Q1 2021 DENTSPLY SIRONA Inc Earnings Call

[music].

And answer session to ask a question. During this session you would need to price star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and and now like the hand the conference over to your Speaker today Kerry Dixon. Thank you. Please.

Go ahead.

Thank you to me and and good morning, everyone. Welcome to our first quarter 2021 earnings conference call and I'd like to remind you that and earnings call press release and slide presentation related to the call are available at our website at Www Dot does fly throw and a dot com.

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 and financial results. We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties are.

Our most recent for them 10-K with some of the most important risk factors that could cause actual results to differ from our predictions.

And today's conference call our remarks will be based on non-GAAP financial results, we believe that non-GAAP financial measures provide investors with useful supplemental information about financial performance of our business enabled a comparison of financial results between periods, where certain items me very independently of business performance and allow for greater transparency with respect to key metrics used for.

The management and operating our business. Please refer to our press release for the reconciliation between gap and non-GAAP results and with that I'd like to now turn the call over to Don Casey, Our Chief Executive Officer. Thank you carry and thank all of you for joining US. This morning, I hope, you're all safe and well.

We're pleased with our performances quarter and.

And then I'll Mark and continues to show a gradual recovery highlighting it's underlying strength and attractiveness Dennis have shown real resilience and a commitment to their patients during the pandemic and now and the recovery.

And we are very proud of how our team has continued to support our customers as patient volumes have improved and <unk>.

Want to thank all the dense boy sirona employees around the globe their performance has been remarkable.

That kept our workplaces safe and operating they've delivered for our customers and have kept making progress on key company initiatives. It is a privilege to be part of this organization.

And firms the momentum and our business and provides a solid starting point for the fiscal year.

Let's look at Q1 and more detail.

As Don mentioned the business deliver strong organic revenue growth of 12, 1% versus last year.

Our reported growth was 17, 5%.

Consumables posted organic growth of 21, 2% and the first quarter versus last year.

As a reminder, our PPE business is immaterial.

Sales across all product categories rebounded in the quarter does.

These results reinforce our view of dentistry, as and necessity with resilient underlying growth trends.

Technology and equipment organic sales grew five 8% versus last year led by equipment and imaging and influence gross profit was $611 million or 50 959, 5% of sales.

There is a strong outcome was primarily driven by favorable mix.

While we saw higher shipping costs are execution and supply chain initiatives largely offset the impact.

And <unk> and benefits from our three year restructure and projects.

Also we were cautious on our investment spent approach and the first quarter.

Going forward and we will accelerate the pace of those investments, which we will discuss later.

While we have and measure and are spending insurer and categories, we're ramping up investments and sales and marketing resources R&D.

And digital infrastructure to support our medium and long term growth plans.

[noise] operating profit grew over 67.2% compared to last year to $219 million.

It represents and margin expansion of 630 basis points to 21.3 per cent.

As explained earlier or margin right benefited from the gross profit margin on sales mix combined with operating leverage and investment spend and increasing at a lower rate done our sales growth.

Moving on net interest and our expense increased 9 million, reflecting higher levels of debt versus last year.

And none GAAP tax rate and the first quarter was 22.9% decrease compared to 24.6% and the prior year quarter, which was a function of the changes and the U S versus non U S pretax income mix.

Non-GAAP EPS was 72 cents at 67.4% versus the prior year quarter.

The consumables business perform the consumer business performance and the first quarter was strong.

Sales or 430 million and increase of 21.5 per cent versus the prior year.

Growth was the strongest and rest of the world and grew double digits and both the U S and Europe.

Sales grew and all categories led by Endo and restaurants if they.

The consumables Mark it has been resilient and he's recovering well.

This results also reflect the ongoing progress optimizing promotional strategies and improve and demand creation tools, we are strengthening our relationships with dentists deliver and clinically relevant products with a strong incentives for them.

We are of course also seeing a rebound and dealer orders as they ramp up purchases to meet anticipated demand.

Currency Beverly impacted sales by for six per cent upset by and reduction of point of for three per cent due to divestitures and discontinued products.

Next I'd like to cover our cash flows and.

And the first quarter of 2021, our operating cash flow was $49 million at 15 9 million improvement versus last year.

And we'll return a total of $112 million to shareholders through dividends and share buybacks and deployed 92 million to fund the acquisition of datum.

The company finished this first quarter with strong cash on hand of $318 million and committed credit facilities of another $1 billion.

Approximately $350 million of short term credit facilities expire in April and were not renewed.

