Good day, and welcome to the DENTSPLY International, Fourth Quarter Year End 2014 Earnings Call. Today’s conference is being recorded. At this time I will like to turn the conference over to Mr. Derek Leckow, Vice President of Investor Relations. Sir, you may begin.

Thank you, Kyle. Good morning everyone and thank you for joining us to discuss DENTSPLY International’s fourth quarter and fiscal 2014 results. I’m joined by Bret Wise, DENTSPLY’s Chairman and Chief Executive Officer; Chris Clark, our President and Chief Financial Officer; and Jim Mosch, our Executive Vice President and Chief Operating Officer. I hope you had a chance to review our press release issued earlier this morning. A copy of the release and a set of supplemental slides and information relating to non-GAAP financials are available for download in the Investor Relation’s section of our website, www.DENTSPLY.com under the heading quarterly results. And don’t forget the Safe Harbor language and U.S. GAAP reconciliation contained in today’s release also pertain to this conference call. We may make forward-looking statements involving risks and uncertainties. These should be considered in conjunction with the risk factors and uncertainties that are described in the release and in our SEC filings. It is possible that actual results may differ materially from the forward-looking statements that we make today. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. With that, I would now like to turn the call over to Bret Wise. Bret.

Thank you Derek and good morning everyone and thank you for joining us again on the call this morning. I have just a few opening comments on the state of the markets, our strategic priorities, and then briefly on our results, and then I’ll turn the call over to Jim and Chris who will provide more details. First on the markets, generally the trends that we saw earlier in the year continued in Q4. Overall, the global markets were reasonably stable with the exception of the CIS region which continued its steep decline. U.S. markets certainly is showing signs of life, probably at about the same pace as in Q3 or may be a little bit better. The European market, ex-CIS, remained flattish with some markets growing slowly and some contracting a bit, however, I will say there is a slight bias towards improvement there. The markets that we’re growing, there are more of them and they are a little bit more robust and there are fewer markets that we are contracting. The rest of the world was of course a mixed bag. The growth markets continued to be China, select countries in Asia; India, Middle East, and Canada, while Australia was stable and Japan and Brazil declined modestly. Overall, I’d say the market trends are very consistent with what we saw earlier in the year, may be with a slight bias towards getting better. Moving to DENTSPLY, we entered 2014 focused on new project launches and growth, but also on improving our efficiency in terms of operating margins, asset churns, and cash flow as priorities. We also established a target to achieve an adjusted operating margin of 20% by 2017, and that was off a 17.6% base in 2013. So, we are looking for approximately 240 basis points of…

Thank you Bret. I would like to comment on operational highlights for Q4 in 2014 and provide some perspective on 2015, and I’ll then turn it over to Chris. 2014 saw lower than expected internal growth in the first half of the year and we saw improvement in Q3 and Q4. In the U.S. we saw good retail growth of our chairside consumables in the mid-single-digit range, although wholesale growth was muted. More specifically, our resources business saw continued performance from new products such as TPH Spectra, Prime&Bond Elect, and the Class II marketing campaign, all supporting excellent growth. In addition, our prevention hygiene businesses has leveraged new product launches such as NUPRO Varnish and Cavitron FITGRIP driving growth above consumables overall. This was somewhat offset by lab, which was negative driven by declines in traditional lab products. Outside the U.S., we saw a real acceleration in the chairside consumable categories. In Q4, Western Europe internal growth was up mid-single digits and Asia was up double digits, which helped to counter very slow growth in Latin America and contraction in CIS. Looking to our healthcare business, we continue to leverage previous launches of the Origo male catheter and Sense [ph] female catheter and healthcare grew nicely in the quarter in both Europe and the U.S. Of the products launch in Q4 we have been very pleased with the success of both the Midwest E Electric handpiece and the TRUSHAPE dental retention endodontic system. The Midwest E has provided an entrance into the growing electric handpiece segment. Response has been excellent and sales were XXX expectations in Q4. In addition, TRUSHAPE has been well received by the endodontic community and the minimally invasive and dental retention attributes has resonated with clinicians. Turning to our implant business we’ve had excellent acceptance of…

