Sirona Reports Fiscal 2013 Second Quarter Results

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Sirona Reports Fiscal 2013 Second Quarter Results

  • Second quarter revenues of $267.3 million, up 15.3% compared to prior year, or up 14.7% constant currency*.
  • Second quarter diluted earnings per share of $0.56 on a GAAP reported basis compared to $0.54 in the prior year. Second quarter non-GAAP adjusted EPS* of $0.75, up 11.3% compared to $0.67 in the prior year.
  • Management now anticipates FY13 constant currency revenue growth at 10% to 12% (previously 9% to 11%), and non-GAAP adjusted EPS* in the range of $3.36 to $3.43 (reflecting growth of approximately 11% to 13%, compared to previous guidance of $3.33 to $3.43).

LONG ISLAND CITY, N.Y.--(BUSINESS WIRE)-- Sirona (NAS: SIRO) , the dental technology leader, today announced its financial results for the quarter ended March 31, 2013.


Second Quarter Fiscal 2013 vs. Second Quarter Fiscal 2012 Financial Results

Revenue was $267.3 million, an increase of $35.5 million or up 15.3% (and up 14.7% on a constant currency basis). The Company's business segments performed as follows: CAD/CAM Systems increased 21.1% (up 20.6% on a constant currency basis), Treatment Centers increased 17.6% (up 16.7% on a constant currency basis), Imaging Systems increased 11.8% (up 11.3% on a constant currency basis), and Instruments increased 2.9% (up 2.2% on a constant currency basis).

Revenue in the United States increased 12.1%, and revenues outside the United States increased 16.5% (up 15.7% constant currency). U.S. revenues benefited from strong demand for our Imaging and CAD/CAM products and the expanded agreement with Patterson. International sales were led by Germany and our non-European markets and were particularly strong in the CAD/CAM and Treatment Center segments.

Gross profit was $144.7 million, up $20.1 million. Gross profit margin was 54.1% in the second quarter of Fiscal 2013, compared to 53.8% in the prior year. Gross profit margin as a percent of sales was positively impacted by lower deal related amortization which more than offset margin compression mainly due to product mix.

Net income for the second quarter of 2013 was $31.7 million, or $0.56 per diluted share, versus $30.5 million, or $0.54 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share for the second quarter of 2013 was $0.75 compared to $0.67 in the prior year quarter or an increase of 11.3%. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.

At March 31, 2013, the Company had cash and cash equivalents of $156.1 million and total debt of $75.3 million, resulting in net cash of $80.7 million. This compares to net cash of $75.6 million at September 30, 2012.

Jeffrey Slovin, President and CEO of Sirona commented: "Sirona's strong second quarter reflects our continued momentum in the marketplace. We posted record quarters in both CAD/CAM and Treatment Centers, up 20.6% and 16.7% respectively, on a constant currency basis. Importantly, our double digit growth was broad based, with the U.S. up 12.1%, and International markets up 15.7%, constant currency, led by Germany and non-European markets."

Mr. Slovin continued: "Sirona once again demonstrated its market leadership at this year's International Dental Show. We launched a record number of new products that improve the patient experience and dental practice. We launched "CAD/CAM for Everyone," a significant expansion of our CAD/CAM product line to meet the diverse needs of our dentists and labs. With our current innovative product portfolio and our exceptional sales and service infrastructure, we are confident that Sirona is well positioned for future growth."

Fiscal 2013 Guidance

Management now anticipates FY13 constant currency revenue growth at 10% to 12% (previously 9% to 11%), and non-GAAP adjusted EPS* in the range of $3.36 to $3.43 (reflecting growth of approximately 11% to 13%, compared to previous guidance of $3.33 to $3.43).

First Six Months Fiscal 2013 vs. First Six Months Fiscal 2012 Financial Results

Revenue was $539.7 million, an increase of $49.8 million or up 10.2% (up 11.4% on a constant currency basis). The Company's business segments performed as follows: CAD/CAM Systems increased 17.3% (up 18.5% on a constant currency basis), Treatment Centers increased 10.6% (up 12.4% on a constant currency basis), Imaging Systems increased 6.7% (up 7.7% on a constant currency basis), and Instruments decreased 1.7% (down 0.1% on a constant currency basis).

