Dentsply Sirona Earnings: Weak Results as Tough Environment Persists and Drags Sales and Margin

No-moat Dentsply Sirona reported tepid second-quarter earnings that came in below our expectations. Total sales of $984 million were down 4.3% as the challenging macroenvironment, foreign exchange headwinds and unfavorable product mix weighed down sales. While three of four segments delivered positive organic growth, connected technology solutions plunged over 18% on a reported basis and more than offset these gains. Despite launching the lower-priced and legacy brand Orthophos SL in Europe last quarter to combat marketwide pressures and competition headwinds, imaging equipment still suffered. The challenged top line flowed down to impact profitability, and poor product mix, volume challenges, and pricing weighed down margins. While we still expect a tough environment in the second half of the year across geographies, management noted some improvement in customer surveys from key markets like Germany, so we are slightly encouraged by this.