DENTSPLY SIRONA Inc. (“Dentsply Sirona”) (Nasdaq: XRAY), The Dental
Solutions Company, announced its financial results for the three
months ended June 30, 2020.
Don Casey, Chief Executive Officer of Dentsply Sirona,
commented: “The global response to COVID-19 impacted our
second quarter results. We have been encouraged to see continued
improvement in sales trends, as dental offices reopen and patients
return. To address the challenges posed by the pandemic, Dentsply
Sirona has taken a number of steps focused on employee safety,
customer service and securing the financial position of the
Company. Today, to better position the Company for the future, we
are initiating a series of additional restructuring actions that
will enhance revenue growth, expand margins, and simplify the
organization. As we embrace the current challenges, we remain
optimistic about the future and we are confident in our strategy,
our customers, and the Dentsply Sirona team.”
Q2 20 Operating Summary (GAAP)
(in millions, except per
share amount and percentages) |
|
Q2 20 |
|
Q2 19 |
|
YoY |
Net Sales |
|
490.6 |
|
|
|
1,009.4 |
|
|
(51.4 |
%) |
Operating (loss) income |
|
(104.3 |
) |
|
|
67.5 |
|
|
NM |
Operating (loss) income % |
|
(21.3 |
%) |
|
|
6.7 |
% |
|
|
Net (loss) income |
|
(95.4 |
) |
|
|
36.4 |
|
|
NM |
Net (loss) income per diluted
common share |
|
(0.44 |
) |
|
|
0.16 |
|
|
NM |
Q2 20 Operating Summary
(Non-GAAP)[1]
(in millions, except per
share amount and percentages) |
|
Q2 20 |
|
Q2 19 |
|
YoY |
Net Sales |
|
490.6 |
|
|
|
1,009.4 |
|
|
(51.4 |
%) |
Organic Sales % |
|
|
|
|
|
(49.9 |
%) |
Operating (loss) income |
|
(42.3 |
) |
|
|
201.8 |
|
|
NM |
Operating (loss) income % |
|
(8.6 |
%) |
|
|
20.0 |
% |
|
|
Net (loss) income |
|
(40.2 |
) |
|
|
147.9 |
|
|
NM |
Net (loss) income per diluted
common share |
|
(0.18 |
) |
|
|
0.66 |
|
|
NM |
NM - not meaningful[1] Organic sales, Non-GAAP operating (loss)
income, Non-GAAP net (loss) income, and Non-GAAP EPS are Non-GAAP
financial measures which exclude certain items. Please refer to the
tables at the end of this release for a reconciliation between GAAP
and Non-GAAP measures.
Segment Results
Consumables Segment
Second quarter 2020 sales were $187 million, down 58.6% as
compared to prior year. Foreign currency decreased sales by 0.9%.
On an organic basis, consumable sales declined by 57.7% as compared
to prior year. The decline in organic sales was due to lower demand
in all three regions as dentists and customers reduced dental
visits and procedures in response to COVID-19. Key drivers of this
decline were lower sales of Endodontic, Restorative, and
Preventive products.
Technologies & Equipment Segment
Second quarter 2020 sales were $304 million, down 45.6% versus
prior year. Currency reduced sales by 1.0%, while divestitures and
discontinued products reduced sales growth by 1.0%. On an organic
basis, net sales declined by 43.6%. Key drivers of the decrease in
organic sales were Equipment & Instruments, Digital Dentistry,
and Implants businesses.
Cash Flow and Liquidity
Operating cash flow in the second quarter of 2020 was $175
million, up 20.7% as compared to operating cash flow generation of
$145 million in the second quarter of 2019. The strong cash flow
performance this quarter was driven by a reduction in working
capital, primarily related to a decrease in accounts receivables
and to a lesser extent, a reduction in inventory.
In the second quarter, the Company paid $22 million in
dividends, bringing a total of $184 million returned to
shareholders in the first six months of 2020. At June 30, 2020, the
Company had $1.1 billion of cash available on its balance
sheet.
Fiscal Year 2020 Outlook
As a result of the uncertainty around the duration of the
COVID-19 pandemic and its impact on the business, the Company is
not providing 2020 guidance.
Expanding the Restructuring Plan – Path to Durable
Value-Creation
In November 2018, the Board launched a comprehensive plan
originally designed to achieve annualized topline growth of 3% to
4% on a consistent basis, and adjusted operating income margin of
22% by the end of 2022. The plan also includes evaluating non-core
and underperforming businesses, utilizing free cash flow generation
and excess balance sheet capacity to return cash to shareholders,
and reviewing additional longer-term cost savings
opportunities.
As the Company continued to execute on its restructuring plan,
additional opportunities have become apparent. Today, the Company
announced that it is taking a number of additional steps, including
two portfolio shaping initiatives and additional actions designed
to simplify the organization and improve productivity.
