My name is Jeff Johnson. I'm the Senior Medical Technology Analyst at Baird, and our next presentation this morning is from Dentsply Sirona, a leading manufacturer of dental consumables and equipment, products across the globe. With us today from Dentsply Sirona, we're happy to have President and Chief Executive Officer, Simon Campion. I think I said that right, right? I don't know why I threw that little accent on there. Simon, I'll turn it over to you. I think you have a couple slides to go through, and then we'll go to some Q&A. Great. Thank you. Yep. Good morning, everyone. Thank you, Jeff. We're now two years into our transformation journey at Dentsply Sirona, and we're happy to be here today to provide you an update on that journey, and an overview, and discuss our business. If you could just take a moment to read our forward-looking statements with respect to the presentation. Our most recent SEC filings list some of the most important risk factors that could cause actual results to differ from our predictions. Turning now to a snapshot of our business. For those of you not familiar with Dentsply Sirona, this should serve as a helpful introduction. For all of you, it's worthwhile to summarize some recent key numbers, so you can assess and measure our performance going forward. From a regional perspective, Europe represents our largest geography, heavily influenced by our presence in Germany, which disproportionately contributes to our revenue profile, especially with equipment. We see the U.S. market as a large source of continued opportunity for our company, while focus and selective expansion in LatAm and Asia-Pacific creates an opportunity to accelerate our growth. With more than half of our sales coming from segments with favorable long-term dynamics, we think we're well-positioned to provide great solutions for our customers and their patients and generate results for the investment community. A core tenet of this management team's philosophy is to utilize robust data to make data-driven decisions. That's why we continue to survey our customers, and conduct assessments to validate and support our strategic initiatives. Through this work, our customers have told us that we do have one of the most recognized brands in dental, that we do offer a comprehensive and competitive portfolio, that our education programs and access to those programs is unparalleled, and our scale and breadth does differentiate us. Our strategy is very clear to us. Digitalize dentistry, innovate in products and service for oral health and continence care, focused on customer and patient needs. Be great partners and do so through a committed and engaged team, with compliance and quality always at the core. And we are continuing to operationalize and advance all five of our strategic objectives. We cascade these objectives through our organization and have aligned our goals around them from annual operating plans, to bonus plans, to work plans. We have moved deliberately to execute on these through our operating model that we introduced, through our processes, and throughout the investments that we are making to transform the outlook for Dentsply Sirona. Last week, we announced a significant new product with Primescan 2, the first cloud-native intraoral scanning solution powered by our proprietary DS Core. It is truly transformative and arguably breakthrough, designed with the future in mind, and is one example of how we are driving our strategic objective to accelerate enterprise digitalization. Our foundational initiatives also continue to progress and are important drivers of our strategic agenda. We are designing a winning portfolio, driving network efficiency, refining our ERP landscape, and executing on our restructuring, and all of these are further shaping and improving the hygiene of our organization. We remain confident in the strategy. We want to capitalize on the opportunity that the dental industry affords an organization like ours, and we believe that as we execute against our stated objectives, we will be well-positioned to win in this market space. With that, I'll join you, Jeff, for questions. Yeah, great, thanks, so you covered quite a few topics there, from the kinda restructuring and cost takeout, to the new products, to the just kind of core execution parts. You know, let's start with Primescan 2. Just, it, you know, wasn't in my original script, only because we didn't know you were launching it until last week, but I'll give you a couple of minutes here, you know, kind of a commercial for Primescan 2, if you will, and the way I wanna phrase the question, or kind of couch it is, you know, you guys have really focused on DS Core and this cloud-based solution in the last year or two. You know, how do you see that fitting into the future of dentistry between DS Core, and then I think Primescan 2 is your first product that directly connects to DS Core? And I think you have to be subscribed to DS Core even to use it. I might be wrong on that. Correct me if I'm wrong on that. But how are you trying to transform, you know, what can be a slow-moving dental industry as well, but how are you trying to transform that with products like Primescan 2, but more importantly, DS Core? Well, with. So DS Core is on the market now about two years. And, you know, at the end of Q2, with about 27,000 unique users to it, and every time we improve the capability and the functionality of it, we see, you know, stepwise increases in the number of users. So we would like—we expect that to continue. Primescan 2 is the first scanner that's wireless and cloud native. And so that's linked directly to DS Core. You're correct, you do need a subscription to DS Core to utilize it. It's at the base level of the subscriber levels. But we feel that the-... that the workflow efficiency, that the