Q4 2023 Dentsply Sirona Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Dentsply Sirona 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by welcome to the Dentsply thrown a fourth quarter 2023 earnings conference call.

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Operator: Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Andrea Daley, Vice President of Investor Relations. Please go ahead.

Please be advised that today's conference is being recorded.

I would now like to him a conference over to your speaker today, Andrea Daily Vice President of Investor Relations. Please go ahead.

Andrea Daley: Thank you, operator. And good morning, everyone. Welcome to the Dentsply Sirona fourth quarter 2023 earnings call. Joining me for today's call is Simon Campion, Chief Executive Officer, Glenn Coleman, Chief Financial Officer, and Andreas Frank, Chief Business Officer. I'd like to remind you that an earnings press release and slide presentation related to the call are available in the investors section of our website at www.dentsplysirona.com. Before we begin, please take a moment to read the forward-looking statements in our earnings press release. During today's call, we may 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 uncertainty. Our most recently filed Form 10-K and any subsequent updated information in subsequent SEC filings list some of the most important risk factors that could cause actual results to differ from our prediction. Additionally, on today's call, our remarks will be based on non-GAAP financial results. We believe that non-GAAP financial measures offer investors valuable additional insights into our business's financial performance, enable the comparison of financial results between periods where certain items may vary independently of business performance, and enhance transparency regarding key metrics utilized by management in operating our business.

Andrea Daley: Thank you operator, and good morning, everyone welcome to the den spy thrown a fourth quarter of 2023 earnings call. Joining me for today's call is Simon Campion, Chief Executive Officer, Glen Coleman, Chief Financial Officer, and Andreas Frank Chief Business Officer.

Andrea Daley: I'd like to remind you that in earnings press release, and slide presentation related to the call are available in the investors section of our website at Www Dot Dentsply Sirona Dot com.

Andrea Daley: Before we begin please take a moment to read the forward looking statements and our earnings press release.

Andrea Daley: During today's call, we may make certain predictive statements that reflect our current views about future performance and financial results.

Andrea Daley: We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties.

Andrea Daley: Our most recently filed Form 10-K, and any updating information in subsequent SEC filings lists some of the most important risk factors that could cause actual results to differ from our predictions.

Andrea Daley: Additionally, on today's call our remarks will be based on non-GAAP financial results.

Andrea Daley: We believe that non-GAAP financial measures offer investors valuable additional insights into our businesses financial performance.

Andrea Daley: Enable the comparison of financial results between periods, where certain items may vary independently of business performance and enhance transparency regarding key metrics utilized by management and operating our business. Please.

Andrea Daley: Please refer to our press release for the reconciliation between GAAP and non-GAAP results. Comparisons provided are to the prior year quarter unless otherwise noted. A webcast replay of today's call will be available on the investor section of the company's website following the call. And with that, I will now turn the call over to Simon. Thank you, Andrea.

Andrea Daley: Please refer to our press release for the reconciliation between gap and non-GAAP results.

Comparisons provided or to the prior year quarter, unless otherwise noted.

Andrea Daley: A webcast replay of today's call will be available on the investors section of the company's website following the call.

Andrea Daley: And with that I will now turn the call over to Simon.

Simon Campion: Thank you Andrea we appreciate you joining us this morning for a Q4 2023 earnings call.

Simon Campion: We appreciate you all joining us this morning for our Q4 2023 earnings. Today I'll begin by providing a summary of our recent performance, then Glenn will cover Q4 and Folio 23 financial results, and share our 2024 Outlook. And I will finish by providing a strategic operating, Now starting on slide three. We achieved over 2% organic sales growth in 2023, above our projection, driven by growth in three of our four segments. The ortho business saw double-digit growth in both bite and sure smile. Eds segments posted growth in all regions and product categories and, in total, delivered mid-single-digit growth. While well-specced healthcare generated high single-digit growth, through the fourth quarter, the macro environment remains challenging. CTS segments declined slightly more than expected, mainly due to equipment and instruments with softness in imaging, which we anticipate will continue in 2024.

Simon Campion: Today I'll begin by providing a summary of a recent performance.

Simon Campion: And Glenn will cover queue for full year 2003 financial results.

There are 2024 outlook.

Simon Campion: Finished by providing a strategic operating update.

It all started on slide three.

Simon Campion: We achieved over 2% organic sales growth in 2023 above our projections driven by growth in three of our four segments.

Simon Campion: Also business solo double digit growth in bold bright unsure smile.

Simon Campion: Segments posted growth in all regions and for other categories and in total delivered mid single digit growth, while well expect healthcare generated high single digit growth.

Simon Campion: Through the fourth quarter, the macro environment remains challenging.

Simon Campion: The Cps segments declined slightly more than expected, mainly due to equipment and instruments with softness and imaging, which we anticipate will continue in 2024.

Simon Campion: This was partially offset by an increase in demand for CAD CAM and particularly for intraoral scanners, which was another bright spot for us. In January, we conducted our latest customer survey with over 3,500 respondents from 12 key geographies. Sentiment in the U.S. improved slightly about the future of the industry and their practices, while German and Australian customers continue to express a negative outlook, and this is largely unchanged from the last quarter.

Simon Campion: This was partially offset by an increase in demand for cadcam, and particularly for intra oral scanners, which was another bright spot for us.

Simon Campion: In January we conducted our latest customer survey with over 3500 respondents from 12 key geographies.

Simon Campion: Sentiment in the U S improved slightly about the future of the industry and their practices.

Simon Campion: Germany, and Australia and customers continued to expressing negative outlook and this is largely unchanged from the last quarter.

Simon Campion: The survey also suggested that patient demand in China continues at reduced levels, but with no sequential deterioration. The EBITDA margin for 2023 came in at 17.4%, and adjusted EPS was $1.83, both in line with our guidance. As we stated at the beginning of the year, we consider 2023 a transition year for Dentsply Sirona. We promptly and decisively executed several critical transformation initiatives to achieve the necessary cost savings enabling strategic reinvestment for hygiene and growth. We made significant progress on these initiatives, which have strengthened the foundation of the business and set us on a path to improved future performance, which we highlighted for you at our investor day in November. As we have said, we believe 2024 will be an inflection year for us, delivering double-digit adjusted EPS growth, largely due to the benefits of our transformation initiative.

Simon Campion: The survey also suggested the patient demand in China continues at reduced levels.

Simon Campion: With no sequential deterioration.

Simon Campion: The better margin for 2023 came in at 17.4%.

Simon Campion: EPS was one dollar and 80 <unk>.

Simon Campion: Both in line with our guidance.

Simon Campion: As we stated at the beginning of the year, we consider 2023, a transition year for Dennis place Rona.

Simon Campion: We promptly ends decisively executed several critical transformation initiative to achieve the necessary cost savings enabled strategic reinvestment for hygiene and growth.

Simon Campion: We made significant progress on these initiatives, which have strengthened the foundation of the business and set us on a path to improved future performance, which we highlighted for you at our Investor Day in November.

Simon Campion: As we have said, we believe 2024 will be an inflection year for us delivering double digit adjusted EPS growth.

Simon Campion: Largely due to the benefits of our transformation initiatives.

Simon Campion: We remain laser focused on executing our strategy while simultaneously strengthening our foundation, developing new capabilities, and implementing greater discipline and rigor across our business. Moving to slide four, I would like to share some selected business highlights. In 2023, we will continue to bring innovation to the market. We have enhanced our DS core offering, expanding the platform, and enabling new clinical functionality. On the last earnings call, I shared that we had already exceeded our DS Core target for 2023, and as an update, we ended the year with over 14,000 unique accounts. We believe that DSCore will play an ever-expanding role in shaping dentistry as the industry undergoes a digital evolution that's connecting technology and clinical workflows. We're also focusing on digital print materials, and we recently launched Lusitone for prime print and expanded our Splinter.

Simon Campion: We remain laser focused on executing our strategy for simultaneously strengthening our foundation, developing new capabilities and implementing greater discipline and rigor across our business.

Simon Campion: Moving to slide four I would like to share some selected business highlights.

Simon Campion: In 2023, we continued to bring innovation to the market.

Simon Campion: We enhanced our D S core offering expanding the platform and enabling new clinical functionality.

Simon Campion: And the last earnings call assured that we had already exceeded rgs core target for 2023 and that is an update we ended the year with over 14000 unique accounts.

Simon Campion: We believe that <unk> will play an ever expanding role in shaping the industry.

Industry undergoes a digital evolution, that's connecting technology and clinical workflows.

Simon Campion: We're also focusing on digital print materials, and we recently launched loose loose its own for prime print and expanded our splints offering.

Simon Campion: We believe we are well positioned to advance digital print materials and continue to see opportunities to accelerate the adoption of 3D printing in dental practice, as a stand-alone office capability or as a complement to in-office milling. As previously communicated, we reinvigorated our focus on clinical education. We know that digital dentistry requires hands-on, in-person training to facilitate practice integration and unlock the potential of digital tools, and we are committed to providing this for our customers.

Simon Campion: We believe we are well positioned to advanced digital print materials and continue to see opportunities to accelerate the adoption of three D printing and dental practices as a standalone office capability or as a comprehensive in office building.

Simon Campion: As previously communicated we reinvigorated our focus on clinical education offerings.

Simon Campion: We know the digital industry requires hands on in person training to facilitate practice integration and unlock the potential of digital tools and we are committed to providing this for our customers.

Simon Campion: By 2023, we were proud to offer over 9,200 training and education courses globally through live, online, and hybrid formats, which reflects about a 30% increase compared to prior years. We also expanded our reach with digital learning platforms through a partnership with DTI that started in the fourth quarter. Live events play an important role in enriching our clinical education platform. Earlier this month, I had the opportunity to attend our second DS World event in Dubai. This event featured courses on many dental disciplines, with over 1,000 participants in attendance.

Simon Campion: In 2023, we were proud to offer over 9200 training and education courses globally through live online and hybrid formats, which reflects about a 30% increase compared to prior year.

Simon Campion: We also expanded our reach with digital learning platforms through a partnership with DTI that started in the fourth quarter.

Simon Campion: Live events play an important role in enriching our clinical education platform.

Simon Campion: Earlier this month I had the opportunity to attend our second D S world events in Dubai.

Simon Campion: This event featured courses on many dental disciplines with over 1000 participants and attendance and this is the first of several deals world events. We have planned this year.

Simon Campion: And this is the first of several DS World events we have planned this year. In the fourth quarter, we also conducted several implant-focused events in the U.S. and Europe. Building on the success of these events, we look forward to hosting our Implant Solutions World Summit in Miami in the second quarter. We continue to progress our sustainability strategy. In 2023, we achieved a new record for our injury and illness prevention. The safety of our employees is of the utmost importance, and we are very proud of this accomplishment.

Simon Campion: And the fourth quarter. We also conducted several implants focused events in the U S and Europe building.

Simon Campion: Building on the success of these events, we look forward to hosting our implant solutions World Summit in Miami in the second quarter.

Simon Campion: We continued to progress our sustainability strategy in 2023, we achieved a new record for our injury and illness prevention rate the.

Simon Campion: The safety of our employees is of the utmost importance and we're very proud of this accomplishment.

Simon Campion: Our well-specced healthcare business also continues to lead in this area and recently won an award for sustainable medtech innovation for the use of renewable plastic in Low Frick L, a female urinary catheter. We were also named to Sustainalytics' 2024 ESG top rated companies list earlier this month. Wrapping up the highlights, we recently announced an expansion of our collaboration with ADEC, introducing a new integrated product offering that will bring together PrimeScan Connect and certain ADEC delivery systems. This builds upon our existing collaboration with ADEC that integrated Cavitron into their platform. The new offering creates a fresh solution to meet customer needs, empowering dental professionals to streamline practice workflows and elevate the patient experience. Thanks, Simon.

Simon Campion: Our wealth back to health care business also continues to lead in this area and recently won an award for sustainable Med Tech innovation for the use of renewable plastic and low freq L. A female urinary catheter.

Simon Campion: We are also named two Sustainalytics 2024, ESG top rated companies list earlier this month.

Simon Campion: Wrapping up the highlights we recently announced an expansion of our collaboration with a deck introducing a new integrated product offering that will bring together primes can connect and certain adak delivery systems.

Simon Campion: This builds upon our existing collaboration with a deck that integrated <unk> into their platform.

Simon Campion: The new offering creates a fresh solution to meet customer needs empowering dental professionals to streamline practice workflows and elevate the patient experience.

Simon Campion: And with that I would hand, the call over to Glen for the financial update.

Glenn G. Coleman: Good morning, and thank you all for joining us. Today, I'll cover several topics, including our fourth quarter and full year 2023 results, as well as our outlook for 2024. Let's begin on slide five. Our fourth-quarter revenue was $1.01 billion, representing reported sales growth of 2.9% and Organic Sales Growth of 1.9%. Foreign currency positively impacted sales by approximately $10 million or 100 basis points compared to the prior year quarter. On a constant currency basis, the key highlights in the quarter included strong sales performance in China, which grew over 35 percent, double-digit growth in both well-spec'd and implant-tempered statics, and High Single-Digit Growth in our Global Aligners Business. Despite higher sales, EBITDA margins declined 40 basis points in the quarter, mainly due to a year-over-year decline in gross margins, which contracted 100 basis points. This was largely driven by unfavorable country mix due to lower-margin implant sales in China and unfavorable product mix within our Endo and CAD-CAM portfolios. The adjusted EPS in the quarter was $0.44, down 4% from the prior year, largely due to lower gross margins and a higher tax rate.

Glenn G. Coleman: Thanks, Simon good morning, and thank you all for joining us.

