CTMI Cti Molecular Imaging - Common Stock (MM)

CTI Molecular Imaging, Inc. Reports Financial Results for the Third Quarter of Fiscal 2004 Net Revenues of $92 Million and EPS of $0.06 KNOXVILLE, Tenn., Aug. 5 /PRNewswire-FirstCall/ -- CTI Molecular Imaging, Inc. (NASDAQ:CTMI), a leading provider of positron emission tomography (PET) equipment, molecular biomarkers and services, today announced financial results for its third quarter ended June 30, 2004. Net revenues for the third quarter were $91.8 million, a 7.5% decline from net revenues of $99.2 million for the same period last year. Net income was $2.7 million, or $0.06 per share on a fully-diluted basis, compared to $7.5 million, or $0.16 per share on a fully-diluted basis, in the prior fiscal year's third quarter. "As we previously announced, our operational performance in the quarter was a result of unexpectedly soft demand in the market for PET and PET/CT equipment and temporary transitional issues relating to the sales force realignment with Siemens," said Ronald Nutt, Ph.D., President and Chief Executive Officer. "The realignment is now complete and this step will provide us with a much more powerful sales and marketing capability going forward. However, we continue to expect that the market demand for PET and PET/CT tomographs will remain sluggish through fiscal 2005, particularly in the domestic market." During the third quarter, on a consolidated basis CTI Molecular Imaging sold 33 scanners and booked orders for an additional 42 units. "We expect this pause in growth of shipments will continue until the market absorbs the sharp increase in installed base over the past two years, after which time we expect the growth rate in scanner shipments will resume. In the meantime, our sales realignment with Siemens provides us with the ability to manage our cost structure and focus our combined resources more effectively as we navigate through the slowdown. Most importantly, the clinical awareness of the diagnostic benefit of PET and PET/CT continues to drive adoption growth and this trend provides us great confidence in the future," continued Dr. Nutt. CTI Solutions experienced strong growth in sales of FDG during the quarter, which is evidence of continued growth in PET utilization and increasing market share. For the third quarter, sales of FDG doses increased 53% over the prior year's quarter and 7% sequentially, partially offset by a 2.5% sequential decline in average price. "FDG dose sales continue to grow at their recent historical rate of between 50% and 60% over the past several years. Additionally, during the third quarter, the price decline for FDG experienced further moderation, consistent with our expectations for an eventual stabilization. In fact, the sequential price decline of 2.5% was the lowest rate since our IPO two years ago. These trends are indicative of positive utilization trends and a continued growing end-market which will fuel an eventual rebound in growth of scanner demand," added Dr. Nutt. Segment Information: Three Months Ended Nine Months Ended June 30, June 30, (in thousands) 2004 2003 2004 2003 (unaudited) (unaudited) Revenues, gross: CPS $61,888 $63,523 $187,237 $150,829 Detector Materials 15,015 14,020 42,627 42,290 CTI Solutions 48,075 55,240 133,010 126,622 Total $124,978 $132,783 $362,874 $319,741 Revenue eliminations: CPS $(17,246) $(19,245) $(44,494) $(34,014) Detector Materials (14,843) (13,143) (42,220) (39,825) CTI Solutions (1,104) (1,190) (3,986) (4,174) Total $(33,193) $(33,578) $(90,700) $(78,013) Revenues, net: CPS $44,642 $44,278 $142,743 $116,815 Detector Materials 172 877 407 2,465 CTI Solutions 46,971 54,050 129,024 122,448 Total $91,785 $99,205 $272,174 $241,728 Income (loss) from operations: CPS $9,517 $12,629 $27,499 $29,269 Detector Materials 6,974 7,671 22,150 17,315 CTI Solutions (3,142) (554) (12,317) (5,423) Corporate (2,161) (1,376) (6,011) (1,876) Total $11,188 $18,370 $31,321 $39,285 Orders, Shipments and Backlog: The company sold 33 scanners and booked orders for 42 units during the third quarter of fiscal 2004, compared to 49 units sold and 65 orders booked during the prior year period. Backlog on a consolidated basis at June 30, 2004 was $169 million. Backlog includes orders for PET and PET/CT scanners, cyclotrons and service and maintenance contracts, and excludes orders placed for FDG doses. Financial Outlook: "The fourth quarter operational results will be determined by the success we have at translating prior orders in backlog into sales and minimizing cancellations as we transition our distribution efforts. With this in mind, we expect fourth quarter financial performance to be in line with the low end of our prior guidance. For the fourth quarter, we expect net revenues of $110 million to $115 million and earnings per share of $0.17. These expectations take into account the various effects of the new agency agreement with Siemens, as well as the acquisition of Concorde Microsystems," said Dr. Nutt. Earnings Conference Call Information: The dial-in number for today's earnings call at 9:00 a.m. EDT is (706) 643-3432. A replay of the call will be available for one week until August 12, 2004. To hear this replay, please dial (800) 642-1687 and enter the reservation number 8952962. A simultaneous webcast of the call will be accessible via the internet at http://www.ctimi.com/ under the Investor Relations section. A replay of the webcast will also be archived on this site. About CTI Molecular Imaging: CTI Molecular Imaging, Inc. is a leading supplier of products and services for positron emission tomography (PET), a diagnostic imaging technology used in the detection and treatment of cancer, neurological disorders and cardiac disease. Additional information is available at: http://www.ctimi.com/ . About PET and PET/CT: PET images the biology of diseases at the molecular