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.
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).
ANGIODYNAMICS (ANGO): Free Stock Analysis
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PATTERSON COS (PDCO): Free Stock Analysis
SIRONA DENTAL (SIRO): Free Stock Analysis
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