Sirona Reports Record Fiscal 2012 Fourth Quarter and Full Year Results

Sirona Reports Record Fiscal 2012 Fourth Quarter and Full Year Results

  • Fourth quarter revenues of $247.4 million, up 13.1% compared to prior year, or up 23.4% constant currency. Fiscal year 2012 revenues increased 7.2%, or up 12.6% constant currency.

  • Fourth quarter operating income, excluding amortization* of $11.7 million, totaled $57.1 million, up 25.5% compared to prior year (excluding a non-cash compensation charge). Fiscal 2012 operating income, excluding amortization*of $47.9 million, totaled $233.7 million, up 5.0% compared to prior year (excluding a non-cash compensation charge).

  • Sirona announces fiscal 2013 guidance: revenue growth of 9% to 11% constant currency, and EPS on a non-GAAP adjusted basis^ in a range of $3.33 to $3.43 (reflecting growth of approximately 10% to 13%).

LONG ISLAND CITY, N.Y.--(BUSINESS WIRE)-- Sirona (NAS: SIRO) , the dental technology leader, today announced its financial results for the quarter and fiscal year ended September 30, 2012.

Fourth Quarter Fiscal 2012 vs. Fourth Quarter Fiscal 2011 Financial Results


Revenue was $247.4 million, an increase of $28.6 million or up 13.1% (and up 23.4% on a constant currency basis). The Company's business segments grew as follows: CAD/CAM Systems increased 25.6% (up 36.5% on a constant currency basis), Treatment Centers increased 13.2% (up 28.0% on a constant currency basis), Imaging Systems increased 6.9% (up 14.0% on a constant currency basis), and Instruments increased 1.0% (up 14.0% on a constant currency basis).

Revenue in the United States increased 34.1%, while revenues outside the United States increased 5.7% (up 19.2% constant currency), with particularly robust performance in the Asia-Pacific region.

Gross profit was $132.1 million, up $21.4 million. Gross profit margin was 53.4% in the fourth quarter of Fiscal 2012, compared to 50.6% in the prior year. Gross profit margin as a percent of sales was positively impacted by better segment gross profit margin and lower amortization.

Fourth quarter 2012 operating income excluding amortization expense was $57.1 million (operating income of $45.4 million plus amortization expense of $11.7 million), compared to $45.5 million (operating income of $25.0 million plus amortization expense of $13.9 million, plus a $6.6 million non-cash compensation charge) in the fourth quarter of 2011.

Net income for the fourth quarter of 2012 was $34.7 million, or $0.62 per diluted share, versus $13.8 million, or $0.24 per diluted share in the prior year period. Non-GAAP earnings per diluted share for the fourth quarter of 2012 was $0.71 compared to $0.68 in the prior year quarter.

At September 30, 2012, the Company had cash and cash equivalents of $151.1 million and total debt of $75.5 million, resulting in net cash of $75.6 million. This compares to net debt of $22.5 million at September 30, 2011.

Jost Fischer, Chairman and CEO of Sirona commented: "We had an outstanding fourth quarter, with every segment of our business growing double digits, constant currency and strong operating income growth. Fiscal 2012 was another year of double digit constant currency revenue growth for Sirona, where we exceeded sales expectations. We posted record revenues and earnings, strengthened our balance sheet, extended our global leadership position and introduced the revolutionary Omnicam. Our 12.6% constant currency revenue growth was particularly noteworthy compared to a record setting fiscal 2011 in which Sirona grew over 16% constant currency."

Mr. Fischer continued: "For the year, Treatment Centers and CAD/CAM led our growth, up 15.1% and 13.9% respectively on a constant currency basis. Revenue growth was particularly strong in non-European international markets, led again by the Asia-Pacific region. The U.S. continues to improve for us, accelerating for the third consecutive quarter, ending up a robust 11.4% for the year. Although Germany was down due to a difficult IDS comparison to last year, we had our second best year ever in Germany, and the rest of Europe grew this quarter and for the year, on a constant currency basis. We ended our year with an unprecedented celebration at CEREC 27.5 where we received a standing ovation from a crowd of around 4,000 dental professionals with the launch of the revolutionary Omnicam. With the investment in our global sales and service infrastructure continuing to pay dividends and innovation as our top priority, we expect our momentum to continue into next year as reflected in our revenue guidance."

Fiscal 2013 Guidance

Management anticipates fiscal year 2013 constant currency revenue growth to be in the range of 9% to 11%, and EPS on a non-GAAP adjusted basis^ in a range of $3.33 to $3.43 (reflecting growth of approximately 10% to 13%).

Fiscal 2012 vs. Fiscal 2011 Financial Results

Revenue was $979.4 million, an increase of $65.5 million or up 7.2% (up 12.6% on a constant currency basis). The Company's business segments grew as follows: CAD/CAM Systems increased 9.1% (up 13.9% on a constant currency basis), Imaging Systems increased 7.4% (up 11.5% on a constant currency basis), Treatment Centers increased 7.2% (up 15.1% on a constant currency basis), and Instruments increased 0.2% (up 7.5% on a constant currency basis).

Revenue in the United States increased 11.4%, while revenues outside the United States increased 5.5% (up 13.2% constant currency), with particularly robust performance in the Asia-Pacific region.

Gross profit was $524.0 million, up $40.3 million. Gross profit margin was 53.5% for Fiscal 2012, compared to 52.9% in the prior year. Gross profit margin as a percent of sales was positively impacted by lower amortization.

Fiscal 2012 operating income excluding amortization expense was $233.7 million (operating income of $185.7 million plus amortization expense of $47.9 million). This compares to 2011 operating income excluding amortization and a non-cash compensation charge of $222.5 million (operating income of $160.9 million plus amortization expense of $54.9 million, plus the $6.6 million charge).

Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on November 16, 2012. The teleconference can be accessed by calling +1 800.299.7635 (domestic) or +1 617.786.2901 (international) using passcode # 43749778. 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 November 23, 2012 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode #17050016. 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.

_______________

* Operating income plus amortization 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.

^This metric is a new, non-GAAP financial measure that excludes certain items. Please refer to "Reconciliation of GAAP and non-GAAP Information (unaudited)" in the attached exhibits for a description of these items. The 10% to 13% growth rate for non-GAAP Adjusted EPS compares this new metric for fiscal 2013 guidance to fiscal 2012 non-GAAP Adjusted EPS re-calculated on the same basis.

SIRONA DENTAL SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME

UNAUDITED

Three months ended

September 30,

Year ended

September 30,

2012

2011

2012

2011

$'000s (except per share amounts)

$'000s (except per share amounts)

Revenue

$

247,364

$

218,797

$

979,351

$

913,866

Cost of sales

115,285

108,080

455,400

430,214

Gross profit

132,079

110,717

523,951

483,652

Selling, general and administrative expense

76,912

74,637

295,659

277,081

Research and development

12,606

13,485

52,622

55,530

Provision for doubtful accounts and notes receivable

(338)

62

(75)

96

Net other operating income

(2,500)

(2,500)

(10,000)

(10,000)

Operating income

45,399

25,033

185,745

160,945

Loss/(gain) on foreign currency transactions, net

(382)

2,864

5,873

(5,668)

Loss on derivative instruments

(2,147)

2,140

(1,961)

3,302

Interest expense, net

984

1,020

3,767

3,883

Other expense/(income)

(529)

39

(257)

(101)

Income before taxes

47,473

18,970

178,323

159,529

Income tax provision

12,622

4,821

42,718

35,744

Net income

34,851

14,149

135,605

123,785

Less: Net income attributable to noncontrolling interests

115

391

1,773

1,992

Net income attributable to Sirona Dental Systems, Inc.

$

34,736

$

13,758

$

133,832

$

121,793

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

- Basic

$

0.63

$

0.25

$

2.41

$

2.19

- Diluted

$

0.62

$

0.24

$

2.36

$

2.13

Weighted average shares - basic

55,128,904

56,080,442

55,524,188

55,735,422

Weighted average shares - diluted

56,388,273

57,466,184

56,755,396

57,292,996

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2012

September 30,

2011

$'000s (except per share amounts)

ASSETS

Current assets

Cash and cash equivalents

$

151,088

$

345,859

Accounts receivable, net of allowance for doubtful accounts

of $1,408 and $1868, respectively

132,569

97,853

Inventories, net

81,007

93,028

Deferred tax assets

24,781

25,014

Prepaid expenses and other current assets

17,622

15,477

Income tax receivable

2,213

4,193

Total current assets

409,280

581,424

Property, plant and equipment, net of accumulated depreciation

and amortization of $125,706 and $111,832, respectively

143,351

131,044

Goodwill

631,077

653,799

Investments

14

2,453

Restricted cash

-

655

Intangible assets, net of accumulated amortization of

$446,447 and $412,428, respectively

288,556

346,442

Other non-current assets

9,368

2,884

Deferred tax assets

12,888

7,427

Total assets

$

1,494,534

$

1,726,128

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable

$

51,961

$

48,697

Short-term debt and current portion of long-term debt

478

368,403

Income taxes payable

14,906

6,811

Deferred tax liabilities

817

1,108

Accrued liabilities and deferred income

118,075

110,207

Total current liabilities

186,237

535,226

Long-term debt

75,000

-

Deferred tax liabilities

122,441

138,327

Other non-current liabilities

16,852

16,978

Pension related provisions

61,629

49,677

Deferred income

40,000

50,000

Total liabilities

502,159

790,208

Shareholders' equity

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

0

0

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

56,598,045 shares issued and 55,051,673 shares outstanding at Sept. 30, 2012;
56,292,420 shares issued and 55,815,323 shares outstanding at Sept. 30, 2011

566

563

Additional paid-in capital

699,279

685,617

Treasury stock (at cost)

1,546,372 shares held at cost at Sept. 30, 2012;
477,097 shares held at cost at Sept. 30, 2011

(69,058)

(19,749)

Excess of purchase price over predecessor basis

(49,103)

(49,103)

Retained earnings

437,471

303,639

Accumulated other comprehensive income/(loss)

(29,797)

11,309

Total Sirona Dental Systems, Inc. shareholders' equity

989,358

932,276

Noncontrolling interests

3,017

3,644

Total shareholders' equity

992,375

935,920

Total liabilities and shareholders' equity

$

1,494,534

$

1,726,128

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended

September 30,

2012

Year ended

September 30,

2011

$'000s

Cash flows from operating activities

Net income

$

135,605

$

123,785

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

Depreciation and amortization

77,749

81,173

Compensation charge paid by shareholders

-

6,625

(Gain)/loss on disposal of property, plant and equipment

(91)

-

(Gain)/loss on derivative instruments

(1,961)

3,302

(Gain)/loss on foreign currency transactions

5,873

(5,668)

Deferred income taxes

(17,274)

(17,173)

Amortization of debt issuance cost

631

587

Share-based compensation expense

8,623

7,604

Changes in assets and liabilities

Accounts receivable

(38,301)

(14,202)

Inventories

8,824

(19,542)

Prepaid expenses and other current assets

(1,935)

8,861

Restricted cash

646

20

Other non-current assets

(290)

(453)

Trade accounts payable

4,600

6,191

Accrued interest on long-term debt

-

-

Accrued liabilities and deferred income

(6,674)

2,566

Other non-current liabilities

15,144

(2,997)

Income taxes receivable

1,954

(697)

Income taxes payable

8,246

(1,129)