SonoSite, Inc. (Nasdaq:SONO), the world leader and specialist in
hand-carried ultrasound for the point-of-care, today reported
record financial results for the first quarter ended March 31,
2008. Worldwide revenue in the first quarter of 2008 grew 23% to
$52.5 million compared with the first quarter of 2007. Changes in
foreign currency rates increased worldwide revenue by approximately
4%. Compared to the first quarter of 2007, international revenue
grew 32% and US revenue grew 12%. In the US, hospital revenue grew
16% and office revenue grew 33%. The overall US growth rate was
offset by an expected decline in US enterprise revenue of 17%. For
the first quarter of 2008, SonoSite reported net income of $1.2
million, or $0.07 per diluted share, compared with a net loss of
$563,000 or $0.03 per share for the first quarter in 2007. Net
income in the quarter included a one-time, pre-tax charge of
$675,000 for integration of the former MarketBridge physician
office channel and the elimination of overhead within the company�s
marketing, general and administrative structure. Cash flow from
operations was $7.3 million in the quarter. �The year is off to an
excellent start and we are on track to achieve our growth and
profitability objectives for 2008,� said Kevin M. Goodwin, SonoSite
President and CEO. �We saw good momentum across our major markets
driven by strong reception to our new products which accounted for
over 40% of the quarter�s revenue.� �The international group
continued their blistering pace and marked the sixth consecutive
quarter of growth exceeding 20%,� Mr. Goodwin said. �In the US, we
saw good performance in the hospital and office sectors immediately
after integrating these channels inside the company during the
first quarter. We are looking forward to a year of continued
progress in the US.� In the first quarter, gross margin grew to 72%
compared with 70% in the first quarter of 2007 and reflected the
positive impact of the company�s new fourth generation products,
the M-Turbo� and S Series� products introduced in October 2007, as
well as the favorable impact of foreign currency rates. Operating
expenses grew 10% to $35.4 million (including the previously
mentioned one-time charge) compared with the same period in 2007.
Changes in foreign currency rates and the one-time charge increased
operating expenses by 4%. As of March 31, 2008, cash, cash
equivalents and investments were $315.9 million. Company Outlook
SonoSite management updated its 2008 financial objectives.
Management�s "base plan" is to achieve revenue growth of at least
15%, gross margins of approximately 70% and operating margins of 9
- 10%. Due to lower market interest rates, the company expects
interest income to be offset by interest expense in 2008. The
company expects to have a tax rate of approximately 39% for the
year, virtually all of which is a non-cash item. Income taxes are
largely a non-cash expense due to unused net operating loss
carryforwards. The company reiterated its target to achieve a 15%
operating margin in 2009. Conference Call Information SonoSite will
hold a conference call today at 1:30 pm PT/4:30 pm ET. The call
will be broadcast live and can be accessed via the �Investors�
Section of SonoSite�s website at www.sonosite.com. A replay of the
audio webcast will be available beginning April 28, 2008, at 4:30
pm (PT) until May 23, 2008, at 12:00 midnight (PT) by dialing
719-457-0820 or toll-free 888-203-1112. The confirmation code
8481608 is required to access the replay. The call will also be
archived on SonoSite�s website at http://ir.sonosite.com. About
SonoSite 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. The company
employs over 600 people worldwide. Forward-looking Information and
the Private Litigation Reform Act of 1995 Certain statements in
this press release relating to the market acceptance of our
products, possible future sales relating to expected orders, and
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 and are subject to known and unknown risks and
uncertainties and are based on potentially inaccurate assumptions.
