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dentsply international\'s (xray) ceo bret wise on q3 2015 results - earnings call transcript
Third quarter 2015 earnings conference call at 8: 30 a. m. on October 28, 2015
Chairman and ceo Clark
President and CFOJim Mosch
Executive Vice President and COODerek Leckow-
Vice President of William Blair Jeff JohnsonRobert W.
Ibuprofen Suspension Drops Bank of America
Stanley, David steton.
Great Lakes ReviewBrandon Royal-
Jefferieperatorgood day welcomes the 2015 revenue call on the international third quarter.
Today\'s call is being recorded.
At this time, I want to hand it over to Sir.
Derek leckov, vice president of investor relations.
You can start, Sir.
Thank you, Kayla.
Good Morning, everyone.
Thank you for joining us to discuss DENTSPLY International\'s 2015 performance for the third quarter.
Bret Wise, vice chairman and CEO of DENTSPLY, also joined me;
Chris Clark, our president and chief financial officer;
Jim Moss, our executive vice president and chief operating officer.
I hope you have the opportunity to review the press release we posted earlier this morning.
A copy of the release and a set of non-
GAAP holdings are available for download in the Investor Relations section of our website. dentsply.
Com under the quarterly performance title.
Of course, the language of safe harbor and the United StatesS.
The GAAP reconciliation included in today\'s press release is also related to this conference call.
We can move forward.
Forward-looking statements involving risks and uncertainties.
These should be considered in conjunction with the risk factors and uncertainties described in the press release and our SEC documents.
Actual results may differ significantly from forward results
The statement we made today.
The company has no obligation to update or revise any forwarding-
Look for statements that reflect events or situations that may occur after the date of this call.
With this, I want to transfer the call to Bret Wise now. Bret?
Thank you, Derek.
Good Morning, everyone.
Thank you for attending our third quarter conference call this morning.
I will make some brief overview comments on our results and strategy and then forward more details on operational objectives and financial results to Jim and Chris.
Overall, DENTSPLY continues to execute our strategy in what we believe is a stable global market.
Based on what we saw earlier this year, this market view is generally consistent in most regions, although I would like to add that the third quarter is always the most difficult to interpret trends, especially in Europe.
Specifically, for DENTSPLY, we have been implementing our strategy to first make significant improvements in the efficiency of our global platform, and then once the project gains momentum, use part of these savings to accelerate investment in growth.
As you have seen in recent quarters, I think it will be clear again today that we have been very successful in significantly improving our profit profile, and I think it is fair to say, we are far ahead of the plan that was put forward to you at the beginning of last year.
In order for us to be on the same bottom line, you will remember that on April 2014 or about 18 months ago, we announced the global efficiency plan with the aim of increasing our profit margin to 20%, our operating profit margin is 20%, which will be 240 basis points in 17 years.
We made a 6% deposit on 2013.
The second goal of this project, perhaps the most important, then, I will take advantage of the partial savings generated by the above objectives while still achieving or exceeding the operating profit margin target, invest in growth opportunities.
The operating profit margin target is the net target, that is, the net target of reinvestment.
The results of this project are now very obvious.
In the first nine months of 2015, our adjusted operating profit margin was 20. 3%.
It is now up 270 basis points from 2013 basis points, exceeding our temporary target of 20% set for 2017.
We got there a little earlier than expected.
As in the second quarter, operating margins rose by 220 basis points in the quarter and adjusted earnings per share rose by 6 basis points.
5%, although the currency has a lot of headwinds on the back line, the same is true on the adjusted EPS line.
In fact, the currency headwinds of adjusted earnings per share are in the range of 6%.
On the basis of the unchanged currency, adjusted earnings per share, the adjusted earnings per share improvement will reach double digits this quarter.
Two other important points of profit margin.
While the absolute amount of money to income or operating income is negative, it is actually helpful in terms of the percentage measurement of operating profit margins.
It is important to note that the third improvement in operating margins this quarter comes from currency.
The second important point is that so far, in this project, we have re-invested a portion of our savings to facilitate the project itself, which is an investment in systems, consultants, etc.
