Toronto, Ontario, October 30, 2012 - Prism Medical Ltd.,
("Prism Medical" or "the Company")
(TSXV: PM), a leading provider of durable medical equipment
and related services to the mobility challenged, today
reported financial results for the third quarter (Q3) ended
August 31, 2012.
Financial Summary
(in thousands of Canadian dollars) |
Three months ended August 31 |
Nine months ended August 31 | ||||
2012 | 2011 |
% Change | 2012 | 2011 |
% Change | |
Revenues | $17,188 | $18,450 | (6.8%) | $57,757 | $53,407 | 8.1% |
Gross profit | $6,690 | $7,001 | (4.4%) | $22,758 | $21,627 | 5.2% |
(as % of revenues) | 38.9% | 37.9% | 39.4% | 40.5% | ||
Net income | $71 | $443 | (84.0%) | $2,417 | $2,420 | 0% |
(as % of revenues) | 0% | 2.4% | 4.2% | 4.5% | ||
EBITDA1 | $1,003 | $1,730 | (42.0%) | $5,843 | $6,640 | (12.0%) |
(as % of revenues) | 5.8% | 9.3% | 10% | 12.4% | ||
Earnings per share | ||||||
Basic | $0.01 | $0.07 | (85.7%) | $0.29 | $0.40 | (27.5%) |
Diluted | $0.01 | $0.07 | (85.7%) | $0.29 | $0.35 | (17.1%) |
Third Quarter Highlights
- The UK and Canadian business have performed well as strategic initiatives continue to be successfully implemented, however budgetary constraints and economic uncertainty in the US impacted the Company's Q3 results. The US market is underdeveloped and dependent on capital project implementations which are more sensitive to budgetary contractions.
- Subsequent to the quarter the Company's lender increased the Credit Facility relating to the demand revolving loan from $15.0 million to $17.5 million and the demand revolving loan to finance acquisitions from $7.5 million to $27.5 million.
"Our financials for this quarter were not as strong as
we anticipated, primarily due to the economic uncertainty
in the U.S.," said Stuart Meldrum, Chief Executive
Officer of Prism Medical. "The performance of the US
economy has resulted in reduced capital spending by our
customers. However, the U.S. market is relatively
underpenetrated and we continue to believe in the positive
long term trends that underpin our optimism of the growth
potential of this market. We have also been successfully
implementing our strategic initiatives in the UK and
Canada, and we have been performing well in these markets.
We continue to see strength in service revenues from the UK
and strong institutional demand for our products in
Canada."
Financial Review
Revenues
Total revenues for Q3 2012 decreased by 6.8% to $17.2
million compared to $18.4 million in Q3 2011.
The United States represented 25.0% of the Company's
revenues in Q3 2012 compared to 27.0% in Q3 2011. Revenues
in the U.S. declined by 12.2% in Q3 2012 compared with the
same period in the prior year. The decline was primarily
due to the economic uncertainty in the U.S., resulting in
delay or cancellation of capital spending projects.
However, economic uncertainty does not affect the positive
long term trends that underpin the Company's optimism
of the growth potential of this market.
Canadian sales composed 17.0% of the Company's revenues
in Q3 2012 unchanged from Q3 2011. Revenues in Canada
decreased by 9.1% in Q3 2012 compared with the same period
in the prior year. Canada had a particularly strong first
half resulting in a small market correction in the
quarter.
The United Kingdom comprised 58.0% of the Company's
revenues in Q3 2012 compared to 56.0% in Q3 2011. Revenues
in the UK decreased by 3.6% in Q3 2012 compared with the
same period in the prior year however on a year to date
basis revenues are ahead of last year and have remained
strong.
Gross Profit
Gross profit dollars for the three month period ended
August 31, 2012 decreased by 4.4%, to $6.7 million compared
with the prior year. Gross profit rate for the three month
period ended August 31, 2012 increased slightly to 38.9%
from 37.9% in Q3 2011. The increase in gross profit rate
was primarily due to continuing improvements in engineering
efficiencies in the UK.
Selling, General and Administrative
Selling and marketing expenses for the three months ended
August 31, 2012 increased by 17.1% to $1.9 million,
compared to the same period in the prior year. General and
administrative expenses increased by 9.1% to $4.6 million
in the three month period ended August 31, 2012, compared
with the corresponding period in the prior year. The
increase in SG&A was primarily due to increased costs in
the US to support an anticipated revenue growth and
expansion.
EBITDA1
EBITDA for the three month period ended August 31, 2012
decreased by 42.0% to $1,003, or 5.8% of sales, compared to
$1,730, or 9.3% of sales in Q3 2011. EBITDA for the nine
month period ended August 31, 2012 decreased by 12% to
$5,843 or 10.1% of sales compared to $6,640 or 12.4% of
sales in the comparative period last year.
Net Income
Net income for the three months ended August 31, 2012
decreased by $372 or 84% and was virtually unchanged for
the nine months ended August 31, 2012 compared to the same
period last year. The decrease in the third quarter was
driven by lower operating profit offset by lower interest
expense and higher tax recoveries recorded in the U.S..
