ZVXI Zevex International (MM)

ZEVEX International Inc. (Nasdaq: ZVXI) reported record financial results for the three and nine months ending Sept. 30, 2005. Net income for the third quarter ending Sept. 30, 2005, was a record $785,483, or $0.22 per share, compared with a net loss of $294,721, or ($0.09) per share, for the same period of 2004. For the nine-month period ending Sept. 30, 2005, net income was a record $999,104, or $0.28 per share, compared with $106,952, or $0.03 per share, for the same period of 2004. Revenue for the third quarter ending Sept. 30, 2005, increased 52 percent to $8.1 million, compared with $5.3 million for the third quarter of 2004. For the nine-month period ending Sept. 30, 2005, revenue grew by 18 percent to $20.9 million, compared with $17.8 million for the same period of 2004. ZEVEX CEO and President David McNally said, "Sales were very strong in both of our divisions during the third quarter. Our Applied Technology division produced revenue of $3.4 million, a 44 percent gain over third quarter 2004 revenue of $2.3 million. Applied Technology division sales were substantially higher this quarter due to strong demand from two of our largest customers. "In addition, our Therapeutics division produced revenue of $4.7 million, a 59 percent gain over third quarter 2004 revenue of $3.0 million. The international revenue from our Therapeutics division increased more than sixfold over last year's third quarter, primarily based upon sales to Numico, our exclusive distributor for a private-label version of our newest, most advanced enteral feeding pump, the EnteraLite(R) Infinity(R), that provides patients in hospitals, nursing homes, or at home with the lightest, most accurate, and longest lasting, battery-operated pump available in Europe. Also, growth in our domestic ambulatory pump and disposable set sales led to a 14 percent increase in revenue from our Therapeutics division during this year's third quarter," concluded McNally. McNally further stated that the company has added a second production shift in order to support forecasted demand for the company's products. Gross profit for the third quarter increased to 38 percent, compared with 34 percent in the same quarter of 2004, primarily due to the product mix delivered during the quarter. Operating expenses continued to decline as a percent of sales to 28 percent for the third quarter of 2005, compared with 40 percent for the same quarter of 2004. Selling, general and administrative expenses were 24 percent of sales for the third quarter of 2005, compared with 32 percent for the same quarter of 2004. Research and development expenses for the third quarter of 2005 were 4 percent of sales, compared with 8 percent of sales for the same quarter of 2004. Operating income for the third quarter of 2005 was 10 percent of sales, compared with a loss for the same quarter of 2004. For both the nine-month periods ended Sept. 30, 2005 and 2004, gross profit was 37 percent. Operating expenses for the first nine months of 2005 were 32 percent of sales, compared with 36 percent of sales for the same period of 2004. Selling, general and administrative expenses were 27 percent of sales for the nine-month period of 2005, compared with 30 percent for the same period of 2004. R&D expenditures were 4 percent of sales for the first nine months of 2005, compared with 6 percent of sales for the same period of 2004. For the nine-month period ended Sept. 30, 2005, operating income was 5 percent of sales, compared with 1 percent of sales for the same period of 2004. McNally added, "We are very encouraged by this quarter's performance. The reductions in operating expenses expressed as a percentage of sales for the third quarter and first nine months of 2005 compared to the same periods of 2004 indicate that we have been able to generate more sales without proportionally increasing overhead expenses. This operating leverage is a tribute to our management team and all our employees who are exercising budget control while driving sales growth." CONFERENCE CALL ZEVEX International Inc. invites all those interested to join the ZEVEX management team for its earnings conference call for the third quarter ended Sept. 30, 2005. The call will be held Tuesday, Nov. 1, 2005, at 4:30 p.m. EDT (3:30 p.m. Central, 2:30 p.m. Mountain, 1:30 p.m. Pacific). The telephone numbers for the call are as follows: Domestic: 800-257-6566 International: 303-262-2052 A live webcast and a rebroadcast of the conference call will be available on the company's Web site at www.zevex.com and www.streetevents.com. To listen to the live broadcast, please enter the site 10-15 minutes prior to the call in order to download any necessary software, and then click on the "Webcast" icon on the ZEVEX home page to access the call. The webcast will be archived on both sites. There is no other replay access to the call. ABOUT ZEVEX ZEVEX International Inc. (www.zevex.com), founded in 1986, is a diversified