As savings accelerate, the need for these investments to boost the project will now be reduced a bit.
At this point we are at a turning point in this project where growth investment will receive additional funding and I have asked Jim to give you more in his comments.
This is an exciting time in-house, because we have done a lot of very hard work to reach this moment, and we can start to grow our investment seriously.
It is also important to note that although we have designed the plans implemented so far to minimize the impact on the business organization, thereby minimizing the impact on sales growth, there must be some negative impact.
I really can\'t quantify you, but I think it\'s important to note that when we turn to growth investment now, we can help mitigate that impact when we get to 2016, and start to benefit from the top and bottom.
So, from the point of view of growth, the internal growth of this quarter is positive. 7%.
On a regional scale, it rose by 1.
6% in the United States, up 0.
Europe 3%, up 4.
8% of the rest of the world.
I only have some analytical comments to help you.
Globally, the impact of discontinued products in our laboratory restructuring is about 50 basis points negative, while the US part of the impact of discontinued products is the largest at 100 basis points.
We said on our previous phone call that we will give you this impact.
However, we do not currently adjust the reported internal growth of discontinued products or services.
Therefore, the headwind is the number in the report.
In Europe, the number reported is positive 0. 3.
This was negatively affected by the production cut-off products of approximately 25 to 30 basis points.
CIS is still negative. It was down.
It reduced Europe\'s numbers by about 30 basis points this quarter.
Elsewhere in the world, we are very happy with the growth of most countries.
One notable exception is the group of countries we call the Pacific Rim, which is included in the rest of the world and which is in the medium term
Single digits reported this quarter.
However, this is far from the recent performance and our expectations for the quarter.
The main reason is that our production facilities and distribution facilities in Tianjin, China are temporarily lost.
Our facility is very close to the port where a chemical explosion occurred on August, and we did suffer great damage, and our facility was not available for manufacturing, logistics and transportation for a few weeks in five to six years.
We have now resumed production and shipping and we expect this disruption to be temporary.
However, it does have a meaningful negative impact on our growth in the rest of the world this quarter.
As we enter the fourth quarter, we have a very good new product Channel for the next few quarters, and as Jim will point out later, we are now starting to implement our growth investment.
Of course, both of these will help speed up our business next year.
The last comment.
For me, this change in growth investment is very important, because we are now at the moment when we have the most flexibility to invest in growth since the recession.
Of course, this is due to the hard work and dedication of our more than 11,000 employees around the world, and we are all very happy that we can now move into the next phase of the initiative.
Under the guidance, we once again increased the yield range by 2015 by raising the bottom of the interval by $0.
Top in the range of 04 and 0 dollars. 02.
This brings a new range for adjusted earnings per share of $2. 58 to be at $2. There are 64 this year.
On the operating profit margin target, of course, we have exceeded the target we set in early 2014, and we will consider this and we will give you further guidance on the year-end call.
Needless to say, the goal we set before has a good advantage, and of course it has now been achieved.
Of course, without some comments on the Sirona merger, our discussion this morning would be incomplete.
As you know, we announced our historic merger with Sirona back in September.
This is a very exciting event for both companies and our market.
By bringing together the best technical equipment and consumables, we believe that we can deliver more innovation and value to our customers than any company can provide itself.
Of course, we are currently applying for regulatory approval and waiting for shareholder approval from both companies, and we expect the transaction to close by 2016.
While at this conference call we will not say too much about the merger, to be fair, we are very enthusiastic about the potential of the deal and the future we have with Sirona and its employees.
This concludes my prepared statement.
I would like to transfer the call to Jim now to talk to our operation plan. Jim?
Thank you, Brett.
I would like to provide an operational update for the third quarter and provide some further views on the initiative in 2015.
I will then hand it over to Chris for a financial review.
From our third quarter sales performance, our global consumables business is growing in the medium term.
We believe that the market is above the single digit, the rest of the world is leading in growth, the US is growing strongly, and Europe is growing positively.
Our program sales program and new product launches continue to support our consumer goods business worldwide.
Dental professional growth is low in single digits, and growth is affected by the generally slow situation in Europe, the continued price competition in the orthodontic market, and CIS and professional contraction.
