- Net sales of $951 million increased 0.5%, organic sales increased 1.3%
- GAAP gross margin of 52.1%, GAAP net loss of ($494) million or loss per share of ($2.46)
- Adjusted EBITDA margin of 17.9%, adjusted EPS of $0.50
- Revised FY24 outlook: expect organic sales of (3.5%) to (2.5%) (previously (1%) to flat); adjusted EPS of $1.82 to $1.86 (previously $1.96 to $2.02)
Third quarter net sales of $951 million increased 0.5% (organic sales increased 1.3%) compared to the third quarter of 2023. Foreign currency changes negatively impacted third quarter 2024 net sales by ($8) million. Net loss was ($494) million, or ($2.46) per share, compared to a net loss of ($266) million, or ($1.25) per share in the third quarter of 2023. Non-cash charges for the impairment of goodwill were ($495) million net of tax, or ($2.46) per share in the third quarter of 2024, versus ($302) million net of tax, or ($1.42) per share in the third quarter of 2023. Adjusted earnings per diluted share were $0.50, compared to $0.49 in the third quarter of 2023. A reconciliation of Non-GAAP measures (including organic sales, adjusted EBITDA and margin, adjusted EPS, adjusted free cash flow conversion, and segment adjusted operating income) to GAAP measures is provided below.
"Third quarter organic growth was driven by favorable timing in Essential Dental Solutions of approximately $20 million related to stocking orders in anticipation of U.S. ERP deployment, and higher sales in CAD/CAM, which benefited from the launch of our new scanner, Primescan 2. Due to ongoing market pressures impacting equipment in the U.S., as well as the evolving landscape with Byte, we are lowering our full year organic sales outlook.” said Simon Campion, President and Chief Executive Officer. "We continue to transform Dentsply Sirona and pivot quickly where needed. While we have more work to do, we now have multiple initiatives contributing positively to profitability and strengthening our Company's foundation for the long term.”
Q3 24 Summary Results (GAAP)
| (in millions, except per share amount and percentages) | Q3 24 | Q3 23 | YoY | |||
| Net Sales | $951 | $947 | 0.5% | |||
| Gross Profit | $495 | $495 | 0.2% | |||
| Gross Margin | 52.1% | 52.2% | ||||
| Net Loss Attributable to Dentsply Sirona | ($494) | ($266) | NM | |||
| Diluted Loss Per Share [1] | ($2.46) | ($1.25) | NM | |||
| (in millions, except per share amount and percentages) | Q3 24 | Q3 23 | YoY | |||
| Net Sales | $951 | $947 | 0.5% | |||
| Organic Sales Growth % | 1.3% | |||||
| Adjusted EBITDA | $170 | $171 | (1.8%) | |||
| Adjusted EBITDA Margin | 17.9% | 18.3% | ||||
| Adjusted EPS | $0.50 | $0.49 | 3.0% |
Percentages are based on actual values and may not reconcile due to rounding.
[1] Because the Company recorded net losses in the third quarter of 2024 and 2023, no potential dilutive common shares were used in the computation of diluted loss per common share as the effect would have been antidilutive.
[2] Organic sales growth, adjusted EBITDA, and adjusted EPS are Non-GAAP financial measures which exclude certain items. Please refer to "Non-GAAP Financial Measures" below for a description of these measures and to the tables at the end of this release for a reconciliation between GAAP and Non-GAAP measures.
Q3 24 Segment Results
| Net Sales Growth % | Organic Sales Growth % | |||
| Connected Technology Solutions | (2.3%) | (1.4%) | ||
| Essential Dental Solutions | 6.6% | 7.5% | ||
| Orthodontic and Implant Solutions | (4.6%) | (3.9%) | ||
| Wellspect Healthcare | (0.4%) | -% | ||
| Total | 0.5% | 1.3% | ||
| Net Sales Growth % | Organic Sales Growth % | |||
| United States | 5.0% | 5.1% | ||
| Europe | (1.8%) | (2.0%) | ||
| Rest of World | (3.0%) | 0.6% | ||
| Total | 0.5% | 1.3% | ||
Operating cash flow in the third quarter of 2024 was $141 million, compared to $134 million in the prior year, primarily as a result of the favorable timing of accounts payable and improved inventory management. In the third quarter of 2024, the Company paid $33 million in dividends and executed share repurchases of $100 million, resulting in a total of $345 million returned to shareholders through dividends and share repurchases in the first nine months of 2024. The Company had $296 million of cash and cash equivalents as of September 30, 2024.
Goodwill Impairment
In the third quarter of 2024, the Company recorded a non-cash charge for the impairment of goodwill of ($495) million net of tax within the Orthodontic and Implant Solutions segment. The decline in fair value for this reporting unit was driven by sustained macroeconomic pressures, legislative trends impacting Byte, weakened demand and competitive pressures in implants, and lower expected volumes of lab materials.