Our strong balance sheet and credit metrics provide a solid foundation for our balanced capital allocation. We will continue to return cash to shareholders, while appropriately investing for growth in the business.

Now, let me provide and update on our financial expectations for 2021.

We are we were pleased to see a faster than anticipated market recovery and the first quarter.

We are seeing healthy demand continuing into the second quarter, driven by positive momentum and patient confidence and procedure volumes with a vaccine rollouts.

These positive trends provide us with optimism for the rest of the year.

At the same time, we remain cautious given the market conditions in certain geographies.

While there may be near term volatility the long term underlying growth dynamics of the dental market remain intact.

Based on that we are revising our outlook for fiscal 2021.

We are now expecting fiscal 2021 reported sales to be in the $4 1 billion two for $3 billion range.

This range equates to a reported sales growth rate of approximately 23 to 22, 23% to 30%.

From an organic sales perspective, the range provided equates to an organic growth rate of approximately 18% to 25%.

Our new non-GAAP EPS range for fiscal 'twenty, one is now $2.75 to $2 and 90.

Compared to our prior outlook of $2 60.

To $2 80.

This full year outlook includes the shift of investment spend of approximately <unk> <unk> from Q1 into the remainder of the year.

There are two risks to this outlook that are worth highlighting.

COVID-19, and potential supply disruptions regarding shipping costs and availability of certain semiconductors.

We're mindful of the lessons learned about this virus, especially considering that some countries are experiencing increases and cases with governments intervene and with restrictions.

Before I turn the call back to Don we would like to share a quick update on our efforts around ESG.

We continue to believe as strong ESG program can facilitate topline growth and reduce costs.

It can contribute to reducing legal and regulatory risks, while improving employee engagement.

In close collaboration with our board of directors and sharing and airport with members of a cross functional team to ensure.

That our ESG objectives are aligned with our purpose and mission of improving access to oral health care globally.

In April we posted our first ever sustainability factsheet and environmental scorecard.

They are available for review on the sustainability section on our website.

We are measuring and analyzing our ESG data and.

And excited to share more of our findings with you as we develop and track additional metrics.

Finally, I want to thank our almost 15000 associates around the globe for their great ongoing dedication and results with that I will now turn the call back to Don.

Thanks Jorge.

I would now like to provide some perspective around 2021 and beyond by outlining our strategy and operating priorities.

Let's move to slide 15.

Our strategy and priorities have been consistent over the past three years, we believe that <unk> sirona will grow long term by delivering superior integrated workflows built on diagnostic excellence easy to use treatment planning and the central products that improve outcomes for patients and dental professionals.

Our prayers are driving revenue growth improving margins and creating a simplified organization that takes advantage of scale.

There's still a lot of work to be done, but our team is confident that the margin and cost saving goals. We have outlined in the past will be delivered.

For us the focus now really turns to accelerating growth.

Our strategy has been refined to reflect the continued evolution of and dental space.

There has been a strong growth and specific segments of the market highlighted by a static areas like clear liners and implants. Many of these higher growth areas have been enabled by digital dentistry driving good growth there.

Dennis and Dsos increasingly look to enhance their practices by participating in these higher growth areas that involve more complex procedures.

This leads to an increased willingness to invest and equipment and training both areas, where <unk> sirona is the leader.

Products like <unk>, and <unk> imaging become essential to improving their diagnostic capabilities more.

More practices are also recognizing the utility of incorporating digital scanners as and a central part of their office workflow.

These more sophisticated digital devices, when combined with increasingly easy to use treatment planning, let's Dennis offer things like clear liners implants are complex restorations for their patients.

This is better for the patient and better for the economics and efficiency of the practice.

<unk> Sirona is uniquely suited to thrive in this market.

We have both imaging and digital impression businesses that form the foundation of the digital ecosystem when combined with our treatment Center business. We have one of the largest installed basis of digital assets and all of dental a critical cornerstone for our strategy going forward.

The company has deep expertise and treatment planning and workflow management with well recognized names like shorts miles, so, Texas Atlantis simpler and Seric.

And <unk> Sirona has a full portfolio of a central consumer product consumable products that are critical components and many major procedures for.

For large installed digital based powered by a suite of treatment planning and other workflow tools combined with these essential products make us very optimistic that we can deliver real solutions to our customers.

In addition to delivering against that strategy, we will measure our success by meeting or exceeding critical targets that we've set for ourselves our growth is now targeted for to 5% plus going forward.

And we're committed to improving our margin to reach the 22 goal by the end of 2020.

Our efforts around organization simplification and scale will allow us to hit the cost saving target of $250 million through the end of the restructuring plan.

