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Dentsply International Inc (XRAY) Q3 2018 Earnings Conference Call Transcript


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Dentsply International Inc (NASDAQ: XRAY)
Q3 2018 Earnings Conference Call
Nov. 08, 2018 , 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Dentsply Sirona Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, John Sweeney, Vice President of Investor Relations. Sir, you may begin.

John Sweeney -- Vice President, Investor Relations

Thank you, Ashley. And good morning and thank you everybody for joining us today. Welcome to our third quarter 2018 conference call. I'll remind you that an earnings press release and slide presentation related to the call are available on our website at dentsplysirona.com. Our earnings call presentation many the numbers discussed on the call today will be non-GAAP financial measures. And there are reconciliations provided in our press release and in our earnings fact.

The earnings call will be a little longer than usual today as Don and Nick would like the opportunity to tell you about the diagnostics they've completed on the business and details of the upcoming restructuring plan. But before we begin, please take a moment to read the forward-looking statements in our earnings press release. During today's conference call we'll make certain predictive statements that reflect our current views about the future performance and financial results and we base those statements and certain assumptions and expectations of future events that are subject to risks and uncertainties. Our most recent Form 10-K and Form 10-Q with some of our most important risk factors that could cause actual results to differ from our predictions.

And with that, I'll now turn the call over to Don Casey, Chief Executive Officer of Dentsply Sirona.

Donald M. Casey Jr -- Chief Executive Officer

Thanks, John. And thank you for joining us on our third quarter earnings call. We have a lot to cover and appreciate you taking time with us this evening. Before talking about the specific results, I wanted to offer some perspective. After spending nine months here, a few things are very apparent. The first is that the dental industry is a great place to be with positive underlying trends relating to demographics, technology and economics.

Further, I believe that Dentsply Sirona is well positioned to succeed with a strong global footprint, important brands that have a loyal following, a strong track record of innovation tracing back over 100 years. And most importantly a dedicated, passionate workforce. But it's equally clear that our current business performance and trajectory over the past three years is not where it needs to be. We are not living up to our potential to deliver for our customers, investors and our employees.

Our results in this quarter, further highlight the need to take decisive action to better position the company for long-term value creation. As part of the call today, we will outline the results of an extensive diagnostic and offer a major restructuring plan that we have begun executing against. Key components of that plan will focus on how we deliver sustainable 3% to 4% revenue growth and an operating margin of 20% by 2020 with further improvements targeted through to 2022. We plan to simplify the organization and have developed an aggressive cost cutting savings targets of over $200 million today.

Just as we are disappointed in and fully accountable for our results as we go through the presentation today, you will see that we are optimistic about the future of the business and that we are committed to taking the necessary steps to deliver attractive financial performance going forward.

Let's begin with a summary review of the third quarter.

As you can see on Slide 7. Our top-line was down 6.5% on internal basis in the third quarter. The revenue decline was significantly impacted by planned changes in our dealer-inventory stocking levels, in our Technology and Equipment segment and a $20 million reduction in consumable revenues resulting from a start-up challenge in the new Central Distribution Hub in Europe.

Our lower topline and increased expenses drove an adjusted operating income margin of 13% and adjusted EPS of $0.38. Operating cash flow was $126 million in the third quarter, reflecting the strong underlying cash flow generating capabilities of Dentsply Sirona.

Before I go into more detail on our restructuring plan, I will now turn the call over to Nick Alexos, who will go into more details on our financial performance and outlook for the rest of the year.

Nick Alexos -- Executive Vice President and Chief Financial Officer

Thank you, Don and for very reference, we're on Page 9 of these slides, the segment performance for consumables. As you know, we reported across two segments, Consumables and Technology and Equipment, our Consumables segment accounted for 47% of our revenue for the third quarter and represents a diverse portfolio of products that provide steady growth at stable margins.

However, in Q3, as Don mentioned, our Consumables segment had an internal revenue decline of 3% as we had a $20 million revenue shortfall resulting from operational issues at our European Distribution Center in Venlo, the Netherlands. Venlo is our centralized European distribution site. As a result of the move to Venlo during the last year, in Q3, we experienced start-up shipping delays for some of our product lines. We have put systems and a team in place now to fix these particular issues and have seen improvement back to levels required for hitting our fourth quarter shipment forecast.

While this was unfortunate the facility will provide us with the infrastructure to more efficiently serve our customers in the European markets. Excluding the Venlo impact, Consumables revenues actually achieved low single-digit growth. The lower shipment volumes for Venlo however which caused also an unfavorable mix shift in our product sales where the principal driver of our Consumables segment margin declined by 370 basis points as compared to the 2017 third quarter.

You're now to Page 10, segment performance for Technology and Equipment. This segment accounted for 53% of the revenue for the third quarter.

As you all know, our T&D segment has a number of unique technologies and includes our implant and healthcare businesses. Q3 revenues in this segment declined by 11.3% and were down 9.3% on internal basis. Here, we had planned for in previously discussed some of the significant revenue reductions during the third quarter due to the dealer inventory restocking of our equipment.

We had $34 million of dealer destocking in the third quarter as opposed to $35 million of dealer stocking increases in the prior year quarter. For a net reduction in year-over-year revenue growth of $69 million. Excluding the year-over-year stocking and destocking, T&E would actually have posted commendable growth for the quarter.

In partnership with our primary dealers, we had actually a very successful DS World in October, which evidences good retail demand for our full range of products. We did also see positive traction in implants and in our healthcare business World Spec, which serves the hydrophilic catheter market. Healthcare showed strong performance, up mid single digits. This is a business that continues to realize revenue and profitability growth.

Technology and equipment margins were down 1330 basis points as compared to prior year. This is significant margin compression as a result of a variety of factors. The year-over-year changes in Technology and Equipment revenue due to the destocking that I mentioned versus stocking, the year before, reduced T&E margins by about 600 basis points through just lower absorption in our fixed cost structure. Product mix and pricing in certain businesses and technology equipment further reduced margins by approximately 300 basis points, and we also had some investments in marketing and sales capabilities, which we've talked about previously, in order to drive the continued growth that we're seeing in retail demand and this impacted margins by about 200 basis points.

If you now go to Slide 11, we can speak to the regional revenue performance. Looking at our business performance on a regional basis, US revenue declined 10% on a total basis in the quarter, mainly due once again to the inventory destocking in our CAD-CAM and Imaging business principally in the US as well as -- which is principally in the US.

