Prism Medical Reports Second Quarter Results

TORONTO, July 13, 2012 /CNW/ - 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 second quarter (Q2) ended May 31, 2012.

Financial Summary

(in thousands of Canadian dollars)   Three months ended May 31   Six months ended May 31
                         
    2012   2011   % Change   2012
  2011
  % Change
Revenues   $21,912   $18,811   16.5%   $40,569   $34,964   16.0%
Gross profit   $8,764   $8,054   8.8%   $16,068   $14,629   9.8%
(as % of revenues)   40.0%   42.8%       39.6%   41.8%    
Net income   $1,538   $1,143   34.6%   $2,347   $1,980   18.5%
(as % of revenues)   7.0%   6.1%       5.8%   5.7%    
EBITDA1   $2,843   $2,768   2.7%   $4,815   $4,931   (2.4%)
(as % of revenues)   13.0%   14.7%       11.9%   14.1%    
Earnings per share                        
Basic   $0.18   $0.20   (10.0%)   $0.28   $0.35   (20.0%)
Diluted   $0.18   $0.16   12.5%   $0.28   $0.28   0%
                         

Second Quarter Highlights

  • Canadian revenues grew by 71.1% in Q2 2012 compared to the same period last year, primarily due to strong institutional replacement sales and continued expansion in Quebec
  • Revenues from the UK grew by 12.7% in Q2 2012 compared to Q2 2011, driven by large institutional contracts and organic initiatives
  • Portable gantry unit launched successfully in Canada
  • Continued investment in the US market for future growth
  • Witnessed continued strength in home care product and service demand in all geographies

"Strong Canadian sales and recent bundled contract wins in the UK produced double digit top-line growth this quarter," said Stuart Meldrum, Chief Executive Officer of Prism Medical. "During Q2 we maintained our focus on the US and expect to continue to win new business as we expand our platform in this underpenetrated market. The Canadian launch of our home care gantry was met with good initial orders and we expect interest to grow as we introduce this product in the US in the coming months."

Financial Review

Revenues

Total revenues for Q2 2012 grew by 16.5% to $21.9 million compared to $18.8 million in Q2 2011. North American revenues grew by 20.6% year-over-year and the region accounted for 49.0% of revenues in Q2 2012 compared to 47.0% in the second quarter of 2011.

The United States represented 21.0% of the Company's revenues in Q2 2012 compared to 28.0% in Q2 2011. Revenues in the US declined by 14.5% in Q2 2012 compared with the same period in the prior year. The decline was due to timing delays in several institutional projects. Business development efforts are proceeding on target and we expect to maintain our traction as we grow our presence in this market.

Canadian sales composed 28.0% of the Company's revenues in Q2 2012 compared to 19.0% in Q2 2011. Revenues in Canada grew by 71.1% in Q2 2012 compared with the same period in the prior year. The increase in revenues was due to the continuation of stronger institutional demand for our products as health care institutions replaced end-of-life products, new institutions were built in several provinces and as we continued to penetrate the Quebec market.

The United Kingdom comprised 51.0% of the Company's revenues in Q2 2012 compared to 53.0% in Q2 2011. Revenues in the UK grew by 12.8% in Q2 2012 compared with the same period in the prior year. The growth in revenue was primarily due to strong revenues resulting from the Leonard Cheshire contract and the acquisition of Movement 2.

Gross Profit

Gross profit dollars for the three month period ended May 31, 2012 grew by 8.8%, to $8.8 million compared with the prior year. Gross profit rate for the three month period ended May 31, 2012 decreased slightly to 40.0%, from 42.8% in Q2 2011. One-off large sales orders with slightly lower margins and, inefficiencies in installation in the US contributed to the decrease. In addition, the second quarter of 2011 was favourably impacted by a number of one-time adjustments to margins. In the second quarter, we continued to improve the gross margin rate of our UK engineering teams as management activities continued to deliver integration efficiencies.

