Q2 2025 Dentsply Sirona Inc Earnings Call

Welcome to the Q2 2025 dense sply serona earnings conference call.

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Andrea Daly, vice president of investor relations. Please go ahead.

Thank you, operator and good morning everyone. Welcome to the densely serona. Second quarter 2025 earnings call joining me. For today's call is Dan cavella chief executive officer, and Matt, gar, 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

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. Our most recently filed Form 10-K and any updated information in subsequent Form 10-Q or other FCC filings list some of the most important risk factors that could cause actual results to differ from our predictions.

On today's call, our remarks will be based on non-gaap financial results. We believe that non-gaap Financial measures offer investors valuable additional insights into our business's financial performance enable the comparison of financial results between periods or certain items May Vary independently of business performance and enhanced transparency. Regarding key metrics utilized by management. And operating our business, please refer to our press release for the reconciliation between gaap and non-gaap results.

Comparisons provided are to the prior year quarter. Unless otherwise noted a webcast replay of today's call will be available on the investor section of the company's website following the call.

and with that, I will now turn the call over to Dan

Thank you, Andrea. And good morning everyone.

This is my first earnings call says, taking the CEO role in August 1st.

So I thought it would be appropriate to open with a few statements before progressing into the Q2 business results, the mat will cover Q2 financials and give an update on our 2025 Outlook.

First, I want to thank Simon for his nearly 3 years in the role where he built a strong team.

Strengths and Communications with our customers and initiated multiple programs to improve dense fly Corona's position in the market.

Having come from our board of directors. I can tell you that, I personally appreciate the work. He's done. And I plan to build on these programs with an eye on moving deeper faster and strengthening our long-term position in the market.

Second, I look forward to partnering with Matt as our new CFO.

I believe Matt's experience and background are exactly what we need. And we're forming a strong partnership as we move forward together.

I've also had the opportunity to engage with senior leadership identify Serano. And my initial assessment is that we have the core Foundation to shape, this company's future.

I'm sure many of you are wondering what I plan on doing, or what changes you should expect from me, but I do have several hypotheses and ideas on what to focus on. I'm currently working with the team and our customers to listen and learn. So we can prioritize and focus our approach before fully developing pathways.

There are a few areas that are immediately apparent that I'll share with you now starting on slide 3.

I've been focusing initially on providing stability to the organization through the CEO change. So we can focus on execution and drive results.

I've been active with the DS team connecting, interacting and conducting deep, Dives to listen learn and aligned on our go forward approach.

We will continue to improve our focus on the customer and the customer experience. Every position in every department will make this a priority.

We will enhance our support of the customers and our field-based employees through simplifying interactions. Speed of response and increased strategic Investments.

The field team is and will become even more so a strength of our company.

The tip of our spear.

We will focus on enhancing investments in innovation, including speed to market and adding value to our clinicians and their workflows, so that they can offer the best products and services to their patients and grow their skills and practices.

As Market leaders, we will need to shape the future of our markets partnering, with our practitioners to migrate from product, offerings into proceduralized.

Focusing on the complete provider patient experience leveraging, the entire company's broad portfolio throughout Pace competition.

DS. Core platform is a critical element of the company's strategy and it continues to gain traction with 50,000 unique users. Now using the platform and more connected devices and lab orders processed each month.

We have a strong supply chain under great leadership that I believe we can enhance even further through streamlining. Several components to unlock value, reduce costs, and refunds to invest in fueling future growth.

As you've heard from us, we have programs underway that will continue. But will also be looking at more strategic moves to better position ourselves for the future.

Wrapped around our commercial enablement, Innovation engine and operations. Muscle will be streamlined support functions that will add value through simplifying and standardizing systems processes and structure that will allow us to move faster. Support customers better and unlock funds that can be redirected into sustained profitable growth.

The team has made progress. Here are the results seen in our financial outcomes, but there's more work to do in this area.

We will make decisions that support long-term sustained growth that leads to Stronger financial performance, benefiting our business, and our shareholders.

moving into our Q2 business results on slide 4,

Global sales were 936 million, decreasing 5%, as reported or negative 7% on a constant currency basis, excluding the bite, impact sales declined, approximately 4%,

Adjusted. Even to margin was 21%, increasing 360 basis points versus prior year. Q2

Adjusted earnings per share were 52 cents growing 7% versus prior year.

