DENTSPLY SIRONA Inc. (“Dentsply Sirona” or the “Company”) (Nasdaq:
XRAY) today announced its financial results for the fourth quarter
and full year of 2023.
Full year 2023 net sales of $3,965 million
increased 1.1% (organic sales increased 2.2%), compared to the full
year of 2022. Net income (loss) was ($132) million, or ($0.62) per
share, compared to net income (loss) of ($950) million, or ($4.41)
per share for the full year of 2022. Non-cash charges for the
impairment of goodwill and other intangible assets was ($302)
million, net of tax, or ($1.42) per share in 2023, and ($1.1)
billion, net of tax, or ($5.10) per share in 2022. Adjusted
earnings per diluted share were $1.83, compared to $2.09 in 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.
Fourth quarter net sales of $1,012 million
increased 2.9% (organic sales increased 1.9%) compared to the
fourth quarter of 2022. Net income was $67 million, or $0.32 per
diluted share, compared to net income (loss) of ($15) million, or
($0.07) per share in the fourth quarter of 2022. Adjusted earnings
per diluted share were $0.44 compared to $0.46 in the fourth
quarter of 2022.
“We delivered on our outlook with three of our four
segments posting year-over-year growth in the fourth quarter and
full year 2023,” said Simon Campion, President and Chief Executive
Officer. “Dentsply Sirona's transformation is taking shape, and
while there is more work ahead, we expect that 2024 will be an
inflection point for improved profitability and adjusted earnings
per share growth. We maintain our conviction that we are on the
right path to deliver meaningful value over the long term."
Q4 23 and FY 23 Summary Results
(GAAP)
(in millions, except per share amount and
percentages) |
|
Q4 23 |
|
Q4 22 |
|
YoY |
|
FY 23 |
|
FY 22 |
|
YoY |
Net Sales |
|
$1,012 |
|
$983 |
|
2.9% |
|
$3,965 |
|
$3,922 |
|
1.1% |
Gross Profit |
|
$522 |
|
$517 |
|
1.0% |
|
$2,086 |
|
$2,127 |
|
(1.9%) |
Gross Margin |
|
51.6% |
|
52.6% |
|
|
|
52.6% |
|
54.2% |
|
|
Net Income (Loss) Attributable
to Dentsply Sirona |
|
$67 |
|
($15) |
|
NM |
|
($132) |
|
($950) |
|
NM |
Diluted Earnings (Loss) Per
Share |
|
$0.32 |
|
($0.07) |
|
NM |
|
($0.62) |
|
($4.41) |
|
NM |
|
NM - not
meaningful |
Percentages are
based on actual values and may not recalculate due to
rounding. |
|
Q4 23 and FY 23 Summary Results
(Non-GAAP)[1]
(in millions, except per share amount and
percentages) |
|
Q4 23 |
|
Q4 22 |
|
YoY |
|
FY 23 |
|
FY 22 |
|
YoY |
Net Sales |
|
$1,012 |
|
$983 |
|
2.9% |
|
$3,965 |
|
$3,922 |
|
1.1% |
Organic Sales Growth % |
|
|
|
|
|
1.9% |
|
|
|
|
|
2.2% |
Adjusted EBITDA |
|
$173 |
|
$171 |
|
0.7% |
|
$691 |
|
$766 |
|
(9.8%) |
Adjusted EBITDA Margin |
|
17.1% |
|
17.5% |
|
|
|
17.4% |
|
19.5% |
|
|
Adjusted EPS |
|
$0.44 |
|
$0.46 |
|
(4.0%) |
|
$1.83 |
|
$2.09 |
|
(12.8%) |
|
[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 recalculate due
to rounding. |
|
Q4 23 and FY 23 Segment
Results
|
|
Net Sales Growth % |
|
Organic Sales Growth % |
|
|
Q4 23 |
FY 23 |
|
Q4 23 |
FY 23 |
|
|
|
|
|
|
|
Connected Technology Solutions |
|
(7.0%) |
(4.1%) |
|
(8.3%) |
(2.8%) |
Essential Dental Solutions |
|
4.5% |
2.8% |
|
3.4% |
3.6% |
Orthodontic and Implant Solutions |
|
10.3% |
3.4% |
|
10.6% |
5.1% |
Wellspect Healthcare |
|
21.1% |
6.6% |
|
16.9% |
7.3% |
Total |
|
2.9% |
1.1% |
|
1.9% |
2.2% |
|
|
|
|
|
|
|