Today will cover several topics, including our fourth quarter and full year of 2023 results as well as our outlook for 2024.

Glenn G. Coleman: Let's begin on slide five.

Glenn G. Coleman: Our fourth quarter revenue was $1.01 billion, representing reported sales growth of 2.9%.

Glenn G. Coleman: And organic sales growth of 1.9%.

Foreign currency positively impacted sales by approximately $10 million or 100 basis points compared to the prior year quarter.

Glenn G. Coleman: On a constant currency basis, the key highlights in the quarter included strong sales performance in China, which grew over 35%.

Glenn G. Coleman: Double digit growth in both well specht and implants and for statics.

Glenn G. Coleman: At high single digit growth in our global Aligners business.

Glenn G. Coleman: Despite higher sales EBIT margin declined 40 basis points in the quarter, mainly due to year over year decline in gross margins, which contracted 100 basis points.

Glenn G. Coleman: This was largely driven by unfavorable country mix due to lower margin implant sales in China and unfavorable product mix within our <unk> portfolios.

Glenn G. Coleman: Adjusted EPS in the quarter was 44 cents down 4% from the prior year largely due to lower gross margins in a higher tax rate.

Glenn G. Coleman: In the fourth quarter, we generated $160 million of operating cash flow, 13% year-over-year driven by improved inventory management and the timing of accounts payable compared to the prior year. Free cash flow conversion was 128% compared to 110% in the prior year. In the fourth quarter, we repurchased $150 million of stock at an average price of $30.73 and paid $30 million in dividends. For the full year, we returned $416 million to shareholders.

Glenn G. Coleman: In the fourth quarter, we generated $160 million of operating cash flow up 13% year over year, driven by improved inventory management and.

Glenn G. Coleman: And the timing of accounts payable compared to the prior year.

Glenn G. Coleman: Free cash flow conversion was 128% compared to 110% in the prior year.

Glenn G. Coleman: And the fourth quarter, we repurchased $150 million of stock.

Glenn G. Coleman: At an average price of $30.73.

Glenn G. Coleman: And pay $30 million in dividends.

Glenn G. Coleman: For the full year, we returned $416 million to shareholders.

Glenn G. Coleman: Let's now turn to fourth quarter segment performance on slide six. Starting with the Essential Dental Solutions segment, which includes Endo, Resto, and Preventive products, organic sales grew 3.4%, driven by growth in all three regions and in each product category. EDS benefited from stable patient traffic and price increases implemented earlier in the year. Shifting to the orthodontic and implant solutions segment, organic sales grew 10.6%. Linus Guhai, single digit

Glenn G. Coleman: Let's not turn to fourth quarter segment performance on slide six.

Glenn G. Coleman: Starting with the Essentials dental solutions segment, which includes endo resto preventative products.

Glenn G. Coleman: Organic sales grew 3.4% driven by growth in all three regions and in each product category.

Glenn G. Coleman: Eds benefited from stable patient traffic and price increases implemented earlier in the year.

Glenn G. Coleman: Shifting to the orthodontic, an implant solutions segment organic sales grew 10.6%.

Glenn G. Coleman: Linus grew high single digits.

Glenn G. Coleman: Specifically, SureSmile grew 13%. It continues to benefit from market share gains, new product offerings, and differentiated outcomes. Additionally, we believe the recent launch of our SureSmile simulator within DSCore will benefit future sales. Additionally, our direct-to-consumer aligner brand Byte grew 6% despite a constrained financing environment. With the recent uptick in new customer interest, we are ramping our investment in treatment planning, clinical support, and sales, which supports our anticipated greater than 20% growth rate this year. We also expect Shure spinal to grow double digits in 2024. Moving on to implants and prosthetics.

Glenn G. Coleman: Specifically suresmile grew 13%.

Glenn G. Coleman: It continues to benefit from market share gains new product offerings and differentiated outcomes.

Glenn G. Coleman: Additionally, we believe the recent launch of our share a smile simulator within D. S core will benefit future sales.

Glenn G. Coleman: Our direct to consumer Aligner brand bite grew 6%, despite a constrained financing environment.

Glenn G. Coleman: With the recent uptick in new customer interest we are ramping our investment in treatment planning clinical support in sales, which supports are anticipated greater than 20 per cent growth and fight this year.

Glenn G. Coleman: We also expect sure smile to grow double digits in 2024.

Glenn G. Coleman: Moving to implants prosthetics double digit growth was a clear bright spot in the quarter driven by BBT in market share gains in China and higher demand in Europe.

Glenn G. Coleman: Double-digit growth was a clear bright spot in the quarter, driven by VBT and market share gains in China and higher demand in Europe. Globally, premium and value implants saw similar growth. Our U.S. implants business was down slightly in the quarter, but it showed less of a decline than previous quarters, and we anticipate a return to growth in 2024. Wrapping up our dental performance, CTS, our Connected Technology Solutions segment. So organic sales declined 8.3% versus the prior year quarter.

Glenn G. Coleman: Globally premium and value implant saw similar growth rates.

Glenn G. Coleman: R. U S implants business was down slightly in the quarter, which showed less of a decline then previous quarters.

And we anticipate a return to growth in 2024.

Glenn G. Coleman: Wrapping up our dental performance Cts are connected technology solutions segment.

So organic sales declined 8.3% versus the prior year quarter.

Glenn G. Coleman: Our global CAD CAM business grew low single digits driven by increased demand in the U.S. However, the equipment and instruments business declined double digits in the quarter. Moving to WellSpec'd Healthcare, organic sales grew 16.9%, driven by growth in Europe and the U.S. As a reminder, WellSpec had an easier comp as the prior quarter was impacted by a one-time pricing matter in Italy.

Glenn G. Coleman: Our global CAD Cam business grew low single digits, driven by increased demand in the U S will the equipment and instruments business declined double digits in the quarter.

Moving to wells backed healthcare.

Glenn G. Coleman: Organic sales grew 16.9% driven by growth in Europe, and the U S.

Glenn G. Coleman: As a reminder, wells backed hadn't easier comps.

Glenn G. Coleman: As the prior year quarter was impacted by one time pricing matter in Italy.

Glenn G. Coleman: In addition, new product launches contributed to better-than-expected year-over-year growth. Now, let's turn to slide 7 to discuss fourth quarter financial performance by region. U.S. sales declined 1.2% due to lower sales of equipment, instruments, and implants.

Glenn G. Coleman: In addition, new product launches contributed to a better than expected year over year growth.

Glenn G. Coleman: Now, let's turn to slide seven to discuss fourth quarter financial performance by region.

Glenn G. Coleman: U S sales declined 1.2% due to lower sales of equipment instruments and implants.

Glenn G. Coleman: Although partially offset by strong growth in aligners and CAD CAM equipment, U.S. CAD-CAM distributor inventory levels decreased sequentially in the quarter by approximately $4 million, and ended the year essentially flat compared to the end of 2022. However, relative to historical averages, distributor inventory levels remain low.

Glenn G. Coleman: Partially offset by strong growth and Ah liners and Cadcam equipment.

Glenn G. Coleman: U S cadcam distributor inventory levels decreased sequentially in the quarter by approximately $4 million and.

Glenn G. Coleman: And ended the year essentially flat compared to the end of 2022.

Glenn G. Coleman: Relative to historical averages distributor inventory levels remain low.

Glenn G. Coleman: Turning to Europe, the region returned to growth in the quarter with contributions from WellSpect, EDS, and OIS. Cher Smile grew over 25% with notable growth in Spain, France, and Germany. We also saw an increase in implant demand, driven by growth in MIS and higher conversions from our legacy product, Zive, to our new DS Omni Taper implant. The CTS segment continues to see lower volumes due to recessionary impacts, particularly in Germany, which is the largest market in the region. However, excluding Germany, European organic sales grew 4.1% compared to the prior year.

Glenn G. Coleman: Turning to Europe.

Glenn G. Coleman: Region returned to growth in the quarter with contributions from well Spect Eds N O I S.

Glenn G. Coleman: Sure Smile grew over 25% with notable growth in Spain, France and Germany.

Glenn G. Coleman: We also saw an increase in implants demand driven by growth and M. I S and higher conversions from our legacy product aside to our new D. S omni taper implant.

Glenn G. Coleman: Our Cts segment continued to see lower volumes due to recessionary impact, particularly in Germany, which is our largest market in the region.

Glenn G. Coleman: Excluding Germany, Europe organic sales grew 4.1% compared to the prior year.

Glenn G. Coleman: Rest of World Organic Sales grew 5.4% in the quarter, led by China, which delivered significant growth in implants. In 2023, we saw a more than 40% increase in our Chinese implant customer base. The public and private sectors both continue to experience significant market growth. Sales in Japan declined during the quarter, as the prior quarter benefited from government rebate programs on certain equipment.

Glenn G. Coleman: Rest of World organic sales grew 5.4% in the quarter led by China, which deliver significant growth in implants.

Glenn G. Coleman: In 2023, we say more than 40% increase in our China implants customer base.

The public and private sector, both continued to experience significant market growth.

Glenn G. Coleman: Sales in Japan declined during the quarter at the prior year quarter benefited from government rebate programs uncertain equipment.

Glenn G. Coleman: Wrapping up Q4 regional performance, Latin America grew high single digits in the quarter, led by solid demand and sales execution in Brazil and Mexico. We saw an improvement in intraoral scanner volume driven by the launch of PrimeScanConnect and sales of refurbished Omnicam units in the region. In the first half of 2024, we plan to launch SureSmile, DS Core, and PrimePrint in Brazil and other countries within the region. Now, let's turn to slide 8 to briefly cover our full year 2023 performance. Sales for the full year were $3.97 billion, representing a reported sales growth of 1.1% and Organic Fields growth of 2.2%. Warrant Currency Translation negatively impacted sales by 110 basis points due to a stronger dollar versus most major currencies.

Wrapping up Q4 regional performance Latin America grew high single digits in the quarter led by solid demand in sales execution in Brazil and Mexico.

Glenn G. Coleman: We saw an improvement and enter all scanner volume driven by the launch a prime scan connect and sales a refurbished omnicam units in the region.

Glenn G. Coleman: And the first half of 2024, we plan to launch Suresmile score and prior print in Brazil, and other countries within the region.

Glenn G. Coleman: Now, let's turn to slide eight to briefly cover a full year 2023 performance.

Glenn G. Coleman: Those are the full year with $3.97 billion, representing reported sales growth of 1.1%.

Glenn G. Coleman: An organic sales growth of 2.2%.

Glenn G. Coleman: Foreign currency translation negatively impacted sales by 110 basis points.

Glenn G. Coleman: A stronger dollar versus most major currencies.

Glenn G. Coleman: Key highlights for the year included double-digit growth in aligners and high single-digit growth in China due primarily to significantly higher volumes in implants, which more than offset the pricing declines associated with VBP. The largest challenge we saw in 2023 was lower volumes in equipment and instruments, which we attribute to recessionary concerns and higher interest rates in the U.S., Germany, and other developed markets, as well as competitive pressure. And we see this trend continuing into 2024. EBITDA margins contracted 210 basis points to 17.4% due to cost inflation and higher investments in the commercial organization, clinical education, and infrastructure. Partially Offset by Restructuring Benefits, Even the margins were in line with our guidance, and the adjusted EPS of $1.83 was at the midpoint of our range. Operating cash flow was $377 million, down 27% year over year.

Key highlights for the year included double digit growth in the liners and high single digit growth in China, due primarily to significantly higher volume and implants, which more than offset the pricing declines associated with VB pay.

Glenn G. Coleman: The largest challenge we saw in 2023 was lower volumes and equipment and instruments, which we attribute to recessionary concerns and higher interest rates in the U S, Germany and other developed markets.

Glenn G. Coleman: As well as competitive pressure and.

Glenn G. Coleman: And we see this trend continuing into 2024.

Glenn G. Coleman: EBITDA margins contracted 210 basis points to $17, 4%.

Glenn G. Coleman: Due to cost inflation and higher investments in the commercial organization clinical education and infrastructure.

Glenn G. Coleman: Hershey offset by restructuring benefits.

Glenn G. Coleman: Even the margins were in line with our guidance and adjusted EPS of $1.83 was at the midpoint of our range.

Glenn G. Coleman: Operating cash flow with $377 million down 27% year over year driven.

Glenn G. Coleman: Driven by higher investments, Structuring Cash Outlays and Unfavorable Timing of Accounts Receivable and Accounts Payable, free cash flow conversion was 58% compared to 81% in 2022. As we mentioned during our recent investor day in November, our long-term goal is to achieve 100% free cash flow conversion on a consistent basis. Once we move past the cash outlays associated with our transformation initiative, the company continues to have a strong balance sheet and finish the year with $334 million of cash and cash equivalents on hand, with a net debt to EBITDA ratio of approximately 2.6 times, which is slightly above our long-term targeted rate of 2.5 times due to the fourth quarter $150 million share buyback.

Glenn G. Coleman: Driven by higher investments restructuring cash outlays, and unfavorable timing of accounts receivable and accounts payable.

Free cash flow conversion was 58% compared to 81% in 2022.

Glenn G. Coleman: As we mentioned during our recent Investor day in November our long term goal is to achieve 100 per cent free cash flow conversion on a consistent basis. Once you move past the cash outlays associated with our transformation initiatives.

Glenn G. Coleman: The company continues to meet a strong balance sheet and finish the year with 334 million of cash and cash equivalents on hand.

Glenn G. Coleman: With a net debt to EBIT ratio of approximately 2.6 times.