Both adjusted ibida and EPS results are driven. Primarily from bite impact, and active cost reduction programs.

Cash flow from operations was 48 million for the quarter.

Our data and customer survey in the second quarter show. Global patient volumes and procedures largely unchanged from previous quarters.

From a regional perspective.

U.S. sales for Q2 are $293 million, down 18% in total or 11%, excluding the bite impact.

Results are driven primarily by continued softness in connected technology, solutions, and orthodontic and implant solutions, given the performance. This is a priority area for us to address. We've already kicked off activities in my first week.

European sales were 404 million, basically flat versus Q2 prior year, Germany delivered its fourth consecutive quarter of growth driven by CTS and Shore smile, which was up over 27% offset by softness and IPS

press the world sales for 239 million up slightly versus prior year with growth in essential Dental Solutions and chore, smile up, double digits, partially offset by softness and CTS

Before I hand the call to Matt, I want to say that I'm excited to join the dense Supply Corona team and be part of shaping the future of this organization.

I believe our potential has never been greater, but it's up to us to harness our resources and shape the future of our markets, placing our customers at the center of all we do and making thoughtful Investments that drive long-term sustained profitable growth. Thank you. I will now turn the call over to Matt.

Thanks Dan. Hello everyone, and thank you for joining us.

At Dan noted its early days for us but we are working closely together and share the belief that densely surround us. Potential has never been greater than it is now

Since joining DS, my party has been helping the team focus on value accretive activities.

It was very strong engagement across the company in this regard, and Dan's arrival is helping to further our efforts and increase our pace.

Our areas of immediate Focus are fully aligned and currently being actioned first customer experience.

We are directing our Firepower to establish the best outcomes for customers through service and Innovation second margin enhancement. We are raising the speed of transformation by eliminating waste throughout our operations and focusing the organization on value agreed of actions.

And lastly, Capital allocation.

We are taking a disciplined approach and make an appropriate Investments to deliver increasing rates of return and shareholder value.

and now let me turn to our second quarter results, and a review of our 4 year 2025 Outlook to begin on, slide 5

Our second quarter, net sales were 936, million representing a decline of 4.9% persons, the prior year quarter, and a 6.7% decline on a constant currency basis of which roughly half was due to bite.

Adjusted to keep it down. Margins expanded 360 basis points to 21.1% benefiting from the suspension of bite sales and lower operating expenses.

despite lower sales, adjusted gross margin expanded 60 basis points to 55.9%

Adjusted EPS in the quarter was 52, cents, up 6.6% from prior year, largely due to higher adjusted, avadim margins FX, and a lower share count, partially offset by below the line items and a higher tax rate.

As you will have seen, we recorded a roughly 214 million non-cash after tax charge related to the impairment of Goodwill and other intangible assets within the OAS and CTS segments.

These impairments were driven by the impacts of terrorists and current period buying changes relative to the initial investment thesis.

359 million, our Q2, net debt, to ebitda ratio was 3.1 times and flat on a sequential basis.

We also completed a 550 million hybrid Bond offering in Q2 which helped to increase our ongoing Financial flexibility.

And now, let's turn to second quarter segment performance beginning on slide 6.

Starting with EDS, which includes Endo Resto and preventative products.

Sales on a constant current currency basis, increased 1.1% with growth in the rest of the world partially offset by lower volumes in Europe. And the US,

it's worth noting that EDS performance in the quarter reflected stable, patient traffic across our major markets, a good indicator of the relatively stable, environment and consistent with our customer surveys.

Shifting to ois.

Sales and constant currency declined, 19.4% with fight accounting for over half of the decline.

IPS declined double digits in the quarter driven by lower lab, volumes globally and lower implant sales in the US and Europe which were partially offset by growth of implants in China.

Stress Mi continued to make solid gains Rising 3.3%, driven by strong performance in Europe, and rest of world partially offset by softness in the US.

Turning to CTS sales and constant currency fell 5.9% versus the prior year quarter as double digit growth in imaging. In Europe was more than offset by declines in CAD Cam and imaging in the US.

Note that changes in distributor inventories did not impact the comparison of CTS sales year-over-year.

Sales and constant currency to client 2.5% as expected year-over-year results were negatively impacted by a us dealer initial stocking order, which occurred in the prior year, period and had an approximately 4.5% negative impact, which was partially offset by the benefit of new product launches.