Looking to the balance of 2018, we expect our revenues will continue to be lower versus prior year for the same reason. Going to Europe, revenues declined 8.4% on internal basis, primarily driven by the revenue shortfall we mentioned with regards to Venlo and some softness in the equipment markets in Central Europe. As we move into the fourth quarter, we are beginning to see signs of normalized growth in the European equipment market, suggesting that the downturn was temporary. Rest of world revenues increased 1.5% on internal growth.

Now we go to Slide 12, for our consolidated non-GAAP financial summary. Revenues on a consolidated basis excluding precious metals, declined 7.7% of the third quarter and were down 6.5% on an internal basis. Of the $77 million of year-over-year decline in revenues as you reconciled back $69 million was due to the differential in stocking versus destocking for CAD-CAM and Imaging, $20 million was due to the problems we encountered in shipping for our consumable business at Venlo.

FX reduced revenues year-over-year by $70 million and then acquisitions added $5 million, with the remainder of approximately $20 million driven by organic growth.

Gross profit was $512.1 million or 55.4%, down 360 basis points as compared to the prior-year. Net destocking in our T&E segment accounted for about 200 basis points of this gross margin decline and then other factors including Venlo, mix in price accounted for the remainder of the gross profit margin compression.

Total operating expenses, which includes R&D were $391.8 million, up $12 million as compared to prior year or $18 million on a constant currency basis. While our operating expenses benefited from our cost savings program during the quarter, these savings were more than offset by increased marketing and selling expenses and expenses related to restructuring and building out of our new organization as well as additional R&D expenses ahead of IDS and the timing of certain other costs.

Adjusted non-GAAP margins consequently declined to 13%, down 812 basis points as a result of the gross margin declines that we discussed and the increased SG&A expense.

With regard to the targeted $100 million cost savings initiative, we have already achieved year-to-date about $50 million of actual savings and expect to achieve another $20 million for the remainder of the year with the balance flowing into a new restructuring program. On a net EPS basis for Q3 were $0.38 compared to $0.70 in the prior year.

Let's go to Slide 13 on cash flows, which shows the cash flow from operating activities for the third quarter were $125.6 million, down 24% and cash flows from operations less capital expenditures were $76.2 million versus CapEx of prior year. In 2018, we continue to expect capital expenditures will be approximately $200 million or slightly less. One additional cash flow initiative we have is a detailed program to reduce internal inventory levels. At the end of the third quarter, we continue to hold inventory at higher levels in 2017 due to the elevated requirements in Venlo and we are now targeting a reduction versus our Q1 level peak of $20 million versus the level that we had targeted previously of $30 million.

Lastly, in terms of guidance, on Page 14, on an income statement basis at this point based on our Q3 performance and our viewed Q4, we continue to expect revenue of 2018 at $3.95 billion or 2% constant currency decline over 2017. As we are seeing better retail demand for T&E products in key markets. Our estimate for the dealer destocking for 2018 is now 110 to 115, slightly above our previous guidance range of 100 to 110, which we think is a quite healthy achievement for this year.

To date, we've incurred $69 million of destocking, which means we are planning approximately $40 million to $45 million of destocking in the fourth quarter and that's reflected in our revised guidance. As a result of the weaker performance expected in the fourth quarter, -- as a result of the weaker performance expected -- resulted in the Q3, we now are looking at an OI margin of 15% to 15.5% for the full year 2018.

Given the lower than expected level of performance, adjusted EPS is now at or slightly below the bottom end of our previous range of $2 to $2.15. The new guidance includes the impact of Venlo as well as some of the noted Q3 SG&A variances and the higher anticipated level of inventory burn.

Our tax rate assumption for 2018 remains at 22%. I want to reiterate our disappointment in our results and I would also highlight the clear necessity to undertake the actions of our planned restructuring which are long overdue. At the same time, I show my appreciation for all our employees' efforts in working to improve the financial and operating performance of Dentsply Sirona.

And with that I turn the call back over to Don, who will give an overview of our restructuring plan.

Donald M. Casey Jr -- Chief Executive Officer

Thanks, Nick. As I mentioned in the opening over the last six months we've conducted an extensive review of our business. This involved our Board, leadership team, customers, partners and outside advisors. The conclusions have reaffirmed our thoughts on the positive long-term prospects for both the market and that of Dentsply Sirona.

The analysis shows that the dental market is an attractive category with sales in excess of $25 billion. It is one that is consistently growing in the mid-single digits with 2018 being no exception. Growing economies, favorable demographics and new procedures will continue to fuel the market more than offsetting some of the category consolidation and pricing pressure that has been seen over the last few years. New innovations can drive growth and create entirely new platforms as we've seen with CAD-CAM, imaging, implants in clear aligners, technology can transform dentistry and improve patient outcomes while making the dentists more efficient.

The technology also allows general dentist to develop capabilities to perform procedures that were historically done by specialists, expanding care options for patients and enhanced revenue streams for the dentist. All of this underlines the growth potential of dentistry. Our assessment also highlighted Dentsply Sirona's unique positioning within this market. We have a truly global footprint that allows the Company to maximize the sale of our innovations.

Our Company has major brands that service anchors in many of the critical procedures. These brands are well recognized and have a very loyal following and will service platforms for us to expand from and to cross-sell solutions. Our tracking study shows the Company and many of our key brands have a well-deserved reputation for innovation and quality.

We have an experienced and committed workforce of over 16,000 people today. They carry on the legacy of serving customers for over 100 years. But reputation and legacy are no guarantee for future success and our diagnostic has helped clarify critical areas where we need to improve. These areas include inconsistent growth, margin compression, and organizational complexity.

Starting with growth on Slide 17. Today, our analysis identified four major causes for our lack of consistent growth. The first is that our R&D program has not delivered a consistent level of substantial innovation needed to increase sales. The second is that we have not created scale of the customer. Our individual businesses have viewed the customers as unique and distinctive resulting in multiple approaches to often the same customer. They would be a Tulsa customer or CEREC customer, not a Dentsply Sirona customer. This diminishes our impact while increasing costs.

If the third is the need to improve our sales and marketing execution, our analysis shows that will be important to take greater responsibility for our own demand creation. The major change in the US technology and equipment area over the last two years highlighted that we have historically relied heavily on partners to create demand for a number of our products. While we think that is a very important part of our sales and marketing model, they also highlight the need for Dentsply Sirona to do a much better job supporting our own products with demand creation activity.

The second area of improvement in sales and marketing execution is being more rigorous around decision making and measurement criteria by bringing greater discipline in evaluating our sales and marketing programs, we will generate greater impact and improved returns on this investment.

