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8-K - FORM 8-K - SYNERGETICS USA INC | c61784e8vk.htm |
Exhibit 99.1
SYNERGETICS USA, INC.
3845 Corporate Centre Drive
OFallon, Missouri 63368
(636) 939-5100
http://www.synergeticsusa.com
Pamela G. Boone, Chief Financial Officer
3845 Corporate Centre Drive
OFallon, Missouri 63368
(636) 939-5100
http://www.synergeticsusa.com
Pamela G. Boone, Chief Financial Officer
SYNERGETICS ANNOUNCES FIRST QUARTER RESULTS
Reports 50% Increase in EPS, Growth in Ophthalmic
Sales and Improved Margins
Sales and Improved Margins
OFALLON, Mo. (December 14, 2010) Synergetics USA, Inc. (NASDAQ: SURG), a medical
device company that designs, manufactures, and markets innovative microsurgical devices for
ophthalmic and neurosurgical applications, today reported its results for the first quarter ended
October 31, 2010. The Company reported first quarter 2011 sales of $12.1 million and net income of
$633,000, or $0.03 per diluted share.
We are very pleased with our performance in the first quarter of fiscal 2011, stated Dave Hable,
President and CEO of Synergetics USA, Inc. We faced a significant challenge to overcome a
$444,000 shortfall in sales arising from the sale of the Omni® product line.
In addition, there was a modest headwind associated with lower sales of capital equipment due to
the overall economic environment. This shortfall was overcome by a 6% growth in sales of our
disposable products. In effect, we replaced relatively low margin capital equipment sales with
higher margin disposable product sales. As a result, our sales mix improved and our disposable
sales now constitute 83% of our total product sales. This also increased the number of units
manufactured, causing a decline in our overhead rates.
Our focus for fiscal 2011 continues to be building on sales and improving our margins. We are
focused on our top four research and development projects that will expand our reach in the
vitreoretinal and intracranial markets to drive organic growth. We stepped up our R&D programs in
key areas and expect to introduce new products in the coming year. We also expect to begin
shipping products to Alcon, Inc. in the third quarter of fiscal 2011. In addition, our strong
financial condition is providing the foundation to aggressively pursue new business development
opportunities that have the potential of expanding our markets for ophthalmic and neurosurgery
products.
First Quarter Results
First quarter 2011 sales were unchanged at $12.1 million compared with the first quarter of
2010. Although sales were unchanged, the mix of sales in the first quarter of fiscal 2011 was
favorably impacted by increased sales of our higher margin disposable products that was offset by
lower sales of neurosurgical products due to the transition of our direct neurosurgery sales to our
marketing partners and lower sales of capital equipment.
| Ophthalmic sales rose 6.0% to $8.0 million compared with the first quarter of fiscal 2010. | ||
| Neurosurgical sales (including sales to our marketing partners) declined 22.4% to $2.2 million in the first quarter of fiscal 2011 compared with $2.9 million in the same period in 2010. The decline in neurosurgery sales was the result of the transition to Codman & Shurtleff, Inc. (Codman) and Stryker under marketing partner agreements. |
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SURG Announces First Quarter Results
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| Total OEM sales rose 8.7% to $1.8 million compared with $1.7 million in the first quarter of fiscal 2010. |
Our top six product lines representing approximately 72% of total first quarter sales showed solid
growth since last year and were up 16.9% compared with the first quarter of fiscal 2010, continued
Mr. Hable. We are pleased with the solid organic growth from these key product groups, especially
in our disposable product lines that carry higher margins and offer the opportunity for repeat
purchases.
Unit sales of neurosurgical products sold through Codman and Stryker were also up since last year
due to the increased market penetration of our marketing partners in domestic and international
markets; however, our total revenue from neurosurgical products remains below last year due to
lower transfer pricing. We believe this has been more than offset by lower sales and marketing
costs and improved manufacturing efficiencies arising from the growth in unit volume, stated Mr.
Hable.
