DENTSPLY SIRONA Inc. (“Dentsply Sirona” or the “Company”) (Nasdaq:
XRAY) today announced its financial results for the first quarter
of 2023.
First quarter net sales of $978 million increased
0.9%, compared to $969 million in the first quarter of 2022. Net
loss for the first quarter of 2023 was ($19) million, or ($0.09)
loss per share, compared to net income of $69 million, or $0.32 per
diluted share in the first quarter of 2022. Net loss for the first
quarter of 2023 includes restructuring related charges and other
costs of $71 million net of tax, or $0.33 per share. Adjusted
earnings per diluted share decreased to $0.39 compared to $0.54 in
the first quarter of 2022. A reconciliation of Non-GAAP measures
(including organic sales, adjusted EBITDA and margin, adjusted EPS,
and adjusted free cash flow conversion) to GAAP measures is
provided below.
“Our first quarter results reflect a strong start
to 2023 that exceeded our outlook, driven primarily by strong
demand for aligners and consumables. As a result of our first
quarter performance, stable patient traffic in key markets, and
improving confidence in our ability to execute on strategic
objectives, we are raising the low-end of our full year outlook for
net sales, organic sales growth, and adjusted EPS,” said Simon
Campion, President and Chief Executive Officer. “We are encouraged
by the results in the quarter and are beginning to see promising
momentum from our transformation work, but recognize that we
continue to operate in a volatile macroeconomic environment. We
remain confident that our plans will deliver meaningful long-term
value for our shareholders, customers, and employees alike.”
Q1 23 Summary Results (GAAP)
(in millions, except per share amount and
percentages) |
|
Q1 23 |
|
Q1 22 |
|
YoY |
Net Sales |
|
978 |
|
969 |
|
0.9% |
Net (Loss)/ Income Attributable to Dentsply Sirona |
|
(19) |
|
69 |
|
NM |
Diluted (Loss)/ Earnings Per Share |
|
(0.09) |
|
0.32 |
|
NM |
NM - not meaningfulPercentages are based on
actual values and may not reconcile due to rounding.
Q1 23 Summary Results
(Non-GAAP)[1]
(in millions, except per share amount and
percentages) |
|
Q1 23 |
|
Q1 22 |
|
YoY |
|
|
|
|
|
|
|
Net Sales |
|
978 |
|
|
969 |
|
|
0.9 |
% |
Organic Sales Growth % |
|
|
|
|
|
5.1 |
% |
Adjusted EBITDA |
|
161 |
|
|
189 |
|
|
(15.6 |
%) |
Adjusted EBITDA % |
|
16.4 |
% |
|
19.6 |
% |
|
|
Adjusted EPS |
|
0.39 |
|
|
0.54 |
|
|
(27.8 |
%) |
[1] Organic sales growth, adjusted EBITDA, and
adjusted EPS are Non-GAAP financial measures which exclude certain
items. Please refer to "Non-GAAP Financial Measures" below for a
description of these measures and to the tables at the end of this
release for a reconciliation between GAAP and Non-GAAP
measures.Percentages are based on actual values and may not
reconcile due to rounding.
Segment Results
Technologies &
EquipmentFirst quarter 2023 net sales were $548 million,
down (3.0%) versus prior year. Foreign currency negatively impacted
sales by (4.7%), while organic sales increased by 1.7% as compared
to prior year. The organic sales growth was driven by strong
aligners sales and the timing of CAD/CAM dealer orders, partially
offset by the impact of VBP on implants sales in China and lower
imaging and instruments volumes.
ConsumablesFirst quarter 2023
net sales were $430 million, up 6.4% versus prior year. Foreign
currency negatively impacted sales by (3.4%), while organic sales
increased by 9.8% as compared to prior year. The organic sales
growth was primarily driven by strong retail demand.
Cash Flow and Liquidity
Operating cash flow in the first quarter of 2023
decreased to ($21) million, as compared to $93 million in the prior
year, primarily as a result of changes in working capital and
increased operating expenses associated with commercial investments
and non-recurring charges such as restructuring and remediation
costs. In the first quarter of 2023, the Company paid $27 million
in dividends and announced a $150 million accelerated share
repurchase ("ASR") agreement. Under the terms of the ASR,
approximately 3.1 million shares were delivered during March
2023, representing $120 million of the total anticipated
repurchase. The ASR was executed under Dentsply Sirona’s current
share repurchase authorization and was completed on April 28, 2023.