level, often before anatomic changes are visible or, in some cases, before symptoms appear. Diseases are biological processes and it is these processes that PET examines. PET/CT is an imaging technology that combines the biological examination of patients by PET with the CT images of the body's structural detail. PET/CT technology improves the diagnostic accuracy and treatment management of patients by providing surgeons, radiation oncologists and other physicians with precise anatomical landmarks associated with the disease condition as determined by PET. PET's whole-body imaging capability helps physicians improve their ability to detect and determine the location, extent and stage of cancer, neurological disorders and cardiac disease. By improving diagnosis, PET scans aid physicians in selecting better courses of treatment, as well as assessing whether treatment is effective or should be changed. Recent published clinical trials have shown that in a wide array of cancers, the use of PET has caused the treatment to be changed for 15 to 50% of patients, depending on the specific clinical question. In addition, PET and PET/CT provide both the patient and their physician with a degree of certainty that is often unavailable through other imaging methods. Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as "believe," "expect," "anticipate," "intend," "on pace," "estimate" or similar expressions, include statements regarding CTI's financial outlook for 2004, the anticipated financial impact and operational improvements resulting from the new agency agreement with Siemens, future demand for scanners, future pricing trends and any other statements that necessarily depend on future events. Forward-looking statements involve a number of risks and uncertainties and there can be no assurance that any forward-looking statements will prove to be accurate. Important factors that could cause actual results to differ materially from those anticipated in the forward- looking statements include: competition; uncertainties and potential difficulties regarding the implementation of the new agency agreement with Siemens; the seasonality of capital equipment sales; the availability and amount of third-party payor reimbursement for PET procedures; Siemens' option to purchase a majority interest in CPS, CTI's subsidiary that develops and manufactures PET scanners; market adoption of and demand for PET products in general and CTI's products and services in particular; the timing of orders from distribution partners and customers; legislative and regulatory developments; the timing of research and development and marketing expenses; relationships with suppliers and distributors; pricing; customer demand for financing services; and general economic conditions, such as interest rates. CTI undertakes no obligation to update or revise any forward-looking statements. Further information regarding risks, uncertainties and other factors that could adversely affect CTI or cause actual results to differ materially from those anticipated in forward-looking statements are included in CTI's Annual Report on Form 10-K for the fiscal year ended September 30, 2003 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. CTI Molecular Imaging, Inc Consolidated Balance Sheets June 30, September 30, (in thousands) 2004 2003 (unaudited) ASSETS Current assets: Cash and cash equivalents $28,688 $49,978 Accounts receivable -- trade, net 55,607 72,240 Accounts receivable -- related party, net (1) 24,137 42,430 Inventories 110,107 70,852 Deferred tax asset 15,268 17,751 Prepaid expenses and other current assets 5,575 7,691 Total current assets 239,382 260,942 Property and equipment, net 126,771 107,293 Goodwill 46,552 25,040 Other assets 34,942 31,773 Total assets $447,647 $425,048 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $37,188 $46,507 Current maturities of long-term debt and capital lease obligations 4,333 5,501 Accrued liabilities 23,369 25,854 Customer advances 10,054 6,863 Income taxes payable 710 3,724 Total current liabilities 75,654 88,449 Other long-term liabilities 3,089 2,332 Deferred tax liability 4,796 8,999 Long-term debt and capital lease obligations 13,668 18,688 Total liabilities 97,207 118,468 Minority interest 54,205 46,727 Shareholders' equity 296,235 259,853 Total liabilities and shareholders' equity $447,647 $425,048 (1) Represent receivables from Siemens Medical Solutions USA, Inc. CTI Molecular Imaging, Inc. Consolidated Statements of Operations Three Months Ended Nine Months Ended June 30, June 30, 2004 2003 2004 2003 (In thousands, except share and per share data) (unaudited) (unaudited) Revenues $91,785 $99,205 $272,174 $241,728 Cost of revenues 54,618 61,156 163,488 143,186 Gross margin 37,167 38,049 108,686 98,542 Operating expenses: Selling, general and administrative expenses 17,566 11,776 49,258 36,409 Research and development expenses 7,701 7,386 26,325 21,450 Stock-based compensation expense 712 517 1,782 1,398 Total operating expenses 25,979 19,679 77,365 59,257 Income from operations 11,188 18,370 31,321 39,285 Interest expense, net 289 231 1,239 506 Other (income) expense 662 (540) (229) (1,219) Income before income taxes and minority interest 10,237 18,679 30,311 39,998 Provision for income taxes 4,296 7,143 11,924 15,229 Income before minority interest 5,941 11,536 18,387 24,769 Amount applicable to minority interest, net of taxes 3,198 4,062 9,159 9,391 Net income $2,743 $7,474 $9,228 $15,378 Earnings per share Basic $0.06 $0.17 $0.21 $0.36 Diluted $0.06 $0.16 $0.20 $0.33 Weighted average shares Basic 44,714,143 43,977,630 44,541,307 43,000,695 Diluted 46,463,847 46,423,125 46,152,994 46,531,486 DATASOURCE: CTI Molecular Imaging, Inc. CONTACT: David N. Gill, +1-865-218-2000, or Michael A. Lawless, +1-865-218-2000, both of CTI Molecular Imaging, Inc. Web site: http://www.ctimi.com/

Copyright