Delivering on our growth margin and organizational saving goals will allow us to target double digit adjusted EPS growth and create sustainable value for our shareholders.

Moving to slide 16.

There are three components of our growth plans and organic innovation acquisitions, and improving our global commercial capabilities we.

We are investing increased time financial resources and human capital to accelerate our organic innovation. Our innovation approach has been revamped to focus on procedures and workflows versus individual product.

This allows us to better meet our customer needs.

As for he said R&D investment has been increased significantly in 2021, and we expect that trend to continue into the future.

The increase resources will be directed to critical procedure workflows and faster growing areas like clear liners implants restorations and endodontics.

To further demonstrate our commitment to innovation and I mentioned during our last call a new consumables innovation center will be opened this year and Charlotte to complement our other centers of excellence around the world.

Our portfolio work will also give <unk> sirona greater exposure to faster growing parts of the market, while eliminating slower growth less profitable areas.

And the past 12 months and log lab and the traditional orthodontic businesses were exited we deployed capital and added bite and debt to boost our clear aligner and implant platforms, respectively, increasing our presence and higher growth categories and our team also has a good pipeline of opportunities to continue enhancing our workflow solutions and digital technology.

<unk>.

Critical to innovation, the ability to rapidly scale and globalize them <unk> Sirona has an extensive network of over 5000 commercial people and over 100 countries that will allow us to take full advantage of our innovation pipeline.

There've been several investments made to enhance our commercial effectiveness.

These investments include tools like Salesforce Dot com globally, we have improved our training program to allow <unk> sirona to approach our customers as one company with comprehensive solutions and.

And our sales force excellence program is being rolled out globally over the remainder of this year as.

And as Jorge mentioned, there's also been good progress made on shifting our promotional program to be more retail demand focused and addition, all of these efforts are supported by an extensive clinical education program that has engaged over 1 million dental professionals over the last year.

The highlight of our clinical education efforts and 2021 will be DS World, a major event and the U S. We've announced that this event will be a hybrid this year with a major live as well as online component.

On slide 17, our major introductions over the past few years or display we are seeing the benefits of those efforts in 2021 with products like short fill one prime mill <unk> and a major sure Smile software upgrade and the team is also very excited about our back half of 2021, where we will see major launches and several critical.

Eckel areas, including implants and endodontics.

Moving to slide 18.

And strategic acquisitions are important to our overall growth plan as.

As we've now had bite for about five months, we are very happy to report that the integration is on track, but it's performing well and we believe it has a very bright future.

That business is expected to be accretive to our long term financial targets and non-GAAP EPS in 2021.

The acquisition has also given our clear aligner business important critical mass and areas like supply chain and R&D.

We continue to expect our total clear aligner business to exceed a $300 million run rate by the end of 2021.

We're also pleased with the integration of debt of the datum acquisition as well this is helping improve our critical implant platform.

Moving to slide 19.

And closing the dental market continues to demonstrate resilience and the strong underlying fundamentals and make it attractive. We are pleased with our performance. This quarter. It should be noted that there remains some uncertainty around the continued impact of the pandemic and the recovery will not be uniform across the globe. Despite all of this though.

We expect to see a continued gradual improvement and the overall dental market.

As the recovery continues the company expects to increase investment to support our growth initiatives throughout the year to drive growth rate.

We believe that there are many lessons learned during the pandemic that will help us operate more efficiently going forward and have we seen this quarter <unk> sirona is well positioned to capitalize on the continued recovery.

And with that I will turn the call back to Gary. Thank you.

Thank you Don and now we will open for Q&A.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please.

Please standby, while we compile the Q&A roster.

Your first question comes from Nathan Rich of Goldman Sachs. Your question. Please.

Thanks, Good morning, Don and Jorge.

Maybe starting with the revenue performance and the first quarter. It sounds like the market improve kind of more than you anticipated and you definitely highlighted the broad based strength and you saw in the quarter. How do you think this plays out over the balance of the year. It doesn't look like you've really changed your revenue assumptions for future quarters.

Despite the strength, you've seen and the first quarter. So just.

Can you help us think about this revenue cadence over the balance of the year.

And.

Good morning, Nathan let me start and.

And then.

Don will add some comments.

Listen if you go back.

A quarter ago, we decided to provide guidance.

Cause we believe and our ability to execute and we were optimistic about the recovery and the dental markets I think Q1 confirm that it came in.

Little bit better than what we thought clearly that gives us confidence for the rest of the year. As a result, we actually increased the bottom of the range of our revenue by $100 million when you think about it.