The Company had $318 million of cash and cash equivalents at
March 31, 2023.
2023 Outlook
Based on the better-than-expected results in the
first quarter, the Company is raising the low-end of its 2023 net
sales outlook by $50 million to a new range of $3.90 billion to
$3.95 billion, and flat to up 2% on an organic sales basis. The
Company is also raising the low-end of its adjusted EPS range by
$0.05 to a new range of $1.85 to $2.00. The revised outlook still
assumes foreign currency will be a (100) bps headwind to net sales
on a full year basis.
Other 2023 outlook assumptions are included in the
first quarter 2023 earnings presentation posted on the Investors
section of the Dentsply Sirona website at
https://investor.dentsplysirona.com. The Company does not provide
forward-looking estimates on a GAAP basis as certain information is
not available and cannot be reasonably estimated.
Recent Announcements & Additional
Highlights
- Sustainability Update
- On April 24, 2023, Dentsply Sirona announced that, in partnership
with FDI World Dental Federation and Smile Train, the first-ever
global standard protocols for digitalized cleft treatment were
developed. The three-way partnership is part of Dentsply Sirona's
sustainability strategy "BEYOND: Taking action for a brighter
world".
- SureSmile VPro Launch
- On April 20, 2023, Dentsply Sirona introduced SureSmile VPro and
SureSmile VPro mobile app in the European market as part of its
aligner treatment offering.
- IDS 2023 - From March
14-18, 2023, Dentsply Sirona joined more than 120,000 dental
professionals from 162 countries at the International Dental Show
(IDS) 2023 in Cologne, Germany. Innovations from Dentsply Sirona's
digital universe were on display, including Primescan Connect,
Primeprint, Axeos, and DS Core.
Conference Call/Webcast
InformationDentsply Sirona’s management team will host an
investor conference call and live webcast on May 3, 2023 at
8:30 am ET. A live webcast of the investor conference call and a
presentation related to the call will be available on the Investors
section of the Company’s website at
https://investor.dentsplysirona.com.
For those planning to participate on the call,
please register at
https://register.vevent.com/register/BI0a72416a821c450aaab373dc1a8cac3c.
A webcast replay of the conference call will be available on the
Investors section of the Company’s website following the call.
About Dentsply SironaDentsply
Sirona is the world’s largest manufacturer of professional dental
products and technologies, with over a century of innovation and
service to the dental industry and patients worldwide. Dentsply
Sirona develops, manufactures, and markets a comprehensive
solutions offering including dental and oral health products as
well as other consumable medical devices under a strong portfolio
of world class brands. Dentsply Sirona’s products provide
innovative, high-quality and effective solutions to advance patient
care and deliver better and safer dental care. Dentsply Sirona’s
headquarters is located in Charlotte, North Carolina. The Company’s
shares are listed in the United States on Nasdaq under the symbol
XRAY. Visit www.dentsplysirona.com for more information about
Dentsply Sirona and its products.
