Sirona Reports Record Results for First Quarter of Fiscal 2014 *First quarter revenues of $298.7 million, up 9.7% compared to prior year, or up 6.3% constant currency^*. *First quarter diluted earnings per share of $0.79 on a GAAP reported basis compared to $0.68 in the prior year. First quarter non-GAAP adjusted EPS^* of $0.96, up 1.8% compared to $0.94 in the prior year. *Management continues to anticipate FY14 constant currency revenue growth of 4% to 6%, and non-GAAP adjusted EPS^* in the range of $3.60 to $3.70 (reflecting growth of approximately 6% to 9%). Business Wire LONG ISLAND CITY, N.Y. -- February 7, 2014 Sirona (Nasdaq:SIRO), the dental technology leader, today announced its financial results for the quarter ended December 31, 2013. First Quarter Fiscal 2014 vs. First Quarter Fiscal 2013 Financial Results Revenue was $298.7 million, an increase of $26.3 million or up 9.7% (and up 6.3% on a constant currency basis). The Company's business segments performed as follows: Instruments increased 23.9% (up 18.1% on a constant currency basis), CAD/CAM Systems increased 10.7% (up 7.6% on a constant currency basis), Imaging Systems increased 9.2% (up 7.0% on a constant currency basis), and Treatment Centers increased 1.7% (down 3.0% on a constant currency basis). Revenue in the United States increased 12.2%, and revenues outside the United States increased 8.4% (up 3.4% constant currency). U.S. revenues continued to benefit from strong demand for our Imaging and CAD/CAM products. Sales growth in international markets was driven by Europe, excluding Germany, and other international markets. Gross profit was $162.7 million, down $10.9 million. Gross profit margin was 54.5% in the first quarter of Fiscal 2014, compared to 55.8% in the prior year. The change in gross profit margin as a percent of sales reflects the development of product and regional sales mix as well as unfavorable impacts of foreign exchange rate fluctuations. Net income for the first quarter of 2014 was $44.2 million, or $0.79 per diluted share, versus $38.3 million, or $0.68 per diluted share in the prior-year period. Non-GAAP adjusted earnings per diluted share for the first quarter of 2014 was $0.96 compared to $0.94 in the prior-year quarter, or an increase of 1.8%. Non-GAAP adjusted EPS growth was impacted by unfavorable developments in foreign currencies as well as a difficult comparable resulting from a $4.4 million patent infringement settlement in last year’s first 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, 2013, the Company had cash and cash equivalents of $210.9 million and total debt of $75.5 million, resulting in net cash of $135.4 million. This compares to net cash of $166.3 million at September 30, 2013. Jeffrey Slovin, President and CEO of Sirona commented: “I am pleased to report record quarterly revenues and earnings. Our strong performance was geographically broad based. The U.S. grew 12.2%, driven by strength in both CAD/CAM and Imaging. Outside of Germany, our international business grew 8.3% on our constant currency basis.” Mr. Slovin continued: “On a segment level, Instruments led the way with 18.1% constant currency growth, benefiting from the increased capacity of our new state-of-the-art manufacturing facility. CAD/CAM grew 7.6%, on our constant currency basis, despite a difficult comparable, reflecting the strong demand for Sirona’s products. Our “CAD/CAM for Everyone” strategy is driving new user demand, and early indications are that customers remain focused on Omnicam and our new chairside milling units. These factors contributed to our 69.3%CAD/CAM segment gross profit margin.” Fiscal 2014 Guidance Management continues to anticipate FY14 constant currency revenue growth of 4% to 6%, and non-GAAP adjusted EPS^* in the range of $3.60 to $3.70 (reflecting growth of approximately 6% to 9%). Conference Call/Webcast Information Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on February 7, 2014. The teleconference can be accessed by calling +1-877-703-6107 (domestic) or +1-857-244-7306 (international) using passcode # 16950014. 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 14, 2014 by calling +1-888-286-8010 (domestic) or +1-617-801-6888 (international) using passcode #45731244. 