DENTSPLY SIRONA Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Negative Sentiment: Q2 revenue declined: Sales fell 4.1% as reported, or 6.3% on a constant-currency basis, with weakness in CAD/CAM, dental consumables, implants and SureSmile. Adjusted EPS was flat at $0.52, while adjusted EBITDA margins were roughly unchanged only after a $44 million tariff refund.
  • Neutral Sentiment: DENTSPLY SIRONA maintained its 2026 outlook for revenue of $3.5 billion–$3.6 billion and adjusted EPS of $1.40–$1.50, excluding tariff-related effects. Management expects Q3 revenue and earnings to decline sequentially because of seasonality and planned investments.
  • Negative Sentiment: The company said the U.S. recovery remains its top priority, but commercial-force training and dealer expansion are expected to have a larger impact in 2027 rather than this year. Management also acknowledged that the U.S. is currently lagging competitors in implants and that SureSmile remains pressured.
  • Positive Sentiment: Management reported progress on its 24-month Return-to-Growth plan, including expanded dealer partnerships, clinical education, sales-force certification and increased R&D investment, with improvements expected to become more visible in Q4. DS Core adoption and double-digit APAC milling-system growth were cited as encouraging signs.
  • Positive Sentiment: Wellspect remained a bright spot, with revenue up 7.1% on continued new-product sales and geographic expansion. Operating cash flow rose to $99 million from $48 million, and the company repurchased 1.3 million shares while continuing to prioritize debt reduction.
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Earnings Conference Call
DENTSPLY SIRONA Q2 2026
00:00 / 00:00

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Operator

Good day. Thank you for standing by. Welcome Dentsply Sirona's Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Wade Moody, Investor Relations. Please go ahead.

Wade Moody
Wade Moody
Senior Manager of Investor Relations at Dentsply Sirona

Thank you, operator. Good afternoon, everyone. Welcome to the Dentsply Sirona second quarter 2026 earnings call. Joining me for today's call are Dan Scavilla, President and Chief Executive Officer, and John Fortson, Executive Vice President and Chief Financial Officer. I'd like to remind you that an earnings press release and slide presentation related to the call are available on the investors section of our website at www.dentsplysirona.com. Before we begin, please take a moment to read the forward-looking statements in our earnings press release. During today's call, we may make certain forward-looking statements that reflect our current views about future performance and financial results. We base these statements on certain assumptions and expectations on future events that are subject to risks and uncertainties.

Wade Moody
Wade Moody
Senior Manager of Investor Relations at Dentsply Sirona

Our most recently filed Form 10-K and any updated information in subsequent Form 10-Q or other SEC filings, list some of the most important risk factors that could cause actual results to differ from our predictions. On today's call, our remarks will be based on non-GAAP financial results. We believe that non-GAAP financial measures offer investors valuable additional insights into our business's financial performance, enable the comparison of financial results between periods where certain items may vary independently of business performance, and enhance transparency regarding key metrics utilized by management in operating our business. Please refer to our press release for the reconciliation between GAAP and non-GAAP results. Comparisons provided are to the prior year quarter, unless otherwise noted. A webcast replay of today's call will be available on the Investors section of the company's website following the call.

Wade Moody
Wade Moody
Senior Manager of Investor Relations at Dentsply Sirona

With that, I will now turn the call over to Dan.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Thanks, Wade, and good afternoon, everyone. Before we discuss the quarter, I'd like to welcome John Fortson to his first earnings call as Executive Vice President and Chief Financial Officer of Dentsply Sirona. John joined us on July 20th, and we're excited to have him on board. He is a proven finance and business leader who's worked closely with CEOs and boards through periods of transformation, strengthening operations, allocating capital with discipline, and creating long-term shareholder value. Having served both as a public company CFO and CEO, his experience is well aligned both with where Dentsply Sirona is today and where we're headed in the future. I'm glad he's on our team. I'd also like to thank Mike Pomeroy for his leadership as Interim CFO. I sincerely appreciate his contributions. With that, I'll turn the call over to John to review our second quarter 2026 financial results.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Thanks, Dan, and good afternoon, everyone. First off, I'd like to say it's a privilege to join Dentsply Sirona. Having followed the company for many years, I am familiar with the strength of its portfolio and energized by the opportunity to help restore the business to its full potential. What ultimately drew me here was the clear commitment from the board and the leadership team to execute a disciplined turnaround. There is a strong focus on operational excellence and long-term value creation. Although I've only been with the company for a few weeks, I'm hitting the ground running and ready to execute the Return-to-Growth action plan with the team. Let's move to Q2 results on slide four. Our second quarter 2026 revenue was $898 million, representing a decrease of 4.1% as reported, or 6.3% on a constant currency basis.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Adjusting for the impact from Byte and the planned dealer inventory reduction of approximately $8 million in the quarter, revenue declined 3.6% on a constant currency basis. Adjusted EBITDA margins were approximately flat year-over-year, with the benefit from $44 million in tariff refunds offset by a decline in gross profit driven by lower volumes, sales mix, and incremental tariff impacts. OpEx was up $12 million year-over-year, including an FX headwind of approximately $8 million. A decrease in G&A was offset by investments made into sales, marketing, and R&D as was planned in support of the Return-to-Growth action plan. Adjusted EPS in the second quarter was flat versus last year at $0.52. The tariff refunds translated into a positive $0.17 per share impact. Operating cash flow in the quarter was $99 million compared to $48 million in the prior year quarter.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