Finally, given the breadth of our platform, we believe it is imperative that we move from a product orientation to a customer-focus in order to deliver meaningful solutions. Our margin compression can be attributed to several factors. The first is that we have a high fixed cost structure, whether in our manufacturing network or sales and marketing organizations, we have a high level of fixed costs mainly related to human capital that doesn't allow us to react quickly to changes in the market. Our results in 2018 highlighted this as we face significant dealer inventory reductions without the corresponding reduction in our cost structure.

The second factor has been an expansion in sales and marketing spending at both the country and the strategic business unit level in anticipation of growth that is not been generated. The final areas pricing compression in some categories like imaging, this pricing compression is a function of shift to lower priced parts, wire lines as well as promotional efforts designed to maintain competitiveness.

The diagnostic also highlighted an unnecessarily complex business model, with 10 dental strategic business units interfacing with over 50 individual countries and over 200 legal entities, our current business matrix creates a challenge that is expensive to maintain and makes clear accountability and prioritization very difficult. While various restructuring programs have started in the past, they have not been completed. The result has been a partial evolution of the organizational structure that now needs to be addressed.

Based on the review of our business, we formulated a comprehensive program to enhance growth, improved margins and simplify the organization. We believe that this program will enable us to deliver 3% to 4% revenue growth and operating margins of 20% by the end of 2020, and a return to pre-merger levels by 2022 with continuous improvements thereafter.

In order to deliver this improvement, five new operating principles are being incorporated into the company that will help us achieve our aspirations. These operating principles include first; approaching our customers as one across the entire organization. By understanding all the ways that we have a relationship with that customer across the entire company, Dentsply Sirona will be better able to serve their customers.

Second, we recognized the need to take full responsibility for creating our own demand. As we launch new technologies that can transform procedures, we have a responsibility to educate dentists and their staff on how to use them and why our products are unique. And while our dealers do a wonderful job, it is our role to bring KOLs, clinical education and unique in sales and marketing programs to help successfully sell our solutions.

Third, innovation is our lifeblood and going forward, we have to ensure that our innovation is substantial and supportive. We need to prioritize our R&D spending across the entire company portfolio, rather than looking at each of the individual business units that have been driving their own innovation plans.

Fourth, Dentsply Sirona is a leader in clinical education, but we must take that to a new level. As there is more and more technology and product innovation, we believe that we can play the unique role across procedures by providing best-in-class clinical education. Whether it's through our state of the art training facilities in places like Charlotte and Bensheim or regional and local training events or through our online presence. This will be a differentiator for us.

And finally, we need to operate at scale. Our history of loose integration is not allowed us to get the operational efficiencies we need, whether in procurement, logistics, manufacturing sales-force or other marketing programs, we will look to create cost cross-company leverage going forward to take full advantage of our scale.

Under our plan to accelerate growth, there are four key programs. The first is a significant consolidation of our commercial organization starting with the strategic business units. We will be moving from 10 dental SBUs to four, while focusing them on strategic marketing and innovation. Moving to a more focused approach, here we will allow for the creation centers of excellence, elimination of duplication and can allow the organization to better prioritize R&D and marketing programs. As part of this consolidation responsibility for supply chain will move from the SBUs to a newly created central supply chain organization.

While we're keeping the current reporting segments, we will have five product groups. They are healthcare, which will continue to stand-alone. We will then look at digital dentistry, which is composed of CAD-CAM and orthodontics, next comes equipment and instruments, which will include treatment centers, instruments and imaging. Implants will be stand-alone and finally consumables composed of our restorative, preventive, endodontics and lab businesses.

In addition, we will be consolidating our regional commercial organization to focus on common country clusters. This strategy puts the customer at the center of how Dentsply Sirona is organized and importantly leverage sales and marketing infrastructure across multiple countries. This also serves to eliminate the duplication of resources at the corporate, regional and country level. While we will continue invest in R&D, we spending in 2018 exceeding $160 million. Going forward, innovation will be prioritized across all the businesses to focus on the large initiatives that can generate the most benefit to the entire company.

As noted earlier, our current model relies on each SBU developing their own R&D priorities and this has hampered (ph) the Company's ability to capitalize on the largest opportunities and allocate resources accordingly. This approach will lead to bigger ideas that are delivered faster with more complete support. One of our biggest assets is our sales-force. In addition to maximizing our return in this critical area, we are making some important changes. To become more customer-centric, all countries will move to a single unified sales and marketing structure. Today resources in the countries are mix between some commercial efforts run by the SBUs versus other run by the countries.

Further, we have recently concluded a major segmentation study in the sales-force effectiveness diagnostic in the US. The results will allow for a much more analytically driven approach to targeting in call planning. This will be enhanced by a single view of the customer, a single CRM system and a single sales operation platform. It will also facilitate cross-selling opportunities and more pricing discipline and we will bring this process to the globe.

Our experience in places like Latin America and China have also shown the importance of the emerging markets. And these developing economies we have seen, high single-digit growth opportunities. Applying our model, focused support to other areas of the world will continue to be an important part of our growth strategy. All of these activities will contribute to restarting our growth engine.

I will now turn to margin improvement and organizational simplification. In addition to the structural changes mentioned before, we'd be looking at several other programs to improve our margins. A major initiatives moving to a centralized global supply chain. Our supply chain has historically been run at the business unit or country level. This does not allow us to leverage critical areas for scale, including manufacturing, global demand planning, logistics distribution and procurement. All areas that given our size, should be a competitive advantage for Dentsply Sirona. Moving to one supply chain will allow for scale improved cost and more reliability.

It's important to note though that this movement will happen over two years as we build the structure necessary to accept this organization and avoid supply chain disruption. As part of our diagnostics, several opportunity to shape our portfolio have been identified. Going forward, our focus will be on looking to address businesses that are non-core, not profitable or underperforming. There will be a strong bias to action. It should be noted that World Spec (ph) is not one of these assets, this business has been performing well as accretive to our growth and profitability. It also benefits from leverage in our share back office areas. As such, this will be an area of continued investment for us.

Supporting both the growth and the margin improvement initiatives is our organizational simplification effort. In addition to the consolidation around the strategic business units, the regional commercial units and the centralized supply chain, we will be reorganizing our support functions to serve these units. This functional realignment will happen as the commercial units are made operational.

Slide 31 details our headcount reduction goals. As a result of the streamlining initiatives and margin improvement programs, we are targeting a net headcount reduction 6% to 8% by 2021 from the current level of roughly 16,300 people today. This is a very difficult decision for the organization, and we will work with our employees and workers councils to determine the best outcome for all of them.