Management now anticipates annual cost savings of approximately
$250 million, up from the previous target range of $200 to $225
million. The Company has already incurred approximately $225
million of restructuring expense, and now expects to incur
approximately $375 million in total one-time expenditures and
charges, up from the previous estimate of $275 million. The
additional portfolio shaping initiatives announced today
include:
- The clear aligner market is an attractive opportunity for
Dentsply Sirona, as it allows the Company to take full
advantage of its unique strategic assets and its track record of
innovation. The Company is exiting the traditional
orthodontics business, which includes brackets, bands, tubes and
wires. The Company is transferring a portion of its traditional
orthodontic assets to support the ramp up of its clear aligner
business, which is experiencing strong revenue growth. The
traditional orthodontic business is a component of the Technologies
& Equipment Segment. This business had net sales of
approximately $132 million in 2019.
- As the laboratory market evolves, the digital space is one that
offers Dentsply Sirona an opportunity to innovate and take
advantage of our digital assets. Accordingly, the Company is
exiting a portion of the analog laboratory business that
manufactures removable dentures and related products. This business
is a component of the Consumables Segment and had net sales of
approximately $44 million in 2019.
The net income of the two businesses mentioned above is not
material to the Company’s consolidated results. Together, the
portfolio shaping initiatives and additional actions are expected
to result in the closure of several facilities and an incremental
reduction of approximately 6% to 7% of the Company's workforce by
the end of 2021. The ongoing execution of the restructuring will
enhance Dentsply Sirona's continuing efforts to grow revenues,
expand margins, and simplify the organization.
Conference Call/Webcast InformationDentsply
Sirona’s management team will host an investor conference call and
live webcast on August 6, 2020 at 8:00 am ET. A presentation will
also be available on www.dentsplysirona.com in the Investors
section.
Investors can access the webcast via a link on Dentsply Sirona’s
web site at www.dentsplysirona.com. For those planning to
participate on the call, please dial +1-877-370-7637 for domestic
calls, or +1-629-228-0723 for international calls. The Conference
ID # is 3285259. A replay of the conference call will be available
online on the Dentsply Sirona web site, and a dial-in replay will
be available for one week following the call at +1-855-859-2056
(for domestic calls) or +1-404-537-3406 (for international calls),
replay passcode # 3285259.
About Dentsply SironaDentsply Sirona is the
world’s largest manufacturer of professional dental products and
technologies, with a 133-year history of innovation and service to
the dental industry and patients worldwide. Dentsply Sirona
develops, manufactures, and markets a comprehensive solutions
offering including dental equipment and dental consumable products
under a strong portfolio of world class brands. The Company also
manufactures and markets healthcare consumable products. As The
Dental Solutions Company, Dentsply Sirona’s products provide
innovative, high-quality and effective solutions to advance patient
care and deliver better, safer and faster dentistry. Dentsply
Sirona’s worldwide headquarters is located in Charlotte, North
Carolina. The Company’s shares of common stock 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:John Sweeney, CFA, IRCVice
President, Investor
Relations+1-717-849-7863John.Sweeney@dentsplysirona.com
Forward-Looking Statements and
Associated Risks
Information the Company has included in this press release, and
information which may be contained or incorporated by reference in
filings with the U. S. Securities and Exchange Commission (the
“SEC”) as well as other press releases or other public statements,
contains or may contain forward-looking statements. These
forward-looking statements include, among other things, statements
about the Company’s restructuring initiatives and their expected
impact, and other plans, objectives, expectations (financial or
otherwise) or intentions.
The Company’s forward-looking statements involve risks and
uncertainties. Actual results may differ significantly from those
projected or suggested in any forward-looking statements. 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 effects of the COVID-19 outbreak and the adverse impact on
the Company's business, financial condition, results of operations
and cash flows, including, but not limited to, the Company's
growth, operating costs, customer demand for products and industry
demand generally, margins, and its ability to access capital
markets, and the global economy and financial markets
generally;
- the effects of the COVID-19 outbreak, and the current economic
environment generally, on the Company's working capital, cash flows
and liquidity;
- the Company's ability to execute key strategic activities due
to competing priorities and strategies of its distribution partners
and other factors
- the Company's ability to protect its technology infrastructure
from cyber-attacks and other disruptions
- the Company's ability to maintain effective internal controls
during periods of restructuring and organizational changes
- a significant failure or disruption in service within the
Company’s operations or the operations of key distributors
- the Company’s ability to attract and retain talented employees,
or to manage succession and retention for its key executives
- the Company's ability to successfully implement its cost
reduction and restructuring plans
- the Company's ability to regain profitability in a very
competitive marketplace, which depends upon the Company's ability
to differentiate its products and services from those of
competitors
- results in pending and future litigation, investigations or
other proceedings which could subject the Company to significant
monetary damages or penalties and/or require it to change its
business practices, or the costs incurred in connection with such
proceedings
- other risks described from time to time in the Company’s
filings with the SEC
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, in Part II, Item
1A, "Risk Factors" in the Company's subsequent Form 10-Qs, and
information which may be contained in the Company’s other filings
with the SEC, when reviewing any forward-looking statement.
Investors should understand it is impossible to predict or identify
all such factors or risks. As such, investors should not consider
either the foregoing list, or the risks identified in the Company’s
SEC filings, to be a complete discussion of all potential risks or
uncertainties associated with an investment in the Company.
