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Reading Dentsply Sirona’s Guidance for 2018

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Dentsply Sirona’s 2018 guidance

Dentsply Sirona (XRAY) reported its 2018 guidance during the company’s 4Q17 and fiscal 2017 earnings results release on March 2, 2018. For fiscal 2018, the company expects its sales to be in the range of $4.2 billion–$4.25 billion.

The constant currency revenue growth for fiscal 2018 is expected to be ~3%. These sales estimates include the company’s targeted reduction of $40 million in dealer equipment inventory levels. This is expected to have an impact of ~1% on the company’s sales growth in fiscal 2018. The large part of these inventory level reductions are expected to be executed during 1H18 and will impact the company’s US business.

For fiscal 2018, Dentsply Sirona has an adjusted EPS (earnings per share) guidance range of $2.70–$2.80, representing a growth rate of 8% to 11%.

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2018 margin guidance

Dentsply Sirona expects to generate flat margins or a decline in its gross margin and operating margin due to currency headwinds, and the negative impact of the reductions in dealer equipment levels. However, more than half of the $100 million cost savings (discussed in detail previously in this series) is expected to be achieved in fiscal 2018.

Tax guidance

Dentsply Sirona expects an effective tax rate of 22% in 2018, compared with the ~17.4% it recorded in 2017, due to the impact of the US tax reforms. Dentsply Sirona generates ~35% of its revenues from the United States and the rest from the international markets.

The newly implemented US tax reforms are expected to reduce the company’s foreign tax credits and provide limited foreign tax income deferment capacity to Dentsply Sirona.

By comparison, peers Danaher (DHR), Align Technology (ALGN), and Zimmer Biomet Holdings (ZBH) are estimated to register sales of $19.4 billion, $1.8 billion, and $8 billion, respectively, in fiscal 2018.

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