DENTSPLY SIRONA Inc. (NASDAQ:XRAY) Q2 2023 Earnings Call Transcript

And just to give you some perspective on the second quarter here, implants had a really strong quarter. We saw growth across all product categories, except for imaging. So the one area that we’re still being cautious on is the equipment side in China, both imaging and CAD/CAM but on the whole, between the COVID recoveries, between what we’re seeing in terms of our share gains in VBP and it’s both on the public and private side, we feel really good about the momentum we have there.

Simon Campion: I would just add on the — on our server data from China, where we had over 250 respondents. They are reasonably bullish about the next three to six months. Though their patient levels are — their offices are not yet full, but they are improving quarter-over-quarter or survey over quarter – survey-over-survey.

Unidentified Analyst: Really helpful, thank you. And then just on imaging, we saw strength from the supply recovery in the quarter. But if we exclude this impact, can you discuss like the underlying business performance? And then how are you thinking about imaging throughout the back half of the year?

Glenn Coleman: Yes, no, we were pleased with the imaging performance as well as treatment centers. Both Europe and Rest of the World had really strong, robust double-digit growth in both of those categories. A lot of it was the improvements I mentioned earlier on supply chain and shortening lead times. If we look at the rest of the year, we’re still cautious on imaging. So I would say, right now, I’m still expecting to see some pressure on imaging in the third quarter and in the fourth quarter, and that’s what’s built into our guidance. So we’re not expecting to see a rebound, the high cost of financing, we think will likely impact some of this in the back half of the year in certain markets, including Germany, so, we’re going to be cautious on the equipment forecast going forward.

It’s one of the reasons why our second half of the year guidance relative to first half of the year is flat to down when you look at half-to-half performance. And so if that turns out to be better, that’s going to be upside for us. But right now, we’re being very cautious on the equipment environment until we see better signs overall. Thanks for your question.

Operator: Thank you. Please stand by for our next question. Our next question comes from Justin Lin with William Blair. Please proceed.

Justin Lin: Hi, good morning guys. Thanks for taking my questions. I want to touch on guidance a little bit. The EPS guidance raise factoring the 3 points of FX headwind, I think, essentially just passes through the beat in the quarter that, obviously, you’ve raised yourselves much greater than the beat. Can you maybe just talk about kind of your thought process behind the guidance here?

Glenn Coleman: Yes. Listen, I think this is our second guidance raise. We’re only halfway through the year. We did pass through the outperformance here in the second quarter. To your point, we are seeing higher FX headwinds right now. So we’re absorbing those in this increased guidance range that we’re providing. And again, if you look at the back half of the year, there are certain areas where we need to be careful about relative to getting ahead of ourselves. So, if you look at the Germany market, Australia, we’re being cautious there. I want to see the momentum we have coming out of DS World. We’re expecting to have a great event, and I’m hoping that we actually get some upside from the U.S. team coming out of the September event.

So, still some things to see before we get too bullish on the year but in terms of EPS, we still have a lot of investments to make in this business ,we still got to get the infrastructure to where it needs to be having a solid foundation across the company. And like I mentioned earlier, I’m going to take some of this overperformance and try to do some things that I think will position us even better for next year. And so I’m looking at areas and opportunities, Simon mentioned these reviews that we’re doing regionally. Coming out of the last region review, we gave some additional dollars to certain sales leaders to go and get better top line performance for next year. And we have more planned coming up here later this month in Asia Pacific, as an example, and I’m planning on probably having a similar conversation.

So one of the benefits of us actually overperforming on the top line is we can probably do some more investments to position us better for next year. But on the whole, we’re very happy with the first half of the year performance, both top line, EPS, EBITDA margins, and we’re moving forward.

Justin Lin: Got it. That’s very helpful. I guess we haven’t really talked about Primeprint for a while, I feel like. Can you talk about how the product is gaining traction relative to your expectation and whether you’ve seen any sort of short-term hit to Prime mill, some doctors may see 3D printing as a replacement for mills in your practices.

Simon Campion: Yes. So I’ll start with the second part of your question, Justin. We see printing and milling as extremely complementary. Printing does not, in our opinion, have the capability for permanent crowns, but more facilitates implants, temporary crowns, et cetera, et cetera, that’s our opinion. And we’ve been sharing it with customers and potential customers and we think it does resonate, and we have a strong printer offering, a strong resin offering and a great mill offering. Now with respect to our performance, I would say we are doing okay in the marketplace today. Our device is very efficient. We believe it’s got a great safety profile in the sense that it doesn’t expose the clinicians or technicians or the office to resins or fumes and the fact that it’s linked up to DS Core and other technologies as well.