Comprehensive Plan & Restructuring – Path to Durable Value-Creation
Over the last six months, the Dentsply Sirona management team has conducted an extensive diagnosis of the market, the Company and its performance. Based on the conclusions of this review, the Board and the management team remain very optimistic about the underlying dental industry, the Company’s unique position and the opportunity to create sustainable value for its shareholders. To improve performance, the Board and management team have developed a comprehensive plan with the help of leading third-party advisors, designed to achieve annualized topline growth of 3-4% on a consistent basis, and adjusted operating income margin of 20% by the end of 2020, with continued expansion thereafter.
Dentsply Sirona’s plan will focus on:
Establishing Consistent Topline Growth by:
• Streamlining sales and marketing
• Prioritizing Research and Development activities across the organization to drive more substantial innovation
• Enhancing sales force effectiveness with proprietary segmenting, targeting and call planning analytics that will link all sales operations, direct and indirect selling activities
• Building on Dentsply Sirona’s industry leading clinical education programs that will include training academies, similar to Charlotte, NC and Bensheim, Germany, and enhance our digital continuing education and major educational events
• Continuing to focus on emerging markets
Aggressively Improving Margins While Simplifying the Organization
The Company is working to return margins to pre-merger levels by reducing its cost structure and managing its portfolio of market leading assets. As part of the restructuring plan, the Company will:
• Consolidate the Company’s Dental Strategic Business Units (SBUs) organization from 10 to 4 units to better unlock the synergies that exist within the various businesses. The Company will continue to report the existing Technology & Equipment and Consumable segments
• Optimize its corporate infrastructure to support its enhanced business model
• Show progress on operating expenses, with spending in 2019 lower than 2018
• Reduce global workforce by approximately 6-8% (net)
• Target $200-$225 million in net annual cost savings by 2021
The Company’s priorities also include evaluating non-core and underperforming businesses, utilizing free cash flow generation and excess balance sheet capacity to return cash to shareholders, and reviewing additional longer-term cost savings opportunities.
Don Casey, Chief Executive Officer of Dentsply Sirona, commented: “We fully realize that our recent performance has been unacceptable and that is why we are taking aggressive action to grow revenues, expand margins and simplify the organization. During the implementation of the program, we have prioritized maintaining the Company’s revenue stream and serving our customers, including leveraging our existing infrastructure and outside resources to coordinate our activities. We are dedicated to supporting our talented teams through this important and much-needed transformation,” Mr. Casey continued. “Our path forward will require making difficult decisions, but nevertheless, we are confident that the steps announced today will ensure growth over the long-term, and drive significant value for our shareholders."