SHENZHEN, China, March 5 /Xinhua-PRNewswire-FirstCall/ -- Mindray Medical International Limited , a leading developer, manufacturer and marketer of medical devices in China with a rapidly growing international presence, today announced its selected unaudited financial results for the fourth quarter and full year ended December 31, 2007.
"We are proud of our performance in our first full year as a public company," said Mr. Xu Hang, Mindray's chairman and co-chief executive officer. "In 2007, we delivered 47 percent revenue growth over last year and net income growth was even higher at 63 percent."
Financial Results for Full Year and Fourth Quarter 2007
Mindray reported net revenues of RMB2,230.9 million (US$305.8 million) for the full year 2007, a 47.3% increase from RMB1,515.0 million 2006. Mindray reported net revenues of RMB673.8 million (US$92.4 million) for the fourth quarter 2007, a 41.2% increase from RMB477.4 million in the fourth quarter 2006.
Net revenues generated in international markets in the full year 2007 increased 53.3% to RMB1,128.0 million (US$154.6 million) from RMB735.6 million in 2006. Net revenues generated in international markets in the fourth quarter 2007 increased 37.3% to RMB345.5 million (US$47.4 million) from RMB251.6 million in the fourth quarter 2006.
Net revenues generated in China in the full year 2007 increased 41.5% to RMB1,102.9 million (US$151.2 million) from RMB779.4 million in 2006. Net revenues generated in China in the fourth quarter 2007 increased 45.4% to RMB328.3 million (US$45.0 million) from RMB225.8 million in the fourth quarter 2006.
Fourth Quarter Performance by Segment
Patient Monitoring & Life Support Products: Patient monitoring & life support products segment revenues increased 21.0% to RMB228.9 million (US$31.4 million) from RMB189.2 million in the fourth quarter 2006. The patient monitoring & life support products segment contributed 34.5% to total net segment revenues in the fourth quarter 2007.
The patient monitoring & life support products segment contributed 36.2% to full year 2007 total net segment revenues, compared to 40.1% in 2006.
In-Vitro Diagnostic Products: In-vitro diagnostic products segment revenues increased 49.1% to RMB200.2 million (US$27.4 million) from RMB134.3 million in the fourth quarter 2006. The in-vitro diagnostic products segment contributed 30.1% to total net segment revenues in the fourth quarter 2007.
The in-vitro diagnostic products segment contributed 31.2% to full year 2007 total net segment revenues, compared to 29.3% in 2006.
Medical Imaging Systems: Medical imaging systems segment revenues increased 60.0% to RMB224.4 million (US$30.8 million) from RMB140.2 million in the fourth quarter 2006. The medical imaging systems segment contributed 33.8% to total net segment revenues in the fourth quarter 2007.
The medical imaging systems segment contributed 31.1% to full year 2007 total net segment revenues, compared to 29.3% in 2006.
Gross Margins
Full year 2007 gross profit was RMB1,224.5 million (US$167.9 million), a 48.0% increase from RMB827.5 million in 2006. The consolidated gross margin for the full year 2007 was 54.9% compared to 54.6% in 2006. Non-GAAP gross margin, as defined below, was 55.8% in the full year 2007 compared to 54.7% in 2006.
Fourth quarter 2007 gross profit was RMB356.8 million (US$48.9 million), a 38.9% increase from RMB257.0 million in the fourth quarter 2006. The consolidated gross margin for the fourth quarter 2007 was 53.0% compared to 53.8% in the fourth quarter 2006 and 55.1% in the third quarter 2007. Non-GAAP gross margin was 53.8% in the fourth quarter 2007 compared to 53.9% in the fourth quarter 2006 and 56.0% in the third quarter 2007.
Operating Expenses
Selling expenses for the full year 2007 were RMB311.4 million (US$42.7 million), or 14.0% of total net revenues, unchanged from 2006. Selling expenses for the fourth quarter 2007 were RMB99.0 million (US$13.6 million), or 14.7% of total net revenues, compared to 13.1% in the fourth quarter 2006 and 14.5% in the third quarter 2007.
