DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference Transcript

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

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : So I guess maybe a couple -- there's been a number of recent announcements. Maybe let's talk first about the situation with (technical difficulty) any updates there in terms of the suspension and sort of your work with the FDA on the product category?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : DS Core. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. No, that makes sense. And remind me some of those things about demand generation and R&D, those were sort of largely until this point run separately. And so that sort of it's like integrating those within the rest of the DENSTPLY SIRONA world, like that would be sort of like an incremental benefit from this point. It's like we're running those as one standard operation from the get-go.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. No, that makes sense. Many other news obviously, you announced a new management team member this week. Can you talk about sort of your decision-making process in there and sort of why -- how the process enrolled and sort of why you picked the person you did?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : He worked with him before, right?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. Okay. No, that makes sense. And then just in terms of -- I appreciate the update on the tax situation, probably not too much more you can share on that front. But it seems like in terms of scope limiting comment. So anything you can say in terms of helping people to think through the substantial size of that implication? Because I think it was helpful to obviously hear the 8-K earlier this week in terms of that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay. That makes sense. And no sort of time frame to put around that because they probably work on the schedule that they work on.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : A fair statement. Maybe switching to the overall demand environment. I think it's been characterized by you and others across the industry is stable. And could you sort of talk about what you're seeing, both maybe on the consumable side and then in sort of specialty and then in -- on the equipment side, that would be a helpful update.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Right. When are you doing your next survey? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : In January, so in time for the 4Q call, perhaps.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay, nice. And if we think about sort of the economic cycle, right, in terms of dental, how do we think about like the sort of feedback of sort of improving consumer sentiment and sort of improving consumer spending vis-a-vis dental, right? Like not to make maybe a gross serotype, but you think of somebody if they got a bonus or raise, they may not run out to the dental -- dentist later that afternoon, right? But it sort of obviously comes with that broader sentiment [ ship]. Is there like a sort of rule of thumb that you guys think about in terms of like the lag that, that might have?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : And then on the reverse side, if they sort of see that and then -- yes, then they go there. How have you thought about sort of potential on sort of rates to in terms of equipment? We started to see rates come down, but perhaps not to the extent that we're hoping for it. And obviously, hopefully, it continues. Is there sort of a tipping point or you just think it's sort of to your point that the sort of unlock on the equipment side is more a function of that kind of broader just seeing things get better, plus rates being lower, just in general, like is that the better way to characterize it?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. No, that makes sense. You've also launched some innovative products this year in terms of the Primescan 2. And I think you talked about, obviously, the impact of DS World. How do we think about the uptake of Primescan 2 as we think about the fourth quarter?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : I call it the gateway drug.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : That was my phrase. I won't attribute that to you. You can't say that. So if we think about the Primescan 2, who is buying it at this point? Is it sort of people refreshing their prior scanners? Is it sort of appealing to new customer base? How do we think about who the core buyers are at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : That makes sense. And as you've pointed out this uptake of DS Core, thank you for that those updates on that. How -- what have been your learnings been in terms of why people are using it? What are they using it for? It seems like that's been a pain point that we've heard from customers have the scanner and I have this and I have that and trying to connect them all, so it clearly fits a market need. And how do you sort of see the rollout over the next year or 2 in sort of response to some of your early learnings here?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. And in terms of the financial model, I was attributed similar to the Apple sort of like iCloud model where it sort of come in and have an early use and then as you figure sort of like (technical difficulty). Can you remind us of that and sort of how that financial model works in conjunction with the labs as well?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. That makes sense. How do you think about sort of the trajectory of SureSmile at this point? I think you've talked about, obviously, the mid-single-digit growth you're referring to in the third quarter continue to sort of outpace the broader market. How do you -- where do you see sort of the increased opportunities now and who sort of the incremental new buyer? Because I assume that's where most of the opportunity is coming from sort of adding additional doctors versus sort of increasing penetration.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. No, that makes sense. Do you see sort of a -- in terms of the software opportunity we're talking to about on SureSmile in the ortho space. Is that kind of we think -- should think that, that should be wrapped up as sort of by the end of '25 and so maybe that sort of ortho opportunity is more sort of 2026 plus? Is that the right sort of time frame to think about for that?