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Call End 9:33

Sirona Dental Systems, Inc. (SIRO)

F1Q09 (Qtr End 12/31/08) Earnings Call

February 05, 2009, 9:00 am ET


John Sweeney - VP, IR

Jost Fischer - Chairman, President and CEO

Simone Blank - EVP and CFO


Natalie - William Blair & Company

Jon Wood - Bank of America/Merrill Lynch

Jeff Johnson - Robert Baird



Good day ladies and gentlemen and welcome to the Sirona Dental Systems First Quarter 2009 Earnings Conference Call. My name is [Shakuana] and I will be your coordinator for today. At this time all participants are in a listen-only mode. (Operator Instructions).

I would now like to turn the call over to your host for today, Mr. John Sweeney, Vice-President of Investor Relations. Please proceed.

John Sweeney

Thank you and good morning everyone. Before I turn the call over to Jost Fischer, Chairman, President, and CEO of 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 product sales volumes of the company's products, the possibility of changing economic, market, and competitive conditions, dependence of 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 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 will 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 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.

Our first quarter results are in line with our expectations against the backdrop of a challenging economic environment we continue to execute and we are taking the necessary steps to succeed, while we see some dentists postponing equipment purchases. We also see that they continue to evaluate and invest in innovative high-tech products that improve their competitive position and increase their practice income.

Our CEREC AC launch is off to a great start and represents another example of our industry leading research and development efforts benefit the company. In addition our expense management initiatives are underway and we will start seeing the benefit as we move forward. The highlight of the dental calendar will be the buy annual IDS dental show in Cologne at the end of March. This is the largest show in the dental world and the key launch platform for the industry and for us.

Before I discuss these topics I will turn the call to Simona for a review of our results.

Simone Blank

Thank you, Jost. First quarter revenues were $179.7 million down 10.2% compared to prior year or down 4.4% constant currency. As we expected, our first quarter revenues were impacted by the global recession.

Now I would like to highlight the quarter's regional development. US revenues declined 6%, last year’s quarter benefited substantially from the MC-XL upgrade program. If we exclude the impact of the trading program from the prior year quarter, our US revenues in total would have shown a year-over-year increase. Also US sales of our of digital panoramic and 3D Galileos systems were particularly strong in the quarter. International revenues declined 12%, down 4% on a constant currency basis. European revenues were down versus the prior year was mixed results among the countries. The German, UK and Spanish markets declined where as our sales in France, Austria, and certain other countries showed growth.

Our non-US, non-European revenues were up materially with continued strong performance in Japan.

Moving on to a review of our business segments performance. Imaging segment revenues declined 5% flat constant currency, benefiting from positive development in the US as well as solid performance in many of our non European market such as Japan, and Australia. This was offset by a weak performance in Germany, which was down materially. Imaging segment gross profit margin was 60% in line with the prior year period.

Treatment Center revenues declined 12% or down 4% on a constant currency basis. Strong performance in non-US, non-European markets was offset by weakness in Europe and some European dentist postponed purchases of treatment center.

Segment gross profit margin was 37.7%, down 5% from prior year. The margin decline was due to product and regional mix. Revenues in our CAD/CAM segment declined 13% or down 9% constant currency. If you back out the impact of last years trading program in the US, CAD/CAM segment revenues would have shown growth. We experienced revenue declines in Europe, with Germany down significantly.

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