Q3 2025 Dentsply Sirona Inc Earnings Call
Speaker #2: Good day and thank you for standing by . Welcome to the Q3 2025 Dentsply Sirona Earnings Conference Call . At this time , all participants are in a listen mode .
Speaker #2: After the speakers presentation , there will be a Q&A session . To ask a question during the session , you will need to press star one one on your telephone .
Speaker #2: You'll then hear an automated message advising that your hand is raised to withdraw your question . Please press star one one again . Please be advised that today's conference is being recorded .
Speaker #2: I would now like to hand the conference over to your first speaker today , Wade only Moodie , Investor Relations . Please go ahead .
Speaker #3: Thank you . Operator . And good morning , everyone . Welcome to the Dentsply Sirona third Quarter 2020 Earnings call . Joining me for today's call is Dan , President and Chief Executive Officer .
Speaker #3: 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 WW DENTSPLY SIRONA Inc. .
Speaker #3: 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 forward looking statements that reflect our current views about future performance and financial results .
Speaker #3: 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 SEC filings , list some of the most important risk factors that could cause actual results to differ from our predictions on today's call .
Speaker #3: Our remarks will be based on non-GAAP financial results . We believe that non-GAAP financial measures offer investors valuable additional insights into our businesses financial performance , enable the comparison of financial results between periods where certain items may vary independently of business performance and enhanced transparency regarding key metrics utilized by management and operating our business .
Speaker #3: 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 .
Speaker #3: A webcast replay of today's call will be available on the investors section of the company's website . Following the call . And with that , I will now turn the call over to Dan .
Speaker #3: Thanks , Wade , and good morning , everyone . Let's start with slide three . I recently completed my first 90 days as CEO of Dentsply Sirona .
Speaker #3: During my first week at the company , we held the Q2 20 earnings call where I shared my list . Learn lead , approach along with my initial thoughts on the organization's focus areas .
Speaker #3: Since then , I've continued to assess these through meetings with customers , partners , and employees where I've been learning our strengths and areas of improvement .
Speaker #3: These discussions have helped validate initial observations , gain alignment with my leadership team , and shape our return to growth action plans to improve performance and deliver sustained , profitable growth over the next 24 months .
Speaker #3: This plan requires us to go deeper , move faster , and be bolder to reshape and improve the customer experience . I believe the potential for DENTSPLY SIRONA Inc. has never been greater , and we have at our fingertips what we need to achieve this .
Speaker #3: First , I'll discuss our Q3 25 results and full year outlook . Then I'll share a deeper view of our return to growth Action plan and is four key pillars .
Speaker #3: Before I begin , I want to note that as announced in this morning's press release , Matthew Garth , our chief Financial Officer , has departed the company .
Speaker #3: This action is not the result of any dispute , disagreement or financial reporting matter . Matt was not the right fit for me and where I plan to take the enterprise in the finance organization , he is a talented fighter and we wish him the very best .
Speaker #3: The transition plan is in place to ensure continuity and that we maintain financial discipline as we select the right leader to join us .
Speaker #3: Driving DENTSPLY SIRONA Inc. forward . Moving to slide four , let's let's discuss our quarterly financial results for Q3 25 . Global sales were $904 million , decreasing 5% as reported or -8% on a constant currency basis .
Speaker #3: Excluding the bite impact , sales declined 5% and as disclosed in last year's Q3 earnings call , Q3 24 included a $24 million , one time dealer , Pre-buy .
Speaker #3: In advance of the US ERP implementation . Adjusting for this one time headwind , Q3 25 sales on a constant currency basis were down 2.5% .
Speaker #3: Adjusted EBITDA was 18.4% , up 50 basis points versus prior year , driven by lower sales on favorable product and geography mix and tariff impacts .
Speaker #3: That negatively impacted gross profit . This was offset by reduced spending in OpEx . non-GAAP earnings per share was $0.37 , down $0.13 versus prior year .
Speaker #3: Approximately half the EPs decline reflects the impacts of sales mix and tariffs on gross profit , with the remaining half driven by higher non-GAAP tax rates in the quarter of 32% versus 16% last year .
Speaker #3: This is due to shifts in profit between the US and international markets . Q3 cash from operations was $79 million and ending cash balance was $363 million .
Speaker #3: We recorded a $263 million non-cash after tax charge related to the impairment of goodwill and intangible assets . These impairments were driven by the impacts of tariffs and lower projected volumes of equipment , implants and prosthetic products , particularly in the US .
Speaker #3: In the third quarter . Dentsply Sirona returned $32 million to shareholders through dividends , with $96 million returned to shareholders through dividends . Year to date .
