O'FALLON, MO--(Marketwired - December 09, 2013) - Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications, today reported growth in sales and reported gross profit, operating margin, income from continuing operations and net income for the first quarter ended October 31, 2013.
First Quarter Summary:
- Total sales were $15.5 million, a year-over-year increase of 6.2%.
- OEM sales increased 19.1% and Ophthalmic sales declined 1.9% year-over-year.
- Domestic product sales increased 9.6% and International sales declined 3.4% year-over-year.
- Disposable products sales increased 13% and capital equipment sales declined 31.6% year-over year.
- GAAP EPS was $0.04 compared to $0.05 for the first quarter of last year.
- Cash flow from operations was $1.5 million compared to a loss of $103,000 last year.
"We had a solid start to the fiscal year highlighted by strong OEM revenue growth, contributions from our recent acquisition of M.I.S.S. Ophthalmics Limited and notable cash flow from operations compared to last year," stated Dave Hable, President and CEO of Synergetics USA, Inc. "We continue to see progress in our commercialization of VersaVIT™, our innovative, portable vitrectomy machine, and related disposable products which offset ongoing weakness in our ophthalmic business again this quarter. We look forward to building on this solid start to fiscal year 2014 driven by increasing contributions to top-line results from new products, like our VersaVIT™ franchise, steady demand from our OEM partners and improving profitability and financial performance as we progress through the remainder of the fiscal year."
First Quarter Results
First quarter sales increased 6.2% to $15.5 million compared to $14.6 million in the first quarter of fiscal 2013. The increase in first quarter sales from last year was due primarily to growth in OEM sales.
- Total Ophthalmic sales declined 1.9% to $8.5 million compared to $8.7 million in the first quarter of fiscal 2013. Domestic ophthalmic sales decreased 0.8% in the first quarter of fiscal 2014, primarily due to the decreased sales of base business capital equipment and disposables, partially offset by increased sales of procedural kits. International ophthalmic sales decreased 3.4% in the first quarter of fiscal 2014, primarily due to decreased sales of capital equipment and base business disposables, partially offset by sales from our acquisition of M.I.S.S. Ophthalmics.
- Total OEM sales increased 19.1% to $6.8 million compared to $5.7 million in the first quarter of fiscal 2013. The increase in OEM sales benefited from strong volumes of disposable products sold to Codman & Shurtleff, Inc. OEM sales also included deferred revenue of $322,000 recognized in the first quarter of fiscal 2014 compared with $322,000 in the first quarter of fiscal 2013.
- Disposable product sales grew 13.0%, or $1.6 million, to $13.8 million in the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013. Disposable sales accounted for approximately 88.6% of total sales in the first quarter of fiscal 2014.
- Capital equipment sales totaled $1.4 million in the first quarter of fiscal 2014 compared to $2.1 million in the first quarter of fiscal 2013.
Gross profit for the first quarter of fiscal 2014 rose to $8.9 million, or 57.5% of sales, compared to $8.5 million, or 58.0% of sales, in the first quarter of fiscal 2013. The decline in gross profit margin in the first quarter of fiscal 2014 was driven by a shift in the mix to OEM sales versus the prior year period.
Research and development expenses rose to $1.2 million, or 7.7% of net sales. The Company's R&D investment is driven by the opportunities to develop new products to meet the needs of its surgeon customers. Sales and marketing expenses increased to $3.6 million, or 23.0% of sales, this year, compared with $3.3 million, or 22.3% of net sales, for the same period last year. General and administrative expenses increased to $2.6 million, or 17.0% of net sales, for the first quarter of fiscal 2014, compared with $2.4 million, or 16.5% of net sales, for the same period last year. The increase in sales and marketing and G&A expenses was primarily due to the additional expenses related to our recent acquisition of M.I.S.S. Ophthalmics. Total operating expenses included $125,000 in the first quarter of fiscal 2014 related to the medical device excise tax which the Company began paying in January 2013.
Operating income for the first quarter of fiscal 2014 declined to $1.4 million compared to $1.9 million in the first quarter of fiscal 2013. Net income for the first quarter of fiscal 2014 declined 30.8% to $0.9 million, or $0.04 per diluted share, compared to $1.4 million, or $0.05 per diluted share, compared to the first quarter of fiscal 2013.
As of October 31, 2013, the Company had approximately $13.5 million in cash and no interest-bearing debt on its balance sheet.
Conference Call Information
Synergetics USA, Inc. will host a conference call on Monday, December 9, 2013 at 4:00 p.m. Central Time (5:00 p.m. Eastern). The toll free dial-in number to participate live on this call is (800) 588-4973, confirmation code 36213533. For callers outside the U.S., the number is (847) 230-5643. Participants are encouraged to email questions to investorinfo@synergeticsusa.com. 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. The Company's distribution channels include a combination of direct and independent sales distributor organizations, both domestically and internationally, and important strategic alliances with market leaders. The Company's product lines focus upon precision engineered, disposable and reusable devices, surgical equipment, procedural kits and the delivery of various energy modalities for the performance of 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, 2013, as amended, 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.
