MURRYSVILLE, Pa., July 25 /PRNewswire-FirstCall/ -- RESPIRONICS,
INC. (NASDAQ:RESP) today announced record financial results for the
three months and fiscal year ended June 30, 2007. FINANCIAL RESULTS
Three Months Ended June 30, 2007 Net sales for the fourth quarter
totaled $332.4 million, which represents an increase of more than
18 percent over the $280.7 million achieved in the fourth quarter a
year ago. The Company's recent acquisitions added approximately
$5.1 million of revenues during the quarter, primarily related to
international distributor acquisitions. Acquired revenues represent
less than two percent of the current quarter revenue growth.
Domestic revenues increased from $196.9 million in the fourth
quarter a year ago to $224.8 million in the current year's fourth
quarter, an increase of 14 percent. The Company's domestic revenue
gains were led by a year-over- year increase of $21.2 million, or
more than 17 percent, in domestic sleep therapy products. The
Company's performance in the sleep therapy market was enhanced by
the successful launch of several new products, including the
BiPAP(R) autoSV(TM) unit as well as the REMstar(R) Auto CPAP with
the new A- Flex(TM) breathing mode, complementing the existing M
Series line of sleep therapy devices and a broad range of patient
interface products. Led by strong performance in oxygen therapy,
the Company's home respiratory care revenues increased by $3.3
million, or 19 percent, in the current year's fourth quarter. The
Company's domestic hospital group revenues also grew by ten percent
during the fourth quarter to $53.0 million. International revenues
totaled $107.6 million for the fourth quarter, a 28 percent
increase over the $83.8 million reported a year ago, led by 33
percent growth in the sleep therapy market and 25 percent in Home
Respiratory Care products. The Company also achieved 29 percent
growth in its Hospital Group products in the international markets,
driven by strong performances in ventilation as well as Respiratory
Drug Delivery. International revenues represented 32 percent of
total revenues during the current year's fourth quarter. On a
global basis, sleep therapy revenues grew by 21 percent during the
fourth quarter, from $158.9 million to $192.6 million. Global
hospital ventilation sales grew by 14 percent, from $35.3 million
last year to $40.3 million in the fourth quarter of fiscal year
2007. The Company also experienced another strong quarter of global
revenue growth in Respiratory Drug Delivery, which posted 28
percent growth on prior year revenues of $12.2 million, to $15.6
million in the current year fourth quarter. In the Children's
Medical Ventures business unit, revenues increased by 21 percent
from $14.0 million to nearly $17.0 million. Net income for the
current quarter was $36.6 million, or $0.50 per diluted share,
including stock compensation expenses totaling $3.2 million on a
pre- tax basis, or $0.02 per diluted share after tax. This
represents 25 percent earnings per share growth compared to the
$0.40 per diluted share reported in the prior year fourth quarter.
The prior year fourth quarter included $3.0 million of stock
compensation expenses on a pre-tax basis, or $0.03 per diluted
share after tax. Excluding the impact of stock compensation expense
in the current year fourth quarter, net income was $38.8 million,
or $0.52 per diluted share. This represents a 22 percent increase
over the $0.43 per diluted share reported a year ago, excluding
stock compensation expenses. During the current year fourth
quarter, the Company reported a lower effective income tax rate of
23 percent resulting primarily from tax planning efforts to capture
incremental research and development credits from prior years, as
well as from fiscal year 2007. These tax planning efforts generated
approximately $5.7 million of reduced income taxes during the
fourth quarter (which represents approximately $8.9 million on a
pre-tax basis). With these tax credits, the Company covered
approximately $1.3 million of related professional tax service
fees, and also used the current year portion of these credits,
approximately $2.7 million, to increase the fourth quarter funding
of its profit-sharing program. Additionally, the Company made a
$4.0 million contribution to the Respironics Sleep and Respiratory
Research Foundation (the "Foundation"). The Foundation was
established to increase education and awareness and advance basic
research in the fields of sleep and respiratory medicine. The
current quarter contribution is specifically earmarked for a
multi-year trial of patients with obstructive sleep apnea who are
also at increased cardiovascular risk. The trial, which will be
conducted in India, China, and Australia, will look at different
cardiovascular end-points for these patients and specifically will
have the objective of evaluating the effect of CPAP therapy on
cardiovascular outcomes for individuals suffering from obstructive
sleep apnea. During the current year fourth quarter, the Company
also incurred $0.9 million of restructuring and acquisition-related
expenses, primarily associated with the restructuring of operations
at certain manufacturing facilities and the integration of acquired
companies. These various expenses, as well as the income tax
credit, are included in both the Company's GAAP-basis $0.50 per
diluted share and the non-GAAP $0.52 per diluted share excluding
stock compensation expenses reported above. The Company's increase
in earnings per share in the current year is primarily the result
of sales growth and operating margin increases versus the prior
year as well as lower income tax expense. With the financial
information included in this press release, the Company provides a
tabular reconciliation of GAAP net income with net income excluding
the impact of stock compensation expenses. Fiscal Year Ended June
30, 2007 For the year ended June 30, 2007, net sales increased to
$1,195 million, a 14 percent increase compared to $1,046 million
from the 2006 fiscal year. Net income for the fiscal year ended
June 30, 2007 was $122.2 million, or $1.66 per diluted share,
including stock compensation expenses totaling $12.5 million on a
pre-tax basis, or approximately $0.10 per diluted share after tax.