And are there.

The better than expected revenue for us and the for.

First quarter was not $100 million it was less than that so we are reflecting our higher level of confidence and the rest of the year.

Based on that change and also all the other changes that we.

Debt with our with our guidance.

We still think that the.

The second half of the year is going to be a little bit higher and the first half and that is consistent with historical patterns I think and that path. If you go back.

Several years, what you see is that the first half is typically 47% of the total year.

And this time, we think that the first half is going to be a little bit higher than that but not much higher so.

All of the all of the <unk>.

The risks and opportunities that we talk about the weighted.

And our prepared remarks are factoring for that but net net we are more optimistic about the about the revenue for the year and Thats why we are raising our overall guidance.

There are risks that we have to be mindful of it but we are optimistic about the future.

Yes, the only thing I'd add.

Look we're trying to be as transparent as we can I mean, thats why we were kind of alone and offer and guidance last time and.

Look we feel good about how the first the category came back and how we performed and the only thing.

I would add to Jorge is discussion as you know, we're watching numbers and India, Brazil Other places where.

And we have a pretty significant presence and.

It's a little uncertain and look as and as we get more certainty about what the pace of the recovery is we've demonstrated that we're willing to change our guidance for sources, Jorge just mentioned, but.

And again, we thought the quarter was good we think the rebound is is coming we're gratified with how the Companys performance.

That's helpful and if I could just ask a follow up on gross margin.

I think you kind of reach and multi year high and <unk> is a very strong performance could you just maybe help us think about the sustainability of margins at those levels you highlighted some moving pieces just around mix and shipping costs. So just would be interested to get your thoughts on how that plays out over the balance of the year.

Yeah. Good question, Nathan clearly very happy with that with the gross margin rate, we had in the quarter.

As you know we don't guide.

Margin rate because similar to SG&A, both fluctuate from up from quarter to quarter and.

And in Q1.

We had a great mix consumables the consumables growth of 21, 5% that certainly contributed significantly to two the strong.

Margin rate and the quarter so.

And there are other things going on with the with the gross margin rate. So those are temporary in nature or fluctuating and nature. If you will.

And our gross margin rate. We are also seeing the benefits of many of the restructuring initiatives and portfolio optimization and the initiatives that we have executed over the last stop over the last couple of years.

And is there you you correctly captured the fact that we're beginning to do.

The trade and program around the World you you know and then whether it's directly digital or not you know the clear line of business is is really and important component of that you know we've been very happy with how sure Smile has been performing I mean, obviously bite. It has been a terrific addition, and and we think that you know obviously we are.

Very happy with how that's performing and the runway in front of that but you know a short smile is tightly integrated with prime scan and and we feel that you know that integration really let's Dennis practice clear liners pretty easily.

Yeah, we're pretty optimistic that that that business is gaining steam and you know we think that's gonna be a nice addition, and a nice way to accelerate.

You know our presence with with Zurich. So you know look as you think about the cadence you and I'm not gonna tell you quarter to quarter to quarter, but yeah, I I I certainly think the back half. We're we're pretty excited about what we're offering and we're excited about the promotional juice that we have and you know we think a short smile gets bigger and stronger that's an obvious.

And benefit that reflects what we think will reflect well on prime skin.

[laughter], Okay and.

Cherokee airplanes, and Kenny and can you and can you give us your updated that does the integration that price between bite interest now what our dental students day, now and they've had a little bit more time to digest that with you know the acquisition instead of where you see it and the first signs of sort of and integrated off right and there.

You know it's attention was for so our our research when we were looking at by told US and they were gonna be some people, who like bite and some people don't I mean, the people who are in the clear line of business.

You know think having a another clear liner brand that's driving general patient demand as a good thing people, who don't necessarily like clear liners, whether they're going through the dentist's office or not Don we haven't seen a whole lot of movement from that but that being said you know.

Look for five months in and they're seeing good benefit on on shore Smile. We continue to you know improve things like customer service and delivery times and we actually open a large manufacturing facility, that's really big beginning to benefit us and on the shore smiles side and you know they're excited about what that means and the most of them are taking a wait and see.

And you know there there are a little bit depressed, but they're better than what we see and North America, and then Europe is a little bit uneven and others.

Parts of Europe that are kind of and above the 90% level.

But theres no place around the world right now that we see absolute patient volume traffic exceeding pre pandemic levels and <unk>.

Some places it gets close and that being said the thing that's really kind of continue driving a lot of a lot of volume for us and others and you look like the implant businesses across all the dental competitors you can see that more complex procedures continue to be a trend that you see and the dentist, we talked to you and and it's nice by the way you and we're starting to be able to talk to.

