FROM:
|
FOR: | |
Padilla Speer Beardsley Inc.
|
Synovis Life Technologies, Inc. | |
1101 West River Parkway
|
2575 University Ave. West | |
Minneapolis, Minnesota 55415
|
St. Paul, Minnesota 55114 | |
CONTACTS:
|
CONTACTS: | |
Nancy A. Johnson / Marian Briggs
|
Richard Kramp, President and CEO | |
(612) 455-1745 / (612) 455-1742
|
Brett Reynolds, CFO | |
(651) 796-7300 |
• | Revenue from Veritas rose to $4.2 million in the first quarter, a 38 percent increase over the comparable period last year. Veritas comprised 21 percent of overall net revenue, and is increasingly used by surgeons in the hernia and breast reconstruction markets. | ||
• | Microsurgical products revenue totaled $3.4 million in the first quarter, up 37 percent over the same period last year, with sales of the Coupler and Flow Coupler® products up 48 percent. Late in the first quarter, two additional sales representatives were hired to bring the Microsurgical sales force to 11 professionals in the United States. | ||
• | Peri-Strips Dry® (PSD) revenue totaled $5.4 million in the first quarter, a 20 percent increase from the year-ago period. The company believes the number of gastric sleeve procedures performed is on the rise as private insurance companies increasingly reimburse for this surgery. Surgeons are more likely to use a buttress in gastric sleeve procedures, compared to other bariatric surgeries, given the longer staple line. | ||
• | Orthopedic and Wound product revenue totaled $883,000 for the first quarter, up from $159,000 a year ago. Orthopedic and Wound was established in July 2009 with the acquisition of substantially all of the assets of Pegasus Biologics, Inc. and its products were re-launched in January 2010. Orthopedic and Wound products include the OrthADAPT® Bioimplant for orthopedic applications and Unite® Biomatrix to treat chronic wounds. | ||
• | The first quarter gross margin improved to 73 percent, up from 71 percent in the same period last fiscal year. | ||
• | Selling, general and administrative expenses totaled $10.5 million in the first quarter, up 19 percent from $8.9 million in the year-ago quarter, primarily due to higher sales and marketing costs. | ||
• | Research and development (R&D) expenses totaled $1.3 million in the first quarter, versus $1.1 million in the year-ago period. R&D investment in Orthopedic and Wound was higher in the current quarter due to the development and testing of the ProCUFF™ orthopedic product and the related anchoring system and instrumentation. In the fiscal 2011 second quarter, Synovis expects to file a 510(k) application with the FDA for the anchoring system and instrumentation for this arthroscopically delivered device to reinforce rotator cuff and other tendon repairs. | ||
• | Operating income for the first quarter totaled $2.4 million, more than double operating income of $0.9 million in the year-ago period, chiefly due to higher revenue. |
• | Income tax expense was recorded at an effective rate of 36 percent in the first quarter of fiscal 2011. In addition, discrete tax benefits accounted for $230,000, or $0.02 per diluted share, in the quarter due to reinstatement of the federal R&D credit for prior periods and an adjustment to the company’s deferred tax rate. |
• | Cash and investments totaled $61.5 million as of January 31, 2011, or $5.43 per share, consistent with the $61.9 million at the end of fiscal 2010. | ||
• | Operating activities used cash of approximately $0.6 million in the first quarter of fiscal 2011, versus $1.2 million used in the year-ago period. Cash is typically used in the first quarter for payment of year-end accruals. |
About Synovis Life Technologies |
Three Months Ended | ||||||||
January 31 | ||||||||
2011 | 2010 | |||||||
Net revenue |
$ | 19,477 | $ | 15,212 | ||||
Cost of revenue |
5,292 | 4,360 | ||||||
Gross margin |
14,185 | 10,852 | ||||||
Gross margin percentage |
73 | % | 71 | % | ||||
Selling, general and administrative expenses |
10,509 | 8,857 | ||||||
Research and development expenses |
1,300 | 1,075 | ||||||
Operating expenses |
11,809 | 9,932 | ||||||
Operating income |
2,376 | 920 | ||||||
Interest income |
74 | 84 | ||||||
Income before provision for income taxes |