Non-GAAP Financial Measures
The Company defines "organic sales" as the increase or decrease
in net sales excluding: (1) net sales from acquired and divested
businesses recorded prior to the first anniversary of the
acquisition or divestiture, (2) net sales attributable to
discontinued product lines in both the current and prior year
periods, and (3) the impact of foreign currency translation, which
is calculated by comparing current-period sales to prior-period
sales, with both periods converted to the U.S. dollar rate at local
currency foreign exchange rates for each month of the prior
period.
The "organic sales" measure is not calculated in accordance with
accounting principles generally accepted in the United States ("US
GAAP"); therefore, this item represents a Non-GAAP measure. This
Non-GAAP measure may differ from those used by other companies and
should not be considered in isolation from, or as a substitute for,
measures of financial performance prepared in accordance with US
GAAP. Organic sales is an important internal measure for the
Company. The Company's senior management receives a monthly
analysis of operating results that includes organic sales. The
performance of the Company is measured on this metric along with
other performance metrics.
The Company discloses organic sales to allow investors to
evaluate the performance of the Company’s operations exclusive of
certain items that impact the comparability of results from period
to period and may not be indicative of past or future performance
of the normal operations of the Company. The Company believes that
this information is helpful in understanding underlying net sales
trends.
Adjusted Net Income (Loss) and Adjusted Earnings (Loss)
Per Diluted Common Share
In addition to reporting net income (loss) attributable to
Dentsply Sirona and earnings (loss) per diluted common share in
accordance with US GAAP, the Company provides adjusted net income
(loss) and adjusted earnings (loss) per diluted common share
(“adjusted EPS”) measures. The Company defines "adjusted net income
(loss)" as net income (loss) attributable to Dentsply Sirona
excluding certain items as noted below. Adjusted EPS is calculated
by dividing adjusted net income (loss) by diluted common shares
outstanding.
The adjusted net income (loss) attributable to Dentsply Sirona
consists of net income (loss) attributable to Dentsply Sirona
adjusted to exclude the following:
(1) Business combination related
costs and fair value adjustments. These adjustments include costs
related to integrating and consummating mergers and recently
acquired businesses, as well as costs, gains and losses related to
the disposal of businesses or significant product lines. In
addition, this category includes the roll off to the consolidated
statements of operations of fair value adjustments related to
business combinations, except for amortization expense noted below.
These items are irregular in timing and as such may not be
indicative of past and future performance of the Company and are
therefore excluded to allow investors to better understand
underlying operating trends.
(2) Restructuring program related
costs and other costs. These adjustments include costs related to
the implementation of restructuring initiatives as well as certain
other costs. These costs can include, but are not limited to,
severance costs, facility closure costs, lease and contract
termination costs, related professional service costs, duplicate
facility and labor costs associated with specific restructuring
initiatives, as well as legal settlements and impairments of
assets. These items are irregular in timing, amount and impact to
the Company’s financial performance. As such, these items may not
be indicative of past and future performance of the Company and are
therefore excluded for the purpose of understanding underlying
operating trends.
(3) Amortization of purchased
intangible assets. This adjustment excludes the periodic
amortization expense related to purchased intangible assets.
Amortization expense has been excluded from adjusted net income
attributable to Dentsply Sirona to allow investors to evaluate and
understand operating trends excluding these large non-cash
charges.
(4) Credit risk and fair value
adjustments. These adjustments include both the cost and income
impacts of adjustments in certain assets and liabilities including
the Company’s pension obligations, that are recorded through net
income which are due solely to the changes in fair value and credit
risk. These items can be variable and driven more by market
conditions than the Company’s operating performance. As such, these
items may not be indicative of past and future performance of the
Company and therefore are excluded for comparability purposes.
(5) Income tax related adjustments.
These adjustments include both income tax expenses and income tax
benefits that are representative of income tax adjustments mostly
related to prior periods, as well as the final settlement of income
tax audits, and discrete tax items resulting from the
implementation of restructuring initiatives and the vesting and
exercise of employee share-based compensation. These adjustments
are irregular in timing and amount and may significantly impact the
Company’s operating performance. As such, these items may not be
indicative of past and future performance of the Company and
therefore are excluded for comparability purposes.
The "adjusted net income (loss)" and "adjusted EPS" measures are
not calculated in accordance with accounting principles generally
accepted in the United States; therefore, these items 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. Income tax related adjustments
may include the impact to adjust the interim effective income tax
rate to the expected annual effective tax rate.
Both adjusted net income (loss) and adjusted EPS are important
internal measures for the Company. The Company's senior management
receives a monthly analysis of operating results that includes
adjusted net income (loss) and adjusted EPS. The performance of the
Company is measured on these metrics along with other performance
metrics.
The Company discloses adjusted net income (loss) and adjusted
EPS to allow investors to evaluate the performance of the Company’s
operations exclusive of certain items that impact the comparability
of results from period to period and may not be indicative of past
or future performance of the normal operations of the Company and
certain large non-cash charges related to intangible assets either
purchased or acquired through a business combination. The Company
believes that this information is helpful in understanding
underlying operating trends and cash flow generation.