Thank you Jim. Good morning everyone. I’d like to provide some detail on both our fourth quarter and our full year results by reviewing key elements of our income statement and also providing some additional color on our balance sheet and cash flow. The fourth quarter sales excluding precious metals decline 3.2% compared to the prior year, as internal growth of 190 basis points and net impact from acquisitions of 20 basis points were more than fully offset by unfavorable currency translation of 530 basis points. Internal growth was 0.7% in the U.S. and was negatively impacted by the headwind from channel inventory contractions associated with purchasing ahead of our October price increase that we mentioned on our third quarter call, as well as the 180 basis point headwind from lower small equipment sales compared to a very strong prior year base that included a major new product launch. From a retail standpoint our growth in the U.S. was much better than this and we expect this to continue as we move into 2015. European internal growth was 2.0% in the quarter including 3.8% excluding Russia CIS, which continues to contract well into double digits as a result of the economic and political situation there. For the quarter Russia CIS was a headwind to our global internal growth figure by approximately 80 basis points. Our rest of the world internal growth of 3.4% in the quarter was led by particularly strong performances in the Pacific Rim as Bret mentioned. Gross profit on an adjusted basis in the fourth quarter was 57.4% of sales excluding precious metals, which was an improvement of 90 basis points over prior year and reflects the favorable impact of price, mix, FX and some of our recent operational improvement efforts, partially offset by lower absorption as…

Thank you. [Operator Instructions]. We will take our first question from Robert Jones with Goldman Sachs.

Hi, this is Nathan Rich on for Bob today. Chris, first question for you. You just mentioned the ability to maybe shift manufacturing and costs across geographies to offset some of the FX impact. I was just wondering if you could maybe give us a little bit more detail on how big of an opportunity is this, and is there an benefit from doing this assumed in your guidance.

Yes, Nathan. As we look at that, that’s certainly one of the longer-term objectives associated with the operating margin improvement initiatives. As we look at it, we have plants that make similar products, not always necessarily the exact same product or using the exact same process in terms of manufacturing process. So one of our objectives of the initiative is frankly to standardize that on a much more common basis allowing some plants that are producing similar products to actually produce the same products in the same manner, and that would allow us over time to flex production back and forth based on a number of different factors, including FX. I would say that we have some limited capability to-date to do that. I would say that that is a longer term objective, and while there may be a little bit of help in that in 2015, I would say that’s really more of a longer term benefit that we see from the program.

Great. Thanks and then Bret you talked about U.S. growth being a little bit soft, and I understand I guess there was some pull forward ahead of the price increase in October. Could you just maybe talk about your expectations for 2015 in the U.S. Do you see that internal growth rate kind of improving throughout the year and then also internationally just kind of any impact on kind of the sales and earnings cadence around the IDS Show?

Okay Nathan, quickly our U.S. growth was muted for the reasons that both Jim and Chris covered. I do think that the U.S. market has accelerated somewhat as we move through the year, and there is no reason not to expect it won’t accelerate going forward, and that’s why in our comments we said we expect our own internal growth in the U.S. to accelerate as we move through 2015, so we are reasonably comfortable with that. On international and the effects of the IDS, the IDS is not a big selling show for consumables. Meaning, we go to the show, we demonstrate our new products, and then over a subsequent month or subsequent quarters we try to get back to those dentists or those customers and re-engage on the new technology. So, we don’t usually see a big boost in short-term growth from the IDS, in fact what we see is a big boost in spending for the IDS. It is quite an expensive show. So if we look at first quarter, our first quarter, it’s probably going to be the most challenging quarter we have for the reasons stated there, that we are likely – I think that U.S. growth will accelerate its growth through the year that will help us. It’s probably more back-end loaded than front-end loaded, and spending will probably be front end loaded, both on the efficiency programs and on trade shows, the IDS being the largest. But it usually doesn’t resolve in a quick ramp-up in sales, it’s more a precursor to sales later in the year.

