DENTSPLY International Inc. Earnings Cheat Sheet: Increasing Costs Tighten Margins as Net Income Falls

Rising costs hurt S&P 500 (NYSE:SPY) component DENTSPLY International Inc. (NASDAQ:XRAY) in the third quarter as profit dropped from a year earlier. DENTSPLY International manufactures and distributes dental equipment and products, including artificial teeth and dental consumable products.

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DENTSPLY International Earnings Cheat Sheet for the Third Quarter

Results: Net income for DENTSPLY International Inc. fell to $60.6 million (42 cents per share) vs. $63.7 million (44 cents per share) a year earlier. This is a decline of 4.8% from the year earlier quarter.

Revenue: Rose 14.4% to $619.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: XRAY reported adjusted net income of 46 cents per share. By that measure, the company beat the mean estimate of 43 cents per share. It beat the average revenue estimate of $600.4 million.

Quoting Management: Bret Wise, Chairman and Chief Executive Officer, stated, “We are pleased to report another quarter of strong performance despite the orthodontic supply disruption in Japan.We are also excited to have closed the Astra Tech transaction during the quarter allowing us to begin the integration process earlier than we originally anticipated. We are pleased with the early assessment coming out of our integration efforts.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 4 cents in the second quarter, by one cent in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Gross margin shrank 2.3 percentage points to 48%. The contraction appeared to be driven by increased costs, which rose 19.7% from the year earlier quarter while revenue rose 14.4%.

Revenue has now gone up for three straight quarters. In the second quarter, revenue rose 7.8% to $609.4 million while the figure rose 4.5% in the first quarter from the year earlier.

Last quarter’s profit decrease breaks a streak of two consecutive quarters of year-over-year profit increases. Net income rose 2.6% in the second quarter and 11.7% in the first quarter.

Looking Forward: For the next quarter, analysts are growing pessimistic about the company’s expected results. The average estimate for the fourth quarter is 49 cents per share, dropping from 50 cents a month ago. In the past month, the average estimate for the fiscal year has fallen from $1.99 per share to $1.96 abs.

Competitors to Watch: Young Innovations, Inc. (NASDAQ:YDNT), Align Technology, Inc. (NASDAQ:ALGN), Sirona Dental Systems, Inc. (NASDAQ:SIRO), Biolase Technology, Inc. (NASDAQ:BLTI), Pro-Dex, Inc. (NASDAQ:PDEX), Danaher Corporation (NYSE:DHR), Integra LifeSciences Hldgs. Corp. (NASDAQ:IART), 3M Company (NYSE:MMM), Cantel Medical Corp. (NYSE:CMN), and Zimmer Holdings, Inc. (NYSE:ZMH).

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(Source: Xignite Financials)