Contact
Information:Investors:Andrea DaleyVice President, Investor
Relations+1-704-805-1293InvestorRelations@dentsplysirona.com
Press:Marion Par-WeixlbergerVice President,
Public Relations & Corporate Communications+43 676
848414588marion.par-weixlberger@dentsplysirona.com
Forward-Looking Statements and
Associated Risks
This Press Release contains statements that do not
directly and exclusively relate to historical facts which
constitute forward-looking statements, including, statements and
projections concerning, among other things, the expected timing,
benefits and costs associated with the Company’s restructuring plan
described in this Press Release. The Company’s forward-looking
statements represent current expectations and beliefs and involve
risks and uncertainties. Actual results may differ significantly
from those projected or suggested in any forward-looking statements
and no assurance can be given that the results described in such
forward-looking statements will be achieved. Investors are
cautioned not to place undue reliance on such forward-looking
statements which speak only as of the date they are made. The
forward-looking statements are subject to numerous assumptions,
risks and uncertainties and other factors that could cause actual
results to differ materially from those described in such
statements, many of which are outside of our control. The Company
does not undertake any obligation to release publicly any revisions
to such forward-looking statements to reflect events or
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Any number of factors could
cause the Company’s actual results to differ materially from those
contemplated by any forward-looking statements, including, but not
limited to, the risks associated with the following: the Company’s
ability to remain profitable in a very competitive marketplace,
which depends upon the Company’s ability to differentiate its
products and services from those of competitors; the Company’s
failure to realize assumptions and projections which may result in
the need to record additional impairment charges; the effect of
changes to the Company’s distribution channels for its products and
the failure of significant distributors of the Company to
effectively manage their inventories; the Company’s ability to
control costs and failure to realize expected benefits of cost
reduction and restructuring efforts and the Company’s failure to
anticipate and appropriately adapt to changes or trends within the
rapidly changing dental industry. Furthermore, many of these risks
and uncertainties are currently, or in the future may continue to
be, amplified by the COVID-19 pandemic and the impact of varying
private and governmental responses that affect our customers,
employees, vendors and the economies and communities where they
operate. Investors should carefully consider these and other
relevant factors, including those risk factors in Part I, Item 1A,
(“Risk Factors”) in the Company’s most recent Form 10-K, including
any amendments thereto, and any updating information which may be
contained in the Company’s other filings with the SEC, when
reviewing any forward-looking statement. The Company notes these
factors for investors as permitted under the Private Securities
Litigation Reform Act of 1995. Investors should understand it is
impossible to predict or identify all such factors or risks. As
such, you should not consider either the foregoing lists, or the
risks identified in the Company’s SEC filings, to be a complete
discussion of all potential risks or uncertainties.
|
DENTSPLY
SIRONA INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(in millions,
except per share amounts) |
(unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net sales |
$ |
978 |
|
|
$ |
969 |
|
Cost of products sold |
|
459 |
|
|
|
448 |
|
|
|
|
|
Gross profit |
|
519 |
|
|
|
521 |
|
Selling, general, and administrative expenses |
|
416 |
|
|
|
376 |
|
Research and development expenses |
|
46 |
|
|
|
45 |
|
Restructuring and other costs |
|
59 |
|
|
|
3 |
|
|
|
|
|
Operating (loss) income |
|
(2 |
) |
|
|
97 |
|
|
|
|
|
Other income and expenses: |
|
|
|
Interest expense, net |
|
19 |
|
|
|
12 |
|
Other expense (income), net |
|
7 |
|
|
|
(2 |
) |
|
|
|
|
(Loss) income before income taxes |
|
(28 |
) |
|
|
87 |
|
(Benefit) provision for income taxes |
|
(5 |
) |
|
|
18 |
|
|
|
|
|
Net (loss) income |
|
(23 |
) |
|
|
69 |
|
|
|
|
|
Less: Net loss attributable to noncontrolling interest |
|
(4 |
) |
|
|
— |
|
|
|
|
|
Net (loss) income attributable to Dentsply Sirona |
$ |
(19 |
) |
|
$ |
69 |
|
|
|
|
|
Net (loss) income per common share attributable to Dentsply
Sirona: |
|
|
|
Basic |
$ |
(0.09 |
) |
|
$ |
