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DENTSPLY SIRONA Inc. (XRAY) Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 headline results were weak on revenue and profitability as Byte, U.S. CAD/CAM softness, and distributor-order timing weighed on performance; net sales fell to $905M, down 10.6% YoY, GAAP EPS was ($2.16) on $370M after‑tax impairments, and adjusted EPS was $0.26 .
  • Management issued initial FY2025 guidance: net sales $3.50–$3.60B (organic down 2%–4% including a ~2% Byte drag) and adjusted EPS $1.80–$2.00; EBITDA margin targeted “>18%,” with Q1 expected to be the trough and sequential improvement through the year .
  • Offsets and “green shoots”: Europe returned to organic growth (~+1.8%), Global Imaging grew nearly 13% in Q4, Wellspect grew mid‑single digits, and SureSmile aligners delivered high single‑digit growth in the quarter; management is redeploying Byte capabilities to accelerate SureSmile and e‑commerce initiatives .
  • Estimate comparison: S&P Global consensus data was unavailable due to access limits; management said that excluding incremental Byte charges, Q4 revenue outperformed the latest guide by ~2% and FY adjusted EPS finished ~4% above the midpoint, a modest positive vs internal expectations .

What Went Well and What Went Wrong

What Went Well

  • Europe and Imaging inflected: “return to organic sales growth in Europe of approximately 2% and global growth in Imaging of nearly 13%” in Q4; Germany posted the highest sales in 7 quarters on improved execution and Orthophos SL relaunch .
  • Orthodontics (ex‑Byte) and Wellspect resilience: SureSmile grew nearly 4% globally in Q4 with 20%+ in Europe; Wellspect grew ~6.7% organically in Q4 and ~5.9% for FY24 and is under strategic review to unlock value .
  • Cost and transformation progress: Phase II actions largely complete and on track for run‑rate savings by end‑2025; ERP phase went live in the U.S. Nov 1; management targets >18% EBITDA margin in 2025 driven by savings and mix .

What Went Wrong

  • Byte drove outsized headwinds: Q4 organic sales down 10.7% included a ~6.1% Byte impact; management recorded $370M after‑tax impairment (incl. Byte trademark write‑off) and suspended Byte sales/marketing in consultation with FDA .
  • U.S. market acute softness in Q4: U.S. sales fell ~29.9% organically on Byte, softer retail CAD/CAM, and distributor timing tied to ERP; CTS global CAD/CAM declined double digits in the U.S. .
  • Margin compression: Q4 gross margin fell 240 bps and EBITDA margin fell 290 bps YoY, primarily Byte‑related and lower volumes; adjusted EPS dropped to $0.26 vs $0.44 LY .

Financial Results

Quarterly trend (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$984 $951 $905
Gross Margin (GAAP)51.9% 52.1% 49.2%
Adjusted EBITDA Margin17.5% 17.9% 14.2%
Adjusted EPS ($)$0.49 $0.50 $0.26

Q4 YoY comparison

MetricQ4 2023Q4 2024
Revenue ($M)$1,012 $905
Gross Margin (GAAP)51.6% 49.2%
Adjusted EBITDA ($M)$173 $128
Adjusted EBITDA Margin17.1% 14.2%
Adjusted EPS ($)$0.44 $0.26

Q4 Segment breakdown

SegmentQ4 2023 Net Sales ($M)Q4 2024 Net Sales ($M)YoY GrowthOrganic Growth
Connected Technology Solutions$319 $293 (8.3%) (8.2%)
Essential Dental Solutions$358 $346 (3.5%) (3.4%)
Orthodontic & Implant Solutions$259 $185 (28.6%) (28.7%)
Wellspect Healthcare$76 $81 8.6% 6.7%
Total$1,012 $905 (10.6%) (10.7%)

Q4 Geography breakdown

RegionQ4 2023 Net Sales ($M)Q4 2024 Net Sales ($M)YoY GrowthOrganic Growth
United States$368 $259 (29.8%) (29.9%)
Europe$397 $408 2.8% 1.8%
Rest of World$247 $238 (3.4%) (2.0%)
Total$1,012 $905 (10.6%) (10.7%)

Q4 cash and other KPIs

KPIQ4 2024
Operating Cash Flow ($M)$87
Adjusted FCF Conversion72%
Cash & Equivalents ($M)$272
Dividend Declared$0.16/share (payable Apr 11, 2025)
Adjusted EBITDA ($M)$128

Non‑GAAP adjustments (Q4 2024)

