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Sirona Dental Systems, Inc. (SIRO)

F1Q10 (Qtr End 12/31/09) Earnings Call Transcript

February 8, 2009 8:30 am ET


John Sweeney – VP, IR

Jost Fischer – Chairman, President and CEO

Simone Blank – EVP and CFO

Jeff Slovin – EVP and COO, U.S. Operations


Natalie Nadler [ph] – William Blair

Larry Marsh – Barclays Capital

Jeff Johnson – Robert Baird

Greg Brash – Sidoti & Co.

Abigail Darby – JP Morgan

Jonathan Block – SunTrust Robinson Humphrey

Peter Bye – Jefferies & Co.

Ross Taylor – CL King

Scott Green [ph] – Bank of America/Merrill Lynch

Derek Leckow – Barrington Research



Good day, ladies and gentlemen, and welcome to the first quarter 2010 Sirona Dental Systems earnings conference call. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder this conference is being recorded for replay purposes.

I would now like to turn the call over to Mr. John Sweeney, Vice President of Investor Relations. Please proceed, sir.

John Sweeney

Good morning, everyone. I would like to remind you that the earnings slide deck presentation relating to this conference call is available on our Web site at

Before I turn the call over to Jost Fischer, Chairman, President, and CEO, Sirona Dental Systems, I need to inform you that the 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. These matters discussed in the 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 products, 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 that speak only as of the date of this call.

Please note on today’s call we will be presenting additional financial information including non-GAAP financial measures under Section 101 of Regulation G of the 1934 Exchange Act.

In addition, during today’s call management will comment on guidance for fiscal year 2010. Please note that all statements made in connection with the guidance are based on the current expectations and actual results could differ materially from such forward-looking statements.

Now, I would like to turn the call over to Jost Fischer, Chairman, President and CEO of Sirona Dental Systems.

Jost Fischer

Thanks, John. It is my pleasure to welcome all of you to our First Quarter 2010 Conference Call. Joining today are Simone Blank, Executive Vice President and CFO and Jeffrey Slovin, Executive Vice President and COO of U.S. Operations.

We are pleased with our exceptionally strong performance in the first quarter. We achieved strong revenue growth of 19.5% or 10.9% on a constant currency basis, driven by our recent innovative product launches and our technologically advanced product portfolio. The bottom-line benefited from robust sales growth, margin expansion, expense management initiatives and deleveraging.

Looking at our performance by segment in the first quarter, we had record revenues of $73.8 million in our CAD/CAM segment, up 29.3% constant currency. Our Instrument business also had a record quarter with revenues of $26.1 million, up 6.7% constant currency. Our Imaging segment also had record sales of $71 million, up 3.7% constant currency.

Finally, our Treatment Center revenues increased 0.5% constant currency to $43.9 million with a notable contribution from our TENEO Treatment Center.

In addition to our exceptional revenue performance, operating income plus amortization increased 51.5% to $59.6 million. Our strong cash flow translated directly into a reduction in our net debt, which now stands at $254 million, down $40 million as compared to September 30th.

We continued to capitalize on our 2009 product launches with a substantial contribution from our CEREC AC Galileos 3D imaging systems, TENEO and the CDR Elite Sensor.

I would also like to highlight the impact of one of our more recent innovations, the Galileo CEREC integration. This technology combines the diagnostic capabilities of Galileos with the high-quality esthetic restorations offered by our CEREC system. This enables dental practitioners to plan and create customized sample implant solutions more easily with a substantially lower level of risk.

Importantly, we are the only company with a product portfolio to integrate these two technologies and therefore are well-positioned to capitalize on this opportunity. We are seeing that dentists interested in 3D are now looking for CAD/CAM integration capabilities and vice versa. And this capability is increasingly influencing their decisions.

Later this year, we are going to celebrate our CEREC 25th year anniversary. For the past quarter century, Sirona has advanced the field of CAD/CAM in dentistry, constantly upgrading its systems.

I will now turn the call over to Simone for a review of our first quarter financials.

Simone Blank

Thank you, Jost. In the first quarter, our revenues increased $35.1 million to $214.8 million. In the U.S. we had record revenues of $68.7 million, up 12.1%, with strong CAD/CAM and imaging sales. Outside the U.S. international revenues increased 10.4% constant currency with particular strength in CAD/CAM and positive growth in all segments.

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