Factors that could affect the rate and extent of market acceptance
of our products, the receipt of expected orders, and our financial
performance include our ability to successfully manufacture, market
and sell our ultrasound systems, our ability to accurately forecast
customer demand for our products, our ability to manufacture and
ship our systems in a timely manner to meet customer demand,
variability in quarterly results caused by the timing of large
project orders from governmental or international entities and the
seasonality of hospital purchasing patterns, timely receipts of
regulatory approvals to market and sell our products, regulatory
and reimbursement changes in various national health care markets,
constraints in government and public health spending, the ability
of our distribution partners and other sales channels to market and
sell our products, the impact of patent litigation, our ability to
execute our acquisition strategy, the effect of transactions and
activities associated with our issuance of senior convertible debt
in July 2007 on the market price of our common stock, and as well
as other factors contained in the 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. � SonoSite,
Inc. Selected Financial Information � � Consolidated Statements of
Operations (in thousands except per share data) (unaudited) Three
Months Ended March 31, � 2008 � � 2007 � � Revenue $ 52,499 $
42,795 Cost of revenue � 14,659 � � 12,875 � Gross margin 37,840
29,920 Gross margin percentage 72.1 % 69.9 % � Operating expenses:
Research and development 6,197 6,143 Sales, general and
administrative � 29,249 � � 26,025 � Total operating expenses
35,446 32,168 � Operating income (loss) 2,394 (2,248 ) � Other
income (loss), net � (151 ) � 1,302 � � Income (loss) before income
taxes 2,243 (946 ) � Income tax provision (benefit) � 998 � � (383
) � Net income (loss) $ 1,245 � $ (563 ) � � Net income (loss) per
share: Basic $ 0.07 � $ (0.03 ) Diluted $ 0.07 � $ (0.03 ) � �
Weighted average common and potential common shares outstanding:
Basic � 16,770 � � 16,494 � Diluted � 17,406 � � 16,494 � � � � �
Condensed Consolidated Balance Sheets (in thousands) (unaudited)
March 31, December 31, � 2008 � � 2007 � � Cash and cash
equivalents $ 171,857 $ 188,701 Short-term investment securities
141,358 119,873 Accounts receivable, net 53,071 60,954 Inventories
33,090 29,740 Deferred income taxes, current 12,944 13,138 Prepaid
expenses and other current assets � 3,434 � � 7,759 � Total current
assets 415,754 420,165 � Property and equipment, net 9,517 10,133
Investment securities 2,715 1,257 Deferred income taxes 12,444
12,959 Intangible assets, net 16,349 16,346 Other assets � 10,248 �
� 9,521 � Total assets $ 467,027 � $ 470,381 � � Accounts payable $
5,863 $ 8,868 Accrued expenses 19,212 24,431 Deferred revenue,
current portion 3,361 3,502 Deferred tax liability , current � 115
� � 115 � Total current liabilities 28,551 36,916 � Long-term debt
225,000 225,000 Deferred tax liability 4,528 4,528 Other
liabilities, net of current portion � 11,706 � � � 11,075 � Total
liabilities 269,785 277,519 � Shareholders' equity: Common stock
and additional paid-in capital 239,023 236,325 Accumulated deficit
(43,648 ) (44,893 ) Accumulated other comprehensive income � 1,867
� � 1,430 � Total shareholders' equity � 197,242 � � 192,862 �
Total liabilities and shareholders' equity $ 467,027 � $ 470,381 �
� � � � Condensed Consolidated Statements of Cash Flow (in
thousands) (unaudited) Three Months Ended March 31, � 2008 � � 2007
� Operating activities: Net income (loss) $ 1,245 $ (563 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 1,064 1,103 Stock-based
compensation 1,879 1,920 Deferred taxes and other 1,004 (1,321 )
Changes in working capital � 2,142 � � 9,560 � Net cash provided by
operating activities 7,334 10,699 � Investing activities:
Investment securities, net (22,321 ) 777 Purchases of property and
equipment (355 ) (1,050 ) Earn-out consideration associated with
SonoMetric acquisition � (921 ) � (654 ) Net cash used in investing
activities (23,597 ) (927 ) � Financing activities: Exercise of
stock options � 685 � � 1,564 � Net cash provided by financing
activities 685 1,564 � Effect of exchange rate changes on cash and
cash equivalents � (1,266 ) � (222 ) � Net change in cash and cash
equivalents (16,844 ) 11,114 Cash and cash equivalents at beginning
of period � 188,701 � � 45,673 � Cash and cash equivalents at end
of period $ 171,857 � $ 56,787 �
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