Synergetics USA, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months Ended October 31, 2013 and 2012
(Dollars in thousands, except share and per share data)
Three Months Ended Three Months Ended
October 31, 2013 October 31, 2012
------------------ ------------------
Net sales $ 15,530 $ 14,620
Cost of sales 6,606 6,147
------------------ ------------------
Gross profit 8,924 8,473
------------------ ------------------
Operating expenses
Research and development 1,197 861
Sales and marketing 3,576 3,263
Medical device excise tax 125 --
General and administrative 2,635 2,408
------------------ ------------------
7,533 6,532
------------------ ------------------
Operating income 1,391 1,941
------------------ ------------------
Other income (expenses)
Investment income 4 7
------------------ ------------------
Miscellaneous -- (3)
------------------ ------------------
4 4
Income from operations before
provision for income taxes 1,395 1,945
Provision for income taxes 460 593
------------------ ------------------
Net income $ 935 $ 1,352
================== ==================
Earnings per share:
Basic earnings per share $ .04 $ 0.05
================== ==================
Diluted earnings per share $ .04 $ 0.05
================== ==================
Basic weighted average common
shares outstanding 25,294,020 25,160,757
Diluted weighted average common
shares outstanding 25,380,940 25,286,184
Net income $ 935 $ 1,352
Foreign currency translation
adjustment 175 70
------------------ ------------------
Comprehensive income $ 1,110 $ 1,422
================== ==================
Synergetics USA, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of October 31, 2013 (Unaudited) and July 31, 2013
(Dollars in thousands, except share data)
October 31, July 31,
2013 2013
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 13,537 $ 12,470
Accounts receivable, net of allowance for
doubtful accounts of $555 and $495,
respectively 12,730 14,425
Inventories 16,029 14,825
Income taxes refundable -- 254
Prepaid expenses 1,381 996
Deferred income taxes 1,887 1,827
------------ ------------
Total current assets 45,564 44,797
Property and equipment, net 8,998 8,962
Intangible and other assets
Goodwill 12,228 12,155
Other intangible assets, net 11,603 11,715
Deferred income taxes 3,405 3,557
Patents, net 1,440 1,411
Cash value of life insurance 96 96
------------ ------------
Total assets $ 83,334 $ 82,693
============ ============
Liabilities and stockholders' equity
Current Liabilities
Accounts payable 3,109 3,237
Accrued expenses 3,203 3,486
Income taxes payable 81 --
Deferred revenue 1,288 1,288
------------ ------------
Total current liabilities 7,681 8,011
------------ ------------
Long-Term Liabilities
Deferred revenue 14,208 14,530
------------ ------------
Total long-term liabilities 14,208 14,530
------------ ------------
Total liabilities 21,889 22,541
------------ ------------
Commitments and contingencies
Stockholders' Equity
Common stock at October 31, 2013 and July 31,
2013, $0.001 par value, 50,000,000 shares
authorized; 25,296,106 and 25,292,960 shares
issued and outstanding, respectively 25 25
Additional paid-in capital 27,673 27,489
Retained earnings 34,031 33,097
Accumulated other comprehensive loss:
Foreign currency translation adjustment (284) (459)
------------ ------------
Total stockholders' equity 61,445 60,152
------------ ------------
Total liabilities and stockholders' equity $ 83,334 $ 82,693
============ ============
Synergetics USA Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended October 31, 2013 and 2012
(Dollars in thousands, except share data)
Three Months Ended Three Months Ended
October 31, 2013 October 31, 2012
------------------ ------------------
Cash Flows from Operating Activities
Net income $ 935 $ 1,352
Adjustments to reconcile net
income to net cash used in
operating activities
Depreciation 266 305
Amortization 180 161
Provision for doubtful accounts
receivable 56 (3)
Stock-based compensation 184 243
Deferred income taxes 92 97
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable 1,629 (169)
Inventories (1,152) (1,577)
Prepaid expenses (236) (229)
(Decrease) increase in:
Accounts payable (135) 31
Accrued expenses (267) (42)
Deferred revenue (322) (322)
Income taxes payable 300 50
------------------ ------------------
Net cash provided by (used in)
continuing operating
activities 1,530 (103)
------------------ ------------------
Cash Flows from Investing Activities
Purchase of property and
equipment (302) (106)
Acquisition of patents and other
intangibles (82) (78)
------------------ ------------------
Net cash used in continuing
investing activities (384) (184)
------------------ ------------------
Foreign exchange rate effect on cash
and cash equivalents (79) (69)
------------------ ------------------
Net increase (decrease) in cash and
cash equivalents 1,067 (356)
Cash and cash equivalents
Beginning 12,470 12,680
------------------ ------------------
Ending $ 13,537 $ 12,324
================== ==================
SYNERGETICS USA, INC.
3845 Corporate Centre Drive
O'Fallon, Missouri 63368
(636) 939-5100
http://www.synergeticsusa.com
Pamela G. Boone
Chief Financial Officer
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