Sirona Dental Systems, Inc. (SIRO)
F2Q09 (Qtr End 03/31/09) Earnings Call Transcript
May 5, 2009 8:30 am ET
John Sweeney – Director, IR
Jost Fischer – Chairman, President & CEO
Sirona Blank – EVP & CFO
Jeffrey Slovin – EVP & COO of US Operations
Brendan [ph] – Banc of America Securities
Tycho Peterson – JP Morgan
Ross Taylor – CL King
Jeff Johnson – Robert Baird
Greg Brash – Sidoti and Company
John Kreger – William Blair and Company
Adam Pusard – Barclays Capital
Previous Statements by SIRO
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I would now turn the call over to your host for today’s call, Mr. John Sweeney, Vice President of Investor Relations. Please proceed, sir.
Thank you and good morning everyone. Before I turn the call over to Jost Fischer, Chairman, President, and CEO, Sirona Dental Systems, I need to inform you that information in this conference call contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the company’s ability to control. The matters discussed in this conference call are subject to various factors which could cause actual events and results to differ materially from such statements. Such factors include uncertainties as to future sales volumes of the company's products; the possibility of changing economic, market, and competitive conditions; dependence on product, dependence on key personnel, technological developments, intense competition, market uncertainties, dependence on distributors’ ability to manage growth, dependence on key suppliers; and other risks and uncertainties including those detailed in the company's filings with the Securities and Exchange Commission.
The company undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this conference call. You are cautioned not to place undue reliance on these forward-looking statements which speaks only as of the date of this conference call.
Please note that in today’s conference call you’ll be presented with additional financial information, including non-GAAP financial measures under Section 101 of Reg G of the 1934 Exchange Act. In addition, during today's conference call, management will comment on guidance for fiscal year 2009. Please note that all statements made in connection with the guidance are based on current expectations, and actual results could differ materially from such forward-looking statements.
Now, I’d like to turn the call over to Jost Fischer, Chairman, President, and CEO, Sirona Dental Systems.
Thanks, John. It is my pleasure to welcome all of you to our second quarter 2009 conference call. Joining me today are Simone Blank, Executive Vice President and CFO and Jeffrey Slovin, Executive Vice President and COO of US Operation.
Despite the global recession, we have made good progress towards achieving our goal. Our new digital impression unit, the CEREC AC, is progressing well. The AC coupled with our CEREC Connect functionality are at the forefront of digital dentistry and illustrate Sirona’s continuing leadership in CAD/CAM. At the 2009 International Dental Show in Cologne in March, we showcased our innovation capabilities. We launched a considerable number of new products and product enhancements, including the integration of CEREC and GALILEOS.
The (inaudible) of CAD/CAM and GALILEOS’ 3D combines the diagnostic capabilities of GALILEOS with a high quality aesthetic respiration solution offered by our CEREC system. This technology enables dental practitioners to plan and create customized dental implant solutions more easily with a substantially lower level of risk. Importantly, no other company has a research and development capabilities or product portfolio to integrate these two advanced dental technologies.
Our CEREC AC was ranked by the Association of German Dental Manufacturers as one of the most important innovations at the IDS.
Still we face a difficult global economy and many dentists are postponing purchases. Notwithstanding, Sirona is highly competitive in each of our four business divisions. We have taken the necessary steps to compete and succeed in the market.
Before, I discuss these topics in more detail, I would turn the call over to Sirona for a review of our results.
Thank you, Jost. Second quarter revenues were $164.8 million, down 13% compared to prior year or down 4.5% constant currency. As we anticipated, our second quarter revenues were impacted by the difficult economic environment and the timing of the biennial International Dental Show in Cologne. In addition, last year’s MC XL trade-in program had a significant positive impact on our results.
Now I would like to highlight the quarter's regional development. US revenues declined 1%; last year’s revenues benefited substantially from the MC XL upgrade program. If we exclude the impact of this program, our US and CAD/CAM revenues would have shown significant growth.
Our CAD/CAM business has held up well even in this difficult economy.
US sales of our 2D and 3D digital panoramic units posted positive growth and we believe Sirona increased its market share in digital radiography during the quarter. Financing programs the dentist offered to our distributors were a key contributor to our sales success in the US.
International revenues declined 18%, down 6% on a constant currency basis. This decline was the result of the weak global economy, the IDS, and the timing of our international project business. We were pleased to see positive revenue growth in the German market after a weak first quarter. We are cautiously optimistic that this positive trend will continue for Sirona. Our business in other European markets declined in the face of strong economic headwind.