Q4 23 and FY 23 Geographic
Results
|
|
Net Sales Growth % |
|
Organic Sales Growth % |
|
|
Q4 23 |
FY 23 |
|
Q4 23 |
FY 23 |
|
|
|
|
|
|
|
United States |
|
(0.4%) |
3.2% |
|
(1.2%) |
3.0% |
Europe |
|
5.3% |
(0.6%) |
|
2.7% |
(0.2%) |
Rest of World |
|
4.3% |
0.7% |
|
5.4% |
5.1% |
Total |
|
2.9% |
1.1% |
|
1.9% |
2.2% |
|
|
|
|
|
|
|
Cash Flow and Liquidity
Operating cash flow in the fourth quarter of 2023
was $160 million, compared to $142 million in the prior year,
primarily as a result of improved working capital due primarily to
effective inventory management and the timing of accounts payable.
Full year 2023 operating cash flow was $377 million, as compared to
$517 million in the prior year, primarily driven by unfavorable
working capital and higher cost of sales and operating expenses. In
the fourth quarter, the Company paid $30 million in dividends and
executed share repurchases of $150 million, resulting in a total of
$416 million returned to shareholders in 2023. The Company had $334
million of cash and cash equivalents as of December 31,
2023.
Quarterly Cash Dividend
The Company's Board of Directors approved a 14%
increase in the Company's quarterly dividend rate, from the
previous rate of $0.14 per share of common stock to $0.16 per
share. The dividend is payable on April 12, 2024, to holders of
record as of March 29, 2024. This represents the fourth consecutive
annual double-digit increase, demonstrating the Company's
commitment to return cash to shareholders.
Full Year 2024 Outlook
The 2024 outlook includes anticipated net sales in
the range of $3.96 billion to $4.02 billion, flat to up 1.5% on an
organic basis. Adjusted EPS is expected to be in the range of $2.00
to $2.10.
Other 2024 outlook assumptions are included in the
fourth 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 without unreasonable effort and cannot be reasonably
estimated.
Conference Call/Webcast
InformationDentsply Sirona’s management team will host an
investor conference call and live webcast on February 29, 2024, 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/BI780eb31a2a894c20ae60990011145ed8.
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+1-704-591-8631InvestorRelations@dentsplysirona.com
Press:Marion Par-WeixlbergerVice President, Public
Relations & Corporate Communications+43 676
848414588marion.par-weixlberger@dentsplysirona.comForward-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. 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 and percentages) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net sales |
$ |
1,012 |
|
|
$ |
983 |
|
|
$ |
3,965 |
|
|
$ |
3,922 |
|
Cost of products sold |
|
490 |
|
|
|
466 |
|
|
|
1,879 |
|
|
|
1,795 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
522 |
|
|
|
517 |
|
|
|
2,086 |
|
|
|
2,127 |
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
|
409 |
|
|
|
402 |
|
|
|
1,613 |
|
|
|
1,589 |
|
Research and development expenses |
|
43 |
|
|
|
43 |
|
|
|
184 |
|
|
|
174 |
|
Goodwill and intangible asset impairments |
|
— |
|
|
|
6 |
|
|
|
307 |
|
|
|
1,287 |
|
Restructuring and other costs |
|
(3 |
) |
|
|
1 |
|
|
|
67 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
73 |
|
|
|
65 |
|
|
|
(85 |
) |
|
|
(937 |
) |
|
|
|
|
|
|
|
|
Other income and expenses: |
|
|
|
|
|
|
|
Interest expense, net |
|
20 |
|
|
|
20 |
|
|
|
81 |
|
|
|
65 |
|