These factors are offset by several new products in our root canal surgery business, the increase in neighbor volume in the US, the expansion of our business scope and the continued good performance of our EV implant system launched last year.
Our lab business went down halfway.
Quarterly single digits affected by discontinued products.
We have previously outlined the global restructuring of our laboratory business, including stopping certain commercial production lines, selling some product lines, and enterprises, and also making appropriate adjustments to the cost structure, to get rid of the market that has been based on precious metals in the past.
The restructuring will be basically completed by the end of this year.
However, as we mark the shutdown of several product lines, it will have an impact in the middle of next year.
We have now launched all the main elements of the restructuring and are confident that this will improve business focus and profitability through a streamlined portfolio and a transition to higher growth and more profitable laboratory materials.
As we enter the fourth quarter, we plan to launch several new products in our business.
Our recovery business launched CeramX Universal in September with over 1,000 new users.
Thanks to the unique sphere technology, spherical filling technology, this is a general-purpose composite material with natural aesthetics.
CeramX provides superior processing power without compromising long-term performance features.
In addition, in our restorative team, our Midwest division will launch the Midwest heritage Plus.
The original tradition is high
Speed handpiece is one of the most recognized and utilized handpieces in the North American market.
The new Legacy Plus combines superior features, higher reliability and significant power improvements, as well as superior vibration and noise reduction.
Our preventive business will work with Steri-Mate 360.
This will be one of the most important upgrades of our market-leading Cavitron ultrasonic scalpers in a few years.
The footprint of Cavitron Touch will be much smaller, including a Touch screen interface, lightweight and compact wires, and superior spin features, providing better access and ergonomics for clinicians.
We expect these products to grow strongly in the fourth quarter, but the impact will definitely be even greater as they roll out globally in the coming quarters.
In addition to the products mentioned here, we plan to launch several other products this quarter and enter 2016, which will be on display at the grand New York Dental Conference in November and the Chicago winter conference in February.
On the whole, we saw a sharp acceleration in the release of new products in 2016.
We are excited about new products coming on sale in the coming quarters, certainly more than normal product traffic.
As Bret outlined, we continue to make good progress on our operating target of 20% profit, and in some ways we advance.
At this point, we would like to provide more details about our reinvestment plan to support long-term growth as part of the global efficiency plan.
As mentioned earlier, in our manufacturing field, we will focus on the global product platform of the clinical discipline.
One of the important factors is the transformation of the global portfolio strategy into business execution through regional business organizations.
Structurally, this needs to be increased
Market expertise in each global portfolio.
We are making investments, and based on these investments, each business unit will have dedicated resources in their respective geographic markets to support the technological market and competitive development, we expect more than 50 people to finish q1 2016.
We also highlight our commitment to sales excellence, that is, training and development and the expansion of the sales force.
We constantly review our sales staff adjustments and deployments and conclude to add sales reps across multiple business and geographic areas.
We are starting this activity now and we will have some people in place by the end of the year, although most of these positions will be filled by q1.
In order to support sales expansion and impact worldwide and our sales core, we have launched a global sales excellence program, this will seek to standardize and expand our sales training development efforts worldwide.
A complementary strategy in this regard is to expand clinical education, which is also ongoing.
With several innovative approaches to design and deployment, this investment will be based on clinical-related training and education with a special emphasis on program consistency and enhanced performance.
Finally, as we noted earlier, we are moving to independent domestic enterprises to fully integrate the DENTSPLY national organization, which will lead to the launch of five countries by January 1, 2016.
Early in the process, we saw the leverage of critical mass, and the collaboration of individual national management teams, and we believe that with the development of national organizations, this will accelerate common customer strategy and business success.
At the moment, it certainly has a lot of activities to board.
It is satisfying and exciting that we are now at the insertion point of the efficiency plan, because as we move to the investment and growth plan, the focus, which is almost entirely cost-driven, is now more balanced.
We look forward to updating you on our progress as we move forward.
At this point, I want to hand it over to Chris Clark for a financial review.
Thank you, Jim. Good morning, everyone.
