DENTSPLY SIRONA (XRAY) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $951 million, up 0.5% year-over-year, with organic sales up 1.3% but down 0.8% excluding distributor order timing; nine-month sales declined 2.2% to $2.89 billion.

• Byte aligner business suspended sales, marketing, and shipments due to regulatory review and legislative changes, with strategic options under evaluation and material impact expected on future results.

• Q3 net loss widened to $494 million, or $(2.46) per share, mainly due to a $495–$504 million goodwill impairment in Orthodontic and Implant Solutions.

• Transformation initiatives are progressing, with over 70% of phase two actions executed, $200 million run-rate savings achieved, and continued focus on cost savings and operational efficiency.

• Leadership changes and redeployment of Byte staff to other business areas are underway to address underperformance and leverage talent.

Financial highlights

• Adjusted EPS for Q3 was $0.50, up 3% year-over-year, aided by distributor order timing and lower share count.

• Adjusted EBITDA margin was 17.9%, down 40 basis points year-over-year due to gross margin pressure from unfavorable mix, lower volume, and pricing.

• Operating cash flow for Q3 2024 was $141 million, up 5% year-over-year; adjusted free cash flow conversion was 97%.

• Cash and cash equivalents stood at $296 million as of September 30, 2024.

• $345 million returned to shareholders via dividends and share repurchases year-to-date.

Outlook and guidance

• Full-year 2024 organic sales now expected to decline 3.5% to 2.5%, revised from previous flat to down 1%.

• Net sales forecasted at $3.79–$3.83 billion, with adjusted EBITDA margin lowered to ~17.5% from >18%.

• Adjusted EPS for 2024 guided to $1.82–$1.86, down from prior $1.96–$2.02.

• Byte aligner suspension expected to have a material adverse effect on future revenue and earnings; timing of resumption is uncertain.

• Capital expenditures for 2024 projected at $170M–$200M, focused on ERP and capacity expansion.