Great, thanks for the color.

Thank you.

We will take our next question from Jeff Johnson with Robert Baird.

Thank you. Good morning guys, how are you?

Good morning Jeff.

Good morning Jeff.

Good. Just wondering Chris maybe we could just start on the Russia CIS. You’ve been helpful the last few quarters providing the breakout there, but we are starting to bump-up against the much easier comps there. Should we still expect down -- on top of down comps over the next few quarters or just what’s going on in that business. Obviously the geo-political stuff is still an issue there.

Yes I think you have a couple of factors going on. Obviously, it is very unstable from an economic situation. We think that the demand levels are continuing to drop. Certainly, we are not seeing any sequentially improvements if they are continuing to decline in double digits, and so from that angle, I think that’s an indication that it really has not stabilized. First quarter, we began to run-up against the base. So, from that angle, we are running against a base that declined as opposed to a base that improved, but I guess I would say that, that base has continued to decline the subsequent three quarters. So again, I guess all I can say at this stage is it’s highly uncertain and certainly we would hope that it stabilizes, and that’s historically been a nice growth market for us, but it’s been a pretty significant headwind, and I don’t know that that’s going to flip around anytime soon.

All right. That’s helpful. And then Bret going back to some of your comments on the first question there around margins, you know margins continue to impress this quarter. I think it’s seven straight quarters here that you guys have put up some very solid margin improvement. Is it fair to think though, we have to think of those margins kind of flattening out. I’m just trying to read your comments on the IDS spending and the kind of improvement on the U.S. organic throughout the year. Would it be kind of flat to start the year and then some nice expansion as we exit the year or how to think about that margin gating?

Yes, thanks Jeff. You know, I think for the full year, we are comfortable in saying we are going to see continued margin improvement in 2015. Part of that’s our self-help program and part of that’s I think the opportunity for faster growth in the U.S. in particular. I do think quarter is always hard to predict. First quarter, I think is going to be the most challenging for the spending that you commented on. So I don’t really have high expectations for the first quarter for margin improvement. I think it will be more backend loaded in the year this year.

All right, that’s helpful. And then just Chris back on the FX, issues for the year. It sounds like you are saying that about 50% of the impact flows through this year and obviously currency is going to be volatile over coming months and quarters in that, I’m sure. So is that kind of a flow though rate we should be thinking of. I know its varied anywhere from 50% flow-through to a 100% flow through over the last few years. But is that – with the hedging in place kind of 50% the right number at this point.

Yes, at this point in time Jeff, that’s correct. I mean recognize that the caveat for this is highly volatile, right. I mean these rates are flipping around significantly, constantly almost hour by hour. So yes, as we sit here today, we think the headwind in approximately $0.14 in terms of earnings at current rates for the impact on 2015. But that includes about that size of benefit in that net number from the cash flow hedges. Those cash flow hedges again, I guess they anniversary themselves, they go away. So again, the gross impact is basically close to double that $0.14.

Yes, okay. Thanks guys. Yes got it thanks.

We will take our next question from Steve Beuchaw with Morgan Stanley.

Hi guys, thanks for taking the questions. I have one longer-term cash flow question; I guess that would be for Chris. You guys have given us a pretty helpful roadmap for how you think about margins improving over time. The cash flow improvement in 2014 was obviously very strong. Would you be willing to speak to a longer-term view, maybe through 2017, just to be consistent with the commentary on the margin improvement? You know thinking about how you can grow, either operating a fee cash flow over that period of time. We know margins keep improving, but obviously you’ve had some improvements on the balance sheet as well. Can you give us a sense for how that flows from here? Thanks.

