DENTSPLY SIRONA Inc. (XRAY) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Dentsply Sirona's Investor Day. This is the first one for this management team. We are so glad you could join us today whether in person at our Charlotte headquarters or through the webcast. We appreciate you all taking the time to learn more about Dentsply Sirona and hope that you all walk away today with a deeper understanding of our company. I am Andrea Daley, Vice President Investor Relations for Dentsply Sirona. I've been here for just over 2.5 years. And in that time, I have seen significant progress on our transformation initiatives. I'm excited for you all to hear today about them throughout the day. Our headquarters has been based here in Charlotte for over 4 years now and is home to one of our flagship DS academies. We also have about 250 employees based here from numerous functions, including commercial teams, legal, finance, HR, marketing, IT and more. Now I'd like to cover a few housekeeping items. Emergency exits are located right outside the auditorium in the front and back of the room. Clearly, marked over ahead. Restrooms are also located just outside of the auditorium. Please mute your cell phones during today's presentation to avoid distracting others. And if you haven't connected already, the Wi-Fi information is located on the back of your badge. Lastly, the full presentation is posted to the Investors section of our website for your reference and a replay of the webcast will be available on the Investors section of our website following today's event. Before we get started, please take a moment to read our forward-looking statements in our presentation. During today's event, we may make certain predictive statements that reflect our current views about future performance and financial results. 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 updating information in subsequent SEC filings list some of the most important risk factors that could cause actual results to differ from our predictions. Additionally, at today's event, some of our remarks will be based on non-GAAP financial measures. Please refer to the back of the presentation for the reconciliation between GAAP and non-GAAP financial measures. Now let's turn to our agenda for the day. Unfortunately, Simon Campion, our President and CEO, is not able to be with us today due to not unexpected death in his family. We prerecorded his remarks. So you will still hear from Simon today, but unfortunately, he will not be available for Q&A. Simon will begin by providing an overview of our strategy and our path to above market growth. Following Simon, Andreas Frank, our Chief Business Officer; and Max Milz, Head of Connected Technology Solutions business unit, will provide further details about how our broad portfolio of solutions positions us to deliver accelerated growth while connecting the future of dentistry through differentiated technology. We will then have a Q&A session with Andreas, Max and Glenn Coleman, our CFO, before taking a short break. Glenn is taking Simon's spot in this session. To kick off the second half of the presentation, we have 2 panel sessions where you will hear from our key opinion leaders on the impact that we are having in their respective practices as well as several of our regional commercial leaders on how we are driving a differentiated customer experience across our global markets. Then, Tony Johnson, our Chief Supply Chain Officer, will provide more details on some of the transformation initiatives related to our global supply chain. And finally, Glenn will provide an update on financials, including our outlook and our path to value creation for all stakeholders. We will wrap things up with the final Q&A session before some closing remarks. At the close of today's presentation, those who have joined us in person will have the opportunity to participate in technology tours to get a closer look at some of our innovative technology solutions. Before providing more details on the tours, I will provide more details on the tours after the formal presentation. Now before we start with Simon's remarks, I would like to share a short video about our partnership with Smile Train, to show how we are improving oral health globally to build a brighter, more sustainable future for children and families around the world. Let's take a look. [Presentation]

We hope you share our excitement about the impact we are having with this partnership with Smile Train. A healthy smile truly is transformative. Now I would like to share the prepared remarks we have from Simon. First, you will hear a personal message followed by his presentation. Thanks.

Good morning, and welcome to Dentsply Sirona's Investor Day. I want to thank you for your interest in our company and in our Investor Day event. We are proud to host today at our global headquarters in Charlotte, which gives us the chance to showcase our world-class facility and provides you an opportunity to witness firsthand our connected solutions and workflows as well as our dental academy space. I wish I could be there with you all in Charlotte, but unfortunately, a not unexpected death in my immediate family has occurred at this time. You are in more than capable hands with our team in Charlotte, and I look forward to connecting with you all in the very near future. And with that, let's get started. We do hope that after today, you will share our conviction that this organization has recently pursued and will continue to pursue appropriate and judicious steps to restore, indeed improve our growth profile, our profitability and our attractiveness for all stakeholders, including investors like many of you. In this meeting, we will show you our pathway to improve financial performance. But before I commence, let me just make a quick comment on why I joined Dentsply Sirona. From an investor's perspective, this company has certainly had its share of challenges over the years. What I saw was the leading brand in the industry with great products and technologies, a tremendous canvas to effect change and an opportunity to restore Dentsply Sirona to market leadership. Thereby creating value for our employees and our shareholders. Throughout the morning, members of our leadership team will discuss some of the initiatives underway at our company. There are 4 core messages I hope you leave with today. Firstly, despite some near-term macroeconomic challenges that our industry faces, the macro dynamics of the dental market are well understood and demographics support the growth rates that we will discuss. We are confident in our ability to grow at these rates in the 3-year horizon by executing on our plans that you'll hear more about today. Secondly, we are not simply focusing on growth, we are focusing on profitable growth. We have already demonstrated our commitment and our ability to reshape the cost profile of our business through our previously announced transformation initiatives. Today, we will share with you how we plan to unlock further improvements in our profitability profile. Thirdly, our portfolio consists of robust, leading edge products and technologies with market shaping capabilities, coupled with geographic scale, and we are pleased that our recent voice of customer work confirms this. And finally, this leadership team with deep experience building and leading high-performance transformative cultures will drive execution and accountability, leading to improved value creation for all our stakeholders. Glenn will build out our projections in his discussion a little later. With 1 year behind us on our transformation journey, we stand here renewing our commitment to our vision and to our values. A recent employee pulse survey confirms that this leadership team is demonstrating these values, thereby instilling the confidence that our employees sought regarding the direction and integrity of our company. And it's worth noting that as we reshape the culture of our organization, these values will stand as a cornerstone to enable and measure this reshaping and guide our actions. Now there is nothing on this slide that you haven't seen before, but it's worthwhile to establish some baselines to assess and measure our performance going forward. We ended 2022 with sales of $3.9 billion while we expect to return to modest growth in 2023. Europe represents our biggest geography, heavily influenced by our presence in Germany, which disproportionately contributes to our revenue profile. It's also important to consider the U.S. as a large source of continued opportunity for our company. Given the growth rates and connectivity opportunities that I will discuss momentarily, more than 50% of our segment sales have the potential to drive accelerated growth. While we may have historically spoken anecdotally about our strengths, we can now do so supported by robust data. We are the most recognized brand in dental, our portfolio is comprehensive and competitive. Our ability to educate is unparalleled, and our scale is extensive. The industry we participate in share similarities with other health care industries. An aging population with increasing longevity will require more health care, including dental care, especially as more patients and clinicians recognize the connection between oral health and psychological and physical health. Also, dental care is becoming more accessible to patients through increased globalization and increased consumer focus on aesthetic dentistry. Integration and connectivity across the continual of dental care and service providers will continue to evolve, indeed accelerate. This connectivity must enable efficiency and accessibility. Accessibility for dentists and their patients to move, share and transport their data effortlessly. The continued and increasing role of dental support organizations or DSOs in many markets, particularly the North American market, will necessitate improved process efficiencies and data transportability and protection. Our connectivity and workflow capabilities together with our product offering across the continual of dental care with DS Core at the hub enables all these requirements for all customer types. And I think it's important to emphasize here that our open architecture allows customers who do not use DS scanners to benefit from interoperability with other digital equipment from the DS portfolio. Finally, we have, as you know, focused on increasing accessibility to our technologies by investing in high-growth areas geographically such as SureSmile in Europe and Japan and implants in North America. and by investing in the patient experience with our SureSmile and Byte aligners. Dental care is evolving. Technology is driving some of this evolution but it is also evolving in the way dental care is being delivered and by whom. Changes in delivery models such as DSOs and changes in the demographics of dental clinical care teams, such as more female dental graduates are shifting how we think about our business from education to digitalization, to innovation and product design to delivery. Many of the topics I've covered here are helping to refine our thinking about innovation. All types of innovation for the future. Suffice to say, we think our products, services and technology can address this evolving and increasingly connected market today and shape it in the future. We believe our portfolio and strategy positions us well to win. Again, it comes down to execution in the field and having the infrastructure and processes in place to deliver the desired customer experience and we know we can do a lot better in this regard. The dental market, a $30 billion global market is quite balanced across its core segments. We have established ourselves as a leader in essential dental solutions. So it is critically important for us to continue to pay attention to our innovation, education and footprint in this space. The significant opportunities for share gain reside elsewhere, specifically in connected technology, aligners and implants. It also lies in different geographies such as the U.S. While you are already aware of the investments we have made in our aligners and implants business, you will hear later from Andreas and Max as to why we feel that we are the best company to partner with on the digitalization of dentistry journey. We are committed to taking advantage of the opportunities in these categories and our prioritizing investments with this mindset. We are also committed to our Wellspect Healthcare business a business that continues to grow, to innovate and to drive profitability. After carefully evaluating strategic alternatives presented for Wellspect, we believe that we can create more value if it remains in our hands. To this end, I'm pleased to announce a leadership change in this organization. [ Chris Schlenk ], a veteran neurology home care executive has joined our organization and is relocating to Sweden to oversee this growing and profitable business. We believe his deep experience will help us accelerate this platform and improve shareholder value. In a nutshell, we see areas of our business where we feel that growing with the market is acceptable. Some areas we're growing with the market is progress and a stepping stone to greater performance and others where we have the potential to achieve above-market growth with the right delivery and execution. Our strategy is crystal clear to us. Digitalized dentistry, innovate in products and services focused on customer and patient needs, be great partners and do so through a committed and engaged team with quality and compliance at the core. You will hear today about how we are operationalizing and advancing on all 5 of these strategies. These objectives are cascaded through our organization and we have aligned our goals around them from annual operating plans to annual bonus plans to individual work plans. We have moved swiftly, meaningfully and with heightened urgency to execute on these through our operating model, our processes and our investments to transform Dentsply Sirona. We have made several intentional leadership changes over the past 12 months and 2 are particularly important when I think about culture. We brought in Andrea Frohning, a tenured dental Chief Human Resources Officer with a track record of facilitating cultural change. We also brought in Emily Miner as Chief Quality Officer, who, in partnership with Tony Johnson in operations is heightening our focus on quality across our organization. We've spoken consistently about 2023 as a transition year. A transition year for performance, for culture, for systems and for people. We now have many of the building blocks in place to execute intentionally on our plans to transform this company across product families, geographies and functions. Our operating model is how we run the business. It is our engine, our foundation for execution. It is centered on customers with our values consistently reinforced and exhibited by our leadership team and our management processes focused on winning as one team. On innovation, not just product innovation, and on disciplined execution. Repairing the fractured culture at our company by instilling a new tone at the top and focusing on ethics and compliance has been a priority for us this past year. We have made robust progress in this regard, and we are breaking down silos by focusing on teams and not groups or functions by organizing and behaving as one DS and by encouraging a speak-up culture. An example of this cross-functional work is our recently established RCO leader forum to share best commercial practices globally. Our revised and renewed code of ethics and business conduct has more than 99.5% completion of the required training. And by the way, I do know who the remaining employees are and they have received a reminder from me. We have encouraged ourselves and our employees to be bold and aggressive in their thinking, whether that's investing in implants, fixing our ERP systems or stopping projects by fostering a culture of collaboration, of accountability but no blame, of transparency, we are generating innovative ideas across the entire company and creating a renewed excitement as to how we can perform better together and be a better place to work. Our employees show a strong commitment to our vision of transforming dentistry, and there are many examples of this passion in the products we have developed and the education that we provide. Importantly, we also believe that actions in the world we live and speak louder than words. And that's why our partnerships with several organizations and NGOs that only resonate with many of our employees but also materially impact patients around the world. I'll speak more to this momentarily. Our employees are also committed to the way we want to run our business. Our new structure drives alignment, our metrics and KPIs drive accountability and our processes drive discipline. And finally, our efforts to improve the experience of working at Dentsply Sirona and to recognize great work are already paying dividends. Our turnover, for example, in sales and R&D this year is at all-time lows. And I've already mentioned our significant training results on our code of conduct. We have just rolled out our X-ray Awards program. This program has 2 categories, 1 of which recognizes teams against defined performance criteria, while the second recognizes employees who contribute in a meaningful way to Dentsply Sirona, but also in a meaningful way to the society in which they live. Our employee surveys confirms that Dentsply Sirona is already a better place to work, which has led to improved performance and sets us up very well to drive better results in the future. Our sustainability strategy is, of course, the right thing to do for our environment, our business and our customers. It is also particularly important for our employees as our recent employee survey confirmed. We have made robust progress this year on our campaign of healthy smiles, healthy planet and healthy business and are well on our way to achieving our priority goals. I noted a few moments ago that our employees are committed to our vision of our company and that we want our actions to be far louder than our words. We have several examples of how we have committed our people and resources to help promote women and dentistry to improve access to dental care for indigenous South Americans and to create smiles through our core partnership with Smile Train, the world's largest cleft treatment organization. Together with these incredibly worthy organizations, we are making a difference to the world we live in and we are rightly proud of that. I hope the video that you saw earlier resonated with each 1 of you. We have helped transform life's pathway for over 2,700 children. Our new leadership team is aware of the historical performance of our organization. We have acted swiftly and decisively in several respects to improve execution, accountability and value creation. The transformational activity is underway in our organization are overseen by the transformational leaders on this leadership team. This is why they've been brought into our organization or have had their roles elevated. For example, Glenn has been a public company CFO in the past and has led large-scale M&A integrations and ERP transformation. Andreas has much experience in general management, strategy and business development in addition to several prior years of experience in the dental industry. Rich has a demonstrable track record not only as a general counsel, but also as a transformative business development executive and business partner. Tony and Emily have led operations and quality transformations in the past and all that, that entails from [indiscernible] up implementation, to intense focus on continuous improvement and margin enhancement, to implementing ground up quality systems and processes. An enabler of much of this work is the ongoing cultural transformation led by our new CHRO, Andrea Frohning, who has great experience in this regard. We are confident that we have the right team in place to lead this organization into a phase of stability with a winning culture that drives high performance. We have placed the customer, their patients, their processes at the center of our innovation mindset. Our digitally enabled workflows are open and interoperable systems and our continuous expansion of our digital capabilities allows us and our customers to drive scale while also enabling us to address the unique needs and requirements of different customer segments. Importantly, we recognize that innovation is not just about products. It's about all our interactions with our customers and how we serve them. For example, by recognizing our customers' needs for flexible learning solutions, we've enhanced our DS Academy by introducing the DS Academy campus. This digital platform provides dental professionals with an array of live and on-demand content covering areas like digital dentistry, orthodontics and implant and restorative dentistry, many of which qualify for continuing education credits. Additionally, the campus will host live webinars on various topics pertinent to today's dental professionals. We have also begun to increase the clinical savviness of our commercial teams to enhance the value of their interactions with customers. This is particularly important as GPs perform more complex procedures that were historically the specialist realm only. We've already spoken about the importance of DSOs in the dental space. We have embarked on with some initial success rebuilding and deepening relationships in this customer segment through our DSO specific engagement team and by partnering with them on their specific product and software needs. Again, Andreas and Max will discuss why we are well positioned today and why we are investing in our ability to help customers on their digital journeys. Being a med tech company means not only are customers and patients at the center of all we do, but quality also shares that core. We have elevated the role of quality within our organization and are taking meaningful steps and making meaningful investments to heighten organizational awareness to elevate competencies, to improve processes and to improve interdependencies between quality, operations and R&D. Tony will speak more as to why that is important a little later. We aspire to be a customer-centric organization and formed by robust customer insights. That's why we conduct our own market surveys, and I know that resonates with you all. We intend to be much closer to our customers so that we have data to drive our innovation investment decisions, indeed, all our investment decisions. Our recently completed product portfolio and customer needs assessment survey has informed us that we have no meaningful product gaps, but we need to improve our customer experience. It also confirmed the importance of continued but meaningful digitalization. This data will help us to define our path forward to improved customer engagement and a better new product development process. I want to highlight a key theme that holds paramount importance to our company, discipline. The comments I've made earlier about the importance of customer centricity, making DS a great place to work, innovation, sustainability, quality. We cannot achieve the standards needed without discipline. And that's why this leadership team is in place. Our customers and our enterprise must come first. We need to do what's right every step of the way and doing what's right will require investments and decisions informed by data to drive more efficient processes, to improve the experience of working with and working for Dentsply Sirona and to make smart investments to grow our business. Some of these improvements in efficiency are well underway. Tony will speak later about our portfolio optimization work. He will also discuss manufacturing and distribution sites and ensuring we have balance across our network. Our operating model is rooted in being one team, in driving innovation in all we do and in being disciplined. Of course, this needs to be measurable, and that's why we now have robust KPIs across our organization. These KPIs are now helping us to allocate resources, people and dollars to those projects with the highest return on investment. This team is focused on execution and transformation. Execution so that we meet the first of our strategic goals, achieve annual growth and margin commitments. The transformational work we have underway is comprehensive. And the organizational realignment commenced earlier this year was necessary to help fund critical hygiene work across our company. We've spoken about unlocking efficiency in our organization. We've commenced activity in each and every 1 of these critical projects to get after the untapped efficiency and to unlock even more value for our stakeholders. And you'll note that we are also investing in compliance to ensure success occurs in the right way. Glenn, Andreas, Max and Tony will share more on these topics in their respective discussions with you this morning. We have heard you. We know Dentsply Sirona is a show-me story. We know that we are in the process of reestablishing and restoring trust with many of our stakeholders, not least with the investment community. I'm hoping that during your interactions with us this past year, you will have realized that we are a lot less about the fluff and a lot more about the flint. You should not expect to hear a fluff from this leadership team. Our mantra is great strategy is a lot less about great thinking and a lot more about great execution. We are in execution mode. We are in transformation mode. When we combine these, we plan to drive meaningful improvement in our performance. You will see today how we expect to deliver 4% to 6% growth rate in this 3-year plan. This is a meaningful shift for our organization, and we intend to do so in a predictable and stable way. Andreas and Max will talk about some of the levers to deliver this. In parallel, we expect significant margin expansion, and Glenn and Tony will explain how we can achieve this. Coupling these with more diligence on our SG&A, we plan to deliver as committed to in January of this year, our target of $3 of EPS in 2026. We are taking actions to deliver higher, more profitable growth and we are focusing our investments in spaces and geographies with greater strategic opportunities, and we are intensely focused on being more efficient in everything we do. As I commented on earlier, I do hope that you will leave today sharing our conviction that we are making the right moves to alter the trajectory of this company. We are committed to it. We have the experience to deliver it and we have the character, tenacity and discipline to get it done. Thank you.

