Q3 2020 DENTSPLY SIRONA Inc Earnings Call
Ladies and gentlemen, and thank you for standing by and welcome to the third quarter of 2020 dense fly Sirona earnings conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session ask a question during the session you'll need to press star one on your telephone.
<unk> that today's conference is being recorded do you require any further assistance. Please press star zero I would not like turn the conference over two speaker today, John Sweeney V. P of Investor Relations. Please go ahead Sir.
Thank you operator, and good morning, everyone welcome to our third quarter 2020 earnings conference call I'd like to remind you that in earnings called press releases slide presentation related to call are available on our website at www.
You did supply Sirona dotcom before we begin please take a moment to read the forward looking statements and our earnings press release during today's call. We make certain predictive statements that reflect our current views about future performance financial results, we basically statements and certain assumptions and expectations on future events that are subject to risk and uncertainty.
These are most recent form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions.
In Ah in today's conference call Ah remarks will be based on non-GAAP financial results. We believe that non-GAAP financial measures provide investors useful supplemental information about the financial performance of our business enabled the comparison of financial results between periods, where certain items may vary independently of business performance and allow for greater.
Transparency respect the key metrics used by management and operating their business. Please refer to our press release for the reconciliation between gap and non-GAAP results and with that I'll now like to turn the call over to Dawn Casey, Our Chief Executive Officer done.
Thank you John and thank all of you for joining US today, we hope that all your families are keeping safe and healthy.
Before starting a presentation I wanted to first acknowledge the hard work of the dense ply sirona team around the world. It's.
It starts with our supply chain.
This group does not have the ability to work from home yet has consistently delivered and served our customers without interruption.
Beyond our supply chain I would also like to thank our entire team globally.
They have shown remarkable resilience during these past eight months and have remained committed to our customers and delivering against our priorities.
It is a privilege to be part of this team.
During our call today, we would like to cover four areas. The first is to outline our third quarter results. The second is to provide some details on how our businesses performing his dental offices have reopened around the world.
We will also provide some context on how we are looking at the short term environment in light of the continued uncertainty around the impact of the resurgence of Covid and finally, we will outline our priorities going forward.
Overall, we are pleased with the company's performance in the third quarter. The dental industry has historically demonstrated resilience over the years and continues to show sound fundamentals.
It means in the second quarter.
While there were exceptions in certain countries for the most part dental offices were open and dentists were able to ramp up procedures in their practices throughout the quarter.
We are place to see this that the steps were taken to improve our business performance have resulted in positive financial outcomes.
At the same time, we remain cautious an overall industry trends as we move through the for a quarter. This is due to a high degree of COVID-19 related uncertainty across the globe.
Looking at <unk>, 2023rd quarter P&L on a slide eight.
Starting with the top line organic sales were down 8.8% versus last year, which is a significant improvement as we compared to the second quarter performance when we experience at 50% year over year decline.
Gross profit was 506 million or 56.6% of sales a level that approaches the gross profit margin right. We had in the prior year quarter.
The margin rate reduction of 30 basis points versus last year was primarily the result of product makes changes and increased inventory costs due to COVID-19.
Cause it was partially upset by both temporary and structural cost savings initiatives.
SG&A of 309 million was down a substantial 67 million or down 17.7%.
S G and a as a percent of sales decline 450 basis points, 234.5%.
The reduction in SG&A was a direct result of decisive actions, we took to manage our cost base. During the pandemic and also the result of the continued execution of long term productivity improvements we began implementing last year.
Some of that cost actions implemented in the second quarter, where temporary and have been faced out for example at the end of the third quarter. The vast majority of our employees had returned to work. In addition volume driven expenses move in line with higher sales volume towards the end of September.
One item to note that improved SG&A and a quarter was a reduction of 8 million and bat that expense as a result of can teeter improvements in collection efforts.
As a result of the sales recovery and cost actions listed above.
Offer an income increased by 14.3% to 197 million.
Net interest in order expense was 13 million into quarter, App 11 million year over year, driven primarily by higher that balances.