Glenn G. Coleman: Which is slightly above our long term target at rate of two and a half times due to the fourth quarter 150, mandar share buyback.

Glenn G. Coleman: Today, we also announced a 14% increase to our dividend.

Glenn G. Coleman: This marks our fourth consecutive year of double digit increases the dividend and demonstrates their confidence in our long term plan.

Glenn G. Coleman: Today, we also announced a 14% increase in our dividends. This marks our fourth consecutive year of double-digit increases in the dividend and demonstrates our confidence in our long-term plan. With that, let's move to slide nine to discuss our expectations for 2024. For 2024, we expect organic sales to be flat at up one and a half percent, which represents a net sales range of $3.96 billion to $4.02 billion.

With that let's move to slide nine to discuss our expectations for 2024.

Glenn G. Coleman: 2024, we expect organic sales to be flat up 1.5%.

Glenn G. Coleman: Which represents a net sales range of 3.96 billion to $4.02 billion.

Glenn G. Coleman: We expect FX to be a slight headwind to reported sales based on current rates.

Glenn G. Coleman: And anticipate stronger organic sales growth in the second half of the year.

Glenn G. Coleman: As we remain cautious on the macroeconomic backdrop for the next several quarters, particularly for equipment.

Glenn G. Coleman: We expect FX to be a slight headwind to reported sales based on current rates and anticipate stronger organic sales growth in the second half of the year. However, we remain cautious on the macroeconomic backdrop for the next several quarters, particularly for equipment. We expect our EBITDA margin to be greater than 18% in 2024, an expansion of approximately 100 basis points year over year. We also expect margin improvement as we progress through the year based on the timing of investments and restructuring savings. We projected an increase in our full-year tax rate due to geographic income mix and expect the Q1 tax rate to be higher than the full year as we finalize our 2024 tax planning initiative. We expect the adjusted earnings per share to be in the range of $2 to $2.10.

Glenn G. Coleman: We expect our EBIT margin to be greater than 18% in 2024 and expansion of approximately 100 basis points year over year.

Glenn G. Coleman: We also expect margin improvement as we progress through the year based on the timing of investments and restructuring savings.

Glenn G. Coleman: We projected increase in our full year tax rate.

Glenn G. Coleman: Geographic income mix and.

Glenn G. Coleman: And expect the Q1 tax rate to be higher than the full year as we finalize our 2024 tax planning initiatives.

Glenn G. Coleman: We expect that adjusted earnings per share to be in the range of $2 to $2.10.

Glenn G. Coleman: Four Q1, we expect organic sales to be roughly flat to the prior year.

Glenn G. Coleman: With slightly lower reported sales due to anticipated FX headwind of approximately $10 million.

Glenn G. Coleman: On a sequential basis gross margin is projected to improve in Q1.

Glenn G. Coleman: With this we expect EPS will be up mid single digits year over year.

Glenn G. Coleman: For Q1, we expect organic sales to be roughly flat to the prior year, with slightly lower reported sales due to an anticipated FX headwind of approximately $10 million. On a sequential basis, gross margin is projected to improve in Q1. With this, we expect EPS will be up mid-single digits year over year. In Q1, we expect to see growth in OIS and well-specced healthcare. All set by the clients in EDS due to a tougher comp and CTS based on current trends. Now, let's turn to slide 10 to discuss the puts and takes in our 2024 Adjusted EPS Outlook. Organic growth at the midpoint is expected to contribute $0.04 to earnings.

And Q1, we expect to see growth in OIS and walked back to health care.

Glenn G. Coleman: Offset by declines in eds.

Glenn G. Coleman: Due to a tougher cop and Cts based on current trends.

Glenn G. Coleman: Let's turn to slide tend to discuss the puts and takes in our 2024 adjusted EPS outlook.

Glenn G. Coleman: Organic growth at the midpoint is expected to contribute four to earnings.

Glenn G. Coleman: Are projected cost savings from the restructuring plan should reach the run rate of $200 million in 2024.

Glenn G. Coleman: That have investments we expect this will contribute approximately 13.

Glenn G. Coleman: Of EPS.

Glenn G. Coleman: The investments for 2024 include ERP expenses by insurers while expansion.

We expect net investment hedges will be a seven tailwind to EPS consistent with our previous comments at our November Investor Day.

Simon Campion: Our projected cost savings from the restructuring plan should reach a run rate of $200 million in 2024. Net of investments, we expect this will contribute approximately 13 cents of EPS. The investments for 2024 include ERP expenses, FITE, and SureSmile Expansion. We expect net investment hedges will be a 7 cents tailwind to EPS, consistent with our previous comments at our November Investor Day. We are forecasting that other items, namely cost, inflation, tax, and share count, will net to a two-cent headwind to EPS. These drivers combine to ingest an EPS outlook of $2.05 at the midpoint of the range, up double digits versus the prior year. With that, I will now turn the call back over to Simon. Thank you, Glenn.

Glenn G. Coleman: We are forecasting the other items, namely cost inflation tax and share count.

Glenn G. Coleman: On that to a two cent headwind to EPS.

Glenn G. Coleman: These drivers combine to ingested EPS outlook of $2.05 at the midpoint of the range up double digits versus the prior year.

Glenn G. Coleman: With that I will now turn the call back over to Simon.

Simon Campion: Thank you Glenn move.

Simon Campion: Moving onto our strategic update starting on slide 11.

Simon Campion: Our strategy is clear and remains unchanged.

Simon Campion: Digitalized industry deliver customer centric innovation and products and services for oral health and confidence care.

Simon Campion: Serve our partners effectively.

Simon Campion: And accomplish these goals through a dedicated and engaged team with compliance and quality always at the core.

Simon Campion: We continue to actively implement in advance all five of our strategies.

Simon Campion: Moving on to our strategic update, starting on slide 11. Our strategy is clear and remains unchanged: digitalize dentistry.

Simon Campion: With strengthening execution disciplined continued process improvements and the strategic investments we are making in the company. We believe we can advance performance of this company and create increased value for our stakeholders and employees.

Simon Campion: Deliver customer-centric innovation in products and services for oral health and continent care, serve our partners effectively, and accomplish these goals through a dedicated and engaged team with compliance and quality always at the core. We continue to actively implement and advance all five of our strategies. With strengthening execution discipline, continued process improvement, and the strategic investments we are making in the company, we believe we can advance the performance of this company and create increased value for our stakeholders and employees. Now, moving to slide 12, let me discuss our foundational initiative. During 2023, we established many of the fundamental elements necessary to purposefully carry out our plans for 2024 and beyond to transform this company across product lines, regions, and operational areas.

Simon Campion: Now moving to slide 12, let me discuss our foundational initiatives.

June 2023, we established many of the fundamental elements necessary to purposely carry out our plans for 2024 and beyond.

Simon Campion: To transform this company across product lines regions and operational areas.

Simon Campion: With the restructuring program, largely complete and on track to deliver $200 million in savings. This year, we are shifting focus to the foundational initiatives, we have prioritized for 2024.

Simon Campion: We spoke about these at our Investor date in November and we continue to make progress on each of them.

Simon Campion: Let's start with supply chain transformation.

Simon Campion: Our supply chain is overly complex and we know we have significant opportunities to improve it.

Simon Campion: In 2023, we announced the closure of three manufacturing sites and consolidated to distribution centers into one.

Simon Campion: With the restructuring program largely complete and on track to deliver $200 million in savings this year, we are shifting focus to the foundational initiatives we have prioritized for 2024. We spoke about these at our Investor Day in November, and we continue to make progress on each. Let's start with supply chain transformation. Our supply chain is overly complex, and we know we have significant opportunities to improve it. In 2023, we announced the closure of three manufacturing sites and consolidated two distribution centers into one. These actions set into motion our efforts to unlock value in our manufacturing and distribution network. To pursue this goal, we kicked off an extensive network analysis to guide our execution roadmap.

Simon Campion: These actions set into motion our efforts to unlock value in our manufacturing and distribution network.

Simon Campion: To pursue this goal we kicked off an extensive network analysis to guide our execution roadmap.

Simon Campion: Spearheaded by a dedicated and cross functional team of experts. We expect this global initiatives will yield significant results, including enhanced operational efficiency improved footprints and lower costs.

Simon Campion: We expect to begin to realise financial benefits in 2025, continuing into 2026 and beyond.

Simon Campion: Simplifying our supply chain as closely intertwined with our skew optimization initiative.

Simon Campion: Ah streamlining our portfolio and utilizing a robust product lifecycle management process, we can improve and simplify our supply chain and reduce sustaining engineering costs.

Simon Campion: Spearheaded by a dedicated and cross-functional team of experts, we expect this global initiative will yield significant results, including enhanced operational efficiency, improved footprint, and lower costs. We expect to begin to realize financial benefits in 2025, continuing into 2026 and beyond. Simplifying our supply chain is closely intertwined with our SKU optimization initiative.

Simon Campion: 2024, we expect to execute on the first wave of the skew optimization program addressing 60% of the skews and the endo unrest portfolios.

Simon Campion: We are taking a thoughtful approach to this work to drive up costs and improve working capital while maintaining revenue in ensuring a positive customer experience.

Simon Campion: We expect to begin delivering benefits from the first wave towards the end of 2024, and we also plan to evaluate further opportunities.

Simon Campion: Our ERP modernization initiatives upgrades improve and standardise our ERP systems.

Simon Campion: By streamlining our portfolio and utilizing a robust product lifecycle management process, we can improve and simplify our supply chain and reduce sustaining engineering costs. In 2024, we expect to execute on the first wave of the SKU optimization program, addressing 60% of the SKUs in the ENDO and RESTO portfolios. We are taking a thoughtful approach to this work to drive out cost and improve working capital while maintaining revenue and ensuring a positive customer experience. We expect to begin delivering benefits from the first wave towards the end of 2024, and we also plan to evaluate further. Our ERP modernization initiative will upgrade, improve, and standardize our ERP. The new system will unlock organizational capacity, enhance efficiencies in our network, and pave the way for future automation opportunities company-wide. We are conducting rigorous systems testing and ensuring organizational readiness as we prepare for the phased deployment approach.

Simon Campion: The new system will unlock organizational capacity enhance efficiencies in our network and paved the way for future automation opportunities companywide.

Simon Campion: We are conducting rigorous system testing and ensuring organizational readiness as we prepare for the phase deployment approach.

Simon Campion: We have targeted our initial rollout from mid 2024, and we're confident in our ability to execute this program with minimal disruption.

Simon Campion: Of course, as we advanced these three foundational initiatives, we remain steadfast in upholding compliance and quality is key guiding principles.

Simon Campion: We plan to deliver on our promises in a manner that aligns with our values with success gauged by our ability to generate value for our stakeholders over the long term.

Simon Campion: I'm moving to our final slide I would like to reinforce a key few points.

Simon Campion: First with focused execution, we delivered on our 2023 guidance.

Simon Campion: While and markets remain challenging our strategy is clear and our execution has improved and we will continue to do so.

Simon Campion: Second we have established our foundational initiatives and strategic objectives.

Simon Campion: We are significantly better positions to deliver on our goals for the work that's been completed or is well underway.

Simon Campion: We have targeted our initial rollout for mid-2024, and we are confident in our ability to execute this program with minimal disruption. Of course, as we advance these three foundational initiatives, we remain steadfast in upholding compliance and quality as key guiding principles. We plan to deliver on our promises in a manner that aligns with our values, with success gauged by our ability to generate value for our stakeholders over the long term. Now, moving to our final slide, I would like to reinforce a key viewpoint. First, with focused execution, we delivered on our 2023 guidance. While the end markets remain challenging, our strategy is clear, and our execution has improved and will continue to improve. Second, we have established our foundational initiatives and strategic objectives.

Simon Campion: Third we are poised to deliver double digit adjusted EPS growth in 2024, much of which we expect to derive from our transformational actions.

Simon Campion: Fourth we remain confident in the path to our targeted $3 of adjusted EPS in 2026.

Simon Campion: We've established the roadmap to reach our goals and are fully focused on execution, which we believe positions as well for improved performance in 2024 and beyond.

Speaker Change: And with that that's now opened it up for questions operator.

Speaker Change: As a reminder to ask a question. Please press star one one on your phone.

And wait for your name to be announced to withdraw your question. Please press star one one again.

All participants will be allowed one question and one follow up.

Speaker Change: Please stand by while we compile the CUNY roster.

Speaker Change: Our first question comes from Nathan Rich with Goldman Sachs. Your line is open.

Simon Campion: We are significantly better positioned to deliver on our goals through the work that's been completed or is well underway. Third, we are poised to deliver double-digit-adjusted EPS growth in 2024, much of which we expect to derive from our transformational actions. Fourth, we remain confident in the path to our targeted $3 of adjusted EPS in 2020. We've established the roadmap to reach our goals and are fully focused on execution, which we believe positions us as well for improved performance in 2024 and beyond. And with that, let's now open it up for questions. Operator. As a reminder, to ask a question, please press star 11 on your phone and wait for your name to be announced.

Nathan Rich: Hi, good morning, Thanks, a lot for taking the the questions.

Nathan Rich: Maybe he wanted to start Simon with the transformation efforts that you talked about and where the company is making investments. This year I think the level of reinvestment of the restructuring savings was a bit higher than we expected. So could you maybe just go into a bit more detail of where the most significant investments are this year and is that something that becomes part.

Nathan Rich: The run rate of the expense space or does that step down in future years, and sort of tied to that if you could kind of help us think about you know where the 100 basis points of EBITDA margin expansion comes from between.

Nathan Rich: Gross margin and an operating expense that'd be helpful as well.

