REYKJAVIK, Iceland, July 28, 2005 (PRIMEZONE) --Ossur: Sales in the second quarter of 2005 exceeded all previous single-quarter sales in the Company's history, at USD 35.4 million, as compared to USD 31.8 million in the preceding year.
Sales increased by 13% as measured in USD, and 11% as measured in local currencies, taking into account discontinued operations.
Profit for the second quarter was USD 4,6 million, increasing by 20% from the preceding year.
Earnings per share (EPS) came to 1.47 US cents, as compared to 1.22 US cents per share in the second quarter of 2004, increasing by 20%.
The Ossur hf. interim Consolidated Financial Statements for the second quarter of 2005 were approved at a meeting of the Company's Board of Directors on 27 July. The quarterly statement, prepared in compliance with International Financial Reporting Standards (IFRS), has been reviewed and endorsed by the Company auditors.
Second Quarter Operations
Excellent sales are the most prominent feature of Ossur's operations in the second quarter. The sales figures represent the highest single-quarter sales in the Company's history, with the corresponding quarter of last year taking second place. Sales from continuing operations increased by 13% as measured in USD, and 11% as measured in local currencies. Including sold operating units, sales increased by 11% in US dollars, and by 10% as measured in local currencies. The favourable results can be attributed to successful operation in all market regions, but the excellent growth in US prosthetics sales is a significant factor. The division in sales between prosthetic and orthotic products was as follows:
Thousand USD Q1 2005 Q1 2004 Change in
USD %
Prosthetics 27,455 23,577 16%
Orthotics 7,589 7,799 -3%
Other 378 399 -5%
Total 35,422 31,775 11%
The ratio of operating expenses to sales showed no significant change. Marketing and sales expenses were comparatively low, but administrative expenses rose slightly. Profit from operations amounted to 18% of sales, while earnings before interest, tax and depreciation amounted to 22%. Net profit was 13% of sales.
Key Operating Results, Second Quarter
Income statement for Change
the second
quarter of 2005 (USD % of % of
'000) Q2 2005 sales Q2 2004 sales
Net sales 35,422 100% 31,775 100% 11%
Cost of goods sold -13,863 -39% -12,595 -40% 10%
Gross profit 21,559 61% 19,180 60% 12%
Other income 510 1% 307 1% 66%
Sales and marketing
expenses -7,002 -20% -6,856 -22% 2%
Research &
development expenses -2,767 -8% -2,156 -7% 28%
General &
administrative
expenses -5,800 -16% -4,853 -15% 20%
Profit from
operations 6,500 18% 5,622 18% 16%
Interest income /
(expenses) -271 -1% -696 -2% -61%
Profit before tax 6,229 18% 4,926 16% 26%
Income tax -1,614 -5% -1,066 -3% 51%
Net profit for the
period 4,615 13% 3,860 12% 20%
Earnings per
outstanding shares
(US cents) 1,47 1,22 20%
EBITDA 7,758 22% 6,738 21% 15%
The operating units of the consolidation are comparable between years, with the exception that the subsidiary Mauch Inc. in Dayton, Ohio, was sold at year-end 2004, and Ossur's Icelandic retail operations were sold in early June. Sales of discontinued operating units amounted to USD 230 thousand in the second quarter, as compared to USD 624 thousand in the corresponding quarter of last year.
