Sonos (NASDAQ:SONO)
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SonoSite, Inc. (Nasdaq:SONO), the world leader and specialist in
point-of-care, hand-carried ultrasound, today announced financial
results for the fourth quarter and full year ended December 31, 2007.
Worldwide revenue in the fourth quarter of 2007 grew 19% to $64.8
million compared with $54.4 million in the fourth quarter of 2006. For
the full year of 2007, worldwide revenue grew 20% to $205.1 million
compared with $171.1 million for 2006.
SonoSite reported net income of $4.3 million or $0.25 per diluted share
for the fourth quarter of 2007 compared with net income of $5.8 million
or $0.34 per diluted share in the fourth quarter of 2006. The 2007
comparison with 2006 was impacted by SonoSite’s
effective tax rate of 40% in the fourth quarter of 2007 compared with 1%
in the fourth quarter of 2006. Income taxes are largely a non-cash
expense due to unused net operating loss carryforwards.
For the full year of 2007, SonoSite reported net income of $6.9 million
or $0.40 per diluted share compared with net income of $7.2 million or
$0.43 per diluted share in the prior year. The 2007 comparison was
impacted by the company’s tax rate of 38% for
the year compared to 8% for the full year of 2006.
“The fourth quarter capped a year of steadily
improving execution and culminated with the largest new product
introduction in our history,” said Kevin M.
Goodwin, President and CEO. “The early success
of our M-Turbo™ system and S Series™
ultrasound tools added momentum to our fourth quarter growth and
positions us solidly for 2008.”
“Increased expenses for pending patent
litigation inflated G&A expense, which alongside a planned step-up in
R&D investment, affected overall bottom-line progress,”
Mr. Goodwin said. “Importantly, the R&D
investment has positioned SonoSite to open new market opportunities in
2008. We are pleased that even with a $4.0 million increase in legal
expenses, we grew operating income 16% for 2007.”
During the fourth quarter of 2007, US revenue grew 18% to $32.8 million
and accounted for 51% of total revenue. International revenue grew 21%
to $32.0 million.
For the year, US revenue grew approximately 16%, accounting for 51% of
total year revenue. International revenue grew 24% for the year. Changes
in foreign currency rates increased worldwide revenue by approximately
3% in the fourth quarter and 2% for the year.
“We continued to take steps during 2007 to
increase our global presence and opened new subsidiaries in India and
Italy, bringing us to ten international subsidiaries,”
Mr. Goodwin said.
“In the US, we saw strong progress in our
direct hospital channel, which grew revenue approximately 25% in the
quarter,” Mr. Goodwin said. “Although
our physician office channel partner improved performance as we moved
through the year, sales were down in the segment on a year-over-year
basis. At year-end, we decided to bring the office channel in-house and
integrate the office sales representatives with our direct sales team.
We now have 70 sales territories in the US.”
Operating expenses in the fourth quarter increased 19% to $39.6 million
and 18% for the full year to $138.1 million. Changes in foreign currency
rates increased expenses by 2% for both the quarter and the year.
As of December 31, 2007, cash and investments totaled $309.8 million.
Cash and investments increased by $14.2 million for the year, net of the
proceeds of the convertible senior note financing. Days sales
outstanding decreased by four days compared to the prior year due to
improved collections worldwide. Inventories increased by $6.7 million
for the year.
Company Outlook for 2008
The company updated its outlook for the full year 2008. SonoSite
continues to target revenue growth of approximately 15% for the year and
an operating margin of 7-8%, which includes estimated expenses for
pending litigation. R&D expenses are expected to be approximately 12% of
revenue while SG&A expenses are targeted at approximately 49 –
50% of revenue. The company expects other income to approximate $5
million and to have a tax rate of approximately 38% for the year.
Diluted shares outstanding are expected to be in a range of 17.5 –
17.8 million.
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 February 14,
2008, at 4:30 pm (PT) until March 13, 2008, at 10:00 pm (PT) by dialing
(719) 457-0820 or toll-free (888) 203-1112. The confirmation code
9103418 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, as updated by our
most recent quarterly reports filed on Form 10-Q 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
Twelve Months Ended
December 31,
December 31,
2007
2006
2007
2006
Revenue
$
64,835
$
54,353
$
205,068
$
171,083
Cost of revenue
19,687
16,140
62,505
49,673
Gross margin
45,148
38,213
142,563
121,410
Gross margin percentage
69.6
%
70.3
%
69.5
%
71.0
%
Operating expenses:
Research and development
6,234
6,126
25,872
20,183
Sales and marketing
26,200
22,746
91,054
81,631
General and administrative
7,145
4,491
21,186
15,760
Total operating expenses
39,579
33,363
138,112
117,574
Other income, net
1,522
1,060
6,565
3,977
Income before income taxes
7,091
5,910
11,016
7,813
Income tax provision
2,838
85
4,132
582
.
Net income
$
4,253
$
5,825
$
6,884
$
7,231
Net income per share:
Basic
$
0.25
$
0.35
$
0.41
$
0.44
Diluted
$
0.25
$
0.34
$
0.40
$
0.43
Weighted average common and potential common shares outstanding:
Basic
16,723
16,409
16,621
16,274
Diluted
17,350
16,918
17,168
16,857
Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
December 31,
December 31,
2007
2006
Cash and cash equivalents
$
188,701
$
45,673
Short-term investment securities
119,873
38,428
Accounts receivable, net
60,954
52,838
Inventories
29,740
23,020
Deferred income taxes, current
13,138
7,684
Prepaid expenses and other current assets
7,759
4,821
Total current assets
420,165
172,464
Property and equipment, net
10,133
10,752
Investment securities
1,257
3,014
Deferred income taxes
12,959
20,113
Intangible assets, net
16,346
3,864
Other assets
9,521
1,687
Total assets
$
470,381
$
211,894
Accounts payable
$
8,868
$
6,450
Accrued expenses
24,431
15,459
Deferred revenue, current portion
3,502
3,253
Deferred tax liability , current
115
-
Total current liabilities
36,916
25,162
Long-term debt
225,000
-
Deferred tax liability
4,528
384
Other liabilities, net of current portion
11,075
5,317
Total liabilities
277,519
30,863
Shareholders' equity:
Common stock and additional paid-in capital
236,325
231,551
Accumulated deficit
(44,893
)
(51,777
)
Accumulated other comprehensive income
1,430
1,257
Total shareholders' equity
192,862
181,031
Total liabilities and shareholders' equity
$
470,381
$
211,894