Sirona Reports Record Fiscal 2013 First Quarter Results

Sirona Reports Record Fiscal 2013 First Quarter Results

  • First quarter revenues of $272.4 million, up 5.5% compared to prior year, or up 8.6% constant currency*.

  • First quarter earnings per share of $0.68 on a GAAP reported basis compared to $0.67 in the prior year. First quarter non-GAAP adjusted EPS* of $0.94, up 9% compared to $0.87 in the prior year.

  • Fiscal 2013 guidance confirmed.

LONG ISLAND CITY, N.Y.--(BUSINESS WIRE)-- Sirona (NAS: SIRO) , the dental technology leader, today announced its financial results for the quarter ended December 31, 2012.

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


Revenue was $272.4 million, an increase of $14.3 million or up 5.5% (and up 8.6% on a constant currency basis). The Company's business segments performed as follows: CAD/CAM Systems increased 13.5% (up 16.5% on a constant currency basis), Treatment Centers increased 4.3% (up 8.4% on a constant currency basis), Imaging Systems increased 2.7% (up 4.9% on a constant currency basis), and Instruments decreased 5.8% (down 2.1% on a constant currency basis).

Revenue in the United States increased 29.0%, while revenues outside the United States decreased 3.3% (up 0.6% constant currency). We had exceptional growth in the U.S. benefiting from strong demand for our Imaging and CAD/CAM products as well as from anticipated tax changes. Despite solid demand, sales in international markets were impacted by Omnicam capacity constraints and from the prioritization of the U.S., the challenging prior-year comparison for Imaging, and a back-end loaded order intake during the quarter, which will translate into sales in the second quarter of fiscal year 2013.

Gross profit was $151.9 million, up $13.1 million. Gross profit margin was 55.8% in the first quarter of Fiscal 2013, compared to 53.8% in the prior year. Gross profit margin as a percent of sales was positively impacted by a positive segment and product mix and lower deal related amortization.

Net income for the first quarter of 2013 was $38.3 million, or $0.68 per diluted share, versus $38.3 million, or $0.67 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share for the first quarter of 2013 was $0.94 compared to $0.87 in the prior year quarter. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.

At December 31, 2012, the Company had cash and cash equivalents of $124.2 million and total debt of $75.4 million, resulting in net cash of $48.8 million. This compares to net cash of $75.6 million at September 30, 2012.

Jost Fischer, Chairman and CEO of Sirona commented: "It is extremely gratifying for my last quarter as CEO of Sirona to leave on such a high note, reporting a record first quarter. The Company is in an excellent position. We continue to see significant enthusiasm surrounding the launch of our revolutionary Omnicam. Demand was so strong that we could not fulfill all of our orders. I am pleased to report that the ramp up phase of manufacturing for the Omnicam is behind us. We continue to see strong demand across Sirona's broad product portfolio and in all major geographies. I am pleased to see us begin fiscal 2013, building on last year's success: we extended our global leadership position and delivered strong financial results."

Mr. Fischer continued: "For the quarter, three of our segments had record quarters, with CAD/CAM and Treatment Centers leading our growth, up 16.5% and 8.4% respectively, on a constant currency basis. Revenue growth was extremely strong in the U.S., up 29.0%, positively impacted by our expanded exclusivity agreement with Patterson, strong demand for our CAD/CAM and Imaging products, and the anticipated implementation of the Medical Device Tax in 2013. Sales outside the U.S. were impacted by prioritization of shipments, but we are seeing strong order intake and we expect to see it reflected in our sales beginning next quarter. Our positive momentum across the product portfolio is continuing into the second quarter and we expect revenue growth to accelerate throughout the year."

Fiscal 2013 Guidance

Management continues to anticipate 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%).

Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on February 8, 2013. The teleconference can be accessed by calling +1 800.561.2718 (domestic) or +1 617.614.3525 (international) using passcode # 89492026. 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 February 15, 2013 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode #61019907. 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.

