SonoSite, Inc. (Nasdaq:SONO), the world leader and
specialist in bedside and point-of-care ultrasound, today reported
financial results for the fourth quarter and year ended December
31, 2010.
REVENUE
Revenue for the fourth quarter was $89.3 million, an increase of
28% for the quarter. Full-year 2010 revenue reached $275.4 million
compared to $227.4 million in 2009, an increase of 21%.
VisualSonics, Inc. revenue was $8.9 million for the quarter,
representing the second consecutive strong performance since the
company was acquired in June 2010.
SonoSite revenue, excluding VisualSonics, was $80.4 million, an
increase of 15% compared to the fourth quarter of 2009, and $257.7
million for the full-year, an increase of 13%.
Foreign currency rates had negligible impacts on fourth quarter
and full-year results.
HIGHLIGHTS
- US Sector achieved an all time high in
quarterly revenue of $40.5 million, up 37%
- Revenues in the musculoskeletal (MSK)
market doubled for the year
- US Enterprise channel tripled revenues
during the fourth quarter
- Sales trend for impedance cardiography
(ICG) products improved
- International revenues stabilized and
met internal expectations
- VisualSonics acquisition delivered
second consecutive quarter with on target results
- 2010 EBITDAS grew at approximately
triple the rate of full-year revenue growth
- The company was awarded a significant
“point-of-care standardization agreement” from a world renowned,
major US health system. The agreement includes a large multi-unit
order that adds to their already large installed base of nearly 200
existing ultrasound systems within the health system.
EBITDAS and EBIT
Fourth Quarter Results
Fourth quarter EBITDAS reflects non-recurring charges of $2.3
million, including charges related to acquisition and
restructuring.
Excluding these charges, EBITDAS was $19.6 million or 22% of
revenue, an increase of 74% over the prior year. Including these
charges, EBITDAS was $17.7 million, or 20% of revenue, up 82% over
the fourth quarter 2009.
Excluding these charges, EBIT was $15.3 million or 17% of
revenue, an increase of 88% over the prior year. Including these
charges, EBIT was $13.0 million, or 15% of revenue, up 97% over the
fourth quarter 2009.
Full-Year Results
For the full year of 2010, non-recurring charges were $7
million.
Excluding these charges, EBITDAS was $48.1 million or 17% of
revenue, an increase of 60% compared to the prior year. Including
these charges, EBITDAS was $41.7 million, or 15% of revenue, up 64%
over the full year 2009.
Excluding non-recurring charges, EBIT for the full-year of 2010
was $33.9 million or 12% of revenue, up 87%. Including these
charges, EBIT was $26.9 million, or 10% of revenue, up 100% over
the full-year 2009.
For the full-year, cash flow from operations was $22.5
million.
EPS
Excluding non-recurring charges, EPS was $0.52 per share for the
fourth quarter and $0.98 per share for the full-year of 2010.
Including non-recurring charges, EPS was $0.41 per share for the
fourth quarter, versus $0.13 per share in 2009. Including
non-recurring charges, EPS was $0.66 per share for the full-year
2010, versus $0.19 per share in 2009.
Over the full-year of 2010, the weighted average of
fully-diluted outstanding shares was 15.0 million compared to 17.7
million in the prior year. Over this period, the company
repurchased 4.2 million shares in the open market pursuant to its
share repurchase program. At year end, shares outstanding were 13.5
million.
COMMENTARY
“We are encouraged by the results of our fourth quarter and
full-year 2010,” said Kevin M. Goodwin, SonoSite’s President and
CEO. “With a record revenue performance and improving structural
profitability, we are pleased with the progress of our overall
business platform heading into 2011. We are now preparing for major
product roll-outs over the next eighteen months and continued
pursuit of improvement over the next three-year cycle. With the new
product launches, we anticipate stronger performance and increasing
competitive strength, as we are confident that these products will
raise the ‘innovation bar’ in point-of-care ultrasound
visualization.”
Mr. Goodwin continued, “In addition, over the next several
weeks, our newly acquired division, VisualSonics, will be launching
a significant ‘new to the world’ technology called the Vevo® LAZR
Photoacoustics Imaging system. This technology provides researchers
with the capability to measure hypoxia (oxygen levels) in tumors,
which will be particularly valuable for cancer research.”
