Dentsply International Inc. (XRAY) reported results for the second quarter of 2009. GAAP EPS was $0.47, marginally lower than the Zacks Consensus Estimate of $0.48 and the year-ago EPS of $0.52. Adjusted EPS was $0.49, compared to $0.52, a year earlier.

Net sales declined 7% year over year to $553.2 million. Excluding precious metal content, net sales fell roughly 6% year over year to $511.9 million. The drop was primarily due to an unfavorable foreign-currency translation (FX), lower specialty, chair side consumables and lab products sales. Sales of these products declined due to the current economic turbulence prompting customers to defer their purchasing decisions.

Dentsply is the leading manufacturer and distributor of a wide range of products for the dental market. The company, being a player in the non-life sustaining products, witnessed waning sales due to the current economic turbulence.

Excluding precious metal content, gross margin declined 210 basis points year over year to 56.1% in the quarter. The decline was primarily due to lower sales, an unfavorable foreign exchange and an adverse product mix. Excluding precious metal content, operating margin declined 160 basis points year over year to 19.3%. Lower operating margin was primarily due to recent acquisitions. Weaker sales volume, an unfavorable foreign exchange and an adverse product mix also contributed to the decline.

Lower gross and operating margins resulted in the net margin of 13.8%, excluding precious metal content, declining 70 basis points year over year. For the full year, management expects non-GAAP EPS between $1.80 and $1.90.

The company announced a quarterly cash dividend of $0.05 per share. The dividend is payable on Oct. 6, to shareholders of record as on Sept. 25. We think that the dividend payout is safe considering the company’s strong cash balance of approximately $252 million at the end of the quarter. The company increased its cash position by roughly $48 million in the first six months of the year.

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