O-FALLON, MO — (Marketwired) — 06/10/13 — Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications, today announced results for the third quarter ended April 30, 2013.
Total sales of $16.3 million, an increase of 11.6% year-over-year. Total sales increased 15.7% on a sequential basis.
OEM sales increased 24.1% and Ophthalmic sales increased 3.1% year-over-year.
Domestic sales increased 13.8% and International sales increased 5.3% year-over-year.
GAAP EPS of $0.05 versus $0.04 for the third quarter of fiscal 2012 and adjusted non-GAAP EPS of $0.05 versus $0.05 for the third quarter of fiscal 2012.
Cash flow from operations of $1.8 million.
Nine month fiscal 2013 sales increased 4.1% year-over-year to $44.9 million.
“We were pleased with our third quarter performance overall as we posted solid top-line growth driven by normalized ordering patterns from our OEM partners and improving sales contributions from our VersaVIT vitrectomy systems,” said David M. Hable, the Company-s President and Chief Executive Officer. “While still early in our commercialization of the VersaVIT system, we have made considerable progress since receiving FDA approval less than a year ago. We are encouraged by the continued strong market response and anticipate stronger ophthalmic sales growth in the future as utilization of the installed base increases.”
Third quarter of fiscal 2013 sales totaled $16.3 million, an increase of 11.6% compared to sales of $14.6 million in the third quarter of fiscal 2012. Third quarter sales performance was driven primarily by a 24.1% increase in OEM sales and by a 3.1% increase in Ophthalmic sales. Other revenues declined 1.4% year-over-year to $210,000.
Total Domestic sales increased 13.8% to $12.3 million in the third quarter of fiscal 2013, driven primarily by higher OEM sales and by growth in Domestic Ophthalmic sales year-over-year. International sales of $3.9 million this quarter increased 5.3% year-over-year primarily due to increased sales of VersaVIT vitrectomy systems and procedural kits and decreased foreign currency losses, partially offset by decreased sales of base business capital equipment and disposables.
Total Ophthalmic sales increased 3.1% to $8.7 million, compared with $8.4 million in the third quarter of fiscal 2012. Domestic Ophthalmic sales increased 1.6% primarily due to increased sales of VersaVIT vitrectomy systems and procedural kits, partially offset by decreased sales of base business capital equipment and disposables. International Ophthalmic sales increased 5.1% year-over-year primarily due to increased sales of VersaVIT vitrectomy systems and procedural kits and decreased foreign currency losses, partially offset by sales of base business capital equipment and disposables.
Total OEM sales increased 24.1% to $7.4 million, compared with $6.0 million in the third quarter of fiscal 2012. OEM sales include sales to our marketing partners. The increase in OEM sales benefited primarily from strong disposable forceps and electrosurgical generator sales to Codman and Stryker.
Disposable product sales totaled $13.0 million, an increase of 7.4% compared with sales of $12.1 million in the third quarter of fiscal 2012. Capital equipment sales totaled $2.9 million in the third quarter of fiscal 2013 compared with $2.2 million in the third quarter of fiscal 2012, an increase of 37.0% year-over-year.
Gross profit for the third quarter of fiscal 2013 totaled $9.1 million, or 55.7% of net sales, compared with $7.8 million, or 53.7% of net sales, in the third quarter of fiscal 2012. Third quarter of fiscal 2012 gross margin included the impact of an inventory write-down of $367,000, or approximately 2.5% of net sales. Year-over-year gross margin performance was also negatively impacted by product mix shift in our ophthalmic product lines versus the prior year period.
Total operating expenses increased 14.2% year-over-year to $7.3 million, or 45.1% of net sales, in the third quarter of fiscal 2013 from $6.4 million, or 44.0% of net sales, in the comparable period. Research and development expenses increased 5.6% and comprised 6.0% of net sales compared to 6.3% last year. Sales and marketing expenses grew 22.8% and were 21.7% of net sales compared to 19.7% last year. General and administrative expenses rose 3.5%, accounting for 16.7% of net sales compared to 18.0% last year. The increase in G&A was largely due to additional incentive compensation, as well as other varied cost increases compared to the prior year period. Third quarter of fiscal 2013 operating expenses were impacted by the medical device excise tax of $115,000, or 0.7% of net sales, which the Company began paying in January 2013 and did not impact results in the prior year period.