For a lot more people face to face is that they learned I mean, they learned during you know over the last year that I can do clear aligner is I can do a little bit more complex implants, and we we feel that's a really good trend for us long term because the minute they recognize that they need to add and stay doing these more complex procedures because it's jen.

Great and a higher revenue per patient and what they saw pre pandemic they tend to be pretty interested and digital equipment. So we so we like that and then just in terms of dealer orders Tycho. It's interesting I would tell you. The we all learned over the course of the pandemic how much inventory do we really need.

And I tend to think the dealers, while they're there they're getting a little bit more aggressive right now I don't think that the absolute level of inventory there they're going to hold is going to go back to pre pandemic levels might get near but.

And they've they've learned we're pretty efficient supplier, how much do they need to carry upfront and.

And I don't want to speak for for those guys, but.

What we're seeing is yes, we're.

Good orders.

How much are they going to come back all the way back we don't know, but we're very happy with what the trend we're seeing right now.

Okay. That's helpful.

Two quick ones for Jorge on the operating margins I think you had originally said last quarter and the first quarter. We had the weakest margins, obviously up 630 basis points. So can you talk a little bit about.

How much of that was mix versus cost saving and then secondly on R&D and now that you're breaking it out can you just give us a rough sense of how much is split between the two divisions.

Yeah.

Thanks Tycho.

We said last quarter that Q1 is typically from a revenue perspective would be the weakest quarter and.

And and we also said that the operating profit margin was going to be a few points out and below what we experienced in Q4 and as we said and our prepared remarks, and I think you would have seen that across the board the industry overall bounce back faster than what we were expecting in the first quarter and as we were.

We're planning for spending patterns and investments and the first quarter. We were we were cautious and and we thought that that we needed to manage investment for certain amount of revenue and as we were getting closer to the end of the quarter, we will realize the industry was coming back faster.

So as a result of that.

Thank you.

The margin rate and Q1.

<unk>.

Much higher than what you would normally see and it typically for.

First quarter.

We clearly continue to see the benefits from our structural changes that we have made as well so.

We are very much and track to achieving the savings that we committed to delivering by the end of 'twenty, one beginning of 'twenty two and the first quarter. We bought we realize further savings and the restructuring plan of <unk>.

Close to $16 million and and and the company continues to operate very lean and efficiently I think there is a typical expenses that.

We used to incur debt because people are not traveling and events are very limited none of that spend has happened and yet and so all of those factors contributed to.

And a very strong pulp.

Operating profit margin rate.

In the quarter as we look for war.

We believe we will maintain a healthy margin rate.

Very much on track to getting to the 21% rate by the end of this year, we will have to make some investments that thought we then make and in the first quarter I mentioned in my prepared remarks, how we we shifted we have shipped and at least five pennies from the first quarter into the remainder of the year and and those those five pennies are very <unk>.

We saw when we were doing diligence.

Okay. Thank you.

And can tiger.

Your next question comes from Aaron Right of Credit Suisse. Your question. Please.

Great. Thanks for for taking my questions Uhm. My first one is how how should we be thinking about what's embedded and expectations for 2021 for prime skin and how are you thinking about the upgrade cycle and are you seeing any changes in terms of practitioner adopting for war standalone crime skin uhm versus full chair aside system and and sort of environment.

Yeah, Thanks and you.

Yeah.

We've kind of evolved our approach to Sarah and obviously with Prime scam. If you look two years ago, and and I know, you've you've been fall and is longer than that.

Was all about chairs and <unk>.

It was it.

It was critical to us and we continue to believe that it's a differentiator for us over the marketplace. We are seeing a trend where there is more interest and standalone Ti units and we felt that we were not competitive two years ago. So that's one of the reasons, we kind of bifurcated our approach.

With Prime scanned and there was obviously, there's a full chair side, but we were selling a unit.

And it didn't come with the software that let it become instantly chair side.

And and we've seen good growth there. So you know the art form for US is how do we continue driving R. R. D. I presence aggressively and then overtime shift those people up to chair side.

So as we look out over 2021, and probably you know.

Beyond that you know, we expect to see the D. I side of the business growing faster than the chair side, but then you know what we're effectively doing is creating and install base, where we can go right back in and and seldom share the advantage of chair sides.

Right. After that so you know it you may see a little bit of lag and how fast chair site grows but and aggregate we expect.

Start to grow quite nicely over the course of 2021 and beyond.

