DENTSPLY SIRONA Inc. (XRAY) Bundle
Understanding DENTSPLY SIRONA Inc. (XRAY) Revenue Streams
Understanding DENTSPLY SIRONA Inc.’s Revenue Streams
As of September 30, 2024, the total net sales for the company were $951 million, slightly up from $947 million in the same period of 2023. For the nine months ended September 30, 2024, the total net sales were $2.888 billion, down from $2.953 billion in 2023.
Revenue Breakdown by Segment
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Connected Technology Solutions | $269 | $276 | $(7) | (2.3%) |
| Essential Dental Solutions | $369 | $347 | $22 | 6.6% |
| Orthodontic and Implant Solutions | $241 | $252 | $(11) | (4.6%) |
| Wellspect Healthcare | $72 | $72 | $0 | 0.0% |
For the nine months ended September 30, 2024, the breakdown was as follows:
| Segment | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Connected Technology Solutions | $769 | $850 | $(81) | (9.5%) |
| Essential Dental Solutions | $1,108 | $1,110 | $(2) | (0.1%) |
| Orthodontic and Implant Solutions | $788 | $781 | $7 | 0.9% |
| Wellspect Healthcare | $273 | $276 | $(3) | (1.1%) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the three months ended September 30, 2024, showed a decrease in organic sales of 1.4% compared to a decrease of 8.1% in the corresponding period of 2023. For the nine months ended September 30, 2024, organic sales saw a decrease of 3.9%.
Geographical Revenue Contribution
| Region | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Change ($ millions) |
|---|---|---|---|
| United States | $374 | $356 | $18 |
| Europe | $347 | $354 | $(7) |
| Rest of World | $230 | $237 | $(7) |
For the nine months ended September 30, 2024, the geographical breakdown was:
| Region | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) | Change ($ millions) |
|---|---|---|---|
| United States | $1,089 | $1,069 | $20 |
| Europe | $1,110 | $1,153 | $(43) |
| Rest of World | $689 | $731 | $(42) |
Significant Changes in Revenue Streams
Notable changes in revenue streams included a significant decrease in the Connected Technology Solutions segment, which reported a 9.5% decline in net sales for the nine months ended September 30, 2024, primarily attributed to lower volumes of imaging equipment and treatment centers. Additionally, the Orthodontic and Implant Solutions segment experienced a 4.6% decrease in net sales for Q3 2024, driven by competitive pressures and pricing challenges.
A Deep Dive into DENTSPLY SIRONA Inc. (XRAY) Profitability
A Deep Dive into DENTSPLY SIRONA Inc.'s Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $495 million, unchanged from the previous year. The gross profit as a percentage of net sales was 52.1% compared to 52.2% in 2023. For the nine months ended September 30, 2024, gross profit was $1,512 million, down 3.3% from $1,564 million in 2023, with a gross margin of 52.4% compared to 53.0% in the prior year .
Operating Profit: The operating loss for the three months ended September 30, 2024, was $(462) million, compared to an operating loss of $(236) million in 2023. For the nine months, the operating loss was $(370) million versus $(158) million in the previous year .
Net Profit Margin: The net loss attributable to the company for the three months ended September 30, 2024, was $(494) million, resulting in a basic loss per common share of $(2.46), compared to a net loss of $(266) million and a loss per share of $(1.25) for the same period in 2023. The nine-month results showed a net loss of $(480) million with a basic loss per share of $(2.35), compared to a net loss of $(199) million and a loss per share of $(0.94) in 2023 .
Trends in Profitability Over Time
The gross profit margin has shown a declining trend, with a decrease from 53.0% to 52.4% from the nine months ending September 30, 2023, to the same period in 2024. This decline is attributed to increased manufacturing and input costs, despite a decrease in warranty costs . The operating loss has widened significantly, indicating challenges in managing operational expenses amidst declining sales volumes .
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the industry average gross margin for similar companies is approximately 55%. DENTSPLY SIRONA's gross margin of 52.1% indicates a performance lag compared to its peers . The operating margin is notably negative, contrasting with an industry average operating margin of around 10%, highlighting operational inefficiencies .
Analysis of Operational Efficiency
Operational efficiency has been impacted by rising selling, general, and administrative (SG&A) expenses, totaling $390 million for the three months ended September 30, 2024, compared to $372 million in 2023, marking an increase of 5.2%. For the nine months, SG&A expenses remained stable at $1,204 million . Research and development (R&D) expenses decreased to $40 million for the three months, down from $46 million in 2023 .
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Gross Profit | $495 million | $495 million | $0 | 0.0% |
| Operating Loss | $(462) million | $(236) million | $(226) million | NR |
| Net Loss | $(494) million | $(266) million | $(228) million | NR |
| SG&A Expenses | $390 million | $372 million | $18 million | 5.2% |
| R&D Expenses | $40 million | $46 million | $(6) million | (12.0%) |
Debt vs. Equity: How DENTSPLY SIRONA Inc. (XRAY) Finances Its Growth
Debt vs. Equity: How DENTSPLY SIRONA Inc. Finances Its Growth
The company's total debt as of September 30, 2024, stood at $2,134 million, with a carrying value of $2,217 million. In comparison, the total debt reported at December 31, 2023, was $2,018 million with a carrying value of $2,118 million .