The year-over-year increase is primarily attributable to the receipt of the tariff refunds, in addition to improvements in working capital with better management of accounts payable and inventory. We continue to remain diligent on improving our working capital. This will be a key focus area of mine going forward. In the second quarter, we opportunistically repurchased 1.3 million shares at an average price below $10 per share. This represents the first time Dentsply Sirona has repurchased shares since the third quarter of 2024. We finished the quarter with cash and cash equivalents of $239 million, and our Q2 net debt to EBITDA ratio was 3.2x, consistent with where we ended Q1 of this year. We continue to prioritize debt reduction. Now let us turn to Q2 segment performance on slide five. Starting with the CTS segment, sales were $239 million, an as-reported decline of 1.5%.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Equipment and instruments revenue was $137 million, flat year-over-year, with declines in treatment centers. This was partially offset by growth in imaging equipment, particularly in EMEA, where we saw increased demand for our Orthophos line of imaging products. CAD/CAM revenue was $102 million, down mid-single digits, driven by lower volumes in the Americas and unfavorable price mix in EMEA, partially offset by double-digit growth in APAC. EMEA saw a slight softening of demand for select areas of capital equipment as providers deferred some investment decisions due to uncertainties from the Middle East conflict. Turning to EDS, which includes endo, resto, and preventative products, sales of $376 million declined 2.7% as reported, primarily driven by lower volumes in the Americas and EMEA.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

As we shared in Q1, the impact of inventory changes for our EDS products held by our distributor partners in the EMEA region had a negative impact on results. We saw a sequential improvement in Q2 as we obtained greater visibility into the dynamics within various markets and distributors across the region. Overall, sell-out in the region was in the low single digits, consistent with expectations for dental consumables. The sell-in is lower year-over-year as certain distributors reduced their inventory levels. We do not believe this reduction in wholesale inventory is a demand-driven trend. Moving to OIS, revenue of $197 million declined 13.2% as reported. When adjusting for the year-over-year impact from Byte, OIS declined 5.7% as reported, consistent with last quarter. IPS revenue of $157 million declined mid-single digits, driven by lower volumes of premium implants in the Americas and APAC.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

EMEA implants grew mid-single digits as reported, led by improved performance for MIS, our value implant brand. For ortho, SureSmile revenue of $40 million declined double digits, primarily attributable to the Americas region. Wrapping up with Wellspect Healthcare, revenue of $86 million increased 7.1% as reported, driven by the continued strength of new product sales and execution by the business, partially offset by lower inventory levels in the U.S. market. Now let's move to slide six to discuss our outlook for 2026. We are maintaining our 2026 outlook for net sales of $3.5 billion-$3.6 billion and adjusted EPS in the range of $1.40-$1.50. This EPS range excludes the benefit from tariff refunds and impact of incremental tariffs. Our decision to maintain our outlook is based on expectations as of today, including our current expectation regarding tariffs and trade policies.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Looking to the third quarter of 2026, we expect revenue to decline sequentially due to normal seasonality. As we continue to execute our Return-to-Growth priorities, we also expect Q3 earnings to be below Q2 2026 levels, excluding the $0.17 benefit from tariff refunds. We remain committed to investing in our sales force, clinical education programs, and R&D with the benefit of these investments expected to become increasingly visible beginning in Q4. With that, I will turn the call back to Dan.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Thanks, John. As we wrap up the second quarter since beginning our 24-month Return-to-Growth action plan, our priorities haven't changed. We're focused on putting customers at the center of every decision, improving execution, investing where we see the greatest opportunity for long-term growth, and strengthening the financial foundation of the company. We're making progress, but this is still a turnaround. Some parts of the business are improving faster than others, and there's still a lot of work ahead. As John mentioned, we expect more of the improvement weighted towards the fourth quarter, given investment timing and macroeconomic conditions. What gives me confidence is that we're beginning to see evidence that the work we're doing is gaining traction. Everything starts with the customer. Over the last six months, we've been rebuilding how we engage with our customers.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

We're investing in clinical education, strengthening our commercial organization, expanding customer access through our dealer network, and making it easier to do business with Dentsply Sirona. In the second quarter, clinical education was at the forefront. We brought together more than 1,000 clinicians at our global implant summit, hosted endo KOLs at our 2026 Endodontic Forum, and convened leading experts across restorative and multidisciplinary dentistry to help shape the next generation of clinical solutions. These opportunities enable us to learn directly from clinicians, strengthen relationships, and ensure our innovation pipeline reflects what customers need most. At the same time, we're investing in our own commercial capabilities. Every U.S. implant sales rep recently completed the most comprehensive implant certification program we've ever delivered. Our most experienced team members told us they've learned more in those four days than they had in years.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

