DENTSPLY SIRONA Inc.

Previous wording

Various headwinds are expected to weigh on global growth throughout the remainder of 2025, due in large part to increasing uncertainties related to global trade policy and inflation. A number of key macroeconomic forecasts were sharply lowered in April 2025 in response to the potential for a severe escalation in global trade barriers and competition. Weaker overall growth in the United States and narrowing interest rate differentials suggest the potential for further depreciation of the U.S. dollar and heightened risk of recession. Markets in several other regions, including Europe, have continued to experience varying degrees of pressures inhibiting growth and face concerns about the systemic impacts of adverse economic conditions and geopolitical events. Changes in trade policy, supply chain constraints, higher energy costs, labor shortages, and geopolitical tensions in the Middle East and Ukraine have all contributed to the risk of higher inflation and general economic uncertainty across the industry and the regions in which the Company operates. In recent years the Company has experienced higher prices for certain raw materials, including electronic components, which have led to a negative impact on margins. Although the rate of inflation showed signs of slowing at the start of 2025, prices for both raw materials and wages are expected to remain high through the remainder of the year, and prices may potentially increase if trade conflicts deepen. The Company may not be successful in its efforts to fully mitigate or offset the impacts of cost inflation.

Current wording

Various headwinds are expected to weigh on global growth throughout the remainder of 2025, due in large part to increasing uncertainties related to global trade policies and inflation. Weaker overall growth in the United States and narrowing interest rate differentials suggest the potential for further depreciation of the U.S. dollar and heightened risk of recession. Markets in several other regions, including Europe, have continued to experience varying degrees of pressures inhibiting growth and face concerns about the systemic impacts of adverse economic conditions and geopolitical events. Changes in trade policy, supply chain constraints, higher energy costs, labor shortages, and geopolitical tensions in the Middle East and Ukraine have all contributed to the risk of higher inflation and general economic uncertainty across the industry and the regions in which the Company operates. In recent years, the Company has experienced higher prices for certain raw materials, including electronic components, which have led to a negative impact on margins. The Company may not be successful in its efforts to fully mitigate or offset the impacts of cost inflation.

Previous wording

The challenging macroeconomic conditions have also negatively impacted demand for the Company’s products and may continue to do so in the future. These conditions include a steep decline in measures of consumer confidence in the United States since the start of the year. Additionally, higher interest rates have put pressure on the ability and willingness of our customers to obtain financing for equipment purchases, which adversely affects volumes for these products. The higher cost of borrowing has also reduced patient demand for elective dental procedures, which affects sales of the Company’s offerings more broadly. The Company has also faced additional competitive pressure from dental practices for lower-priced options for equipment and other products, in particular imaging products and implants. While the Company has taken steps to address competitive pressures, such as the reintroduction of its Orthophos SL 2D and 3D products, these trends may continue. While patient volumes have largely remained stable in the United States, the impact of macroeconomic declines and high interest rates has been particularly apparent in Germany, which represented 11% of the Company’s sales for the three months ended March 31, 2025. Germany was in a recession for most of 2023, largely due to persistent high inflation and falling household spending. Although conditions, including inflation, marginally improved in 2024, economic forecasts by the German government project limited growth in 2025. The Company anticipates that the challenging macroeconomic and market conditions in Germany are likely to persist and may negatively impact sales of equipment in 2025, despite moderate growth in the first quarter.

Current wording

The challenging macroeconomic conditions have impacted consumer confidence, ability and willingness of clinicians to obtain financing to purchase equipment, and consumer discretionary spending for elective procedures, leading to adverse impacts on the Company’s results of operations. The Company has taken actions to attempt to mitigate the effects of the macroeconomic conditions and may take further actions in the future. While patient volumes have largely remained stable in the United States, the impact of macroeconomic declines and high interest rates has been particularly apparent in Germany, which represented 11% of the Company’s sales for the six months ended June 30, 2025. Germany was in a recession for most of 2023 and 2024, largely due to persistent high inflation and falling household spending. The Company anticipates that the challenging macroeconomic and market conditions in Germany are likely to persist and may negatively impact sales of equipment in 2025, despite moderate growth in the first half of the year.