Operator: To withdraw your question, please press star one one again. All participants will be allowed one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Nathan Rich with Goldman Sachs. Your line is open. Hi, good morning.

Speaker Change: Sure. Thanks, Nathan I'll start and then we can hand, it over to to Glenn I think as we as we said.

Speaker Change: Many occasions over the past year or so we had disinvested R. D invested in a few crucial areas in our business name.

Glenn: Namely our sales force a commission plans.

Glenn: And clinical education and over the past year, we have systematically gone after each one of those and and invested in them I think the the best benchmark are the two best benchmarks are the fact that we added almost 50 heads U S commercial team on implants and Dsos.

Simon Campion: Thanks a lot for taking the questions. Maybe I wanted to start, Simon, with the transformation efforts that you talked about and where the company is making investments this year. You know, I think the level of reinvestment of the restructuring savings was a bit higher than we expected. So could you maybe just go into a bit more detail about where the most significant investments are this year? And is that, you know, something that becomes part of the run rate of the expense base, or does that step down in future years? And sort of tied to that, if you could kind of help us think about where the 100 basis points of EBITDA margin expansion comes from between gross margin and operating expense, that would be helpful as well. I'll start, and then we can hand it over to Glenn.

Glenn: And also added a significant investment in clinical education, and as I mentioned in the prepared remarks, we delivered over 30 per cent more courses. In 2023, then we had before in fact this year will also extend the reach of of D. S. World events. So they are two key areas that we've invested in.

In addition to work on on our network.

Speaker Change: What we would call it hygiene factors within our organization to give you some color on the on the numbers are passive over to to Glenn.

Glenn: Good morning, and thanks for the question if I look at the investments that are incremental in 2024, I would say, they're going to be part of our base costs going forward I think first one I would highlight is the bite investments that we're making with the opportunity that we now see with the competitive dynamics are gonna be investing more in the commercial.

Simon Campion: I think, as we've said on many occasions over the past year or so, we have disinvested or de-invested in a few crucial areas in our business, namely our sales force, our commission plans, and clinical education. And over the past year, we have systematically gone after each one of those and invested in them. I think the best benchmark, or the two best benchmarks, are the fact that we added almost 50 heads to our U.S. commercial team for implants and DSOs and also made a significant investment in clinical education. And, as I mentioned in the prepared remarks, we delivered over 30% more courses in 2023 than we had before. And in fact, this year, we'll also extend the reach of DS World events. So these are two key areas that we've invested in, in addition to work on our network and other, what we would call, hygiene factors within our organization. And to give you some color on the numbers, I'll pass it over to... Nathan, good morning.

Glenn: Clinical support area treatment planners and infrastructure at bite, we already started in the fourth quarter and we see a pretty immediate return on those investments. So I mentioned on my prepared remarks.

Glenn: <unk> is expected to grow over 20 per cent in 2024 so.

Glenn: Excited about the opportunity there, we are putting more investments and to buy and we expect to see how much faster ramp, especially as we got into later in the year.

Glenn: In addition, I would highlight some of the things that Simon said around our ortho business.

Glenn: We are investing more ensure smile and Japan and Brazil. These are really nice market opportunities for us or putting more commercial resources on the ground there.

Glenn: Nickel education continues to ramp up for us, especially on the implants and and those side of our business.

Glenn: We're continuing to advance our next Gen ERP platform, so that will have incremental investment in 2024.

Glenn G. Coleman: Thanks for the question. If I look at the investments that are incremental in 2024, I would say they're going to be part of our base cost going forward. I think the first one I would highlight is the bite investments that we're making, the opportunity that we now see with the competitive dynamic. We're going to be investing more in the commercial, clinical support area, treatment planners, and infrastructure at BITE.

Glenn: And then I would just say dsos continued to be an area of focus for us. So.

Glenn: That's where we're putting our money this is going to be part of our infrastructure going forward, but you should expect to return on these investments some of which coming later this year.

Glenn: So we're quite excited about that in terms of your question on the EBIT margin expansion I would expect about half of that coming from gross margin improvement.

Glenn: At half coming from SG&A leverage.

Glenn: Great.

Glenn: If I could maybe just ask you a quick follow up Glen on the comments on bite and the re acceleration of growth. There you know when we think about growth invited and maybe just growth and clear liners. In general you know how does how does your current kind of view of the demand environment and the consumer environment kind of factor into.

Glenn G. Coleman: We already started in the fourth quarter, and we see a pretty immediate return on those investments. As I mentioned in my prepared remarks, growth is expected to go over 20% in 2024. So, I'm excited about the opportunity there where you are at putting more investment in. 2x, and we expect to see a much faster ramp, especially as we get into later in the year. In addition, I would highlight some of the things that Simon said about our ortho business.

Glenn G. Coleman: Are your expectations and do you need to see any kind of improvement in the macro to kind of help fuel that acceleration in by revenue that you expect.

Glenn G. Coleman: We are investing more in SureSmile in Japan and Brazil. These are really nice market opportunities for us, so we're putting more commercial resources on the ground there. Clinical education continues to be a priority for us, especially in the implants and endos side of our business.

Glenn G. Coleman: Yeah no. Thanks, we are really excited about Arthur business, so relative to buy we see some very good early indicators right now in terms of the revenue ramp so that would include unique visitors.

Glenn G. Coleman: That are hitting our website that has seen it and really nice sequential improvement from Q3 into Q4.

Glenn G. Coleman: We're continuing to advance our next-gen ERP platform, so that will have incremental investment in 2024. And then I would just say DSOs continue to be an area of focus for us. And that's where we're putting our money. This is going to be part of our infrastructure going forward, but you should expect a return on these investments, some of which will come later this year. So we're quite excited about that. In terms of your question, Even a margin expansion, I would expect about half of it coming from gross margin improvement to come from SG&A. Thanks.

Glenn G. Coleman: Probably the most important thing is seeing significant growth an impression kits in the fourth quarter in the early part of Q1 and obviously the conversion cycle is around 60 days. So I should start to see those conversion kits convert to revenue in the latter part of February and I'm seeing that and so that's why I'm confident that these investments are good investments.

Glenn G. Coleman: They're going to pay off in terms of faster revenue growth and why I'm talking at least 20 per cent revenue growth on by.

Glenn G. Coleman: In 2024, unsure smile, we continue to see market share gains contingency differentiated outcomes with our product with fewer.

Few refinements last revisions of our product. The Suresmile simulator is also expected to drives a better growth and assure smile business and so we don't expect to see much of an improvement overall from a macro perspective, but we do see.

Glenn G. Coleman: Great. If I can maybe just ask a quick follow-up, Glenn, on the comments on Byte and the reacceleration of growth there, you know, when we think about, you know, growth in Byte or maybe just growth in clear liners in general, how does your current kind of view of the demand environment and the consumer environment kind of factor into your expectations? And do you need to see any kind of improvement in the macro to kind of help fuel that acceleration in Byte revenue that you expect? Yeah, no, thanks.

Glenn G. Coleman: Good underlying trends both in office for sure a smile and direct to consumer with by instead of it maybe you want to comment on some of the really good work, we're doing a bike plus yeah. So Nathan was as we've said I think the last time.

Nathan Rich: We rolled out a bite plus pilot, which is where we were for customers to to a dentist. We're now active we extended the pilot it started off with about 10 about 10 locations, where now and twenty-five locations. What we've what we've heard anecdotally from from those customers is that.

Glenn G. Coleman: We are really excited about our ortho business. So relative to bite, we see some very good early indicators right now in terms of the revenue ramp. So that would include unique visitors that are hitting our website.

Nathan Rich: The patients that are are filtering through to them a good candidates for four orthodontic treatment, but as we hypothesized.

Glenn G. Coleman: That's seen a really nice sequential improvement from Q3 into Q4. Probably the most important thing is I've seen significant growth and impressions in the fourth quarter and early part of Q1. Obviously, the conversion cycle is around 60 days, so I should start to see those conversions and why I'm talking at least 20% revenue growth on BITE in 2024.

Nathan Rich: This was also going to generate incremental traffic for these dental practices. So several several of them have noted.

Nathan Rich: That these patients are getting other treatments aside from orthodontic treatment in their practices and they would otherwise not being a dental patient and then just to tobacco onto onto shore smile.

Nathan Rich: Again, what we've heard anecdotally is with the with the launch of the shoe or small simulator and the September timeframe, our customers have seen an increase in their treatment acceptance rates as well when you <unk> when you control a patient alive. The smile that they should expect to have the dentists are saying that the treatment except in the right there.

Glenn G. Coleman: On SureSmile, we continue to see market share gains and continue to see differentiated outcomes with our product. However, fewer refinements, and fewer revisions of our product. The SureSmile simulator is also expected to drive some better growth in the SureSmile business. And so we don't expect to see much of an improvement overall from a macro perspective, but we do see good underlying trends both in-office with SureSmile and direct-to-consumer with Byte. And, Simon, maybe you want to comment on some of the really good work we're doing on BytePlus. Yeah.

Nathan Rich: Suggesting is being accepted.

Speaker Change: Very helpful. Thank you.

Speaker Change: One more environment.

Speaker Change: Our next question comes from the line S. Michael Cherney with Leerink partners. Your line is open.

Speaker Change: Good morning, and thank you so much for taking the question.

Speaker Change: Relative to the guidance.

Speaker Change: Okay.

Speaker Change: Michael we're having a hard time hearing you.

Speaker Change: But can you repeat your question please.

Speaker Change: Operator, maybe we should go to the next question.

Simon Campion: So, Nathan, as we've said, I think the last time we rolled out a BytePlus pilot, which is where we refer customers to a dentist, we're now active. We've extended the pilot. It started off with about $10 million in locations.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.

Elizabeth Hammell Anderson: Hi, guys I'm good morning, and thanks, so much for that question today I was wondering if you could help us I understand a little bit more on the equipment diverse Guyana on in that market can you talk about sort of how you're seeing maybe volumes on the equipment side entered a differentiate that persist price internet how that's been churning recent.

Simon Campion: We're now in 25. What we've heard anecdotally from those customers is that the patients that are filtering through to them are good candidates for orthodontic treatment, but as we hypothesized, this was also going to generate incremental traffic for these dental practices. Several of them have noted that these patients are getting other treatments aside from orthodontic treatment in their practice, and they would otherwise not have been a dental patient.

Elizabeth Hammell Anderson: Typically just understand that trend as you move into 2024. Thank you.

Speaker Change: Sure. So I'll start Elizabeth and then Glen can give you some some additional color I listen that as as we as we've done every quarter. We have we completed our our customer survey with over three and a half thousand respondents in the last quarter.

Simon Campion: And then just to back up onto SureSmile, again, what we've heard anecdotally is that with the launch of the SureSmile simulator in the September timeframe, our customers have seen an increase in their treatment acceptance rates as well. When you can show a patient live the smile that they should expect to have, the dentists are saying that the treatment acceptance rate they're suggesting is being. Very helpful, thank you.

Elizabeth Hammell Anderson: Say.

Elizabeth Hammell Anderson: In the U S. Sentiment has has remained stable if not a little more positive than than in the past and that goes across all all dental categories.

Elizabeth Hammell Anderson: But the areas of continued pressure for Austin I would assume others.

Glenn G. Coleman: Our next question comes from the line of Michael Cherny with Lee Rink Partners. Your line is open. Michael, we're having a hard time hearing you.

Elizabeth Hammell Anderson: Our our Germany, and Australia, a round investments in capital equipment.

Operator: Mike, can you repeat your question, please? Operator, maybe we should go to the next question. One moment for our next question. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open. Hi, guys. Good morning.

Elizabeth Hammell Anderson: As we've noted before.

Elizabeth Hammell Anderson: In the in the U S anything above 20 or $25000 tends to be funded.

Elizabeth Hammell Anderson: Finance, rather by by our customers.

Elizabeth Hammell Anderson: That number is much lower.

Simon Campion: And thanks so much for the question today. I was wondering if you could help us understand a little bit more on the equipment side, what's going on in that market. Can you talk about sort of how you're seeing maybe volumes on the equipment side and sort of differentiate that versus price and sort of how that's been trending recently? We just understand that trend as you move into 2024. Sure, so I'll start, Elizabeth, and then Glenn can give you some additional color.

Elizabeth Hammell Anderson: In in other geography, so continued pressure in in Germany, and in Australia in particular, but more positive sentiment in general than the U S.

Elizabeth Hammell Anderson: You have to just add you know when you look up.

Elizabeth Hammell Anderson: Just gonna add in our fourth quarter, obviously are Cts business was down, but we actually saw growth and cadcam in certain regions such as the U S. So seeing some good growth in our scanners mills printers, obviously, the headwind has been really around imaging and instruments, but most notably imaging.

Elizabeth Hammell Anderson: So that's been the dynamic and why we've we've seen declines over on our Cts portfolio from our pricing point of view I would just say the dynamics are.

Glenn G. Coleman: Listen, as we do every quarter, we completed our customer survey with over 3,500 respondents in the last quarter, and I would say in the U.S., sentiment has remained stable, if not a little more positive than in the past, and that goes across all Dentsply. But the areas of continued pressure for us, and I would assume others, are Germany and Australia around investment in capital equipment. As we've noted before, in the U.S., anything above $20,000 or $25,000 tends to be funded – financed, rather, by our customers, while that number is much lower in other geographies. Yeah, I just add, you know, when you look at, Elizabeth, I was just gonna add in our fourth quarter, obviously, our CTS business was down, but we actually saw growth in CAD CAM, certain regions such as Obviously, the headwind has been really around imaging and instruments, but most notably imaging.