clinical outcomes enabled by DS Core, that the transportability of Primescan around an office, so it's essentially like your cell phone. You can pick it up and move it. There's no trolley involved. But also we feel that the improved or the ability to include patients in the decision-making, you know, at that point in time, will help improve conversion rates or acceptance rates from patients to dentists. We've seen that historically in my experience, in the surgery world, where when you educate patients about the options that are available to them, the physician will choose to side with the patient on their request for treatment, and we see a parallel with improved acceptance rates with DS Core and Primescan 2. We've robustly tested it over several months. We had 110 dentists from around the world in Germany last week for the launch event, and the feedback is extremely positive. Moving forward, we will be utilizing the cloud for all new technology launches. Okay. They will all be based in the cloud, and we want to create an ecosystem built around DS Core, with the entry point to that ecosystem being Primescan 2. All right, fair enough. And when you move everything to the cloud the way you're doing, is that for convenience for the docs? Is it for, you know, lower operating costs over time for the docs? Just what are the key advantages, and have you seen any other companies, 'cause, or your major competitors, we're not seeing anyone else really push on this cloud-based solution in a big way. You know, is this what you think at the core is gonna be Dentsply's differentiating their differentiation, I guess, over the next, you know, five to 10 years? Yeah, we think the cloud is going to help differentiate us. It is going to improve efficiencies for dentists and their practices, especially when they have more than one practice, and, you know, patients are moving between practices, perhaps. We think it's very relevant to DSOs, which are becoming a larger and more critical part of certainly the U.S. dental landscape. And, you know, the fact that there is reduced amounts of hardware because the computations are done on the cloud, we would expect to see some reduced COGS as well. Yeah. Okay. And you guys are trying to hit a price point, I think, with Primescan 2, and correct me if I'm wrong here, but it's kind of somewhere between Primescan Connect and fully loaded Primescan, cart-based, all that. And, you know, theoretically, to your point, it should be hardware-light compared to your other Primescan. So one, is this a gross margin play? Is Primescan 2 a gross margin benefit for you guys? I'm assuming it is, but you can answer that question. And then, two, in this market where you do see, you know, Primescan Connect has had good success, obviously, you've had to kinda get into that $20,000 price point 'cause you've seen some competitors launch down in even lower price points. Is middle of the road the right price point that will appeal to dentists for what they're getting here in Primescan 2? We feel it is what they're getting here with Primescan 2 is an opportunity to build a digital ecosystem for themselves and their practices. I remember, you know, scanners in the United States are maybe 40%-50% penetrated. Yeah. We saw data last week that scanners in Germany, for example, are 27% penetrated. So, there's significant room to grow with respect to scanner penetration. With respect to your margins, you know, when we get some volume out of Primescan 2, it's definitely accretive to... compared to Primescan, Primescan Connect. You know, historically, over the past several years, before we arrived at the company, the focus was heavily on CEREC and CEREC only, and, you know, God forbid, if you sold a standalone scanner. We have changed that, we've changed that plan. The scanners are the gateway to the digital workflows in a dental office. And so in 2023, we sold more scanners than ever before. In 2024, we will sell more scanners than ever before as well. Yeah. It's been very, very deliberate to go after the scanner market first, and then enable people the opportunity to build out their digital practice if they so choose. And in the years you referenced there and thinking out over the next few years, you think more of those, and I know most probably, I don't know how to define most, but most will probably be standalone scanners that you sell. But do you think more of the minority will be attached to a CEREC mill or attached to a 3D printer? I think we have to improve our capabilities with respect to the optionality that having chairside milling affords a customer. But the starting point should be getting a scanner into your practice and then building it out. We need to convey the value that chairside dentistry has for the dental community. You know, mills are even less penetrated than scanners, so we need to do a much better job at educating customers on the value to them and the value to their patients. If you think back maybe ten years and the demand that was generated for surgical robotics, and you see the billboards all around the U.S., you know, "Go to hospital A, they have the robot." There's arguably no reason why we shouldn't be advertising direct to consumers about the benefits of chairside same-day dentistry. All right. Fair enough. You mentioned Germany in your, as you were going over the slides, Europe, 39%, your biggest market. You know, we do a lot of survey work, but obviously, we survey U.S. dentists, and I think I'd feel somewhat comfortable saying the dental market in the U.S. has been relatively stable. Again, plus or minus, in every month I probably feel a little better or a little worse versus the prior month, but relatively stable. You know, you do as much, if not even more survey work than we do of your own customer base. You know, one, do you agree