The effective tax rate in the quarter was 20.3% down from 24.8 in the prior year, primarily as a function of the changes in the U S versus non U S. Pretax income makes delivered this quarter.
EPS was 67 cents, an increase of 17.5% versus cute 320 19.
Before I moved to segment performance, let me provide an update on two key enterprise wide initiatives.
First we are pleased to report that we are on track with the plans, we laid out last quarter to exit the traditional ortho and traditional lab businesses.
We're expecting to complete this actions by the end of this fiscal year.
Our portfolio shaping activities make our overall business stronger by allowing us to focus.
Efforts, an area that provide the greatest growth potential and return on investment.
Our health care business continue its on its growth trajectory.
Equipment and instruments was flat.
The impact of the pandemic was offset by sales of our new Axios imaging system.
Digital dentistry declined due to a difficult year on year comparison.
Please remember that teeny revenues increased 11% in the third quarter of 2019, primarily as a result of a strong CAD cam sales in advance of the EPS World.
Down 14.6% with declines in both consumables and T. any.
The South American market and in particular, Brazil continues to be severely impacted by call. It 19.
China, and Japan, where markets are also experienced covered related declines in the quarter.
On Slide 12, we show our Q3 cash flow performance.
Okay.
At the same time, there are certain considerations that can impact the potential range of outcomes in the fourth quarter.
First we have some lingering concerns regarding the impact from COVID-19 on our global operations.
Second it is likely that pent up demand boosted third quarter sales and revenue per visit.
Third.
Certain temporary cost reduction initiatives and dead within the third quarter and sells volume driven expenses began to increase in line with the men.
Finally.
Or 2019 fourthquarter benefited from strong sales of Cat Cam systems due to a highly successful D S World and the U S upgrade program.
Our sales increased 27% in total company sells increased 8.4% in the fourth quarter of 2019.
As a result, Q3 2020 financial performance alone cannot be used as the basis to project fourthquarter outcomes.
Despite the uncertainty we are encouraged by this structural improvements, we're implementing and their impact on our ability to increase competitiveness and achieve our long term financial targets.
With that I will now turn to call back to dawn.
Thank you Jorge and now let's move to slide 15.
Two years ago, Densify, Sirona announced a comprehensive restructuring program designed to accelerate growth improved margins and simplify the organization.
In 2019, we made solid progress in achieving a restructuring objectives and that progress has continued in 2020, despite the pandemic.
As we look at the objective said two years ago, we are more convinced than ever that the plan and the targets are the right one.
We have delivered on some of the milestones to date and are confident that we will continue making progress against the remaining areas and deliver value for our shareholders.
The highest priority of the restructuring was to accelerate growth.
As part of that our leadership team has spent a lot of time looking at our innovation process and has made major changes.
One of the most important shifts we made is around R&D.
We know really focus on customers and procedures, rather than an individual products in siloed S. B as.
This sets dense plies sirona up to take full advantage of our broad portfolio that includes a category leading installed base of digital diagnostic assets.
Good morning cycle, a very good question. Obviously, we are very pleased with the results that we accomplish and now in Q3 they show.
The the actual outcome of all the work that were doing when you look at specifically at Q3, you have to think about.
Savings and a structural changes like in two different categories.
In the third quarter, obviously related to Corbett and volume challenges at the beginning of the quarter. There were a lot of Bob temporary cost savings actions that we took and in fact that actually began in Q2 when we.
As more complex procedures done how much of that is going to trend out in the fourth quarter, particularly as we have seen some of the big five countries in Europe really kind of begin to lock things down so.
We're not going to give you a real specific comments June July August September October, but look we felt that the the business returned nicely in the third quarter.
We're waiting.
To see again, how the kind of second wave impacts us across the globe, but so far we're comfortable with what we are seeing develop.
Okay, and then before I hop off can you just break out the ortho and lab contribution I had a few people ask me what the organic growth would have been backing that out.
Yes, I call. It was interesting this quarter.