Selling, General and Administrative

SG&A expenses increased by $0.8 million in the three month period ended May 31, 2012, compared with the corresponding period in the prior year. The increase in SG&A was due to costs associated with various strategic initiatives, specifically further investment in the US management and sales teams as well as the acquisition of Movement 2.

EBITDA1

EBITDA for the three month period ended May 31, 2012, grew approximately 2.7% to $2,843, or 13.0% of sales, compared to $2,768, or 14.7% of sales in Q2 2011.

Net Income

Net Income for the three month period ended May 31, 2012 grew approximately 34.6% to $1,538, or 6.9% of sales, compared to $1,143, or 6.1% of sales, in Q2 2011. Tax recoveries recorded in the US contributed to a lower effective tax rate compared to the prior period.

Liquidity

At May31, 2012, total debt net of cash was $12.0million, compared with $12.6 million at November30, 2011.

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. Through the addition of additional distribution, both through independent dealers and Company-owned 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 continues to change, we believe that the long term trend continues to be favorable.

We estimate that for Prism, the US 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 US 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 US and designing affordable products for the private-pay homecare market.

Dividend Declaration

The Board of Directors has approved a dividend of $0.08 per common share payable on July31, 2012 to the shareholders of record on July24, 2012.

Notice of Conference Call

Prism Medical will host a conference call on July 13, 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
Dial-In Number:  (647) 427-7450 or (888) 231-8191
Taped Replay: (416) 849-0833 or (855) 859-2056
Reference Number: 98481244
   

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.

PRISM MEDICAL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
(thousands of Canadian dollars)   May 31
2012
$
November 30
2011
$
      (Note 21)
ASSETS      
Current assets      
Cash and cash equivalents   2,320 3,113
Accounts receivable, net   14,985 16,870
Inventories   12,733 11,839
Prepaid expenses   1,651 970
Other receivables   840 1,051
Income taxes recoverable   439 193
Total current assets   32,968 34,036
Deferred charges   1,357 1,057
Property, plant and equipment   3,314 3,795
Goodwill   18,577 18,671
Intangible assets   3,652 3,992
Future income tax assets   260 276
Total Assets   60,128 61,827
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities      
Bank indebtedness   10,319 10,850
Accounts payable and accrued liabilities   7,894 9,110
Current portion of  provisions   60 92
Current portion of deferred revenue   178 179
Income taxes payable   1,344 1,048
Current portion of long-term debt   1,950 2,096
Total current liabilities   21,745 23,375
       
Long-term portion of  provisions   - 64
Long-term portion of deferred revenue   301 301
Long-term debt   2,086 2,768
Future income tax liabilities   1,660 1,671
Total liabilities   25,792 28,179
       
Shareholders' equity   34,336 33,648
Total liabilities and shareholders' equity   60,128 61,827
       

On behalf of the Board:

Director                                                                                                        Director

"Andrew McIntyre"                                                                                          "Howard Taylor"

_________________                                                                                     _________________







PRISM MEDICAL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

    Three months ended May 31   Six months ended May 31
  2012 2011   2012 2011
  $ $   $ $
Revenues 21,912 18,811   40,569 34,964
Cost of products and services sold 13,148 10,757   24,501 20,335
Gross profit 8,764 8,054   16,068 14,629
           
Expenses          
     Selling and marketing 1,902 1,917   3,636 3,442
     General and administrative expenses 4,643 3,817   8,952 7,303
     Interest expense 208 441   394 913
     Foreign exchange (gains) losses 79 112   79 38
  6,832 6,287   13,061 11,696
Income before income taxes 1,932 1,767   3,007 2,933
           
Income tax provision (recovery)          
  Current 372 213   597 360
  Deferred 22 411   63 593
  394 624   660 953
Net income for the period 1,538 1,143   2,347 1,980
           
Earnings per share          
  Basic $0.18 $0.20   $0.28 $0.35
  Diluted $0.18 $0.16   $0.28 $0.28

PRISM MEDICAL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF TOTAL COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

