DENTSPLY SIRONA Inc (XRAY) 2003 Q2 法說會逐字稿

The conference is scheduled to begin momentarily. Until that time, your lines will be placed on music-hold. Thank you for your patience. Good morning, my name is Katie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Dentsply International second quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, please press "*" than the number "1" on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now like to turn the call over to Mr. John Miles, Chairman and CEO. You may begin your conference.

Thank you, Katie. Good morning, everyone and thank you for joining the Dentsply second quarter 2003 conference call. My name is John Miles, Chairman and CEO. And with me this morning is Gary Kunkle, President and COO, and Bret Wise, SVP and CFO. As is our usual format, I'll start by giving some overview comments concerning our second quarter results and our overall business. Brett will then go through a more detailed review of the P&L and balance sheet, then we would collectively be pleased to answer any questions you may have.

Before starting, I need to read you our Safe Harbor Statement. In accordance with the rules of the Securities and Exchange Commission, information discussed during this conference call, including the question-and-answer session, will be part of an 8-K filing that will be made by the company after the call. To the extent that any non-GAAP financial items are discussed in this call, the additional information required by the SEC about such non-GAAP financial matters will be available through our Web site by going to Dentsply.com and going to the Investor Relations section and clicking on the link which will provide access to the 8-K filed for this conference call and further information about any non-GAAP items. The conference call may include forward-looking statements and as such are made in accordance with the Safe Harbor provisions of the Securities and Exchange Commission. Forward-looking statements involve risks and uncertainties which could materially affect the company's business and should be considered in conjunction with the risk factors and uncertainties described in the company's most recent annual report on Form 10-K.

I'm sure that each of you received a copy of our second quarter earnings announcement released yesterday after the market closed. I'm extremely pleased to report that Dentsply achieved an all-time record for both quarterly sales and profits. Our reported sales for the second quarter were $417.9 million, a 9.7% increase over the year earlier quarter. And on an ex precious metal basis, sales increased 10.9%. Diluted earnings per share were 55 cents, an increase of 19.6% over the year earlier period. The 10.9% sales gain ex precious metals for the quarter broke out as follows: dental-base business growth--4.5%; non-dental-based business--negative three tenths of a percent; foreign exchange--6.9% favorable; and acquisitions divestitures net--a negative two-tenths of 1%.

Three factors adversely impacted our base business growth during the quarter. First, sales of Cercon machines in the United States slowed sharply from the year earlier period, which was actually the launch quarter for Cercon machines in the United States. The important news is that Cercon restoration prescriptions from dentists continue to grow rapidly, despite the slowdown in machine sales. There is plenty of capacity in terms of the installed machine base to handle current and projected demand. We're seeing small to mid-size labs outsource their Cercon copings to a larger lab with Cercon capabilities. These smaller labs pay a higher price per coping by outsourcing, but on the other hand avoid the up-front capital investment of nearly $50,000. Today, more than 300 U.S. dental labs are currently outsourcing their Cercon restorations. As their volume builds and the overall U.S. laboratory market improves, I'm sure these labs will revisit their make versus (ph) by decision.

Finally, we must bear in mind that nearly all profits associated with the Cercon productline reside with the consumable, not with the equipment. Secondly, SARS in several key Asian countries turned strongly positive regional growth into negative growth for the quarter. More specifically, dental business in China, Hong Kong, Singapore, and Taiwan dropped sharply due to this epidemic; therefore, sales were adversely affected. By the end of the second quarter, dental visits had returned to approximately 80% of normal.

Finally, European sales of heavy equipment dropped very sharply in the second quarter. In hindsight, I have to say we shot ourselves in the foot. We previewed our new all-digital panoramic x-ray machine, the Orthoralix 9200 DDE, at the IDS meeting at the end of March. Market response was very enthusiastic, orders for the new unit poured in, but orders for the older unit dried up. Shipment of the Orthoralix 9200 DDE, however, only commenced in July of this year. We are now fully up and running and expect to satisfy demand fully during the third quarter. These three issues reduced the internal dental sales growth rate by nearly two full percentage points.

Dental-base business growth on a geographical basis ex precious metals broke out as follows: In the U.S.--2.9%; strong double-digit growth was again achieved by Tulsa Endodontics, led by nickel-titanium files; and GAC Orthodontics, primarily led by In-Ovation-R, our self-ligating bracket; and Mystique, our clear all-ceramic bracket. Cercon prescriptions soured during the quarter, while sales of Cercon machines slowed sharply, as previously explained.