We continue to expect this business to deliver mid single-digit growth for the full year.

With that, let's move to slide 7 to discuss our updated outlook for 2025.

We are maintaining our full year 2025 outlook for sales, adjusted, Evita margin and adjusted eps.

now, looking to the third quarter on a sequential basis, reported sales are expected to be down, slightly following normal seasonality,

While adjusted even down margin is expected to decline due to tariff related costs, beginning to roll through the p&l.

We expect that these factors combined with a higher tax rate will result in sequentially lower adjusted eps.

This Outlook helps us maintain our full year projection and a relatively balanced first and second half of the year.

before we wrap up, I'd like to share an additional thought on Capital allocation

We believe that dense Supply Corona has the potential to yield sustainably, high levels of free cash flow.

Effort is underway to work down inventories and reduce our overall working capital requirements.

We plan to prioritize investments in Innovation and growth financial flexibility and returns to shareholders.

And now let me summarize on Friday.

In the second quarter, our Topline continue to be challenged. However we delivered adjusted, Evita margin expansion and adjusted EPS growth through continued, Financial discipline

For maintaining our full year outlook for sales and adjusted eps.

We've added flexibility to our balance sheet and we are actively working to enhance our cash flow generation.

We see significant untapped opportunity at dense Supply Corona.

Unlocking, it starts with taking a value creation oriented approach to financial management. And that work has already started.

We Believe combining this approach with the customer experience transformation underway at the S will allow us to yield greater results faster and we look forward to sharing our proof points in the coming quarters.

With that, let's open it up for questions.

Thank you.

R11 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 1 again.

Please limit to 1 question and 1 follow-up please. Stand by while we compile the Q&A roster,

Our first question comes from Elizabeth Anderson of evercore isi, your line is now open.

A little bit of like a State of the Union. As you see the broader overall Dental Market says, you know, so we can kind of set out what you're seeing on that level. And then obviously some of the, the specific like idiosyncratic factors that you were discussing on top of that.

Thanks for the question. Elizabeth. This is Dan. And, uh, yeah, so I'll give you my perspective being 5 days in the seat here and go out of that way. But, you know, just using data that we have, and that we've talked about, you know, the Q2 survey in particular, which we found consistent with the Ada survey saying that the patient volumes remain stable, uh procedural utilization in the electives like implants and Ortho continue to be soft.

And, you know, we see some shifts, but nothing meaningful, maybe Germany, the dentist, and it looks like it's slightly better, uh, tough to call, right? You have a lot of activity on the macro with tariffs and activities. That fluctuate every hour. I think the real thing is remain focused on the patient and the chair and the dentist.

Give them the right products and drive this. When you do that the right way, all those other things can soften out. Our thought is focus on the long term and not react to the short term noises out there. So that's really where we're headed.

Call out in terms of Distributors, stock UPS or docking Dynamics in the quarter, maybe particularly in CTS and UDS. Um, that might be more of a question for Matt.

Yeah, it is. And, and hi. This is Matt. Um, again when we said in the prepared remarks, that we really didn't see a significant Revenue impact on a year-over-year basis related to, uh, stocks at dealers. And in fact, when you look at it on a year-over-year basis, they're both on an Imaging basis and on a cad cam basis and a good healthy position and the Deltas year-over-year were pretty similar. So feeling good about the overall stock situation.

Got it. Thank you.

Thank you.

Saxon of medium and Company, your line is now open.

Oh great. Uh, Dan and Matt thanks for taking my questions. Um then maybe I'll I'll start with a higher level of question for you and, and nice, uh, talking to you again on on a dense by call. So, you know, just wanted to understand kind of what about the opportunity at dense fly motivated. You to switch over and then you know with backgrounds and Spine and more most recently in Vision Care and uh you know, other areas at at J&J anything you learned in those markets, that might be particularly useful, as it relates to dense, flights positioning and dental and and how you're thinking about profitability.

Yeah thanks for the question David. And it is good to uh connect with you in another part here. So I look forward to going forward with you. You know, there's a couple things. Um

Globus is such a great company and there's such a great learning there. Uh, followed by, as you said that the breadth of moving around and different things with J&J. What I saw with dense flies the opportunity to honestly, apply all of those. And I think it's more about the operational experience and the execution coming from those and bringing it in here that I think would be what interested me most, and there's a lot of areas to focus on. I think the vast majority. I've had my hands in in the past and I think I can apply and help the team. And so for me,

It's about taking my experience, helping what I think is truly great team accelerate to get where we need to get to.

