DENTSPLY SIRONA Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Added Dan Scavilla and Mike Barber to the Board, with their expertise beneficial to transformation strategy.
• Green shoots in business: Europe had ~2% organic sales growth, imaging ~13% global growth, Wellspect ~7% growth, SureSmile nearly 4% Y/Y growth (20%+ in Europe).
• Key actions taken: Reintroduced Orthophos SL, improved commercial execution, enhanced training.
• Phase II transformation activities largely complete, on track for full run rate savings by end of 2025. Virtual sales team in U.S. fully staffed with over 8,000 unique customer touch points. Completed largest ERP deployment in U.S. on November 1.
• Innovation: Launched MIS LYNX implant, Primescan 2, DS core surpasses 37,000 unique users. Hosted thousands of training and education events globally, including 6 DS World events.

Segment Performance

• Essential Dental Solutions (EDS): Organic sales declined 3.4%, driven by timing of U.S. distributor orders. Excluding this impact, EDS benefited from stable patient traffic in the quarter and higher volumes in Rest of World.
• Orthodontic & Implant Solutions: Organic sales declined 28.7% primarily driven by the $62 million year-over-year impact from Byte. SureSmile grew low single digits globally, supported by over 20%-plus growth in Europe and mid-single-digit growth in rest of world. Implants and prosthetics had sequential increase but year-over-year decline.
• Connected Technology Solutions (CTS): Organic sales declined 8.2% versus prior year quarter. Global CAD/CAM declined double digits, while equipment and instruments returned to growth. Imaging benefited from the relaunch of Orthophos SL in Europe and APAC.
• Wellspect: Organic sales grew 6.7% across all 3 regions as new product launches continued to positively contribute.

Guidance

• 2025 organic sales expected down 2%-4% including negative 2% Byte sales impact, net sales range $3.5B-$3.6B.
• EBITDA margin expected >18% in 2025, improving as year progresses.
• Adjusted EPS expected $1.80-$2. Q1 2025 organic sales expected to decline high single digits Y/Y due to Byte and CTS headwinds.

Risks

• Macro environment uncertainties, especially for equipment.
• Competitive pressures in implants and equipment.
• Uncertainty around German tax situation.
• Potential disruption from distributor transactions (no immediate impact noted).

Question and Answer

Q: About Wellspect strategic alternatives and new product areas.

A: Wellspect is largely stand-alone, launched sleeved intermittent catheter, other innovations not disclosed.

Q: Margin confidence and G&A benchmarking.

A: Q1 margin lowest, ramps up, back-office transformation to improve G&A.

Q: Byte strategy and P&L implications.

A: Byte resources redeployed to SureSmile, Byte sales impact on P&L.

Q: Implants U.S. team progress.

A: Focus on digital connectivity, clinical education, simplifying messaging, recalibrating sales force.

Q: German tax and distributor impact.

A: No update on German tax, good relationship with distributors.