Dentsply International

$2 Billion

KEY EXECUTIVES:

Bret W. Wise, Chairman, CEO and President
Christopher T, Clark, Exec. VP and COO
William R. Jellison, CFO and Senior VP
James G. Mosch, Operating Sr. VP
Robert J. Size, Operating Sr. VP
Andrew M. Lichkus, PhD, VP, Chief Technology Officer

NO. OF EMPLOYEES:

9,000
       

GLOBAL HEADQUARTERS:

York, PA

The company that strives to help keep smiles healthy had many reasons to grin in 2007—billions of them, in fact. In the past six years, Dentsply International Inc. has seen its net sales double from $1 billion to $2 billion last year. For the year, sales increased 11% compared with 2006, which had sales topping $1.8 billion. When excluding precious metal content from the figures, sales rose 12.1% to $1.8 billion in 2007. Net income was nearly $260 million, compared with approximately $224 million for 2006.

All the gains came in a time of transition for the company, which saw former Chairman and CEO Gary Kunkle Jr. retire at the end of 2006. Bret Wise, who took over the helm, knew Dentsply well, however, given that he had worked his way up from senior vice president and chief financial officer when he joined the company in 2002 and, before his most recent post, was serving under Kunkle as president and chief operating officer. Christopher Clark, formerly senior vice president, also moved up into his current position as executive vice president and chief operating officer.

Along with a new regime has come a renewed focus on strengthening organic growth and dedicated overseas resources. As part of the company’s strategy, nearly 60% of Dentsply’s sales came from overseas, with double-digit increases seen in areas such as Asia-Pacific, Canada, the Middle East and Australia. Europe contributed 39% of global sales. Given the international focus, the company expanded its 2,000-member global sales force during 2007. In the United States, Dentsply’s Strategic Partnership Program helped foster productive and profitable relationships with dealer partners and other customers. In all six of the continents in which the company does business, Dentsply’s clinical education program reached more than 160,000 dental professionals.

Dentsply poured more than $150 million into new technologies and acquisitions last year as part of its initiative to invest 75% of cash flow into organic growth and acquisitions. Particular attention has been paid toward emerging markets such as Eastern Europe, Latin America and Asia-Pacific. Five acquisitions were completed in 2007, expanding the company’s reach in areas such as Spain and Turkey as well as to solidify Dentsply’s presence in what it deemed previously underrepresented dentistry markets. In September, for example, Dentsply completed its acquisition of assets from Sultan Healthcare, Inc. These assets are expected to help Dentsply expand its product offerings in new categories such as infection control and add approximately $45 million to $50 million in annual sales for the company.

The largest portion of the firm’s product portfolio is comprised of orthodontics, endodontics and implants, all of which collectively contributed 40% of total sales for the year. Consumables contributed 38% of sales, while prosthetics added 19% to the total.

In 2007, Dentsply launched 35 new products. Among them was the GT Series X Rotary Files With M-Wire NiTi, used for reshaping procedures during root canals. The M-Wire nickel titanium technology was gained from Dentsply’s SportsWire acquisition in 2007. In this therapeutic category, VDW.Silver and VDW.Gold endodontic motors also were introduced during the year.

In terms of aesthetic treatments, Dentsply realized gains from its In-Ovation C ceramic, self-ligating bracket system launched in late 2006.

As with many companies seeking new material solutions for new generations of product offerings, Dentsply also went beyond the use of zirconia and titanium to fabricate DeguDent dental copings and bridge substructures fabricated from lower-cost non-precious metals using automated selective laser melting.

Looking ahead, the company already has posted growth of 18.6% in the first quarter of 2008 (compared with the same quarter a year ago), with sales at $560.8 million. Excluding precious metal content, sales were $496.2 million, a 17.6% increase from the prior year’s quarter. According to Wise, who presented the results during a recent earnings call to analysts, the growth represents Dentsply’s fastest quarterly expansion since the third quarter of 2002.

He acknowledged that economic conditions have slowed US sales of certain higher-end discretionary procedures but noted that overall sales in Europe and other overseas regions maintained strong growth rates in spite of the impact of currency fluctuations and other economic issues.

“Overall, we’re off to a strong start in 2008 for both sales growth and earnings growth. As we entered the year, we had taken some weakness in the US market into account when we gave our guidance for all of 2008 that was back at the beginning of February,” Wise said. “I think we have seen some of that weakness in the US develop, and it will probably take a few quarters for that to turn around. However, one of the key strengths of Dentsply is our diversity in both product categories and in our geographic coverage, and this quarter and throughout 2008, we expect that to be a key driver in our financial results.”

The executive team also pointed to the recent approval of new indications to extend Dentsply’s tissue care positioning for its Ankylos implant line in the United States; the indications, previously approved in Europe, have been “very effective” there, executives noted. In the first quarter, the company also introduced Midwest Carries ID, an updated caries detection device utilizing technology acquired last year. The orthodontic business also launched a new lingual minor tooth movement system called Innovation LMTM.