This initiative is not only encouraging, but also just the start of an ongoing investment in education. We're also seeing momentum internationally. In APAC, we're expanding education programs, advancing implant sales training, and seeing continued adoption of our Connected Technology Solutions, including double-digit growth in milling systems. On the digital side, DS Core continues to gain traction. During the quarter, four European DSO groups began to implement the platform, reinforcing the value of an integrated digital workflow that connects diagnosis, treatment planning, and clinical execution. We've also continued to strengthen our U.S. distribution footprint by growing our dealer network. During the quarter, we announced the expansion of our partnership with Atlanta Dental and Nashville Dental, and we advanced our long-standing relationship with Medline Sinclair in Canada. These partnerships are important building blocks for sustainable commercial growth, extending our reach and giving more customers access to our connected technology portfolio.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Wellspect continues to perform exceptionally well. The business delivered another strong quarter, supported by new product launches, geographic expansion, and continued adoption of our newest products. That's a good example of what consistent execution looks like, and we intend to apply those same principles across the areas of the company. We also established a small group, a strategic advisory board, to provide guidance on Wellspect's long-term priorities, innovation, and growth opportunities. Execution also means improving how we operate internally. We're simplifying the organization, enforcing accountability, standardizing processes, embedding lean operating principles in AI to eliminate routine work and accelerate decision-making so our teams can spend more time serving customers and bring innovation to market faster. Financial discipline remains equally important. We're improving cash generation, strengthening the balance sheet, and continuing to deploy capital in a disciplined way.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

As John previously mentioned, we repurchased 1.3 million shares for approximately $12 million using a portion of the tariff refund proceeds, consistent with the capital allocation framework we introduced earlier this year. We continue balancing investments in innovation, commercial capabilities, and shareholder returns to support long-term value creation. Six months into the Return-to-Growth action plan, I believe we're going deeper, moving faster, taking bolder steps to improve our business. We're recalibrating customer relationships. We're strengthening our commercial organization. We're expanding access to our products. We're simplifying the company, we're creating a stronger financial foundation. The path won't be linear, we're seeing encouraging signs that our actions are beginning to translate into improved execution and stronger customer engagement. Thank you to our employees around the world for their continued hard work and dedication to our customers.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I continue to believe the potential for Dentsply Sirona has never been greater, we have at our fingertips everything we need to achieve our plan. With that, let me turn the call over to the operator. We can start the Q&A session. Thank you.

Operator

Thank you. As mentioned, at this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. Please limit to one question. If you wish, a follow-up. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Your first question comes on the line of Elizabeth Anderson with Evercore ISI. Your line is now open.

Elizabeth Anderson
Elizabeth Anderson
Analyst at Evercore ISI

Hi, guys. Good afternoon, thanks so much for the question. I guess my first question is, John, maybe you could talk a little bit about why Dentsply was sort of the right next step on your career. Do you guys now think you have the full team in place to go forward with what you need to do to help get the company on the right footing? Can you also, maybe as my follow-up, just talk through how you kind of see the drivers that increased EPS from 3Q to 4Q like you were just laying out, John? Thank you very much.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Sure. No, I'll start. Dan can talk a little bit about the team, but I've followed this company for a long time. I've been in the Carolinas really for 15+ years and have followed the story. I really feel like the board and the current leadership team under Dan are ready to do what needs to be done to take this company to the next level. Right? I feel, having studied for a number of months, the Return-to-Growth action plan and in conversations with Dan and the other leaders, I feel like they have the right plan at the right time, and I'm pretty excited about being here. I look at the prioritizations, they're pretty straightforward. We return to growth, we maximize profitability, and we maximize cash generation. I think we have the opportunity to do all three.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Thanks. I'll answer the rest of that, Elizabeth. We have a great executive committee. My direct reports, if you look through it, a vast amount of that was rebuilt, and those that remained were a really strong base to go from. I feel very bullish about that team. The rate of engagement we have around the world when it comes to our directors up as well continues to impress me. To answer the question, yeah, we have who we need to make the changes that we need to make. I feel very strong about that.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

As far as the progression and heaviness, perhaps of the fourth quarter, given the turnaround and very similar to what we may have spoken to in the past. A lot of that really banks on the fact of when you're reorganizing the company and you have some of the timing of when those structural changes take place. You'll see it bear more in the fourth quarter than you would previous as we go do that. In addition, if you remember, we've added a lot of the dealers in the first quarter or second, and I always mention it's about nine months before you really produce there to sell capital. You're bringing them on board, training them, getting their reps out there, building a pipeline, and closing.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

While we are positive and seeing positive results of who we brought on, I think that will be heavier in the fourth quarter than perhaps what we've seen in the first or second.

Elizabeth Anderson
Elizabeth Anderson
Analyst at Evercore ISI

Super helpful. Thank you. Welcome, John.

John Fortson
John Fortson
EVP and CFO at Dentsply Sirona

Thank you.

Operator

Thank you. Your next question comes to the line of Allen Lutz with Bank of America. Your line is now open.

Allen Lutz
Allen Lutz
Analyst at Bank of America

Good afternoon. Thanks for taking the question. Really a follow-up on my question from last quarter around the Return-to-Growth action plan here. Dan, you talked about a lot of the same things that you talked about last quarter, some new distribution partners which you executed against in the quarter. You gave the example on investing in clinical education, and R&D continues to trend up nicely. Would love to get a sense in terms of where you're most excited. You sort of answered it a little bit with the last question around maybe some of the contributions from dealers coming in the fourth quarter. Would love to get a sense of the parts of the Return-to-Action plan as you go through it now you're six months in.

