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Forward LOOKING statements This presentation contains forward-looking statements regarding future events or the future financial performance of the Company that involve substantial risks and uncertainties. Actual events or results may differ materially from those in the projections or other forward-looking information set forth herein as a result of certain risk factors. These risk factors include, without limitation; the continued strength of dental and medical markets, the timing, success and market reception for our new and existing products, uncertainty with respect to governmental actions with respect to dental and medical products, outcome of litigation and/or governmental enforcement actions, continued support of our products by influential dental and medical professionals, our ability to successfully integrate acquisitions, risks associated with foreign currency exchange rates, and changes in the general economic environment that could affect the business. Changes in such assumptions or factors could produce significantly different results. For a more detailed description of risk factors that may affect forward-looking statements, please refer to the Company s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Copies of such filings are available through the SEC s web site: www.sec.gov. 2 2
Non-GAAP FINANCIAL measures In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share. The Company discloses adjusted net income attributable to DENTSPLY International to allow investors to evaluate the performance of the Company's operations exclusive of certain items that impact the comparability of results from period to period and certain large non-cash charges related to purchased intangible assets. The Company believes that this information is helpful in understanding underlying operating trends and cash flow generation. The adjusted net income attributable to DENTSPLY International consists of net income attributable to DENTSPLY International adjusted to exclude the impact of the following: (1) Acquisition related costs. These adjustments include costs related to integrating recently acquired businesses and specific costs related to the consummation of the acquisition process. These costs are irregular in timing and as such may not be indicative of past and future performance of the Company and are therefore excluded to allow investors to better understand underlying operating trends. (2) Restructuring and other costs. These adjustments include both costs and income that are irregular in timing, amount and impact to the Company's financial performance. As such, these items may not be indicative of past and future performance of the Company and are therefore excluded for the purpose of understanding underlying operating trends. (3) Amortization of purchased intangible assets. This adjustment excludes the periodic amortization expense related to purchased intangible assets. Following a significant acquisition in 2011, the Company began recording large non-cash charges related to the values attributed to purchased intangible assets. These charges have been excluded from adjusted net income attributed to DENTSPLY International to allow investors to evaluate and understand operating trends excluding these large non-cash charges. (4) Income related to credit risk and fair value adjustments. These adjustments include both the cost and income impacts of adjustments in certain assets and liabilities that are recorded through net income which are due solely to the changes in fair value and credit risk. These items can be variable and driven more by market conditions than the Company's operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes. (5) Certain fair value adjustments related to an unconsolidated affiliated company. This adjustment represents the fair value adjustment of the unconsolidated affiliated company's convertible debt instrument held by the Company. The affiliate is accounted for under the equity method of accounting. The fair value adjustment is driven by open market pricing of the affiliate's equity instruments, which has a high degree of variability and may not be indicative of the operating performance of the affiliate or the Company. (6) Income tax related adjustments. These adjustments include both income tax expenses and income tax benefits that are representative of income tax adjustments mostly related to prior periods, as well as the final settlement of income tax audits. These adjustments are irregular in timing and amount and may significantly impact the Company's operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes. Adjusted earnings per diluted common share is calculated by dividing adjusted net income attributable to DENTSPLY International by diluted weighted-average common shares outstanding. Adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share are considered measures not calculated in accordance with US GAAP, and therefore are non-us GAAP measures. These non-us GAAP measures may differ from other companies. Income tax related adjustments may include the impact to adjust the interim effective income tax rate to the expected annual effective tax rate. The non-us GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP. 3 3
About DENTSPLY International Leading professional dental consumables company $3 billion in revenue Broad consumables portfolio: recurring revenue Global Infrastructure Sales in more than 120 countries Large sales force in both distributed and direct channels Operations in more than 40 countries Committed to innovation & education R&D: over 50 clinical studies 30+ significant new products annually Clinical Educator: train ~250,000 each year Consolidator in a fragmented market Selective; reinvest for growth Financially strong Growing free cash flow $6.6 billion market cap 4 4