Great, thanks for that. And then as my follow-up I wanted to ask on implants. Um, so you know, maybe you can give a little more color on how that uh, part of the portfolio did both geographically and then across premium and value. And then in the script you talked about it being a priority area and already had some initiatives going. So can you give me uh give a little more color there? Like, what exactly are you doing in? In that part of the business and how how should we think about? Uh the impact they might have. Thanks so much.

And what, Dan just spoke to in terms of driving, some new consumer experiences. And then also from the China vbp program that we've seen so far this year that should carry us from a value perspective, Q2 was down. Let's call it low double digits. And again, largely due to what was taking place in the Middle East and that will carry through for the full year as we look forward. But overall, the Big Driver as we're looking at implants has been from the lab side of the house. And so, we'll expect to see that continue through email and the US, uh, both in the quarter and then over the year.

Great. Thank you.

Thank you. Next question, comes from Kevin Caliendo of UBS. Your line is now open.

Thanks for the question. Uh, welcome again. And that this is Dylan Finley on for Kevin. Um, to start just wondering if you could, maybe reframe, some of your tariff assumptions for the year, you know, I believe previously, the team had size in about 15 million and annual costs per year, so, wondering if there's any changes around that. Um, and then, you know, second of all,

does the guide contemplate, any mitigation efforts, um, in any kind of supply chain action or Price action, you can talk about their

Yeah, let me start with the activities that the teams are driving today, which have been extremely good results on expense control and driving efficiencies through the supply chain organization. You see that showing up in our margin as we speak last quarter. We told you that we were expecting about a $50 million annualized impact from tariffs. What has happened over the past couple of weeks with Europe and with Switzerland and Sweden, has showed us that that has grown to about 80 million dollars that we were looking at on an annualized basis. So,

The interesting thing there for 2025 is that we have a similar situation on the 25th or the puts and takes and the timing impacts that we've seen are going to result in the same level of impact here in 2025. So that 25 million dollars roughly spread across Q3. And Q4, the mitigation factors we continue to look at ways including cost savings, including activities uh that we are driving towards finding initiatives and finding mitigation efforts and I think that will continue through the end of this year and we'll look hard at what we're going to do for 2026.

Great, thank you very much and then on Orthodontics. Uh, quick clarification. Did you see any adjustments or, or kind of chargebacks on bite? I know, last quarter, um, there was like, a reverse of some of the refunds. It was a bit of a positive. So just just wondering if there's any adjustment there on bite. Um, and then second of all, just quickly, if you could talk about sure smile, um, and what you're seeing in the US today, you know 1 of your competitors called out you know, challenging conversion rates um potential ship to wires and brackets from orthodontists. Um, just any any commentary you can provide on that market

Yeah, so the the assumptions that we put into place as you know, you saw last quarter around bite and what's happening there. The the patient load has come off faster. We did see about a 4 million dollar adjustment here in the second quarter for the second half of the year. We now believe we are in line appropriately with the rates of the drop off. So, not anticipating any further changes in in that assumption as you look at sure. Smile. Again we, we said good performance, 3.3% growth. On a year-over-year basis. The US

Like many other areas that we are seeing in the US, there is a little bit of a drag their the things that we are doing to try and drive change education programs working with our sales force, and driving, new ways of working specifically with Specialists and orthodontists. That's what you will see. Help us drive a change in the US.

Thank you.

Thank you.

Our next question comes from. Michael churny of lyric partner, your line is now open

Uh, good morning and thanks for taking the question. Uh, this might be getting a little ahead of ourselves but maybe tying back a little bit to what Elizabeth asked off the top. Um, she talked about the End Market, I'd love to talk internally but how you see the portfolio Dan, you know, as you settle in obviously we have the wellspect. Um,

Relative to the business. Do you feel this early point in time? Like there are areas where you have holes that you want to pursue? And how do you think about the the build of inorganic versus organic growth? Along that front? It might be a philosophical question, but thought I'd at least start there.

No, no problem. Like I appreciate the question. So there's a couple things.

