Press Release

• Reported revenues of $954.2 million, up 47.0% compared to prior year; sales of the combined businesses¹ grew 0.4% excluding the effect of exchange rates
  
• GAAP EPS of $0.39, and non-GAAP adjusted EPS of $0.66
  
• Closed acquisition of MIS Implants
  
• Announced 5 million share increase in repurchase authorization
  
• Raised bottom end of previous guidance range: adjusted EPS of $2.75 to $2.80
  

YORK, Pa., Nov. 04, 2016 (GLOBE NEWSWIRE) -- DENTSPLY SIRONA Inc. (“Dentsply Sirona”) (NASDAQ:XRAY), The Dental Solutions Company^TM, today announced its financial results for the three months ended September 30, 2016.

Third Quarter 2016 Financial Results

Reported net sales of $954.2 million increased 47.0% compared to $648.9 million in the third quarter of 2015.  For the three month period ended September 30, 2016, sales of the combined businesses¹ grew 0.4% at constant currency exchange rates and internal growth² was flat.

On a geographic basis, U.S. reported net sales, excluding precious metals, of $334.2 million increased 33.9% compared to $249.5 million in the third quarter of 2015. Sales of the combined businesses¹ declined 3.1% on a constant currency basis with internal growth down 3.2% during the three month period ended September 30, 2016².

Reported net sales in Europe, excluding precious metals, increased 41.3% to $348.3 million compared to $246.5 million in the third quarter of 2015.  Sales of the combined businesses¹ grew 1.6% on a constant currency basis with internal growth of 1.2% during the three month period ended September 30, 2016².

Reported net sales in Rest of World, excluding precious metals, increased 92.6% to $256.7 million compared to $133.3 million in the third quarter of 2015.  Sales of the combined businesses¹ grew 3.8% on a constant currency basis with internal growth of 2.6% during the three month period ended September 30, 2016².

In the Dental and Healthcare Consumables segment, net sales, excluding precious metals, increased by 7.0% to $497.2 million in the third quarter of 2016.  Sales of our combined businesses¹ for Dental and Healthcare Consumables were flat on a constant currency basis with internal growth down 0.3% during the three month period ended September 30, 2016².

Reported net sales for Technologies, increased by 168.5% to $442.0 million in the third quarter of 2016. This increase is due to the consolidation of the Sirona businesses for three months. For the three month period ended September 30, 2016, sales of the combined businesses¹ for Technologies grew 0.9% on a constant currency basis and internal sales growth of the combined businesses was 0.2%².

Net income attributable to Dentsply Sirona for the third quarter of 2016 was $92.5 million, or $0.39 per diluted share, compared to $84.5 million, or $0.59 per diluted share in the third quarter of 2015.  On an adjusted basis, excluding certain items, net earnings per diluted share were $0.66 compared to $0.66 in the third quarter of 2015.  A reconciliation of the non-GAAP measures to earnings per share calculated on a US-GAAP basis is provided in the attached table.

Jeffrey T. Slovin, Dentsply Sirona’s Chief Executive Officer commented: “During the third quarter, we made substantial progress on our integration activities and continued making investments that will generate growth.  Rest of World led the way on top of strong double digit growth last year.  Our U.S. business declined as the softness others experienced earlier impacted purchase orders we received this quarter.  At the end user level, our products are growing.  This should translate into accelerating growth in the fourth quarter.”

Mr. Slovin continued: “I am pleased that the integration is on track and our organization is focused on delivering on our commitments.  During the quarter, we captured synergies which benefited our bottom line.  We closed the acquisition of MIS Implants, repurchased an additional $100 million of shares and paid $18 million in dividends.  At SIROWORLD, the market witnessed a unified Dentsply Sirona, which generated significant demand and demonstrated the power of our combination.  Our investments in sales and service, R&D and clinical education will deliver strong returns.  As we begin to capitalize on them, and increasingly capture revenue synergies, we will drive stronger growth in 2017 and beyond.”

Guidance for 2016^
Management raises the bottom end of its previous range and now anticipates adjusted EPS for 2016 in the range of $2.75 to $2.80.

Dentsply Sirona Announces Increase to Share Repurchase Plan
On September 21, 2016, the Company’s Board of Directors increased the authorized number of shares that can be held in Treasury by 5.0 million to 39.0 million. Under this program, the Company repurchased 11.4 million shares during the first nine months of 2016 for $699.6 million.   As of September 30, 2016, the Company held 32.9 million shares of treasury stock.

Conference Call/Webcast Information

Dentsply Sirona’s management team will host an investor conference call and live webcast today at 8:30 am EDT.  A presentation related to the call will be available on www.dentsplysirona.com in the Investors section.

Investors can access the webcast via a link on Dentsply Sirona’s web site at www.dentsplysirona.com.  For those planning to participate on the call, please dial +1-888-503-8168 for domestic calls, or +1-719-457-2674 for international calls.  The Conference ID # is 9221631.  A replay of the conference call will be available online on the Dentsply Sirona web site, and a dial-in replay will be available for one week following the call at +1-888-203-1112 (for domestic calls) or +1-719-457-0820 (for international calls), replay passcode # 9221631.

