Cti Molecular Imaging (NASDAQ:CTMI)
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CTI Molecular Imaging, Inc. Reports Financial Results for the
Third Quarter of Fiscal 2004
Net Revenues of $92 Million and EPS of $0.06
KNOXVILLE, Tenn., Aug. 5 /PRNewswire-FirstCall/ -- CTI Molecular Imaging, Inc.
(NASDAQ:CTMI), a leading provider of positron emission tomography (PET)
equipment, molecular biomarkers and services, today announced financial results
for its third quarter ended June 30, 2004.
Net revenues for the third quarter were $91.8 million, a 7.5% decline from net
revenues of $99.2 million for the same period last year. Net income was $2.7
million, or $0.06 per share on a fully-diluted basis, compared to $7.5 million,
or $0.16 per share on a fully-diluted basis, in the prior fiscal year's third
quarter.
"As we previously announced, our operational performance in the quarter was a
result of unexpectedly soft demand in the market for PET and PET/CT equipment
and temporary transitional issues relating to the sales force realignment with
Siemens," said Ronald Nutt, Ph.D., President and Chief Executive Officer. "The
realignment is now complete and this step will provide us with a much more
powerful sales and marketing capability going forward. However, we continue to
expect that the market demand for PET and PET/CT tomographs will remain
sluggish through fiscal 2005, particularly in the domestic market."
During the third quarter, on a consolidated basis CTI Molecular Imaging sold 33
scanners and booked orders for an additional 42 units. "We expect this pause
in growth of shipments will continue until the market absorbs the sharp
increase in installed base over the past two years, after which time we expect
the growth rate in scanner shipments will resume. In the meantime, our sales
realignment with Siemens provides us with the ability to manage our cost
structure and focus our combined resources more effectively as we navigate
through the slowdown. Most importantly, the clinical awareness of the
diagnostic benefit of PET and PET/CT continues to drive adoption growth and
this trend provides us great confidence in the future," continued Dr. Nutt.
CTI Solutions experienced strong growth in sales of FDG during the quarter,
which is evidence of continued growth in PET utilization and increasing market
share. For the third quarter, sales of FDG doses increased 53% over the prior
year's quarter and 7% sequentially, partially offset by a 2.5% sequential
decline in average price. "FDG dose sales continue to grow at their recent
historical rate of between 50% and 60% over the past several years.
Additionally, during the third quarter, the price decline for FDG experienced
further moderation, consistent with our expectations for an eventual
stabilization. In fact, the sequential price decline of 2.5% was the lowest
rate since our IPO two years ago. These trends are indicative of positive
utilization trends and a continued growing end-market which will fuel an
eventual rebound in growth of scanner demand," added Dr. Nutt.
Segment Information:
Three Months Ended Nine Months Ended
June 30, June 30,
(in thousands) 2004 2003 2004 2003
(unaudited) (unaudited)
Revenues, gross:
CPS $61,888 $63,523 $187,237 $150,829
Detector Materials 15,015 14,020 42,627 42,290
CTI Solutions 48,075 55,240 133,010 126,622
Total $124,978 $132,783 $362,874 $319,741
Revenue eliminations:
CPS $(17,246) $(19,245) $(44,494) $(34,014)
Detector Materials (14,843) (13,143) (42,220) (39,825)
CTI Solutions (1,104) (1,190) (3,986) (4,174)
Total $(33,193) $(33,578) $(90,700) $(78,013)
Revenues, net:
CPS $44,642 $44,278 $142,743 $116,815
Detector Materials 172 877 407 2,465
CTI Solutions 46,971 54,050 129,024 122,448
Total $91,785 $99,205 $272,174 $241,728
Income (loss) from operations:
CPS $9,517 $12,629 $27,499 $29,269
Detector Materials 6,974 7,671 22,150 17,315
CTI Solutions (3,142) (554) (12,317) (5,423)
Corporate (2,161) (1,376) (6,011) (1,876)
Total $11,188 $18,370 $31,321 $39,285
Orders, Shipments and Backlog:
The company sold 33 scanners and booked orders for 42 units during the third
quarter of fiscal 2004, compared to 49 units sold and 65 orders booked during
the prior year period. Backlog on a consolidated basis at June 30, 2004 was
$169 million. Backlog includes orders for PET and PET/CT scanners, cyclotrons
and service and maintenance contracts, and excludes orders placed for FDG
doses.
Financial Outlook:
"The fourth quarter operational results will be determined by the success we
have at translating prior orders in backlog into sales and minimizing
cancellations as we transition our distribution efforts. With this in mind, we
expect fourth quarter financial performance to be in line with the low end of
our prior guidance. For the fourth quarter, we expect net revenues of $110
million to $115 million and earnings per share of $0.17. These expectations
take into account the various effects of the new agency agreement with Siemens,
as well as the acquisition of Concorde Microsystems," said Dr. Nutt.
Earnings Conference Call Information:
The dial-in number for today's earnings call at 9:00 a.m. EDT is (706)
643-3432. A replay of the call will be available for one week until August 12,
2004. To hear this replay, please dial (800) 642-1687 and enter the
reservation number 8952962. A simultaneous webcast of the call will be
accessible via the internet at http://www.ctimi.com/ under the Investor
Relations section. A replay of the webcast will also be archived on this site.
About CTI Molecular Imaging:
CTI Molecular Imaging, Inc. is a leading supplier of products and services for
positron emission tomography (PET), a diagnostic imaging technology used in the
detection and treatment of cancer, neurological disorders and cardiac disease.