I actually believe that, no 1 else is better suited to compete holistically in this market than D sply, serona. We have everything that we need to do this and drive it. It's about focus and execution. I don't think there's major gaps that are out there and any minor gaps. I think you've got an incredible Innovation engine, seriously, that just working on those things? Should we do it faster? Can we penetrate deeper the answers? Of course. And that will always be it no matter what the performance is that way, but but the potential and when I talk about unlocking the potential, it's about using every single thing that we have to impact further than what we've been doing. And I think that's really it that way. Uh where it comes organic versus inorganic the answers both I I lean more towards the organic because I think you build the right in-house capabilities and write Productions. And you can actually do that in usually, a more profitable way eliminate unnecessary impairments and other external costs. But opportunistically, when we have a strong cash flow, the ability to buy and accelerate speed,

Of course, it's something that will consider and do at the appropriate times.

Got it. And I just 1 more on implants. If I can, as you think about the market, I know the under the previous leadership team, there was a major focus on reinvigorating, various different areas of growth.

You know, how do you feel about where those pieces of the reboot on implants fit as you settle into the seat? Um, again, I know these are early questions, but just trying to get a sense of some of the keys. We should expect going forward. Thank, you know, and I, I appreciate your positioning with it. Um, listen, I I I think the following, I think the teams moving in the right direction in several areas, I haven't come in and said we're changing. This, we're making a radical shift, and what I don't want to do is create a disruption that actually slows us, it puts us at a temporary competitive disadvantage. Um, I will continue to look, I might change my opinion as I go deeper in my listen and learn sessions, but to date while I've seen the things that are in progress, I think I'm going to keep them in progress. I want to go deeper and faster in a lot of the areas. Uh, I probably won't be as specific and focused in key areas. I think all of these are meaningful areas for us and I want to see growth and health in all of them, how we do that and which order and prioritize, what do we do that? Let let me step back and take some time learning and get you later on.

But uh, so far, continue the path, accelerate it and probably broaden where I think we ought to be focused.

Great, thanks.

Thank you. Our next question comes from Stephen valet of Missoula Securities. Your line is now open

Our next question comes from Stephen valet.

Our next question comes from.

Michael Cerrone of Jeffrey. Your line is now open.

Good morning, and thanks for taking the questions and, uh, Dan congrats on the new role.

Um, thank you, you're welcome. Um, just a follow-up um, on on the Tariff stuff and and how it relates to to margin expansion. You talked about you know, the updated thoughts being about 80 million dollars, annualized impact. Don't want to get you know, too far ahead of ourselves here. But you know, when you think about 2026 and and you do see that full impact, you know, how do you think about your ability to continue to expand? You know, growth and and ebita margins?

Yeah, Michael, let me start. This is Dan. I'll hand it over to Matt, but right now we're not in a position to project what we want to do in 2026 and the volatility of every hour of every day of the change in tariffs.

Would certainly tell you that Prudence says to pause and focus before reacting. And so, you know, ultimately what I think we're going to do is assess the situation and see, do keep in mind that we have the manufacturing and logistic Firepower globally to position ourselves for a benefit longer term. But we're just simply aren't going to react in such a volatile Market at this point.

Yeah, the only thing I would add to that. Dan is as you look at how we're building the rest of 2025 and the Outlook that we gave you, it does embed the Tariff impact into our Outlook.

That's why we're taking some time to really develop what that's going to mean for 2026.

Got it. Okay, that that's helpful. And then, you know, second 1 for me, uh, Dan in the prepared remarks, you mentioned, um, you know, you've already started taking some activities to address the softness and CTS any chance you can uh, elaborate on some of those

No, I appreciate the question but I think that um let me do it and execute it and tell you what we did versus tell you where we're going. I I'd rather keep that for competitive reasons in the into this team to go execute.

Okay, thank you.

Thank you. Our next question comes from Jonathan block of stifle. Your line is now open.

Great, thanks, guys. Maybe I'll just start with a clarification. I think, you know, the $50 million.

But I thought you said go into 80 million tariffs annualized headwind. Sorry, was that a net number or arguably is that gross before any, you know, mitigating initiatives that maybe you're able to put in place over the the coming months just the clarification there.

That is the growth annualized impact. And again, for 2025, though, based on how we see the components moving it. The the the impact to us in 2025, is still roughly 25 million dollars.

