Earnings and CC notes
Net sales for the quarter totaled $14,003,000, a 67% increase from net sales of $8,370,000 for last year's third quarter and an $882,000, or 7%, increase from second quarter 2000 net sales of $13,121,000. The company has now posted eight consecutive quarters of record net sales since its initial sales were made in the third quarter 1998.
Net income for the third quarter was $665,000 ($.03 per share) compared to a pro forma net loss of $2,455,000 ($.17 per share) for last year's third quarter and a pro forma net loss of $582,000 ($.03 per share) for second quarter 2000.
Branded product sales, comprised of the company's NATURA and CONFORMA product lines, were $9,241,000 in the third quarter 2000, an 89% increase from branded product sales of $4,890,000 recorded in last year's third quarter and a 17%, or $1,352,000, increase from the second quarter 2000 level.
Hearing aid component sales were $4,762,000 in the third quarter 2000 compared to $3,480,000 in the third quarter 1999 and $5,232,000 in the second quarter 2000.
CC notes:
- First positive EPS
- 9% decline in OEM products
- Manufacturing costs decreasing
- Increasing sales to consolidators
- 51.6% is highest gross margin ever
- 385 store sonus networks deal
- deal with Hear-X 85 stores
- Natura sales double from April levels
- 2500 accounts in third quarter that orders product doubled from first quarter
- Conforma doing well in Europe since an off-the-shelf product, but below in US
- Altare will be introduced as lower cost digital product
- Starky Labs has agreed to purchase product in 2001, but will not count them in 2001 rev est since unreliable.
- Expects fourth quarter to set records also.
- Branded products sales 9.24M up 89% y2y and 17% q2q
- will target Conforma for time users by lowering price
- 465K in g&a
- sga was 34%, will increase due to Altare marketing
- 2.28M in r&d
- 800k in interest income
- 14.3M in acct rec, but 8M in Starky recievables
Q&A
- If 18M is contractually by Starky, why not counted? Didn't put quarterly numbers so can't tell how much will be in each quarter. Figured safer to take it out and orders from Starky will be upside
- Branded product business is the future
- Will be profitable next year
- Want to be the worlds best hearing aid company
- Guidance for rev will be higher mid 15M, should get EPS 0.03 but shooting higher.
- Some vendors wonder how they can charge high prices for Conforma's instant fit since it not a custom fit as done by the audiologists
- Starky wants latest product. We keep OEM one generation product behind. They want to accellerate the pace of getting new product. Starky want extended payment since SNCI is public vs. private. Since 4M a quarter it is significant chunk of our revs. Also we are the only high end digital product for them.
- Starky has been good payer, only 90-180 days outstanding.
- Altare does not contain noise reduction, but our sound processing is still better than the competitor.
- 25% market is high end analog. We feel that we can offer digital at analog price.
- Return rate reflects quality of product. Natura II with noise reduction have lower returns rates that continue to trend down.
- Mid December should see better rev estimate.
- September was best month ever.
- Conforma pricing holding well in Europe but US dispenser attitude in US needs to be jump started.
- ADA conference this week
- Bill Stern from Starky said product doesn't work and hurt some lady ears. We sold 100K of these products that don't work. Why would they order more if they don't work. Caller apparently a fraud to me. Starky has 90M in sales of our products.
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Bizarre call. Company trying to shed old customers and branch out with new state of the art products.
Let's where is goes tomorrow. Present PE (using EPS of 0.12)vs. growth rate makes this pricy.
Jack |
