SHENZHEN, China, May 10 /PRNewswire-Asia-FirstCall/ -- Mindray
Medical International Limited (NYSE: MR), a leading developer,
manufacturer and marketer of medical devices worldwide announced
today its selected unaudited financial results for the first
quarter ended March 31, 2010.
Highlights for First Quarter 2010
-- Net revenues were $145.8 million, an increase of 8.7% over the first
quarter of 2009
-- International revenues were $83.7 million, a year-over-year increase of
16.6%. Emerging markets continued to lead revenue growth among all
international regions
-- China revenues were flat year-over-year, reflecting unfavorable
comparison due to a $6.5 million retroactive VAT refund recorded in the
first quarter of 2009 and drop in government tender sales in the first
quarter of this year. Without taking into account this retroactive VAT
refund, non-tender sales increased by 46.5% year-over-year
-- Non-GAAP operating income was $35.9 million. First quarter 2010
operating income was $31.9 million, representing an operating margin of
21.9%, compared to 21.9% in the first quarter of 2009 and 20.1% in the
fourth quarter of 2009
-- EBITDA increased 9.0% to $38.8 million as compared to $35.6 million in
the first quarter of 2009
-- Non-GAAP net income was $40.1 million. First quarter 2010 net income
was $36.2 million, representing a net margin of 24.8%, compared to
18.9% in the first quarter of 2009 and 19.8% in the fourth quarter of
2009. Both Non-GAAP net income and net income for the first quarter of
2010 includes the $8.6 million corporate income tax reduction received
from the nationwide key software enterprise status award for calendar
year 2009
-- Raised approximately $149.7 million, net of related costs, through a
public offering of four million American Depository shares ("ADSs")
-- Implemented SAP system in the US, completing installation in all
operating regions
-- Released M-7 portable color ultrasound system in the first quarter
"We are pleased with our performance for the quarter, driven by
solid international growth and strong non-tender sales in the
domestic market," commented Xu Hang,
Mindray's chairman and co-chief executive officer. "Excluding the
$6.5 million retroactive software VAT
refund that positively impacted the first quarter 2009 sales
performance, our overall sales growth would have been 14.2%. This
is healthy growth in spite of the lingering effect of the
Chinese New Year in February and
lower tender sales in China
relative to the year ago period. We are confident that the
advantages of our brand and expanding sales channels will continue
to fuel strong non-tender sales in the domestic China market, particularly among our
higher-end products like color ultrasound. Additionally, we are
encouraged by the robust performance we continue to see in emerging
markets, as well as the return to growth in more geographies,
including Eastern Europe and the
Commonwealth of Independent States ("CIS") region. Our financial
results indicate the progress we continue to make in penetrating
into higher-end markets while continuing to build a global brand
that represents high-quality, cost-effective products and
services."
SUMMARY - First Quarter 2010
(US$ millions, except per-share data)
1Q/2010 1Q/2009 % change
Net revenues 145.8 134.2 8.7%
Revenues generated in China 62.2 62.4 -0.3%
Revenues generated outside China 83.7 71.8 16.6%
Gross profit 82.3 74.7 10.0%
Non-GAAP gross profit 83.9 76.3 9.9%
Operating income 31.9 29.4 8.5%
Non-GAAP operating income 35.9 34.7 3.6%
EBITDA 38.8 35.6 9.0%
Net income 36.2 25.3 42.8%
Non-GAAP net income 40.1 30.5 31.6%
Diluted EPS 0.31 0.23 38.4%
Non-GAAP diluted EPS 0.35 0.27 27.5%
Revenues
Mindray reported net revenues of $145.8
million for the first quarter of 2010, an 8.7% increase from
$134.2 million for the first quarter
of 2009.
Net revenues generated in China
in the first quarter of 2010 remained flat at $62.2 million from $62.4
million in the first quarter of 2009, while net revenues
generated in international markets in the first quarter of 2010
increased 16.6% to $83.7 million from
$71.8 million in the first quarter of
2009.