Okay, Great and then and and can you provide and update on a D. S and it's kinda itchy at this point or U T and greater traction there how it from the day digital dentistry offerings day thing and gaining traction and potentially and those yet accounts.

Yeah did obviously the dsos tends to be a much more north American impact you know, we we feel that we've been pretty well against Dsos more people a lot of them are very very interested and work flow, particularly with something like a short smile and and we're getting and again you almost have to think of there's the the.

Five 700.

Offices.

As a group and then you kind of think of the 5200 and kind of art group practice offices that are not necessarily household names, we tend to we've been doing well and kind of these midsize dsos, but we've we've been very competitive and some of the larger dsos with both some of our digital entries.

Around prime scan as well Schwartz miles. So you know when you say update on our strategy or strategies to compete and win and do it and such a way that were built.

Building out our growth rate at a good margin and then you know how do we grow from there, but not no big change and strategy and you know, we feel we've done pretty well and and dsos without necessarily calling okay. What went on and Aspen and what went out and Hartland Bang Bang Bang and all the way down the line.

Okay, Great and so let me for this way or and Dsos will grow year on year for us.

Okay. Thanks.

Your next question comes from John Block Ah Stifel. Your question. Please.

Hi, This is Trevor off for John and Thanks for taking my question and so I'm just starting with the operating margin and your guide and supplies and no material improvement for the balance of the year. So you know should we still be thinking about exiting the fourth quarter with the strongest margin a year or just any changes to the cadence there.

Yeah. Thanks for the question.

As I indicated before margin is margins are going to fluctuate quarter to quarter, depending on on makes depending on now and.

And the cases of investments and and other things overall, what what we're expecting and and that's what we're reflecting in our and our numbers is that we will be around at 21 per cent level for the remainder of the year, we were trying to balance and and well thanks for us starting with a top line we were.

Want to make we went to deliver and the short term, which we are we also want to make investments to ensure that we actually hit that for two five per cent top line growth rate that we're targeting so that's going to require investments and and they will happen throughout the year or restructuring projects continue to deliver those.

Some of them require investments that have paybacks.

A few quarters later, so all of those things contribute to some fluctuation throughout the year.

If if queue for it turns out to be a very high.

Quarter from a revenue perspective as possible that the operating profit margin will be over 21% on average that's what we are model and for for for the year and that is consistent with our goals are for this year and is consistent with our goal of achieving 22 per cent as we go into <unk>.

<unk> so to get to 22 per cent next year. There are some investments and we have to make this year and and so we have to balance all of those priorities.

Priorities for the company.

Great. That's helpful. And then maybe just non digital dentistry and you know did you saw a decline and the quarter coming off a difficult 2020 comp, but can you just comment on how the category from relative to expectations and maybe how things looked agassi and the quarter.

And and in April.

[noise] well, we're not going to comment on April, but you know digital dentistry performed well.

We were kind of and a little bit of a unique situation, where we had a very strong D. S world and queue for 2019, and we were somewhat limited from a supply chain perspective. So there was there was a lot of movement from queue for and to Q1, [noise], creating a pretty tough comp for us all that being said you know.

Relative to where we are and the recovery and what we're seeing in terms of interest from Dennis literally on a global basis, we feel digital dentistry is doing pretty well and we feel that again the thing that we've seen coming out of the pandemic is a lot more interest and I would say more complex procedures, you know with two day <unk>.

<unk> Yep.

Remember digital dentistry isn't just all seric for us and it also talk about imaging two day three D and.

And can beam.

And you're seeing a lot more interest and complex procedure and and the digital assets make that diagnosis, a lot easier and the treatment planning works pretty well for it for those guys. So you know overall look as as you see clear liners as you see implants move a lot of that's being powered by these much more sophisticated digital diagnosis and treatment planning and as.

As a result, you're seeing good solid demand and digital dentistry and you know some of that is obscure and.

And our case around the comp that was specifically unique to Q1 2020.

Great. Thank you.

HM.

Your next question comes from Jeff Chats, and a third your question. Please.

Thank you good morning, guys, Don maybe just a couple of clarify and questions and if I could first just out and fight our math like sometimes struggles to be accurate, but our math would suggest the bite may be able for 40 million and revenue. This quarter. That's a couple of quarters sooner than I thought they could get there so one or we ballpark accurate there and.

Kill you know looking at some of the consumer review sites and things like that I mean, the feedback on bite has been noticeably and very very good and you know we think about the cost structure, there and that's not just customer acquisition costs, but also them support and and things like that you know.