On Slide 32, we outlined our anticipated $20 million to $25 million cost reduction program. We fully expect to drive margins of 20% by the end of 2020 and return to pre-merger levels by 2022 with additional improvements thereafter. The restructuring will result in a one-time charge and expenses of up to $275 million.

On Slide 33, we outline our multi-year expectations. In terms of revenue growth, we can see consumables holding steady at 2% to 3%. We anticipate technology and equipment returning to growth in 2019 partially as a result of getting through our 2018 inventory destocking, but also due to the generally improving US retail trends. This segment should grow 4% or even more going forward.

Taken together, we believe this will result in Dentsply Sirona revenue growth at or above market with our target of 3% to 4%.

In terms of our operating income, our goal is to realize a margin of 22% by 2022. While 2019 will be a year focused on execution, we expect to see margins of 20% by the end of 2020. This revenue and margin algorithm yield solid double-digit growth in adjusted EPS. This will translate into growth in operating and free cash flow, which we will then utilize to further enhance our financial performance.

We understand that we need to reinforce our credibility by demonstrating that we are on track to achieve our goals. On Slide 34, we detailed the key activities and associated metrics that will allow you to measure our success in our financial progress. Among the key activities, we will report progress on, include the SBU and RCO consolidation, with our expectation that the majority of them will be completed in the first half of 2019.

A second key activity will be implementing a sales-force effectiveness program, which will be starting in the US and transferred around the world through the course of 2019. Another critical activity is progress in creating a comprehensive R&D portfolio program. We expect it to be completed in 2019 and we'll provide progress reports as appropriate. And we will also provide an update on our portfolio shaping activities. Among critical non-financial metrics, we will report on, include headcount reduction, progress in critical growth markets and then number of clinical education contacts that we have.

Financial measures will include revenue growth, operating income margin, as well as our progress on restructuring charges. This is an ambitious and comprehensive program and there are obviously risk in pursuing a change initiative of this size. We have worked with our entire organization and outside advisors to make sure there are adequate resources to accomplish the plan. A phased approach will allow us to focus on completing critical priorities before moving on.

And above all, we have prioritized managing our customers and implementing a strong system of financial control to improve management visibility during this process.

So now to summarize. As you heard today, we are taking major steps to restructure our businesses to deliver on the promise of our portfolio. We've outlined a path that will lead to substantial value creation. We are focused on driving growth, improving margins and simplifying our business. We do recognize the scope of the undertaking in the task at hand. Coming out of that business diagnostic, the Board and management are convinced that this is the right plan, but we also acknowledge that the restructuring will take time.

Our near near-term priorities' execution in 2019 will be a transition year, but you will see signs of progress. We are cognizant of risk mitigation and making sure that we do this in a way that does not disrupt our revenue stream, impact our customers or interrupt our supply chain. You will see margins of 20% by 2020, with improvement to pre-merger levels thereafter. And we're not done, we are looking for more and we are on a path to returning margins to pre-merger levels over the long run or higher.

Our team looks forward to providing an update in 2019, including our progress against the KPIs and business initiatives that we've laid out for you today.

As this comes to a close, I want to relate that we just completed a two-day leadership summit with our top 50 leaders. I was very impressed by their passion for this company and commitment for delivering to our investors, customers and employees. They are excited about this plan and this excitement is critical as we put Dentsply Sirona on a more sustainable path.

We look forward to updating you on our progress regularly. In light of the restructuring we announced today, we will not be holding an Investor Day in the fourth quarter. We believe it is critical that we are focused on executing and delivering sustainable value.

And with that we'll open it up for questions. John?

John Sweeney -- Vice President, Investor Relations

Yes, operator. We'd like to take the first question please.

Questions and Answers:

Operator

Thank you. (Operator Instructions) And our first question comes from the line of Brandon Couillard with Jefferies. Your line is now open.

Brandon Couillard -- Jefferies -- Analyst

Thanks, good afternoon. Quite a lot to digest there. I guess, Don, with respect to your 3% to 4% sort of topline growth outlook for the next few years, you sort of speak to how you expect to achieve that given the number of moves you're making internally and the potential risks from disruption as we've seen with the distribution center facility transitioned this quarter?

Donald M. Casey Jr -- Chief Executive Officer

Yes, I think that's a great question. Thanks, Brandon and thanks for spending time with us today. Look right now as we've gone through this change initiative, we've established two core priorities that we referred to with guard rail. The first is we can't interrupt our customer service and we got to make sure supply chain is reliable.

So, if you listen to the presentation, we kind of talked about the fact that we will make the supply chain changes gradually and one of the things we're learning with things like Venlo is, we got to make sure our processes are in great shape before we transfer. So, we're saying that supply chain will be a little bit more of a gradual kind of over the next 18 months, two-year program to make sure that we have adequate supply of product that needs to support our selling initiatives.

In terms of -- on the commercial side, it's really interesting. I've been here nine months and I've been really impressed with our ability to generate sales in a lot of different places, but I do find it somewhat difficult to say at a local country level what our priorities are. So in our mind, by looking to move to four SBUs, four dental groups, if you will, and really focusing the R&D on bigger and more substantial innovation, we really think that we are going to actually simplify the executions at the country level, which we think will have a positive impact, even though there's going to be some change in the back.

The other issue is, we've been really working hard to make sure that our sales force effectiveness program, which we're starting to implement in the US in the first quarter of 2019 is really gradual. I mean the thing you don't want to do is literally have 2,000 sales and marketing people waking up the following morning and doing something different. So, we're really looking and focusing on maintaining each of the salespeople relationship with the critical customers and really helping them do a better job in understanding all the other areas of that customer is touched by Dentsply Sirona and look at cross selling it and other solutions things.

So, yes look at -- we understand it's a big program. We have spent a lot of time with our leadership group to make sure that we outline clear priorities of, don't interrupt your revenue stream, make sure that you've got an adequate supply of products and let's really get the commercial organization where it needs to get too quickly and then let's focus on really making our sales force hum in the field.

Brandon Couillard -- Jefferies -- Analyst

Thanks. And I guess one more -- if I could, just on the headcount reduction, can you just elaborate on what areas of the business that will come out of whether its sales, R&D? Thank you.

Donald M. Casey Jr -- Chief Executive Officer

Yes. Thanks, Brandon. And -- look we understand we gave you guys a ton of stuff tonight, and we are going to relax our one question policy. So, look as we go forward I would tell you the strategic business unit and the regional commercial organization consolidation is obviously a big chunk of what we have in the plan right now and that will happen most immediately.