Ladies and gentlemen, please welcome Executive Vice President, Chief Business Officer, Andreas Frank.

Good morning. Welcome again to everyone here in Charlotte and those of you joining us on our webcast today. I joined the company 18 months ago, and my passion is to improve the lives of more people with better quality of care. The video you saw earlier today is a powerful illustration of our purpose here at Dentsply Sirona. We transformed dentistry to improve oral health globally. I have over 20 years of experience in strategy, M&A and general management roles. I spent several years in the dental business at Danaher initially and then move to Hill-Rom as an executive driving the transformation and expansion into practice-based care and connected health. Building on the strategic priorities and operating model Simon outlined, let's focus on how we empower our customers as digitalization accelerates. First, we start from a position of strength. We offer a comprehensive portfolio of workflow and technology solutions built on a history of successful innovation. Today, we provide the largest connected portfolio and end-to-end platform in dental. We also carved out a defensible and financially accretive position in the Continence Care segment with Wellspect Healthcare. Our competitive advantage builds from 3 core elements across regions and categories. DS Core uniquely positions us to drive dental practice efficiency. In this fully cloud-native open platform is already transforming dentistry across traditional and digital workflows, and it is the only one of its kind. Our global clinical education footprint and key opinion leader network provide unparalleled content and education opportunities for our customers. These programs help accelerate their connectivity journey and professional development drives the integration of new technologies into their practices. We regularly upgrade our offering to evolve with the changing needs of the market. And we also execute to achieve commercial excellence globally. We enhanced the engagement at the local level, leveraging distribution partners, direct sales and service as well as direct-to-patient channels and e-commerce. We're driving sales force efficiency and effectiveness combined with training of digital skill sets. Not only does this focus benefit our customers, but it positions us to drive profitable growth, combined with disciplined execution, these elements position us to deliver on our target of $3 adjusted EPS in 2026. So let me highlight upfront 3 levers that serve as a common theme across the initiatives in our business units and regions. Winning portfolio, clinical education, commercial excellence. The key value drivers will come as no surprise following Simon's opening remarks, digitalization, deeper engagement with our customers to address their most important needs and disciplined execution in all areas. Let's now cover some additional insights into each of our global business units, and then we will come back to these 3 key levers driving differentiation. Over the past 12 months, we have surveyed a broad base of our customers to pressure test our assumptions and competitive position. We know we have opportunities for improved execution. Also, we still see significant runway to grow organically through innovation as well as through opportunistic tuck-in acquisitions across our largely fragmented end markets. It's worth noting that our go-to-market channels vary by category as well as geography. We have direct-to-patient, B2C and B2B capabilities and we will continue to optimize our channel mix and sales force effectiveness to increase customer proximity and engagement. Let's first cover our specialty Continence Care business. As you know, we decided to keep Wellspect in our portfolio earlier this year. Wellspect provides both male and female intermittent catheters. A few years ago, the business expanded into enterology as a new growth vector. The Wellspect business is historically weighted more towards European markets, particularly the Nordics with significant runway left in North America. With Chris as our new general manager now in place, we're excited to see what's ahead for this business. We expect to realize accretive growth with recent product launches in urology as well as enterology. Several additional innovations are currently in the pipeline, and we plan to introduce more products through 2026. Wellspect has a history of leadership in sustainability, and we believe we can continue to leverage this position as a competitive advantage. The business also has a culture of continuous improvement delivering more than 500 basis points of operating income expansion over the past 7 years. These continued efficiencies support incremental investment in commercial excellence and digital tools. We will now turn to our dental portfolio for the remainder of this presentation. With our trusted workflow solutions highlighted in the blue bar -- in the light blue bar, we serve the full spectrum from traditional preventive, restorative and endodontic procedures, all the way to fully digitally enabled implant placement and aligner design. Our connected technologies highlighted in the dark blue bar, such as 2D and 3D digital imaging, intraoral scanning as well as milling and printing are transforming the practice of dentistry and expanding access to better care. Now DS Core will evolve to connect these workflows and technologies in one shared environment. You will hear from Max next on how DS Core serves as the hub and how DS Core becomes a force multiplier for the digital dental practice of the future. It enables practices, labs and patients to collaborate more effectively across an entire patient case, expand the treatment offering and acceptance and ultimately, deliver the desired outcomes. More than 45% of our current solutions are already connected through digital technology or workflows. We expect our connected portfolio to expand and deliver accretive growth. I will start with CTS, our Connected Technology Solutions business. CTS serves the clinical infrastructure needs in the dental office. Our history of pioneering new solutions like CEREC, intraoral scanning, 3D imaging and MRI for dentistry created a technology portfolio that's the broadest in the industry. We are also currently the only dental company with leading positions in both milling and printing for in-office use. Our know-how in material sciences and expanding AI capabilities enable us to better address customer needs and help optimize workflow and product performance. And as you can see, our CTS sales are balanced across major regions. We expect our key initiatives to support mid-single-digit organic growth over the planning period, and Max will cover these opportunities in more detail. I want to highlight two areas of strength and category leadership for us to build upon. First, CEREC chairside CAD/CAM technology. With a strong #1 position, we still see significant runway to grow milling and printing applications as complementary solutions today. Our materials expertise, combined with our post processing know-how in centering blocks and curing resins allows us to optimize equipment parameters and manufacturing outcomes. Now let's talk about a few examples of how we expand our offering and improve the speed, strength and aesthetics of our materials. We have our growing range of the CEREC milling blocks and I'm happy to announce that our Lucitone digital print resin just received FDA clearance about a week ago for use on Primeprint. Lucitone was cleared for the use of digital denture applications. And soon, DS Core will provide a new range of options for clinicians and laboratories to collaborate on design services that we're very excited about. We expect these options to further accelerate the adoption of digital tools and dentistry. Second, intraoral scanning. Adoption of intraoral scanners is growing rapidly but remains only around 30% penetration globally. We will continue to expand and refine our stand-alone offering with Primescan Connect and Primescan AC connected through DS Core. In parallel, we're investing in our commercial sales and service footprint across business units to sell intraoral scanning technology. We have several pilots already underway and kicked off additional sales training across regions. Okay. Let's continue with our implants and prosthetic solutions business. Our portfolio ranges from premium and value implants to regenerative solutions, prosthetics and final restorations supported by digital materials and tools that enable the entire workflow from implant placement to final restoration. This segment also includes our Atlantis digital customer button design services and manufacturing as well as lab materials, with traditional and digital print solutions. Combining these categories in one group reflects the need we see for close connectivity and integration across the implant value chain and referral network involving general practitioners, specialists and laboratories. We remain focused on the turnaround of our premium implant and prosthetics business and see continued growth from recent product launches starting to offset declines in legacy systems. As you know, we made incremental sales force investments to drive towards improved effectiveness including a systematic, rigorous and ongoing sales training program. We are renewing our engagement with the clinical community by increasing events globally to strengthen our network across the entire value chain. In addition to premium solutions, we are providing broader access to care with an attractive value offering, leveraging our global cost position. Our value-focused implant team has a track record of successful fast follower innovation, driving profitable growth. We will also evaluate selective opportunities to optimize our go-to-market strategy, balancing direct and distributor sales with opportunities for tuck-in acquisitions. Moving to orthodontics. Our solutions are focused on aligner treatment. We serve the professional segment with SureSmile with its proprietary treatment planning algorithms that allow us to reduce the number of refinements needed. We also provide direct-to-consumer offerings through Byte. We see these solutions as complementary, serving different patient demographics. The Byte at home solution expands the reach for aligner treatment directly to patients, many of whom do not have an established relationship with a dentist and thereby growing the overall market. As you can see from the market share data, we have a lot of runway to continue to expand globally and further penetrate the existing categories. And a little later, we'll talk about the hybrid solution you see here. Our Byte business has evolved significantly since the acquisition in 2021. And the team has adapted the business model to drive profitable growth. As an example, we have now consolidated most of our aligner manufacturing into one of our facilities for both Byte and SureSmile. Integrated systems and automation drive increased efficiencies and cost savings, and we also continue to operate treatment planning services out of Costa Rica for both SureSmile and Byte. Now I think you appreciate how reducing customer acquisition costs and improving conversion rates play a particularly important role in the aligner segment. We've taken a few steps to drive improvements in this area like the recent launch of our SureSmile Outcome Simulator powered by DS Core. Our goal here is to show patients the potential treatment benefits and drive improved treatment acceptance rates. In turn, our Byte business has changed its marketing strategy to focus on specific target demographics, which has resulted in more than 20% higher customer conversion rates year-to-date versus last year. We are also expanding our offering to our existing loyal customer and patient base with ancillary products and services, including at home and professional dental care, such as retainers, whitening and preventive care. These opportunities have the potential to significantly increase the lifetime value of our aligner customers. To wrap up the portfolio discussion, I'll turn to EDS, our essential dental solutions business. EDS serves the full range of traditional procedural workflows from preventive, restorative as well as endodontic treatments supported by digital tools such as intraoral imaging and scanning. EDS continues to serve as an important foundation of our portfolio. We own many of the most trusted brands in these consumable categories globally and clinicians and labs use our product every day to improve treatment outcomes and increase efficiency. Combined with our commercial footprint and broad distribution reach, we serve more than 500,000 dental clinics around the world. These markets remain highly fragmented and are typically characterized by incremental innovation and product refinements. Now let's talk about the growth drivers for EDS. We plan to continue to enhance our margin profile and leverage our category leadership to deliver consistent growth. With focused innovation on procedural efficiency, in clinical performance, targeted new value offerings as well as growth-based incentives for our commercial teams, we expect to accelerate new customer acquisition and expand our leadership position. Enhancing our overall cost and value proposition will also enable us to compete more effectively across both premium and value segments. And part of this effort will include evaluating our manufacturing and distribution footprint, which Tony will cover. Lastly, we have a strong history of workflow-based clinical education across EDS and we expect to continue our investment here. Our program includes partnerships with more than 100 global key opinion leaders and many more local influencers and advocates who work closely with us to develop and teach relevant content for our customers. We remain focused on enabling our customers to achieve predictable and efficient clinical performance. Let's now come back to the 3 key differentiators from an enterprise perspective. Our winning portfolio is strengthened by DS Core, our unparalleled clinical education infrastructure with our DS Academy offering and our commitment to commercial excellence and execution across all regions, channels and customer segments. We'll show you how this positions us to win with our unique footprint and capability set. We'll start with innovation. We plan to continue investing into building a cohesive digital environment, connecting additional elements of our portfolio in moving clinical applications onto DS Core over the next 24 months. You can see a few examples here, with a number of our launches in '23 focused on digital workflows like orthodontic outcome simulations and additional functionality for DS Core as well as expansion of milling and printing materials. We also introduced some new products in our rotary portfolio with improved ergonomics, an integrated technology to locate the apex in endodontic procedures. Overall, we spent about 60% of our total $180 million in R&D on new product development with most of this directed to our connected technologies and workflows to drive accretive growth. We expect to further optimize this ratio with a simplified portfolio and allocate incremental dollars from maintenance and sustaining engineering to new product development activities. We continue to evolve our R&D capabilities. In software engineering, we have augmented our teams with external partners to accelerate our transition to cloud technologies. Similarly, we're further adding to our team focused on AI opportunities in one of our existing locations. For our material sciences, we are investing in manufacturing and processing know-how for digital materials. We've also instituted a rigorous new product development and prioritization process across all GBUs and software engineering with improved program management and greater ROI discipline. Our teams and supply chain, quality and regulatory affairs as well as R&D will collaborate trust functionally with a shared set of metrics to ensure predictable launch performance and timing. Now you can't have a great winning portfolio without robust product life cycle management, and we recognize quickly that we have room for improvement here. That's why early in '23, we kicked off our first initiative focused on our EDS portfolio and design a plan for a thoughtful transition of more than 18,000 SKUs and about 200 brands in the endodontic and restorative the portfolio to position our customers with other alternatives for their patients. This work has resulted in a potential $30 million margin opportunity from optimization of SKUs and brands. To that end, we recently set up a dedicated cross-functional PMO to execute in a manner that minimizes customer and revenue disruption. A simplified portfolio enables better resource allocation, including sales execution and innovation investments. It reduces cost of inventory, registrations, maintenance, sustaining engineering and marketing. It also unlocks potential additional footprint optimization and opportunities for scale. Let's now shift to clinical education. Another critical building block to establish a differentiated position with value-added services for our customers. Digital dentistry continues to require hands-on and in-person training to accelerate practice integration and realize the full benefit of digital tools. Our world-class global education footprint consists of 55 education centers across 33 countries, 20 academies equipped to teach digital dentistry and over 400,000 courses delivered in 2022. We also collaborate with third-party education experts to broaden our offerings. For those of you attending in person today, you will have a chance to tour our DS Academy here in Charlotte later and get a first-hand impression of our state-of-the-art facilities. As you can see here, our offering starts at universities and teaching institutions and spans the full range from local events such as lunch and learns to global events such as DS World and our Implants Symposium. In addition to learning and development, these education forums also serve to build a peer-to-peer network in community of clinicians. In line with our history of pioneering innovation, university serves as a valuable partner and source of research and forward-thinking ideas such as dental MRI technology. Our experience also shows that when our state-of-the-art technology is deployed at teaching institutions, more than 70% of graduating students are likely or very likely to purchase the same product used in dental schools. I'll now turn to commercial excellence, the third element of the strategy. In our dental business, we have a total footprint of more than 4,800 commercial employees and conduct business in more than 100 countries. With the organizational restructuring earlier this year, we focused on improved execution with our customers. To this end, we created a closer link between our commercial teams and our global business units. We're now driving additional sales force effectiveness by optimizing our footprint, upgrading incentive plans and evolving capabilities towards digital dentistry. In addition, we're evaluating opportunities to expand our position in Asia Pacific and Latin America. Our priority to win in implants and aligners extends in these regions, including the upcoming launch of SureSmile and DS Core in Brazil as well as the previously mentioned investments into our SureSmile sales force in Japan. We're also assessing our position and potential requirements for future volume-based procurement in China. Our channel today includes a combination of distribution, B2C, e-commerce as well as direct to patient. And we see opportunities to optimize our mix and expand with DSOs, which currently own 20% of dental practices in the U.S. In this growing segment, we have increased our focus and resources to meet the specific innovation needs of DSOs and improve our market share. Our Byte direct-to-patient team adapts patient marketing and acquisition strategies to improve conversion rates and reduce cost. We measure performance from the top of the funnel all the way through the treatment completion and follow-up using clearly defined KPIs and metrics. The growing consumer brand of Byte and presence across social media attracts 1 million unique visitors monthly, and we regularly refine the e-commerce engine to maximize leads and opportunities generated from this web traffic. We also invested in a new patient engagement app to encourage more patient compliance, which leads to more predictable outcomes and drive patient satisfaction. Patient adoption of the app now exceeds 90%. And as a result, we have seen a significant improvement in Net Promoter Scores at the point of treatment completion. We believe our office-based hybrid workflow will further improve conversion rates, reduce cost and enhance value for both patients as well as clinicians with the opportunity to access a new client base. The hybrid solution connects a potential Byte customer with a dental office to receive a digital intraoral scan on site. This makes the work far more efficient, provides clinical engagement for the patient and a potential new customer for the practice. So now let's talk about DSO, which make up an increasing share of the dental market. This trend is more advanced in the U.S. where we currently see 20% of dental offices affiliated with DSOs, and data suggests this will double in the next 5 years. With increasing student loans, the rising cost of establishing an independent practice and staffing shortages, we believe that DSOs will continue to expand both in the U.S. and internationally. DSOs have similar needs to stand-alone offices at the practice level, with additional enterprise requirements to capture economies of scale across their network, and we aspire to be their preferred partner. As a starting point, we can fulfill a broad range of traditional and digital needs, simplify transactional processes and provide tailored and flexible solutions. We support the education needs of infrastructure as well as customized content to enhance the efficiencies of the organization. And finally, DS Core provides an enterprise-level platform to enable a simple, secure and connected environment, reduce equipment downtime and enhance collaboration across offices and labs. You can see here how all elements of our strategy work together to drive value for our customers. And now, in summary, let me reiterate our commitment to enhancing our customer experience globally into accelerating profitable growth towards our target of $3 per share adjusted EPS in 2026. We're deploying and refining our playbook across an end-to-end connected platform, winning portfolio with DS Core, clinical education and commercial excellence tailored towards the needs and specific focus areas of each region, global business and customer segment. And DS Core sits at the hub of connecting the future of dentistry. So let's hear a few customers and their perspectives from our recent DS World in Las Vegas. [Presentation]

Ladies and gentlemen, please welcome Group Vice President, Connected Technology Solutions, Max Milz.