Elizabeth Hammell Anderson: Customers are buying the lower and lower priced scanner. So prime scan connect is actually seen some really good momentum.

Elizabeth Hammell Anderson: And so we've seen a bit of a mix shift relative to prime skin ASE in Sarak Prime scan to prime scanned connect so it's some of the dynamics on the pricing side.

Speaker Change: Got it that's really helpful and maybe I can learn more for you.

Think about sort of kept appointment and I understand that you said that your attorney 70, 575 for Tennessee cash that investors is the right way to think about the dividend transaction clouded mind with EPS growth and then the rest is.

Speaker Change: Sure rebuild but it obviously you've talked about maybe tiny M&A is that like the right way to think about that checkup next particularly between David Adams, the Chevy Bye-bye bye-bye.

Speaker Change: Yes. It is so we would expect to grow dividends pretty consistent with our earnings growth, which should be double digits over the next several years. So that's the right way to think about our dividend.

Glenn G. Coleman: So that's been the dynamic and why we've seen declines overall in our CTS portfolio. From a pricing point of view, I would just say the dynamics are. Customers are buying the lower end, the lower price. PrimeScan Connect has actually seen some really good momentum. And so we've seen a bit of a mixed shift relative to PrimeScan ASC. CEREC PrimeScan2, PrimeScan Connect.

They're not share repurchases, we said about $600 million of share repose over the next three years and.

Speaker Change: That's pretty consistent with our current view based upon our cash flow projections.

Speaker Change: Got it thank you so much.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line as John Black with Stifel. Your line is open.

Glenn G. Coleman: So that's some of the dynamics on the show. And maybe, Glenn, one more for you. If we think about sort of cap deployment, I understand what you said about sort of returning 75, more than 75% of free cash flow to investors. Is the right way to think about the dividend sort of that should grow in line with EPS growth and then sort of the rest is, you know, mostly a share repo, but, you know, obviously, you've talked about maybe tiny M&A. Is that like the right way to think about that sort Yes, it is.

John Black: Great. Thanks, guys good morning.

John Black: First one Glenn what might be for you, but the 2024 top line guidance of around 1%.

John Black: Organic at the midpoint give or take based on your comments I'm getting almost 100 beds or maybe even a little bit more.

John Black: That 100 bps of growth from Ortho alone just based on how you frame shirts model and bite.

Speaker Change: So can you just give a few more details on the other key products I'm guessing C. T. S is the biggest drag in wells back would be but maybe you can frame some of the other key product lines as well I'd just as when you think about the various growth range for 2024.

Glenn G. Coleman: So we would expect to grow dividends pretty consistently with our earnings growth, which should be double digits over the next several years. So that's the right way to think about our dividends. And then on share repurchases, we said about $600 million of share repos over the next three years. It's pretty consistent with our current view based upon our cash flow. Thank you. Our next question comes from the line of John Block with Feefle. Your line is open. Great, thanks, guys. Good morning.

Speaker Change: Sure John Thanks for the question I'll keep it to the segment level I think that's probably appropriate. So obviously the fastest growing area. We would expect in 2024 is worth Owen implants.

Glenn G. Coleman: First one, Glenn, this one might be for you, but you know, the 2024 top line guidance of around 1% organic at the midpoint, give or take. Based on your comments, I'm getting almost 100 bps or maybe even a little bit more than 100 bps of growth from ortho alone, you know, just based on how you frame sure, small, and bite. So can you just give us, you know, a few more details on the other key products? I'm guessing CTS is the biggest drag and WellSpec would be up, but maybe we can outline some of the other key product lines as well, just as we think about the various growth rates for 2024. Sure, John.

Speaker Change: I mentioned double digit growth for sure a smile over 20 per cent growth and bite.

Speaker Change: On the implant side, you know, we expect to see really strong growth continuing in China. So I would put strong growth above 25% in 2024 and.

And we expect to return to growth in our U S implants business in the back half of the year, So ortho and implants as a segment I would say, it's going to be the fastest growing area for us in 2024 E. D. S are essential dental solution segment, I would say nominal growth, it's going to be really largely dependent on <unk>.

Speaker Change: Patient traffic so right now we're kind of modeling it to be flattish I would say overall in 2024 and.

Glenn G. Coleman: Thanks for the question. I'll keep it to the segment level. I think that's probably appropriate.

Speaker Change: And then C. T. S is expected to be down year over year again, similar dynamics to what we saw in the fourth quarter and full year of twenty-three where cadcam should continue to grow so scanner growth growth in our three D print Darien prime print.

Glenn G. Coleman: So obviously, the fastest growing area we would expect in 2024 is ortho and implants. I mentioned double-digit growth for SureSmile, and over 20% growth in Byte. On the implant side, you know, we expect to see really strong growth continuing in China, so I would put strong growth at above 25 percent. And we expect a return to growth in our U.S. implant business in the back half of the year. So ortho and implants as a segment, I would say, is going to be the fastest growing area for us. 2024.

Speaker Change: And growth in our in our mills, but that's gonna be likely offset by declines and imaging and so right now we're not projecting any real improvement in imaging.

Speaker Change: Going into 2024, but overall cts or modeling to be down year over year, and then lastly outside of dental wells backed health care should continue to put up some decent growth I would say mid single digit is a low bar for our wells back business.

Speaker Change: Okay, Great that was very helpful detail and then assign.

Speaker Change: Simon you mentioned, the skew optimization or rationalization to start this year.

Speaker Change: I know your past experience with big projects like that starting this year, how long will that go on for your thoughts around risks of implementation in terms of potential revenue leakage and then when we tie it back to the 2024 gross margin expansion glad that you alluded to earlier to to Nathan's question.

Glenn G. Coleman: EDS, or Essential Dental Solutions segment, I would say nominal growth is going to be really largely dependent on patient traffic. So right now, we're kind of modeling it to be flattish, I would say overall, in 2024. And then CTS is expected to be down year over year. Again, similar dynamics to what we saw.

Speaker Change: Is is the skew optimization in 24 is that more of we're starting this thing in 24, and it's more of a tailwind for 25. Thanks guys.

Glenn G. Coleman: [inaudible] Growth in our mills, but that's going to be likely offset by declines in imaging. And so right now, we're not projecting any real improvement in imaging going into 2024. But overall, CTS, we're modeling to be down year over year. And then lastly, outside of dental, WellSpec Healthcare should continue to put up some decent growth, I would say, mid-single digit as a low bar for our way. Okay, great.

Speaker Change: Yeah. So thanks, John So skew optimization as we have noted before we're focusing on endo and resto, we're targeting about 60% of our skews on in that space.

Speaker Change: We have been we've been thoughtful about this process, we've run a number of pilots in different in different geographies and that gives us.

Simon Campion: That was a very helpful detail. And then, you know, Simon, you mentioned skew optimization or rationalization earlier this year. I know you have past experience with big projects like that. You know, starting this year, how long will it go on for your thoughts around risks of implementation in terms of potential revenue leakage? And then when we tie it back to the 2024 gross margin expansion, Glenn, that you alluded to earlier in Nathan's question, is the skew optimization in 24? Is that more of we're starting this thing in 24, and it's more of a tailwind for 25? Thanks, guys.

Speaker Change: A high degree of confidence that we can we can execute on that the we expect benefits from it to begin to materialize at the back end of 24, and then into 25 and beyond.

Speaker Change: And we also intend as we noted in the prepared remarks to begin to look at other aspects of our portfolio outside of <unk> and and rest. So I think we know that the last earnings call that we've we've set up a team to do this work who are working in conjunction with our.

Speaker Change: Countries that are a regional leadership teams.

Speaker Change: The company had done this historically in the past, but created little visibility for the commercial teams on the ground and for customers.

Speaker Change: And we are we are not going to make that error again, so we're being very thoughtful about it unless you have any comments to add to that.

Simon Campion: Yes, so thanks, John. So SKU optimization, as we've noted before, we're focusing on Endo and Resto. We're targeting about 60% of our SKUs in that space. We have been thoughtful about this process. We've run a number of pilots in different geographies, and that gives us, you know, a high degree of confidence that we can execute on that.

Speaker Change: Only thing I would add is at 24 is very much you commented on the very broad network that we have who were working across all our plans to stand up some.

Speaker Change: Standardized processes that allow us to have this ability not just in 24, but as we executed into 25 26 to.

Simon Campion: We expect benefits from it to begin to materialize at the back end of 24 and then into 25 and beyond. And we also intend, as we noted in the prepared remarks, to begin to look at other aspects of our portfolio outside of Endo and Resto. I think we noted at the last earnings call that we've set up a team to do this work, who are working in conjunction with our countries and our regional leadership teams. The company had historically done this in the past, but it created little visibility for the commercial teams on the ground and for customers.

Speaker Change: To make sure we have some clear kpis and forward looking metrics and I think the initial steps what we less visible on the commercial side.

Speaker Change: But they will also already yield benefits in terms of our inventory management as we take out non we just simplify the portfolio by taking out non revenue generating skews and work on the back end as we get ready for 20 526.

Speaker Change: Thanks for your question John.

Our next question comes from the line Ave, Michael Cherney with Leerink partners. Your line is open.

Andreas G. Frank: And we are not going to make that error again, so we're being very thoughtful about it. Andreas, do you have any comments to... Um, the only thing I would add is that 24 is very much your comment on the very broad network that we have. So we're working across our plans to stand up some standardized processes that allow us to have visibility, um, not just in 24 but as we, [inaudible] Thanks for your question, John. Our next question comes from the line of Michael Cherny with Lee Rink Partners. Your line is open. Okay, let's try this again.

Michael Cherny: Okay, Let's try this again can you hear me.

Michael Cherny: That is much better okay, I'm learning the new technology here. So thanks, you just we're talking about you know call at the lower end with the skew rationalization of products I want to touch a little bit more on the higher end as you think about what's baked into the 24.

Michael Cherny: Guidance, how much of it is from a quasi vitality index either some of the new more high end products.

Operator: Sounds much better. We can. Okay. Thanks. What's the thing about what's big? Guidance. How much?

Michael Cherny: Or how much conversion you can have on near term pipeline in particular on new instrumentation.

Glenn G. Coleman: Vitality Index, New, more high-end products, and how Yeah, I think relative to the skew rationalization, and optimization, there's really no benefit baked into our Cost Reduction Efforts in 2024. That would be more of 2025. If you're talking about new product launches and the impact on our guidance for 2024, we have a couple of product launches in the back half of the year that we're obviously counting on to drive some of the revenue growth and, obviously, some of the margin improvement. Simon, do you want to comment on those?

Speaker Change: Yeah, I think relative to the skew rationalization optimization, there's really no benefit baked into our.

Speaker Change: Cost reduction efforts in 2024, that'd be more of 2025, if we're talking about new product launches and the impact in our guidance for 2024, we have a couple of product launches in the back half of the year that we are obviously counting on to drive some of the revenue growth and obviously some of the margin improvement some you want to comment.

Speaker Change: And then the the the additional piece here around around D. S core Ah Michael we launched at D. S World.

Simon Campion: And then the additional piece here around DS Core, Michael. We launched DS World in May of last year and the SureSmile Simulator in September, and we've just launched some more capability around the user experience and user interface. And each time we have incrementally added or improved the user experience and added clinical functionality, we've seen an uptick in the number of accounts using DSCore. So that will continue to be central to any new product introductions or new software in 2024 and beyond. And at the back end of last year, we also launched the new X-Mart Pro endodontic system. We've had very positive feedback from customers in Europe about it, and we do expect to bring that to the US market later this year. This is understood and helpful, and then you talked a bit about, Think about it. How much is that in U.S. dollars?

Speaker Change: Two years ago now almost we added to it with the communication Kansas.

Speaker Change: In may of last year, and the shoe a small simulator in September.

Speaker Change: Loans, some more capability around the user experience and user interface and.

Speaker Change: And each time, we have incrementally added or improve the user experience and added things clinical functionality.

Speaker Change: Seen an uptick in the in the number of accounts using D. S. Cool so that that will continue to be central to any new product introductions, our new software introductions, and 2024 and beyond and at the back end of last year. We also launched the new X men pro.

Speaker Change:

Speaker Change: <unk> system, we've had very positive feedback from from customers in Europe about it and we do expect to bring that to the U S. Market later this year as well.

Understood and helpful. And then you talked a bit about the improvement you were expecting to see on the U S. Implant side of the business as you think about what's baked into the next you know the the multi your guidance into 26, how much is that U S recovery.

Speaker Change: Factor in the driver of the organic growth component of that multi year contribution.

Speaker Change: So I think what what what what we noted I'd invest today and and all our hypothesis and assumptions from Investor day across all of our businesses and margins et cetera remained remain intact. What we said was we expect to go above the market and in a liners, we expect to grow.

Glenn G. Coleman: I think what we noted at Investor Day and all our hypotheses and assumptions from Investor Day across all of our, [inaudible] in the implants business by. So that's what's baked into our assumptions around revenue growth and our $3.00 VPS target in 2020. Glenn, do you have anything to add to that? No.

Speaker Change: Above the market in a connected technologies in a normal macro environment.

Speaker Change: Our intention is to get back to market growth in.

Speaker Change: In the implants business by 2026, so that's that's what's baked into our assumptions around revenue growth and our three daughters Vps target in 2026, Glen do you have anything to add to that no.

Glenn G. Coleman: Our next question comes from a line of. Jeff Johnson with Baird. Your line is open. Thank you. Good morning, guys.

Speaker Change: Nope.

Speaker Change: Perfect.

Speaker Change: Thanks.

Our next question comes from the line.

