DENTSPLY SIRONA Inc. (“Dentsply Sirona” or the "Company") (Nasdaq:
XRAY) today announced its financial results for the third quarter
of 2022.
Third quarter net sales of $947 million decreased
(8.9%), compared to $1,040 million in the third quarter of 2021.
Foreign currency translation negatively impacted sales by (8.2%).
Net loss for the third quarter of 2022 was ($1,077) million, or
($5.01) loss per diluted share, compared to $84 million, or $0.38
per diluted share in the third quarter of 2021. Adjusted earnings
per diluted share decreased to $0.41 compared to $0.60 in the third
quarter of 2021. A reconciliation of Non-GAAP measures (including
organic sales, adjusted operating income and margin, adjusted EPS,
and adjusted EBITDA) to GAAP measures is provided below.
"Our third quarter results reflect continued
macroeconomic headwinds, including foreign currency impacts, global
supply chain challenges, and regional softness in the U.S. and
China. Despite the challenges this quarter, we were encouraged by
double-digit growth in clear aligners, solid performance in Europe,
and continued strong demand for Imaging equipment,” said Simon
Campion, Chief Executive Officer. “We are not satisfied with third
quarter results, however this quarter marks an important turning
point as we enter our company's next chapter. We have initiated a
comprehensive review of our entire business in order to improve our
execution, build a winning portfolio, and return the Company to
growth. Dentsply Sirona has great products and solutions, a healthy
innovation pipeline, and we are committed to charting a path
forward which delivers better and more consistent results for our
shareholders."
Q3 22 Summary Results (GAAP)
(in millions, except per share amount and
percentages) |
|
Q3 22 |
|
Q3 21 |
|
YoY |
|
|
|
|
|
|
|
Net Sales |
|
947 |
|
1,040 |
|
(8.9%) |
Operating (Loss)/ Income |
|
(1,218) |
|
132 |
|
NM |
Operating (Loss)/ Income % |
|
(128.5%) |
|
12.8% |
|
|
Diluted (Loss)/ Earnings Per Share |
|
(5.01) |
|
0.38 |
|
NM |
NM - not meaningful* Percentages are based on
actual values and may not recalculate due to rounding.
Q3 22 Summary Results
(Non-GAAP)[1]
(in millions, except per share amount and
percentages) |
|
Q3 22 |
|
Q3 21 |
|
YoY |
|
|
|
|
|
|
|
Net Sales |
|
947 |
|
1,040 |
|
(8.9%) |
Organic Sales Growth % |
|
|
|
|
|
(0.7%) |
Adj. Operating Income |
|
139 |
|
189 |
|
(26.6%) |
Adj. Operating Income % |
|
14.7% |
|
18.2% |
|
|
Adj. EPS |
|
0.41 |
|
0.60 |
|
(31.5%) |
[1] Organic sales growth, adjusted operating
income, 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 recalculate due to rounding.
Segment Results
Technologies &
EquipmentThird quarter 2022 net sales were $556 million,
down (9.0%) versus prior year. Foreign currency negatively impacted
sales by (9.6%), while organic sales increased by 0.6% as compared
to prior year. The growth in organic sales was driven by demand for
clear aligners and imaging equipment; partially offset by lower
CAD/CAM volumes.
ConsumablesThird quarter 2022
net sales were $391 million, down (8.7%) versus prior year. Foreign
currency negatively impacted sales by (6.2%), while organic sales
decreased by (2.5%) as compared to prior year. The decrease in
organic sales was driven by softening demand in the U.S. and China;
partially offset by demand for preventive consumables.
Cash Flow and Liquidity
Operating cash flow in the third quarter of 2022
was $109 million, as compared to $172 million in the prior
year. In the third quarter of 2022, the Company paid $27 million in
dividends resulting in a total of $228 million returned to
shareholders in the first nine months of 2022. As of
September 30, 2022, the Company had $418 million of cash and
cash equivalents on its balance sheet.
Goodwill Impairment
In the third quarter of 2022, the Company recorded
a non-cash charge for the impairment of goodwill and intangible
assets of $1.1 billion net of tax, due primarily to macroeconomic
factors as a result of weakened global demand, higher cost of
capital, unfavorable foreign currency impacts, and increased raw
material, supply chain and service costs, which are contributing to
reduced forecasted revenues, lower operating margins, and reduced
expectations for future cash flows.