A warm welcome also from my side. My name is Max Milz, and I'm responsible for Connected Technology Solutions. I joined the company since 2021 after 12 years at Siemens in China and in Germany. And I joined DS to foster its reputation as a recognized pioneer in digital dental technologies. Today, I'm really happy to guide you through why we are a leader in innovative connected solutions that drive the future of dentistry. Okay. We heard a lot about dentistry. We heard a lot about digital. Why are we doing digital? It's ready to serve our customers' most important needs, clinical patient outcomes, growth for their practice and efficiency in their practices. And how are we doing in digital? We are driving differentiation by connecting all of our offering in a single platform, DS Core. For initial workflows, we will leverage our strength in connected equipment to drive growth in value categories such as implants, aligners, endodontics and restorative dentistry. We are leading the industry forward with innovative solutions that increase our addressable market and connect to the future of the industry. We're enabling better patient outcomes as well as growth and efficiency for dental practices. We're driving competitive differentiation with a full suite of proprietary and industry-leading digital solutions enabled by our foundational cloud platform, DS Core. We are integrating equipment, technology and workflows to enable high-value dental procedures and accelerate growth. In short, at Dentsply Sirona, we are focusing on empowering customers with our digital workflows. What do customers expect from digital technologies? They want to focus on patient challenges and not technology. They expect technology-enabled consistent and predictable clinical outcomes. Device connectivity is really about driving ease of use, particularly as our customers deploy more and more technologies in their practices. And just like smartphones and tablets from the same company work better together, the same expectation exists for digital technologies in dentistry. Dentists and labs expect that dental technology works in the same similar way as the technology they use in their everyday lives. It's really about driving better outcomes for patients and clinicians. We already talked about those 3. The first one is, of course, better patient experience in clinical outcomes. And then there are 2 pillars that really matter. One is growth, the other one is efficiency. Dentists want to focus on oral health challenges. And of course, the technology needs to serve them. And our goal is to enable vibrant practices and labs to deliver better oral health outcomes for patients. Let's talk about growth for a little bit. Growth is really about easier, faster diagnosis of indications, improved case acceptance and leveraging the power of the dental care team for efficient collaboration between practices and labs. Efficiency is, first and foremost, about addressing the single biggest cost in a dental practice, and that's the time of the dentists. Freeing up dentist time for ease of use, automation and manual steps and delegation to assistants increases the efficiency of a practice tremendously. It's the single most important economic efficiency driver in a practice, and this is where digital technology can help. In addition, automatic software updates, remote service for equipment and controlling IT spending further drive efficiency that drive equipment uptime and lower costs. Growth for a dental practice requires digitalization. So digital. How digital is the industry today? If you look at this adoption curve, you can see that every dental practice, to some extent, is digital today. There is no modern dental practice without a 2D X-ray or a treatment center. Without them, a modern dental practice cannot function. For every other piece of digital technology, there's a long runway because the majority of dental practices do not use them today. We already heard that only around 30% of dental practices today use an intraoral scanner, even less have a 3D X-ray or CBCT, which is essential for treatment planning and diagnosis for complex procedures. And less than 20% use a chairside mill, and a 3D printer is even behind that. We talk about cloud and AI, but they are still in their infancy in dentistry. They are important enablers that can supercharge the adoption of digital technologies, but it's still at the early stage. And we heard from Andreas that dental MRI is on the horizon for dentistry, which has the potential to bring greater diagnostic power by making the currently invisible visible, and that's soft tissue. And that's just one of many benefits. Dentsply Sirona is a recognized pioneer in digital technologies. We introduced intraoral scanner and milling with the CEREC system in the '80s. And we also brought CBCT into dental practices with the Galileos system. We are now focused on simplifying digital dentistry by leveraging cloud computing and AI with DS Core. What's driving the adoption of digital industry? It's really quite simple. It's the same customer needs I mentioned at the beginning: clinical outcomes, growth and efficiency. Cloud computing is an essential element in driving this digitalization and the adoption of digital technologies because it has the potential to radically simplify how digital the industry is done in practices and to simplify the IT stack. Because if you walk into a dental practice today, what you really see is, if you look carefully, lots and lots of PCs. Today, almost every piece of equipment comes with a dedicated PC. PCs and operating systems age. Operating systems need to be upgraded and software needs to be upgraded. Combining the different data formats that are used in dentistry is not always easy. We believe that the future of dentistry is cloud-based, with a simplified IT stack that allows clinical workflows accessible from any screen, reduce costs, no more need for manual software updates and seamless and easy user experience as well as remote service. Why is that? Because cloud-based software is not about software. It's about having access to almost unlimited computing power, automatic updates, seamless interoperability, data transfer and much less clutter. To give you an example from your everyday lives. We need to do a last search on Google, maybe yesterday, which version did you use? Do you think it was the same version you used a month ago, same version used a year ago? Does it matter? It doesn't matter because what you care about is what the technology enables you to do. And that's why we are leveraging cloud technology also for dentistry. Of course, in health care, it's important to do this with the right regulatory context. The cloud-based future of Dentsply Sirona is driven by DS Core, which, by the way, is also open to third-party integrations. DS Core is at the heart of our connected technology solutions. Let's deep dive a bit into DS Core. It's really quite simple. It's 3 things. On the one hand, it's connectivity and computing for the equipment. Secondly, it's a simple, secure connected platform, open to third-party integrations. And finally, it's about clinical capabilities that enable key workflows such as aligners, implants, resto or chairside milling and printing. Let's look at each of those elements in a little bit more detail. If you think about digital technologies and equipment, this is really about enabling practices to connect different categories of equipment, intraoral scanners, 2D X-rays, 3D X-rays, chairside mills, chairside printers, treatment centers, and integrating it all together in a single cloud platform so that this data is available from anywhere. At this stage, we're in a hybrid stage where you have traditional equipment that uploads data into the cloud platform. In the future, we foresee migration to completely cloud-driven devices. The platform is really about the computing backbone of digital dentistry. All data is securely short, accessible from anywhere and allows collaboration with the dental care team. This really allows using that data along the entire patient journey, from the diagnosis to the case presentation, to the planning, and finally, the surgery in collaboration between labs and dental practices. It's important to make sure the DS Core is interoperable also with equipment from other manufacturers. Already today, there's a wide array of different data formats that are supported on DS Core, and we plan to expand this even further. When we talk about clinical, we're really talking about clinical workflows because this is the delivery mechanism of the dentistry. By visualizing the data from connected equipment for diagnosis, we can facilitate the patient communication, case acceptance and treatment planning. And for us, this is really about gradually replacing the stand-alone software packages we have, bringing them all into DS Core in a unified environment to enable dentists to grow their clinical capabilities with confidence and to expand into more high-value procedures. I'd like to show you a few of the capabilities that we have in DS Core today because it is a gradual build out. We are regularly developing new capabilities and we have the ability to immediately deploy them to all customers that are using DS Core because that's one of the benefits of being cloud-based. You have immediate access without installations without having to do anything. So where do we stand? Let's look at a couple of examples of DS Core. And for those of you in site, you'll also be able to see them later in the academy and in our connectivity at the Core tour. We'll also have key opinion leaders, Dr. Gupta and Dr. Barsoum, later on here who can explain how they use DS Core to achieve more with less. The first capability to highlight here is about equipment management. Today, you can connect intraoral scanners, X-ray devices, mills and printers to DS Core, enabling automatic upload of the data and remote service. This is a big efficiency driver because the data is all of a sudden available from anywhere, and we can get equipment up and running faster in case they need to be serviced. Secondly, there's a single media library that's really accessible from anywhere. One of the benefits of this automatically automated -- uploaded data is that the intraoral scans and x-rays as well as photos and other patient media can be viewed from anywhere, from your home, from the plane, wherever you have an Internet-capable device. This creates a big differentiation from traditional case management because you typically can only access the data when you're on site in the practice. And most of those systems don't even integrate data from different imaging devices in one area. So this is really about efficiency and flexibility of being able to work from anywhere. A third example is really about the patient-specific applications because if you think about dentistry, patient-specific applications like crowns, nightguards, surgical guides require planning and manufacturing. This is a really big deal for dental practices. DS Core now enables practices with a hybrid workflow to increase the efficiency of their chairside scanners and to design and manufacture with a Primemill or a Primeprint in different locations. In addition, for built-in converters on DS Core, we also allow the use of third-party software with the data from DS Core, which is particularly important for labs. Both are big enablers of efficiency in a dental practice. We already mentioned case acceptance. Studies today suggest that only around 30% of treatment plans are accepted. DS Core has a big focus on allowing an easier and better patient consultation by using the power of these digital images. Because before you're going to spend a couple of thousand dollars on a dental treatment, you want to consult with your dentist why are you doing the treatments. And very often, you might even consult with your partner at home. That's why we introduced the communication canvas that allows a flexible arrangement of all the different types of media, intraoral scans, x-rays, photos and many other media on an infinite canvas on any device, whether you want to work on an iPad, a laptop or a big connected TV screen to have that really important patient communication. And since some of those patient decisions will only be taken at home, we also allow the sharing of that data with the patient. And since cloud computing is really a little bit magic, you have access to it at your home because it's a video stream. And this video stream means you don't need dedicated software and you have access to it immediately. These are powerful tools for case acceptance. Let's move to our SureSmile simulator that was already mentioned. We recently launched this and it's using algorithms with machine learning to simulate the outcome of the aligner treatment that can also be shared with the same technology with the patient at home. It also importantly shows a measure of complexity of the particular aligner treatment, enabling the dentist to price that particular aligner case more accurately and avoiding unplanned revisions. Based on initial customer feedback, we know that these visualization and complexity indications are really leading to a lot more case acceptance and fewer unplanned visits. And finally, dentistry is a team sport. The collaboration between dentists and labs is really important. The vast majority of dental practices primarily use dental labs for the design and manufacturing of the final applications, from crowns to dentures to nightguards. With our solutions today, how do dentists share data with labs today? It's really through a lot of clutter, WhatsApp, WeTransfer, e-mail, Dropbox, many other things, where all this complexity hits us on the side of the dental lab because they receive data through all of those different channels. And we aim to do this differently. We empower dentists to work the way it makes the most sense for their practice, whether it's with the lab or chairside. But fundamentally, also enable them to work very easily and fast together with their lab, whether it's ordering from a lab, reviewing the design, ordering a SureSmile aligner. And on the right-hand side, what you can see here is real-time collaboration between dentists and labs, easily using the same data available in the cloud. This is the future of digital dentistry. How do we innovate at Dentsply Sirona? We already mentioned that the customer is at the core of everything we do. We recently held a DS Core Innovation Day in our software engineering hub in Zurich, where we also, by the way, have a fully functioning dental practice, of course, full of Dentsply Sirona technologies. And we brought together key opinion leaders from across specialties from around the world to showcase our latest innovations and gather feedback on future offerings. Many dentists and lab owners are entrepreneurs that run their own practices. So stepping away from patient care and spending time with us really demonstrates their commitment to shaping the future of dentistry. Our innovation approach puts the customer at the center and hands-on collaboration is so important for that. This network of DS Core champions also allows us to partner with experts to test new functionalities fast and efficiently. Two of our KOLs, Dr. Gupta and Dr. Barsoum, that you will hear later on also participated in the events in Zurich. Ultimately, DS Core is about enabling dentists to achieve more with less and leverage the full power of the Dentsply Sirona portfolio. When we talk about the more side, we already heard that only around 30% of treatment plans are realized. This is a major opportunity for improved oral health and revenue upside for our customers. That's why we focus our customers to really see more by making diagnosis more accessible, introducing AI tools for it, enabling them to more quickly and accurately identify oral health challenges. Secondly, it's about educating more because before a case is accepted, that patient needs to be educated about your oral health challenge and the treatment options. Both of those, of course, drive case acceptance, but doing more is about more than that. It's about giving access to the full range of digital dentistry options, whether you want to get into aligners, whether you get into 3D printing, eventually, almost any dental procedure available in the practice will be available through with the connectivity of DS Core. Of course, there's also a less part of this entire conversation, and that's really about less time, less cost and less downtime. When we talked about last time, we already know that today, through the hybrid workflow, we can increase the speed of chairside milling by around 30%. We believe there's a drastic potential to lower IT costs and also equipment costs in dental practices through cloud-based infrastructure. And finally, sometimes equipment breaks, and then you want to get it back up fast and quickly. Through DS Core, connected equipment can be triaged early on so the first visit of a service technician can be spared. That's a big time saving for the dentist and it gets equipment very quickly back up. So it's really about achieving more with less. And we have a full road map to take this even further. What's one of the things that Dentsply Sirona can bring to the table to really drive leadership in digital dentistry? It's the largest installed base of digital equipment in the industry. We are the only company that has a strong base in intraoral scanners, imaging, mills, printers and treatment centers. This gives us a springboard for connecting all of our offerings in a single platform, more than 175,000 intraoral sensors and extraoral devices, more than 60,000 scanners that make more than 10 million scans every year, and on the 30,000 mills and printers, more than 6 million crowns, veneers, nightguards, surgical guides are made every year. Connecting this installed base in a single platform is a tremendous opportunity to drive aligner, implants and restorative businesses and gives us the right to win in digital dentistry. As Simon said earlier, this requires one team driving innovation across our business and relentlessly executing with more focus and discipline. And I can tell you the change that I have experienced here is very real. Let's look at one specific example of -- can you go back, please? Can you go one page back, please? Let's look at one specific example of the advantage that Dentsply Sirona experienced this year, and that's chairside milling and printing. Both of those technologies start with intraoral scanner. In our case, that's a Primescan. Nowadays that gets pushed into DS Core and from there, you can now choose flexibly what are you going to do with it. Do you want to send us to a lab? Or do you choose to manufacture chairside on your mill or your printer? We are the leader in CEREC chairside milling, and this is ideal for permanent restoration such as crowns. We've now expanded into 3D printing, and we can leverage the same base of scanners and these core users to also drive the 3D printing opportunity. 3D printing is really great for everything that's temporary, like nightguards, surgical guides and models. To expand the market for share side manufacturing, we've also enabled third-party integrations of other scanners so that people can have access to the leading mill and the leading printer. Both of those technologies, in particular, CEREC, are something which our customers really love because of the ROI and the payback period in their practice, which is typically around 2 to 3 years. It's not only attractive to our customers, it's also attractive to us because with every miller or printer, we have an opportunity for incremental revenue of blocks, resins, services, spare parts. We estimate that around 40% of the initial system purchase can be additional revenue for us through the lifetime of the system. Sometimes, we get the question of how do printing and milling fit together. A recent survey showed that around 90% of dentists see these technologies as complementary or neutral, and we agree because chairside milling is great for everything that's permanent because it's durable, high strength and aesthetic. And 3D printing is really great for everything that's temporary: nightguards, surgical guides and models. We are the only player that has a leading position in both, and they're now integrated in DS Core and together, they can drive the profitability and growth of a practice. To summarize, let me emphasize a couple of few points that we discussed together. On the one hand, connected technology solutions are the backbone of dental practice growth and efficiency. Dentsply Sirona is the leader in connected technology solutions with trusted brands and an end-to-end portfolio. DS Core sits at the hub by enabling us to leverage the biggest installed base of digital equipment for growth in digital procedures like aligners, implants and restorative. Thank you very much for your time. I'm looking forward to seeing some of you in our connectivity at the tour sessions later on, and we're now going to move to Q&A.

Ladies and gentlemen, for the Q&A panel, we welcome on stage, Andrea Daley, Glenn Coleman, Andreas Frank and Max Milz.

All right. We're ready for Q&A now. We're going to open it up to Q&A with our 3 presenters we have here. We have about 20 minutes for Q&A. So let me share some quick instructions on how we're going to conduct Q&A for the 2 segments. [Operator Instructions] Let's start here with Jeff.