The overall U.S. dental laboratory market remained modestly down. Europe CIS ex precious metals--9.8%, European sales were led by strong growth in both the dental implant product lines as well as the Endodontic product lines. IBS orders received in late March but shipped in April also accelerated growth during the quarter. Asia had negative growth of 3.9%. As previously mentioned, SARS resulted in sharply reduced dental visits in China, Hong Kong, Singapore, and Taiwan, which offset solid performance by Dentsply for the year.

By the end of the second quarter dental business in SARS-related regions had increased to approximately 80% of normal. In Latin America, we had positive growth of 4.6%. Latin economies continued to improve with increase activity reported by Brazil, Argentina, and Venezuela. The rest of the world was negative growth of 3.1%, principally due to political and economic unrest in the Mideast African region, which resulted in this performance.

Turning to other business topics, first I want to start by commenting on German reimbursement. Last week, the German political parties forged a consensus concerning total healthcare reimbursement changes, and while it must still be passed by parliament, I'm quite sure it represents what will, in fact, become the new healthcare reimbursement plan. The salient points are as follows:

First, all changes will be effective January, 2005. Both employee and employer healthcare contribution rates will be reduced from 14.6% to 13% of wages. Co pays on the medical side will be introduced for doctor visits, hospital stays, and prescriptions. No changes will be made in dental co pays. Dental prosthetic -- and by that I mean crown and bridge, and dentures -- will be dropped from the overall healthcare plan and replaced with a mandatory private insurance for dental prosthetics only. Employees cost for this mandatory insurance will be between 7.5 to 8 Euros per month. We view these proposed changes as, frankly, quite positive in terms of the future dental demand.

Progress continues on target for Dentsply's new filling plant in Chicago for dental anesthetic production. Phase I, which is completion of the sterile portion of the facility, will be done in a couple of weeks by mid August followed by validation of equipment, media fills in September, and stability trials which will commence in October. Regarding Oraquicks (ph), we filed a response to all open FDA questions in mid June and would expect final FDA approval by year-end. After approval, applicator molds and automatic assembly equipment will have to be made, which would indicate a mid 2004 U.S.A. launch.

In Europe, we received approval from Sweden, which is our member reference date, labeling on equipment validation issues remain to be completed and are in process. We plan a control launch of Oraquicks (ph) in Sweden during the fourth quarter of this year to gain valuable knowledge and experience before launching this product in the larger markets. Approval of other easy member states is anticipated by year-end, with a phase 2004 rollout throughout Europe.

Several of our first half new product launches continue to enjoy strong market success. Notable would be Aquasil Ultra, our revolutionary new impression material; Quick Spill (ph), a posterior product with significantly reduced procedure time; Xeno III which we launched in Europe during the fourth quarter of last year but launched in the U.S. in the first quarter of this year; our new stylist high-speed handpiece; and most recently, the Silver Gold Kiss (ph) Porcelain System, which is a different and new type of porcelain system which is simpler for the crown and bridge technician to achieve shade. Key second half new product launches will include an east Stylus electric handpiece, dental implants with a new surface treatment for more rapid Osseointegration; and LED curing lights.

Let me conclude by commenting on our guidance for 2003. We are comfortable with an EPS range of $2.07 to $2.10 per share. Without consideration of the one-time pickup on practice work stocks and warrants, which will be realized upon the closing of the Kodak Practice Works transaction. This guidance is an increase from our earlier quarter EPS guidance. And as most of our second half new product launches will occur in the early fall, we would anticipate the larger EPS effect to occur during fourth quarter of '03. I'll now turnover the conference to Brett, who will take you through the P&L and balance sheet.

Thank you, John. Good morning, everyone and thank you for joining us on our second quarter conference call. I have a few comments on each of earnings, the balance sheet and cash flows for the quarter. I'd like to start with earnings. As John mentioned, sales increased in the quarter by 9.7% and 10.9% without precious metals. Internal sales growth for dental was 4.5% and currency added 6.9% to sales without precious melts. Gross margins, ex precious metals were 55.2%, and improved from the 55.1% we saw in the second quarter of 2002, while operating margins were 19.1% compared to 19.3% in the year earlier period.