Other (income) expense, net |
|
(4 |
) |
|
|
37 |
|
|
|
9 |
|
|
|
53 |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
57 |
|
|
|
8 |
|
|
|
(175 |
) |
|
|
(1,055 |
) |
(Benefit) provision for income taxes |
|
(15 |
) |
|
|
23 |
|
|
|
(43 |
) |
|
|
(105 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
|
72 |
|
|
|
(15 |
) |
|
|
(132 |
) |
|
|
(950 |
) |
|
|
|
|
|
|
|
|
Less: Net loss attributable to noncontrolling interests |
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dentsply Sirona |
$ |
67 |
|
|
$ |
(15 |
) |
|
$ |
(132 |
) |
|
$ |
(950 |
) |
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to Dentsply
Sirona: |
|
|
|
|
|
|
|
Basic |
$ |
0.32 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.62 |
) |
|
$ |
(4.41 |
) |
Diluted |
$ |
0.32 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.62 |
) |
|
$ |
(4.41 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
210.0 |
|
|
|
215.1 |
|
|
|
212.0 |
|
|
|
215.5 |
|
Diluted |
|
210.9 |
|
|
|
215.1 |
|
|
|
212.0 |
|
|
|
215.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
|
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
334 |
|
|
$ |
365 |
|
Accounts and notes receivable-trade, net |
|
695 |
|
|
|
632 |
|
Inventories, net |
|
624 |
|
|
|
627 |
|
Prepaid expenses and other current assets |
|
320 |
|
|
|
269 |
|
Total Current Assets |
|
1,973 |
|
|
|
1,893 |
|
|
|
|
|
Property, plant and equipment, net |
|
800 |
|
|
|
761 |
|
Operating lease right-of-use assets, net |
|
178 |
|
|
|
200 |
|
Identifiable intangible assets, net |
|
1,705 |
|
|
|
1,903 |
|
Goodwill, net |
|
2,438 |
|
|
|
2,688 |
|
Other noncurrent assets |
|
276 |
|
|
|
198 |
|
Total Assets |
$ |
7,370 |
|
|
$ |
7,643 |
|
|
|
|
|
Liabilities and Equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
305 |
|
|
$ |
279 |
|
Accrued liabilities |
|
749 |
|
|
|
727 |
|
Income taxes payable |
|
49 |
|
|
|
46 |
|
Notes payable and current portion of long-term debt |
|
322 |
|
|
|
118 |
|
Total Current Liabilities |
|
1,425 |
|
|
|
1,170 |
|
|
|
|
|
Long-term debt |
|
1,796 |
|
|
|
1,826 |
|
Operating lease liabilities |
|
125 |
|
|
|
149 |
|
Deferred income taxes |
|
228 |
|
|
|
287 |
|
Other noncurrent liabilities |
|
502 |
|
|
|
399 |
|
Total Liabilities |
|
4,076 |
|
|
|
3,831 |
|
|
|
|
|
Total Equity |
|
3,294 |
|
|
|
3,812 |
|
|
|
|
|
Total Liabilities and Equity |
$ |
7,370 |
|
|
$ |
7,643 |
|
|
DENTSPLY
SIRONA INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In millions) |
(unaudited) |
|
|
|
Year Ended December 31, |
|
2023 |
|
2022 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(132 |
) |
|
$ |
(950 |
) |
|
|
|
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
132 |
|
|
|
119 |
|
Amortization of intangible assets |
|
211 |
|
|
|
209 |
|
Goodwill impairment |
|
291 |
|
|
|
1,187 |
|
Indefinite-lived intangible asset impairment |
|
16 |
|
|
|
100 |
|
Deferred income taxes |
|
(130 |
) |
|
|
(228 |
) |
Stock based compensation expense |
|
46 |
|
|
|
59 |
|
Restructuring and other costs |
|
33 |
|
|
|
(10 |
) |
Equity in earnings from unconsolidated affiliates |
|
4 |
|
|
|
36 |
|
Other non-cash (income) expense |
|
(5 |
) |
|
|
60 |
|
Loss (gain) on sale or disposal of non-strategic businesses and
product lines |
|
— |
|
|
|
3 |
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts and notes receivable-trade, net |
|
(58 |
) |
|
|
85 |
|
Inventories, net |
