DENTSPLY SIRONA Inc Q4 2024 Earnings Call Summary

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

Question: Elizabeth Anderson - Evercore ISI - Analyst : I had a little bit of a question about the Wellspect strategic alternatives. Obviously, thanks for all the details in terms of the new product launch and the continued investment there. Maybe one, can you talk about some of the new product areas that you're working on in terms of what you expect the opportunities to be there? And then two, if I remember correctly, in the last strategic alternatives review of that business, one of the issues was the in mesh manufacturing footprint with some of your dental businesses. And so have you guys worked to address that as part of -- since that last transition? And if you could give us an update on that as well, that would be helpful.

Question: Erin Wright - Morgan Stanley - Analyst : On margins, if you're assuming consistent margins in the first quarter, if I heard that correctly, that assumes a pretty meaningful ramp for the balance of the year. I guess what gives you confidence in that? And then it says you mentioned you're working with a third party to address cost, I guess, getting you closer to industry margins. I guess, over what time frame could that be achieved? What magnitude are you thinking about on that front?

Question: Erin Wright - Morgan Stanley - Analyst : Okay. Great. And then just on dental utilization trends. So where do we stand now across the key markets? And you mentioned the continuation of the same expected in 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 1:30PM, XRAY.OQ - Q4 2024 DENTSPLY SIRONA Inc Earnings Call I guess, what does that mean? And for instance, how do we think about volume trends across EDS and the broader consumables for (inaudible).

Question: Brandon Vazquez - William Blair & Company - Analyst : I'll ask two upfront because they're both related, so I'll just bucket them together here. They're both on Byte. The question is around -- there was a comment on the call that you wrote off the entire brand name, if I heard that correctly. So just talk about what is the strategy here? It sounds like that implies it maybe gets rolled into SureSmile, what does this look like from a commercial strategy perspective over the next 12 to 24 months? And then the follow-up to that is basically talk about what the P&L implications of this are. It sounds like Byte becomes a little bit of a tailwind after some restructuring going into '24. So talk through the -- how that commercial strategy then impacts the P&L going forward.

Question: David Saxon - Needham & Company Inc. - Analyst : Simon and Herman. Maybe I wanted to ask on implants, specifically the US team. It looks like it was down in the quarter. So can you just talk about the progress you're seeing in that team and thoughts of timing of returning to growth and then potentially market growth over time?

Question: David Saxon - Needham & Company Inc. - Analyst : Okay. Great. That was helpful. And then just as a follow-up, I wanted to ask about this partner that's going to help you with G&A, just so we can get an idea of like the potential benefit. I guess I'd love to hear what's the benchmark for G&A as a percent of sales that you're targeting? And where are you at currently?

Question: Jeff Johnson - Robert W. Baird & Co., Inc. - Analyst : I wanted to start just on the cost transformational process. So the $80 million to $100 million in savings that you targeted through 2025, can you just level set us or remind us how much of that has run rate into the model at the end of 2024? How much is going to be incremental in 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 1:30PM, XRAY.OQ - Q4 2024 DENTSPLY SIRONA Inc Earnings Call And when I look at slide 11, Herman, as you've referred to, that $0.13 benefit, I think if I'm doing the math right, and taking that up to a pre-tax, that's about a $35 million to $40 million pre-tax benefit. Is that the flow-through of those 2025 incremental cost savings? Is that primarily what makes up that $35 million to $40 million of benefit on a pre-tax basis in 2025?