“The Vevo LAZR will operate in concert with our unique ultra
high-frequency micro-ultrasound technology and opens up the
potential to further advance cancer research, and as such, there
has been significant anticipation of the Vevo LAZR launch. We are
excited to announce that a world-leading biotech company has
already pre-ordered a Vevo LAZR system. This technology will make
its debut at the American Association of Cancer Research April
3-6th,” said Mr. Goodwin.
2011 FINANCIAL OUTLOOK
For 2011, management is targeting full-year revenue growth of
13% to 18%.
- Management expects organic revenue
growth rates to increase in the second half as new technology
introductions from VisualSonics arrive “in market” and core
business “point-of-care” market initiatives take hold.
- In the international markets, we expect
stable yet lower growth in Western Europe, based on current
economic conditions. The company is targeting higher growth rates
in Asia-Pacific and the BRIC geographies.
- The company will continue to focus on
operating leverage while investing in new product introductions and
demand generation. Based on the current development cycle, the
company expects higher proportion of expenses in the 2nd and 3rd
quarters compared to previous years.
- Additionally, management expects to
incur additional non-recurring charges of approximately $1-2
million related to the integration of VisualSonics and continued
cost restructuring. These actions are intended to provide a more
scalable and more structurally profitable business platform over
the coming three year period of 2011- 2013.
Non-GAAP Measures
This release includes discussions of EBIT, EBITDAS and EPS
excluding non-recurring charges; these are non-GAAP financial
measures. SonoSite believes these measures are 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 February 17 at 1:30 pm
PT/4:30 pm 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 February
17th at 5:30 pm PT and will be available until March 3rd at 9:59 pm
PT by dialing 719-457-0820 or toll-free 888-203-1112. The
confirmation code 2745372 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 bedside and point-of-care ultrasound and an industry
leader in ultra high-frequency micro-ultrasound technology and
impedance cardiography equipment. Headquartered near Seattle, the
company is represented by fourteen 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 are “forward-looking
statements” for the purposes of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, including
statements relating to our future financial condition and results
of operations and statements regarding planned product launches and
the potential market opportunity for these products. 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 we do not achieve the
financial results that we expect, the risk we are unable to launch
our new products as and when expected, the risk that our existing
and new products do not achieve market success 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 Twelve Months Ended December 31,
December 31, 2010 2009 2010 2009 Revenue $ 89,298 $ 69,727 $
275,362 $ 227,389 Cost of revenue 26,590
21,682 79,740 69,715 Gross
margin 62,708 48,045 195,622 157,674 Gross margin percentage 70.2 %
68.9 % 71.0 % 69.3 % Operating expenses: Research and
development 9,287 7,453 32,550 29,021 Sales, general and
administrative 40,411 33,981 136,156 116,132 Licensing income and
litigation settlement - - -
(924 ) Total operating expenses 49,698 41,434 168,706
144,229 Operating income 13,010 6,611 26,916 13,445
Other loss, net (4,020 ) (2,694 ) (12,519 )
(8,181 ) Income before income taxes 8,990 3,917
14,397 5,264 Income tax provision 3,217
1,684 4,425 1,981
Net income $ 5,773 $ 2,233 $ 9,972 $ 3,283
Net income per share: Basic $ 0.43 $ 0.13
$ 0.69 $ 0.19 Diluted $ 0.41 $ 0.13
$ 0.66 $ 0.19 Weighted average common
and potential common shares outstanding: Basic 13,498
17,346 14,506 17,239
Diluted 14,031 17,832 15,028
17,698
Reconciliation of
Non-GAAP Measures:
Reconciliation of Adjusted EBIT: Operating income
(EBIT) $ 13,010 $ 6,611 $ 26,916 $ 13,445 Adjustments to
EBIT: Acquisition and integration costs 1,144 1,512 4,212 4,690
Restructuring and other non-recurring charges, including
stock-based compensation component 1,122 -
2,753 - Non-GAAP Adjusted EBIT $
15,276 $ 8,123 $ 33,881
$ 18,135
Reconciliation of Adjusted EBITDAS:
Operating income (EBIT) $ 13,010 $ 6,611 $ 26,916 $ 13,445
Depreciation and amortization 2,588 1,800 8,406 5,447 Stock-based
compensation 2,131 1,351 6,377
6,552 EBITDAS 17,729 9,762 41,699 25,444
Adjustments to EBITDAS: Acquisition and integration costs
1,144 1,512 4,212 4,690 Restructuring and other non-recurring
charges, excluding stock-based compensation component 695
- 2,225 -
Non-GAAP Adjusted EBITDAS $ 19,568 $ 11,274 $ 48,136
$ 30,134
Reconciliation of Adjusted
EPS: Non-GAAP Adjusted EBIT $ 15,276 $ 8,123 $ 33,881
$ 18,135 Other loss, net (4,020 ) (2,694 )
(12,519 ) (8,181 ) Adjusted income before income
taxes 11,256 5,429 21,362 9,954 Adjusted income tax provision
4,028 2,333 6,566
3,745 Adjusted net income $ 7,228 $ 3,096 $
14,796 $ 6,209 Non-GAAP Adjusted net income
per share, diluted $ 0.52 $ 0.17 $ 0.98 $ 0.35
SonoSite, Inc.
