SHENZHEN, China, Nov. 7, 2011 /PRNewswire-Asia-FirstCall/ -- Mindray Medical International Limited (NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide, announced today its selected unaudited financial results for the third quarter ended September 30, 2011.
Highlights for Third Quarter 2011
- Net revenues were $218.4 million, up 29.8% over the third quarter of 2010.
- Robust China sales, an increase of 35.4% year-over-year, primarily driven by higher regular sales.
- Strong international sales of $124.9 million, a year-over-year increase of 25.9%. Emerging markets continued to achieve significant growth this quarter.
- Non-GAAP net income was $42.5 million, a 7.4% increase over the third quarter of 2010.
- Net operating cash was $29.9 million, up 7.3% year-over-year.
- Reagent revenues growth accelerated, contributing 31.3% to the in-vitro diagnostic business in this quarter.
- Mindray introduced its latest series of patient monitoring systems including the iMEC series and the new iPM series. Mindray also launched the DP10, DP20 and DP30 black and white ultrasound systems.
- On November 4, 2011, the Board of Directors approved a share repurchase program of up to $100 million.
"Despite a volatile and challenging global macro environment during the third quarter, we are happy to report that our total revenues rose nearly 30%, led by robust growth of over 35% in our China sales," commented Xu Hang, Mindray's chairman and co-chief executive officer. "Our sales strength reflects the success of our strategic initiatives and favorable hospital and government spending trends in areas where we have major presence. Emerging markets also continue to contribute significant year-over-year growth of over 30% this quarter. In spite of the political unrests in the Middle East and Africa, sales in those markets exceeded our expectations and recorded substantial increases of more than 40% during the period. In developed markets, we did well and delivered double-digit growth in both North America and Western Europe. Overall, our investments in all regions have yielded positive results and we will continue to work hard to aggressively increase our market penetration worldwide."
SUMMARY --Third Quarter2011
(in $ millions, except per-share data) | Three Months Ended | |||
September 30 | ||||
2011 | 2010 | % chg | ||
Net Revenues | 218.4 | 168.3 | 29.8% | |
Revenues generated in China | 93.5 | 69.0 | 35.4% | |
Revenues generated outside China | 124.9 | 99.2 | 25.9% | |
Gross Profit | 119.8 | 99.0 | 21.1% | |
Non-GAAP Gross Profit | 121.2 | 100.2 | 21.0% | |
Operating Income | 38.7 | 38.7 | -0.2% | |
Non-GAAP Operating Income | 43.9 | 42.4 | 3.5% | |
EBITDA | 48.4 | 45.8 | 5.7% | |
Net Income | 37.3 | 35.9 | 3.8% | |
Non-GAAP Net Income | 42.5 | 39.5 | 7.4% | |
Diluted EPS | 0.31 | 0.30 | 2.3% | |
Non-GAAP Diluted EPS | 0.36 | 0.34 | 5.9% | |
Revenues
Mindray reported net revenues of $218.4 million for the third quarter, a 29.8% increase from $168.3 million in the same period last year. Net revenues generated in China jumped 35.4% to $93.5 million, from $69.0 million in the same quarter last year. Net revenues generated in the international markets rose 25.9% to $124.9 million, from $99.2 million in the third quarter last year.
Performance by Segment
Patient Monitoring and Life Support Products: Revenues for this segment jumped 32.4% to $96.1 million, from $72.6 million in the third quarter of last year, contributing 44.0% to total net revenues.
In-Vitro Diagnostic Products: Revenues for this segment increased 29.3% to $55.7 million, from $43.1 million in the third quarter of last year, contributing 25.5% to total net revenues.
Medical Imaging Systems: Revenues for this segment rose 24.5% to $53.2 million, from $42.7 million in the third quarter of last year, contributing 24.4% to total net revenues.
Others: Other revenues, primarily comprised of service fees charged for post-warranty period repair services, increased 35.9% to $13.4 million, from $9.9 million in the third quarter of last year, contributing 6.1% to total net revenues.
Gross Margins
Third-quarter gross profit was $119.8 million, a 21.1% increase from $99.0 million in the same period last year. Non-GAAP gross profit was $121.2 million, a 21.0% increase from $100.2 million in the same quarter last year. Gross margin was 54.9%, compared to 58.8% in the third quarter of 2010 and 57.0% in the second quarter of this year. Non-GAAP gross margin was 55.5%, compared to 59.5% in the third quarter of 2010 and 57.6% in the second quarter of this year.