Adjusted Operating Income (Loss) and Margin
In addition to reporting operating income (loss) in accordance
with US GAAP, the Company provides adjusted operating income (loss)
and margin. The Company defines "adjusted operating income (loss)"
as operating income (loss) in accordance with US GAAP excluding
certain items noted above which are excluded on a pre-tax basis to
arrive at adjusted operating income (loss), a Non-GAAP measure. The
adjusted operating margin is calculated by dividing adjusted
operating income (loss) by net sales.
The "adjusted operating income (loss)" and "adjusted operating
margin" measures are not calculated in accordance with accounting
principles generally accepted in the United States; therefore,
these items 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.
Both adjusted operating income (loss) and adjusted operating
margin are important internal measures for the Company. The
Company's senior management receives a monthly analysis of
operating results that includes adjusted operating income (loss)
and margin. The performance of the Company is measured on these
metrics along with the adjusted net income (loss) and adjusted EPS
metrics noted above as well as other performance metrics.
The Company discloses adjusted operating income (loss) and
margin to allow investors to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period and may not be
indicative of past or future performance of the normal operations
of the Company and certain large non-cash charges related to
intangible assets either purchased or acquired through a business
combination. The Company believes that this information is helpful
in understanding underlying operating trends and cash flow
generation.
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except per share
amounts)(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net sales |
$ |
490.6 |
|
|
|
$ |
1,009.4 |
|
|
$ |
1,364.9 |
|
|
|
$ |
1,955.6 |
|
|
|
|
|
|
|
|
|
Cost of products sold |
314.5 |
|
|
|
468.6 |
|
|
721.0 |
|
|
|
915.1 |
|
|
|
|
|
|
|
|
|
Gross profit |
176.1 |
|
|
|
540.8 |
|
|
643.9 |
|
|
|
1,040.5 |
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses |
279.1 |
|
|
|
430.9 |
|
|
672.6 |
|
|
|
862.8 |
|
|
|
|
|
|
|
|
|
Goodwill impairment |
— |
|
|
|
— |
|
|
156.6 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Restructuring and other
costs |
1.3 |
|
|
|
42.4 |
|
|
43.8 |
|
|
|
62.9 |
|
|
|
|
|
|
|
|
|
Operating (loss) income |
(104.3 |
) |
|
|
67.5 |
|
|
(229.1 |
) |
|
|
114.8 |
|
|
|
|
|
|
|
|
|
Net interest and other expense
(income) |
15.6 |
|
|
|
19.9 |
|
|
20.5 |
|
|
|
13.4 |
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
(119.9 |
) |
|
|
47.6 |
|
|
(249.6 |
) |
|
|
101.4 |
|
|
|
|
|
|
|
|
|
(Benefit) provision for income
taxes |
(24.0 |
) |
|
|
11.2 |
|
|
(13.8 |
) |
|
|
25.8 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
(95.9 |
) |
|
|
36.4 |
|
|
(235.8 |
) |
|
|
75.6 |
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to
noncontrolling interest |
(0.5 |
) |
|
|
— |
|
|
(0.5 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to Dentsply Sirona |
$ |
(95.4 |
) |
|
|
$ |
36.4 |
|
|
$ |
(235.3 |
) |
|
|
$ |
75.6 |
|
|
|
|
|
|
|
|
|
Net (loss) income per common
share attributable to Dentsply Sirona: |
|
|
|
|
|
|
|
Basic |
$ |
(0.44 |
) |
|
|
$ |
0.16 |
|
|
$ |
(1.07 |
) |
|
|
$ |
0.34 |
|
Diluted |
$ |
(0.44 |
) |
|
|
$ |
0.16 |
|
|
$ |
(1.07 |
) |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
218.7 |
|
|
|
224.2 |
|
|
219.8 |
|
|
|
223.7 |
|
Diluted |
218.7 |
|
|
|
225.7 |
|
|
219.8 |
|
|
|
225.3 |
|
|
|
|
|
|
|
|
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In millions)(unaudited)
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
Assets |
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,109.1 |
|
|
$ |
404.9 |
|
Accounts and notes receivables-trade, net |
500.2 |
|
|
782.0 |
|
Inventories, net |
548.9 |
|
|
561.7 |
|
Prepaid expenses and other current assets, net |
204.7 |
|
|
251.3 |
|
|
|
|
|
