DENTSPLY Misses by a Penny – Analyst Blog

DENTSPLY International (XRAY) reported first quarter fiscal 2010 earnings per share of 44 cents, a penny below the Zacks Consensus Estimate and a penny above the year-ago earnings of 43 cents.

 

We were encouraged to see net sales in the reported quarter increase 7.7% to $545.9 million. The increase in net sales indicates that the global dental market is slowly recovering with several product segments and geographies showing signs of growth. Not being a life-sustaining product, the dental market was badly affected by the economic downturn that resulted in patients deferring their adoption.

 

Excluding the precious metal content, net sales increased 6.8% to $497.5 million. Growth was fueled by acquisitions, internal growth and a favorable foreign currency (FX) translation. Dental consumable and specialty products helped generate positive internal growth during the period.

 

Excluding the precious metal content, gross margin in the reported quarter was 56.7%, declining from the year-ago gross margin of 57.1%.

 

Selling, general and administrative expenses increased 5.6% to $188 million. Higher operating expenses led to a decline in DENTSPLY’s operating margin. Excluding the precious metal content, adjusted operating margin declined 40 basis points (bps) to 19%.

 

The company ended the quarter with cash and cash equivalents of $405 million and had an outstanding debt of approximately $457.6 million at the end of the reported quarter.

 

DENTSPLY maintained its earnings guidance for fiscal 2010. The company expects earnings in the range of $1.90 to $2.00. New product introductions should help drive sales.

 

We currently have a Neutral recommendation on the stock. DENTSPLY International is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products and dental specialty products.