2,450 | 1,004 | ||||||
Provision for income taxes |
652 | 361 | ||||||
Net income |
$ | 1,798 | $ | 643 | ||||
Basic earnings per share |
$ | 0.16 | $ | 0.06 | ||||
Diluted earnings per share |
$ | 0.16 | $ | 0.06 | ||||
Weighted average shares
outstanding — basic |
11,270 | 11,213 | ||||||
Weighted average shares
outstanding — diluted |
11,456 | 11,386 |
Three Months Ended | ||||||||
January 31 | ||||||||
2011 | 2010 | |||||||
Veritas |
$ | 4,159 | $ | 3,018 | ||||
Peri-Strips |
5,409 | 4,508 | ||||||
Tissue-Guard |
4,225 | 3,759 | ||||||
Microsurgery |
3,443 | 2,515 | ||||||
Orthopedic and Wound |
883 | 159 | ||||||
Surgical tools and other |
1,358 | 1,253 | ||||||
Total Revenue |
$ | 19,477 | $ | 15,212 | ||||
Domestic |
$ | 16,735 | $ | 12,902 | ||||
International |
2,742 | 2,310 | ||||||
Total Revenue |
$ | 19,477 | $ | 15,212 | ||||
January 31, | October 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 18,346 | $ | 12,951 | ||||
Short-term investments |
31,217 | 41,119 | ||||||
Accounts receivable, net |
9,600 | 8,701 | ||||||
Inventories |
9,146 | 9,433 | ||||||
Deferred income tax asset, net |
367 | 367 | ||||||
Other current assets |
2,515 | 1,715 | ||||||
Total current assets |
71,191 | 74,286 | ||||||
Investments, net |
11,958 | 7,854 | ||||||
Property, plant and equipment, net |
3,636 | 3,401 | ||||||
Goodwill |
3,620 | 3,620 | ||||||
Other intangible assets, net |
6,058 | 6,182 | ||||||
Deferred income tax asset, net |
2,095 | 2,139 | ||||||
Total assets |
$ | 98,558 | $ | 97,482 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 1,810 | $ | 1,644 | ||||
Accrued expenses |
4,149 | 6,371 | ||||||
Total current liabilities |
5,959 | 8,015 | ||||||
Total liabilities |
5,959 | 8,015 | ||||||
Shareholders’ equity: |
||||||||
Preferred stock: authorized 5,000,000 shares of $.01
par value; none issued or outstanding at both dates |
— | — | ||||||
Common stock: authorized 20,000,000 shares of $.01
par value; issued and outstanding 11,336,920 and
11,228,654 at January 31, 2011 and October 31, 2010,
respectively |
113 | 112 | ||||||
Additional paid-in capital |
63,150 | 61,780 | ||||||
Accumulated other comprehensive income (loss) |
(11 | ) | 26 | |||||
Retained earnings |
29,347 | 27,549 | ||||||
Total shareholders’ equity |
92,599 | 89,467 | ||||||
Total liabilities and shareholders’ equity |
$ | 98,558 | $ | 97,482 | ||||
For the three months ended January 31, | 2011 | 2010 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 1,798 | $ | 643 | ||||
Adjustments to reconcile net income to net cash
used in operating activities: |
||||||||
Depreciation of property, plant and equipment |
307 | 348 | ||||||
Amortization of intangible assets |
191 | 204 | ||||||
Amortization of investment premium, net |
101 | 426 | ||||||
Stock-based compensation |
309 | 375 | ||||||
Tax benefit from stock option exercises |
156 | — | ||||||
Deferred income taxes |
44 | (169 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(899 | ) | (173 | ) | ||||
Inventories |
287 | (707 | ) | |||||
Other current assets |
(800 | ) | (1 | ) | ||||
Accounts payable |
166 | (680 | ) | |||||
Accrued expenses |
(2,222 | ) | (1,423 | ) | ||||
Net cash used in operating activities |
(562 | ) | (1,157 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of property, plant and equipment |
(542 | ) | (128 | ) | ||||
Investments in patents and trademarks |
(67 | ) | (14 | ) | ||||
Purchases of investments |
(6,000 | ) | (19,273 | ) | ||||
Proceeds from the maturing or sale of investments |
11,660 | 18,650 | ||||||
Other |
— | (2 | ) | |||||
Net cash provided by (used in) investing activities |
5,051 | (767 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Net proceeds related to stock-based compensation plans |
1,014 | 51 | ||||||
Repurchase of the Company’s common stock |
(126 | ) | (2,552 | ) | ||||
Excess tax benefit from stock option exercises |
18 | 1 | ||||||
Net cash provided by (used in) financing activities |
906 | (2,500 | ) | |||||
Net change in cash and cash equivalents |
5,395 | (4,424 | ) | |||||
Cash and cash equivalents at beginning of period |
12,951 | 15,863 | ||||||
Cash and cash equivalents at end of period |
$ | 18,346 | $ | 11,439 | ||||