Speaker Change: Jack Johnson with Bird your line is open.

Jeffrey D. Johnson: Thank you good morning, guys and congrats on at least delivering to your targets here in a tough environment.

Glenn G. Coleman: And congratulations on at least delivering to your targets here in a tough environment. The ability to do that is not lost on some of us who have been around for a long time with this company. I wanted to maybe stick, Simon, on that 2026 topic that you were just talking about, the $3 target. You reiterated in your slide deck this morning that you feel comfortable with that. You know, Glenn, I guess when I think about the 13 cents in cost savings as you run rate, sorry, the 13 cents in incremental EPS this year from running those cost savings in, even if we assume next year, you know, maybe that doubles or something, because those are back-end loaded on the cost savings this year or something, and that's maybe being generous.

Jeffrey D. Johnson: The ability to do that is not lost on some of US has been around for a long time with this company.

Jeffrey D. Johnson: One of them, maybe stick Simon and at 2026 topic that you were just talking about the three dollar.

Jeffrey D. Johnson: Target you reiterated in your slide deck. This morning that you feel comfortable with that you don't Glen I guess, when I think about the 13 cents in cost savings you run rate or sorry, the 13 cents an incremental EPS. This year from reading those cost savings and even if we assume next year, you know maybe that doubles or something cause those are back end loaded on the cost savings this year or something and.

Glenn G. Coleman: But if we assume that, we would still need kind of your core X cost savings EPS growth to get well north of 10% and probably pushing low teens even then outside of just the cost savings over the next two years to get to $3. So I guess, you know, help us get comfortable there, especially given where it seems as if, you know, there's going to be little organic growth this year and hard to know when that organic growth can pick up. Thank you.

Jeffrey D. Johnson: Maybe being generous, but if we assume that we would still need kind of your core X cost savings E. P. S growth to get well north of 10 per cent and probably pushing low teams. Even then outside of just the cost savings over the next two years to get them to $3. So I guess, you know help us get comfortable there, especially given where it seems as if.

Is going to be a little organic growth this year and and hard to know when that organic world can pick up thank you.

Glenn G. Coleman: Jeff, thanks for the comment. I think, first and foremost, nothing has changed relative to what we communicated back in November, where we expect it to land for 2023 in our view of where we expect it to land by 2020. We've indicated back in November that we expected, you know, lower growth in 2024 with a tough, challenging macro environment, but we do expect, http://TheBusinessProfessor.com. On the restructuring savings, obviously, we're making a number of investments this year that's offsetting the gross savings from the restructuring program, but obviously, a lot of these investments we're making we're expecting to get returns on. Overall, that should help The benefits that Tony Johnson walked through around global operations and 20 cents of EPS improvement, none of that's reflected in our numbers essentially today. So while a small amount in 2024, most of that will come in 2025 and 2026 as we go through plant optimization, SKU rationalization, and our distribution footprint simplification. So that's all really in the 25 and 26 time frame.

Speaker Change: Yeah. Thanks for the comment I think first and foremost nothing has changed relative to what we communicate it back in November and.

Speaker Change: Where we expected to land for 2023 in our view of where we expect to land by 2026.

Speaker Change: We had indicated back in November that we expected you know lower growth in 2024 with a tough challenging macroenvironment, but we do expect.

Speaker Change: To see organic growth get back to a normalised rate and growing and that 4% to 6% range. Starting in 2025. So that's a key component to us getting to the to the $3.

Speaker Change: On the restructuring savings, obviously, we're making a number of investments this year, that's offsetting the gross savings from the restructuring program, but.

Speaker Change: But obviously a lot of these investments, we're making we're expecting to get returns on.

Speaker Change: So overall that should help us get towards that three dollar EPS target the.

Speaker Change: The benefits that Tony Johnson walk through or around global operations in 20th sense of EPS improvement none of that is reflected in our numbers essentially today. So while the small amount in 2024, but most of that will come in 2025 in 2026th as we go through the plant optimization Askew rationalization.

And our distribution footprint simplification. So that's all really in the 25 and 26 timeframe. We've talked a lot about the work we're doing with your P and right now that's an actual headwind to our class that will eventually become a benefit to us as we get to 2026 and can do some things around our cost.

Glenn G. Coleman: We've talked a lot about the work we're doing with ERP, and right now, that's an actual headwind to our costs. That will eventually become a benefit to us as we get to 2026 and can do some things around our cost structure and become more efficient once we have a common ERP platform.

Speaker Change: Structure and being more efficient once we have a common ERP platform.

Glenn G. Coleman: And then aligner profitability was also part of our bridge, and I feel even more confident now with our aligner profitability. Yes, we're making some investments early in 2024 for bite, but we really like what we see with our aligner business right now. And so overall, nothing has changed from those aspects, you know, below the line.

Speaker Change: And then a liners profitability was also part of our bridge and I feel even more confident now with our Aligners profitability, Yes, we're making some investments early in 2024 for a bite, but we really like what we see with our Aligners business right now and so overall nothing.

Speaker Change: Nothing has changed from those aspects you know below the line, we got the net investment hedges that we communicated seven cents back in November that's consistent with our guidance that we just laid out here and that will continue.

Glenn G. Coleman: We've got the net investment hedges that we communicated seven cents back in November. That's consistent with our guidance that we just laid out here, and that'll continue.

Glenn G. Coleman: 25 and 26 to be a similar benefit for us. And then the shared buyback program with the incremental cash we expect to generate will also help us get to $3 or so. Nothing new, Jeff.

Speaker Change: In 25 26 to be a similar benefit for US and then the share buyback program at the incremental cash we expect to generate will also help us get to the $3. So.

Glenn G. Coleman: We're consistent with our messaging from November and obviously getting the organic growth back to a normalized rate. Yeah, that's helpful. Thanks for all that.

Speaker Change: Nothing new Jeff were consistent with our messaging from November.

Speaker Change: And obviously getting the organic growth back to a normal lives right in 4% to 6% is going to be free for us.

Jeff: Yeah. That's helpful. Thanks for all of that and then Simon maybe a bigger picture questions. You know you're talking about E. D. S. P and flattish this year, that's probably I would assume within.

Simon Campion: And then, Simon, maybe a bigger picture question. You know, you're talking about EDS being flattish this year. That's probably, I would assume, within, you know, plus or minus a few points, a couple points of the market. What was the price of EDS in 2023? What do you think it's going to be in 2024?

Jeff: Plus or minus a few points a couple points.

Market, what was pricing and E. D. S. For 2023, what do you think it's going to be in 24, and I think even more importantly.

Jeff: 74%, a little more than four per cent on R&D I would assume that a lot of that R&D is going to general consumables, but we've been hearing more and more from public private dealers from even some of your core manufacturing peers.

Simon Campion: And I think even more importantly, you know, you're spending 4%, a little more than 4% on R&D. I would assume that not a lot of that R&D is going to general consumables. But we've been hearing more and more from public-private dealers, from even some of your core manufacturing peers, that there's been a lack of innovation on the consumable side for 5, 6, 7 years now, and that's allowing some of these private label products or maybe lower-priced branded alternatives to come in and really put pressure on the higher-end branded consumable products out there.

Jeff: There's been a lack of innovation on the consumable side for 567 years now and that's allowing some of these private label products or maybe lower price branded alternatives to come in and and really.

Jeff: Pressure on the higher end branded consumable products out there. So how important is innovation and consumables do you have enough in that four per cent R&D number to fund any kind of standing in that area and how should we think about E. B S. Maybe over the multiyear period, then now what those transit starting to flare up maybe a little bit. Thanks.

Simon Campion: So how important is innovation in consumables? Do you have enough in that 4% R&D number to fund any kind of spending in that area? And how should we think about EDS maybe over the multi-year period then with those trends starting to flare up maybe a little bit? Thanks.

Speaker Change: Sure. Thanks, Jeff. So you you I think the first question was around around pricing I would say.

Speaker Change: Very very modest pricing on the E D S side in 2023.

Speaker Change: Can we expect arguably even more modest pricing.

Speaker Change: In 2024 and beyond now with respect to innovation as we noted.

Speaker Change: In November December timeframe, we brought on a new Chief Technology Officer, who is driving a far more disciplined and organised process than we've had historically at dance place Aronow, we've already made I think meaningful change as to how we how we innovate and how we milestone monitor.

Simon Campion: Sure, thanks, Jeff. So your first question was around pricing, I would say, very, very modest pricing on the EDS side in 2023. And we expect an arguably even more modest price in 2024 and beyond. Now with respect to innovation, as we noted in the November-December time frame, we brought on a new Chief Technology Officer who is driving a far more disciplined and organized process than we've had historically at Dentsply Sirona. We've already made meaningful changes to how we innovate and how we milestone and monetize. New Product Introductions.

Speaker Change: Is.

Speaker Change: New product introductions around innovation in E D S.

Speaker Change: No I I think I think I think the 4% as an okay number for now we have to we have to be a extra ordinary diligent with how and where we spend.

Speaker Change: 4% and that's what that's what Kevin is doing right now a large parts of that 4% is going towards the digitalization of of dentistry in D. S. Core we do see that as as no pun intended as core to our future.

Simon Campion: Around innovation in EDS, I think the 4% is an okay number. For now, we have to be extraordinarily diligent with how and where we spend that 4%, and that's what Kevin is doing right now. A large part of that 4% is going towards the digitalization of dentistry and DS-Core. We do see that as, no pun intended, core to our future, and we have seen the improvement in adoption as we. We do spend, I would say, a significant amount of money on innovation in our EDS portfolio. And I mentioned the launch of the xMARC Pro device late last year, which we'll launch in the U.S. later this year.

Speaker Change: And we have seen the the improvement in adoption as we as we are.

Speaker Change: Expand the clinical functionality of it we do spend a I would say a significant amount of money on innovation in R. E D S portfolio and.

Speaker Change: I mentioned the the launch of the X men Pro device late last year, which was launched in the U S.

Speaker Change: Later this year. So we are integrating the feedback is positive on that.

Speaker Change: We need to be extra ordinarily diligent with respect to identifying unmet clinical needs in the ETS portfolio. So that the products that we launch are meaningful and not simply me too products.

Simon Campion: So we are innovating, and the feedback on that is positive. We need to be extraordinarily diligent with respect to identifying unmet clinical needs in the EDS portfolio so that the products that we launch are meaningful and are not simply me-too products and make a difference to patient outcomes and clinically fit patients. Is there an opportunity for lower prices? For sure, and we have demonstrated that we are prepared to do so where appropriate. We launched PrimeScan Connect in the DI space two years ago.

Speaker Change: And make a difference to the patient outcomes and too clinical efficiency.

Speaker Change: Is there is there an opportunity for lower prices for sure and we have we have demonstrated that we are prepared to to do so where appropriate we launched crimes can connect and the.

Speaker Change: And the and the D. I space two years ago at Glen noted, we've seen I think rapid uptake of that particularly in in 2023 and this plan. Also note noted we have both premium and value based implants, which showed similar growth trajectories in in queue for so we are not we are not afraid of the of the value of segments.

Simon Campion: As Glenn noted, we've seen, I think, a rapid uptake of that, particularly in 2023. And as Glenn also noted, we have both premium and value-based implants, which showed similar growth trajectories in Q4. Fair enough. Thank you. Maybe Jeff, just one comment to add, just on EDS specifically: it's not just about basic chemistry, right? A lot of it has to do with packaging, and delivery methods to make the practice more efficient.

Speaker Change: When when we know what we're getting into.

Speaker Change: Address internet. Thank you.

Speaker Change: Maybe maybe.

Speaker Change: Maybe Jeff just just one common to address on ETS, specifically, it's not just about basic chemistry right. A lot of it has to do with packaging was delivery methods are methods to make the practice more efficient in one area that I would also point out in terms of focus is digital materials right above.

Andreas G. Frank: And one area that I would also point out in terms of focus is digital materials, right? So both in terms of milling as well as printing, that's an investment that we lean behind and where we see good growth going forward. And one moment for our next question. Our next question comes from Erin Wright with Morgan Stanley. Your line is open.

Speaker Change: In terms of milling as well as printing that's an that's an investment that we leave behind in where we seek a growth going forward.

Speaker Change: And one moment for our next question.

Speaker Change: Our next question comes from Aaron right with Morgan Stanley. Your line is open.

Simon Campion: Great, thanks. So can you talk a little bit more about the, sorry, excuse me, the implant competitive environment right now across the geographies and an underlying demand there, but also, more just from a competitor disruption standpoint, can that present any sort of opportunities for you? Hey, Erin, thanks for the question. Let me start with China specifically. And then maybe Andreas can take the competitive piece.

Aaron: Great. Thanks, So can you talk a little bit more about that.

Aaron: Sorry, excuse me to input competitive environment right now across the geography as in 99 demand, there, but but awesome I just kind of competitor disruption standpoint cannot prevent any sort of opportunities for ya.

Aaron: Hello, and thanks for the question.

Speaker Change: Isn't that let me, let me start with with China, specifically and then maybe Andrew can take the competitive peace.

Simon Campion: We've been super happy with China's performance on implants this year. We grew significantly in implants this year, in both the private and public sectors, and that led to growth overall in China. Despite the headwinds that we had in early 2023, and as Glenn noted, we expect more than 25% growth in implants again in China in 2024. So it clearly shows that our team can perform in China with respect to implants. As I noted previously, our portfolio across the board, but particularly in implants, is very, very competitive. The 2000 customer survey that we did last summer told us that our portfolio is very, very competitive and has no meaningful gaps. So we're quite comfortable with it.

Andrew: We've we've been Super happy with.

