DENTSPLY International Reports Third Quarter 2014 Results
DENTSPLY International Inc.
October 29, 2014 7:02 AM
GlobeNewswire Europe
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· Adjusted earnings per diluted share grew 9% to a third quarter record of $0.62
· Adjusted operating margin expanded 80 basis points to 18.7% from 17.9%
· Operating cash flow increased 17% to $148 million for the third quarter and grew 42% to $368 million through nine months
York, PA - October 29, 2014 - DENTSPLY International Inc. (XRAY) today announced sales and earnings for the three months ended September 30, 2014.
Third Quarter Results
Net sales in the third quarter of 2014 of $708 million increased 0.6% from $704 million in the third quarter of 2013. Net sales, excluding precious metals content, of $682 million increased 1.8% from $669 million in the third quarter of 2013.
Net income attributable to DENTSPLY International for the third quarter of 2014 was $75 million, or $0.52 per diluted share, compared to $80 million, or $0.55 per diluted share in the third quarter of 2013. Adjusted earnings per diluted share (a non-GAAP measure) increased 9% to a third quarter record $0.62 per diluted share from $0.57 per diluted share in the third quarter of 2013. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.
Bret Wise, Chairman and Chief Executive Officer, stated "We are pleased to deliver improved sales and earnings performance in the third quarter while operating in global market conditions that are generally stable. Our results reflect the significant opportunity we have at DENTSPLY to create value by leveraging our global cost structure and redirecting resources to the areas of greatest growth potential. Looking ahead, we see further opportunity to drive more efficient cash generation as we execute our plan to expand margins while also improving return on invested capital. With the performance to date, we are updating our full year outlook, calling for adjusted earnings per diluted share in the range of $2.49 to $2.53."
Additional Information
A conference call is scheduled to begin today at 8:30 a.m. (Eastern Time). Supplemental materials for reference during the call will be available for download in the investor relations section of DENTSPLY`s web site, at www.dentsply.com. Investors can access a webcast of the call via a link on DENTSPLY`s web site at www.dentsply.com. In order to participate in the call, dial (888) 312-3047 for domestic calls, or (719) 325-2100 for international calls. The Conference ID # is 8189257. During the call, participants will be able to discuss third quarter 2014 results with DENTSPLY`s Chairman and Chief Executive Officer, Bret Wise, President and Chief Financial Officer, Chris Clark, and Executive Vice President and Chief Operating Officer, Jim Mosch.
For those unable to listen to the live conference call, a rebroadcast will be available online at the DENTSPLY web site, and a dial-in replay will be available for one week following the call at (888) 203-1112 (for domestic calls) or (719) 457-0820 (for international calls), Replay Passcode # 8189257.
DENTSPLY International Inc. is a leading manufacturer and distributor of dental and other consumable medical device products. The Company believes it is the world`s largest manufacturer of consumable dental products for the professional dental market. For over 110 years, DENTSPLY`s commitment to innovation and professional collaboration has enhanced its portfolio of branded consumables and small equipment. Headquartered in the United States, the Company has global operations with sales in more than 120 countries. Visit www.dentsply.com for more information about DENTSPLY and its products.
This press release contains forward-looking information (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding future events or the future financial performance of the Company that involve substantial risks and uncertainties. Actual events or results may differ materially from those in the projections or other forward-looking information set forth herein as a result of certain risk factors. These risk factors include, without limitation; the continued strength of dental and medical markets, the timing, success and market reception for our new and existing products, uncertainty with respect to governmental actions with respect to dental and medical products, outcome of litigation and/or governmental enforcement actions, volatility in the capital markets or changes in our credit ratings, continued support of our products by influential dental and medical professionals, our ability to successfully integrate acquisitions, risks associated with foreign currency exchange rates, risks associated with our competitors` introduction of generic or private label products, our ability to accurately predict dealer and customer inventory levels, our ability to successfully realize the benefits of any cost reduction or restructuring efforts, our ability to obtain a supply of certain finished goods and raw materials from third parties and changes in the general economic environment that could affect the business. Changes in such assumptions or factors could produce significantly different results.
For additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements, please refer to the Company`s most recent Form 10-K and its subsequent periodic reports on Forms 10-Q filed with the Securities and Exchange Commission.
Non-US GAAP Financial Measures
In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share. The Company discloses adjusted net income attributable to DENTSPLY International 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 certain large non-cash charges related to purchased intangible assets. The Company believes that this information is helpful in understanding underlying operating trends and cash flow generation. The adjusted net income attributable to DENTSPLY International consists of net income attributable to DENTSPLY International adjusted to exclude the impact of the following:
(1) Acquisition related costs. These adjustments include costs related to integrating recently acquired businesses and specific costs related to the consummation of the acquisition process. These costs 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 and other costs. These adjustments include both costs and income that 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. Beginning in 2011, the Company began recording large non-cash charges related to the values attributed to purchased intangible assets. These charges have been excluded from adjusted net income attributed to DENTSPLY International to allow investors to evaluate and understand operating trends excluding these large non-cash charges.