The the actual exclusion off the top of those to this position us for the purposes of calculating organic growth actually made our organic growth are worse than reported growth from a sales perspective that is because in the quarter.
After we announced that we were exiting this two businesses actually sales were very positive there was a significant amount of demand as customers and dealer partners.
Or are there a lot of product in preparation for the exit of thought of those businesses. So.
Most of the or a big chunk of the Delta.
Delta between reported and organic.
Was driven by those those two businesses, but it was a it wasn't any interest in result, this quarter typically it goes the other way around but in this case.
Organic was a little bit lower than reported because of that dynamic.
Okay. Thank you.
Thanks, Doug.
Thank you. Our next question comes from Jeff Johnson with Baird. You May proceed with your question.
The levels. Thanks.
Thanks, Yeah, you know a couple of things first I'm not going to bite on the 21. Thanks. Thanks for giving me the credit upfront on that but you're you know the comparative base. We're using is 2019 right now you know the again the the mix for US is really going to be how how do people.
It's a good centralized so.
We feel that you know, we're we're pretty much on target.
And again, it will be a consistent kind of improvement process over 2021 2022.
Jorge just kind of mentioned it.
Look we had laid out the target of 22 in 2022.
Whether whether that target is exactly hit.
Given covidien, given where revenues potentially could fall in 2021, it's still a little bit of a question for US I would tell you of where we're really committed to that 22 number obviously look we hit it this quarter.
For Q exiting Threeq, you and if you see any signs of encouragement that things there there could be stabilizing and then I do have a follow.
Yeah. Good morning, Steve Let me start and then I'll have that dawn complement the question I think got in Q3.
Outside the U.S.
There was a mixed bag or.
You know again, we're not trying to be evasive. It's just you know at this point, where you know there's a couple of vectors that are a little bit hard to understand just the mix of consumables T N E and the mix of rest of world and exposure to of different parts of the business to different parts of of you know, whether it's Asia, whether it's Brazil.
Or whether it's something that's going on in Europe.
Okay. That's that's certainly fair and then just a couple of quick clarifications. It one Jorge I know there was a dialogue back on the two to call you know appropriately about the impact of supply in inventory on two Q would it be fair to say that the the the the level of inventory in the.
Supply chain was not a factor one way or another for three Q and if it was could you help us understand you know whether or not inventory or supply levels might've benefactor, and then done it would be helpful. If you could just spend another minute sort of you know up kind of commenting on the decision to put 100 million dollar number out there what you've seen.
Tail, and making sure that wholesale and retail shipments over time get as close as possible I don't think that as we are that right now but that is that is our goal that those two numbers.
A real emphasis on how are you going to.
Get our installed digital assets.
Whether it's prime scan or whether it's on the couch, how do we integrate shores smile seamlessly with that and then with one DS really provide the general dentists with some incentives to try sure smile and the process is working and.
As you guys know well from us or Invisalign and other people, it's pretty formulaic how many how many starts did you get and things begin to roll through so what we're seeing in.
In the third quarter in the fourth quarter.
Give us confidence to start talking about a run rate in excess of $100 million.
As as we get out of 2021 and.
Again, the focus one of the reasons, we felt very comfortable getting out of the traditional ortho business was because we were seeing the beginnings of what we're very excited about we're sure smile and we've seen that validated in the third quarter and obviously again, we can see starts and we can see trials.
A year ago, and so we're working off a tough comp there where you had a.
Both our partners get very very aggressive about what was going to go on at DS World and it worked out very very well. So first I would tell you that retail very comfortable with what's going on we're very excited with.
The reception of Prime mill.
And prime scan is really doing very very well in the marketplace. So that's that's 0.1 0.2, it's really the comp that's obscuring what's going on and again as you see our dealer partners report they feel very good about what's going on is a validation of what we see on a retail basis right now I'd tell you we're.
Pretty comfortable that we're competing effectively in the DIY space.
With Prime scan that's.
We.
