Exhibit 99.1
Sirona Reports Fiscal 2007 Third Quarter and Year-to-Date Results
· Third quarter revenues increased 33.8%, up 27.1% on a constant currency basis, as a result of:
– the full effect of the Schick Acquisition
– the launch of our Galileos 3D Imaging System, and
– the performance of our Dental CAD/CAM Systems
· Sirona lowers fiscal 2007 guidance
Long Island City, New York, August 9, 2007 — Sirona (Nasdaq: SIRO), a leading global manufacturer of technologically advanced, high quality dental equipment, today reported its financial results for the quarter and nine months ended June 30, 2007.
Third Quarter Fiscal 2007 vs. Third Quarter Fiscal 2006 Financial Results
Revenue was $157.0 million, an increase of $39.7 million or 33.8% (up 27.1% on a constant currency basis) with growth rates for the Company’s business segments as follows: Imaging Systems increased 89% (up 80% constant currency); Dental CAD/CAM Systems increased 34% (up 30% constant currency); Instruments increased 7% (up 1% constant currency); and Treatment Centers increased 5% (down 1% constant currency). Revenue in the United States increased by 59%. Outside the United States, revenue increased 24% (up 16% constant currency). Imaging Systems revenue growth was mainly attributable to the June 2006 acquisition of Schick Technologies Inc., the continued adoption of digital radiography and the sales of the Company’s Galileos 3D imaging unit. Dental CAD/CAM Systems revenue growth was mainly driven by the Company’s new MC XL systems.
Gross profit increased by $15.4 million to $67.1 million, up 29.7%. Gross profit margins declined 1.4% year-over-year to 42.8% in the third quarter of 2007. Gross profit was positively impacted by the Schick products, the GALILEOS 3D imaging unit, as well as robust German sales, offset in part by higher manufacturing costs and start-up expenses for the new CAD/CAM milling unit, by product mix in the Dental CAD/CAM Systems segment and by a negative US$/Euro exchange rate impact.
Operating income was $5.5 million compared to $3.7 million in the prior year period, as the increase in gross profit was partially offset by higher SG&A and R&D expense. Operating income included $19.6 million of expense related to the amortization of intangible assets resulting from the MDP transaction and Schick acquisition compared to $13.3 million of expense related to the amortization of intangible assets in the prior year period. The year-over-year increase in SG&A and R&D expense was driven by the inclusion of Schick’s operations, a negative US$/Euro exchange rate impact, increased expense associated with major product launches, Sirona’s expanded presence in various markets, and increased stock option expenses.
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Net income was $2.0 million in the third quarter of 2007, compared to a net loss of $5.5 million in the prior year period.
At June 30, 2007 the Company had cash and cash equivalents of $58.5 million and total debt of $535.1 million, resulting in net debt of $476.6 million. This compares to net debt of $452.8 million at September 30, 2006. Of the $23.8 million increase in net debt, approximately half was due to currency fluctuations.
Chairman, President & CEO Jost Fischer commented, “In the third quarter, although we achieved strong revenue growth, our performance was below our expectations and I am disappointed with our financial results. We will not achieve our previous guidance primarily for the following reasons: lower than expected MC 3 system sales, longer customer purchasing cycles for our Galileos 3D imaging system, delays in realization of multi-unit contract business in emerging markets in our treatment center segment and lower gross profit margins. Our operating income will be further impacted by our decision to continue to invest in our sales infrastructure and product development as we are confident of the longer term superior prospects of the high-tech dental equipment market.”
Guidance
The Company is lowering its Fiscal year 2007 guidance and now expects constant currency revenue growth of 6% to 8%, down from its previous expectation of 11% to 14%. Sirona’s revenue growth rate assumes that Schick was in last year’s results for the full prior-year period.
Sirona currently expects fiscal 2007 operating income, excluding amortization of intangible assets, to be flat compared to prior year. In fiscal 2006, operating income, excluding $66 million of amortization of intangible assets, was $126 million, including the results of Schick for the full fiscal year. This represents a reduction compared to Sirona’s prior guidance which was based on estimated operating income, excluding $77 million of amortization of intangibles, of $142 million to $146 million in 2007.
Nine Months Fiscal 2007 vs. Nine Months Fiscal 2006 Financial Results
Revenue was $482.0 million, an increase of $96.9 million or 25.2% (up 18.3% constant currency) with growth rates for the Company’s business segments as follows: Imaging Systems increased 94% (up 82% constant currency); Instruments increased 16% (up 8% constant currency); Treatment Centers increased 9% (up 1% constant currency); and Dental CAD/CAM Systems increased 1% (down 3% constant currency). Revenue in the United States increased 40%. Outside the United States, revenue increased 19% (up 10% constant currency).
Gross profit increased by $38.7 million to $221.8 million, up 21.2%. Gross profit margin declined 1.5% year-over-year to 46.0% in the nine months ended June 30, 2007. The margin development was positively impacted by the Schick products, the GALILEOS 3D imaging unit, as well as strong German sales and a favorable product mix in the Treatment Center segment. These positive developments were offset by higher manufacturing costs and start-up expenses for the new CAD/CAM milling unit, by product mix in the Dental CAD/CAM Systems segment, by multi-unit contract
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business in emerging markets in the Instruments segment and by a negative US$/Euro exchange rate impact.