Previous wording

As disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Form 10-K”), the Company’s business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States and other countries. The U.S. government has recently implemented or is in the process of implementing various tariffs on the importation of goods from certain countries, a number of which are applicable to the Company’s supply chain, operations, and sales. On April 2, 2025, the United States announced a baseline 10% tariff on all foreign goods and incremental tariff rates on goods imported from specified nations, including China and those in the European Union. The announced tariffs incremental to the baseline were subsequently suspended for a period of 90 days; however, China’s tariff rate was raised to 145%.

Current wording

As disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Form 10-K”), the Company’s business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States and other countries. The U.S. government has recently implemented or is in the process of implementing various tariffs on the importation of goods from certain countries, a number of which are applicable to the Company’s supply chain, operations, and sales, including a baseline 10% tariff on all foreign goods, a 15% tariff in lieu of the baseline tariff on goods from countries in the European Union, and higher incremental tariff rates on goods imported from other specified nations.

Previous wording

The tariffs enacted and proposed by the Trump Administration to date and retaliatory tariffs by other countries could make it significantly more difficult or costly for the Company to import certain products or materials to the United States, or export products or materials from the United States to other countries. Currently, a small portion of the products, materials, and components used in our products are imported from China, and a significant share of the dental equipment that we sell in the United States is manufactured in Europe. Europe is also a major market for our products, while sales in China represent less than 5% of the Company’s global sales on an annual basis. If the United States’ previously announced incremental tariffs imposed on member states of the European Union go into effect, or if member states of the European Union subsequently impose retaliatory tariffs on the United States, there may be a material impact on our business and results of operations. We continue to monitor and evaluate the ongoing and potential impacts of the tariffs and changes in trade policy, whether implemented or proposed, on our supply chain, costs, sales and profitability. We seek to implement strategies that would mitigate such impacts, including by reviewing competitive pricing strategies to offset tariffs and evaluating potential sourcing options that work with our vendors and merchants to seek to minimize products sourced from high tariff rate countries, both for existing products and for new product development. The impact that these tariffs and changes in trade policy will ultimately have on our financial results remains unclear, including the impact on demand for our products in certain markets if prices rise as a consequence of import tariffs. For additional information, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Current wording

The tariffs enacted and proposed by the Trump Administration to date and retaliatory tariffs by other countries could make it significantly more difficult or costly for the Company to import certain products or materials to the United States, or export products or materials from the United States to other countries. Currently, a small portion of the products, materials, and components used in our products are imported from China, and a significant share of the dental equipment that we sell in the United States is manufactured in Europe. Europe is also a major market for our products, including certain consumable products made in the United States, while sales in China represent less than 5% of the Company’s global sales on an annual basis. We continue to monitor and evaluate the ongoing and potential impacts of the tariffs and changes in trade policy, whether implemented or proposed, on our supply chain, costs, net sales and profitability. We have implemented and continue to evaluate additional strategies that would mitigate such impacts, including competitive pricing strategies to offset tariffs and evaluating potential sourcing options that work with our vendors and merchants to seek to minimize products sourced from high tariff rate countries, both for existing products and for new product development. The impact that these tariffs and changes in trade policy will ultimately have on our financial results remains uncertain, including the impact on demand for our products in certain markets if prices rise as a consequence of import tariffs. For additional information, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Previous wording

In 2025, geopolitical conflicts are expected to continue to shape market dynamics and pose general threats to financial stability in affected regions, including ongoing tensions from the Russia-Ukraine conflict and the conflict in the Middle East. Overall, the Company’s operations in Russia, Ukraine, and Israel have not been materially impacted by these conflicts.

Current wording

Geopolitical conflicts are expected to continue to shape market dynamics and pose general threats to financial stability in affected regions, including ongoing tensions from both the Russia-Ukraine conflict and the conflict in the Middle East, neither of which has eased during the second quarter. Overall, the Company’s operations in Russia, Ukraine, and Israel have not been materially impacted by these conflicts.

Previous wording

The Company’s operations in Israel consist of two manufacturing facilities for implants products, with one site in northern Israel and one site in southern Israel, both of which remain open and continue to operate normally. For the three months ended March 31, 2025, net sales of products produced at these sites comprised approximately 4% of our consolidated net sales and 15% of the net sales of the Orthodontic and Implant Solutions segment. Net assets within Israel totaled $153 million as of March 31, 2025, consisting primarily of acquired technology, property, plant and equipment, inventory, and cash associated with our operations in the country.

