DENTSPLY International Reports Record Results for the Third Quarter

October 25, 2012

For further information contact:    

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

  • Third quarter net sales grew 20.1% on a constant currency basis excluding precious metals 

  • Earnings per share of $0.37 on a GAAP reported basis compared to $0.42 in the prior year 

  • Adjusted third quarter EPS grew 10.9% to $0.51 vs. $0.46 in the prior year period 

 

 

York, PA - October 25, 2012 - DENTSPLY International Inc. (NASDAQ: XRAY) today announced sales and earnings for the three months ended September 30, 2012.  Net sales in the third quarter of 2012 increased 12.3% to $695.7 million from $619.8 million in the third quarter of 2011.  Net sales, excluding precious metals content, of $647.1 million increased 14.8% from $563.8 million in the third quarter of 2011.  Constant currency net sales growth, excluding precious metals content, in the third quarter was 20.1%, driven by acquisitions and internal sales growth in each of the U.S., Europe, and Rest of World categories.    

Net income attributable to DENTSPLY International for the third quarter of 2012 was $53.4 million, or $0.37 per diluted share, compared to $60.6 million, or $0.42 per diluted share in the third quarter of 2011.  On an adjusted basis, excluding certain items, earnings increased to $0.51 per diluted share from $0.46 per diluted share in the third 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 "DENTSPLY continues to execute well in a global dental market that is relatively stable despite challenging economic trends.   We are pleased with our internal growth rate and margin improvement for the third quarter and believe that our business overall continues to outperform the dental market.  Based on the company's performance to date and our outlook for the remainder of the year, we are updating our full-year adjusted earnings expectations to a range of $2.19 to $2.24 from the prior range of $2.18 to $2.24."

Additional Information

A conference call is scheduled to begin today at 8:30 a.m. (Eastern Time).  A live webcast will be accessible via a link on DENTSPLY's web site at www.dentsply.com.  Supplemental materials for reference during the call will be available for download in the investor relations section of DENTSPLY's web site.  In order to participate in the call, dial (888) 224-1005 for domestic calls, or (913) 312-1453 for international calls.  The Conference ID # is 6417967.  At that time, you will be able to discuss third 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 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 # 6417967.  

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 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) Orthodontic 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 Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Net sales $ 695,734 $ 619,759 $ 2,175,141 $ 1,799,705
Net sales, excluding precious metal content 647,120 563,751 2,011,225 1,654,746
Cost of products sold 331,619 322,111 1,010,807 887,222
Gross profit 364,115 297,648 1,164,334 912,483
% of Net sales 52.3 % 48.0 % 53.5 % 50.7 %
% of Net sales, excluding precious metal content 56.3 % 52.8 % 57.9 % 55.1 %
Selling, general and administrative expenses 260,352 231,493 860,740 643,244
Restructuring and other costs 15,097 26,353 18,862 33,849
Operating income 88,666 39,802 284,732 235,390
% of Net sales 12.7 % 6.4 % 13.1 % 13.1 %
% of Net sales, excluding precious metal content 13.7 % 7.1 % 14.2 % 14.2 %
Net interest and other expense 12,885 20,826 40,173 29,985
Income before income taxes 75,781 18,976 244,559 205,405
Provision for (benefit from) income taxes 18,960 (40,627 ) 48,550 1,042
Equity in net (loss) income  attributable
to unconsolidated affiliated company (2,529 ) 1,597 (5,448 ) 1,690
Net income 54,292 61,200 190,561 206,053
% of Net sales 7.8 % 9.9 % 8.8 % 11.4 %
% of Net sales, excluding precious metal content 8.4 % 10.9 % 9.5 % 12.5 %
Less: Net income attributable to noncontrolling interests 928 603 3,148 2,136
Net income attributable to DENTSPLY International $ 53,364 $ 60,597 $ 187,413 $ 203,917
% of Net sales 7.7 % 9.8 % 8.6 % 11.3 %
% of Net sales, excluding precious metal content 8.2 % 10.7 % 9.3 % 12.3 %
Earnings per common share:
Basic $ 0.38 $ 0.43 $ 1.32 $ 1.44
Dilutive $ 0.37 $ 0.42 $ 1.30 $ 1.42
Cash dividends declared per common share $ 0.055 $ 0.050 $ 0.165 $ 0.150
Weighted average common shares outstanding:
Basic 141,843 141,349 141,767 141,337
Dilutive 143,884 143,395 143,885 143,578