0.32 |
|
Diluted |
$ |
(0.09 |
) |
|
$ |
0.32 |
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
Basic |
|
214.5 |
|
|
|
217.0 |
|
Diluted |
|
214.5 |
|
|
|
217.8 |
|
DENTSPLY
SIRONA INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(in millions) |
(unaudited) |
|
|
March 31, 2023 |
|
December 31, 2022 |
|
|
|
|
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
318 |
|
$ |
365 |
Accounts and notes receivables-trade, net |
|
652 |
|
|
632 |
Inventories, net |
|
659 |
|
|
627 |
Prepaid expenses and other current assets |
|
314 |
|
|
269 |
Total Current Assets |
|
1,943 |
|
|
1,893 |
|
|
|
|
Property, plant, and equipment, net |
|
770 |
|
|
761 |
Operating lease right-of-use assets, net |
|
191 |
|
|
200 |
Identifiable intangible assets, net |
|
1,862 |
|
|
1,903 |
Goodwill |
|
2,701 |
|
|
2,688 |
Other noncurrent assets |
|
206 |
|
|
198 |
Total Assets |
$ |
7,673 |
|
$ |
7,643 |
|
|
|
|
Liabilities and Equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
267 |
|
$ |
279 |
Accrued liabilities |
|
748 |
|
|
727 |
Income taxes payable |
|
43 |
|
|
46 |
Notes payable and current portion of long-term debt |
|
316 |
|
|
118 |
Total Current Liabilities |
|
1,374 |
|
|
1,170 |
|
|
|
|
Long-term debt |
|
1,842 |
|
|
1,826 |
Operating lease liabilities |
|
144 |
|
|
149 |
Deferred income taxes |
|
271 |
|
|
287 |
Other noncurrent liabilities |
|
404 |
|
|
399 |
Total Liabilities |
|
4,035 |
|
|
3,831 |
|
|
|
|
Total Equity |
|
3,638 |
|
|
3,812 |
|
|
|
|
Total Liabilities and Equity |
$ |
7,673 |
|
$ |
7,643 |
DENTSPLY
SIRONA INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in millions) |
(unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
Net (loss) income |
$ |
(23 |
) |
|
$ |
69 |
|
|
|
|
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
31 |
|
|
|
29 |
|
Amortization of intangible assets |
|
53 |
|
|
|
55 |
|
Fixed asset impairment |
|
4 |
|
|
|
— |
|
Deferred income taxes |
|
(21 |
) |
|
|
(14 |
) |
Stock based compensation expense |
|
17 |
|
|
|
11 |
|
Restructuring and other costs |
|
48 |
|
|
|
(2 |
) |
Other non-cash expense |
|
9 |
|
|
|
2 |
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts and notes receivable-trade, net |
|
(15 |
) |
|
|
34 |
|
Inventories, net |
|
(30 |
) |
|
|
(41 |
) |
Prepaid expenses and other current assets, net |
|
(17 |
) |
|
|
(17 |
) |
Other noncurrent assets |
|
(1 |
) |
|
|
3 |
|
Accounts payable |
|
(14 |
) |
|
|
19 |
|
Accrued liabilities |
|
(31 |
) |
|
|
(51 |
) |
Income taxes |
|
(37 |
) |
|
|
3 |
|
Other noncurrent liabilities |
|
6 |
|
|
|
(7 |
) |
Net cash (used in) provided by operating
activities |
|
(21 |
) |
|
|
93 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
|
(39 |
) |
|
|
(44 |
) |
Cash received on derivative contracts |
|
2 |
|
|
|
1 |
|
Net cash used in investing activities |
|
(37 |
) |
|
|
(43 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Cash paid for treasury stock |
|
(150 |
) |
|
|
(150 |
) |
Proceeds on short-term borrowings |
|
198 |
|
|
|
163 |
|
Cash dividends paid |
|
(27 |
) |
|
|
(24 |
) |
Proceeds from long-term borrowings, net of deferred financing
costs |
|
— |
|
|
|
5 |
|
Repayments on long-term borrowings |
|
— |
|
|
|
(2 |
) |
Proceeds from exercised stock options |
|
— |
|
|
|
5 |
|
Other financing activities, net |
|
(4 |
) |
|
|
(7 |
) |
Net cash provided by (used in) financing
activities |
|
17 |
|
|
|
(10 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(6 |
) |
|
|
(5 |
) |
Net (decrease) increase in cash and cash equivalents |
|
(47 |
) |
|
|
35 |
|
Cash and cash equivalents at beginning of period |
|
365 |
|
|
|
339 |
|
Cash and cash equivalents at end of period |
$ |
318 |
|
|
$ |
374 |
|
|
|
|
|
Non-GAAP Financial Measures
In addition to results determined in accordance
with U.S. generally accepted accounting principles (“US GAAP”) the
Company provides certain measures in this press release, described
below, which are not calculated in accordance with US GAAP and
therefore represent Non-GAAP measures. These Non-GAAP measures may
differ from those used by other companies and should not be
considered in isolation from, or as a substitute for, measures of
financial performance prepared in accordance with US GAAP. These
Non-GAAP measures are used by the Company to measure its
performance and may differ from those used by other companies.
Management believes that these Non-GAAP measures
are helpful as they provide another measure of the results of
operations, and are frequently used by investors and analysts to
evaluate the Company’s performance exclusive of certain items that
impact the comparability of results from period to period, and
which may not be indicative of past or future performance of the
Company.