Net interest and other expenses declined by $3.5 million compared to the prior year. Interest expense is a component, decreased by $1.3 million, and that is due to lower variable interest rates, approximately half of our long-term debt is carried with variable interest rates. During the 2003 quarter, we also had currency transaction gains of $1.2 million, and that compares to currency transaction losses of $2.3 million during the 2002 quarter. Valuation of the Practice Works warrants (ph) was a $600,000 charge this quarter, and that compares to a $400,000 gain in the year earlier quarter.

Just a note on the Practice Works transaction with Kodak, assuming the transaction closes at the announced share price, we would recognize a pre-tax gain in the period that the deal closes of approximately $6.5 million on our holdings of both the common stock and the warrants. Until the transaction does close, we'll continue to value the warrants using the Black-Scholes method, and they'll be mark-to-market each period. The tax rate for the second quarter was 32.5%, and that is roughly the same as the first quarter of 2003. And as announced, net income was $44.2 million representing a 20.1% improvement over the prior area, and earnings per share were 55 cents, and that represents a 19.6% improvement over the second quarter of 2002.

Turning to the balance sheet, we built approximately $35 million of cash this quarter, and that brings our total cash position to $81.4 million. You may recall that we discussed the likelihood of some cash build this year rather than debt reduction due to favorable investment rates we can receive on the cash invested versus the carrying cost of our debt and penalties we would incur in retiring debt at this time. Accordingly, this is a plan (ph) cash build, and we anticipate there will be a further cash build throughout the rest of the year. Thinking about uses of cash and other sources late this year, we do have approximately $20 million of Japanese-denominated borrowings which are maturing, and we will either retire those borrowings or roll them over, depending upon the interest rate scenario at the time and also our cash position in that jurisdiction at that time.

We're also anticipating that Oraquicks (ph) will we be approved late this year which will trigger the final $16 million payments to Astrazinika (ph), which is the final piece or attainment for that acquisition. We did make a $2 million milestone payment related to the Oraquicks (ph) product during the second quarter of 2003.

And on a separate matter, we're also currently in arbitration with Agussa (ph) to resolve the last potential purchase price adjustment which could be up to $10 million to close that transaction.

Looking at sources of cash, of course, the Practice Wworks transaction if it closes as it has been announced would provide us with approximately $23.5 million in proceeds from both our common stock, holdings and the warrants.

Turning to go working capital, accounts receivable base were 53 days at the end of the second quarter, and that is roughly the same as the end of the first quarter. Inventory stood at 102 days at the end of the second quarter, that is down two days from the end of the first quarter. We are maintaining our target of 95 days by the end of 2003, so we would expect to see some cash flow benefits from inventories over the remainder of this year. Goodwill rose during the period by 23 million -- during this quarter by 22 million -- and that is due entirely to movements in currencies.

Looking at liabilities, long-term debt rose by 28 million. Again, that is due entirely to the weakening of the U.S. dollar versus the currencies that our debt is reported in. In fact, we actually reduced debt on a cash basis by approximately 2 million during the quarter and recall that rather than reducing debt we were building cash of $35 million during the quarter. So on a net debt basis cash and actual debt payments, we reduced debt by approximately $37 million this quarter.

Equity rose by $81 million, that is reflecting, of course, the earnings during the quarter but also reflecting the affect of currency translation on the equity component of the balance sheet. Our debt-to-total capitalization ratio fell to 45.8% at the end of the second quarter, and that is down from 47.1% at the end of the first quarter and 47.9% at the end of 2002. And if you look at that on a net basis, net of cash accumulated and net of the Euro and the interest rates swaps, the ratio of net debt to total capitalization now stands at 40.5%, compared to 43.2% at the end of Q1 and 45.1% at the end of 2002. You might recall that our stated long-term goal is to maintain a debt-to-total capitalization ratio of 35% to 40% and on net basis, net of the cash accumulation and the swaps were now approaching the high-end of that rage. We're really actually at the high-end of that range.

From a cash flow perspective, operating cash flow was approximately 95.6 million year-to-date in 2003, and that's substantially ahead of the 54.4 million reported for the 2002 period. Depreciation and amortization for the six month period was 25 million, and capital expenditures were approximately 40 million which is substantially higher as expected than the $22 million we had in the first half of 2002. And that, of course, reflects the investment in our new pharma plant in Chicago. Absent that investment CapEx would have been about 22 million for the first six months of this year, which is closer to a normal run-rate. As a reminder, we expect CapEx for the full year to be in the $70 million range, and again that's heavily influenced by the pharma plant.