DENTSPLY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2012 2011
Assets
Current Assets:
Cash and cash equivalents $ 56,075 $ 77,128
Accounts and notes receivable-trade, net 467,296 427,709
Inventories, net 415,922 361,762
Prepaid expenses and other current assets 189,685 146,304
Total Current Assets 1,128,978 1,012,903
Property, plant and equipment, net 602,670 591,445
Identifiable intangible assets, net 841,751 791,100
Goodwill, net 2,207,413 2,190,063
Other noncurrent assets, net 196,610 169,887
Total Assets $ 4,977,422 $ 4,755,398
Liabilities and Equity
Current liabilities $ 940,720 $ 724,073
Long-term debt 1,237,244 1,490,010
Deferred income taxes 319,834 249,822
Other noncurrent liabilities 318,757 407,342
Total Liabilities 2,816,555 2,871,247
Total DENTSPLY International Equity 2,122,071 1,848,077
Noncontrolling interests 38,796 36,074
Total Equity 2,160,867 1,884,151
Total Liabilities and Equity $ 4,977,422 $ 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 September 30, 2012
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 88,666 13.7 %
Restructuring and Other Costs 15,457 2.3 %
Amortization of Purchased Intangible Assets 9,313 1.4 %
Orthodontics Business Continuity Costs 110 - %
Acquisition-Related Activities (1,893 ) (0.1 )%
Adjusted Non-GAAP Operating Income $ 111,653 17.3 %
Three Months Ended September 30, 2011
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 39,802 7.1 %
Acquisition-Related Activities 35,530 6.3 %
Restructuring and Other Costs 14,826 2.6 %
Amortization of Purchased Intangible Assets 5,490 1.0 %
Orthodontics Business Continuity Costs 1,321 0.2 %
Adjusted Non-GAAP Operating Income $ 96,969 17.2 %

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.
Nine Months Ended September 30, 2012
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 284,732 14.2 %
Amortization of Purchased Intangible Assets 37,359 1.8 %
Restructuring and Other Costs 20,097 1.0 %
Acquisition-Related Activities 10,544 0.6 %
Orthodontics Business Continuity Costs 1,071 - %
Adjusted Non-GAAP Operating Income $ 353,803 17.6 %
Nine Months Ended September 30, 2011
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 235,390 14.2 %
Acquisition-Related Activities 41,521 2.5 %
Restructuring and Other Costs 16,330 1.0 %
Amortization of Purchased Intangible Assets 10,003 0.6 %
Orthodontics Business Continuity Costs 2,041 0.1 %
Adjusted Non-GAAP Operating Income $ 305,285 18.4 %

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 September 30, 2012
Income Diluted
(Expense) Per Share
Net Income Attributable to DENTSPLY International $ 53,364 $ 0.37
Restructuring and Other Costs, Net of Tax 10,909 0.08
Amortization of Purchased Intangible Assets, Net of Tax 5,159 0.04
Income Tax-Related Adjustments 4,039 0.03
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax 1,687 0.01
Orthodontics Business Continuity Costs, Net of Tax 70 -
Acquisition-Related Activities, Net of Tax (1,161 ) (0.01 )
Rounding - (0.01 )
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 74,067 $ 0.51
Three Months Ended September 30, 2011
Income Diluted
(Expense) Per Share
Net Income Attributable to DENTSPLY International $ 60,597 $ 0.42
Acquisition -Related Activities, Net of Tax 36,122 0.25
Restructuring and Other Costs, Net of Tax 9,530 0.07
Amortization of Purchased Intangible Assets, Net of Tax 3,838 0.03
Orthodontics Business Continuity Costs, Net of Tax 866 -
Gain on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax (1,800 ) (0.01 )
Income Tax-Related Adjustments (42,950 ) (0.30 )
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 66,203 $ 0.46

