
Dentsply Sirona Investor Day Focuses on Streamlining Strategy and Utilizing Digital Assets to Drive 15% Earnings Growth CAGR From 2023-2026
11-10-23 (by: Scott Gleason) Dentsply Sirona recently hosted its investor day where the company laid out plans to reach $3.00 per share in adjusted earnings by 2026 (compared to consensus forecasts for 2023 of $1.98. This would imply a three-year earnings CAGR of 15% which the company plans to achieve through high mid-single digit growth and 500+ basis points of operating margin expansion as part of a strategic restructuring and reinvestment process. The company plans to accelerate growth utilizing its DS Core software platform to facilitate the connection of clinical workflows and technology, expanding its clinical education programs, and improving commercial execution. Denstply Sirona noted that a number of its digital technologies are still in the relatively early stages of commercial adoption which could drive significant growth in coming years.
The company believes guided to mid-single digit growth in its market leading CAD/CAM franchise and technology solutions business, mid-single digit growth in dental implants, and 20% plus growth in clear aligners where it is currently the number three player on a share basis. In its general dental solutions business the company guided to low single digit growth. While highlighting a number of key product launches, management also noted opportunities to simplify its portfolio with 15% of products driving 90% of revenue. The company plans to go from 30,000 to 12,000 SKUs in the coming years. Management also highlighted opportunities with its commercial channel to focus more on digital engagement and improve e-commerce as a way of lowering cost.
The company also highlighted opportunities to improve its global supply chain including rationalizing insourcing and outsourcing manufacturing decisions, site consolidation, and optimizing its freight and distribution network. Management is also focused on centralizing engineering and decision making from current siloed approaches.
From a capital deployment standpoint, the company announced a large incremental $1 billion share buyback and plans to look at small tuck-in deals not requiring significant integration. The deals also need to be accretive to growth and accretive to earnings within two years.