SonoSite, Inc. (NASDAQ:SONO), the world leader and
specialist in hand-carried ultrasound for the point-of-care, today
reported financial results for the first quarter ended March 31,
2010.
REVENUE
Revenues in the first quarter of 2010 were $56 million, an
increase of 8% compared to the first quarter of 2009. Revenues from
the recently acquired CardioDynamics (CDIC) were $3.2 million for
the quarter. Revenues were up 2%, excluding CDIC, and included a 4%
currency gain.
“We saw some encouraging signs of improvement in our US hospital
channel with year-over-year revenue growth of 12% and order booking
rates that increased at a much faster rate,” said Kevin M. Goodwin,
SonoSite President and CEO. “With stable pricing, we delivered
solid progress on EBIT with growth of 68% alongside an increase in
EPS of 60%. We also experienced broadening success globally as 20
of 25 revenue regions achieved or exceeded forecast.”
Mr. Goodwin continued, “As planned, our US enterprise channel
had decreased revenues of 59% for the quarter. We expect this will
improve during the remainder of the year. The Company’s new primary
care division (formerly CardioDynamics) had a sequential decline in
revenues for ICG systems, due to ongoing channel restructuring. We
saw encouraging signs for long-term ultrasound sales growth
following two quarters of market development.”
“We were not completely satisfied with expense control during
the quarter, as overall operating expenses came in $500k higher
than planned. Thus, we are tightening our focus on expense
management for the remainder of the year as we strive to deliver
operating margins of 11-13% for the year, commensurate with our
revenue performance.”
EBIT and EBITDAS
First quarter EBIT was $2.7 million, an increase of 68% compared
to the first quarter of 2009. First quarter EBITDAS was $5.4
million, an increase of 4% compared to the first quarter of 2009;
year-over-year EBITDAS comparisons were negatively affected by
changes in stock compensation.
NET INCOME
For the first quarter of 2010, the Company recorded net income
of $1.4 million or $0.08 per share, compared to $0.9 million or
$0.05 per share in 2009.
COMMENTARY
“We exited the quarter with encouraging signs from our US
hospital channel on both revenue performance and booking rates,”
said Mr. Goodwin. “We believe we will see improvement in our
international business. We have updated our revenue outlook for the
year and now expect growth between 10-12%. We are also reaffirming
our EBIT margin targets of 11-13%.”
Mr. Goodwin continued, “During the quarter, we finalized two
strategic steps. The first was with Carticept Medical, Inc., a
developer of innovative products for the treatment of
musculoskeletal injuries, located in Atlanta, Georgia. The second
alliance was an exclusive agreement with Physio-Control, Inc., a
wholly-owned subsidiary of Medtronic, Inc., which is the world
leader in cardiac monitors and external defibrillation for
emergency medical services (EMS), based in Redmond, Washington.
This is part of our long-term growth strategy to expand our
footprint into the emerging segments of musculoskeletal medicine
and EMS.”
2010 FINANCIAL OUTLOOK
The company is updating guidance (at current exchange
rates):
- revenue growth of 10-12%;
- stable gross margins of
approximately 70%;
- reaffirmed EBIT margins of
11-13%;
- EBITDAS margins of 16-18%;
and
- full-year effective tax rate of
30%.
Non-GAAP Measures
This release includes a discussion of “EBITDAS” which is a
non-GAAP financial measure. SonoSite believes this measure is a
useful complement to results provided in accordance with GAAP.
"EBITDAS" refers to operating income (EBIT) before depreciation,
amortization and stock-based compensation.
Conference Call Information
SonoSite will hold a conference call on April 26 at 1:30 p.m. PT
/ 4:30 p.m. ET. The call will be broadcast live and can be accessed
via http://www.sonosite.com/company/investors.
A replay of the audio webcast will be available beginning April 26,
2010, 5:30 p.m. PT and will be available until May 10, 2010, 9:59
p.m. PT by dialing (719) 457-0820 or toll-free (888) 203-1112. The
confirmation code 4670785 is required to access the replay. The
call will also be archived on SonoSite’s website.
About SonoSite
SonoSite, Inc. (www.sonosite.com) is the innovator and world
leader in hand-carried ultrasound and industry leader in impedance
cardiography equipment. Headquartered near Seattle, the company is
represented by ten subsidiaries and a global distribution network
in over 100 countries. SonoSite’s small, lightweight systems are
expanding the use of ultrasound across the clinical spectrum by
cost-effectively bringing high performance ultrasound to the point
of patient care.