Andrew: With China performance on implants. This year, we we grew significantly and implants. This year in both the private and public sectors that led to growth overall in China. Despite.

Andrew: Despite the headwinds that we had the the in the early twenty-three and as Glenn noted, we expect more than 25% growth.

Andrew: Implants again in China in 2024 so.

Andrew: It clearly shows that that our team can execute in in China with respect to implants. We've as I noted previously our portfolio across the board, but but particularly in implants is.

Andrew: Is very very competitive the 2000 customer survey that we did last summer.

Andrew: <unk> told us at our portfolio is very very competitive and has no meaningful gaps.

Andrew: So where where we're quite comfortable with it we have demonstrated I think progress in in the U S, where we where we slowed the deterioration throughout the year and is Glen noted, we expect to grow implants in the U S. In 2024 at a in response to a previous question I I noted that as part of a three dollar.

Simon Campion: We have demonstrated, I think, progress in the U.S., where we've slowed the deterioration throughout the year. And as Glenn noted, we expect to grow implants in the U.S. in 2024. And in response to a previous question, I noted that, you know, as part of our $3 bridge, we expect implants to be growing at market rates by... That's our expectation. Yeah, we just had a couple I mean, our fourth quarter performance in implants and prosthetics was the best quarter that we had all year. We actually grew double digits. Obviously, a lot of that comes from China, but we also had really good performance in Europe. And so the two together obviously drove... [inaudible] Commercial Excellence, where we've made investment, but also clinical, is an area that we have built upon and are leaning into. You've heard the comments previously. So I think that's one important point. The other element is the implant. See www.youtube.com or the link in the description below.

Andrew: [noise] bridge, we expect implants to be drawing at market rate by 2026, that's that's our expectation.

Glenn G. Coleman: Yeah, We just had a couple of things I mean, our fourth quarter performance and implants and prosthetics was the best quarter that we had all year, we actually grew double digits, obviously, a lot of that coming from China, but we also had really good performance in Europe and so the two together obviously drove.

Glenn G. Coleman: Good resolved for US we did see improvements in our U S implants business, but it is still declining. So we are not happy with where we're out there. We do expect it to get back to growth in the second half of 2024, we've done all the things to turn that business around so we feel good about improved performance in our U S implants business, but overall did.

Speaker Change: See less of a reduction in in the U S. In the fourth quarter as well unless you make a couple of comments as well yeah, I'd I'd just shrinking back to portfolio commercial excellent where we've made investment but also clinical education, which is an area that we have built upon and leaning into so you've heard the comments.

Speaker Change: Previously so that I think that's one important point yeah, either element is the implant.

Speaker Change: Hard also comes with a purse static solutions and that's the way we have a very competitive portfolio, including customer apartment in a highly digitize work floated links into D. S. Cole overtime. So that's an area that we also feed all will be an important driver of incremental growth here over the over the period.

Andreas G. Frank: Okay, thanks. And then just a quick one on capital deployment. You mentioned the near-term buybacks and your plans on that front. But I think you said previously that you'd be back in the market potentially doing deals in 2025. You know, is that still your thinking on that front?

Okay. Thanks, and then just a quick one on capital deployment and you mentioned the near term buybacks and your plans on that front, but I think you said previously that you'd be back in new market potentially do anything else in 2025.

Speaker Change: Is that still your thinking on that five G C near term paper or an opportunity to read your perspective are alright, whereas in your state at <unk>. Thanks.

Simon Campion: Do you see near-term pipeline opportunities from a deal perspective? Or, or where are your stated targets on that front? Thanks.

Simon Campion: So I think near-term opportunities may be technology-type acquisitions that require a little integration, Erin. And then I do think we'll be back in the market in 2025 and beyond for larger-scale M&A that requires integration. We are focused on ourselves right now in 2023 and 2024.

So I think near near term opportunities may be your technology type acquisitions.

Speaker Change: That that require a little integration Aaron.

Speaker Change: And then I do think will be will be back in.

Speaker Change: In the in the market and twenty-five and beyond for larger scale larger scale M&A that requires integration, but we are we are we are focus on on on ourselves right now in 23 and 24, unless we see something that's that's a nice talking.

Simon Campion: Unless we see something that's a nice tuck-in, we'll probably avoid it until 2025 when we've restored the stability of our organization. Yeah, I think the good news is our balance sheet could support M&A activity. We have low leverage.

Speaker Change: Will probably avoided until twenty-five when when we vote restored the stability of our organization. Yeah. I think the good news is our our balance sheet could support M&A activity, we have low library for a 2.6 times and that should come down here in the next couple of quarters.

Glenn G. Coleman: Times and that should come down here in the next couple of quarters, have a strong. We are in a liquidity position. We are expecting to generate more cash flow. So from a balance sheet perspective, we could support a really robust M&A strategy. It's organizational capability in the short term as we work through some of our foundational initiatives and transformation initiatives. Our next question comes from the line of Brandon Vazquez. With William Blair, your line is open.

Speaker Change: Have a strong <unk>.

Speaker Change: Liquidity position, we're expecting to generate more cash flow. So from a balance sheet perspective, we could support it really robust M&A strategies organization and capability in the short term as we work through some of our foundation on there she lives in transfer transformation initiatives.

Speaker Change: Thanks.

Speaker Change: Our next question comes from the line of <unk>.

Brandon Vazquez: Brandon Vasquez.

Brandon Vazquez: With William Blair. Your line is open.

Operator: Hi. Thanks for taking the question. First, on a modeling perspective, you guys are pointing to about 100 basis points of view with the margin expansion in 24. Can you just talk about maybe the cadence of that expansion through the year? I know you guys have made a lot of recent commercial investments, so maybe they need some time.

Brandon Vazquez: Hi, Thanks for taking the question on the first one a modeling perspective and you guys are pointing to about 100 basis points of view retail margin expansion. In 24 can you just talk about maybe the cadence of that expansion through the year. I know you guys have made a lot of recent commercial investment so maybe they need some time.

Glenn G. Coleman: Should we think of this more as the back half of the year where we'll see some of this margin expansion, or should we be modeling for this to be pretty evenly split throughout the year? Yeah, it's more backend loaded, but we would expect even a margin expansion both in Q1 and Q2, with more of the expansion coming in Q3 and Q4.

Brandon Vazquez: <unk> should we think of this more as in the back half of the year will see some of this margin expansion or or should we be modeling for this to be pretty easily.

<unk>.

Yeah, it's more back end loaded, but we would expect EBIT margin expansion, both in Q1 and Q2.

Brandon Vazquez: More of the expansion coming in Q3, and Q4 and the main reason behind that is some of these investments that we're making our more front end loaded in a year and a restructuring savings obviously are more benefiting the back end of the year. So we do expect EBIT margin expansion starting in the first quarter, but most of it will happen in the back half of the year.

Glenn G. Coleman: And the main reason behind that is some of these investments that we're making are more front-end loaded for the year, and the restructuring savings, obviously, are more benefiting the back end of the year. So we do expect a margin expansion starting in the first quarter, but most of it will happen in the back end. Okay, and then on maybe just one quick follow-up on BITE here, I think the commentary around expectations for 20% plus growth was pretty notable. I guess the question is kind of like, what gives you confidence?

Speaker Change: Okay and then.

Speaker Change: Maybe just one quick follow up on bite here.

Speaker Change: I think the the commentary around expectations for 20 per cent plus growth or we're pretty notable.

Speaker Change: I guess the question is kind of like what gives you.

Glenn G. Coleman: I know you're seeing some early pickup right now, but what gives you the confidence that this can be durable given expectations for what seems to be a still kind of difficult macro within dental? You know, this seems to be a highly sensitive market on the macro side. So, you know, how do you guys feel?

Speaker Change: I know you are seeing some early pick up right now what gives you the confidence that this can be durable given expectations for what seemed to be is still kind of difficult.

Speaker Change: Okay.

Speaker Change:

Speaker Change: It seems to be a highly kind of sensitive market too.

Speaker Change: The macro side. So like you know how do you guys feel do you need an improvement in macro to hit that 20 per cent plus and bite. Thanks.

Glenn G. Coleman: Do you need an improvement in macro to hit that 20% plus in BITE? Thanks. Yeah, I think we're counting on a stable macro environment to hit these numbers. As I mentioned earlier, an increase in unique visitors to our Byte website is a very positive trend for us. More importantly, impression kits are going up significantly, and I won't give you the exact number, but it's well north of 50%, just to give you some context for the last couple of months and what we've seen. So it's that type of growth, and obviously not all of that converts to revenue.

Speaker Change: Yeah, I think we're counting on a stable macro environment that these numbers I mentioned earlier increase and unique visitors to our bite website is a very positive trend for us.

Speaker Change: More importantly, impression kids going up significantly.

Speaker Change: And we'll give you the exact number but as well north of 50 per cent just to give you. Some context since the last couple of months and what we've seen so is that type of growth and obviously not all that converts to revenue.

Glenn G. Coleman: But we do think our conversion rates will also improve as we get further into the BytePlus hybrid model that Simon outlined earlier. So when we look at some of the indicators, including what we're seeing in the back half of February, we're going to expect to see some of this convert to revenue. We feel quite good that BITE is going to put up some meaningful growth here in 2024. I would just say that, you know, we did see some headwinds on the financing front in the fourth quarter with bites. A bite only grew six percent.

Speaker Change: But we do think our conversion rates are also improve as we get further into the bite plus hybrid model that Simon outlined earlier, so when we look at some of the indicators, including what we're seeing in the back half of February what do you expect to see some of this convert to revenue.

Speaker Change: We feel quite good that bit's gonna put up some some meaningful growth here.

Speaker Change: In 2024, I would just say that you know we did see some headwinds on the financing front in the fourth quarter with bites, if I'd only be 6%.

Glenn G. Coleman: In the fourth quarter, we had some financing constraints, and a lot of it was subprime customers. We worked through some of that here in the first quarter as well, so that got a little bit better, got it to 2024. But that, obviously, to your point, is macro-dependent to a certain extent, so we're keeping a close eye on that. But with the investments that we're making now, adding more treatment planners, clinical, and sales support people, I feel like we have a really good path here to generate 20, Growth, and Byte in 20. Our next question comes from the line of Kevin Caliendo with UBS. Your line is open. Thanks. Thanks for getting me in.

Speaker Change: In the fourth quarter, we had some financing constraints a lot of it was subprime customers. We work through some of that here in the in the first quarter as well so that got a little bit better as we've gotten into 2024, but that obviously to your point is.

Speaker Change: Macro dependent to a certain extent, so we're keeping a close eye on that.

Speaker Change: But with the investments that we're making now adding more treatment planners clinical and sales support people I feel like we got a really good path here to generate 20 plus per cent growth and bite in 2024.

Speaker Change: Our next question comes from the line as Kevin Caliendo with you B S. Your line is open.

Kevin Caliendo: Thanks, Thanks for getting me and I appreciate it.

Glenn G. Coleman: I appreciate it. I just wanted to talk about the sort of expectations for macro. You talked about it with Byte, but I want to talk about it just in the context of, You know, right now it's a difficult macro environment, and organic growth is zero to one and a half percent. Next year, you expect it to get back to four to six.

Kevin Caliendo:

Kevin Caliendo: Just wanted to talk about the or get the sort of expectations for the macro you talked about it with bite, but I want to talk about it just in the context of.

Kevin Caliendo: Right now, it's a difficult macro environment organic growth of zero to 1.5% next year, you expect it to get back to four to six.

Simon Campion: How much of that four to six is predicated on the macro returning to normal? Or how much of that is predicated on innovation and market share gains? I'm just trying, I'm really trying to understand when you think the macro starts to improve or what's sort of predicated on your guidance for that to happen. So let me start Kevin about there's another function here, and it's called, and that's within our that's within our Over the past year, we've demonstrated that we're bringing improved systems and processes to our company, which includes commercial, adjusting how we pay our sales reps, and investing in clinical education, which we know is crucial for dentists and welcomed by dentists, and particularly by DSOs who want to partner with us on So, you know, part of that 4 to 6% is us getting better and improving at execution, and we've demonstrated that we are well underway in that process. Glenn, do you want to comment on the macro?

Kevin Caliendo: How much of that four to six is predicated on the macro returning to normal or how much of that is predicated on innovation and market share gains I'm just try it I I really trying to understand when do you think the.

Kevin Caliendo: The macro starts to improve or what sort of predicated and your guidance for that to happen.

Speaker Change: So let me start Kevin.

Kevin Caliendo: About about the there's another there's another function here and it's and it's called execution.

Kevin Caliendo: And that that that's within our that's within our control.

Kevin Caliendo: Over the past year, we've demonstrated that we that we're bringing improved systems and processes.

Kevin Caliendo: To our to our company, which includes commercial adjusting how we how we pay our our sales reps and.

Kevin Caliendo: And investing in clinical education, which we know is crucial for for for dentists and welcomed by dentist and Ah, particularly by by Dsos, who want to partner with us on the provision of training so.

Kevin Caliendo: Part of that 4% to 6% is ourselves getting better and improving at execution and we've demonstrated that that we are well underway in that in that process. Then do you want to comment on the on the macro peace.

Glenn G. Coleman: Yeah, I think as we look at 2025 and getting back to 46%, we're obviously counting on a much more normalized macro environment. Share gain wise, I would say ortho is an area we would expect to continue to gain share. Sales execution wise, the implant business would be the area to expect improvement in 2025 as well. But, you know, the equipment side of our business has been a big headwind for us. And the thought is that interest rates will start to come down in the back half of this year and continue to come down in 2025. That should help the overall equipment environment. And if we see a turn on the equipment side, if you look at the rest of the numbers, we're actually performing quite well. That should get us back to more of the four to..., with the ortho games that we're expecting in terms of market. That's a super helpful answer.