Revenue in the United States increased 21.0%, and revenues outside the United States increased 6.1% (up 7.8% constant currency), with particularly strong performance in the CAD/CAM and Treatment Center segments.

Gross profit was $296.6 million, up $33.1 million. Gross profit margin was 54.9% in the first half of Fiscal 2013, compared to 53.8% in the prior year. Gross profit margin as a percentage of sales was positively impacted by lower levels of deal related amortization.

Net income for the six months ended March 31, 2013 was $70.0 million, or $1.24 per diluted share, versus $68.8 million, or $1.21 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share was $1.69 in the first half of Fiscal 2013 compared to $1.54 in the first half of Fiscal 2012 or an increase of 9.6%.

Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on May 10, 2013. The teleconference can be accessed by calling +1 866.318.8620 (domestic) or +1 617.399.5139 (international) using passcode # 33101324. The webcast will be available via the Internet at http://ir.sirona.com and a presentation relating to the call will be available on our website. A replay of the conference call will be available through May 17, 2013 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode #64526160. A web archive will be available for 30 days at www.sirona.com.

About Sirona Dental Systems, Inc.

Sirona, the dental technology leader, has served dealers and dentists worldwide for more than 130 years. Sirona develops, manufactures, and markets a complete line of dental products, including CAD/CAM restoration systems (CEREC), digital intra-oral, panoramic and 3D imaging systems, dental treatment centers and handpieces. Visit http://www.sirona.com for more information about Sirona and its products.

This press release contains forward-looking information about Sirona Dental Systems, Inc.'s financial results, guidance and estimates, business prospects, and products and services that involve substantial risks and uncertainties or other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You can identify these statements by the use of words such as "may," "could," "estimate," "will," "believe," "anticipate," "think," "intend," "expect," "project," "plan," "target," "forecast", and similar words and expressions which identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and involve known and unknown risks and uncertainties, and other factors. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date hereof. For a discussion of such risks, uncertainties and other matters that could cause actual results to differ materially, including risks relating to, among other factors, the market for dental product and services, pricing, future sales volume of the Company's products, the possibility of changing economic, market and competitive conditions, dependence on products, dependence on key personnel, technological developments, intense competition, market uncertainties, dependence on distributors, ability to manage growth, dependence on key suppliers, dependence on key members of management, government regulation, acquisitions and affiliations and currency exchange rate fluctuations, readers are urged to carefully review and consider various disclosures made by the Company in its Annual Report on Form 10-K and in its reports on Forms 10-Q and 8-K filed with the U.S. Securities and Exchange Commission, which can be accessed through the SEC's website,www.sec.gov. This presentation contains non GAAP financial measures, which should not be viewed in isolation and do not purport to be an alternative to net income (loss) as an indicator of operating performance or an alternative to cash flows from operating activities as a measure of liquidity. The Company assumes no obligation to and expressly disclaims any obligation to update or revise any forward-looking statements contained in this document to reflect new information or future events or developments after the date any such statement is made.

* Non-GAAP adjusted EPS and constant currency growth and results are non-GAAP financial measures that exclude certain items. Please refer to "Reconciliation of GAAP and non-GAAP Information (unaudited)" in the attached exhibits for a description of these items.

 

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

 

  Three months ended Six months ended

 

March 31,March 31,

 

201320122013 2012

$'000s (except per share amounts)

$'000s (except per share amounts)
Revenue$267,326$

231,864

$

539,730$489,980
Cost of sales122,620 107,215 243,153 226,548 
Gross profit144,706124,649296,577263,432
 
Selling, general and administrative expense83,99272,667169,775146,313
Research and development15,10213,63829,19726,924
Provision for doubtful accounts and notes receivable547728617767
Net other operating income(2,500) (2,500)(9,414)(5,000)
Operating income47,56540,116106,40294,428
(Gain)/loss on foreign currency transactions, net1,4171,3505,9973,580
(Gain)/loss on derivative instruments2,564(2,936)1,218(2,500)
Interest expense, net8301,0141,8001,917
Other expense/(income)342 228 682 490 
Income before taxes42,41240,46096,70590,941
Income tax provision10,179 9,305 25,405 20,916 
Net income32,23331,15571,30070,025

Less: Net income attributable to noncontrolling
interests

575 634 1,340 1,227 

Net income attributable to Sirona Dental Systems,
Inc.

