Dentsply’s stock closes at five-year low
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- Published: Tuesday, 21 August 2018 07:45
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Shares of Dentsply Sirona Inc. have tumbled 18.7% to close at a 5½-year low, after the dental-products maker slashed its full-year outlook and announced a restructuring program when its two main clients cut their inventories by more than expected. The news overshadowed better-than-expected second-quarter profit and sales. “We are very disappointed in the results we provided today,” said Chief Executive Don Casey.
Mr Casey continued: “We take full accountability for them, and will outline the steps we are taking today to better position this company for sustainable growth going forward.” Dentsply makes and distributes a range of dental products, from consumables — supplies and small equipment that are used in dental practices, such as root-canal instruments and materials, dental anesthetics, prophylaxis paste, dental sealants, impression materials, restorative materials, tooth whiteners and topical fluoride.
The company also makes high-tech equipment, such as imaging equipment and computer-aided design and machining, known by the acronym CAD/CAM, along with dental implants, scanning equipment, orthodontic appliances and dental chairs. Dentsply said its net loss widened to $1.12 billion, or $4.98 a share, in the period, from $1.05 billion, or $4.58 a share, in the same period a year ago. Excluding nonrecurring items, such as a $1.27 billion goodwill and intangible impairment charge, adjusted earnings per share came to 60 cents, above the FactSet consensus of 59 cents.
Sales rose to $1.04 billion from $992.7 billion, above the FactSet consensus of $1.02 billion. But the company cut its 2018 adjusted EPS guidance range to $2.00 to $2.15 from $2.55 to $2.65, which now assumes that constant-currency revenue declines about 2% compared with previous expectations of 2% growth.
The planned restructuring will better align the company with its marketplace, said Casey. Dentsply is currently built around 10 dental business units, each of which is responsible for R&D, manufacturing and marketing. “This structure has served us well in the past but does not reflect today’s customer or competitive marketplace,” said Casey, who has been in the CEO role for six months. “It led to complexity and does not help us to present one face to the customer, leverage cross-selling opportunities, and has significant cost implications.”
In the U.S. alone, the company has more than 15 selling organizations that are all targeting the same customer, he said. The setup also complicates the supply chain, which comprises more than 40 manufacturing facilities and 80 distribution sites, he said. “That just does not allow us to create scale in procurement and demand planning and logistics,” he said.
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