ev3 Inc. Reports Third Quarter Net Sales Increase Of 55%
PLYMOUTH, Minn., Oct. 20 /PRNewswire-FirstCall/ -- ev3 Inc. , a global endovascular device company, today reported financial results for its fiscal third quarter of 2006.
ev3's net sales in the third quarter of 2006 increased 55% to $51.9 million versus net sales of $33.5 million in the third quarter of 2005. This growth reflected strong sales growth in all of ev3's reported product lines and geographic markets, and was driven by continued improvement in sales force productivity and increased market penetration of products introduced over the prior 18 months. Third quarter sales included a $1.1 million stocking order from a subsidiary of Medtronic Inc. with whom ev3 entered into a distribution agreement for the Japanese market in September 2006.
Jim Corbett, President and CEO of ev3 Inc., commented, "We are pleased by both the magnitude and balance of our sales growth in the third quarter. Sales not only increased at a rate of over 50% for the sixth consecutive quarter, but also represented another record for quarterly sales despite normal seasonal weakness in Europe and other geographies."
ev3's net loss for the third quarter of 2006 declined 39% to $12.5 million compared to $20.5 million in the third quarter of 2005. ev3's net loss per common share for the third quarter of 2006 was $0.22 per common share, compared to $0.42 per common share, in the third quarter of 2005. Total weighted average common shares outstanding used in the per share calculations were 57.0 million and 49.1 million for the third quarter of 2006 and 2005, respectively.
ev3's loss before interest, taxes, depreciation and amortization (EBITDA), excluding charges for non-cash stock-based compensation, declined 70% to a loss of $5.0 million, compared to a loss of $16.6 million in the third quarter of 2005. ev3 uses the non-GAAP financial measures, EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, as supplemental measures of performance and believes that these measures facilitate operating performance comparisons from period to period and company to company.
Corbett continued, "In the third quarter we continued to make substantial progress in our drive to profitability through tightly controlled operating expenses combined with significant sales growth. In particular, we continued to drive downward the important cost of goods sold expense category as evidenced by the third quarter improvement of 6.6 and 1.9 percentage points versus the year ago and preceding quarters, respectively."
For the nine months ended October 1, 2006, ev3's net sales increased 56% to $144.8 million compared to net sales of $92.7 million in the first nine months of 2005. ev3's net loss for the first nine months of 2006 was $47.8 million compared to $88.0 million in the first nine months of 2005. ev3's net loss attributable to common shareholders for the first nine months of 2006 declined 52% to $47.8 million, or $0.85 per common share, compared to $100.1 million, or $4.99 per common share, for the first nine months of 2005. ev3's EBITDA, excluding charges for non-cash stock-based compensation, for the first nine months of 2006 declined 58% to a loss of $26.3 million, compared to a loss of $63.4 million in the first nine months of 2005.
EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, for the third quarter and nine months ended October 1, 2006 and October 2, 2005 are reconciled to ev3's net loss for the respective periods immediately following the detail of net sales by geography later in this press release.
Neurovascular segment net sales increased 52% to $20.7 million in the third quarter of 2006 versus $13.7 million in the third quarter of 2005. Within the neurovascular business segment, sales of embolic products increased 64% to $10.2 million from $6.2 million, and sales of neurovascular access and delivery products were up 42% to $10.5 million from $7.5 million. The primary growth drivers for the neurovascular segment were the continued market penetration of both the Onyx Liquid Embolic System for the treatment of brain arterio-venous malformations (AVMs), and the Nexus family of embolic coils for the treatment of brain aneurysms.
Cardio peripheral segment net sales in the third quarter of 2006 increased 57% to $31.2 million versus $19.8 million in the third quarter of 2005. Within the cardio peripheral business segment, stent sales increased 67% to $16.5 million from $9.9 million. Sales of thrombectomy and embolic protection products increased 95% to $5.8 million from $2.9 million, while sales of procedural support and other cardio peripheral products increased 27% to $8.9 million from $7.0 million. The largest contributors to the growth in the cardio peripheral segment were ev3's new EverFlex stent product and the SpideRX Embolic Protection Device.
