NEWPORT BEACH, Calif., Dec. 12 /PRNewswire-FirstCall/ -- Sybron
Dental Specialties, Inc. (NYSE:SYD), a leading manufacturer of a
broad range of value-added products for the dental profession,
including the specialty markets of orthodontics, endodontics and
implantology, announced today its financial results for its fourth
fiscal quarter and fiscal year ended September 30, 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001204/SDSLOGO ) FOURTH
QUARTER RESULTS Net sales for the fourth quarter of fiscal 2005
totaled $170.4 million, an increase of 17.0% over the $145.7
million in net sales in the corresponding prior year period.
Sybron's internal net sales, which exclude currency fluctuations
and include only the organic growth of acquisitions made in the
past twelve months, grew 11.8% in the fourth quarter over the same
period of the prior year. The internal net sales growth rate of the
Company's consumable products was 11.7%. The sales of these
products accounted for approximately 97% of the Company's total net
sales in the quarter. Net income for the fourth quarter of fiscal
2005 was $21.5 million, an increase of 33.5% over net income of
$16.1 million in the same period of the prior year. Fully diluted
earnings per share were $0.52 in the fourth quarter of fiscal 2005,
an increase of 30.0% over fully diluted earnings per share of $0.40
in the same period of the previous year. Net income and earnings
per share in the fourth quarter of fiscal 2005 were positively
impacted by the adjustment of the annual effective tax rate, as
well as adjustments of certain tax liabilities. In the fourth
quarter of fiscal 2005, Sybron generated $31.0 million in free cash
flow, defined as cash flows from operating activities of $38.3
million minus capital expenditures of $7.3 million. This compares
with free cash flow of $19.5 million in the fourth quarter of
fiscal 2004 (cash flows from operating activities of $25.0 million
minus capital expenditures of $5.5 million). "A strong new product
pipeline, outstanding efforts by our sales force and the continuing
adoption of our Damon self-ligating system helped drive the highest
level of internal net sales growth in two years," said Floyd W.
Pickrell, Jr., Chief Executive Officer of Sybron Dental
Specialties. "We are also extremely pleased with our improvement in
working capital management, as both our inventory days and days
sales outstanding reached record low levels in the fourth quarter.
Our continued sales momentum and improved working capital
management are helping to drive strong returns on capital and
creating additional value for our shareholders." "Sales were strong
across the Company and we executed well in all areas except for
expense control, which will receive additional focus in fiscal
2006," said Mr. Pickrell. SEGMENT SALES HIGHLIGHTS In the fourth
quarter, internal net sales of the Company's Professional Dental
segment increased 12.9% over the same period in the prior year.
Internal net sales of Professional Dental consumable products
increased 12.4%. Net sales in the quarter were positively impacted
by continued strong sales of MaxCem self-adhesive cement,
double-digit sales growth in the infection prevention line of
products, as well as the launch of the new Demetron LED II curing
light. During the fourth quarter, internal net sales of the
Company's Specialty Products segment grew 10.6% over the same
period in the prior year. Total net sales were positively impacted
by the launch of the metal version of the Damon 3 self-ligating
bracket, increasing sales of the Damon brackets in international
markets and continued double-digit sales growth in the endodontics
line of products. FOURTH QUARTER FINANCIAL HIGHLIGHTS Gross margins
in the fourth quarter of 2005 were 55.3%, compared with 54.8% in
the same period of the prior year. The improvement in gross margin
was primarily attributable to the Company's increased sales of
higher gross margin products such as dental implants. This
improvement was partially offset by costs related to the closure of
the Company's Demetron manufacturing facility. Selling, general and
administrative expenses (SG&A) were $63.2 million, or 37.1% of
net sales, in the fourth quarter of 2005, compared with $51.0
million, or 35.0% of net sales, in the same period of the prior
year. A non-cash charge of $2.0 million was recorded as a result of
impairment to several intangible assets. The largest asset, which
related to intellectual property associated with disinfecting
solutions, became impaired throughout fiscal 2001 and fiscal 2002,
at which time the charges should have been taken. The Company's
management concluded that the effect of the delay in recording the
charges was not material to any of the prior periods in which
impairment occurred and the correcting entries are not material to
the fourth quarter of fiscal 2005. Higher incentive compensation
and Sarbanes-Oxley compliance costs also contributed to the
increase in SG&A. Research and development expenditures were
$3.5 million in the fourth quarter of fiscal 2005, an increase of
20.7% over $2.9 million of expenditures in the same period of the
prior year. Operating income for the fourth quarter of fiscal 2005
was $31.0 million, compared to $28.9 million in the fourth quarter
of fiscal 2004. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the quarter was $35.9 million, compared
with EBITDA of $33.0 million in the fourth quarter of fiscal 2004.
