Sirona Dental Systems, Inc. (SIRO)
Q4 2011 Earnings Call
November 18, 2011 08:30 AM EST
John Sweeney - VP, IR
Simone Blank - CFO and EVP
Jost Fischer - Chairman & CEO
Jeffrey Slovin - President and Director
Glen Santangelo - Credit Suisse
Robert Jones - Goldman Sachs
Brandon Couillard - Jefferies
Steve Beuchaw - Morgan Stanley
Larry Marsh - Barclays Capital
John Kreger - William Blair
Ethan Roth - WJB Capital Group
Jonathan Block - SunTrust
Scott Green - Bank of America Merrill Lynch
Jeff Johnson - Robert W. Baird
Ross Taylor - CL King
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I would now like to turn the presentation over to Mr. John Sweeney, Vice President of Investor Relations to Sirona Dental Systems. Please proceed.
Thank you. Good morning, everyone. Welcome to our fourth quarter and full year fiscal 2011 conference call. I’d like to remind you that an earnings slide deck presentation relating to this call is available on our website at www.sirona.com.
Before we begin, please take a moment to read the forward-looking statements on slide two 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. Those statements and certain assumptions and expectations of future events are subject to risks and uncertainties our most recent Form 10-K gives some of the most important risk factors that can 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.
Thanks, John. It is my pleasure to welcome all of you to our fourth quarter and full year 2011 conference call. Joining me today are Jeffery Slovin, President and Simone Blank, Executive Vice President and Chief Financial Officer. I am delighted to report that fiscal 2011 was a year filled with many accomplishments and successes for Sirona.
We posted outstanding financial results, strengthened our balance sheet, introduced exciting new product offerings and had an impressive showing at the International Dental Show in Cologne. The product launch platform for the dental industry. Our success at the IDS helped drive our strong sales performance particularly in the German market where we saw our revenue increase an exceptionally strong 27.4% to $189 million.
Sirona raised its guidance three times over the course of the year and achieved constant currency revenue growth of 16.4%. Our strategy to leverage our financial strength and reinvest it back into targeted areas of the business has proven to be a very wise decision.
We’ve been strong proponents of building a solid foundation that will allow Sirona to keep growing for years to come. The pillars of the strategy are; the continuous development of innovative advancements in dental technology and the expansion of our sales and service infrastructure in attractive markets around the world.
As many of you know, innovation is the hallmark of Sirona. During the year, we invested in industry-leading 56 million in research and development. This investment resulted in multiple new product introductions including Orthophos XG 3D, CEREC 4.0, SINIUS, FaceScan, SIROBoost and a host of others.
We believe strongly in the potential of these innovations and you should expect to see their impact as we move through fiscal 2012 and beyond. We are proud of all of our innovative new products that are poised to once again change the face of dentistry. And we will not rest on our laurels.
In fact, we have further empowered our accomplished R&D team by opening our brand-new, state-of-the-art, center of innovation in Bensheim, Germany. This exceptional facility is a testament to why we think Sirona is ideally positioned to continue our tradition of leading the way with innovation for the dental industry. We are extremely excited to see what will emerge from our newly commissioned facility.
In fiscal 2011, Sirona invested heavily in expanding its global sales and service infrastructure with major initiatives in Japan, Russia and Korea, to name but a few. These investments were a key driver for our strong international growth. Clearly, this strategy is paying substantial dividends. Importantly, the two prong strategy of our commitment to innovation supported by an expanding global sales and service organization is delivering strong results.
Imaging was our best performing segment in fiscal 2011, up 24.8% constant currency. With strong performance from our Orthophos XG 3D and 3D imaging systems.
In 3D imaging, Sirona is the global leader. CAD/CAM increased 15.9%, benefiting from the continuous international build out of our sales and services infrastructure and the successful trading programs in Germany and the U.S.
Treatment centers increased 10.2%; revenue growth was particularly driven by non-European international markets. And instruments increased 5.6%. International revenues increased 20.5% constant currency with Germany, other European markets and other world markets all increasing at solid, double-digit rates. For the U.S., our revenues increased 6.8% with particularly strength in the imaging segment.
In addition to our strong revenue growth, we also made progress in expanding our margin. SG&A as a percent of sales, excluding the one-time charge, declined 100 basis points to 29.6%. In our operating income, excluding amortization as a one-time charge was 222.5 million, up 17.8% compared to 2010.
All of our hard work translated into solid free cash flow, a total of 121.9 million in financial year ‘11. We used this cash to reduce our net debt by 96.4 million, deleveraging our balance sheet and strengthening our financial position for the future.