Allen Lutz
Allen Lutz
Analyst at Bank of America

Would love to get a sense where you're most excited and what do you think the first part of that is to hit the P&L? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Thanks, Allen. I appreciate that question. Honestly, what I'm most excited about is the level of engagement we have with our dentists and seeing that accelerate at different levels of the company. I want to say it's a re-engagement and the feedback that I've been getting from different folks that how happy they are with the dentists themselves coming back on the clinical education programs or the interaction with executives, or even some of the events that we have held or attended. They see our recommitment into that, and I've been getting a lot of good feedback from them, which is encouraging to me because as we say and have said, it's all about the customer first. If we're going to turn this around, it's about supporting the customer first and foremost and then earning the right to grow and take share from there. So that excites me.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Honestly, with John joining the team and really filling out an already strong executive council that I have, that's second thing that's exciting to me and you're right, I love the partnership expansion in the U.S. with the dealers and I think that's still yet to prove out more in the second half of the year. All three of those rank up for me.

Allen Lutz
Allen Lutz
Analyst at Bank of America

Great. Thank you.

Operator

Thank you. Your next question comes to the line of Michael Cherny with Leerink Partners. Your line is now open.

Dylan Finley
Dylan Finley
Analyst at Leerink Partners

Thanks for taking the question. This is Dylan Finley on for Mike. Just wanted to start briefly on the tariff refund. Just a clarification point. Was that refund assumption embedded in the initial guide? Does the maintenance of the guide account for the contribution of that refund? Secondly here, if you could just broadly comment on your quarterly run rate into COGS, what you're seeing today with the 122s and now the 301s, where do you see your quarterly spend on tariffs from here?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Dylan, I'll answer that. The first thing is we did not build a refund into our initial guidance. That was something that we decided not to do because it was uncertain when it would occur or what it would be. That's an addition. As we maintain our base guidance, as John called out, we're saying we're not changing that, and certainly in addition, we would layer in some semblance of the tariff that we were calling out earlier in that section. It's something totally unrelated to the operations of the business and done. We do not disclose the rate of tariffs per quarter, that would be something I'll refrain from answering.

Dylan Finley
Dylan Finley
Analyst at Leerink Partners

Very helpful. Thank you. As a brief follow-up here, you guys showed some nice gross margin improvement, if I'm just looking and backing out the tariffs. On SG&A, in the past you talked about reduction in targeted annual savings. Any updated thoughts on the magnitude of that and timing of when we should see some improvement in SG&A? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

It's a little bit, Dylan, of a couple of things. It's sort of a put and take here. We're reorganizing a lot of our company, whether it be through headcount or indirect spending, but I'm also redeploying that into increasing the field, increasing clinical education, increasing rep education, and accelerating innovation. It's not an anticipated drop through to the bottom line so much as a repositioning for long-term growth that's occurring.

Dylan Finley
Dylan Finley
Analyst at Leerink Partners

Great. Thank you.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Kathy, do we have Vik on the line?

Operator

Pardon me. Yes. Vik Chopra with BMO, your line is now open.

Analyst at BMO

Hi, Dan and John. It's Anton on for Vik. Thanks for taking our questions. Maybe first, I'll start on the U.S. commercial expansion. Dan, you've repeatedly emphasized that the U.S. business recovery is your top priority and have been taking clear steps in building out the U.S. commercial team with senior leadership and competitive hires. I'd be curious to hear where we stand in the U.S. commercial team build-out. Do you have all the people you need or are there more seats to fill? Does the guide contemplate accelerating productivity from these hires throughout the year, or is that more of a 2027 phenomenon?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. Thanks, Anton. First, I would say I'll probably never have as many people as I need because there's no answer to that. I want to have as many reps in the field representing us as we can. That said, what we did do in the first quarter was make a significant verticalization of our commercial organization under the team, and they did a great job. Those folks that lead those verticals are dental experts with a lot of competitive experience, as you referred to, and it's there. We are, again, retraining the reps that we have, recertifying them, and then to your point, expanding them both from new hires and competitive hires. I really do think those efficiencies, while they will continue sequentially through the quarters as you get through Q2 to Q3 to Q4, I think are going to be more impactful into next year.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

A lot of that training, a lot of that clinical education, and then just getting everybody into those moves that they need to do into the field, I think will be more of a next year impact. I'm happy with the progress being made with that team.

Analyst at BMO

That's really great to hear. Maybe one more follow-up on China. Last night, one of your peers shared some updated perspectives on the China environment and VBP timing. I'd be curious to get your perspective here as well. What's your latest thinking on China VBP 2.0 in 2026, and how do we think about the impact for Dentsply?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. Again, great question. It moves, as you know. It's been delayed. It's been cast out there. I'm probably going to line up with the timing. I know that it was pushed off several months from China that way. We don't have a significant impact baked into that for this year, nor do I expect one. China's an area of significant long-term growth for us right now, and it's one that we're keeping our eye on of how best to approach. At this point, I would tell you that it's smaller and that we have our eyes on how to make that bigger over time. The VBP is simply just one step along the way for us to really get into that market.

Analyst at BMO

Thanks so much again.

Operator

Thank you. Your next question comes to the line of Jon Block with Stifel. Your line is now open.

Joe Federico
Joe Federico
Analyst at Stifel

Hey, everyone. Joe Federico on for Jon. Thanks for taking the question. Maybe just to zoom in on implants a little bit. Is there any further detail you can provide on the performance in the quarter? I think you said EMEA was mid-single digits led by value, maybe any other color between value and premium. How did the U.S. perform, just how do you view the market growth there in the quarter and then in 3Q to date? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. We tend not to break it down by products or things like that in a lot of detail. What I would tell you is that our value products in EMEA had a very strong quarter. There's a lot of cadence there that we're doing. In the U.S., simply part of the turnaround, we lag behind that. We have incredible products. As I just said, we've recertified our team to give them more education to go out and worry about workflow and dentist needs as opposed to just selling a single product. It's still a continued investment in our turnaround plan, focused primarily on the U.S., still investing obviously in EMEA and Asia-Pac. I would say that when you look at the competitors, we're lagging behind and we need to change that. We've got the right products. We have the right approach.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

We have to execute and get up to market and beyond.