Operating income was 18.2% and EBITDA was 21.1% of net sales for
the quarter, compared with 19.8% and 22.7%, respectively, in the
same period of 2004. Fourth quarter 2005 EBITDA is calculated by
adding net income of $21.5 million, income taxes of $4.7 million,
net interest expense of $4.8 million, and depreciation and
amortization of approximately $4.9 million. Fourth quarter 2004
EBITDA is calculated by adding net income of $16.1 million, income
taxes of $7.9 million, net interest expense of $5.1 million and
depreciation and amortization of approximately $3.9 million.
Sybron's effective tax rate in the fourth quarter of fiscal 2005
was 17.9%, compared with 33.0% in the fourth quarter of fiscal
2004. The lower tax rate is attributable to both the revision of
the annual rate as well as discrete adjustments. The annual rate,
excluding discrete adjustments, was determined to be 30.8% and, as
a result, a credit of $1.0 million was recorded to adjust the 32%
rate that had been used during the first nine months of the year.
The lower rate is attributable primarily to the decision not to
repatriate funds from a non-US location. Discrete adjustments
related to the reversal and establishment of various tax
liabilities, were also recorded during the quarter and netted to a
$2.4 million positive impact. The annual rate, excluding discrete
adjustments is calculated by adding income taxes reported for
fiscal 2005 of $28.4 million and discrete items of $4.0 million
($2.4 million of which were recorded in the fourth quarter of
fiscal 2005) and then dividing this total by the Company's fiscal
2005 reported income before taxes of $105.1 million. The effective
income tax rate is expected to increase from 30.8% in fiscal 2005
to 33% in fiscal 2006, primarily as a result of lower expected
foreign tax credit utilization in fiscal 2006 and an increase in
the percentage of earnings coming from higher tax rate
jurisdictions. Net trade receivables were $112.5 million and days
sales outstanding (DSOs) were 54.5 days at September 30, 2005,
compared to 58.8 days at September 30, 2004. Net inventory was
$92.8 million at September 30, 2005 and inventory days were 118
days, compared to 133 days at September 30, 2004 and 121 days at
June 30, 2005. Please refer to the supplemental schedules, provided
on the Financial Reports section of Sybron's Investor Relations web
site (http://www.sybrondental.com/investors/index.html), for a
detailed calculation of the Company's DSOs and inventory days.