Key Operating Results, January through June
Consolidated Income Jan. - Jan. -
Statements (USD June % of June % of Change
'000) 2005 sales 2004 sales
Net sales 66,572 100% 62,443 100% 7%
Cost of goods sold -26,364 -40% -24,728 -40% 7%
Gross profit 40,208 60% 37,715 60% 7%
Other income 586 1% 332 1% 77%
Sales and marketing
expenses -13,995 -21% -13,696 -22% 2%
Research &
development expenses -5,202 -8% -4,476 -7% 16%
General &
administrative
expenses -10,696 -16% -9,707 -16% 10%
Profit from
operations 10,901 16% 10,168 16% 7%
Interest income /
(expenses) -682 -1% -974 -2% -30%
Profit before tax 10,219 15% 9,194 15% 11%
Income tax -2,431 -4% -2,071 -3% 17%
Net profit for the
period 7,788 12% 7,123 11% 9%
Earnings per
outstanding shares
(US cents) 2,48 2,24 11%
EBITDA 13,291 20% 12,477 20% 7%
Balance Sheet at End of June
Consolidated balance sheets
(USD '000) 30.6.2005 31.12.2004 Change
Fixed assets 66,519 67,944 -2%
Current assets 41,914 40,971 2%
Total assets 108,433 108,915 0%
Stockholders' equity 60,755 54,720 11%
Long-term liabilities 29,646 35,622 -17%
Current liabilities 18,032 18,573 -3%
Total equity and liabilities 108,433 108,915 0%
Total assets at end of June amounted to USD 108 million, with the Company's total assets remaining unchanged from the turn of the year. Equity increased by 11%, putting the end-June equity ratio at 56%, up by 50% from the year-end level.
Cash Flow, January through June
Jan. - June Jan. - June
Cash Flow 2005 (USD '000) 2005 2004
Working capital from operating
activities 12,095 11,690
Cash from operating activities net of
taxes and interest 7,693 6,011
Net cash used in investing activities -3,880 -3,148
Net cash provided by financing
activities -4,386 -4,443
Net change in cash and cash
equivalents 3,590 2,664
Cash from operating activities, net of interest, amounted to USD 7.7 million, as compared to USD 6.0 million in 2004. The increase amounted to 28%.
Financial ratios
2005 2004
Earnings per share over past 12 months (US
cents) 5,04 2,65
P/E ratio 24,4 35,7
Return on common equity 29% 18%
Current ratio 2,3 2,1
Equity ratio 56% 48%
Market value of stock (Million USD) 388 302
Sales Trends by Market Region
Thousand USD Q2 2005 Q2 2004 Change Change in
in USD % local
currencies %
North America 18,133 16,299 11% 10%
Europe 9,562 8,352 14% 10%
The Nordic
countries 5,002 4,343 15% 11%
Other markets 2,495 2,157 16% 16%
Total continuing
operations 35,192 31,151 13% 11%
Discontinued
operations 230 624
Total 35,422 31,775 11% 10%
The favourable results can be attributed to successful operation in all market regions, but the excellent growth in US prosthetics sales, amounting to 16% between years, proved a significant factor. Sales of orthotic products was also more successful in the US market than previously, remaining stable as opposed to previous slides. On the whole, sales in the North American market increased by 10% as measured in local currency. The European markets showed good progress, with sales increasing by 10% in local currencies. Temporary problems which slowed growth in the first quarter as reported earlier, are now resolved. Nordic operations continued to do well, with the increase in sales at 11%, as measured in local currencies. Sales in other international markets were excellent, increasing by 16% between years.
Gross profit was satisfactory in the second quarter at 61%, as compared to 60% in the corresponding quarter last year. The average rate of the dollar was 12% lower as measured in Icelandic kronur in the second quarter of 2005 than the second quarter of 2004. The same applied in the first quarter, when the average rate was 12% lower than in the preceding year. This has the effect of undermining the gross profit of the Company, as described in earlier reports. However, the strength of the euro against the US dollar contributes to the gross profit of the Company. The euro was on the average approximately 5% higher than the dollar in both these quarters as compared to comparable periods in the preceding year. Some boost is provided to gross profit by the fact that growth in Europe was strong in countries where average prices are higher, which had the results that gross profit exceeded anticipations by a small margin. Approximately 0.7% gross profit margin can be attributed to lowering of a reserve for write-down of obsolete products.