|
6 |
|
|
|
(141 |
) |
Prepaid expenses and other current assets |
|
(58 |
) |
|
|
(33 |
) |
Other noncurrent assets |
|
4 |
|
|
|
1 |
|
Accounts payable |
|
14 |
|
|
|
30 |
|
Accrued liabilities |
|
(16 |
) |
|
|
4 |
|
Income taxes |
|
(11 |
) |
|
|
(15 |
) |
Other noncurrent liabilities |
|
30 |
|
|
|
1 |
|
Net cash provided by operating activities |
$ |
377 |
|
|
$ |
517 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Cash received on sale of non-strategic businesses or product
lines |
|
13 |
|
|
|
— |
|
Capital expenditures |
|
(149 |
) |
|
|
(149 |
) |
Cash received on derivative contracts |
|
39 |
|
|
|
13 |
|
Proceeds from sale of property, plant and equipment |
|
7 |
|
|
|
— |
|
Other investing activities, net |
|
1 |
|
|
|
(2 |
) |
Net cash used in investing activities |
$ |
(89 |
) |
|
$ |
(138 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from long-term borrowings |
|
— |
|
|
|
6 |
|
Repayments on long-term borrowings |
|
(7 |
) |
|
|
(2 |
) |
Net borrowings (repayments) on short-term borrowings |
|
126 |
|
|
|
(64 |
) |
Proceeds from exercised stock options |
|
— |
|
|
|
6 |
|
Cash paid for treasury stock |
|
(300 |
) |
|
|
(150 |
) |
Cash dividends paid |
|
(116 |
) |
|
|
(104 |
) |
Other financing activities, net |
|
(10 |
) |
|
|
(21 |
) |
Net cash used in financing activities |
$ |
(307 |
) |
|
$ |
(329 |
) |
|
|
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
(12 |
) |
|
|
(24 |
) |
|
|
|
|
Net (decrease) increase in cash and cash
equivalents |
|
(31 |
) |
|
|
26 |
|
Cash and cash equivalents at beginning of
period |
|
365 |
|
|
|
339 |
|
Cash and cash equivalents at end of period |
$ |
334 |
|
|
$ |
365 |
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
Interest paid, net of amounts capitalized |
$ |
97 |
|
|
$ |
70 |
|
Income taxes paid, net of refunds |
|
177 |
|
|
|
122 |
|
Non-cash investing activities: |
|
|
|
Change in accounts payable related to capital expenditures |
$ |
6 |
|
|
$ |
(6 |
) |
|
|
|
|
|
|
|
|
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 a 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 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 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 gains and losses on the sale of
property, charges related to legal settlements, executive
separation costs, write-offs of inventory as a result of product
rationalization, and changes in accounting principles recorded
within the period. This category also includes costs related to
investigations and associated remediation activities which
primarily include legal, accounting and other professional service
fees, as well as turnover and other employee-related costs.
(3) Goodwill and intangible asset impairments.
These adjustments include charges related to goodwill and
intangible asset impairments.
(4) Amortization of purchased intangible assets.
This adjustment excludes the periodic amortization expense related
to purchased intangible assets, which are recorded at fair value.
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.
(5) 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, the credit
risk component of hedging instruments, 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 Gross Profit
Adjusted gross profit is computed by excluding from
gross profit the impact any of the above adjustments that affect
either sales or cost of sales.