But as you begin to look at other areas where we think that there is significant opportunity around supply chain, around some of the functional areas that need to begin to reflect the new organizational structure. We think there'll be considerable savings as we go through that. And a lot of this is, Brandon, is really eliminating duplication. If we have a strategic business unit that is in-charge of, say, Western Europe and then the countries in Western Europe have similar people doing marketing, and say implants, we really want to eliminate some of that duplication.

And then over time, we also really have done a pretty extensive portfolio shaping analysis and as we go through that we think that there are some opportunities to really focus on units that maybe not strategic, not really in our core, or really been underperforming for a number of years that we think we can move on and that's going to have an impact on hedge. So, I would tell, you look the SBU and RCO consolidation, followed by supply chain are obviously areas of portfolio shaping. And ultimately, we really don't think that it's going to be a big change in our sales force. We just like to make our current sales force more effective.

Brandon Couillard -- Jefferies -- Analyst

Super. Thank you.

Operator

Thank you. And our next question comes from the line of Jeff Johnson with Baird. Your line is now open.

Jeff Johnson -- Baird -- Analyst

Thank you, guys. Can you hear me, OK?

Donald M. Casey Jr -- Chief Executive Officer

Yes, Jeff.

Jeff Johnson -- Baird -- Analyst

All right, great. Hey, Don, how are you? So, I guess my first question and I'll make it two very quick questions. But just kind of that path to 3% to 4% revenue and the path to 20%, it sounds like exiting 2020 if I'm hearing you right on that, but I would assume that's going to be choppy. You've laid out a little bit on 2019, but I would assume we shouldn't connect kind of dots as there are more about ramp at the end of it or kind of an acceleration in some of those improvements as we get deeper into these efforts?

Donald M. Casey Jr -- Chief Executive Officer

First, Jeff, thanks for the question, and they don't even have to be quick. Look, we're not going to give you a kind of a quarter-by-quarter margin expectation. I do think that we're timing some of the commercial changes relatively quickly, and if you look, the portfolio shaping which are relatively minor businesses will occur over the time period that we're outlining.

I do think that if you saw the press release that we do say as -- one of the ways we're really looking to make sure that we're showing performance quickly is we're committing to our operating expenses being lower in 2019 than they were in 2018. And that's kind of a way that we are really holding ourselves accountable for not only headcount changes, but really getting after costs.

And Jeff, one thing I really want to emphasize and it's one of the challenges when we're trying to communicate a program the significant is, obviously the hard numbers are sitting there in the costs and the headcount. And I referenced the top 50 meeting. Our leadership team fundamentally believes that really focusing the organization on bigger priorities and bigger bets and more substantial innovation is actually going to liberate the organization and really help it grow.

So one of the things that when we talk about this program internally, is really focus on, A; delivering the margin improvement that we have to deliver, B; we get excited about the opportunity to really get after growth.

Jeff Johnson -- Baird -- Analyst

That's helpful. And then I guess, let me just follow-up Don, on the question around the point you made there on operating expenses coming down next year. Where do you think gross margins go next year and over the next couple years? You know, obviously you talked about some price mix image issues in imaging this quarter, we've written some notes, I'm sure others have, on kind of some of those pressures may be continuing for a while, and some other cost pressures on the manufacturing side, you might have it on the product mix side. So just where do you think gross margin when we move here in the next one to two to three years?

Nick Alexos -- Executive Vice President and Chief Financial Officer

Hey, Jeff. It's Nick. Let me take that. Thanks for the question. As you know and as Don has mentioned, we've got a high fixed cost structure. So as we look at the performance that we've targeted in the strategic plan, I think you're going to see both margins, our gross margins and then consequently operating margins improve as we better control our operating expenses. So I don't have a specific gross margin target for you, but as if you kind of pencil out where we're going to end up for the year, given our guidance of 15% to 15.5% and then 20% and 22% target, I think you're going to see a good portion of that -- I guess an even split between gross margin and operating margin is certainly the savings that we've targeted fall into both buckets.

Jeff Johnson -- Baird -- Analyst

Thank you.

Operator

Thank you. And our next question comes from the line of Tycho Peterson with J.P. Morgan. Your line is now open.

Tycho W. Peterson -- J.P. Morgan Securities LLC -- Analyst

Hey, thanks. Going to try to fill you guys a little bit for 2019 as well. Just given that your long-term guidance is 3% to 4% in the topline, Street has you just under 3% topline next year. As we think about portfolio transformation, are you comfortable with where the Street is, and is it going to be a product-heavy year given that it's an IDS year, or should we think about the following IDS cycles has been maybe more important for you guys?

Nick Alexos -- Executive Vice President and Chief Financial Officer

Hey, Tycho, it's Nick. I would say that we are definitely expecting a good IDS year, and I'll let Don follow-up on that. We're in the midst of our budget process, so we don't have a specific view on 2019. But as you know with the dealer destocking of $110 million to $115 million this year, certainly we would expect an uplift from that and that will certainly help our absorption levels in our fixed cost facility, and that will also targeting OpEx being below -- we should have a good year next year, while we're still ramping up our topline growth rate strategies.

Donald M. Casey Jr -- Chief Executive Officer

Yes, and Tyco, just obviously you've tracked a category for a long period of time, I guess yours tend to be significant years. The strategy we are taking right now is we're focusing on probably five to six big ideas and we're really going to drive them, which is a little bit of a different tack than we've taken in the past where it might have been 30 or 40 things where we try to be all things, all people. We're very comfortable that the innovations we are bringing and announcing at IDS are going to be a significant. And look, we're not going to outline exactly what they are obviously, we're in markets where you can tank markets in advance, if you get too specific on what you're launching. But we are very comfortable that we're going to have a really strong IDS.

Tycho W. Peterson -- J.P. Morgan Securities LLC -- Analyst

Okay. And then a follow-up on equipment, the CAD-CAM numbers out of Schein are great, up 40%, you obviously had the destock headwind. Can you maybe just talk to momentum in the underlying market around CAD-CAM. And Jeff alluded to the pricing in his question. So can you maybe just talk on some of the strategies, you've taken around pricing per CAD-CAM? And then lastly, if I look at your comments a year ago, you called out I think about an $8 million inventory destock headwind, today, you're saying it was $34 million in the year ago. So was that just the restatements, that's a difference?

Nick Alexos -- Executive Vice President and Chief Financial Officer

No, I think last year's destocking for Q3 was the $34 million. Why don't we check on that, Tycho, and Don, can you answer on the pricing for CAD-CAM and our imaging?

