Sirona announces fourth-quarter and fiscal year end 2009 results

Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the quarter and fiscal year ended September 30, 2009.

Chairman, President & CEO, Jost Fischer commented; “We are pleased to report another year of solid performance for Sirona and note that we finished with robust fourth quarter constant currency revenue growth of 8.4%. Despite the weak global economy, Sirona was able to grow constant currency revenues in fiscal 2009, driven by our innovative high-tech product line. During the year, the Company introduced breakthrough advancements in dental care, led by the CEREC AC. Our operating cash flow increased 26.6% to $119.9 million, and we reduced our net debt by $110.0 million. These results demonstrate the strength and resilience of our diversified business model. We are well positioned to compete successfully in fiscal 2010, backed by an innovative product offering, and a strong global sales and service infrastructure.”

Fourth Quarter Fiscal 2009 vs. Fourth Quarter Fiscal 2008 Financial Results

Revenue was $188.2 million, an increase of $7.6 million or 4.2% (up 8.4% on a constant currency basis), with growth rates for the Company's business segments as follows: CAD/CAM increased 35.3% (up 40.1% constant currency); Instruments increased 2.3% (up 7.7% constant currency); Imaging Systems declined 5.5% (down 2.7% constant currency); and Treatment Centers declined 15.0% (down 10.4% constant currency). Revenue in the United States increased by 32.1%, particularly driven by CAD/CAM sales which benefited from strong interest in the CEREC AC and the AC trade-in program. Outside the United States, revenue declined 5.0% (flat constant currency).

Gross profit was $92.0 million, up $10.6 million compared to prior year. Gross profit margin was 48.9% in the fourth quarter of 2009 compared to 45.1% in the prior year. The gross profit margin expansion was driven by higher CAD/CAM sales, lower levels of amortization expense, and the strengthening of the US dollar relative to the Euro.

Fourth quarter 2009 operating income excluding amortization expense was $43.2 million (operating income of $24.7 million plus amortization expense of $18.6 million), compared to $33.1 million (operating income of $10.1 million plus amortization expense of $22.9 million) in the prior year. Fourth quarter 2009 operating income included restructuring expenses in the amount of $3.7 million.

Net income for the fourth quarter of 2009 was $26.7 million, or $0.476 per diluted share, compared to a loss of $5.2 million, or $0.09 per diluted share, for the fourth quarter of 2008. Fourth quarter 2009 earnings per share included $0.39 of amortization and depreciation expense attributable to the write-up in value of assets due to purchase accounting, a gain of $0.04 related to the revaluation of the Patterson exclusivity fee, a gain of $0.03 resulting from the revaluation of short-term intra-group loans, a $0.065 restructuring charge and a $0.03 one-time, non-cash gain.

For the fourth quarter of 2008, earnings per share included $0.38 of amortization and depreciation expense attributable to the write-up in value of assets due to purchase accounting, a loss of $0.11 related to the revaluation of the Patterson exclusivity fee and an $0.08 loss resulting from the revaluation of short-term intra-group loans.

The effective tax rate for fiscal 2009 was 14.7%.

At September 30, 2009, the Company had cash and cash equivalents of $181.1 million and total debt of $474.9 million, resulting in net debt of $293.8 million. This compares to net debt of $403.8 million at September 30, 2008. The decrease in net debt was driven by strong cash flow from operations, and lower tax and interest payments in the 2009 fiscal year. In May of 2009, the Company paid back the first scheduled debt repayment of $79 million, six months ahead of schedule.

Fiscal 2009 vs. Fiscal 2008 Financial Results

Revenue was $713.3 million, a decrease of $43.8 million, or 5.8% (up 1.3% constant currency) with growth rates for the Company's business segments as follows: CAD/CAM increased 3.4% (up 9.3% constant currency); Instruments declined 9.1% (up 0.5% constant currency); Treatment Centers declined 9.7% (flat constant currency); and Imaging Systems declined 10.7% (down 5.4% constant currency). Revenue in the United States was flat compared to prior year. Outside the United States, revenue declined 8.2% (up 1.8% constant currency) benefiting from growth in Germany and with mixed performance across the various countries.

Gross profit increased by $0.5 million to $346.1 million, up 0.2%. Gross profit margin of 48.5% was up 290 basis points compared to the prior year, mainly driven by lower levels of deal related amortization, a favorable product mix shift, and the strengthening of the US dollar relative to the Euro.

2009 operating income excluding amortization expense was $156.6 million (operating income of $85.1 million plus amortization expense of $71.5 million). This compares to 2008 operating income excluding amortization expense of $155.4 million (operating income of $63.8 million plus amortization expense of $91.6 million). Operating income in fiscal 2009 included restructuring expenses in the amount of $8.2 million.

Fiscal 2010 Guidance

The Company expects constant currency revenue growth of 4% to 6% in fiscal 2010. Operating income excluding amortization expense is expected to be in the range of $166 to $176 million.