DENTSPLY International Reports First Quarter 2013 Results

May 9, 2013

  • Net sales were a record for the first quarter and increased 2.2% and 1.1% excluding precious metals 

  • Earnings per diluted share of $0.49 on a GAAP reported basis and $0.52 on an adjusted basis 

York, PA - May 9, 2013 - DENTSPLY International Inc. (NASDAQ: XRAY) today announced sales and earnings for the three months ended March 31, 2013.

Net sales in the first quarter of 2013 increased 2.2% to $732.1 million from $716.4 million in the first quarter of 2012.  Net sales, excluding precious metals content, in the first quarter of 2013 of $672.6 million increased 1.1% from $665.6 million in the first quarter of 2012.  Constant currency net sales growth, excluding precious metals content, in the first quarter was 1.7%, driven by modest internal growth in all regions against a relatively strong prior year comparison.    

Net income attributable to DENTSPLY International for the first quarter of 2013 was $71.7 million, or $0.49 per diluted share, compared to $53.3 million, or $0.37 per diluted share in the first quarter of 2012.  On an adjusted basis, excluding certain items, earnings were $0.52 per diluted share for both the first quarter of 2013 and 2012, respectively.  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 "DENTSPLY reported record revenue and flat adjusted earnings per share for the first quarter reflecting the slow growth of the global dental market at present and important investments made by the Company during the quarter.  Looking forward, we believe that we have opportunities to accelerate growth in both sales and earnings as the year progresses.  Given the current market environment and currency exchange rates, we are revising our expectations for adjusted earnings per share for 2013 to a range of $2.33 to $2.43."  

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.  

A live webcast will be accessible via a link on DENTSPLY's web site at www.dentsply.com.  In order to participate in the call, dial (888) 500-6973 for domestic calls, or (719) 457-2662 for international calls.  The Conference ID # is 3903926.  At that time, you will be able to discuss first quarter 2013 results with DENTSPLY's Chairman and Chief Executive Officer, Mr. Bret Wise, President and Chief Financial Officer, Mr. Chris Clark, and Executive Vice President and Chief Operating Officer, Mr. Jim Mosch.  

A rebroadcast of the conference call will be available online at the DENTSPLY web site.  You may also access a dial-in replay for one week following the call at (888) 203-1112 (for domestic calls) or (719) 457-0820 (for international calls), Replay Passcode # 3903926.  

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, continued support of our products by influential dental and medical professionals, our ability to successfully integrate acquisitions, risks associated with foreign currency exchange rates, and changes in the general economic environment that could affect the business.  Changes in such assumptions or factors could produce significantly different results.

For an additional description of risk factors, 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-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.  These adjusted amounts consist of US GAAP amounts excluding, net of tax (1) acquisition related costs, (2) restructuring and other costs, including legal settlements, (3) amortization of purchased intangible assets, (4) Orthodontic business continuity costs, (5) income related to credit risk and fair value adjustments, (6) certain fair value adjustments at an unconsolidated affiliated company, and (7) income tax related adjustments.  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 Company believes that the presentation of adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share provides important supplemental information to management and investors seeking to understand the Company's financial condition and results of operations.  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
March 31,
2013 2012
Net sales $ 732,084 $ 716,413
Net sales, excluding precious metal content 672,649 665,625
Cost of products sold 343,884 323,663
Gross profit 388,200 392,750
% of Net sales 53.0 % 54.8 %
% of Net sales, excluding precious metal content 57.7 % 59.0 %
Selling, general and administrative expenses 293,677 304,353
Restructuring and other costs 665 1,237
Operating income 93,858 87,160
% of Net sales 12.8 % 12.2 %
% of Net sales, excluding precious metal content 14.0 % 13.1 %
Net interest and other expense 15,964 13,969
Income before income taxes 77,894 73,191
Provision for income taxes 3,542 14,715
Equity in net loss of
unconsolidated affiliated company (1,779 ) (4,248 )
Net income 72,573 54,228
% of Net sales 9.9 % 7.6 %
% of Net sales, excluding precious metal content 10.8 % 8.1 %
Less: Net income attributable to noncontrolling interests 888 944
Net income attributable to DENTSPLY International $ 71,685 $ 53,284
% of Net sales 9.8 % 7.4 %
% of Net sales, excluding precious metal content 10.7 % 8.0 %
Earnings per common share:
Basic $ 0.50 $ 0.38
Dilutive $ 0.49 $ 0.37
Cash dividends declared per common share $ 0.0625 $ 0.0550
Weighted average common shares outstanding:
Basic 142,775 141,721
Dilutive 145,099 143,984

