DENTSPLY SIRONA(US:XRAY)2023-02-28 15:03Financial Data and Key Metrics Changes - The fourth quarter revenue was $983 million, representing a decline of 10.9% year-over-year, largely impacted by foreign currency and a stronger US dollar [19] - Organic sales decreased by 2.6%, but excluding China, sales grew by 0.4% [19] - Adjusted EPS in the fourth quarter was $0.46, exceeding the high end of the outlook range by $0.09, but declined by $0.37 year-over-year [21] - Operating income was $154 million with an operating margin of 15.7%, which contracted year-over-year due to FX and inflation headwinds [20] Business Line Data and Key Metrics Changes - Organic sales in the Technologies & Equipment (T&E) segment declined by 2.2%, while the consumables segment declined by 3.4% [23] - Aligners grew over 25% in the fourth quarter, driven by strong growth in both SureSmile and Byte [24] - The Equipment & Instruments business declined by low single digits, while implants were down double digits due to softer demand in China, the US, and Europe [26] Market Data and Key Metrics Changes - US sales were $369 million, representing an organic sales decline of 1.7% [28] - European sales were down 3.2% on an organic basis due to lower implants and equipment volume [29] - In China, lower sales were experienced across product groups due to COVID shutdowns and VBP impacts [30] Company Strategy and Development Direction - The company announced an organizational restructuring plan aimed at improving operational performance and aligning business units [10] - The plan includes reducing the global workforce by approximately 8% to 10% and implementing five global business units [12] - The company aims to achieve at least $200 million in annual cost savings over the next 18 months [14] Management's Comments on Operating Environment and Future Outlook - Management views 2023 as a transition year with significant work underway to improve the company and fix internal issues [35] - The company expects organic sales to be in the range of down 1% to up 2% for 2023, with a net sales range of $3.85 billion to $3.95 billion [36] - Management remains cautious about the demand outlook in China due to significant uncertainties [39] Other Important Information - The company plans to return at least 50% of free cash flow to shareholders through dividends and share repurchases [50] - A 12% increase in dividends was announced, marking three consecutive years of double-digit increases [34] - The company maintains a strong balance sheet with $365 million in cash and cash equivalents and a net debt-to-EBITDA ratio of approximately 2.1 times [33] Q&A Session Summary Question: Revenue expectations and growth rates - Management has not laid out long-term revenue expectations but anticipates returning to market growth rates above 2.5% to 3% in the coming years [68] Question: Timeline for new investments and product launches - The reorganization provides better visibility on R&D investments and their returns, with expectations for more disciplined spending moving forward [75] Question: Current market conditions in major geographies - Management is more positive about Q1 than previously, expecting strong growth from the Ortho portfolio and CAD/CAM, despite headwinds in China [78][80] Question: Impact of SKU rationalization on sales - No meaningful SKU rationalization is expected in 2023, with plans to be laid out for future actions [101] Question: Margin profile of Wellspect business - The Wellspect business is included in full-year expectations and is accretive to overall corporate average [105]