Thank you, Andrea. Jeff Johnson from Baird. So Glenn, let me start just by saying congrats on all the changes over the past year. I think it's clear you and Simon have come in and been the first in a long time to acknowledge maybe some real issues here that have existed with Dentsply for a number of years. Let me start with -- I guess my first question here is just on maybe some structural things we're seeing in the industry. And I've covered the industry for 20 years here. And I think as we think about the positioning of your company and maybe even the other publicly traded manufacturer out there, one thing that I think investors maybe lose some focus on or don't even realize is you guys only control probably about 15%, 20% of the market. There's 80% other manufacturers out there or 80% of the market, in the other hand, are others. And the industry really seems like it's moving away from premium products, whether that's structural inflation for some of these practices that it hasn't existed in 20 years, is there now reimbursement rates not going up, kids coming out of school with a lot more debt. There's a lot of reasons why practice profitability is under pressure. And it feels like whether it's consumables, equipment, implants, you name it, there's just the move to lower-priced products. And you are one of the premium out there across pretty much all that. So how does that factor into kind of how you think about the long-term setup for this company and what you have to do maybe from a mix standpoint and a focus not just in implants, but across your entire business and what historically has been your pricing positioning versus where maybe the long-term industry trends are going?

Jeff, thanks for the question. I think you're right on in terms of the #1 issue our customers are seeing are higher costs in their practices. And how you solve that problem is how you're going to win in the marketplace. And so when we first look at it, it's DS Core and improving their workflows is a big way to actually reduce their costs and get more traffic through their practices. So I think this whole discussion we just had around connectivity, improving workflows is a big deal that addresses a major customer issue, which is higher cost in their practices. Moving down the value chain from premium to value, we play in these spaces today. We have a MIS Implants business, as an example, which is a value implants business. That has done quite well. Even though we've struggled overall with implants, we've grown value implants double digits pretty consistently over the last several quarters. We also launched an intraoral scanner called Primescan Connect, which is a lower-priced scanner. And we've been very successful in rolling that particular product out in many markets around the globe. So yes, we see some shift to lower-priced products. We have products that fit that category. But I think the biggest thing for us is how do we improve workflows and make their practices more efficient. And maybe, Andreas, I don't know if you want to comment further. But that would be my 2 cents.

Yes. I think maybe a couple of thoughts to add there, right? I think the industry, certainly, if I think back sort of 10 years ago, 15 years ago, we see a real acceleration in digital technologies, and that brings the opportunity to connect these workflows in a new way. And I think that's where we continue to see innovation, and that's where we continue to see the opportunity to actually continue to develop our products. And I think on our last earnings call, we talked about the survey that we just did with customers, right? What really matters to them. And the top 2 answers were efficiency in their practice, a lot of that is enabled through more digital technologies. And the second piece was conversion of patients to treatment. It's pretty natural. But again, I think that's where Max talked about the patient canvas, the ability to engage with patients in a new way. we believe that it may be a different, but a new way of sort of premium offerings that we provide that actually help our customers achieving those goals.

And maybe just one quick follow-up. Just on the LRP, thinking about the mid-single-digit growth through 2026 on a CAGR. You do have the footnote in there about that would be more in a normalized macro. I would assume, given kind of the trailing 12-month performance, kind of the guidance that's implied for fourth quarter, looking at those numbers, you probably don't want to see models in 2024 going to mid-single-digit growth. I know you're not talking specifically to 2024 here, but I would assume that's a safe assumption. Should we think about that mid-single-digit growth given where we are in the macro as being more aspirational? Should we think about that mid-single-digit growth being more back-end loaded on the 3-year plan? Again, just trying to think about the near term versus the next couple of few years out.

Yes. And Jeff, I'll be making some more comments later this morning on the trajectory of the 4% to 6% compounded annual growth rate, how we see that laying out. But obviously, we think in a normal macroeconomic environment, we can grow in those ranges. When you look at the opportunities we have in ortho as an example, which is a double-digit growth opportunity for us, and we've done that for the last 5 quarters. Implants, big opportunity for us to grow in that mid- to higher end range as well. And obviously, we've underperformed to date, but we have plans in place that should really move us towards market growth, which you can call mid-single digits. Rest of the portfolio, we feel very good about it as well. But I'll comment more later this morning and give you a little bit better flavor of how does it play out for 2024 and beyond. But just short answer is, for 2024, we're not expecting that level of growth. We expect it to gradually increase over the 3 years. Thanks for the question.

Over here, let's take Erin's.

Okay. Great. Erin Wright, Morgan Stanley. This 60% or 57% of your business that's tied to those faster-growing segments, where does that go over the next 3 to 5 years? I guess I have to add up all those bar charts that you had that weren't labeled there. But -- and then I guess the second part of my question is more so a follow-up to Jeff's here on the tougher macro environment. And in patients as an environment that you're assuming does not persist in that 4% to 6% growth rate, I guess, are there other levers you can pull? And maybe you'll get into this later to get to your EPS target in the event that this does persist here.

Yes. I'll just comment on the last piece first, and then maybe, Andreas, you can comment as well on some of the faster growth areas. But as it relates to the EPS and $3 target that we're shooting for in 2026, most of it's in our control, and you're going to hear me talk about this later this morning. Most of it's in our control and things that we've already started or things that are underway. So we feel very good about our ability to get there. Obviously, there's a piece of it that's going to be tied to organic growth and is going to be impacted by macro or market challenging conditions. So I think I'll cover more in terms of the bridge, what's in our control, what's not so much in our control, but we feel very good about getting there, just given most of it is, in fact, things that we're working on today or candidly has already been completed. On the faster growth areas, we expect to grow our ortho business in the mid-teens area, both direct-to-consumer and in office. We feel very good about that. We've demonstrated we've been able to do it to date. We've been taking market share. If you look at our differentiated claims we have on fewer refinements and less revisions for SureSmile, as an example, that's getting really good traction with our customers. Just launched a new ortho simulator. I feel very good about the sales force expansion that we're doing. You heard in some of the prepared remarks, we're going to be expanding in places like Japan and Brazil. And so we feel very good that the ortho space is one where we can grow in the mid-teens range. Implants, we think, is a fast-growing area. We have not been growing to date like we would like. But again, we have plans in that area. And we feel very good about the sales force expansion we've done in the U.S. We haven't seen the results of that yet, but we've made those investments. We've done a lot more around clinical education events globally with our implants business. And so we do expect to see better performance going into next year. And then lastly, our connected technology solutions business that Max runs, I mean, this is a really great opportunity for us when we think about scanners, mills, printers, DS Core and bringing it all together. I mean for us, that should be a mid-single-digit growth area at a minimum. And so you take those 3 fast-growing areas to say, can you win and will you win, we think the answer is yes to both. And you look at other areas like essential dental, sticky business, but a really good profitable business for us. It's not going to grow at the same rate, but overall, the blended portfolio should get us into that 4% to 6% range, again, in a normal macro environment.

Yes, what I would add there, maybe more from a regional perspective, Erin, is I think in the U.S., and Jeff commented this perfectly, right? It's a highly -- it continues to remain a highly fragmented market. Some areas more than others, certainly in the U.S., continuing to drive efficiency and that story is going to be paramount. But you look at rest of world, a lot of it is still expanding access to care. And actually, our position also with essential dental, the products that get used by clinicians every day to be in the office and present every day is important. And it gives us -- it gives us a great jump point to introduce gradually in the areas, in those rest of world markets, new access to new products, new procedures that those practitioners will also introduce over time.

Let's take next question here from Elizabeth.

Elizabeth Anderson from Evercore. I just wanted to ask a follow-up question on DS Core, in particular. It seems the way that it's -- you presented it in the slides is basically you're viewing it as like an accelerant to the equipment sales in CAD/CAM and imaging and treatment centers. So I guess, one, just to understand that and how you sort of see that, like the contribution specifically of DS Core to those growth rates going forward. And then secondarily, do you sort of see it over the longer term as like an independent like revenue center? And maybe relatedly to that, is that -- is it a product that a bet like who wins in the long-term software ecosystem because you have like the practice management side, which every practice has, you have this, you have that. So can you just sort of talk about that longer-term vision of that sort of software ecosystem?

Elizabeth, let me start, and then Max, maybe you can add some color. So when we look at DS Core, we do charge a monthly subscription for the service. So anywhere from $20 a month to several hundred dollars a month depending upon the storage, the bandwidth, the features and functionality that a customer wants. And so we do charge a fee for it, but that's not going to be a meaningful part of the revenue growth for DS Core. The more important part of it is connecting DS Core with everything else that we sell and the pull-through of sales. And that's the way you should think about it. And just to give you some context about the uptake of DS Core, we've already through 9 months actually achieved our full year target for DS Core subscriptions. So we're making really good progress. We feel very good about how it's going to get us more pull-through in the future. But Max, maybe you can comment further on some of this.

Absolutely. I think I talked about DS Core being 3 things, right, connectivity for the equipment, the platform and then clinical. So let's make that specific in the case of aligners. You scan over Scan Primescan, the data goes into DS Core, you can simulate with the Outcome Simulator, which is a DS Core application, and then you can order your SureSmile case. So that's really about bringing the different pieces together. So it's kind of a rising tide that lifts all boats and making sure that we have the opportunity to monetize on all of those outlets, whether it's equipment, the platform itself or the clinical use cases such as aligners, implants, restorative, chairside and so forth.

Thank you.

That's good. Nathan?

Great. Nathan Rich from Goldman Sachs. You talked about a lot of the factors of getting back to that 4% to 6% growth being within your control. The commercial investments you're making, regular cadence of new product launches. Great gaining share of wallet with customers. I wonder if you could help frame us in terms of what those levers can contribute to getting back to that mid-single-digit growth range versus what may be dependent on the end market. And then also, how should we think about pricing over the next 3 years? As Jeff referred to, we've seen a lot of pressure on ASPs across the technology and some of the high-value areas of the market. What are you embedding in your outlook for overall pricing?

Yes, I'll start with that, and Andreas, feel free to chime in at the end. I think as it relates to pricing, over the last couple of years, we've been able to get some pretty decent price increases just because of the inflationary environment. And the price increases we passed on to customers did not fully offset what we saw in our business, but it was probably in the 3% to 4% range over the last couple of years. As we look forward, our assumption is we're going to get very minimal price increase, and it will be very selective on where we're going to be able to get it in terms of our portfolio. We know that some parts of the portfolio like intraoral scanning is probably going to be actually a price reduction as we need to be more competitive. Imaging, the same thing. So on the equipment side, obviously a bit of a pricing headwind over the next couple of years. In certain other parts of the portfolio, a slight tailwind. But overall, I almost think of it as slightly positive in terms of what we've assumed in terms of our 3-year plan. You want to comment on the other piece, Andreas?

I'd say this. So if I go back to sort of the 3 elements, right, in terms of what can support pricing, right, is I think one is the customer experience. And a big piece of that is the commercial excellence discussion and story there. And I think the renewed training, the investments we're making, upgrading capabilities, running pilots, combining some of our intraoral scannings with the orthodontic reps where we are direct, right? I think optimizing that channel mix for us is one important piece that we're looking at. And then secondly, I'd say, I'd call it, value-added services. We provide clinical education as a critical piece. Every customer I talk to makes the point that digital technology is great, but you need to be able to integrate it in your practice. And that is where we can be really helpful, and that's where we're focusing a lot of our education content is helping our customers once they have the technology that we provide to actually make it work for them in their practice. So both -- I think both of those are sort of supporting where we are today from -- also from a pricing perspective.

Yes. In terms of the macro headwinds and what we control versus what's subject to market conditions, almost half the portfolio, I would say, is probably subject to market volatility, market pressure. So what's not would be well specked a lot of the essential dental business, the acute procedures, but obviously, equipment some restorative procedures are subject to macro sensitivities in the macroeconomic environment. So about half of it, I would say, plus or minus. But even with that, we think we've got good plans, new product launches, DS Core and driving more pull-through sales, we feel very good about our long-term plan of 4% to 6%. Thank you.

John?

Great. Jon Block from Stifel. I'll pick up on the DS Core theme. I mean you mentioned the open architecture, you're looking to make workflow more flexible and efficient. But also at the end of the day, you want to drive revenue for Dentsply Sirona, right? So are there any metrics that you can point to in terms of growth from DS Core practices versus none? Are you seeing acceleration? I'm guessing it's early. You probably have to normalize for some variables. But if they are becoming more efficient and getting greater throughput, do you think we would start to see it in the numbers? Is there anything you could quantify there? And then maybe just on the DSO side, you guys have this great broad portfolio. You've clearly punched below your weight from a DSO perspective. Where are you with that initiative? What's the market share today and where you think it could go because if it's 20% DSOs in the U.S. going to 40%, I think you said over the next 5 years, that would seem to be -- could be a big driver of the 4% to 6% growth algo.

I'll start with the first part of your question on DS core. And I think the way we look at it today and the thing we're really looking at is the leading indicator, it's number of subscriptions. It's still early. We're not going to see the pull-through yet. But as customers subscribe to DS Core, that's really important. That's why I brought it up earlier in terms of my comment of we've already exceeded the number of subscriptions for this year because if we get customers that are using DS Core, we definitely are going to see the pull-through effect. But it's too early. I mean, we've just launched this recently. But we will continue to track those accounts that have DS Core to see what the growth rates are and see if we're seeing the benefit that we would expect. Do you want to comment maybe on the DSO piece?

Yes. So on DSO, maybe let me start just by reiterating that we want to be the partner of choice for these DSOs. We see that as an important segment, as a growing segment not only in the U.S. but also in other markets around the world. And I think you're right, we do not, today, capture our fair share of that opportunity. So what we're doing is, in particular, when I think about DS Core, maybe to start there and pick up where actually Max referenced this user forum and summit that we had in Zurich. We are actively partnering with customers, including DSOs, on trialing an enterprise solution or different enterprise solutions in the U.S. and internationally for DS Core. So we're co-creating, codeveloping with them. So we're partnering with them on the innovation side. We're also, from an executive team perspective, we're really engaged in all these DSO discussions now at a very different level personally. And I think that will help us to bring to bear the full portfolio, which is, I think, the appeal of Dentsply Sirona to a DSO.

Yes. If I may, I can give you 2 illustrations on the first point. So for example, we know from a DSO that's been using DS Core in Europe already. They told us that their systems take around 20 to 30 minutes to collate data for referring an implant case. That's why they started using DS Core because I said this is time wasted. There's no benefit in it. So that's an early indication for the attractiveness for the practice. And on the other hand, we just had our DS World in Las Vegas. We had a number of customers that said, "Well, I'm really going back to your imaging system now because I see how it's all coming together and the efficiency convenience I'm getting." Plus, you're probably aware that we had additional workflow integrations announced with third-party scanners. We had a number of customers who said, "Well, I always wanted to get a mill or a printer, but I already had a scanner. And now you're giving me the option to expand in that space." So that's kind of the early indications that we see on that.

Thank you.

That concludes our Q&A session. We're now going to take a 15-minute break and come back with our panels. Thank you.

Thank you.

Thank you. [Break]

Ladies and gentlemen, please welcome Vice President of Sales, North America Commercial, Lauren Seymour.

Hello, everybody. Good mid-morning. I am Lauren Seymour, and I'm the Vice President of Sales for the North American Commercial Team. And as you heard Andreas say earlier, we are intently focused on enabling customer success. And today, we want you to hear from some of our customers. So first, let's kick it off with a video from one of our key opinion leaders who participated in the event you heard Max talk about earlier, the DS Core Innovation Days, held recently in Zurich, Switzerland. [Presentation]

So now you heard from one customer, but let's hear from 2 more, who each run a thriving dental practice in the U.S. They're both clinical educators for audiences across the globe. I'm thrilled to welcome to the stage with me Dr. Shivi Gupta. She owns a practice in San Diego, California, that's focused on CAD/CAM and CBCT technology. And Dr. Meena Barsoum, who owns a practice in Chicago, Illinois. His practice is centered around CAD/CAM, implants and digital dentistry. Please join me in welcoming to the stage, Dr. Gupta and Dr. Barsoum. So thank you guys so much for taking time out of your practice to be with us here today. So let's start and let's just talk about dentistry and how it's evolving. Tell us about your practice, how you keep up with this evolution, and tell us how digitization is helping both your patients and your practice growth. So Dr. Gupta, let's start with you.

Sure. Well, I use the complete Dentsply Sirona digital workflow in my practice. I have all the Primes, Primescan, Primemill, Primeprint, as well as SpeedFire, Cone Beam imaging and now DS Core. So the beauty of this technology is that it connects seamlessly, allowing me to do all of my procedures in my practice digitally, which drives benefits for both my patients and my practice. So for my patients, I can provide a much more comfortable patient experience. And using the digital platforms, I'm able to show patients -- I'm able to educate them more in detail on their oral condition, their treatment needs, which in turn helps them say yes to treatment more readily. For my practice, I can be more productive. So I'm able to see more patients in a day, which opens the doors to more advanced treatment. So I can increase my service offerings because I know I can do all of these procedures in a more safer, more predictable manner. So going digital has really just kept me engaged and keeps me more excited in this profession. And that's something that my patients, my team can feel, and keeps me more successful.

So for patients, education, comfort. For you, practice efficiencies. Dr. Barsoum, share your thoughts.