Speaker #3: Now moving to slide five for Q3 results from a regional perspective , US sales were $291 million , down 22.2% versus prior year , driven by lower sales throughout essential Dental Solutions , Cad-cam imaging and implants , partially offset by strong performance in treatment centers and in healthcare , are well Spect business , which delivered 22.3% growth .
Speaker #3: Adjusting for the bite impact and the one time $24 million prior year US sales were down 9.7% , European sales were $382 million , increasing 9.9% as reported , or 2.6% on a constant currency basis , driven by growth in connected technology solutions and labs , partially offset by softness in restorative .
Speaker #3: The UK , France , Italy and Spain had strong , constant currency growth , partially offset by lower sales in Switzerland . Germany , sales were flat in Q3 versus prior year .
Speaker #3: Wells FX sales grew 5.3% in Europe on a constant currency basis . Rest of world sales were $231 million , down slightly versus prior year , with strength in essential dental solutions offset by declines in connected technology solutions and implants .
Speaker #3: Strength in Australia and India were offset by softness in Japan . Well , spec grew 87.3% off a small base in Q3 . Now turning to slide six for our business segment results .
Speaker #3: KT's sales on a constant currency basis decreased 7% versus prior year . Equipment and instruments increased by low single digits , reflecting growth of imaging in Europe and rest of world , and growth of treatment centers across all three regions , partially offset by a decline in imaging in the US , any growth was offset by double digit decline from CAD Cam in the US and rest of world .
Speaker #3: Distributor inventory levels for both CAD Cam and imaging products remain below our historical averages . Moving to EDS , which includes endo Resto and preventative products .
Speaker #3: Sales on a constant currency basis decreased 6.2% with the decline entirely attributed to the previously described dealer Pre-buy . Shifting to OIS sales in constant currency declined 17.1% , excluding the byte impact , OIS sales were down 5.8% in ortho sure small decline , low single digits in the quarter , as we saw softness in the US market partially offset by growth in Europe and Rest of world .
Speaker #3: IPS declined mid-single digits in the quarter , driven by lower implant volumes in US and China . We saw slowdown in the activity in the Chinese market and anticipation of the implementation of the second phase of the Vwbp program in Europe .
Speaker #3: IPS increased slightly , wrapping up our segment results , sales in constant currency for well Spect healthcare increased 9.3% . As we saw growth across all three regions .
Speaker #3: Now , I'd like to discuss the outlook for the remainder of 2025 on slide seven . The company is revising its 2025 outlook based on the results of the third quarter tariff impacts and targeted investments .
Speaker #3: We've already begun making in key areas to accelerate growth and momentum in 2026 . The revised outlook includes net sales in the range of 3.6 to $3.7 billion in constant currency , sales are expected to be in the range of negative five to -4% year over year .
Speaker #3: Adjusted EPs is expected to be approximately $1.60 . Now on slide eight , I'd like to look forward and discuss our detailed return to growth action plans designed to improve performance and deliver sustained , profitable growth over the next 24 months .
Speaker #3: This will be achieved by going deeper , moving faster and being bolder and based on four pillars . Putting customers at our center , reigniting the US business to win , empowering people to power performance and evolving operations to fuel innovation .
Speaker #3: I will now discuss the actions we will take in each pillar , putting customers at the center . What I've learned in my first 90 days is in our businesses , where the customer is the center of everything we do .
Speaker #3: We win . I know that may seem obvious , but one of the reasons we're not growing as an enterprise is that we have some parts of the company where we can serve the customer far more effectively by putting the customer at the center of everything we do , every employee and every team at Dentsply Sirona now starts with the mindset of delivering a better , more positive , easy to do business with customer experience to earn their share in loyalty .
Speaker #3: The customers defined as any practitioner who uses our products regardless if they purchase directly through a DSO or dealer . They're our customers and we will partner with dsos and dealers to deliver the timely , consistent support they need .
Speaker #3: We will achieve this by creating a global customer service and technical service organization that delivers high quality support worldwide , while maintaining the agility needed to meet local market needs .
Speaker #3: We will also enhance our support for customers and our field based employees through simplifying interactions , speed of response and increased strategic investments .
Speaker #3: The field is and will become even more so . A strength of our company . The tip of our spear reigniting the US business to win .
Speaker #3: Second , we're making the return to health of our US business a top priority with a comprehensive plan to reignite growth and strengthen our commercial foundation .
Speaker #3: Under the leadership of our new Chief Commercial Officer , we're aligning our teams accelerating decision making and positioning Dentsply Sirona to compete and win with greater speed and focus .
Speaker #3: Here are specific actions we're drive this plan taking to forward , many of which are already underway , including organizing our commercial teams to better reflect the requirements of the market with the aim of enabling improved coordination , clear strategic focus , and stronger competitiveness .
