Post on 23-Aug-2020
INVESTOR PRESENTATION
F O RWA R D L O O K I N G S TAT E M E N T S
This presentation contains forward-looking information (within the
meaning of the Private Securities Litigation Reform Act of 1995)
regarding future events or the future financial performance of the
Company that involve substantial risks and uncertainties. Actual
events or results may differ materially from those in the
projections or other forward-looking information set forth herein as
a result of certain risk factors. These risk factors include, without
limitation; the continued strength of dental and medical markets,
the timing, success and market reception for our new and existing
products, uncertainty with respect to governmental actions with
respect to dental and medical products, outcome of litigation
and/or governmental enforcement actions, volatility in the capital
markets or changes in our credit ratings, continued support of our
products by influential dental and medical professionals, our ability
to successfully integrate acquisitions, risks associated with foreign
currency exchange rates, risks associated with our competitors’
introduction of generic or private label products, our ability to
accurately predict dealer and customer inventory levels, our ability
to successfully realize the benefits of any cost reduction or
restructuring efforts, our ability to obtain a supply of certain
finished goods and raw materials from third parties and changes in
the general economic environment that could affect the business.
Changes in such assumptions or factors could produce
significantly different results.
For additional information regarding the factors that may cause
actual results to differ materially from these forward-looking
statements, please refer to the Company's most recent Form 10-K
and its subsequent periodic reports on Forms 10-Q filed with the
Securities and Exchange Commission.
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 2
N O N - G A A P F I N A N C I A L M E A S U R E S In addition to the results reported in accordance with US GAAP, the Company provides
adjusted net income attributable to DENTSPLY International and adjusted earnings per
diluted common share (“adjusted EPS”). The Company discloses adjusted net income
attributable to DENTSPLY International to allow investors to evaluate the performance of
the Company’s operations exclusive of certain items that impact the comparability of results
from period to period and may not be indicative of past or future performance of the
normal operations of the Company and certain large non-cash charges related to purchased
intangible assets. The Company believes that this information is helpful in understanding
underlying operating trends and cash flow generation.
Adjusted net income and adjusted EPS are important internal measures for the Company.
Senior management receives a monthly analysis of operating results that includes adjusted
net income and adjusted EPS and the performance of the Company is measured on this
basis along with other performance metrics.
The adjusted net income attributable to DENTSPLY International consists of net income
attributable to DENTSPLY International adjusted to exclude the net of tax impact of the
following:
(1) Business combination related costs. These adjustments include costs related to
integrating and consummating recently acquired businesses and costs, gains and losses
related to the disposal of businesses or product lines. These items are irregular in timing
and as such may not be indicative of past and future performance of the Company and are
therefore excluded to allow investors to better understand underlying operating trends.
(2) Restructuring, restructuring program related costs and other costs. These adjustments
include costs related to the implementation of restructuring initiatives as well as certain
other costs. These costs can include, but are not limited to, severance costs, facility closure
costs, lease and contract terminations costs, related professional service costs, duplicate
facility and labor costs associated with specific restructuring initiatives, as well as, legal
settlements and impairments of assets. These items are irregular in timing, amount and
impact to the Company’s financial performance. As such, these items may not be indicative
of past and future performance of the Company and are therefore excluded for the purpose
of understanding underlying operating trends.
(3) Amortization of purchased intangible assets. This adjustment excludes the periodic
amortization expense related to purchased intangible assets. Beginning in 2011, the
Company began recording large non-cash charges related to the values attributed to
purchased intangible assets. As such, amortization expense has been excluded from
adjusted net income attributed to DENTSPLY International to allow investors to evaluate
and understand operating trends excluding these large non-cash charges.
(4) Credit risk and fair value adjustments. These adjustments include both the cost and
income impacts of adjustments in certain assets and liabilities including the Company’s
pension obligations, that are recorded through net income which are due solely to the
changes in fair value and credit risk. These items can be variable and driven more by
market conditions than the Company’s operating performance. As such, these items may
not be indicative of past and future performance of the Company and therefore are
excluded for comparability purposes.
(5) Certain fair value adjustments related to an unconsolidated affiliated company. This
adjustment represents the fair value adjustment of the unconsolidated affiliated company’s
convertible debt instrument held by the Company. The affiliate is accounted for under the
equity method of accounting. The fair value adjustment is driven by open market pricing of
the affiliate's equity instruments, which has a high degree of variability and may not be
indicative of the operating performance of the affiliate or the Company.
(6) Income tax related adjustments. These adjustments include both income tax expenses
and income tax benefits that are representative of income tax adjustments mostly related
to prior periods, as well as the final settlement of income tax audits, and discrete tax items
resulting from the implementation of restructuring initiatives. These adjustments are
irregular in timing and amount and may significantly impact the Company’s operating
performance. As such, these items may not be indicative of past and future performance of
the Company and therefore are excluded for comparability purposes.
