Synergetics
Sales up 13.6% Year-Over-Year to $15.1 Million EBITDA up 42.4% Year-Over-Year to $3.1 Million Income From Continuing Operations up 41.9% Year-over-Year to $1.9 Million Earnings per Share From Continuing Operations up 40% to $0.07
O'FALLON, MO, Mar 12, 2012 (MARKETWIRE via COMTEX) -- Synergetics USA, Inc. /quotes/zigman/98249/quotes/nls/surg SURG -3.56% , a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications, today announced results for the second quarter ended January 31, 2012.
Highlights of the quarter include:
-- Total sales of $15.1 million, an increase of 13.6% year-over-year.
-- Ophthalmic and OEM sales increased 13.7% and 23.0%, respectively, year-over-year.
-- Gross margin increases to 59.5% and operating margin increases to 17.4%.
-- EBITDA from continuing operations of $3.1 million, an increase of 42.4% year-over-year.
-- Income from continuing operations of $1.9 million, or $0.07 per diluted share, up 41.9% and 40%, respectively, year-over-year.
"We were encouraged by the strong, double-digit top line performance across our Ophthalmic and OEM businesses and pleased to report growth in net income and earnings per share of at least 40%. Moreover, we achieved a number of second quarter financial records in revenues, operating margins, EBITDA and net earnings," stated David M. Hable, President and CEO of Synergetics USA, Inc. "We continue to make progress with the implementation of our lean enterprise initiatives and expect continued margin improvement and free cash flow generation. In sum, we are focused on driving growth going forward and expect to deliver continued strong results and we are on track for meeting our stated goals."
Second Quarter Results
Second quarter of fiscal 2012 sales totaled $15.1 million, an increase of 13.6% compared to sales of $13.3 million in the second quarter of fiscal 2011. The increase in second quarter sales from last year was due to double-digit growth in both ophthalmic disposable products and OEM sales through our marketing partners. This growth was tempered by a decline in our Other segment primarily due to residual direct neurosurgery sales in the second quarter of fiscal 2011.
-- Domestic sales increased 15.4% to $10.9 million in the second quarter of fiscal 2012 driven by positive Ophthalmology volume as well as higher OEM sales in the period. International sales increased 9.1% to $4.1 million this quarter.
-- Ophthalmic sales rose 13.7% to $8.9 million compared with $7.8 million the second quarter of fiscal 2011. The growth in Ophthalmology benefited from higher volume of disposable products, including cannula systems and procedural kits, including our new VersaPACK kit, to domestic and international customers. Domestic Ophthalmic sales rose 11.2% and International Ophthalmic sales increased 16.7% year-over-year.
-- Total OEM sales rose 23.0% to $6.0 million compared with $4.9 million in the second quarter of fiscal 2011. OEM sales beginning in fiscal 2012 include sales to our marketing partners. The increase in OEM sales benefited primarily from additional volumes of disposable products to Stryker and shipments of generators and accessories to Codman in the period. OEM sales also included deferred revenue of $131,000 from Codman and $322,000 from Alcon recognized in the second quarter of fiscal 2012 versus $64,000 from Codman and $231,000 from Alcon in the prior year period.
-- Disposable product sales totaled $11.9 million, an increase of 13.5% compared with sales of $10.5 million last year. Capital equipment sales totaled $2.7 million in the second quarter of fiscal 2012 compared with $2.5 million in the second quarter of fiscal 2011, an increase of 9.0% year-over-year.
Gross profit for the second quarter of fiscal 2012 totaled $9.0 million, or 59.5% of sales, compared with $7.7 million, or 58.2% of sales, in the second quarter of fiscal 2011.
Total operating expenses increased 7.8% year-over-year to $6.4 million, or 42.1% of sales in the second quarter from $5.9 million in the comparable period. Research and development expenses were 6.1% of sales compared to 7.4% last year. Sales and marketing expenses were 19.3% of sales compared to 20.6% last year and general and administrative expenses were 16.7% of sales compared to 16.4% last year.
Operating income for the second quarter of fiscal 2012 increased 42.7% to $2.6 million compared with $1.8 million last year, representing an operating margin of 17.4% this quarter versus 13.8% last year. Operating income performance was due to the strong gross margin improvement and moderate operating expense growth as the Company begins to realize cost savings from its ongoing lean manufacturing initiatives and as it benefitted from timing differences in research and development.