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. SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Three months ended December 31, 2013 2012 $'000s (except per share amounts) Revenue $ 298,726 $ 272,404 Cost of sales 135,995 120,533 Gross profit 162,731 151,871 Selling, general and administrative 88,057 85,853 expense Research and development 15,118 14,095 Net other operating income (2,500 ) (6,914 ) Operating income 62,056 58,837 (Gain)/loss on foreign currency 2,604 4,580 transactions, net (Gain)/loss on derivative instruments (567 ) (1,346 ) Interest expense, net 782 970 Other expense/(income) 464 340 Income before taxes 58,773 54,293 Income tax provision 13,812 15,226 Net income 44,961 39,067 Less: Net income attributable to 790 765 noncontrolling interests Net income attributable to Sirona $ 44,171 $ 38,302 Dental Systems, Inc. Income per share (attributable to Sirona Dental Systems, Inc. common shareholders): - Basic $ 0.80 $ 0.70 - Diluted $ 0.79 $ 0.68 Weighted average shares - basic 55,054,040 55,004,471 Weighted average shares - diluted 56,130,008 56,327,927 SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 31, September 30, 2013 2013 (unaudited) $'000s (except per share amounts) ASSETS Current assets Cash and cash equivalents $ 210,920 $ 241,745 Restricted cash 674 681 Accounts receivable, net of allowance for doubtful accounts of $1,526 and $1,588, respectively 161,577 145,212 Inventories, net 120,710 109,175 Deferred tax assets 30,115 31,370 Prepaid expenses and other current 34,567 32,556 assets Income tax receivable 1,535 2,345 Total current assets 560,098 563,084 Property, plant and equipment, net of accumulated depreciation and amortization of $168,270 and 219,709 182,737 $156,730, respectively Goodwill 683,074 672,086 Intangible assets, net of accumulated amortization of $520,407 and $503,130, respectively 296,552 301,718 Other non-current assets 4,573 5,620 Deferred tax assets 16,422 13,174 Total assets $ 1,780,428 $ 1,738,419 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 59,486 $ 73,235 Short-term debt and current portion of 480 447 long-term debt Income taxes payable 9,151 9,319 Deferred tax liabilities 1,353 745 Accrued liabilities and deferred 154,078 162,341 income Total current liabilities 224,548 246,087 Long-term debt 75,000 75,000 Deferred tax liabilities 131,103 131,455 Other non-current liabilities 26,016 27,447 Indebtedness to related parties Pension related provisions 67,354 65,985 Deferred income 31,704 34,401 Total liabilities 555,725 580,375 Shareholders' equity Common stock ($0.01 par value; 95,000,000 shares authorized; 57,447,203 shares issued and 55,224,468 shares outstanding at Dec. 31, 2013; 574 572 57,213,615 shares issued and 54,999,436 shares outstanding at Sept. 30, 2013 Additional paid-in capital 729,733 723,288 Treasury stock (at cost) 2,222,735 shares held at cost at Dec. 31, 2013; (112,548 ) (111,955 ) 2,214,179 shares held at cost at Sept. 30, 2013 Excess of purchase price over (49,103 ) (49,103 ) predecessor basis Retained earnings 628,387 584,216 Accumulated other comprehensive 24,540 8,607 income/(loss) Total Sirona Dental Systems, Inc. 1,221,583 1,155,625 shareholders' equity Noncontrolling interests 3,120 2,419 Total shareholders' equity 1,224,703 1,158,044 Total liabilities and shareholders' $ 1,780,428 $ 1,738,419 equity SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months ended December 31, 2013 2012 $'000s Cash flows from operating activities Net income $ 44,961 $ 39,067 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 19,010 17,912 (Gain)/loss on disposal of property, plant and - (30 ) equipment (Gain)/loss on derivative instruments (567 ) (1,346 ) (Gain)/loss on foreign currency transactions 2,604 4,580 Deferred income taxes (3,979 ) 8,815 Amortization of debt issuance cost 101 138 Share-based compensation expense 3,361 6,097 Changes in assets and liabilities Accounts receivable (15,588 ) (12,753 ) Inventories (11,354 ) (10,589 ) Prepaid expenses and other current assets (1,750 ) (6,054 ) Restricted cash (15 ) - Other non-current assets 781 (81 ) Trade accounts payable (14,848 ) 9,078 Accrued liabilities and deferred income (10,206 ) (26,909 ) Other non-current liabilities (1,768 ) 1,873 Income taxes receivable 835 (41 ) Income taxes payable (293 ) 3,932 Net cash provided by operating activities 11,285 33,689 Cash flows from investing activities Investment in property, plant and equipment (43,123 ) (10,347 ) Proceeds from sale of property, plant and 308 83 equipment Purchase of intangible assets (220 ) (12 ) Acquisition of business, net of cash acquired - (35,019 ) Net cash used in investing activities (43,035 ) (45,295 ) Three months ended December 31, 2013 2012 $'000s Cash flows from financing activities Repayments of short-term and long-term debt - (98 ) Purchase of treasury stock (593 ) (17,172 ) Dividend distributions to noncontrolling (147 ) (434 ) interest Common shares issued under share based compensation plans 2,351 2,791 Tax effect