DENTSPLY SIRONA (XRAY) Q4 2017 earnings summary

Executive summary

• FY2017 was challenging amid integration and equipment-distribution changes; sales and earnings returned to growth in H2, and faster sales and earnings growth was expected in 2018.

• Priorities shifted to sales-force effectiveness, faster innovation, emerging-market growth and margin expansion through operating efficiencies.

Financial highlights

• FY2017 net sales were $3,993.4M, up 6.6% reported; excluding precious-metal content, sales rose 7.4% to $3,952.9M.

• GAAP net loss attributable was $1,550.0M, or diluted EPS of -$6.76, reflecting $1,650.9M goodwill and $346.7M indefinite-lived intangible impairment charges.

• Adjusted net income was $618.2M and adjusted diluted EPS was $2.66, down 4.3% YoY from $2.78.

• Gross margin excluding precious-metal content was 55.4%, up 100 bps YoY; reported operating loss was $1,562.3M.

Outlook and guidance

• 2018 sales and earnings growth was expected to accelerate; distributor inventory reductions were projected to reduce sales by ~$40M during 2018.

• Capital expenditures were forecast at $130M–$140M for FY2018; cost-reduction initiatives targeted ~$100M over several years.

• German reorganization plans were expected to cost ~$65M over two years and generate $11M–$14M in annual savings over one to three years.