Mr. Andy McIntyre reports
PRISM MEDICAL REPORTS SECOND QUARTER RESULTS
Prism Medical Ltd. has released financial results for the second quarter ended May 31, 2014.
FINANCIAL HIGHLIGHTS
(expressed in thousands of Canadian dollars
except for earnings per share and where otherwise noted)
Three months Six months
ended May 31, ended May 31,
2014 2013 2014 2013
Revenues $10,376 $10,518 $20,266 $18,623
Gross margin 4,268 4,665 8,534 8,021
(as % of revenues) 41.1% 44.4% 42.1% 43.1%
Restructuring charges 1,218 -- 1,218 --
Net income from continuing
operations 22,571 513 22,613 23
(as % of revenues) NM 4.9% NM 0.1%
Net income (loss) from discontinued
operations (1,182) 861 (556) 1,410
Net income 21,389 1,374 22,057 1,433
Adjusted EBITDA
Continuing operations 25,857 1,283 26,603 1,442
(as % of revenues) NM 12.2% NM 7.7%
Basic earnings per share
From continuing operations 2.64 0.06 2.67 0.00
From discontinued operations (0.14) 0.10 (0.07) 0.17
From net income (loss) 2.51 0.16 2.61 0.17
Diluted earnings per share
From continuing operations 2.59 0.06 2.64 0.00
From discontinued operations (0.14) 0.10 (0.06) 0.17
From net income (loss) 2.46 0.16 2.58 0.17
Second quarter highlights:
- Sale of United Kingdom business for net proceeds of $53.8-million resulted in a net
gain of $24.0-million included in net income of $21.4-million for the
second quarter compared with net income of $1.4-million in the same
quarter last year.
- Revenue from continuing operations was $10.4-million in the second
quarter and $20.3-million for the six months ended May 31, 2014, compared
with $10.5-million and $18.6-million, respectively, last year. Revenues for
the quarter were somewhat less than expected as a result of delayed
spending in the U.S. acute care market segment and delayed order
fulfilment as a result of the U.S. plant relocation.
- During the quarter, the U.S. operations moved to a new location with
greatly expanded capacity, which will allow for more efficient receiving,
shipping and production layout at an occupancy cost that is marginally
higher than the previous location.
- In the quarter, the company incurred restructuring and other non-recurring costs
totalling $2.3-million, which will significantly reduce future corporate
overheads.
- For a comprehensive discussion of the quarter, please refer to the
company's management's discussion and analysis and financial statements
for the six-month period ended May 31, 2014. Both these documents can be
found on SEDAR or the company's website.
"We were very pleased to have unlocked a significant shareholder value through the sale of the U.K. operations. Equally important, it will allow management to focus all its attention and resources on the high-growth North American market. It continues to be our intention to return to our shareholders in the near future the majority of the proceeds from the U.K. sale in the form of a substantial issuer bid," said Andy McIntyre, executive chairman and chief executive officer of Prism Medical.
Outlook
The company intends to increase sales and profitability and provide a reasonable return on shareholders' equity with a focus on the North American market. The company believes that performance will be positively affected by a continued North American institutional and home care demand for the company's products, improved manufacturing efficiencies, greater geographic coverage, and revenues and profits from new product introductions. During the past year, the company's North American operations have materially improved. Management believes that there are significant growth opportunities within the expanding North American health care industry both through organic growth and acquisitions that offer the potential to significantly increase shareholder value, while remaining consistent with Prism Medical's key growth strategies of vertical integration, product diversification and the application of relevant knowledge by its service-oriented personnel.
The demand for the company's core products and services, in management's estimation, continues to experience growth at different rates in the geographic markets in which the company participates. Government financing for the company's products in Canada is a key driver of sales. Although government policies related to health care in the markets it operates continue to change, the company believes that the long-term trend continues to be favourable.
Management believes that the U.S. market holds the greatest long-term potential to provide above-average revenue growth both in the institutional and home care markets. While budget constraints and the cyclicality of the institutional order pipeline can cause variability in U.S. revenue, the company's efforts to build a larger footprint in this market have already translated into strong revenue growth.
Dividend policy
While the company has no formal policy on dividend payments and the board of directors determines the suitability of such payments on a quarterly basis, the company views dividend payments as an important part of its investor strategy and expects to continue its historical pattern of four dividend payments per fiscal year.
Dividend declaration
On July 28, 2014, the board of directors approved the payment of eight cents per common share to shareholders of record on Aug. 16, 2014, to be paid on Sept. 5, 2014.
We seek Safe Harbor.
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