Sirona Dental Systems, Inc. (SIRO)

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Sirona Dental Systems Inc. (SIRO)

Q4 2012 Earnings Call

November 16, 2012 9:00 am ET


Jost Fischer – Chairman, Chief Executive Officer

Jeffrey Slovin - President

Simone Blank – Executive Vice President, Chief Financial Officer

Joshua Zable – Vice President, Investor Relations


Ross Taylor – CL King

Robert Jones – Goldman Sachs

John Kreger – William Blair

Jeff Johnson – Robert Baird

John Baugh – Stifel Nicolaus

Scott Green – Bank of America Merrill Lynch

Tycho Peterson – JP Morgan

Jon Wood – Jefferies

Steve Beuchaw – Morgan Stanley

Jonathan Beake – Citigroup



Good day ladies and gentlemen and welcome to the Sirona Dental Fourth Quarter and Full Year 2012 Earnings conference call. At this time, all participants are in a listen-only mode. Later on, we will conduct a question and answer session, and if at any time you require operator assistance please press star, zero and an operator will be happy to assist you. As a reminder, today’s conference is being recorded for replay purposes.

And with that, I’d now like to turn the conference over to your host for today, Mr. Joshua Zable, Vice President, Investor Relations. Please go ahead, sir.

Joshua Zable

Thank you and good morning everyone. Welcome to our fourth quarter and full year fiscal 2012 conference call. I would like to remind you that an earnings slide deck presentation relating to this call is available on our website at

Before we begin, please take a moment to read the forward-looking statement on Slide of our earnings slide presentation. During today’s conference call, we’ll make certain predictive statements that reflect our current views about our future performance and financial results. We base these statements on certain assumptions and expectations of future events that are subject to risks and uncertainties. Our most recent Form 10-K lists some of our most important risk factors that could cause actual results to differ from our predictions.

And with that, I’ll now turn the program over to Jost Fischer, Chairman and CEO of Sirona Dental Systems. Jost?

Jost Fischer

Thanks, Josh. It is my pleasure to welcome all of you to our fourth quarter and full year 2012 conference call. Joining me today are Jeffrey Slovin, President, and Simone Blank, Executive Vice President and Chief Financial Officer. I am delighted to report that fiscal 2012 was a year with many accomplishments for Sirona. We ended the year on a high note with Q4 constant currency revenue growth of 23.4% and operating income plus amortization growth of 25.5%. Each one of our four business segments delivered double-digit constant currency revenue growth in the fourth quarter.

In August, we launched our revolutionary Omnicam, a product with no equal, at the largest digital dentistry event ever, CEREC 27.5. For the full year, Sirona achieved constant currency revenue growth of 12.6%. This was particularly noteworthy compared to our record-setting fiscal 2011 where Sirona grew over 16% constant currency. We continue to take market share. Keep in mind, we did all of this while continuing to invest in our sales and service infrastructure.

2012 was a very productive year for Sirona. Let me reiterate the key pillars of our successful strategy. To expand our outstanding portfolio of high tech dental products through continuous innovation, we have invested over $290 million in the past six years, creating new and enhanced products and solutions for better dentistry. To grow and leverage our world-class global sales and service infrastructure, we are active in over 135 countries around the globe. We continue to execute on our strategy, giving Sirona a clear competitive advantage and enabling us to deliver consistent, robust organic growth.

We’ve also built a solid foundation that will allow Sirona to keep growing for years to come. This year, we strengthened our go-to-market strategy in the U.S. by expanding our exclusive relationship with Patterson. In Europe, we continue to take market share and support key distributors like our largest European partner, Henry Schein. In addition to strengthening these geographies, we’ve continued to invest in our sales and service infrastructure around the world, creating a world-class global distribution network.

We also continued our market-leading investment in research and development, spending more than 52 million in fiscal 2012. You have already seen the latest fruits of our pipeline with the launch of the revolutionary new Omnicam and the industry-leading intraoral sensor, Schick 33. It is important to note that these products contributed very little to Q4 and fiscal 2012, so we expect to see the full benefit of these products this year.

Treatment centers showed the highest revenue growth for the year, up 15.1% constant currency. This segment benefited from the expansion of our sales and service infrastructure and was bolstered by the success of our newest platform, Sinius. CAD/CAM increased 13.9% constant currency for the year, also benefiting from the continuous international build-out of our sales and service infrastructure. In the year, Q4 showed the strongest growth across all geographies. Imaging grew 11.5% constant currency in fiscal 2012 with strong growth in non-European international markets and the U.S. Our expanded agreement with Patterson is already paying dividends.

Instruments grew 7.5% constant currency for the year, benefiting from our expanded sales and service infrastructure. International revenues increased 13.2% constant currency, led by strong double-digit growth in Asia Pacific. We are pleased to highlight that our non-European international markets now account for about 37% of sales. Germany was down but entirely due to a difficult comp. We had our second best year ever in Deutschland. The rest of Europe was up both for the quarter and the year, and that includes France and Italy being up. The U.S. grew 11.4% and gained momentum throughout the year. We are very pleased with our growth here.

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