ItemEPS impact
Goodwill & Intangible Impairments$1.86
Amortization of Intangibles$0.20
Restructuring & Other$0.18
Income Tax‑Related Adjustments$0.18
Adjusted EPS$0.26
GAAP Diluted EPS($2.16)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY 2025N/A$3.50–$3.60Initial outlook
Organic Sales GrowthFY 2025N/A(4%) to (2%), incl. ~ (2%) Byte impactInitial outlook
Adjusted EPS ($)FY 2025N/A$1.80–$2.00Initial outlook
EBITDA MarginFY 2025N/A>18%Initial outlook
Tax RateFY 2025N/AHigher YoY (mix, trends)Initial outlook
Q1 FrameworkQ1 2025N/ALowest quarter of year; sequential margin improvement thereafterInitial outlook
DividendOngoing$0.16/qtr (Dec’24)$0.16/qtr declared Feb 26, 2025Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Byte/regulatory and strategyVoluntary suspension (Oct) and large goodwill impairment; revised FY24 outlook lower $62M YoY Byte impact in Q4; Byte trademark fully written off; redeploying Byte DTC/e‑commerce/software talent to SureSmile; focus on SureSmile only Negative for near-term sales; strategic pivot to strengthen SureSmile
CAD/CAM & ImagingQ2: CTS pressured by macro/competition; Q3: Primescan 2 launch supported CAD/CAM U.S. CAD/CAM retail weak; Imaging strong (near +13%); Orthophos SL relaunch helped EU/APAC Mixed: Imaging improving; U.S. CAD/CAM subdued
Europe/GermanyQ3: Europe modest decline; U.S. +5% organically Europe returned to growth; Germany best quarter in 7 quarters Improving
WellspectQ2/Q3 steady; flat in Q3 on timing Organic +6.7% Q4; strategic alternatives process initiated Positive growth; potential portfolio action
ERP & Supply ChainQ2: second phase, savings and ERP plan U.S. ERP go‑live Nov 1; distributor timing created Q3/Q4 shift Executing; one‑time order timing effects
Cost transformationQ2: $80–$100M annualized savings targeted Back‑office G&A transformation contemplated with third party (not in 2025 guide) Further efficiency optionality
DS Core / Digital platformQ3: Scanner launch (Primescan 2) DS Core >37k unique users, +15% seq; integrating with Primescan 2 Adoption building
Regulatory/legal (German tax)—No meaningful update; process ongoing Overhang persists

Management Commentary

  • “Green shoots…return to organic sales growth in Europe of approximately 2% and global growth in Imaging of nearly 13%. Wellspect…approximately 7% growth. SureSmile…nearly 4% increase…over 20% growth in Europe” .
  • “We made a strategic decision to redeploy certain Byte resources to our SureSmile platform…to drive direct‑to‑consumer demand and revamp e‑commerce…improvements to launch as early as mid‑2025” .
  • “For 2025…organic sales to be down 2% to 4%…We expect EBITDA margin to be greater than 18%…with margin improving as we progress through the year” .
  • “Phase II transformation activities…on track to deliver full run rate savings by the end of 2025…largest individual phase of our ERP deployment in the U.S. went live on November 1” .

Q&A Highlights

  • Byte strategy and P&L: Brand name written off; focus exclusive on SureSmile; Byte’s DTC/e‑commerce/software capabilities redeployed to SureSmile and potentially other areas. Residual Byte revenue under $40M will roll off; net year‑over‑year EPS accretion expected from cost removal and redeployment .
  • Margin cadence: Q1 expected to be the lowest; sequential improvement throughout 2025 driven by cost actions and volume normalization; back‑office transformation could add upside but not in base guide .
  • U.S. channel and inventory: CTS distributor inventory decreased ~$45M sequentially in Q4; remains below historical averages; U.S. decline largely Byte, CAD/CAM retail softness, and ERP‑related order timing .
  • German tax: No new meaningful developments; company continues to engage with authorities .
  • CAD/CAM macro: PS2 launched, but U.S. retail demand remains pressured by macro and discretionary nature of procedures; imaging outperformed; Patterson relationship not cited as a driver .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 revenue and EPS was unavailable due to access limits at the time of analysis; as a result, we cannot quantify beats/misses relative to Street estimates. Values retrieved from S&P Global were unavailable due to request limits.
  • Management indicated that excluding incremental Byte charges recognized in Q4, top line outperformed latest internal guidance by ~2% and FY adjusted EPS finished ~4% above the midpoint, suggesting modestly better‑than‑guided performance on the core business ex‑Byte .

Key Takeaways for Investors

  • 2025 is a reset year: organic down 2%–4% with Byte a ~2% headwind; the operating plan targets >18% EBITDA margin and sequential improvement after a weak Q1 .
  • Structural actions continue: Phase II savings, potential G&A transformation, ERP rollout, and SKU/network optimization support margin expansion and cash conversion (FY24 OCF $461M; 83% adjusted FCF conversion) .
  • Strategic portfolio move pending: Wellspect strategic alternatives could unlock value and sharpen the dental focus; Wellspect has delivered steady growth and strong profitability .
  • Digital and Imaging momentum: DS Core adoption and Orthophos SL relaunch underpin Imaging strength; success here is critical to re‑accelerating the integrated digital workflow thesis .
  • Byte pivot reduces volatility: redeploying Byte’s capabilities to SureSmile/e‑commerce should improve unit economics and growth durability in aligners over time, especially in Europe where momentum is strongest .
  • U.S. CAD/CAM demand remains the swing factor: retail softness and discretionary dynamics persist; watch distributor inventory normalization and macro for signs of recovery .
  • Near‑term trading lens: Sentiment likely hinges on proof points for margin ramp (>18%), clarity/timing on Wellspect outcome, and updates on Byte remediation and legal/regulatory overhangs (incl. German tax) .

Sources: Q4 2024 8‑K and press release, and Q4 2024 earnings call; prior quarter filings and Byte update

  • Q4 2024 8‑K and exhibits:
  • Q4 2024 press release:
  • Q4 2024 earnings call transcript:
  • Q3 2024 8‑K:
  • Q2 2024 8‑K:
  • Byte suspension press release (Oct 24, 2024):
  • Wellspect strategic alternatives press release:

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