of common shares issued under share based compensation plans (1,485 ) (1,910 ) Net cash used in financing activities 126 (16,823 ) Change in cash and cash equivalents (31,624 ) (28,429 ) Effect of exchange rate change on cash and 799 1,511 cash equivalents Cash and cash equivalents at beginning of 241,745 151,088 period Cash and cash equivalents at end of period $ 210,920 $ 124,170 Reconciliation of GAAP and Non-GAAP Information (unaudited) HISTORICAL Non-GAAP Adjusted Net Income Financial Measures (unaudited) Three months ended December 31, 2013 Tax Per Pre Tax Impact* After Tax Diluted Share $'000s, except per share amount GAAP net income attributable to Sirona Dental $ 44,171 $ 0.79 Systems, Inc. shareholders Adjustments Amortization and depreciation expense resulting from the step-up to fair values of $ 9,431 $ 2,216 7,215 intangible assets related to past business combinations (Gain)/loss on foreign currency 2,604 612 1,992 transactions, net^ (Gain)/loss on derivative (567 ) (133 ) (434 ) instruments^ Other items: Compensation charge for expenses in 1,286 302 984 connection with the CFO Transition Non-GAAP adjusted net income attributable to $ 53,928 $ 0.96 Sirona Dental Systems, Inc. shareholders * tax impact calculated using estimated effective tax rate of 23.5% Three months ended December 31, 2012 Tax Per Pre Tax Impact** After Tax Diluted Share $'000s, except per share amount GAAP net income attributable to Sirona Dental $ 38,302 $ 0.68 Systems, Inc. shareholders Adjustments Amortization and depreciation expense resulting from the step-up to fair values of $ 9,633 $ 2,312 7,321 intangible assets related to past business combinations (Gain)/loss on foreign currency 4,580 1,099 3,481 transactions, net^ (Gain)/loss on derivative (1,346 ) (323 ) (1,023 ) instruments^ Other items: Non-cash remeasurement of deferred tax assets and 2,196 2,196 liabilities due to an increase in German trade tax rate Non-cash compensation charge for the revaluation of share based compensation in 3,764 903 2,861 connection with the Transition Agreement for the departing CEO and Chairman Non-GAAP adjusted net income attributable to $ 53,138 $ 0.94 Sirona Dental Systems, Inc. shareholders ** tax impact calculated using estimated effective tax rate of 24% FORWARD-LOOKING Non-GAAP Adjusted EPS Guidance (unaudited) Low End of Guidance Tax After Per Pre-Tax Impact Tax Diluted Share $ millions, except per share amount GAAP net income attributable to Sirona Dental $ 174 $ 3.10 Systems, Inc. shareholders Adjustments Amortization and depreciation expense resulting from the step-up to fair $ 36 $ 9 $ 27 values of intangible assets related to past business combinations Other items: Compensation charge for expenses in 1 - 1 connection with the CFO Transition Non-GAAP adjusted net income attributable to Sirona Dental $ 202 $ 3.60 Systems, Inc. shareholders High End of Guidance Tax After Per Pre-Tax Impact Tax Diluted Share $ millions, except per share amount GAAP net income attributable to Sirona Dental $ 179 $ 3.20 Systems, Inc. shareholders Adjustments Amortization and depreciation expense resulting from the step-up to fair 36 9 27 values of intangible assets related to past business combinations Other items: Compensation charge for expenses in 1 - 1 connection with the CFO Transition Non-GAAP adjusted net income attributable to Sirona Dental $ 207 $ 3.70 Systems, Inc. shareholders ^We are unable to provide estimates for these items because we are unable to predict the 2014 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 ongoing 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. 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 ongoing 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 many 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, 2013, was $1.36115 and varied from $1.34970 to $1.36970 . For the three months ended December 31, 2012, an average exchange rate converting Euro denominated revenues into U.S. Dollars of $1.29708 was applied. Our forecasted 2014 constant currency net revenue guidance excludes the impact of foreign exchange. We are unable to reconcile our projected 2014 constant currency net revenue growth to our full-year projected 2014 net revenue growth because we are unable to predict the 2014 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. ^* 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. Contact: Sirona Dental Systems, Inc. Joshua Zable, +1-718-482-2184 Vice President, Investor Relations firstname.lastname@example.org
Sirona Reports Record Results for First Quarter of Fiscal 2014
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