• Revenue: $951 million, representing a 0.5% increase on a reported basis and 1.3% on an organic basis compared to the prior year quarter.
• Organic Sales Growth: 1.3%, driven by timing of EDS sales with distributors.
• Adjusted EPS: $0.5, up 3% versus the prior year quarter.
• Operating Cash Flow: $141 million, up 5% compared to the prior year quarter.
• Share Repurchases: $100 million completed in Q3, with a year-to-date total of $345 million returned to shareholders.
• Leverage Ratio: Increased slightly to 2.8 times.
• Organic Sales Decline (Excluding Timing Impacts): 0.8%.
• Gross Margin: Declined 40 basis points versus prior year due to unfavorable product mix and lower volume.
• Segment Performance - Essential Dental Solutions: Organic sales increased 7.5%.
• Segment Performance - Orthodontic and Implant Solutions: Organic sales declined 3.9%.
• Segment Performance - Connected Technology Solutions: Organic sales declined 1.4% versus the prior year quarter.
• Regional Performance - US: Organic sales increased 5.1%.
• Regional Performance - Europe: Organic sales declined 2%.
• Regional Performance - Rest of World: Organic sales grew 0.6%.
• Full Year 2024 Outlook - Organic Sales: Expected to be down 2.5% to 3.5%.
• Full Year 2024 Outlook - Net Sales: Expected to be in the range of $3.79 billion to $3.82 billion.
• Full Year 2024 Outlook - Adjusted EBITDA Margin: Approximately 17.5%.
• Full Year 2024 Outlook - Adjusted EPS: Expected to be in the range of $1.82 to $1.86.

• Warning! GuruFocus has detected 3 Warning Signs with XRAY.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dentsply Sirona Inc (NASDAQ:XRAY) reported $951 million in revenue for Q3 2024, with organic sales up 1.3%, driven by timing of EDS sales.
• The launch of Primescan 2 in September contributed to growth in the CAD/CAM segment, marking a milestone in digital dentistry.
• The company successfully launched Exmark Pro Plus in the US, exceeding full-year projections by the end of Q3.
• Dentsply Sirona Inc (NASDAQ:XRAY) has executed over 70% of its phase two transformation activities, aiming for full run-rate savings by the end of 2025.
• The company has made significant progress in its ERP rollout, with successful deployments in the UK and the US, enhancing operational efficiency.

Negative Points

• Dentsply Sirona Inc (NASDAQ:XRAY) announced a voluntary suspension of sales, marketing, and shipments of byte aligners and impression kits due to regulatory reviews, impacting revenue.
• The company recorded a $500 million non-cash after-tax charge related to goodwill in the orthodontic and implant solution segment due to macroeconomic pressures.
• Organic sales in the orthodontic and implant solution segment declined by 3.9%, with a notable decline in the US and Europe.
• The company revised its full-year 2024 outlook, expecting organic sales to be down 2.5% to 3.5%, citing market pressures and challenges with byte.
• Dentsply Sirona Inc (NASDAQ:XRAY) is facing ongoing macroeconomic challenges, including high interest rates and reduced patient traffic in key markets like Japan and China.

Q & A Highlights

Q: Can you provide an update on the suspension of BYTE sales and the associated costs? A: Simon Campion, CEO, explained that the suspension is due to a regulatory review and strategic assessment. The company is evaluating the legislative environment, recent performance, and long-term prospects. Glenn Coleman, CFO, added that BYTE's recent quarter revenue was $40 million, but it was dilutive to earnings due to high operating expenses. The company is taking swift action to reduce costs, including ceasing marketing activities and redeploying assets.

Q: How is the implant business performing, and what are the expectations for growth? A: Simon Campion noted a decline in the value segment of the implant business due to unique events, including challenges in China and the Middle East. The company has not met its internal expectations and is making leadership changes to improve performance. The focus is on communicating the value of their products and expanding sales efforts, particularly in the U.S.

Q: How are macroeconomic conditions affecting investment versus cost-saving strategies? A: Simon Campion stated that while cost-cutting is necessary, the company cannot cut its way to growth. Investments are being made in areas that stimulate growth, such as implants and aligners, and in improving customer experience through digital platforms. The focus is on reallocating resources to higher-growth categories and enhancing operational efficiency.

Q: What is the outlook for the CAD/CAM segment, particularly with the launch of Primescan 2? A: Simon Campion reported that Primescan 2 has been well-received, with strong sales since its launch. The company saw the best quarter for scanner units in three years. However, there is a significant delta between wholesale and retail demand, and the company remains cautious due to macroeconomic uncertainties.

Q: Can you provide more details on the virtual sales team initiative? A: Simon Campion explained that over 75 virtual sales representatives have been hired, with plans to have 100 by Q1 2025. These reps are starting to engage with customers and are expected to generate revenue in 2025. The initiative aims to get closer to customers and create demand across the portfolio, particularly in the Essential Dental Solutions segment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.