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CTI Molecular Imaging, Inc. (CTMI) Reports Financial Results For The First Quarter Of Fiscal 2005


10/19/2005 5:12:36 PM

KNOXVILLE, Tenn., Jan. 31 /PRNewswire-FirstCall/ -- CTI Molecular Imaging, Inc. , a leading provider of positron emission tomography (PET) equipment, molecular biomarkers and related services, today announced financial results for its first quarter ended December 31, 2004.

Net revenues for the first quarter were $111.5 million, a 50% increase over net revenues of $74.1 million for the same period last year. Net income was $4.0 million, or $0.08 per share on a fully-diluted basis, compared to $0.7 million, or $0.02 per share on a fully-diluted basis, in the prior fiscal year's first quarter. Backlog at December 31, 2004 totaled $164 million, an increase of $25 million from $139 million at September 30, 2004.

"We are off to a strong start in 2005 with revenue and earnings well ahead of our plan and guidance," said Ron Nutt, Ph.D., President and Chief Executive Officer. "Our clinical scanner business did particularly well, providing some early confirmation that the market continues to improve. In addition, the adoption rate of PET continues to increase as FDG dose volumes were in line with expectations," continued Dr. Nutt.

During the first quarter of fiscal 2005 CTI shipped 40 scanners on a consolidated basis compared with 26 units in fiscal 2004. FDG doses sold by PETNET domestically increased 6.5% sequentially from the fourth quarter of 2004 and 42% over the prior year's first quarter. These increases were partially offset by a 3.2% sequential decline in average dose price.

Segment Information:

"Over the past two years our business model has evolved with the acquisition of three companies -- Mirada, Concorde and Imtek -- and as we have begun the process of positioning ourselves for the put/call event with our partner Siemens Medical Systems. Effective October 1, 2004 we restructured our organization into two business groupings -- the Clinical Scanner Business, run by Greg Brophy, and Molecular Biomarker Technologies, run by me," said Dr. Nutt. "Beginning this quarter, we are presenting our financial results in six financial reporting segments," added Dr. Nutt. The Clinical Scanner Business grouping consists of three reporting segments -- CPS and Detector Materials, which are unchanged from the past, as well as a new segment entitled Service and Distribution, which includes the service and distribution activities related to clinical scanners. The Molecular Biomarker Technologies grouping also consists of three reporting segments -- PETNET, Molecular Technologies Inc. (biomarker development), and Molecular Imaging Products, which includes Concorde's microPET and microCAT animal scanners, Mirada medical image analysis applications and cyclotron sales and service. These new reporting segments of Service and Distribution, PETNET, Molecular Technologies and Molecular Imaging Products were all previously a part of CTI Solutions.

CTI Molecular Imaging, Inc Segment Information Three Months Ended December 31, (in thousands) 2004 2003 Revenues, gross: CPS $67,033 $55,486 Detector Materials 7,687 12,089 Service and Distribution 17,154 13,857 Clinical Scanner Business 91,874 81,432 PETNET 26,557 19,489 MTI 204 - Molecular Imaging Products 13,746 7,211 Molecular Biomarker Technologies 40,507 26,700 Total $132,381 $108,132 Revenue eliminations: CPS $(5,353) $(17,987) Detector Materials (7,687) (12,064) Service and Distribution (4,764) (1,588) Clinical Scanner Business (17,804) (31,639) PETNET - (35) MTI (50) - Molecular Imaging Products (3,060) (2,351) Molecular Biomarker Technologies (3,110) (2,386) Total $(20,914) $(34,025) Revenues, net: CPS $61,680 $37,499 Detector Materials - 25 Service and Distribution 12,390 12,269 Clinical Scanner Business 74,070 49,793 PETNET 26,557 19,454 MTI 154 - Molecular Imaging Products 10,686 4,860 Molecular Biomarker Technologies 37,397 24,314 Total $111,467 $74,107 Income (loss) from operations: CPS $14,087 $6,312 Detector Materials 2,714 6,711 Service and Distribution (778) (3,935) Eliminations 861 (3,497) Clinical Scanner Business 16,884 5,591 PETNET 822 475 MTI (1,368) (758) Molecular Imaging Products (365) (1,053) Eliminations (361) (1) Molecular Biomarker Technologies (1,272) (1,337) Corporate and Eliminations (1,429) 157 Total $14,183 $4,411 Shipments, Orders and Backlog:

The company sold 40 scanners during the first quarter and booked 52 new orders. Backlog on a consolidated basis at December 31, 2004 is $164.1 million. This backlog includes orders for PET and PET/CT scanners, cyclotrons and service and maintenance contracts, and excludes orders placed with PETNET for FDG doses and customer orders to distributors where the related scanners have not yet been ordered from CPS.

Financial Outlook:

"Based on the strong performance in the first quarter and our current scanner backlog, we believe that revenues this year will be in the range of $440 - $450 million on the sale of approximately 185 scanners. Earnings per share for the year should be in the range of $0.54 to $0.56," said Dr. Nutt. "For the second quarter, we are expecting a quarter very similar to the first quarter. We expect revenue of $110 - $115 million and earnings per share of $0.08 to $0.10," added Dr. Nutt.