Operating Expenses
Selling expenses reached $41.0 million, or 18.8% of total net revenues, compared to 18.0% in the third quarter of 2010 and 18.6% in the second quarter of this year. Non-GAAP selling expenses stood at $39.3 million, or 18.0% of total net revenues, up from 17.2% in the third quarter of 2010 and 17.7% in the second quarter of this year.
General and administrative expenses were $20.8 million, or 9.5% of total net revenues, compared to 9.0% in the third quarter of 2010 and 8.0% in the second quarterof this year. Non-GAAP general and administrative expenses were $19.5 million, or 8.9% of the total net revenues, compared to 8.8% in the same quarter of 2010 and 7.7% in the second quarterof this year.
Research and development expenses reached $19.3 million, or 8.9% of total net revenues, compared to 8.8% in the third quarter of 2010 and 8.5% in the second quarter of this year. Non-GAAP research and development expenses were $18.4 million, or 8.4% of total net revenues, compared to 8.3% in the third quarter of 2010 and 8.0% in the second quarter of this year.
Total share-based compensation expenses, which were allocated to cost of revenues and related operating expenses, were $3.1 million, up from $1.9 million in the third quarter of 2010 and $3.3 million in the second quarter of this year.
Operating income was $38.7 million, flat as compared to the third quarter of last year. Non-GAAP operating income was $43.9 million, up 3.5% from $42.4 million in the same quarter last year. Operating margin was 17.7%, compared to 23.0% in the third quarter of 2010 and 21.8% in the second quarter of this year. Non-GAAP operating margin was 20.1% in the third quarter, compared to 25.2% in the same period of 2010 and 24.2% in the second quarter of this year.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
Third-quarter EBITDA increased 5.7% year-over-year to $48.4 million, from $45.8 million in the same period of 2010.
Net Income
Net income increased 3.8% year-over-year to $37.3 million, from $35.9 million in the third quarter of last year. Non-GAAP net income increased 7.4% year-over-year to $42.5 million, from $39.5 million in the third quarter of last year. Net margin was 17.1%, down from 21.4% in the third quarter of 2010 and 20.6% in the second quarter of this year. Non-GAAP net margin was 19.4%, compared to 23.5% in the third quarter of 2010 and 22.9% in the second quarter of this year. Income tax expenses in the third quarter were $7.5 million, representing an effective tax rate of 16.6%.
Third-quarter 2011 basic and diluted earnings per share were $0.32 and $0.31 respectively, compared to $0.31 and $0.30 in the same period last year. Basic and diluted non-GAAP earnings per share were $0.36 and $0.36 respectively, compared to $0.35 and $0.34 in the third quarter of last year. Shares used in the computation of diluted earnings per share for this quarter were 119.6 million.
Other Select Data
Average accounts receivable days outstanding were 71 days in the third quarter, compared to 64 days in the second quarter. Average inventory days were 100 days, compared to 94 days in the last quarter. Average accounts payable days outstanding were 58 days, compared to 57 days in the last quarter. Mindray calculated the above working capital days using the average of beginning and ending balances of the quarter.
As of September 30, 2011, the company had $532.2 million in cash and cash equivalents and short-term investments, up from $467.1 million as of June 30, 2011. Net cash generated from operating activities and net cash outflow for capital expenditures during the quarter were $29.9 million and $19.4 million respectively.
As of September 30, 2011, the company had approximately 6,700 employees.
Business Outlook for Full Year 2011
The company has raised its full-year guidance and anticipates its full-year 2011 net revenues to increase more than 20% year-over-year, exceeding its previous guidance of net revenue growth of more than 16%.
The company reaffirms its full-year 2011 non-GAAP net income guidance of more than 10% growth over its non-GAAP net income for last year. This guidance excludes the tax benefits related to the key software enterprise status ($8.6 million and $7.6 million recognized in the first quarter of 2010 and 2011 respectively) and assumes a corporate income tax rate of 15% applicable to the Shenzhen subsidiary.
The company expects its full-year capital expenditure to remain in the range of $70 million to $80 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.
"We had significant growth in our key global markets in the third quarter. Based on the positive sales trajectory we have achieved so far, we are pleased to raise our full-year revenue guidance to more than 20% growth from our previous guidance of over 16%. We also reiterate our non-GAAP net income guidance of more than 10% year-over-year growth," commented Li Xiting, Mindray's president and co-chief executive officer. "In addition to our strong fundamental performance, the $100 million share buyback program we announced today also highlights our confidence about Mindray's long-term growth prospects and our commitment to increasing value for our shareholders. On the M&A front, we continue to actively seek opportunities that could bring complementary technologies and/or products to our company. Overall, we remain confident that Mindray is well-positioned for future growth and expansion in the global market."