Speaker #3: Supported by defined decision making processes . Performance indicators and accountability frameworks . As mentioned before , combining customer service and technical service into a single , globally led team under experienced leadership to improve the customer experience and strength and coordination with our dealer partners .
Speaker #3: Pursuing a multichannel approach to retain direct sales in specialty areas while re-engaging and expanding our network of US dealer partners in CTS to accelerate market penetration .
Speaker #3: We're also aligning with Dsos by offering simpler and more comprehensive support , such as all in one de novo offerings , with leverages the breadth of our portfolio , investing in our sales team to fill open positions , expand coverage and deploy growth based compensation and retention tools to better serve existing customers and acquire new ones .
Speaker #3: Increasing our investment in clinical education for dental professionals , focusing on advanced training areas like connected dentistry and single visit care . At the same time , we're strengthening our sales training to better reflect the needs of dental offices , giving our teams a deeper understanding of practice workflows and the tools to deliver tailored solutions that improve both clinical and operational outcomes .
Speaker #3: The initiatives outlined are focused on North America , but have clear applicability across the EMEA and Asia-pac . We plan to increase regional investments in 2026 to accelerate growth at the same time , we're exploring new go to market models in Asia-pac to strengthen CTS market penetration in Japan and refining our strategy in China .
Speaker #3: As the US business gains momentum , we will strategically shift additional investments towards EMEA and Asia-pac , empowering people to power performance . The lead DENTSPLY SIRONA Inc. of this turnaround , we're strengthening our organizational foundation to empower our people to power performance .
Speaker #3: Our teams need the right tools , systems and information to operate effectively . Supported by a greater automation and clearer priorities . With aligned leadership and bringing new expertise where needed to accelerate our progress .
Speaker #3: This balanced approach leverages the strength of our existing organization and complements them with leaders who have deep experience in global transformations , sustained growth and consistent financial performance with our finance organization , we're taking steps to elevate capabilities while ensuring continuity as we identify the right long term financial leader for Dentsply Sirona , as I shared at the top of the call , Matt Garth is departed the organization and a transition plan is in place to ensure continuity and maintain financial discipline .
Speaker #3: A search for his successor , led by hydrogen struggles , is underway during this interim period . Board member Leslie Varon , former chief financial officer of Xerox Corporation , will provide governance and oversight of the finance organization and her capacity as Audit and Finance Committee chair in our commercial organization .
Speaker #3: We're sharpening our focus on the customer experience and market competitiveness under the leadership of Chief Commercial Officer Aldo Dent , we're strengthening execution in North America and rebuilding the US .
Speaker #3: Commercial leadership structure . This includes the search for a new US VP of sales and broader efforts to deepen partnerships , improve service delivery , drive customer loyalty coming from a distinguished career at Johnson and Johnson , and given Udo's experience in the orthopedic industry , he knows how to fix customer experience and to enhance our approach in competitive and evolving markets .
Speaker #3: We've also established a transformation office responsible for oversight of our return to Growth plan . This office will advance our enterprise AI and automation strategy , fundamentally improving how we work to lead this critical effort .
Speaker #3: Dustin Shields has been appointed Chief Transformation Officer , joining Dentsply Sirona in December . Dustin brings extensive global experience in commercial and operational functions , integrations and business optimization , most recently at Globis Medical .
Speaker #3: Under his leadership , the Transformation Office will focus on delivering cross-functional improvements that enhance efficiency , agility , and long term value creation .
Speaker #3: We've also appointed a leader of digital transformation to lead the integration of AI across our operations to increase speed , strengthen data driven decision making , and improve the effectiveness of our support functions .
Speaker #3: Evolving operations to fuel innovation with a commercial organization more closely aligned to customer needs and improved product development processes , will focus our investments on innovation that help clinicians enhance their streamline workflows and grow their practices .
Speaker #3: In parallel , we'll continue to increase and accelerate R&D investments to improve the health of our commercial engine . We're also taking steps to enable our supply chain to move faster and go deeper than before , to create stronger , more profitable and scalable manufacturing .
Speaker #3: And distribution network . Building on the ongoing work of the supply chain transformation team , this includes a plan to enhance operational efficiencies through resource consolidation , standardized packaging and establish more advanced planning and forecasting to favorably impact working capital and product costs .
Speaker #3: We need to further streamline our support department cost structures to optimize resources , processes and systems to reach benchmark efficiency levels . Reduce complexity and release capital to be redeployed into our commercial and innovation priorities .
Speaker #3: This will be accomplished by implementing common processes , common systems , and establishing regional support centers . This will include a significant reduction in legal entities and the continued implementation of SAP as our global ERP system .
Speaker #3: We plan on deleveraging the business through profitable growth and disciplined execution to drive improved EBITDA , working capital and cash flow to support future capital needs .