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, as well as the related income tax
impacts of those items. Additionally, net income is adjusted for
other tax-related adjustments such as: discrete adjustments to
valuation allowances and other uncertain tax positions, final
settlement of income tax audits, discrete tax items resulting from
the implementation of restructuring initiatives and the windfall or
shortfall relating to 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 adjusted free cash flow divided by adjusted net income
(loss). Management believes 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 (loss) 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 December 31, 2023 |
|
Q4 2023 Change |
|
Three Months Ended December 31, 2022 |
(in millions, except percentages) |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
368 |
$ |
397 |
$ |
247 |
$ |
1,012 |
|
(0.4 |
%) |
5.3 |
% |
4.3 |
% |
2.9 |
% |
|
$ |
369 |
$ |
376 |
$ |
238 |
$ |
983 |
Foreign exchange impact |
|
|
|
|
|
|
0.8 |
% |
2.6 |
% |
(1.1 |
%) |
1.0 |
% |
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
(1.2 |
%) |
2.7 |
% |
5.4 |
% |
1.9 |
% |
|
|
|
|
|
|
Percentages are based on actual values and may not recalculate due
to rounding. |
|
|
|
Year Ended December 31, 2023 |
|
2023 Change |
|
Year Ended December 31, 2022 |
(in millions, except percentages) |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
U.S. |
Europe |
ROW |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,437 |
$ |
1,550 |
$ |
978 |
$ |
3,965 |
|
3.2 |
% |
(0.6 |
%) |
0.7 |
% |
1.1 |
% |
|
$ |
1,392 |
$ |
1,559 |
$ |
971 |
$ |
3,922 |
Foreign exchange impact |
|
|
|
|
|
|
0.2 |
% |
(0.4 |
%) |
(4.4 |
%) |
(1.1 |
%) |
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
3.0 |
% |
(0.2 |
%) |
5.1 |
% |
2.2 |
% |
|
|
|
|
|
|
Percentages are based on actual values and may not recalculate due
to rounding. |
|
A reconciliation
of reported net sales to organic sales by segment is as
follows: |
|
|
|
Three Months Ended December 31, 2023 |
|
Q4 2023 Change |
|
Three Months Ended December 31, 2022 |
(in millions, except percentages) |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
319 |
$ |
358 |
$ |
259 |
$ |
76 |
$ |
1,012 |
|
(7.0 |
%) |
4.5 |
% |
10.3 |
% |
21.1 |
% |
2.9 |
% |
|
$ |
344 |
$ |
343 |
$ |
234 |
$ |
62 |
$ |
983 |
Foreign exchange impact |
|
|
|
|
|
|
|
1.3 |
% |
1.1 |
% |
(0.3 |
%) |
4.2 |
% |
1.0 |
% |
|
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
|
(8.3 |
%) |
3.4 |
% |
10.6 |
% |
16.9 |
% |
1.9 |
% |
|
|
|
|
|
|
|
Percentages are based on actual values and may not
recalculate due to rounding. |
|
|
|
Year Ended December 31, 2023 |
|
2023 Change |
|
Year Ended December 31, 2022 |
(in millions, except percentages) |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
Connected Technology Solutions |
Essential Dental Solutions |
Orthodontic and Implant Solutions |
Wellspect Healthcare |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,169 |
$ |
1,468 |
$ |
1,040 |
$ |
288 |
$ |
3,965 |
|
(4.1 |
%) |
2.8 |
% |
3.4 |
% |
6.6 |
% |
1.1 |
% |
|
$ |
1,219 |
$ |
1,427 |
$ |
1,006 |
$ |
270 |
$ |
3,922 |
Foreign exchange impact |
|
|
|
|
|
|
|
(1.3 |
%) |
(0.8 |
%) |
(1.7 |
%) |
(0.7 |
%) |
(1.1 |
%) |
|
|
|
|
|
|
Organic sales |
|
|
|
|
|
|
|
(2.8 |
%) |
3.6 |
% |
5.1 |
% |
7.3 |
% |
2.2 |
% |
|
|
|
|
|
|
|
Percentages are based on actual values and may not recalculate due