About Dentsply Sirona:

Dentsply Sirona is the world’s largest manufacturer of professional dental products and technologies, with a 130-year history 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.  As The Dental Solutions Company, Dentsply Sirona’s products provide innovative, high-quality and effective solutions to advance patient care and deliver better, safer and faster dentistry.  Dentsply Sirona’s global headquarters is located in York, Pennsylvania, and the international headquarters is based in Salzburg, Austria. 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.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "project," "forecast," or other similar words. Statements contained in this press release are based on information presently available to the Company and assumptions that the Company believe to be reasonable. The Company is not assuming any duty to update this information if those facts change or if the assumptions are no longer believed to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. These risk factors include, without limitation; risks that the new businesses will not be integrated successfully; risks that the combined companies will not realize the estimated cost savings, synergies and growth, or that such benefits may take longer to realize than expected; risks relating to unanticipated costs of integration, including operating costs, customer loss or business disruption being greater than expected; unanticipated changes relating to competitive factors in the industries in which the Company operates; the ability to hire and retain key personnel; reliance on and integration of information technology systems; international, national or local economic, social or political conditions that could adversely affect the Company or its customers; risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; the ability to attract new customers and retain existing customers in the manner anticipated; the continued strength of dental and medical device markets; the timing, success and market reception for our new and existing products; uncertainty regarding 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; changes in the general economic environment that could affect the business; and the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs. The foregoing list of factors is not exhaustive.

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 Sirona and adjusted earnings per diluted common share (“adjusted EPS”).  The Company discloses adjusted net income attributable to Dentsply Sirona 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 may not be indicative of past or future performance of the normal operations of the Company 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 principal measurements used by the Company in evaluating its business are: (1) constant currency sales growth by segment and geographic region; (2) internal sales growth by segment and geographic region; and (3) adjusted  operating income and margins of each reportable segment, which excludes the impacts of purchase  accounting, corporate expenses, and certain other items to enhance the comparability of results  period to period.  These principal measurements are not calculated in accordance with accounting  principles generally accepted in the United States; therefore, these items represent non-US GAAP  measures. These non-US GAAP measures may differ from 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.

The Company defines “constant currency sales growth” as the increase or decrease in net sales from period to period excluding precious metal content and the impact of changes in foreign currency exchange rates. This impact is calculated by comparing current-period revenues to prior-period revenues, with both periods converted at the U.S. dollar to local currency average foreign exchange rate for each month of the prior period, for the currencies in which the Company does business.

The Company defines “internal sales growth” as constant currency sales growth excluding the impacts of net acquisitions and divestitures, merger accounting impacts and discontinued products.

Management also believes that the presentation of net sales, excluding precious metal content, provides useful information to investors because a portion of Dentsply Sirona’s net sales is comprised of sales of precious metals generated through sales of the Company’s precious metal dental alloy products, which are used by third parties to construct crown and bridge materials. Due to the fluctuations of precious metal prices and because the cost of the precious metal content of the Company’s sales is largely passed through to customers and has minimal effect on earnings, Dentsply Sirona reports net sales both with and without precious metal content to show the Company’s performance independent of precious metal price volatility and to enhance comparability of performance between periods. The Company uses its cost of precious metal purchased as a proxy for the precious metal content of sales, as the precious metal content of sales is not separately tracked and invoiced to customers. The Company believes that it is reasonable to use the cost of precious metal content purchased in this manner since precious metal dental alloy sale prices are typically adjusted when the prices of underlying precious metals change.

Adjusted net income and adjusted EPS are important internal measures for the Company. Senior management receives a monthly analysis of operating results that includes adjusted net income and adjusted EPS and the performance of the Company is measured on this basis along with other performance metrics.

The adjusted net income attributable to Dentsply Sirona consists of net income attributable to Dentsply Sirona adjusted to exclude the net of tax impact of the following:

(1) Business combination related costs and fair value adjustments.  These adjustments include costs related to integrating and consummating mergers and recently acquired businesses, as well as costs, gains and losses related to the disposal of businesses or product lines.  In addition, this category includes the roll off to the consolidated statement of operations of fair value adjustments related to business combinations, except for amortization expense noted below.  These items 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 program related costs and other costs.  These adjustments include costs related to the implementation of restructuring initiatives as well as certain other costs.  These costs can include, but are not limited to, severance costs, facility closure costs, lease and contract terminations costs, related professional service costs, duplicate facility and labor costs associated with specific restructuring initiatives, as well as, legal settlements and impairments of assets. These items 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.  Amortization expense has been excluded from adjusted net income attributed to Dentsply Sirona to allow investors to evaluate and understand operating trends excluding these large non-cash charges.

(4) Credit risk and fair value adjustments.  These adjustments include both the cost and income impacts of adjustments in certain assets and liabilities including the Company’s pension obligations, 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, and discrete tax items resulting from the implementation of restructuring initiatives.  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 Sirona by diluted weighted-average common shares outstanding.  Adjusted net income attributable to Dentsply Sirona 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.

