Sirona second-quarter revenue increases 15.4% to $190.1 million

Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the three and six months ended March 31, 2010.

Second Quarter Fiscal 2010 vs. Second Quarter Fiscal 2009 Financial Results

Revenue was $190.1 million, an increase of $25.3 million or 15.4% (up 11.0% on a constant currency basis), with growth rates for the Company's business segments as follows: Instruments increased 22.0% (up 15.1% constant currency); Treatment Centers increased 20.7% (up 13.9% constant currency); Imaging Systems increased 20.4% (up 16.6% constant currency); and CAD/CAM increased 6.3% (up 3.4% constant currency). Revenue in the United States increased by 7.7%, particularly driven by strong sales of our Galileos 3D imaging system. Outside the United States, revenue increased by 19.2% (up 12.5% constant currency), driven by strength in Germany and Australia.

Gross profit was $99.3 million, up $19.0 million. Gross profit margin was 52.2% in the second quarter of Fiscal 2010, compared to 48.7% in the prior year. The gross profit margin expansion was the result of product and regional mix and lower levels of amortization expense.

Second quarter 2010 operating income excluding amortization expense was $46.1 million (operating income of $30.6 million plus amortization expense of $15.5 million), compared to $31.3 million (operating income of $13.7 million plus amortization expense of $17.6 million) in the prior year.

Net income for the second quarter of 2010 was $17.5 million, or $0.31 per diluted share, compared to $0.6 million, or $0.01 per diluted share in the prior year period. Second quarter 2010 earnings per share included $0.21 of amortization and depreciation expense attributable to the write-up in value of assets due to purchase accounting, a loss of $0.07 related to the revaluation of the Patterson exclusivity fee, a loss of $0.06 resulting from the revaluation of short-term intra-group loans and a $0.01 gain on the sale of a subsidiary. For the second quarter of 2009, earnings per share included $0.23 of amortization and depreciation expense attributable to the write-up in value of assets due to purchase accounting, a loss of $0.05 related to the revaluation of the Patterson exclusivity fee, a $0.03 loss resulting from the revaluation of short-term intra-group loans and a $0.04 restructuring expense.

At March 31, 2010, the Company had cash and cash equivalents of $162.4 million and total debt of $367.3 million, resulting in net debt of $204.9 million. This compares to net debt of $293.8 million at September 30, 2009. The decrease in net debt was driven by strong cash flow from operations. In March, the Company paid back the second scheduled debt repayment of $78.1 million, eight months ahead of schedule.

Chairman, President & CEO, Jost Fischer commented; "We are pleased with our strong performance in the second quarter. Our innovative product launches and technologically advanced portfolio continue to drive our performance. This was highlighted by robust sales of our Galileos 3D imaging system, which benefited from heightened interest in our Galileos CEREC integration. Our bottom line benefited from strong sales growth, margin expansion and deleveraging. As a result of our first half 2010 performance, and our confidence in the remainder of the year, we are increasing our Fiscal 2010 guidance."

Fiscal 2010 Guidance Update

The Company expects to achieve constant currency revenue growth in the range of 6% to 8% in Fiscal 2010, up from the previous guidance range of 4% to 6%. Operating income excluding amortization expense is expected to be in the range of $178 to $184 million, up from the previous guidance range of $170 million to $176 million.

First Half Fiscal 2010 vs. First Half Fiscal 2010 Financial Results

Revenue was $405.0 million, an increase of $60.4 million or up 17.5% (up 10.9% constant currency) with growth rates for the Company's business segments as follows: CAD/CAM Systems increased 20.8% (up 15.5% constant currency); Instruments increased 20.4% (up 10.6% constant currency); Treatment Centers increased 16.1% (up 6.6% constant currency); and Imaging Systems increased 14.1% (up 9.2% constant currency). Revenue in the United States increased 10.0%. Outside the United States, revenue increased 21.4% (up 11.3% constant currency) driven by solid performance in Germany and Asia Pacific.

Gross profit increased by $44.4 million to $211.7 million, up 26.5%. Gross profit margins expanded 370 basis points to 52.3 percent, due to product and regional mix and lower levels of amortization expense.

First half 2010 operating income excluding amortization expense was $105.8 million (operating income of $74.1 million plus amortization expense of $31.7 million), compared to $70.7 million (operating income of $35.5 million plus amortization expense of $35.2 million) in the prior year. First half 2009 results included a $2.8 million restructuring expense.