Speaker #3: Debt reduction in shareholder returns , the well spec business will be a key role in achieving our financial goals as previously announced , following an evaluation of strategic alternatives for Well-specced , we determined that retaining the business will deliver greater financial and strategic benefit to shareholders than the other options available .
Speaker #3: Specifically , keeping the business as part of our portfolio allows us to realize previous investments not yet monetized . While benefiting from a strong cash flow generation and preserving optionality for future growth .
Speaker #3: Beyond dental , as evidenced by our recent results , we know how to penetrate this market and grow this business . Moving to slide nine .
Speaker #3: In summary , we made progress over the past two years in footprint consolidation SKU rationalization and resource streamlining . We need to move faster and act bolder to reshape the customer experience and strengthen our competitiveness in the dental market .
Speaker #3: I'm continuing to work through my onboarding to better understand the complete enterprise and market to set the appropriate financial targets , but we expect to be able to free up additional capital in our operational structure and products while reaching benchmark levels in our support functions and improve rep effectiveness .
Speaker #3: Accomplishing this will free up capital to invest in additional field based resources . Increased rep and clinical education , and higher levels of investment in innovation to drive growth and shareholder returns .
Speaker #3: I will end my formal remarks with a statement I opened with: I believe the potential for Dentsply Sirona has never been greater.
Speaker #3: I recognize that the company has undergone change over the last few years . The change has not been fast enough for you or the dense board .
Speaker #3: That is why I stepped into this seat at their request . It's time for bold change and we're entering a new era for DENTSPLY SIRONA Inc. , one that's rooted in discipline , ownership , acting with urgency , and a mandate to deliver results .
Speaker #3: Our board of directors and my leadership team believe deeply in our ability to reposition Densify Sirona as the market leader . It once was , and will be again .
Speaker #3: We're committed to doing the work necessary to get there , even if even if it means making tough decisions . I couldn't be up for this more than anything in my life .
Speaker #3: I'm excited to do this and drive forward with this , making changes . I look forward to keeping you up to date on our progress , and I'm committed to communicating with you in a direct and transparent manner every step of the way .
Speaker #3: Thank you . We will now open the call for questions .
Speaker #2: Thank you . As a reminder to ask a question , you will need to press star one one on your telephone and wait for your name to be announced .
Speaker #2: To withdraw your question , please press star one one again . Please limit yourself to one question . Please stand by while we compile the Q&A roster .
Speaker #2: Our first question is from Elizabeth Anderson with Evercore ISI . Your line is open .
Speaker #4: Hi , guys . Good morning and thank you for the question . I was wondering if you could maybe talk a little bit more about the US market .
Speaker #4: I think , you know , based on what you put in the slides , x the one time items , it looks like it was still down about 10% year over year .
Speaker #4: So could you just sort of talk about where that is . Is that a result of the sales situation ? Is it a lingering impact of the sort of prior Patterson situation , just a little bit more color on what you see driving those shorter term results would be very helpful .
Speaker #4: Thank you .
Speaker #3: Thanks , Elizabeth . I think it's a really a list of many things . What I'm going to say is our focus in the US from our structure and how we go out , that competitively is one thing throughout the products .
Speaker #3: I think it's the relationships with the dealers that we need to make a move on. Honestly, getting deeper with the DSOs and more meaningful strategies.
Speaker #3: Many of these things all come together . It's not just one area . I really think it's more about our structural approach and our execution .
Speaker #3: In the US market and how we as an organization can give our team the better tools to do that . Throughout the portfolio , in a better way .
Speaker #3: That's really what the return to health plan is about . Is addressing what I see as shortcomings that we can allow to continue and drive improvement in each one of these segments with a deeper focus through structure and funding .
Speaker #4: Thank .
Speaker #5: You .
Speaker #2: Thank you for your question . Our next question is from David Samson with Needham and Company . Your line is open .
Speaker #6: Great . Good morning Dan . Thanks for taking my questions . So I just wanted to ask on this returning to profitable growth kind of framework over the next 24 months , I guess .
Speaker #6: How should we think about the cadence of getting to growth over that two year period ? Is that kind of should we think about flat next year or , you know , any guardrails around 2026 growth ?
Speaker #6: And then just in terms of that target of growth like is that absolute growth or is that market growth ? Would love just some more color there .
Speaker #6: Thanks .
Speaker #3: Thanks , David . Hey , I appreciate the question . You know , this is my my desire is to return to growth tomorrow .
Speaker #3: I would say don't model that just yet . What I do need is a little more time . We're going through the 2026 plan now , and I'm really working with every department in every country to do this with the team .
Speaker #3: So , so give me a little bit of time to come back at this . You know , I will tell you , it's not a January 1st .
