Job cuts weighed at Dentsply Sirona
York-based Dentsply Sirona Inc. intends to make a number of cuts as part of an effort to get the worldwide maker of dental implements and products back on track, company officials told analysts during a conference call.
The conference call was held Nov. 8 as the international company released third-quarter results showing revenues down 8 percent compared to the year-ago period.
The company posted sales of $928.4 million for the third quarter of 2018, down from $1.01 billion for the same period last year. Net income dropped to $27.5 million for the third quarter, down from $90.5 million for the same quarter in 2017.
An effort to reach Dentsply Sirona, which has its main office on West Philadelphia Street in York, were unsuccessful. A spokesman with a New York public relations firm for the company said it is too early in the planning stages to say whether the cuts - likely to affect 6 percent to 8 percent of the workforce - will impact the York operations, which include a factory in the city at 500 W. College Ave.
Three years ago, Dentsply International Inc. merged with Austria-based Sirona Dental Systems Inc. to form Dentsply Sirona, and turmoil has followed the company since. Last year, the company saw a number of high-level departures after a billion-dollar loss in the second quarter. The stock, which trades as XRAY on Nasdaq, has a 52-week range of $33.93 to $68.98, with it trading around $36.32 on Nov. 14.
In January, Donald M. Casey Jr., a former executive with Cardinal Health, was named CEO. Casey was joined by Nick William Alexos, CFO and executive vice president for Dentsply, on the conference call, a transcript of which was provided later. In response to questions from analysts about the company's projections for cost savings of $200 million to $225 million by 2021, Alexos said the cuts would include jobs.
"I would say that the major buckets are obviously some level of head-count reductions," Alexos said. He added that the company also would look at organizational redundancies by having fewer business units.
Casey said the company will be looking at operations that are "non-core and not particularly productive."
Steven Valiquette, an analyst with Barclays Capital Inc., noted on the call that, before the merger, the original Dentsply started plans for a major restructuring that would have cut costs, as well. He asked whether the new restructuring would include Sirona assets or Dentsply assets.
"Is there still a lot of low-hanging fruit on the legacy Dentsply side of the business given that, again, this broad restructuring took place not that long ago?" Valiquette asked. "And do you run the risk of too much cutting just leading to, let's call it unintended consequences on top-line growth?"
Casey responded that the Dentsply restructuring was "reasonably successful but was about halfway through about the time of the merger."
"If the legacy Dentsply company had another 18, 24 months, I think that they would've delivered continued benefit there, and it's benefit we're looking to get after now," Casey said.
While the plan is anticipated to result in annualized top-line growth of 3 percent to 4 percent, the global workforce will be cut by about 6 percent to 8 percent, the company said in a news release. The company has about 16,100 workers worldwide, according to Yahoo Finance.
"We fully realize that our recent performance has been unacceptable and that is why we are taking aggressive action to grow revenues, expand margins and simplify the organization," Casey said in the news release. "Our path forward will require making difficult decisions, but nevertheless, we are confident that the steps announced today will ensure growth over the long term and drive significant value for our shareholders."
Dentsply Sirona makes a range of professional dental products and technologies.
The company’s York operations make and distribute artificial teeth, small dental equipment, bone-grafting products and preventive dental products, according to the company. It also has a dental-products distribution facility in Lancaster County.
The company recently named Charlotte, North Carolina, the home of a new commercial hub expected to create more than 300 jobs.