Operating income was $37.2 million compared to $50.4 million in the prior year period, as the increase in gross profit was more than offset by higher SG&A and R&D expense. Operating income included $58.8 million of expense related to the amortization of intangible assets resulting from the MDP transaction and Schick acquisition, compared to $36.4 million of expense related to the amortization of intangible assets in the prior year period. The year-over-year increase in SG&A and R&D expense was driven by the inclusion of Schick’s operations, a negative US$/Euro exchange rate impact, increased expense associated with major product launches and the bi-annual IDS trade show in Cologne, Sirona’s expanded presence in various markets, and additional expenses following the Schick acquisition (including stock option expense, costs related to the preparation and audit of U.S. GAAP financial statements and Sarbanes-Oxley compliance).
Net income was $4.6 million compared to $2.2 million. Nine months 2007 net income includes a one-time charge related to the early extinguishment of debt of $21.1 million ($13.7 million after tax) and a foreign exchange gain of $3.9 million ($2.5 million after tax) resulting from the refinancing.
The effective tax rate represents an estimate of 35% for fiscal year 2007.
Conference Call/Webcast Information
Sirona will hold a conference call to discuss its financial results at 9:00 a.m. Eastern Standard Time on August 9, 2007. The teleconference can be accessed by calling +1 888 396 2386 (domestic) or +1 617 847 8712 (international) using passcode # 21593459. The webcast will be available via the Internet at www.sirona.com. A replay of the conference call will be available through September 9, 2007 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode # 93317237. A web archive will be available for 30 days at www.sirona.com.
About Sirona Dental Systems, Inc.
Recognized as a leading global manufacturer of technologically advanced, high quality dental equipment, Sirona has served equipment dealers and dentists worldwide for more than 125 years. Sirona develops, manufactures, and markets a complete line of dental products, including the CAD/CAM restoration equipment (CEREC), digital and film-based intra-oral, panoramic and cephalometric X-ray imaging systems, dental treatment centers and handpieces. Visit http://www.sirona.com for more information about Sirona and its products.
This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a nonhistorical nature and are subject to risks and uncertainties that are beyond the Company’s ability to control. The matters discussed in this news release are subject to various factors which could cause actual events and results to differ materially from such statements. Such factors include uncertainties as to the future sales volume 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
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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 release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.
Contact information:
John Sweeney, CFA
Sirona Dental Systems, Inc.
Director of Investor Relations
+1 718 482 2184
john.sweeney@sirona.com
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· depreciation and amortization expense, and because Sirona uses capital assets, depreciation and amortization expense is a necessary element of its costs and ability to generate revenue; and
· tax expense, and because the payment of taxes is part of Sirona’s operations, tax expense is a necessary element of costs and impacts Sirona’s ability to operate.
In addition, other companies may define EBITDA differently. EBITDA, as well as the other information in this filing, should be read in conjunction with Sirona’s financial statements and footnotes contained in the documents that Sirona files with the U.S. Securities and Exchange Commission.
In addition to EBITDA, the accompanying financial tables also set forth certain supplementary information that Sirona believes is useful for investors in evaluating Sirona’s underlying operations. This supplemental information includes gains/losses recorded in the periods presented relating to early extinguishment of debt, stock option grants, revaluation of the carrying value of the dollar-denominated exclusivity payment and borrowings where the functional currency is Euro, and the Schick acquisition. Sirona’s management believes that these items are either nonrecurring or noncash in nature, and should be considered by investors in assessing Sirona’s financial condition, operating performance and underlying strength.
Sirona’s management uses EBITDA together with this supplemental information as an integral part of its reporting and planning processes and as one of the primary measures to, among other things:
(i) monitor and evaluate the performance of Sirona’s business operations;
(ii) facilitate management’s internal comparisons of the historical operating performance of Sirona’s business operations;
(iii) facilitate management’s external comparisons of the results of Sirona’s overall business to the historical operating performance of other companies that may have different capital structures and debt levels;
(iv) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and
(v) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
Sirona’s management believes that EBITDA and the supplemental information provided is useful to investors as it provides them with disclosure of Sirona’s operating results on the same basis as that used by Sirona’s management.
Constant Currency: We have included certain revenue information in this press release on a constant currency basis. This information is a non-GAAP financial measure. We supplementally present revenue on a constant currency basis because we believe it facilitates a comparison of our operating results from period to period without regard to changes resulting solely from fluctuations in currency rates. Sirona calculates constant currency revenue growth by comparing current period revenues
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to prior period revenues with both periods converted at the Euro/U.S. $ average foreign exchange rate for the current period.
The exchange rates used in converting Euro denominated revenues into U.S. $ in the Company’s financial statements prepared in accordance with U.S. GAAP were: $1.3483 and $1.2565 for the three months ended June, 30, 2007 and 2006, respectively, and $1.3153 and $1.2134 for the six months ended June, 30, 2007 and 2006, respectively.
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