Q2 2024 Dentsply Sirona Inc Earnings Call

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

Operator: Good day, and thank you for standing by.

Good day, and thank you for standing by.

Operator: Welcome to the Dentsply Sirona earnings conference call. At this time, all participants aren't in listening only mode. After the speech is presentation, there will be a question-and-answer session. To ask a question during this session, you need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised. That today's conference is being recorded.

Welcome to the <unk> Sirona earnings Conference call.

Speaker Change: At this time, all participants are in listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you need to press star one on your telephone. You will then hear an automated message advising that your hand is raised.

After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during this session.

Speaker Change: I need to press star one on one on your telephone you would be in here an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Andrea Daley. Please go ahead.

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

Operator: I would now like to hand a conference over to you. First speaker today.

Speaker Change: I would now like to hand, the conference over to your first speaker today, Andrew Bailey. Please go ahead.

Andrea Daley: Andrea Daley, please go ahead. Thank you, operator, and good morning, everyone. Welcome to the Dentsply Sirona second quarter 2024 earnings call. Joining me for today's call is Simon Campion, Chief Executive Officer, and Glenn Coleman, Chief Financial Officer. I'd like to remind you that an earnings press release and slide presentation related to the call are available in the investor section of our website at www.dentsplysirona.com.

Andrea Daley: Thank you, operator, and good morning, everyone. Welcome to the Dentsply Sirona second quarter 2024 earnings call. Joining me for today's call is Simon Campion, Chief Executive Officer, and Glenn Coleman, Chief Financial Officer. I'd like to remind you that an earnings press release and slide presentation related to the call are available in the investor 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.

Speaker Change: Thank you operator, and good morning, everyone welcome to the desk by Sirona second quarter 'twenty 'twenty four earnings call. Joining me for today's call is Simon Campion, Chief Executive Officer, and Glenn Coleman, Chief Financial Officer, I'd like to remind you that an earnings press release and slide presentation related to the call.

Speaker Change: All are available in the investors section of our website at www dot in Spicer in a dot com.

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

Speaker Change: 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 uncertainties.

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

Speaker Change: Our most recently filed Form 10-K, and any updating information and subsequent SEC filings list. 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. We believe that non-GAAP financial measures offer investors valuable additional insight 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 the transparency regarding key metrics. We utilize by management and operating our business. Please refer to our press release for the reconciliation between gap and non-gap 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.

Speaker Change: 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 and financial performance enable the comparison of financial results between periods, where certain items may vary independently of business performance and enhanced.

Andrea Daley: 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 the transparency regarding key metrics utilized by management in operating our business.

Speaker Change: Transparency regarding key metrics utilized by management in operating our business. Please refer to our press release for the reconciliation between GAAP and non-GAAP results.

Speaker Change: Comparisons provided are to the prior year quarter, unless otherwise noted.

Speaker Change: Webcast replay of today's call will be available on the investors section of the Companys website, following the call and with that I would now like to turn the call over to Simon.

Andrea Daley: And with that, it would now like to turn the call over to Simon.

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 would now like to turn the call over to Simon.

Simon Campion: Thank you, Andrea.

Simon D. Campion: Thank you, Andrea, and thank you all for joining us this morning for our Q2 2024 earnings. I will start by providing an overview of our Q2 performance, give an update on the previously announced transformation work, and share information about new initiatives and investments we have been planning. Then Glenn will cover Q2 financial results and our full year 2024 outlook. I will finish with a brief strategic operating, starting on slide three. Our second quarter revenue of $984 million was unfavorably impacted by lower sales in our connected technology solution. As expected, capital equipment continues to experience pressure, largely but not exclusively due to macroeconomic conditions.

Simon Campion: And thank you all for joining us this morning for our Q2 2024 earnings call. I will start by providing an overview of our Q2 performance. Give an update on the previously announced transformation work and share information about new initiatives and investments we have been planning.

Simon: Thank you Andrea and thank you all for joining US this morning for our Q2 2024 earnings call.

Simon D. Campion: Other factors included some pricing degradation and weaker than expected performance in certain major markets. However, we delivered organic sales growth in the other three segments: Essential Dental Solutions, Orthodontic and Implant Solutions, and Wellspec Healthcare.

Simon: I will start by providing an overview of our Q2 performance.

Speaker Change: Date on the previously announced transformation work.

Speaker Change: For your information about new initiatives and investments we have been planning.

Glenn Coleman: Then Glenn will cover Q2 financial results and our full year 2024 outlook.

Speaker Change: Then Glenn will cover Q2 financial results and our full year 2020 for outlook.

Simon Campion: I will finish with a brief strategic operating update. Starting on slide three, our second quarter revenue of 984 million dollars was unfavorably impacted by lower sales in our connected technology solution segment. I expected capital equipment to continue to experience pressure, largely but not exclusively due to macroeconomic conditions. Other factors included some pricing degradation and weaker than expected performance in certain major markets. We delivered organic sales growth in the other three segments. The Central Dental Solutions, orthodontic and implant solutions and well-spec healthcare. We were pleased to see double-digit growth in aligners, despite some headwinds, which we will discuss later. Our continued focus and investments in well-spec healthcare enabled us to deliver another quarter of strong growth.

Speaker Change: I will finish with a brief strategic operating update.

Glenn: Starting on slide three.

Glenn: Our second quarter revenue of $984 million was unfavorably impacted by lower sales in our connected technology solutions segment.

Glenn: As expected capital equipment continued to experience pressure, largely but not exclusively due to macroeconomic conditions.

Glenn: Other factors included some pricing degradation and weaker than expected performance in certain major markets.

Glenn: We delivered organic sales growth in the other three segments with central dental solutions, orthodontic and implant solutions and well expect health care.

Simon D. Campion: We were pleased to see double-digit growth in aligners despite some headwinds, which we will discuss later. Our continued focus and investment in Wellspec's healthcare business enabled us to deliver another quarter of strong growth. For the full year, we are revising our outlook based on first-half performance, FX, evolving market dynamics, and the continued macroeconomic headwinds. Eighteen months ago, we announced a restructuring plan to transform Dentsply Sirona. We also communicated that this would be a long journey.

Glenn: We were pleased to see double digit growth in our liners. Despite some headwinds, which we will discuss later.

Glenn: Our continued focus on investments and well expect healthcare enabled us to deliver another quarter of strong growth.

Simon Campion: For the full year, we are revising our outlook based on first-hand performance, FX, evolving market dynamics, and the continued macroeconomic headwinds. We also communicated that this would be a journey. With our phase one initiatives complete or well underway, we are ready to advance the phase two to build on our progress to date and further advance our transformative agenda to improve efficiencies and drive profitable growth. Although the macro environment has impacted the sales outlook for the global dental market, we remain committed to continue assessment of our business, adapting our organization accordingly. Enhancing our efficiency and execution capabilities and investing in high return categories, all with the goal of driving sustainable EPS growth, as we highlighted during our investor day.

Glenn: For the full year, we are revising our outlook based on first half performance.

Glenn: <unk> evolving market dynamics and the continued macroeconomic headwinds.

Glenn: 18 months ago, we announced a restructuring plan to transform dense play sirona.

Glenn: We also communicated that this would be a journey.

Simon D. Campion: With our Phase 1 initiatives complete or well underway, we are ready to advance to Phase 2 to build on our progress to date and further advance our transformative agenda to improve efficiencies and drive profitable growth. However, the macro environment has impacted the sales outlook for the global dental market. We remain committed to continued assessment of our business and adjusting our organization accordingly, enhancing our efficiency and execution capabilities, and investing in high-return categories, all with the goal of driving sustainable EPS growth, as we highlighted during our investor day.

Glenn: With our phase one initiatives complete are well underway, we are ready to advance to phase II to build on our progress to date and further advance our transformative agenda to improve efficiencies and to drive profitable growth.

Glenn: Although the macro environment has impacted the sales outlook for the global dental market.

Glenn: We remain committed to continued assessment of our business adapting our organization accordingly, enhancing our efficiency and execution capabilities and investing in high return categories. All with the goal of driving sustainable EPS growth as we highlighted during our Investor day.

Simon Campion: As we said in our press release, we have identified 80 to 100 million dollars in annualized structural and operational synergies that are incremental to our recently completed 200 million dollar restructuring program. We have a clear plan to achieve these synergies and expect to realize them in the next 12 to 18 months. Both our Phase One and Phase Two restructuring plans are fundamentally shaping our company. We design these plans to improve our operational performance and drive much higher customer engagement, increase alignment, drive process and discipline, and strategically position dense flights or only to win. Since announcing phase one, we have moved very deliberately in many areas, including reinvestment in key geographies commercially, competency struts as clinical education, simplifying our manufacturing distribution and product footprint, driving an intentional focus on quality, refining our new product development processes, and implementing a single ERP system.

Simon D. Campion: As we said in our press release, we have identified $80 to $100 million in annualized structural and operational synergies that are incremental to our recently completed $200 million restructuring program. We have a clear plan to achieve these synergies and expect to realize them in the next 12 to 18 months. Both our Phase 1 and Phase 2 restructuring plans are fundamentally shaping our company.

Glenn: As we said in our press release, we have identified $80 million to $100 million.

Glenn: And annualized structural and operational synergies that are incremental to our recently completed $200 million restructuring program.

Glenn: We have a clear plan to achieve these synergies and expect to realize them in the next 12 to 18 months.

Glenn: Both are phase one and phase two restructuring plans are fundamentally shaping our company.

Simon D. Campion: We designed these plans to improve operational performance and drive much higher customer engagement, increase alignment, drive process and discipline, and strategically position Dentsply Sirona to win. Since announcing Phase 1, we have moved very deliberately in many areas, including reinvestment in key geographies commercially, competencies such as clinical education, simplifying our manufacturing distribution and product footprint, driving an intentional focus on quality, refining our new product development processes, and implementing a single ERP. These cost-saving initiatives and reinvestments have been instrumental in re-establishing positive and constructive relationships with key stakeholders of our company, including customers and investors

Glenn: We design these plans to improve our operational performance and drive much higher customer engagements increase alignment drive process and discipline and strategically position dense play sirona to win.

Glenn: Since announcing phase one we have moved very deliberately in many areas, including reinvestments in key geographies commercially.

Glenn: Lindsey as clinical education, simplifying our manufacturing distribution and product footprint.

Lindsey: And intentional focus on quality refi.

Lindsey: Refining our new product development processes, and implementing a single ERP system.

Simon Campion: These cost saving initiatives and reinvestments work instrumental in reestablishing positive and constructive relationships with key stakeholders of our company, including customers and investors. We remain confident that these phase one initiatives will have a lasting impact, improving performance to drive long-term shareholder value and contribute meaningfully to our bottom line through 2026 and beyond. As we discussed in Q1, we have been planning incremental measures to better position ourselves to achieve our profitability and EPS target. We are always believed there were additional opportunities to shape and structure our company; we prioritize the phase one operational initiatives. We expect these new initiatives will not only improve our financial performance, but also refine our organizational structure, enhance our business processes, and better align roles and responsibilities to support our objectives.

Lindsey: These cost saving initiatives and Reinvestments were instrumental in reestablishing positive and constructive relationships with key stakeholders of our company, including customers and investors.

Simon D. Campion: We remain confident that these Phase 1 initiatives will have a lasting impact, improving performance to drive long-term shareholder value and contribute meaningfully to our bottom line through 2026 and beyond. As we discussed in Q1, we have been planning incremental measures to better position ourselves to achieve our profitability and EPS targets. While we always believed there were additional opportunities to shape and structure our company, we prioritized the Phase I operational initiative.

Lindsey: We remain confident that these phase one initiatives will have a lasting impact improving performance to drive long term shareholder value and contribute meaningfully to our bottom line through 2026 and beyond.

Lindsey: As we discussed in Q1, we had been planning incremental measures to better position ourselves to achieve our profitability and EPS targets.

Lindsey: While we always believed there were additional opportunities to shape and structure of our company, we prioritize the phase one operational initiatives.

Simon D. Campion: We expect these new initiatives will not only improve our financial performance but also refine our organizational structure, enhance our business process, and better align roles and responsibilities to support our objectives. Specifically, I will discuss shortly how we are executing on new investments to reshape our structure, enhance relationships with our customers, and further strengthen our competitive position and accelerate innovation through disciplined R&D pipeline management. Additionally, we are evaluating further strategic investment opportunities, though we will not disclose these details today for competitive reasons.

Lindsey: We expect these new initiatives will not only improve our financial performance, but also refine our organizational structure enhance our business processes and.

Lindsey: And better align roles and responsibilities to support our objectives.

Simon Campion: Specifically, I will discuss shortly how we are executing on new investments to reshape our structure, enhance relationships with our customers, and further strengthen our competitive position and accelerate innovation through disciplined R&D pipeline management.

Lindsey: Specifically.

Lindsey: We'll discuss shortly how we are executing on new investments to reshape our structure enhanced relationships with our customers and further strengthen our competitive position and accelerate innovation through disciplined R&D pipeline management.

Simon Campion: Additionally, we are evaluating further strategic investment opportunities, though we will not disclose these details today for competitive reasons. We are laser focused on simplifying our global structure by consolidating product categories within each global business segment to better align our portfolio with our customers' needs. In doing so, we are also simplifying our regional structure and re-evaluating our marketing efforts across our business. We have assessed and re-evaluated lower-performing businesses and geographies and have decided to selectively exit certain countries, which we expect to complete in 2025. We expect these exits to have a $5 million impact to revenue with minimal impact to the bottom line.

Lindsey: Additionally, we are evaluating further strategic investment opportunities, though we will not disclose these details today for competitive reasons.

Simon D. Campion: We are laser focused on simplifying our global structure by consolidating product categories within each global business segment to better align our portfolio with our customers' needs. In doing so, we are also simplifying our regional structure and re-evaluating our marketing efforts across our business. We have assessed and re-evaluated lower performing businesses and geographies and have decided to selectively exit certain countries, which we expect to complete in 2025. We expect these exits to have a $5 million impact on revenue with minimal impact on the bottom line.

Lindsey: We are laser focused on simplifying our global structure by consolidating product categories within each global business segments to better align our portfolio with our customers' needs.

Lindsey: In doing so we are also simplifying our regional structure and reevaluating our marketing efforts across our business.

Lindsey: We have assessed and reevaluated lower performing businesses and geographies and have decided to selectively exit certain countries, which we expect to complete in 2025.

Lindsey: We expect these exits to have a $5 million impact to revenue with minimal impact to the bottom line.

Simon Campion: We also initiated plans to reduce external spend and GNA cost by consolidating our vendor and supplier base while tightening spend control. In addition, we have developed a plan to consolidate service and support activities that, in turn, will enhance efficiency through streamlined tools and processes, which are enabled by our ERP transformation, though I'll note the timeline for this particular project extends beyond 18 months. As we've previously shared, our survey results tell us that we do not have major product gaps in our portfolio and that our company is uniquely positioned to be a partner of choice for customers around the world.

Simon D. Campion: We also initiated plans to reduce external spend and G&A costs by consolidating our vendor and supplier base while tightening spend control. In addition, we have developed a plan to consolidate service and support activities, which in turn will enhance efficiency through streamlined tools and processes, which are enabled by our ERP transformation, though I'll note the timeline for this particular project extends beyond 18 months. As we've previously shared, our survey results tell us that we do not have major product gaps in our portfolio and that our company is uniquely positioned to be a partner of choice for customers around the world. These are not our words, but the words of our customers.

Lindsey: We also initiated plans to reduce external spend and G&A costs by consolidating our vendor and supplier base, while tightening spend control.

Lindsey: In addition, we have developed a plan to consolidate service and support activities that in turn will enhance efficiency through streamlines tools and processes, which are enabled by our ERP transformation.

Lindsey: The timeline for this particular project extends beyond 18 months.

Lindsey: As we've previously shared our survey results tell us that we do not have major product gaps in our portfolio and that our company is uniquely positioned to be a partner of choice for customers around the world.

Simon Campion: These are not our words, but the words of our customers. We will continue working towards better leveraging our portfolio to drive improved performance where we have lagged the market for years. Unlocking the value in here in our portfolio requires us to think differently to invest strategically and to create our own demand. So what does it mean to create our own demand? We must develop closer, more meaningful relationships with all our customers. While we have made progress here, we must continue to assess and take opportunities to advance this crucial strategic objective when and where appropriate. Our global sales force, as you know, is a critical part of our commercial infrastructure.

Speaker Change: These are not our words, but the words of our customers.

Simon D. Campion: We will continue working towards better leveraging our portfolio to drive improved performance where we have lagged the market for years. Unlocking the value inherent in our portfolio requires us to think differently, to invest strategically, and to create our own demand.