Speaker Change: Yeah, I think as we look at 2025 and getting back to 4% to 6% were obviously counting on a much more normalized macro environment share gain wise I was it worth though is an area. We we would expect to continue to gain share.

Speaker Change: So his execution why is the implants business would be theory to expect improvement in 2025 as well.

Speaker Change: But you know the equipment side of our business has been the big headwind for us and.

Speaker Change: The thought is interest rates will start to come down in the back half of this year.

Speaker Change: Continue to come down in 2025 that should help the overall equipment environment.

And we see a turn in the equipment side. If you look at the rest of the numbers were actually performing quite well that should get us back to more of the 4% to 6% range with the ortho gains that were expecting in terms of market share.

Speaker Change: That's super helpful answer.

Simon Campion: And just on SureSmile quickly, how much of the growth of SureSmile is tied to the new scanner? Meaning is it, are you seeing a correlation there? And that's driving growth? Is SureSmile driving scanner growth? Is the scanner driving SureSmile growth? Is there any, is there any correlation that you can see? I'm just trying to understand sort of how it's being positioned in the market. I think there's probably a correlation between both of them, Kevin, for sure. We've also added the SureSmart Simulator to DSCore, which, as I noted in the response to a previous question, I think the only thing I would add, Kevin. You probably remember in 2023 we mentioned that we equipped all of our ortho reps with scanners.

Unsure smile quickly how much of the the growth of sure Smile is tied to the new scanner, meaning is it are you seeing a correlation there and that that's driving growth is sure smile driving the scanner growth as the scanner driving suresmile growth is there any is there any correlation that you you see I'm just trying to understand sort of how it.

Speaker Change: Being positioned in the market.

Speaker Change: I think there's there's probably a correlation between both of them Kevin for for sure. You. We've also added the shore small assimilated to D S core, which which as I noted in response to a previous question is driven up treatment, except an acceptance rates.

Speaker Change: In our in our customers and we also have not been shy and and driving what we what we feel is a differentiated offering compared to ER compared to our competitors with respect to the fewer revisions. So I think it's a combination of many many factors.

Speaker Change: And back to the previous question execution on Commission plans is another factor then you have some something to add.

Speaker Change: I think the only thing I would add Kevin you probably remember in 2023, we mentioned that we equipped all of our ortho reps with scanners.

Simon Campion: And so we have seen some really good momentum since then, http://TheBusinessProfessor.com. It's hard to say how much of the growth scanners are driving in terms of the action, aligners versus the other way around, but I think on the whole, the decision to invest in scanners, get them in the hands of our reps, is paying off, and we're seeing strong double-digit growth in jurisprudence. Sounds good

Speaker Change: So we have seen some really good momentum post that decision. So that was an investment you made we're seeing some payoffs and.

Speaker Change: It's hard to say how much of the growth scanners are driving in terms of the actual Ah liners versus the other way around but I think on the whole the decision to invest in scanners get them in the hands of our reps is paying off and we're seeing strong double digit growth ensure a smile.

Simon Campion: Thanks, guys, so much. Our next question comes from the line of Jason Bednar with Piper Sandler. Your line is open.

Speaker Change: Sounds good thanks, guys. So.

Speaker Change: Our next question comes from the line as Jason Bedner with Piper Sandler Your line is open.

Glenn G. Coleman: Hey, good morning, thanks for squeezing us in here. Wanted to start, maybe, with a follow up on Byte. It definitely sounds more bullish than I think we were maybe in the second half of last year. Maybe hard to break down, but how much of the 20% growth would you characterize as maybe share gains from that other DTC player exiting the market versus just a healthier view of the macro? And, and I guess maybe versus benefits you're making, you're making yourself just trying to understand maybe what's exogenous here versus, you know, what's attributable to your own actions in that 20% growth outlook as we really try to think about what's sustainable beyond 2024. I think the majority of the growth is coming from the competitive dynamics that have taken place over the last, So certainly more than half of that. Okay, I guess, Glenn, you're still making a lot of investments in this category, though.

Jason M. Bednar: Hey, good morning, an extra squeeze me notes in here wanted to start me with a follow up on by.

Jason M. Bednar: Definitely sound more bullish than I think where we were making the second half of last year, maybe hard to break down but how much of the the 20 per cent growth would you characterize as maybe share gains from the other T. T. C player exiting the market versus just a healthier view of the macro.

Jason M. Bednar: And and I guess, maybe versus benefit you make you're making yourself just trying to understand maybe what's exogenous here versus you know what the tribute attributed to your own actions and that 20 per cent growth outlook as we really try to think about what sustainable beyond 2024.

Jason M. Bednar: I I think the majority of the growth is coming from the competitive dynamics that have taken place over the last couple of months, so certainly more than half of that growth.

Speaker Change: Okay, I guess Glenn.

Glenn: You're still making a lot of investments in this category, though so I mean <unk>.

Simon Campion: So I mean, I guess, as we think about the sustainability of growth, you know, I know we had some questions earlier on macro-dependency, but you know, this can still, would you agree this can still be a growth leg for you, not necessarily 20%, but still well above company-wide as we look beyond 2024? And then, a separate follow-up, you sound a little more confident, I thought about, or bullish on 3D printing. You know, how much more progress has to happen on the resin side before uptake and prime print really inflects higher? Yeah, I think we would expect bite to continue to have healthy growth going forward beyond 2024. So I'm not going to say it's going to be 20% plus, but certainly it's going to be a faster growing part of our portfolio, even beyond 2024. Maybe you can comment, Andreas, on the 3D printer. Before I do so, I'm just staying on BITE for a moment.

As soon as we think about the sustainability of growth, Yeah, Hey, I know, where we are some questions early around that macro dependency, but you know this can still which is would you agree this can still be a growth.

Glenn: Leg for you not Nathan that's right, 20%, but still well above company why does we look beyond 2024, and then at separate follow up just you sound also a little more confident I thought about are bullish on three D. Printing you know how much more progress has to happen do you think on the Verizon side before uptake in.

Glenn: Prime print really influx higher.

Glenn: Yeah, I think we would expect bite to continue to have healthy growth going forward beyond 2024, So I'm not gonna say, it's gotta be 20 per cent plus but certainly it's gonna be a faster growing part of our portfolio even beyond 2024.

Glenn: Maybe you can comment Andreas on the three D printer.

Andreas G. Frank: Before he just so just.

Andreas G. Frank: We demonstrated last year that we're able to drive net income performance on the bike platform. That is an inherent assumption of ours going forward as well, despite the investments we're making to tap into the opportunity that has presented. We're not looking to get all of the opportunity that's presenting itself; we're looking to make a profit. In terms of the resins and the printing equipment, what gives us confidence there, I think, is the shift of the market to looking for a safe and secure and connected solution that is applicable to their office, right? So we're moving from sort of this very early adopter technology segment in printing to a more sort of workflow-focused customer segment, and that's where Prime Print comes in. All right, thank you so much. Thank you. Our last question comes from the line of Michael Petusky with Barrington Research. Your line is open.

Andreas G. Frank: Staying on byte for for a moment, Jason Yeah, we demonstrated last year that we were able to drive net income performance.

Andreas G. Frank: On the on the bike platform that is Ah I didn't hear into assumption of hours going forward as well. Despite the despite the investments, we're making too to tap into the the opportunity that has presented itself.

Andreas G. Frank: We're not looking to get all of the opportunity that's presenting itself. We're getting we're looking to get the profitable opportunity that presented itself.

Andreas G. Frank: In terms of the resins N D printing equipment.

Andreas G. Frank: The well it gives us confidence fair I think is the the shift of the market looking for a a safe and secure in a connected solution that is applicable to their office right. So we're moving from sort of just very early adopter technology, Turkmen and printing to a more sort of workflow focus.

Customer segment, and that's where our prime print is positioned and that's sort of what we're looking to grow our solution here and also integrating all materials and I will workflows for dentures, and and <unk> splints printed impression.

<unk> drug guides, the usual sort of applications that you would see in an office with prime print.

Speaker Change: Alright, thank you so much.

Speaker Change: Thank you.

Speaker Change: Our last question comes from the line of Michael Pitofsky with Barrington Research. Your line is open.

Operator: I may have possibly missed this, but I don't. Did you guys talk about any impact quantification? Yeah, no, we haven't mentioned anything around that impact. I would just say we built some conservatism into our guidance back in Q4. We really didn't have any significant impact from that.

Michael John Petusky: Good morning, I may have possibly missed this but I don't think it was mentioned did you guys talk about any impact quantification of how shines issues may have impacted your fourth quarter was there any talk about that or or if not can you talk about that sort of thing.

Speaker Change: Yeah, No we haven't mentioned anything around that impact I I would just say we built some conservatism into our guidance back in queue for we really didn't have any significant impact from that incident.

Glenn G. Coleman: So obviously, there was some impact, but you also have some dynamics where we saw improvements in other orders coming from dealers. So for our business, there was minimal impact. That's all we're going to say about that.

Speaker Change: So obviously there were some impact but you have also some dynamics of.

Where we saw improvements in other orders coming from dealers, so for our business minimal impact and.

Speaker Change: That's all we're gonna say about that thanks.

Speaker Change: And then just a quick follow up on a bike which is popular today I hear the the the the great data point about impression kit the ramp and also some of the the order is starting to fall through I I'm, assuming though you know when you say hey, the conversion rate, we expect that to improve it you haven't seen.

Glenn G. Coleman: And then just a quick follow-up. I hear the great data. Pressure Kit Ramp, I'm assuming, though, when you say, hey, the conversion rate, you haven't seen the evidence yet.

Speaker Change: Evidence yet that is that fair.

Glenn G. Coleman: That's fair. Our conversion rates are pretty consistent with what we've seen in the last couple of quarters. So that's correct. I do believe, though, if BytePlus is successful, and that's our hybrid model, that could potentially help our conversion rates tick up, but we have not seen that yet.

Speaker Change: That's fair or conversion rates are pretty consistent from what we've seen in the last couple of quarters. So that's correct I I do believe though if five plus is successful and that's a hybrid model that could potentially help our conversion rates pick up.

Speaker Change: But we have not seen it yet.

Glenn G. Coleman: All right, very good, thanks. And this concludes today's question and answer session. I would now like to turn the conference back to Simon Campion for his closing remarks. Thank you.

Speaker Change: All right very good thanks, guys appreciate it thank.

Thank you.

Speaker Change: And this concludes today's question and answer session I would I would like to turn the conference back to Simon campaign for closing remarks.

Simon Campion: Thank you, operator. So thanks to you all for joining today's call. Before we close, I would like to leave you all with some... Firstly, we are well positioned to attract... We have the largest end-to-end dental portfolio that is more than 45% digitally connected. We have leading brands and strategic objectives that focus on high-growth areas such as aligners, implants, our digitalization strategy enabled by DSCore, and across continents. Secondly, our transformation is taking place, and while there is more work ahead, we do have a clear and actionable... Accelerate Profitable Growth. We expect that 2024 will be an inflection point for Improved Profitability and Adjusted EPS. Thirdly, we are building a durable, sustaining, sustainable business. Better positioned to navigate external challenges and capitalize on new market opportunities as we move forward.

Simon Campion: Thank you. Thank you operator, so thanks to you all for for joining today's call.

Simon Campion: Before we close I would like to leave leave you all with some key points.

Simon Campion: Firstly, we are well positioned and attractive industries, we have the largest ends twins dental portfolio that is more than 45% digitally connected.

Simon Campion: We do have leading brands and strategic objectives that focus on high growth areas such as the liners implants are digitalization strategy enabled by D. S Corps and continents care <unk>.

Simon Campion: Secondly, our transformation is taking place and viola is more work ahead, we do have a clear and actionable path to accelerate profitable growth.

Simon Campion: We expect the 2024 will be an inflection of your for improved profitability and adjusted EPS growth.

Simon Campion: Thirdly, we are building a durable sustaining sustainable business, that's better positioned to navigate external challenges and capitalize on new market opportunities as we move forward.

Simon Campion: We remain confident that we are on the right path to deliver meaningful value over the long term. As you may have already seen, earlier today, we also announced Eric Brandt's intent to retire from the Board of Directors following our May Annual Meeting. Erica served as a director of the company for nearly 20 years and as chairman for six. I would like to express a sincere thanks to Eric for his many years of service with Dentsply Sirona and wish him all the best in his future endeavors. And finally, on behalf of our management team, I would like to extend our gratitude to all our employees for their tenacious commitment to the business and the ongoing transformation process. We especially want to express our appreciation to those employees who have been impacted by our restructuring program and wish them the very best in their future. This concludes today's conference call. Thank you for participating. You may now disconnect.

Simon Campion: We remain with our conviction that we are on the right path to deliver meaningful value over the <unk> over the long term.

Simon Campion: You may have already seen earlier today, we also announced every branch intense to retire from the board of directors. Following our May annual meeting Erika.

Simon Campion: Erica served as a director of the company for nearly 20 years and as chairman for six years and I would like to express sincere. Thanks to worry for as many years of services to dance place Rona and wish him all the best in his future endeavors.

Simon Campion: And finally on behalf of our management team I would like to extend our gratitude to all our employees for their tenacious commitment to the business and the ongoing transformation process and.

Simon Campion: And we especially want to express our appreciation.

Simon Campion: So those employees, who have been impacted by our restructuring program and wish them the very best in their future endeavors. Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Mmm.

Speaker Change: [music].