We also commented in the release on certain charges we took during the quarter and during the six-month period. Those were relating primarily to accounting issues that arose at three of our 34 divisions that had been involved in integrating acquisitions from the 2001 transactions. In the first quarter, we took a charge of approximately $4 million relating to these issues and decided in April that we needed to take physical inventory at one division to fully address the matters. The results of the additional work done in the second quarter, including the physical inventory, was that we took an additional $5.5 million charge this quarter. We believe we have taken appropriate actions including personnel changes to address these issues, and we believe that the issues are now fully addressed.

On an unrelated matter during the second quarter, we undertook an independent evaluation of our reserving practices, focusing on areas where the highest judgment is involved. Examples would be product return reserves or excess in obsolete inventory. As a result, we found that our actual experience has been consistently more favorable than the assumptions used and status of certain of the reserves and some of the reserves should have been reversed in earlier periods or were erroneously established.

The impact of the establishment reversal of these reserves was not materially the result of operations in the prior periods and will not be material to the results of operations in 2003. As a result of this evaluation, however, the company is revising certain procedures for identifying estimating reserves to approve the accuracy of the accounting (ph) for lost contingencies in the future.

That concludes our prepared remarks. I would like to thank you for listening in, and I would like to turn the call back over to the operator for questions. Thank you.

At this time, I would like to remind everyone, in order to ask a question, please press "*" then the number "1" on your telephone keypad. We'll pause for just a moment to compile the Q-and-A roster.

Your first question comes from Suey Wong with Robert W.Baird

Thank you. John and Brett, could you talk about your outlook for organic growth over the next few quarters?

Certainly. I would say based on our experience for the first half of this year, we probably should say we will be growing in the 5 to 7% range for the balance of the year. That's a little lower than, frankly, where we had hoped to be, but I think until the U.S. lab business -- really, the worldwide lab business -- gets a little stronger, that's probably where we will be. I would say that we are generating excellent profitability off of our organic sales growth rate, and that's reflected, of course, in our upwardly revised EPS guidance.

Okay. So, John, you're looking for an acceleration of growth over the balance of the year, and the number you're saying is roughly 5 to 7%.

Yes, sir, Suey.

Great. Could you give us an outlook for the lab business? When do you see that turning around?

You know, I'm not actually sure. I almost hesitate to say this, Suey. I will say that July has been a significantly stronger month for U.S. lab business for us. I hesitate to say whether that's a turnaround and a trend or not, although I certainly consider it welcome. We're just going to have to get through another couple of months before I am comfortable making that call, but the quarter started out nicely.

John, would this be a fair statement: in your lab business, even if it stays flat, there is a shift towards ceramic, which is more profitable, and also the comps would be possibly favorable in the back half?

Well, there certainly is going to be a shift toward consumables, and as a result of that, improved margin on the lab business. I'm a little nervous about the total sales level, Suey, because specifically in terms of the lab business, it depends on how many Cercon units you sell in total because even though you really make almost no money on them, they are 50,000 a pop.

Mm-hmm.

So I'm not sure about the second part, but the first part of your question, absolutely. There will be a shift toward more profitable consumables.

Okay. Can you talk about your projections for Cercon system sales, the machine sales, over the back half?

Uh... (laughs) We're clearly selling Cercon machines. As I indicated in my earlier comments, this quarter we compared with the launch quarter in the U.S. which was extremely strong and then of course it slowed down after the initial quarter launch, so the comparison on the back half would be less favorable than it was on the first half.

But I have to tell you, Suey, if you look at all of the ads that we're running in the dental publications, our total focus today is not on selling Cercon machine; it's on getting more prescriptions from doctors, because there is plenty of machine capacity to provide that. So you've seen our ads change their focus from, initially, really focused at the dental lab, explaining this new technology today, to being focused totally on the dentist to a drive end user demand, which to us is what it's all about because, frankly, that is where all the profit is.

Okay, one last question. Brett, could you give me the numbers for the consumables business and also for the equipment business?