Maybe and update on on what you're seeing on the cost side and and if you're more bullish less bullish on the accretion that you've been expecting from and ETS per second from that deal here going forward. Thanks.

Yeah, Jeff we'll split the question and I'll I'll I'll talk about bite and then I'll, let Jorge deal with revenue and margin and and and a longterm financial impact.

Look the reason we bought bite as we thought that they had a first and really really good product. They had a great team and culture out there that was very customer focused and we remain very very customer focused in terms of those reviews literally we something we look at as a team on a on and hourly and nightly basis.

So yeah, it's and it's really important to us as we think about how do we maintain high net promoter scores and you know how do we create the brands that we feel we want which and and our mind is again, we're reaching out to a segment of the population that is not necessarily come into the dentist office it tends to be a little younger and.

And they don't necessarily have a specific relationship with a dentist. So you know we as we think about how do we attract those patients correctly put them and are they eligible for class one and.

And we want to maintain a really strong relationship with that patient.

And we do we've got a fantastic operation [noise] out and Salt Lake City. It's one of the treats that we when we go visit our our by team we get to go out there and then you know from a supply chain perspective, one of the reasons that we were excited about bite is that we think we built a world class manufacturing operation and and Mexicali and.

And we feel that that's gonna give bite a a real opportunity to deploy what we think is great technology, but you know in terms of specific revenue and financial expectations I'll turn that over the forehead, yeah, Jeff. Thanks for the question list and I've done said, we're very very happy with with the performance of bite we are.

Tracking with our business case.

We were happy about the opportunity.

We have one bite for only five months right. So we were happy with what we're seeing I just stopped reaffirm our views of the total revenue for the clear airliners franchise for us and ex is $300 million for for for this year is there is some upsides, perhaps but it's it's early.

<unk> to to start counting on on things like that we need to keep working on the integration integrating new companies, especially companies that are relatively young it takes time and day. It takes investments and it takes a lot of air for from the entire organization. So we have to balance all of those things we need to learn a lot of things and.

<unk> thought about the direct to consumer business and not we're balancing all of those things net net.

Very happy very much on track with our business case.

Thank you and then Don just maybe as a follow up to your prime scam commentary and I think we'd all agree that day is probably the the longer term a bigger growth opportunity, but is that it all fading your thoughts on crime mill upgrade opportunity that you know, even if cadcam and is it going to be our chair site isn't going to be a big driver of future growth I I I think you saw at 50 or <unk>.

3000, and installed Sarah ex across the globe and I had a silver price mill upgrades can still be pretty meaningful over the next year or two even his chair site isn't a big growth driver for the company going forward. Thanks.

Yeah, and and I don't want to say the chair sides, not gonna be a growth and to and I I tend to think that what we're seeing is and evolution, where scanners are now kind of becoming to facto a standard practice and and and a lot of offices around the world, but but even that north American parts of Europe are are way ahead of other places and.

And in terms of Prime Mail you look we're really early and Prime mail I mean that kind of a bummer for us as we launched it and then we go into the pandemic, but the economics of full chair. So I'd dentistry still are very very attractive.

To the individual dentist and that's something that we absolutely sell so one of the reasons, whereas comfortable as as we say we are in terms of let's drive some D. I is because that's a great upgrade opportunity and our mind and I'll, let the dentist get comfortable with the eye and then let's go and sell them on the benefits of chair side. So we're very bullish on Prime mill I mean first you.

You know and and I know <unk>, we actually had the opportunity to to actually show you. This I mean look we're basically scanning and delivering a a really accurate well-made crown and under an hour with full chair side with Prime mail given the speed and you know now that we've got her to Sarah blocks and we're super excited about what that means as a as a total integrated.

System, So look I I I would tell you and prime mill very early game very early in the in the process. We we are very very bullish on what prime milk and be and and look you know if if this winds up that we expand our overall digital footprint starting with the scan you know by 15 20 per cent overtime.

And they don't necessarily buy mills. The first time believe me there there will be somebody knocking on their door to sell them a prime mill not too not too far down the line because the economics are really really compelling and the patient experience for something like single visit dentistry, a one hour dentistry really good.

Got it thank you.

Thanks to ethnic Jeff.

Your next question comes from Brandon Chiliarch I've Jefferys your question. Please.

Hey, Thanks for morning, <unk>, Don if we just look at the consumables business. It's been the mixed that for awhile, but some improvement and the first quarter you can cop notwithstanding.

Where do you think you're gaining share are losing share and that category, which areas you're still lagging whichever do you think your.

Maybe picking up some share.

