IMRIS reports second quarter 2010 results

WINNIPEG, Aug. 5 /CNW/ - IMRIS Inc. (TSX: IM) ("IMRIS" or the "Company") today reported second quarter 2010 financial results highlighted by strong backlog conversion and sales growth, gross profit improvement and continued progress in building the business.

    Q2 2010 Highlights:

    -   Sales increased 70% to $16.8 million over Q2 2009

    -   Gross profit improved by 43% from Q2 2009 to $6.3 million

    -   Installed customer base increased 44% year over year to 23 systems
        across four continents

    -   China's PLA 301 hospital launches international IMRISneuro training

Sales performance continued to be strong in the second quarter of 2010 increasing by 70% to $16.8 million. Year to date June 30, 2010, sales increased by 100% compared with the first half of 2009. Gross profit also increased significantly, increasing by 43% to $6.3 million in second quarter of 2009 and by 82% to $11.4 million during the first six months of 2010. Net loss for the second quarter of 2010 was $1.9 million and $3.8 million year to date, representing improvements of 43% and 45% respectively from the same periods in 2009.

"During the first six months of the year, we doubled our revenues with Q2 2010 up by 70% to $16.8 million, representing continuing strong revenue growth," said David Graves, IMRIS CEO. "We have a very robust backlog at $94 million and we believe the softer order flow in the first half of 2010 will not have a meaningful impact on our business going forward. Given our sales funnel visibility, we expect order bookings to significantly accelerate in the second half of this year."

    Financial Highlights:

    ($ 000's except per    3 months ended June 30     6 months ended June 30
     share amounts      -----------------------------------------------------
    (unaudited)            2010     2009   Change     2010     2009   Change
    Sales                16,751    9,828      70%   29,299   14,632     100%
    Gross profit          6,349    4,429      43%   11,434    6,276      82%
      Gross profit as %
       of sales           37.9%    45.1%    n/m(1)   39.0%    42.9%      n/m
    Operating expenses    8,366    6,765      24%   15,298   12,584      22%
    EBITDA(2)            (1,129)  (1,809)     38%   (2,126)  (5,282)     60%
    Operating loss
     before              (2,017)  (2,336)     14%   (3,864)  (6,308)     39%
      Foreign exchange
       gain (loss)          146     (961)     n/m       13     (624)     n/m
      Interest income         6        1      n/m       10        5      n/m
    Net loss             (1,865)  (3,296)     43%   (3,841)  (6,927)     45%
    Basic & diluted
     loss per share       (0.06)   (0.12)     50%    (0.12)   (0.25)     52%
    Cash, cash
     equivalents &
     receivable(3)       25,428   21,191      20%   25,428   21,191      20%
    Total assets         61,364   41,945      46%   61,364   41,945      46%

    (1) Not meaningful.
    (2) EBITDA is defined as earnings before interest income (expense),
        foreign exchange gain (loss) taxes and amortization. See "Non-GAAP
        Financial Measures" in the Company's Q2 2010 MD&A for a
        reconciliation of EBITDA to GAAP measures.
    (3) Includes restricted cash pledged as security for letters of credit on
        certain system installations.

Second Quarter and Six Month Results


Sales in the second quarter of 2010 were $16.8 million, increasing by 70% from $9.8 million in the second quarter of 2009. During the first six months of 2010 sales were $29.3 million versus $14.6 million in the first half of 2009. The higher performance in 2010 reflects increased installations and higher system pricing. Growth in revenues from service contracts also contributed to higher year to date sales results this year. Revenues from maintenance contracts contributed $0.5 million in the second quarter and $1.0 million year to date compared with $0.4 million and $0.8 million in the second quarter of 2009 and first six months of 2009 respectively.

    Gross Profit

Gross profit increased by 43% to $6.3 million in the second quarter of 2010 and by 82% to $11.4 million in the first six months of 2010. Gross profit as a percentage of sales was 37.9% in the second quarter and 39.0% in the first half of 2009. The results reflect overall continued strong margin performance from IMRISneuro net of the scheduled impact from two lower margined system installations that were substantially completed in the first half of 2010. With completion of these installations, gross margins are expected to be higher in the second half of 2010.

    Operating Expenses

Consistent with the Company's plans to build capacity into the organization to support the ongoing delivery of high levels of customer service and position the business for strong growth, operating expenses increased to $8.4 million in the second quarter of 2010 and to $15.3 million in the first half of 2010. In 2009, operating expenses were $6.8 million and $12.6 million in the second quarter and first six months respectively. The higher year over year expenses represent higher staffing levels in key customer facing areas of the organization as well as increased research and development expenditures to support ongoing strengthening and broadening of the Company's product portfolio.

Amortization was $0.9 million in the quarter compared with $0.5 million in Q2 2009 and $1.7 million in the first half of 2010 versus $1.0 million in H1 2009. Higher amortization costs in 2010 are due to additions to IMRIS's research and development test facilities and higher patent amortization costs primarily associated with IMRIS's MR-compatible surgical robot technology which the Company acquired in February 2010.


EBITDA in the second quarter of 2010 was negative $1.1 million compared with negative $1.8 million in the second quarter of 2009. Year to date June 30, 2010 EBITDA improved to negative $2.1 million compared with negative $5.3 million in H1 2009. The year over year improvements are primarily due to increased sales volumes, net of the higher cash operating expenses described above.