Total Current Assets |
2,362.9 |
|
|
1,999.9 |
|
|
|
|
|
Property, plant and equipment,
net |
771.7 |
|
|
802.4 |
|
Operating lease right-of-use
assets, net |
138.8 |
|
|
159.3 |
|
Identifiable intangible
assets, net |
2,039.6 |
|
|
2,176.3 |
|
Goodwill, net |
3,227.2 |
|
|
3,396.5 |
|
Other noncurrent assets,
net |
64.0 |
|
|
68.5 |
|
|
|
|
|
Total Assets |
$ |
8,604.2 |
|
|
$ |
8,602.9 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
214.1 |
|
|
$ |
307.9 |
|
Accrued liabilities |
486.9 |
|
|
629.2 |
|
Income taxes payable |
61.7 |
|
|
56.1 |
|
Notes payable and current portion of long-term debt |
0.3 |
|
|
2.3 |
|
|
|
|
|
Total Current Liabilities |
763.0 |
|
|
995.5 |
|
|
|
|
|
Long-term debt |
2,182.7 |
|
|
1,433.1 |
|
Operating lease
liabilities |
101.0 |
|
|
119.5 |
|
Deferred income taxes |
439.2 |
|
|
479.6 |
|
Other noncurrent
liabilities |
472.9 |
|
|
480.3 |
|
|
|
|
|
Total Liabilities |
3,958.8 |
|
|
3,508.0 |
|
|
|
|
|
Total Equity |
4,645.4 |
|
|
5,094.9 |
|
|
|
|
|
Total Liabilities and Equity |
$ |
8,604.2 |
|
|
$ |
8,602.9 |
|
|
|
|
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(In millions)(unaudited)
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
Cash flows from
operating activities: |
|
|
|
Net (loss) income |
$ |
(235.8 |
) |
|
$ |
75.6 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
Depreciation |
64.5 |
|
|
70.4 |
|
Amortization of intangible assets |
93.8 |
|
|
95.5 |
|
Amortization of deferred financing costs |
1.8 |
|
|
1.4 |
|
Fixed asset impairment |
— |
|
|
33.2 |
|
Deferred income taxes |
(32.4 |
) |
|
(18.4 |
) |
Stock based compensation expense |
19.7 |
|
|
34.4 |
|
Restructuring and other costs - non-cash |
4.5 |
|
|
14.8 |
|
Goodwill impairment |
156.6 |
|
|
— |
|
Indefinite-lived intangible asset impairment |
38.7 |
|
|
5.3 |
|
Other non-cash income |
(3.7 |
) |
|
(16.7 |
) |
Loss on disposal of property, plant and equipment |
0.6 |
|
|
0.6 |
|
Gain on divestiture of noncontrolling interest |
— |
|
|
(8.7 |
) |
Loss on sale of non-strategic businesses and product lines |
— |
|
|
14.5 |
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts and notes receivable-trade, net |
268.7 |
|
|
(1.5 |
) |
Inventories, net |
(1.0 |
) |
|
(18.3 |
) |
Prepaid expenses and other current assets, net |
33.0 |
|
|
7.9 |
|
Other noncurrent assets, net |
5.9 |
|
|
6.9 |
|
Accounts payable |
(88.7 |
) |
|
(32.2 |
) |
Accrued liabilities |
(138.6 |
) |
|
(81.1 |
) |
Income taxes |
(14.6 |
) |
|
(11.0 |
) |
Other noncurrent liabilities |
(8.6 |
) |
|
1.8 |
|
Net cash provided by
operating activities |
164.4 |
|
|
174.4 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Capital expenditures |
(38.8 |
) |
|
(63.5 |
) |
Purchase of short term
investments |
— |
|
|
(0.3 |
) |
Cash received on sale of
non-strategic businesses or product lines |
— |
|
|
11.6 |
|
Cash received on derivative
contracts |
57.5 |
|
|
27.0 |
|
Proceeds from sale of
property, plant and equipment, net |
0.7 |
|
|
0.7 |
|
Net cash provided by
(used in) investing activities |
19.4 |
|
|
(24.5 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Repayments on short-term
borrowings |
(1.2 |
) |
|
(23.3 |
) |
Cash paid for treasury
stock |
(140.0 |
) |
|
(60.0 |
) |
Cash dividends paid |
(44.0 |
) |
|
(39.1 |
) |
Cash paid for contingent
consideration on prior acquisitions |
(2.7 |
) |
|
(30.6 |
) |
Proceeds from long-term
borrowings |
1,448.4 |
|
|
1.7 |
|
Repayments of long-term
borrowings |
(700.9 |
) |
|
(134.6 |
) |
Deferred financing costs |
(6.3 |
) |
|
— |
|
Proceeds from exercised stock
options |
5.4 |
|
|
76.4 |
|
Cash paid on derivative
contracts |
(30.5 |
) |
|
— |
|
Net cash provided by
(used in) financing activities |
528.2 |
|
|
(209.5 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
(7.8 |
) |
|
0.1 |
|
Net increase (decrease) in
cash and cash equivalents |
704.2 |
|
|
(59.5 |
) |
Cash and cash equivalents at
beginning of period |
404.9 |
|
|
309.6 |
|
Cash and cash equivalents at
end of period |
$ |