to rounding. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
For the three months ended December 31, 2023, a reconciliation
of selected items as reported in the Condensed Consolidated
Statements of Operations to adjusted Non-GAAP items is as
follows: |
|
(in millions, except percentages and per share data) |
|
Gross Profit |
|
Operating Income |
|
Net Income Attributable to Dentsply Sirona (a) |
|
Diluted EPS |
GAAP |
|
$ |
522 |
|
$ |
73 |
|
|
$ |
67 |
|
|
$ |
0.32 |
|
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
Amortization of Purchased Intangible Assets |
|
|
30 |
|
|
52 |
|
|
|
37 |
|
|
|
0.18 |
|
Restructuring Related Charges and Other Costs |
|
|
6 |
|
|
16 |
|
|
|
14 |
|
|
|
0.06 |
|
Business Combination Related Costs and Fair Value Adjustments |
|
|
— |
|
|
2 |
|
|
|
3 |
|
|
|
0.01 |
|
Income Tax Related Adjustments |
|
|
— |
|
|
— |
|
|
|
(28 |
) |
|
|
(0.13 |
) |
Adjusted Non-GAAP |
|
$ |
558 |
|
$ |
143 |
|
|
$ |
93 |
|
|
$ |
0.44 |
|
GAAP Margin |
|
|
|
|
7.2 |
% |
|
|
|
|
Adjusted Non-GAAP Margin |
|
|
|
|
14.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The total tax expense associated with the Non-GAAP adjustments
above was $44 million. |
|
|
|
Percentages are based on actual values and may not reconcile due to
rounding. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
For the three months ended December 31, 2022, a reconciliation
of selected items as reported in the Condensed Consolidated
Statements of Operations to adjusted Non-GAAP items is as
follows: |
|
(in millions, except percentages and per share data) |
|
Gross Profit |
|
Operating Income |
|
Net (Loss) Income Attributable to Dentsply Sirona (a) |
|
Diluted EPS |
GAAP |
|
$ |
517 |
|
$ |
65 |
|
|
$ |
(15 |
) |
|
$ |
(0.07 |
) |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
Amortization of Purchased Intangible Assets |
|
|
29 |
|
|
50 |
|
|
|
36 |
|
|
|
0.17 |
|
Restructuring Related Charges and Other Costs |
|
|
6 |
|
|
30 |
|
|
|
22 |
|
|
|
0.10 |
|
Goodwill and Intangible Asset Impairments |
|
|
— |
|
|
6 |
|
|
|
12 |
|
|
|
0.06 |
|
Business Combination Related Costs and Fair Value Adjustments |
|
|
— |
|
|
3 |
|
|
|
4 |
|
|
|
0.02 |
|
Fair Value and Credit Risk Adjustments |
|
|
— |
|
|
— |
|
|
|
18 |
|
|
|
0.08 |
|
Income Tax Related Adjustments |
|
|
— |
|
|
— |
|
|
|
22 |
|
|
|
0.10 |
|
Adjusted Non-GAAP |
|
$ |
552 |
|
$ |
154 |
|
|
$ |
99 |
|
|
$ |
0.46 |
|
GAAP Margin |
|
|
|
|
6.6 |
% |
|
|
|
|
Adjusted Non-GAAP Margin |
|
|
|
|
15.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in calculating
diluted GAAP net loss per common share |
|
|
215.1 |
|
Weighted average common shares outstanding used in calculating
diluted Non-GAAP net income per common share |
|
|
215.5 |
|
(a) The total tax expense associated with the Non-GAAP adjustments
above was immaterial. |
|
|
|
Percentages are based on actual values and may not reconcile due to
rounding. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
For the year ended December 31, 2023, a reconciliation of
selected items as reported in the Condensed Consolidated Statements
of Operations to adjusted Non-GAAP items is as follows: |
|
(in millions, except percentages and per share data) |
|
Gross Profit |
|
Operating (Loss) Income |
|
Net (Loss) Income Attributable to Dentsply Sirona (a) |
|
Diluted EPS |
GAAP |
|
$ |
2,086 |
|
$ |
(85 |
) |
|
$ |
(132 |
) |
|
$ |
(0.62 |
