Sirona Dental Systems' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Sirona Dental Systems, Inc. (SIRO)

Q2 2012 Earnings Conference Call

May 4, 2012 8:30 am ET


Jost Fischer - Chairman & CEO

Simone Blank - CFO and EVP

Jeffrey Slovin - President and Director

Joshua Zable - VP, IR


Ross Taylor - C.L. King & Associates, Inc

Robert Jones - Goldman Sachs Group, Inc

Brandon Couillard - Jefferies & Company

Elliot Feldman - Barclays Capital

Jonathan Block - SunTrust Robinson Humphrey

Scott Green - Bank of America Merrill Lynch

Steve Beuchaw - Morgan Stanley & Co. LLC

Jeffrey Johnson - Robert W. Baird & Co

Tycho Peterson - JP Morgan Chase & Co

John Kreger - William Blair & Company, LLC

Jeffrey Warshauer - Sidoti & Company, LLC



Good day ladies and gentlemen and welcome to the Sirona Dental Systems’ Second Quarter Fiscal Year 2012 Earnings Conference Call. At this time, all participants are in listen-only mode. We will be facilitating 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’d now like to turn the presentation over to your host for today’s call Mr. Joshua Zable, Vice President of Investor Relations. Please proceed, sir.

Joshua Zable

Thank you and good morning, everyone. Welcome to our second quarter 2012 conference call. I’d 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 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. We make 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 Fischer

Thanks, Joshua. It is my pleasure to welcome all of you to our second quarter 2012 conference call. Joining me today are Jeffery Slovin, President and Simone Blank, Executive Vice President and Chief Financial Officer.

I’d like to introduce our new Vice President of Investor Relations, Joshua Zable. Joshua recently joined Sirona and he knows us well as he followed the Company when he was a medical device sales side analyst. We’re delighted to have him on our team and look forward to working with him.

I’m pleased to report solid results for the second quarter of fiscal 2012. Our double-digit revenue growth continued with sales up 11.1% on a constant currency basis. We continue to gain market share. Operating income plus amortization also grew double-digits, up 10.9%. Treatment Centers and the CAD/CAM segments were the strongest performers in the quarter, up 17.5% and 13.7% respectively, constant currency.

Under regional basis Sirona’s revenue growth was driven by international markets, up 13.7% constant currency and was particularly strong in the Asia Pacific region. This robust performance is directly attributable to the investments we made in our sales and service infrastructure and we’re pleased with the results they’re yielding.

It is important to note that many of the international markets that we’re investing in are growing materially above the Company’s average rate. Overall, our investments in key markets around the world will enable us to compete more effectively today and in the years to come.

Let me reiterate the two key pillars of our successful strategy. To expand our outstanding portfolio of high-tech dental products through continuous innovation. We have invested over $250 million in the past six years in the pursuit of creating new and enhanced products and solutions to continue our world-class global sales and service infrastructure. We’re 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 consistently strong organic.

I will now turn the call over to Simone, who will review our second quarter financials.

Simone Blank

Thank you, Jost. In the second quarter our revenues increased $17.1 million to $231.9 million, up 8% or up 11.1% on a constant currency basis. Our double-digit revenue growth was mainly driven by continued strong performance in international markets, which increased 9.2% or up 13.7% constant currency. Sales were particularly robust in the Asia Pacific region. In the United States revenues increased 4.9% compared in the first quarter of this fiscal year.

Sirona’s operating income plus amortization increased 10.9% to $52.2 million. Moving on to a review of our business segment. Revenues in our CAD/CAM segments increased 11.1% to $85.6 million or up 13.7% on a constant currency basis. CAD/CAM revenues benefited from very strong growth in international market.

We continue to get excellent feedback from the marketplace on our CEREC 4.0 software. Dentists appreciate the ease of use, the ability to design multiple restorations and the increased processing speed. In the second quarter we also successfully launched the inlab 4.0 software for all our customers. Our CAD/CAM segment margin was 70%, down 160 basis points compared to the prior-year period, but on the levels of the full fiscal year 2011. The decrease in the quarter was mainly driven by current promotion.

Imaging segment revenues increased 3.5% to $74.8 million, up 6% on a constant currency basis. Growth was mainly driven by the U.S. and the non-European international markets. This quarter we started to come up against the launch of the ORTHOPHOS 2D, 3D unit. As a reminder, last years Q2 imaging grew over 20%.

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