Sirona second quarter revenue increases 12.9% to $214.7 million

Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the quarter ended March 31, 2011.

Second Quarter Fiscal 2011 vs. Second Quarter Fiscal 2010 Financial Results

Revenue was $214.7 million, an increase of $24.6 million or up 12.9% (up 14.0% on a constant currency basis), with growth rates for the Company's business segments as follows: Imaging Systems increased 21.4% (up 22.2% constant currency); CAD CAM increased 16.1% (up 17.0% constant currency); Treatment Centers increased 3.4% (up 4.8% on a constant currency basis); and Instruments declined 1.3% (flat constant currency). Revenue in the United States increased 2.9%, while revenues outside the United States increased 17.5% (up 19.0% constant currency), with strong growth in Germany, other European markets and solid performance in Asia Pacific.

Gross profit was $115.7 million, up $16.4 million. Gross profit margin was 53.9% in the second quarter of Fiscal 2011, compared to 52.2% in the prior year. The gross profit margin expansion was mainly driven by lower levels of amortization expense.

Second quarter 2011 operating income excluding amortization expense was $47.0 million (operating income of $33.5 million plus amortization expense of $13.5 million), compared to $46.1 million (operating income of $30.6 million plus amortization expense of $15.5 million) in the second quarter of 2010.

Net income for the second quarter of 2011 was $29.3 million, or $0.51 per diluted share, versus $17.5 million, or $0.31 per diluted share in the prior year period. Non-GAAP earnings per diluted share for the second quarter of 2011 was $0.58 compared to $0.64 in the second quarter of 2010.

At March 31, 2011, the Company had cash and cash equivalents of $300.1 million and total debt of $382.2 million, resulting in net debt of $82.1 million. This compares to net debt of $119.0 million at September 30, 2010.

Jost Fischer, Chairman and CEO of Sirona commented: "I am pleased to report another quarter of solid execution and strong revenue growth for Sirona. Our performance was particularly encouraging given the timing of the International Dental Show ("IDS") in March, as dentists have usually postponed purchases in anticipation of the show. The quarter saw continued robust sales in international markets, with strong growth in Germany, other European markets and Asia Pacific. Our solid financial performance is the direct result of our strategy to make significant investments in both research and development and in expanding our global footprint."

Mr. Fischer continued: "The highlight of the quarter was our strong showing at the IDS which once again confirmed Sirona's leadership position as the premier provider of innovative high-tech dental products. At the show, the Company introduced a wide range of new products, ensuring that Sirona will continue to lead the dental industry's conversion to digital dentistry. As a result of our encouraging business trends, and the ongoing momentum in international markets, we are increasing our guidance."

Fiscal 2011 Guidance

Management now anticipates constant currency revenue growth in the range of 13% to 16% (previously 9% to 12%), and operating income, excluding amortization estimated at $54 million for fiscal 2011, to be in the range of $214 to $221 million (compared to previous guidance of $208 to $216 million).

First Six Months Fiscal 2011 vs. First Six Months Fiscal 2010 Financial Results

Revenue was $450.4 million, an increase of $45.4 million or up 11.2% (up 14.9% constant currency) with growth rates for the Company's business segments as follows: CAD CAM Systems increased 14.5% (up 17.6% constant currency); Imaging Systems increased 13.8% (up 16.3% constant currency); Treatment Centers increased 8.6% (up 14.0% constant currency); and Instruments declined 0.5% (up 4.3% constant currency). Revenue in the United States increased 1.8%. Outside the United States, revenue increased 15.5% (up 21.2% constant currency) driven by solid performance in Europe, led by Germany, as well in the Asia Pacific and Middle East markets.

Gross profit increased by $34.4 million to $246.1 million, up 16.2%. Gross profit margins expanded 240 basis points to 54.6 percent, driven by strong revenue growth, favorable product mix and lower levels of amortization expense.

First six months 2011 operating income excluding amortization expense was $116.5 million (operating income of $89.5 million plus amortization expense of $27.0 million), up 10.2% compared to $105.8 million (operating income of $74.1 million plus amortization expense of $31.7 million) in the prior year.