Yep. Got it, uh, not a full year and maybe some, you know, inventory that, that, that's at at pretty terrifying levels on the 25th, okay? And then, you know, Dan, I, this 1 might be too early to ask, but just, um, you know, when we think about some of the companies prior initiatives, right, there was a lot there, I mean, there was Erp, there was SKU rationalization, there was some Call consolidating of the manufacturing footprint.

You know, you inherit some of those things that are at various stages, of, of completion. So we would love your thoughts. I mean, are those top of the list initiatives? Do those all make sense to you are those on track according to Prior timelines, any update that you're able to give, there would be great. Thanks.

Thanks, Jonathan. Yeah, and it's a great question. And so what I'd say is, I think all of those are the Right Moves. Um, I think we have to go deeper and faster for sure. And uh, again, let let me go assess some of that. Come back at a later date, with a bigger broader plan, but there's nothing in there that I would step in and say, stop this, or don't do this. It made sense. Listen, the real focus and the macro approach here for this company is we need to return the US to health and sustained growth and there's different mechanisms to do that. But it simply starts with remaining focused and improving our focus on the dentist, the customers, and the field.

Supplying them with great Innovation and with a consistent supply chain and us, all of us supporting it in-house. That's really where we're going to stay focused and if there are some activities to strengthen that, that's really where we'll go along those lines. There'll be some broader things later. But again, or with the focus of the US Health First rest of the world and Europe, continuing to feed and in driving through that engine and naturally what we're focusing in with the team now,

Great color. Thank you.

Our next question comes from Jeff Johnson of beard. Your line is now open.

Thank you. Good morning guys. And uh, Dan, you know, I think John just asked you on kind of your commitment to some of those cost savings initiatives and other kind of uh middle of the p&l kind of efforts that uh the prior management has been focused on, maybe I'll I'll I'll go the opposite direction. Just kind of on the top line you know, there's been an intense Focus over the last couple of years. On some of this cloud-based uh DS core strategy. And you know, some of the equipment be coming uh Cloud native uh equipment. You know, my view on that. Not that you care about that, I guess. But has always been that, you know, might be a great long-term opportunity to be harder to monetize that in the short run would would love to get your up uh input on. Kind of how you're thinking about that commitment to DS core and the the intense Focus there versus maybe improving some of the actual you know, hardware and products themselves uh especially in some of the specialty areas. Thanks.

With Ds core. Uh, we have to make sure that the Investments are healthy and that Innovation is consistent in all of those other things of instrumentation and implants as well. So when Matt and I discussed how to unlock value or where, to go, we're signaling that we need to streamline throughout the entire p&l, not just the middle to free up cash so that we can reinvest and drive sustained growth through all of those mechanisms.

Fair enough and then maybe just 1, follow-up question, just on your value implant, uh, commentary around Mis and maybe some manufacturing, uh, headwinds there, uh, throughout the rest of the year, you know, how confident are you or how are you able to assess? Whether it's, it's truly getting product out the door versus market share, uh, gains for some of your competitors who have really focused on those value implants as well. Over the last couple of years, it seems like the value implant side of the market. Still has a little more strength than premium. So for that to remain down and and I don't know if you said down double digits the rest of the year, but still down the rest of the year a little surprised to hear that. Thanks.

Yeah. No. That that that's a good point of reference. The the second half of the year will definitely be stronger on the value side, again, that that event. And the, the Middle East that, that went down, obviously had an impact on our ability to, to ship out of the region. And so you've seen some uh headwinds there but that that will flip and we will be competitive. As we move into the second half of the year. On the volume side, the bigger piece of the overall implant story though you also noted which is overall

Competitive competitiveness and what is taking shape in the market? And I think those lean purely into what Dan was talking about with changes and movements and Evolutions that are taking place with our sales force. In the US, we've seen over the last couple of weeks, a significant, retraining and education program that the US team has launched. Those are the types of efforts that are going to allow us to be able to get back into the game and drive growth in premium.

Thank you.

Thank you. Our next question comes from Brandon Vazquez of William. Baird your line is now open.

Hi everyone. Thanks for um, taking the question. I wanted to follow up on a comment, uh, turning a thought that was going on. I think it was the John's question, but how much of the US business in, in your mind, as you come into the seat is underperforming, simply because of execution on of dense Supply or how much of it is simply underperformance, uh, of the dental macro Market.