1,109.1 |
|
|
$ |
250.1 |
|
|
|
|
|
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 June 30, 2020 |
|
Q2 2020 Change |
|
Three Months Ended June 30, 2019 |
(in millions, except
percentages) |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
130.9 |
|
$ |
215.3 |
|
$ |
144.4 |
|
$ |
490.6 |
|
|
(60.3 |
%) |
(49.0 |
%) |
(44.0 |
%) |
(51.4 |
%) |
|
$ |
329.5 |
|
$ |
422.0 |
|
$ |
257.9 |
|
$ |
1,009.4 |
|
Foreign exchange impact |
|
|
|
|
|
|
— |
% |
(1.1 |
%) |
(2.0 |
%) |
(1.0 |
%) |
|
|
|
|
|
Acquisitions and
divestitures |
|
|
|
|
|
|
(0.3 |
%) |
(0.9 |
%) |
(0.1 |
%) |
(0.4 |
%) |
|
|
|
|
|
Discontinued products |
|
|
|
|
|
|
— |
% |
(0.1 |
%) |
— |
% |
(0.1 |
%) |
|
|
|
|
|
Organic
sales |
|
|
|
|
|
|
(60.0 |
%) |
(46.9 |
%) |
(41.9 |
%) |
(49.9 |
%) |
|
|
|
|
|
A reconciliation of reported net sales to organic sales by
segment is as follows:
|
|
Three Months Ended June 30, 2020 |
|
Q2 2020 Change |
|
Three Months Ended June 30, 2019 |
(in millions, except
percentages) |
|
Technologies & Equipment |
Consumables |
Total |
|
Technologies & Equipment |
Consumables |
Total |
|
Technologies & Equipment |
Consumables |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
303.9 |
|
$ |
186.7 |
|
$ |
490.6 |
|
|
(45.6 |
%) |
(58.6 |
%) |
(51.4 |
%) |
|
$ |
558.4 |
|
$ |
451.0 |
|
$ |
1,009.4 |
|
Foreign exchange impact |
|
|
|
|
|
(1.0 |
%) |
(0.9 |
%) |
(1.0 |
%) |
|
|
|
|
Acquisitions and
divestitures |
|
|
|
|
|
(0.9 |
%) |
— |
% |
(0.4 |
%) |
|
|
|
|
Discontinued products |
|
|
|
|
|
(0.1 |
%) |
— |
% |
(0.1 |
%) |
|
|
|
|
Organic
sales |
|
|
|
|
|
(43.6 |
%) |
(57.7 |
%) |
(49.9 |
%) |
|
|
|
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
For the three months ended June 30, 2020, a reconciliation
of selected items as reported in the 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 June 30, 2020 |
Amortization of Purchased Intangible Assets |
Restructuring Program Related Costs and Other
Costs |
Business Combination Related Costs and Fair Value
Adjustments |
Credit Risk and Fair Value Adjustments |
Tax Impact of Non-GAAP Adjustments |
Income Tax Related Adjustments |
Total Non-GAAP Adjustments |
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
$ |
176.1 |
|
28.7 |
|
0.4 |
|
1.3 |
|
— |
|
— |
|
— |
|
$ |
30.4 |
|
$ |
206.5 |
|
% OF NET SALES |
35.9 |
% |
|
|
|
|
|
|
|
42.1 |
% |
SG&A EXPENSES |
279.1 |
|
(17.9 |
) |
(12.2 |
) |
(0.2 |
) |
— |
|
— |
|
— |
|
(30.3 |
) |
248.8 |
|
% OF NET SALES |
56.9 |
% |
|
|
|
|
|
|
|
50.7 |
% |
RESTRUCTURING AND OTHER
COSTS |
1.3 |
|
— |
|
(1.3 |
) |
— |
|
— |
|
— |
|
— |
|
(1.3 |
) |
— |
|
(LOSS) INCOME FROM
OPERATIONS |
(104.3 |
) |
46.6 |
|
13.9 |
|
1.5 |
|
— |
|
— |
|
— |
|
62.0 |
|
(42.3 |
) |
% OF NET SALES |
(21.3 |
%) |
|
|
|
|
|
|
|
(8.6 |
%) |
NET INTEREST AND OTHER
EXPENSE |
15.6 |
|
— |
|
0.1 |
|
— |
|
(1.9 |
) |
— |
|
— |
|
(1.8 |
) |
13.8 |
|
PRE-TAX (LOSS) INCOME |
(119.9 |
) |
46.6 |
|
13.8 |
|
1.5 |
|
1.9 |
|
— |
|
— |
|
63.8 |
|
(56.1 |
) |
INCOME TAXES |
(24.0 |
) |
— |
|
— |
|
— |
|
— |
|
17.1 |
|
(8.5 |
) |
8.6 |
|
(15.4 |
) |
% OF PRE-TAX LOSS |
20.0 |
% |
|
|
|
|
|
|
|
27.5 |
% |
LESS: NET LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTERESTS |
(0.5 |
) |
|
|
|
|
|
|
— |
|
(0.5 |
) |
NET (LOSS) INCOME ATTRIBUTABLE
TO DENTSPLY SIRONA |
$ |
(95.4 |
) |
|
|
|
|
|
|
$ |
55.2 |
|
$ |
(40.2 |
) |
% OF NET SALES |
(19.4 |
%) |
|
|
|
|
|
|
|
(8.2 |
%) |
(LOSS) EARNINGS PER SHARE -
DILUTED |
$ |
(0.44 |
) |
|
|
|
|
|
|
$ |
0.26 |
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding used in calculating diluted GAAP net loss
per common share |
|
|
|
|
218.7 |
Weighted average
common shares outstanding used in calculating diluted Non-GAAP net
loss per common share |
|
|
|
218.7 |
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except per share
amounts)(unaudited)
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per
Diluted Common Share
A reconciliation of net loss attributable to Dentsply Sirona and
net loss per diluted common share to adjusted net loss and adjusted