Gross profit for the first quarter of fiscal 2011 rose to $7.0 million, or 58.2% of sales, compared
with $6.9 million, or 57.0% of sales, in the first quarter of 2010. The growth in gross profit and
margin was due to improved profit margins on our ophthalmology products and improved absorption of
both labor and overhead on all products, partially offset by the margin impact of the transition of
sales to our marketing partners. As the Company replaced large dollar capital equipment sales with
smaller dollar disposables sales, the number of units manufactured increased and caused a
corresponding reduction in our overhead rates.
R&D expenses as a percentage of net sales were 6.0% and 5.4% for the first quarter of fiscal 2011
and 2010, respectively.
Sales and marketing expenses were down $236,000 to $3.0 million, or 25.0% of net sales, for
the first quarter of 2011, compared with $3.3 million, or 26.8% of net sales, for the first quarter
of 2010.
General and administrative expenses increased by approximately $222,000 to $2.3 million, or 18.6%
of net sales, in the first fiscal quarter of 2011, compared with $2.0 million, or 16.7% of net
sales, for the first fiscal quarter of 2010.
Operating income for the first quarter of fiscal 2011 increased to $1.0 million compared with
$979,000 in the first quarter of fiscal 2010. The improvement in operating income was primarily
the result of the increase in gross profit margin.
First quarter 2011 net income increased 16.8% to $633,000, compared with net income of $542,000 in
the first quarter 2010. Net income per share rose 50.0% to $0.03 in the first quarter of fiscal
2011 from $0.02 in the first quarter of fiscal 2010. Basic weighted-average shares outstanding
increased from 24,458,089 at October 31, 2009, to 24,782,913 at October 31, 2010.
We are very positive about the outlook for Synergetics future, stated Mr. Hable. Our entire
team is focused on the key strategies to build sales and grow net income. We believe our strong
cash position and reduced debt will provide us with the financial flexibility and leverage to
achieve these goals.
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SURG Announces First Quarter Results
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December 14, 2010
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December 14, 2010
Conference Call Information
Synergetics USA, Inc. will host a conference call on Wednesday, December 15, 2010, at 10:30 a.m.
Eastern Time. The toll free dial-in number to listen and participate live on this call is (800)
447-0521, confirmation code 28432132. For callers outside the U.S., the number is (847) 413-3238.
Participants are encouraged to email questions to investorinfo@synergeticsusa.com. The conference
call will also be simulcast live at http://www.synergeticsusa.com. An online replay will be
available on the Companys website for approximately 30 days.
About Synergetics USA, Inc.
Synergetics USA, Inc. (Synergetics USA or the Company) is a leading supplier of precision
microsurgery devices. The Companys primary focus is on the microsurgical disciplines of
ophthalmology and neurosurgery. Our distribution channels include a combination of direct and
independent sales organizations and important strategic alliances with market leaders. The
Companys product lines focus upon precision engineered, microsurgical, hand-held devices and the
delivery of various energy modalities for the performance of less invasive microsurgery including:
(i) laser energy, (ii) ultrasonic energy, (iii) radio frequency for electrosurgery and lesion
generation and (iv) visible light energy for illumination, and where applicable, simultaneous
infusion (irrigation) of fluids into the operative field. The Companys website address is
http://www.synergeticsusa.com.
Forward-Looking Statements
Some statements in this release may be forward-looking statements for the purposes of the Private
Securities Litigation Reform Act of 1995. In some cases forward-looking statements can be
identified by words such as believe, expect, anticipate, plan, potential, continue or
similar expressions. Such forward-looking statements include risks and uncertainties, and there
are important factors that could cause actual results to differ materially from those expressed or
implied by such forward-looking statements. These factors, risks and uncertainties are discussed
in Synergetics Annual Report on Form 10-K for the year ended July 31, 2010, as updated from time
to time in our filings with the Securities and Exchange Commission.
