American Dental Partners — Q3 2010 Earnings Presentation
22 slides from American Dental Partners's earnings presentation, Oct 26, 2010
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Slide 4: Third Quarter 2010 Earnings Conference Call
Third Quarter 2010 Earnings Conference Call October 26, 2010 Exhibit 99.2
Slide 5: Slide 5
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Slide 8: Introductory Comments
Introductory Comments “Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of the historical information contained in this press release, the matters described herein contain "forward-looking" statements that involve risk and uncertainties that may i
Slide 9: Highlights
Highlights • Financial results for 3Q10 vs. 3Q09: Net revenue +5% Earnings from operations +8%* Net earnings +35%* • Completed two in-market practice acquisitions • Completed one pediatric Medicaid de novo • Initiated share repurchases * Excludes unusual items. See Income Statement slide.
Slide 10: Patient Revenue of Affiliated Practices
Patient Revenue of Affiliated Practices $111.3 million vs. $103.2 million +7.8% • -1.6% same market growth • -2.1% same market excluding acquisitions growth • -3.2% same practice growth Components of same market growth • -2.1% hours • +2.5% productivity per hour • -2.0% effectivity (a ) Revenue mix
Slide 11: Income Statement (thousands, except per share amts)
Income Statement (thousands, except per share amts) 3Q10 3Q09 Non GAAP As reported Non GAAP As reported Non GAAP Change Net revenue 71,116 $ 71,116 $ 67,986 $ 67,986 $ 5% Operating expenses: Salaries and benefits 29,242 29,242 29,384 29,384 (210) b.p. Lab fees and dental supplies 10,759 10,759 9,527
Slide 12: Diluted Earnings per Share
Diluted Earnings per Share (a) $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 9 mos '09 9 mos '10 Reported EPS After-tax Amortization Expense (a) See Appendix for reconciliation of non-GAAP items. (b) Calculated at $12 share price and trailing twelve months ended September 30, 2010 financial results. } +64% }
Slide 13: Cash Flow (thousands, except per share amounts)
Cash Flow (thousands, except per share amounts) Operating activities 2009 benefited from 3 day DSO improvement (30 27) as compared to 1 day DSO improvement (26 25) in 2010 ($3 million difference) Maintenance capital expenditures Includes 10 Improvis EDR implementations Growth capital expenditures In
Slide 14: Capitalization ($ millions)
Capitalization ($ millions) $0 $100 $200 $300 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Equity Debt Debt to Total Capitalization 36% 47% 34% 36% Leverage • $106 million debt • 2.1x debt/EBITDA (bank compliance calculation) • $48.9 million available for borrowing under credit facility (bank compliance
Slide 15: Cost of Capital Framework
Cost of Capital Framework Debt 40% 8% 3% Equity 60% 25% 15% Total 18% Mix Pre-tax Cost Blended Cost Returns on capital in recent years have been affected by 2007 Metro Dentalcare acquisition, 2008 litigation settlement, 2007-2010 economic downturn and 2009-2010 investment in pediatric Medicaid expan
Slide 16: Returns on Capital ($ millions)
Returns on Capital ($ millions) (a) Litigation settlement resulted in decrease in EFO of approximately $15 million on a per annum basis. (b) Includes expenses and income associated with litigation settlement. See 2008 Form 10-K MD&A for detailed discussion. (c) Adjustment of purchase price from 10x
Slide 17: Return on Market Value
Return on Market Value (millions, except per share amount) 9 months Sep '09 Sep '10 TTM Cash flow from operations 40.4 $ 32.6 $ 27.3 $ 35.1 $ Maintenance capital expenditures 3.4 1.1 1.6 3.9 $ Free cash flow 37.0 $ 31.5 $ 25.7 $ 31.2 $ Diluted shares outstanding 16.0 Share price 12.00 $ Market value
Slide 18: Operating Comments
Operating Comments • quarter financial results affected by fluctuating monthly performance • Elevated unemployment levels and consumer uncertainty negatively affecting revenue • In face of the economic challenges, continue to manage costs with caution and to reinvest capital in projects that we expe
Slide 19: Appendix
Appendix
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures • This presentation includes non-GAAP financial measures. In accordance with the requirements of Regulation G of the Securities and Exchange Commission, please see the attached financial tables for a presentation of the most comparable GAAP measures, the reconciliation to
Slide 21: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation (thousands, except per share amt) 9 months '09 9 months '10 Net earnings (as reported) 7,729 $ 5,864 $ 8,172 $ Add: Write-off of expenses associated with debt refinancing, net of tax Add: Expenses associated with Christie Dental affiliation, net of tax - - Add: Expenses a
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