Speaker #3: Everything's rosy , but it sure can't be that you're exiting the year the same way . And so how we lay out those sequential improvements .
Speaker #3: I need a little more time to refine , but I require that we have sequential improvements as we get through the year . I just need more time to figure out when I can tell you with confidence .
Speaker #3: When they begin at what section of next year .
Speaker #6: Okay , thanks for that . And then just in terms of capital allocation , I believe you talked about deleveraging in the script .
Speaker #6: So , can you just remind us your your philosophy around capital allocation and specifically on the dividend , like how important is that .
Speaker #6: Are there areas in other parts of the business or you know , mechanics that you could direct that cash ? Thanks so much .
Speaker #3: Yeah , you got it , David . Listen , I think that is a legitimate question . I think discussing dividend in its value is something we need to explore further with the board and with the shareholders to understand how important is that in adding shareholder value and where could that be used differently ?
Speaker #3: The main tool of deleveraging isn't buying down the shares . We're actually retiring debt . To me it's about growing the business first through the US and then consistently through the rest of the world to raise EBITDA .
Speaker #3: So that your your ratio changes . I really think it's more about growing that piece of it . The denominator , if you will .
Speaker #3: That is the health of this . And yes , with that comes better profit , better cash flow , which we then can and will at some point redeploy into debt , retirement .
Speaker #3: And when needed , share repurchase .
Speaker #6: Great . Thank you .
Speaker #2: Thank you for your question . Our next question is from John Block with Stifel . Your line is open .
Speaker #7: Great . It's Jordan Bernstein on for for John . Thanks for taking our question . Just on the R&D aspect of the return to growth action plan .
Speaker #7: You heard some recent comments from you about trying to take that number up and accelerating investments in R&D . Just if you could talk through that dynamic and , you know , is that a multi-year type of acceleration and where your your heads are at for the R&D organization ?
Speaker #7: Thanks .
Speaker #3: Yeah . Great question , Jordan , and thanks for it . So a couple of thoughts here . One of the reasons I'm adjusting down EBITDA now for this year is we are pulling forward millions of dollars of R&D investment into the fourth quarter .
Speaker #3: That will help us position better strength in 26 and beyond . And so we are beginning that . I would like to get up to the right benchmark .
Speaker #3: You know , I know we've always tossed around 6 to 7% . We'll evaluate that . It's probably a likely thing . I'm not sure we can get there in one fell swoop .
Speaker #3: I am looking at that now , and while I have the desire and we will increase the investment in R&D , I'm also going to look deeper with the R&D leadership to make sure we're spending it efficiently and that we are spreading it out to make sure that we mitigate risk .
Speaker #3: And so there's a couple of steps there as well of are we really spending the dollars we have today in the best way ?
Speaker #3: And then once we have that in a good spot , how do we increase it in a way that maximizes the output for the market and for the shareholders ?
Speaker #7: Great . Thank you .
Speaker #2: Thank you . Our next question is from Jeff Johnson with Baird . Your line is open .
Speaker #8: Thank you . Good morning . Dan . Maybe I could just follow up and stay on the track . You were just on on the R&D side and really the opex side .
Speaker #8: If I look at the guidance take down for this year , I mean , no , no real surprise to see a new CEO come in and kind of flush the current year out .
Speaker #8: And I think all that makes sense . But it looks like maybe your OpEx spending , R&D included going up , maybe $50 million in the back half of this year to kind of get to that new guidance range .
Speaker #8: Is that something we should think about as 50 million in the second half of this year up ? And so we carry that over to another 100 million next year .
Speaker #8: Just to annualize . That is that kind of the new run rate spend . And if it is , I know you're nowhere close to talking about 2026 at this point , but the streets hanging out at like 16% Ebit margin feels like to me , if you have to take opex , spend up 2 to 3 points , maybe we should sharpen our pencils on that 16% op margin .
Speaker #8: Thank you .
Speaker #3: Yeah , Jeff , again , appreciate that too . And like I said let me wrestle through 2026 with the team and see the real thing I'm doing right now is taking a loan to increase investments so that as we go forward and we find efficiencies , we can actually make it self-funding .
Speaker #3: So I don't think it's a new add on top thing . It's a I'm going to pull some money out now get this engine running .
Speaker #3: And as we find efficiencies and redeploy it , I'm going to expect to see decreases over time in those opex numbers with an increase in EBITDA .
Speaker #3: But again , to jump start it , I'm going to pull down , as you just said , some EPs invested in the right areas so that we can start delivering these efficiencies .
Speaker #3: I've talked about as we get through 2026 and into 2027 .
Speaker #8: All right . Fair enough . And I've been jumping between calls . So if you if you asked us to hold to one call or question , I apologize .