Capital expenditures were $7.3 million in the fourth quarter of
fiscal 2005, compared to $5.5 million in the same period of the
previous year. The average debt outstanding for the quarter was
$222.5 million with an average interest rate of 7.8%. The Company
paid down $21.7 million in debt during the quarter, leaving total
debt outstanding at September 30, 2005 of $211.8 million. Sybron's
cash and cash equivalents balance was $58.6 million at September
30, 2005, compared with $46.8 million at June 30, 2005. Sybron's
capital structure was 34.5% debt and 65.5% equity at September 30,
2005. This compares with 42.5% debt and 57.5% equity at September
30, 2004. FULL YEAR 2005 FINANCIAL HIGHLIGHTS The following is a
summary of the key financial highlights in fiscal 2005: * Net sales
totaled $649.7 million, compared to $574.0 million in fiscal 2004,
an increase of 13.2%. * Net income was $76.7 million, compared to
$62.1 million in fiscal 2004, an increase of 23.5%. * Earnings per
diluted share was $1.85, compared to $1.54 in fiscal 2004, an
increase of 20.1%. * Inventory days were reduced from 133 to 118. *
Free cash flow was $80.9 million, defined as cash flows from
operating activities of $100.3 million minus capital expenditures
of $19.4 million. * $8.8 million of debt was retired, two cash
acquisitions totaling $69.9 million were completed and cash
increased to $58.6 million from $40.6 million at September 30,
2004. OUTLOOK For the first quarter of fiscal 2006, Sybron expects
revenue to range from $160.0 million to $165.0 million, and diluted
earnings per share to range from $0.35 to $0.40, which reflects the
adoption of SFAS 123R, "Share-Based Payment." On a pro forma basis,
excluding tax-effected stock compensation expense, diluted earnings
per share would range from $0.39 to $0.44. For additional
information, please see the attached reconciliation of pro forma
and GAAP results. For the full fiscal year 2006, Sybron expects
revenue to range from $685.0 million to $705.0 million (with
internal net sales growth between 6% and 9%). The Company's revenue
estimates for fiscal 2006 exclude the impact of potential
acquisitions. Sybron also expects diluted earnings per share for
fiscal 2006 to range from $1.77 to $1.92 (which also reflects the
adoption of SFAS 123R). Based on current assumptions the Company
expects to record $11.3 million in stock compensation expense ($7.6
million after tax) during fiscal 2006. The impact of the adoption
of SFAS 123R is based on the Company's current estimates and may
differ materially from actual results due to changes in the number
of options granted or the number of options forfeited. On a pro
forma basis, excluding tax-effected stock compensation expense,
diluted earnings per share would range from $1.95 to $2.10. For
additional information, please see the attached reconciliation of
pro forma and GAAP results. In support of its outlook for fiscal
2006, the Company cited the following catalysts for the anticipated
growth in revenue and earnings: * Healthy end-user demand in its
key markets; * Continued roll-out of the Damon product line
including the metal and aesthetic versions of the self-ligating
bracket, as well as the self- ligating buccal tubes; * Continued
emphasis on manufacturing cost reductions; and * Cost control
measures for specific selling, general and administrative expenses
Commenting on the outlook for Sybron, Mr. Pickrell said, "We intend
to continue our strategy of focusing our efforts on the fastest
growing areas of dentistry. Our productive R&D efforts and
acquisitions have provided a broad portfolio of products to
capitalize on high growth areas such as self-ligating appliances,
dental implants, endodontics and all of the major dental resin
categories. Our balance sheet is also the strongest it has been
since our spin-off, which provides us the financial flexibility to
continue pursuing attractive acquisition opportunities. Entering
fiscal 2006, Sybron has never been in a stronger position, and we
expect to continue delivering significant growth in revenue,
earnings and cash flow over the long-term." NON-GAAP FINANCIAL
MEASURES The Company has included information concerning EBITDA and
free cash flow because management believes that certain investors
use this information as measures of a company's performance and
ability to service its debt. EBITDA and free cash flow should not
be considered as alternatives to, or more meaningful than, net