As of September 30, 2024, the long-term debt amounted to $1,795 million, while the short-term debt, including notes payable and the current portion of long-term debt, was $422 million .
The debt-to-equity ratio for the company was calculated as follows: total debt of $2,134 million divided by total equity of $2,490 million, resulting in a ratio of 0.86 . This ratio is higher than the industry average, which typically ranges from 0.4 to 0.6, indicating a more leveraged position compared to its peers .
In recent activities, the company had $394 million available under lines of credit as of September 30, 2024. This includes a $700 million multi-currency revolving credit facility expiring in May 2028, and an aggregate $500 million under a U.S. dollar commercial paper facility .
The company is rated Baa3 by Moody's and BBB- by S&P, indicating a moderate credit risk. The company’s interest expense for the three months ended September 30, 2024, was $18 million, down from $19 million in the same period in 2023 .
To illustrate the financial structure, the following table summarizes the debt and equity components as of September 30, 2024:
| Debt Component | Amount (in millions) |
|---|---|
| Long-Term Debt | $1,795 |
| Short-Term Debt | $422 |
| Total Debt | $2,134 |
| Total Equity | $2,490 |
| Debt-to-Equity Ratio | 0.86 |
The company has balanced its growth financing through a combination of debt and equity, maintaining compliance with its debt covenants, which include a total debt to total capital ratio not exceeding 0.6 .
Assessing DENTSPLY SIRONA Inc. (XRAY) Liquidity
Assessing DENTSPLY SIRONA Inc.'s Liquidity
Current and Quick Ratios
The current ratio as of September 30, 2024, was 1.25, calculated as current assets of $1,921 million divided by current liabilities of $1,542 million. The quick ratio was 0.73, derived from current assets minus inventories ($1,302 million) divided by current liabilities.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, stood at $379 million, reflecting a decrease from $431 million at December 31, 2023. This change indicates a tightening in liquidity, primarily influenced by a reduction in cash and cash equivalents and an increase in current liabilities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows were as follows:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Operating Activities | $374 | $217 | $157 |
| Investing Activities | ($140) | ($69) | ($71) |
| Financing Activities | ($264) | ($179) | ($85) |
| Net Change in Cash | ($38) | ($56) | $18 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $394 million available under lines of credit. The total net debt to total capitalization ratio was 43.6%, indicating a moderate leverage level. Despite the operational cash flow improvement, the increase in treasury stock repurchases and capital expenditures indicates potential liquidity pressures moving forward.
The company’s cash and cash equivalents were reported at $296 million on September 30, 2024, compared to $334 million at December 31, 2023, highlighting a decrease in liquidity position over the period.
Conclusion
Overall, DENTSPLY SIRONA Inc. shows a mixed liquidity position, with a current ratio above 1 indicating short-term solvency, but the quick ratio below 1 suggests potential concerns in meeting immediate obligations without relying on inventory sales.
Is DENTSPLY SIRONA Inc. (XRAY) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key financial ratios including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company is currently not applicable due to a reported net loss of $494 million for the three months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.38 as of September 30, 2024, calculated using a book value of equity of $2,491 million and total shares outstanding of 201 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated at approximately $3.44 billion, with EBITDA for the trailing twelve months (TTM) estimated at $550 million. This results in an EV/EBITDA ratio of approximately 6.25.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a high of $50.00 and a low of $30.00, currently trading around $32.00.
Dividend Yield and Payout Ratios
The company declared a cash dividend of $0.16 per share, yielding approximately 0.50% based on the current stock price of $32.00. The payout ratio is not applicable as the company is currently reporting losses.
Analyst Consensus
Analyst consensus on the stock valuation is currently a Hold, with 60% of analysts rating it as such, 30% recommending a Sell, and the remaining 10% suggesting a Buy.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | Not Applicable |
| P/B Ratio | 0.38 |
| EV/EBITDA Ratio | 6.25 |
| 12-Month Price Range | $30.00 - $50.00 |
| Current Stock Price | $32.00 |
| Dividend per Share | $0.16 |
| Dividend Yield | 0.50% |
| Analyst Consensus | Hold |
Key Risks Facing DENTSPLY SIRONA Inc. (XRAY)
Key Risks Facing DENTSPLY SIRONA Inc.
Understanding the internal and external risks impacting the financial health of DENTSPLY SIRONA Inc. is crucial for investors. The company operates in a highly competitive environment, and several risk factors could impact its performance.
Industry Competition
The dental and healthcare market is characterized by intense competition. The company faces pressure from both established players and new entrants, which can lead to pricing pressures and reduced market share. For the three months ended September 30, 2024, the company reported a net sales decrease of $11 million in the Orthodontic and Implant Solutions segment, reflecting a 4.6% decline compared to the same period in 2023.
