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8-K - FORM 8-K - SIRONA DENTAL SYSTEMS, INC.d484506d8k.htm

Exhibit 99.1

 

LOGO

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, New York, February 8, 2013 – Sirona (Nasdaq: 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.

 

* 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.


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.

 

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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.

Contact information:

Joshua Zable

Vice President, Investor Relations

+1 718 482 2184

Joshua.Zable@Sirona.com

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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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   

 

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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

     December 31,
2012
    September 30,
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   
  

 

 

   

 

 

 

 

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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

Proceeds from sale of property, plant and equipment

     83        —     

Purchase of intangible assets

     (12     (66

Acquisition of business, net of cash acquired

     (35,019     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (45,295     (7,941

 

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     Three months ended
December 31,
 
     2012     2011  
     $‘000s  

Cash flows from financing activities

    

Repayments of short-term and long-term debt

     (98     (366,646

Proceeds from borrowings

     —          129,209   

Purchase of treasury stock

     (17,172     (7,020

Debt issuance cost

     —          (2,289

Dividend distributions to noncontrolling interest

     (434     (1,689

Common shares issued under share based compensation plans

     2,790        464   

Tax effect of common shares issued under share based compensation plans

     (1,910     (639
  

 

 

   

 

 

 

Net cash used in financing activities

     (16,824     (248,610

Change in cash and cash equivalents

     (28,429     (240,213

Effect of exchange rate change on cash and cash equivalents

     1,511        33   

Cash and cash equivalents at beginning of period

     151,088        345,859   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 124,170      $ 105,679   
  

 

 

   

 

 

 

Supplemental information

    

Interest paid

   $ 684      $ 241   

Interest capitalized

     29        102   

Income taxes paid

     14,379        9,579   

Acquisition of business

    

Current assets

   $ 5,185      $ —     

Non-current assets

     61,237        —     

Current liabilities

     (7,835     —     

Non-current liabilities

     (11,951     —     
  

 

 

   

 

 

 
     46,636        —     

Cash paid

     (36,673  

Settlement of balances

     (4,544  
  

 

 

   

 

 

 

Fair value of liabilities incurred

   $ 5,419      $ —     
  

 

 

   

 

 

 

 

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Reconciliation of GAAP and Non-GAAP Information (unaudited)

HISTORICAL

Non-GAAP Adjusted Net Income Financial Measures (unaudited)

 

     GAAP Reconciliation to Non-GAAP  
     Three months ended December 31, 2012  
     Pre Tax     Tax Impact*     After Tax     Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 38,302      $ 0.68   

Adjustments

        

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 9,633      $ 2,312        7,321     

(Gain)/loss on foreign currency transactions, net

     4,580        1,099        3,481     

(Gain)/loss on derivative instruments

     (1,346     (323     (1,023  

Other items:

        

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2,196          2,196     

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the departing CEO and Chairman

     3,764        903        2,861     
      

 

 

   

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 53,137      $ 0.94   
      

 

 

   

 

 

 

 

* tax impact calculated using estimated effective tax rate of 24%

 

     GAAP Reconciliation to Non-GAAP  
     Three months ended December 31, 2011  
     Pre Tax      Tax Impact**      After Tax      Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 38,277       $ 0.67   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 11,959       $ 2,751         9,208      

(Gain)/loss on foreign currency transactions, net

     2,230         513         1,717      

(Gain)/loss on derivative instruments

     436         100         336      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 49,538       $ 0.87   
        

 

 

    

 

 

 

 

** tax impact calculated using estimated effective tax rate of 23%

 

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FORWARD-LOOKING

Non-GAAP Adjusted EPS Guidance (unaudited)

 

     Low End of Guidance  
     Pre Tax      Tax Impact      After Tax      Per Diluted
Share
 
     $ millions, except per share amount         

GAAP net income attributable to Sirona Dental Systems, Inc. Shareholders

         $ 155       $ 2.73   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 38       $ 9       $ 29      

(Gain)/loss Foreign Currency Transactions, net**

     —           —           —        

(Gain)/loss on derivative instruments, net**

     —           —           —        

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2            2      

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the departing CEO and Chairman

     4         1         3      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 189       $ 3.33   
        

 

 

    

 

 

 
     High End of Guidance  
     Pre Tax      Tax Impact      After Tax      Per Diluted
Share
 
     $ millions, except per share amount         

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 161       $ 2.84   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

     38       $ 9       $ 29      

(Gain)/loss Foreign Currency Transactions, net**

   $ —           —         $ —        

(Gain)/loss on derivative instruments, net**

     —           —           —        

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2            2      

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the departing CEO and Chairman

     4         1         3      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 195       $ 3.43   
        

 

 

    

 

 

 

 

** We are unable to provide estimates for these items because we are unable to predict the 2013 and long-term impact of foreign exchange due to unpredictability of future changes in foreign exchange rates.

To supplement our consolidated financial statements and our business outlook, we use the following non-GAAP financial measures: (i) non-GAAP adjusted net income, and (ii) non-GAAP adjusted earnings per diluted share, which exclude, as applicable, amortization and depreciation expense resulting from the step-up to fair values of intangible and tangible assets related to past business combinations, gain/loss on foreign currency transactions, gain/loss on derivative instruments and any related tax effects and to the extent relevant in a particular period, any other cash or non-cash items that management does not view as indicative of its on-going operating performance. Also set forth above under the heading “FORWARD-LOOKING” are reconciliations of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures.

Management recognizes that the use of these non-GAAP measures has limitations, including the fact that they might not be comparable with similar non-GAAP measures used by other companies and that management must exercise judgment in determining which types of charges and other items should be excluded from its non-GAAP financial measures. Management currently compensates for these limitations by providing full disclosure of each non-GAAP financial measure and a reconciliation to the most directly comparable GAAP measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

 

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We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our “core operating performance”. Management believes that “core operating performance” represents Sirona’s operating performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from “core operating performance” the impact of acquisition-related intangible depreciation and amortization in order to compare our underlying financial performance to prior periods, certain charges related to currency revaluation of assets and liabilities that do not reflect our period-to-period core operating performance, and to the extent relevant in a particular period, any other cash or non-cash items that management does not view as indicative of its on-going operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are provided to and used by our institutional investors and the analyst community to facilitate comparisons with prior and subsequent reporting periods.

Constant Currency: We have included certain revenue information in this press release on a constant currency basis. This information is a non-GAAP financial measure. We additionally present revenue on a constant currency basis because we believe it facilitates a comparison of our operating results from period to period without regard to changes resulting solely from fluctuations in currency rates.

Sirona calculates constant currency revenue growth by comparing current period revenues to prior period revenues with both periods converted at the U.S. Dollar/Euro average foreign exchange rate for each month of the current period. The average exchange rate for the three months ended December 31, 2012, was $1.29708 and varied from $1.28296 to $1.31075. For the three months ended December 31, 2011, an average exchange rate converting Euro denominated revenues into U.S. Dollars of $1.34934 was applied.

Our forecasted 2013 constant currency net revenue guidance excludes the impact of foreign exchange. We are unable to reconcile our projected 2013 constant currency net revenue growth to our full-year projected 2013 net revenue growth because we are unable to predict the 2013 and long-term impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates. Therefore, we are unable to provide a reconciliation of these measures.

 

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