) |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
Amortization of Purchased Intangible Assets |
|
|
121 |
|
|
211 |
|
|
|
154 |
|
|
|
0.73 |
|
Restructuring Related Charges and Other Costs |
|
|
18 |
|
|
123 |
|
|
|
95 |
|
|
|
0.44 |
|
Goodwill and Intangible Asset Impairments |
|
|
— |
|
|
307 |
|
|
|
302 |
|
|
|
1.42 |
|
Business Combination Related Costs and Fair Value Adjustments |
|
|
2 |
|
|
15 |
|
|
|
14 |
|
|
|
0.07 |
|
Fair Value and Credit Risk Adjustments |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income Tax Related Adjustments |
|
|
— |
|
|
— |
|
|
|
(44 |
) |
|
|
(0.21 |
) |
Adjusted Non-GAAP |
|
$ |
2,227 |
|
$ |
571 |
|
|
$ |
389 |
|
|
$ |
1.83 |
|
GAAP Margin |
|
|
|
|
(2.1 |
%) |
|
|
|
|
Adjusted Non-GAAP Margin |
|
|
|
|
14.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in calculating
diluted GAAP net loss per common share |
|
|
212.0 |
|
Weighted average common shares outstanding used in calculating
diluted Non-GAAP net income per common share |
|
|
213.1 |
|
(a) The total tax expense associated with the Non-GAAP adjustments
above was $139 million. |
|
|
|
Percentages are based on actual values and may not reconcile due to
rounding. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
For the year ended December 31, 2022, a reconciliation of
selected items as reported in the Condensed Consolidated Statements
of Operations to adjusted Non-GAAP items is as follows: |
|
(in millions, except percentages and per share data) |
|
Gross Profit |
|
Operating (Loss) Income |
|
Net (Loss) Income Attributable to Dentsply Sirona (a) |
|
Diluted EPS |
GAAP |
|
$ |
2,127 |
|
$ |
(937 |
) |
|
$ |
(950 |
) |
|
$ |
(4.41 |
) |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
Amortization of Purchased Intangible Assets |
|
|
121 |
|
|
209 |
|
|
|
153 |
|
|
|
0.71 |
|
Restructuring Related Charges and Other Costs |
|
|
7 |
|
|
92 |
|
|
|
73 |
|
|
|
0.36 |
|
Goodwill and Intangible Asset Impairments |
|
|
— |
|
|
1,287 |
|
|
|
1,104 |
|
|
|
5.10 |
|
Business Combination Related Costs and Fair Value Adjustments |
|
|
1 |
|
|
6 |
|
|
|
6 |
|
|
|
0.03 |
|
Fair Value and Credit Risk Adjustments |
|
|
— |
|
|
— |
|
|
|
33 |
|
|
|
0.15 |
|
Income Tax Related Adjustments |
|
|
— |
|
|
— |
|
|
|
33 |
|
|
|
0.15 |
|
Adjusted Non-GAAP |
|
$ |
2,256 |
|
$ |
657 |
|
|
$ |
452 |
|
|
$ |
2.09 |
|
GAAP Margin |
|
|
|
|
(23.9 |
%) |
|
|
|
|
Adjusted Non-GAAP Margin |
|
|
|
|
16.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in calculating
diluted GAAP net loss per common share |
|
|
215.5 |
|
Weighted average common shares outstanding used in calculating
diluted Non-GAAP net income per common share |
|
|
215.9 |
|
(a) The total tax expense associated with the Non-GAAP adjustments
above was $237 million. |
|
|
|
Percentages are based on actual values and may not reconcile due to
rounding. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
A reconciliation
of as reported GAAP net income to Adjusted EBITDA for the three
months ended December 31, 2023 and 2022 is as follows: |
|
|
|
Three Months Ended December 31, |
(in millions) |
|
2023 |
|
2022 |
|
|
|
|
|
GAAP net income (loss) |
|
$ |
67 |
|
|
$ |
(15 |
) |
Interest expense, net |
|
|
20 |
|
|
|
20 |
|
Income tax (benefit) expense |
|
|
(15 |
) |
|
|
23 |
|
Depreciation(1) |
|
|
32 |
|
|
|
28 |
|
Amortization of purchased intangible assets |
|
|
52 |
|
|
|
50 |
|
Restructuring related charges and other costs |