Yes. I have that, Suey, not to cut off Brett. Heavy equipment, which would include the Cercon units of course, was negative 10%, which reflects not only fewer Cercon units sold but of course the problem that we encountered in terms of heavy equipment in Europe. Consumables and small equipment was favorable 5.5%, and non-dental was a negative 11.3 and that degenerated 4.5. Those were all ex precious metals, Suey.

Great. Thank you, John.

You're welcome.

Your next question comes from Mike Carlotti (ph) from Palmero (ph).

Can you quantify what the EPS benefit was for reversal of the reserves in the first and second quarters, and should we expect more coming forward or has that been resolved?

I think I can do that. I think we tried to lay that out pretty clearly in the press release. The charges in the second quarter, as indicated in the press release, were 5.5 million in the second quarter; the reversal of the reserves was $44 million in the second quarter, so net, there was a net charge to EPS of $1.1 million. On the first six months basis, it would be $9.6 million of charges and $6.8 million of reversals or a net charge of $2.8 million. And the second part of the answer to your question is, yes, I believe it is a closed issue.

On the 5 to 7% growth outlook, is that excluding foreign exchange benefit or would that be inclusive.

No, excluding foreign currency. Base growth without foreign currency movement. If the, you know, Euro dollar relationship stays where it is, the currency will obviously continue to be strongly favorable over the balance of the year.

Okay. And then you had mentioned that the European implant market was doing quite well. Is that the same case in the United States?

I have to say, Mike, when we talk about total product line basis, if we talk about it at all, I would say that our total worldwide implant business grew very strongly. First number was probably a two, not a one.

Okay.

I think the implant market worldwide today is probably growing 12, 13%. So we were very pleased with that performance during the quarter.

Okay, great. Thank you.

You're welcome.

Your next question comes from Richard Deat (ph) with Mones, Crespy & Parte (ph)

Thank you. What was the impact of the price increases in the U.S dental market?

They were pretty modest. We basically take annual price increases generally effective January 1 at about the rate of inflation, and I would estimate 2003 price increases in the U.S. were probably 1.2 to 1.3%.

That's it. Thank you.

You're welcome.

Your next question comes from Dax Valassis (ph) with Gates Capital Management.

Yes, I was wondering, the charges in the quarter, where are those located on the P&L?

Yeah, the charges in the second quarter, the $5.5 million, about 4.6 million of that is in cost of sales, and the balance would be in SG&A.

Okay. And them what about the 4.4 of gains?

Right. The 4.4 million of reserve reversals, 2.1 million of that affects SG&A, and the balance affects gross margins. So cost of sales.

Okay, thank you.

Your next question is comes from Greg Halter with LJR.

Good morning, gentlemen.

Good morning.

Congratulations on a good quarter. I wonder if you could bring us up to speed on the acquisition integration and what you're seeing in the acquisition market generally?

You know that we've indicated that as we've de-leveraged our balance sheet, we are going to be back in the M&A game as a consolidator. We really had that position all year. There's lots of discussions going on. We have actually made some bids but have not been successful. So I still believe that you will see us make dental acquisitions probably in the consumables area as we go forward.

Okay. And is there anything in particular or areas that you would like to fill in in your product line offering?

Sure. I mean, we have talked about where the keyholes are -- infection control is certainly one, preventive products is a very broad category, so certainly we would see opportunities there -- Just as two kind of big categories. I also think we would be interested in what I would call longer term emerging technologies because longer term, I think, you'll see dentistry bifurcate somewhat. There is always going to be a strong what I call mechanical component to dentistry in terms of crowns and bridges and dentures, but I think as we gaze down the road, you'll see pharmaceuticals and biology start to play a role in dentistry, and we would probably be interested in establishing technologies in those areas as well.

Okay. And I know you guys have been dealing with this for a long time, but the lawsuit on the artificial teeth?

Yes, sir, long time is an under statement. 1996, I think, is when it actually started. You know that the testimony -- everything was totally finished at the end of September last year, and the blunt truth is we're waiting for the judge to render her opinion, and initially we had thought that it would be by a year-end, 2002; it clearly wasn't. And I guess all I can say is we kind of expect it any time. But I don't really have any knowledge as to precisely when it will be issued.

Okay. And can you comment on the sales force additions? I think on the last call, you mentioned there were 35 U.S. sales professionals, and I'm just wondering how that effort is going and if there's any plans to add any new folks?