General and administrative expenses for the full year 2007 were RMB91.1 million (US$12.5 million), or 4.1% of total net revenues, compared to 5.0% in 2006. General and administrative expenses for the fourth quarter 2007 were RMB25.9 million (US$3.6 million), or 3.8% of total net revenues, compared to 6.9% in the fourth quarter 2006 and 3.7% in the third quarter 2007.
Research and development expenses for the full year 2007 were RMB215.2 million (US$29.5 million), or 9.6% of total net revenues, compared to 9.8% in 2006. Research and development expenses for the fourth quarter 2007 were RMB68.0 million (US$9.3 million), or 10.1% of total net revenues, compared to 9.6% of total net revenues in the fourth quarter 2006 and 9.9% in the third quarter 2007.
Total share-based compensation expenses, which were allocated to cost of goods sold and related operating expenses, were RMB17.5 million (US$2.4 million) in the fourth quarter 2007, compared to RMB6.5 million in the fourth quarter 2006 and RMB13.3 million in the third quarter 2007.
Full year 2007 non-GAAP operating profit was RMB683.8 million (US$93.8 million) compared to RMB419.0 million in 2006. Full year 2007 GAAP operating profit was RMB606.6 million (US$83.2 million). Non-GAAP operating margins were 30.7% for full year 2007, compared to 27.7% for the full year 2006. GAAP operating margins were 27.2% for full year 2007, compared to 23.7% for the full year 2006.
Non-GAAP operating profit, as defined below, in the fourth quarter 2007 was RMB186.1 million (US$25.5 million), a 49.3% increase from RMB124.7 million in the fourth quarter 2006. GAAP operating profit in the fourth quarter 2007 was RMB163.9 million (US$22.5 million), a 95.1% increase from RMB84.0 million in the fourth quarter 2006. Non-GAAP operating margins were 27.6% in the fourth quarter 2007, compared to 26.1% in the fourth quarter 2006 and 30.1% in the third quarter 2007. GAAP operating margins were 24.3% in the fourth quarter 2007 compared to 17.6% in the fourth quarter 2006 and 27.0% in the third quarter 2007.
Net Income
Full year 2007 non-GAAP net income increased 61.2% year-over-year to RMB672.0 million (US$92.1 million) from RMB416.8 million in 2006. Full year 2007 GAAP net income was RMB591.6 million (US$81.1 million) compared with RMB361.8 million in 2006. Non-GAAP net margins were 30.1% in the full year 2007, compared to 27.5% in 2006. GAAP net margins were 26.5% in the full year 2007 compared to 23.9% in 2006. Full year 2007 income tax expense was RMB106.5 million (US$14.6 million), representing an effective tax rate of 15.3% compared to a 6.1% effective tax rate in the full year 2006.
Fourth quarter 2007 non-GAAP net income increased 31.0% year-over-year to RMB185.4 million (US$25.4 million) from RMB141.5 million in the fourth quarter 2006. Fourth quarter 2007 GAAP net income was RMB157.9 million (US$21.7 million) compared with RMB106.0 million in the fourth quarter 2006. Non-GAAP net margins were 27.5% in the fourth quarter 2007, compared to 29.6% in the fourth quarter 2006 and 30.0% in the third quarter 2007. GAAP net margins were 23.4% in the fourth quarter 2007 compared to 22.2% in the fourth quarter 2006 and 27.0% in the third quarter 2007. Fourth quarter 2007 income tax expense was RMB32.2 million (US$4.4 million), representing an effective tax rate of 16.9% compared to a 4.0% effective tax rate in the fourth quarter 2006.