Organic Sales
The Company defines “organic sales” as the reported
net sales adjusted for: (1) net sales from acquired businesses
recorded prior to the first anniversary of the acquisition; (2) net
sales attributable to disposed businesses or discontinued product
lines in both the current and prior year periods; and (3) the
impact of foreign currency changes, which is calculated by
translating current period net sales using the comparable prior
period's foreign currency exchange rates.
Adjusted Operating Income
Adjusted operating income is computed by excluding
the following items from operating Income (loss) as reported in
accordance with US GAAP:
(1) Business combination related costs and fair
value adjustments. These adjustments include costs related to
consummating and integrating acquired businesses, as well as net
gains and losses related to the disposed businesses. In addition,
this category includes the post-acquisition roll-off of fair value
adjustments recorded related to business combinations, except for
amortization expense of purchased intangible assets noted below.
Although the Company is regularly engaged in activities to find and
act on opportunities for strategic growth and enhancement of
product offerings, the costs associated with these activities may
vary significantly between periods based on the timing, size and
complexity of acquisitions and as such may not be indicative of
past and future performance of the Company.
(2) Restructuring related charges and other costs.
These adjustments include costs related to the implementation of
restructuring initiatives, including but not limited to, severance
costs, facility closure costs, and lease and contract termination
costs, as well as related professional service costs associated
with these restructuring initiatives and global transformation
activity. The Company is continually seeking to take actions that
could enhance its efficiency; consequently, restructuring charges
may recur but are subject to significant fluctuations from period
to period due to the varying levels of restructuring activity, and
as such may not be indicative of past and future performance of the
Company. Other costs include charges related to goodwill and
intangible asset impairments, legal settlements, executive
separation costs, and changes in accounting principle recorded
within the period. This category also includes costs related to the
recent investigation and associated remediation activities which
primarily include legal, accounting and other professional service
fees, as well as turnover and other employee-related costs.
(3) Amortization of purchased intangible assets.
This adjustment excludes the periodic amortization expense related
to purchased intangible assets, which are recorded at fair value in
purchase accounting. Although these costs contribute to revenue
generation and will recur in future periods, their amounts are
significantly impacted by the timing and size of acquisitions, and
as such may not be indicative of the future performance of the
Company.
(4) Fair value and credit risk adjustments. These
adjustments include the non-cash mark-to-market changes in fair
value associated with pension assets and obligations, and
equity-method investments. Although these adjustments are recurring
in nature, they are subject to significant fluctuations from period
to period due to changes in the underlying assumptions and market
conditions. The non-service component of pension expense is a
recurring item, however it is subject to significant fluctuations
from period to period due to changes in actuarial assumptions,
interest rates, plan changes, settlements, curtailments, and other
changes in facts and circumstances. As such, these items may not be
indicative of past and future performance of the Company.
Adjusted Net Income (Loss)
Adjusted net income (loss) consists of net income
(loss) as reported in accordance with US GAAP, adjusted to exclude
the items identified above. Additionally, income tax expense is
adjusted for the related income tax impacts of the items named
above, as well as discrete income tax adjustments such as: final
settlement of income tax audits, discrete tax items resulting from
the implementation of restructuring initiatives and the vesting and
exercise of employee share-based compensation, any difference
between the interim and annual effective tax rate, and adjustments
relating to prior periods.
These adjustments are irregular in timing, and the
variability in amounts may not be indicative of past and future
performance of the Company and therefore are excluded for
comparability purposes.
Adjusted EBITDA and Margin
In addition to the adjustments described above in
arriving at adjusted net income, adjusted EBITDA is computed by
further excluding any remaining interest expense, net, income tax
expense, depreciation and amortization.
Adjusted EBITDA margin is calculated by dividing
adjusted EBITDA by net sales.
Adjusted Earnings (Loss) Per Diluted Share
Adjusted earnings (loss) (EPS) per diluted share is
computed by dividing adjusted earnings (losses) attributable to
Dentsply Sirona shareholders by the diluted weighted average number
of common shares outstanding.
Adjusted Free Cash Flow Conversion
The Company defines adjusted free cash flow as net
cash provided by operating activities minus capital expenditures
during the same period, and adjusted free cash flow conversion is
defined as that number divided by adjusted net income (loss).