We feel that we're competing effectively in in the D. S. O space I think we it's an area that we have opportunity to to do even better in the future as we begin to really focus on this idea of procedures you know when when we talk to the the large dsos and kind of the mid mid sized dsos. It's all about right now you know how what is procedure time what.
My dentist get done you know can a general Dennis do you know kind of entry level specialty procedures, whether that's implants, whether that's endo or whether that's clear liners and what can you do dense ply sirona to help us get there and we feel we're very competitive not offering. So you know dsos I think came back a little faster you.
You know I I think that situations equaled itself out his pee pees become generally available and we look at as a long term opportunity for us.
Okay, great. Thank you.
Thanks Sarah.
Thank you. Our next question comes from Nathan Rich with Goldman Sachs. You have received your question.
Good morning, Thanks for the questions Alright can you maybe provided a bit more detail on the decline in the in the rest of the world business. It sounded like Brazil was was challenging uhm I would've thought you know, China and Japan, maybe would have done a little bit better given you know there maybe a little bit further long in terms of dealing with.
Covid. So does it any more color that you have there it would be helpful. Just as we think about these markets going forward.
Yeah, I think that'd before you go down a specific market obviously, Brazil.
Is that one problems.
Trouble spot.
K has been also.
Experiencing a lot of telling you from a corporate perspective.
With respect to China and.
Market and the performers in that market.
Yeah, we're getting good reception to it I don't think we're going to see the concentrated selling event that you would have seen when we're out in Las Vegas.
So we're looking at is it a what's attendance is going to be you know, we think it's not going to be the same.
Number of people attending over the course of this year, the virtual DS World as a week long program.
So we're not going to get quite as many people and theres not going to be in our opinion as but we will see as immediate a reason to go by.
So we tend to see we think that the underlying demand is very very good.
Closing the specific sales it may be a little bit more gradual than what we have seen in the past so.
Again, we're all adopting to the virtual world I mean, the good news is there is not the expenses associated with it.
And we're going to see probably a more normalized demand curve.
One of the challenges for the supply chain is when when we're going to go have a big DS World. Obviously, it creates some peaks and valleys and our supply chain, which we don't have to deal with.
But you know we'll learn this year I mean between DS World and obviously next quarter Youre going to have I'd EPS.
Which is not going to be as a well attended event and a lot of that is moving virtually as well. So you know we're going to learn overtime I would tell you Nate overtime, we expect that to equal out you might see a much more level loading of what demand looks like EM.
The thing that we're really looking at and we can see orders and we can see how thats trending we feel we feel really good about how prime scan Prime mill is performing right now.
That's helpful. Thank you.
Thank you. Our next question comes from Michael Cherny with Bank of America and proceed with your question.
Good morning. This is Allen in for Mike is there any indication that the pent up demand that you saw in Threeq, who is caring for Q based.
Basically is there anything that call out there. Thanks.
Yes, I think it is a very hard to hire assessment to make I think a pent up demand was up was a big factor in Q3.
Going into Q4, it really hard to predict.
That might be a little bit but on.
Probably not off the top of the same extend to the same extent that we saw in Q3.
Great and then Joe.
Any anything you can say about the confidence level expenses today versus where it was about three months ago around capital spending.
Pretty first Alan Thank you for the question pretty good I mean, it's interesting the thing that we're seeing on a on a global basis is that a tech and you can see it in our performance technology and equipment that pretty well.
Look.
And we had actually thought based on what we had seen in prior downturns.
The t. any would have come back a little bit more slowly and that hasn't been the case so.
As you start seeing you.
You know pandemic related stimulus one of the things you see or tax incentives on a global basis that may lead to people, having incentives to buy technology and equipment towards the end of the year. That's that's particularly in Europe that becomes an important issue and what we're seeing in the US is again I had mentioned it to Aaron.
We're we're really happy with how this idea of single visit dentistry is playing out and I.
I do think one of the the offshoots of the pandemic. So you had Dennis really kind of go down April and May.
And a lot of the dentists really used that time to first judging by all the CE we saw.
Tremendous amount of clinical.