Additional information is available at: http://www.ctimi.com/ .
About PET and PET/CT:
PET images the biology of diseases at the molecular level, often before
anatomic changes are visible or, in some cases, before symptoms appear.
Diseases are biological processes and it is these processes that PET examines.
PET/CT is an imaging technology that combines the biological examination of
patients by PET with the CT images of the body's structural detail. PET/CT
technology improves the diagnostic accuracy and treatment management of
patients by providing surgeons, radiation oncologists and other physicians with
precise anatomical landmarks associated with the disease condition as
determined by PET.
PET's whole-body imaging capability helps physicians improve their ability to
detect and determine the location, extent and stage of cancer, neurological
disorders and cardiac disease. By improving diagnosis, PET scans aid physicians
in selecting better courses of treatment, as well as assessing whether
treatment is effective or should be changed. Recent published clinical trials
have shown that in a wide array of cancers, the use of PET has caused the
treatment to be changed for 15 to 50% of patients, depending on the specific
clinical question. In addition, PET and PET/CT provide both the patient and
their physician with a degree of certainty that is often unavailable through
other imaging methods.
Certain matters discussed in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements, which may be identified by words such
as "believe," "expect," "anticipate," "intend," "on pace," "estimate" or
similar expressions, include statements regarding CTI's financial outlook for
2004, the anticipated financial impact and operational improvements resulting
from the new agency agreement with Siemens, future demand for scanners, future
pricing trends and any other statements that necessarily depend on future
events. Forward-looking statements involve a number of risks and uncertainties
and there can be no assurance that any forward-looking statements will prove to
be accurate. Important factors that could cause actual results to differ
materially from those anticipated in the forward- looking statements include:
competition; uncertainties and potential difficulties regarding the
implementation of the new agency agreement with Siemens; the seasonality of
capital equipment sales; the availability and amount of third-party payor
reimbursement for PET procedures; Siemens' option to purchase a majority
interest in CPS, CTI's subsidiary that develops and manufactures PET scanners;
market adoption of and demand for PET products in general and CTI's products
and services in particular; the timing of orders from distribution partners and
customers; legislative and regulatory developments; the timing of research and
development and marketing expenses; relationships with suppliers and
distributors; pricing; customer demand for financing services; and general
economic conditions, such as interest rates. CTI undertakes no obligation to
update or revise any forward-looking statements. Further information regarding
risks, uncertainties and other factors that could adversely affect CTI or cause
actual results to differ materially from those anticipated in forward-looking
statements are included in CTI's Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 and Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.
CTI Molecular Imaging, Inc
Consolidated Balance Sheets
June 30, September 30,
(in thousands) 2004 2003
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $28,688 $49,978
Accounts receivable -- trade, net 55,607 72,240
Accounts receivable -- related party, net (1) 24,137 42,430
Inventories 110,107 70,852
Deferred tax asset 15,268 17,751
Prepaid expenses and other current assets 5,575 7,691
Total current assets 239,382 260,942
Property and equipment, net 126,771 107,293
Goodwill 46,552 25,040
Other assets 34,942 31,773
Total assets $447,647 $425,048
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $37,188 $46,507
Current maturities of long-term
debt and capital lease obligations 4,333 5,501
Accrued liabilities 23,369 25,854
Customer advances 10,054 6,863
Income taxes payable 710 3,724
Total current liabilities 75,654 88,449
Other long-term liabilities 3,089 2,332
Deferred tax liability 4,796 8,999
Long-term debt and capital lease obligations 13,668 18,688
Total liabilities 97,207 118,468
Minority interest 54,205 46,727
Shareholders' equity 296,235 259,853
Total liabilities and
shareholders' equity $447,647 $425,048
(1) Represent receivables from Siemens Medical Solutions USA, Inc.
CTI Molecular Imaging, Inc.
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
June 30, June 30,
2004 2003 2004 2003
(In thousands, except share
and per share data) (unaudited) (unaudited)
Revenues $91,785 $99,205 $272,174 $241,728
Cost of revenues 54,618 61,156 163,488 143,186
Gross margin 37,167 38,049 108,686 98,542
Operating expenses:
Selling, general and
administrative expenses 17,566 11,776 49,258 36,409
Research and
development expenses 7,701 7,386 26,325 21,450
Stock-based
compensation expense 712 517 1,782 1,398
Total operating expenses 25,979 19,679 77,365 59,257
Income from operations 11,188 18,370 31,321 39,285
Interest expense, net 289 231 1,239 506
Other (income) expense 662 (540) (229) (1,219)
Income before income
taxes and minority interest 10,237 18,679 30,311 39,998
Provision for income taxes 4,296 7,143 11,924 15,229
Income before minority
interest 5,941 11,536 18,387 24,769
Amount applicable to minority
interest, net of taxes 3,198 4,062 9,159 9,391
Net income $2,743 $7,474 $9,228 $15,378
Earnings per share
Basic $0.06 $0.17 $0.21 $0.36
Diluted $0.06 $0.16 $0.20 $0.33
Weighted average shares
Basic 44,714,143 43,977,630 44,541,307 43,000,695
Diluted 46,463,847 46,423,125 46,152,994 46,531,486
DATASOURCE: CTI Molecular Imaging, Inc.
CONTACT: David N. Gill, +1-865-218-2000, or Michael A. Lawless,
+1-865-218-2000, both of CTI Molecular Imaging, Inc.
Web site: http://www.ctimi.com/