with that assessment of the U.S. market? And then Europe has had pockets of okay and not okay, but Germany, to your point, is your biggest market, just given the legacy Sirona, and that's where the survey data has really looked, you know, soft. Any change in the German outlook in the near term? I would say based on the last survey, Germany is less bad than it was. Okay. But it- Less bad is a good starting point. But it's still poor. Yeah. The outlook is still poor, particularly with respect to, you know, dentist sentiment as opposed to patient sentiment. Yeah. The outlook is still poor. The U.S, you, your survey work and the ADA and ours correlates pretty well. I think we saw a little bit of softening in patient outlook in the U.S., but it's, you know, a point or two, so it's marginal. In China and Japan, you know, a poorer outlook, but again, it's a couple of points here or there. But typically, for Germany and Australia, since we started doing these surveys, and we normally get maybe 300 respondents in those countries, they are certainly the most negative with respect to capital equipment. Yeah. And, you know, Australia faced, I think it was 11 interest rate rises in 13 months or something like that. So they are very hesitant to invest in some of the higher-end, capital equipment. I think we've benefited from the introduction of Primescan Connect, where we did well on that, which diluted the margin profile, but we did very well in getting that scanner into the market because of the price point, for it. Okay, those are helpful updates, so maybe move on a couple other topics here. You know, a question I've been getting from investors here just recently. You know, Glenn announced he was stepping down as CFO. We've seen Andreas no longer with the company. You know, what kind of signal, if any, are those sending? How do we think about what that means about the internals at Dentsply, at kind of the outlook? Is there anything we should be reading there, you know, good, bad, and different? No, there's nothing we really should be reading into any of those changes. You know, Andreas was caught up in the wave two of the restructuring and our desire to do some things a little differently, and then Glenn as CFO and Rick as CEO, they left for their own personal reasons. There were no disagreements between either of them and me personally, or the leadership team or the board. They simply made career decisions, for better or for worse, you'll have to ask them, but career decisions to move on. The team is very aligned. The board is aligned with our objectives and what we're doing to transform this company. I'm sure you all agree, it does need transformation. And we are making very deliberate investments to grow the top line while improving the hygiene of the company with respect to all the, you know, transformation initiatives around ERP, around SKU, around network, around commercial investments that we're making at the same time. Yeah. And, and I think I asked you this question last year. I asked it as a, "You've been there for one year." Now I'll ask it as you've been there for two years. You know, have those transformation efforts been more challenging, you know, or been about what you expected? And I think, you know, look, if we're being intellectually honest, you guys have done a lot of blocking and tackling on some of those transformation efforts. Obviously, it's not easy to go in and shut down factories and or facilities in Germany or what have you. And I think Andrea always tells me I'm saying that wrong, and I'm not supposed to phrase it that way or something with the German market, so correct me with exactly technically what you're doing in Germany. But, you know, you've had some good success there. Are those or is the cost saving still on track? Yeah, so, all of those initiatives are still on track. I would say we have a lot of initiatives that the team is working on. You know, quality, operations, R&D. We brought in a new CTO. We're more disciplined about where we invest and what we do with respect to R&D. So there are a lot of things going on, ERP as well. I would say that maybe ERP is arguably the most challenging. Yeah. But there's. I would say the people that we brought in and their teams have experience in doing these transformations. And so we're confident that we can get there. They are all still on track. You know, historically, we have, for example, on SKU, discontinued products without talking to customers, which is a bad thing to do. We've been very deliberate with the rationalizations in endo and resto about talking to customers in advance and getting their perspective. And as a result of those discussions over several months, we have refined the projections for that SKU rationalization, and we took it down from 60% to around 48%-50%. But it's still the right thing to do. And in other areas, we have found that we can take some price on SKUs that customers want, but there's an opportunity to take some price. So, we've been deliberate in talking to customers and engaging with them, affording them an opportunity to do last-time buy. So we are not making any of these decisions in a vacuum without- Okay, fair enough. ... everybody on board. Yeah, and just on that SKU point, again, it's technical, it's not... I don't even know that we model it directly, although Dane and Tommy would know that better than I do. But you had been talking about taking those endo and resto SKUs down 60%. Now you're saying you're only gonna take them down 48%-50%? 