    Operating and Net Loss

Operating loss decreased to $2.0 million from $2.3 in the second quarter of 2009 contributing to an operating loss during the first six months of 2010 of $3.9 million compared with $6.3 million during the same period in 2009. Net loss improved by 43% to $1.9 million in the second quarter of 2010 and by 45% to $3.8 million year to date. The year over year improvements reflect higher gross profit net of higher operating expenses to fund growth. Foreign exchange gains arising from translation of the Company's US dollar cash balances also contributed to the year over year improvements in net loss. The Company realized modest foreign exchange gains in the second quarter and first six months of 2010 versus foreign exchange losses of $1.0 million and $0.6 million in the second quarter and first six months of 2009 respectively.

    Liquidity and Capital Resources

Cash, cash equivalents and restricted cash at June 30, 2010 totaled $21.1 million. In addition the Company had accounts receivable of $4.3 million, the majority of which are expected to be collected within the next 60 days. These funds together with ongoing operating cash flow will be used to fund the Company's working capital and general corporate purposes.


At June 30, 2010 IMRIS's total backlog was $94.0 million comprised of $70.1 million reflecting the unrecognized portion of the revenues anticipated to be recorded from confirmed system orders and $23.9 million comprising the unrecognized portion of the revenues anticipated to be recorded from executed service contracts. In the second quarter of 2010, bookings totalled $6.1 million and included one new IMRISneuro customer order in the US and two order upgrades from existing customers. During the quarter $16.8 million of backlog was converted into revenues, and weakening of the Canadian dollar versus the US dollar resulted in a $0.2 million increase in the value of the backlog.

China's PLA 301 Hospital Launches International Training Centre Featuring IMRISneuro

In June 2010, Beijing's PLA 301 hospital officially launched its international intraoperative MR training centre which has been developed in conjunction with the hospital's IMRISneuro system. The launch of the training centre, was held as part of a two day conference that was attended by more than 200 neurosurgeons from throughout China and featured presentations by neurosurgical opinion leaders from around the world. The event provided an excellent forum to communicate the benefits of the IMRISneuro solution to the Chinese neurosurgical community and included the opportunity for attendees to witness the capabilities of IMRISneuro first hand. Through its ongoing relationship with PLA 301, IMRIS will be hosting site visits by customers from other locations in the Asia Pacific market at the new intraoperative training centre.

2010 Outlook

IMRIS continues to expect a strong year of growth in 2010.

The Company's sales funnel continues to expand with customers increasingly embracing the value proposition IMRIS solutions offer. Order bookings in the first half of 2010 were lower than in prior quarters, owing to the underlying seasonality inherent in the medical device industry, together with uncertainty over the potential impacts of US healthcare reform which caused some delays in purchase decisions by US customers. With stronger seasonal performance in the second half of the year, 2010 order flow is expected to build on the positive trends in 2009.

Conversion of backlog at higher rates than historical trends is expected to result in strong year over year growth in annual revenues and continued strengthening of sequential quarterly revenues throughout the year. Annual gross profit as a percentage of sales is forecast to be in the range of performance levels achieved in 2009. Gross profit as a percentage of sales is expected to strengthen in the second half of the year owing to the completion of the initial IMRISNV and IMRIScardio installations in the first half of the year.

    (4) See "Non-GAAP Financial Measures" in the Company's Q2 2010 MD&A for
        further information on backlog.

Based on the strong growth opportunities available in the marketplace, the Company is continuing to prudently invest through increased operating expenses to build capability and capabilities in its current operations - primarily in the customer facing areas of the business. The Company expects to deliver improved year over year operating results in 2010. In addition, new opportunities are continuously evaluated, and where the potential exists for substantial revenue and gross margin enhancement, the Company will consider investing additional resources in advance of revenue.

The Company's full financial statements as well as management's discussion and analysis will be available at and

Conference Call

Management will host a conference call to discuss the results at 5:00 p.m. ET today, Thursday, August 5, 2010. Following management's presentation, there will be a question-and-answer session for analysts and institutional investors. To participate in the teleconference, please call 416-644-3414 or 800-814-4859. To access the live audio webcast, please visit IMRIS's website at A taped rebroadcast will be available to listeners following the call until midnight (ET) on August 12, 2010. To access the rebroadcast, please call 416-640-1917 or 877-289-8525 and enter passcode 4318262 followed by the number sign. The webcast will also be archived on IMRIS's website.


IMRIS (TSX: IM) is a global leader in providing image guided therapy solutions. These solutions feature fully integrated surgical and interventional suites that incorporate magnetic resonance, fluoroscopy and computed tomography to deliver on demand imaging during procedures. The Company's systems serve the neurosurgical, cardiovascular and neurovascular markets and have been selected by leading medical institutions around the world.

For more information, visit

Forward-Looking Statements

This press release may contain or refer to forward-looking information based on current expectations. In some cases, forward-looking statements can be identified by terminology such as "anticipate", "may", "expect", "believe", "prospective", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. These statements should not be understood as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that actual results will be consistent with such statements. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. These forward-looking statements are made as of the date hereof and we assume no responsibility to update or revise them to reflect new events or circumstances.


For further information: For further information: Kelly McNeill, Executive Vice President Finance and Administration and Chief Financial Officer, IMRIS Inc., Tel: 204-480-7090, Email:; Brad Woods, Director Investor Relations & Corporate Communications, IMRIS Inc., Tel: 204-480-7094, Email:

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