Donald M. Casey Jr -- Chief Executive Officer

Yes. And Tycho, when we -- if you go back to our second quarter call, we said that we were unhappy with the performance of our technology and equipment business. We took a couple very specific actions, and I'll come back to where pricing fits in that. The first is we stood up in sales force that was focused on CAD-CAM. The second is, we launched a pretty comprehensive marketing program designed to create interest and not just CAD-CAM but imaging as well. The third, we worked with our dealer partners and they've been terrific and getting their sales force is aligned, giving their sales force is the right level of incentive. We also offered some financing and we are seeing some very positive trends underlying.

And Nick mentioned in his script that, he was talking about a very positive DS world and we had a very good DS world. So I would tell you and it hasn't been about price, it is realistically getting back and fundamentally delivering the benefits of chair-side dentistry, which we think is transformative.

I think the longer term, one of the questions that we have to look at is, what is the impact of DI and CAD-CAM and the interesting thing is that, right now we are finding that the CAD-CAM is moving and we are seeing positive momentum there. And I don't think that's coming at the expense of the -- I think there are some of our customers are beginning to segment themselves, say, look I want to do DI and some of them wanted to full chair-side.

So again, I think some of this is getting back to good old-fashioned blocking and tackling around CAD-CAM. And, again it was my first -- my first DS world and listening to the the loyalty that CEREC doctors have for this product is really impressive.

Tycho W. Peterson -- J.P. Morgan Securities LLC -- Analyst

Okay, thank you.

Operator

Thank you. And our next question comes from the line of Jonathan Block with Stifel. Your line is now open.

Jonathan Block -- Stifel, Nicolaus & Co., Inc. -- Analyst

Hey, guys. Thanks, and good afternoon. I'm actually going to apologize in advance for this question, but I really think it's important. You guys are about 30% below the EPS range for 2018 that you gave only nine months ago, and numbers have essentially come down for each of the past three quarters. You're giving today, numbers and goals that are two and four years out. And I guess what I'm asking is, why should people have conviction in those numbers, and I am asking because if you look at the numbers, I think it implies well over $3 earnings power in 2022, which is really compelling. But how do you get people comfortable on the roadmap to achieve that? And then I've got a shorter follow-up.

Donald M. Casey Jr -- Chief Executive Officer

Sure. And Jonathan, look, it's a question we fully expect and look, I would tell you nobody is more disappointed in the movement that we've been doing with guidance than Nick and myself. So that's the first thing. The second is, why should people believe us? Well that if you listen to you how we're kind of laying out our KPIs, we're laying out three kind of things for you to measure things along.

I mean the first is, what we kind of call activities and we fully expect to provide transparency on these major initiatives, where are they? And did we deliver on our R&D portfolio? Did we deliver on sales force effectiveness program and where are we? The second part of that is where we're really talking about non-financial metrics as we kind of go forward. And the last issue was, we're saying that we're going to report out on seven key financials, which are margin and all that stuff along the way.

In terms of what we're trying to get done, look on the underlying part of the business, the first thing starts with growth and right now, if you basically peel back our third and fourth quarter, one is an issue that we didn't comprehend when we put together our budget in 2018, which was a major change in the dealer destocking of $110 million, that was pretty significant. The second was, as we began to stand up a centralized facility in Europe, we had start-up issues at the end of the quarter, we feel that those -- that's been resolved and that site is moving along nicely.

So as you look at what has impacted our 2018, they've been very significant headwinds. If you look at going forward, we're trying to outline some very transparent steps around organizational structure, growth initiatives that we should be able to report on and give you my oppose along the way, but you are only as good as we deliver. So without trying to quote Bill Parcells, we understand that we have to deliver on these commitments.

Jonathan Block -- Stifel, Nicolaus & Co., Inc. -- Analyst

That's very helpful. I appreciate that, and maybe just shorter follow-up is something is certainly still the case, but might be temporary loss of investors as you've got a really under-levered balance sheet and good cash flow, but how do we think about deploying capital during this time of restructuring, is management going to be overly focused on what you guys need to do over the next two to three years or can we still think about you guys executing on some tuck-ins along the way? Thanks for your time.

Donald M. Casey Jr -- Chief Executive Officer

Yes, thanks, John and I would say it's the latter. Look we are -- we believe that our go-to-market capabilities are really strong and look, we have a lot of areas that we think tuck-ins can really help us with the technology that we haven't developed internally or help us with the solution. So look, I'm not going to give an exact number of where we expect to deploy cash in terms of make it available for tuck-ins versus other uses, but we are going to be actively in the market, where we can see technologies that would help us accelerate growth.

Nick Alexos -- Executive Vice President and Chief Financial Officer

Next question.

Operator

Thank you. And our next question comes from the line of Erin Wright with Credit Suisse. Your line is now open.

Erin Wright -- Credit Suisse -- Analyst

Great, thanks for taking my questions. And so, how is innovation as part of these new efforts to reinvigorate growth and you mentioned the stepped-up innovation this year and an IDS year, but can you elaborate a little bit more on the pipeline, do you have some more meaningful launches coming up even at Greater New York? Thanks.

Donald M. Casey Jr -- Chief Executive Officer

We're not going to do anything in Greater New York and really the next big tranche of things will be IDS and again this is -- it's new to me to be honest, because coming out of medical devices you could usually talk about the next couple of years, but obviously in our technology and equipment business, we have a consumer that would -- that paid attention to what we say, and if we announce specific innovations, we have a potential to change our buying trajectory before then. So we're not going to do that, but most people tend to focus on our technology and equipment business. We feel pretty good that we've got some good innovations coming along in our metrics and our orthodontic business. We like what's going on in some of our implant businesses. In addition to straight up innovation that's coming out of our own shop when you look at buying technologies that we don't believe we fully deployed like things like MIS.

We get excited and if you look at, we think that there is some real work that we can be doing in our rest of business in our preventive franchises as well. And then the last issue near and dear our hearts is endo, and we look at our track record of innovation over the last decade, it's been pretty important for us to innovate in endo and right now, I would tell you that's a very high priority for us. So you know, Erin, we're looking forward to again a very, very fulsome IDS.

Erin Wright -- Credit Suisse -- Analyst

And how would you characterize less consumables growth parsing out specialty as well as general consumables, and I guess I'm focused here on the US and take that you have visibility on the end market demand trends? Thanks.

Donald M. Casey Jr -- Chief Executive Officer

Yeah, and while we don't give specific guidance on consumables in the US, I mean if we feel the underlying US businesses has been pretty good, again without quoting direct numbers, we feel our consumable business is very competitive in the US business, and again we think that that marketplace, it's been growing in the mid-single digits, mid to low single-digit number. So and again, we feel pretty good about how we're performing in that market in that area.

Operator

Thank you. And our next question comes from the line of Nathan Rich with Goldman Sachs. Your line is now open.