Speaker #8: But I'd like to hear on the European market , I don't know if you're still doing some of the surveys that your predecessor was doing , but , you know , some of our checks , and I think even if we look at two Q results from some of the manufacturers and the dealers out there , it seems like the European dental market has maybe gotten back on a little bit better footing .
Speaker #8: And really , even the international market ex Canada . So , so we'd love to just kind of hear your overall arching view of of the international markets at this point .
Speaker #8: You know , market more so even than your performance in the quarter . Thanks .
Speaker #3: Yeah , you got it . So a couple of things we do our surveys every six months . We didn't do it for the third quarter with that .
Speaker #3: But nonetheless we didn't see any drastic shifts from where we had done before . And anecdotally , as I was out in the field and talking with people , you know , a few people said it was slow down .
Speaker #3: A few people said it speed up . So I'm going to kind of call it as kind of normal and nothing changed . The European side's interesting because while I do think it may be improving , I think the credit of the growth in Europe really goes to our leadership team .
Speaker #3: I think the person leading it is a fantastic leader who has done a great job organizing the resources , cross-functionally and driving growth .
Speaker #3: I think the cadence is improving and I really think it's more about the approach that team has taken , which , to be honest with you , I'm looking at as applicable to the US and it's pretty much included in these points .
Speaker #3: I laid out .
Speaker #8: Thank you .
Speaker #9: Hey , we can move to the next one if if we're not hearing the question right now .
Speaker #2: Our next question is from Erin , right with Morgan Stanley . Your line is open .
Speaker #10: Hi . Great . Thanks so much . How are you thinking about your relationship with distributors ? I think you talked a little bit about kind of supply chain in your prepared remarks , but how does this , you know , intertwine with some of your strategies around return to growth and profitable growth ?
Speaker #10: And are you entertaining more of a hybrid approach or not ? What makes sense over the longer term ? And I'm sure there's still stuff that's up in the air , but I'm curious , your view right now , as it stands .
Speaker #3: Yeah . Thanks , Erin . Listen , I think like many people in the market , we need to look at this with open eyes .
Speaker #3: And I think there's several ways to get there in my prepared remarks , I called out a multi-channel approach . And so what I am signaling is we have direct businesses and we intend to keep those and go more direct in those areas and support them holistically .
Speaker #3: Anything with our disposables that we use , I'm saying I think that's fine . I'm not looking to make any meaningful shifts there and keep those alone .
Speaker #3: But re-engaging with dealers , Shine and Patterson , when I say that . And New Dealers , which I won't call out at this point so that we have a broader reach and more presence , I see that as the model that we need to use to go forward .
Speaker #3: I have personally spoken with all of the CEOs . We have these in play . I'm not going to comment further on that because they're all at several different stages of maturity with where we can line in or not , but I would envision us next year having that locked in in a way that is beneficial for everybody .
Speaker #10: Okay . Thank you .
Speaker #2: Thank you for your question . Our next question is from Vic Chopra with W.F. . Your line is open .
Speaker #11: Hey , good morning . A couple of questions for me . So on this return to growth action plan , Dan , I appreciate it's early , but can you just talk about some of the key milestones that you'll use to measure success for each of the pillars .
Speaker #11: And then had a follow up , please .
Speaker #3: Yeah , Vic , you got it . So , you know , let's start with the obviously focus on the US market . There .
Speaker #3: I'm really setting out metrics which are obviously going to be stabilizing sales . And then returning to growth over some period of time is going to be one of the key metrics .
Speaker #3: Doing that by actually hiring out and retaining reps is going to be a key one . The rate of training we do for not only the rest , but our our clinical partners as well , will be another key metric through these investments .
Speaker #3: So as we start training more and seeing more of both the field and the dentist , that's going to be key . Holding on to them is going to be key .
Speaker #3: Seeing the sales turn of as a result of that is going to be one of the major moves that I see . And I didn't mention this in my prepared remarks , but having a stronger presence in universities and teaching institutions is a focal point as well , to create those long term seats .
Speaker #3: And now , while we're there currently , again , we need to go deeper . There and be more present to create that longer term health .
Speaker #3: That's really one of the things , you know , I've already called out what's almost finished when it comes to the organizational build to supplement a great team with even stronger talent that's out there .
Speaker #3: That way , I think with the supply chain and operations , there's really a couple of measures there . We're going to see a lift in gross profit naturally as we get through these things , and certainly moving facilities or people and all that , take a longer term that doesn't pop within a quarter with the R&D .
Speaker #3: We'll see it as a percent of sale on product launches . So I think there are really the main ones , right ? If we know how to free up cash and we see changes where we can redeploy this , we watch the sales stabilize and grow .