income as an indicator of Sybron's operating performance or cash
flows as a measure of liquidity. EBITDA and free cash flow have not
been prepared in accordance with generally accepted accounting
principles (GAAP). EBITDA and free cash flow, as presented by
Sybron, may not be comparable to similarly titled measures reported
by other companies. The Company has included information concerning
its annual tax rate, excluding discrete adjustments in fiscal 2005,
because management believes that certain investors will use this
information to understand the impact of discrete adjustments the
Company made in the fourth quarter of fiscal 2005. Sybron's annual
tax rate, excluding discrete adjustments has not been prepared in
accordance with GAAP and should not be considered as an alternative
to, or more meaningful than effective tax rate as an indicator of
Sybron's tax expense as a percent of income before taxes. Annual
tax rate, excluding discrete adjustments, as presented by Sybron,
may not be comparable to similarly titled measures reported by
other companies. The Company has included pro forma results for the
fourth quarter of fiscal 2005, the full year of fiscal 2005, the
first quarter of fiscal 2006 and the full year of fiscal 2006, as
well as reconciliations of these pro forma results to reported
earnings and earnings per share under GAAP because management
believes that certain investors will use this information to
understand the impact of the company's adoption of SFAS 123R,
"Share-Based Payment". Pro-forma net income and pro forma fully
diluted earnings per share have not been prepared in accordance
with GAAP. Pro forma net income and pro forma fully diluted
earnings per share should not be considered as alternatives to, or
more meaningful than, net income or fully diluted earnings per
share as indicators of Sybron's operating performance. Pro forma
net income and pro forma fully diluted earnings per share, as
presented by Sybron, may not be comparable to similarly titled
measures reported by other companies. CONFERENCE CALL AND WEBCAST
The Company will host a conference call on Tuesday, December 13,
2005 at 9:00 a.m. Pacific Time to review the information in this
press release and respond to questions. The dial-in number for the
call is (800) 762-4717 for domestic callers and (480) 629-9025 for
international callers, passcode 802254. A recorded replay of the
conference call will be offered beginning at 12:30 p.m. Pacific
Time on Tuesday, December 13th via both the Company's website and a
telephone dial-in number. The telephone dial-in number for the
recorded replay is (800) 475-6701, passcode 802254 for domestic
callers and (320) 365-3844, passcode 802254 for international
callers. The telephone replay will be available through 11:59 p.m.
Pacific Time on December 16th, 2005. The live webcast and archived
replay may be accessed in the Investor Relations section of Sybron
Dental's website at http://www.sybrondental.com/. CAUTION REGARDING
FORWARD-LOOKING STATEMENTS Statements made in this press release
regarding future matters are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements, including those dealing with the
Company's expectations as to its future revenue; earnings per
share; organic growth, stock compensation expense; the demand for
its products; the development, introduction and sales of new
products; the increase in demand in orthodontics for self-ligating
brackets; the Company's ability to capitalize on the demand for
self-ligating brackets with its Damon brand of products and; the
Company's ability to reduce its manufacturing, selling, general and
administrative expenses are based on the Company's current
expectations. Our actual results may differ materially from those
currently expected or desired because of a number of risks and
uncertainties, including the level of demand for the Company's
products; regulatory compliance; currency exchange rate
fluctuations; distributor inventory adjustments; the intensity of
competition; changes in the number of stock options granted or the
number of options forfeited; and other factors affecting the
Company's business prospects discussed in filings made by the
Company, from time to time, with the SEC including the factors
discussed in the "Cautionary Factors" section in Item 7 of the
Company's most recent Annual Report on Form 10-K and its periodic