Joe Federico
Joe Federico
Analyst at Stifel

Thank you.

Operator

Thank you. Your next question comes to the line of Michael Sarcone with Jefferies. Your line is now open.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

Hey, good afternoon, and thanks for taking the question. Two from me. Can you just give us an update on or elaborate more on capital equipment demand? You mentioned some uncertainties in Europe related to Mideast tensions, but maybe give us kind of an around the world view, and then, just second of what we have here now is, Dan, you talked about the sales force ramping. How are you thinking about growth in implants as we look to 2027? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Hey. What we're saying with us in the capital itself, and as you know, it's seasonal. In EMEA, because we are one of the leaders in dental, the rural regions are a little bit bigger for us than perhaps our competitors, and we are seeing delays that have occurred there. We're not going to call it out. We're not going to call it down at this point. Our eyes are on it. It's an unknown ability when that resolves or when they'll pick up. That really was just it, is we're just seeing some delays in there because of the uncertainty of that situation. Do we think that that can clear through in Q3 or Q4? We hope so for the sake of the people there, eyes on it for that one. That's really kind of the thing that's going there.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

On the sales force itself and the productivity and the lift that would occur for implants into 2027, I'm going to refrain for now. We got to go focus on this year and the turnaround to finish that, we'll be giving guidance more as we get into the early part of next year along those lines.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

Got it. Thanks, Dan.

Operator

Thank you. Your next question comes to the line of Lily Lozada with JPMorgan. Your line is now open.

Lily Lozada
Lily Lozada
Analyst at JPMorgan

Great. Thanks so much for taking the question. Following up on the prior question about implants. When I look at the results across the segments, the one area that was really softer this quarter was OIS. I'm hoping you can unpack that a little bit. To what extent was that a function of headwinds from a weaker consumer environment, given the price point and more elective nature of the procedures, or was there something else at play?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. Thanks, Lily. I appreciate that. What I think is a couple of things with OIS in particular. Right. Two, let's remember, you have that Byte impact that's occurring, and John called out the impact of that. We still carry that through of a significant part. That's really it.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I think what we have seen, particularly on SureSmile, is more of a U.S. impact, and I think it's more about us, again, looking at the turnaround as we enter back to orthodontists and we hire that sales force, we modernize our software and go. The Byte removal is still something carrying. I think that SureSmile U.S. is that next one that's out there. The rest of it I was happy with. I think that's really in OIS, the two main impacts.

Lily Lozada
Lily Lozada
Analyst at JPMorgan

Great. That's helpful. I just want to make sure I'm understanding some of the comments you all made on macro. It sounded like you did see some pockets of lower demand due to the macro environment. I think the messaging prior was that the ebbs and flows in the market don't really impact Dentsply so much, just given all of the operational improvement that you're making. Just want to make sure I get the message clear on that. What's the latest that you're hearing on macro, and how much does that impact you in 2026? Thanks so much.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

It's a great question, Lily. Let me expand on that too, just for clarity, thanks for pulling it out. In the past, I'll stick to this, I've said that we shouldn't count on a market up or down to drive our growth. We have many things we have to do ourselves, and whether the market's up or down, we have to improve and grow. That was the latter part of your question. I'll stick with that. When I was calling out the macroeconomics, it really is about keeping our eye in the Middle East and the tensions that's out there, not just because it's somewhat disruptive to us from a procedure or capital, it's also the increased freight. We have to date seen impacts, and we have absorbed those impacts. I anticipate that to settle down and go back to a normal rate.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I have not backed off the Return-to-Growth investments in Salesforce, ClinEd, or innovation. My point is, if those pressures remain high, there's a point in the future that I may choose not to absorb them and adjust accordingly on the bottom line. I don't see it yet. I'm just dropping it as a hint. That's really what I meant by that statement.

Lily Lozada
Lily Lozada
Analyst at JPMorgan

Great. Very helpful. Thank you.

Operator

Thank you. Your next question comes to the line of Jeff Johnson with RW Baird. Your line is now open.

Jeff Johnson
Analyst at RW Baird

Thank you. Good afternoon, guys. Dan, I wanted to start in EDS, if I could. You pointed to volume declines both EMEA and in the Americas. Any way you can qualitatively help us understand which of those might have been better or worse, I guess, how to play one off the other, number one, and distributor changes in Europe, maybe the answer is that was the worst side of my question. Just any clarity there, number one. Number two, I think in the past you've been pretty clear you don't think you have room at this point to increase price on the EDS side. We've kind of picked up maybe in our channel conversations with some of your smaller and other dealers in the U.S. that you did push some price here recently on the consumable side. Any truth to that?