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.
Nine Months Ended September 30, 2012
Income Diluted
(Expense) Per Share
Net Income Attributable to DENTSPLY International $ 187,413 $ 1.30
Amortization of Purchased Intangible Assets, Net of Tax 25,148 0.17
Restructuring and Other Costs, Net of Tax 14,063 0.10
Acquisition-Related Activities, Net of Tax 6,630 0.05
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax 5,280 0.04
Orthodontics Business Continuity Costs, Net of Tax 692 -
Income Tax-Related Adjustments (1,375 ) (0.01 )
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 237,851 $ 1.65
Nine Months Ended September 30, 2011
Income Diluted
(Expense) Per Share
Net Income Attributable to DENTSPLY International $ 203,917 $ 1.42
Acquisition-Related Activities, Net of Tax 42,363 0.30
Restructuring and Other Costs, Net of Tax 10,403 0.07
Amortization of Purchased Intangible Assets, Net of Tax 6,844 0.05
Orthodontics Business Continuity Costs, Net of Tax 1,308 0.01
Gain on Fair Value Adjustments at an Unconsolidated Affiliated Company, Net of Tax (2,059 ) (0.01 )
Credit Risk Adjustment to Outstanding Derivatives, Net of Tax (783 ) (0.01 )
Income Tax-Related Adjustments (43,733 ) (0.31 )
Adjusted Non-GAAP Net Income Attributable to DENTSPLY International $ 218,260 $ 1.52

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 September 30, 2012
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 75,782 $ (18,961 ) 25.0 %
Restructuring and Other Costs 15,458 (4,549 )
Amortization of Purchased Intangible Assets 9,313 (4,154 )
Orthodontics Business Continuity Costs 110 (40 )
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company (407 ) 123
Acquisition-Related Activities (1,893 ) 732
Income Tax-Related Adjustments - 4,041
As Adjusted - Non-GAAP Operating Results $ 98,363 $ (22,808 ) 23.2 %
Three Months Ended September 30, 2011
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 18,976 $ 40,627 (214.1 )%
Acquisition-Related Activities 47,558 (11,436 )
Restructuring and Other Costs 14,825 (5,136 )
Amortization of Purchased Intangible Assets 5,490 (1,652 )
Orthodontics Business Continuity Costs 1,322 (456 )
Gain on Fair Value Adjustments at an Unconsolidated Affiliated Company (393 ) 119
Income Tax-Related Adjustments - (42,950 )
As Adjusted - Non-GAAP Operating Results $ 87,778 $ (20,884 ) 23.8 %
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.
Nine Months Ended September 30, 2012
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 244,559 $ (48,550 ) 19.9 %
Amortization of Purchased Intangible Assets 37,359 (12,211 )
Restructuring and Other Costs 20,098 (6,035 )
Acquisition-Related Activities 10,544 (3,914 )
Orthodontics Business Continuity Costs 1,071 (379 )
Loss on Fair Value Adjustments at an Unconsolidated Affiliated Company (229 ) 69
Income Tax-Related Adjustments - (1,375 )
As Adjusted - Non-GAAP Operating Results $ 313,402 $ (72,395 ) 23.1 %
Nine Months Ended September 30, 2011
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - GAAP Operating Results $ 205,405 $ (1,042 ) 0.5 %
Acquisition-Related Activities 53,947 (11,971 )
Restructuring and Other Costs 16,331 (5,769 )
Amortization of Purchased Intangible Assets 10,003 (3,159 )
Orthodontics Business Continuity Costs 2,041 (733 )
Gain on Fair Value Adjustments at an Unconsolidated Affiliate Company (392 ) 119
Credit Risk Adjustment to Outstanding Derivatives (1,275 ) 492
Income Tax-Related Adjustments - (43,733 )
As Adjusted - Non-GAAP Operating Results $ 286,060 $ (65,796 ) 23.0 %

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