Speaker Change: We will continue working towards better leveraging our portfolio to drive improved performance, where we have lagged the market for years.

Lindsey: Unlocking the value inherent in our portfolio requires us to think differently to invest strategically and to create our own demand.

Lindsey: So what does it mean to create our own demand.

Simon D. Campion: We must develop closer, more meaningful relationships with all our customers. While we have made progress here, we must continue to assess and take opportunities to advance this crucial strategic objective when and where appropriate. Our global sales force, as you know, is a critical part of our commercial influence. Moreover, the geographic distribution of dental practices, particularly in the U.S., can make reaching customers challenging and, in some cases, result in marginal returns.

Lindsey: We must develop closer more meaningful relationships with all our customers.

Lindsey: While we have made progress here, we must continue to assess and take opportunities to advance this crucial strategic objective when and where appropriate.

Lindsey: Our global sales force as you know is a critical part of our commercial infrastructure.

Simon Campion: Moreover, the geographic distribution of dental practices, particularly in the US, can make reaching customers challenging and, in some cases, result in marginal return. To augment our efforts and improve our coverage more cost-effectively, we plan to increase investment in our own sales channels. As a first step, we have recruited a sales leader with a strong track record of standing up inside sales organizations around the world. By the end of Q1 2025, we intend to recruit higher-trained and deploy at least 100 dents by Serona inside sales reps in the US. This team will complement our field-based sales teams by connecting with customers who do not see our field-based reps as frequently as we would like.

Lindsey: Moreover, the geographic distribution of dental practices, particularly in the U S can make reaching customers challenging.

Lindsey: And in some cases result in marginal in return.

Simon D. Campion: To augment our efforts and improve our coverage more cost-effectively, we plan to increase investment in our own sales channels. As a first step, we have recruited a sales leader with a strong track record of standing up inside sales organizations around the world. By the end of Q1 2025, we intend to recruit, hire, train, and deploy at least 100 Dentsply Sirona inside sales reps in the U.S.

Lindsey: To augment our efforts and improve our coverage more cost effectively.

Lindsey: We plan to increase investments in our own sales channels.

Lindsey: As a first step we have recruited a sales leader with a strong track record of standing up inside sales organizations around the world.

Lindsey: By the end of Q1 2025, we intends to recruit hire train and deploy at least 100 densify sirona inside sales reps in the U S.

Simon D. Campion: This team will complement our field-based sales teams by connecting with customers who do not see our field-based reps as frequently as we would like. They will focus on generating demand and funneling it through the appropriate channel, either our direct sales forces in endodontics and orthodontics, for example, or through our dealer partners. More specifically, we see an opportunity to increase our in-office aligner business, particularly with orthodontists where we are underpenetrated. Our studies demonstrate a compelling value and technology proposition, leading us to increase investment in commercial and technology assets.

Lindsey: This team will complement our field based sales teams by connecting with customers, who do not see our field base reps as frequently as we would like.

Simon Campion: They will focus on generating demand and funneling it through the appropriate channel. Either our direct sales forces in endodontics and orthodontics, for example, or through our dealer partners. More specifically, we see an opportunity to increase our in-office aligner business, particularly with orthodontists where we are under-penetrated. Our studies demonstrate a compelling value and technology proposition, leading us to increase investments in commercial and technology assets. To enhance the effectiveness and performance of our commercial and service teams, we also intend to invest in technology that facilitates a seamless customer service and engagement experience alongside implementing an advanced CPQ system.

Lindsey: They will focus on generating demand and funneling it through the appropriate channel either our direct sales forces and endodontics and Orthodontics for example, or through our dealer partners.

Lindsey: More specifically, we see an opportunity to increase our in office or line of business, particularly with all the dentists, where we are underpenetrated.

Lindsey: Our studies demonstrated a compelling value and technology proposition, leading us to increase investments in commercial and technology assets.

Simon D. Campion: To enhance the effectiveness and performance of our commercial and service teams, we also intend to invest in technology that facilitates a seamless customer service and engagement experience, alongside implementing an advanced CPQ system. Furthermore, many of our direct customers would prefer to do business with our company through a robust e-commerce platform.

Lindsey: To enhance the effectiveness and performance of our commercial and service teams. We also intend to invest in technology that facilitates a seamless customer service and engagement experience alongside implementing an advanced <unk> system.

Simon Campion: Furthermore, many of our direct customers would prefer to do business with our company through a robust e-commerce platform. With that in mind, we have developed a detailed plan to upgrade our offering through increased functionality and capability and are now moving into the execution phase. Our plan incorporates many discrete areas of enhancement, which we expect will improve the performance of this channel and customer experience with our company. We expect most of these initiatives will go live by the end of Q2 2025.

Lindsey: Furthermore, many of our direct customers would prefer to do business with our company through a robust e-commerce platform.

Simon D. Campion: With that in mind, we have developed a detailed plan to upgrade our offering through increased functionality and capability and are now moving into the execution phase. Our plan incorporates many discrete areas of enhancement, which we expect will improve the performance of this channel and customers' experience with our company. We expect most of these initiatives will go live by the end of Q2 2025.

Lindsey: With that in mind, we have developed a detailed plan to upgrade our offering through increased functionality and capability and are now moving into the execution phase.

Lindsey: Our plan incorporates many discrete areas of enhancement, which we expect will improve the performance of this channel and customers experience with our company.

Lindsey: We expect most of these initiatives will go live by the end of Q2 2025.

Simon Campion: And this leads us to our relationships with distributors. The degree to which we partner with distributors varies around the world. We value these partners in all geographies, and we have worked hard to strengthen those relationships. That said, changing market and competitive dynamics have impacted our relationships with certain distributors, and we are adjusting accordingly. For example, some not only distribute for us and others, but in certain areas, they compete with us directly. Others execute in manners that do not wholly align with our strategic objectives. We have and will continue to invest significantly and strategically across our businesses, introducing new products and software into the marketplace and training our distribution partners to represent our portfolio to our customers.

Lindsey: And this leads us to our relationships with distributors.

Simon D. Campion: The degree to which we partner with distributors varies around the world. We value these partners in all geographies, and we have worked hard to strengthen those relationships. That said, changing market and competitive dynamics have impacted our relationships with certain distributors, and we are adjusting accordingly. For example, some not only distribute for us and others, but in certain areas, they compete with us directly.

Lindsey: The degree to which we partner with distributors varies around the world.

Lindsey: We value these partners in all geographies and we have worked hard to strengthen those relationships.

Lindsey: That said changing market and competitive dynamics have impacted our relationships with certain distributors and we are adjusting accordingly.

Lindsey: For example, some not only distribute for us than others, but in certain areas they compete with us directly.

Simon D. Campion: Others execute in ways that do not wholly align with our strategic objectives. We have and will continue to invest significantly and strategically across our business. Introducing new products and software into the marketplace and training our distribution partners to represent our portfolio to our customers. Through these activities, we enable distributor success, which in some cases is not adequately reflected in our current terms and conditions with. With this in mind, we recently issued a non-renewal notice to Patterson Companies under our Equipment Distribution Agreements in the United States and Canada. We did not make this decision likely easily.

Lindsey: Others execute in matters that do not wholly aligned with our strategic objectives.

Lindsey: We have and will continue to invest significantly and strategically across our businesses.

Lindsey: Introducing new products and software into the marketplace and training our distribution partners to represent our portfolio to our customers.

Simon Campion: Through these activities, we enable distributors' success, which in some cases is not adequately reflected in our current terms and conditions with them. With this in mind, we recently issued a non-renewal notice to partisan companies under our equipment distribution agreements in the United States and Canada. We did not make this decision lightly. It reflects our desire for improved delivery and communication of the value proposition we bring to dentistry, including our evolving digitally connected ecosystem. Our current contract remains in effect as we engage in ongoing discussions, which we hope leads to an agreement that aligns more closely with the evolving environment and our strategic objectives.

Lindsey: Through these activities, we enabled distributor success, which in some cases is not adequately reflected in our current terms and conditions with them.

Lindsey: With this in mind, we recently issued a non renewal notice to Patterson companies under our equipment distribution agreements in the United States and Canada.

Speaker Change: We did not make this decision likely at.

Simon D. Campion: It reflects our desire for improved delivery and communication of the value proposition we bring to dentistry, including our evolving digitally connected ecosystem. Our current contract remains in effect as we engage in ongoing discussions, which we hope will lead to an agreement that aligns more closely with the evolving environment and our strategic objectives. To help us achieve the Phase 2 cost savings and advance our strategic initiatives, we have made several organizational and leadership changes, including merging North America and Latin America into one commercial team now called the Americas region.

Speaker Change: It reflects our desire for improved delivery and communication of the value proposition, we bring to dentistry, including our evolving digitally connected ecosystem.

Lindsey: Our current contract remains in effect as we engage in ongoing discussions, which we hope lead through an agreement that aligns more closely with the evolving environment and our strategic objectives.

Simon Campion: To help us achieve the phase two cost savings and advance our strategic initiatives, we have made several organizational and leadership changes, including merging North America and Latin America into one commercial team now called the America's region. Given their experience and track record, we are confident that the regional commercial leaders now in place can drive the necessary changes to address our operational realities, improve organizational health, and better position Densely Surrounded for future growth.

Lindsey: To help us achieve the phase II cost savings and advance our strategic initiatives, we have made several organizational and leadership changes.

Lindsey: Including emerging North America, and Latin America into one commercial team now called the Americas region.

Simon D. Campion: Given their experience and track record, we are confident that the regional commercial leaders now in place can drive the necessary changes to address our operational realities, improve organizational health, and better position Dentsply Sirona for future growth. Furthermore, we announce today that, as part of our leadership changes in connection with Phase 2, Andreas Frank will be leaving the organization.

Lindsey: Given their experience and track record we are confident that the regional commercial leaders now in place and drive the necessary changes to address our operational realities improve organizational health and better position <unk> sirona for future growth.

Simon Campion: Furthermore, we announced today that, as part of our leadership changes in connection with phase two, Andreas Frank will be leaving the organization. Andreas made many meaningful contributions in helping us establish our path forward and in executing the work we have undertaken. These changes are intended to increase alignment between our global business units and our regions, thereby creating positive momentum in our revenue trajectory, which we anticipate will improve the leverage of our other emergent accrued activities. Finally, we have been diligently improving processes in R&D to ensure that we are working on the right programs at the right time.

Lindsey: Furthermore, we announced today that as part of our leadership changes in connection with Phase II.

Lindsey: Andreas Frank will be leaving the organization.

Simon D. Campion: Andreas made many meaningful contributions in helping us establish our path forward and in executing the work we have undertaken. These changes are intended to increase alignment between our global business units and our regions, thereby creating positive momentum in our revenue trajectory, which we anticipate will improve the leverage of our other margin accretive activities. I'm Ali.

Lindsey: Andreas made many meaningful contributions in helping us establish our path forward and then executing the work we have undertaken.

Lindsey: These changes are intended to increase alignment between our global business units and our regions, thereby creating positive momentum in our revenue trajectory, which we anticipate will improve the leverage of our other margin accretive activities.

Lindsey: Finally.

Simon D. Campion: We have been diligently improving processes in R&D to ensure that we are working on the right programs at the right time, programs that focus on unmet clinical and workflow needs for our customers. Our ongoing assessment has identified $19 million outside of the Phase II initiatives that we plan to reallocate into programs tailored to those needs and with return dynamics that can allow us to alter the return trajectory of our total innovation pipeline. Specifically, we are increasing investments in orthodontic software to improve the dental professional's experience.

Lindsey: We have been diligently improving processes in R&D to ensure that we are working on the right programs at the right time.

Lindsey: Programs that focus on unmet clinical and workflow needs for our customers.

Simon Campion: Our ongoing assessment has identified 19 million dollars outside of the phase two initiatives that we plan to reallocate into programs tailored to those needs and with return dynamics that can allow us to alter the return trajectory of our total innovation pipeline. Specifically, we are increasing investments in orthodontic software to improve the dental professional experience, accelerating DS core capability and making further investments across our connected technology platforms. Now let's circle back and talk about our $3 EPS target. As we stated, when we announced this objective, achieving this target assumes an improved macroeconomic environment. Since announcing the target, we've continued to see pressures globally, particularly in markets where we have a significant presence such as Germany and Australia, as well as higher interest rates persisting across many of our major markets, including the US.

Lindsey: Our ongoing assessment has identified $19 million outside of the phase two initiatives that we plan to reallocate into programs tailored to those needs and with return dynamics that can allow us to alter the return trajectory of our total innovation pipeline.

Lindsey: Specifically, we are increasing investments in orthodontic software to improve the dental professionals experience.

Simon D. Campion: Accelerating DS Core Capability and making further investments across our connected technology platform. Now, let's circle back and talk about our $3 EPS target. As we stated when we announced this objective, achieving this target assumes an improved macroeconomic environment.

Lindsey: Accelerating <unk> core capability, and making further investments across our connected technology platforms.

Lindsey: Now lets circle back and talk about our $3 EPS target.

Lindsey: As we stated when we announced this objective achieving this target assumes an improved macroeconomic environment.

Simon D. Campion: Since announcing the target, we've continued to see pressures globally, particularly in markets where we have a significant presence, such as Germany and Australia, as well as higher interest rates persisting across many of our major markets, including the U.S. However, despite the challenges already noted, the contribution of our Phase 1 activities to our $3 target is meaningful and within our control. This EPS target remains a North Star for us, and we expect Phase 2 to help our path to the $3 EPS target.

Lindsey: Since announcing the target we've continued to see pressures globally, particularly in markets, where we have a significant presence such as Germany, and Australia as well as higher interest rates persisting across many of our major markets, including the U S.

Simon Campion: Despite the challenges already noted, the contribution of our phase one activity to our $3 target is meaningful and within our control. This EPS target remains a North Star for us, and we expect phase two to help our path to the $3 EPS target. We also believe, as you heard today, that it's crucial to continue investing in our business to drive profitable growth and remain good stewards of our organization, as we laid out at Investor Day. In a nutshell, and while we are still fine-tuning our numbers, some of these initiatives will go towards helping us achieve the $3 EPS target, while the remainder will go towards improving our competitiveness, which we expect will drive even greater value.

Lindsey: Despite the challenges already noted the contribution of our phase one activities to a $3 target is meaningful and within our control.

Lindsey: This EPS target remains a north star for Us and we expect phase two to help our path to the $3 EPS target.

Simon D. Campion: We also believe, as you heard today, that it's crucial to continue investing in our business to drive profitable growth and remain good stewards of our organization, as we lay it out at investment. In a nutshell, and while we are still fine-tuning our numbers, some of these initiatives will go towards helping us achieve the $3 EPS target, while the remainder will go towards improving our comparativeness, which we expect will drive even greater value.

Lindsey: We also believe as you heard today that it's crucial to continue investing in our business to drive profitable growth and remain good stewards of our organization as we laid out at Investor day.

Lindsey: In a nutshell and while we are still fine tuning our numbers. Some of these initiatives will go towards helping us achieve the $3 EPS target, while the remainder will go towards improving our competitiveness, which we expect will drive even greater value.

Simon Campion: Before I hand a call over to Glenn to discuss the financial results in more detail, let me add that we had a strong cash row quarter, resulting in over $100 million in cash becoming available. We plan to return this to our shareholders through additional share buybacks in Q3 of this year, and I'll highlight that in total, we now plan to return about $380 million to shareholders this year through share buybacks and dividends.

Simon D. Campion: Before I hand the call over to Glenn to discuss the financial results in more detail, let me add that we had a strong cash flow quarter, resulting in over $100 million in cash becoming available. We plan to return this to our shareholders through additional share buybacks in Q3 of this year. And I'll highlight that, in total, we now plan to return about $380 million to shareholders this year through share buybacks and dividends. Now, over to you, Glenn.

Lindsey: Before I hand, the call over to Glenn to discuss the financial results in more detail.

Glenn: Let me add that we had a strong cash flow quarter, resulting in over $100 million in cash becoming available.

Simon Campion: Now, we'll return to you then.

Glenn Coleman: Thanks, Simon.

Glenn G. Coleman: Thanks, Simon. Good morning, and thank you all for joining us. Today, I'll provide more detail on our second quarter results and an update on our full year 2024 outlook. Let's begin with slide four. Our second quarter revenue was $984 million, representing a decline of 4.2% versus the prior year quarter. On an organic basis, sales declined 2.3% as foreign currency negatively impacted sales by approximately $20 million or 190 basis points, with the largest impact coming from the weakening of the Japanese yen versus the U.S. dollar. On a constant currency basis, three of the four segments posted organic growth in the quarter, highlighted by double-digit growth in aligners and well-specced healthcare. However, these improvements were offset by declines in CTS.

