing the customer experience. Following these updates, the session is opened for questions, with Elizabeth Anderson asking about the tariff impact.

In the paragraph, Simon Campion discusses how the current tariff situation has been factored into the company's guidance, estimating an annual impact of $50 million due to tariffs. He mentions that about half of their U.S. sales come from products manufactured outside the U.S. and notes that while they have options to address any further complications, they aren't providing specific details at the moment. Elizabeth Anderson is given an update on the CFO search, with Campion indicating progress and the potential return of Herman in the future. Following this, Michael Cherny from Leerink Partners is introduced to ask questions, specifically inquiring about the orthodontic segment.

In the paragraph, Simon Campion discusses the progress of Dentsply Sirona's SureSmile initiative, particularly emphasizing the need to improve the user experience for orthodontists and their staff. He mentions the company's redeployment of resources towards enhancing their websites and developing e-commerce solutions. Efforts by the software and R&D teams are underway to redesign the user interface based on customer feedback, with improvements expected by the end of the year or early next year. The focus is on reengaging with the orthodontist community due to the significant volume they represent. Michael Cherny thanks Simon, and Dylan Finley of UBS takes over to commend the company's impressive execution on EBIT margin, highlighting favorability in the OIS segment.

In the paragraph, Simon Campion discusses financial performance and expectations for future quarters. He notes an improvement in Q1 and indicates that this improvement should continue throughout the year, despite previously inconsistent margins. The company is focused on growth while managing expenses, which positively impacts the profit and loss statement. Dylan Finley inquires about the earnings per share (EPS) guidance for Q2, which suggests a 92 to 93 cents increase in the first half of the year, noting seasonal impacts that typically boost Q4 results. Campion responds that Q2 is expected to follow normal seasonal patterns, mentioning that potential tariff implications could occur later in the year, which might affect market dynamics slightly. Andrea Daley then notes a technical difficulty in hearing the subsequent question.

The paragraph is a conversation during a Q&A session where David Saxon asks about the growth in equipment and the impact of dealer inventory on CAD/CAM. Simon Campion responds, noting that inventory levels remained stable, with CAD/CAM seeing a slight $1 million degradation compared to the prior year. Saxon also inquires about the US implants market, where Simon mentions that despite some legacy brand declines, the EV family has shown growth, with premium growth being nominal. Simon indicates continuous engagement with customers in recent weeks.

The paragraph discusses the ongoing efforts to enhance the commercial team's effectiveness, specifically focusing on improving the clinical knowledge and relationship-building skills of sales representatives and managers, particularly in the context of implant sales. Despite facing a disappointing quarter, the organization remains committed to strengthening its commercial team and customer relationships, a process that has been a priority for two years but has not yet achieved the desired progress. Additionally, in response to a question from Simran standing in for Vik Chopra of Wells Fargo, it is clarified that no mitigation strategies for the impact of tariffs in 2025 are currently included in the financial guidance, and potential future strategies are considered.

The paragraph discusses the company's efforts to optimize their manufacturing and distribution capabilities. They are working on transitioning U.S. customers to domestically manufactured endo files and building strategic stock to import into the U.S. for future preparedness. They are also considering redistributing inventory from global distribution centers to the U.S. While being cautious with expenses, the company is contemplating strategic price increases, despite customer concerns. An unidentified analyst then inquires about the status of a German tax issue. Simon Campion responds, stating they are in ongoing discussions with German authorities, providing necessary documentation, but there is no clear resolution timeline or defined outcome yet.

In the paragraph, Simon Campion expresses confidence in their position, even if a ruling goes against them, indicating that they would appeal it. He mentions that they have received consistent advice since the merger and their stance remains unchanged. During the Q&A, analyst Jon Block questions the discrepancy between the significant Q1 performance and unchanged full-year guidance. Simon responds by attributing the Q1 success partly to one-time occurrences and timing, suggesting prudence in their dental market outlook. He notes no significant change in dental practice activity or customer sentiment in North America, and a positive improvement in their performance in Germany.

The paragraph discusses a conversation between Jon Block and Simon Campion, focusing on the data gathered around Liberation Day, which showed a slight drop in sentiment from "not concerned" to "somewhat concerned" due to macroeconomic factors, particularly in the dental sector. Campion emphasizes the importance of being prudent given the uncertainties. The conversation then shifts to the SureSmile product, which experienced a slight year-over-year decline. Block asks about strategies to compete in the orthodontic market, given competition from aggressive pricing by a Chinese company, another leveraging its existing franchise, and a major incumbent player. Campion responds that their competitive advantage lies in their software, DS Core, the scanner combination, and a competitive price position for their aligner offering.