Income from continuing operations increased 41.9% year-over-year to $1.9 million, or $0.07 per diluted share, from $1.3 million, or $0.05 per diluted share for the same period of fiscal 2011.
Six Month Results
Total net sales for the first six months of fiscal 2012 increased 12.7% to $28.6 million compared with $25.4 million in the same period last year. Net income for the first six months of fiscal 2012 increased 35.1% to $2.6 million, or $0.10 per diluted share, versus $2.0 million, or $0.08 per diluted share, in the first six months of fiscal 2011. These results are net of a loss from discontinued operations of $382,000, or $0.02 per diluted share, related to the completion of the sale of assets from our plastic injection molding business in the period.
As of January 31, 2012, the Company had approximately $13.9 million in cash and $741,000 in interest-bearing debt compared with $18.4 million in cash and $1.1 million in debt at the end of fiscal 2011. The use of cash over this period was primarily due to the tax payment of $6.0 million related to the Alcon supply agreement and settlement proceeds paid during the first six months of fiscal 2012 in addition to the continued use of cash to retire debt obligations. The Company expects to pay off the remaining debt using cash flow from operations and its strong cash balance in the third quarter of fiscal 2012.
Marketing Partner Strategic Updates
Alcon Supply Agreement
Subsequent to the end of the second quarter of fiscal 2012, Alcon informed the Company that it had decided to cancel the orders and forecasts covering the two products to have been supplied under the supply agreement executed in April 2010. The Company plans on recognizing the remaining deferred revenue associated with the supply agreement ratably over the next fourteen years, which is the remaining life of the patents, and the associated agreement. Importantly, the supply agreement has not been cancelled and remains in effect with both parties responsible for ongoing performance obligations.
Mobius Therapeutics(TM) Agreement
Synergetics recently entered into an agreement with Mobius Therapeutics(TM), LLC to provide packaging for Mitosol(R), a drug recently approved by the U.S. Food and Drug Administration to be used in glaucoma surgery.
Stryker Agreement
Synergetics and Stryker Corporation have negotiated an early extension of the supply agreement for disposable ultrasonic instrument tips and certain other consumable products used in conjunction with the ultrasonic aspirator console and handpieces through March 31, 2016. "We are very excited about extending the agreement with Stryker over the next five years and the increased sales opportunities we expect going forward. The early extension of this important agreement allows both companies to adequately plan for the volumes being generated," said David M. Hable. "The agreement extension highlights our excellent partnership with Stryker and the potential to expand sales through their extensive sales and marketing organization. In addition, we continue to pursue cooperative development projects that build on their market leading ultrasonic aspirator console."
Conference Call Information
Synergetics USA, Inc. will host a conference call on Tuesday, March 13, 2012, at 10:30 a.m. Eastern Time to discuss second quarter and six month results and other recent developments and to review its growth strategy. The toll free dial-in number to listen and participate live on this call is (800) 588-4973, confirmation code 31637755. For callers outside the U.S., the number is (847) 230-5643. Participants are encouraged to email questions to [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it . The conference call will also be simulcast live at http://www.synergeticsusa.com . An online replay will be available on the Company's website for approximately 30 days.
About Synergetics USA, Inc.
Through continuous improvement and development of our people, our mission is to design, manufacture and market innovative surgical devices, capital equipment, accessories and disposables of the highest quality in order to assist and enable surgeons who perform surgery around the world to provide a better quality of life for their patients.
Synergetics USA, Inc. (the "Company") is a leading supplier of precision surgical devices. The Company's primary focus is on the disciplines of ophthalmology and neurosurgery. Our distribution channels include a combination of direct and independent sales distribution organizations and important strategic alliances with market leaders. The Company's product lines focus upon precision engineered, disposable and reusable devices, procedural kits and the delivery of various energy modalities for the performance of less invasive surgery including: (i) laser energy, (ii) ultrasonic energy, (iii) radio frequency energy 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 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 the Company's Annual Report on Form 10-K for the year ended July 31, 2011, as updated from time to time in our filings with the Securities and Exchange Commission. The Company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services.