I would like to provide some details of our third quarter performance by reviewing key elements of the income statement, balance sheet and cash flow statement, and provide some additional color for our profit improvement plan.
Sales excluding metals fell by 7 in the third quarter.
7% internal growth of 1 compared to the previous year.
7% was offset by the negative currency translation of 9. 1%.
Net acquisition growth was negative 0.
3% this quarter.
This mainly reflects the impact of several non-asset divestitures
More than the core product line that offset the impact of the acquisition.
As Bret mentioned, the impact of discontinued products has reduced the internal growth rate for the quarter by about 50 basis points.
We continued to maintain strong operating margin performance in the third quarter, operating margin of 20.
Excluding the adjusted precious metals, 9% of sales increased by 220 basis points over 18 basis points.
The previous quarter was 7%.
This represents the accelerating impact of our global efficiency improvement initiative, and I will provide more perspective later.
In the first three quarters of 2015, our adjusted profit margin was 20.
3% improved by 170 basis points over the same period in 2014.
About 1 out of 3 of this quarter\'s operating profit margin increase is the result of money, money is still the headwind factor of our sales and income, but it is currently the headwind factor of our operating profit margin.
If the exchange rate remains similar to today, the currency will be the headwind of our operating margin in 2016, but will be offset by savings from the efficiency plan.
At this point, nevertheless, we expect profit margins to expand next year.
We will update you more when we report year-end results.
Adjusted gross profit for the third quarter was 60.
Excluding precious metals, 1% of sales increased by 240 basis points over the previous year.
The adjusted SG & A fee is 39.
Excluding precious metals, 2% of sales increased by 10 basis points over 2014.
We see that the global efficiency program has benefits in terms of our commodity sales costs and operating expenses, and at this time, the number of supportive investments is not commensurate through the operating expenditure line.
As I mentioned, as the profit and loss impact of our overall efforts continues to accelerate, we continue to be very pleased with the progress of our global efficiency plan.
The initiatives that we drive these impacts represent significant changes in our structure and operational approach that enable us to better utilize our base assets and expense base.
We continue to advance the implementation of the laboratory business restructuring that we discussed during our last quarter call, we are satisfied with the continuous improvement of the operational results related to our actions, and the forward-looking direction of the business, now we have moved from planning to implementation.
Of course, as mentioned earlier, this is a drag on our business due to discontinued products, but the operational leverage obtained is huge and is going on as planned.
Savings from this effort will continue to increase in the coming quarters, and resistance to internal growth will continue to increase.
Also, in the third quarter, we closed an additional manufacturing location and announced that the second location was about to close, in line with our goal of stripping or stopping low or non-profit margins
Core product line, but also promote the utilization of more manufacturing facilities.
Our global procurement program also continues to gain momentum, enabling us to leverage the purchasing power of $2 to deliver benefits.
8 billion companies compared to smaller decentralized business units.
As Jim pointed out, we have also implemented the global SVU structure to a large extent, providing more strategic and operational support, while also achieving a global rather than regional basis.
We are also advancing our national operating model in many regions, which allows us to maintain the advantages of SVU\'s specific sales focus while also achieving national support agencies that leverage the strategic and cost advantage of generic products.
In addition to improving operational efficiency, we believe this will greatly improve the level of collaboration between our businesses, thus increasing the value we can provide to our average customers.
Finally, we are moving forward with the integration of back office functions, including shared services that support transaction accounting, and the initial stages of our logistics integration plan.
The impact of these strategic initiatives on our total profit and loss is accelerating and is a key driver of the strong operating profit margin performance we have been discussing.
Also, as discussed by Jim, this provides us with confidence that we are now increasingly shifting our focus to include reinvestment in growth.
Our reporting rate for the third quarter was 21. 1%.
Our business tax rate for the quarter is 22. 7%.
Compared with the third quarter of last year, a drop of 10 basis points.
In the first three quarters of this year, due to the unfavorable geographic income combination compared to the previous year, we continue to see a slight decrease in the tax rate of about 20 basis points.
Net income due to the international situation of dengshibai
The reporting base for the third quarter was $84. $6 million or $0.
