DENTSPLY SIRONA (XRAY) Q4 2023 earnings summary

Executive summary

• FY23 net sales were $3.965B, up 1.1% reported and 2.2% organically; three of four segments grew, while Equipment & Instruments remained challenged.

• FY23 adjusted EPS was $1.83, down from $2.09; adjusted EBITDA margin was 17.4%, down 210 bps YoY.

• 2024 midpoint guidance implies double-digit adjusted EPS growth; transformation initiatives support a $3.00 adjusted EPS target for 2026.

Financial highlights

• Q4 revenue was $1.012B, up 2.9% reported and 1.9% organically; FX contributed a 100 bps tailwind.

• Q4 adjusted EPS was $0.44 versus $0.46; adjusted EBITDA was $173M versus $171M, with margin of 17.1% versus 17.5%.

• FY23 adjusted EBITDA was $691M versus $766M; adjusted operating income was $571M, with a 14.4% margin.

• FY23 GAAP net loss was $132M, or $0.62 per diluted share; Q4 GAAP net income was $67M, or $0.32 per diluted share.

• FY23 operating cash flow was $377M, down 27.1%; adjusted free cash flow was $228M, with 58% conversion. Q4 operating cash flow was $160M, up 12.7%.

Outlook and guidance

• FY24 sales guidance is $3.96B–$4.02B, with organic sales flat to +1.5%; current rates imply a slight FX headwind.

• FY24 adjusted EPS guidance is $2.00–$2.10, with a $2.05 midpoint and 12% growth at midpoint; assumes ~2% share-count reduction.

• Adjusted EBITDA margin is expected above 18%, implying ~100 bps expansion; R&D expense is expected above 4% of sales.

• EPS growth drivers include organic growth, margin expansion and restructuring savings; inflation, tax and other factors represent a ~$0.02 headwind.

• FY24 capex is forecast at $170M–$200M; cash returns are targeted at ≥75% of free cash flow.