48 to 50. Okay. Is that a new number? I don't remember you talking about that. No, I think we spoke about that. We did ... at earnings. Did you? Yeah. Okay, sorry. Yeah, maybe it was a busy day. I'll blame that as opposed to anything else, so maybe I missed it. You know, one other topic that came up on last quarter's call was obviously you know, a letter you sent, or at least a discussion you had with one of your biggest channel partners out there, about whether or not you're gonna renew in the 2025-2026 time period, the distribution agreement. You know, as I go out there and diligence that and talk to some of the private dealers and manufacturers and that, I don't think those letters are too abnormal. It just calls a timeout, gives you a chance to go back to the table and say, "Hey, we wanna renegotiate some things." You know, is my assessment of that correct? And two, you know, what are you really looking for different, better, changed from maybe your distribution partners? Yeah, so, you know, I think your assessment is broadly correct. We feel that we create immense value for our distribution partners. They create value for us, too. Make no mistake about that, but we create immense value. We invest, you know, $170 million or so in R&D. We engage with the customers, we provide clinical education, et cetera, et cetera. And so we feel we need to get more value from the relationship in some respects. The Patterson thing was, that's equipment only in North America and Canada. It's separate to agreements with anyone else. It's separate to the consumables agreement we have with Patterson. We had been speaking to them, and we needed more attention. Okay. And is there any reason to think there was just something with the fiscal calendar, anything that Patterson was just the first, but we might see this same kind of discussion or notice to other distribution partners? Or was it mainly a Patterson focus? It's a Patterson focus. Okay. Okay. Check that off the box. Thank you. A couple other questions. You know, maybe we'll start on the orthodontic side. It's not quite 10% of your global revenue, but it's probably been the best, outside of maybe the healthcare part of the business, the best performing. So, you know, talk to me about maybe the sustainability of that SureSmile product. You are talking about now starting to take that into the ortho channel. You don't have an ortho sales force. Is this incremental investments, and how do you go in and build relationships since you've been out of the ortho channel now for, what, four years, five years? Four, five years. But really been out of the ortho market since the tsunami, so for 10 years or something. So just how do you overcome those challenges? Yeah, so, we have... Again, that was an example of where we have historically irritated some key customers. We're in the process of repairing those relationships. So we've been going to orthodontic shows, for example, in the past year or so. We know, given the legacy of Dentsply that we're owning in wires and brackets, that the software that we have is actually really very good. And people who know how to use it use it very, very well, and the outcomes are very predictable with it because it originated in the wires and brackets. Our front end is not great. It's not particularly user-friendly. It's a bit kludgy, and so getting new customers to engage because of the front end is a bit of a challenge, and so- Here, you're talking the treatment planning? The treatment planning, yeah. Yeah. So, what we announced in respect to how we're gonna spend some of the Wave 2 savings is we're going to improve the front end and make it more user-friendly and accessible for customers. So that's the first part. And the second part then, you know, we will, when we're closer to having that software piece fixed, we will create an orthodontist sales channel. We feel we have a great product offering. We're very competitively priced. The customers we speak to say that our software, apart from the front end, is really robust and very, very good. When we look at data, again, we're data-driven, so we've recently completed a survey of in excess of two hundred and fifty orthodontists, and so we know the product choices that they make. We know why they make product choices. We know that in excess of 80% of them have between two and four different aligners on their shelf. Yeah. Today, we are not one of those aligners. We know that most of the volume in orthodontics is with the orthodontist, and so we are missing out on a major slice of the action by not focusing on that channel, so we're gonna fix the front end. We're gonna invest in a commercial team. It's gonna take. It's gonna be hard work. I mean, I'm sure you're gonna ask me a question about implants momentarily. It's gonna be hard work. We're not taking it for granted, but there's opportunity there. You know, our friends who were in here before us sell $3 billion. Yeah. No, fair enough. All right. So. So yes, I was gonna go to implants on that, you know, I think when you came in two years ago, we're gonna put thirty new sales reps in the U.S. market. We're gonna go out there and hold more education events. We'll get back to market within a year or so, and I think, you know, the realization has hit that it's gonna take more than just probably, you know, education events and what have you. So yeah, on the implant side, I have one question on Byte I wanna come back to as well in ortho, but since we're segueing to implants here for a second, you know, how do you overcome those challenges in implants, and what does it take? Does it take new product, a new focus on price point? What does it take to kinda get back to at least market, which from here would probably be a home run, just getting back to market for your implant business. I mean, it would do a lot for your overall growth. Yep. So, let me try and answer a question on ortho and implants at the same time here- Yeah ... if it's possible. I think one of the challenges that we faced that we kinda, you know, to be fair, didn't appreciate to the extent of the challenge was the referral network in implants. Yep. So