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* 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

December 31,

2012

2011

$'000s (except per share amounts)

Revenue

$

272,404

$

258,116

Cost of sales

120,533

119,333

Gross profit

151,871

138,783

Selling, general and administrative expense

85,783

73,646

Research and development

14,095

13,286

Provision for doubtful accounts and notes receivable

70

39

Net other operating income

(6,914)

(2,500)

Operating income

58,837

54,312

(Gain)/loss on foreign currency transactions, net

4,580

2,230

(Gain)/loss on derivative instruments

(1,346)

436

Interest expense, net

970

903

Other expense/(income)

340

262

Income before taxes

54,293

50,481

Income tax provision

15,226

11,611

Net income

39,067

38,870

Less: Net income attributable to noncontrolling interests

765

593

Net income attributable to Sirona Dental Systems, Inc.

$

38,302

$

38,277

Income per share (attributable to Sirona Dental

Systems, Inc. common shareholders):

- Basic

$

0.70

$

0.69

- Diluted

$

0.68

$

0.67

Weighted average shares - basic

55,004,471

55,783,648

Weighted average shares - diluted

56,327,927

57,121,505

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,

September 30,

2012

2012

(unaudited)

$'000s (except per share amounts)

ASSETS

Current assets

Cash and cash equivalents

$

124,170

$

151,088

Accounts receivable, net of allowance for doubtful accounts

of $1,290 and $1,408, respectively

145,569

132,569

Inventories, net

92,124

81,007

Deferred tax assets

27,942

24,781

Prepaid expenses and other current assets

24,242

17,622

Income tax receivable

2,291

2,213

Total current assets

416,338

409,280

Property, plant and equipment, net of accumulated depreciation

and amortization of $135,418 and $125,706, respectively

147,400

143,351

Goodwill

659,533

631,077

Investments

25

14

Intangible assets, net of accumulated amortization of

$463,164 and $446,447, respectively

326,837

288,556

Other non-current assets

4,642

9,368

Deferred tax assets

13,051

12,888

Total assets

$

1,567,826

$

1,494,534

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable

$

61,838

$

51,961

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

419

478

Income taxes payable

19,155

14,906

Deferred tax liabilities

499

817

Accrued liabilities and deferred income

111,329

118,075

Total current liabilities

193,240

186,237

Long-term debt

75,000

75,000

Deferred tax liabilities

136,959

122,441

Other non-current liabilities

24,336

16,852

Pension related provisions

62,977

61,629

Deferred income

37,500

40,000

Total liabilities

530,012

502,159

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;

56,776,626 shares issued and 54,946,874 shares outstanding at Dec. 31, 2012;

56,598,045 shares issued and 55,051,673 shares outstanding at Sept. 30, 2012

567

566

Additional paid-in capital

706,745

699,279

Treasury stock (at cost)

1,829,752 shares held at cost at Dec. 31, 2012;

1,546,372 shares held at cost at Sept. 30, 2012

(86,230)

(69,058)

Excess of purchase price over predecessor basis

(49,103)

(49,103)

Retained earnings

475,773

437,471

Accumulated other comprehensive income/(loss)

(13,332)

(29,797)

Total Sirona Dental Systems, Inc. shareholders' equity

1,034,420

989,358

Noncontrolling interests

3,394

3,017

Total shareholders' equity

1,037,814

992,375

Total liabilities and shareholders' equity

$

1,567,826

$

1,494,534

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three months ended

December 31,

2012

2011

$'000s

Cash flows from operating activities

Net income

$

39,067

$

38,870

Adjustments to reconcile net income

to net cash provided by operating activities

Depreciation and amortization

17,912

19,255

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

(30)

-

(Gain)/loss on derivative instruments

(1,346)

436

(Gain)/loss on foreign currency transactions

4,580

2,230

Deferred income taxes

8,815

(4,428)

Amortization of debt issuance cost

138

199

Share-based compensation expense

6,097

2,093

Changes in assets and liabilities

Accounts receivable

(12,753)

(28,626)

Inventories

(10,589)

2,129

Prepaid expenses and other current assets

(6,054)

5,022

Restricted cash

-

646

Other non-current assets

(81)

(273)

Trade accounts payable

9,078

(10,478)

Accrued liabilities and deferred income

(26,908)

(17,060)

Other non-current liabilities

1,873

193

Income taxes receivable

(41)

1,741

Income taxes payable

3,932

4,389

Net cash provided by operating activities

33,690

16,338

Cash flows from investing activities

Investment in property, plant and equipment

(10,347)

(7,875)