Selected Financial Information
Condensed Consolidated Balance Sheets (in
thousands) (unaudited) December 31, December 31, 2010 2009
Cash and cash equivalents $ 78,690 $ 183,065 Short-term investment
securities - 74,682 Accounts receivable, net 81,516 71,347
Inventories 37,126 32,216 Deferred tax asset, current 7,801 7,350
Prepaid expenses and other current assets 12,384
12,034 Total current assets 217,517 380,694
Property and equipment, net 9,133 9,160 Investment in Carticept
8,000 - Deferred tax asset, net 4,373 775 Intangible assets, net
85,209 27,920 Other assets 4,823 4,425
Total assets $ 329,055 $ 422,974 Accounts
payable $ 10,597 $ 6,175 Accrued expenses 32,535 25,923 Deferred
revenue 6,042 5,504 Total current
liabilities 49,174 37,602 Long-term debt, net 97,379 92,905
Deferred tax liability, net 1,811 5,083 Deferred revenue 15,236
18,081 Other non-current liabilities 12,565
14,873 Total liabilities 176,165 168,544
Shareholders' equity: Common stock and additional paid-in capital
299,005 287,537 Accumulated deficit (148,975 ) (32,753 )
Accumulated other comprehensive loss 2,860
(354 ) Total shareholders' equity 152,890
254,430 Total liabilities and shareholders' equity $ 329,055
$ 422,974
SonoSite, Inc.
Selected Financial Information
Condensed Consolidated Statements of Cash Flow
(in thousands) (unaudited) Twelve Months Ended December 31, 2010
2009 Operating activities: Net income $ 9,972 $ 3,283 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 8,176 5,352 Stock-based
compensation 6,377 6,552 Deferred income tax (provision) benefit
(5,073
) 427 Amortization of debt discount and debt issuance costs 4,505
5,015 Gain on bargain purchase of CardioDynamics - (1,099 ) Gain on
convertible debt repurchase - (1,100 ) Excess tax benefit from
exercise of stock-based awards (1,188 ) (144 ) Other adjustments
1,469 729 Changes in working capital
(1,761
) 2,033 Net cash provided by operating activities
22,477
21,048 Investing activities: Maturities of investment
securities, net 74,777 (3,824 ) Purchases of property and equipment
(1,590 ) (2,586 ) Investment in Carticept Medical Inc. (8,000 ) -
Purchase of VisualSonics, Inc, net of cash acquired (61,440 ) -
Purchase of CardioDynamics, net of cash
acquired
- (8,185 ) Earn-out consideration for SonoMetric acquisition
- (387 ) Net cash provided by (used in) investing
activities 3,747 (14,982 ) Financing activities: Excess tax
benefit from exercise stock-based awards 1,188 144 Proceeds from
exercise of stock-based awards 5,267 1,769 Minimum tax withholding
on stock-based awards (1,212 ) (1,342 ) Stock repurchase including
transaction costs (126,104 ) - Repayment of VisualSonics, Inc.
long-term debt (8,865 ) - Payment of LumenVu contingent
consideration (425 ) - Proceeds from sale of call options - 1,646
Purchase of convertible debt - (30,492 ) Purchase of warrants
- (1,514 ) Net cash used in financing
activities (130,151 ) (29,789 ) Effect of exchange rate
changes on cash and cash equivalents
(448
) (2,470 ) Net change in cash and cash equivalents
(104,375 ) (26,193 ) Cash and cash equivalents at beginning of
period 183,065 209,258 Cash and cash
equivalents at end of period $ 78,690 $ 183,065
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