Management believes that this Non-GAAP measure is important for use
in evaluating the Company’s financial performance as it measures
our ability to efficiently generate cash from our business
operations relative to earnings. It should be considered in
addition to, rather than as a substitute for, net income as a
measure of our performance or net cash provided by operating
activities as a measure of our liquidity.
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
A reconciliation of reported net sales to organic
sales by geographic region is as follows:
|
|
Three Months Ended March 31, 2023 |
|
Q1 2023 Change |
|
Three Months Ended March 31, 2022 |
(in millions, except percentages) |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
351 |
$ |
396 |
$ |
231 |
$ |
978 |
|
13.9 |
% |
(3.6 |
%) |
(7.6 |
%) |
0.9 |
% |
|
$ |
308 |
$ |
411 |
$ |
250 |
$ |
969 |
Foreign exchange impact |
|
|
|
|
|
|
(0.7 |
%) |
(4.7 |
%) |
(7.5 |
%) |
(4.2 |
%) |
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
14.6 |
% |
1.1 |
% |
(0.1 |
%) |
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages are based on actual values and may
not reconcile due to rounding.
A reconciliation of reported net sales to organic
sales by segment is as follows:
|
|
Three Months Ended March 31, 2023 |
|
Q1 2023 Change |
|
Three Months Ended March 31, 2022 |
(in millions, except percentages) |
|
Technologies& Equipment |
Consumables |
Total |
|
Technologies& Equipment |
Consumables |
Total |
|
Technologies& Equipment |
Consumables |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
548 |
$ |
430 |
$ |
978 |
|
(3.0 |
%) |
6.4 |
% |
0.9 |
% |
|
$ |
565 |
$ |
404 |
$ |
969 |
Foreign exchange impact |
|
|
|
|
|
(4.7 |
%) |
(3.4 |
%) |
(4.2 |
%) |
|
|
|
|
Organic sales |
|
|
|
|
|
1.7 |
% |
9.8 |
% |
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages are based on actual values and may
not reconcile due to rounding.
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
For the three months ended March 31, 2023, a
reconciliation of selected items as reported in the Condensed
Consolidated Statements of Operations to adjusted Non-GAAP items is
as follows:
|
GAAP |
|
|
|
|
|
|
ADJUSTED NON-GAAP |
(in millions, except per share amounts and percentages) |
Three Months Ended March 31, 2023 |
Amortization of Purchased Intangible Assets |
Restructuring Related Charges and Other Costs
(a) |
Business Combination Related Costs and Fair Value
Adjustments |
Tax Impact of Non-GAAP Adjustments |
Income Tax Related Adjustments |
Total Non-GAAP Adjustments |
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
NET SALES |
$ |
978 |
|
— |
|
— |
|
— |
|
|
|
$ |
— |
|
$ |
978 |
|
GROSS PROFIT |
|
519 |
|
30 |
|
4 |
|
1 |
|
|
|
|
35 |
|
|
554 |
|
% OF NET SALES |
|
53.1 |
% |
|
|
|
|
|
|
|
56.6 |
% |
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES |
|
416 |
|
(23 |
) |
(15 |
) |
(2 |
) |
|
|
|
(40 |
) |
|
376 |
|
% OF NET SALES |
|
42.5 |
% |
|
|
|
|
|
|
|
38.4 |
% |
RESEARCH AND DEVELOPMENT EXPENSES |
|
46 |
|
— |
|
(1 |
) |
— |
|
|
|
|
(1 |
) |
|
45 |
|
% OF NET SALES |
|
4.7 |
% |
|
|
|
|
|
|
|
4.6 |
% |
RESTRUCTURING AND OTHER COSTS |
|
59 |
|
— |
|
(59 |
) |
— |
|
|
|
|
(59 |
) |
|
— |
|
OPERATING (LOSS) INCOME |
|
(2 |
) |
53 |
|
