Full Press Release Details
SOUTH JORDAN, Utah, Feb. 28, 2007 (PRIME NEWSWIRE) -- Merit Medical Systems, Inc. (Nasdaq:MMSI), a manufacturer and marketer of proprietary disposable devices used primarily in cardiology and radiology procedures, today announced financial results for the fourth quarter and fiscal year ended December 31, 2006.
For the fourth quarter of 2006, the Company reported record revenue of $50.8 million, a 19.1% increase over revenue of $42.7 million for the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $3.1 million, or $0.11 per share. This compares to net income of $3.7 million, or $0.13 per share, reported for the fourth quarter of 2005. Earnings per share for the fourth quarter of 2006 were negatively impacted by an impairment charge of approximately $929,000, or $0.02 per share, which was primarily associated with intellectual property assets acquired from Sub-Q Inc. in March 2005, as well as an expense of approximately $306,000 attributable to the Company's adoption of Statement of Financial Accounting Standards No. 123(R), Share Based Payment, effective January 1, 2006.
For the year ended December 31, 2006, the Company reported record revenue of $190.7 million, a 14.5% increase over revenue of $166.6 million in revenue reported for the year ended December 31, 2005. In addition, the Company reported net income of $12.3 million, or $0.44 per share, for calendar year 2006. This compares to net income of $15.8 million, or $0.57 per share, for calendar year 2005. Earnings per share for 2006 were affected by the impairment charge mentioned above as well as the expense of approximately $1.5 million, or $0.03 per share, attributable to the Company's adoption of SFAS No. 123(R).
Sales in each of the Company's product categories grew for the fourth quarter and year ended December 31, 2006. For the fourth quarter of 2006, compared to the fourth quarter of 2005, stand-alone device sales rose 25%; custom kit and tray sales increased 24%; catheter sales rose 16%; and inflation device sales increased 11%.
For the year ended December 31, 2006, compared to the year ended December 31, 2005, catheter sales rose 20%; stand-alone device sales increased 18%; custom kit and tray sales rose 15%; and inflation device sales rose 9%.
"Across the board sales growth, the acquisition of MCTec, Merit's internal research and development, and product line acquisitions such as the Futura(r) safety scalpel and the Honor(r) hemostasis valve contributed to the increase in our growth rate from 11% in 2005 to 14.5% in 2006," said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer. "The Company is engaged in substantial internal cost savings initiatives as well as a stepped-up focus on off-shore manufacturing to improve gross margins."
Gross margins were down from 38.8% of sales in the fourth quarter of 2005 to 37.3% of sales in the fourth quarter of 2006. Gross margins were down from 41.5% of sales for calendar year 2005 to 38.3% of sales for calendar year 2006. The gross margin decline in the fourth quarter and the year ended December 31, 2006 was due primarily to expenses incurred during the second half of 2005 for new facilities and related costs (i.e. utilities, maintenance, cleaning and taxes) and equipment as well as the increased cost of direct labor, increased health insurance costs and the adoption of SFAS No. 123(R).
Selling, general and administrative expenses were 23.4% and 23.9% of sales for the fourth quarter and calendar year 2006, respectively, compared with 22.3% and 23.2% of sales for the comparable periods of 2005. The impairment charge and the adoption of SFAS 123(R) mentioned above increased SG&A expenses by $1.1 million, or 2.2% of sales, and $1.9 million, or 1.0% of sales, for the fourth quarter and calendar year 2006, respectively.
Research and development costs were 4.6% and 4.5% of sales, respectively, for the fourth quarter and year ended December 31, 2006, compared to 4.5% and 4.2% of sales for the comparable periods of 2005.
Merit's effective tax rates for the fourth quarter and calendar year 2006 were 35.5% and 35.9%, respectively, compared to 28.0% and 34.0% for the same periods of 2005. The increase in the effective tax rate for 2006 over 2005 was the result of the reimbursement in 2005 by the Company of costs incurred by its Irish operation for the development of two new products that are taxed at a lower income tax rate than in the United States.
The Company's cash position increased to $9.8 million on December 31, 2006, compared to $4.6 million on December 31, 2005.
Based on the Company's recent acquisition of Datascope Corporation's chronic dialysis catheter product line, its recently announced distribution agreement with Milamy Partners LLC regarding the KanguruWeb(tm) abdominal retraction system, and other potential agreements, the Company has determined it will announce its projected 2007 sales and earnings guidance on or before March 30, 2007.
MERIT MEDICAL SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
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SALES $ 50,816 $ 42,682 $190,674 $166,585
COST OF SALES 31,853 26,113 117,596 97,493
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GROSS PROFIT 18,963 16,569 73,078 69,092
administrative 11,909 9,536 45,486 38,579
development 2,361 1,910 8,582 6,992
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Total 14,270 11,446 54,068 45,571
OPERATIONS 4,693 5,123 19,010 23,521
Interest income 70 67 250 491
Interest expense (6) (1) (12) (18)
income (23) (57) (64) (94)
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Income - net 41 9 174 379
EXPENSE 4,734 5,132 19,184 23,900
INCOME TAX EXPENSE 1,681 1,436 6,883 8,122
NET INCOME $ 3,053 $ 3,696 $ 12,301 $15,778
====================== ======================
Basic $ 0.11 $ 0.14 $ 0.45 $ 0.59
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Diluted $ 0.11 $ 0.13 $ 0.44 $ 0.57
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Basic 27,509,033 27,239,784 27,333,146 26,848,447
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Diluted 28,630,264 28,048,195 28,244,948 27,847,122
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MERIT MEDICAL SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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Cash $ 9,838 $ 4,645
Trade receivables, net 25,745 25,433
Employee receivables 194 116
Other receivables 192 108
Inventories 38,562 32,080
Prepaid and other assets 1,031 1,023
Deferred income tax assets 2 28
Income tax refund receivables 82 977
Total current assets 75,646 64,410
Property and equipment, net 92,383 85,618
Patents, trademarks and license
agreements, net 4,350 3,342
Goodwill 7,541 6,415
Other assets 2,656 2,363
Deferred income tax assets 2
Total other assets 107,022 97,837
Total Assets $ 182,668 $ 162,247
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ -- $ 2
Trade payables 10,598 10,254
Accrued expenses 8,464 8,549
Advances from employees 245 316
Deferred taxes payable 190 1,141
Income taxes payable 1,177 455
Total Current Liabilities 20,674 20,717
Deferred income tax liabilities 5,469 4,166
Deferred compensation payable 2,869 2,363
Deferred credits 2,239 2,415
Other long-term obligations 205 100
Total liabilities 31,456 29,763
Stockholders' Equity
Common stock 54,394 48,198
Retained earnings 96,969 84,668
Accumulated other comprehensive
Total stockholders' equity 151,212 132,484
Total Liabilities and
Stockholders' Equity $ 182,668 $ 162,247
Three Months Ended Twelve Months Ended
December 31, December 31,
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Non-GAAP ADJUSTMENTS
taxes $ 4,733 $ 5,132 $ 19,184 $ 23,900
compensation 306 -- 1,502 --
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income taxes 5,039 5,132 20,686 23,900
(36%) (1,814) (1,848) (7,447) (8,604)
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income $ 3,225 $ 3,284 $ 13,239 $ 15,296
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Basic $ 0.12 $ 0.12 $ 0.48 $ 0.57
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