Excluding the impact of stock compensation expenses in the current
year, net income was $130.7 million, or $1.76 per diluted share.
This represents a 22 percent increase over the $1.36 per diluted
share reported a year ago, excluding the impact of stock
compensation expenses. COMMENTS FROM MANAGEMENT Quarterly Results
John Miclot, President and Chief Executive Officer, commented on
the Company's results, "We are very pleased to be reporting these
strong fourth quarter results as we close our fiscal year 2007 and
look forward to an exciting fiscal year 2008. In the fourth
quarter, we generated 18 percent growth in revenues and 22 percent
earnings per share growth. These results were driven by very
balanced performance across our various business units and key
geographic regions. Our results were highlighted not only by an
outstanding performance from our M Series family of sleep therapy
devices and our new OptiLife(TM) mask, but also by strong revenue
growth globally in Home Respiratory Care as well as across the
various business units within our hospital group, including
hospital ventilation, Respiratory Drug Delivery and Children's
Medical Ventures." Mr. Miclot continued, "Our global performance in
sleep therapy was driven by 17 percent domestic and 33 percent
international growth for a worldwide increase of 21 percent,
outpacing market growth. We are very pleased with the early success
of several new technologies, including the BiPAP(R) autoSV(TM) unit
that is focused on the treatment of complex apnea patients and the
A- Flex(TM) breathing mode that is integrated into our REMstar(R)
Auto CPAP device. Recent product introductions in our Home
Respiratory Care business unit also led to exceptional 19 percent
growth domestically and international growth of 25 percent in this
marketplace. The early success of our EverFlo(TM) Stationary Oxygen
Concentrator and EverGo(TM) Portable Oxygen Concentrator are very
gratifying, each demonstrating the value of recent investments we
have made in oxygen therapy through acquisitions and internal
research and development. In hospital ventilation, noninvasive
ventilation, which continues to be an exciting growth market for
the Company, drove our 14 percent growth in this portion of our
business." he added. "The Company continues to support basic
research in sleep and respiratory medicine through a $4.0 million
contribution to the Respironics Sleep and Respiratory Research
Foundation. These funds will be used for research that will further
advance the medical community's understanding of the potential
effects of untreated obstructive sleep apnea on cardiovascular
risk. Additionally, the Company invested $18.5 million during the
quarter on direct research and development activities, as well as
approximately $29.0 million in business acquisitions as we continue
to execute on our strategy in the sleep and respiratory
marketplaces. We are pleased to be expanding our presence in the
sleep and respiratory markets through both the introduction of
internally developed products, as well as through acquisitions such
as our previously announced acquisition of the J.H. Emerson
Company. We are proud of our growing portfolio of technologically
advanced products and solutions that we are able to offer to our
customers on a global basis," Mr. Miclot noted. Mr. Miclot
concluded, "Fiscal year 2007 has been another successful year for
Respironics, and I would like to once again thank all of our
associates for the contributions they make worldwide to help us
deliver life-changing therapies to patients with sleep and
respiratory disorders. The exceptional performance of our
associates has enabled us to once again deliver strong financial
results in fiscal year 2007. As we begin fiscal year 2008, I again
look to their contributions to drive our Company to achieve our
vision to be the worldwide leader in delivering valued solutions to
the global sleep and respiratory markets." Financial Position The
Company continues to maintain a strong balance sheet position, with
$307.2 million of cash and short-term investments as of June 30,
2007, representing a decrease of $11.5 million compared to March
31, 2007. During the fourth quarter, the Company made approximately
$29.0 million of strategic investments and acquisition-related
payments. As previously reported, the Company invested
approximately $23.0 million of cash to acquire the operating assets
of the J.H. Emerson Company (Emerson). The Emerson acquisition
further expands the Company's portfolio of home respiratory care
products with the Cough Assist(R) device and enables Respironics to
better serve the needs of respiratory-impaired patients. In
addition to Emerson, the Company acquired a majority interest in an
international distributor in April that provides Respironics with a
direct distribution channel in Denmark, and it purchased the
remaining ownership interests of a previous joint venture in
Switzerland. During the quarter, the Company's accounts receivable
days sales outstanding remained at 60 days, consistent with the
level achieved as of March 31, 2007. The Company's long-term debt
balance was $26.4 million as of June 30, 2007, down slightly
compared to $26.9 million as of March 31, 2007. Respironics' strong
balance sheet positions the Company to execute its strategy, which
calls for optimizing the Company's core growth drivers while
investing in new areas of the sleep and respiratory markets.