Performance by Segment
Patient Monitoring & Life Support Products: Patient
monitoring & life support products segment revenues increased
5.3% to $61.7 million from
$58.6 million in the first quarter
2009. The patient monitoring & life support products segment
contributed 42.3% to total net revenues in the first quarter of
2010.
In-Vitro Diagnostic Products: In-vitro diagnostic products
segment revenues increased 17.6% to $37.9
million from $32.2 million in
the first quarter of 2009. The in-vitro diagnostic products segment
contributed 26.0% to total net revenues in the first quarter of
2010.
Medical Imaging Systems: Medical imaging systems segment
revenues increased 4.0% to $37.1
million, from $35.7 million in
the first quarter of 2009. The medical imaging systems segment
contributed 25.5% to total net revenues in the first quarter of
2010.
Others: Other revenues, which are primarily comprised of service
fees income charged for post warranty period repair services
increased 19.5% to $9.1 million from
$7.6 million in the first quarter of
2009. Other revenues contributed 6.2% to total net revenues in the
first quarter of 2010.
Gross Margins
First quarter 2010 gross profit was $82.3
million, a 10.0% increase from $74.7
million in the first quarter of 2009. First quarter 2010
non-GAAP gross profit was $83.9
million, a 9.9% increase from $76.3
million in the first quarter of 2009. The consolidated gross
margin for the first quarter of 2010 was 56.4% compared to 55.7% in
the first quarter of 2009 and 54.0% in the fourth quarter of 2009.
Non-GAAP gross margin was 57.5% in the first quarter of 2010
compared to 56.9% in the first quarter of 2009 and 54.9% in the
fourth quarter of 2009.
Operating Expenses
Selling expenses for the first quarter of 2010 were $23.7 million or 16.2% of total net revenues,
compared to 16.2% in the first quarter of 2009 and 17.5% in the
fourth quarter of 2009. Non-GAAP selling expenses for the first
quarter of 2010 were $22.4 million,
or 15.3% of total net revenues, compared to 15.0% in the first
quarter of 2009 and 16.9% in the fourth quarter of 2009.
General and administrative expenses for the first quarter of
2010 were $12.2 million, or 8.4% of
total net revenues, compared to 6.6% in the first quarter of 2009
and 8.5% in the fourth quarter of 2009. Non-GAAP general and
administrative expenses for the first quarter of 2010 were
$11.8 million, or 8.1% of total net
revenues, compared to 5.7% in the first quarter 2009 and 8.1% in
the fourth quarter of 2009.
Research and development expenses for the fourth quarter of 2010
were $14.4 million, or 9.9% of total
net revenues compared to 11.0% in the first quarter of 2009 and
7.8% in the fourth quarter of 2009. Non-GAAP research and
development expenses for the first quarter of 2010 were
$13.8 million, or 9.4% of total net
revenues, compared to 10.4% in the first quarter of 2009 and 7.5%
in the fourth quarter of 2009.
Total share-based compensation expenses, which were allocated to
cost of revenues and related operating expenses, were $1.9 million in the first quarter of 2010
compared to $3.0 million in the first
quarter of 2009 and $2.0 million in
the fourth quarter 2009.
Operating income in the first quarter of 2010 was $31.9 million, an 8.5% increase from $29.4 million in the first quarter of 2009.
Non-GAAP operating income in the first quarter 2010 was
$35.9 million, a 3.6% increase from
$34.7 million in the first quarter of
2009. Operating margin was 21.9% in the first quarter 2010 compared
to 21.9% in the first quarter of 2009 and 20.1% in the fourth
quarter of 2009. Non-GAAP operating margin was 24.6% in the first
quarter of 2010 compared to 25.9% in the first quarter 2009 and
22.4% in the fourth quarter of 2009.
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")
EBITDA in the first quarter of 2010 was $38.8 million compared to $35.6 million in the first quarter of 2009, and
$51.7 million in the fourth quarter
of 2009.