59 per share after dilution.
By contrast, it\'s $75. $3 million or $0.
In the third quarter of 2014, 52 shares were diluted per share.
These results include some of the items that we have listed in our schedule for release.
Adjusted, net profit was $93.
This quarter was $5 million, compared to $83.
9 million, after adjustment, the earnings per share increased by 6. 5% to $0.
66 than the third quarter of last year\'s performance of $0. 62.
Money represents the headwinds of revenue this quarter.
5%, according to the current exchange rate, the annual impact of the currency is estimated to be about $0.
£ 15 per share is worse than what we assumed in our initial guidance this year.
In terms of cash flow, our operating cash flow for the quarter was $159. 7 million.
That\'s up 8% from $145 in the third quarter of last year. 7 million.
This represents a record cash flow performance in the third quarter, and so far our operating cash flow is $0. 371 billion, which is also the record for the first nine months of this year.
We have a free cash flow yield of 6 based on operating cash flow minus capital expenditure divided by market value.
The end of the third quarter was 9%.
With free cash flow of $141 in the third quarter, cash flow conversion is still excellent.
4 million is 151% of our adjusted net income for the current period.
Inventory completed 115 days on September.
Four days less than last year.
Sorry, September is 60 days.
This is also 2 days less than the previous year, and the number of days payable is 7 days more than the previous year.
Overall, we are satisfied with the status quo of our initiatives to improve the performance of working capital.
Our overall operating results, coupled with the improvement of our asset turnover, have driven solid results and solid improvements in our return on investment capital.
Capital expenditure for the quarter was $18 million, depreciation was $23 million, and amortization was $11 million.
We bought back about 240,000 shares at an average of $56 this quarter. 12 per share.
In the first nine months of 2015, we re-purchased 2.
1 million shares.
In EBITDA for the past 12 months, our leverage ratio has been defined as net debt, 1.
Five times at the end of September.
We continue to believe that, supported by our strong balance sheet and cash flow regeneration, capital allocation is a driver of shareholder value through acquisitions and stock buybacks.
I would like to give a brief introduction to the time that we expect to complete certain documents in the next few days.
In view of the upcoming merger with Sirona and related capital market activities, we will revise some of our historical finances to comply with our divisional reports starting this year.
So you will see a revision soon-
This revision in Table 10-
K that will be submitted soon.
In addition, we expect to resubmit
4 Power of Attorney and our Form 10-
The third quarter shortly thereafter.
Finally, as Bret points out, based on our continued strong earnings performance, we have raised our earnings guidance of 2015 per share to $2. 58 to $2.
64 on the basis of adjustment.
This reflects the strong momentum of our global efficiency program, the associated costs of investment growth mentioned by Jim, and the continued currency headwinds of about $0.
According to the current interest rate, the fourth quarter.
This completes the statement that we have prepared, and we thank you for your support, and now we are happy to answer any questions you may have. Question-and-
We will join William Blair from John.
Good morning, guys.
Actually, Robbie applied for John today.
Thank you for answering the question.
Just started the marketing steps, thanks for the details affecting the growth this quarter and some of the one-off projects, but even if it is adjusted for those projects, it looks like there is a little bit of deterioration in internal growth.
Can you help us understand?
Have you seen any weaknesses or specific areas where anything seems to be slowing down?
Bret WiseRobbie, let me take a picture.
I think it may be the most difficult thing for us to comment before the third quarter to assess the trend because our holiday is extended, especially in Europe, and the United States will be affected as a result.
I think if you make adjustments to discontinued products, the US may be a bit light this quarter.
We don\'t know--
We have not seen some of the superimposed trends that have caused this.
It\'s just that some of our businesses are a little weaker than we thought.
We think this may be the time.
Europe rose only slightly in the quarter.
Of course, although this situation is decreasing, it has been suppressed by the CIS.
In southern Europe, we see sustained economic growth.
In northern Europe, the situation is relatively flat, but the impact of discontinued products is here.
So I don\'t think there is any substantial change in the trend there.
In other parts of the world, we are in very good condition, except for this kind of interruption we have in China, because of the explosion of factories, Port factories.