Outlook For fiscal year 2008, the Company is comfortable with
earnings per share estimates, including stock compensation
expenses, of approximately $1.90 to $1.98. These earnings per share
amounts include expected stock compensation expense of
approximately $14.5 million to $15.5 million on a pre-tax basis, or
approximately $0.11 to $0.12 per share after tax. Revenue
expectations for the year are approximately $1,345 million to
$1,375 million. Respironics is a leading developer, manufacturer
and distributor of innovative products and programs that serve the
global sleep and respiratory markets. Focusing on emerging market
needs, the Company is committed to providing valued solutions to
help improve outcomes for patients, clinicians and health care
providers. Respironics markets its products in 131 countries and
employs more than 4,900 associates worldwide. Further information
can be found on the Company's Web site:
http://www.respironics.com/. The Company will host a conference
call at 5:00 p.m. Eastern Time today to discuss these quarterly
results, market trends and future outlook. The conference call will
be broadcast live over the Internet and can be accessed by all
interested parties from the Company's web site at
http://www.respironics.com/ or at http://www.companyboardroom.com/.
Please allow extra time prior to the call to visit the site and
download the streaming media software required to listen to the
Internet broadcast. A replay of the web cast will be available
following the call. FORWARD-LOOKING STATEMENT This document
contains forward-looking statements, including statements relating
to, among other things, developments in the healthcare industry;
the success of the Company's marketing, sales, and promotion
programs; future sales, acceptance, and quality of the Company's
products and programs; the results of clinical trials; the timing
and success of new product introductions; new product development;
anticipated cost savings; FDA and other regulatory requirements,
enforcement actions, product recalls or related field actions;
future results from acquisitions and strategic investments; growth
rates in foreign markets; regulations and other factors affecting
operations and sales outside the United States; foreign currency
fluctuations; the effects of a major natural disaster, cyber-attack
or other catastrophic event that results in the destruction or
disruption of any critical business or information technology
systems; customer consolidation and concentration; increasing price
competition and other competitive factors in the manufacture,
distribution, and sale of products; interest rate fluctuations;
expiration of intellectual property rights; intellectual property
and related litigation; other litigation; future levels of earnings
and revenues; the number of equity awards granted to employees and
changes in the Company's stock price; and third party
reimbursement; all of which are subject to change. Actual results
may differ materially from those described in any forward-looking
statements. Additional information on potential factors that could
affect the Company's financial results are included in the reports
filed with the SEC, including the reports on Form 10-K, 10-Q and
8-K. RESPIRONICS, INC. AND SUBSIDIARIES Condensed Statement of
Operations & Reconciliation of Non-GAAP Financial Measures
(Unaudited) (In thousands, except per share amounts) In managing
its business, Respironics makes use of certain non-GAAP financial
measures in evaluating the Company's results of operations from
core operations. The measure, "net income, excluding the impact of
stock compensation expenses," is reconciled with GAAP net income in
the tables below. For the three months and fiscal year ended June
30, 2007: GAAP FAS Non-GAAP GAAP FAS Non-GAAP 3 months 123(R) 3
months Fiscal 123(R) Fiscal Year Ended Impact Ended Year Impact
Ended Fiscal Year 6/30/07 6/30/07 Ended 6/30/07 2007 6/30/07 Sales
$332,357 $332,357 $1,195,035 $1,195,035 Cost of goods sold 154,080
(177) 153,903 555,825 (685) 555,140 Gross profit 178,277 177
178,454 639,210 685 639,895 General & administrative expense
47,224 (2,089) 45,135 164,298 (8,259) 156,039 Sales, marketing,
