PACIFIC GROWTH EQUITIES
353 Sacramento Street, 16th Floor, San Francisco, CA 94111 Fred Toney April 14, 1998 (415) 274-6863 Rating: Strong Buy
Schick Technologies, Inc. Supply Shortfall in March Quarter, Raising June Quarter Estimates
Summary & Investment Recommendation: ú Demand of $15 Million in March Quarter, Company Shipped $12-13 Million Schick Technologies preannounced this morning that it intends to report between $12-13 million in revenue for Q4:98 (March). This falls below our previous $13 million estimate for Q4:98 and our expectation that revenues could be as much as $1-2 million higher than this estimate. Demand exceeded Schick's ability to fulfill shipments in the quarter, particularly on dental products (CDR System), and the $15 million that was actually scheduled to ship in Q4:98 did not all ship.
accuDEXA (Osteoporosis) First, accuDEXA's initial product launch has exceeded expectations. In Q4:98, accuDEXA shipments were about 400 units, ahead of our 250 unit estimate. Revenues from accuDEXA were about $4 million, above our $2.5 million estimate.
CDR Systems (Dental) Next, CDR System (dental) sales were just below $9 million in Q4:98, even though demand and scheduled shipments totaled about $11 million. A component was in limited supply during the quarter, specifically the CCD, or charged coupled array, used in the CDR System. Shipment of this component was delayed several weeks during March and only began to be supplied to Schick in late March. The Company was then unable to complete all scheduled shipments for March, but two weeks later (in April) all of the March scheduled shipments have been completed. This leads to a shifting of revenues from the March quarter to the June quarter.
Three things give us comfort about this occurrence and the Company's business going forward: 1) the purchasing manager for this component no longer is employed by Schick (a swift act), 2) the APS (or active pixel sensor) with higher resolution is being included in about 50% of new CDR systems in the current quarter (June) up from just 10% in the March quarter, and increasing, and 3) CCD shipments have not been a problem previously and the delivery does not appear to be a manufacturing issue for the supplier but was a delivery schedule issue that conflicted with the supplier's line maintenance schedule. |