Glenn Coleman: Good morning, and thank you all for joining us. Today, I'll provide more detail on our second quarter results in an update on our full year 2024 outlook. Let's begin on slide 4. Our second quarter revenue was $984 million, represented to climb a 4.2% versus the prior year quarter. On an organic basis, sales declined 2.3%, as foreign currency negatively impacted sales by approximately $20 million, or 190 basis points. with the largest impact coming from the weakening of the Japanese yen versus the US dollar. On a constant currency basis, three of the four segments posted organic growth in the quarter, highlighted by double-digit growth in aligners and well-spec health care.

Glenn Coleman: These improvements were also by declines in CTS, where we continued to experience the effects of challenging equipment market conditions and competitive pressure. Even in margins contracted 30% of the basis points, many due to a decline in gross margins, which was largely driven by the impact of lower volumes, pricing, and unfavorable product mix in our CTS segment. In the quarter, a large proportion of our CAD-CAM sales came from Prime Scan Connect, which has a lower gross margin profile than our other Prime Scan offerings. This is not a new trend, but one that has become more pronounced.

Glenn: These improvements were offset by declines in Cts.

Glenn G. Coleman: We continue to experience the effects of challenging equipment market conditions and competitive pressure. Even margins contract by 30 basis points. Many of these were due to a decline in gross margins, which was largely driven by the impact of lower volumes, pricing, and unfavorable product mix in our CTS segment. In the quarter, a larger proportion of our CAD CAM sales came from PrimeScan Connect, which has a lower gross margin profile than our other prime scan offerings. This is not a new trend but one that has become more pronounced. Adjusted EPS in the quarter was 49 cents, down 4% from the prior year.

Glenn: We continued to experience the effects of challenging equipment market conditions and competitive pressure.

Glenn: EBITDA margins contracted 30 basis points, mainly due to a decline in gross margins, which was largely driven by the impact of lower volumes pricing and unfavorable product mix in our Cts segment.

Glenn: In the quarter, a larger proportion of our CAD Cam sales came from prime scan connect which has a lower gross margin profile than our other prime scan offerings.

Glenn: This is not a new trend, but one that has become more pronounced.

Glenn Coleman: Adjust the DPS in the quarter with 49 cents, down 4% from the prior year due to lower sales on a higher tax rate. Operating cash flow of $208 million doubled over the prior year due to favourable timing of cash collections and receipt of a foreign tax refund. Three cash flow conversion was 155% compared to 65% in the prior year. In the second quarter, we repurchased $150 million of shares at an average price of $27.85 and paid $33 million in dividends. Assignment mentioned previously, we intend to repurchase $100 million of shares in Q3 and plan to do so without increasing our leverage given the strong cash flow performance in the quarter.

Glenn: Adjusted EPS in the quarter was 49, <unk> down 4% from the prior year.

Glenn G. Coleman: Due to lower sales and a higher tax rate, operating cash flow of $208 million doubled over the prior year. Due to the favorable timing of cash collections and receipt of a foreign tax refund, pre-cash flow conversion was 155% compared to 65% in the prior year. In the second quarter, we repurchased $150 million of shares at an average price of $27.85 and paid $33 million in dividends. As Simon mentioned previously, we intend to repurchase $100 million of shares in Q3 and plan to do so without increasing our leverage given the strong cash flow performance in the quarter.

Glenn: Due to lower sales and a higher tax rate.

Glenn: Operating cash flow of $208 million doubled over the prior year.

Glenn: Due to favorable timing of cash collections and receipt of a foreign tax refund.

Glenn: Free cash flow conversion was 155% compared to 65% in the prior year.

Glenn: In the second quarter, we repurchased $150 million of shares at an average price of $27 85, and paid $33 million in dividends.

Glenn: As Simon mentioned previously we intend to repurchase $100 million of shares in Q3 and plan to do so without increasing our leverage given the strong cash flow performance in the quarter.

Glenn Coleman: For the full year, we now plan to return approximately $380 million to shareholders in a combination of dividends and share repurchases. We continue to maintain a strong balance sheet with cash and cash equivalents of $279 million on June 30th. Our Q2 leverage ratio remains stable at 2.7 times, and we plan to end the year with a leverage ratio slightly lower than current levels.

Glenn G. Coleman: For the full year, we now plan to return approximately $380 million to shareholders through a combination of dividends and share repurchase. We continue to maintain a strong balance sheet with cash and cash equivalents of $279 million on June 30. Our Q2 leverage ratio remains stable at 2.7 times.

Simon: For the full year, we now plan to return approximately $380 million to shareholders through a combination of dividends and share repurchases.

Glenn: We continue to maintain a strong balance sheet with cash and cash equivalents of $279 million on June 30.

Glenn: Our Q2 leverage ratio remains stable at two seven times and we plan to end the year with a leverage ratio slightly lower than current levels.

Glenn G. Coleman: We plan to end the year with a leverage ratio slightly lower than current levels. Let's now turn to the second quarter segment performance on slide five. Starting with the Essential Dental Solutions segment, which includes Endo, Resto, and Preventive products, organic sales increased 1.5%, driven by steady patient traffic in Europe, partially offset by lower volume in the U.S. Our new EndoMotor X-Smart Pro Plus drove increased demand in Europe and Japan in Q2, and recently received 510K clearance to launch in the U.S., which is now planned in Q3.

Glenn Coleman: Let's now turn to second quarter segment performance of slide 5. Starting with the essential dental solution segment, which includes endo, resto, and preventive products. Organic sales increase 1.5%, driven by steady patient traffic in Europe, partially offset by lower volume in the US. Our new endo motor, XMAR Pro Plus, drove increased demand in Europe and Japan in Q2. And recently received 510(k) clearance to launch in the US, which is now planned in Q3. Shifting to the orthodontic and implant solution segment, organic sales grew 4.6% with double-digit growth from aligners, up 11%. JurisMile, our professional aligner brand, grew 6% driven by double-digit growth in Europe.

Glenn: Let's now turn to the second quarter segment performance on slide five.

Glenn: Starting with the essential dental solutions segment, which includes endo resto and preventive products organic sales increased one 5%.

Glenn: Driven by steady patient traffic in Europe, partially offset by lower volume in the U S.

Glenn: Our new Endo Motor X Smart pro plus drove increased demand in Europe, and Japan in Q2 and.

Glenn: And recently received five 10-K clearance to launch in the U S, which is now planned in Q3.

Glenn G. Coleman: Shifting to the orthodontic and implant solution segment, organic sales grew 4.6%, with double-digit growth from aligners up 11%. JuraSmile, our professional aligner brand, grew 6%, driven by double-digit growth in Europe. Your Smile also saw accelerated sales growth in Japan, and we've recently made investments to expand our footprint and coverage. Byte, our direct-to-consumer aligner brand, grew 16% over the prior year quarter.

Glenn: Shifting to the orthodontic and implant solutions segment organic sales grew four 6% with double digit growth from our liners up 11%.

Glenn: Juror Smile, a professional aligner brand grew 6% driven by double digit growth in Europe.

Glenn Coleman: JurisMile also saw accelerated sales growth in Japan. We recently made investments to expand our footprint and coverage. Flight, our direct-to-consumer aligner brand, grew 16% over the prior year quarter. During the quarter, legislative changes required us to adjust our go-to-market model in certain states. Given the evolving legislative and regulatory environment, we now expect bite to grow approximately 15% for the full year, compared to our previous estimate of more than 20% growth. On the premium side, growth in our EV family of implants and prosthetic solutions outpaced the client in legacy brands. Supporting our commitment to clinical education, in Q2 we held our Implant Solutions World Summit in Miami, hosting over 600 implant professionals from 25 countries.

Glenn: First of all I'll also saw accelerated sales growth in Japan, We recently made investments to expand our footprint in coverage.

Glenn: Fight, our direct to consumer Aligner brands grew 16% over the prior year quarter.

Glenn G. Coleman: During the quarter, legislative changes required us to adjust our go-to-market model in certain states. Given the evolving legislative and regulatory environment, we now expect BITE to grow approximately 15% for the full year, compared to our previous estimate of more than 20% growth. Implants and prosthetics grew low single digits in the quarter, driven by strong implant growth in China, partially offset by declines in the U.S. and Europe.

Glenn: During the quarter legislative changes required us to adjust our go to market model in certain states.

Glenn: Given the evolving legislative and regulatory environment, we now expect bite to grow approximately 15% for the full year.

Glenn: Compared to our previous estimate of more than 20% growth.

Glenn: Implants prosthetic grew low single digits in the quarter driven by strong implants growth in China, partially offset by declines in the U S and Europe.

Glenn G. Coleman: Our value implant segment was flat in the quarter as growth in most markets was offset by the impact of Turkey's suspension of all imports from Israel. On the premium side, growth in our EV family of implants and prosthetic solutions outpaced declines in legacy brands. Supporting our commitment to clinical education, in Q2, we held our Implant Solutions World Summit in Miami, hosting over 600 implant professionals from 25 countries.

Glenn: Our value implant segment was flat in the quarter as growth in most markets was offset by the impact of Turkey suspension of all imports from Israel.

Glenn: On the premium side growth in our <unk> family of implants prosthetic solutions outpaced declines in legacy brands.

Glenn: Supporting our commitment to clinical education in Q2, we held our implant solutions World Summit in Miami.

Glenn Coleman: Wrapping up our dental performance, CTS, our connected technology solution segment, so organic sales increased 4% sequentially but declined 16% versus the prior year quarter. We saw a double-digit decline in both E&I and CAD CAM as the demand environment for equipment remains soft due to macro headwinds and higher interest rates in most markets. Declines in imaging equipment and treatment centers are also partially driven by a tougher comp versus the prior year quarter. While we anticipate the equipment market will remain challenging through the second half of the year, we expect our current implant actions, including an upcoming digital equipment launch, to improve our performance in the second half.

Glenn G. Coleman: Wrapping up our Dental Performance, CTS, our Connected Technology Solutions segment. So organic sales increased 4% sequentially but declined 16% versus the prior year quarter. We saw a double-digit decline in both ENI and CAD-CAM, as the demand environment for equipment remains soft due to macro headwinds and higher interest rates in most markets. Declines in imaging equipment and treatment centers were also partially driven by a tougher comp versus the prior year quarter.

Glenn G. Coleman: While we anticipate the equipment market will remain challenging through the second half of the year, we expect our current and planned actions, including an upcoming digital equipment launch, to improve our performance in the second half. We look forward to sharing more with you about this launch in the near future. We've also seen very good adoption for DSCore registrations, which continue to grow, and we now have over 27,000 unique users as of quarter end, representing 37% growth compared to Q1.

Glenn Coleman: We look forward to sharing more with you about this launch in the near future. We've also seen very good adoption on DS core registrations, which continue to grow, and we now have over 27,000 unique users as of quarter end, representing 37% growth compared to Q1. Moving to well-spec healthcare, organic sales through 11.7% exceeding our expectations. We saw growth across all regions, and we continue to benefit from new product launches, market share gains, and an initial stocking order from a new distributor. In the second half, we expect the well-spec growth rate to moderate to the mid-single-digit range.

Glenn G. Coleman: Moving to well-specced healthcare, organic sales increased to 11.7%, exceeding our expectations. We saw growth across all regions, and we continue to benefit from new product launches, market share gains, and an initial stocking order from a new distributor. In the second half, we expect the well-specified growth rate to moderate to the mid-single-digits. Now, let's turn to slide six to discuss second quarter financial performance by region. U.S. organic sales declined 0.6% due to lower imaging equipment volume and lower wholesale volumes in EDS.

Glenn Coleman: Now let's turn to slide 6 to discuss second quarter financial performance by region. US organic sales declined 0.6% due to lower imaging equipment volume and lower wholesale volumes in EDS. On a retail basis, EDS sales were approximately flat in the quarter. US CAD CAM grew low single digits. Distributor inventory levels decreased sequentially by approximately $16 million, consistent with normal seasonality, compared to a $23 million sequential decrease in the prior year quarter. We expect US CAD CAM distributor inventory levels to fluctuate quarter to quarter and be roughly flat by the end of the year compared to current levels.

Glenn G. Coleman: On a retail basis, EDS sales were approximately flat in the quarter. U.S. CAD-CAM, GU-LOW SINGLE DIGIT, Distributor inventory levels decreased sequentially by approximately $16 million, consistent with normal seasonality, compared to a $23 million sequential decrease in the prior year quarter. We expect U.S. CAD-CAM distributor inventory levels to fluctuate quarter to quarter and be roughly flat by the end of the year compared to current levels. Turning to Europe, organic sales declined 2.6% due to lower CTS volume across the region as a result of prolonged recessionary trends, particularly in Germany, most notably affecting the demand for equipment.

Glenn: Yeah.

Glenn: Now, let's turn to slide six to discuss second quarter financial performance by region.

Glenn: U S organic sales declines, 0.6% due to lower imaging equipment volume and lower wholesale volumes in E. D. S.

Speaker Change: On a retail basis <unk> sales were approximately flat in the quarter.

Speaker Change: U S Cadcam grew low single digits.

Speaker Change: Distributor inventory levels decreased sequentially by approximately $16 million consistent with normal seasonality compared to a $23 million sequential decrease in the prior year quarter.

Speaker Change: We expect U S cadcam distributor inventory levels to fluctuate quarter to quarter and be roughly flat by the end of the year compared to current levels.

Glenn Coleman: Turning to Europe, organic sales declined 2.6% due to lower CTS volume across the region. as a result of prolonged recessionary trends, particularly in Germany, most notably affecting the demand for equipment. In Q2, we began to deliver units of orthophosis SL, our relaunch 2D and 3D imaging line. While we're pleased with the uptake of the relaunch, we expected to only partially offset the macro headwinds and competitive pressures in the second half of the year. The decline in CTS was partially offset by growth in EDS and well-spec healthcare, both of which benefit from new product launches. Rest of World organic sales declined 4.3% in the quarter, as robust growth in China for end-to-end implants was offset by self-demand for equipment in Japan and Australia, New Zealand.

Speaker Change: Turning to Europe organic sales declined two 6% due to lower Cts volume across the region.

Speaker Change: As a result of prolonged recessionary trends, particularly in Germany.

Glenn: Notably affecting the demand for equipment.

Glenn G. Coleman: In Q2, we began to deliver units of Orthophos SL, our relaunched 2D and 3D imaging line. While we're pleased with the uptake of the relaunch, we expect it will only partially offset the macro headwinds and competitive pressures in the second half of the year. The decline in CTS was partially offset by growth in EDS and well-specced healthcare, both of which benefited from new product launches. Rest of World Organic Sales declined 4.3% in the quarter.

Glenn: In Q2, we began to deliver units of worthless SSL or relaunched two D and three D imaging line.

Glenn: While we're pleased with the uptake of the relaunch we expect it will only partially offset the macro headwinds and competitive pressures in the second half of the year.

Glenn: The declines in Cts were partially offset by growth in Etfs, and well expect health care, both of which benefited from new product launches.

Glenn: Rest of World organic sales declined four 3% in the quarter.

Glenn G. Coleman: As robust growth in China for endo and implants was offset by soft demand for equipment in Japan and Australia and New Zealand. With that, let's move to slide seven to discuss our updated outlook for 2024. We are revising our full-year outlook based upon first-half results, anticipated additional FX headwinds, market dynamics, and our expectation for prolonged macro challenges. Our July customer survey, which included approximately 2,000 responses, confirmed what external data indicated about the market and demand dynamics. And we believe it's prudent to take a cautious view through the remainder of the year. Several key markets showed a dip in patient traffic, including the U.S., France, and Spain.

Glenn: As robust growth in China for Endo, and implants was offset by soft demand for equipment in Japan, and Australia and New Zealand.

Glenn Coleman: With that, let's move to slide 7 to discuss our updated outlook for 2024. We are revising our full-year outlook based upon first-half results, anticipated additional FX headwinds, market dynamics, and our expectation for prolonged macro challenges. Our July customer survey, which included approximately 2,000 responses, confirmed what external data indicated about the market and demand dynamics. And we believe it's prudent to take a cautious view to the remainder of the year. Several key markets showed a dip in patient traffic, including the U.S., France, and Spain. While customers expressed an interest in innovations that can improve their workflows, they also reported that they plan to delay capital investments in the near term, consistent with the ADA data trends.

Glenn: With that let's move to slide seven to discuss our updated outlook for 2024.

Glenn: We are revising our full year outlook based upon first half results anticipated additional FX headwinds market dynamics, and our expectation for prolonged macro challenges.