Continuing education part one part two is they really assess their practice and the conversations that weve had subsequent to that really tell us that you know there's a there's a pretty significant group of dentists that recognize a we're we're going to what we learned in the pandemic and what we've learned subsequent where you're going to have to think about patient flow a little bit.
Differently because.
Infection protocols hate Chairside single visit chair side Dentistry makes a heck of a lot of sense second issue is we're we're excited that you know they are seeing hey, we really need to move to digital dentistry, because that's going to allow us to pick up time, rather than do impressions.
Having somebody shoe to scan with a prime scan is going to take less than a minute.
Thats, a timesaver and they're looking for time savers in the post cobot World and the last thing we mentioned in a couple of places Axios, which is our new wide field of view.
[music].
Imaging system, and we're seeing good pickup on that and we feel that okay. You do see people why would somebody go out and buy and Akcea as well you. They're really looking at is a practice builder that lets them get into things.
Things like implants things like clear Aligners, particularly when you when you take a digital scan and you combine it with a threed image on with short Smile, you get real root to crown movements. So.
We we've been happy with the performance of the technology and equipment area with US It came back a little bit faster than we thought and what we're seeing on a global basis, there's good healthy demand for it.
Thank you.
Thanks Sam.
Thank you. Our next question comes from Brandon.
Well armed with Jefferies.
Please you May proceed with your question.
Thanks, Good morning, Don will be great can you just touch on the implant business, there, but curious how.
Your portfolio shaped up relative to some of the data points, we've had from peers over the last few weeks.
We feel pretty good we you know.
We believe we performed.
Basically at market.
You know I think obviously straumann has done very very well.
I think looking across the rest of the market. We we all performed pretty similarly.
Part one part two.
If you from where we sit right now we feel pretty good.
First I would tell you our portfolio is better today and is getting consistently better.
Aster easy to US was an important launch and we're seeing a good response to it I think in general the implant business has has returned.
You know if you kind of were planning on getting a set of implants. You you have people have by and large followed up with their dentists and done that and that's one of the things we're talking about when you see more complex procedures and you see the overall mix benefit from that and we look at implants performed in line.
With the rest of our company so.
That's the first thing I'd tell you a second you know.
As if I look out over the next two years and where we want to be is outperforming on implants outperforming the market and we think we put the plans in place part one part two is we we feel very good about what our portfolio looks like over the next.
Two years that were coming.
So you know implants to us as an opportunity.
Thanks, a quick follow up on sure smiled up.
Relative to the 100 million run rate number you pointed to by the end of next year is that a U.S. only.
No figure, how we think about the geographic rollout from here and what contributes to your achieving that target.
We sell short smile in multiple countries you know obviously, the U.S. is where the momentum has picked up the fastest and again, that's why we feel that the system of lets focus on our CEREC base, let's get things like one D.S. out there.
Are are really important we think that model can be replicated in multiple countries around the world.
I you know the $100 million in is inclusive of multiple companies multiple countries excuse me, we you know we.
And again, we're I think we're in 10 countries now.
But again I would say the pick up where the pickup has been the fastest is where we've got the model right and the model in the US is one that were.
Very happy with.
Thanks.
Thank you. Our next question comes from Jon Block with Stifel. You May proceed with your question.
Hi, This is Trevor on for John Thanks for the question.
Overall, there wasn't much of a difference and the declines across the two segments, but if I take your comment about U.S. symbols, having positive organic growth implies teeny was weaker.
Or weaker than consumables in the us while the ops it might have been true in Europe and rest of world. So can you comment on any differences in the trends you're seeing across the different geographies and maybe to what extent the timing of EPS World My comp there might have played a factor. Thanks.
Hi, good morning, John.
Yes.
Correct with that with respect to consumables on the T. any I don't think there were any major differences.
Between up between regions.
As we indicated in our prepared remarks and that comment that a couple of times. The the comps variances versus last year are very difficult given the very strong Q3, 2019, we had our sales and shipments in advance of part D. As were were.
Were very strong and at last quarter in the U.S., we had the E.