net loss per diluted common share is as follows:
|
|
Three Months Ended June 30, 2020 |
(in millions, except per share
amounts) |
|
Net (Loss) Income |
|
Per DilutedCommon Share |
|
|
|
|
|
Net loss attributable to Dentsply Sirona |
|
$ |
(95.4 |
) |
|
$ |
(0.44 |
) |
Pre-tax Non-GAAP adjustments: |
|
|
|
|
Amortization of purchased intangible assets |
|
46.6 |
|
|
|
Restructuring program related costs and other costs |
|
13.8 |
|
|
|
Credit risk and fair value adjustments |
|
1.9 |
|
|
|
Business combination related costs and fair value adjustments |
|
1.5 |
|
|
|
Tax impact of the pre-tax Non-GAAP adjustments (a) |
|
(17.1 |
) |
|
|
Subtotal Non-GAAP adjustments |
|
46.7 |
|
|
0.22 |
|
Income tax related adjustments |
|
8.5 |
|
|
0.04 |
|
Adjusted Non-GAAP net
loss |
|
$ |
(40.2 |
) |
|
$ |
(0.18 |
) |
|
|
|
|
|
(a) The tax amount
was calculated using the applicable statutory tax rate in the tax
jurisdiction where the Non-GAAP adjustments were generated. |
|
|
|
|
|
Weighted average
common shares outstanding used in calculating diluted GAAP net loss
per common share |
|
218.7 |
Weighted average
common shares outstanding used in calculating diluted Non-GAAP net
income per common share |
|
218.7 |
For the three months ended June 30, 2020, the following
table presents the details of the "Restructuring program related
costs and other costs" line item of the above table and the
affected line item in the Consolidated Statements of
Operations:
(in millions) |
|
Costs related to restructuring plans |
|
Professional services costs |
|
Incentive compensation |
|
Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold |
|
$ |
0.4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.4 |
|
SG&A |
|
(0.1 |
) |
|
11.7 |
|
|
0.6 |
|
|
— |
|
|
12.2 |
|
Restructuring and other
costs |
|
2.1 |
|
|
— |
|
|
— |
|
|
(0.8 |
) |
|
1.3 |
|
Interest expense, Interest
income, and Other expense (income), net |
|
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
Total |
|
$ |
2.3 |
|
|
$ |
11.7 |
|
|
$ |
0.6 |
|
|
$ |
(0.8 |
) |
|
$ |
13.8 |
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
Adjusted Operating Income (Loss) and Margin
A reconciliation of operating loss and margin to adjusted
operating loss and margin is as follows:
|
|
Three Months Ended June 30, 2020 |
(in millions, except
percentages) |
|
Operating (Loss) Income |
|
Percentage of NetSales |
|
|
|
|
|
Operating loss |
|
$ |
(104.3 |
) |
|
|
(21.3 |
%) |
Amortization of purchased intangible assets |
|
46.6 |
|
|
|
9.6 |
% |
Restructuring program related costs and other costs |
|
13.9 |
|
|
|
2.8 |
% |
Business combination related costs and fair value adjustments |
|
1.5 |
|
|
|
0.3 |
% |
Adjusted Non-GAAP operating
loss |
|
$ |
(42.3 |
) |
|
|
(8.6 |
%) |
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except per share
amounts)(unaudited)
For the three months ended June 30, 2019, a reconciliation
of selected items as reported in the 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 June 30, 2019 |
Amortization of Purchased Intangible Assets |
Restructuring Program Related Costs and Other Costs
(a) |
Business Combination Related Costs and Fair Value
Adjustments |
Credit Risk and Fair Value Adjustments |
Tax Impact of Non-GAAP Adjustments |
Income Tax Related Adjustments |
Total Non-GAAP Adjustments |
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
$ |
540.8 |
|
28.8 |
|
11.0 |
|
1.5 |
|
— |
|
— |
|
— |
|
$ |
41.3 |
|
$ |
582.1 |
|
% OF NET SALES |
53.6 |
% |
|
|
|
|
|
|
|
57.7 |
% |
SG&A EXPENSES |
430.9 |
|
(18.5 |
) |
(31.8 |
) |
(0.3 |
) |
— |
|
— |
|
— |
|
(50.6 |
) |
380.3 |
|
% OF NET SALES |
42.7 |
% |
|
|
|
|
|
|
|
37.7 |
% |
RESTRUCTURING AND OTHER
COSTS |
42.4 |
|
— |
|
(42.4 |
) |
— |
|
— |
|
— |
|
— |
|
(42.4 |
) |
— |
|
INCOME FROM OPERATIONS |
67.5 |
|
47.3 |
|
85.2 |
|
1.8 |
|
— |
|
— |
|
— |
|
134.3 |
|
201.8 |
|
% OF NET SALES |
6.7 |
% |
|
|
|
|
|
|
|
20.0 |
% |
NET INTEREST AND OTHER
EXPENSE |
19.9 |
|
— |
|
(14.5 |
) |
(0.2 |
