SOUTH JORDAN, Utah, Oct. 25, 2007 (PRIME NEWSWIRE) -- Merit Medical Systems, Inc. (Nasdaq:MMSI), a leading manufacturer and marketer of proprietary disposable devices used primarily in cardiology and radiology procedures, today reported revenues of $50.6 million for its third quarter ended September 30, 2007, compared with $46.7 million for the third quarter of 2006, an increase of 8%. Revenues for the nine-month period ended September 30, 2007 were a record $153.4 million, compared with $139.9 million for the comparable nine-month period in 2006, a gain of 10%.
Net income for the third quarter ended September 30, 2007 was $4.3 million, or $0.15 per share. For the comparable quarter of 2006, net income was $3.3 million, or $0.12 per share. Net income for the nine-month period ended September 30, 2007 was $10.9 million, or $0.38 per share. For the comparable nine-month period of 2006, net income was $9.2 million, or $0.33 per share.
Gross margins for the third quarter of 2007 were 39.1% of sales, compared to 38.7% of sales for the third quarter of 2006, the first quarter in 13 quarters that the gross margins were up over the prior year. Gross margins were 37.9% of sales for the nine-month period ended September 30, 2007, compared to 38.7% of sales for the comparable period in 2006. The increase in gross margins for the third quarter of 2007, as compared to the third quarter of 2006, can be attributed primarily to production efficiencies resulting in lower headcount, product mix improvement, the transfer of four products to Mexico, and the implementation of automation projects. The decrease in gross margins for the first nine months of 2007, as compared to the same period of 2006, can be attributed primarily to an increase in wages, additional headcount, an increase in the sale of lower-margin kits, inventory obsolescence and higher health benefit costs.
All product categories of Merit's business contributed to revenue growth in the third quarter of 2007, as compared to the third quarter of 2006, with catheter sales increasing 18%; inflation device sales rising 10%; stand-alone device sales growing 9%; and custom kit and procedure tray sales increasing 2%.
For the nine-month period ended September 30, 2007, compared to the nine-month period ended September 30, 2006, catheter sales increased 19%; stand-alone device sales rose 12%; custom kit and procedure tray sales grew 10%; and inflation device sales increased 4%.
"The improvement in gross margins and profits for the third quarter were pleasing, especially during the traditional seasonal slowdown and challenging market conditions," said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer. "We believe the results validate the plan management has been implementing to reduce costs, improve efficiencies and focus on the profit contributions of various product lines. Many of the benefits of these efforts are expected to continue into the future as well."
"In the next 90 days, we plan to introduce several new products, including the 4-French Impress(r) radiology catheter, the 8.3-French periocardiocentesis tray, the Prelude(r) Hi-Beam introducer sheath, the Prelude(r) radial artery introducer sheath, the Sea Dragon(tm) torque device, the All Star(tm) hemostasis valve, and the 15 cm S-MAK(tm) micro access kit," Lampropoulos added.
Selling, general and administrative expenses for the third quarter of 2007 were 23.1% of sales, compared with 23.2% of sales in the previous year's third quarter. Research and development costs during the third quarter of 2007 were 3.9% of sales, compared with 4.5% of sales for the same period last year. For the nine-month period ended September 30, 2007, selling, general and administrative costs were 23.2% of sales, compared with 24.0% of sales for the first nine months of 2006. Research and development costs were 4.3% of sales for the first nine months of 2007, compared with 4.4% of sales for the same period in 2006.
Income from operations for the quarter ended September 30, 2007 was $6.1 million, compared with $5.1 million for the same period in 2006. Income from operations for the first nine months of 2007 was $16.0 million, compared to $14.3 million in the same period of 2006.
Merit's effective tax rates for the third quarter and the nine-month period ended September 30, 2007 were 30.6% and 33.3%, respectively, compared with 36.4% and 36.0% for the comparable periods of 2006. The lower effective tax rate for the three and nine months ended September 30, 2007, was primarily the result of a FIN 48 adjustment of approximately $300,000 which was attributable to a tax accrual which expired on federal and state tax returns.
Merit's cash position increased to $12.2 million on September 30, 2007, compared with $9.8 million on December 31, 2006.
CONFERENCE CALL
Merit Medical invites all interested parties to join its officers in its third quarter earnings conference call to be held today, October 25, 2007, at 5 p.m. Eastern (4 p.m. Central; 3 p.m. Mountain; and 2 p.m. Pacific). The telephone numbers to call are (domestic) 800-366-7417; and (international) 303-262-2130.
A live webcast will also be available for the conference call at www.merit.com and www.fulldisclosure.com. To listen to the live broadcast, please enter the site 10-15 minutes prior to the call in order to download any necessary media players. Just click on the "CCBN Webcast" logo on the lower right-hand corner of Merit's home page. The webcast will be archived on both sites. There is no other replay access to the call.