Full Year 2022 Outlook
Based on the results of the third quarter and
recent developments in the macroeconomic environment, we are
updating our 2022 outlook. The updated outlook includes an expected
organic sales decline of approximately (2%) on a full-year basis,
with net sales in the range of $3.85 billion to $3.88 billion.
Adjusted operating income margin is expected to be greater than
15%. Adjusted EPS is estimated to be in the range of $1.90 to
$2.00.
Further 2022 outlook assumptions are included in
the Q3 2022 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.
Q3 21 and FY 21 Restatements
As previously reported, the Company restated its
financial statements for Q3 2021 and FY 2021. Any figures provided
herein for those prior periods reflects the restatements.
The comparative financial information for the three
and nine months ended September 30, 2021 provided herein
should be read in conjunction with the applicable financial
statements and accompanying notes of the Company. For more
information, please refer to the Company's Amendment No. 1 to its
Annual Report on Form 10-K/A for the fiscal year ended December 31,
2021 and Amendment No. 1 to its Quarterly Report on Form 10-Q/A for
the quarter ended September 30, 2021.
Conference Call/Webcast
InformationDentsply Sirona’s management team will host an
investor conference call and live webcast on November 14, 2022
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://dpregister.com/sreg/10173404/f51ed93790.
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
All statements in this press release that do not
directly and exclusively relate to historical facts constitute
“forward-looking statements.” These statements represent current
expectations and beliefs, and no assurance can be given that the
results described in such statements will be achieved. Such
statements are subject to numerous assumptions, risks,
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. Furthermore, many of these risks
and uncertainties are currently amplified by and may continue to be
amplified by or may, in the future, be amplified by, the novel
coronavirus (“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. For a
written description of these factors, see the section titled “Risk
Factors” in Dentsply Sirona’s Amendment No. 1 to the Annual Report
on Form 10-K for the fiscal year ended December 31, 2021 and any
updating information in subsequent SEC filings. No assurance can be
given that any expectation, belief, goal or plan set forth in any
forward-looking statement can or will be achieved, and readers are
cautioned not to place undue reliance on such statements which
speak only as of the date they are made. We do not undertake any
obligation to update or release any revisions to any
forward-looking statement or to report any events or circumstances
after the date of this press release or to reflect the occurrence
of unanticipated events.
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in millions, except per share
amounts)(unaudited)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net sales |
$ |
947 |
|
|
$ |
1,040 |
|
$ |
2,939 |
|
|
$ |
3,128 |
Cost of products sold |
|
439 |
|
|
|
471 |
|
|
1,329 |
|
|
|
1,385 |
|
|
|
|
|
|
|
|
Gross profit |
|
508 |
|
|
|
569 |
|
|
1,610 |
|
|
|
1,743 |
Selling, general, and administrative expenses |
|
401 |
|
|
|
395 |
|
|
1,187 |
|
|
|
1,174 |
Research and development expenses |
|
41 |
|
|
|
39 |
|
|
131 |
|
|
|
122 |
Goodwill impairment |
|
1,187 |
|
|
|
— |
|
|
1,187 |
|
|
|
— |
Intangible asset impairment and other costs |
|
97 |
|
|
|
3 |
|
|
107 |
|
|
|
11 |
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(1,218 |
) |
|
|
132 |
|
|
(1,002 |
) |
|
|
436 |
|
|
|
|
|
|
|
|
Other income and expenses: |
|
|
|
|
|
|
|
Interest expense, net |
|
14 |
|
|
|
14 |
|
|
41 |
|
|
|
43 |
Other expense (income), net |
|
9 |
|
|
|
5 |
|
|
20 |
|
|
|
4 |
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
