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May 1, 2012 at 7:00 AM EDT

DENTSPLY International Reports Record First Quarter Results

News

For further information contact:    

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

  • Record first quarter net sales increased 25.6% and 26.3% excluding precious metals 

  • Earnings per diluted share of $0.37 on a GAAP reported basis and $0.52 on an adjusted basis 

York, PA - May 1, 2012 - DENTSPLY International Inc. (NASDAQ: XRAY) today announced sales and earnings for the three months ended March 31, 2012.  Net sales in the first quarter of 2012 increased 25.6% to $716.4 million from $570.5 million in the first quarter of 2011.  Net sales, excluding precious metals content, of $665.6 million increased 26.3% from $527.0 million in the first quarter of 2011.  Constant currency net sales growth, excluding precious metals content, in the first quarter was 28.3%, driven largely by acquisitions, but also supported by internal sales growth, which was notably strong in the United States.  

Net income attributable to DENTSPLY International for the first quarter of 2012 was $53.3 million, or $0.37 per diluted share, compared to $69.1 million, or $0.48 per diluted share in the first quarter of 2011.  On an adjusted basis, excluding certain non-GAAP items, earnings increased to $0.52 per diluted share from $0.50 per diluted share in the first quarter of 2011.  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 report a strong start to fiscal 2012.  Our new product portfolio continues to drive above-market base business growth in many sectors of dentistry, helping to overcome our supply constraints in orthodontics.  Our orthodontics business has improved sequentially and we expect this to continue through the balance of 2012.  We have also made substantial progress on our acquisition integration efforts, including going live with a new combined implant organization in the United States.  The global dental market continued to grow in the first quarter, with strength in the U.S. offsetting slower conditions in Europe.  Given these factors, we are confirming our earnings expectations on an adjusted basis for 2012 in the range of $2.22 to $2.30 per diluted share."  

Additional Information

A conference call has also been scheduled for today, Tuesday, May 1, 2012 at 8:30 a.m. (Eastern Time).  A live broadcast will be accessible on DENTSPLY's website http://www.dentsply.com/.  In order to participate in the call, dial (888) 204-4317 for domestic calls, or (913) 312-0411 for international calls.  The Conference ID # is 5693504.  At that time, you will be able to discuss first quarter 2012 results with DENTSPLY's Chairman and Chief Executive Officer, Mr. Bret Wise; President and Chief Operating Officer, Mr. Chris Clark; and Senior Vice President and Chief Financial Officer, Mr. William Jellison.

A rebroadcast of the conference call will be available to the public online at the DENTSPLY website http://www.dentsply.com/.  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 # 5693504.

DENTSPLY International Inc. is a leading manufacturer and distributor of dental and other healthcare products.  The Company believes it is the world's largest manufacturer of professional dental products.  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 http://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, 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, (3) amortization of purchased intangible assets, (4) orthodontics business continuity costs, (5) income related to credit risk 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,
2012 2011
Net sales $ 716,413 $ 570,503
Net sales, excluding precious metal content 665,625 527,005
Cost of products sold 323,663 270,519
Gross profit 392,750 299,984
% of Net sales 54.8 % 52.6 %
% of Net sales, excluding precious metal content 59.0 % 56.9 %
Selling, general and administrative expenses 304,353 200,767
Restructuring and other costs 1,237 633
Operating income 87,160 98,584
% of Net sales 12.2 % 17.3 %
% of Net sales, excluding precious metal content 13.1 % 18.7 %
Net interest and other expense 13,969 4,585
Income before income taxes 73,191 93,999
Provision for income taxes 14,715 23,712
Equity in net loss attributable
to unconsolidated affiliated company (4,248 ) (824 )
Net income 54,228 69,463
% of Net sales 7.6 % 12.2 %
% of Net sales, excluding precious metal content 8.1 % 13.2 %
Less: Net income attributable to noncontrolling interests 944 379
Net income attributable to DENTSPLY International $ 53,284 $ 69,084
% of Net sales 7.4 % 12.1 %
% of Net sales, excluding precious metal content 8.0 % 13.1 %
Earnings per common share:
Basic $ 0.38 $ 0.49
Dilutive $ 0.37 $ 0.48
Cash dividends declared per common share $ 0.055 $ 0.050
Weighted average common shares outstanding:
Basic 141,721 141,614
Dilutive 143,984 144,044

DENTSPLY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2012 2011
Assets
Current Assets:
Cash and cash equivalents $ 67,346 $ 77,128
Accounts and notes receivable-trade, net 461,352 427,709
Inventories, net 403,052 361,762
Prepaid expenses and other current assets 187,435 146,304
Total Current Assets 1,119,185 1,012,903
Property, plant and equipment, net 604,160 591,445
Identifiable intangible assets, net 998,538 791,100
Goodwill, net 2,109,451 2,190,063
Other noncurrent assets, net 183,727 169,887
Total Assets $ 5,015,061 $ 4,755,398
Liabilities and Equity
Current liabilities $ 794,483 $ 724,073
Long-term debt 1,481,217 1,490,010
Deferred income taxes 321,362 249,822
Other noncurrent liabilities 371,024 407,342
Total Liabilities 2,968,086 2,871,247
Total DENTSPLY International Equity 2,008,617 1,848,077
Noncontrolling interests 38,358 36,074
Total Equity 2,046,975 1,884,151
Total Liabilities and Equity $ 5,015,061 $ 4,755,398

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, 2012
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 87,160 13.1 %
Amortization of Purchased Intangible Assets 15,359 2.3 %
Acquisition-Related Activities 7,534 1.1 %
Restructuring and Other Costs 1,730 0.3 %
Orthodontics Business Continuity Costs 617 0.1 %
Adjusted Non-GAAP Operating Income $ 112,400 16.9 %
Three Months Ended March 31, 2011
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 98,584 18.7 %
Amortization of Purchased Intangible Assets 2,268 0.5 %
Recent Acquisition-Related Activities 399 0.1 %
Restructuring and Other Costs 234 - %
Adjusted Non-GAAP Operating Income $ 101,485 19.3 %

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, 2012
Income Diluted
(Expense) 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 and Non-Controlling Interests 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 and Non-Controlling Interests 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
Three Months Ended March 31, 2011
Income Diluted
(Expense) Per Share
Net Income Attributable to DENTSPLY International $ 69,084 $ 0.48
Amortization of Purchased Intangible Assets, Net of Tax 1,508 0.01
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax 921 0.01
Recent Acquisition-Related Activities, Net of Tax and Non-Controlling Interests 245 -
Income Tax-Related Adjustments 196 -
Restructuring and Other Costs, Net of Tax and Non-Controlling Interests 114 -
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 72,068 $ 0.50

DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
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, 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 15,359 (4,377 )
Acquisition-Related Activities 7,534 (2,737 )
Restructuring and Other Costs 1,730 (566 )
Orthodontics Business Continuity Costs 617 (209 )
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 %
Three Months Ended March 31, 2011
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 93,999 $ (23,712 ) 25.2 %
Amortization of Purchased Intangible Assets 2,268 (760 )
Recent Acquisition-Related Activities 399 (154 )
Restructuring and Other Costs 234 (120 )
Income Tax-Related Adjustments - 196
As Adjusted - Non-GAAP Operating Results $ 96,900 $ (24,550 ) 25.3 %
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