Nathan Rich -- Goldman Sachs -- Analyst

Thanks for the questions. Don, could you maybe help us think about the major buckets of $200 million and $225 million of cost savings between headcount and some of the other areas. Just think you would help getting that additional visibility as we think about that you've ability of those targets?

Donald M. Casey Jr -- Chief Executive Officer

Sure actually, I'll turn it over to Nick.

Nick Alexos -- Executive Vice President and Chief Financial Officer

Yeah, I mean I would say that the major buckets are obviously some level of headcount reductions, also there is some rationalization of facilities and program management within that. I would say that they are half between kind of gross margin level expenses and then operating expenses across, but as Don said earlier, we are looking to rationalize the organizational structure and eliminate some redundancies within the business by having fewer business units within the two segments, and that will increase efficiencies.

Donald M. Casey Jr -- Chief Executive Officer

And just to amplify what Nick said Nathan, is look, we believe that there is a significant opportunity in terms of the RCO/SBU consolidation, some other functional consolidation, so put that in the headcount bucket, there is second area that we were excited about is procurement. Again, it's kind of hard to develop the really effective procurement organization when you've got SBUs in countries as the primary management point. So we think there's significant money there. And then on some of the portfolio shaping opportunities, we believe that there are businesses that are noncore and not particularly productive. So I would bucketed headcount, operational savings and then obviously, we're going to get a fair amount of margin lift in the accelerating growth portfolio. So --

Nathan Rich -- Goldman Sachs -- Analyst

Okay, great. And then just one on the disruption in Europe on the consumable side, it looks like it was slightly more than 400 basis points of the headwind this quarter, can you maybe just talk about the remediation efforts you put in place, and how quickly you think you can kind of get back to that more normalized growth?

Donald M. Casey Jr -- Chief Executive Officer

Yeah, and just for perspective, Venlo is something that we think it's important for our ability to serve our customers long term and it's a centralized activity. We had -- if you think about that particular facility of services, some of our direct kind of smaller Direct to Doctor businesses and that went fine as we were transferring a lot of the work we do with our dealers, which tend to be larger orders moving in with a new technology and new process in place for Venlo.

At this point, we feel pretty good that the Venlo situation is under control. We feel very good that the facility at this point is producing at a level that it should be able to meet any demand that we see currently forecasted in the fourth quarter, and then Nick and I are actually going to be in Venlo next Tuesday, let's see for ourselves. But at this point is, we feel pretty good that the situation has been remediated. The other thing that it's going to be a learning opportunity for the organization where, OK, how do we -- what are the five key things we learned when we're doing these things, and I think it was an important trial by fire that I think will make us better as we really begin to look at doing some other supply chain consolidation.

Nathan Rich -- Goldman Sachs -- Analyst

Makes sense. Thank you.

Operator

Thank you. And our next question comes from the line of Steven Valiquette with Barclays. Your line is now open.

Steven Valiquette -- Barclays -- Analyst

Thanks, good afternoon Don and Nick, thanks for taking the question. So, couple of things I think about, here I guess framing that's a little bit differently, the legacy Dentsply company went through a very similar deep dive analysis about five years ago. The strategy to do some major restructuring cost savings also lead to a lot of margin expansion and the company actually did achieve some of that and actually most of the margin expansion from call it 2013, 2015 and 2016 or so.

I guess the question really is that given that Dentsply restructuring, wasn't that long ago, first is more of this restructuring related to legacy Sirona assets versus legacy Dentsply assets although that's really seem like it based on the slides. But the number two, I guess that there still a lot of low hanging fruit on the legacy Dentsply side of the business given that again this broad restructuring took place not that long ago and you run the risk too much cutting just leading to let's call it unintended consequences on top-line growth.

Donald M. Casey Jr -- Chief Executive Officer

Yeah thanks Steve, great question. It's interesting one of the things coming in new, I get to read about all the projects and the Dentsply the legacy Dentsply organization went through a relatively significant restructuring design to do a much better job of integrating what at that time was 6 SBUs, I would say it was reasonably successful, but was about halfway through about the time of the merger and as such some of the rationalization work that was targeted in plants on the legacy Dentsply side what we've gotten to and then all of a sudden, you basically had a company the size of the legacy Dentsply organization on top of the organization that hadn't necessarily completed the transition and needed to do so. I tend to think that there if the legacy Dentsply company had the 18, 24 months, I think that there would have delivered continued benefit there and it benefit we're looking to get after now, that's the first point.

The second thing is, we've really stop thinking about the company as kind of legacy Dentsply and legacy Sirona, and it's really interesting one of the things that we need to start thinking about, is you look at some of our specialty businesses or our technology and equipment businesses, there is cost leverage is because we're calling on the same dentist with 10 different platforms, and so in my mind, it's less about how are we going to carve out savings on one side or the other, but let's take a customer approach and then lets look at what's the best way for us to understand the best relationship we have with that dentist and make sure that we're approaching it that way.

So in my mind one of the opportunities of putting the companies together was to creating a much broader portfolio that should be of a high degree of relevance to that dentist and deliver it that way, and we just haven't done that. So -- and then as you think about the cost savings and the reason we say 20% by 2020 and then we say, look we want to get back to pre-merger levels and beyond is that we think that there is a significant amount of supply chain work that we can do. We just don't want to do that right out of the gate as we're going through kind of a commercial evolution. So that's kind of how we think about it. Long-way -- longer way of saying Dentsply did not get all the low hanging fruit and as a combination of these two assets put together should create other opportunities for us to get after.

Steven Valiquette -- Barclays -- Analyst

Okay. That would be some helpful color. Thank you.

Operator

Thank you. And our next question comes from the line of Steve Beuchaw with Morgan Stanley. Your line is now open.

Steve Beuchaw -- Morgan Stanley -- Analyst

Well, hi, and thanks for the time here. I want to try to help everybody get or maybe a little bit more comfortable with the top line trajectory maybe come out of a couple of different ways. The first, when I think about the challenges that the company has faced historically, they're actually pretty different in different regions. We tend to focus a lot on what's going on in the US, but I wonder if you could talk about the balance of improvement that you're contemplating in the top line trajectory and the extent to which they are different in the different regions and the extent to what you think in the different regions, given their different market dynamics. The critical success factors, might be more, more in your control?

Donald M. Casey Jr -- Chief Executive Officer

Yes, Steve. Let's take things one at a time. I mean, first, we have been relatively consistent over the last nine months talking about the fact that we think developing market should be a good place for us, and we're going to continue investing. I mean, if you look at the growth we've been seeing in places like Brazil and China and the model we approach there, so we think that that's a model that we can continue investing in and replicate.