The ratio of operating expenses to sales was similar to previous figures. Marketing and sales expenses were comparatively low, while administrative expenses rose slightly. As before, all research and development costs are expensed in the income statement. Profit from operations amounted to 18% of sales, while earnings before interest, tax and depreciation were 22%. Net profit was 13% of sales.
Five-year comparison
Q2 Q2
Q2 2005 2004 2003 Q2 2002 Q2 2001
Net sales 35,422 31,775 22,726 21,223 16,882
Profit from
operations 6,500 5,622 2,549 2,989 1,949
Interest income
/ (expenses) -271 -696 -247 338 213
Earnings before
taxes 6,229 4,926 2,302 3,309 2,185
Earnings after
taxes 4,615 3,860 1,908 2,589 2,707
Stockholders'
equity 60,755 49,669 44,171 33,559 30,547
Total assets 108,433 103,515 85,825 67,199 58,201
Working capital
from operating
activities 6,748 9,519 3,183 3,558 2,664
Net cash
provided by
operating
activities 5,649 5,325 2,230 554 2,733
Return on common
equity ( based
on operations
for the last 12
months) 29% 18% 25% 29% 26%
Current ratio 2.3 2.1 3.5 2.0 1.7
Equity ratio 56% 48% 51% 50% 50%
Earnings per
shares over last
12 months 5.04 2.65 3.02 2.74 2.07
Average number
of shares 318 318 328 328 328
Price per share
at the end of
the quarter 79.50 69 51.50 55.50 47
Market value in
USD million 388 302 221 211 148
Ossur Asia-Pacific
Ossur has acquired the Australian company Advanced Prosthetic Components, one of the Company's distributing agents. Ossur Asia-Pacific will concentrate on Ossur's current markets in Australia, China and Japan, in addition to working on further development of markets in Korea, Taiwan and other Asian markets. Ossur Asia-Pacific has five employees, with Harvey Blackney, former owner of the company, as CEO. The acquisition price was USD 1.2 million, in addition to inventory.
Changes in Icelandic Operations
In early June, pharmaceutical retailer Lyf og heilsa took over Ossur hf.'s retail operation in Reykjavik, together with all the services offered by the outlet, including gait analysis. The sale of the retail operation means that Ossur hf. has divested itself of all operations in the domestic market which are not linked to the Company's core activities. The total proceeds from the sale of the operation and inventory fell just short of USD 900 thousand; the turnover of the operation in 2004 amounted to just over USD 700 thousand. Gains on the sale, amounting to approximately USD 450 thousand, are recognised under other income in the income statement.
Products
In the course of the year, strong emphasis has been placed on research and design involving a new bionic product line. For this reason, new products in Ossur's current product line have not been prominent. Some smaller products have been introduced and older products improved. The new bionic product line is scheduled for launching in the third quarter.
Operating Prospects
Prospects for third quarter are fair. One time integration and restructuring expenses will be expensed in third quarter as explained in a separate news release.
Investor Meetings
On Wednesday, 3 August, Ossur hf. will host a presentation meeting for investors.
At 8.30 a.m., local time, an open meeting will be held with the Company's management in Hvammur conference room at the Grand Hotel in Reykjavik. At the meeting, Jon Sigurdsson, CEO, and Hjorleifur Palsson, CFO, will discuss the Company's operation over the quarter.
A telephone conference in English will be held at 12:00 noon, local time, 14:00 CET. The meeting can be heard on the Ossur website: www.ossur.com.
Please call the following telephone numbers to participate in the conference:
Telephone number for Europe: +44 (0) 20 7162 0191 Telephone number for the United States: +1 334 323 6203
Queries can also be sent to the meeting held in English by e-mail to investormeeting@ossur.com.
If you wish to receive Ossur press releases by e-mail, please subscribe at the following web-site: http://www.ossur.com/investormailings
The 2nd Quarter 2005 Report is available on the following link: http://hugin.info/133773/R/1004187/154432.pdf
The 2nd Quarter 2005 Presentation is available on the following link: http://hugin.info/133773/R/1004186/154431.pdf
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