& commission expense 63,073 (665) 62,408 234,231 (2,649)
231,582 Research & development expense 18,842 (294) 18,548
65,886 (902) 64,984 Contribution to foundation 4,000 4,000 6,500
6,500 Restructuring & acquisition-related expense 905 905 4,769
4,769 Other income (3,319) (3,319) (11,264) (11,264) Net Income
before income tax $47,552 $3,225 $50,777 $174,790 $12,495 $187,285
Income tax 10,986 1,024 12,010 52,505 4,030 56,535 Net Income
$36,566 $2,201 $38,767 $122,285 $8,465 $130,750 Basic earnings per
share 0.50 0.53 1.67 1.79 Basic shares outstanding 73,102 73,102
73,095 73,095 Diluted earnings per share 0.50 0.52 1.66 1.76
Diluted shares outstanding 73,358 1,167 74,525 73,804 636 74,440
For the three months and fiscal year ended June 30, 2006: GAAP
Non-GAAP GAAP Non-GAAP Fiscal Fiscal 3 months FAS 3 months Year FAS
Year Fiscal Year Ended 123(R) Ended Ended 123 (R) Ended 2006
6/30/06 Impact 6/30/06 6/30/06 Impact 6/30/06 Sales $280,706
$280,706 $1,046,141 $1,046,141 Cost of goods sold 129,953 (169)
129,784 473,264 (810) 472,454 Gross profit 150,753 169 150,922
572,877 810 573,687 General & adminis- trative expense 32,480
(1,952) 30,528 152,420 (7,615) 144,805 Sales, marketing, &
commission expense 54,515 (676) 53,839 206,432 (2,797) 203,635
Research & development expense 17,827 (187) 17,640 58,966 (733)
58,233 Contribution to foundation 0 0 1,500 1,500 Restructuring
& acquisition- related expense 2,233 2,233 3,953 3,953 Other
income (2,410) (2,410) (9,617) (9,617) Net Income before income tax
$46,108 $2,984 $49,092 $159,223 $11,955 $171,178 Income tax 16,706
876 17,582 59,329 3,425 62,754 Net Income $29,402 $2,108 $31,510
$99,894 $8,530 $108,424 Basic earnings per share 0.40 0.43 1.38
1.50 Basic shares outstanding 72,673 72,673 72,311 72,311 Diluted
earnings per share 0.40 0.43 1.36 1.47 Diluted shares outstanding
73,671 294 73,965 73,570 300 73,870 This press release includes
diluted earnings per share, excluding the impact of stock
compensation expenses, which is a non-GAAP financial measure as
defined by the Securities and Exchange Commission. The presentation
of diluted earnings per share, excluding the impact of stock
compensation expenses, is not in accordance with, or a substitute
for, GAAP, and may be different from, or inconsistent with,
non-GAAP financial measures used by other companies. Management
believes that the presentation of diluted earnings per share,
excluding the impact of stock compensation expenses, facilitates a
fuller analysis of the Company's results of operations,
particularly in evaluating performance period-over-period.
Additionally, management uses diluted earnings per share, excluding
the impact of stock compensation expenses, internally in financial
planning, to monitor Company performance, and in evaluating
management performance. Product Sales Summary (Unaudited) (Dollars
in thousands) Three months ended Fiscal Year ended 6/30/07 6/30/06
6/30/07 6/30/06 Domestic Sleep and Home Respiratory Group $171,809
$148,754 $599,432 $535,654 Domestic Hospital Group 52,990 48,149
207,059 189,127 International Group 107,558 83,803 388,544 321,360
Total $332,357 $280,706 $1,195,035 $1,046,141 Condensed Balance
Sheet (Unaudited) (Dollars in thousands) At At 6/30/07 6/30/06 Cash
and cash equivalents $231,830 $259,513 Short-term investments
75,354 5,838 Trade accounts receivable 220,398 187,502 Inventories
172,671 124,149 Other current assets 76,025 65,090 Total current
assets 776,278 642,092 Property, plant and equipment (net) 155,953
137,943 Other assets, including goodwill 294,589 237,343 Total
assets $1,226,820 $1,017,378 Current liabilities $239,152 $211,042
Long-term obligations 26,411 26,756 Other non-current liabilities
27,695 15,132 Shareholders' equity 933,562 764,448 Total
liabilities and shareholders' equity $1,226,820 $1,017,378
DATASOURCE: Respironics, Inc. CONTACT: Dan Bevevino, Vice President
& CFO, Respironics, Inc., +1-724- 387-5235; Joe Calabrese,
General Contact, +1-212-827-3772 Julie Tu, Analyst Information,
+1-212-827-3776, both of Financial Relations Board for Respironics,
Inc. Web site: http://www.respironics.com/
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