At Brandon, it's a great question. Am I honest? Answer is. Let me evaluate it and go deeper and see how you, you know, to make that split this early on. I'm not really quite comfortable doing it. Um I do have the belief that we have an incredibly strong team in the field and a great bag. And I think we have to look at ourselves and say how can we move with better speed and decision making so that we give our field the chance to actually come out and perform stronger than they've been? Um, what that percent split is

Versus macro, I don't really know. But I happen to believe that when you have the right team, doing the right things, it softens a lot of those macro impacts anyway. And so let me dig deeper in come back to you once I have some better understanding

okay, and I guess that my follow-up is is related and it's somewhat leads into this, which is

the dental Market has seen Macro headwinds for several years now. Um, I'm not sure. And you guys, I'd be curious if you guys disagree with me, but I'm not sure. We see, kind of like a silver lining here, and where things are meaningfully improving for dental in the foreseeable future or at least in the next 6. Let's call it 2025. Um, again, if you disagree, please let me know. But in that if this is the case for uh, a, a little bit of time. Now the densify need to readjust to operate in this new environment. I think the prior leadership team, while there were a lot of great execution, uh, initiatives going on, there was a chunk of kind of their EPS goals that was built on, improving macro, is this something that you guys think you will Bank on as you start to develop plans, or or do you think that macro is Weighing on the on the sector so much that you need to just build plans to execute regardless, uh, and anything that macro would just be upside to that.

We're going to allow us to not only react to the shape, the macro as we go forward. It's about making sure we focus on the holistic set of our teams and portfolios to be able to do that. And while that sounds a lofty, I truly believe that it is more than doable.

Thank you.

Our next question comes from Alan Lutz of Bank of America. Your line is now open

Good morning and thanks for taking the questions. I have a high level question for for Dan and Matt. Um, you know, there's a lot of areas where you can focus Investments. As you've talked about um, sales force implants, aligners clinical education, you talked about DS score. I know it's very early, so not looking for any, uh, you know, specifics on on where where you're looking to invest. But just any early learnings and thoughts, you've had as you've looked at the business and then moving forward, how should we think about timing of potential Investments here and would this be a shift of dollars? You're already spending or would this be incremental spend? Thank you.

Yeah I'll go first and then let Matt kind of go in there so my experience uh not just dense Supply but my experience which showed that a focus in investing on the customer in the field are always going to be the thing that will help us be the strongest and go and so that's going to be there. Um, there's nothing that Matt and I would signal as a significant shift that would throw off your models at this point, but rather us looking with our eyes where we can find.

Efficiencies and free up cash to reinvest, and ideally do that in a way that can generate growth. So I would tell you we're not going to see a radical shift, that's going to throw you off. Uh, we are going to dig deep and move fast for sure but ultimately I think giving the field what they need, providing the customers, what they need is really the key here doing that in a faster manner with more options in an easier way is what I think we're going to focus on.

just to add because I think Dan and I are in 100% aligned and I frankly in my time here so far, I think the entire team is which is

there is a repurposing of spend that we can do to drive speed to drive growth and put areas where the team was already looking for efficiencies namely and those middle pnl elements but certainly within the corporate shifting, those into the field shipping those into Innovation. And so I think that's the the the primary Viewpoint that I have that. I'm going to try and and keep and build out with Dan and the team is is of the same mindset. So I don't I don't know yet. If there's a significant amount of uh, additional incremental spend, I will tell you we're going to go through our strategic planning process. We will go through our annual planning process. That will be a great time after that to really hone in on some of the changes that we want to drive from a modeling perspective.

But all of it is to reformulate a financial model for for DS that returns higher cash. That gives us the option to optionality for growth and returns to shareholders. Yeah and I would just add 1 last thing Matt and I are big fans of spending what we earn.

And uh, actually reducing leverage that will create longer term flexibility.

Great, thank you very much.

Thank you.

Our next question comes.

From Vic Chopra of Wells Fargo, your line is now open.

Hey, good morning, and thanks for taking the questions, Dan. Congrats on the new role, and I'm looking forward to continuing to work with you. Um,

I just had a quick high level question. Uh, Dan, you know maybe just talk about some of the lessons you've learned from your time at Globus medical that you think are applicable here and then I had a quick follow-up please.