|
|
16 |
|
|
|
30 |
|
Goodwill and intangible asset impairments |
|
|
— |
|
|
|
6 |
|
Business combination related costs and fair value adjustments |
|
|
2 |
|
|
|
6 |
|
Fair value and credit risk adjustments |
|
|
— |
|
|
|
23 |
|
Rounding |
|
|
(1 |
) |
|
|
— |
|
Adjusted EBITDA(2) |
|
$ |
173 |
|
|
$ |
171 |
|
|
|
|
|
|
Net sales |
|
$ |
1,012 |
|
|
$ |
983 |
|
Adjusted EBITDA margin |
|
|
17.1 |
% |
|
|
17.5 |
% |
|
(1) Excludes those depreciation related amounts which
were included as part of the Restructuring related charges and
other costs and Business combination related costs and fair value
adjustments above. |
(2) Adjusted EBITDA for Q4 2022 has been updated to reflect the
reclassification of $1 million in certain gains from hedging
instruments from Interest expense to Other expense (income) in
order to conform with current year presentation. |
|
|
A reconciliation
of as reported GAAP net income to Adjusted EBITDA for the year
ended December 31, 2023 and 2022 is as follows: |
|
|
|
Year Ended December 31, |
(in millions) |
|
2023 |
|
2022 |
|
|
|
|
|
GAAP net loss |
|
$ |
(132 |
) |
|
$ |
(950 |
) |
Interest expense, net |
|
|
81 |
|
|
|
65 |
|
Income tax benefit |
|
|
(43 |
) |
|
|
(105 |
) |
Depreciation(1) |
|
|
126 |
|
|
|
116 |
|
Amortization of purchased intangible assets |
|
|
211 |
|
|
|
209 |
|
Restructuring related charges and other costs |
|
|
123 |
|
|
|
92 |
|
Goodwill and intangible asset impairments |
|
|
307 |
|
|
|
1,287 |
|
Business combination related costs and fair value adjustments |
|
|
18 |
|
|
|
9 |
|
Fair value and credit risk adjustments |
|
|
— |
|
|
|
43 |
|
Adjusted EBITDA(2) |
|
$ |
691 |
|
|
$ |
766 |
|
|
|
|
|
|
Net sales |
|
$ |
3,965 |
|
|
$ |
3,922 |
|
Adjusted EBITDA margin |
|
|
17.4 |
% |
|
|
19.5 |
% |
|
(1) Excludes those depreciation related amounts which were included
as part of the Restructuring related charges and other costs and
Business combination related costs and fair value adjustments
above. |
(2) Adjusted EBITDA for 2022 has been updated to reflect the
reclassification of $5 million in certain gains from hedging
instruments from Interest expense to Other expense (income) in
order to conform with current year presentation. |
|
DENTSPLY SIRONA INC. AND SUBSIDIARIES |
(In millions, except per share amounts and percentages) |
(unaudited) |
|
A reconciliation
of adjusted free cash flow conversion for the three months ended
December 31, 2023 and 2022 is as follows: |
|
|
|
Three Months Ended December 31, |
(in millions, except percentages) |
|
2023 |
|
2022 |
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
160 |
|
|
$ |
142 |
|
Capital Expenditures |
|
|
(40 |
) |
|
|
(32 |
) |
Adjusted free cash flow |
|
|
120 |
|
|
|
110 |
|
|
|
|
|
|
Adjusted net income |
|
$ |
93 |
|
|
$ |
99 |
|
Adjusted free cash flow conversion |
|
|
128 |
% |
|
|
110 |
% |
|
A reconciliation
of adjusted free cash flow conversion for the year ended
December 31, 2023 and 2022 is as follows: |
|
|
|
Year Ended December 31, |
(in millions, except percentages) |
|
2023 |
|
2022 |
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
377 |
|
|
$ |
517 |
|
Capital Expenditures |
|
|
(149 |
) |
|
|
(149 |
) |
Adjusted free cash flow |
|
|
228 |
|
|
|
368 |
|
|
|
|
|
|
Adjusted net income |
|
$ |
389 |
|
|
$ |
452 |
|
Adjusted free cash flow conversion |
|
|
58 |
% |
|
|
81 |
% |
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