Speaker #3: And as a result of that , we see the profit lift through our customer experience . I think they're the ones that I'm trying to wrap around now .
Speaker #3: Make sure the team is aligned with that . In a simplified way . So we know how to react faster and move and address these as needed .
Speaker #11: Great . Appreciate the color and the quick follow up question . You know , you recently appointed Aldo Denti as your chief Commercial officer .
Speaker #11: Just curious to get your early thoughts and what impact you expect him to make over the coming months . Thanks , Dan .
Speaker #3: Yeah , thanks , Vic . So , so Aldo's honestly a great one . I had the opportunity to work with him side by side when we were in Johnson and Johnson Vision Care , and that company needed a turnaround and we had come in with several people and we're all part of bringing that back to the strength that it had .
Speaker #3: And he was a driving force of that in the commercial side of that coming in , you know , again , his role in orthopedics in J&J , which is no small task running that really had a lot of activity .
Speaker #3: So bringing that strength and that experience with a known person to come side by side with me is really important to me . I think that his drive to actually create a focused , trained and well resourced commercial team is going to be one of the keys here .
Speaker #3: I think that his professional approach out with dealers and dsos will be a lift for us . I think . Again , he's a main ingredient .
Speaker #2: Thank you for your question . Our next question is from Michael Cherny with Leerink Partners . Your line is open .
Speaker #12: Hey . Hi . Good morning . This is Alan Muhammad on for Michael Cherny . I appreciate the color on the return to growth action plan .
Speaker #12: And fully understand that FY 26 planning is still underway , but if we think about things bigger , picture which areas of your business do you think are best positioned to start stabilizing growth both from a competitive and innovative standpoint ?
Speaker #12: Thank you .
Speaker #3: Yeah , it's a good question . And you know my my easy answer is all of them . But at the end of the day each one of these requires a different approach .
Speaker #3: So the CTS move is more about getting the dealers lined up , trained and out with us . I think the biggest part of changing both customer service and technical service under one team and one focus , be a major lift in not only the ongoing customer experience , but new customers through the implementation of capital and training .
Speaker #3: And so those things are going to be one of the big return to health type items . I think setting up implant strategies and how we can get the right training and the right holistic approach , and using DDS core as one of the drivers of that will be a major thing to go through .
Speaker #3: And while strong in EDS , you know , making sure that we continue to have the right investments in Endo , the right training with those type of things throughout Eds are all going to be key to actually lifting them up .
Speaker #3: So really , if you ask me , there's one more important than the other . The answer is no . That's the benefit of having a diverse portfolio .
Speaker #3: And it's well balanced . But they all require different approaches and they're all addressed in this plan .
Speaker #12: Product . Thank you .
Speaker #2: Thank you . Our next question is from Michael Sarcone with Jefferies . Your line is open .
Speaker #13: Good morning and thanks for taking the questions . I guess I'll ask my my two up front just first , you know , can you talk about the characteristics you're you're looking for in a new CFO and then just related to that , Dan , I guess , how do you think about your guidance philosophy right now ?
Speaker #13: And , you know , do you expect that may change as you bring on a new CFO ?
Speaker #3: Michael . Good questions . You know , looking for a main attributes of CFO . And I'm not saying that the person before didn't have these , but what I really need right now is a person who can dig down into the data and get the meaningful metrics that we need .
Speaker #3: And then in a consistent fashion , communicate those and educate the team to follow those , to go . Right now , we have plenty of data , but how we use it isn't the best way .
Speaker #3: And so I really need someone to harness all of that power to create the focus we need to show the metrics and driving this return to health thing that's first and foremost .
Speaker #3: And enterprise leader right now who has deep experience throughout . So that they can look at this and work with all of us to guide us through and help us do it .
Speaker #3: It's going to be one of the key factors that are out there . So it's kind of both a broad person with a lot of strategy who can dig very deep and use numbers and make sure that everyone understands and follows along .
Speaker #3: Communication is going to be key . Guidance , strategy . I would say , look where I came from . I'm going to follow that when we get this back to health .
Speaker #3: Right ? It's one of those ones where we put out conservative estimates with the goal to beat and raise as we go forward , demonstrating a cadence of sustained , profitable growth .
Speaker #3: That's ultimately where I want to get to . I don't think that would change within CFO coming in . I think that's got to be the mantra of this company going forward .
Speaker #3: We need the right person to fit that approach.
Speaker #13: Great . Thanks , Dan .
Speaker #2: Thank you . The next question is from Allen Lutz with Bank of America . Your line is open .
Speaker #14: Good morning and thanks for taking the question . Dan . You mentioned a lot of different investment areas in your prepared remarks . Global customer service and technical service organizations , clinical education , shifts in regional spending .