Yeah. Yeah. You know it's again are are consumable business just to break out some components for is is a little bit of a background and you kind of are prevented business. The rest of business around a business and and a lab business you know I I would tell you the the resto and the preventive businesses have been we think doing well.

Our endodontics business, which is as large and and very very profitable we've been very happy with the performance over the last two quarters, we're very optimistic that will pick up some.

Some introductions and the back half of this year, which we think will be important to create some momentum on that business and then lab has kind of been you know a little bit of a challenge for us. It there. There's two components. One we kind of got out of the analog lab business, which was a significant piece, which leaves us the digital lab business. We think over time, that's going to allow us to.

Accelerate growth right. There you know when you look at stuff like our digital Denture program are are three D printing ingredient looser tone, we think we have an opportunity to grow there. So you know in terms of what we do and the and the first quarter, where do we gain share.

One wouldn't it be great. If we all had some syndicated data. So we can answer this question with some degree of precision, but you know we're we're happy with how you know, particularly we we think we held serve on and we think we did pretty well on the restaurant and preventive businesses and and lab, it's kind of hard to tell but we were happy with the performance of that business and the quarter.

And then the switch over to implants and.

A while for that you spiked that out as a positive within the T. V segment can be a little more specific on the growth rate.

And and plant and the first quarter and and you think that franchise can grow and lie or faster than the corporate average this year.

Yeah, the the the influence business performed well and a quarter and <unk> is is one area, where we we are spending a lot of time invest and a lot of money, making progress we are not where we want to be by Q1 wasn't good was a good quarter we.

<unk> as we have indicated before we are not Ah growing and yet with the category that is a key priority for us and everything we're doing right now is aiming to approach that number at some point and there's there's a lot of opportunities and we have a great portfolio and we have and and number of of.

Brands that we are trying to optimize the we'd just that completed the acquisition.

That this quarter, which is a is a valuation of our conviction about saw grow and that business and it's very early on but we are very excited about that acquisition small, but it is thought but as you not be and main contributor. We are very you know bullish on the the capabilities that we have with Atlantis and now with all.

Other parts of the portfolio so work in progress moving and the right direction.

Thanks.

Yeah final question comes from Jason Banner of Piper Sandler and your question. Please.

Hi, This is screen on for Jason Thanks for sleeping and I said, so first following up on that try and no question, Yeah, any early and say on how many of those and then so can you use their first and say that you needed. It that are upgrading and then and definitely on that you said you spent a year and Billy not capacity has that been able to meet the demand or is that still too.

I like to tell and that.

So first yeah price I would say primary right now has been principally and upgrade we've been happy that we have attracted new users to full chair side typically what we see it it's actually easier to sell D. I. Then you go in to felt for that we're attracting new people by selling D. I N.

And you upgrade them to chair side, a little bit down the line, but you know so far I'd say Prime mill has been mostly and upgrade if you look back on the product that it's actually replacing that's about seven years old. So this was and needed innovation and right now where we feel very good about capacity you know.

I I would say to characterize things and Q for 19, we had a very very big D. S. World, We were capacity constrained and and actually mill was was really introduced at that time period. It took us a while to clear that up which is one of the reasons, we have the tough comp and from Q1 20th.

And 20 right now we feel good about our ability to meet demand Oh overtime.

Thank you and and one last one and access we've seen sounds pretty attractive promotion going on and for and parts of the world and we're just wondering are those competitively driven and then how has demanded bang here and now that we're it got the quarters and for lunch.

On an axis of demand has been good you know first it's a really really good product I mean, you you know we we took a we were a little bit behind coming into the wide field of view business, but you know we think our product is best and class and by the way. If you actually look at the capabilities look at the new software that we put and that was in excess it's it's really really good.

Product you know in terms of the individual promotions by region look there you know different parts, we're gonna respond competitively as we need to but you know by and large.

One of the things that are cheap commercial officer, other Peterson and and and Jorge of put and places. We we have a pretty disciplined approach to pricing. We don't want one region to get to the point, where they're creating a gray market opportunity that lets things move around the world. So I would tell you first what we want to be competitive with with access it's a great product and more <unk> more.

[noise] places we can sell that the better are we you know is.

Is there a differential promotions, yeah that that goes on and typically throughout the entire company, but but again, we think we've got excellent discipline in terms of establishing a floor.

In terms of how things are promoted on a regional basis for you know if we're gonna make a big big on a DSO business that all runs through a pretty sophisticated pricing process. So thanks.

Thank you.

And this concludes today's conference call. Thank you for participating you may now disconnect.

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