reports on Form 10-Q. We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events or otherwise. BUSINESS DESCRIPTION
Sybron Dental Specialties and its subsidiaries are leading
manufacturers of both a broad range of value-added products for the
dental profession, including the specialty markets of orthodontics,
endodontics and implantology, and a variety of infection prevention
products for use by the medical profession. SYBRON DENTAL
SPECIALTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME (in thousands, except per share amounts) (unaudited) Three
Months Ended Twelve Months Ended September 30, September 30, 2005
2004 2005 2004 Net sales $170,396 $145,680 $649,666 $573,976 Cost
of sales Cost of products sold 75,667 65,921 284,035 256,191
Restructuring charges 512 (143) 588 1,471 Total cost of sales
76,179 65,778 284,623 257,662 Gross profit 94,217 79,902 365,043
316,314 Selling, general and administrative expenses 62,264 50,747
237,216 202,204 Restructuring charges 128 -- 616 (488) Amortization
of intangible assets 789 294 2,579 1,232 Total selling, general and
administrative expenses 63,181 51,041 240,411 202,948 Operating
income 31,036 28,861 124,632 113,366 Other income (expense)
Interest expense (4,436) (4,709) (18,473) (19,487) Amortization of
deferred financing fees (408) (415) (1,653) (1,625) Other, net 41
331 585 451 Income before income taxes 26,233 24,068 105,091 92,705
Income taxes 4,704 7,943 28,406 30,593 Net income $21,529 $16,125
$76,685 $62,112 Earnings per share: Basic earnings per share $0.53
$0.41 $1.92 $1.61 Diluted earnings per share $0.52 $0.40 $1.85
$1.54 Weighted average basic shares outstanding 40,374 39,045
40,005 38,637 Weighted average diluted shares outstanding 41,730
40,584 41,451 40,253 SYBRON DENTAL SPECIALTIES, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per
share amounts) (unaudited) September 30, September 30, 2005 2004
ASSETS Current assets Cash and cash equivalents $58,572 $40,602
Accounts receivable (less allowance for doubtful receivables of
$3,007 and $2,094 at September 30, 2005 and September 30, 2004,
respectively) 112,500 104,148 Inventories 92,840 93,689 Deferred
income taxes 7,788 3,293 Prepaid expenses and other current assets
12,261 12,975 Total current assets 283,961 254,707 Property, plant
and equipment, net of accumulated depreciation of $117,252 and
$101,934 at September 30, 2005 and September 30, 2004, respectively
87,762 83,121 Goodwill 295,306 268,768 Intangible assets, net
50,882 16,178 Other assets 32,507 23,784 Total assets $750,418
$646,558 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
Accounts payable $20,135 $19,512 Current portion of long-term debt
733 882 Income taxes payable 11,822 17,089 Accrued payroll and
employee benefits 31,537 29,712 Restructuring reserve -- 711
Accrued rebates 9,336 9,475 Accrued interest 3,519 3,620 Other
current liabilities 15,412 12,291 Total current liabilities 92,494
93,292 Long-term debt 61,099 69,589 Senior subordinated notes
150,000 150,000 Deferred income taxes 16,405 12,266 Other
liabilities 28,267 22,639 Total liabilities 348,265 347,786
Commitments and contingent liabilities Stockholders' equity
Preferred stock, $.01 par value; authorized 20,000 shares, no
shares outstanding -- -- Common stock, $.01 par value; authorized
250,000 shares, 40,395 and 39,307 shares issued and outstanding at
September 30, 2005 and September 30, 2004, respectively 404 393
Additional paid-in capital 118,448 93,817 Retained earnings 264,841
188,156 Accumulated other comprehensive income 18,460 16,406 Total
stockholders' equity 402,153 298,772 Total liabilities and
stockholders' equity $750,418 $646,558 SYBRON DENTAL SPECIALTIES,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) (unaudited) Twelve Months Ended September 30, 2005 2004
Cash flows from operating activities: Net income $76,685 $62,112
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 15,060 13,361 Loss on impairment
of long- lived assets 3,219 -- Amortization of intangible assets
2,579 1,232 Amortization of deferred financing fees 1,653 1,625
Loss (gain) on sales of property, plant and equipment 374 (253)
Provision for losses on doubtful receivables 775 916 Inventory
provisions 4,401 4,406 Deferred income taxes 1,279 (950) Tax
benefit from issuance of stock under employee stock option plan
7,794 4,749 Changes in assets and liabilities, net of effects of
businesses acquired: Increase in accounts receivable (5,446) (356)
