Sirona Reports Fiscal 2013 Second Quarter Results

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,

2013

2012

2013

2012

$'000s (except per share amounts)

$'000s (except per share amounts)

Revenue

$

267,326

$

231,864

$

539,730

$

489,980

Cost of sales

122,620

107,215

243,153

226,548

Gross profit

144,706

124,649

296,577

263,432

Selling, general and administrative expense

83,992

72,667

169,775

146,313

Research and development

15,102

13,638

29,197

26,924

Provision for doubtful accounts and notes receivable

547

728

617

767

Net other operating income

(2,500)

(2,500

)

(9,414

)

(5,000

)

Operating income

47,565

40,116

106,402

94,428

(Gain)/loss on foreign currency transactions, net

1,417

1,350

5,997

3,580

(Gain)/loss on derivative instruments

2,564

(2,936

)

1,218

(2,500

)

Interest expense, net

830

1,014

1,800

1,917

Other expense/(income)

342

228

682

490

Income before taxes

42,412

40,460

96,705

90,941

Income tax provision

10,179

9,305

25,405

20,916

Net income

32,233

31,155

71,300

70,025

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 - basic

54,928,332

55,683,043

55,083,264

55,804,656

Weighted average shares - diluted

56,202,296

56,916,390

56,384,483

57,025,942

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,

September 30,

2013

2012

(unaudited)

$'000s (except per share amounts)

ASSETS

Current assets

Cash and cash equivalents

$

156,088

$

151,088

Restricted cash

167

-

Accounts receivable, net of allowance for doubtful accounts

of $1,535 and $1,408, respectively

126,311

132,569

Inventories, net

106,376

81,007

Deferred tax assets

28,271

24,781

Prepaid expenses and other current assets

24,211

17,622

Income tax receivable

1,946

2,213

Total current assets

443,370

409,280

Property, plant and equipment, net of accumulated depreciation

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

146,496

143,351

Goodwill

644,134

631,077

Intangible assets, net of accumulated amortization of

$463,173 and $446,447, respectively

309,924

288,556

Other non-current assets

4,337

9,382

Deferred tax assets

13,011

12,888

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 debt

344

478

Income taxes payable

10,729

14,906

Deferred tax liabilities

336

817

Accrued liabilities and deferred income

115,753

118,075

Total current liabilities

194,604

186,237

Long-term debt

75,000

75,000

Deferred tax liabilities

131,350

122,441

Other non-current liabilities

24,372

16,852

Pension related provisions

61,313

61,629

Deferred income

35,000

40,000

Total liabilities

521,639

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;

56,868,619 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

569

566

Additional paid-in capital

708,241

699,279

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 earnings

507,431

437,471

Accumulated other comprehensive income/(loss)

(36,420)

(29,797)

Total Sirona Dental Systems, Inc. shareholders' equity

1,037,792

989,358

Noncontrolling interests

1,841

3,017

Total shareholders' equity

1,039,633

992,375

Total liabilities and shareholders' equity

$

1,561,272

$

1,494,534

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 amortization

36,457

38,460

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

93

-

(Gain)/loss on derivative instruments

1,218

(2,500)

(Gain)/loss on foreign currency transactions

5,997

3,580

Deferred income taxes

5,374

(8,147)

Amortization of debt issuance cost

277

351

Share-based compensation expense

8,352

4,290

Changes in assets and liabilities

Accounts receivable

2,689

(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 payable

16,118

(5,431)

Accrued liabilities and deferred income

(24,252)

(16,932)

Other non-current liabilities

2,386

522

Income taxes receivable

260

1,208

Income taxes payable

(4,208)