No. I think the 35 salespeople we had talked about was added -- they were over and above the normal additional rates in the fourth quarter of 2002. In 2003, I'd say we have been growing our sales force pretty much in line with our organic growth rates as we do every year.

Okay. And, Brett, is there any short-term debt included in that current liability piece?

There is a small component, a couple of million dollars, so it's really almost nothing.

Okay, great. Thank you.

Again I would like to remind everyone, in order to ask a question, please press star then the number "1" on your telephone keypad. Your next question comes from Bob Plesia (ph) with RJJP, Incorporated (ph).

Good morning. Could you go over again the growth rate of the dental market in your sales and U.S. and Europe?

Yes. I think worldwide, dental market is probably growing today 5 maybe 5.5%. You know there's some executive judgment in that because there is not a lot of hard statistics. In the U.S., I would say consumables, dental consumables, are probably growing in the 4.5% to 6.5% range. And I think what I call heavy equipment, chairs, units and lights, even though we're not in that business, has been growing much more rapidly than that based on the reported results that I see from companies like Henry Shine (ph) and Patterson (ph). I would say that business is growing double-digit. But probably I'm not the best one to comment on that.

I'd say in Europe, the dental market is growing a ittle slower than it is in the U.S., and I'd say it's a reflection of the economy being poorer in Europe and the fact that in total their unemployment rates are significantly higher than they are in the United States.

Historically, you know, Asia has been a very rapidly growing area for us. It wasn't in this quarter because of SARS, but I would anticipate we'll see a positive growth in the third quarter, and it will continue to be probably the most rapidly growing area as we get SARS further and further behind us. Latin America is also rapidly growing -- it's really kind of bumpy -- but right now, it's more rapidly growing. And the economies seem to be doing well. And the rest of the world, Mideast, Africa is kind of a coin toss (ph), I guess; you're going to have to get the political issues resolved before those markets are very attractive.

Your sales seem to be below these numbers in the second quarter.

Yeah. I guess I'd say that's true, and I tried to explain why that occurred. We actually had 4.5% growth, although on consumables we actually had 5.5% growth, which I'd say is at least at the dead market if not slightly better, because the 5.5 is a worldwide growth number, not just a U.S. number. But Cercon units, the machines themselves, the $50,000 milling machine sales were down sharply this quarter versus a year ago in the United States because a year ago was the initial launch of Cercon.

Right.

While it's nice to sale the $50,000 machines, what's really important is how many prescriptions that you're getting for Cercon, which is growing, frankly, I'd say, explosively, and that's really where all the profit is in terms of that product line. So it could make the top line sales look lower, but it doesn't impact the bottom line. I explained that in Europe our heavy equipment sales were terrible for the second quarter, and I have to say it was self-induced. We showed a really exciting, major new unit at the IDS, the European dental show, end of March. The market really liked it. We have gotten lots of orders for it, but we didn't get any orders for the older unit. And we were not able to start delivery of the new unit until July of this year, and if I had it to do over again probably I wouldn't have shown it at IDS and kept getting orders for the older one and introduced the new one when I was 100% ready to ship. You know, we indicated, I think, those factors impacted our growth this quarter by a full two percentage points. So I guess I think we're doing at least a market in total and maybe a little better.

Good. Thanks, John.

Yes, sir.

You have a follow-up question from Mike Carlotti with Palmero.

Could you just outline the breakdown of the charges and cost in SG&A for Q1 like you did in Q2?

Sure, I would be glad to do that. Actually, what I have here is the year-to-date numbers, so we'll just take the difference -- actually, I don't need to. All of the charges in Q1 were to cost of sales and none of it was to SG&A.

And same for the reserves, that was in cost of sales, too?

All of the reversals in the first quarter, the 2.4 million, all would have affected gross margin. So, yes, it would be running through sales, cost of sales actually, because those were sales returned reserves.

Great, thank you.

At this time, there are no further questions. Mr. Miles, are there any closing remarks?

Yes. I would just like to say that our business continues to run well. As you know, we earned 55 cents a share for the quarter, and as a result of that performance, we've increased our EPS guidance for the full year. And we continue to rapidly generate cash as evidenced by the $81 million of cash on our balance sheet as of quarter end. So I'd like to conclude by thanking all of our shareholders both for their interest in and support of our company. Thank you.

This concludes today's Dentsply International second quarter earnings release conference call. You may now disconnect.