(thousands of Canadian dollars, except per share amounts)   Three months ended May 31   Six months ended May 31
  2012 2011   2012 2011
  $ $   $ $
Net income for the period 1,538 1,143   2,347 1,980
Other comprehensive income          
  Unrealized gain (loss) on translation of foreign subsidiaries 841  855   (11) 57
Total comprehensive income (loss) for the period 2,379 1,998   2,336 2,037
           

PRISM MEDICAL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

(Thousands of Canadian dollars and number
of common shares)
Number
of
Common
Shares
#
Share
Capital
$
Other
Paid In
Capital
$
Contributed
Surplus
$
Retained
Earnings
$
Accumulated
Other
Comprehensive
Income (Loss)
$
Total
Equity
$
Balance as at November 30, 2011 8,334 23,676 - 703 9,232 38 33,649
Net income for the period   - - - 2,347 - 2,347
Other comprehensive income (loss)         - - - - (11) (11)
Total comprehensive income (loss) for the Period   - - - 2,347 (11) 2,336
Issued under stock option plan   227 - (33) - - 194
Stock based compensation 37 -   161 - - 161
Dividends paid on common shares   - - - (2,004) - (2,004)
Balance as at May 31, 2012 8,371 23,903 - 831 9,575 27 34,336
             
               
Balance as at December 1, 2010 5,587 11,917 1,395 546 7,159 - 21,017
Net income for the period - - - - 1,980 - 1,980
Other comprehensive income (loss) - - - -   57 57
Total comprehensive income (loss) for the period - - - - 1,980 57 2,037
Issued under stock option plan 120 433 - 73 - - 506
Redemption of convertible debentures 347 1,300 (14) - - - 1,286
Dividends paid on common shares - - - - (1,292) - (1,292)
Balance as at May 31, 2011 6,054 13,650 1,381 619 7,847 57 23,554
               

PRISM MEDICAL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
    Three months ended   Six months ended
(thousands of Canadian dollars)   May 31
2012
$
May 31
2011
$
  May 31
2012
$
May 31
2011
$
             
Cash flows from operating activities            
Net income for the period   1,538 1,143   2,347 1,980
Cash taxes paid   (50) -   (217) (250)
Interest paid   (172) (170)    (342) (728)
Add (deduct) items not affecting cash            
  Deferred income taxes   (84) 460   15 628
  Depreciation and amortization   651 508   1,267 994
  Stock-based compensation   69 41   161 83
  Interest accretion on convertible debt   - 46   - 92
  Post-retirement benefit obligation   63 -   126 -
  Foreign exchange (gain) loss   29 112   29 39
    2,044 2,140   3,386 2,838
Net change in non-working capital balances related to operations   260 298   (394) (2,384)
Cash provided by operating activities   2,304 2,438   2,992 454
             
Cash flows from investing activities            
  Deferred charges   (238) (98)   (412) (199)
  Intangible assets   (26) (23)   (43) (48)
  Purchase of property, plant and equipment   (129) (308)   (236) (446)
  Purchase of a business   - (400)   - (400)
Cash used in investing activities   (393) (829)   (691) (1,093)
Cash flows from financing activities            
  Increase (decrease) in bank indebtedness   1,019 (976)   (531) 1,468
  Increase in long-term debt   23 625   281 625
  Repayment of long-term debt   (675) (818)   (1,013) (1,541)
  Issuance of share capital   194 433   194 433
  Dividends paid   (1,337) (873)   (2,004) (1,292)
Cash used in financing activities   (776) (1,609)   (3,073) (307)
             
Effect of foreign exchange rate changes on cash   23 -   (21) -
Net increase (decrease) in cash and cash equivalents during the period   1,158 -   (793) (946)
Cash and cash equivalents, beginning of period   1,162 -   3,113 946
Cash and cash equivalents, end of period   2,320 -   2,320 -

 

 

 

 

SOURCE Prism Medical Ltd.

For further information:

George Chiarucci
Chief Financial Officer
gchiarucci@prismmedicalltd.com
416-260-2145 ext. 229

Babak Pedram
TMX Equicom
bpedram@equicomgroup.com
416-815-0700 ext. 264

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Prism Medical Ltd.

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