Current wording

The Company’s operations in Israel consist of two manufacturing facilities for implants products, with one site in northern Israel and one site in southern Israel, both of which remain open and continue to operate normally. For the six months ended June 30, 2025, net sales of products produced at these sites comprised approximately 3% of our consolidated net sales and 13% of the net sales of the Orthodontic and Implant Solutions segment. Net assets within Israel totaled $163 million as of June 30, 2025, consisting primarily of acquired technology, property, plant and equipment, cash, and inventory associated with our operations in the country.

Previous wording

In May 2024, in response to ongoing military actions by Israel in the Gaza strip, the government of Turkey implemented restrictions on the import of goods manufactured within Israel for sale in the Turkish market, which were still in effect as of March 31, 2025. Sales of our products made in Israel and sold in Turkey have historically represented approximately 1% of our global sales of the Implant & Prosthetic Solutions reporting unit, but this product category is an area of relatively high potential growth. The loss of sales to Turkey in 2024 was partially offset by sales of implants produced outside of Israel. It is not clear when these restrictions will be lifted or if other countries will institute similar restrictions.

Current wording

In May 2024, in response to ongoing military actions by Israel in the Gaza strip, the government of Turkey implemented restrictions on the import of goods manufactured within Israel for sale in the Turkish market, which were still in effect as of June 30, 2025. Sales of our products made in Israel and sold in Turkey have historically represented approximately 1% of our global sales of the Implant & Prosthetic Solutions reporting unit, but this product category is an area of relatively high potential growth. The loss of sales to Turkey has been partially offset by sales of implants produced outside of Israel. It is not clear when these restrictions will be lifted or if other countries will institute similar restrictions.

Previous wording

In February 2022, because of the invasion of Ukraine by Russia, economic sanctions were imposed by the United States, the European Union, and certain other countries on Russian financial institutions and businesses. Due to the medical nature of our products, the current sanctions have not materially restricted our ability to continue selling many of our products to customers located in Russia. For the three months ended March 31, 2025, net sales in Russia and Ukraine were approximately 2% of our consolidated net sales, and net assets in these countries were $87 million as of March 31, 2025. These net assets include $49 million of cash and cash equivalents held within Russia as of March 31, 2025, as well as inventory and trade accounts receivable. Due to currency control measures imposed by the Russian government, which include restrictions on the ability of companies to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia, we continue to be limited in our ability to transfer this cash balance out of Russia without incurring substantial costs. Additionally, beginning in September 2024, as a result of further restrictions by European financial institutions on receiving payments from Russia, our capacity to receive intercompany payments for the delivery of our products into Russia has been partially reduced, which further limits our ability to use cash received from sales in Russia for our general purposes. It is unclear whether the remaining financial institutions which the Company relies upon for bank transfers from Russia will ultimately be able to continue facilitating payments, or for how long. If these restrictions on cash transfers from Russia worsen, or if we are not able to obtain long-term relief from these restrictions, we may need to take additional actions, including potential suspension of our business in Russia.

Current wording

In February 2022, because of the invasion of Ukraine by Russia, economic sanctions were imposed by the United States, the European Union, and certain other countries on Russian financial institutions and businesses. Due to the medical nature of our products, the current sanctions have not materially restricted our ability to continue selling many of our products to customers located in Russia. For the six months ended June 30, 2025, net sales in Russia and Ukraine were approximately 3% of our consolidated net sales, and net assets in these countries were $99 million as of June 30, 2025. These net assets include $61 million of cash and cash equivalents held within Russia as of June 30, 2025, as well as inventory and trade accounts receivable. Due to currency control measures imposed by the Russian government, which include restrictions on the ability of companies to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia, we continue to be limited in our ability to transfer this cash balance out of Russia without incurring substantial costs. Additionally, beginning in September 2024, as a result of further restrictions by European financial institutions on receiving payments from Russia, our capacity to receive intercompany payments for the delivery of our products into Russia has been partially reduced, which further limits our ability to use cash received from sales in Russia for our general purposes. It is unclear whether the remaining financial institutions which the Company relies upon for bank transfers from Russia will ultimately be able to continue facilitating payments, or for how long. If these restrictions on cash transfers from Russia worsen, or if we are not able to obtain long-term relief from these restrictions, we may need to take additional actions, including potential suspension of our business in Russia.