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Moderately quickly.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. And how much of the R&D, you're talking about making the user interface better also sort of pushes up to like (inaudible) of the types of cases that SureSmile can treat as well.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. Okay. That certainly makes sense. Okay. And then you, obviously, in your earlier comment talked about sort of the changes you've made on the implant business. How has the sort of post those changes? What's different about the implant business in terms of how you're operating it? And any sort of early results that you can point to? Or is it sort of too soon to make that kind of?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay. focus on that. Okay. One area that I know is a relatively smaller portion of your business, but still has very nice margin as Wellspect. Can you talk to us about how that business has been faring as we end up the year in sort of the increased traction you've seen with some of the new products that have been launched there?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay. Great. I know we've been talking about sort of more of the demand profile across the different businesses. Other work that you guys have been doing on the margin line in terms of the restructuring has been focused on a variety of areas, including the SKU reduction plan. How do we think about the early eliminations of the SKUs in respect to the cost structure in the fourth quarter? And then what do you think are the incremental opportunities as we roll through 2025?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : In fairness to do that. In the SKU set, have you seen customers being willing to move to other products? Or is it kind of like we think of dentals being a bit conservative, but obviously, there's some incrementals in there. How do we think about their willingness to switch?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. Okay. No, that makes sense. Obviously, you talked about the ERP rollout now in the U.K. and the U.S. What are sort of the early learnings from that and (technical difficulty)? And how do we think about the rest of the ERP implementation as we go forward at this point?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay. And what's your next large market that you're doing there?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. No, that makes sense. As we think about the opportunities across the cost structure, obviously, you've taken to a fine to come to many of those. Where do you see sort of incremental opportunities to sort of make -- to drive further efficiency within the business, whether that's still -- on the OpEx side in certain areas is further some of the processes, maybe you just talked about on the -- that came out in the ERP implementation as we kind of like look forward into '25.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. No, that makes sense. Speaking of sourcing, one thing that's come up in a lot of investor questions (technical difficulty) is the potential tariff situation, right? And I realize it's hard to comment on speculative policies that haven't been implemented yet. But as regards to specifically the potential tariffs in China and Mexico, how do you manage that? Or sort of how do you think about what leverage you have to pull and where you see you could pass on costs as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Okay. And for those people who might not be quite familiar with the Maquiladora structure, can you just spend like 20 seconds or maybe it's not possible to explain in 20 seconds, but like a brief period time just to sort of explain how that works.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. Okay. That makes sense. Given where the stock price is today, how do you think about capital deployment at this point in time? Obviously, you've said previously M&A is probably not something you're super excited about. Why you're doing the ERP implementation of making some of these other changes? How do you think about sort of the balance would change sort of repo, reinvestment in the business and the opportunities you've sort of highlighted? Are there options available?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. That makes sense. If we think about like sort of the long-term outlook, how do you think about like when you might feel comfortable sort of giving an updated picture about that?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Got it. This 2025 is obviously an IV (technical difficulty) which in the exciting world of dental means it's an [ IDS ] world, [ IDS ] year. Anything that sort of sneak previews in terms of things you guys are thinking about for new product launches or anything on that front? Obviously, you just did Primescan 2, so I assume that's part of it in terms of the broader awareness there.

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. One thing you've been pretty emphatic about over the last year or so is sort of becoming your own demand generators right? We've seen innovations come from DENTSPLY about (technical difficulty) and things like that, that have helped to sort of help drive spending and things like that. How do you think about that as you're thinking about maybe your sort of budget for '25 and maybe some recent activities that you've been doing in terms of incremental things you can do to drive that own demand generation?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : That's something you did this quarter. Is that to (technical difficulty) last quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 1:20PM, XRAY.OQ - DENTSPLY SIRONA Inc at Evercore ISI HealthCONx Conference

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Yes. That's. Maybe sort of lastly on the -- you brought up earlier, the China question, sort of how do you think about that overall demand environment? Obviously, they have a certain a variety of macro issues at the moment as well. But how would you sort of characterize the broader dental demand environment there?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Makes sense. Maybe in the last two minutes that we have, what do you think at this point, December 2024 is most misunderstood about DENSPLY at this point?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : Makes sense. I think that's a great place to end it. Thank you.