Glenn: Our July customer survey, which included approximately 2000 responses confirmed what external data indicated about the market and demand dynamics.

Glenn: And we believe it's prudent to take a cautious view through the remainder of the year.

Glenn: Several key markets showed a dip in patient traffic, including the U S, France and Spain.

Glenn G. Coleman: Although customers expressed an interest in innovations that can improve their workflows, they also reported that they plan to delay capital investments in the near term, consistent with the ADA data trends. At current FX rates, we now expect full-year net sales to range from $3.86 billion to $3.90 billion. We expect organic sales to be down 1% to flat compared to our prior estimate of flat to up 1.5%. Moving to profitability, our outlook for an adjusted EBITDA margin of greater than 18% remains unchanged from our prior outlook.

Glenn: While customers expressed an interest in innovations that can improve their workflows. They also reported that they plan to delay capital investments in the near term consistent with the AIA data trends.

Glenn Coleman: At current FX rates, we now expect full-year net sales to range from $3.86 billion to $3.90 billion. We expect organic sales to be down 1% to flat, compared to our prior estimate of flat to up 1.5%. Moving to profitability, our outlook for adjusted even a margin of greater than 18% remains unchanged from our prior outlook. With these updates, we expect 2024 adjusted EPS to be in the range of $1.96 to $2.02, representing growth of 7 to 10% over the prior year. For the third quarter, we expect sales to increase low single digits on an organic basis and decline low single digits on a reported basis compared to the prior year.

Glenn: At current FX rates, we now expect full year net sales to range from $3 86 billion to $3 nine zero billion.

Glenn: We expect organic sales to be down 1% to flat compared to our prior estimate of flat to up one 5%.

Glenn: Moving to profitability our outlook for adjusted EBITDA margin of greater than 18% remains unchanged from our prior outlook.

Glenn G. Coleman: With these updates, we expect 2024 adjusted EPS to be in the range of $1.96 to $2.02, representing growth of 7% to 10% over the prior year. For the third quarter, we expect sales to increase low single digits on an organic basis and decline low single digits on a reported basis compared to the prior year. sequentially, we project gross margin to improve slightly in Q3 but decline year over year. We anticipate third quarter adjusted EPS will be down mid-single digits year over year, primarily due to a higher tax rate. And with that, I'll turn the call back over to Simon. Thank you, Glenn.

Glenn: With these updates we expect 2020 for adjusted EPS to be in the range of $1 96 to.

Glenn: $2 in <unk>.

Glenn: Representing growth of 7% to 10% over the prior year.

Glenn: For the third quarter, we expect sales to increase low single digits on an organic basis and declined low single digits on a reported basis compared to the prior year.

Glenn Coleman: So, clientially, we project gross margin to improve slightly in Q3 but decline year-over-year. We anticipate third quarter adjusted EPS will be down mid-single digits year-over-year, primarily due to a higher tax rate.

Glenn: Sequentially, we project gross margin to improve slightly in Q3, but declined year over year.

Glenn: We anticipate third quarter adjusted EPS will be down mid single digits year over year, primarily due to a higher tax rate.

Simon Campion: And with that, I'll turn the call back over to Simon.

Glenn: And with that I'll turn the call back over to Simon.

Simon Campion: Thank you, Glenn.

Simon: Thank you Glenn.

Simon D. Campion: Moving on to our strategic update, starting on slide 16. We remain confident in the strategy that we have laid out. Digitalize our company, win in high growth categories, create a high performance culture, enhance and sustain profitability, and meet our stated financial objectives. As we noted this time last year, we had several areas that we wanted to focus on in 2023, 2024, and beyond to drive this. These included work on our foundational initiatives.

Simon Campion: Moving on to our strategic update, starting on slide 8. We remain confident in the strategy that we have laid out. Digitalize our company, win in high-growth categories, create a high-performance culture, enhance and sustain profitability, and meet our stated financial objectives. As we noted this time last year, we had several areas that we wanted to focus on in 2023, 2024, and beyond to drive the agenda. These included work on our foundational initiatives, designing a really important folio, driving network efficiency, redefining our ERP landscape, and executing our restructuring. Let me now provide you with a brief update on our progress.

Simon: Moving onto a strategic update starting on slide eight.

Simon: We remain confident in the strategy that we have laid out.

Speaker Change: Is utilize our company win in high growth categories create a high performance culture enhanced and sustained profitability and meet our stated financial objectives.

Speaker Change: As we noted this time last year, we had several areas that we wanted to focus on in 2023 2024 and beyond to drive this agenda.

Speaker Change: These included work on our foundational initiatives designing a winning portfolio driving network efficiency redefining, our ERP landscape and executing our restructuring.

Simon D. Campion: Designing a Winning Portfolio, Thriving Network Efficiency, Redefining Our ERP Landscape, and Executing Our Restructuring. Let me now provide you with a brief update on our program. We are advancing our SKU optimization work and expect to eliminate almost 50% of our Endo and Restorative SKUs by the end of 2025. We anticipate having the majority of this completed by the end of this year, starting with the non-revenue generating SKUs, while we work towards migrating revenue generating SKUs in 2025.

Speaker Change: Now I'll provide you with a brief update on our progress.

Simon Campion: We are advancing our SKU optimization work and expect to eliminate almost 50% of our endow and restorative SKUs by the end of 2025. We anticipate having the majority of this completed by the end of this year, starting with non-revenue generating SKUs while we work towards migrating revenue generating SKUs in 2025. Our supply chain team continues to seek opportunities to improve our network performance. We have recently closed another US distribution site and announced plans to close another US-based manufacturing site. We have been driving towards a Q3 commencement of an initial ERP rollout in Europe for several months.

Speaker Change: We are advancing our SKU optimization work and expect to eliminate almost 50% of our endo and restored of Skus by the end of 2025.

Speaker Change: We anticipate having the majority of this completed by the end of this year, starting with the non revenue generating skus, while we work towards migrating revenue generating skus in 2025.

Simon D. Campion: Our supply chain team continues to seek opportunities to improve our network performance. We have recently closed another U.S. distribution site and announced plans to close another U.S.-based manufacturing facility. We have been driving towards a Q3 commencement of an initial ERP rollout in Europe for several months. I am pleased to inform you that tomorrow, August 1st, we will go live with SAP 4HANA in the UK.

Speaker Change: Our supply chain team continues to seek opportunities to improve our network performance.

Speaker Change: We have recently closed another U S distribution site and.

Speaker Change: And announced plans to close another U S based manufacturing site.

Speaker Change: We have been driving towards a Q3 commencement of an initial ERP rollout in Europe for several months.

Simon Campion: I am pleased to inform you that tomorrow, August 1st, we will go live with SAP S/4HANA in the UK. We have completed an extraordinarily robust set of tests and simulations and will now shift our focus to a go-live in North America in the latter part of 2024, with other implementations to follow. Today, we have clearly articulated phase two of our plans to transform dense-plice-erona. We have demonstrated our ability to deliver on such objectives with our success to date in phase one, and we are confident we can deliver on these new initiatives and investments as we strive towards making dense-plice-erona the pre-eminent partner for dentists, hygienists, and practice owners around the world.

Speaker Change: I am pleased to inform you that Tomorrow August 1st we will go live with SAP four Hana in the U K.

Simon D. Campion: We have completed an extraordinarily robust set of tests and simulations and will now shift our focus to going live in North America in the latter part of 2024 with other implementations to follow. Today, we have clearly articulated Phase 2 of our plans to transform Dentsply Sirona. We have demonstrated our ability to deliver on such objectives with our success to date in Phase 1, and we are confident we can deliver on these new initiatives and investments as we strive to make Dentsply Sirona the preeminent partner for dentists, hygienists, and practice owners around the world.

Speaker Change: We have completed an extra ordinarily robust set of tests and simulations and we will now shift our focus to a go live in North America in the latter part of 2024 with other implementations to follow.

Speaker Change: Today, we have clearly articulated phase two of our plans to transform dense play sirona.

Simon Campion: Now, let me close with a few remarks on slide nine. Last year, we committed to taking decisive action, and this was not a singular statement in time. We want to capitalize on the opportunity that the dental industry affords an organization like ours, and we believe that the actions we have announced today, as well as those we took in phase one, will continue to drive efficiency and position us well in this evolving market. We will continue to regularly assess our business, take decisive action, and pivot as needed to improve our company and its performance, particularly with respect to revenue growth, margin expansion, and EPS.

Simon D. Campion: Now let me close with a few remarks on slide 16. Last year, we committed to taking decisive action, and this was not a singular statement in time. We want to capitalize on the opportunity that the dental industry affords an organization like ours, and we believe that the actions we have announced today, as well as those we took in phase one, will continue to drive efficiency and position us well in this evolving market. We will continue to regularly assess our business.

Simon D. Campion: Take decisive action and pivot as needed to improve our company and its performance, particularly with respect to revenue growth, margin expansion, and EPS. Today, you've heard us expand on further decisive action that we are taking to not only aid our path to our $3 target but also improve and increase our proximity to our customers. To recap, we ended Q2 experiencing continued pressure on our capital equipment business. Our implants business in China has progressed well, while we continue to invest in the U.S. business and do expect growth in the back half of 2025.

Simon Campion: Today, you've heard us expand on further decisive action that we are taking to not only aid our path to our $3 target, but to also improve and increase our proximity to our customers. To recap, we ended Q2 experiencing continued pressure on our capital equipment business. Our implants business in China has progressed well, while we continue to invest in the U.S. business and do expect growth in the back half of 2024. Our also business continues to be our fastest growing portfolio globally, notwithstanding the previously mentioned regulatory environment for bites in the U.S. Our new product launches, particularly in endodontics and well-specced, have done well for us, and we look forward to sharing more information with you at 2024 Progressives.

Simon D. Campion: Our ortho business continues to be our fastest growing portfolio globally, notwithstanding the previously mentioned regulatory environment for bytes in the U.S. Our new product launches, particularly in Endodontics and WellSpect, have done well for us, and we look forward to sharing more information with you as 2024 progresses. And with that, I will open it up to questions. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: We look forward to sharing more information with you at 2024 progresses.

Operator: And with that, I will open it up for questions. Thank you.

Speaker Change: And with that I will open it up for questions.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Operator: At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: As a reminder to ask a question you need to press Star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Operator: Please limit your inquiries to one question and one follow-up. Please stand by while I will compile the Q&A roster.

Speaker Change: Please limit your inquiries to one question and one follow up please standby, while we compile the Q&A roster.

Brandon Vazquez: The first question comes from Brandon Vazquez, from William Blair. Please go ahead. Morning everyone, thanks for taking the question. Maybe first I'll focus a little bit on macro. I mean, it's something that's on everyone's minds these days, and it seems like in certain areas it's deteriorating a little bit. So maybe can you just spend a couple more minutes talking about the specific segments? Is this broad base or is this kind of equipment specific where you're seeing macro worsening? And what's kind of the exit trajectory of macro conditions as we're going into the back after the year now for these segments.

Operator: To withdraw your question, please press star 1 1 again. Please limit your inquiries to one question and one follow-up. Please stand by while we compile the Q&A roster. The first question comes from... Brandon Vasquez from William Blair. Please go ahead. Good morning, everyone.

Speaker Change: The first question comes from.

Speaker Change: Brandon Vazquez from William Blair. Please go ahead.

Brandon Vazquez: Thanks for taking the question. Maybe first, I'll focus a little bit on macro. I mean, it's something that's on everyone's mind these days.

Brandon Vazquez: Good morning, everyone. Thanks for taking the question, maybe first I'll focus a little bit on macro I mean, it's something that's on everyone's mind. These days and it seems like in certain areas. It's deteriorating a little bit. So maybe can you just spend a couple more minutes talking about the specific segments. It is this broad based or is this kind of equipment specific where you're seeing.

Speaker Change: Macro worsening.

Speaker Change: And what's kind of the exit trajectory of macro conditions as we're going into the back half of the year now for these segments.

Glenn Coleman: Yeah, Brandon, this is Glenn.

Brandon Vazquez: And it seems like in certain areas, it's deteriorating a little bit. So maybe you can just spend a couple more minutes talking about the specific segments? Is this broad-based? Or is this kind of equipment-specific where you're seeing macro worsening? And what's the exit trajectory of macro conditions as we're going into the back half of the year now for these segments? Yeah, Brandon. This is Glenn.

Glenn: Yeah. Brandon This is Glenn I'll start good morning, I think first and foremost we're seeing a worsening trend in terms of the macro environment I think on the equipment side, certainly a challenging environment, it's been challenging for the last several quarters.

Simon Campion: I'll start. Good morning. I think, first and foremost, when I was seeing a worsening trend in terms of the macro environment, I think on the equipment side, certainly a challenging environment. It's been challenging for the last several quarters. The biggest challenges for us continue to be Germany, parts of Asia, including Japan and Australia, and the US market. So I wouldn't say it's gotten any worse, but certainly when we look at the equipment market, it's a challenging market. On the consumable side, I would say the patient traffic has been pretty stable. We have seen a bit of a decline in some of the specialty procedures and elected procedures.

Speaker Change: You know the biggest challenges for us continued to be Germany.

Speaker Change: Parts of Asia, including Japan, and Australia.

Speaker Change: In the U S market. So you know I wouldn't say, it's gotten any worse, but certainly when we look at the equipment market.

Glenn G. Coleman: I'll start. Good morning. I think, first and foremost, we're not seeing a worsening trend in terms of the macro environment. I think on the equipment side, certainly a challenging environment. It's been challenging for the last several quarters.

Glenn G. Coleman: You know, the biggest challenges for us continue to be Germany, parts of Asia, including Japan and Australia, and the U.S. market. So, you know, I wouldn't say it's gotten any worse, but certainly when we look at the equipment market, it's a challenging market. On the consumable side, I would say patient traffic has been pretty stable. We have seen a bit of a decline in some of the specialty procedures and elective procedures, so aligners and implants, as an example, in the U.S. market.

Speaker Change: It's a challenging market.

Speaker Change: Consumable side, I would say that patient traffic has been pretty stable.

Speaker Change: I've seen a bit of a decline in some of the specialty procedures in elective procedures. So our liners and implants as an example in the U S market that was confirmed also with our external survey that we do.

Simon Campion: So aligners and implants as an example in the US market. That was confirmed also with our external survey that we do. And so those are overall some of the trends that we're saying, but something maybe you want to comment as well.

Speaker Change: And so those are overall some of the trends that we're seeing but something maybe you want to comment as well, yes. Good morning. Brendan then I think we noted.

Simon Campion: Yeah, good morning, Brandon. And I think we noted previously that for some of those specialty procedures, patients actually finance their treatment. So when you have a continued inflationary environment, they are less likely to finance those procedures, and some of the details from the survey reaffirmed that this past quarter.

Glenn G. Coleman: That was also confirmed in our external survey that we do. And so, those are overall some of the trends that we're seeing, but Simon, maybe you want to comment as well. Yeah, good morning, Brandon, and I think we noted previously that for some of those specialty procedures, patients actually finance their treatment.

Speaker Change: Previously that for some of those specialty procedures.

Speaker Change: It's actually finance their their treatment. So when you have a continued inflationary.

Simon D. Campion: So when you have a continued inflationary environment, they are less likely to finance. Okay, thanks. And a lot of other updates to hit on, I'm sure other analysts will get to, but I'll maybe focus on the other top inbound and discussion I usually have with investors, which is if macro is performing a little bit worse today, guidance has to come down a little bit. I know, Simon, you were touching on this 2026 EPS target. Help us frame out what macro needs to happen in order to get there.

Speaker Change: Inflationary environment on their own.

Speaker Change: Less likely to to finance those procedures and some of the details from the survey reaffirm that this past quarter.

Brandon Vazquez: Okay, thanks. And a lot of a lot of other updates to hit on. I'm sure other analysts will get to, but I'll maybe focus on the other top inbound and discussion I usually have with investors, which is if macro is performing a little bit worse today. A guidance has to come down a little bit and assign menu. We're touching on this 2026 EPS target. Help us frame out what macro needs to happen in order to get there still. We're tracking a little bit behind that now. What needs to happen in the next two years to still hit that 2026 EPS target in terms of macro, and should we maybe be thinking of that one third macro in the EPS bridge.

Speaker Change: Okay. Thanks.

Speaker Change: A lot of a lot of other updates to hit out I'm sure other analysts will get to but I'll, maybe focus on the other top inbound in discussion I, usually have with investors which is.

Simon: Macro is performing a little bit worse today guidance has to come down a little bit I know Simon you were touching on this 2026 EPS target help us frame out what macro needs to happen in order to get there still we're tracking a little bit behind that now.