Speaker #14: I would think that not all of that spending is going to take place in the fourth quarter . Can you talk about what you are spending money on in the fourth quarter , and maybe what we should expect to start in 2026 ?
Speaker #14: Thanks .
Speaker #3: Yeah , that's a great question and thanks for it . So listen , there's a couple of things . And I won't lay out every single put and take here for you .
Speaker #3: But there are big moves that we need to make contractually to free up some of the things that we have done historically that don't make sense .
Speaker #3: These days . Some of those will involve some penalties that we're going to pay in the fourth quarter to create freedom , to free up cash as early as the first quarter .
Speaker #3: So I'm taking a few hits to free up some strategic moves that allow us to go into that right away into next year .
Speaker #3: In the fourth quarter , there is an acceleration of R&D that I have set up to go , and while we don't have the execution of clinical education , establishing those programs and putting in place anything that we can do for that is there .
Speaker #3: So what I would tell you is some acceleration in R&D a little bit of prep work in the clinical side . You mentioned customer service , tech service that probably won't have an impact in the fourth quarter because their existing people , we are reorganizing and we're beginning to recruit , but most likely will be negligible in the fourth quarter .
Speaker #3: And we're prominent by the first half of the year is really where I'm going with that .
Speaker #14: Great . Thank you . Dan .
Speaker #2: Thank you . Our next question is from Brandon Vazquez with William Blair . line is open .
Speaker #15: Hey , Dan , thanks for taking the question . I just want to ask a kind of a high level question on the initiatives you've laid out here .
Speaker #15: Obviously encouraging to see kind of an action plan here . But this this story has been a bit of a , you know , it'll be this is my phrase , maybe not yours , but the story under the prior management team has been a turnaround story .
Speaker #15: And then a little bit now it looks like once again , again , my phrase a bit of a turnaround story again , many of the initiatives here feel like ones that we've been focused on for years , frankly , like getting closer to the customers and supporting them , improving efficiencies .
Speaker #15: So I guess what would be helpful is can you just talk a little bit at a high level
Speaker #15: about what Your of these initiatives do you think are incremental to what has been attempted to turn things around at DENTSPLY SIRONA Inc. in the past couple of years that you think will will start to eventually lead to some more durable improvements ?
Speaker #15: Thanks .
Speaker #3: Yeah , I think that that is a great question . And so I'll give you a couple of thoughts right . There is no doubt that the customers , the employees and the board are tired .
Speaker #3: Right ? There's fatigue of coming through with these words and not quite getting where we need to go . My assessment would be while there are many right things that were done in the past , I feel like we were trimming branches when we should be cutting down trees .
Speaker #3: So when I talk about going faster , bolder , deeper , I think that's really what I mean . With that . And a lot of these things were in the right move , but not deep enough to go .
Speaker #3: And I think Aldo and Dustin and I have experienced in these that we can bring in , but I don't know , was there as strongly as before .
Speaker #3: Now there's great folks on the team who are already in place , but I think the real thing is to drive deeper and push .
Speaker #3: There . And it is a turnaround story . And the goal for me isn't to convince you why we know how to do this or that .
Speaker #3: I'm the guy I'm going to prove it to you through results . We just got to get past the talk and into the action , and I think there's enough talk that's been done .
Speaker #3: It's time to start getting this done through execution and pointing to the numbers , as opposed to saying where we'll be .
Speaker #15: Thank you .
Speaker #2: Thank you for question . Our next question is from Kevin Caliendo with UBS . Your line is open .
Speaker #12: Thank you . This is Dylan Findlay on for Kevin . I wondering if you could talk a little bit about implants . You you go direct there .
Speaker #12: So, not necessarily impacted by your relationships with dealers in that area of the market. What are the specific pain points that you're facing there today?
Speaker #12: And why do you think your predecessors have not been able to close the gap within the market ?
Speaker #3: Yeah , again , good question . I can't answer why people before me did or didn't do things because I wasn't here . So I'll focus really on where we're going to go from here .
Speaker #3: I don't think we have the right amount of reps present throughout the world . I'm not convinced they have the right training . I don't believe the branding and coordination is laid out in the way that can add strength .
Speaker #3: I don't think we're leveraging some of the other infrastructure like a core type program that we have to benefit these . I think all of those have to occur with a significant increase in training , not only of the reps , but of the dentists of our products .
Speaker #3: And quite frankly , in that area , we need to be present . It's honestly not that different than orthopedics , where you need someone there in the room , someone well trained who can offer a lot of optionality out for the dentists .
Speaker #3: And I think we've got to take that type of model and apply it more effectively here than it has been done in the past .
Speaker #2: Thank you for your question . This concludes the question and answer session . Thank you for your participation in today's conference . This does conclude the program .