In terms of the different trajectories in the different parts of the world, what -- there are a lots of different trajectories, but I would tell you in my mind, there's been two things that are consistent across all the regions. The first is we've got to deliver major innovation and whether it's major innovation or technology and equipment business that's going to be relevant in Europe, and it's going to be relevant in the US or whether it's coming up with new innovation and what we would consider like a specialty business like implants or in endo or something like orthodontic.

We don't see a huge difference in the impact that those new products could have across the Board. So in our mind, there is not a regional strategy on, OK, we need to develop a tailored North American strategy versus a Central Europe versus like emerging market. In our mind is how do we really look at innovation that's truly relevant across the market around the world. So I realize it might not sync completely up with your thesis there, but in my mind if we can really get the new products in the pipeline flowing 1.2 is make sure that we are consistently excellent in our go-to-market strategy, I think we are going to be in good shape.

Steve Beuchaw -- Morgan Stanley -- Analyst

And just building on the commentary about new products. How much do you think you can improve price and mix trends over the course of the forecast horizon with new product flow? Thanks.

Donald M. Casey Jr -- Chief Executive Officer

Whether we improve it or arrest the decline, I'll take those as two sides of the same coin. Look the innovations that we're pushing out we think has a potential to do very, very well in the marketplace and we're very conscious of whether they're going to be margin accretive or dilutive and one of the reasons that I cited the fact that we need to change our approach to R&D and begin to focus on bigger bets is, look, we need to look across our portfolio and say what's going to have the best benefit to our top and bottom line as Dentsply Sirona as to what might be the best for our preventive SBU.

And in doing that obviously, if there are higher margin products that are more relevant in areas of the world that we have higher margin profiles, that's where we are going to be able to pick up resources and reallocate them to deliver there. So again, I get very excited about some of the things in our pipeline and the fact that we do think that they are going to really help us on both the top line and margin basis.

Steve Beuchaw -- Morgan Stanley -- Analyst

Okay. Thanks, Don.

Operator

Thank you. And our next question comes from the line of John Kreger with William Blair. Your line is now open.

John Kreger -- William Blair -- Analyst

Thanks very much. Don, can you maybe go back to the strategic review you guys did of the market overall, dental market. What did you conclude for longer-term dental market growth and what did that study conclude in terms of how the market is evolving. Just to give us a sense of what Dentsply needs to do to sort of be able to outpace the market long-term? Thanks.

Donald M. Casey Jr -- Chief Executive Officer

Yes, thanks for the question, John. I would tell you it's -- we break it up and kind of consumables and technology and equipment. We think that there are positives in the consumable business that are offsetting some of what you may think about consolidation whether it's in the DSOs or some of the pricing compression.

So we believe that the consumable business is kind of a 2% to 4% relatively consistent. And again there is positive in new products and other that will offset what we consider with consolidating related pressure. On the T&E business, again we really look at this year in the largest market, there was a significant anomaly at the wholesale level, where we saw a tremendous amount of inventory destocking.

Again I hope you hear that we were pretty happy with how the third quarter T&E business was performing, and we think that's indicative of it, we've got a good portfolio of products and T&E, whether that's CAD-CAM or whether that's being more competitive in D or instruments or other areas. We believe that business should be a 4% to 6% or potentially higher grower depending on where we are in in new products. So on an aggregate basis we really look at the combined business sitting around 3% to 5% and we said both in our transcript, and I believe in the press release that we believe we are be able to track that market if not outpace that it's clearly our objective to outpaces it.

John Kreger -- William Blair -- Analyst

Okay, thanks. And maybe a follow-up Nick for you. What is your thinking about destocking at this point. Are we done as you think to 2019 and beyond. Is the inventory in the channel appropriate or do we need to be thinking about more of that in 2019?

Nick Alexos -- Executive Vice President and Chief Financial Officer

Yes, the short answer John has said, our expectation is that this will be a good year to get the level of inventory in the channel to where demand at a retail level corresponds with demand at the wholesale level. So it's obviously a significant reduction this year $110 million to $115 million and that's been trending pretty well. So we feel pretty good about getting this behind us.

John Kreger -- William Blair -- Analyst

Okay. Thank you.

Donald M. Casey Jr -- Chief Executive Officer

Thank you, John.

Operator

Thank you. And our next question comes from the line of Yi Chen with H. C. Wainwright. Your line is now open.

Yi Chen -- H. C. Wainwright -- Analyst

Hi, sorry for that. Thank you for taking the question. So my question is sincerely relate to the revenue growth. What do you see the revenue growth essentially reversing?

Nick Alexos -- Executive Vice President and Chief Financial Officer

Well, the answer to that, I mean, obviously as we said the dealer destocking will help us certainly with revenue growth going into next year on the technology and equipment side, and on the consumable side, we believe the Venlo issue certainly getting behind us and we'll be able to see positive growth on the consumable side as well. So clearly, the expectation is positive revenue growth into next year.

Yi Chen -- H. C. Wainwright -- Analyst

Perfect, thank you so much for that.

Nick Alexos -- Executive Vice President and Chief Financial Officer

Sure.

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Don for any closing remarks.

Donald M. Casey Jr -- Chief Executive Officer

Okay. Well, first we appreciate that we went a little bit long today, but obviously we had a lot to talk about. So thank you for your time and we look forward to reporting back as time moves on. And again, we mentioned in our transcript at this point, we are not planning on doing an Investor Day at this point. So again hope everyone has good evening and we appreciate the time spent with us. Thank you very much.

Nick Alexos -- Executive Vice President and Chief Financial Officer

Thank you, bye.

Operator

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. And you may all disconnect. Everyone have a wonderful day.

Duration: 67 minutes

Call participants:

John Sweeney -- Vice President, Investor Relations

Donald M. Casey Jr -- Chief Executive Officer

Nick Alexos -- Executive Vice President and Chief Financial Officer

Brandon Couillard -- Jefferies -- Analyst

Jeff Johnson -- Baird -- Analyst

Tycho W. Peterson -- J.P. Morgan Securities LLC -- Analyst

Jonathan Block -- Stifel, Nicolaus & Co., Inc. -- Analyst

Erin Wright -- Credit Suisse -- Analyst

Nathan Rich -- Goldman Sachs -- Analyst

Steven Valiquette -- Barclays -- Analyst

Steve Beuchaw -- Morgan Stanley -- Analyst

John Kreger -- William Blair -- Analyst

Yi Chen -- H. C. Wainwright -- Analyst

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Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

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