Yes. And so for me, similar story. I mean I started my practice in 2010. I was a few months out of school, and it was a scratch start-up. So imagine in the middle of a recession, that was a pretty stressful thing to do. On top of it, I invested in CEREC right off the bat. So that was a big piece of our investment. And back then, we had a lot of time to be able to do that same-day dentistry. And today, 13, 14 years later, we've actually built our practice around that 3D technology and that digital technology. So all of our patients get to enjoy that single-visit dentistry. So for me, it's part of our core and our practice. It's in our DNA. And we always try to allow that single visit or that same-day dentistry for our patients because it's what's helped us grow and get to this point.

So Dr. Barsoum, let's talk about the growth in 3D printing and how it's impacting the dental industry and your practice in particular. What opportunities does it create for you? And then especially, how do you differentiate and complement the technologies of 3D printing and milling?

Yes, it's a great question. And I was one of the early adopters of 3D printing. We saw that chart earlier, and I was like all the way to the left when it came to 3D printing. I bought one not knowing what I could do with it. And today, I have the first Primeprint outside of Germany, and I was able to implement that in the practice. And I truly believe that 3D printing and milling are 2 very necessary pieces of technology that are complementary and not competitive in nature. There's a lot of procedures that we do that require both pieces of technology. So for example, if I'm restoring a patient with an implant, and you'll see here in this video, if I have a patient coming in and they need a scan or a missing tooth, we'll capture an intraoral scan like you see on the screen. We'll capture a cone beam image. We'll merge all that data together. And then I can virtually plan the position of that implant. Once I do that, I need my 3D printer to manufacture that surgical guide because that surgical guide can be manufactured in a very safe and effective manner through 3D printing. So once that guide is created, I can then place the implant. And fast forward a few months once that implant has been integrated, I can then use my scanner in my Primemill to manufacture the final restoration. So I still truly believe that porcelain and ceramic is the gold standard when it comes to intraoral restorations, and the Primemill is the best one at doing that in my practice. But I still need 3D printing. I still need to be able to manufacture models and splints and surgical guides. So I need both of those pieces of technology every day.

So thank you because that gives real-life examples of how you would use the 2 complementary. So thank you. Dr. Gupta, I'm going to go to you first. And we're going to switch gears and talk about DS Core, which we've heard a lot about this morning, right? We've heard a lot of presentations. We had a lot of questions from our guests. Talk about how you use DS Core in real-life examples in your practice.

Yes. So DS Core has been a huge game changer in my practice. I have a multi-doctor practice, so that means we're all sharing the technology. So DS Core has given us the ability to do a hybrid workflow, which allows us to be more productive. So what happens is one doctor can take a scan, and once that scan is completed, it's uploaded to the cloud, meaning it's uploaded to DS Core. Then they can go over, walk away from the operatory, go to a design station, download that file from DS Core and complete the design for the restoration on the design station. And then they can also send that to the milling unit directly from the design station. So that opens up the scanner for other clinicians and for more productive procedures. And also, we have the DS Core Canvas, this video you're seeing in the back. So this has really enhanced my treatment plan presentation. It streamlined a very elegant approach. So what we're able to do is we're able to take all the records for our patient, and we're able to put them in one screen. So previously, I'd have to open up multiple platforms to show patients their Cone Beam or show them their CEREC scan. Now we can do that all in one place. So we can zoom in. We can annotate directly on the canvas. So this helps patients understand their treatment needs a lot easier. And it also has increased my case acceptance by a lot. And now we have also the SureSmile Simulator. So all of my team members have -- are trained on how to capture a full mouth digital scan. So once they capture that full mouth digital scan, it goes up to the cloud, and then we can -- up to DS Core, and we can initiate the SureSmile Simulator. So this gives our patients an immediate preview of what their teeth will look like if they undergo clear aligner therapy, if they undergo SureSmile. So it's been really nice. Again, increasing my case acceptance. So also, there's so many parts to DS Core. We're also able to share our records with our specialists, with our lab partners. I can share them with radiologists, with ENT, with my oral surgeons much easier, and it's all in one place. So it prevents these referrals from getting lost in translation, which overall helps with a better patient experience. So before coming on my flight, I checked my practice management software. And I'm happy to share that my practice numbers are up by 23% from last year. And I do attribute a lot of that to DS Core.

That's awesome. Congratulations. That is awesome. And thank you for the real-life examples because I think the real-life practice examples just put it into practice for us. Dr. Barsoum?

Yes. So I use DS Core every single day. And part of what we do, I'm part of an organization called Imagen Dental Partners, and we have 84 practices. And one of the keys that we have with our practices is having this technology. So when I think about my workflow for years and what I've done, if I wanted to share a lot of the findings with a new patient, whether it's the CBCT, whether it's the photos or the intraoral scan, I would have to bring in different pieces of hardware, bring in my Primescan, load up the scan on that, open up my software and view the Cone Beam image and then go to my practice management software and show the pictures and the X-rays. And now our exam can be a lot more efficient because all of it is within that DS Core platform. So that Communication Canvas that Shivi mentioned is a huge part of how I do my new patient exams, where I can very efficiently walk a patient through a tour of their mouth and share with them all of our findings and everything that we're seeing in our recommendations.

Excellent. Thank you. Let's shift a little bit. Let's talk about patients. So what trends do you see in how your patients are wanting to access care? And what's important to them today? Let's start with you, Dr. Gupta.

Sure. So single-visit dentistry has certainly increased patient's access to care. A lot of our patients just don't have time to take off multiple days from work, or they have child care issues. So the single-visit appointment has really allowed us to treat more of our patients in a timely manner. And then we also have patients that are living in remote areas and have to travel a few hours to see a provider. So I'm in San Diego, not a remote area by any means, but I have a patient base that does travel a couple of hours to see me. And just last week, I had a patient who drove a couple of hours to see me. It was her -- her 65th birthday was approaching, and she wanted a smile makeover. So this is a really sweet and heartwarming appointment. Throughout the appointment, her 3 grown children kept calling her, checking in on her, telling her how excited they were for her final results. And throughout the whole appointment, her husband also sat in on the operatory to support her. But he was so in awe of just how smooth and efficient the entire workflow went. So really nice appointment there. And speaking of these aesthetic procedures, these cosmetic makeovers, we're seeing an uptake of these types of procedures. And while it might not seem like a big deal, we know it has a big impact on our patients' confidence, on their well-being. And as we all know, that's very important.

Absolutely. Dr. Barsoum?

Yes. And so like I mentioned, part of our group, we have a large number of practices, and Max mentioned this earlier. DS Core is building an enterprise solution for our group, and we're working on bringing that in so we can utilize the data and the metrics as well as the skills that are improved by being able to communicate more effectively. So part of our organization, for example, we only partner with dentists that have or are willing to invest in CEREC and Cone Beam technology. We believe in that because a lot of our practices that currently are within our organization have succeeded with that technology. So we want to help bring that in and make that a core of our practices. Patients want certain things, and they want things done efficiently, and they're consumers just like the rest of us. And I've always tried to build a practice in an environment that removes a lot of these barriers. And it does help us grow. And I know Shivi mentioned her practice has grown 23%. We actually grew 23.1% last year. So we're doing really well with the technology. So it is something that I'm passionate about because my goal in the way I practice is always to remove these barriers from patients. We want them to say yes to treatment. We want them to do that treatment today in a comfortable and an efficient way. So using this entire cohesive package really helps me do that.

That's awesome. All right. I got one more question. This question is going to be really near and dear to both of your hearts as educators. Talk about the importance of clinical education and how the DS Academy and our infrastructure helps you further that education with your parents and -- with your patients and your peers.

Yes. And so obviously, I'm very passionate about education. It's something I do very regularly. I spend almost 100 nights on the road teaching other dentists and clinicians how to use this technology. And when I first invested in all this equipment, I was offered education and training by some of my peers, and it really was important to how I use the equipment. And so I feel like I'm paying it forward now by helping train these other clinicians. So one of the things I really love about this is being able to be hands-on with peers and showing them how to utilize this equipment and technology best. And DS is a company that offers this clinical education with the equipment, and it's something that I really find value in. Doctors can buy technology, and they can come in and do a 2-day hands-on workshop with myself or with Shivi, learning something very basic to something very advanced like a full mouth rehab. But they also have other options. They could do full-day seminars. They could do online education. So there's a lot of ways that will meet the doctor in terms of giving them the education that they need.

Dr. Gupta?

Well, similar to Meena, as an educator myself, I do see the big impact education has on doctor success with the technology. I teach 2-day courses here at the DS Academy as well as at our Scottsdale campus on CEREC and 3D printing. So we have doctors attending from all over the country as well as all over the world. And after attending the courses, doctors go back to their practices, and they're ready to take on more bigger cases. And they're always returning to learn more advanced procedures like implants or full mouth rehabs. So really, our goal and what we do is we help doctors maximize the use of their technology and leverage their investment so that they're able to grow their practice.

So listen, thank you both so much. That was informative. It was helpful. We appreciate you taking your time to be here with us today. And I think when you think about it, to sum it all up, the digital industry -- the digital dental industry is evolving rapidly with new digital solutions. It has a significantly positive impact on your ability to expand your practice and provide better, enhanced patient care. So thank you also for sharing your thoughts about DS Core. It's been a big topic today. It helps you be more efficient with your time and your resources and ultimately helps you have better outcomes for your patients. Same-day dentistry, digital dentistry. People with busy lives, they have very little time to spare. And after all, I think we're really here to talk about patients, are we not? So thank you guys so much for being here. Coming up next, we have our Commercial Excellence Panel with several of our regional commercial leaders.

Ladies and gentlemen, please welcome Senior Vice President, Chief Human Resources Officer, Andrea Frohning.

Good morning, everyone. I'm Andrea Frohning, and I'm the Chief HR Officer here at Dentsply Sirona. I joined DS this past summer to help lead what I believe is quickly becoming one of the strongest workforces in the industry. We are proud of our talented team, and we're committed to serving our customers with innovative products and solutions. As you heard Simon say earlier today on the video, we are placing a tremendous amount of focus on building a high-performance culture here at DS. And a big part of that culture is putting customers at the center of everything we do. Today, we want you to hear from some of our commercial regional leaders, who, along with their teams, are key to fostering strong customer relationships and differentiating us in the market. I'm thrilled to have on stage with me 3 of our largest regional commercial organizations: Andrew Robinson, who leads our North American region; Gerry Campbell, who overseas Europe, Middle East and Africa; and Bruce Peatey, who is responsible for our Asia Pacific region. Andrew, Gerry, Bruce, thank you for sharing your experiences and insights. Let's get started. Okay. So in addition to that short intro that I did, I'd like for you to just give a little bit more detail around your background and then talk about maybe 1 or 2 things that you're really excited about in your region. Andrew, why don't you start?

Certainly. So thank you, and hello, everyone. My name is Andrew Robinson. And as Andrea said, I am responsible for leading the commercial organization here in North America. I've been with DS for roughly 18 months. And prior to that, I spent over 15 years in commercial leadership roles in the medical device segment. So to your question, there are really 2 areas that really excite me about what we're doing in North America. The first is around the investments that we're placing in the customer experience and to accelerate our growth. For example, we're putting a lot of extra focus and resource towards the partnerships we have with our DSO customers. And you've heard a lot about that already today. And already, we're seeing positive signs of progress with our renewed commitment to this important group. The second, which is near and dear to my heart as someone who's carried the bag myself, is our sales force. We have invested in this team over the past several quarters, in training, in new comp plans and at head count. And that has really created a high-level engagement within this organization. In fact, we're seeing such improvements in our turnover rates, which is creating a really high-level engagement. And probably the best example of the traction we made here is when you have a rep or a former employee call you up and say, hey, I want to come back. I hear about the changes that are taking place at DS and I want to be a part of that. And so when you have this engagement in our field force, it really makes a difference with our customers.

So my name is Gerry Campbell. I lead our commercial organization in EMEA. And I've been with the company for 16 years. And I'm most excited about our organizational agility. We've improved a lot in this area in the last year. And I would say that when we think about our customers, we want to be able to react quickly to customer needs and [ tunnels ] into practical solutions so that they can do better dentistry for the patients. I think with our new structure, we are more agile. We get shorter layers on it, and we're also better communicators. So what we do is get the voice of the customer to the center where it's needed more quickly. And in that way, we help our dentists then to do what they need to do every day, which is give patients better treatments. And the better we are at doing that, the more successful we'll be.

Bruce?

Yes. Bruce Peatey. I'm leading the commercial organization for Asia Pacific. I've been in Dentsply Sirona now for 1 year this month. I've got 30 years' experience in medical sales and marketing roles, but primarily in Asia Pacific. And I'm excited to be part of this management team, absolutely. But I've also -- I know you asked for 2, but I've got 3, if that's okay. I'm so excited. So we have -- number one is -- and we're calling them 3Cs. We've got compliance, China and culture. And let's start with compliance. I'm with a leadership team that is absolutely committed to the highest levels of ethics and compliance not just through words but also through actions. This year, we've raised the bar to 100%, and we're committed to ensuring we keep that standard. Then we talk about China. Maximizing growth in China was the key priority this year. We had to capitalize on the rebound that was happening post-COVID. But also, we're able to secure a winning position in the implant BBP policy. Now despite the policy-driven price reductions, we've achieved growth this year in this market. So very, very happy about that. And we've also begun the investments in those key initiatives to ensure that we're able to be successful in that market in the long term. And finally, I want to talk about culture. Is that okay? So we're talking about culture.

Near and dear to my heart. Talk about culture all you want.

I thought you wouldn't mind. So we have -- we're building on a strong leadership team in Asia Pac. And one of the critical steps we made early in the year was to promote Daisy Zhang, is the General Manager for China. Daisy is a local talent who has been with the business for a long time. She is actually our first female GM for DS China, which is a great achievement. But it was her local knowledge that was most impactful early in the year. We were navigating that the market coming out of lockdowns for COVID, and she helped us get through that turbulent time. And also though, the immediate impact of connection with customers and our strategic partners was a great influence. And I think we've also promoted several top talent in the bigger roles throughout the year, and we've brought in some new diverse talent to inject with a positive impact. And so I believe these moves are driving a high-performance culture in APAC, and it's a high potential region. So we need to have that in place.

Great. Thank you. And it's fine to talk about the third one, culture. And actually, now that you did bring it up, let's stay there just a little bit longer actually and talk a little bit more about the high-performance culture. I don't know if you'll remember this or not, but a couple of weeks ago, you made the comment if we win in the workplace, we'll win in the marketplace. And I love that. I'll probably steal that one, to be honest with you. But your examples that you talked about with Daisy and some of the other team members of upskilling the team, sharing best practices, breaking down silos, really are doing a great job to drive the commercial excellence. Just talk a little bit more about some of the additional examples there.

Yes, sure. So in my experience, you can move the needle on culture pretty quickly. Yes. And we used the example I mentioned around compliance early on. But the process of driving high performance very fairly similar. And it does start with building a strong leadership, that have -- they're geared towards growth. They're geared towards high performance and have the ability to drive change or continuous improvement. And to do that, it starts with good communication. So you need to communicate. People want to understand what's required to be high performing. And so they need to know what's in it for the organization and they need to know what's in it for the organization, and they need to know what's in it for them. So the next part then clearly is setting the expectations, whether it's 100% completion of training, whether it is forecast accuracy or achieving sales targets. You've got to make that clear. And then we call out people who may have fallen short of those expectations and see that as an opportunity to learn and improve. But more importantly, I love finding people doing the right thing. So we recognize it. We celebrate it. And if I can, I want to promote them for showing what high performance is all about. And the last point I would make, to your point, if you've got a high-performing culture, you're more likely to have high engaged people. They want to be part of a high-performing team. And then when you think about high performance plus high engagement, absolutely, you're going to win in the market.

Yes. Perfect. Thank you, Bruce. Those are great examples. I'll also add that a big driver for us in our high-performance culture has been aligning our compensation plans to drive the behaviors that we absolutely want to see in our sales reps. Andrew, what else would you add here to talk about what you're doing differently to improve commercial excellence?

Yes, yes. so I'll probably expand around the things that I kind of mentioned earlier, right? So again, around the investments we're putting in the customer experience, it's really from continuing to build out our industry-leading clinical education platform. And as we said earlier, you're going to get a chance to see a part of that when you do the DS Academy tour later today, really to the investments in the back-end infrastructure which goes to improving the customer ordering and servicing experience that's critically important. On the growth side, I'm going to go back to DSOs, and you've heard a lot about that already. But DSOs are and will continue to be an increasingly larger part of the overall dental market. And we at DS strongly believe that we're uniquely positioned to not only help DSOs grow but to help them grow efficiently with our digital technology. We've been investing in our commercial coverage of DSOs, but maybe more importantly, we've been investing in the collaboration efforts with our DSO partners to really better understand what their needs are, especially around the enterprise environment that they work. And so one of the things we're working on is the build-out of DS Core into that enterprise environment. And when I talk to some of our DSOs, the things that they're really excited about, you've heard a little bit about it earlier today, but it's really about being able to manage their fleet of equipment in real time. It's about evaluating utilization in that efficiency metrics that's really going to help them drive that efficient, profitable growth, and then performing preventive maintenance, which is easy for them to do, but really what it means is that it avoids costly downtime so that their equipment is consistently up and running and taking care of their patient flow. So when you add all this together and you think about what we can offer for DSOs, we really have the potential to bring something to the market that's truly game changing and clearly differentiating us in that DSO market. So those things are, I'd say, pretty exciting.