Regulatory Changes
Changes in regulations can significantly impact operations. The company has faced challenges due to legislative trends affecting its direct-to-consumer aligner business. Specifically, changes in Nevada, Florida, and Illinois have led to a reduction in sales of approximately $15 million during the first nine months of 2024.
Market Conditions
Market conditions, particularly in North America and Europe, have shown signs of weakening demand, contributing to reduced forecasted revenues. For the nine months ended September 30, 2024, the company recorded a $480 million net loss, increasing from $199 million in the same period in 2023.
Operational Risks
Operational risks include potential disruptions in supply chains and manufacturing processes. The company reported an operating loss of $462 million for the three months ended September 30, 2024. Additionally, the company has incurred restructuring costs of $45 million for the nine months ended September 30, 2024.
Financial Risks
The company faces financial risks including high levels of debt. As of September 30, 2024, total liabilities stood at $4.136 billion, with long-term debt comprising $1.795 billion. The ratio of total net debt to total capitalization was 43.6%, up from 35.1% at the end of 2023.
Goodwill and Intangible Asset Impairments
Significant impairments have been recorded, with pre-tax goodwill impairment charges of $504 million for the Orthodontic Aligner Solutions and Implant & Prosthetic reporting units as of September 30, 2024. This reflects adverse market conditions and competitive pressures impacting expected cash flows.
Mitigation Strategies
The company has implemented various strategies to mitigate risks, including operational restructuring and a focus on cash flow management. However, the effectiveness of these strategies remains to be seen in light of ongoing market challenges.
| Risk Factor | Description | Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition affecting pricing and market share. | Net sales decrease of $11 million in Orthodontic and Implant Solutions. |
| Regulatory Changes | Legislative trends impacting direct-to-consumer aligner business. | Sales reduction of approximately $15 million in 2024. |
| Market Conditions | Weakening demand in North America and Europe. | Net loss of $480 million for nine months ended September 30, 2024. |
| Operational Risks | Potential disruptions in supply chains and manufacturing. | Operating loss of $462 million for the three months ended September 30, 2024. |
| Financial Risks | High levels of debt impacting financial stability. | Total liabilities of $4.136 billion; long-term debt of $1.795 billion. |
| Goodwill Impairments | Significant impairments recorded due to market conditions. | Pre-tax goodwill impairment charges of $504 million. |
Future Growth Prospects for DENTSPLY SIRONA Inc. (XRAY)
Future Growth Prospects for DENTSPLY SIRONA Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers that include product innovations, market expansions, and strategic acquisitions.
Product Innovations
In 2024, the company launched several new products in the Essential Dental Solutions segment, which contributed to a 7.5% organic sales increase for the three months ended September 30, 2024. This segment generated net sales of $369 million, compared to $347 million in the same period in 2023. The positive reception of new preventive and restorative products has positioned the company to capture a larger market share.
Market Expansions
The company has seen significant growth opportunities in international markets. For example, during the nine months ended September 30, 2024, net sales in Europe were $1.110 billion, while the Rest of World segment generated $689 million, despite a 5.7% decline. The company is actively exploring additional international markets, particularly in Asia, to expand its footprint.
Acquisitions
Strategic acquisitions remain a focus area, with the company having repurchased approximately 9.4 million shares at a cost of $250 million during the nine months ended September 30, 2024. This move is part of a broader strategy to optimize capital structure and invest in growth areas.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a revenue growth rate of 3% to 5% annually over the next five years, driven by product innovations and market expansions. The earnings estimates for 2024 indicate a diluted loss per share of $2.46, which reflects ongoing investments in growth initiatives.
Strategic Initiatives or Partnerships
The company is pursuing partnerships with technology firms to enhance its product offerings, particularly in the area of digital dentistry. Collaborations aimed at integrating AI and machine learning into dental solutions are expected to drive future growth.
Competitive Advantages
The company maintains several competitive advantages that position it well for growth, including:
- Strong Brand Recognition: Established reputation in the dental industry.
- Diverse Product Portfolio: Comprehensive range of products catering to various dental needs.
- Global Distribution Network: Extensive reach across multiple regions, facilitating market penetration.
Financial Summary Table
| Metric | 2024 (Q3) | 2023 (Q3) | Change (%) |
|---|---|---|---|
| Net Sales | $951 million | $947 million | 0.4% |
| Gross Profit | $495 million | $495 million | 0.0% |
| Operating Loss | $(462) million | $(236) million | NM |
| Net Loss | $(495) million | $(266) million | NM |
| Diluted Loss per Share | $(2.46) | $(1.25) | NM |
Conclusion on Growth Strategies
As the company navigates the challenges of 2024, its focus on product innovation, market expansion, and strategic acquisitions will be critical in driving future growth.
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Resources:
- DENTSPLY SIRONA Inc. (XRAY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of DENTSPLY SIRONA Inc. (XRAY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View DENTSPLY SIRONA Inc. (XRAY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.