Previous wording

In July 2024, the Company delivered a one-year notice of non-renewal in connection with its non-exclusive distribution agreements with Patterson Companies, Inc. (“Patterson”) for the distribution of dental equipment in the United States and Canada. It is anticipated that Patterson will continue to be one of the Company’s two largest distributors as a percentage of the Company’s global revenue during the one-year notice period. The Company intends to continue to engage in discussions for new distribution agreements with Patterson. However, failure to successfully renegotiate the distribution agreements or secure potential new agreements with another distributor could have a material adverse effect on the Company’s business, operating results and financial condition. The Company has not incurred any charges against earnings to date related to non-renewal of the distribution agreements. For additional information, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Current wording

In July 2024, the Company delivered a one-year notice of non-renewal in connection with its non-exclusive distribution agreements with Patterson Companies, Inc. (“Patterson”) for the distribution of dental equipment in the United States and Canada. The Company remains engaged in discussions for new distribution agreements with Patterson. It is anticipated that Patterson will continue to be one of the Company’s two largest distributors as a percentage of the Company’s global revenue while negotiations continue. However, failure to successfully renegotiate the distribution agreements or secure potential new agreements with another distributor could have a material adverse effect on the Company’s business, operating results and financial condition. For additional information, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Previous wording

RESULTS OF OPERATIONS, THREE MONTHS ENDED MARCH 31, 2025 COMPARED TO THREE MONTHS ENDED MARCH 31, 2024

Current wording

RESULTS OF OPERATIONS, THREE AND SIX MONTHS ENDED JUNE 30, 2025 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 2024

Previous wording

The Company presents net sales comparing the current year periods to the prior year periods. In addition, the Company also presents changes in net sales on an organic sales basis, which is a Non-GAAP measure. The Company defines “organic sales” as the reported net sales adjusted for: (1) net sales from acquired and divested businesses recorded prior to the first anniversary of the acquisition or divestiture; (2) net sales attributable to discontinued product lines in both the current and prior year periods; and (3) the impact of foreign currency changes, which is calculated by translating current period net sales using the comparable prior period’s currency exchange rates.

Current wording

The Company presents net sales comparing the current year periods to the prior year periods. In addition, the Company also presents changes in net sales on a constant currency basis, which is a Non-GAAP measure. The Company defines “constant currency” as the reported net sales adjusted for the impact of foreign currency changes, which is calculated by translating current period net sales using the comparable prior period’s currency exchange rates.

Previous wording

Our measure of organic sales may differ from those used by other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP. Organic sales is an important internal measure for the Company, and its senior management receives a monthly analysis of operating results that includes organic sales. The performance of the Company is measured on this metric along with other performance metrics.

Current wording

Constant currency is an important internal measure for the Company, and its senior management receives a monthly analysis of operating results that includes constant currency. The performance of the Company is measured on this metric along with other performance metrics.

Previous wording

The Company discloses changes in organic sales to allow investors to evaluate the performance of the Company’s operations exclusive of the items listed above that may impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the Company. The Company believes that this supplemental information is helpful in understanding underlying net sales trends.

Current wording

The Company discloses changes in constant currency to allow investors to evaluate the performance of the Company’s operations exclusive of the items listed above that may impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the Company. The Company believes that this supplemental information is helpful in understanding underlying net sales trends. Our measure of constant currency may differ from those used by other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.

Previous wording

The decrease in organic sales was driven by lower volumes in the Orthodontic and Implant Solutions segment as a result of the suspension of the sale and marketing of Byte aligner system and impression kits announced in October 2024, as well as lower volumes of implants and prosthetics products across all regions. These decreases were partially offset by growth in the Wellspect Healthcare segment.

Current wording

The net sales decrease on a constant currency basis for both the three and six months ended June 30, 2025 was driven by lower volumes in the Orthodontic and Implant Solutions segment as a result of the suspension of Byte sales, as well as lower volumes of CAD/CAM, imaging, and implants and prosthetics products. These decreases were partially offset by growth in the Essential Dental Solutions segment.