Adjusted earnings per diluted common share is calculated by dividing adjusted net income
attributable to DENTSPLY International by diluted weighted-average common shares
outstanding. Adjusted net income attributable to DENTSPLY International and adjusted
earnings per diluted common share are considered measures not calculated in accordance
with US GAAP, and therefore are non-US GAAP measures. These non-US GAAP measures
may differ from other companies. Income tax related adjustments may include the impact
to adjust the interim effective income tax rate to the expected annual effective tax rate.
The non-US GAAP financial information should not be considered in isolation from, or as a
substitute for, measures of financial performance prepared in accordance with US GAAP.
D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 3 2 0 1 5
A B O U T D E N T S P LY I N T E R N AT I O N A L
Leading professional dental consumables company
$3 billion revenue base
90+% value-added consumables portfolio
Global infrastructure
Sales in more than 120 countries
Large sales force in both distributed and direct channels
Operations in more than 40 countries
Innovation & education
R&D: over 50 clinical studies
30+ significant new products annually
Clinical educator: train ~250,000 each year
Consolidator in a fragmented market
Selective; reinvest for growth
Financially strong
Deploying free cash flow: repurchases, dividends, M&A
$7.5 billion market cap
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 4
T H E G L O B A L M A R K E T
Dental
~$21 billion; $17 billion in consumables
Less volatile than broader economy
Market typically grows 1 to 2 times GDP
Fragmented
Top 10 competitors: only 60% of
market
End-user customer: generally 1 to 3
dentists per office
Less government reimbursement – dependent than medical market
Medical
Consumable medical devices
Focused on Urology segment: $1 billion
addressable market
Primarily single-use catheters
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 5
22%
22%
17%
15%
13%
6% 5% Preventive
Restoratives
Large Equipment
Implants
Prosthetics
Orthodontics
Endodontics
M A R K E T O P P O R T U N I T Y
Developed markets - 18% of global population
~1.2 billion people
Over 65: +20% spending per patient
Retaining natural dentition longer
Link to medical health
Emerging markets - 82% of global population
~5.5 billion people
Access to dental care improving
Middle class population to double by 2020
Discretionary spending power
Dental markets:
Grow 1-2x underlying GDP growth
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 6
4 0 . 2
5 4 . 6
7 1 . 5
8 0
8 6 . 7
2 0 1 0
2 0 2 0
2 0 3 0
2 0 4 0
2 0 5 0
U S P O P U L AT I O N A G E 6 5 A N D O V E R I N M I L L I O N S
D E N T S P LY ’ S G L O B A L F O OT P R I N T
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 7
N O R T H A M E R I C A 37%
L A T I N A M E R I C A 4%
E U R O P E 45%
M I D D L E E A S T &
A F R I C A 3%
A S I A 6%
J A P A N 3%
A U S T R A L I A 2%
P E R C E N T O F 2 0 1 4 S A L E S B Y R E G I O N
E X C L U D I N G P R E C I O U S M E T A L C O N T E N T
U N PA R A L L E L E D P RO D U C T L I N E B R E A D T H P E R C E N T O F 2 0 1 4 S A L E S
E X C L U D I N G P R E C I O U S M E T A L C O N T E N T
28%
49%
13%
10%
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 8
C H A I R S I D E C O N S U M A B L E S
Restorative, Preventive
S P E C I A LT I E S
Implants, Endodontics,
Orthodontics
P R O S T H E T I C S
Artificial Teeth, Denture Bases,
Crown and Bridge, CAD/CAM
M E D I C A L
Urology, Surgery, Instruments
B A R R I E R S TO E N T R Y: C O M P E T I T I V E A D V A N TAG E
Fragmented Market
~3,600 highly trained product-specific
sales and technical staff
Complexity and global scale in
manufacturing
Established brand names
Extensive patent portfolio
Strong relationships: dental schools and
end-users
Professional services: clinical education,
opinion leadership
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 9
M A R K E T L E A D I N G I N N O V AT I O N
Solutions that improve/deliver:
Clinical effectiveness
Clinical efficiency
Patient-preference
Committed to Innovation:
30+ significant new products
annually
50+ clinical studies ongoing
Enhancements to existing
products
Consistent investment: internal
projects, licensed technology and
acquisitions
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 10
P RO F E S S I O N A L S E R V I C E S
Strong key opinion leader support & customer reach
Approximately 250,000 dental professionals trained
in clinical programs
~5,500 programs annually in more than 34 countries
on 6 continents
Leveraging both web-based and classroom CE
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 11
I N N O V AT I O N & L E A D I N G B R A N D S
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 12
PREVENTIVE RESTORATIVE PROSTHETICS ENDODONTIC IMPLANTS ORTHODONTIC UROLOGY
L E A D I N G B R A N D S
N E W P R O D U C T S
S P E C I A L T I E S C O N S U M A B L E S M E D I C A L
P E R F O R M A N C E L E V E R AG E P O I N T S
Market improvement
US: signals of improvement
Europe: ~45% of sales
Currency: Euro and EM
Internal changes: on track toward 20% adj. operating margin
Expecting +240 bps over 3 years; 80bps in 2014
Reinvest for growth
Innovation
Clinical
Sales force
M&A
Flexibility to deploy capital: ~$460MM 2014 FCF*
Internal investment
Acquisitions
Share repurchases
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 13
* Represents cash flow from operations less capital expenditures.