medical device company committed to creating products that transform life with patented and proprietary medical device technologies -- from sensors and surgical tools to medical electronic systems. For more information concerning ZEVEX and its products, please visit the ZEVEX Web site at the following link: www.zevex.com. Forward-Looking Statements Statements made in this press release, including those relating to forecasted demand, anticipated revenue and profit growth and other statements regarding future performance, are forward looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Among these, the company's efforts to continue to improve its sales and margins in its core businesses may not be effective, or such efforts could be more difficult or expensive than the company currently anticipates. Further, demand from the company's largest customers could fluctuate, possibly impacting revenue on a quarterly or annual basis. In addition to the foregoing, the economic, competitive, governmental, technological and other factors identified in the company's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended Dec. 31, 2004, may cause actual results or events to differ materially from those described in the forward-looking statements in this press release. -0- *T ZEVEX INTERNATIONAL INC. CONSOLIDATED INCOME STATEMENT Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 2005 2004 2005 2004 (unaudited)(unaudited)(unaudited) (unaudited) Revenue: Product sales $7,985,249 $5,187,253 $20,512,430 $17,180,510 Engineering services 151,974 152,153 406,610 591,597 ---------- ---------- ----------- ------------ Total revenue 8,137,223 5,339,406 20,919,040 17,772,107 Cost of sales 5,056,861 3,517,818 13,183,688 11,193,467 ---------- ---------- ----------- ------------ Gross profit 3,080,362 1,821,588 7,735,352 6,578,640 Operating expenses: Selling, general and administrative 1,945,200 1,707,321 5,746,869 5,408,745 Research and development 330,242 427,711 895,870 993,354 ---------- ---------- ----------- ------------ Total operating expenses 2,275,442 2,135,032 6,642,739 6,402,099 Operating income (loss) 804,920 (313,444) 1,092,613 176,541 Other income (expense): Interest and other income 12,337 10,120 28,892 14,976 Interest expense (31,774) (25,254) (119,766) (114,807) ---------- ---------- ----------- ------------ Income (loss) before income taxes 785,483 (328,578) 1,001,739 76,710 Benefit (provision) for income taxes -- 33,857 (2,635) 30,242 ---------- ---------- ----------- ------------ Net income (loss) $785,483 ($294,721) $999,104 $106,952 ========== ========== =========== ============ Basic net income (loss) per share $0.23 ($0.09) $0.29 $0.03 ========== ========== =========== ============ Weighted average shares outstanding 3,407,290 3,400,964 3,404,549 3,400,964 ========== ========== =========== ============ Diluted net income (loss) per share $0.22 ($0.09) $0.28 $0.03 ========== ========== =========== ============ Diluted weighted average shares outstanding 3,575,475 3,400,964 3,531,890 3,473,602 ========== ========== =========== ============ ZEVEX INTERNATIONAL INC. CONSOLIDATED BALANCE SHEET Sept. 30, Dec. 31, 2005 2004 ASSETS (unaudited) Current assets Cash and cash equivalents $613,362 $212,859 Designated cash for sinking fund payment on industrial development bond 71,897 96,042 Accounts receivable, net of allowances for doubtful accounts of $158,000 and $192,000 5,543,932 3,563,436 Other receivable -- 35,500 Inventories 4,285,552 4,584,755 Marketable securities 28,800 29,250 Prepaid expenses and other current assets 68,763 149,690 ----------- ----------- Total current assets 10,612,306 8,671,532 Property and equipment, net 4,605,962 4,345,942 Patents, trademarks and other intangibles, net 354,122 335,244 Goodwill, net 4,048,264 4,048,264 ----------- ------------ Total assets $19,620,654 $17,400,982 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $2,338,158 $1,949,618 Other accrued liabilities 859,078 606,734 Deferred revenue 83,332 -- Bank line of credit 610,536 -- Income taxes payable 2,005 2,005 Current portion of industrial development bond 100,000 100,000 Current portion of other long-term debt 55,460 53,246 ----------- ------------ Total current liabilities 4,048,569 2,711,603 Industrial development bond 1,100,000 1,200,000 Other long-term debt 724,486 766,362 Stockholders' equity Common stock; $.001 par value, 10,000,000 authorized shares, 3,446,850 issued and 3,407,617 outstanding at Sept. 30, 2005, and 3,440,197 issued and 3,400,964 outstanding at Dec. 31, 2004 3,447 3,440 Additional paid-in capital 16,316,373 16,290,452 Unrealized gain on marketable securities (18,975) (18,525) Treasury stock; 39,233 shares (at cost) at Sept. 30, 2005, and Dec. 31, 2004 (89,422) (89,422) Accumulated deficit (2,463,824) (3,462,928) ----------- ------------ Total stockholders' equity 13,747,599 12,723,017 ----------- ------------ Total liabilities and stockholders' equity $19,620,654 $17,400,982 =========== ============ *T