Previous wording

The decrease in organic sales was primarily due to lower volumes of CAD/CAM products across all three regions, driven in part by lower demand and competitive pressures including pricing. The decrease was partially offset by higher volumes of imaging products across all three regions, as well as higher sales of treatment centers, which was primarily due to the timing of fulfilling a one-time order in Europe during the quarter.

Current wording

The net sales decrease on a constant currency basis for both the three and six months ended June 30, 2025 was primarily due to lower volumes of CAD/CAM and imaging products, particularly in the United States, driven in part by lower demand and competitive pressures including pricing. The decrease was partially offset by higher volumes of imaging and treatment center equipment in Europe.

Previous wording

The increase in organic sales was driven by growth in Europe and Rest of World, in part due to favorable pricing of restorative products, partially offset by lower volumes of endodontic and restorative products in the United States.

Current wording

The net sales increase on a constant currency basis for the six months ended June 30, 2025 was primarily due to higher volumes and new product launches in Europe and Rest of World, partially offset by lower volumes of restorative products in the United States.

Previous wording

The decrease in organic sales was primarily driven by weaker sales of aligners in the United States, which were negatively impacted by the suspension of the sale and marketing of Byte aligner system and impression kits announced in October 2024, as well as a decrease in volume for implants and prosthetics products across all three regions. The decrease was partially offset by higher volumes of orthodontic products in Europe. Additionally, during the three months ended March 31, 2025, the Company refined its estimate of expected customer refunds for the Byte aligner business, resulting in an $8 million favorable adjustment to net sales.

Current wording

The net sales decrease on a constant currency basis for both the three and six months ended June 30, 2025 was driven by the suspension of Byte sales which affected volumes of aligners in the United States, as well as lower volumes for implants and prosthetics products in the United States and Europe. The decrease was partially offset by higher volumes of orthodontic products in Europe. Additionally, the Company refined its estimate of expected customer refunds for the Byte aligner business during the three and six months ended June 30, 2025, resulting in a $4 million and $12 million favorable adjustment to net sales, respectively.

Previous wording

Distributor inventory levels for both CAD/CAM and imaging products at March 31, 2025 approximate historical averages.

Current wording

The net sales decrease on a constant currency basis for the six months ended June 30, 2025 was primarily driven by the suspension of Byte sales. The decrease was also due to lower volumes of CAD/CAM and imaging equipment, implants and prosthetics products, and preventive and restorative products, partially offset by higher volumes of treatment centers. Distributor inventory levels for imaging products were stable in the six months ended June 30, 2025, while sales in the comparative six months ended June 30, 2024 were negatively impacted by a decrease in distributor inventory levels of approximately $12 million. Volumes for CAD/CAM products were negatively affected by a decrease in distributor inventory levels approximating $15 million in the six months ended June 30, 2025 compared to a lower decrease of approximately $7 million in the six months ended June 30, 2024. Distributor inventory levels for both CAD/CAM and imaging products at June 30, 2025 approximate historical averages.

Previous wording

The increase in organic sales was primarily due to higher volumes of imaging equipment and treatment centers within the Connected Technology Solutions segment, higher volumes and favorable pricing of restorative products in the Essential Dental Solutions segment, and higher volumes in the Wellspect Healthcare business, primarily driven by new product launches. These increases were partially offset by lower volumes of CAD/CAM equipment and implants and prosthetics products.

Current wording

The net sales increase on a constant currency basis for the six months ended June 30, 2025 was primarily due to higher volumes of imaging equipment, instruments, and treatment centers within the Connected Technology Solutions segment, higher volumes of restorative and endodontic products in the Essential Dental Solutions segment, and higher volumes in the Wellspect Healthcare business, primarily driven by new product launches. These increases were offset by lower volumes and unfavorable pricing of CAD/CAM equipment and lower volumes of implants and prosthetics products.

Previous wording

Gross profit as a percentage of net sales for the three months ended March 31, 2025 showed a slight decline as the unfavorable absorption on lower volumes, foreign currency translation, and unfavorable mix of endodontic, CAD/CAM, and implants products were mostly offset by the impact of the one-time benefits to revenue noted above and a decrease in warranty costs.

