Sirona Dental Systems, Inc.
) posted a 5.4% rise in adjusted earnings to $43.8 million or 78
cents per share for the fourth quarter of fiscal 2013 ended Sep
30 from $41.5 million or 74 cents in the corresponding quarter of
prior fiscal year. However, earnings missed the Zacks Consensus
Estimate of 80 cents per share.
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Adjusted earnings exclude amortization and depreciation expense
resulting from the step-up to fair values of intangible assets
related to past business combinations, and gain on derivative
Revenues in the quarter grew 12.6% (8.3% on a constant currency
basis) to $278.6 million, exceeding the Zacks Consensus Estimate
of $266 million. Revenues in Sirona's CAD/CAM Systems segment
rose 35.2% (30.3% on a constant currency basis); Imaging Systems
segment went up 5.5% (2.7% on a constant currency basis),
Instruments segment increased 3.0% (2.6% on a constant currency
basis), and Treatment Centers segment fell 3.6% (8.9% on a
constant currency basis) in the quarter.
Revenues in the U.S. grew 2.8% in the quarter as the company
benefited from the expanded partnership with Patterson Dental of
Patterson Companies Inc.
) as well as delivery of CAD/CAM trade-up units. Sales in
international markets rose 17.0% (10.6% in constant currency),
driven by CAD/CAM and Imaging in Europe. Sales were exceptionally
good in Germany due to the CAD/CAM trade-up program and rising
demand for products in the segment.
Fiscal 2013 Results
Sirona's adjusted earnings per share in the fiscal year rose 7.8%
to $3.19 from $2.96 in the prior fiscal year while adjusted total
earnings rose 6.8% to $179.3 million from $167.8 million a year
Revenues in the year went up 12.5% (11.7% on a constant currency
basis) to $1,101.5 million. Segment wise, revenues in the CAD/CAM
Systems rose 22.4% (21.6% on a constant currency basis), Imaging
Systems escalated 10.0% (9.5% on a constant currency basis),
Treatment Centers scaled up 6.9% (5.8% on a constant currency
basis), and Instruments grew 1.0% (flat on a constant currency
basis) in the fiscal year.
Revenue in the U.S. rose 18.2% driven by strong demand for
Imaging and CAD/CAM products, the impact of implementation of the
Medical Device Tax in 2013 and anticipated changes in tax
benefits in the next quarter, the delivery of Omnicam trade-ups
in the third and fourth quarters, and the expanded agreement with
Revenues outside the U.S. rose 10.1% (9.1% in constant currency)
driven by strong 23.4% (in constant currency) rise in sales in
Germany, due to orders following the International Dental Show in
Cologne in March this year (where 25 new products have been
introduced by SIRO), a successful trade-up program in the CAD/CAM
segment, as well as solid sales of renowned M1+ treatment center
Sirona Dental exited the second quarter with cash and cash
equivalents of $241.7 million as of Sep 30, 2013, up from $151.1
million as of Sep 30, 2012. Total debt remained nearly the same
at $754.5 million as of Sep 30, 2013 compared with the same as of
Sep 30, 2012.
In fiscal 2013, Sirona Dental had cash flow of $232.0 million
from operations, up 15.2% from $201.4 million in the prior fiscal
year. Capital expenditures (net) surged 50.2% to $70.6 million
from $47.0 million in fiscal 2012.
For fiscal 2014, SIRO expects revenue growth in the range of 4 to
6% in constant currency. The growth assumes 20% constant currency
growth in its two largest markets, the U.S. and Germany.
Sirona Dental also anticipates adjusted earnings in the range of
$3.60 to $3.70 per share, implying a growth of 6 to 9%.
Overall, the company expects to witness solid demand for its
products and generate strong bottom line leverage.
Sirona Dental is the world's leading provider of dental CAD/CAM
systems. Despite its promising results and guidance, shares of
the company dipped 3.3% to $70.19 after the market closed on Nov
22. We are also discouraged about its earnings miss in the fourth
Currently, SIRO carries a Zacks Rank #4 (Sell). While we avoid
Sirona Dental, some better-ranked stocks from the medical
instruments industry that worth a look include
Natus Medical Inc.
) with a Zacks Rank #1 (Strong Buy), and
) with a Zacks Rank #2 (Buy).