Also a number of out of activity that.
Really.
Turbocharge, the sales and non of CAD cam equipment, but I cross sell across regions when you kind of adjust.
Just for for that type of.
Specific activity to Keith Keith we last year, we feel really good about that retail sales that we are experiencing with that with CAD Cam.
Those products continue to sell out really well and I think the performance is is it similar across.
Most geographies.
Okay, Great and a quick follow up on margins.
Just.
Anything significantly different sanmina within the segments overall, it's pretty similar to Threeq 19 levels for the total business, but just looking within staining consumables, there anything to call out there.
No I think from a from a margin perspective.
The all of the savings that we are achieving and especially the structural cost savings those are applicable to both up to both segments you can see how.
We are gross margin for example, I recall, there pretty well in the third quarter EPS DNA improved substantially versus last year and now on a on a ratio basis sequentially and and those that is work that is happening across the board. There are the only one difference between them.
Those two segments operating margin perspective, when we talk about this last quarter is the fact that the consumables segment 10.
Tend to have things to have a much have a higher fixed cost base and so is a lot more sensitive to adapt to changes in volume that's kind of the only a structural difference but.
Productivity improvements and all are actions are impacting favourably, both both segments.
Great. Thank you.
Thanks to our bank if travel.
Operator next question please.
Thank you. Our next question comes from Elizabeth Anderson with Evercore. You May proceed with your question.
Hi, good morning, guys.
Typically speaking.
I just wanted to understand as you look at sort of the equipment outlook I know, obviously you have a tough comp in the fourth quarter you know from the.
Throughout my follow up last year, but how do you think about like how you're structuring like trade into May and I know that you had obviously started the U.S. trade and demand program like how do we think about.
With that in terms of Europe, and particularly in Germany for 20, you know as we go forward.
Yes, Thanks, Elizabeth and and we we hear you about Fridays part.
Part one but.
Look I would tell you.
We were at a very early stage on the trade in programs at this point, we've basically done them in North America, we havent rolled that out too.
All of Europe.
Were or of Asia Pac at this point, so and a year ago that was a function of keeping up with demand.
Now, we feel pretty good about our supply chain and we can begin to executed obviously coming right out of the pandemic, we were not 100% sure. How things were played out so we look at that as well.
We're in early stages part one part two yeah the comp.
You know the DS World comp is is one that is an obvious feature of how we are thinking about third quarter and fourth quarter.
Obviously, we know what goes on at retail and we were happy to see one of our partners report the CAD Cam sales on a on a retail basis or are very encouraging. So obviously when you get a bolus of pre.
Pre shipments.
A year ago heading into what was a very very big event for us that's going to skew things. So we've mentioned a couple of times today, we're really laser focused on what's going on at retail and we can see obviously.
Somebody doesn't just walk in and say, Hey, I want to buy Prime scanned. It's you know in terms of a number of leads in a funnel and whatnot again, where we feel that we're seeing.
Positive retail trends in CAD cam versus prior year.
Okay. That's helpful and just philosophically how are you handling new product launches, we I'd ask this year with a lot of virtual format.
Yes, you know, it's it's really funny.
I'd EPS is which is obviously something we work years in advance and that's that's going to be the big event, where we're going to rollout as many new products as we can and.
You know a year and a half ago two years ago. When we were doing this it was it was a huge event. So what we've done with our entire teams sit there and say okay. There is not going to be an I'd EPS. So how do we really take advantage of things that we're doing so first I'll tell you, we're expanding DS world beyond the U.S., we're looking at at a DS World This year and is Israel, Russia.
And in Germany, it's going to be new to us and we're going to figure out how out how that stuff works. The second is we are going to be very concentrated right.
Right now you know Axios for US is a big launch on the TV side, you've got problems can prime mill still kind of running hard.
Sure Phil one is something that we're putting a lot of emphasis along with positive 360 use kind of the consumable lead thing and as we get into 2021, we're going to pick one or two products and really drive that across the entire DS sales portfolio in a country, where as before we'd be a little bit chopped up.