$31,658 $

30,521

 

$

69,960 $68,798 
 

Income per share (attributable to Sirona Dental
Systems, Inc. common shareholders):

- Basic

$0.58$

0.55

$

1.27$1.23
- Diluted$0.56$

0.54

$

1.24$1.21
Weighted average shares - basic54,928,33255,683,04355,083,26455,804,656
Weighted average shares - diluted56,202,29656,916,39056,384,48357,025,942
 

 

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 
 March 31, September 30,
20132012
(unaudited)
$'000s (except per share amounts)
ASSETS
 
Current assets
Cash and cash equivalents$156,088$151,088
Restricted cash167-
Accounts receivable, net of allowance for doubtful accounts

   of $1,535 and $1,408, respectively

126,311132,569
Inventories, net106,37681,007
Deferred tax assets28,27124,781
Prepaid expenses and other current assets24,21117,622
Income tax receivable1,9462,213
Total current assets443,370409,280
 
Property, plant and equipment, net of accumulated depreciation

      and amortization of $139,845 and $125,706, respectively

146,496143,351
Goodwill644,134631,077
Intangible assets, net of accumulated amortization of

   $463,173 and $446,447, respectively

309,924288,556
Other non-current assets4,3379,382
Deferred tax assets13,01112,888
Total assets$1,561,272$1,494,534
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
Trade accounts payable$67,442$51,961
Short-term debt and current portion of long-term debt344478
Income taxes payable10,72914,906
Deferred tax liabilities336817
Accrued liabilities and deferred income115,753118,075
Total current liabilities194,604186,237
 
Long-term debt75,00075,000
Deferred tax liabilities131,350122,441
Other non-current liabilities24,37216,852
Pension related provisions61,31361,629
Deferred income35,00040,000
Total liabilities521,639502,159
 
Shareholders' equity

Preferred stock ($0.01 par value; 5,000,000 shares authorized;
   none issued and outstanding)

00
Common stock ($0.01 par value; 95,000,000 shares authorized;

56,868,619 shares issued and 54,937,167 shares outstanding at Mar. 31,
2013;
56,598,045 shares issued and 55,051,673 shares outstanding at Sept. 30, 2012

569566

Additional paid-in capital

708,241699,279
Treasury stock (at cost)

1,931,452 shares held at cost at Mar. 31, 2013;
1,546,372 shares held at cost at Sept. 30, 2012

(92,926)(69,058)
Excess of purchase price over predecessor basis(49,103)(49,103)
Retained earnings507,431437,471
Accumulated other comprehensive income/(loss)(36,420)(29,797)
Total Sirona Dental Systems, Inc. shareholders' equity1,037,792989,358
Noncontrolling interests1,8413,017
Total shareholders' equity1,039,633992,375
Total liabilities and shareholders' equity$1,561,272$1,494,534
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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
 

 

Six months ended

March 31,
2013 2012
$'000s

 

Cash flows from operating activities
Net income$71,300$70,025
 

Adjustments to reconcile net income
  to net cash provided by operating activities

Depreciation and amortization36,45738,460
(Gain)/loss on disposal of property, plant and equipment

 

93-
(Gain)/loss on derivative instruments1,218(2,500)
(Gain)/loss on foreign currency transactions5,9973,580
Deferred income taxes5,374(8,147)
Amortization of debt issuance cost277351
Share-based compensation expense8,3524,290
 
Changes in assets and liabilities
Accounts receivable2,689(18,606)
Inventories(25,333)(8,262)
Prepaid expenses and other current assets(6,902)(6)
Restricted cash(167)646
Other non-current assets(5)(234)
Trade accounts payable16,118(5,431)
Accrued liabilities and deferred income(24,252)(16,932)
Other non-current liabilities2,386522
Income taxes receivable2601,208
Income taxes payable(4,208)