Jeff Johnson
Analyst at RW Baird

Did that have any impact in the quarter or in your go forward thinking?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. You got it, Jeff. Let me kind of get after the first one. In EDS in particular, most of the pressure remains in Europe. I'll tell you, we've actually seen some of our bigger dealers make significant orders in the second quarter that were positive in double digit growth. There are four other dealers, actually, most of them are private equity owned, and we're seeing them take historic inventory levels from about 12 or more weeks down to possibly eight weeks. When we talk to them, that's what we're seeing. We don't know if it's a factor of them coming into private equity or not, but that's really what we've been talking about, is we're seeing this sell-through occur. We feel positive as to those activities that are occurring. It is multiple dealers, not one, I think, in Europe.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

That's the thing I do want to make sure folks understand. That is really kind of coming out into the restorative and endodontic side more than anything else. I think in the U.S., there are different things we need to do with our portfolio, our pricing, our positioning to be more competitive. I think, again, as we educate the team and refocus in endodontics in particular, but also pay attention to restorative, there's opportunity there. Some of our investment and accelerated investment in R&D is going to give us more opportunity to go provide that and capture it. That's really the flavor between those two areas. Pricing, there's always a price tweak here or there. We've not taken anything significant in pricing. I would tell you're hearing it through the channels. We haven't implemented anything out there.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Could very well be just cleaning up price, shifting SKUs, some level of mix that might be impacting that. Really had no price increase since September of 2025.

Operator

Okay, thank you. Your next question comes to the line of Kevin Caliendo with UBS. Your line is now open.

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

Hey, guys. Thank you for taking my question. I just want to sort of understand what's embedded in the current guide from the market perspective. What do you expect the markets to do over the second half of the year, and how do you feel you're going to do against that? Meaning, do you feel like you're going to be in line with the market, lose share, gain share against that? That's sort of my first question, just sort of what's the expectation for the handful of end markets that are most important to you? The comment about distributor inventories was interesting, just given the new distributor relationships that you have. Were you saying that broadly speaking, inventory levels are lower or on a same-store basis?

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

I was wondering if you sign a new distributor relationship, would you be putting some inventory to them as well? I'm just trying to understand what that meant or how to think about that.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Well, let's start with that last one. We'll go backwards with that. Keep in mind, when we're signing up the U.S. dealers, they are for capital expansion. We're not actually having them buy capital and hold it. We're actually working with them to move that differently. You wouldn't see a lift that way. My previous comment from the previous questions was focused on dealers for the EDS models that are out there. To your point, if we were to open up a new dealer there, they would buy inventory, we would see that, but we have not done that. That's really what I'm thinking that way. Kevin, you had the first part of the question, I just need you to kind of go through it again, because I think it slipped my mind.

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

Well, I'm just wondering how to think about what you're expecting in terms of the overall market.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

The market. Thank you.

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

Their growth and how you think you're going to do relative to that. What's embedded in the guidance? Are you going to just be along with the markets? Are you going to gain share, lose share? How should we think about it in the various segments-

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Thanks.

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

against what's embedded? Yeah.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Oh, yeah. A couple of things here. I think when you hear the reports out from competitors about the market stabilization, I agree with them. I think that that's there. We can all pick a number, I'll pick one and say about 3% growth would be out there. However, what's embedded in our guidance is very different. We're calling out a turnaround, we're trying to go from negative into flat into growth over time. That's not something we would achieve within the 12 months of 2026. Our guidance was really more about the execution of clinical programs, rep education, and going out the execution. What I had said in the past is I think we would have negative Q1, negative Q2. I'm thinking somewhat more favorable, not positive, but little more favorable or less loss in Q3.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I'm looking in the U.S. to exit the year with a plus sign. That's really where we're getting into. I think getting more into market and market dynamics for us will be more of a 2027 as we execute the Return-to-Growth plan.

Kevin Caliendo
Kevin Caliendo
Analyst at UBS

That's super super helpful. Thanks so much.

Operator

Thank you. Your next question comes to the line of Steven Valiquette with Mizuho Securities. Your line is now open.

Steven Valiquette
Steven Valiquette
Analyst at Mizuho Securities

Yeah. Hi. Thanks. Yeah, it's Steven Valiquette from Mizuho. With some ongoing discussion this quarter among digital equipment manufacturers, seeing customers continue to move to lower price points on intraoral scanners, we heard more about some movement to leasing arrangements for digital equipment instead of straight product sales, at least from some manufacturers. I was just curious to get your updated thoughts on competitive landscape and IOS, is there any inflection on leasing versus purchasing for higher priced items from your perspective? Also just remind us on your own philosophy on leasing options to practitioners for your own digital equipment offerings. Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Okay. Great question, Steven. A couple of thoughts here. I think you always offer many options depending on the customer, if they want to buy it outright, if they want to do it over time, if they wish to do it through a lease. All of those are valid things that we're open to do and have been doing as well. I think you're right, there is a growth of lower cost intraoral scanners, and there's a quality that also gains with them over time. While I do think there's always room for premium in the future, you need to show the flexibility of how to get it into the customer's hands. Quite frankly, I think you also need to have the offerings at different levels, depending on what the customer wants. It is something we're looking at.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Those options are things that we have in place, I think really for me, next gen intraoral scanners, we need to look at high-end, mid and also low. That's something that's in front of our innovation program.

Steven Valiquette
Steven Valiquette
Analyst at Mizuho Securities

Okay. That's very helpful. Thanks.

Operator

Thank you. Your next question comes to the line of Erin Wright with Morgan Stanley. Your line is now open.