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SURG Announces First Quarter Results
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December 14, 2010
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Synergetics USA, Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended October 31, 2010, and 2009
(Dollars in thousands, except share and per share data)
Consolidated Statements of Income
Three Months Ended October 31, 2010, and 2009
(Dollars in thousands, except share and per share data)
Three Months Ended | Three Months Ended | |||||||
October 31, 2010 | October 31, 2009 | |||||||
Net sales |
$ | 12,076 | $ | 12,146 | ||||
Cost of sales |
5,053 | 5,219 | ||||||
Gross profit |
7,023 | 6,927 | ||||||
Operating expenses |
||||||||
Research and development |
719 | 659 | ||||||
Sales and marketing |
3,023 | 3,259 | ||||||
General and administrative |
2,252 | 2,030 | ||||||
5,994 | 5,948 | |||||||
Operating income |
1,029 | 979 | ||||||
Other income (expenses) |
||||||||
Investment income |
32 | | ||||||
Interest expense |
(80 | ) | (168 | ) | ||||
Miscellaneous |
(7 | ) | (10 | ) | ||||
(55 | ) | (178 | ) | |||||
Income before provision for income taxes |
974 | 801 | ||||||
Provision for income taxes |
341 | 259 | ||||||
Net income |
$ | 633 | $ | 542 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.03 | $ | 0.02 | ||||
Diluted |
$ | 0.03 | $ | 0.02 | ||||
Basic weighted average common shares
outstanding |
24,782,913 | 24,458,089 | ||||||
Diluted weighted average common shares
outstanding |
24,862,420 | 24,496,554 |
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SURG Announces First Quarter Results
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Synergetics USA, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of October 31, 2010 (Unaudited) and July 31, 2010
(Dollars in thousands, except share information)
Condensed Consolidated Balance Sheets
As of October 31, 2010 (Unaudited) and July 31, 2010
(Dollars in thousands, except share information)
October 31, 2010 | July 31, 2010 | |||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 18,519 | $ | 18,669 | ||||
Accounts receivable, net of allowance for
doubtful accounts of $293 and $282,
respectively |
9,132 | 9,056 | ||||||
Inventories |
13,421 | 11,891 | ||||||
Prepaid expenses |
530 | 792 | ||||||
Deferred income taxes |
658 | 658 | ||||||
Total current assets |
42,260 | 41,066 | ||||||
Property and equipment, net |
8,044 | 8,044 | ||||||
Intangible and other assets |
||||||||
Goodwill |
10,690 | 10,690 | ||||||
Other intangible assets, net |
12,180 | 12,353 | ||||||
Patents, net |
897 | 870 | ||||||
Cash value of life insurance |
72 | 72 | ||||||
Total assets |
$ | 74,143 | $ | 73,095 | ||||
Liabilities and stockholders equity |
||||||||
Current Liabilities |
||||||||
Current maturities of long-term debt |
$ | 1,407 | $ | 1,398 | ||||
Current maturities of revenue bonds payable |
116 | 116 | ||||||
Accounts payable |
1,844 | 1,800 | ||||||
Accrued expenses |
2,694 | 2,624 | ||||||
Income taxes payable |
254 | 11 | ||||||
Deferred revenue |
400 | 400 | ||||||
Total current liabilities |
6,715 | 6,349 | ||||||
Long-Term Liabilities |
||||||||
Long-term debt, less current maturities |
784 | 939 | ||||||
Revenue bonds payable, less current maturities |
1,583 | 1,612 | ||||||
Deferred revenue |
18,630 | 18,630 | ||||||
Deferred income taxes |
1,264 | 1,339 | ||||||
Total long-term liabilities |
22,261 | 22,520 | ||||||
Total liabilities |
28,976 | 28,869 | ||||||
Stockholders Equity |
||||||||
Common stock at October 31, 2010 and July 31,
2010, $0.001 par value, 50,000,000 shares
authorized; 24,842,441 and 24,772,155 shares
issued and outstanding, respectively |
25 | 25 | ||||||
Additional paid-in capital |
25,087 | 24,905 | ||||||
Retained earnings |
19,952 | 19,319 | ||||||
Accumulated other comprehensive loss: |
||||||||
Foreign currency translation adjustment |
103 | (23 | ) | |||||
Total stockholders equity |
$ | 45,167 | $ | 44,226 | ||||
Total liabilities and stockholders equity |
$ | 74,143 | $ | 73,095 | ||||
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