Brandon Vazquez: Still, we're tracking a little bit behind that now. What needs to happen in the next two years to still hit that 2026 EPS target in terms of macro? And should we maybe be thinking of that one-third macro in the EPS bridge as something that is coming a little bit lower at this point? Thanks.

Simon: What needs to happen in next two years to still hit that 2008, 2006, EPS target in terms of macro and should we maybe be thinking of that one third macro in the EPS bridge. Thanks, something that has come in a little bit lower at this point thanks guys.

Brandon Vazquez: That's something that is coming a little bit lower at this point.

Simon Campion: Thanks. Yeah, thank you, Brandon.

Simon D. Campion: Yes, thank you, Brandon. As we noted at Investor Day and each quarter since, our assumptions around that target were predicated on a more normalized macro environment, and we have still yet to see that, although reports about reduced interest rates continue to swirl, but it's going to take more than one of those. What you heard us describe today was a balance between aiding our path to the target but also taking decisive steps to invest in the areas to continue the transformative journey that we're on, to invest in orthodontics, to invest in a new inside sales team, which will drive and create demand, to invest in e-commerce, and to streamline our organization.

Speaker Change: Thank you Brendan.

Glenn Coleman: As we noted at Investor Day and each quarter since, our assumptions around that target were predicated on a more normalized macro environment.

Speaker Change: As we noted at Investor day in each quarter since our.

Speaker Change: Our assumptions around that target.

Speaker Change: Were predicated on a more normalized macro environments and we have we are still yet to see that albeit the reports about reduced reduced interest rates continue to continue to squirrel, but it's going to take are going to take more than one of those.

Glenn Coleman: And we have we have still yet to see that, albeit the reports about reduced reduced interest rates continue to continue to swirl, but it's going to take going to take more than one of those. What you heard us describe today was a balance between aiding our past to the target, but also taking the size of steps to invest in the areas. To continue the transformative journey that we are on to invest in orthodontics to invest in in our in a new inside sales team, which will which will drive and create demand to invest in in the commerce and to streamline our organization.

Speaker Change: You heard us describe today was a balance between aiding our past to the to the target, but also taking decisive steps to invest in the areas to continue the transformative journey that we're on to invest in orthodontics to invest in.

Speaker Change: Yeah.

Speaker Change: Our new inside sales team.

Speaker Change: Which will which will drive and create demand to invest in e-commerce and to streamline our organization so oil.

Glenn Coleman: So while satisfying some of our investor needs and desires internally as well, we are also extraordinarily focused on transforming this company into a company that provides long-term, long-term shareholder value by investing in the high growth categories that we laid out at Investor Day.

Simon D. Campion: So while satisfying some of our investor needs and desires internally as well, we are also extraordinarily focused on transforming this company into a company that provides long-term shareholder value by investing in the high-growth categories that we laid out at InvestorDay. And Brandon, I would just add that, you know, the two-thirds of that bridge that is in our control, we are on track to deliver, and we're executing against those plans.

Speaker Change: While satisfying some.

Speaker Change: Some of our investor needs and desires internally as well. We are also extraordinarily focused on transforming this company into a company that provides long term long term shareholder value by investing in the high growth categories that we laid out at Investor day.

Glenn Coleman: Brandon, we just add that the two-thirds of that bridge that is in our control, we are on track delivering; we're executing against those plans. So obviously the macro piece and getting back to a normalized macro environment looks to be more challenging, but that's why we've announced some of the additional actions that we're taking today. As we move forward to continue to drive towards that three-dollar EPS number.

Speaker Change: And Brian I would just add that you know the two thirds of that bridge that our is in our control. We are on track to deliver and we are executing against those plans.

Simon D. Campion: So obviously, the macro piece and getting back to a normalized macro environment looks to be more challenging, but that's why we've announced some of the additional actions that we're taking today and as we move forward to continue to drive towards that $3 EPS number. Thank you.

Speaker Change: So obviously, the macro piece and getting back to a normalized macro environment looks to be more challenging, but that's why we've announced some of the additional actions that we're taking today and as we move forward to continue to drive towards that $3 EPS number.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you.

Operator: One moment for our next question. Our next question comes from Kevin Caliendo from UBS. Please go ahead. Thank you very much. This is Dylan Finley on behalf of Kevin.

Speaker Change: One moment for our next question.

Dylan Finley: Our next question comes from Kevin Caliendo from UBS. Please go ahead. Thank you very much.

Speaker Change: Our next question comes from Kevin Caliendo from UBS. Please go ahead.

Dylan Christopher Finley: Just honing in on some of those comments about your non-renewal of the agreement with Patterson for equipment, I guess, from here, does it make sense to work with another distributor? Or is this a pivot in the model entirely, you know, in your go-to-market strategy there? And then, secondarily, any context on the timing of when this current contract expires? Thanks. Good morning, Dylan and Simon.

Dylan Finley: This is Dylan Finley on for Kevin. Just honing in on some of those comments about your non-lunewal of the agreement with Patterson for equipment. I guess from here does it make sense to work with another distributor, or is this a pivot in the model entirely in your go-to-market strategy there? And then secondarily, any context on the timing of when this current contract expires? Thanks.

Speaker Change: Thank you very much this is dylan on for Kevin.

Dylan: Just honing in on some of those comments about your non renewal of the agreement with Patterson for for equipment I guess from here does it make sense to work with another distributor or is this a pivot in model entirely.

Speaker Change: In your go to market strategy here.

Speaker Change: And then secondarily any context on the timing of when this current contract expires.

Simon Campion: Good morning, Dylan and Simon. The distributors we partner with globally are extraordinarily valuable to us, and we feel we are extraordinarily valuable to them as well. We have been discussing with Patterson for some time about our relationship, and we felt that this was an appropriate time to begin negotiations about renewing contracts, et cetera, et cetera. Given the value that we bring to them, given the new products that we introduce, et cetera, et cetera.

Speaker Change: Yeah.

Simon: Good morning Simon.

Speaker Change:

Simon D. Campion: The distributors we partner with globally are extraordinarily valuable to us, and we feel we are extraordinarily valuable to them as well. We have been talking with Patterson for some time about our relationship, and we felt that this was an appropriate time to begin negotiations about renewing contracts, etc., and given the value that we bring to them, given the new products that we introduce, etc., etc., so we very much hope that we can reach an agreement, a new agreement with Patterson that is more reflective of the environment we're in and of the value that we create, but for now, and for Thanks. And then, just as a follow-up, no change is expected to how you deal with them in terms of your consumables. This is exclusively focused on the equipment.

Speaker Change: The distributors, we partner with with globally.

Speaker Change: Extra ordinarily are valuable to us and we feel we are extraordinarily valuable to them as well we have been discussing with with Patterson for some time about.

Speaker Change: About our relationship and.

Speaker Change: We felt that this was an appropriate time to begin negotiations about renewing contracts et cetera, et cetera and given.

Speaker Change: Given the given the value that we bring to them given the new products that we introduce et cetera et cetera. So we very much hope that we get to an agreement a new agreement with Patterson.

Simon Campion: So we very much hope that we get to an agreement, a new agreement with Patterson that is more reflective of the environment we're in and of the value that we create. But for now and for the next 12 months, the current contract remains in place, and we will continue to partner with them.

Speaker Change: That is more reflective of of the environment, we're in and the value that we create.

Speaker Change: And but for now and for the next 12 months.

Speaker Change: The current contract remains in place and we will continue to partner with them.

Speaker Change: Yeah.

Dylan Finley: Thanks.

Simon Campion: And then, just as a follow-up, no change expected to how you deal with them in terms of your consumables.

Speaker Change: Thanks, and then just as a follow up.

Speaker Change: No change expected to how do you deal with them in terms of your consumables.

Simon Campion: This is exclusively focused on the equipment that you distribute. That is correct. And just as a reminder, Patterson does the distribution of equipment in both the US and Canada. All right, thank you.

Speaker Change: Exclusively focused on the equipment.

Speaker Change: W distributed.

Speaker Change: That is correct.

Speaker Change: And just as a reminder, Patterson does the distribution of equipment in both the U S and Canada.

Dylan Christopher Finley: Thank you, Distribute. That is correct. And just as a reminder, Patterson does the distribution of equipment in both the U.S. and Canada. All right, thank you. Next question, please. One moment for our next question. Our next question comes from David Saxon, from Need a Main Company. Please go ahead. Oh, great. Good morning, Simon and Glenn. Thanks for taking my questions. Maybe I'll start with Glenn on margin

Operator: Next question, please. One moment for our next question.

Speaker Change: Alright. Thank you next question. Please why mommy for our next question.

David Saxon: Our next question comes from David Saxon from Need a Mate Company. Please go ahead. Oh, great. Good morning, Simon and Glenn. Thanks for taking my questions.

Speaker Change: Our next question comes from David Saxon from Needham and company. Please go ahead.

David Joshua Saxon: So it looks like the first half EBITDA margin is about 17.2%. Obviously, you're reiterating the above 18% guidance for the year. So can you just walk through the bridge to getting the second half closer to 19%?

David Joshua Saxon: Oh, great. Good morning, how many Glenn thanks for taking my questions, maybe I'll start with Glenn on on margin. So it looks like first half EBIT margin is at 17, 2%, obviously, you're reiterating the above 18% guidance for the year. So can you just walk through the bridge to getting.

Glenn Coleman: Maybe I'll start with Glenn on margins. So it looks like first half, EBITDA margin is about 17.2%. Obviously, you're reiterating the above 18% guidance for the year. So can you just walk through the bridge to getting second half closer to 19%? I think what's implied. How much of this new restructuring program kind of helps out in the back half? And what other factors can help drive that margin improvement? You know, thanks for the question. If you look at our EBITDA margin progression here, we grew sequentially about 70 basis points from Q1 to Q2 to 17.5%.

Speaker Change: Second half closer to 19% I think what's implied how much of this new restructuring program kind of helps out in the back half.

Speaker Change: And what other factors too.

Speaker Change: Drive that margin improvement.

Glenn G. Coleman: I think what's implied is how much this new restructuring program kind of helps out in the back half. You know, thanks for the question. If you look at our EBITDA margin progression here, we grew sequentially about 70 basis points from Q1 to Q2. I would expect we'll see another sequential improvement in Q3 to around 18% based upon some of the color that I gave as part of my prepared remarks and then about 20% or even a little bit north of that in Q4.

Speaker Change: You know thanks for the question if you look at our EBITDA margin progression here, we grew sequentially about 70 basis points from Q1 to Q2.

Glenn Coleman: I would expect we'll see another sequential improvement in Q3 to around 18% based upon some of my color that I gave as part of my prepared remarks. And then about 20% or even a little bit north of that in Q4. So clearly the hockey stick is going to be in Q4. And a lot of that is going to come from lower op-ex expenses and all the cost reduction that puts that we're doing from both our previous restructuring plan. Now we're seeing the full benefit of those actions, coupled with some of the newer actions that we have outlined this morning.

Speaker Change: To 17, 5% I would expect we'll see another sequential improvement in Q3 to around 18% based upon some of my color that I gave is part of my prepared remarks, and then about 20% or even a little bit north of that in Q4. So clearly the the hockey stick is going to be in Q4, and a lot of that is going to come from lower opex.

Glenn G. Coleman: So clearly, the hockey stick is going to be in Q4, and a lot of that is going to come from lower OPEX, uh... expenses and all the cost reduction efforts that we're doing from both our previous restructuring plan. Now we're seeing the full benefit of those actions coupled with some of the newer actions that we have outlined this morning. So our OPEX is expected to come down, did come down in Q2 on an absolute basis, and that will continue to happen in the back half of the year.

Speaker Change: <unk>.

Speaker Change: Expenses and all the cost reduction efforts that we're doing from.

Speaker Change: Both our previous restructuring plan now we're seeing the full benefit of those actions coupled with some of the newer actions that we have.

Glenn Coleman: So our op-ex is expected to come down, did come down in Q2 on an absolute basis. That will continue to happen in the back half of the year. And then we do expect a slight improvement in gross margins in Q3, and then another improvement in Q4. And so that's the progression of margins for the rest of the year.

Speaker Change: Outlined this morning, so I'll.

Speaker Change: Our opex is expected to come down.

Speaker Change: It did come down in Q2.

Speaker Change: On an absolute basis that will continue to happen in the back half of the year and then we do expect a slight improvement in gross margins in Q3, and then another improvement in Q4.

Glenn G. Coleman: And then we do expect a slight improvement in gross margins in Q3 and then another improvement in Q4. And so that's the progression of margins for the rest of the year. Okay, great. That's super helpful. Thanks. And then maybe this is the first time in just on CTS.

Speaker Change: And so that's the progression of margins for the rest of the year.

Glenn Coleman: Okay, great.

David Joshua Saxon: So it sounds like you and I are still facing some challenges, you have some unfavorable mix, and CAD CAM, going to PrimeScan Connect, you talked about some improved execution expected in the second half. I guess, what should we think about, 4-year 2024 growth? At this point, is it closer to down double digits? And then, you know, interest rates obviously impact demand. So with a potential rate cut in September, how does that impact how you think about the level of demand? Will that be enough? Or do we need to see, you know, two, three, four rate cuts before demand really recovers? Thanks so much.

Glenn Coleman: That's a very helpful thanks.

Speaker Change: Okay, Great. That's super helpful. Thanks, and then maybe this is for Simon just on Cts. So it sounds like Eni is still facing some challenges you had some unfavorable mix and CAD Cam.

Glenn Coleman: And then maybe this is first time in just on CTS. So it sounds like E&I is still facing some challenges. You have some unfavorable mix in CAD-CAM going to Prime Scan Connect. That you talked about some improved execution expected in the second half.

Speaker Change: Im going to Prime scan connect you talked about some improved execution expected in the second half.

Glenn Coleman: I guess how should we think about 4-year 2024 growth at this point is a closer down double digits. And then, with interest rates obviously impact demand. So, with a potential rate cut in September, how does that impact how you think about the level of demand? Will that be enough, or do we need to see 2, 3, 4 rate cuts before demand really recovers?

Speaker Change: I guess, how should we think about.

Speaker Change: For year 2020 for growth at this point is it closer down double digits.

Speaker Change: And then with interest rates, obviously impacts.

Speaker Change: Demand, so with a potential rate cut in September.

Speaker Change: How does that impact how you think about the level of demand.

Speaker Change: Will that be enough or do we need to see two or three or four rate cuts before demand recover.

Glenn Coleman: Thanks so much.

Speaker Change: Recovers thanks, so much.

Glenn Coleman: This is Glenn. I'll take the question. If we look at our CTS business in the second half of the year, we're modeling to be down low single digits, which would be an improvement from what we saw in the first half of the year. We'd clearly recognize it's a challenging environment. Having said that, there's a lot of reasons to believe that we will see better performance in the second half of the year versus the first half of the year. So first, I would highlight what we're seeing in terms of retail demand in the US with our imaging business.

Glenn G. Coleman: This is Glenn. I'll take the question. If we look at our CTS business in the second half of the year, we're modeling to be down low single digits, which would be an improvement from what we saw in the first half of the year. We clearly recognize it's a challenging environment. Having said that, there are a lot of reasons to believe that we will see better performance in the second half of the year versus the first half of the year. I would highlight what we're seeing in terms of retail demand in the U.S. for our imaging business. We were actually flat.

Speaker Change: This is Glenn I'll take the question if we look at our Cts business in the second half of the year, we're modeling to be down low single digits, which would be an improvement from what we saw in the first half of the year, we clearly recognize it's a challenging environment.

Speaker Change: Having said that there's a lot of reasons to believe that we will see better performance in the second half of the year versus first half of the year. So first.

Speaker Change: I would highlight what we're seeing in terms of retail demand in the U S with our imaging business, we were actually flat.

Glenn Coleman: We were actually flat in our imaging business on a retail level. So we were down double digits wholesale, which is what we report revenues out on. But from a retail perspective, it was encouraging to see a pickup in demand on imaging on a retail level. And that you lead to dealer orders coming forward in the second half of the year. We talked about the orthophose relaunch of our 2D and 3D imaging machine in Germany. Seeing a good momentum there, starting to convert those orders now to sales. We're going to be also relaunching that product in the rest of Europe and Asia in the second half of the year.

Glenn G. Coleman: In our imaging business at a retail level, we were down double digits wholesale, which is what we report revenues on. But from a retail perspective, it was encouraging to see a pickup in demand for imaging at a retail level. And that should lead to dealer orders coming forward in the second half of the year. We talked about the orthophos relaunch of our 2D and 3D imaging machines in Germany.

Speaker Change: In our imaging business on a retail level. So we were down double digits wholesale which is what we report revenues out on but from a retail perspective. It was encouraging to see a pickup in demand on imaging on a retail level and that should lead to dealer.