Yes, I guess I would say Steve that as we think about the objectives of our self health program as Bret describes it, obviously margins are certainly one of that and the other piece frankly is to continue to improve our ROIC and by basically addressing the asset base, including working capital. We think we have opportunities over time to continue to improve in the working capital side. Again, that’s going to be a gradual improvement, but we think that we showed some improvement, solid improvement in 2014. We’re hoping to continue to, we expect to continue to drive that in ’15 and beyond. So I think that as we think about the cash flow opportunities, I think the cash flow opportunity is really too full. No one, it improved earnings as a result of the operating margin improvement and then secondly the improvements in networking capital over time. So I mean again, I think that growth certainly drives it as well I guess would be the third factor in the context of as today’s markets improves and internal growth improves and then that’s obviously a factor as well. So those three things would cause me to say over time we would expect that to continue to improve.

And then I want to follow up on implants. I wonder if you’d be willing to give us any geographic and deconstruction of how the growth was looking in your implant business towards the end of the year. How do you see it into next year? And then while we are on the topic of implants, given the amount of strategic activity going on in the implant market, are you seeing any opportunities for commercial traction, incremental share gains or maybe a bit of opportunity to capitalize on attrition given the amount of activity out there? Thanks.

Yes Steve, this is Jim Mosch. As I mentioned in my comments, I think one of the things that we relied on significantly in 2014 was the EV launch. As I mentioned, we’re probably ahead about 50%, a little more than a 50% conversion level of that system and I will also say that that’s been pretty evenly distributed. We saw continued sequential growth in the U.S., so we’re kind of pleased with that position. I think we recognize that we needed improvement in that area from early in the year. We saw that in Q3 and Q4 and we expect that to continue into 2015. Likewise Europe was strong ex-CIS. CIS has been a challenge. That’s a pretty sizable market for us and we don’t expect to see a lot of improvement in that situation in 2015. As Chris mentioned, it’s very, very volatile. From the rest of the world situation we’ve seen improvement in the Pacific Rim through 2014. So as I look at it I believe that we’re well positioned. We’re seeing nice growth in our digital portfolio. We have continued traction in the EV system and we would expect to continue to improve in the overall implant business. On the commercial side, I think we’re going to be absorbing EV really throughout 2015. We do have some new opportunities. We will have some product additions that we’ll show at the IDS as it relates to Atlantis and our digital portfolio and we expect to kind of get some continued growth from that segment, but as far as a major commercial shift, I don’t see anything on the horizon.

Very helpful. Thanks Jim.

We’ll take our next question Brandon Couillard with Jefferies.

Thanks, good morning. Bret, back on the U.S. business, just to make sure I heard this right, did you say that the hand piece comp was a 80 basis point headwind in the fourth quarter and then could you parse out just the tier side consumables trend and how that shaped up in the fourth quarter relative to sort of the runway we see in the last three periods.

Sure Bran, I’ll take a shot at that and Chris may need to interject here as well. On the small equipment decline year-over-year there’s a couple of factors there. One is that we had a large launch last year. It was Aquasil Cordless was the launch and so that’s a piece of equipment that goes along with an impression material, suite of products that’s called – that was very successful last year and it created a big baseline for us to get over this year. But secondly we saw small equipment generally slow down in the fourth quarter and diverge from the growth rates of consumables. That happens from time to time, but not that often and when it does diverge significantly we call it out. I would assume that that’s temporary and its probably going to play itself out here over the next few quarters as those two growth rates, consumables and small equipment kind of return to a common norm. As far as consumables themselves, the chairside consumable component of our business grew retail quite nicely in the fourth quarter. I would say at a kind of an accelerating pace. Now it was [indiscernible] hidden by the small equipment impact and also the slight destocking coming out of the third quarter price increases. But I think Jim commented that we’re in mid single digits in those products. We had some encouraging reports on that market from one large distributor earlier in the month and like we mentioned, we think that that consumable segment is going to continue to accelerate going into ’15 in the U.S. So we’re reasonably optimistic about that market.