Current wording

Gross profit as a percentage of net sales for the three months ended June 30, 2025 increased primarily due to lower manufacturing costs and a benefit from foreign currency translation. These increases were partially offset by unfavorable product mix and pricing for CAD/CAM and implants products.

Previous wording

The decrease in SG&A expenses for the three months ended March 31, 2025 was primarily driven by lower headcount costs for Byte and lower sales and advertising costs for Byte products after the suspension of the sale and marketing of Byte aligner systems and impression kits announced in October 2024. The decrease was also due to lower headcount costs as a result of restructuring activities.

Current wording

The decrease in SG&A expenses for the three and six months ended June 30, 2025 was primarily driven by lower headcount and advertising costs for Byte products. The decrease was also due to lower headcount costs as a result of restructuring and cost-saving initiatives.

Previous wording

For the three months ended March 31, 2025, R&D expenses decreased as the Company continues to prioritize a disciplined approach with ongoing investments in digital workflow solutions, product development initiatives, and software development, including clinical application suite and cloud deployment. The Company expects to continue to maintain a level of investment in R&D that is at least 4% of annual net sales.

Current wording

For the three and six months ended June 30, 2025, R&D expenses decreased as the Company continues to prioritize a disciplined approach with ongoing investments in digital workflow solutions, product development initiatives, and software development, including clinical application suite and cloud deployment. The Company expects to continue to maintain a level of investment in R&D that is at least 4% of annual net sales.

Previous wording

For the three months ended March 31, 2025, no goodwill or intangible asset impairment charges were recorded. For the three months ended March 31, 2024, the Company recorded an intangible asset impairment charge of $6 million. The charge was related to indefinite-lived imaging product trade names within the Connected Technology Solutions segment. For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q.

Current wording

For the three and six months ended June 30, 2025, the Company recorded pre-tax goodwill impairment charges of $156 million for the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment. The Company also recorded intangible asset impairment charges of $64 million within the Connected Technology Solutions unit and $15 million within the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment. For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Previous wording

For the three months ended March 31, 2025 and March 31, 2024, the Company recorded restructuring and other costs of $9 million and $1 million, respectively. The expenses in 2025 primarily consist of costs in connection with various restructuring initiatives. The expenses in 2024 consisted primarily of severance costs in conjunction with the restructuring plan announced in February 2023. For further details refer to Material Trends in Capital Resources below, and Note 8, Restructuring and other costs, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q.

Current wording

The Company recorded restructuring and other costs of $4 million and $13 million for the three and six months ended June 30, 2025, respectively, and $21 million and $22 million for the three and six months ended June 30, 2024, respectively. The expenses in 2025 primarily consist of costs in connection with various restructuring initiatives. The expenses in 2024 consisted primarily of severance costs in conjunction with the restructuring plan announced in February 2023. For further details refer to Material Trends in Capital Resources below, and Note 8, Restructuring and other costs, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Previous wording

The increase in segment adjusted operating income for the three months ended March 31, 2025 is due to lower headcount costs and professional service costs, favorable pricing particularly in Europe, and higher organic sales noted above.

Current wording

The increase in segment adjusted operating income for the three months ended June 30, 2025 is due to lower headcount costs and professional service costs, as well as favorable adjustments for estimated customer refunds and bad debt reserves for the Byte aligner business, partially offset by lower net sales on a constant currency basis.

Previous wording

The decrease in segment adjusted operating income for the three months ended March 31, 2025 is due to the lower organic sales for direct-to-consumer aligners and implants and prosthetics products noted above. The decreases were partially offset by lower headcount costs and professional service costs, as well as an adjustment to net sales for estimated customer refunds for the Byte aligner business as noted above.

Current wording

The decrease in segment adjusted operating income for the six months ended June 30, 2025 is due to the lower volumes of direct-to-consumer aligners and implants and prosthetics products, partially offset by lower headcount costs and professional service costs, as well as favorable adjustments for estimated customer refunds and bad debt reserves for the Byte aligner business.

Previous wording

Interest expense, net for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024 primarily due to a higher average carrying balance of short-term borrowings.

Current wording

Interest expense, net for the three and six months ended June 30, 2025 increased compared to the three and six months ended June 30, 2024 primarily due to a higher average carrying balance of total borrowings.