Net Income
First quarter 2010 net income was $36.2
million compared to $25.3
million in the first quarter of 2009, an increase of 42.8%
year-over-year. First quarter 2010 non-GAAP net income increased
31.6% year-over-year to $40.1 million
from $30.5 million in the first
quarter of 2009. First quarter 2010 net margin was 24.8% compared
to 18.9% in the first quarter of 2009 and 19.8% in the fourth
quarter of 2009. Non-GAAP net margin was 27.5% in the first quarter
of 2010 compared to 22.7% in the first quarter of 2009 and 22.1% in
the fourth quarter of 2009. Income tax benefits in the first
quarter of 2010 were $3.4 million,
resulting from the recognition of the $8.6
million corporate income tax reduction during the quarter
which relates to the nationwide key software enterprise status for
the calendar year 2009, awarded to our Shenzhen subsidiary in January 2010.
First quarter 2010 basic and diluted earnings per share were
$0.33 and $0.31, respectively, compared to $0.23 and $0.23 in
the first quarter of 2009. First quarter 2010 non-GAAP basic and
diluted earnings per share were $0.36
and $0.35 respectively, compared to
$0.28 and $0.27 in the first quarter of 2009. Shares used
in the computation of diluted earnings per share in the first
quarter of 2010 were 115.7 million.
Other Select Data
Total receivables were $106.9
million at the end of the first quarter of 2010, which was
down from $113.3 million at the end
of the fourth quarter of 2009. The inventory level at the end of
the first quarter of 2010 was $69.2
million, compared to $64.5
million at the end of the fourth quarter of 2009. Average
accounts receivable days outstanding were 69 days in the first
quarter of 2010 compared to 53 days in the fourth quarter of 2009.
Average inventory days outstanding were 96 days in the first
quarter of 2010 compared to 74 days in the fourth quarter 2009.
Average accounts payable days outstanding were 60 days in the first
quarter of 2010 compared to 43 days in the fourth quarter of 2009.
Mindray calculates the above working capital days using the average
of beginning and ending balances of the quarter.
As of March 31, 2010, the company
had cash and cash equivalents of $255.1
million as compared to $204.2
million as of December 31,
2009. Total cash, cash equivalents, restricted cash,
short-term investments and restricted investments were $430.6 million, compared to $372.5 million as of December 31, 2009. Net cash generated from
operating activities and capital expenditures for the first quarter
2010 were $32.8 million and
$15.4 million, respectively. In the
first quarter 2010, the company had paid down a total of
$115 million of its short and long
term loans from Bank of China
(Hong Kong) Limited and HSBC.
Business Outlook for Full Year 2010
The company maintains its full year guidance and expects its
full year 2010 net revenues to be 17% higher than its full year
2009 net revenues.
The company also expects its full year 2010 non-GAAP net income
to grow 17% over its non-GAAP net income for full year 2009,
excluding the $8.6 million corporate
income tax reduction recognized in the first quarter of 2010. This
guidance assumes a corporate income tax rate of 15% applicable to
the Shenzhen subsidiary.
The company expects its capital expenditure for 2010 to be in
the range of $60 million to $70
million.
The company's practice is to provide guidance on a full year
basis only. This forecast reflects Mindray's current and
preliminary views, which are subject to change.
"In the first quarter of 2010, Mindray benefited from robust
international sales recovery as markets continued to stabilize,"
said Li Xiting, Mindray's president and co-chief executive officer.
"Domestically, Mindray was affected by unfavourable year-over-year
comparison resulting from the software VAT rebate effective in the
first quarter 2009 as well as a decrease in government tender
sales. We remain firm, however, in our belief that China's healthcare sector continues to be a
major segment that attracts heavy investments from both the Chinese
government and private capital. The cornerstone of our China growth continues to be non-tender sales,
which accounted for more than 90% of domestic China sales during the quarter. We are
encouraged to see strong performance in non-tender sales during the
quarter, which partially offset weakness in tender sales. We
believe this part of our business will remain healthy as the
company positions itself to compete in higher-end markets and
explores introducing some of our future products into private
markets."
Conference Call Information
Mindray's management will hold an earnings conference call at
8:00 AM on May
11, 2010 U.S. Eastern Time (8:00
PM on May 11, 2010
Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
Hong Kong: +852-3002-1672
U.S. Toll Free: +1-866-783-2142
International: +1-857-350-1601
Passcode for all regions: Mindray
A replay of the conference call may be accessed by phone at the
following numbers until May 25,
2010.
