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DENTSPLY SIRONA (XRAY) Q2 Earnings & Revenues Miss Estimates

Zacks Equity Research
·4 min read

DENTSPLY SIRONA Inc. XRAY reported second-quarter 2020 adjusted loss per share of 18 cents, wider than the Zacks Consensus Estimate for loss of 3 cents. Notably, the company had reported adjusted earnings per share (EPS) of 66 cents in the prior-year quarter.

The company reported revenues of $490.6 million, which plunged 51.4% from the year-ago quarter due to the impact from the COVID-19 pandemic. Moreover, the top line missed the Zacks Consensus Estimate by 3.9%. Per management, internal sales declined 49.9%.

Business Details

Consumables

Consumable revenues were down 58.6% year over year and 57.7% on an internal basis in the first quarter to $186.7 million. Per management, decline in organic sales stemmed from lower demand across all three regions due to lower visits by dentists and customers and procedures on account of the COVID-19 pandemic. Lower sales of Endodontic, Restorative and Preventive products primarily led to the downside.

DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise

DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise
DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise

DENTSPLY SIRONA Inc. price-consensus-eps-surprise-chart | DENTSPLY SIRONA Inc. Quote

Technologies & Equipment

Technologies & Equipment revenues plunged 45.6% year over year to $303.9 million in the reported quarter. On an internal basis, sales declined 43.6%. Per management, decline in organic sales in in Equipment & Instruments, Digital Dentistry and Implants business was responsible for the downside.

Revenues by Geography

In the United States, revenues fell 60.3% to $130.9 million and 60% internally. Rest of World revenues declined 44% year over year to $144.4 million. Revenues in the geography decreased 41.9% on an internal sales growth basis. European revenues slumped 49% year on year to $215.3 million. On an internal sales growth basis, European revenues declined 46.9%.

Margin Analysis

Adjusted gross profit in the reported quarter amounted to $206.5 million, down 64.5% on a year-over-year basis. Adjusted gross margin was 42.1%, down 1560 basis points (bps).

Adjusted operating loss came in at $42.3 million, against the year-ago quarter’s adjusted operating income of $201.8 million.

Financial Condition

DENTSPLY SIRONA exited the second quarter with cash and cash equivalents of $1.11 billion, up from $235.9 million on a sequential basis.

Cumulative net cash provided by operating activities was $164.4 million, down 5.7% from the prior-year period.

2020 Guidance

Due to the continued uncertainty regarding the duration and impact of the COVID-19 pandemic on the company’s business, the company has not issued 2020 guidance.

Our Take

DENTSPLY SIRONA ended the second quarter on a weak note. Per management, the global response to the COVID-19 pandemic impacted the company’ second-quarter performance significantly. Substantial decline in the company’s top line is concerning. The company witnessed weak performance in its core segments in the quarter. Significant contraction in gross margin is a woe. Moreover, sales in the United States, Europe and rest of the world declined substantially in the reported quarter.

Nonetheless, the company is optimistic of witnessing sustained improvement in sales trends, with dental offices reopening and rise in patient visits. Per management, in order to position the company better in the future, DENTSPLY SIRONA is undertaking a range of additional restructuring actions, which will boost revenue growth, expand margins, and streamline the organizational structure. These actions instills optimism in the stock amid this uncertain period.

Zacks Rank

The company carries a Zacks Rank of 3 (Hold). 

Key Picks

Some better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, PerkinElmer, Inc. PKI and West Pharmaceutical Services, Inc. WST. While both PerkinElmer and West Pharmaceuticals sport a Zacks Rank #1 (Strong Buy), Thermo Fisher carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.

PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.

West Pharmaceuticals reported second-quarter 2020 adjusted EPS of $1.25, outpacing the Zacks Consensus Estimate of 91 cents. Revenues of $527.2 million surpassed the consensus estimate by 6.9%.

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