Our factory did not explode, but we did lose access to that factory and the factory was damaged.
These factors will affect the rest of the world.
So I really don\'t. -
I don\'t know much about the trends we see.
I think the market is stable and we now want to reinvest in some markets that we think have good growth potential.
At this point, it sounds like you mentioned something in terms of new product launches next year, representing an increase in the fourth and first quarter.
Can you tell us more details?
Maybe just how many new products will be expected, how many reps you want to add, and then when you want to see some of these reinvestment and growth appear on topline.
Is it 2016 events in 2017 or more? Thanks.
Bret WiseOkay, I will try these problems and then let Jim solve the new product.
As part of Jim\'s reinvestment this morning, we gave you some insight into the number of technicians we put into the market.
With regard to the expansion of the sales reps, we will keep this now as it is competitive sensitive, but it is a meaningful addition from now until the end of the first quarter.
I don\'t think that will have any real impact in the fourth quarter, which means we have to hire these people, on them, to train them and get them to work on the ground.
So I think at this point it\'s more of a 2016 impact than a 2015 impact.
Jim, do you have some insight into the new product issue he raised?
Jim moshyer is definitely Robbie.
From some perspective, it is clear that we have outlined several key releases that are going on in the fourth quarter of this year.
I mentioned that the Midwest can be pieced together, and the new Cavitron.
These are equipment products.
Their fares are higher than our general consumables, they are always advantageous to launch these products at the end of the year, and we expect some good performance from these products.
It is clear that these products will continue to move forward.
Also, as we can see next year, I think usually, ideally, you want to have a situation where you have this constant, consistent flow of new products.
The reality is that there are some ups and downs in this process.
In fact, what we are seeing now is that we are seeing a considerable wave of products that will come up in the first quarter.
I can say that we have these in all areas.
We have some notable additions in the healthcare business, and also in the prevention business.
So I am sure that what you will see in the first half of next year is a very consistent addition of new products in all areas.
Thank you very much.
We will be answering Jeff Johnson\'s next question with Robert Baird.
Thank you all. Good morning.
Can you hear me?
Bret, let me start with you and get back to the problem with Robbie.
If we calculate and adjust based on China port issues and laboratory divestiture, maybe organic growth 2.
5%, maybe a little north.
At this point, it may be a bit lower than the market, although if this is true or false, we will see some other people reporting here.
When we think about these investments and the new product process Jim just talked about, are these investments when we get into 2016? Do you think it is better to re-market the growth rate than the market?
How do we judge this and how should we rate you in the next few quarters?
Bret wiseok, Jeff, let me give it a try.
At this point, our only data point is one of the reported manufacturers, which sounds like their growth and organic growth is like our consumables.
So when we have two major dealer reports, of course we will know more and we will have some other industry players reporting.
But I think we are close to the lack of the market, such as the loss of discontinued products and Chinese factories.
New Investment, one of the things I commented on in my prepared comments is that we have been fighting since the recession, which means there is no strong organic growth, this means that there is no extra plan for revenue growth.
As you may recall, one of the main themes when we started this efficiency plan was to reduce our fixed costs and give us the flexibility to put money into the growth plan.
We are now more so than at any time since the recession.
So what I am now more optimistic than I have been for five or six years is that as we gain these excess earnings and reinvestment capabilities, we will drive our organic growth beyond the market.
I don\'t want to admit that we are below the market now.
I\'m not sure if we are.
I think one of the data points we \'ve seen so far shows that we\'re looking at the market right now.
But I think the key is some variable spending that will allow us to push it higher and I think you\'ll start seeing that when we get into 2016.
Okay, Jeff Johnson. It\'s very helpful. Thank you.
Then Chris, maybe just a few quick P & L clarification questions.
One is that when we consider the headwinds of next year\'s FX margin rate or margin percentage, I know you don\'t want to give 2016 guidance, but can you talk about what kind of guidance? Those will be--
Should we consider the headwinds of 30 to 50 basis points from margin, hedging issues, or should we consider quantification?
Chris clackyer, interest rates change a lot if you look obvious, so it will be very variable.