Basic earnings per share and current quarter fully diluted
earnings per share dropped due to the lower net income. On
a year-to-date basis, fully diluted earnings per share
dropped from $0.35 to $0.29 despite net income remaining
relatively unchanged. This was due to the impact of the
conversion of the convertible debentures on the calculation
of the prior year fully diluted earnings per share.
Liquidity
At August 31, 2012, total debt net of cash was $12.4
million, compared with $12.6 million at November 30,
2011.
Dividends paid to date
In this fiscal year, the Company has paid $0.32 per share
in dividends or $0.08 per share per quarter. This being the
anticipated dividend level for the Company during this
fiscal year, no further dividend payments will be made for
the balance of the year.
Outlook
Prism intends to grow sales, profitability and return on
shareholders' equity. The Company believes that
performance will be positively affected by continued North
American institutional demand for our products, improved
manufacturing efficiencies, greater geographic coverage,
and revenues and profits from new product introductions.
With the additional distribution, both through independent
dealers and Companyowned platforms, Prism hopes to achieve
gradual growth in UK and North American profitability even
with the ongoing restricted credit environment.
The demand for our core products and services, in
management's estimation, continues to experience growth
at different rates in the geographic markets in which we
participate. Government funding for our products,
particularly in Canada and the UK is a key driver of sales.
Although government policies related to healthcare in the
markets we operate continue to change, we believe that the
long term trend continues to be favourable.
We estimate that for Prism, the U.S. market holds the
greatest long-term potential to provide above-average
revenue growth. Institutional penetration for safe patient
moving and handling equipment is well below what may be
witnessed in mature markets such as the UK and the homecare
market is similarly underdeveloped. While budget
constraints and the cyclicality of the institutional order
pipeline can cause variability in U.S. revenue, our efforts
to build a larger footprint in this market have already
translated into strong revenue growth. Prism is actively
growing its sales footprint in the U.S. and designing
affordable products for the private-pay homecare
market.
Notice of Conference Call
Prism Medical will host a conference call on November 1,
2012 at 9:00 a.m. EST to discuss its financial results.
Stuart Meldrum, CEO, will Chair and George Chiarucci, CFO,
will co-chair the call. All interested parties can join the
call by referring to the information below:
CONFERENCE CALL DETAILS:
DATE: | Thursday, November 1, 2012 |
TIME: | 9:00 a.m. Eastern Time |
DIAL-IN NUMBER: | (647) 427-7450 or (888) 231-8191 |
TAPED REPLAY: | (416) 849-0833 or (855) 859-2056 |
REFERENCE NUMBER: | 58440717 |
Please dial in 15 minutes prior to the call to secure a
line. A live audio webcast of the conference call will also
be available at www.prismmedicalltd.com. Please connect at
least 15 minutes prior to the conference call to ensure
adequate time for any software download that may be
required to join the webcast.
About Prism Medical Ltd.
Prism Medical Ltd. is one of the largest providers and
manufacturers of durable medical equipment and related
services to the mobility challenged in Canada, the US and
the UK, with more than 100,000 installations and 200,000
product solutions sold. The Prism Medical brands include
Waverley Glen and ErgoSafe, North America's leading
supplier of lifting, handling and repositioning aid
products and services across Canada and the US Freeway and
Prism Service & Repair are leading suppliers of moving and
handling products and services in the UK. For further
information visit Prism Medical's website at www.prismmedicalltd.com
or www.sedar.com.
1Non-IFRS Financial Measures
Prism Medical's consolidated financial statements have
been prepared in accordance with International Financial
Reporting Standards (IFRS). The Company also uses non-IFRS
measures such as EBITDA to measure its financial
performance. EBITDA consists of earnings before interest,
income taxes, depreciation, amortization and stock-based
compensation expense. EBITDA is a financial metric used by
many investors to compare companies on the basis of
operating results, asset value and the ability to incur and
service debt. Management believes that EBITDA is a useful
measure for evaluating the performance of the Company.
EBITDA is not a recognized measure under IFRS and does not
have a standardized meaning prescribed by IFRS and may not
be comparable to similarly titled financial metrics
reported by other companies.
Forward-Looking Information
This document contains forward-looking statements relating
to our operations and to the environment in which we
operate and our strategy, action plans and investments,
which may involve estimates, forecasts and projections.
These statements are not guarantees of future performance
and involve risks and uncertainties that are difficult to
predict and/or are beyond our control. A number of
important factors could cause actual outcomes and results
to differ materially from those expressed in these
forward-looking statements. These factors include those set
forth in this report and our other public filings.
Consequently, readers should not place any undue reliance
on such forward-looking statements. These forward-looking
statements are made as of the date of this report. Prism
Medical is under no obligation to update any
forward-looking statements contained herein should material
facts change due to new information, future events or other
factors. All forward-looking statements attributable to
Prism Medical are expressly qualified by these cautionary
statements.
The TSX Venture Exchange does not accept responsibility
for the adequacy or accuracy of this release.
For further information, please contact:
George Chiarucci Chief Financial Officer gchiarucci@prismmedicalltd.com 416-260-2145 ext. 229 |
Babak Pedram TMX Equicom bpedram@tmxequicom.com 416-815-0700 ext. 264 |
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