(4) Income related to credit risk and fair value adjustments. These adjustments include both the cost and income impacts of adjustments in certain assets and liabilities 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) Certain fair value adjustments related to an unconsolidated affiliated company. This adjustment represents the fair value adjustment of the unconsolidated affiliated company`s convertible debt instrument held by the Company. The affiliate is accounted for under the equity method of accounting. The fair value adjustment is driven by open market pricing of the affiliate`s equity instruments, which has a high degree of variability and may not be indicative of the operating performance of the affiliate or the Company.
(6) 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. 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.
Adjusted earnings per diluted common share is calculated by dividing adjusted net income attributable to DENTSPLY International by diluted weighted-average common shares outstanding. Adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share are considered measures not calculated in accordance with US GAAP, and therefore are non-US GAAP measures. These non-US GAAP measures may differ from other companies. Income tax related adjustments may include the impact to adjust the interim effective income tax rate to the expected annual effective tax rate. The non-US GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Net sales $ 708,240 $ 704,018 $ 2,203,579 $ 2,197,112
Net sales, excluding precious metal content 681,584 669,425 2,101,665 2,058,029
Cost of products sold 320,176 327,601 996,841 1,017,539
Gross profit 388,064 376,417 1,206,738 1,179,573
% of Net sales 54.8 % 53.5 % 54.8 % 53.7 %
% of Net sales, excluding precious metal content 56.9 % 56.2 % 57.4 % 57.3 %
Selling, general and administrative expenses 275,980 269,165 859,943 852,763
Restructuring and other costs 2,503 2,231 4,538 5,065
Operating income 109,581 105,021 342,257 321,745
% of Net sales 15.5 % 14.9 % 15.5 % 14.6 %
% of Net sales, excluding precious metal content 16.1 % 15.7 % 16.3 % 15.6 %
Net interest and other expense 12,065 10,885 32,602 40,337
Income before income taxes 97,516 94,136 309,655 281,408
Provision for income taxes 21,283 13,187 69,831 39,599
Equity in net (loss) income of
unconsolidated affiliated company (967 ) (83 ) (1,624 ) 320
Net income 75,266 80,866 238,200 242,129
% of Net sales 10.6 % 11.5 % 10.8 % 11.0 %
% of Net sales, excluding precious metal content 11.0 % 12.1 % 11.3 % 11.8 %
Less: Net (loss) income attributable to noncontrolling interests (7 ) 1,015 56 3,366
Net income attributable to DENTSPLY International $ 75,273 $ 79,851 $ 238,144 $ 238,763
% of Net sales 10.6 % 11.3 % 10.8 % 10.9 %
% of Net sales, excluding precious metal content 11.0 % 11.9 % 11.3 % 11.6 %
Earnings per common share:
Basic $ 0.53 $ 0.56 $ 1.68 $ 1.67
Dilutive $ 0.52 $ 0.55 $ 1.65 $ 1.65
Cash dividends declared per common share $ 0.06625 $ 0.06250 $ 0.19875 $ 0.18750
Weighted average common shares outstanding:
Basic 141,766 142,421 141,869 142,705
Dilutive 144,286 144,698 144,289 144,952
DENTSPLY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2014 2013
Assets
Current Assets:
Cash and cash equivalents $ 97,652 $ 74,954
Accounts and notes receivable-trade, net 476,856 472,802
Inventories, net 422,485 438,559
Prepaid expenses and other current assets, net 260,708 157,487
Total Current Assets 1,257,701 1,143,802
Property, plant and equipment, net 606,924 637,172
Identifiable intangible assets, net 710,112 795,323
Goodwill, net 2,160,696 2,281,596
Other noncurrent assets, net 148,628 220,154
Total Assets $ 4,884,061 $ 5,078,047
Liabilities and Equity
Current liabilities $ 734,569 $ 796,405
Long-term debt 1,165,566 1,166,178
Deferred income taxes 215,482 238,394
Other noncurrent liabilities 272,200 299,096
Total Liabilities 2,387,817 2,500,073
Total DENTSPLY International Equity 2,495,108 2,535,053
Noncontrolling interests 1,136 42,921
Total Equity 2,496,244 2,577,974
Total Liabilities and Equity $ 4,884,061 $ 5,078,047
DENTSPLY INTERNATIONAL INC.