When we provide guidance on our next call, we will give you a more formal update.
At the current rate, this is basically at the high end of the range you point out.
At this time, this is based on today\'s rates, which are very unstable.
Jeff Johnson is white.
And then the last two of me, I just want to make sure the $10 equity and affiliates.
8 million, I think it\'s all excluded.
This could be a DO adjustment.
I think all of this is excluded. GAAP EPS.
I just wanted to confirm.
Then what drives interest in other businesses, down about $7 million year on year, and then what impact or impact does that have on EPS?
Something happened there with Chris Clark. You’re right;
Most of the affiliate interests are pulled out inGeneral accounting standards adjustment in the United States.
This is actually related to our redemption of convertible bonds.
We are still minority shareholders but the bonds are starting again and it is not in our best interest that we decide to continue to redeem them at this stage.
Based on this, there are some signs for market elements that float on this line as well as on interest and other lines.
So these are the main contents of the adjustment.
Bret Wise and those were unplugged.
Chris clarkthough left Africa
GAAP results, correct.
Jeff Johnson. Okay. Thank you.
We will answer the next question from Erin Wilson of the Bank of Ibuprofen Suspension Drops, USA.
Thanks, Irene WilsonGreat.
Can you elaborate on the area you see in the implant business?
Do you see any meaningful changes in price or competitive dynamics, simply because of integration, or because the disruption or integration process actually helps you, how do you imagine this market growing in the short and long term?
Bret wiseok, I will bring-Jim, would you like to give it a try?
It\'s definitely Jim moshiyes.
Erin, I think from the point of view of the implant market, I think we\'re going to say that it\'s pretty stable over the last few quarters.
Obviously, we haven\'t seen a lot of reports from other implant players yet, so it\'s a bit difficult to measure their results.
But in general, as I said, we would say that the market is fairly stable.
Clearly, the United States may be stronger than Europe.
Europe is a bit confusing, but it hasn\'t changed in the last few quarters.
From the perspective of the whole market, I think we would expect it to continue at the current rate.
There may be a slight improvement next year.
In terms of pricing, average selling prices, competitive factors put some pressure on average selling prices, but not significantly.
One thing I would like to add is that our new system continues to be well absorbed, which is an advanced system.
Therefore, we have achieved a good conversion from the new system at the price point where we have pushed it to the market.
So I think this is a good data point.
Erin Zinc Citrate Tablets Sono is good.
You talked about this briefly, but can you talk about the broader potential demand trends in the US and how we should look at the quarterly progress here?
Bret WiseErin, I think it\'s consistent with what I said before.
August is not a month worth measuring in the United States.
I would like to say that this quarter may be a little stronger at the beginning than at the end, but what we are talking about here is a few basis points.
I don\'t think this is something I will read about any important trends.
We are still interested in new products that we bring to the market.
I think our representative has done a good job of maximizing the use of these aspects.
So I think, as we said in our statement prepared by the United States, the trend is stable.
Irene Zinc Citrate Tablets and a quick one.
In terms of products discontinued in the fourth quarter, what is included in your expectations?
I think the fourth quarter is actually Christmas.
Chris Clark is accelerating.
So when we see it, we have--
It is clear that we basically do not provide internal growth guidance.
But including in our expectations for the quarter, the headwinds of discontinued products are growing.
Bret wisdom hat will be a little heavier in the fourth and first quarter, and then it will start to weaken by the middle of next year.
Chris Clark, it will start to fall back.
Erin Zinc Citrate Tablets Sono is good. Thank you.
We will answer the next question with Steve Beuchaw from Morgan Stanley.
Good morning, guys.
Thank you for answering the question.
There is only one Bret.
Brett, I want to open the floor and give you the opportunity to talk about what you \'ve seen in your conversation with investors over the past few weeks related to the Sirona deal.
If you feel that you want to invest, or need to invest the most time to help people understand the merits of the transaction, the parameters of the transaction are just to help people feel comfortable when thinking about the story.
Bret WiseSteve, we are now in the process of regulatory approval and are applying for trust approval and shareholder approval.
I think at this point we have to stick to the script when we make the announcement.