Speaker Change: Dealer orders coming forward in the second half of the year, we talked about the ortho <unk> relaunch of our two D and three D imaging machine in Germany.

Glenn G. Coleman: We're seeing good momentum there, starting to convert those orders now into sales. We're also going to be relaunching that product in the rest of Europe and Asia in the second half of the year, so that should be a bit of a help.

Speaker Change: Seeing a good momentum there starting to convert those orders now to sales.

Speaker Change: Gonna be also re launching that product in the rest of Europe and Asia in the second half of the year, so that should be a bit of a help I mentioned earlier as well our new product launch we're very excited about we'll be more specific on what that is.

Glenn G. Coleman: I mentioned earlier as well our new product launch. We're very excited about it, and we'll be more specific on what that is in the very near future. But that should drive incremental momentum and sales in the back half of the year. We've got our DS World event coming up in Las Vegas in September, and that typically leads to a lot of momentum going into and coming out of that conference. Q4 seasonality should help us. Typically, it's a stronger quarter. We've got easier comps in the second half of the year versus the first half of the year.

Glenn Coleman: So that should be a bit of a help. I mentioned earlier as well, our new product launch we're very excited about will be more specific on what that is in the very near future, but that you drive incremental momentum and sales in the back half of the year. We've got our DS World event coming up in Las Vegas in September. That typically leads to a lot of momentum going into and coming out of that conference. Q4 seasonality should help us typically. It's a stronger quarter. We've got easier comps in the second half of the year versus the first half of the year.

Speaker Change: In the very near future, but that should drive incremental momentum in sales in the back half of the year. We've got our D. S World event coming up in Las Vegas in September that typically leads to a lot of momentum going into and coming out.

Speaker Change: Of that conference.

Speaker Change: Q4 seasonality should help us typically its a stronger quarter, we've got easier comps in the second half of the year versus first half of the year.

Glenn G. Coleman: Germany actually has shown signs of improvement in our survey, albeit slight improvement, but it's moving in the right direction for the first time in over a year. And obviously, we call out Germany because of the significance of the equipment business in that market. And then, just lastly, there are some favorable reimbursement trends that we're seeing in places like Japan with internal scanning. And so, there are a lot of things that are going to help us, I think, in the second half of the year with all the things that I just mentioned. We're still modeling to be down.

Glenn Coleman: Germany actually has shown signs of improvement in our survey. I'll be at the flight improvement, but it's moving in the right direction for the first time in over a year. And obviously we call Germany because of the significance of the equipment business in that market. And then just lastly, you know, there's some favorable reimbursement trends that we're seeing in places like Japan with integral scanning. And so there's a lot of things that are going to help us, I think, in the second half of the year with all the things that I just mentioned. And we're still modeling to be down, but not down as much as we saw in the first half of the year.

Speaker Change: Germany actually has shown signs of improvement in our survey, albeit slight improvement, but it's moving in the right direction for the first time in over a year and obviously, we call out Germany because of the significance of the equipment business.

Speaker Change: In that market and then just lastly.

Speaker Change: There's some favorable reimbursement trends that we're seeing in places like Japan with intra oral scanning and so there's a lot of things that are going to help us I think in the second half of the year with all the things that I just mentioned, we're still modeling to be down.

Simon D. Campion: But not down as much as we saw in the first half of the year. Simon, I don't know if you want to comment further. Yeah, just a quick comment, David, on scanners. I think we've spoken before about the importance of scanners for our business and how they help unlock value in other parts of our portfolio. In Q2, we had another pretty strong scanner quarter. The mix had shifted, but we had a really strong quarter in standalone, PrimeScans, and PrimeScan Connect, and a more challenging quarter in the full-line CREC scanner.

Speaker Change: But not down as much as we saw in the first half of the year. So I don't know if you want to comment just to just a quick comment David on on scanners, I think we've spoken before about the importance of scanners.

Simon Campion: So I don't know if you want to comment. Just a quick comment, David, on scanners. I think we've spoken before about the importance of scanners for our business and to unlock value and other parts of our portfolio in Q2. We had another pretty strong scanner quarter; the mix, the mix that shifted, but we had a really strong quarter in standalone prime scans and prime scan connect and the more challenging quarter in the full line Syrac scanner. So as you roll forward into a more normalized or even an improved macro environment, having scanners in the marketplace is crucial for us to be able to unlock value quickly in the rest of our portfolio.

David Joshua Saxon: For our business and to unlock value in other parts of our portfolio in Q2, we had another pretty strong a scanner quarter the mix of the mix it shifted but we had a really strong quarter in standalone prime scans and <unk> connect and a more challenging quarter in the in the full line Syrek Sky.

Simon D. Campion: So as you roll forward into a more normalized or even improved macro environment, having scanners in the marketplace is crucial for us to be able to unlock value quickly in the rest of our portfolio, chairside, aligners, implants, and so on and so forth.

David Joshua Saxon: So you know as you roll forward into a more normalize or even an improved macro macro environment, having scanners in the marketplace is crucial for us to be able to unlock value quickly in the rest of our portfolio chair side, a liners implants.

Simon Campion: You know, chair side, aligners, implants, and so on and so forth. So we are pleased with our scanner scanner performance in Q2 and expect that to continue for the rest of the year.

Speaker Change: So on and so forth and so on and so forth. So we are we are pleased with our scanner scanner performance in Q2 and expect that to continue for the rest of the year.

David Joshua Saxon: We are pleased with our scanner performance in Q2 and expect that to continue for the rest of the year. Great. Thanks so much.

Glenn Coleman: Great.

Operator: Thanks so much. Thank you.

Speaker Change: Great.

Speaker Change: So much.

Operator: Thank you. One moment for our next question. Our next question comes from Elizabeth Anderson from Evercore ISI. Please go, please go ahead.

Elizabeth Anderson: One moment for our next question. Our next question comes from Elizabeth Anderson from Every Core ISI. Please go ahead.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Elizabeth Anderson from Evercore ISI. Please go ahead.

Elizabeth Anderson: Hey guys, thanks so much for the question. I had two main questions. One, can you kind of help us parse out the pricing degradation impact either from competition or from trade downs on equipment versus maybe what's more on the macro side? And then I was engaged to hear the comments about the improving business in China. Obviously, we're sort of comping against some VBP-type quarters, but you know, it's obviously at odds to most of the commentary we're hearing about China these days. So just a little bit more detail on sort of what's driving that would be very helpful.

Elizabeth Hammell Anderson: Hey guys, thanks so much for the question. I had sort of two main questions. One, can you kind of help us parse out the pricing degradation impact, either from competition or from trade downs on equipment versus maybe what's more on the macro side? And then I was intrigued to hear the comments about improving business in China. Obviously, we're sort of combing against some VBP-type quarters, but it's obviously at odds with most of the commentary we're hearing about China these days. So just a little bit more detail on sort of what's driving that would be very helpful.

Speaker Change: Hey, guys. Thanks, so much for the question.

Elizabeth Hammell Anderson: Two main questions. One can you kind of help us parse out that pricing degradation impact either from competition from trade downs on equipment versus maybe what's more on the macro side.

Speaker Change: And then I was intrigued to hear your.

Speaker Change: A comment about an improving business in China, obviously, we're sort of copying against MVP type corners, but it's obviously at odds to most of the commentary.

Speaker Change: Hearing about China. These days, so just a little bit more detail on sort of what's driving that would be very helpful. Thank you.

Glenn Coleman: Thank you.

Glenn Coleman: Elizabeth, thanks for the question. You know, on pricing, we have seen some pricing pressure on the imaging side of our business. I would say that's pretty much been offset in total with our EDS portfolio. So we look at our pricing across our entire business. It's kind of flat with some pressure on equipment that is being offset with EDS. So it's overall, I would say having a neutral effect. What we have seen, though, is more volume coming from lower price products. So Prime Scan Connect had a really strong quarter. It comes at a lower price point.

Glenn G. Coleman: Yeah, thanks for the question. You know, on pricing, we have seen some pricing pressure on the imaging side of our business. But I would say that's pretty much been offset in total with our EDS portfolio. So we look at our pricing across our entire business, it's kind of flat, with some pressure on equipment, but it's being offset with EDS. So it's overall, I would say it has a neutral effect.

Speaker Change: But thanks for the question on pricing, we have seen some pricing pressure on the imaging side of our business I would say that's pretty much been offset in total.

Glenn G. Coleman: What we have seen, though, is more volume coming from lower-priced products. So Prime ScanConnect had a really strong quarter, but it comes at a lower price point. And so, obviously, that results in lower revenues on equal volumes, if you will.

Speaker Change: With our <unk> portfolio. So when you look at our pricing across our entire business, it's kind of flat with some pressure on equipment that is being offset with etfs. So it's.

Speaker Change: Overall, I would say, having a neutral effect, while we have seen though is.

Speaker Change: More volume coming from lower priced products. So prime scanner connect had a really strong quarter.

Speaker Change: It comes at a lower price point, and so obviously that results in lower revenues on equal volumes. If you will and so that's been part of the dynamics that we're seeing in terms of the top line and also some of the impact on gross margins because privacy I connect has lower gross margins than our other prime scan offerings. So.

Glenn Coleman: And so obviously that results in lower revenues on equal volumes, if you will. And so that's been part of the dynamics that we're seeing in terms of the top line and also some of the impact on gross margins because Prime Scan Connect has lower gross margins than our other Prime Scan offering.

Glenn Coleman: So. On the pricing side, those are the dynamics that I would call out.

Glenn G. Coleman: And so that's been part of the dynamics that we're seeing in terms of the top line and also some of the impact on gross margins because Prime ScanConnect has lower gross margins than our other Prime Scan offerings. On the pricing side, those are the dynamics that I would call out. In terms of China, you know, we had another really strong quarter in China. Overall, we grew in high single digits.

Speaker Change: On the pricing side those are the dynamics that I would call out in terms of China. We had another really strong quarter in China overall, we grew high single digits.

Glenn Coleman: In terms of China, we had another really strong quarter in China. Overall, we grew high single digits. On the implant side, we actually grew over 30%. For the rest of the year, though, we do expect it to moderate. And so if we look at our implants business as an example, I would tell you that China is likely going to show slower growth on the implant side because we lap tougher comps. But we do expect to see better performance. In the US, and we've talked about that previously. We've got a lot of things that are showing progress there.

Glenn G. Coleman: On the implant side, we actually grew by over 30%. For the rest of the year, though, we do expect it to moderate. And so if we look at our implants business as an example, I would tell you that China is likely going to show slower growth on the implant side because we lap tougher comps. But we do expect to see better performance, uh... in the U.S. We've talked about that previously. We've got a lot of things that are showing progress therein, that should offset some of the moderation that we're seeing in uh... I got it.

Speaker Change: On the implant side, we actually grew over 30%.

Speaker Change: For the rest of the year, though we do expect it to moderate and so if we look at our implant business. As an example, I would tell you that China is likely going to show slower growth on the implant side, because we lap tougher comps, but we do expect to see better performance in.

Speaker Change: In the U S and we've talked about that previously we've got a lot of things that are showing progress there and.

Glenn Coleman: And that should offset some of the moderation that we're seeing in China in the back half of the year. Elizabeth, we did have a strong quarter in China in EDS, but it is no different from any other regional respect to CTS.

Speaker Change: That should offset some of the moderation that we're seeing in China in the back half of the year.

Speaker Change: Elizabeth we did have a strong quarter in China in Etfs, but it is no. It is no different from any other region with respect to Cts.

Elizabeth Anderson: Got it. Thank you.

Elizabeth Hammell Anderson: Got it thank you.

Elizabeth Hammell Anderson: Thank you. One moment for the next question. Our next question comes from Michael Cherny, from Lyrinc. Please go ahead. Great, thank you. This is Dan Clark on behalf of Mike.

Speaker Change: Yeah.

Operator: One more for the next question.

Speaker Change: Thank you one moment for our next question.

Dan Clark: Our next question comes from Michael Cheney from Lering. Please go ahead. Great. Thank you.

Speaker Change: Our next question comes from Michael Cherny from Leerink. Please go ahead.

Dan Clark: This is Dan Clark on for Mike. Just a question going back to the Patterson non-renewal. Could you just help us size, you know, the revenue or the growth that sort of come from, you know, your business has flown through Patterson. And like, how should we, we kind of think about that going forward, whether there is a renewal or not in 2025. Thank you.

Speaker Change: Great. Thank you this is Dan Clark on for Mike.

Daniel Clark: Just a question going back to the Patterson non-renewal. Could you just help us size the revenue or growth that sort of comes from, you know, your business has flown through Patterson and like, how should we think about that going forward, whether there is a renewal or not in 2025? Yeah, so I think first and foremost, I'll give you the publicly available information from our latest 10k, which was 2023 data.

Dan Clark: Just a question going back to the Paterson non renewal.

Speaker Change: Could you just help us size you know.

Dan Clark: Revenue.

Dan Clark: Yes.

Dan Clark: Growth that sort of come from business, that's flowing through Patterson and like how should we we kind of think about that going forward, whether there is a renewal or not in 2025.

Simon Campion: Yeah. So I think first and foremost, I'll give you the publicly available information from our latest 10-K, which was 2023 data. So both Patterson and China. Distributors, so that means Patterson's in that $275 million type range. As a reminder, Patterson is predominantly the US in Canada. They do very little business outside of North America. They're heavily equipment for us. So, if you look at the split of their sales, it's about 70% equipment and 30% consumables. China is more 50, 50 on equipment consumables, and China's much more balanced geographically, with half the revenues in the US, half outside the US.

Daniel Clark: So both Patterson and Shine account for about 21% of our annual revenues. So you can think of that as north of $800 million. Shine is about 14% of that, and Patterson's about 7%, so it gives you a rough magnitude of the two distributors, so that means Patterson's in that $275 million type range. As a reminder, Patterson is predominantly in the U.S. and Canada. They do very little business outside of North America

Speaker Change: Yeah. So I think first and foremost I'll give you the publicly available information from our latest 10-K, which was a 2023 data so both Patterson and Schein account for about 21% of our annual revenues. So you can think of that is north of $800 million.

Dan Clark: China is about 14% of that in Patterson to about 7%. So it gives you rough magnitude of the two.

Dan Clark: Distributors, so that means patterson and that $275 million type range.

Dan Clark: As a reminder, Patterson is predominantly the U S and Canada, they do very little business outside of North America, they're heavily equipment for us so.

Glenn G. Coleman: They're heavy equipment suppliers for us. So if you look at the split of their sales, it's about 70% equipment, 30% consumables. China's more 50-50 on equipment and consumables, and China's much more balanced geographically, with half the revenues in the U.S., half outside the U.S.

Dan Clark: If you look at the split of their sales is about 70% equipment, 30% consumables Shine is more 50 50 on equipment consumables and.

Speaker Change: Sean is a much more balanced geographically with half the revenues in the U S have outside the U S. So those are the overall numbers for our two big distributors, obviously, we work with other distributor partners as well and if you look at our total business. We do about two thirds of our total sales through distribution.

Glenn G. Coleman: So those are the overall numbers for our two big distributors. Obviously, we work with other distributor partners as well, and if you look at our total business, we do about two-thirds of our total sales through distribution. Globally, so hopefully that gives you some idea of the size of our distribution business. Great, thank you. Thank you. Please take a moment for our next question. Our next question comes from John Block from Stifle. Please go ahead. Great, guys. Thanks and good morning.

Simon Campion: So those are the overall numbers for our two big distributors. Obviously, we work with other distributor partners as well. And if you look at our total business, we do about two thirds of our total sales due to distribution globally.

Dan Clark: So hopefully that could you some framing out of the size of our distribution business. Great.

Dan Clark: Globally, so hopefully that gives you.

Dan Clark: Some framing out of the size of our distribution business.

Speaker Change: Great. Thank you.

John Block: One moment for our next question. Our next question comes from John Block from Stifel. Please go ahead. Great guys. Thanks and good morning.

Speaker Change: Thank you.

Speaker Change: Mommy Foreign next question.

Dan Clark: Yeah.

Speaker Change: Our next question comes from Jon Block from Stifel. Please go ahead.

Jonathan David Block: I guess I'm gonna go down a similar road and maybe just ask a big first question and a tighter second one. That non-renewal to Patterson, you know, how do we think about is that sort of a function of shines global reach in terms of why they're, you know, called better insulated? Or is it just the timing of contracts?

Jonathan David Block: Great guys, Thanks, and good morning I.