2024 Outlook
The Company is revising its 2024 outlook due to market pressures impacting U.S. equipment, legislative changes affecting the direct-to-consumer aligner business model, and the voluntary suspension of sales, marketing, and shipments of Byte Aligners and Impression Kits. The revised outlook includes expected net sales in the range of $3.79 billion to $3.83 billion, and organic sales are expected to be in the range of (3.5%) to (2.5%) year-over-year. Adjusted EPS is expected to be in the range of $1.82 to $1.86. The outlook does not include potential adjustments or impacts of additional Byte remediation measures or decisions made by the Company.
Other 2024 outlook assumptions are included in the third quarter 2024 earnings presentation posted on the Investors section of the Dentsply Sirona website at https://investor.dentsplysirona.com. The Company does not provide forward-looking estimates on a GAAP basis as certain information, which may include, but is not limited to, restructuring charges, transformation-related costs, impairment charges, certain tax adjustments, and other significant items, is not available without unreasonable effort and cannot be reasonably estimated. The exact amounts of these charges or credits are not currently determinable but may be significant.
Conference Call/Webcast Information
Dentsply Sirona's management team will host an investor conference call and live webcast on November 7, 2024, at 8:30 am ET. A live webcast of the investor conference call and a presentation related to the call will be available on the Investors section of the Company's website at https://investor.dentsplysirona.com.
For those planning to participate on the call, please register at https://register.vevent.com/register/BI2ff7dbae32e04372ac0f7b84f2806925. A webcast replay of the conference call will be available on the Investors section of the Company's website following the call.
About Dentsply Sirona
Dentsply Sirona is the world's largest manufacturer of professional dental products and technologies, with over a century 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. Dentsply Sirona's products provide innovative, high-quality and effective solutions to advance patient care and deliver better and safer dental care. Dentsply Sirona's headquarters is located in Charlotte, North Carolina. 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.
Contact Information:
Investors:
Andrea Daley
Vice President, Investor Relations
+1-704-591-8631
Press:
Marion Par-Weixlberger
Vice President, Public Relations & Corporate Communications
+43 676 848414588
Forward-Looking Statements and Associated Risks
All statements in this Press Release that do not directly and exclusively relate to historical facts constitute "forward-looking statements.” Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control, including those described in Part I, Item 1A, "Risk Factors” of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Part II, Item 1A, "Risk Factors" of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, and other factors which may be described in the Company's other filings with the Securities and Exchange Commission (the "SEC”). No assurance can be given that any expectation, belief, goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this Press Release or to reflect the occurrence of unanticipated events. Investors should understand it is not possible to predict or identify all such factors or risks. As such, you should not consider the risks identified in the Company's SEC filings to be a complete discussion of all potential risks or uncertainties associated with an investment in the Company.
DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net sales | $ | 951 | $ | 947 | $ | 2,888 | $ | 2,953 | |||||||
| Cost of products sold | 456 | 452 | 1,376 | 1,389 | |||||||||||
| Gross profit | 495 | 495 | 1,512 | 1,564 | |||||||||||
| Selling, general, and administrative expenses | 390 | 372 | 1,204 | 1,204 | |||||||||||
| Research and development expenses | 40 | 46 | 123 | 141 | |||||||||||
| Goodwill and intangible asset impairments | 504 | 307 | 510 | 307 | |||||||||||
| Restructuring and other costs | 23 | 6 | 45 | 70 | |||||||||||
| Operating loss | (462 | ) | (236 | ) | (370 | ) | (158 | ) | |||||||
| Other income and expenses: | |||||||||||||||
| Interest expense, net | 18 | 19 | 53 | 61 | |||||||||||
| Other (income) expense, net | (2 | ) | (5 | ) | (10 | ) | 13 | ||||||||
| Loss before income taxes | (478 | ) | (250 | ) | (413 | ) | (232 | ) | |||||||
| Provision (benefit) for income taxes | 17 | 16 | 69 | (28 | ) | ||||||||||
| Net loss | (495 | ) | (266 | ) | (482 | ) | (204 | ) | |||||||
| Less: Net loss attributable to noncontrolling interest | (1 | ) | - | (2 | ) | (5 | ) | ||||||||
| Net loss attributable to Dentsply Sirona | $ | (494 | ) | $ | (266 | ) | $ | (480 | ) | $ | (199 | ) | |||
| Loss per common share attributable to Dentsply Sirona: | |||||||||||||||
| Basic | $ | (2.46 | ) | $ | (1.25 | ) | $ | (2.35 | ) | $ | (0.94 | ) | |||
| Diluted | $ | (2.46 | ) | $ | (1.25 | ) | $ | (2.35 | ) | $ | (0.94 | ) | |||
| Weighted average common shares outstanding: | |||||||||||||||
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