MMSI ($9-$12.50*New Yearly High) P/E 45 Record Earnings, Maintains Guidance for current quarter.
Thursday July 19, 9:08 am Eastern Time
Press Release
Merit Medical Reports Record Earnings for Second Quarter Ending June 30, 2001
SOUTH JORDAN, Utah--(BW HealthWire)--July 19, 2001--Merit Medical Systems Inc. (Nasdaq:NMS: MMSI), a manufacturer and marketer of proprietary disposable products used in cardiology and radiology procedures, Thursday reported net income of $1.9 million, or $0.23 per share, on sales of $26.3 million for the second quarter ending June 30, 2001.
These results compare with net income of $44,927, or $0.01 per share on sales of $23.6 million for the second quarter of 2000. Operating earnings for the quarter were a record $1.3 million, or $0.16 per share. The remaining $0.07 per share was derived from a one-time sale of nine acres of property adjacent to Merit's corporate headquarters in South Jordan.
For the six month period ended June 30, 2001, net income was $3.0 million compared with a loss of $114,555 for the same period last year. Revenues for the six months of 2001 were $53.1 million compared with $45.6 million in last year's first half, resulting in a gain of 16 percent.
Revenues grew 12 percent for the quarter and came primarily from sales of the company's stand-alone devices, which grew 19 percent; custom kits, which rose 19 percent; and inflation devices, which grew 13 percent. Catheters declined 21 percent due to a spike in last year's second quarter sales caused by a product recall from the largest competitor in the diagnostic catheter marketplace.
For the six month period, custom kits were up 25 percent, stand-alone products were up 17 percent, inflation devices grew 14 percent, and catheters declined 0.3 percent.
Gross margins for the second quarter rose to 35.9 percent compared with 32.3 percent in last year's second quarter. The rising margins are a direct result of the company's continued adoption of cost-reduction programs. For the six months, margins were 35.1 percent compared with 33.4 percent in 2000.
Fred P. Lampropoulos, chairman and chief executive officer, said, ``It is very gratifying to see our efforts rewarded in bringing profits to record levels. Even with an increase of 460,000 weighted average shares outstanding due primarily to the higher stock price, earnings per share were much higher than last year.
``Net, after-tax income rose to 5.0 percent of sales excluding the property sale, compared with 0.2 percent of sales in last year's second quarter. We believe there is a great opportunity to increase this ratio as additional cost-savings programs are implemented.
``Sales per employee rose to $103,000 in the six months compared to $77,000 last year, a productivity gain of 32 percent. Inventory efficiencies rose as inventories were reduced from $27.8 million in second quarter 2000 to $22.3 million in this year's second quarter, which resulted in better return on assets and lower carrying costs.
``In addition, our long-term debt has been reduced from $30.6 million in June of last year to $14.8 million as of June 30, 2001, resulting in much lower interest costs,'' continued Lampropoulos.
``Our earnings guidance for the third quarter remains at $0.12 per share, as we move into our normal, seasonal slow-down. If it is warranted later in the quarter, we will update the investment community,'' Lampropoulos added.
Selling, general and administrative costs continued to decline in the second quarter as a percent of sales to 23.4 percent compared with 24.2 percent last year. Research and development expenses remained relatively constant as a percent of sales at 4.2 percent compared with 4.3 percent of sales in last year's quarter.
Total operating costs as a percent of sales declined to 27.6 percent compared with 29.6 percent in last year's quarter.
For the six month period, SG&A costs were 22.9 percent of sales compared with 26.4 percent in the prior year's first half, which included the charge relating to the Clinipad closure. R&D expenses were 4.2 percent of sales compared with 4.4 percent last year. Total operating costs declined to 27.1 percent of sales compared with 31.4 percent of sales in the first half of 2000.
On operations, Merit's other expenses including interest charges declined by 45 percent in the second quarter to $318,929 compared with $583,517 in last year's quarter as a result of the company's long-term debt being reduced to $14.8 million from $30.6 million as of June 30, 2000, and lower interest rates.
Merit's effective tax rate increased to 30 percent in the second quarter over recent quarters due to higher than expected profits. For the six months ending June 30, 2001, the tax rate was 29 percent versus 30 percent in last year's period.
Income Statement
3 Mos. Ended 6/30 6 Mos. Ended 6/30
2001 2000 2001 2000
(In Thousands Except Share Data)
Revenues: $ 26,264 $ 23,553 $ 53,052 $ 45,633
Cost of Sales: 16,838 15,937 34,406 30,383
Gross Profit: $ 9,426 $ 7,616 $ 18,646 $ 15,250
Operating
Expenses:
Selling, General
and
Administrative 6,158 5,689 12,164 12,027
Research and
Development 1,091 1,002 2,221 2,009
Severance Costs 277 277
Total Operating
Expenses: $ 7,249 $ 6,968 $ 14,385 $ 14,313
Operating Income: $ 2,177 $ 648 $ 4,261 $ 937
Other (Income)
Expense - Net: (468) 584 (31) 1,101
Pretax Income
(Loss): 2,645 64 4,292 (164)
Income Tax Expense
(Benefit): 786 19 1,247 (49)
Net Income (Loss): $ 1,859 $ 45 $ 3,045 ($ 115)
Earnings (Loss)
Per Share
Basic: $ 0.24 $ 0.01 $ 0.39 ($ 0.01)
Diluted: $ 0.23 $ 0.01 $ 0.38 ($ 0.01)
Weighted Avg.
Shares
Outstanding
Basic: 7,895,260 7,747,976 7,845,595 7,685,444
Diluted: 8,243,247 7,785,161 8,069,004 7,839,400
Balance Sheet
12/31/2000 6/30/2001
(In $ Thousands)
Total Current Assets: $41,976 $39,529
Property & Equipment (Net): 21,845 21,639
Other Assets: 7,626 7,524
Total Assets: $71,447 $68,692
Total Current Liabilities: $ 9,528 $11,652
Other Liabilities: 3,134 3,145
Long-term Debt: 24,012 14,755
Stockholders' Equity: 34,773 39,140
Total Liabilities &
Stockholders' Equity: $71,447 $68,692
Founded in 1987, Merit Medical Systems is engaged in the development, manufacture and distribution of proprietary disposable medical products used in interventional and diagnostic procedures, particularly in cardiology and radiology. The company serves client hospitals worldwide with a domestic and international sales force totaling approximately 65 individuals.
Merit Medical employs approximately 1,040 individuals worldwide, with manufacturing facilities in South Jordan and Salt Lake City, Santa Clara, Calif., Angleton, Texas, and Galway, Ireland.
Statements contained in this release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in the company's annual report on Form 10-K for the year ended Dec. 31, 2000.
Such risks and uncertainties include the company's ability to successfully manage its manufacturing and inventory costs, timely product introductions, market acceptance of new products, delays in obtaining regulatory approvals, the impact of changes in foreign currency exchange rates, particularly with respect to the Euro, the ability of the company to increase its inventory turn rate without creating difficulties in product delivery times, price and product competition, and the ability of the company to maintain increased efficiency and provide customer support with its reduced staff.
Actual results may differ materially from anticipated results.
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