TA R G E T S & D R I V E R S O F G ROW T H
Targets of:
3-6% average internal growth (10%- 20% premium to dental market growth)
20% adjusted operating margin in 2017
ROIC in the range of 12-15%
Cash flow growth drivers:
Market opportunities
Dental: premium to GDP
Emerging markets: 2014 ~16%
Global efficiency program:
Global procurement
Better asset turnover and utilization
SG&A leverage
Reinvestment
Innovation
Acquisitions
Sales and marketing
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 14
R E C E N T R E S U LT S
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 15
Q1 2015:
Sales, ex PM, declined 8.4%
Currency translation headwind -9.7%
Constant currency growth +1.3%
Internal growth +1.3%
Adjusted operating margin expanded 100 bps to 18.7%
Operating cash flow increased 2% to a first quarter record $66 million
Free cash flow up 26% to $49 million
EPS on an adjusted basis flat at $0.59
Adjusted EPS grew ~6% ex. currency impact
Currency ~3.5 cent headwind
C U R R E N C Y R AT E C H A N G E S
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 16
-13.5%
2.5%
-17.5%
-1.6%
-10.9%
-6.9%
-15.4%
-2.2%
-8.6%
-21.4%
-11.9%
-22.0% -20.0% -18.0% -16.0% -14.0% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%
EUR/CHF
EUR/SEK
SEK
KRW
JPY
GBP
EUR
CHF
CAD
BRL
AUD
2015 Current Rates vs. 2014 Average Rates Negative values indicate foreign currencies are weakening vs. USD
Negative values indicate EUR is weakening vs. foreign currencies
A D J U S T E D O P E R AT I N G M A R G I N *
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 17
1 9 . 8 %
1 7 . 7 % 1 7 . 5 % 1 7 . 6 % 1 8 . 4 %
2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4
* A non-GAAP measure that excludes certain items.
For a reconciliation to the GAAP measure, refer to our SEC filings including 8-K’s and annual report on form 10-K
A D J U S T E D E P S * & E A R N I N G S G ROW T H
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 18
* A non-GAAP measure that excludes certain items.
For a reconciliation to the GAAP measure, refer to our SEC filings including 8-K’s and annual report on form 10-K
$ 1 . 9 2 $ 1 . 8 9 $ 1 . 9 4 $ 2 . 0 3 $ 2 . 2 2
$ 2 . 3 5 $ 2 . 5 0
2008 2009 2010 2011 2012 2013 2014
S T RO N G F I N A N C I A L P O S I T I O N
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 19
Q1 2015 2014 2013 2012
Cash and cash equivalents $ 1 0 0 . 6 1 5 1 . 6 7 5 . 0 8 0 . 1
Total assets $ 4 , 6 5 3 . 1 4 6 5 0 . 3 5 , 0 7 8 . 0 4 , 9 7 2 . 3
Total debt, current and long term $ 1 , 3 2 6 . 5 1 , 2 6 5 . 7 1 , 4 7 6 . 0 1 , 5 2 1 . 0
Net debt1 $ 1 , 2 2 5 . 8 1 , 1 1 4 . 1 1 , 4 0 1 . 1 1 , 4 4 0 . 9
Equity $ 2 , 1 7 4 . 3 2 , 3 2 2 . 2 2 , 5 7 8 . 0 2 , 2 4 9 . 4
Net debt to total capitalization2 3 6 . 1 %
3 2 . 4 %
3 5 . 2 %
3 9 . 0 %
Net debt to adjusted EBITDA3 2 . 1 x 1 . 9 x 2 . 5 x 2 . 6 x
1 Long-term debt and notes payable minus cash and equivalents
2 Net debt plus total equity
3 Calculated using adjusted operating income, TTM, and adding depreciation
B A L A N C E D C A P I TA L D E P L OY M E N T
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 20
2 . 1 %
4 . 5 %
0 . 5 %
1 0 . 8 %
1 6 . 4 %
0 . 1 %
0 . 6 %
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
A C Q U I S I T I O N G R O W T H B Y Y E A R
0 . 5
0 . 0
0 . 2
4 . 0
2 . 6
2 . 5
1 . 9
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
L E V E R A G E R AT I O : N E T D E B T / E B I T D A
Priorities: next $1 billion of FCF
Reinvest for internal growth
Fund R&D projects
Geographic expansion
Field sales representatives
Acquisitions
Repurchase shares
Increase dividend
2 0 1 5 D E N T S P L Y I N V E S T O R P R E S E N T A T I O N 21