Full year 2007 basic and diluted non-GAAP earnings per share were RMB6.32 (US$0.87) and RMB5.95 (US$0.82), respectively. Full year 2007 GAAP basic and diluted earnings per share were RMB5.56 (US$0.76) and RMB5.23 (US$0.72), respectively.
Fourth quarter 2007 basic and diluted non-GAAP earnings per share were RMB1.74 (US$0.24) and RMB1.63 (US$0.22), respectively. Fourth quarter 2007 GAAP basic and diluted earnings per share for the quarter were RMB1.48 (US$0.20) and RMB1.39 (US$0.19), respectively. Shares used in the computation of diluted earnings per share increased from 111.6 million in the fourth quarter 2006 to 113.5 million in the fourth quarter 2007 due to issuances of new shares and grants of share options in the past twelve months.
The China Unified Corporate Income Tax Law (the "New Law") became effective on January 1, 2008. The New Law established a single unified 25% income tax rate for most companies with some preferential income tax rates including 15% income tax rate to be applicable to qualified "New and Hi-Tech Enterprises". The related detailed implementation rules and regulations on the definition of various terms and the interpretation and application of the provisions of the New Law were promulgated by the State Council in December 2007. However, the application for "New and Hi-Tech Enterprise" under the New Law is pending for the implementation by the relevant government authorities. Under applicable accounting rules, until the company receives official approval for this status, it must use the transition rule in its calculation of its deferred tax balances, which means a gradual increase in rates over the five-year transition period, that is 18% at 2008, 20% at 2009, 22% at 2010, 24% at 2011 and 25% at 2012. If the company had received the approval prior to December 31, 2007, its full year 2007 net income would have increased by RMB5.9 million using the 15% tax rate for 2008 and onward. The company expects that it will apply for the "New and High-Tech Enterprise" status that will allow it a 15% tax rate for 2008 and onward under China's Unified Enterprise Income Tax Law.
Other Select Data
Average accounts receivable days outstanding was 26 days for full year 2007 compared to 21 days for full year 2006. Inventory turnover was 55 days for full year 2007 compared to 60 days for full year 2006. Average accounts payable days outstanding was 59 days for full year 2007 compared to 56 days for full year 2006.
As of December 31, 2007, the company had RMB1,786.8 million (US$244.9 million) in cash and cash equivalents and short-term investments. Net cash generated from operating activities and capital expenditures for the full year 2007 were RMB708.0 million (US$97.1 million) and RMB350.1 million (US$48.0 million), respectively.
As of December 31, 2007 the company had 3,705 employees compared to 3,541 employees on September 30, 2007.
Dividend Declaration
Mindray's board of directors has declared a cash dividend on its ordinary shares of US$0.18 per share, based on its net income for the full year 2007. The cash dividend will be payable on or around April 24, 2008, to shareholders of record as of March 25, 2008. The company has 106.9 million ordinary shares outstanding as of January 31, 2008.
Business Outlook for Full Year 2008
The company expects its full-year 2008 net revenue guidance to be in the range of RMB3,120 million to RMB3,170 million, representing annual growth of 40% to 42% over full fiscal year 2007.
The company also maintains its full-year 2008 non-GAAP net income guidance range of RMB940 million to RMB954 million, representing annual growth of 40% to 42% over full fiscal year 2007.
Non-GAAP net income per share is expected to be in the range of RMB8.25 to RMB8.37 on a fully diluted basis, assuming an estimated diluted share count of 114 million.
The company estimates its total share-based compensation expenses in 2008 will be approximately RMB70 million based on the employee share options that have been granted as of March 4, 2008. Total expense and/or amortization of intangible assets related to the April 2006 acquisition of minority interest will be approximately RMB18.8 million in 2008.
The company expects its capital expenditure for 2008 to be in the range of RMB700 million to RMB800 million.
The company's practice is to provide guidance on a full year basis only. This forecast reflects Mindray's current and preliminary views, which are subject to change.
