Synergetics USA, Inc. (Synergetics) has reported net sales of $13.2 million for the third quarter of fiscal 2009, compared with net sales of $13.5 million in the year-ago quarter. It also reported a net income of $0.5 million, or $0.02 per share, for the third quarter of fiscal 2009, compared with the net income of $1.1 million, or 0.05 per share, in the year-ago quarter.
For the nine months ended May 4, 2009, the company realized revenue of $39.1 million, which compares to $35.6 million for the same period last year. Earnings for the period were $1.5 million, or $0.06 per share, essentially equal to the comparable period of fiscal 2008.
Cash and cash equivalents at May 4, 2009, totaled $603,000, an increase of approximately $103,000 as compared to July 31, 2008. The company had a working capital surplus of approximately $13.4 million at the end of the third fiscal 2009 quarter, compared to a surplus of approximately $12.7 million as of July 31, 2008.
The company reported a 16.6% reduction in long term liabilities from $10.2 million at the fiscal 2008 year end to $8.5 million at the end of the 2009 third fiscal quarter. Stockholders’ equity as of May 4, 2009 increased to approximately $38.1 million as compared to $36.4 million at the end of fiscal 2008. The company reports that its borrowing availability was approximately $3.0 million under its various lines of credit as of May 4, 2009.
Third Quarter Fiscal 2009 Background Financial Information:
Overall ophthalmic sales grew 2.5% compared to the third quarter of fiscal 2008. Domestic ophthalmic sales decreased 8.1% primarily due to a 37.5% decrease in capital equipment sales. International ophthalmic sales increased by 21.3%, notwithstanding a 14.4% decrease in capital equipment sales.
Overall neurosurgical sales grew 6.5% as compared to the three months ended April 30, 2008 driven primarily by increased disposable sales. Domestic neurosurgical sales decreased 4.4% primarily due to a 56.1% decrease in capital equipment sales. International sales increased 18.3%, including a 9.0% increase in capital equipment sales.
OEM sales (sales through our marketing partners) during the third fiscal quarter decreased 25.1% compared to the third quarter of last year, primarily due to decreases in capital equipment sales. These sales were driven by sales to Codman decreasing by 30.7% and sales to Stryker decreasing 10.0% based upon a strong sales comparison in the third quarter of fiscal 2008.
Gross profit margin was approximately 56.2% in the third quarter of fiscal 2009, compared to 60.5% for the comparable period in 2008, primarily due to the change in mix toward higher international sales, decreased OEM capital equipment sales and pricing pressure on both ophthalmic and neurosurgical capital equipment.
Operating income for the third quarter of fiscal 2009 was $879,000 as compared to operating income of $2.2 million in the comparable 2008 fiscal period. The decrease in operating income was primarily the result of a 2.5% decrease in sales, an increase in the cost of sales of $430,000, and a $463,000 increase in sales and marketing expenses.
The company is focused on its level of inventory which has decreased 2.6% since the quarter ended February 3, 2009. One of the company’s primary objectives is to reduce its investment in inventory.
Nine Months Ended May 4, 2009 Background Financial Information:
Fiscal year to date, the company reported a 9.7% increase in revenue as compared to the same period last year, notwithstanding a 12.0% decrease in capital equipment sales. This growth was driven primarily by a 16.2% increase in neurosurgery sales, an 8.8% increase in ophthalmology sales and an 8.6% increase in OEM sales.
Overall domestic sales for the period increased 3.5% as compared to last year. This was comprised of a 1.4% decrease in domestic ophthalmology and a 7.9% increase in domestic neurosurgery sales. Disposable sales increases in both product lines positively impacted each segment.
Overall international sales for the period increased 25.7% as compared to the first nine months of fiscal 2008 with both the ophthalmology and neurosurgery product lines contributing.
Gross profit margin was approximately 57.1% for the first nine months of fiscal 2009, compared to 59.3% for the comparable period in 2008, primarily due to the change in mix to higher international sales, pricing pressure on both ophthalmic and neurosurgical capital equipment and additional costs experienced in manufacturing some of the company’s products.
Operating income for the first nine months was $2.9 million as compared to operating income of $3.2 million in the comparable 2008 fiscal period. The decrease was attributable to an increase in the cost of sales of $2.2 million, a $1.3 million increase in sales and marketing expenses and a $353,000 increase in R&D expenses, partially offset by a decrease of $242,000 in G&A expense and a 9.7% increase in sales.
Net income for the period was $1.5 million, or $0.06 per basic and diluted share, essentially flat in comparison to the same period last year.
Commenting on the results, David M. Hable, President and Chief Executive Officer of Synergetics USA, stated, “The results of the quarter reflect the persistent economic stresses felt by our customers during the period. Despite these pressures, we are pleased with our overall year over year performance, which we believe validates our strategic planning and execution particularly on the international sales front. While domestic sales were negatively impacted by a decrease in capital equipment sales, we worked hard to offset this through a focus on increasing disposable sales in both domestic and international markets.”
Synergetics USA, Inc. is a medical device company focused on microsurgery.