Thanks and then Chris, in terms of the outlook for next year, can you give us some parameters around operating cash flow in CapEx and then just to clarify, does the guidance contemplate any contribution from incremental share repurchases?

The guidance at this point basically includes the share repurchase that had been done as well as offset of future equity dilution. So from that angle that’s pretty consistent with the way we typically provide guidance at the beginning of the year. CapEx, at this point I would estimate that we’re forecasting in the $110 million range for the year and relative to cash flow I would expect I mean obviously we’re coming off an enormous base. I would expect a modest improvement, slight improvement for the year as we continue to make improvement in terms of working capital. But again, it actually would probably not be the same level of improvement that we saw in terms of 2014 over 2013.

Super. Thank you.

You bet.

We’ll take our next question from John Kreger with William Blair.

Hi, thanks very much. The 1.9% organic constant dollar growth that I think you had in the fourth quarter, can you give us a sense about what the price component of that was?

Yes, as we look at it, let me ask the question John via the margin line, which did improve obviously about 90 basis points in the quarter. Price was a component of that. We did typically take our price increases on many of our businesses October 1. Our price increase overall was in the 1.5% range and we think that most of that appears to have stuck at lease in the quarter. So again, that’s not on all of our businesses globally, but that’s on again I guess our U.S. consumables business and several of our international business. So again, there is no doubt that price is a component of the 1.9% growth, but I wouldn’t say that it’s every bit of it.

Great, thanks. So Chris given that, can you just talk a little bit more about this destocking effect that you saw in the U.S. I assume that’s behind you. Do you feel like inventory levels out in the channel are pretty reasonable and stable or might we see any more of that as we move through early ’15?

Yes, I know. We think at this point John we’re kind of entering the year at a pretty normal basis. We called out on the third quarter call that we thought that again, a few of the distributors might have gone in a little bit deeper if you will in terms of price increased pre buy activity in the quarter. Interest rates were low and that gives us obviously as we take price increases, that’s how they put it through their models and make a determination in terms of what the return in terms of going deeper on key products might be and we call that out in terms of it being a potential impact. Obviously it’s always a little bit hard to tell in the exact amount of that, but again that was pretty much in line I would say in the fourth quarter with what we anticipated on the third quarter call. And again, we think we’re entering unbalanced, entering the year again in a pretty stable position. Again, there’s going to be individual businesses, plus and minus and individual geographies plus and minus, but I think overall pretty balanced.

That’s all for it, thanks. Maybe one last one; particularly in the U.S. and Europe, do you have any visibility to the underlying customer type and what sort of growth your seeing into lets say the kind of smaller practice versus larger or/and corporate accounts. Are you seeing any differential in growth rates into those two classes.

Yes, as it relates to that, I mean we certainly recognize that in certain geographies, we see it in the U.S., we see a little bit in the UK. We’ve seen a little bit of activity in Canada, this kind of this rise of Corporate Dentistry. I would say that we’ve had very favorable impact in those type of customers, because we have such a broad portfolio and we are able to leverage that portfolio and our clinical education programs to be able to address the needs of those types of practices. I wouldn’t say at this point in time we’ve seen such a shift and it’s a major, major change where we see a major shift between group or corporate customers versus individual practices. We haven’t seen that phenomena as of yet.

Great, thank you very much.

Our next question comes from John Block with Stifel.

Hi, thanks. This is Ethan Roth on for John. The implant business was up mid-single digits over the second consequently quarter. Last quarter you provided some commentary on the Astra Tech EV system. You mentioned that one third of conversions were coming from new customers. Are you still tracking towards similar levels of competitive conversions?

Yes Ethan, I would say that that’s probably fallen off a little bit and that’s primary as we’ve gotten into the larger markets of the U.S. and Germany where we obviously have much larger businesses, much larger number of customers, so there is really a capacity issues of our ability to address the needs of those customers. However, we are still seeing a good number of conversions of new customs with our EV system. But I would not say it’s at that one-third level.