Previous wording

Other (income) expense, net for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is as follows:

Current wording

Other expense (income), net for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 is as follows:

Previous wording

The effective tax rates for the three months ended March 31, 2025 and 2024 were 56.8% and 44.9%, respectively. The increase in effective tax rate is primarily driven by additional valuation allowance recorded in the three months ended March 31, 2025.

Current wording

The effective tax rates for the three months ended June 30, 2025 and 2024 were 71.2% and 114.4%, respectively. For the six months ended June 30, 2025 and 2024, the rates were 76.9% and 81.2%, respectively. The decrease in effective tax rate is primarily driven by additional impairment recorded in the three and six months ended June 30, 2025.

Previous wording

For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q, and Critical Accounting Estimates in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2024 Form 10-K.

Current wording

For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Previous wording

Cash provided by operating activities decreased compared to the three months ended March 31, 2024, primarily as a result of changes in working capital, including higher accounts receivable due largely to timing of sales and customer remittances and higher build of inventory during the current period, partially offset by lower payments to vendors during the current period due to timing. At March 31, 2025, the number of days for sales outstanding in accounts receivable increased by 4 days to 59 days as compared to 55 days at December 31, 2024, and the number of days of sales in inventory increased by 8 days to 132 days at March 31, 2025 as compared to 124 days at December 31, 2024.

Current wording

Cash provided by operating activities decreased compared to the six months ended June 30, 2024, primarily as a result of lower net sales and changes in working capital, including higher accounts receivable due largely to timing of sales and customer remittances and higher build of inventory during the current period, partially offset by lower payments to vendors during the current period due to timing. At June 30, 2025, the number of days for sales outstanding in accounts receivable increased by 4 days to 59 days as compared to 55 days at December 31, 2024, and the number of days of sales in inventory increased by 17 days to 141 days at June 30, 2025 as compared to 124 days at December 31, 2024.

Previous wording

The cash used in investing activities decreased compared to the three months ended March 31, 2024, due to lower capital expenditures of $15 million and no cash paid on the settlement of derivatives, compared to $9 million paid for the interest rate swap closure in the prior year. The Company estimates capital expenditures to be in the range of approximately $160 million to $190 million for the full year 2025 and expects these investments to include expenses for the ongoing implementation of a new global Enterprise Resource Planning (“ERP”) system, equipment upgrades, and capacity expansion to support product innovation and consolidate operations for enhanced efficiencies.

Current wording

The cash used in investing activities decreased compared to the six months ended June 30, 2024, due to lower capital expenditures of $35 million and a decrease in cash paid on the settlement of derivatives of $7 million due to the interest rate swap closure in the prior year. The Company estimates capital expenditures to be in the range of approximately $160 million to $190 million for the full year 2025 and expects these investments to include expenses for the ongoing implementation of a new global Enterprise Resource Planning (“ERP”) system, equipment upgrades, and capacity expansion to support product innovation and consolidate operations for enhanced efficiencies.

Previous wording

Cash provided by financing activities increased compared to the three months ended March 31, 2024 primarily as a result of the Company entering into the Bridge Loan. The increase in cash provided by financing activities was partially offset by repayments on the commercial paper facility.

Current wording

Cash provided by financing activities increased compared to the six months ended June 30, 2024 primarily as a result of the Company entering into the Notes as described above. The increase in cash provided by financing activities was partially offset by repayments on the Bridge Loan Facility and commercial paper facility.

Previous wording

On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. At March 31, 2025, the Company had $1.19 billion of authorization remaining available for share repurchases. Additional share repurchases, if any, may be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions, or other transactions in such amounts and at such times as the Company considers appropriate based upon prevailing market and business conditions and other factors. The Company is restricted from making share repurchases during the duration of the Bridge Loan. At March 31, 2025, the Company held 65.2 million shares of treasury stock.

Current wording

On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. At June 30, 2025, the Company had $1.19 billion of authorization remaining available for share repurchases. Additional share repurchases, if any, may be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions, or other transactions in such amounts and at such times as the Company considers appropriate based upon prevailing market and business conditions and other factors. At June 30, 2025, the Company held 65.2 million shares of treasury stock.