John Block: I guess I'm going to go down a similar road and maybe just ask a big first question and a tighter second one. That not renewal to Patterson. How do we think about it? Is that sort of a function of Shine's global reach in terms of why they're called better insulated, or is it just the timing of contracts? You know, how do we think about other domestic distributors that I guess you're working with? And you know, Simon, I'm sure some of this is sensitive, but any color would be helpful. And then just the tack on to that.

Jonathan David Block: I guess I'm going to go down a similar road and maybe just as a big first question in a tighter second one that non renewal to Patterson.

Speaker Change: You know how do we think about is that sort of a function of shines global reach in terms of why they're called.

Dan Clark: Called better insulated or is it just the timing of contracts.

Jonathan David Block: You know, how do we think about the other domestic distributors that I guess you're working with? And, you know, Simon, I'm sure some of this is sensitive, but any color would be helpful.

Dan Clark: How do we think about other domestic distributors.

Speaker Change: I guess youre working with Simon I'm sure. Some of this is sensitive but any color would be helpful. And then just to tack on to that Glenn Your comments in a prior question of two thirds of your sales I think you said is through distribution globally.

Simon D. Campion: And then just to add to that, you know, Glenn, your comment to the prior question of two-thirds of your sales, I think you said it was through distribution globally. Simon, with some of those investments that you talked about, just how do we think about that two-thirds percentage trending longer term with the ongoing investments, you know, in your own Salesforce? And I promise the second one will be tighter.

Simon Campion: You know, Glenn, you're coming to the prior question of two thirds of your sales. I think you said is through distribution globally. Simon, with some of those investments that you talked about, just how do we think about that two thirds percentage trending longer term with the ongoing investments? You know, in your own sales force, and I promise this heck will be tighter. Thanks.

Speaker Change: Those investments that you talked about just how do we think about that two thirds percentage trending longer term with the ongoing investments in your own sales force.

Speaker Change: The second will be tighter thank you.

Simon Campion: Okay, good morning, John. The nine-year renewal is exclusive to Patterson in the US and Canada. We have 12 months left to run on that. We hope we get to a new agreement. That is more reflective of, as I said, and the prepared remarks, the current environment and the value that we bring to Patterson specifically.

Jonathan David Block: Thanks. Okay, good morning, John. Listen, the non-renewal is exclusive to Patterson in the U.S. and Canada. We have 12 months left to run on that.

Speaker Change #122: Okay. Good morning, John Oh isn't the non renewal is exclusive to Patterson and <unk> in the U S and Canada.

Speaker Change: We have 12 months left to run on that we hope we get to a new agreement.

Simon D. Campion: We hope we can get to a new agreement that is more reflective of, as I said in my prepared remarks, the current environment and the value that we bring to Patterson specifically. Now, in relation to your comment on the investments we are making, as you know, all distributors distribute products for many different companies. We feel it's incumbent upon us to create our own demand and to have our sales forces in front of customers, end customers, as frequently as possible so that the end customer then requests either our own channel in Endodontics and Ortho, for example, or whatever distribution partner they work with, that they would like to buy XYZ from Dentsply Sirona.

Speaker Change: That is more reflective of as I said in the prepared remarks, the current environment and the value that we bring to Patterson specifically.

Simon Campion: Now, in relation to your comment on the investments we are making. As you know, all distributors distribute products for many different companies. And we feel it's incumbent upon us to create our own demand and to have our sales forces in front of customers and customers as frequently as possible so that the end customer then requests either of our own channel in endodontics and ortho, for example, or whatever distribution partner they work with that they would like to buy X, Y, Z from Dentsply Sirona. We have historically, I think, abdicated responsibility for creating our own demands to our distributors.

Speaker Change: Now in relation to your comment on the investments. We are we are making as you know all distributors distribute products.

Speaker Change: For for many different many different companies and we feel it's incumbent upon us to create our own demand and to have our sales forces in front of customers end customers.

Speaker Change: As frequently as possible so that the end customer then requests either of our own channel and Endodontics and also for example, or whatever distribution partner. They work with that they would like to buy X Y Z from dense play Sirona, we have historically.

Simon D. Campion: We have historically, I think, abdicated responsibility for creating our own demand to our distributors, and I don't feel that is appropriate. We should be doing it ourselves and allowing the customers to make an educated decision on the products that they choose, facilitated by the people who are experts on those products, i.e.

Dan Clark: I think abdicated responsibility for creating our own demand to our distributors.

Simon Campion: And I don't feel that is appropriate. We should be doing it ourselves and allow the customers to make an educated decision on the products that they choose, facilitated by the people who are experts on those products, i.e. Dentsply Sirona Reps.

Dan Clark: I don't feel that is a that is appropriate we should be doing it ourselves.

Dan Clark: And and allow the customers to make an educated decision on the products that they choose facilitated by the people who are experts on those products E dense places our own reps.

John Block: Okay, and I guess just no comment on where you see those two thirds of sales currently to distribute distributors going longer term.

Simon D. Campion: Okay, and I guess just no comment on where you see those two thirds of sales currently to distributors going longer term. I guess that'd be my follow up to that one to shift gears and hit on a different topic. You know, when you guys called out legislation and sort of the greater than 20% growth, I think the new number was closer to 15%. You know, I think it's sort of been drip, drip, drip with some states.

Speaker Change: Okay, and I guess, just don't comment on where you see those two thirds of sales currently do distribute distributors going longer term I guess that'd be my follow up to that wanted to shift gears and hit on a different topic.

John Block: I guess I'd be my follow up to that one to shift gears and head on a different topic. You know, by you guys called out legislation and sort of the greater than 20% growth. I think on the new number was closer to 15%. And, you know, I think it's sort of been drip, drip, drip with some state. So I just be curious your thoughts on, you know, where does this go longer term, right when we think out over the next couple of years. Or do you feel like the states that have moved have moved, and you've largely ring-fenced as we think about things going forward.

Speaker Change: You guys called out legislation.

Speaker Change: Greater than 20% growth I think on the new number was closer to 15% I think it's sort of been drip drip drip with some stage. So I'd just be curious your thoughts on.

Jonathan David Block: So I would be curious your thoughts on, you know, where this goes longer term, right? When we think out over the next couple of years. Or do you feel like the states that have moved have moved, and you've largely ring-fenced yourself as we think about things going forward? Thanks for your time. Transcribed by https://otter.ai Yeah, thanks. Thanks, John. So that legislation varies state to state, but there are some common themes between them all.

Speaker Change: Where does this go longer term right. When we think out over the next couple of years or do you feel like the states have moved have moved and you've largely ring fences as we think about things going forward. Thank you for your time.

Simon Campion: Thanks for your time. Yeah, thanks. Thanks, John.

Simon D. Campion: We have done a number of things to mitigate that. Number one, we have invested in government relations or more investment in government relations to help states understand the process of direct consumer aligners. And then secondarily, we have adjusted our internal processes to facilitate these changes that some states are mandating. And then, I would say thirdly, the bike plus model, which continues to gain some momentum and traction, is also going to help us here.

Speaker Change: Yeah. Thanks, Thanks, John So that legislation varies state to state.

Simon Campion: So that legislation varies state to state, but there are some common themes between them all. We have done a number of things to mitigate that. Number one, we have invested in government relations or more investment in government relations to help to help states understand the process of direct consumer liners. And then second, secondarily, we have we have adjusted our internal processes to facilitate these changes that some states are mandating. And then I would say thirdly, the bike plus model, which continues to gain some momentum and traction, is also going to help us here. I think the adjustment that you've seen in the growth rates is because of the incremental steps and arguably costs to patients because they have to, you know, take some time on the work to go to the dentist or do a tele dentist revisit.

Speaker Change: But there are some some common themes between the mall, we have done a number of things to mitigate that number one we have invested in government relations or more investment in government government relations to help to help.

Speaker Change: States understand the process of direct to consumer.

Speaker Change: <unk> and then second secondarily, we have we have adjusted our internal processes to facilitate these changes that some that some states are mandating and then I would say thirdly, the bite plus model, which continues to gain some momentum and.

Simon D. Campion: I think the adjustment that you've seen in the growth rates is because of the incremental steps and arguably costs to patients because they have to, you know, take some time out of work to go to the dentist or do a teledentistry visit. So it's it's not a reflection on the product that we provide. It's a reflection of our rather internal steps that these regulations are enforcing or placing on potential customers, and it continues to evolve.

Speaker Change: And traction is also going to are going to help us here I think the adjustment that you've seen in the in the growth rates is because of the incremental steps and arguably costs to patients because they have to take some time out of work to go to the dentist or do a tele dentistry visit so it's it's it's not a reflection on an.

Simon Campion: So it's it's it's not a reflection on on on the product that we provide. It's a reflection of our rather on the internal steps that these regulations are enforcing or are placing on potential customers. And it continues to evolve.

Speaker Change: On the product that we provide it's a reflection of our rather on the internal steps that these.

Speaker Change: These regulations are.

Speaker Change: Enforcing or are placing on on potential customers.

Speaker Change: And it continues to evolve.

Operator: Thank you.

Speaker Change: Thank you.

Simon D. Campion: Thank you. Thank you. One moment for our next question. Our next question comes from Jeff Johnson from Bayard. Please go ahead. Thank you. Simon, I guess I want to stick with the bigger picture theme here on the dealer relationships and what have you. You know, everything you commented on here in the Q&A sounds like it's focused on Patterson.

Speaker Change: Thank you one moment for Amir's question.

Jeff Johnson: Our next question comes from Jeff Johnson from Bayer. Please go ahead. Thank you. Good morning, guys.

Jeffrey D. Johnson: I want to go back to the transcript, but it sounded like you also made a comment that, you know, some of these relationships you're looking at are with dealers who do compete with you in certain product categories. That sounds to me like it's a comment that would bring Shine into the discussion as well. But in one of your answers, you obviously talked about the kind of relationship still looking good with Shine. So just one, you know, what kind of footing are you on with Shine at this point?

Speaker Change: Our next question comes from Jeff Johnson from Baird. Please go ahead.

Speaker Change: Yes.

Jeffrey D. Johnson: Thank you good morning, guys, Simon I guess I want to stick on the bigger picture theme here.

Simon Campion: Simon, I guess I want to stick on the bigger picture theme here on the dealer relationships and what have you. You know, everything you commented on here in the Q&A sounds like it's focused on Patterson. I want to go back to the transcript, but it sounded like to me you also made a pattern. The comment that, you know, some of these relationships you're looking at are with dealers who do compete with you in certain product categories. That sounds to me like it's a comment that would bring shine into discussion as well. But in one of your answers, you obviously talked about kind of the relationship.

Jeffrey D. Johnson: On the dealer relationships and what have you.

Speaker Change: Everything you commented on here in the Q&A. It sounds like it's focused on Patterson I want to go back to the transcript, but it sounded like to me you also made a comment that.

Speaker Change: Some of these relationships youre looking at are with dealers, who do compete with you in certain product categories that sounds to me like it. It's a comment that would bring shine into discussion as well.

Simon D. Campion: Is there any commentary you meant to be targeted even at them in the prepared remarks? And then I have one follow-up. Thank you. No, no commentary about any other distributor, Jeff, apart from the relationship with Patterson. But, as I noted in response to John's question, we have a responsibility to create our own demand and funnel it through the appropriate channel, whether it's the direct channels that we have in Endo and Ortho, for example, or through distribution partners worldwide. I think we have a positive relationship with Shine and, indeed, with Patterson.

Speaker Change: But in one of your answers you, obviously talked about kind of the relationship.

Simon Campion: Still looking good with shine. So just one, you know, what kind of what kind of footing are you on with with shine at this point? Is there any commentary you meant to be targeted even at them in the prepared remarks? And then I won't follow up.

Speaker Change: Still looking good with schein, so just one what kind of what kind of <unk> are you on.

Speaker Change: Hi.

Speaker Change: China at this point is there any commentary you may.

Speaker Change: That could be targeted even at them in the prepared remarks.

Simon Campion: Thank you.

Speaker Change: And then I have one follow up thank you.

Simon Campion: No, no commentary about any other distributor, Jeff, apart from the relationship with Patterson. But as I noted in response to John's question, we have a responsibility to create our own demand and funnel it through the appropriate channel, whether it's the direct channels that we have in Endo and Author, for example, or through distribution partners worldwide. I think we have. A positive relationship with Shine and indeed with Patterson, we just have to take steps with with Patterson to to discuss renewed or alternative terms and conditions.

Speaker Change: No no commentary about any other distributor.

Speaker Change: Jeff apart from the relationship with with Patterson.

Speaker Change #103: But as I noted in response to Johns question, we have a responsibility to create our own demand and funneling it through the appropriate channel whether whether it's the direct channels that we have in endo and ortho for example, or through distribution partners worldwide. I think we have a positive relationship with schein and indeed with Patterson, we just have to.

Jeffrey D. Johnson: We just have to take steps with Patterson to discuss renewed or alternative terms and conditions. Yeah, understood. And, You know, I guess my other question would be you do talk about the inside sales force, increasing the efforts, they're increasing some of the e-commerce investments, things like that. So I'll go back and give John maybe a third crack at his question on the percentage that goes through dealers. You know, I guess my question here is, If you were in there with insight, or if you're generating traction with the inside sales force and getting orders for a general consumables product, would you put that order through the dealer?

Speaker Change #103: Take it take steps with Patterson to to discuss renewed or alternative terms and conditions.

Simon Campion: Yeah, understood, and you know, I guess my other question would be you do talk about the inside sales force, increasing the efforts there, increasing some of the e-commerce investments, things like that. So I'll go back and give John maybe a third crack at his question. And on the percentage that goes through dealers, you know, I guess my question here is if you were in there with inside or if you're generating traction with inside sales force and getting orders for a general consumables product, would you put that order through the dealer? You know, I guess I could understand you saying no, but that changes those dynamics and maybe strains those relationships as well.

Speaker Change: Yes understood.

Jeffrey D. Johnson: You know, I guess I could understand you saying no, but that changes those dynamics and maybe strains those relationships as well. So just trying to understand as you go down this path of bigger inside sales, would those orders generated through the inside sales then get transmitted to the dealers? Or would you have other plans for that?

Speaker Change: I guess my other question would be you do talk about the inside sales force.

Speaker Change: Kris and the efforts, they're increasing some of the e-commerce.

Speaker Change: Investments things like that so I'll go back and give John maybe a third crack at his question.

Speaker Change #108: On the percentage that goes through dealers.

Speaker Change: Hi.

Speaker Change: I guess my question here is.

John: If you were in there with inside or if you're generating traction with inside sales force and getting orders.

John: For a general consumables product would you put that order through the dealer.

John: Hi.

Speaker Change #100: I guess I can understand you're saying no, but that changes those dynamics and maybe strange those relationships as well.

Simon Campion: So just trying to understand, as you go down this path of bigger inside sales, would those orders generated through the inside sales and get transmitted to the dealers, or would you have other plans for that?

Speaker Change #105: So just trying to understand as you go down this path and bigger inside sales would those orders generated through the inside sales and get transmitted to the dealers or would you have other plans for that thank you.

Simon Campion: Thank you. Yeah, I think I think Jeff I was, or at least I hope I was very clear and in the prepared remarks and questions thus far that we want to create our own demand, and we absolutely will funnel it through the appropriate channel in some cases. That's our channel, and in other cases, such as the consumables you mentioned, that is that is shine in the US or indeed some others in the US. So we'll absolutely will go to those distributors. Understood.

Simon D. Campion: Thank you. Yeah, I think, Jeff, I was, or at least I hope I was very clear in the prepared remarks and questions thus far that we want to create our own demand, and we absolutely will funnel it through the appropriate channel. In some cases, that's our channel. And in other cases, such as the consumables you mentioned, that is the shine in the US or indeed some others in the US.

John: Yes, I think.

John: I think Geoff I was or at least I hope I was very clear in the prepared remarks and questions. Thus far but we want to create our own demand and we absolutely will funnel it through the appropriate channel in some cases, that's our channel.

Simon D. Campion: So we absolutely will go to those distributors. Understood. Thank you. Thank you. One moment for our next question. Our next question comes from Jason Bednar, from Piper Sandler. Please go ahead. Hey, good morning.

John: Other cases, such as the consumables you mentioned that is a that is shine in the U S or R&D some others in the U S. So we're absolutely will go to those distributors.

Speaker Change: Understood. Thank you.

Speaker Change #113: Thank you one moment for our next question.

Jason Benar: One moment for our next question. Our next question comes from Jason Benar from Piper Sandler. Please go ahead. Hey, good morning. Next to the questions here. A lot of detail today. I think a lot of folks have already covered a lot of the questions around the dealers here.

John: Our next question comes from Jason Bednar.

Speaker Change: From Piper Sandler. Please go ahead.