Hey Vic. Thanks, it is great. Talking to you look forward to getting together again. Um,

You know, again, Globe is just such a great facility with such a great teams. I I could talk a lot about that but I won't. Um what I learned from that team is hands on literally hands on, not some executive talking from a tower, but getting in the field with the Reps and living their life eye to eye with the dentist and then owning it back and making sure there's execution where you as CEO are accountable to that person in the field to do it and do it better. I think that is the strength of Globus and that's what I'm going to bring in here with that.

Learning.

Yeah, I uh, we went over at earlier, but let me do a quick summary here so we did see uh, a performance Trend and and the way that we spoke about it was breaking up premium and value in the quarter premium down slightly, we continue to see uh that the shift from our Legacy Brands to the new evolutionary products that we made in the market, some change over headwinds there on the value side. The volatility in the Middle East did provide a bit of a headwind for us in the quarter. It was significant double digits low double digits, on the value side that will carry through for the rest of the year. So on the value side, you will see performance improved but it will still be down overall for the year. Um, the labs was the other place that we called out that had a significant double-digit decline, primarily anemia in the US and so that rounds out I think on the implant side uh when you look at the aligner side of the house, sure. Smile up 3.3%. And then you adjust

Out the bite performance from the overall segment that gets you back to that double digits.

Thank you. Our next question comes from Stephen.

valet of Missoula security, if your line is now open,

Oh, thanks. Uh, yeah, good morning. I apologize earlier. I was kind of juggling multiple calls at once. Um, you know, Dan is obviously a tone for you to focus on the short term as you're, you're joining the company. Yeah, 1 area. That was, you know, someone in limbo over the past year with some of the relationships with the major Dental Distributors. So I guess I'm just curious. If you can provide a little more color on, you know, where that ranks on the totem pole of your priorities and do you have a general bias coming into the role? Uh, that Distributors are vital or, you know, the door be open. Maybe somewhere down the road, where, maybe a larger portion of your sales are direct just curious again any you know early thoughts around this whole topic. Thanks.

You guys, Stephen appreciate the question. So uh, you know, a couple of things I did have a chance to connect with both, uh, showing in Paterson CEOs and uh, you know, we're going to get together as I get further up to speed have conversations. I would tell you, I'll refrain from telling you what I think and where we're going and what we're doing right now. Till I have a chance to better engage and learn this. Um, I am not really sure focused on the short term. Everything we're doing is going to be about long term here. That would include what our relationship is with those. So for now, uh, I'm active in speaking and engaging with them. I need to go further, uh let's kind of readjust that after I've got a little bit of time under me.

Okay. Makes sense. All right, thank you.

Thank you.

Our next question comes from Aaron Wright of Morgan Stanley, your line is now open

Um thanks for for taking my questions here. So, you know, there's been several iterations of turnaround stories not just a dense fly. But also a cross Dental I guess how, you know, can you talk about what the what's different in your approach and and outside of some of these Investments that you're making and execution and everything? What what do you really think is like the optimal mix across your business like

You know, to really set yourself up for success and dental and more consistent growth and and are you taking a hard look at, even some of the strategies around some of the more Flagship areas? For instance, like how do you feel about the game plan around CAD Cam and how much are you taking into account, the evolution of the competitive landscape there and in other parts of your business that you're taking a hard look at? Thanks.

Aaron. I appreciate the question and I think it's a legitimate question being 5 days in. Let me dig deep. Listen, learn engage with the field engage with customers. Evaluate this out again, I do feel like the company is tracking in the right direction, but not even fast enough. I think there are some things we can do better internally.

Um, well again, let me get through my listen-and-learn sessions, and I will connect with you and probably give you broader scopes as I get a quarter under my belt. To further answer that question the right way.

Okay, great understood. Thank you.

Thank you.

This concludes the question and answer session, I would like to turn it over to Dan skaville CEO for closing remarks.

Thank you all for joining the call today. Matt, and I look forward to engaging the investment Community as you settle into our respective roles.

Before we close, I want to take a moment to thank the entire dense Supply Sayre on a team for the warm welcome and for their unwavering commitment to our customers as they shared earlier. I'm truly excited to be here and to be part of shaping, the future of the organization. So that we can accelerate the value, we provide to our customers and unlock the true potential of the company.

In addition, I want to thank Andrew Daly for her dedication and leadership in the investor relations role. Andrew will be moving into a new opportunity. Elsewhere, we're grateful for her contribution and we wish her continued success in her new role. Thank you, everyone.

Thank you for the your participation. In today's conference, this does conclude the program. You may now disconnect