So what we're going to do is really we're trying to create some DS worlds beyond the U.S. part one part two is we're going to really kind of narrow and focus and then push it across our entire all the sales bags in a in a specific region. So that we get good really good traction there too in our mind to kind of help us overcome that.
The fact that theres not a a big idea, yes event. There and then you know it's really interesting with the shore for one were doing kind of a global launch there the virtual receptions, we've been getting to the launches where we invite kao wells and have been really good so where we've seen that Nick in a couple of countries, where we've launched and.
Great and then so is anything going to replace idea exactly probably not we believe that we put in place a combination of things that will help mitigate any real downward pressure on it.
Okay. That's helpful context, thank so much.
Thank you. Our next question comes from Jason that amount was 5% and proceed with your question.
Hi, Good morning, Thanks for squeezing me in here just really first.
First follow up for me.
Yes, Don unsure smell just curious if you could just expand on where you're at right now with the number of docs that are using the system.
And then what you're seeing and expecting with respect to the formula the utilization ramp for new doctors coming onto the system here over the coming quarters in order to hit that 100 million run rate target you're talking about for next year.
Yes.
First thanks for the question and it's a good one.
I'm not going to give you the specifics in terms of absolute number of doctors, but I would tell you. The progress that we have been made and the reason you see us good.
Pretty confident is we've been able to watch the impact of one DS world and targeting the CEREC community with this and you know, it's a progression and the the inflection point you see is once a doctor has done more than three procedures, we really kind of consider them reliable and you can see things scale.
So you know to be honest you can actually do the extrapolation back to kind of figure out how many doctors we're talking about.
I would tell you one of the things. We're really excited about is we have a pretty large installed base of primes.
Prime scan and Omnicom and I would tell you.
I don't know if we want to go with baseball analogy is now the World series is over we're very early innings on on what we think the upside potential of talking to that community is.
All right. That's helpful. Thank you and then.
Just wanted to come back to one of the thing you mentioned in your prepared remarks, Don is the set new sales force effectiveness program. That's been implemented and just wondering if you could expand on what markets, that's impacting and maybe just unpack a bit more what's being done here on a go forward basis, and maybe how that compares to the sales model you had previously thank you.
Sure.
Yes, thanks, Jason.
Right right now SFP, we put in the in North America It.
It's in most.
Not in all of Europe, but right now UK, France, Germany, and when we think Germany, we tend to think of it as Doc, which which is Austria and Switzerland. So we we feel very good that we have have executed there China is.
Something we kind of kicked off I would say, we're looking at completing that in 2021, and Japan will also follow that model.
And then you know that the interesting thing is if you let me give you a little bit of evolution of of how we've been thinking about things.
We had an SBQ driven model. So for instance, if you were in the US or you were in Germany are you in China seems like the implant sales forces would all report to the implant group.
And the Endo sales forces in the us or China, or or Germany would report to the Endo groups. So there was no concept of in a country that there would be any scale and leverage what we've what we've been doing with the EPS of fee program and when we talked about in our restructuring that we're simplifying things is hey, we're going to go to a regional for.
Amount of demand creation and commercialization and as a result, we now like taking the U.S.. We have one VP of sales and we're moving to that format across the board. We're we're seeding the number of specialty sales forces. So that we can create bigger bags that have broader reaches and we've spent a ton of time.
Time on what what is the exact targeting what is our messaging and what is the frequency look like and what kind of ROI measures that we want to put in there and then we've executed salesforce dot com across the entire world. So one of the reasons I drop that in our prepared remark is.
When we talk about the restructuring and everyone goes to where is the margin, whereas the cost I mean that in our mind the upside of simplification is we feel a.
A significant improvement that will be.
Consistent we think will consistently see upside to that as we get the SMP program rolled out all around the world. It's how we want to deliver dentsply sirona to our customer.
Great. Thank you.
All right well. Thank you everybody for joining us today on our third quarter 2020 earnings Conference call. We look forward to having follow up calls with many of you later on today and thank you very much have a good day.
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