2009 Sales Increase 5.8% to $53.0 Million
Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative microsurgical instruments for ophthalmic and neurosurgical applications, today announced its results for the fourth quarter and fiscal year ended July 31, 2009. The Company reported fourth quarter 2009 sales of $13.9 million and net income of $87,000. Sales for fiscal year 2009 were $53.0 million, and net income was $1.6 million, or $0.07 per diluted share.
“Synergetics'' sales rose 5.8% to $53.0 million in 2009 and benefitted from growth in our core ophthalmic and neurosurgical markets,” stated Dave Hable, President and CEO of Synergetics USA, Inc. “Domestic sales rose 0.6% and international sales increased 18.9% as we expanded our direct sales force in Europe. Our fourth quarter 2009 sales were up 5.7% from the third quarter of fiscal 2009 due to higher domestic sales of ophthalmic products and OEM sales.
“We continued to strengthen our balance sheet and paid down over $1.0 million in debt subsequent to our year end. Our accelerated pay down on our revolving credit line will provide Synergetics more financial flexibility in the coming year as we continue investing in programs to further leverage our operations,” continued Mr. Hable.
Fourth Quarter Results
Fourth quarter 2009 sales of $13.9 million were the highest quarterly sales in the past year; however, sales were down 3.8% from $14.5 million reported in the fourth quarter of 2008. The decrease in fourth quarter sales from last year was due primarily to lower sales to our marketing partners compared with the prior year.
- Ophthalmic sales rose 2.1% to $7.7 million compared with the fourth quarter of fiscal 2008. Domestic ophthalmic sales were down 0.3% and international ophthalmic sales were up 5.7%. The growth in ophthalmic sales benefitted from higher volume of disposable products, partially offset by a decline in capital equipment sales compared with fiscal 2008.
- Neurosurgical sales remained stable at $3.6 million in the fourth quarter of fiscal 2009 compared with the same period in 2008. Domestic neurosurgical sales increased 0.6%, offset by a 3.1% decline in international sales.
- Sales to marketing partners declined 20.6% to $2.5 million in the fourth quarter of fiscal 2009 compared with the fourth quarter of last year, primarily due to lower sales of capital equipment. Sales to Stryker Corporation declined 53.6% compared with the fourth quarter of fiscal 2008. The prior year period included significant sales of the new pain control generator that began shipping in April 2008.
The fourth quarter 2009 results include charges of $975,000 ($0.03 per diluted share) primarily related to inventory write-down due to obsolete inventory identified as part of our materials requirement planning (“MRP”) program launched earlier in fiscal 2009.
“The inventory write-down was an important step in our program to reduce our inventory administration costs,” continued Mr. Hable. “We also initiated programs during the year to reduce scrap costs and reject rates in our manufacturing process and to improve our profitability by continuing to implement lean manufacturing in our disposable product lines. We believe this will also reduce our costs in the future.”
Gross profit for the fourth quarter totaled $7.1 million, or 51.0% of sales, compared with $8.4 million, or 57.8% of sales, in the fourth quarter of 2008. The one-time inventory write-down was included in the 2009 cost of sales and had the effect of reducing gross profit by $826,000 and gross margin by approximately 6% of sales.
Operating income for the fourth quarter of fiscal 2009 was $176,000 compared with $2.0 million in the fourth quarter last year. Fourth quarter operating income was reduced by the previously mentioned charges and higher sales costs related to a change in sales mix (higher direct sales that are commission- based compared with sales through our marketing partners).
Fourth quarter 2009 net income was $87,000 compared with net income of $1.2 million in 2008. The 2009 results included a tax benefit of $46,000.
Fiscal Year Results
Total net sales for fiscal year 2009 were $53.0 million, up 5.8% compared with $50.1 million in fiscal 2008. The increase in sales of 5.8% was due to higher volume of disposable products in domestic and international markets, higher disposable product sales through our marketing partners, offset by weaker capital equipment sales.
“Capital spending for medical products was down in fiscal 2009 in response to the weak economy,” noted Mr. Hable. “Our sales of capital equipment dropped from 38% of 2008 sales to 29% of sales in fiscal 2009. Our overall sales growth in 2009 highlights our success in offsetting the reduced capital equipment sales with our program to expand international sales and our increased sales of disposal surgical products. In the fourth quarter, we also experienced a modest improvement in capital equipment sales compared with the third quarter and expect further improvement as the economy recovers.
“We are also optimistic about building international sales as we gain traction from our new direct sales representatives in Europe and our planned expansion into Australia in fiscal 2010. Our international sales force will focus exclusively on the ophthalmic market as we expand our international distribution of neurological products through our marketing partners,” concluded Mr. Hable.