Forward-looking Information
and the Private Litigation Reform Act of 1995
Certain statements in this press release relating to our future
financial position and operating results are “forward-looking
statements” for the purposes of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on the opinions and estimates
of our management at the time the statements are made and are
subject to risks and uncertainties that could cause actual results
to differ materially from those expected or implied by the
forward-looking statements. These statements are not guaranties of
future performance, are based on potentially inaccurate assumptions
and are subject to known and unknown risks and uncertainties,
including, without limitation, the risk that the acquisition of
CardioDynamics will not yield the expected potential benefits, our
ability to manufacture, market and sell our newest products, our
ability to manage expenses, spending patterns in the hospital
market, healthcare reform, prolonged adverse conditions in the U.S.
or world economies or SonoSite’s industry and the other factors
contained in Item 1A. “Risk Factors” section of our most recent
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. We caution readers not to place undue reliance upon
these forward-looking statements that speak only as to the date of
this release. We undertake no obligation to publicly revise any
forward-looking statements to reflect new information, events or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events.
SonoSite, Inc.
Selected Financial
Information
Condensed Consolidated Statements of Income
(in thousands except per share data) (unaudited)
Three Months Ended March 31, 2010 2009 Revenue $ 55,977 $
51,805 Cost of revenue 16,280 16,713
Gross margin 39,697 35,092 Gross margin percentage 70.9 % 67.7 %
Operating expenses: Research and development 7,597 7,697
Sales, general and administrative 29,429
25,803 Total operating expenses 37,026 33,500
Operating income (EBIT) 2,671 1,592 Other loss, net
(2,262 ) (204 ) Income before income taxes 409 1,388
Income tax (benefit) provision (973 ) 525
Net income $ 1,382 $ 863 Net income per
share: Basic $ 0.08 $ 0.05 Diluted $ 0.08 $
0.05 Weighted average common and potential
common shares outstanding: Basic 16,284 17,080
Diluted 16,823 17,532
Reconciliation of Non-GAAP Adjusted EBITDA: Operating income
(EBIT) $ 2,671 $ 1,592 Adjustments to EBIT: Depreciation and
amortization 1,679 1,046 Stock-based compensation 1,009 2,493
Non-GAAP Adjusted EBITDA $ 5,359 $ 5,131
Condensed Consolidated Balance Sheets
(in thousands) (unaudited) March 31, December 31, 2010 2009
Cash and cash equivalents $ 114,467 $ 183,065 Short-term investment
securities 63,664 74,682 Accounts receivable, net 60,029 71,347
Inventories 30,562 32,216 Deferred tax asset, current 7,345 7,350
Prepaid expenses and other current assets 11,877
12,034 Total current assets 287,944 380,694
Property and equipment, net 8,858 9,160 Investment in Carticept
4,000 - Deferred tax asset, net 729 775 Intangible assets, net
26,923 27,920 Other assets 3,576 4,425
Total assets $ 332,030 $ 422,974 Accounts
payable $ 7,285 $ 6,175 Accrued expenses 20,279 25,923 Deferred
revenue 5,425 5,504 Total current
liabilities 32,989 37,602 Long-term debt, net 93,991 92,905
Deferred tax liability, net 4,863 5,083 Deferred revenue 17,222
18,081 Other non-current liabilities 15,289
14,873 Total liabilities 164,354 168,544
Shareholders' equity: Common stock and additional paid-in capital
289,881 287,537 Accumulated deficit (121,520 ) (32,753 )
Accumulated other comprehensive income (685 ) (354 )
Total shareholders' equity 167,676 254,430
Total liabilities and shareholders' equity $ 332,030
$ 422,974
Condensed Consolidated Statements
of Cash Flow (in thousands) (unaudited)
Three Months Ended
March 31, 2010 2009 Operating activities: Net income $ 1,382 $ 863
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,679 1,046
Stock-based compensation 1,009 2,493 Deferred income tax provision
143 1,459 Amortization of debt discount, debt issuance costs 1,179
1,340 Gain on convertible debt repurchase - (1,339 ) Other
adjustments (436 ) 97 Changes in working capital 8,781
(6,833 ) Net cash provided by (used in) operating
activities 13,737 (874 ) Investing activities: Investment
securities, net 11,052 10,432 Purchases of property and equipment
(1,006 ) (1,092 ) Investment in Carticept (4,000 ) - Payment of
LumenVu contingent consideration (425 ) - Earn-out consideration
associated with SonoMetric acquisition - (387
) Net cash provided by investing activities 5,621 8,953
Financing activities: Excess tax benefit from exercise of
stock-based compensation 436 - Repurchase of convertible debt and
related hedge transactions - (20,416 ) Repayment of long-term debt
(5 ) - Stock repurchase (90,046 ) - Shares retired for taxes (692 )
(562 ) Proceeds from exercise of stock options 1,568
53 Net cash used in financing activities (88,739 )
(20,925 ) Effect of exchange rate changes on cash and cash
equivalents 783 1,707 Net change
in cash and cash equivalents (68,598 ) (11,139 ) Cash and cash
equivalents at beginning of period 183,065
209,258 Cash and cash equivalents at end of period $ 114,467
$ 198,119
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