They are. Yes, they are. Customer success is clearly a focus of ours. Gerry, you talked earlier about the importance of a closed feedback loop and how that helps you and your teams serve your customers better by listening to their needs, of course. Go a little deeper there. Tell us a little bit more of the additional examples.

Well, I mean the big theme we're hearing today is about the move from analog to digital dentistry. And that's creating unique needs amongst our customer base. A small example of that would be our ANKYLOS product. ANKYLOS is a well-established implant system, and the customers love it due to its clinical efficacy. And that product has been around for a long time. They've got a lot of very loyal customers there. And they are now moving towards digital workflows for the efficiencies that they want to gain in their practice. So that creates new needs. So earlier this year, we had some discussions with some of our ANKYLOS loyal users. And they said, look, we're moving digital. You need to help us with this. We need some special components in order to make that digital workflow work properly. So we took that feedback back through our new organizational structure, straight back to the global business unit, R&D folks, got them together, talked about the needs and very quickly turned those needs into practical solutions. And in fact, last month, we had an Ankylos Masters Congress in London. We had a lot of top ANKYLOS users from around the world there, and we launched these 4 new components. And they were delighted by this because they've moved their very traditional yet very clinically efficient system into a digital workflow, and they were delighted by that move. And that to me is an example of how we can move more quickly in the marketplace to really meet customer needs, and digital is moving things quickly. The other part of this to think about is if you think about the practice now, today's dental practice has got lots of connected technology solutions in there, as Max said earlier, from different providers. So if you think about that complexity, our job is to make that simple for the dentist, so their life becomes easy, and they can concentrate on doing clinical work. So we think about DS Core and how that fits with what we're doing today. As you start to move towards digital technology, you have to think about how do we help our customers to do that. It's about the systems that Max discussed this morning, but it's also about our sales team. Now we've got a big sales team with lots of specialties across lots of different regions. And all of them are important in this because they've all got existing relationships with dentists. They talk to them every day about endodontics, about implantology, about aligners, about general practice, about restorative, all of these things every day. And these are the dentists who are in that 70% we talked about earlier who are moving towards digital dentistry. So capturing their needs and understanding how we can help them through this is really important. So the important part for us is we need to train our sales team to make sure that they are capable of providing the help to the dentist on the digital journey. And that's what we're working with, and we trained all of our sales people on digital regardless of their specialty. And I think you bring that core to the center of it. I had an interesting discussion with a dentist a few weeks ago about DS Core and asked the dentist, why did you choose DS Core? And what does it do for you? And she's got a multidisciplinary practice. She does implant. She does clear aligners and general practice. And the way she operated in the analog world is working in the dental practice. She does surgery during the day, and then after surgery is finished, do the planning for the next day's surgery, which meant sitting in the evening in her practice because that's where the software is, that's where the hardware is to do that work. She actually wants to be home with her family. So the big advantage of moving to DS Core is you're able to plan at home. When you can plan at home, then you get the advantage of the technology that's always on, always accessible. And she gets a good work-life balance.

Love those examples. And it's so great to hear how you're listening to the customers, equipping the sales reps to teach the dentists about digital dentistry. It is very exciting. So thank you for sharing that with us. Okay. So let's circle back to a point that we alluded to earlier about aligning strategic investments to high-growth opportunities. Bruce, why don't you kick us off? Tell us a little bit more.

Yes, yes, sure. Now we're always on the lookout for opportunities to fuel growth. But I wanted to mention an opportunity in Japan. We spoke about it earlier today with the SureSmile team. So if you think about the clear aligner market in Japan, it's significant. It's growing. And as Andreas mentioned earlier on, we've got some room to move in that market. So during a review of the SureSmile business, we actually -- it became evident fairly quickly that the Japan sales team productivity was really punching above its weight compared to the rest of the world. So that eventuated into an investment and expansion of that commercial team, as we mentioned. But it wasn't just about the investment. We also wanted to accelerate that success. And we did that by bringing in the General Manager from Iberia, Xavi Carro. So they've had some great success with SureSmile in Iberia. And so we connected Xavi with the APAC team. We brought him to Hong Kong, and he was able to share his passion, he's very passionate, his learnings and best practice, so to help us elevate the business in APAC. And I just think it's a great example of how you have a strategic investment. Combined with global collaboration, it just -- it's the best way to apply to high-growth opportunities.

Great. Good example. Thanks. As we've already talked about today, DS is committing to investing in clinical education. We talked a lot about that already. But for this last discussion point here, I'd ask each of you to share how this sets your sales teams up for success as they engage with their customers. Gerry, why don't you start?

Yes. I mean clinical education is really at the heart of what we do to help dentists look after their patients. And if you think about clinical education, there's 2 components to this. The first is very obvious. We're educating dentists to do better clinical work, and also in digital dentistry. There's a second part of this as well, which is about building communities of dentists, and building communities of dentists that can connect with each other, share ideas and develop each other through that mutual sharing of ideas and education. And recently, we had a big event in London called our PEERS event, which is our clinical education study forums. We normally have these events as individual specialties. But what we did this time was we brought all the specialties there under one roof. So with endodontics, With implantology. We had clear aligners. We had CEREC and restorative all under one roof with a 27-part curriculum. And the dentists who came to those, 350 of them, had the opportunity to then select which part they wanted to go to. And we had a great success here because we had a great collaboration not only within the disciplines, with interdisciplinary as well, which, if you think about it, is very much what's happening today's dental market because a lot of our clinics now are multidisciplinary. So we had set up a very similar function there. And the feedback we got from that event was tremendous because the opportunity for those dentists to speak together, to learn from each other, to form connections outside -- and this is all clinically led. So we have a clinical board. They decide what the curriculum is. They control it and they drive the education. And that carries on outside the different events and different locations. So they can educate, and we fund the education.

Love that. Anything else to add?

Yes. Just briefly, I see this as a great example of a key differentiator with our size and scale of the business. I think for us, APAC leverages those clinical education platforms or communities that have been built up over decades by Europe and North America. And we connect them with an impressive range of KOLs that we have in the APAC region. And so when you think about a truly global network as well as our undeniable leadership in digital dentistry, it provides a foundation of credibility for our sales team to really become that valued and trusted partner to help us succeed in the long term.

Yes. Maybe I'll just touch on our recommitment to DS World. Many of you may know DS World, and it's really the flagship education event within the digital dentistry where we bring clinicians together to learn a new -- about new procedures and technologies, to really improve workflows and patient outcomes ultimately. So not only have we continued to do what we've done in DS World, but we've now expanded it, right? And what started as one event in North America is now expanded to 4 events around the world under the DS World brand. And that has reached and created over 250 clinical education events and has touched about 7,000 participants. So these events create a halo effect not just during the event but well past the event itself. And so when you think about it, if a clinician goes to DS World, they get exposed to, say, chair-side milling or 3D printing for the very first time. They leave there very motivated and wanting to know more about how -- what they learned from a clinical side at DS World can be applied to their practice at home. This becomes a really unique selling event for our sales force because they can go in there, be a consultant for that clinician and bring a very vocal and targeted approach to that customer. And so it really is -- clinical education really supports what we do in the field as well.

Fantastic. Andrew, Gerry, Bruce, it's been great having this discussion. Thank you for sharing your expertise. It's really a joy to work with you as well. So a couple of summary points here. We can best serve our customers by focusing on their success, as we talked about. Through increasing customer intimacy and deepening our relationships with them, we can truly understand and serve their needs. DSOs, as you just talked about, are growing globally, and digital dentistry is really resonating with our customers. And finally, as a preferred partner with a strong value proposition, we can accelerate their business growth with value-added solution. I have one more to add, too, though. You had a third one that you had to add. I have to add one more, too. It's this size and scale as a differentiator that we are creating a differentiated customer experience through our winning portfolio, clinical education, infrastructure and our commitment to commercial excellence. Thanks to you guys. So thank you again for the discussion. Now let's hear about how we are driving performance through global supply chain transformation. Thanks.

Ladies and gentlemen, please welcome Senior Vice President, Chief Supply Chain Officer, Tony Johnson.

Good morning. My name is Tony Johnson, and I'm the Chief Supply Chain Officer here at Dentsply Sirona. I'm a 30-plus year supply chain veteran in the medtech industry and have been with DS for just under 1 year. I spent the first 25 years of my career with Baxter health care, in manufacturing and supply chain, both in North America as well as in Europe, Middle East and Africa. I then spent roughly 6 years with CR Bard and BD in global supply chain leadership roles. I have led significant integrations, supply -- synergy strategies and network optimizations. This includes major product transfers, site closures and portfolio optimization. When Simon first spoke to me regarding this role, I was immediately excited about the opportunity to drive organizational alignment, which Simon described as a cornerstone at DS. As an engineer, I was excited about the technology at DS. And I knew I could make a difference in supply chain by bringing my team together, focusing on optimizing the network and driving better collaboration with our commercial partners. Today, I will introduce you to how we are enhancing performance through global supply chain transformation. Let's start off with a quick overview of a few key areas of focus in our global supply chain, or as we say, GSC, to enhance Dentsply Sirona's performance. When we began the global supply chain transformation program, we saw obvious opportunities to optimize our footprint. We are partnering with our GBUs and commercial teams to make meaningful network changes. We are optimizing our network to operate more efficiently and profitably. Our initial focus has been on near-term opportunities that have the potential to meaningfully contribute to our $3 adjusted EPS target in 2026. We are also conducting a strategic network analysis of both our manufacturing and distribution footprints to build a mid- to long-term network road map. We believe we can further improve our profitability and reduce inventory while also enhancing our overall customer experience. Our transformation work also revealed opportunities to revamp our global supply chain business processes. We know we can create efficiencies and reduce costs through developing standardized processes in, for example, sales and operations planning and procurement. We have also increased our focus on manufacturing, engineering and operational excellence to drive further efficiencies and cost savings across the network. Finally, we are building a partnership across GSC, quality assurance and regulatory affairs and R&D. These 3 organizations together play critical roles in ensuring that our products currently on the market, those that are in our new product development process, meet our customer needs and expectations, improve their workflows and drive values for both our customers and our shareholders. Emily Miner, our new Chief Quality Officer, and I have already built a strong partnership. And we are closely aligned on these goals. Both of our teams would tell you they are working together in a new way and partnering very closely with our R&D team. Now let's take a moment to walk through a few examples of how GSC is delivering on the 5 key strategic objectives Simon reviewed earlier. On achieving our margin and growth commitments, we have worked our back order level down to less than 1 day of sales. We are fulfilling our make-to-order products within our targeted lead times. And we are on target to achieve our cost savings goals for 2023. To support enhance and sustain profitability, we are partnering closely with the SKU optimization team to help shape both our portfolio and our operations network. We believe this initiative will provide a better suite of offerings to our customers, reduce the burden of sustaining engineering and lead to increased operational efficiencies. In fact, we've already announced the closure of 3 manufacturing sites and consolidated 2 distribution centers into one. We have just started this effort, and we see the project yielding continued benefits for our customers and our processes moving forward. We are working to accelerate enterprise digitalization by dedicating subject matter experts to support the ERP modernization program. And we've deployed Kinaxis Demand Planning solutions, an agile supply chain management tool, to improve demand planning. To support our strategy to win in aligners, we've executed a number of initiatives to both in-source and outsource aligners -- the aligner supply chain to reduce costs. Let me be clear on this. Where we have core manufacturing technology that delivers higher quality and lower cost, we will in-source. Where we don't have a technology advantage and can leverage third-party capabilities, we will outsource. To help build a high-performance culture, we have aligned to the DS operating model with our plants organized by GBU. This has already created better decision-making for our teams. We have built a fully dedicated global supply chain transformation team, and I'll talk more about this team in the coming slides. Creating a high-performance culture requires focusing on improving employee engagement across the company, and our focus on GSC has already begun to pay dividends for us. As one example, our total recordable incident rate has dropped by over 50% in 2023 versus 2022, which was already a record-low year. And these are just a few examples of GSC's initiatives to advance DS's strategic objectives. Next, I would like to outline our current manufacturing and distribution networks. Our manufacturing network shown here originated largely as a result of a series of acquisitions with limited integration and did not benefit from a strategic design process geared toward efficient and cost-effective production and distribution. We started this year with 29 manufacturing locations in 14 countries with a heavy bias in high-cost locations like the United States and Europe. Importantly, there's a tremendous opportunity in our manufacturing network to further improve our scale. We also started the year with 73 distribution sites in 30 countries, which vary in size. They range from our primary hub DCs in the U.S. and Europe to very small office-based locations primarily focused on implants to meet customer delivery requirements. Many of these DCs are operated by third-party providers. We see clear opportunities to simplify and optimize our distribution network. For example, inventory has been locally managed instead of globally planned. A more traditional hub-and-spoke model can drive better inventory management and efficiency. We have a global presence in both manufacturing and distribution with a clear opportunity to transform our network through consolidations and reduce cost. As we think about our network, we are focused on simplification and improving product flows. We want to reduce our product lead times and improve our environmental footprint. These will lead to reductions in both total delivered cost as well as our inventory levels. When we kicked off the global supply chain transformation project, we identified very clear nonnegotiables that we laid out and focus on every day. First, we must always ensure the safety of our associates. Secondly, we will not compromise on the quality of our products. Third, our internal changes should be completely invisible to our customers and not create product supply issues. And we will incorporate regulatory and legal compliance in each and everything we do. Now of course, we want to rapidly increase efficiency and drive cost out of our network, but we will do this in a structured and strategic way and not risk these nonnegotiables. We launched our transformation initiative by forming a dedicated supply chain transformation team, as I mentioned earlier. This team includes manufacturing, human resources, quality, finance and engineering experts from across Dentsply Sirona. This team focuses on developing different scenarios, evaluating those scenarios with financial models, driving decisions and then project execution. As we've done with aligners, we will continue to evaluate both insourcing and outsourcing opportunities based on our core competencies and our cost positions. When we are insourcing products, we are looking at both our labor cost and our technology as well as leveraging our scale and overhead. We are also working to optimize our freight and distribution network to improve cost and efficiency. Our distribution network does slightly lag our manufacturing network initiatives as we want to ensure we are clearly focused on time line expectations from order to delivery based on the product, the market and our customer needs. Since launching our transformation team about 8 months ago, we have made meaningful progress. As I mentioned a few minutes ago, we have announced the closure of 3 manufacturing sites. Two of those manufacturing sites have already ceased production, and the third is expected to close in Q4 of 2024. Again, we have already completed the closure of one distribution center this year. While you won't see this in the slide, we have also changed transportation flows to several countries in Asia Pacific to reduce our transportation cost and our lead times by also reducing our carbon footprint. GSC expects to deliver at least $30 million of margin expansion through our transformation efforts. We are in the execution phase of multiple projects that will deliver approximately half of this target in full year 2025. We have also identified additional network opportunities that we believe will enable us to deliver the full value in 2026. Importantly, our network optimization projects are designed to deliver near-term value and efficiency across our organization. Now let's shift our focus as to mid- to long-term opportunities in the GSC strategic road map. We believe we can unlock additional value in our manufacturing and distribution and network, allowing us to continue to reduce cost and inventory levels while also shortening our product lead times. In manufacturing, we will continue to partner closely with the SKU optimization team. We believe we can further reduce our footprint by 15% to 25%, allowing us to continue to reduce costs. We are also working with our Asia Pacific team to develop our China for China strategy. Given local requirements, we know we can increase our market access by producing more product in China to service the China market. We also see an opportunity to increase our manufacturing capacity in more cost-effective markets to further improve our cost position. On the distribution side, we plan our network based on geographic market requirements. As I said, we expect these to vary by market, by customer and by product category. We plan to optimize our hub-and-spoke distribution model, which is the primary and secondary or market-specific DCs. This will allow us to improve our inventory efficiency, reduce overhead and reduce cost of our overall transportation. Finally, the implementation of our new ERP system will unlock significant efficiencies in our DCs and will facilitate additional automation. In summary, we have short-, mid- and long-term opportunities to reduce the total delivered cost of our products. Now let's transition from our network opportunities to discuss how we can drive efficiencies through our processes and the way we work together as an organization. Our supply chain planning and procurement fronts, we are largely recovered from COVID-related supply constraints, and we have reached our targets for back order and lead times for make-to-order products. We are still seeing some extended lead times for raw materials, but importantly, they are no longer causing material shortages in our supply. We are focused on improving our overall forecast accuracy, standardizing our sales and operations planning processes globally, and we've implemented a standardized software to plan. These actions are and will continue to increase our forecast accuracy with better data and will lead to improved inventory management. I'm excited to say we expect to reduce our days of inventory on hand by 15 days through 2026. Thanks to our improved material supply, we have shifted our efforts back to proactive procurement focused on driving direct material savings strategies through our category management process. We will continue to work to consolidate suppliers where possible and improve scale and dual source where it makes sense. We've also identified and are executing indirect spending initiatives such as reducing consumption as well as bundling spend to get better pricing. On the engineering and operational excellence front, we have moved to a centralized organization model. This allows us to drive standardized processes and best practice sharing. One of the areas that surprised me the most when I joined DS was the automated digital workflows we have and the way we use those to manufacture our custom products such as aligners and the Atlantis custom abutments. We will continue to drive digital automation in these spaces and others, and we're also making physical manufacturing automation investments. The plan is for each site to work with the GBUs they support to develop a multiyear savings pipeline. By building a sustainable pipeline of savings projects, we will foster a culture of continuous improvement across the organization and create opportunities to further expand margin. Finally, we remain committed to our BEYOND ESG strategy. We have active projects that should not only reduce cost but also help us do our part to improve the environment and meet our ESG commitments. The good news is these initiatives make good business sense in addition to being the right thing to do. Overall, disciplined execution through standardized processes and tools, automation and relentless focus will enable us to reduce costs in our network. As Simon mentioned earlier today, while we have a renewed focus on quality across our organization, this is not to say that quality is important or that we are investing in quality. It's about strengthening our culture of quality across the organization. This starts with how we design our products and continues with the way we manufacture and release products to the market. And finally, our post-market surveillance. All of these activities are structured to deliver a robust closed-loop quality system. We are building a stronger quality culture through the way we manage the business and the way we as leaders work together. We are shifting away from a siloed functional mindset to one that is focused on enterprise goals. In 2024, we will transform from functional KPIs to jointly defined and owned KPIs. Through cross-functional collaboration across supply chain, quality and R&D, we are better supporting the enterprise, enhancing our focus on supplier quality and creating capacity and expanding capabilities through training and external support. We are embedding manufacturing and quality earlier in our new product development processes to ensure that our validation and registration strategies along with design for manufacturability and serviceability are understood throughout the innovation process. This will ultimately improve our time to market for new products. These 3 critical functions must deliver as one team. To wrap things up here, let me reinforce a few key points. We are delivering tangible near-term results through our early transformation activities. As I said earlier, GSC expects to meaningfully contribute to our $3 adjusted EPS target. We have already begun to execute on a number of initiatives and have identified others to deliver on that plan. We are developing further cost reductions through additional manufacturing and distribution footprint opportunities. We are unlocking organizational capacity and efficiency through GSC business practice harmonization and ERP modernization. We are partnering cross-functionally to accelerate growth and drive results. To sum it all up, we will relentlessly focus on positioning our supply chain network and our processes to make us a competitive advantage for Dentsply Sirona. I'm extremely excited about the progress we have made to date and the opportunities ahead of us. Thank you for your time, and enjoy the rest of the day.

