Q4 2009 Operating Income Grows 117% as Operating Margins Hit 15.4% Excluding Non-recurring Items Conference Call Webcast Live Today at 1:30 pm Pacific/4:30 pm Eastern
BOTHELL, WA - February 11, 2010 - Sonosite, Inc. (Nasdaq:SONO), the world leader and specialist in hand-carried ultrasound for the point-of-care, today reported financial results for the fourth quarter and year ended December 31, 2009.
Revenues in the fourth quarter of 2009 were $69.7 million, a decrease of 1% compared to the fourth quarter of 2008. Full year of 2009 revenues were $227.4 million, down 7% versus full year of 2008. Revenues for the partial year acquisition of CardioDynamics were $4.2 million for the fourth quarter and $7.1 million for the full year of 2009. Excluding partial year revenues from CDIC, Sonosite fourth quarter revenues were $65.5 million, down 7% versus the fourth quarter of 2008. Full year revenues excluding CDIC were $220.3 million, a decrease of 10% compared to 2008. Changes in foreign currency rates increased worldwide revenues by 4% in the fourth quarter and decreased revenues by 2% for the full year.
OPERATING INCOME AND CASH FLOW Fourth Quarter Results
Fourth quarter operating income was $6.8 million, an increase of 46% compared to the fourth quarter of 2008. Operating income for the fourth quarter 2009 included charges from CDIC of $3.3 million, related to operating results as well as acquisition and integration. Excluding CDIC, operating income in the fourth quarter of 2009 was $10.1 million, an increase of 117% compared to the fourth quarter of 2008. Operating margins reached 15.4% for the quarter.
Full Year Results
For the full year of 2009, operating income was $13.7 million, including charges from CDIC of $6.9 million; a decrease of 39% compared to the full year of 2008. Excluding CDIC, full year of 2009 operating income was $20.6 million, down 8% versus the full year of 2008 on a $24 million or 10% revenue decline versus full year 2008.
Operating cash flow was $15.3 million for the quarter and $24.4 million for the full year of 2009, as compared to $11.2 million and $29.2 million for the comparable periods of 2008. Operating cash flow for the full year of 2009 reflects the $21 million received to settle a patent dispute in the fourth quarter.
For the fourth quarter of 2009, the Company recorded net income of $2.2 million or $0.12 per share, compared to $6.0 million or $0.34 per share in 2008. For the full year of 2009, net income was $3.2 million or $0.18 per share compared to $11.2 million or $0.64 per share for the full year of 2008. Excluding non-recurring items such as bond gains, acquisition expenses, and patent royalty revenue, net income would have been $0.36 per share for the full year of 2009 or essentially even with 2008.
"In a very tough year we simply got stronger as a company, improving our operating model and tightening our capital allocation process," said Kevin M. Goodwin, Sonosite President and CEO. "We successfully integrated CardioDynamics which included significant changes to their sales force during the fourth quarter, while successfully closing out our litigation matters and achieving 9% operating margins, a level similar to 2008, despite core revenues falling by $24 million or 10%." "With a difficult year behind us we are stronger and more focused on growth initiatives for 2010 and beyond. We have leaned out our ‘SG&A structure' and are deploying our strategy across four key vertical markets," said Mr. Goodwin. "We have also initiated market development in cardiovascular disease management markets enabling us to expand our role in the cardiovascular health marketplace." "Additionally, we are at work on revising our capital structure with the recently announced "Dutch Auction" tender offer to repurchase $100 million of our shares. Following a two year evaluation of investment alternatives, it became clear to us that investing in our own stock was our best choice," Mr. Goodwin further commented. As of December 31, 2009, the company held $257.7 million in cash and investments and had outstanding senior convertible notes of $114.7 million for net liquidity of $143.0 million.
2010 FINANCIAL OUTLOOK
The company provided the following guidance:
- Revenue growth of up to 10%
- Level gross margin
- Operating margin of 11 - 13%
This release includes a discussion of management measures that are non-GAAP. We believe it is useful for investors to understand the comparison of operating results in 2009 versus 2008 by eliminating the impact of the CDIC related charges, convertible debt repurchase, and partial year patent royalty revenues using non-GAAP measures.
Conference Call Information
Sonosite will hold a conference call on February 11 at 1:30 pm PT/4:30 pm ET. The call will be broadcast live and can be accessed via www.sonosite.com/company/investors. A replay of the audio webcast will be available beginning February 11, 2010, 5:30 pm PT and will be available until February 25, 2010, 9:59 pm PT by dialing (719) 457-0820 or toll-free (888) 203-1112. The confirmation code 7406921 is required to access the replay. The call will also be archived on Sonosite's website.
Sonosite, Inc. (www.sonosite.com) is the innovator and world leader in hand-carried ultrasound. Headquartered near Seattle, the company is represented by ten subsidiaries and a global distribution network in over 100 countries. Sonosite's small, lightweight systems are expanding the use of ultrasound across the clinical spectrum by cost-effectively bringing high performance ultrasound to the point of patient care.
Forward-looking Information and the Private Litigation Reform Act of 1995 Certain statements in this press release relating to our future financial position and operating results are "forward-looking statements" for the purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the opinions and estimates of our management at the time the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those expected or implied by the forward-looking statements. These statements are not guaranties of future performance, are based on potentially inaccurate assumptions and are subject to known and unknown risks and uncertainties, including, without limitation, the risk that the acquisition of CardioDynamics will not yield the expected potential benefits, our ability to manufacture, market and sell our newest products, spending patterns in the hospital market, healthcare reform, prolonged adverse conditions in the U.S. or world economies or Sonosite's industry and the other factors contained in Item 1A. "Risk Factors" section of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. We caution readers not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. We undertake no obligation to publicly revise any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
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