The GLOBAL market Dental ~$21 billion; $17 billion in consumables Less volatile than broader economy Market typically grows 1 to 2 times GDP Fragmented Top 10 competitors: only 60% of market End-user customer: generally 1 to 3 dentists per office Less government reimbursement dependent than medical market Medical Consumable medical devices Urology Segment: $1 billion addressable market Intermittent catheters; hydrophilic > 50% 5 5
Market OPPORTUNITY Developed markets - 18% of global population ~1.2 billion people Over 65: +20% spending per patient Retaining natural dentition longer Link to medical health Emerging markets - 82% of global population ~5.5 billion people Middle class population to double by 2020 Discretionary spending power Dental Markets: Grow 1-2x underlying GDP growth 6 6
DENTSPLY s GLOBAL footprint 2013 sales ex-precious metals content Canada 4% Europe & CIS 45% US 34% Middle East & Africa 3% Asia, ex. CIS & Japan 5% Japan 3% Latin America 4% Australia 2% 7 7
Unparalleled PRODUCT LINE breadth 2013 sales ex-precious metals content 2012 sales ex-precious metals content 8 8
Chairside consumables: LEADING BRANDS with strong market share Preventive Restorative Market Size ~ 4.0 Billion ~ 4.0 Billion DENTSPLY Market Share #1/#2* #1/#2 Major Competitors Danaher 3M Private Label * U.S. Market 3M Danaher Ivoclar 9 9
Prosthetics: CUSTOM LAB solutions Market Size Prosthetics ~ 2.5 Billion DENTSPLY Market Share #1 / #2 Major Competitors Ivoclar Vita Mitsui 10 10
Specialties: POWERFUL BRANDS & expanding business Endodontics Orthodontics Implants Market Size ~ 1.1 Billion ~ 1.2 Billion ~ 3.0 Billion DENTSPLY Market Share Major Competitors #1 #4/#5 #3 Danaher FKG Mani Align Danaher 3M Straumann Nobel Biocare Zimmer 11 11
Medical: LEADERSHIP in urology consumables Market Size DENTSPLY Market Share Major Competitors Urology ~ 1.0 Billion #2 / #3 Coloplast Bard 12 12
Barriers to entry: COMPETITIVE advantage Established brand names Extensive patent portfolio Strong relationships: dental schools and end-users Clinical education ~3,600 highly trained product-specific sales and technical staff Complexity and global scale in manufacturing 13 13
Market-leading INNOVATION Solutions that improve/deliver: Clinical effectiveness Clinical efficiency Patient-preference Committed to Innovation: 30+ significant new products annually 50+ clinical studies ongoing Enhancements to existing products Consistent investment: internal projects, licensed technology and acquisitions 14 14
Innovation & LEADING brands C O N S U M A B L E S S P E C I A L T I E S MEDICAL PREVENTIVE RESTORATIVE PROSTHETICS ENDODONTIC IMPLANTS ORTHODONTIC UROLOGY N E W P R O D U C T S L E A D I N G B R A N D S 15
Clinical EDUCATION Strong key opinion leader support & deep customer reach Approximately 250,000 dental professionals trained annually 5,500 programs in more than 34 countries on 6 continents 16 16
Targets & DRIVERS of growth Targets of: 3-6% average internal growth (10%- 20% premium to dental market growth) 20% adjusted operating margin in 2017 ROIC in the range of 12-15% Cash Flow Growth Drivers: Market opportunities Dental grows faster than GDP Emerging markets: 2013 ~16% Margin expansion Global procurement Better asset turnover and utilization SG&A leverage Reinvestment New products Acquisitions Sales and marketing 17 17
Recent RESULTS Q1 2014: Sales, ex PM, grew +2.5% Internal growth of +1.1% US: +0.1% Europe: -1.3% ROW: +8.9% Adjusted operating margin expanded 150 bps to 17.7% EPS on an adjusted basis grew +13.5% to $0.59 18 18
Annual REVENUE growth* 2008 2009 2010 2011 2012 2013 Constant Currency 5.9% 2.3% 2.6% 11.2% 20.2% 2.0% Fx Impact 3.6% -2.4% -0.5% 3.6% -3.8% 0.1% Total Growth 9.6% -0.1% 2.1% 14.8% 16.4% 2.1% *Excludes precious metal content. This is a non-gaap measure as defined in our annual report on form 10-K. 19 19
Adjusted OPERATING margin* 20% 19.8% 17.7% 17.5% 17.6% 15% 10% 5% 0% 2010 2011 2012 2013 * A non-gaap measure that excludes certain items. For a reconciliation to the GAAP measure, refer to our SEC filings including 8-K s and annual report on form 10-K 20 20
EPS Adjusted EPS* & EARNINGS growth $3.00 $2.50 $2.00 1.92 1.89 1.94 2.03 2.22 2.35 $1.50 $1.00 $0.50 $0.00 2008 2009 2010 2011 2012 2013 * A non-gaap measure that excludes certain items. For a reconciliation to the GAAP measure, refer to our SEC filings including 8-K s and annual report on form 10-K EPS 21
Strong FINANCIAL position Q1 2014 2013 2012 2011 Cash and cash equivalents $55.8 $75.0 $80.1 $77.1 Total assets $5089.4 $5,078.0 $4,972.3 $4,755.4 Total debt, current and long term $1468.6 $1,476.0 $1,521.0 $1,776.7 Net debt 1 $1412.8 $1,401.1 $1,440.9 $1,689.6 Equity $2524.6 $2,578.0 $2,249.4 $1,884.2 Net debt to total capitalization 2 35.9% 35.2% 39.0% 47.3% Net debt to adjusted EBITDA 3 2.4x 2.5x 2.6x 3.5x 1 Long-term debt and notes payable minus cash and equivalents 2 Net debt plus total equity 3 Calculated using adjusted operating income, TTM, and adding depreciation 22 22
18% 12% 6% 0% 4.0 2.0 0.0 23 Balanced CAPITAL deployment Acquisition Growth by Year 16.4% 10.8% 2.1% 4.5% 0.5% 0.1% 2008 2009 2010 2011 2012 2013 Leverage Ratio: Net Debt/EBITDA 3.5 2.6 2.5 Priorities: next $1 billion of FCF Reinvest in the business Fund R&D projects Geographic expansion Field sales representatives 0.5 0.0 0.2 2008 2009 2010 2011 2012 2013 Further improve leverage ratios Acquisitions Repurchase shares Increase dividends 23
Built-in value: DENTSPLY International Strong cash flow Recurring revenue Margin opportunity Leading sales force Strong opinion leader network Favorable demographics 24 24