Conference Call Information:

The dial-in number for tomorrow's earnings call at 9:00 a.m. EST is (706) 643-3432. A replay of the call will be available for one week until February 8, 2005. To hear this replay, please dial (800) 642-1687 and enter the reservation number 3583738. A simultaneous webcast of the call will be accessible via the internet at http://www.ctimi.com/ under the Investor Relations section. A replay of the webcast will also be archived on this site.

About CTI Molecular Imaging:

CTI Molecular Imaging, Inc. is a leading supplier of products and services for positron emission tomography (PET), a diagnostic imaging technology used in the detection and treatment of cancer, neurological disorders and cardiac disease. Additional information is available at: http://www.ctimi.com/ .

About PET and PET/CT:

PET images the biology of diseases at the molecular level, often before anatomic changes are visible or, in some cases, before symptoms appear. Diseases are biological processes and it is these processes that PET examines. PET/CT is an imaging technology that combines the biological examination of patients by PET with the CT images of the body's structural detail. PET/CT technology improves the diagnostic accuracy and treatment management of patients by providing surgeons, radiation oncologists and other physicians with precise anatomical landmarks associated with the disease condition as determined by PET.

PET's whole-body imaging capability helps physicians improve their ability to detect and determine the location, extent and stage of cancer, neurological disorders and cardiac disease. By improving diagnosis, PET scans aid physicians in selecting better courses of treatment, as well as assessing whether treatment is effective or should be changed. Recent published clinical trials have shown that in a wide array of cancers, the use of PET has caused the treatment to be changed for 15 to 50% of patients, depending on the specific clinical question. In addition, PET and PET/CT provide both the patient and their physician with a degree of certainty that is often unavailable through other imaging methods.

Certain matters discussed in this press release and the related conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as "believe," "expect," "anticipate," "intend," "estimate" or similar expressions, include statements regarding CTI's financial outlook for 2005, anticipated market share data, growth in unit sales from international markets, future demand for scanners and other PET-related products, the impact of reduced reimbursement levels for PET and PET-related radiopharmaceuticals, future pricing trends, product mix and any other statements that necessarily depend on future events. Forward-looking statements involve a number of risks and uncertainties and there can be no assurance that any forward-looking statements will prove to be accurate. Important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include: competition; uncertainties and potential difficulties regarding the implementation of the new agency agreement with Siemens; the seasonality of capital equipment sales; the availability and amount of third-party payor reimbursement for PET procedures; Siemens' option to purchase a majority interest in CPS, CTI's subsidiary that develops and manufactures PET scanners; market adoption of and demand for PET products in general and CTI's products and services in particular; the timing of orders from distribution partners and customers; legislative and regulatory developments; the timing of research and development and marketing expenses; relationships with suppliers and distributors; pricing; product mix; customer demand for financing services; and general economic conditions, such as interest rates. CTI undertakes no obligation to update or revise any forward-looking statements. Further information regarding risks, uncertainties and other factors that could adversely affect CTI or cause actual results to differ materially from those anticipated in forward-looking statements are included in CTI's Annual Report on Form 10-K for the fiscal year ended September 30, 2004.

CTI Molecular Imaging, Inc Consolidated Balance Sheets December 31, September 30, (in thousands) 2004 2004 (unaudited) ASSETS Current assets: Cash and cash equivalents $24,853 $36,381 Accounts receivable -- trade, net 63,815 65,946 Accounts receivable -- related party, net (1) 56,077 34,231 Inventories 85,253 92,219 Deferred tax asset 13,839 13,474 Prepaid expenses and other current assets 7,674 8,345 Total current assets 251,511 250,596 Property and equipment, net 137,211 133,074 Goodwill 48,096 46,629 Other assets 35,975 34,915 Total assets $472,793 $465,214 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $30,213 $33,012 Current maturities of long-term debt and capital lease obligations 4,003 4,289 Accrued liabilities 20,532 22,059 Customer advances 11,084 9,801 Income taxes payable 770 4,472 Total current liabilities 66,602 73,633 Deferred revenues 5,381 4,447 Deferred tax liability 4,815 5,013 Long-term debt and capital lease obligations 12,322 12,856 Total liabilities 89,120 95,949 Minority interest 67,638 62,213 Shareholders' equity 316,035 307,052 Total liabilities and shareholders' equity $472,793 $465,214 (1) Represent receivables from Siemens Medical Solutions USA, Inc. CTI Molecular Imaging, Inc. Consolidated Statements of Operations Three Months Ended December 31, 2004 2003 (In thousands, except share and per share data) (unaudited) Revenues $111,467 $74,107 Cost of revenues 69,702 43,735 Gross margin 41,765 30,372 Operating expenses: Selling, general and administrative expenses 16,850 15,260 Research and development expenses 9,261 10,190 Stock-based compensation expense 1,471 511 Total operating expenses 27,582 25,961 Income from operations 14,183 4,411 Interest expense, net 223 485 Other (income) expense (15) (595) Income before income taxes and minority interest 13,975 4,521 Provision for income taxes 5,272 1,699 Income before minority interest 8,703 2,822 Amount applicable to minority interest, net of taxes 4,743 2,105 Net income $3,960 $717 Earnings per share Basic $0.09 $0.02 Diluted $0.08 $0.02 Weighted average shares Basic 45,229,213 44,331,007 Diluted 48,060,300 46,321,070

CTI Molecular Imaging, Inc.

CONTACT: David N. Gill of CTI Molecular Imaging, Inc., +1-865-218-2000


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