Question: Jeff Johnson - Robert W. Baird & Co., Inc. - Analyst : Okay. I guess let me go at it one other way or just ask one follow-up or a two-part follow-up. Just one, the $0.13 savings that's been that is in the slide deck, is that primarily flow through of cost savings from the efforts you've been making on the transformational side? Or is there other stuff in that $0.13? Just so I understand that, number one. And number two, just on SureSmile, I don't have my geographic weightings all that tight. But when I listen to your description of Europe, Rest of World and US, I think I'd get that US SureSmile down in the double digits. What is going on there? I know the end markets are challenged in the US for sure, discretionary spending is. But is there anything else with SureSmile down, I think, double digits in the US? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 1:30PM, XRAY.OQ - Q4 2024 DENTSPLY SIRONA Inc Earnings Call

Question: Kevin Caliendo - UBS Equities - Analyst : First, I guess, I know you didn't mention it, but is there any timing update or any visibility on the German tax situation that you can provide to us at this point? Second question I had was given one of your primary wholesalers is being taken private. Is there any disruption there for you? Have you seen any? Is it an opportunity? Is it like take us through how that transaction if in any way, shape or form, could affect your outlook or your business strategy going forward?

Question: Michael Cherny - Leerink Partners - Analyst : Thanks obviously, for a ton of detail so far. Maybe just asking a bigger picture question. You have the Byte wind down. You have the Wellspect values being put in place. You have the G&A benchmarking work that you're doing, all of it seems very logical at this point in time. Given the broader nature of how many moving pieces you have going on, Simon? Does it make sense to take even a further broader look and make sure that you have the right pieces within the portfolio going forward long term, the assets that you want to have, the other assets that may not fit going forward and do it from a broader basis. How do you think about as you get through some of the especially market-oriented weaknesses that coming out the far side, Dentsply will be a better top line business, while obviously focusing on the leaner side that you've noted relative to the benchmark in work. Sorry, it's a weird question, but I appreciate it.

Question: Jon Block - Stifel Nicolaus and Company, Incorporated - Analyst : Herman, just on slide 5, and I must be doing something wrong here, but it looks like Byte was a $29 million negative hit from the November guidance and you laid out $0.24 in terms of the headwind. But even if I flow through the $29 million like 100%, just drop it to the bottom line, I get a lot closer to a $0.15 hit, not the $0.24. So maybe I'll just start there. Can you just help me out what I'm doing wrong there? Or what's off? And then I'll just ask a follow-up.

Question: Jon Block - Stifel Nicolaus and Company, Incorporated - Analyst : It does. Certainly good enough for me. And maybe I'll just stay on the Byte team, and I'll get to the slides as well. The bridge on page 11 is really helpful, but it shows if I'm reading it correctly, just Byte accretive to 2025 EPS off the adjusted 24 figures of the $1.91. And I've got Byte revenue, you can let me know if I'm in the right ZIP Code of about $140 million in 2024 once you factor in the refunds, you called out, it's going to be a 200 bp headwind to total company growth. So Byte to be down about $80 million year over year, maybe it land $60 million in 2025, feel free to comment on all those assumptions. But this asset is going to be accretive to year-over-year EPS growth if revenues are down $80 million? And maybe, just Simon, just there's so many variable costs involved in this business. So any color or clarity around all those assumptions would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 1:30PM, XRAY.OQ - Q4 2024 DENTSPLY SIRONA Inc Earnings Call

Question: Jason Bednar - Piper Sandler Companies - Analyst : I actually wanted to focus on some of the soft retail CAD/CAM commentary. Look, I can understand maybe some softness in the numbers. Actually, I anticipated some of that, just given some of the Primescan 2 inventory load-in last quarter. Seems like that did impact the numbers here, but it was more the retail commentary that struck me, especially at a time when you've got your first scanner launch really in several years, so just a bit surprising even in a challenged macro. So what do you think is going on, Simon? Why isn't PS2 resonating better in the US? And then how much of the pressure in CAD/CAM do you think can be traced at all to strain relations with Patterson?

Question: Jason Bednar - Piper Sandler Companies - Analyst : Okay. All right. That's helpful. And then maybe if I back up a little bit of a higher-level question and focusing on Germany actually. But I wonder if Germany could actually prove to be a microcosm of what you're experiencing your broader business? You had commercial challenges. You tried to push the high end but really struggled in a tough macro and with some low price competition. And then you pivot and reintroduce a lower-priced offering that helps turn the tide. It's a big contributor to growth returning in the market. Maybe talk about that experience in Germany and that really how it informs how you think about your portfolio and positioning across the globe.