¹“Sales of our combined businesses” combines the historical consolidated revenues of DENTSPLY and Sirona, giving effect to the merger as if it had been consummated on January 1, 2015.
Non-GAAP adjusted EPS, net sales excluding precious metals, constant currency growth and internal growth and results are non-GAAP financial measures that exclude certain items.  Please refer to the disclosure at the end of the release.
² For a reconciliation of constant currency growth to internal revenue growth please see supplemental tables 1-3 at the end of the release.
Non-GAAP adjusted EPS, constant currency growth and internal growth and results are non-GAAP financial measures that exclude certain items.  Please refer to the disclosure at the end of the release.

^Our guidance is presented on a non-GAAP basis, as it does not include the impact of prospective acquisitions, acquisitions announced but not yet closed and other non-GAAP items, including restructuring costs, many of which are difficult to predict. Therefore, we cannot provide a full reconciliation of these measures.  The Company is unable at this time to address the probable significance of all of the unavailable information.

(a)The tax amount was calculated using the applicable statutory tax rate in the tax jurisdiction where the non-US GAAP adjustments were generated.

DENTSPLY SIRONA INC. AND SUBSIDIARIES
(In millions, except percentages)
(unaudited)

For the three month period ended September 30, 2016, sales of our combined businesses grew 40 basis points on a constant currency basis.  This includes a benefit of 80 basis points from net acquisitions and was unfavorably impacted by discontinued products by approximately 40 basis points, which results in no internal sales growth.  Net sales, excluding precious metal content, were positively impacted by approximately 40 basis points due to the weakening of the U.S. dollar over the prior year period.  A reconciliation of reported net sales to net sales, excluding precious metal content, of the combined business is as follows:

(a) Represents Sirona sales for the quarter ended September 30, 2015.
(b) Represents an adjustment to reflect deferred subscription and warranty revenue that was eliminated under business combination accounting standards to make the 2016 and 2015 non-U.S. GAAP combined business results comparable.
NM - Not meaningful

In the US, for the three month period ended September 30, 2016, sales of our combined businesses declined 3.1% on a constant currency basis.  This includes a benefit of 30 basis points from net acquisitions and was unfavorably impacted by discontinued products by approximately 20 basis points, which results in a negative internal sales growth rate of 3.2%.  The decline in sales equally impacted both segments and was the result of the timing of distributor purchases compared to the prior period.

In Europe, for the three month period ended September 30, 2016, sales of our combined businesses grew 1.6% on a constant currency basis.  This includes a benefit of 80 basis points from net acquisitions and was unfavorably impacted by discontinued products by approximately 40 basis points, which results in internal sales growth of 1.2%.  Net sales, excluding precious metal content, were negatively impacted by approximately 1.1% due to the strengthening of the U.S. dollar over the prior year period.  Internal sales growth in this region was primarily driven by higher demand in the Dental and Healthcare Consumables segment.

In Rest of World, for the three month period ended September 30, 2016, sales of our combined businesses grew 3.8% on a constant currency basis.  This includes a benefit of 1.3% from net acquisitions and was unfavorably impacted by discontinued products by approximately 10 basis points, which results in internal sales growth of 2.6%.  Net sales, excluding precious metal content, were positively impacted by approximately 2.8% due to the weakening of the U.S. dollar over the prior year period.  Internal sales growth in the Rest of World region was primarily driven by higher demand in the Technologies segment.

(a) Represents Sirona sales for the quarter ended September 30, 2015.
(b) Represents an adjustment to reflect deferred subscription and warranty revenue that was eliminated under business combination accounting standards to make the 2016 and 2015 non-U.S. GAAP combined business results comparable.

For Dental and Healthcare Consumables, for the three month period ended September 30, 2016, sales of the combined businesses were flat on a constant currency basis.  This includes a benefit of approximately 80 basis points from net acquisitions and was unfavorably impacted by discontinued products by approximately 50 basis points, which results in negative internal sales growth of 30 basis points.  Negative internal sales growth was primarily the result of the timing of distributor purchases compared to the prior period.

For Technologies, for the three month period ended September 30, 2016, sales of our combined businesses grew 90 basis points on a constant currency basis.  This includes a benefit of 70 basis points from net acquisitions which results in internal sales growth of 20 basis points.  Net sales, excluding precious metal content, were positively impacted by approximately 70 basis points due to the weakening of the U.S. dollar over the prior year period.  Internal sales growth in this segment reflects increased demand in the Rest of World region offset by the timing of distributor purchases compared to the prior period.

(a) Represents Sirona sales for the quarter ended September 30, 2015.
(b) Represents an adjustment to reflect deferred subscription and warranty revenue that was eliminated under business combination accounting standards to make the 2016 and 2015 non-U.S. GAAP combined business results comparable.

Contact Information:

Joshua Zable, IRC
VP, Corporate Communications and Investor Relations
+1-718-482-2184
joshua.zable@dentsplysirona.com

Derek Leckow, IRC
VP, Investor Relations
+1-717-849-7863
derek.leckow@dentsplysirona.com

DENTSPLY SIRONA Inc.