Conference Call Information
Mindray's management will hold an earnings conference call at 8:00 PM on March 5, 2008 U.S. Eastern Time (9:00 AM on March 6, 2008 Beijing/Hong Kong Time).
A replay of the conference call may be accessed by phone at the following numbers until March 16, 2008.
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of Mindray's website at http://www.mindray.com .
About Mindray
Mindray Medical International Limited is a leading developer, manufacturer and marketer of medical devices in China with a significant and growing presence worldwide. Established in 1991, Mindray offers a broad range of products across three primary business segments: patient monitoring & life support products, in-vitro diagnostic products, and medical imaging systems. Mindray is headquartered in Shenzhen, China, and has 29 local sales and service offices in China, as well as sales and service offices in Amsterdam, Moscow, Istanbul, London, Mexico City, Mumbai, Sao Paulo, Seattle, Toronto and Vancouver. For more information, please visit http://www.mindray.com .
Use of Non-GAAP Financial Measures
The company has reported for the fourth quarter 2007 and provided estimates for full year 2008 net income, operating income, or earning per share on a non-GAAP basis. Each of the terms as used by the company is defined as follows:
In addition to Mindray's consolidated financial results under GAAP, the company also provides non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating profit, non-GAAP net income and non-GAAP earnings per share on a basic and fully diluted basis. The company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Mindray's financial performance and liquidity and when planning and forecasting future periods. These non-GAAP operating measures are useful for understanding and assessing Mindray's underlying business performance and operating trends and the company expects to report operating profit and net income on a non-GAAP basis using a consistent method on a quarterly basis going forward.
The company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The company notes that these measures may not be calculated on the same basis of similar measures used by other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the
three-month periods ended December 31, 2006 and 2007, respectively, in the attached financial statements.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements," including those related to the company's anticipated operating results for 2008, qualification of the company as a "New and High-Tech Enterprise" and related preferential tax rates, customer acceptance of company products, continued R&D spending levels, increased headcounts, growth in the company's business segments and geographies, business execution, growth in medical spending and the factors driving that growth, and international expansion. These statements are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. It is possible that our actual results and financial condition and other circumstances may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including but not limited to: the expected growth of the medical device market in China and internationally; relevant government policies and regulations relating to the medical device industry; market acceptance of our products; our expectations regarding demand for our products; our ability to expand our production, our sales and distribution network and other aspects of our operations; our ability to stay abreast of market trends and technological advances; our ability to effectively protect our intellectual property rights and not infringe on the intellectual property rights of others; competition in the medical device industry in China and internationally; and general economic and business conditions in the countries in which we operate. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 5 of our annual report on Form 20-F, filed on June 26, 2007. Our results of operations for the fourth quarter of 2007 and for fiscal year 2007 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
This announcement contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars as of and for the quarter ended December 31, 2007 were made at the noon buying rate in the City of New York for cable transfers in Renminbi per US dollar as certified for customs purposes by the Federal Reserve Bank of New York, or the noon buying rate, as of December 31, 2007, which was RMB7.2946 to US$1.00. Mindray makes no representation that the Renminbi or US dollar amounts referred to in this release could have been or could be converted into US dollars or Renminbi, as the case may be, at any particular rate or at all.
All references to "shares" are to our ordinary shares, which are divided into two classes, Class A and Class B. Each of our American Depositary Shares, which trade on the New York Stock Exchange, represents one Class A ordinary share.
IR@Mindray.comJustin.Knapp@Ogilvy.com
CONTACT: In China: Investor Relations, May Li of Mindray Medical
International Limited, +86-755-2658-2518, or IR@Mindray.com; Or Justin
Knapp of Ogilvy Public Relations Worldwide, Beijing, Beijing,
+86-10-8520-6556, or Justin.Knapp@Ogilvy.com; Or In the United States:
Jeremy Bridgman of Ogilvy Public Relations Worldwide, New York, or
+1-212-880-5363
Web site: http://www.mindray.com/