DENTSPLY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2013 2012
Assets
Current Assets:
Cash and cash equivalents $ 56,203 $ 80,132
Accounts and notes receivable-trade, net 468,537 442,412
Inventories, net 417,094 402,940
Prepaid expenses and other current assets 218,685 185,612
Total Current Assets 1,160,519 1,111,096
Property, plant and equipment, net 608,850 614,705
Identifiable intangible assets, net 805,646 830,642
Goodwill, net 2,167,241 2,210,953
Other noncurrent assets, net 159,872 204,901
Total Assets $ 4,902,128 $ 4,972,297
Liabilities and Equity
Current liabilities $ 826,165 $ 927,780
Long-term debt 1,207,722 1,222,035
Deferred income taxes 226,100 232,641
Other noncurrent liabilities 372,747 340,398
Total Liabilities 2,632,734 2,722,854
Total DENTSPLY International Equity 2,233,502 2,208,698
Noncontrolling interests 35,892 40,745
Total Equity 2,269,394 2,249,443
Total Liabilities and Equity $ 4,902,128 $ 4,972,297

DENTSPLY INTERNATIONAL INC.
(In thousands)
Supplemental Summary Cash Flow Information:
Three Months Ended March 31, 2013
Three Months Ended March 31,
2013 2012
Net Cash Provided by Operating Activities $ 36,086 $ 19,953
Net Cash Used in Investing Activities $ (72,723 ) $ (20,199 )
Net Cash Provided by (Used in) in Financing Activities $ 13,603 $ (12,380 )
Depreciation $ 20,416 $ 20,209
Amortization $ 11,934 $ 15,360
Capital Expenditures $ 24,032 $ 18,642
Cash Dividends Paid $ 7,909 $ 7,847

DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Income Summary:
The following tables present the reconciliation of reported GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-GAAP financial measures.
Three Months Ended March 31, 2013
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 93,858 14.0 %
Amortization of Purchased Intangible Assets 11,934 1.8 %
Acquisition-Related Activities 2,137 0.4 %
Restructuring and Other Costs, including Legal Settlements 772 -
Adjusted Non-GAAP Operating Income $ 108,701 16.2 %
Three Months Ended March 31, 2012
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 87,160 13.1 %
Amortization of Purchased Intangible Assets 15,360 2.3 %
Acquisition-Related Activities 7,535 1.1 %
Restructuring and Other Costs 1,729 0.3 %
Orthodontic Business Continuity Costs 616 0.1 %
Adjusted Non-GAAP Operating Income $ 112,400 16.9 %
DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net income attributable to DENTSPLY International and on a per share basis to the non-GAAP financial measures.
Three Months Ended March 31, 2013
Net Diluted
Income Per Share
Net Income Attributable to DENTSPLY International $ 71,685 $ 0.49
Amortization of Purchased Intangible Assets, Net of Tax 8,376 0.06
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 2,734 0.02
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax 1,928 0.01
Acquisition Related Activities, Net of Tax 1,353 0.01
Restructuring and Other Costs, including Legal Settlements, Net of Tax 539 -
Income Tax-Related Adjustments (11,388 ) (0.08 )
Rounding - 0.01
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 75,227 $ 0.52
Three Months Ended March 31, 2012
Net Diluted
Income Per Share
Net Income Attributable to DENTSPLY International $ 53,284 $ 0.37
Amortization of Purchased Intangible Assets, Net of Tax 10,982 0.08
Acquisition Related Activities, Net of Tax 4,797 0.03
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax 4,655 0.03
Restructuring and Other Costs, Net of Tax 1,164 0.01
Orthodontics Business Continuity Costs, Net of Tax 408 -
Income Tax-Related Adjustments (35 ) -
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 75,255 $ 0.52

DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported GAAP effective tax rate as a percentage of income before income taxes to the non-GAAP financial measure.
Three Months Ended March 31, 2013
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 77,894 $ (3,542 ) 4.5 %
Amortization of Purchased Intangible Assets 11,934 (3,558 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 4,452 (1,718 )
Acquisition-Related Activities 2,137 (784 )
Restructuring and Other Costs, including Legal Settlements 772 (233 )
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company 33 (10 )
Income Tax-Related Adjustments - (11,388 )
As Adjusted - Non-GAAP Operating Results $ 97,222 $ (21,233 ) 21.8 %
Three Months Ended March 31, 2012
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 73,191 $ (14,715 ) 20.1 %
Amortization of Purchased Intangible Assets 15,360 (4,378 )
Acquisition-Related Activities 7,535 (2,738 )
Restructuring and Other Costs 1,729 (565 )
Orthodontics Business Continuity Costs, Net of Tax 616 (208 )
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company 273 (83 )
Income Tax-Related Adjustments - (35 )
As Adjusted - Non-GAAP Operating Results $ 98,704 $ (22,722 ) 23.0 %

For further information contact:               

Derek Leckow
Vice President
Investor Relations
(717) 849-7863   


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