At this point, the two companies are still operating independently of each other.
So I thought I \'d get you back to the slide we posted in the mid-termSeptember.
I don\'t think we can go any further this morning at this conference call.
Steve, I have to try.
Then I will ask two simple questions.
One of the trends this quarter.
Leaving aside the impact of discontinued operations, do you see inventory in any distribution channel that may have an impact on quarterly performance in the Channel?
Bret WiseI will start this and Chris if you have anything to add. No.
I think we had a price increase in October 1, we had a price increase every year in October 1, and we saw similar activities from the channel that we usually do.
So no, I don\'t think I see any substantial difference. Chris ClarkNo.
I think I will add that I think our price increase is very similar to the speed of previous years.
Generally in the range of that point to half.
I think the behavior of our distributors is very similar to that of the past.
There are companies that may be a little longer or shorter in the context of the previous period.
But these are often average.
So I would say that in general, it is very similar to the impact we have seen in the past.
Steve BeuchawOkay and my last one actually came back to Tianjin.
You mentioned in the prepared review that it\'s been offline for five to six weeks and I\'m sure you mentioned that it was in August.
Do we see any of this impact being recaptured and do you have a rough idea of the extent of the impact for the quarter?
Sorry if I missed this in the prepared review. Thanks.
Bret WiseI believes we have not quantified this in the prepared comments.
I\'ll start first if you want to quantify, then Chris.
The factory was back in operation and we also got the stock of the factory at the end of September.
So we lost five weeks, maybe even six weeks, but the explosion happened in early August and when we left the quarter, we were completely in the facility again.
I just want to make it clear that in countries like China where we import products and put it at the point of logistics, we don\'t have enough flexibility because they have to clean up the ports, so there is not enough flexibility to introduce new products to the country.
Therefore, we have lost not only the manufacturing opportunity but also the opportunity to ship the inventory, which is the reason for this confusion. Chris Clark
I think that the trajectory difference in the business alone has had an impact on the entire number of internal growth of about 60 basis points, and has had an impact on the rest of the world of about 300 basis points.
Again, it\'s hard to say, but if we look at the difference in trends, that\'s the impact.
Thank you again, Steve BeuchawGuys.
A good morning.
We will answer David Stratton\'s next question with the Great Lakes review.
Good morning, David.
Regarding the current responsibility, I just have a housekeeping issue.
This figure has risen by about 40%, and I just want to make sure that all of this is attributed to the current part of the long term debt decline transition to long term debt. Thank you.
Chris Clark is right.
Yes, you see.
Thank you, David steton.
Bret Wiri added that these liabilities are likely to be refinanced.
Chris Clark. That\'s right.
Our intention is to refinance in the short term, but they did in the quarter from the long termUntil now. Operator[
We will take the next one from Brandon Curia with Jeffries.
Brandon CouillardThanks. Good morning.
Chris, in terms of liquidity, you have made considerable progress in reducing inventory.
Should we expect this trend to stabilize over the next 6 to 12 months as inventory for new product launches increases?
Then, can you give us a revised opinion on capital expenditure this year?
Chris Clark, of course.
With regard to inventory, we obviously did not provide guidance on a quarterly basis, but I think I would say that we have gradually reduced our inventory over a period of time.
I will expect it to continue to decline gradually.
We may have a separate quarter, in which it may remain stable, or a bit depending on the transition program, our transition plan relative to the profit increase plan in the short term, or frankly, the new product you mentioned.
But I think they need a longer period of time or a modest medium term view, and Brandon says I hope ---
We have quite a bit of room to keep taking this thing down.
Compared to capital expenditure, according to historical trends so far, our capital expenditure is relatively low at present.
I think this is also an area relative to the asset turnover that we are looking.
I think I would say that this year, I expect prices to be between $65 million and $80 million this year.
Brandon cullede ChaoThank you.
The operator has no other problems in the queue at this time.
For any additional or concluding remarks, I would like to return it to our speaker.
The interest of Bret densberg WiseThank.
This is the end of our conference call.
I will be by your side todayups. Thank you.
This concludes today\'s meeting.
Thank you for your participation.