Ladies and gentlemen, please welcome Executive Vice President and Chief Financial Officer, Glenn Coleman.

Good morning. I think I know most of you, but for those I don't, my name is Glenn Coleman, and I'm Chief Financial Officer for Dentsply Sirona. I've been with the company for just over a year and bring over 30 years of operational and financial experience, most of it in global health care and medtech companies, including 5 years as a public company CFO. My experience includes successfully completing large-scale transformations, including portfolio optimization, SKU rationalization, organizational restructuring and ERP implementations. Let me start with some key messages you'll hear this morning and share why we're excited about the potential to drive significant financial improvement over the next 3 years to create meaningful shareholder value, which is the main reason I joined the company. There are 4 key messages I want you to take away today. First, we have a clear strategy to deliver above-market sales growth and expect to grow 4% to 6% over the intermediate and long term once we see a return to normal patient traffic and economic conditions. This will be driven by innovation and disciplined execution. Second, we're confident in the path to our target of $3 adjusted EPS by 2026 with transformation actions already taken in 2023 or well underway. The majority of the adjusted EPS improvements are within our control despite the short-term macroeconomic challenges. Third, we're targeting double-digit EPS growth in 2024, which we view as an inflection year. And fourth, we expect to show a meaningful increase in our free cash flow performance over the 3-year period and plan to return about 75% to our shareholders through a combination of increased share buybacks and higher dividends, which will likely increase consistent with our earnings growth. Today, we announced that our Board of Directors has authorized an additional $1 billion share repurchase, which brings our total authorized amount, including previously approved plans, to $1.6 billion. As we announced on our third quarter earnings call, we expect to repurchase approximately $150 million in shares before the end of 2023. We plan to execute our capital deployment strategy while maintaining a low leverage ratio with the goal of keeping our investment-grade credit rating. All that said, we're building a strong foundation to deliver outperformance over the 3-year period. We shared at the beginning of the year that 2023 was going to be a year of transition as we had a lot of work to do to stabilize and transform the company. In the first half of the year, we outperformed expectations while executing on our transformation initiatives. However, the second half of the year has been challenging so far in the face of a very tough market environment. Assuming that these headwinds remain stable and don't worsen further, we believe that 2024 will be an inflection point for us. We expect to deliver double-digit adjusted EPS growth in 2024 with at least 100 basis points of EBITDA margin expansion. This builds on our work this year, most notably successful execution of the restructuring plan, which has enabled reinvestment in the commercial organization in areas like DSOs, implants and aligners that should yield better performance. On this next slide, let's walk through the current state of the organization and where we're going over the next 3 years. With many of the transformation actions currently planned or underway, we expect these initiatives will come together to drive significant P&L benefits. It starts with organizational efficiency initiatives. We have substantially completed the restructuring efforts and are on track to deliver $200 million of annualized savings once these efforts are complete by mid-2024. The last major component of the head count plan was in Germany, and we've now received the necessary approvals to proceed with our plan. We've also completed a significant amount of work on SKU optimization and expect a meaningful reduction largely in our endodontics and restorative portfolios. This will help simplify our network and yield several benefits, including reduction in the inventory obsolescence, lower sustaining engineering costs, improving working capital with lower inventory requirements and a reduction in our facility footprint. We expect this will generate $30 million in gross margin improvement once these plans are completed. We are just at the start of our facility optimization plan and believe we have a much larger opportunity in this area. As Tony mentioned earlier, we expect an additional reduction of 15% to 25% in our manufacturing footprint, which, combined with all other global supply chain transformation efforts, will generate at least $30 million of savings by 2026. We're also making a significant investment of over $135 million to move to a common ERP platform. Today, we have 14 different ERP systems and expect to consolidate into one common platform for quote to cash, distribution and logistics and procure to pay by the end of 2026. Lastly, we're focusing on more consistent and effective new product launches and have significantly improved the rigor and focus of the R&D investments. So to summarize, even with a portion of the savings reinvested in the business, we do expect this will lead to 500 basis points of EBITDA margin expansion by 2026 with at least 100 basis points of EBITDA margin expansion each year. Clearly, you should see, we're going to be a very different company going forward. This is transformative. Let's now discuss our ERP project in a bit more detail. I think we all know, large-scale ERP projects are challenging, require significant investment and run for multiple years. I've successfully done this before in other organizations. And with the deeply tenured individuals on the team, augmented by a leading third-party integration firm, we are confident this can be executed with limited disruption. And there are a few other factors that should also help mitigate the risk. As an example, today, over 90% of our revenues go through 3 of the 14 platforms, one of which was selected for our future state. So it's a well-known technology to us with over 40% of the revenue flowing through this system today. We've already made good progress over the past 6 months and recently completed the design template that we will use in all locations and functions. With the complexities of this large-scale project, we intend to manage risk with a phased rollout approach while also minimizing customization with the country-by-country implementations. We believe the investment and effort of moving to a common ERP platform will yield significant benefit. To give you a few examples, we will ultimately see an improved customer experience, including one view of the customer across all product families and easier ability to bundle equipment and consumables into one commercial offering, better real-time visibility to global KPIs in areas such as sales, orders and supply chain management and standardized data to enhance decision-making. We'll also increase operational efficiency with global supply and operations tools and leverage talent to support multiple locations. The controls and compliance environment will be enhanced by additional automated workflows, like real-time expense approvals and CapEx approvals, an easier M&A integration that includes an integration playbook with standardized processes, controls and data standards. Ultimately, in harmony with other efforts around innovation and discipline, our common ERP platform will provide a foundation for long-term profitable growth. Let me move to our 3-year financial targets. Our long-term financial targets include an organic growth CAGR in the 4% to 6% range in a normal macroeconomic environment, which is 1% higher than our total addressable market growth. And as I said, we expect to deliver over 500 basis points of EBITDA margin improvement, with about 1/3 coming from gross margin improvement and 2/3 from SG&A efficiencies. We plan to deliver growth and profitability while still investing at the same rate, if not higher, in areas such as R&D and the commercial organization. We're also assuming a tax rate of 21%, which is higher than the current rate as certain benefits expire in the next several years. Having said that, we're working on creating a more tax-efficient structure that's aligned with our long-term manufacturing strategy. The net result in 2026 is targeted adjusted EPS of $3 per share and a free cash flow conversion of 100%. The adjusted EPS improvement will represent more than a 60% increase over the next 3 years. So let's unpack each of these financial targets in more detail, starting with organic growth. We expect to improve our trajectory through innovation, investment and execution with deliberate focus on the faster-growing areas in dental. You heard earlier this morning from the team about the key areas of opportunity over the next several years, and I'll touch on a few here. We expect the largest contributor to be our clear aligners business, both direct-to-consumer and in office brands. This business has delivered consistent double-digit growth over each of the past 5 quarters. The aligners aesthetics market is the fastest-growing area in dentistry, and we're well positioned to grow faster than the market with our differentiated claims, geographic expansion, a new ortho simulator and favorable competitive dynamics in the direct-to-consumer space. Implants and prosthetics is another strategic focus and one we've underperformed over the past few years. We've seen improved performance in 2023, especially in China, where we have seen a significant increase in volumes as part of volume-based procurement. We expect to see improvements in our U.S. implants performance in 2024 based on the investments we made earlier this year in clinical education and our sales force footprint and competency. We have a strong portfolio, and better execution will leverage our highly competitive offerings across our global markets. We've targeted to grow implants in line with the overall market growth, which would be a significant improvement from our recent trends. We also expect to see strong growth in connected technology solutions across our prime family of products, including intraoral scanners, mills and 3D printers, which are all conducted through DS Core. Moving from sales to profitability. We see multiple drivers of EBITDA margin expansion over the next 3 years. Organic growth should lead to volume leverage. Even if the current market conditions continue, the majority of the margin expansion shown here is driven by our transformation initiatives, all of which are in process or substantially complete and in our control. We've assumed 3% inflation headwind, partially offset by limited price increases. Let me move to the next slide and walk through how this all translates to achieving our adjusted EPS target. We put a stake in the ground to deliver a target of $3 of adjusted EPS in 2026. We estimate about $0.40 to $0.45 coming from organic growth and leverage. This assumes about 4% organic growth over the period with a 25% adjusted EBITDA margin drop through to the bottom line. We expect a gradual increase in the organic growth rate over the 3-year period. By mid-2024, we expect restructuring to contribute $200 million in annualized savings with about $100 million incremental over 2023. We plan to reinvest about half of these incremental savings in '24 to support growth investments and other key initiatives, so the full impact of the savings run rate won't drop through next year. That said, these investments should fund themselves over the 3-year period, netting us about $0.30 of adjusted EPS benefit by 2026. You heard from Tony earlier about the supply chain transformation we are undertaking. When you combine network and SKU optimization together, we should see about $0.20 of adjusted EPS improvement from global operations transformation. We're now moving to the next phase of SKU reduction in our endo and resto businesses. And savings have been quantified for these 2 areas now that we've started our initial pilot and our revenue migration plans. We've yet to review other areas of the portfolio for further SKU reduction, and these could provide upside to our estimates. We're being very thoughtful about our approach and impact to customers as we execute on this initiative. We've also focused on improving the profitability of our direct-to-consumer Byte business through leverage expected through the P&L with consistent double-digit growth driven by higher customer conversion rates, lower customer acquisition costs and reduced financing expenses. This should lead to margin improvement in the Byte business and generate about $0.05 of incremental adjusted EPS contribution through 2026. Once implemented, the common ERP platform is expected to drive $0.05 of adjusted EPS benefit in '26 and should yield further cost savings over the long term, notably in back-office functions. And finally, we estimate $0.15 of adjusted EPS from several items, including share repurchases, and the recently completed net investment hedging in our foreign operations enabled us to capitalize on favorable interest rate differentials between the U.S. and European rates. We expect to see about $0.07 of adjusted EPS improvement in 2024 for these items. The remainder of the incremental benefit should be realized beyond 2024 even with the expectation of a higher tax rate from current levels. Similar to EBITDA, most of the adjusted EPS improvement comes from our transformation initiatives and, again, is in our control. Shifting to free cash flow. 2023 is an abnormally low year due to nonrecurring cash outlays to support our transformation activities. A key focus for us over the next 3 years we'll be enhancing and improving performance and driving towards a 100% free cash flow conversion by 2026. This should be achieved through better operational performance and improved profitability as well as more efficient inventory management. We see opportunities to reduce inventory levels by about 15 days through the initiatives discussed earlier, which will improve cash flow by approximately $75 million. These anticipated improvements should enable a more meaningful return of cash to shareholders through dividends and share repurchases while also reducing our debt levels and keeping our net debt-to-EBITDA leverage at or below 2.5x over the long term. Our capital allocation priorities are clear. Our highest priority is reinvesting for growth and efficiency in our business, including our commercial organization, clinical education, R&D and ERP systems. We also expect to see a shift of more CapEx being spent in growth investments, such as the potential facility expansions for new product launches for our Wellspect business versus sustaining engineering. And that's all enabled by the SKU rationalization work. Today, we have a healthy balance sheet with access to significant liquidity and the ability to tap up to $700 million through commercial paper or our credit facility. We also have 80% of our debt locked in at fixed interest rates of 2%, which helps mitigate risk and exposure to a higher interest rate environment. We intend to opportunistically pursue strategic tuck-in acquisitions that enhance our growth or positioning while minimizing distraction with our transformation work. And again, we plan to return our remaining free cash flow to shareholders through higher share repurchases and dividends. While we have a lot of work to do on integrating previous acquisitions and advancing our transformation efforts, we don't want to lose sight of creating more shareholder value with accretive tuck-in acquisitions. We have an M&A framework with 3 criteria we consider in evaluating deals: financial, strategic and feasibility fit. Starting with financial fit. We look for acquisitions that are accretive to growth and margins by no later than year 2. A key metric we evaluate is return on invested capital, and we expect to achieve our hurdle rate by year 4. Acquisitions also play an important role in our strategy. In many cases, a transaction can address a customer or a market need, bring new technology to market or further strengthen the portfolio while also affording us the opportunity to further develop acquired technology. Lastly, we look to organizational fit, including adding new capabilities to the organization. We consider footprint location and ability to generate synergies as well as lower cost and tax benefits. We also evaluate the competitive advantages the transaction would bring given our global scale and our ability to leverage our technology across our entire network. I do expect that M&A will become a larger portion of our strategy in 2025 and beyond and further drive shareholder value for the long term. We have a strong balance sheet, ample liquidity and a management team with deep experience in acquiring and integrating businesses. And as I've said, we see capital deployment and return to shareholders as a way to drive shareholder value. Based upon our confidence in our 3-year plan, we expect to increase our return of cash to shareholders over the period linked to our business and financial performance. While the amounts may vary year-to-year, we expect to return about 75% of free cash flow to shareholders through 2026. This is supported with the new $1 billion increase to our share repurchase program and should add about $0.10 to $0.15 of adjusted EPS benefit through 2026. Wrapping up, let me summarize our perspective as to how we drive meaningful shareholder value over the next several years. First, we're well positioned in an attractive dental industry with the broadest portfolio that's more than 45% digitally connected. This positions us well with favorable demographics, practice consolidation and improved access to care. We have leading brands and strategic objectives that focus on high-growth areas such as aligners and implants in our digitalization strategy enabled by DS Core. Second, we have a clear and actionable plan to accelerate profitable growth, which includes a focused R&D strategy that delivers a regular cadence of new products and solutions for our customers. This, coupled with our new operating model, will drive better accountability and execution. We've already actioned upon or are well underway with the transformative initiatives, which are expected to drive meaningful margin expansion over the near and long term. And lastly, we remain disciplined with our capital allocation strategy while maintaining a healthy balance sheet and generating strong cash flows. This should lead to a 100% free cash flow conversion. In closing, I want to reiterate our confidence in our plans to achieve the target of $3 adjusted EPS by 2026. Simon mentioned earlier that we are a show-me story, and that's what we intend to do. We have the right team in place and look forward to driving significant shareholder value over the next several years. And with that, we're now going to move to our final Q&A panel.

Ladies and gentlemen, please welcome back Andrea Daley, Glenn Coleman, Andreas Frank and Tony Johnson.

We're now going to move to our second Q&A panel. We have about 20 minutes for this Q&A panel as well. [Operator Instructions] And with that, let's go ahead and open up. Let's go here first to Jason.