) |
(1.3 |
) |
— |
|
— |
|
(16.0 |
) |
3.9 |
|
PRE-TAX INCOME |
47.6 |
|
47.3 |
|
99.7 |
|
2.0 |
|
1.3 |
|
— |
|
— |
|
150.3 |
|
197.9 |
|
INCOME TAXES |
11.2 |
|
— |
|
— |
|
— |
|
— |
|
38.0 |
|
0.8 |
|
38.8 |
|
50.0 |
|
% OF PRE-TAX INCOME |
23.5 |
% |
|
|
|
|
|
|
|
25.3 |
% |
NET INCOME ATTRIBUTABLE TO
DENTSPLY SIRONA |
$ |
36.4 |
|
|
|
|
|
|
|
$ |
111.5 |
|
$ |
147.9 |
|
% OF NET SALES |
3.6 |
% |
|
|
|
|
|
|
|
14.7 |
% |
EARNINGS PER SHARE -
DILUTED |
$ |
0.16 |
|
|
|
|
|
|
|
$ |
0.50 |
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
(a) Severance
costs related to the Chief Financial Officer and Chief Human
Resources Officer of $11.0 million are included within this
item. |
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except per share
amounts)(unaudited)
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per
Diluted Common Share
A reconciliation of net income attributable to Dentsply Sirona
and net income per diluted common share to adjusted net income and
adjusted earnings per diluted common share is as follows:
|
|
Three Months Ended June 30, 2019 |
(in millions, except per share
amounts) |
|
Net Income |
|
Per DilutedCommon Share |
|
|
|
|
|
Net income attributable to Dentsply Sirona |
|
$ |
36.4 |
|
|
$ |
0.16 |
|
Pre-tax Non-GAAP adjustments: |
|
|
|
|
Restructuring program related costs and other costs (a) |
|
99.7 |
|
|
|
Amortization of purchased intangible assets |
|
47.3 |
|
|
|
Business combination related costs and fair value adjustments |
|
2.0 |
|
|
|
Credit risk and fair value adjustments |
|
1.3 |
|
|
|
Tax impact of the pre-tax Non-GAAP adjustments (b) |
|
(38.0 |
) |
|
|
Subtotal Non-GAAP adjustments |
|
112.3 |
|
|
0.50 |
|
Income tax related adjustments |
|
(0.8 |
) |
|
0.00 |
|
Adjusted Non-GAAP net
income |
|
$ |
147.9 |
|
|
$ |
0.66 |
|
|
|
|
|
|
(a) Severance
costs related to the Chief Financial Officer and Chief Human
Resources Officer of $11.0 million are included within this
item. |
(b) The tax amount
was calculated using the applicable statutory tax rate in the tax
jurisdiction where the Non-GAAP adjustments were generated. |
For the three months ended June 30, 2019, the following
table presents the details of the "Restructuring program related
costs and other costs" line item of the above table and the
affected line item in the Consolidated Statements of
Operations:
(in millions) |
|
Asset impairments |
|
Separation costs related to executives |
|
Sale or discontinuation of non-strategic business or product
lines |
|
Costs related to restructuring plans |
|
Professional services costs |
|
Incentive Compensation |
|
Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10.6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.4 |
|
|
$ |
11.0 |
|
SG&A |
|
— |
|
|
11.0 |
|
|
1.6 |
|
|
— |
|
|
10.9 |
|
|
6.8 |
|
|
1.5 |
|
|
31.8 |
|
Restructuring and other
costs |
|
32.7 |
|
|
— |
|
|
0.8 |
|
|
7.3 |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
42.4 |
|
Interest expense, Interest
income, and Other expense (income), net |
|
— |
|
|
— |
|
|
14.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14.5 |
|
Total |
|
$ |
32.7 |
|
|
$ |
11.0 |
|
|
$ |
27.5 |
|
|
$ |
7.3 |
|
|
$ |
10.9 |
|
|
$ |
6.8 |
|
|
$ |
3.5 |
|
|
$ |
99.7 |
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except per share
amounts)(unaudited)
Adjusted Operating Income (Loss) and Margin
A reconciliation of operating income and margin to adjusted
operating income and margin is as follows:
|
|
Three Months Ended June 30, 2019 |
(in millions, except
percentages) |
|
Operating Income |
|
Percentage of NetSales |
|
|
|
|
|
Operating Income |
|
$ |
67.5 |
|
|
6.7 |
% |
Restructuring program related costs and other costs |
|
85.2 |
|
|
8.4 |
% |
Amortization of purchased intangible assets |
|
47.3 |
|
|
4.7 |
% |
Business combination related costs and fair value adjustments |
|
1.8 |
|
|
0.2 |
% |
Adjusted Non-GAAP operating
income |
|
$ |
201.8 |
|
|
20.0 |
% |
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