79 |
|
3 |
|
— |
— |
|
135 |
|
|
133 |
|
% OF NET SALES |
|
(0.3 |
%) |
|
|
|
|
|
|
|
13.6 |
% |
OTHER INCOME AND EXPENSE |
|
26 |
|
— |
|
— |
|
(1 |
) |
|
|
|
(1 |
) |
|
25 |
|
(LOSS) INCOME BEFORE INCOME TAXES |
|
(28 |
) |
53 |
|
79 |
|
4 |
|
— |
— |
|
136 |
|
|
108 |
|
(BENEFIT) PROVISION FOR INCOME TAXES |
|
(5 |
) |
|
|
|
26 |
7 |
|
33 |
|
|
28 |
|
% OF PRE-TAX (LOSS) INCOME |
|
18.4 |
% |
|
|
|
|
|
|
|
25.8 |
% |
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
|
(4 |
) |
|
|
|
|
|
|
— |
|
|
(4 |
) |
NET (LOSS) INCOME ATTRIBUTABLE TO DENTSPLY SIRONA |
$ |
(19 |
) |
|
|
|
|
|
$ |
103 |
|
$ |
84 |
|
% OF NET SALES |
|
(2.0 |
%) |
|
|
|
|
|
|
|
8.5 |
% |
(LOSS) EARNINGS PER SHARE - DILUTED |
$ |
(0.09 |
) |
|
|
|
|
|
$ |
0.48 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in calculating
diluted GAAP net loss per common share |
|
214.5 |
|
Weighted average common shares outstanding used in calculating
diluted Non-GAAP net income per common share |
|
216.0 |
|
|
|
|
|
|
|
|
Percentages are based on actual values and may
not reconcile due to rounding.
(a) Other Costs includes $8 million in
professional service costs related to the global transformation
project, and $7 million in costs related to the internal
investigation which compromised of professional fees and other
employee-related SG&A expenses.
For the three months ended March 31, 2023, the
following table presents the details of the “Restructuring Related
Charges and Other Costs” column in the above table and the affected
line item in the Consolidated Statements of Operations:
(in millions) |
|
Impairments |
|
Costs Related to Restructuring Plans |
|
Professional Services Costs |
|
Incentive Compensation |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold |
|
$ |
3 |
|
$ |
— |
|
$ |
1 |
|
$ |
— |
|
$ |
4 |
Selling, general, and administrative expenses |
|
|
— |
|
|
— |
|
|
11 |
|
|
4 |
|
|
15 |
Research and development expenses |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
1 |
Restructuring and other costs |
|
|
— |
|
|
59 |
|
|
— |
|
|
— |
|
|
59 |
Total |
|
$ |
3 |
|
$ |
59 |
|
$ |
13 |
|
$ |
4 |
|
$ |
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
For the three months ended March 31, 2022, a
reconciliation of selected items as reported in the Condensed
Consolidated Statements of Operations to adjusted Non-GAAP items is
as follows:
|
GAAP |
|
|
|
|
|
|
|
ADJUSTEDNON-GAAP |
(in
millions, except per share amounts and percentages) |
Three Months Ended March 31, 2022 |
Amortization of Purchased Intangible Assets |
Restructuring Related Charges and Other Costs |
Business Combination Related Costs and Fair Value
Adjustments |
Fair Value and Credit Risk Adjustments |
Tax Impact of Non-GAAP Adjustments |
Income Tax Related Adjustments |
Total Non-GAAP Adjustments |
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
NET SALES |
$ |
969 |
|
— |
|
— |
|
— |
— |
|
|
|
$ |
— |
|
$ |
969 |
|
GROSS PROFIT |
|
521 |
|
32 |
|
— |
|
1 |
— |
|
|
|
|
33 |
|
|
554 |
|
% OF NET SALES |
|
53.8 |
% |
|
|
|
|
|
|
|
|
57.1 |
% |
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES |
|
376 |
|
(23 |
) |
(2 |
) |
— |
— |
|
|
|
|
(25 |
) |
|
351 |
|
% OF NET SALES |
|
38.8 |
% |
|
|
|
|
|
|
|
|
36.2 |
% |
RESEARCH AND DEVELOPMENT