Previous wording

At March 31, 2025, the Company had $584 million of borrowings available under lines of credit, including lines available under its short-term arrangements and revolving credit facility. The Company’s borrowing capacity includes a $700 million multi-currency credit facility which expires in May 2028. The Company also has access to an aggregate $700 million under a U.S. dollar commercial paper facility. The $700 million revolver serves as a back-up to the commercial paper facility, thus the total available credit under the commercial paper facility and the multi-currency revolving credit facility in the aggregate is

Current wording

At June 30, 2025, the Company had $737 million of borrowings available under lines of credit, including lines available under its short-term arrangements and revolving credit facility. The Company’s borrowing capacity includes a $700 million multi-currency credit facility which expires in May 2028. The Company also has access to an aggregate $700 million under a U.S. dollar commercial paper facility. The $700 million revolver serves as a back-up to the commercial paper facility, thus the total available credit under the commercial paper facility and the multi-currency revolving credit facility in the aggregate is $700 million. The Company had no outstanding borrowings under the commercial paper facility at June 30, 2025 resulting in $700 million remaining available under the revolving credit and commercial paper facilities. The Company also has access to $44 million in uncommitted short-term financing under lines of credit from various financial institutions, the availability of which is reduced by other short-term borrowings. The lines of credit have no major restrictions and are provided under demand notes between the Company and the lending institutions. At June 30, 2025, the Company had $7 million outstanding under short-term borrowing arrangements.

Previous wording

The Company’s revolving credit facility, term loans and senior notes contain certain covenants relating to the Company’s operations and financial condition. The most restrictive of these covenants are: (1) a ratio of total debt outstanding to total capital not to exceed 0.6, and (2) a ratio of operating income excluding depreciation and amortization to interest expense of not less than 3.0 times, in each case, as such terms are defined in the relevant agreement. Any breach of any such covenants would result in a default under the existing debt agreements that would permit the lenders to declare all borrowings under such debt agreements to be immediately due and payable and, through cross default provisions, would entitle the Company’s other lenders to accelerate their loans. At March 31, 2025, the Company was in compliance with these covenants.

Current wording

The Company’s revolving credit facility, term loans and senior notes contain certain covenants relating to the Company’s operations and financial condition. The most restrictive of these covenants after the amendments noted below include the following: (1) a ratio of senior debt to capitalization not to exceed 0.6, and (2) a ratio of operating income excluding depreciation and amortization to interest expense of not less than 3.0 times, in each case, as such terms are defined in the relevant agreement. Any breach of any such covenants would result in a default under the existing debt agreements that would permit the lenders to declare all borrowings under such debt agreements to be immediately due and payable and, through cross default provisions, would entitle the Company’s other lenders to accelerate their loans. At June 30, 2025, the Company was in compliance with these covenants.

Previous wording

As of March 31, 2025, in connection with the 2024 Plan, the Company has incurred $30 million in restructuring charges from inception, primarily related to employee transition, severance payments and employee benefits, which are expected to be expensed and paid in cash in 2024 and 2025. Actions taken under the 2024 Plan will seek to streamline the Company’s operations and global footprint, as well as improve alignment of the Company’s cost structure with its strategic growth objectives. In total, including the charges already incurred, the Company expects to incur between $35 million and $50 million in non-recurring restructuring charges under the 2024 Plan.

Current wording

As of June 30, 2025, in connection with the 2024 Plan, the Company has incurred $30 million in restructuring charges from inception, primarily related to employee transition, severance payments and employee benefits, which are expected to be paid by the end of 2025. Actions taken under the 2024 Plan will seek to streamline the Company’s operations and global footprint, as well as improve alignment of the Company’s cost structure with its strategic growth objectives. Remaining restructuring charges attributable to the 2024 Plan are not expected to be material.

Previous wording

The estimates of the charges and expenditures that the Company expects to incur in connection with the 2024 Plan, and the timing thereof, are subject to several assumptions, including local law requirements in various jurisdictions and co-determination aspects in countries where required. Actual amounts may differ materially from estimates. In addition, the Company may incur additional charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the 2024 Plan. For further details refer to Note 8, Restructuring and Other Costs, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q.

Current wording

For further details refer to Note 8, Restructuring and Other Costs, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.