Jason Bednar with Piper Sandler. So Glenn, I'll start with you here. So double-digit EPS growth in 2024, the characterization is a little bit different than what we've heard in the past. I think in the past, it was meaningful EPS growth. So maybe we just have a different definition of meaningful. But I think it was higher than just double digits. So fully understanding the macro dynamics here are a little bit different today than when you've characterized it as meaningful in the past, maybe help us think through your confidence when we pair that double-digit earnings growth with the hockey stick that's out there now for '25 and '26 to get the $3? And then also just where is the sensitivity at in your mind if -- not to say we don't get to 4%, but what if the macro worsens further? What if we're down to inorganic growth or flat or plus 2? Just how you see that -- like that bar in the chart changing with each of those different elements.

Yes. Thanks for the question. I think first and foremost, we're providing some color on 2024 3 months in advance of when we would typically be talking about 2024 and in the face of a lot of uncertainty from a market perspective. But we do believe, right now, even with some of these market challenges that we should see double-digit growth in 2024. Why do we say that? Well, the restructuring savings, even with some being reinvested next year, are going to drive meaningful EBITDA margin expansion for us and drive EPS growth year-over-year. The net investment hedging, I mentioned as well, $0.07 along with the share repurchases, all going to help EPS in 2024. So even with the assumption that the macro environment doesn't improve from where we are today, we're committing to double-digit EPS growth in 2024. Obviously, if the macro environment does improve, it could result in a higher number than that. And if it goes in the wrong direction, it would create some challenges for us. But on the whole, we made the comments because assuming a consistent macro environment from where we are today, all the actions we've already taken, we have a path to double-digit growth on EPS in 2024.

Okay. That's helpful. And then as a follow-up, just taking -- trying to read between the lines and some of your M&A comments, it doesn't sound like anything that you're planning to do near term. Again, M&A can come at any time, but you're talking more about 2025 than 2024. So one is that, is that correct? Would you say no to a deal that presented itself because we are in a period where valuations are pretty attractive right now? And then the part B to the question would be, is there a specific category that you see within your business that fits within all those parameters? I mean implants are probably one that's going to come to mind for a lot of people here. But is there something else in their category that checks the box on margin accretive, growth accretive, clearing that ROIC hurdle like you said?

Yes. So I'll comment maybe on the M&A framework for '24, '25, '26. Maybe you can comment a little bit on some of the areas of the portfolio. The way to think about it is we may do some small tuck-in acquisitions in 2024. Anything that requires any level of integration is off the table. We have a lot of work to do to finish the SKU rationalization work, the facility optimization piece, ERP transformation. We are not going to lose focus of the priorities right now. And so it doesn't mean we will not do anything, but anything we do would be small and require essentially no integration into the company. As we look beyond 2024, clearly, there's going to be some opportunities that will present themselves, and we're in a great position when you look at our balance sheet. We have a low leverage ratio today, generate strong cash flows. And so it presents an opportunity for us to drive shareholder value by doing accretive deals. And I would tell you, the management team we have today has deep experience in doing acquisitions, integration. So I feel really good about our ability to execute on those successfully when we actually move forward with those. But don't expect anything large in 2024. And down the road, 2025 and 2026, we'll see how that plays out. But it is going to be a cornerstone of our strategy over the long term. Maybe you want to comment into some areas of the portfolio or...

Yes. A couple of thoughts. I think number one, we -- obviously from a business perspective, we continue to keep a very active funnel, right? Both across the businesses, in particular, aligners, implants, high-growth areas in technology solutions, we always monitor what is happening. So we continue to be active sort of from our own funnel development and also across regions. I think the areas that stand out to me are in the near-term market access. And I think that's what you talked about, where do we -- where can we get distribution access? Where can we work -- get closer to the customer? That's number one. Number two is capability, right? And I'm going back to some of the comments I made around transition to cloud technology, investments in AI capability, right? I mean I think if there's focused capabilities that we can acquire, we've partnered with third parties, but if there are things that we can do to accelerate our journey there, I think that will be areas that we will be looking at.

Yes. Thank you for your question.

Let's take the question in the back, and then we'll come back here to Brandon.

Yes. It's Mike Petusky, Barrington. I guess I'd love an update, and I know you guys just talked a little bit about this a week or 2 ago. But on Germany, it's obviously a key market, obviously concerns there. And second part to the question, just what do you do from a sales tactic standpoint? Or just how do you help, particularly on larger capital equipment purchases, dental customers in markets like that where there are macro concerns?

Thanks for your question. Just to frame up Germany, for us, it's about 10% of our consolidated sales. So it is a large market, our second largest market behind the U.S. If you read a lot of the external information around Germany, obviously, the recession seems to be extending for a longer period of time, a bit deeper than people initially thought. We do a pretty extensive survey globally with our customers on a quarterly basis. And the sentiment in Germany last quarter in Q2 was much worse than the previous quarter. And so we called it out on our earnings call saying we expect to see some headwinds coming from Germany. And they ended up playing out. I don't think it's gotten a lot worse since the second quarter survey, but it certainly has not gotten any better. And just to put it into perspective, this year, we've seen double-digit declines in Germany year-over-year. And that's hard to overcome when it's 10% of your consolidated sales. What we're doing for our customers is trying to find creative ways to help them with financing. We can leverage our strong balance sheet to help them if they need financing as an example. That may not be the only reason why they're not moving forward with a purchase, though, right? They're just being more concerned with overall spend, and interest rates haven't helped. But the financing piece is the one area that I would highlight. I don't know if you have anything else you would add, Andreas?

The one add that I would make also, just going back to the survey, actually, Germany stands out as one of the markets where staffing is still a concern. And so that discussion around efficiency and how can I use sort of my existing staff or leverage technology to actually be more efficient, actually resonates in that market particularly. And we've seen that historically. I think there's definitely some near-term headwinds on the investment, but I think there's also opportunity in that because I think there's a number of our technologies that can actually help with that particular concern that we see in Germany.

Yes. It's a great point. I think Germany was #1 in terms of staffing issues across our universe of customer survey. Thank you for the question.

Let's come here to Brandon.

Brandon Vazquez from William Blair. First on -- the bridges were very helpful, and I noticed one of the main drivers in both sales and profitability was the ortho business in terms of SureSmile and Byte. Maybe you can talk a little bit on the bottom line. Because I think a lot of us have done surveys. We've talked to docs, and you have a great product there, right? So we can see how sales can come through. How do you get that business more profitable? Is it just a matter of scale? Or are there other initiatives you guys are working on? And at what point does it flip within this LRP to be kind of a profit driver for you?

Yes. As I mentioned on the bridge, we quantified about $0.05 of the EPS improvement coming from ortho, which is really Byte. Byte is where we see the opportunity to make meaningful margin expansion. And really comes down to obviously growing the top line and getting leverage but increasing our customer conversion rate. So what that means is you send an impression kit to a customer, you get it back and actually convert it to a sale. That percent going up is a big deal from a revenue perspective but also a profitability perspective because it drives cost of customer acquisition way down. So that's one thing. And we've seen a really nice improvement on our customer conversion rates, which Andreas oversees, over the last 3 to 4 quarters, and our Byte business is actually profitable. So I know there's questions about the profitability of the business given another competitor in the space is having challenges. Our business is profitable. But we see more opportunity. We've already moved the manufacturing to a common plant with SureSmile and Byte, so that's already completed. But for us, it's really about increasing those customer conversion rates. And we feel very confident. Just given some of the competitive dynamics, we may actually see that go up for us.

A couple of thoughts just to add to that. I think I commented on sort of how that business has evolved since the acquisition. There's obviously a lot changed in sort of how you can advertise. So we have learned how to target specifically around customer segments. So that then translates into conversion rates. There's also -- I talked about the treatment planning that we're doing for both SureSmile and Byte in Costa Rica. I think there's opportunity there to think about sort of how do we think about those platforms going forward, which also plays into the profitability of the combined platform.

Okay. Maybe as a quick follow-up and a question of clarification on that. You're saying SureSmile and Byte are profitable. Are they margin accretive to the company at this point? And if not, when do they -- does it get to that in the LRP? And when does it get there?

Yes. Short answer is no, they are dilutive to our overall corporate average, and no, they do not get back to the full corporate average over the 3-year period. Thank you.

Let's come here to the back with Allen.

Allen Lutz, BofA. Glenn, it seems like you have a pretty good line of sight into some of the direct costs and OpEx savings that you have. But on the organic revenue growth, you mentioned, I think, 4 or 5 different drivers of organic growth through 2026, new products, above-market growth for aligners, implants returning to growth and DS Core. I guess is there any way to rank-order how you feel about the line of sight into the growth opportunities there?

Yes. I think we feel very good about what we can control in these different areas of growth. Aligners, I feel very good in a normal market situation, we're going to actually take market share from everything that I see across the globe, including the additional investments we're making in the ortho business in places like Japan and Brazil, as an example. What happens with the macro environment? I can't predict, right? And that could actually result in a slowdown from what we've seen over the last 5 quarters where we drove double-digit growth. But I put that one along with implants as kind of the biggest drivers. Keep in mind, that's still a relatively small proportion of our business. But when you look at the growth profiles of those 2 areas of our business, clearly, it's going to help us to get to the 4% to 6%. Essential dental is going to probably grow in that low single-digit range. It doesn't have the same level of sensitivity to the macro environment. And then that really leaves our connected technology solutions platform. And we feel very good about what we're doing. You heard a lot about DS Core. We think there's going to be a really nice pull-through effect down the road with Primeprint, Primescan. And so on the whole, those are the areas that are going to drive us towards the 4% to 6%. We don't control the macro piece, and that's the wild card in all this. And I'll just say lastly, Wellspect, we feel very good about the ramp in Wellspect. We don't talk about it too much because it's a $300 million business, but this past quarter grew 7% organically. I mentioned on the call, expect double-digit growth in the fourth quarter driven by new product launches. As we go over the next 3 years, that's a business that should be growing at least in the mid-single-digit range for us given our leadership positions and our new product launches. So on the whole, it really comes down in my mind to the macro environment and how quickly that returns because we feel very good about our plans in each of these areas.

Elizabeth?

Elizabeth Anderson from Evercore. So just to go back to that EPS bridge math, so it seems like if we -- obviously, on this, you're highlighting 4% organic growth. So I don't know, if that works out to $0.10 plus per -- percent over the longer course on simple math. So if we think about like the macro sensitivity, if you were to lose -- let's just say the world gets much worse and you were to lose a couple of percent next year versus the current environment, but then sort of regained, it seems like there's -- it's not -- that there's not as much sensitivity on that portion versus like, say, some of the things you've announced today, like the potential upside from the additional share buyback and things like that. Is that the right way to think about it? Obviously, with all the other pieces that you've put together from the supply chain management and run rate savings and things like that, are there other areas of potential conservatism in the sort of longer-term outlook?

Yes. No, thanks for the question. I want to reiterate kind of the $3 bridge and a couple of important points to take away. Number one is about 2/3 of that bridge, we control, things we've already started, things we've completed, things that will be completed. So outside of the organic growth bucket, we feel very good about the other 2/3 of the bridge. Then to your point, Elizabeth, how do we think about that first bucket? And roughly, you're right, if you take 1 point, it's probably $0.10, plus or minus, if you just do the easy math. We are not assuming a 4% or higher CAGR in 2024. I mentioned in my prepared remarks, we expect a gradual ramp towards 4% to 6%. Obviously, we expect faster growth in the outer years of our plan. But to get to the $3, we are not assuming 4% to 6% in 2024. So that's an important point to take away. In terms of where we have additional upside, I mentioned the SKU work that we're doing. We've really only hit endo and resto so far. As we evaluate the rest of the portfolio, there may be more opportunity there. I think Tony has got a lot of heavy lifting to do, and he'd tell you, he feels very good about what he put up on his chart. But I do think when we ultimately get into it, there may be more upside there as well. And I think the share buyback is conservative. I have assumed $600 million of share repos in 2024 through 2026. And that's obviously incremental to the $150 million we announced most recently on our third quarter earnings call. I think it's a conservative assumption in terms of what the EPS accretion could be as a result of the cash flows we're going to generate and what that would mean in terms of our EPS numbers. But we've got a lot of work to do to still get to these numbers especially around organic growth and getting to that 4% to 6% range. But we control a lot of what's on that bridge, and we are already executing on it. Thank you. Yes, please.

Yes. I think the point about the SKU optimization is a really, really important one because number one, on what we outlined, the 18,000, the 200 brands, we're being very thoughtful, right, with how we transition this revenue. We're approaching this sort of in pieces. We have pilots. We do a lot of SKU cleanup. We do very targeted initial transitions for the individual plans to harmonize our process to then be in a position to move the revenue, right, because it's not about exiting revenue, it's about transitioning revenue. And some of it in later years will depend on new innovation and product development. I think that's number one. I think the other piece is, I think that bridge also contemplates the investments we are making, including raising the bar in quality, in ethics and compliance. And I think in particular, quality is something that I think we take very personally. We have a quality policy. It says quality begins with me. And it is a really important part of how we see our position in the market and what we stand for at Dentsply Sirona and what we commit to for our patients and for our customers. And that is really important to keep in mind as well.

Let's take next question here from Jeff.

Glenn, so a lot of the focus on the organic growth, obviously, you've been pretty clear that the aligner business is the biggest contributor there. When I think back to the SureSmile, Byte chart you showed or the PowerPoint slide you had, it looks like you expect Byte to grow faster than SureSmile. I think you've been clear on that, but correct me if I'm wrong on that. When I think about the DTC market, I don't think it's grown the last couple of years. Obviously, you got Zoom and Peloton pull-forward stuff in 2021 and things like that to deal with. I get that. But if Byte's going to grow above your 20% aligner growth and the market isn't growing, do you expect to just continue taking share? How do you get there beyond maybe another year of your biggest competitor on its back, maybe or maybe not going to stay in business -- there are some opportunities, and there's ways you could do that. But I guess what is the path in your plan to do that? Because that's a big growth rate when you're getting north of 20% in a market that hasn't grown in a couple of years.

Thanks for the question. Andreas, chime in when I'm finished, maybe going through some prepared remarks. So I would say, first and foremost, we have been taking share in the direct-to-consumer space. And we have been growing very nicely if you look at the results for Byte over the last 4 or 5 quarters. We're also rolling out now our hybrid model with Byte. So this is one where instead of sending your impression kit and getting a treatment plan sent back and doing no consultation with a professional, this is going to a professional, getting your initial scan done and getting more confidence in the actual treatment plan. So we call it [ BytePlus ] or BytePro, but I think that's actually going to drive some more meaningful growth for us over the next couple of years. And listen, we do think we can take advantage of the competitive situation that's going on in the space. There's a competitor that has $300 million of revenue that potentially will be up for grabs. And so we're going to go after that hard. Do you want to add any more color to the Byte or SureSmile dynamics?

I'd just say SureSmile continued regional expansion, we talked about Brazil and driving into those markets, it plays very well with the GP as a solution so we can leverage our position that we already have in that segment across the world, really globally to continue to expand with SureSmile. And Byte is exactly what you said, Glenn. It's our hybrid solution. And thinking about it more broadly, right, like how does it become -- the big piece about Byte that I don't think is fully developed and understood yet is how much of a patient engagement tool it is and how much it helps the clinicians that are part of that platform over time as we roll into this hybrid solution to actually more broadly engage with the patients or new patients that come into the practice as a result of Byte and the funnel that we have to bring customers into the practice here.

All right. That concludes this Q&A segment. Keep in mind, for those folks that are joining us later this afternoon, there will be additional opportunity to ask questions as part of the rotations that we're going to do along with the tours and lunch. We'll now turn this over to Glenn for some closing remarks.

You've heard a lot from our team and industry partners today on how we are a leader in the dental industry with our robust and broad portfolio. If there's one thing that I hope we've made abundantly clear is that we're a very different company today than we were a year ago. We have a stronger culture, an experienced and highly capable leadership team and a renewed commitment to operating with excellence in every aspect of our business. As Simon shared earlier, our operating model shapes how we do business. It is foundational for execution and therefore our ability to create value for all stakeholders. We believe the structure that our operating model brings, fueled by innovation, disciplined execution and our ability to win as one team, will drive Dentsply Sirona to new levels of performance and value creation for years to come. And that ability to operate with excellence positions us to take advantage of the tremendous opportunities in front of us. As we close today, I'd like to reiterate what Simon stated in his opening remarks. First, we're in an attractive and growing industry supported by favorable demographics. And we're confident in our ability to execute a strategy that should enable us to drive sustainable, profitable growth. Second, as you heard from all of us throughout the presentation today, we've taken disciplined actions to transform the business and in turn are creating a more durable and nimble business with the potential to grow above market over the long term. Third, our winning portfolio of products and technologies, coupled with our global scale and digital solutions such as DS Core, position us and our customers to win in the market. And finally, we've built a deep and experienced leadership team focused on accountability and execution to create value for all stakeholders through this next phase of transformation. Simply put, we've accomplished a lot over the last 12 months, but we recognize we still have a lot of work in front of us. I'd like to close with thanking our team who did a great job presenting today, demonstrating their expertise and passion for our company. I also want to thank all of you, our shareholders, our investors who attended today. I hope that you enjoy the day and come away with greater insight into Dentsply Sirona, the portfolio, our plans and why we are excited about what the future holds for our business. And with this, the webcast will close. Thank you very much for joining us.