DENTSPLY SIRONA Inc To host a conference call to discuss its Byte Aligner business Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Elizabeth Anderson - Evercore ISI - Analyst : Hi guys. Thanks so much for the question this morning. Okay, I have two questions. One, can you -- is there anything in addition that you can offer us on the current profitability profile? As you pointed out, it was decaying. So obviously, that would limit the impact potentially to 2025 plus? And then secondarily, can you talk to us about how you're thinking about the SureSmile recapture plan? Are there some elements that you can use to boost SureSmile sales because of this? Are the Byte+ people converting over to SureSmile? Anything else on that strategy shift even if it's early days would be helpful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, XRAY.OQ - DENTSPLY SIRONA Inc To host a conference call to discuss its Byte Aligner business

Question: Elizabeth Anderson - Evercore ISI - Analyst : Okay. And just sorry, when you're saying turning dilutive to the business in 3Q, does that mean to the corporate operating margins, you're saying it's negative? I just want to make sure I'm 100% understanding that.

Question: Elizabeth Anderson - Evercore ISI - Analyst : Okay. Got it. Thank you.

Question: Allen Lutz - BofA Global Research - Analyst : Good morning. And thanks for taking the questions. Simon, is there any way to size the nonmarketing-related OpEx at Byte? You mentioned that you can redeploy some of that spend into DS Core and SureSmile. But just trying to get a sense numerically of how big of a dollar shift that could be. Thanks.

Question: Allen Lutz - BofA Global Research - Analyst : Great. And then is there any way -- I know this may be a difficult question to answer here. But the expected duration that Byte could be out of commission, can you talk maybe from a high level about your conversations with the FDA, what you think you need to do? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, XRAY.OQ - DENTSPLY SIRONA Inc To host a conference call to discuss its Byte Aligner business Are there -- is there additional cash that may need to be deployed in order to get that product in a position and be put back on the market? Trying to get a sense of timing and maybe the cash that, that would require. Thanks.

Question: Allen Lutz - BofA Global Research - Analyst : Understandable. Thank you.

Question: Michael Cherny - Leerink Partners - Analyst : Good morning and thanks for taking the question. I might try another way at Allen's question, but a little bit of a different angle, so to speak. You've invested in Byte+, but obviously have made your SureSmile investments. I know there's tried to be a bifurcation of the market. As you sit here with this clinical hold in place, what are the biggest drivers you're looking for on the potential for go/no-go on whether or not owning Byte for the long term still is the right strategy for the business?

Question: Michael Cherny - Leerink Partners - Analyst : And then is there anything -- again, I know it's very quick, but is there anything you've seen from the patients where you've paused or canceled orders in terms of activities they're pursuing? I know, obviously, you have Byte as an option, but is there anything else on the transition side that you're helping them with given they made a decision to go down and align their product base and they may look to your other product or they also may look to other participants in the market? How are you supporting those customers more from ones that haven't started the products yet?

Question: Michael Cherny - Leerink Partners - Analyst : Okay. Thanks.

Question: David Saxon - Needham & Co Inc - Analyst : Great. Good morning, Simon. Thanks for taking my questions. So I guess just on the issues you talked about. I mean it sounds like it's more of a processes and workflow issue to identify these contraindications. So is the fix just implementing technology or software that flags those patients that are contraindicated? Or is it more complicated than that? Any sense of like what the actual fix is would be helpful.

Question: David Saxon - Needham & Co Inc - Analyst : Okay. Great. And then I think you had started launching Byte internationally. It sounds like this is more of a US FDA discussion and dynamics. So can you give us a sense for how much of Byte revenue is OUS? And how you're thinking about international while your paused in the US? Thanks so much.

Question: David Saxon - Needham & Co Inc - Analyst : Great. Thanks.

Question: Erin Wright - Morgan Stanley - Analyst : Great, thanks. So a bigger-picture question. Just at what point does this call into question your commitment to the Byte business from here? And since you're somewhat limited, I guess, I'm talking about Byte specifically, how do you think about just the overall DTC market, the value proposition also in light of what's going on from an adverse state regulatory dynamic, just how you're thinking about things?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. Thanks. And then in terms of the impairment charge for the Implant business, is the weakened demand and pricing pressures. Is that incremental to what you have been seeing or a continuation of the same in terms of what we've been seeing recently there? Thanks.

Question: Erin Wright - Morgan Stanley - Analyst : That's fair. Thank you.

Question: Jonathan Block - Stifel Nicolaus & Co - Analyst : Great. Thanks. Thanks, guys, and good morning. Maybe the first question, Simon. I think you mentioned the issue with Byte is largely around the onboarding process and giving that more scrutiny to ensure proper outcomes. If that's the case, why not leverage and move forward with Byte+? I mean it's like really leaned into that, right? That would seem to run it by the doc, check perio, rectify the onboarding process. And unless I'm mistaken, I think Byte+ is also off the board or suspended during this period of time. So maybe I'll start there, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, XRAY.OQ - DENTSPLY SIRONA Inc To host a conference call to discuss its Byte Aligner business

Question: Jonathan Block - Stifel Nicolaus & Co - Analyst : Okay. Got it. And then maybe just to shift gears a little bit. I guess you're calling out how it was dilutive to 3Q, Byte, but it has been profitable at one point, as you guys have outlined. And I'm guessing there was thoughts about increasing amounts of profitability when we think out to 2026 in the $3 EPS goal. So is there anything to frame around that and how we have to consider that when we think about numbers and where they go over the next 24 months or so? If I can tack on to that, sorry, Simon, I might be off on this one, but I thought at the time of the Byte acquisition, some of the synergies were on the manufacturing line, and SureSmile and Byte and the opportunity there. So is this coming off the same line as SureSmile? And if it is, and again, I'm not sure there, but what would that mean from an absorption standpoint or GM as we think about SureSmile? Thank you.

Question: Brandon Vazquez - William Blair & Co - Analyst : Hi, everyone. Thanks for taking the question. Maybe just one high level first. As we think about Byte just went a little negative or dilutive in terms of EPS in the quarter, it's always been a little difficult to scale. And as we go forward, it sounds like the regulatory environment from both the federal and the state level is getting more difficult. Maybe can you just talk a little bit about what are the levers that you guys -- this seems like it's just getting a harder and harder business to scale. So are there -- is there a path forward where Byte actually is an attractive business for you guys? Can you just comment on what levers and what that environment would look like once this review is done?

Question: Brandon Vazquez - William Blair & Co - Analyst : Okay. And maybe just to ask, Jon Block was asking this a little bit, I'll ask it slightly different. Can you just comment as of today so that we have an understanding how separated or integrated are the Byte and the SureSmile organization today from -- between manufacturing, clinical technicians, sales and marketing? How siloed are those? And just so we can understand and make our own assumptions on to what degree some of these can just be ported over to SureSmile versus needing a longer strategic review? Thanks.