Sirona Dental Systems Inc. (SIRO, Financial) filed Quarterly Report for the period ended 2011-12-31.
Sirona Dental Systems Inc. has a market cap of $2.72 billion; its shares were traded at around $48.72 with a P/E ratio of 16.9 and P/S ratio of 3. Sirona Dental Systems Inc. had an annual average earning growth of 43.7% over the past 10 years. GuruFocus rated Sirona Dental Systems Inc. the business predictability rank of 2.5-star.
Cost of sales for the three months ended December 31, 2011 was $119.3 million, an increase of $14.1 million, or 13.4%, as compared with the three months ended December 31, 2010. Gross profit as a percentage of revenue was 53.8% compared to 55.3% in the prior year period. Cost of sales included amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $11.2 million as well as non-cash share-based compensation expense of $0.03 million for the three months ended December 31, 2011 compared to amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $12.4 million and non-cash share-based compensation expense of $0.04 million for the three months ended December 31, 2010. Excluding these amounts, cost of sales as a percentage of revenue was 41.9% for the three months ended December 31, 2011 compared with 39.4% for the three months ended December 31, 2010. Therefore, gross profit as a percentage of revenue was 58.1%, compared to 60.6% in the prior year period. The decrease in the gross profit margin was mainly due to product mix in all segments, except for the CAD/CAM segment.
For the three months ended December 31, 2011, SG&A expense was $73.6 million, an increase of $10.3 million, or 16.3%, as compared with the three months ended December 31, 2010. During the quarter, we continued to implement our strategy to invest in the expansion of our sales and service infrastructure to capitalize on opportunities to gain market share and to build up our presence in key growth markets. These investments resulted in increased revenues, particularly in international markets. SG&A expense included amortization and depreciation resulting from the step-up to fair values of tangible and intangible assets of $0.7 million as well as non-cash share-based compensation expense in the amount of $2.0 million for the three months ended December 31, 2011, compared with $0.7 million and $1.8 million, respectively, for the three months ended December 31, 2010. Excluding these amounts, as a percentage of revenue, SG&A expense increased to 27.5% for the three months ended December 31, 2011, as compared with 25.8% for the three months ended December 31, 2010.
For the three months ended December 31, 2011 and 2010, Sirona recorded a profit before income taxes of $50.5 million and $55.1 million, respectively. The estimated effective tax rate applied for these periods was 23% and 22%, respectively, compared to an actual effective tax rate of 22.4% in fiscal year 2011. The income tax provision for the three months ended December 31, 2011 and 2010, was $11.6 million and $12.1 million, respectively. The estimated effective tax rate is primarily driven by the expected mix of earnings across different countries.
Net income for the three months ended December 31, 2011 was $38.9 million, a decrease of $4.1 million, as compared with the three months ended December 31, 2010. Major influencing factors on net income were the increase in revenues and gross profit and lower amortization, which was more than offset by an increase in SG&A expense due to continued investments in the expansion of our global sales and service infrastructure, and a higher estimated effective tax rate. Net income for the three months ended December 31, 2011 included amortization and depreciation expense resulting from the step-up to fair values of intangible and tangible assets related to past business combinations (i.e. the Exchange and the MDP Transaction - deal related amortization and depreciation) of $12.0 million ($9.2 million net of tax), unrealized, non-cash foreign currency loss on the deferred income from the Patterson exclusivity payment of $2.5 million ($1.9 million net of tax), and loss on the revaluation of short-term intra-group loans of $3.3 million ($2.5 million net of tax).
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Sirona Dental Systems Inc. has a market cap of $2.72 billion; its shares were traded at around $48.72 with a P/E ratio of 16.9 and P/S ratio of 3. Sirona Dental Systems Inc. had an annual average earning growth of 43.7% over the past 10 years. GuruFocus rated Sirona Dental Systems Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:
Revenue for the three months ended December 31, 2011 was $258.1 million, an increase of $22.5 million, or 9.5%, as compared with the three months ended December 31, 2010. On a constant currency basis, adjusting for the fluctuations in the U.S. Dollar/Euro exchange rate, total revenue increased by 10.2%. By segment, Imaging Systems increased 23.8% (up 24.3% on a constant currency basis), Instruments increased 7.5% (up 8.4% on a constant currency basis), Treatment Centers increased 3.0% (up 3.8% on a constant currency basis), and CAD/CAM Systems increased 1.0% (up 1.5% on a constant currency basis).Cost of sales for the three months ended December 31, 2011 was $119.3 million, an increase of $14.1 million, or 13.4%, as compared with the three months ended December 31, 2010. Gross profit as a percentage of revenue was 53.8% compared to 55.3% in the prior year period. Cost of sales included amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $11.2 million as well as non-cash share-based compensation expense of $0.03 million for the three months ended December 31, 2011 compared to amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $12.4 million and non-cash share-based compensation expense of $0.04 million for the three months ended December 31, 2010. Excluding these amounts, cost of sales as a percentage of revenue was 41.9% for the three months ended December 31, 2011 compared with 39.4% for the three months ended December 31, 2010. Therefore, gross profit as a percentage of revenue was 58.1%, compared to 60.6% in the prior year period. The decrease in the gross profit margin was mainly due to product mix in all segments, except for the CAD/CAM segment.
For the three months ended December 31, 2011, SG&A expense was $73.6 million, an increase of $10.3 million, or 16.3%, as compared with the three months ended December 31, 2010. During the quarter, we continued to implement our strategy to invest in the expansion of our sales and service infrastructure to capitalize on opportunities to gain market share and to build up our presence in key growth markets. These investments resulted in increased revenues, particularly in international markets. SG&A expense included amortization and depreciation resulting from the step-up to fair values of tangible and intangible assets of $0.7 million as well as non-cash share-based compensation expense in the amount of $2.0 million for the three months ended December 31, 2011, compared with $0.7 million and $1.8 million, respectively, for the three months ended December 31, 2010. Excluding these amounts, as a percentage of revenue, SG&A expense increased to 27.5% for the three months ended December 31, 2011, as compared with 25.8% for the three months ended December 31, 2010.
For the three months ended December 31, 2011 and 2010, Sirona recorded a profit before income taxes of $50.5 million and $55.1 million, respectively. The estimated effective tax rate applied for these periods was 23% and 22%, respectively, compared to an actual effective tax rate of 22.4% in fiscal year 2011. The income tax provision for the three months ended December 31, 2011 and 2010, was $11.6 million and $12.1 million, respectively. The estimated effective tax rate is primarily driven by the expected mix of earnings across different countries.
Net income for the three months ended December 31, 2011 was $38.9 million, a decrease of $4.1 million, as compared with the three months ended December 31, 2010. Major influencing factors on net income were the increase in revenues and gross profit and lower amortization, which was more than offset by an increase in SG&A expense due to continued investments in the expansion of our global sales and service infrastructure, and a higher estimated effective tax rate. Net income for the three months ended December 31, 2011 included amortization and depreciation expense resulting from the step-up to fair values of intangible and tangible assets related to past business combinations (i.e. the Exchange and the MDP Transaction - deal related amortization and depreciation) of $12.0 million ($9.2 million net of tax), unrealized, non-cash foreign currency loss on the deferred income from the Patterson exclusivity payment of $2.5 million ($1.9 million net of tax), and loss on the revaluation of short-term intra-group loans of $3.3 million ($2.5 million net of tax).
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