(1,241 |
) |
|
|
113 |
|
|
(1,063 |
) |
|
|
389 |
(Benefit) provision for income taxes |
|
(164 |
) |
|
|
29 |
|
|
(128 |
) |
|
|
97 |
|
|
|
|
|
|
|
|
Net (loss) income |
|
(1,077 |
) |
|
|
84 |
|
|
(935 |
) |
|
|
292 |
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interest |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Net (loss) income attributable to Dentsply Sirona |
$ |
(1,077 |
) |
|
$ |
84 |
|
$ |
(935 |
) |
|
$ |
292 |
|
|
|
|
|
|
|
|
Net (loss) income per common share attributable to Dentsply
Sirona: |
|
|
|
|
|
|
|
Basic |
$ |
(5.01 |
) |
|
$ |
0.39 |
|
$ |
(4.34 |
) |
|
$ |
1.34 |
Diluted |
$ |
(5.01 |
) |
|
$ |
0.38 |
|
$ |
(4.34 |
) |
|
$ |
1.32 |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
214.9 |
|
|
|
218.6 |
|
|
215.6 |
|
|
|
218.6 |
Diluted |
|
214.9 |
|
|
|
220.5 |
|
|
215.6 |
|
|
|
220.7 |
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in millions)(unaudited)
|
September 30, 2022 |
|
December 31, 2021 |
|
|
|
|
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
418 |
|
$ |
339 |
Accounts and notes receivables-trade, net |
|
645 |
|
|
750 |
Inventories, net |
|
592 |
|
|
515 |
Prepaid expenses and other current assets |
|
284 |
|
|
248 |
Total Current Assets |
|
1,939 |
|
|
1,852 |
|
|
|
|
Property, plant, and equipment, net |
|
714 |
|
|
773 |
Operating lease right-of-use assets, net |
|
201 |
|
|
198 |
Identifiable intangible assets, net |
|
1,875 |
|
|
2,319 |
Goodwill |
|
2,584 |
|
|
3,976 |
Other noncurrent assets |
|
209 |
|
|
121 |
Total Assets |
$ |
7,522 |
|
$ |
9,239 |
|
|
|
|
Liabilities and Equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
271 |
|
$ |
262 |
Accrued liabilities |
|
711 |
|
|
760 |
Income taxes payable |
|
68 |
|
|
57 |
Notes payable and current portion of long-term debt |
|
246 |
|
|
182 |
Total Current Liabilities |
|
1,296 |
|
|
1,261 |
|
|
|
|
Long-term debt |
|
1,737 |
|
|
1,913 |
Operating lease liabilities |
|
154 |
|
|
149 |
Deferred income taxes |
|
246 |
|
|
391 |
Other noncurrent liabilities |
|
475 |
|
|
528 |
Total Liabilities |
|
3,908 |
|
|
4,242 |
|
|
|
|
Total Equity |
|
3,614 |
|
|
4,997 |
|
|
|
|
Total Liabilities and Equity |
$ |
7,522 |
|
$ |
9,239 |
|
|
|
|
DENTSPLY SIRONA INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(in millions)(unaudited)
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
Cash flows from operating activities: |
|
|
|
Net (loss) income |
$ |
(935 |
) |
|
$ |
292 |
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
90 |
|
|
|
94 |
|
Amortization of intangible assets |
|
159 |
|
|
|
167 |
|
Deferred income taxes |
|
(220 |
) |
|
|
(11 |
) |
Stock based compensation expense |
|
47 |
|
|
|
54 |
|
Goodwill impairment |
|
1,187 |
|
|
|
— |
|
Indefinite-lived intangible asset impairment |
|
94 |
|
|
|
— |
|
Other non-cash expense |
|
38 |
|
|
|
13 |
|
Gain on sale of non-strategic businesses and product lines |
|
— |
|
|
|
(14 |
) |
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts and notes receivable-trade, net |
|
43 |
|
|
|
(89 |
) |
Inventories, net |
|
(140 |
) |
|
|
(88 |
) |
Prepaid expenses and other current assets, net |
|
(46 |
) |
|
|
(24 |
) |
Other noncurrent assets |
|
(13 |
) |
|
|
(12 |
) |
Accounts payable |
|
40 |
|
|
|
(45 |
) |
Accrued liabilities |
|
(2 |
) |
|
|
70 |
|
Income taxes |
|
41 |
|
|
|
6 |
|
Other noncurrent liabilities |
|
(8 |
) |
|
|
22 |
|
Net cash provided by operating activities |
|
375 |
|
|
|
435 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
|
(117 |
) |
|
|
(101 |
) |
Cash paid for acquisitions of businesses and equity investments,
net of cash acquired |
|
— |
|
|
|
(248 |
) |
Cash received on sale of non-strategic businesses or product
lines |
|
— |
|
|
|
27 |
|
Cash received on derivative contracts |
|
10 |
|
|
|
1 |
|
Other investing activities |
|
(2 |
) |
|
|
2 |
|
Net cash used in investing activities |
|
(109 |
) |
|
|