Jason M. Bednar: Thanks for the questions here. A lot of detail today. I think a lot of folks have already covered a lot of the questions around the dealers here. I want to come back to the restructuring program, phase two, maybe just more to get some help on some of the modeling and the pacing around the $80 to $100 billion in savings. I guess, how would you have us layer these into the model, Glenn? Is it linear, more weighted towards $25, which has to wait until $26 to see the full annualized effect?

Jason M. Bednar: Hey, good morning, Thanks for the questions here.

Jason M. Bednar: A lot of detail today, I think a lot of lot of folks are already covered a lot of the questions around the the dealers here I want to come back to.

Glenn Coleman: I want to come back to the restructure and program, the phase two. Maybe just more to get some help on some of the modeling and the pacing around the 80 to 100 billion savings. I guess how would you have us later these into the model? Glenn, is it linear, more weighted towards 25? The weight will 26 to see the full annualized effect. And it looks like that's a growth savings figure, but you're clearly talking about some of the reinvestment plans and those things. Jeff was just mentioning on the inside reps. How should we be thinking about the net savings level?

Speaker Change: The restructuring program the phase two.

Speaker Change #107: Maybe just more to get some help on some of the modeling and the pacing around the $80 million to $100 million in savings I guess, how would you have us layer into the model Glen is that linear more weighted towards 25.

Glen: Would you have to wait till 'twenty six to see the full annualized effect.

Glenn G. Coleman: And it looks like that's a gross savings figure, but you're clearly talking about some of the reinvestment plans and those things Jeff was just mentioning about the inside reps. How should we be thinking, I guess, about the net savings level? And I guess a similar question: just are these linear net savings? Thanks. Yeah, I think the only thing we're going to comment on relative to the restructuring program is that the savings are expected to be 80 to $100 million over 12 to 18 months. Clearly, a lot of that will take place in 2025.

Speaker Change #107: And it looks like that the gross savings figure, but you are clearly talking about some of the reinvestment plans and those things Jeff was just mentioned on the inside reps.

Speaker Change: How should we be thinking I guess about the net savings level.

Glenn Coleman: And I guess some more questions are these linear net savings. Thanks.

Speaker Change #101: I guess a similar question just are these the linear net savings.

Speaker Change #101: Thanks.

Glenn Coleman: Yeah, I think the only thing we're going to comment on relative to the restructuring program is the savings are expected to be 80 to 100 million dollars over 12 to 18 months. Clearly, a lot of that will take place in 2025, but it is a 12 to 18-month window. We indicated it's about 2 to 4 percent of the workforce that's going to be affected as a result. I would expect there's probably somewhere around 40 to 50 million dollars of charges associated with this restructuring program as well. In terms of the net savings, obviously we're going to drop some to the bottom line to drive us towards the $3 EPS target.

Jason M. Bednar: But it is a 12 to 18 month window, and we indicated it's about two to 4% of the workforce that's going to be affected as a result. I would expect there to be probably somewhere around $40 to $50 million of charges associated with this restructuring program as well. You know, in terms of the net savings, obviously, we're going to drop some of the bottom line to drive us towards the $3 EPS target. And then obviously, the reinvestment that Simon talked about should drive better top-line performance and help to shore up some of our top-line growth that we've got planned over the next several years.

Speaker Change #111: Yes, I think the only thing we're going to comment on relative to the restructuring program is the savings are expected to be $80 million to $100 million over a 12 to 18 months clearly a lot of that will take place in 2025, but it is a 12 to 18 month window.

Speaker Change #101: Indicated it's about 2% to 4% of the workforce, that's going to be affected as a result.

Speaker Change #101: I would expect there is probably somewhere around $40 million to $50 million of charges associated with this restructuring program as well.

Simon: The net savings obviously, you were going to drop some to the bottom line to drive us towards the $3 EPS target and then obviously the reinvestments that Simon talked about should drive better top line performance and helped to shore up some of our our topline growth that we've got planned over the next several years. So that's I think what we're going to comment on at this time.

Glenn Coleman: And then obviously the reinvestments that Simon talked about should drive better top-line performance and help to shore up some of our top-line growth that we've got planned over the next several years. So that's, I think, what we're going to comment on at this time.

Jason Benar: All right, well, helpful.

Jason M. Bednar: So that's, I think what we're going to comment on at this time. All right, helpful. Simon, one for you. I think you mentioned in some of your remarks a shift into targeting the orthodontic channel with your clear aligner offering. I think I heard that right.

Speaker Change #109: Alright, that's helpful.

Jason Benar: Simon, one for you. I think you mentioned in some of your remarks. A shift into targeting to work on a channel with your clear aligner offer, and I think I heard that right. I guess I always figured you had plenty of runway in the GP channel across the globe, but you're staying in the orthodontist community is an opportunity for sure, smile. There's some intrigue there. It's completely on tap for you, sure, but it's also dominated by a key competitor. I guess I'm curious how you'd respond on the opportunity to see in front of you with the GP channel.

Simon: Simon one for you I think you mentioned in some of your remarks.

Speaker Change #114: Shifting to targeting the orthodontic channel with your clear aligner offering I think I heard that right.

Speaker Change #104: I guess I always figured you had plenty of runway in the GP channel across the globe.

Speaker Change #115: But you're saying the orthodontist community as an opportunity for sure Smile.

Speaker Change #117: Theres some intrigue theyre its completely untapped for you sure, but it's also dominated by a key competitor.

Speaker Change #118: I'm curious how you would respond on the opportunity you see in front of you with the GP channel is this some kind of indicator there.

Simon D. Campion: I guess I always figured you had plenty of runway in the GP channel across the globe. But you're saying the orthodontist community is an opportunity for sure, Smile. There's some intrigue there. It's completely untapped for you, yes.

Simon Campion: Is this some kind of indicator there?

Simon Campion: And then what's the approach you're looking to take commercially with the orthodontist since you no longer have relationships there after selling the bracket and wire business a few years ago? Yeah, thank you. Thank you, Jason. We absolutely do still have some runway left in the GP channel, where we are not suggesting we move away from that. In fact, in Q2, we had sequential improvement in the number of new customers that we brought online. We had sequential improvement in the number of aligners sold per customer in Q2. But let's face facts, the majority of the volume is in the orthodontist specialty space.

Speaker Change #116: And then whats the approach Youre looking to take commercially with the orthodontists since you no longer have relationships there after selling the bracket and wire business a few years ago.

Simon D. Campion: But it's also dominated by a key competitor. I guess I'm curious how you would respond to the opportunity you see in front of you with the GP channel. Is this some kind of indicator there?

Speaker Change #112: Yeah. Thank you. Thank you Jason listen we absolutely do still have some runway left in the in the GP channel. We are not suggesting we are we move away from that in fact, the in Q2, we had sequential improvement in the number of new customers that we brought online we had sequential improvement in the <unk>.

Speaker Change #112: The liners sold per customer.

Speaker Change #112: In Q2, but let's.

Speaker Change #112: Let's face facts.

Speaker Change #104: The majority of the volume is in the is in the orthodontic specialty space, we feel we have a a compelling.

Jason M. Bednar: And then what's the approach you're looking to take commercially with the orthodontist since you no longer have relationships there after selling the bracket and wire business a few years ago? Yeah, thank you. Thank you, Jason. Listen, we absolutely do still have some runway left in the GP channel.

Simon Campion: We feel we have a compelling technology offering for the orthodontist with SureSmile. We've spoken about that before. We also feel, and this is based on customer feedback, that our software solution is an excellent solution. We do some work to do on it around the user friendliness of it, and that's reflected in some of the comments I make. But the other thing here too is orthodontists use three or four aligner brands in their offices. And today we are not one of those aligner brands, so we would like to get on their formulary as well and give them a choice to choose a dense price or owner clear aligner.

Speaker Change #104: Technology offering for the orthodontists with with jure Smile and we've spoken about we've spoken about that before.

Speaker Change #104: We also feel and this is based on customer feedback that our our software solution is is a.

Speaker Change #104: An excellent solution, we do some work to do on it around the user friendliness of it and that's that's reflected in some of the some of the comments I make but.

Simon D. Campion: We are not suggesting we move away from that. In fact, in Q2, we had sequential improvement in the number of new customers that we brought online. And we had sequential improvement in the number of aligners sold per customer in Q2. But, you know, let's face facts.

Speaker Change #120: The other thing here too is orthodontist use three or four aligner brands in their offices.

Simon D. Campion: The majority of the volume is in orthodontics. Today, we are not one of those aligner brands, so we would like to get on their formulary as it were and give them a choice to choose a Dentsply Sirona clear aligner that's got great clinical outcomes, is easy to use, and has got great software, albeit somewhat difficult to use. And so we are going to endeavor to address that usability. Anything on the commercial structure?

Speaker Change #110: And today, we are not one of those aligner brands. So we would like to get on their on their formulary.

Speaker Change #110: We're and give them a choice to choose a a dense play sirona clear aligner. That's got great clinical outcomes is easy to use and has got a great software, albeit somewhat difficult to use and so we are going to endeavor to address that usability.

Simon Campion: That's got great clinical outcomes, easy to use, and has got great software, albeit somewhat difficult to use. And so we are going to endeavor to address that usability.

Simon Campion: Anything on the commercial structure? I think it's consistent with where we've invested in other areas. We will invest in feet on the street in the orthodontic business moving forward or more feet on the street and the orthodontic business targeted at orthodontists.

Speaker Change #119: Okay anything on the commercial structure.

Speaker Change #123: I think it's consistent with with where we've invested in other areas. We will we will invest in and feet on the street in the in the orthodontic business moving forward are more feet on the street and the orthodontic business targeted that orthodontists.

Jason Benar: Okay, very helpful. Thank you.

Speaker Change #129: Okay very helpful. Thank you.

Speaker Change #127: Thank you.

Simon: Yeah.

Allen Lutz: Our last question comes from Allen Lutz from BOA. Please go ahead. Good morning. Thanks for taking the questions. Glenn, a couple for you. Are there any restructuring cost savings embedded in the updated 2024 guide? And then can you provide a little bit about where the headcount reductions will be focused? Thank you.

Simon D. Campion: I think it's consistent with where we've invested in other areas. We will invest in feet on the street in the orthodontic business moving forward, or more feet on the street in the orthodontic business targeted at orthodontists. Okay, very helpful. Thank you. Thank you. Our last question comes from Allen Lutz from BOA. Good morning and thanks for taking the questions. Glenn, I have a couple for you.

Simon: Our last question comes from Allen Lutz.

Speaker Change #138: From <unk>. Please go ahead.

Allen Charles Lutz: Are there any restructuring cost savings embedded in the updated 2024 guide? And then can you provide a little bit about where the headcount reductions will be focused? I assume you're talking about the next phase of our transformation. And you're both correct, yeah. There's a small amount that's factored in associated with the 2024 guide.

Allen Charles Lutz: Good morning, and thanks for taking the question Glenn a couple for you.

Allen Charles Lutz: Are there any restructuring cost savings embedded in the updated 2024 guide and then can you provide a little bit about where the head count reductions will be focused.

Glenn Coleman: I assume you're talking about the next phase of our transformation. There's a small amount that's factored in, associated with the 24 guide. I won't give this specific amount, but think of it as a couple of cents of EPS benefit. In terms of the headcount, I think generically speaking, we're just going to say that we see some marketing efficiencies across the organization and more reductions that can be done around some of the corporate functions.

Glenn: Alright, I assume you're talking about the next phase of our transformation.

Speaker Change #132: Your question yes.

Glenn G. Coleman: I won't give a specific amount, but think of it as a couple of cents of EPS benefit. In terms of headcount, I think, generically speaking, we're just going to say that we see some marketing efficiencies across the organization and more reductions that can be done around some of the corporate functions. Great. And then for follow up, I think someone already asked about macro, but following up a little bit on the customer survey from July, you know, things are getting a little bit weaker here.

Speaker Change #128: Theres a small amount that's factored in associated with the 24 guide I won't give the specific amount, but think of it as a couple of cents of EPS bent.

Allen Charles Lutz: Benefit.

Allen Charles Lutz: In terms of the head count I think generically speaking, we're just going to say that.

Speaker Change #130: We see some marketing efficiencies across the organization and more reductions that can be done around some of the corporate functions.

Glenn Coleman: Great. And then for follow up, I think someone already asked on macro, but following up a little bit on the customer survey from July, you know, things getting a little bit weaker here. You know, I guess if interest rates do come down, just trying to get a sense of your expectations. You know, how long would it take if interest rates do come down for maybe some of that to impact your business.

Glenn G. Coleman: You know, I guess if interest rates do come down, just trying to get a sense of your expectations. How long would it take if interest rates did come down for maybe some of that to impact your business? Thanks. Yeah, I mean, it's hard to say.

Speaker Change #131: Great and then for a follow up I think someone already asked on macro but following up a little bit on the customer survey from July.

Speaker Change #136: Things getting a little bit weaker here.

Speaker Change #134: I guess, if interest rates do come down just trying to get a sense of your expectations.

Speaker Change #126: How long would it take.

Speaker Change #124: If interest rates do come down for maybe some of that to impact your business. Thanks.

Glenn Coleman: Thanks. Yeah, I mean, it's hard to say. I think certainly it would be a couple of moves on the rate side. So it's not one or two. It's probably three or four before we start to see some meaningful improvement. But I think consumer confidence, consumer sentiment, would help a lot. I think seeing better patient traffic with our customers will help a lot because they make a lot of money on consumables, and that would obviously be money they could use towards upgrading their technology and their offices and their practices. So those are other factors that we're looking at here as well.

Allen Charles Lutz: I think certainly it'd be a couple of moves on the rate side. So it's not one or two; it's probably three or four before we start to see some meaningful improvement. But I think consumer confidence, and consumer sentiment, would help a lot. I think seeing better patient traffic with our customers will help a lot because they make a lot of money on consumables. And that would obviously be money they could use towards upgrading their technology in their offices and their practices.

Speaker Change #125: Yes, I mean, it's hard to say I think certainly it'd be a couple of moves on the rate side. So it's not one or two its probably three or four before we start to see some meaningful improvement, but I think consumer confidence consumer sentiment.

Speaker Change #125: Would help a lot I think seen better patient traffic with our customers will help a lot because they make a lot of money on consumables and that would obviously be money they could use towards upgrading their technology in their offices and their practices. So those are other factors that we're looking at here as well.

Allen Charles Lutz: So those are other factors that we're looking at here as well. I think some of the innovation we have coming out could move some of our customers as well. And again, the innovation I'm referencing is going to be out in the very near future.

Glenn Coleman: I think with some of the innovation we have coming out that can move some of our customers as well. And again, the innovation I'm referencing is going to be out in the very near term. Great.

Speaker Change #125: And I think with some of the innovation, we have coming out that could move some of our customers as well.

Allen Charles Lutz: And again the.

Allen Charles Lutz: Innovation I'm referencing is going to be out in the very near term.

Glenn G. Coleman: Great, thank you very much. Thank you. Thank you. I am showing no further questions at this time. I will now turn it over to Simon Campion for closing remarks. Please go ahead.

Operator: Thank you very much. Thank you.

Speaker Change #139: Great. Thank you very thank you. Thank you very much.

Allen Charles Lutz: Yeah.

Operator: I am showing no further questions at this time.

Allen Charles Lutz: Thank you.

Allen Charles Lutz: I am showing no further questions at this time I will now turn it over to Simon Campion for closing remarks. Please go ahead.

Simon Campion: I will now turn it over to Simon Campion for closing remarks. Please go ahead. Thank you, everyone, for joining us today. In closing, I would like to reiterate my thanks to the entire Dan Spicer Owner team for their valuable contributions to our organization and their own wavering commitment to our customers. We are making progress, advancing our ongoing transformation and creating an organization and a culture that will benefit all shareholders over the long term, from customers to employees to investors. Thank you for your time today.

Simon D. Campion: Thank you everyone for joining us today. In closing, I would like to reiterate my thanks to the entire Dentsply Sirona team for their valuable contributions to our organization and their unwavering commitment to our customers. We are making progress advancing our ongoing transformation and creating an organization and a culture that will benefit all shareholders over the long term, from customers to employees to investors. Thank you for your time today. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thanks for watching!

Simon D. Campion: Thank you everyone for joining us today in closing I would like to reiterate my thanks to the entire downplay sirona team for their valuable contributions to our organization and their unwavering commitment to our customers.

Speaker Change #133: We are making progress advancing our ongoing transformation.

Speaker Change #133: And creating an organization and the culture that will benefit all shareholders over the long term from customers to employees to investors. Thank you for your time today.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you very much.

Speaker Change #135: Thank you for participating thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Allen Charles Lutz: Yeah.

Allen Charles Lutz: [music].