Reported operating income for the third quarter of fiscal 2013 increased 22.5% to $1.7 million, compared with $1.4 million last year. Adjusted operating income for the third quarter of fiscal 2012, which excludes the impact of the aforementioned obsolete inventory write-down in the third quarter of fiscal 2012, increased to $1.8 million, representing an adjusted operating margin of 10.6% this quarter versus 12.2% for the third quarter of fiscal 2012. Operating income was negatively impacted by growth in operating expenses and by higher cost of goods sold compared to the third quarter of fiscal 2012.
Reported net income increased 14.3% year-over-year to $1.2 million, or $0.05 per diluted share, from $1.0 million, or $0.04 per diluted share, for the same period of fiscal 2012. Reported net income per diluted share in the third quarter of fiscal 2012 includes approximately $0.01 resulting from an obsolete inventory write-down in the period. Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $2.2 million in the third quarter of fiscal 2013, up 16.7% from EBITDA of $1.9 million in the prior year third quarter.
Refer to the tables at the end of this release for a reconciliation of GAAP net income to EBITDA,GAAP operating income to adjusted operating income and GAAP EPS to adjusted non-GAAP EPS and the “Use of Non-GAAP Financial Information” section below.
Total sales for the first nine months of fiscal 2013 increased 4.1% to $44.9 million, compared with $43.2 million in the same period last year. Income from continuing operations for the first nine months of fiscal 2013 declined 72.2% to $1.1 million, or $0.04 per diluted share, compared to $4.0 million, or $0.16 per diluted share, for the first nine months of fiscal 2012. Net income for the first nine months of fiscal 2013 declined 69.3% to $1.1 million, or $0.04 per diluted share, versus $3.6 million, or $0.14 per diluted share, in the first nine months of fiscal 2012. Reported net income per diluted share in the first nine months of fiscal 2013 includes approximately $0.06 resulting from an excess inventory write-down in the period, as compared to $0.01 resulting from an obsolete inventory write-down in the first nine months of fiscal 2012. Excluding the impacts of the inventory write-downs, net income for the first nine months of fiscal 2013 declined 33.3% from $0.10 per diluted share, versus $0.15 per diluted share in the first nine months of fiscal 2012. These results are net of a loss from discontinued operations of approximately $382,000, or $0.02 per diluted share, related to the completion of the sale of assets from our plastic injection molding business in the nine month fiscal 2012 period.
As of April 30, 2013, the Company had approximately $13.1 million in cash on its balance sheet and no debt compared with $12.7 million in cash and no debt at the end of fiscal 2012.
Synergetics USA, Inc. will host a conference call on Monday, June 10, 2013, at 5:00 p.m. Eastern Time to discuss third quarter and nine month results, other recent developments and to review its growth strategy. The toll free dial-in number to participate live on this call is (800) 588-4973, confirmation code 34706255. For callers outside the U.S., the number is (847) 230-5643. The conference call will also be available live via webcast on the investor relations section of the Company-s website, . A replay will be available on the Company-s website for approximately 30 days.
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. Our distribution channels include a combination of direct and independent sales distribution organizations and important strategic alliances with market leaders. The Company-s product lines focus upon precision engineered, disposable and reusable devices, procedural kits and the delivery of various energy modalities for the performance of less invasive 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 .
In addition to results reported in accordance with GAAP, the Company provides adjusted operating income and margin, adjusted net income and adjusted earnings per diluted share. These adjusted amounts consist of GAAP amounts excluding the following adjustment to the extent occurring during the period: inventory write-downs and disposition charges. Adjusted earnings per diluted share were calculated by dividing adjusted net income for diluted earnings per share by diluted weighted average shares outstanding. The Company believes that the presentation of adjusted operating income and margin, adjusted net income and adjusted diluted earnings per share provides important supplemental information to management and investors seeking to understand the financial and business trends relating to our financial condition and results of operations.
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, 2012, 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.
EBITDA is not a financial measure recognized by U.S. generally accepted accounting principles (“GAAP”). EBITDA is defined as income from continuing operations before interest expense, income taxes, depreciation and amortization.
SYNERGETICS USA, INC.
3845 Corporate Centre Drive
O-Fallon, Missouri 63368
(636) 939-5100
Pamela G. Boone
Chief Financial Officer