At the end of 2017, the publicly traded company expected to provide stockholders with a high-end of $2.80 per share in 2018, but over three quarters of underwhelming results, the company reduced its estimates to at or below $2 per share, leading CEO Don Casey and the board of directors to implement a comprehensive restructuring plan to build revenues and increase profitability.
A third-quarter financial report released last week showed sales down 8 percent from the same quarter last year, from $1 billion to $928.4 million. Revenues in the company’s technology and equipment sector fell 11.3 percent for the quarter, a drop the report attributed to destocking, meaning companies that bought Dentsply Sirona’s products last year sold the products this year, but did not order more to replenish supplies.
“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 a statement accompanying the financial results.
“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," he added.
The plan he and the board announced aims to grow revenues by 3 to 4 percent annually and increase margins to 20 percent by 2020.
To increase revenue, the company plans to streamline sales and marking, prioritize research and development, build on its clinical education programs and focus on emerging markets. Leaders hope to enhance profitability by consolidating some of the company’s business units, cutting operating expenses and reducing its global workforce by 6 to 8 percent.
Reached Friday, company spokesperson Columbia Clancy said the specific details of the workforce reductions are not yet known.
“It’s too early to speculate about any details of the workforce reduction,” Clancy said in an email. “The range of 6 to 8 percent is a global target and is not specified for particular countries or sites. Therefore, it is not possible to anticipate any numbers for Johnson City.”
At last count, the Dentsply Sirona plant on Rolling Hills Drive in Johnson City employed about 189 people.
Three years ago, the Washington County Industrial Development Board granted a tax incentive package to the company, then Dentsply International, to convince it to keep the plant open and to invest $13.3 million in the facility.
Under the 15-year deal, the county board owns the property and leases it to the company. Dentsply has paid no rent for the last three years, and afterwards will gradually increase yearly payments to the board until it’s paying a maximum of $120,000 in the final five years.
After five years, Dentsply will be required to provide documentation of the number of its employees at the local facility. If it has fewer than 80 percent of the 214 jobs leaders promised, or 171 employees, the company will be required to pay the full taxes assessed on the property.
A year after receiving the tax abatement deal, Dentsply International merged with Sirona Dental Systems, creating the largest dental supply products manufacturer in the world.