you have an implantologist, and the data that we have says on average, they have 14 different referring dentists. And so not only do we have to build a relationship with the implanter, we have to build a relationship, build credibility, and convince them then to use our product with their network of 14 referrers. So that was not really visible to us at the time, nor contemplated. Compare, you know, to our history in different companies. Many of us, when we were going in to convert an interventional radiologist or an interventional cardiologist or colorectal surgeon to some of our technology, we had to convince that physician only to utilize our product. And I hypothesize, again, we're gonna go and check it, but I hypothesize that the orthodontist angle is more akin to our previous experience in medical devices rather than implants, because the referral network is not as prevalent. All right. Fair enough. I'm gonna... It'll be interesting to see how that hypothesis plays out. It will ... because I do think a lot of GPs still turf the tough cases. So if you're gonna go after the tough cases on the ortho channel, the high acuity teen cases especially, I think a lot of those do get turfed out, as I said, or referred out. We'll survey you as well. Yeah. Okay, we will see what happens. On Byte. So, Byte, you know, your biggest competitor in the DTC market went out of business at the end of the year. That provided some tailwinds. You know, how do you see kind of demand at this point on just a ex SmileDirect tailwinds kind of basis? Is there still decent demand out there for the DTC product, and how do you keep that demand growing over the next couple of years on the DTC side? Yeah, I think there's decent demand in that business for sure. You know, we've got the regulatory challenges that we spoke about at the last earnings call that have slowed down some of the conversion rates. To be fair to SmileDirectClub, their government affairs was helping out with respect to trying to mitigate some of those risks and now it's up to us to invest more in government affairs to do the work ourselves. I think the growth profile is still pretty robust in the direct-to-consumer business. Remember, the median income for those families that go down that route is about $65,000, so, it's a different segment of the market. Of course, there's continued pressure on that group. A lot of them finance their aligners with interest rates the way they are and greater sensitivity around credit scores in that group. We are seeing some pressure on the financing side, but the revenue growth is still, it's certainly still double-digit revenue growth in that space. Yeah. All right, fair enough. You've mentioned a couple times here you talked about an increased burden maybe on the government affairs. Obviously, ERP, I think the joke is something like any ERP system that any company puts in ends up costing twice as much and taking three times as long or something. But, you know, there, there's definitely some costs here, building that orthodontic sales force, things like that. So I think you've done a good job of executing and holding the cost savings, you know, delivering to the cost savings you promised. I. Was it last quarter? And I can't find it here in my notes, as I'm looking. An incremental $100 million now you've uncovered that you can take out costs. Whatever that number is, one, help me out on what that number is, but two, how much of that now can you let flow through, or should we think about the vast majority of that now helping fund these additional investments you're thinking about and contemplating? Yeah, so it's $80 million-$100 million. Eight to a hundred ... is the number. We said we'd realize those savings over the next eighteen months, so think about maybe by the end of next year. Yeah. And we have not communicated the mix of drop-through versus investment. But we, you know, we want to be - we think we've been, we want to continue to be, good stewards of the, you know, medium and long-term health of the organization. And so, you know, a good part of that will go into trying to drive top-line revenue growth, fix the front end of the orthodontic software, create this virtual, or apparently that's the modern word for inside sales, virtual sales force. We've got the leader in place already. He started the Monday after earnings. We've got, I think it's forty-nine candidates lined up to interview. Mm. So we are not letting the grass grow under our feet here. We think it's a very cost-effective way to increase our reach to customers, to GPs, which circles back to the, your- Yep ... participation in our orthodontic survey. Yep. Fair enough. 30 seconds, two just very quick questions. One, back to implants, and I'm jumping around here, but thoughts on build versus buy. Do you have the product you need? Do you have the capabilities to develop the products you need, to improve your performance in that business? So the survey we did last summer says that we're number three or so in the implants with respect to the portfolio, but the gap between number one and number three is marginal compared to the gap in our digital technology, where we're number one and the gap is tens of percentage points. So we think we have the portfolio, but we do continue to launch new products in that space. Our Prime Taper family has done very well for us. Remember, we had significant turnover in that sales team between 2019 and 2022. Yep. Effectively, we have a sales team with 18 months of tenure, and they are getting after those 15 key clinicians, implantologists and referral network, and that's. It's taking longer than we expected. Yeah, understood. All right, well, we are out of time. Thank you, Simon- Pleasure ... for a wonderful overview of the company here. Our next presentation is set to begin at 10:15 A.M.