(319 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Cash paid for accelerated share repurchase |
|
(150 |
) |
|
|
— |
|
Proceeds on short-term borrowings |
|
64 |
|
|
|
147 |
|
Cash paid for treasury stock |
|
— |
|
|
|
(90 |
) |
Cash dividends paid |
|
(78 |
) |
|
|
(68 |
) |
Proceeds from long-term borrowings, net of deferred financing
costs |
|
7 |
|
|
|
15 |
|
Repayments on long-term borrowings |
|
(2 |
) |
|
|
(297 |
) |
Proceeds from exercised stock options |
|
6 |
|
|
|
47 |
|
Other financing activities, net |
|
(15 |
) |
|
|
(11 |
) |
Net cash used in financing activities |
|
(168 |
) |
|
|
(257 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(19 |
) |
|
|
(16 |
) |
Net increase (decrease) in cash and cash equivalents |
|
79 |
|
|
|
(157 |
) |
Cash and cash equivalents at beginning of period |
|
339 |
|
|
|
438 |
|
Cash and cash equivalents at end of period |
$ |
418 |
|
|
$ |
281 |
|
|
|
|
|
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 (Loss) and Margin
Adjusted operating income (loss) is computed by
excluding the following items from operating income:
(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) Impairment related
charges and other costs. These adjustments include charges related
to goodwill and intangible asset impairments. Other costs include
costs related to the implementation of restructuring initiatives,
including but not limited to, severance costs, facility closure
costs, lease and contract termination costs, and related
professional service costs associated with specific restructuring
initiatives. 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 also include legal
settlements, executive separation costs, and changes in accounting
principle recorded within the period. Beginning in the second
quarter of 2022, this category includes costs related to the recent
internal 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 operating margin is calculated by dividing
adjusted operating income by net sales.
Adjusted Net Income (Loss)
Adjusted net income (loss) consists of the reported
net income (loss) in accordance with US GAAP, adjusted to exclude
the items identified above, the related income tax impacts, and
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 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 EBITDA
Adjusted EBITDA is computed by excluding interest,
income tax expense, depreciation and amortization, as well as the
adjustments described above for computing Adjusted Operating
Income.
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
A reconciliation of reported net sales to organic
sales by segment is as follows:
|
|
Three Months Ended September 30, 2022 |
|
Q3 2022 Change |
|
Three Months Ended September 30, 2021 |
(in millions, except percentages) |
|
Technologies& Equipment |
Consumables |
Total |
|
Technologies& Equipment |
Consumables |
Total |
|
Technologies& Equipment |
Consumables |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
556 |
$ |
391 |
$ |
947 |
|
(9.0 |
%) |
(8.7 |
%) |
(8.9 |
%) |
|
$ |
612 |
$ |
428 |
$ |
1,040 |
Foreign exchange impact |
|
|
|
|
|
(9.6 |
%) |
(6.2 |
%) |
(8.2 |
%) |
|
|
|
|
Organic sales |
|
|
|
|
|
0.6 |
% |
(2.5 |
%) |
(0.7 |
%) |
|
|
|
|
* Percentages are based on actual values and may
not recalculate due to rounding.
A reconciliation of reported net sales to organic
sales by geographic region is as follows:
|
|
Three Months Ended September 30, 2022 |
|
Q3 2022 Change |
|
Three Months Ended September 30, 2021 |
(in millions, except percentages) |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
357 |
$ |
358 |
$ |
232 |
$ |
947 |
|
(7.2 |
%) |
(8.8 |
%) |
(11.6 |
%) |
(8.9 |
%) |
|
$ |
384 |
$ |
393 |
$ |
263 |
$ |
1,040 |
Foreign exchange impact |
|
|
|
|
|
|
(2.0 |
%) |
(11.8 |
%) |
(11.7 |
%) |
(8.2 |
%) |
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
(5.2 |
%) |
3.0 |
% |
0.1 |
% |
(0.7 |
%) |
|
|
|
|
|
* Percentages are based on actual values and may
not recalculate due to rounding.