Erin Wright
Erin Wright
Analyst at Morgan Stanley

A couple of kind of modeling questions. One, just on the organic constant currency top line growth. I think you gave total revenue growth, but did you give a true underlying kind of organic metric that you're anticipating, or what are you anticipating in terms of the second half there? And just remind us what's embedded from a currency perspective. And then on a tariff refund, I guess, does the guidance then reflect share buybacks associated with the tariff refund or future I just want to be clear in terms of what's embedded in terms of the EPS number and not, especially when it comes to share buybacks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. What we saw, Erin, in the beginning of the year was a very strong FX rate that we said would taper down over the quarters. That $3.5 billion-$3.6 billion for us is just what we expect to hit for this year. I don't really have the exact amounts that are broken out. We didn't provide anything between constant currency as reported. We're just getting into those ranges, knowing the currencies that we anticipate for this year. The favorableness of the first quarter would diminish in second, and we actually think neutralizer possibly even at the end of the year, kind of negative out. I would say that's not going to be a big driver for us along those lines with it.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

The tariffs, we were calling out the fact that we're not changing the base, we're just dropping the tariffs eventually out there for modeling purposes. That's really what we were trying to do, is just distinguish them out. We're obviously looking to not have that as a measure year-on-year because it's such an oddity. It's got to be off on the side when we talk about Q2 of next year.

Erin Wright
Erin Wright
Analyst at Morgan Stanley

Okay, thanks. You spoke about some of the distributor relationships. You inked a deal with Medline with their Sinclair offering in Canada. I guess, how is that relationship different or unique, or how should we think about that opportunity? Just overall, the North America distributor relationships, how are those progressing? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

You got it. In Canada, it's just great because again, Sinclair's a great business to get into. We do a lot with them already. It's an expansion of what we have, but expansion on the capital side, which we did not have. They've already got the natural reach and feet on the street to actually get our products in front of more customers in a faster pace in Canada, which is a very strong market for us and actually been an area of growth that I think if it continues, we'll call out a bit more in future calls with it. I think on the U.S. side, what I have seen in particular, without calling out names, are two of the new dealers that have grown double digits so far. Again, I'm a little cautious.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I want to get through Q3, maybe start looking at data Q4. For a few that I have added on, I'm really happy with what I'm seeing with their growth. They're smaller numbers and don't drive the overall business, but they're smaller numbers today, and they will grow and become significant over time. That's really what I'm looking at.

Erin Wright
Erin Wright
Analyst at Morgan Stanley

Thank you.

Operator

Thank you. Your next question comes on the line of Daniel Grosslight with Citi. Your line is now open.

Daniel Grosslight
Daniel Grosslight
Analyst at Citi

Hi, guys. Thanks for taking the question. On CTS in the Americas, I think we were down around 10-ish%, nearly 10% constant currency. Can you just help us understand whether this is primarily being driven by CapEx deferral, just given the macro environment, the rate environment? Are you seeing any kind of competitive displacement in CAD/CAM and imaging, particularly from lower ASP type of offerings? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah, you're welcome. We're not seeing a huge bleed-out competitively at this point. We think it's a little more timing. As you know, capital is always bumpy and lumpy, I think that's what we're going to attribute it to. To your point, it's mostly in the CAD/CAM area, like we called out. I would say at this point, I'm not seeing anything that would take me off task. I don't feel like we're at a competitive disadvantage with this. I think it's just a matter of closing out deals that are in the pipeline.

Daniel Grosslight
Daniel Grosslight
Analyst at Citi

Got it. Okay. Just an accounting question on the tariff impact or the tariff benefit this quarter. I think I heard this, but I just want to double-check. That full $44 million hits the P&L. So if I were to normalize for that, I would just subtract $44 million from gross profit and adjust to EBITDA? Or is there some other dynamic I'm not accounting for there?

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

You are exactly right.

Daniel Grosslight
Daniel Grosslight
Analyst at Citi

Okay, great. Thank you.

Operator

Thank you. Your next question comes to the line of Michael Petusky with Barrington Research. Your line is now open.

Michael Petusky
Michael Petusky
Analyst at Barrington Research

Hey, good evening. Dan, I guess you sort of called out the formula for winning that Wellspect's doing, Obviously that has something to do with new product launches and innovation in their space. You obviously come out of a space where innovation was a huge key to winning. I'm just curious, the R&D, the incremental R&D spend you guys are doing right now, what's the mandate? Is it taking bigger swings? Is it hitting more singles? I guess just in terms of time frame for impact, I mean, is there anything likely to actually impact the work you're doing now, impact in mid to late 2027 or is 2028, 2029 more the time frame? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

You got it, Michael. With Wellspect, to your point, we went back in the Return-to-Growth action plan, We've invested in them in several different ways to actually fuel the ability to get the product out and penetrate the markets, They're responding well. That to me is one of those ones where you can actually fund it by itself and allow it to grow. I look at it as a completely separate organization. We just consolidate down for reporting. The point is, they continue to perform. Again, even their pipeline is rich for other products and going out that way. On the dental side, the innovation and the increase in innovation that we had done this year was really intended to accelerate things.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

As you know, DS Core is a platform, and putting more functionality into the digital dentistry flow, like implants on Core or ortho on Core, two examples. The incremental money should move those forward meaningfully. Now, I have to get FDA approval, I do think goal is to have it done in late 2027, but it's about when we file and get approval. Certainly in 2028 would be the thing. Had we not done that would have been further out by at least a year. They're main things that are out there. In addition, given the size and the importance of EDS, we've put more products and more functions therein. We're looking to make sure that that stays fresh and we remain a leader and we invest in it. That answered your question.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

It's a mixed bag of home runs and singles like you have to do with everything. It can't all be big risk or too small risk. It's a blend. It's also both organic and inorganic opportunities for us to look and exploit and grow faster. It really kind of depends on the products and the opportunities. It really is up and down between those.