(In thousands)
Supplemental Summary Cash Flow Information:
Nine Months Ended September 30, 2014 and 2013
Nine Months Ended September 30,
2014 2013
Net Cash Provided by Operating Activities $ 367,780 $ 258,266
Net Cash Used in Investing Activities $ 76,405 $ 161,891
Net Cash Used in Financing Activities $ 264,371 $ 124,650
Depreciation $ 63,048 $ 61,545
Amortization $ 36,430 $ 34,700
Capital Expenditures $ 73,025 $ 73,500
Cash Dividends Paid $ 27,927 $ 25,895
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Three Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 109,581 16.1 %
Amortization of Purchased Intangible Assets 11,894 1.8 %
Restructuring and Other Costs 3,692 0.5 %
Acquisition-Related Activities 2,066 0.3 %
Adjusted Non-US GAAP Operating Income $ 127,233 18.7 %
Three Months Ended September 30, 2013
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 105,021 15.7 %
Amortization of Purchased Intangible Assets 11,237 1.7 %
Restructuring and Other Costs 2,285 0.3 %
Acquisition-Related Activities 1,173 0.2 %
Adjusted Non-US GAAP Operating Income $ 119,716 17.9 %
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Nine Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 342,257 16.3 %
Amortization of Purchased Intangible Assets 36,430 1.7 %
Restructuring and Other Costs 5,880 0.3 %
Acquisition-Related Activities 5,619 0.2 %
Adjusted Non-US GAAP Operating Income $ 390,186 18.5 %
Nine Months Ended September 30, 2013
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 321,745 15.6 %
Amortization of Purchased Intangible Assets 34,652 1.7 %
Restructuring and Other Costs 5,343 0.3 %
Acquisition-Related Activities 4,442 0.2 %
Adjusted Non-US GAAP Operating Income $ 366,182 17.8 %
DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per common share basis to the non-US GAAP financial measures.
Three Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 75,273 $ 0.52
Amortization of Purchased Intangible Assets, Net of Tax 8,417 0.06
Restructuring and Other Costs, Net of Tax 2,524 0.02
Acquisition-Related Activities, Net of Tax 1,394 0.01
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 817 0.01
Income Tax-Related Adjustments 595 -
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax 243 -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 89,263 $ 0.62
Three Months Ended September 30, 2013
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 79,851 $ 0.55
Amortization of Purchased Intangible Assets, Net of Tax 7,851 0.06
Restructuring and Other Costs, Net of Tax 1,961 0.01
Acquisition-Related Activities, Net of Tax 744 0.01
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax (488 ) -
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (829 ) (0.01 )
Income Tax-Related Adjustments (6,882 ) (0.05 )
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 82,208 $ 0.57
DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per common share basis to the non-US GAAP financial measures.
Nine Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 238,144 $ 1.65
Amortization of Purchased Intangible Assets, Net of Tax 25,648 0.18
Restructuring and Other Costs, Net of Tax 4,112 0.03
Acquisition-Related Activities, Net of Tax 3,740 0.02
Income Tax-Related Adjustments 3,536 0.02
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 15 -
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (792 ) -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 274,403 $ 1.90
Nine Months Ended September 30, 2013
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 238,763 $ 1.65
Amortization of Purchased Intangible Assets, Net of Tax 24,229 0.17
Restructuring and Other Costs, Net of Tax 4,462 0.03
Acquisition-Related Activities, Net of Tax 2,843 0.02
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 2,702 0.02
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (1,347 ) (0.01 )
Income Tax-Related Adjustments (18,388 ) (0.13 )
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 253,264 $ 1.75
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Three Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 97,516 $ (21,283 ) 21.8 %
Amortization of Purchased Intangible Assets 11,894 (3,477 )
Acquisition-Related Activities 3,692 (1,168 )
Restructuring and Other Costs 2,066 (672 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 1,331 (514 )
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company 32 (10 )
Income Tax-Related Adjustments - 595
As Adjusted - Non-US GAAP Operating Results $ 116,531 $ (26,529 ) 22.8 %
Three Months Ended September 30, 2013
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 94,136 $ (13,187 ) 14.0 %
Amortization of Purchased Intangible Assets 11,237 (3,386 )
Restructuring and Other Costs 2,285 (324 )
Acquisition-Related Activities 1,173 (429 )
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company (8 ) 2
Credit Risk and Fair Value Adjustments to Outstanding Derivatives (794 ) 306
Income Tax-Related Adjustments - (6,882 )
As Adjusted - Non-US GAAP Operating Results $ 108,029 $ (23,900 ) 22.1 %
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Nine Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 309,655 $ (69,831 ) 22.6 %
Amortization of Purchased Intangible Assets 36,430 (10,782 )
Restructuring and Other Costs 5,880 (1,768 )
Acquisition-Related Activities 5,619 (1,879 )
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company 170 (52 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 24 (9 )
Income Tax-Related Adjustments - 3,536
As Adjusted - Non-US GAAP Operating Results $ 357,778 $ (80,785 ) 22.6 %
Nine Months Ended September 30, 2013
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 281,408 $ (39,599 ) 14.1 %
Amortization of Purchased Intangible Assets 34,652 (10,423 )
Restructuring and Other Costs 5,343 (881 )
Acquisition-Related Activities 4,442 (1,599 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 4,401 (1,699 )
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company (20 ) 6
Income Tax-Related Adjustments - (18,388 )
As Adjusted - Non-US GAAP Operating Results $ 330,226 $ (72,583 ) 22.0 %
For further information contact:
Derek Leckow
Vice President
Investor Relations
(717) 849-7863
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: DENTSPLY International Inc. via GlobeNewswire