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
For the three months ended September 30, 2022, 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) |
ThreeMonthsEndedSeptember30, 2022 |
AmortizationofPurchasedIntangibleAssets |
ImpairmentRelatedCharges andOther Costs(a) |
BusinessCombinationRelatedCosts andFair Value
Adjustments |
Fair Valueand CreditRiskAdjustments |
Tax Impact ofNon-GAAP Adjustments |
Income TaxRelatedAdjustments |
Total Non-GAAPAdjustments |
ThreeMonthsEndedSeptember30, 2022 |
|
|
|
|
|
|
|
|
|
|
NET SALES |
$ |
947 |
|
— |
|
— |
|
— |
|
— |
|
— |
— |
|
$ |
— |
|
$ |
947 |
|
GROSS PROFIT |
$ |
508 |
|
30 |
|
— |
|
1 |
|
— |
|
— |
— |
|
$ |
31 |
|
$ |
539 |
|
% OF NET SALES |
|
53.7 |
% |
|
|
|
|
|
|
|
|
56.9 |
% |
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES |
|
401 |
|
(21 |
) |
(18 |
) |
(1 |
) |
— |
|
— |
— |
|
|
(40 |
) |
|
361 |
|
% OF NET SALES |
|
42.4 |
% |
|
|
|
|
|
|
|
|
38.1 |
% |
RESEARCH AND DEVELOPMENT EXPENSES |
|
41 |
|
— |
|
(2 |
) |
— |
|
— |
|
— |
— |
|
|
(2 |
) |
|
39 |
|
GOODWILL IMPAIRMENT |
|
1,187 |
|
— |
|
(1,187 |
) |
— |
|
— |
|
— |
— |
|
|
(1,187 |
) |
|
— |
|
INTANGIBLE ASSET IMPAIRMENT AND OTHER COSTS |
|
97 |
|
— |
|
(97 |
) |
— |
|
— |
|
— |
— |
|
|
(97 |
) |
|
— |
|
OPERATING (LOSS) INCOME |
|
(1,218 |
) |
51 |
|
1,304 |
|
2 |
|
— |
|
— |
— |
|
|
1,357 |
|
|
139 |
|
% OF NET SALES |
|
(125.4 |
%) |
|
|
|
|
|
|
|
|
14.7 |
% |
OTHER INCOME AND EXPENSE |
|
23 |
|
— |
|
— |
|
— |
|
(6 |
) |
— |
— |
|
|
(6 |
) |
|
17 |
|
(LOSS) INCOME BEFORE INCOME TAXES |
|
(1,241 |
) |
51 |
|
1,304 |
|
2 |
|
6 |
|
— |
— |
|
|
1,363 |
|
|
122 |
|
(BENEFIT) PROVISION FOR INCOME TAXES |
|
(164 |
) |
— |
|
— |
|
— |
|
— |
|
210 |
(12 |
) |
|
198 |
|
|
34 |
|
% OF PRE-TAX (LOSS) INCOME |
|
13.3 |
% |
|
|
|
|
|
|
|
|
27.7 |
% |
LESS: NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
NET (LOSS) INCOME ATTRIBUTABLE TO DENTSPLY SIRONA |
$ |
(1,077 |
) |
|
|
|
|
|
|
$ |
1,165 |
|
$ |
88 |
|
% OF NET SALES |
|
(110.9 |
%) |
|
|
|
|
|
|
|
|
9.3 |
% |
EARNINGS PER SHARE - DILUTED |
$ |
(5.01 |
) |
|
|
|
|
|
|
$ |
5.42 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in calculating
diluted GAAP net loss per common share |
|
|
214.9 |
|
Weighted average common shares outstanding used in calculating
diluted Non-GAAP net income per common share |
|
215.2 |
|
* Percentages are based on actual values and may
not recalculate due to rounding.
(a) Other Costs includes $20 million in costs
related to the internal investigation comprised of $13 million in
professional service fees, and $7 million in turnover and other
employee-related SG&A expenses.