On a geographic basis, ev3's third quarter United States net sales increased 63% to $31.1 million, while third quarter international net sales increased 44% to $20.8 million, over the prior-year quarter. Changes in foreign currency exchange rates had a positive impact of approximately $450,000 on third quarter 2006 net sales compared to the third quarter of the prior year.
ev3 expects 2006 annual net sales to be in the range of approximately $200 to $204 million. ev3 expects fourth quarter of 2006 net sales to be in the range of $55 to $59 million. Fourth quarter sales guidance includes the impact of the company's shift to a distributor model in Japan and the related third quarter stocking order of $1.1 million. Although ev3 expects to incur a net loss for the fourth quarter of 2006, ev3 reaffirms its expectations of achieving a positive EBITDA, excluding charges for non-cash stock based compensation, in the fourth quarter of 2006.
Earnings Call Information
ev3 will host a conference call today, October 20, 2006, beginning at 8:00 a.m. CT to review its results of operations for the third quarter of 2006 and other recent events and to discuss its 2006 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's net sales, cost of goods sold, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at http://www.ev3.net . For those unable to listen to the live broadcast, a playback of the webcast will be available at http://www.ev3.net for approximately 90 days. Those without Internet access may join the call from within the United States by dialing 866-314-9013; outside the United States dial 617-213-8053 passcode 47138630. A playback of the conference call will be available from 10:30 a.m. CT, October 20, 2006 until noon on October 27, 2006 by dialing 888-286-8010 (United States) or 617- 801-6888 (International), passcode 33183423.
ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries.
This press release contains other trademarks and trade names of ev3 Inc. and other third parties, which are the property of their respective owners.
Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited to, in no particular order: product demand and market acceptance; the impact of competitive products and pricing; delays in regulatory approvals and the introduction of new products; and success of clinical testing. More detailed information on these and additional factors which could affect ev3 Inc.'s operating and financial results is described in the company's filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q and annual report on Form 10-K. ev3 Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, ev3 Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
ev3 Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) For the Three Months For the Nine Months Ended Ended October 1, October 2, October 1, October 2, 2006 2005 2006 2005 Net sales $51,906 $33,500 $144,763 $92,722 Operating expenses Cost of goods sold (a) 17,666 13,590 52,333 38,484 Sales, general and administrative (a) 35,498 30,666 109,167 94,823 Research and development (a) 7,036 8,436 19,857 30,653 Amortization of intangible assets 4,483 2,674 13,008 7,877 Loss on sale or disposal of assets, net 18 40 142 204 Acquired in-process research and development - - 1,786 868 Total operating expenses 64,701 55,406 196,293 172,909 Loss from operations (12,795) (21,906) (51,530) (80,187) Other (income) expense: Gain on sale of investments, net - - (1,063) (4,611) Interest (income) expense, net (258) (953) (1,471) 10,833 Minority interest in loss of subsidiary - (486) - (1,212) Other (income) expense, net (152) (8) (1,533) 2,912 Loss before income taxes (12,385) (20,459) (47,463) (88,109) Income tax expense (benefit) 82 (2) 328 (61) Net loss (12,467) (20,457) (47,791) (88,048) Accretion of preferred membership units to redemption value - - - 12,061 Net loss attributable to common shareholders $(12,467) $(20,457) $(47,791) $(100,109) Net loss per common share attributed to common shareholders (basic and diluted) (b) $(0.22) $(0.42) $(0.85) $(4.99) Weighted average common shares outstanding (b) 57,032,677 49,099,357 56,556,305 20,069,139 (a) Includes stock-based compensation charges of: Cost of goods sold $127 $198 $496 $445 Sales, general and administrative 1,389 859 4,554 1,904 Research and development 151 295 523 729 $1,667 $1,352 $5,573 $3,078 (b) Net loss per common share attributed to common shareholders and weighted average common shares outstanding reflect the June 21, 2005 1-for-6 reverse stock split for all periods presented. ev3 Inc. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) October 1, December 31, 2006 2005 (unaudited) Assets Current assets Cash and cash equivalents $26,528 $69,592 Short-term investments 18,450 12,000 Accounts receivable, less allowance of $3,810 and $3,607, respectively 39,447 28,519 Inventories 36,925 32,987 Prepaid expenses and other assets 7,369 7,042 Other receivables 2,070 1,535 Total current assets 130,789 151,675 Restricted cash 2,205 3,102 Property and equipment, net 23,892 17,877 Goodwill 149,061 94,456 Other intangible assets, net 43,550 26,230 Other assets 2,271 3,488 Total assets $351,768 $296,828 Liabilities and stockholders' equity Current liabilities Accounts payable $11,952 $11,716 Accrued compensation and benefits 15,165 14,612 Accrued liabilities 10,524 11,343 Current portion of long-term obligations 1,607 - Total current liabilities 39,248 37,671 Long-term obligations 5,893 - Other long-term liabilities 564 852 Total liabilities 45,705 38,523 Minority interest - 12,850 Stockholders' equity Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 57,283,737 and 49,350,647, respectively 572 493 Additional paid in capital 915,471 807,032 Accumulated deficit (609,998) (562,207) Accumulated other comprehensive income 18 137 Total stockholders' equity 306,063 245,455 Total liabilities and stockholders' equity $351,768 $296,828 ev3 Inc. SELECTED NET SALES INFORMATION (Dollars in thousands, except per share amounts) (unaudited) NET SALES BY SEGMENT For the Three Months Ended For the Nine Months Ended October 1, October 2, % October 1, October 2, % 2006 2005 change 2006 2005 change Cardio Peripheral Stents $16,525 $9,913 67% $45,591 $25,792 77% Thrombectomy and embolic protection 5,750 2,949 95% 15,429 9,410 64% Procedural support and other 8,894 6,981 27% 26,062 20,690 26% Total cardio peripheral 31,169 19,843 57% 87,082 55,892 56% Neurovascular Embolic products 10,177 6,220 64% 26,972 14,417 87% Neuro access and delivery products 10,560 7,437 42% 30,709 22,413 37% Total neurovascular 20,737 13,657 52% 57,681 36,830 57% Total company $51,906 $33,500 55% $144,763 $92,722 56% NET SALES BY GEOGRAPHY For the Three Months Ended For the Nine Months Ended October 1, October 2, % October 1 October 2, % 2006 2005 change 2006 2005 change United States $31,127 $19,081 63% $86,590 $49,141 76% International 20,779 14,419 44% 58,173 43,581 33% Total net sales $51,906 $33,500 55% $144,763 $92,722 56% ev3 Inc. NON-GAAP FINANCIAL MEASURES (Dollars in thousands) (unaudited) For the Three For the Nine Months Ended Months Ended October 1, October 2, October 1, October 2, 2006 2005 2006 2005 Reconciliation of net loss to EBITDA Net loss, as reported (GAAP basis) $(12,467) $(20,457) $(47,791) $(88,048) Interest (income) expense, net (258) (953) (1,471) 10,833 Income tax expense (benefit) 82 (2) 328 (61) Depreciation and amortization 5,927 3,450 17,024 10,790 EBITDA $(6,716) $(17,962) $(31,910) $(66,486) Stock-based compensation 1,667 1,352 5,573 3,078 EBITDA, adjusted for stock- based compensation $(5,049) $(16,610) $(26,337) $(63,408)
ev3 uses non-GAAP financial measures, as outlined above, as supplemental measures of performance and believes these measures facilitate operating performance comparisons from period to period and company to company by factoring out potential differences caused by variations in capital structure, tax positions, depreciation, non-cash charges and certain large and unpredictable charges. ev3 also believes that the presentation of these measures provides useful information to investors in evaluating the company's operations, period over period. Non-GAAP measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company's results as reported under Generally Accepted Accounting Principles (GAAP).Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050615/CGEV3LOGOAP Archive: http://photoarchive.ap.orgPRN Photo Desk, firstname.lastname@example.org Inc.
CONTACT: Patrick D. Spangler, CFO, of ev3 Inc., +1-763-398-7000,email@example.com
Web site: http://www.ev3.net/