DENTSPLY SIRONA (XRAY) Q4 2019 earnings summary

Executive summary

• FY2019 revenue was $4.029B, up 1.1% reported and 5.7% on an internal-growth basis; adjusted diluted EPS rose 22% to $2.45.

• Restructuring execution lifted adjusted operating margin to 18.6% from 15.5%; Q4 adjusted operating margin was up 340 bps YoY.

• Growth was led by Technologies & Equipment, especially Digital Dentistry, while Consumables declined; coronavirus created uncertainty for 2020 activity and supply.

Financial highlights

• FY2019 net sales were $4,029.2M, up 1.1%; excluding precious-metal content, sales were $3,988.1M, up 1.0%, with a 3.3% unfavorable FX impact.

• GAAP operating income was $360.9M versus a $958.1M loss in 2018; net income attributable to shareholders was $262.9M versus a $1,011.0M loss.

• Adjusted net income reached $549.9M and adjusted diluted EPS was $2.45, up 22% from $2.01; adjusted net income increased 21.0%.

• Q4 revenue was $1,111.5M, operating income $136.6M, net income $102.3M and diluted EPS $0.46.

• Operating cash flow was $632.8M, up from $499.8M; free cash flow was $510M, up 61% YoY.

Outlook and guidance

• Restructuring targets remain 3–4% annualized revenue growth, $200M–$225M net annual cost savings by 2021, adjusted operating margin of 20% by end-2020 and 22% by 2022.

• 2019 restructuring progress: $88M savings and ~7% workforce reduction; ~6–8% total reduction and ~$275M one-time expenditures and charges are planned through 2021.

• 2020 capital expenditures are expected at $140M–$150M; restructuring cash payments are estimated at $50M–$100M.

• Coronavirus developments were being monitored; the timing of a return to normal dental-market activity was difficult to predict, with mitigation and employee safety priorities.