EXPENSES |
|
45 |
|
— |
|
— |
|
— |
— |
|
|
|
|
— |
|
|
45 |
|
% OF NET SALES |
|
4.6 |
% |
|
|
|
|
|
|
|
|
4.6 |
% |
RESTRUCTURING AND OTHER
COSTS |
|
3 |
|
— |
|
(3 |
) |
— |
— |
|
|
|
|
(3 |
) |
|
— |
|
OPERATING INCOME |
|
97 |
|
55 |
|
5 |
|
1 |
— |
|
|
|
|
61 |
|
|
158 |
|
% OF NET SALES |
|
10.1 |
% |
|
|
|
|
|
|
|
|
16.3 |
% |
OTHER INCOME AND EXPENSE |
|
10 |
|
— |
|
— |
|
— |
(1 |
) |
|
|
|
(1 |
) |
|
9 |
|
INCOME BEFORE INCOME
TAXES |
|
87 |
|
55 |
|
5 |
|
1 |
1 |
|
|
|
|
62 |
|
|
149 |
|
PROVISION FOR INCOME
TAXES |
|
18 |
|
|
|
|
|
16 |
(2) |
|
14 |
|
|
32 |
|
% OF PRE-TAX INCOME |
|
20.8 |
% |
|
|
|
|
|
|
|
|
21.8 |
% |
LESS: NET INCOME ATTRIBUTABLE
TO NON-CONTROLLING INTERESTS |
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
NET INCOME ATTRIBUTABLE TO
DENTSPLY SIRONA |
$ |
69 |
|
|
|
|
|
|
|
$ |
48 |
|
$ |
117 |
|
% OF NET SALES |
|
7.1 |
% |
|
|
|
|
|
|
|
|
12.0 |
% |
EARNINGS PER SHARE -
DILUTED |
$ |
0.32 |
|
|
|
|
|
|
|
$ |
0.22 |
|
$ |
0.54 |
|
Percentages are based on actual values and may not reconcile due
to rounding.
For the three months ended March 31, 2022, the
following table presents the details of the “Restructuring Related
Charges and Other Costs” column in the above table and the affected
line item in the Consolidated Statements of Operations:
(in millions) |
|
Severance Costs Related to Executives |
|
Costs Related to Restructuring Plans |
|
Professional Services Costs |
|
Total |
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
|
$ |
1 |
|
$ |
— |
|
$ |
1 |
|
$ |
2 |
Restructuring and other costs |
|
|
— |
|
|
3 |
|
|
— |
|
|
3 |
Total |
|
$ |
1 |
|
$ |
3 |
|
$ |
1 |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of as reported net income
attributable to Dentsply Sirona to adjusted EBITDA and margin for
the three months ended March 31, 2023 and 2022 is as
follows:
|
|
Three Months Ended March 31, |
(in millions, except percentages) |
|
2023 |
|
2022 |
Net (loss) income attributable to Dentsply
Sirona |
|
$ |
(19 |
) |
|
$ |
69 |
|
Interest expense, net |
|
|
19 |
|
|
|
12 |
|
Income tax expense |
|
|
(5 |
) |
|
|
18 |
|
Depreciation(1) |
|
|
30 |
|
|
|
28 |
|
Amortization of purchased intangible assets |
|
|
53 |
|
|
|
55 |
|
Restructuring related charges and other costs |
|
|
79 |
|
|
|
5 |
|
Business combination related costs and fair value adjustments |
|
|
4 |
|
|
|
1 |
|
Fair value and credit risk adjustments |
|
|
— |
|
|
|
1 |
|
Adjusted EBITDA |
|
$ |
161 |
|
|
$ |
189 |
|
|
|
|
|
|
Net sales |
|
$ |
978 |
|
|
$ |
969 |
|
Adjusted EBITDA margin |
|
|
16.4 |
% |
|
|
19.6 |
% |
(1) Excludes those depreciation related amounts
which were included as part of the business combination related
adjustments above.
A reconciliation of adjusted free cash flow
conversion for the three months ended March 31, 2023 and 2022
is as follows:
(in millions, except percentages) |
|
2023 |
|
2022 |
Net cash (used in) provided by operating activities |
|
$ |
(21 |
) |
|
$ |
93 |
|
Capital expenditures |
|
|
(39 |
) |
|
|
(44 |
) |
Adjusted free cash flow |
|
$ |
(60 |
) |
|
$ |
49 |
|
|
|
|
|
|
Adjusted net income |
|
$ |
84 |
|
|
$ |
117 |
|
Adjusted free cash flow conversion |
|
|
(71 |
%) |
|
|
41 |
% |
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