INCOME STATEMENT
(Unaudited, in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
---------------------- ----------------------
SALES $ 50,584 $ 46,697 $ 153,425 $ 139,858
COST OF SALES 30,801 28,629 95,247 85,743
---------- ---------- ---------- ----------
GROSS PROFIT 19,783 18,068 58,178 54,115
OPERATING EXPENSES
Selling, general
and administrative 11,707 10,813 35,580 33,577
Research and
development 1,990 2,119 6,561 6,221
---------- ---------- ---------- ----------
Total 13,697 12,932 42,141 39,798
INCOME FROM OPERATIONS 6,086 5,136 16,037 14,317
OTHER INCOME (EXPENSE)
Interest income 96 69 248 179
Other income
(expense) 4 20 2 (45)
---------- ---------- ---------- ----------
Total other income
- net 100 89 250 134
INCOME BEFORE INCOME
TAX EXPENSE 6,186 5,225 16,287 14,451
INCOME TAX EXPENSE 1,891 1,900 5,427 5,203
---------- ---------- ---------- ----------
NET INCOME $ 4,295 $ 3,325 $ 10,860 $ 9,248
---------- ---------- ---------- ----------
EARNINGS PER SHARE-
Basic $ 0.16 $ 0.12 $ 0.40 $ 0.34
========== ========== ========== ==========
Diluted $ 0.15 $ 0.12 $ 0.38 $ 0.33
========== ========== ========== ==========
AVERAGE COMMON SHARES-
Basic 27,326,554 27,363,182 27,452,969 27,273,873
========== ========== ========== ==========
Diluted 28,030,792 28,286,928 28,259,959 28,115,865
========== ========== ========== ==========
BALANCE SHEET
(Unaudited in thousands)
September 30, December 31,
2007 2006
------------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 12,199 $ 9,838
Trade receivables, net 24,844 25,745
Employee receivables 119 194
Other receivables 882 192
Inventories 36,794 38,562
Prepaid expenses and other assets 1,463 1,031
Deferred income tax assets 3 2
Income tax refunds receivable 105 82
----------- -----------
Total Current Assets 76,409 75,646
Property and equipment, net 98,288 92,383
Other intangibles, net 6,438 4,350
Goodwill 9,099 7,541
Other assets 2,844 2,656
Deferred income tax assets 3 2
Deposits 84 90
----------- -----------
Total Assets $ 193,165 $ 182,668
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade payables 10,158 10,598
Accrued expenses 9,880 8,464
Advances from employees 214 245
Deferred income tax liabilities 97 190
Income taxes payable 138 1,177
----------- -----------
Total Current Liabilities 20,487 20,674
Deferred income tax liabilities 5,541 5,469
Liabilities related to unrecognized
tax positions 3,388 --
Deferred compensation payable 2,893 2,869
Deferred credits 2,134 2,239
Other long-term obligations 435 205
----------- -----------
Total Liabilities 34,878 31,456
Stockholders' Equity
Common stock 51,088 54,394
Retained earnings 107,220 96,969
Accumulated other comprehensive loss (21) (151)
----------- -----------
Total stockholders' equity 158,287 151,212
Total Liabilities and Stockholders'
Equity $ 193,165 $ 182,668
=========== ===========
ABOUT MERIT
Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional and diagnostic procedures, particularly in cardiology and radiology. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 90 individuals. Merit employs approximately 1,520 people worldwide, with facilities in Salt Lake City and South Jordan, Utah; Santa Clara, California; Angleton, Texas; Richmond, Virginia; Maastricht and Venlo, The Netherlands; and Galway, Ireland.
The Merit Medical Systems, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3282
Statements contained in this release, which are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 and are subject to risks and uncertainties such as those described in Merit's Annual Report on Form 10-K for the year ended December 31, 2006. Such risks and uncertainties include product recalls and product liability claims; infringement of Merit's technology or the assertion that Merit's technology infringes the rights of other parties; termination of relationship with suppliers, or failure of suppliers to perform; inability to successfully manage growth through acquisitions; delays in obtaining regulatory approvals, or the failure to maintain such approvals; concentration of Merit's revenues among a few products and procedures; development of new products and technology that could render Merit's products obsolete, market acceptance of new products, introduction of products in a timely fashion, price and product competition, availability of labor and materials, cost increases, and fluctuations in and obsolescence of inventory; volatility of the market price of Merit's common stock; foreign currency fluctuations; key personnel; work stoppage or transportation risks; modification or limitation of governmental or private insurance reimbursement, changes in health care markets related to health care reform initiatives; and other factors referred to in Merit's Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results may differ materially from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.