Okay, great. And then just on the 2017 operating margin goal of 20%, what impact if any has the current changes in the FX had on that and since you are still maintaining that target, does that imply modest improvement you are thinking, just on the core margin expansion. Thanks.

Yes, as we look at 2014 FX was actually a little bit of headwinds, by headwind overall for the year in terms of operating margin rate. As we looked at 2015 at current rates its actually going to flip around and be a bit of a help as the drag on the top line is going to be a little bit more than the drag on the bottom line. As we think about the 20%, our objective is 20% in 2017, regardless of the FX situation and so you know again, I do think there maybe a little bit of noise give or take here as we have individual periods with FX changes. But again, I think the key core for us is to keep on focusing on the underlying improvement of business and obviously we are pleased with the progress in 2014.

We will take our next question from Steven Valiquette with UBS.

Yes thanks, I literally had the exact same question that was just asked. So I’m all set now thanks?

Okay, thanks Steve.

Thanks Steve.

And we will take our final question from Erin Wilson with Bank of America.

Great, thanks for taking my questions. In implants have you seen any sort of meaningful changes in pricing or the competitive dynamics across the implant business in light of industry consolidation and how do you envision that market evolving over the next year, but also longer term and you can speak to high end versus value as well?

Certainly. From a standpoint of meaningful change pricing wise, we’ve not seen that to-date. In fact as we look at the premium implant segment, one phenomena we have seen is that implant unit growth has increased and certainly it’s taken a couple of years for that to happen. The other thing we see is that average sell prices are fairly stable and in some cases we are seeing increases. So from the standpoint of the premium implant segment it is defiantly improving and I think you see that in the performance of certainly asking some of our competitors. The industry consolidation you speak of, obviously that is actually happening as we speak. So I don’t think – we’ve yet to see the full impacts of what will happen with Nobel and Zimmer 3i. I think that will come down the road. As far as the longer period of time, I think that’s a little bit difficult to predict. Certainly we recognize that in certain geographic segments value is very important, value implants are very important and you need those systems to have access to broader market. And certainly we will look at those opportunities.

Okay, great and on capital deployment what you are looking at from an acquisition standing? Do you anticipate greater opportunities in 2015 relative to 2014? What types of acquisitions would you be potentially targeting here and on the flip side of that should we anticipate any further divestitures or the emphasis of certain product lines as part of your operational initiatives and would that be incorporated into your guidance. Thanks.

Okay Erin, on acquisitions, both acquisitions and divestitures we haven’t done yet, are not incorporated into our guidance at all. I would say that we are a little bit more optimistic about acquisitions. The ability to execute acquisitions in ’15 than we were in ’14, so we are activity involved in that. I think predicting how much and when is the dangerous game because there is huge timing risk and execution risk on acquisitions. But I think its fair to say that we are interested in growing by acquisition, our balance sheet is in pretty good shape right now. We said in ’14, we are repeating in ’15 to the extent that aren’t acquisitions, we’ll likely be more active in share buybacks. You say us pick up the phase in share buybacks in 2014 as well. So to us its kind of an either or type equation right now, to the extent there is transactions available, we’ll probably transact them. Its important that they fit into the our timing for the efficiency program as well, meaning they are stable enough that we could leave them outside the efficiency program for a while or they could easily be integrated while we are doing the efficiency program as well. So we take that into account as another factor. But I think we are more optimist about the ability to pull cash, to create shareholder value that we have been for some time in the business.

Okay great, thanks so much.

Thank you.

I would now like to turn the conference back over to our speakers for any additional or closing remarks.

Okay, thank you all for your interest in DENTSPLY. That concludes our conference call. If you other questions I’m available today for follow-up, and I look forward to seeing many of you at the upcoming dental shows in Chicago and at the IDS . Thanks a lot. Bye.