Net income for fiscal 2009 decreased 40.1% to $1.6 million, or $0.07 per diluted share, compared with $2.7 million, or $0.11 per diluted share, in fiscal 2008. The fiscal 2009 results included a fourth quarter charge of $975,000, or $0.03 per diluted share, as previously mentioned.
Conference Call Information
Synergetics USA, Inc. will host a conference call on Thursday, October 29, 2009 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 25467383. For callers outside the U.S., the number is (847) 413-3238. Participants are encouraged to email questions to investorinfo@synergeticsusa.com. An audio replay will be available the following business day at http://www.synergeticsusa.com
About Synergetics USA, Inc.
Through continuous improvement and development of our people, our mission is to design, manufacture and market innovative microsurgical instruments and consumables of the highest quality in order to assist and enable surgeons who perform microsurgery around the world to provide a better quality of life for their patients.
Synergetics USA, Inc. (“Synergetics USA” or the “Company”) is a leading supplier of precision microsurgery instrumentation. The Company''s 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 Company''s product lines focus upon precision engineered, microsurgical, hand-held instruments 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 oblation and (iv) visible light energy for illumination, and where applicable, simultaneous infusion (irrigation) of fluids into the operative field. The Company''s 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, 2009, as updated from time to time in our filings with the Securities and Exchange Commission.
Synergetics USA, Inc. and Subsidiaries Consolidated Statements of Income Quarters Ended July 31, 2009 and 2008 (Dollars in thousands, except share and per share data) | ||||||||||
| 2009 | 2008 | |||||||||
| Net sales | $ | 13,906 | $ | 14,457 | ||||||
| Cost of sales | 6,813 | 6,106 | ||||||||
| Gross profit | 7,093 | 8,351 | ||||||||
| Operating expenses | ||||||||||
| Research and development | 751 | 759 | ||||||||
| Selling | 3,521 | 3,223 | ||||||||
| General and administrative | 2,645 | 2,333 | ||||||||
| 6,917 | 6,315 | |||||||||
| Operating income | 176 | 2,036 | ||||||||
| Other income (expense) | ||||||||||
| Investment income | 2 | |||||||||
| Interest expense | (141 | ) | (217 | ) | ||||||
| Miscellaneous | 4 | -- | ||||||||
| (135 | ) | (217 | ) | |||||||
| Income before provision for income taxes | 41 | 1,819 | ||||||||
| Provision for income taxes (benefit) | (46 | ) | 616 | |||||||
| Net income | $ | 87 | $ | 1,203 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.00 | $ | 0.05 | ||||||
| Diluted | $ | 0.00 | $ | 0.05 | ||||||
| Basic weighted average common shares outstanding | 24,454,256 | 24,340,902 | ||||||||
| Diluted weighted average common shares outstanding | 24,472,354 | 24,480,702 | ||||||||
Synergetics USA, Inc. and Subsidiaries Consolidated Statements of Income Years Ended July 31, 2009 and 2008 (Dollars in thousands, except share and per share data) | ||||||||||
| 2009 | 2008 | |||||||||
| Net sales | $ | 52,965 | $ | 50,063 | ||||||
| Cost of sales | 23,550 | 20,101 | ||||||||
| Gross profit | 29,415 | 29,962 | ||||||||
| Operating expenses | ||||||||||
| Research and development | 2,998 | 2,654 | ||||||||
| Selling | 14,262 | 12,601 | ||||||||
| General and administrative | 9,030 | 9,499 | ||||||||
| 26,290 | 24,754 | |||||||||
| Operating income | 3,125 | 5,208 | ||||||||
| Other income (expense) | ||||||||||
| Investment income | 5 | 6 | ||||||||
| Interest expense | (763 | ) | (1,129 | ) | ||||||
| Miscellaneous | 3 | 17 | ||||||||
| (755 | ) | (1,106 | ) | |||||||
| Income before provision for income taxes | 2,370 | 4,102 | ||||||||
| Provision for income taxes | 775 | 1,439 | ||||||||
| Net income | $ | 1,595 | $ | 2,663 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.07 | $ | 0.11 | ||||||
| Diluted | $ | 0.07 | $ | 0.11 | ||||||
| Basic weighted average common shares outstanding | 24,459,749 | 24,321,713 | ||||||||
| Diluted weighted average common shares outstanding | 24,493,263 | 24,474,840 | ||||||||
Contacts:
Synergetics USA, Inc.
Pamela G. Boone, 636-939-5100
Chief
Financial Officer