The paragraph discusses the demand for efficient procedures from various types of dental professionals, such as GPs, endodontists, and orthodontists. Customers prefer fewer attachments and refinements, which the company's device offers, making it efficient and reducing patient return visits. The aligner market is deemed underpenetrated, presenting competitive opportunities. The company acknowledges the need to improve its software, adjust its sales strategy, and enhance its value proposition to capture more market share from competitors. A survey of 250 orthodontists indicated multiple brand options on the market, and the company aims to elevate its brand's position to capitalize on the market's potential, particularly focusing on orthodontists for substantial growth.

In the paragraph, Jeff Johnson asks Simon Campion several questions regarding the impact of tariffs on the company's earnings and strategies to manage them. Jeff questions if the $25 million forecasted impact this year will increase to $50 million next year and whether the $50 million is based on current 10% tariffs or higher Liberation Day tariffs in Europe. He also inquires about the company's exposure to U.S.-China trade dynamics. Simon responds by indicating minimal exposure to China with less than 5% of materials coming from there. He confirms the $0.10 EPS impact translates to $24 million-$25 million but notes that no mitigation efforts are currently planned, which would have to change if Liberation Day tariffs are implemented.

In the paragraph, the discussion focuses on the company's strategic efforts to manage potential impacts from Liberation Day 2.0 tariffs by relocating product inventory to North American distribution centers. Jeff Johnson inquires about expectations for capital expenditures (CapEx) and free cash flow, noting previous spending levels and asking if CapEx might decrease and free cash flow increase. Simon Campion responds that they are working on long-term projects like ERP, which are expected to decrease, thereby improving CapEx and free cash flow. Additionally, he explains that a recent short-term financing decision was made for prudent flexibility in the current economic environment, with no existing cash issues.

In the paragraph, Jason Bednar inquires about the sentiment of US dentists regarding patient treatment acceptance and equipment purchases, especially concerning orthodontic implants. Simon Campion responds by saying that surveys and his recent visits to 17 customers indicate no significant change in patient traffic, treatment acceptance rates, or purchasing intentions. Despite some cautious commentary about dentist sentiment, the overall market conditions remain stable, with no adverse effects materializing yet. Most surveyed customers are primarily waiting to see the impact of tariffs before making decisions, without shifting to cheaper consumables or halting equipment purchases.

The paragraph features a conversation primarily between Jason Bednar and Simon Campion about the performance of a market in Germany. Campion notes that despite having one more quarter of favorable comparisons, Germany has seen steady growth for three consecutive quarters. This growth is attributed to improved execution, especially in the CTS business's imaging and instruments segments. Campion expresses confidence in continued growth in Germany and mentions that similar growth is being targeted in other countries within the EMEA region. The conversation concludes with the introduction of the next question from Brandon Vazquez.

The paragraph discusses the growth and key metrics of DS Core, a platform with 43,000 users and over 50,000 connected devices processing 100,000 orders monthly. Simon Campion highlights an increase in paid subscriptions, which are expected to grow as more features are added. The platform is gaining traction and creating market stickiness. Innovations in workflows and the upcoming integration of implants into DS Core are emphasized, alongside a notable improvement in SureSmile simulations when used with Primescan 2 and DS Core. These efforts aim to drive future performance by incorporating consumable workflows into DS Core.

The paragraph discusses Dentsply Sirona's focus on improving customer experience rather than concentrating solely on product-related areas like implants or aligners. Simon Campion explains that the company has been conducting surveys to understand the challenges customers face when engaging with them. These challenges include invoicing, billing, response speed, e-commerce platform, and return policy. The goal is to streamline customer interactions and enhance overall satisfaction, addressing historical issues like their complex ERP systems and lagging e-commerce experience compared to competitors. To achieve this, Dentsply Sirona has been actively meeting with customers over recent months.

The article paragraph discusses a survey initiative by Dentsply Sirona, aiming to gather feedback from over 500 customers, including general practitioners, specialists, and other staff members. This survey will inform the company's improvement strategies. During a Q&A session, Erin Wright from Morgan Stanley asked about cost management initiatives and guidance formulation amidst recent management changes. Simon Campion responded, confirming no expenses were deferred to other quarters and a modest improvement in operating expenses is expected. He clarified that former executive Glenn Coleman was not involved in guidance formation, as he left the company for personal reasons. Herman Cueto, who stepped in later, along with the finance team, helped in preparing the guidance.

In the closing remarks of the conference, Simon Campion acknowledges the efforts of the Dentsply Sirona team in their ongoing transformation and innovation endeavors. He highlights the company's progress in reaching key milestones, launching new products and technologies, and mitigating risks amidst an uncertain external environment. The focus remains on maximizing customer value, which is believed to unlock the company's full potential for stakeholders. Additionally, the CFO search is in its final phases, with an announcement expected soon. The session concludes with thanks to participants.

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