DENTSPLY SIRONA INC. AND
SUBSIDIARIES(In millions, except
percentages)(unaudited)
For the three months ended September 30, 2021, 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) |
ThreeMonthsEndedSeptember30, 2021 |
AmortizationofPurchased IntangibleAssets |
ImpairmentRelatedCharges andOther Costs |
Business CombinationRelatedCosts andFair Value
Adjustments |
Fair Valueand CreditRiskAdjustments |
Tax Impactof Non-GAAPAdjustments |
Income TaxRelatedAdjustments |
Total Non-GAAPAdjustments |
ThreeMonthsEndedSeptember30, 2021 |
|
|
|
|
|
|
|
|
|
|
NET SALES |
$ |
1,040 |
|
— |
|
— |
|
— |
|
— |
|
— |
— |
|
$ |
— |
|
$ |
1,040 |
|
GROSS PROFIT |
$ |
569 |
|
33 |
|
1 |
|
(1 |
) |
— |
|
— |
— |
|
$ |
33 |
|
$ |
602 |
|
% OF NET SALES |
|
54.7 |
% |
|
|
|
|
|
|
|
|
57.9 |
% |
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES |
|
395 |
|
(23 |
) |
4 |
|
(2 |
) |
— |
|
— |
— |
|
|
(21 |
) |
|
374 |
|
% OF NET SALES |
|
37.9 |
% |
|
|
|
|
|
|
|
|
36.0 |
% |
RESEARCH AND DEVELOPMENT EXPENSES |
|
39 |
|
— |
|
— |
|
— |
|
— |
|
— |
— |
|
|
— |
|
|
39 |
|
GOODWILL IMPAIRMENT |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
— |
|
|
— |
|
|
— |
|
INTANGIBLE ASSET IMPAIRMENT AND OTHER COSTS |
|
3 |
|
— |
|
(3 |
) |
— |
|
— |
|
— |
— |
|
|
(3 |
) |
|
— |
|
OPERATING INCOME |
|
132 |
|
56 |
|
— |
|
1 |
|
— |
|
— |
— |
|
|
57 |
|
|
189 |
|
% OF NET SALES |
|
12.8 |
% |
|
|
|
|
|
|
|
|
18.2 |
% |
OTHER INCOME AND EXPENSE |
|
19 |
|
— |
|
— |
|
1 |
|
(3 |
) |
— |
— |
|
|
(2 |
) |
|
17 |
|
INCOME BEFORE INCOME TAXES |
|
113 |
|
56 |
|
— |
|
— |
|
3 |
|
— |
— |
|
|
59 |
|
|
172 |
|
PROVISION FOR INCOME TAXES |
|
29 |
|
— |
|
— |
|
— |
|
— |
|
16 |
(5 |
) |
|
11 |
|
|
40 |
|
% OF PRE-TAX INCOME |
|
25.8 |
% |
|
|
|
|
|
|
|
|
23.4 |
% |
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS |
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
NET INCOME ATTRIBUTABLE TO DENTSPLY SIRONA |
$ |
84 |
|
|
|
|
|
|
|
$ |
48 |
|
$ |
132 |
|
% OF NET SALES |
|
8.1 |
% |
|
|
|
|
|
|
|
|
12.6 |
% |
EARNINGS PER SHARE - DILUTED |
$ |
0.38 |
|
|
|
|
|
|
|
$ |
0.22 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
* Percentages are based on actual values and may
not recalculate due to rounding.
A reconciliation of as reported GAAP net income to
Adjusted EBITDA for the three months ended September 30, 2022
and 2021 is as follows:
|
|
Three Months Ended September 30, |
(in millions) |
|
2022 |
|
2021 |
|
|
|
|
|
GAAP net (loss) income |
|
$ |
(1,077 |
) |
|
$ |
84 |
Interest expense, net |
|
|
14 |
|
|
|
14 |
Income tax expense |
|
|
(164 |
) |
|
|
29 |
Depreciation(1) |
|
|
30 |
|
|
|
30 |
Amortization of purchased intangible assets |
|
|
51 |
|
|
|
55 |
Impairment related charges and other costs |
|
|
1,304 |
|
|
|
— |
Business combination related costs and fair value adjustments |
|
|
2 |
|
|
|
— |
Fair value and credit risk adjustments |
|
|
6 |
|
|
|
3 |
Adjusted EBITDA |
|
$ |
166 |
|
|
$ |
215 |
|
|
|
|
|
|
|
|
(1) Excludes those depreciation related amounts
which were included as part of the business combination related
adjustments above.
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