DENTSPLY SIRONA Inc. (XRAY) Earnings

Management highlights

- New Leadership Transition * Welcomed John Fortson as new permanent Executive Vice President and CFO, who joined July 20, 2026, bringing deep public company finance and transformation experience aligned with the firm's turnaround goals * Thanked outgoing interim CFO Mike Pomeroy for his contributions - Return to Growth Action Plan Progress (6 months into the 24-month plan) * Customer-centric engagement rebuilt: Over 1,000 clinicians hosted at the Global Implant Summit, endo KOLs convened at the 2026 Endodontic Forum, and cross-specialty experts gathered to shape future product development to align with customer needs * Commercial capability investments: All U.S. implant sales reps completed the most comprehensive implant certification program in the company's history; APAC expanded education and implant sales training, with double-digit growth in milling systems * Digital expansion: DS Core integrated dental workflow platform gained traction, with four major European DSO groups implementing the platform during the quarter * Distribution network expansion: Announced expanded partnerships with Atlanta Dental, Nashville Dental, and deepened the longstanding relationship with Medline Sinclair in Canada, expanding reach for the company's connected technology portfolio * Internal operational improvement: Simplified organizational structure, enforced accountability, standardized processes, and embedded lean principles and AI to eliminate routine work and accelerate decision-making * Financial discipline: Opportunistically repurchased 1.3 million shares for ~$12 million using proceeds from the $44 million Q2 tariff refund, in line with the company's capital allocation framework; working capital improvement remained a key priority, with operating cash flow up year-over-year driven by the refund and better payables/inventory management

Guidance

- Management maintained full-year 2026 guidance: net sales in the range of $3.5 billion to $3.6 billion, and adjusted EPS in the range of $1.40 to $1.50. The EPS range excludes the impact of Q2 tariff refunds and incremental tariffs. - Q3 2026 is expected to see sequential revenue decline due to normal seasonality, and adjusted Q3 earnings (excluding the 17 cent per share Q2 tariff refund benefit) are expected to be below Q2 2026 levels, as the company continues to invest in the Return to Growth Action Plan. - The benefits of current investments in sales, clinical education, and R&D are expected to become increasingly visible starting in Q4 2026, with most improvement in full-year results weighted to the back half of 2026.

Segment performance

- CTS (Technology & Solutions): Total sales of $239 million, a 1.5% as-reported decline year-over-year, representing ~26.6% of total company revenue. Equipment & instruments revenue was $137 million (flat YoY), with declines in treatment centers partially offset by growth in imaging equipment (especially the Orthopos line in EMEA). TADCAM revenue was $102 million, down mid-single digits, driven by lower volumes in the Americas and unfavorable price mix in EMEA, partially offset by double-digit growth in APAC. - EDS (Endo, Resto, Preventative Products): Total sales of $376 million, a 2.7% as-reported decline YoY, representing ~41.9% of total company revenue. The decline was primarily driven by lower volumes in the Americas and EMEA, with planned distributor inventory reduction in EMEA weighing on sell-in (though end-market sell-out remained low single digits, in line with expectations for dental consumables, and sequential improvement was seen in Q2). - OIS (Orthodontics & Implant Solutions): Total sales of $197 million, a 13.2% as-reported decline YoY; adjusting for BITE impact, the as-reported decline was 5.7%, representing ~21.9% of total company revenue. IPS implant revenue was $157 million, down mid-single digits, driven by lower volumes of premium implants in the Americas and APAC, while EMEA implants grew mid-single digits led by the value brand MIS. SureSmile orthodontics revenue was $40 million, down double digits, primarily driven by weakness in the Americas. - WellSpect Healthcare: Total revenue of $86 million, a 7.1% as-reported increase YoY, representing ~9.6% of total company revenue. Growth was driven by strong new product sales and execution, partially offset by lower inventory levels in the U.S. market.

Risks & headwinds

- Select capital equipment demand in EMEA has softened due to provider investment deferral caused by geopolitical uncertainty from the Middle East conflict, leading to delayed purchases and increased freight costs that the company has absorbed to date. - Distributor inventory reduction across multiple EMEA EDS distributors (driven by private equity ownership changes for several distributors) has negatively impacted Q2 sell-in results, though end-market demand remains healthy. - SureSmile orthodontics in the U.S. remains in a turnaround phase, with continued sales weakness as the company rebuilds the sales force and updates product software. - The timing and impact of China's VBP 2.0 medical pricing program remains uncertain, though management does not expect a material impact to Dentsply Sirona's 2026 results. - Macroeconomic and interest rate conditions can contribute to delayed capital equipment purchase decisions in core markets, including the Americas.

Analyst Q&A

• Q: Do you have the full leadership team in place to execute the turnaround? And why do EPS gains expect to be weighted to Q4 2026? /

  A: Management confirms the full executive leadership team is in place, with a rebuilt executive committee and strong engagement across global leadership. EPS and operational improvements are weighted to Q4 because organizational restructuring impacts are realized later in the year, and new dealer partners take roughly 9 months to build sales pipelines and contribute meaningfully to revenue.

• Q: Six months into the Return to Growth Action Plan, which areas show the most encouraging early progress, and when will benefits hit the P&L? /

  A: Management is most encouraged by accelerating re-engagement with dentist customers, with strong positive feedback from the renewed investment in clinical education and customer interaction, which aligns with the customer-first core of the turnaround plan. Most incremental P&L impact from new initiatives is expected in the back half of 2026 and into 2027.

• Q: What drove the soft OIS segment performance this quarter, and how much of that is macro vs. company-specific turnaround factors? /

  A: The majority of the Q2 OIS decline stems from the ongoing planned removal of BITE impact that management previously disclosed. The remaining softness is concentrated in SureSmile orthodontics in the U.S., which is still in the early stages of its turnaround as the company rebuilds the sales force and updates its software platform, with no material macro-driven impact across the rest of the segment.

• Q: How is the company approaching the competitive shift toward lower-priced intraoral scanners and growing customer preference for leasing, and what is the company's product strategy? /

  A: Management confirms the company already offers multiple purchase and financing options, including leasing, to meet customer preferences. The company recognizes growing demand for lower-priced intraoral scanners alongside continued demand for premium offerings, and its future innovation pipeline will include product offerings across high, mid, and low price points to meet all customer segments.

• Q: What is the company's geographic resource allocation priority across segments, given varied performance by region? /

  A: The U.S. is the clear top priority for incremental resources, focused on growing implants and CTS via dealer expansion and sales rep education, while maintaining EDS market leadership. EMEA focuses on working through distributor inventory adjustments with existing resourcing, while APAC prioritizes long-term expansion, particularly in China. All regions follow the same core playbook of customer focus, clinical education investment, and strong commercial execution aligned with market maturity.