(Increase) decrease in inventories 6,992 (9,880) (Increase)
decrease in prepaid expenses and other current assets 1,250 (1,299)
Decrease in accounts payable (692) (115) Increase (decrease) in
income taxes payable (6,758) 815 Increase in accrued payroll and
employee benefits 1,302 1,474 Decrease in accrued rebates (139)
(397) Decrease in restructuring reserve (711) (775) Decrease in
accrued interest (101) (281) Increase in other current liabilities
392 1,374 Net change in other assets and liabilities (9,618) (194)
Net cash provided by operating activities 100,290 77,564 Cash flows
from investing activities: Capital expenditures (19,365) (14,037)
Proceeds from sales of property, plant, and equipment 992 333 Net
payments for businesses acquired (69,882) (6,702) Payments for
intangibles (1,223) (960) Net cash used in investing activities
(89,478) (21,366) Cash flows from financing activities: Proceeds
from credit facility 172,500 135,000 Principal payments on credit
facility (180,901) (185,715) Proceeds from long-term debt -- 2,614
Principal payments on long-term debt (416) (9,366) Proceeds from
exercise of stock options 15,187 12,972 Proceeds received from
employee stock purchase plan 1,661 1,172 Net cash provided by (used
in) financing activities 8,031 (43,323) Effect of exchange rate
changes on cash and cash equivalents (873) 4,859 Net increase in
cash and cash equivalents 17,970 17,734 Cash and cash equivalents
at beginning of year 40,602 22,868 Cash and cash equivalents at end
of year $58,572 $40,602 SYBRON DENTAL SPECIALTIES, INC. AND
SUBSIDIARIES ADDITIONAL DISCLOSURES For periods ended September 30,
2005 INTERNAL GROWTH: Professional Specialty Total Dental Products
SDS Quarter 12.9% 10.6% 11.8% Year to date 6.3% 10.0% 8.0% Total
SDS Foreign Domestic Quarter 12.1% 11.6% Year to date 5.3% 10.3%
DOMESTIC AND INTERNATIONAL SALES BY SEGMENT (In Thousands):
Professional Specialty Total Dental Products SDS Quarter Domestic
$54,958 $41,503 $96,461 International 36,307 37,628 73,935 Total
quarter sales $91,265 $79,131 $170,396 Year to date Domestic
$196,690 $152,264 $348,954 International 144,928 155,784 300,712
Total year to date sales $341,618 $308,048 $649,666 Reconciliation
of Fourth Quarter 2005 and Fiscal Year 2005 Pro Forma and GAAP
Results (in millions, except per share amounts) (Unaudited) Q4 2005
FY 2005 Net income, according to GAAP 21.5 76.7 Less: stock
compensation expense 3.1 7.5 Plus: tax effect of including stock
compensation expense 0.5 2.0 Pro forma net income 19.0 71.2 Fully
diluted earnings per share according to GAAP 0.52 1.85 Tax-effected
impact of pro-forma stock compensation 0.06 0.13 Pro forma fully
diluted earnings per share 0.46 1.72 Shares used in computing fully
diluted earnings per share 41.7 41.5 Reconciliation of Estimated
First Quarter 2006 and Estimated Fiscal Year 2006 Pro Forma and
GAAP Results (in millions, except per share amounts) (Unaudited) Q1
2006 FY 2006 Low High Low High Revenue 160.0 165.0 685.0 705.0 Pro
forma net income 16.2 18.1 81.9 88.2 Less: stock compensation
expense 2.5 2.5 11.3 11.3 Plus: tax effect of including stock
compensation expense 0.8 0.8 3.7 3.7 Net income, according to GAAP
14.5 16.4 74.3 80.6 Pro forma fully diluted earnings per share 0.39
0.44 1.95 2.10 Tax-effected impact of pro-forma stock compensation
0.04 0.04 0.18 0.18 Fully diluted earnings per share according to
GAAP 0.35 0.40 1.77 1.92 Shares used in computing fully diluted
earnings per share 41.3 41.3 42.0 42.0 Stock compensation expense
indicated in the reconciliation table is based on the Company's
current expectations. The actual expense may differ materially from
the Company's estimate due to changes in the number of options
granted or in the number of options forfeited. See the section of
this Press Release entitled CAUTION REGARDING FORWARD-LOOKING
STATEMENTS for a discussion of risks and uncertainties which may
cause the Company's actual stock compensation expense, as well as
all other actual results, to differ materially from the estimates
provided above.
http://www.newscom.com/cgi-bin/prnh/20001204/SDSLOGO
http://photoarchive.ap.org/ DATASOURCE: Sybron Dental Specialties,
Inc. CONTACT: Bernard J. Pitz, Chief Financial Officer of Sybron
Dental Specialties, Inc., +1-949-255-8700 Web site:
http://www.sybrondental.com/investors/index.html Web site:
http://www.sybrondental.com/
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