Michael Petusky
Michael Petusky
Analyst at Barrington Research

Okay, great. Dan, could I just sneak one quick one in? I think this is a quick one. Obviously, historically, outside of the U.S., Germany's always been a key market, and I don't think I've heard you talk about that tonight or possibly even last quarter. Just give an update on what you guys are seeing in Germany across the board. Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah. No, I didn't call it out, I would just tell you it's probably more my style than anything else. I've got nothing that I'm worried about with Germany. I was just focusing more, as you know, U.S. is top priority. How we fund EMEA is out there and then, make sure we get Asia-Pac to grow. You are correct, it's still one of our top markets. It's doing okay. It's not going to be driving a large amount of growth. I think it's moving around market pace right now. It really wasn't anything for me to call out with what we're trying to put out message-wise.

Michael Petusky
Michael Petusky
Analyst at Barrington Research

Got you. Thank you.

Operator

Thank you. Your next question comes to the line of Joseph Downing with PSC. Your line is now open.

Joseph Downing
Analyst at PSC

Hey, guys. Thanks for taking the question. On for Jason today. I'll keep it to one. Dan, when you look at the segment breakdown, it looks pretty different depending on the geography this quarter. You have CTS down high singles in the Americas, but up double digits in APAC, while OIS fell in the Americas and was held closer to flat in EMEA. Just curious, how do you run one Return-to-Growth playbook when each unit saw points that's in a different geography? Which of these regions within each segment gets first dibs on resources here? Just trying to think of how you're thinking about that. Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah, it's a fantastic question. Thanks for asking it. Listen, everything matters, but U.S. is top priority Return-to-Growth. We've made that clear. In that, getting implants and CTS up on its feet through the dealer expansions with the education we've spoken about is critical while maintaining the lead in EDS. That U.S. itself is fairly focused in and going. When it comes into EMEA, in that leadership team, we've made sure they are funded, but again, they don't need as much of a Return-to-Growth plan. That's really about addressing the EDS dealer inventories and driving through. I think they're in good shape. Again, very different will be Asia-Pac and how you get into China, how you continue to expand in Australia and Japan.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

The good news is they all fit into a same model of customer first, innovative products by listening to the customer, clinical education investments and strong reps that do workflow. That applies globally. You just put it at different points along where they are in their maturity curves.

Joseph Downing
Analyst at PSC

Great. Thanks so much.

Operator

Thank you. Your next question comes to the line of Keonhee Kim with Morningstar. Your line is now open.

Keonhee Kim
Keonhee Kim
Analyst at Morningstar

Hey, great. Thanks for taking the question. Hey, Dan, I recall you kind of highlighting investing again, education, especially in implantology as one of the main sources for Return-to-Growth. I guess, kind of as you said today, when assessing the ROI on that front, how do you feel on that? Do you feel like the long-term picture has improved or stayed neutralized? Any thoughts there would be helpful.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

Yeah, you got it. The thing with Clinical Education is it's long-term investment. What I mean by that is, spend it this year, you might see in Q4 some uptake, but it's really about getting the cadence throughout the multiple years by gaining users who are aware of your products and use them continuously. You can run through it, but it's really a main driver of all the competition. It's really something that really works well within this market, and it's really about making sure the generalists, specialists, the referrals all work together and are educated. That money I know is well spent. I have seen what happens when you trim it down. Getting it back on track and then getting it above market is key that way. I would say that I'm pretty happy with where we are with that.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

One thing as well with Q3 in particular, and we talked about where that was going, there'll be a bolus of investment occurring there without the revenue coming up to that. That will come in later quarters. You're going to see the return to health plan, not pay attention and quite frankly, care about quarterly outcomes. It's about spending the money at the right time for sustained long-term growth.

Keonhee Kim
Keonhee Kim
Analyst at Morningstar

Great. That's helpful. Then just one more. I want to double-click on the CTS. CTS in APAC has now had kind of two quarters of sequential improvements. I'm curious if there's anything specific going on in the region that we're not seeing in other categories within the region. If there are any one-timers or big inventory stocking, or do you feel like the market condition has kind of, I guess, improved a little bit in the next or since the beginning of the year? Thanks.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

I want to make sure I heard you. You were talking about APAC, is that what your question was?

Keonhee Kim
Keonhee Kim
Analyst at Morningstar

Yeah, CTS especially in APAC.

Dan Scavilla
Dan Scavilla
President and CEO at Dentsply Sirona

With CTS? Yeah. It's really about a program that we put in place. I'm not going to explain the program here, but it's really an execution we did in two of the key markets that's working very well. We designed it in, honestly, the fourth quarter of last year. Began executing it, as you just kind of called out, in Q1. We're seeing very positive uptake with what it is we're doing there. It is applicable throughout the world, but we're actually trying it right now within certain markets in Asia-Pac.

Keonhee Kim
Keonhee Kim
Analyst at Morningstar

Great. Thanks.

Operator

Thank you. This concludes the question and answer session. Thank you for your participation in today's conference. This concludes the program, and you may now disconnect.

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