U.S. Toll Free: +1-888-286-8010
International: +1-617-801-6888
Passcode: 5663 9799
Additionally, a live and archived webcast of this conference
call will be available on the Investor Relations section of
Mindray's website athttp://www.mindray.com .
Use of Non-GAAP Financial Measures
Mindray provides gross profit, research and development
expenses, selling expenses, general and administrative expenses,
operating income, net income, EBITDA, and earnings per share on a
Non-GAAP basis that excludes share-based compensation expense,
acquired intangible assets amortization expense, realignment costs
-- post acquisition, all net of related tax impact, to enable
investors to better assess the company's operating performance. The
Non-GAAP measures described by the company are reconciled to the
corresponding GAAP measure in the exhibit below titled
"Reconciliations of Non-GAAP results of operations measures to the
nearest comparable GAAP measures."
The company has reported for the first quarter of 2010 and
provided guidance for full year 2010 earnings per share on a
Non-GAAP basis. Each of the terms as used by the company is defined
as follows:
-- Non-GAAP gross profit represents gross profit reported in accordance
with GAAP, adjusted for the effects of share-based compensation and
amortization of acquired intangible assets.
-- Non-GAAP operating income represents operating income reported in
accordance with GAAP, adjusted for the effects of share-based
compensation, realignment cost -- post acquisition, and amortization of
acquired intangible assets
-- Non-GAAP net income represents net income reported in accordance with
GAAP, adjusted for the effects of share-based compensation, realignment
cost -- post acquisition, amortization of acquired intangible assets,
all net of related tax impact.
-- Non-GAAP earnings per share represents Non-GAAP net income divided by
the number of shares used in computing basic and diluted earnings per
share in accordance with GAAP, and excludes the impact of the declared
dividends for the basic calculation.
-- EBITDA represents net income reported in accordance with GAAP, adjusted
for the effects of interest income and expenses, provision for income
taxes, depreciation and amortization.
The company computes its Non-GAAP financial measures using the
same consistent method from quarter to quarter. The company notes
that these measures may not be calculated on the same basis of
similar measures used by other companies. Readers are cautioned not
to view Non-GAAP results on a stand-alone basis or as a substitute
for results under GAAP, or as being comparable to results reported
or forecasted by other companies, and should refer to the
reconciliation of GAAP results with Non-GAAP results for the three
months period ended March 31, 2010 in
the attached financial information.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements,"
including those related to the company's selected unaudited 2010
financial results, the company's business outlook for the fiscal
year 2010, including with respect to net revenues, non-GAAP net
income, capital expenditure, anticipated growth or recovery in
particular geographic or product markets, the impact of anticipated
healthcare reform or government expenditures, the level of
investment in healthcare from government and private sources, the
company's ability to benefit from planned company investments or to
derive anticipated operation synergies, to improve cost structures
and operational efficiencies and to benefit from government tender
sales in China, and growth of
non-tender sales in China. These
other statements are not historical facts but instead represent
only our belief regarding future events or circumstances, many of
which, by their nature, are inherently uncertain and outside of our
control. It is possible that our actual results and financial
condition and other circumstances may differ, possibly materially,
from the anticipated results and financial condition indicated in
these forward-looking statements. Readers are cautioned that these
forward-looking statements are only predictions and may differ
materially from actual future events or results due to a variety of
factors, including but not limited to: the expected growth of the
medical device market in China and
internationally; relevant government policies and regulations
relating to the medical device industry; market acceptance of our
products; our expectations regarding demand for our products; our
ability to expand our production, our sales and distribution
network and other aspects of our operations; our ability to stay
abreast of market trends and technological advances; our ability to
effectively protect our intellectual property rights and not
infringe on the intellectual property rights of others; competition
in the medical device industry in China and internationally; and general
economic and business conditions in the countries in which we
operate. The financial information contained in this release should
be read in conjunction with the consolidated financial statements
and notes thereto included in our public filings with the
Securities and Exchange Commission. For a discussion of other
important factors that could adversely affect our business,
financial condition, results of operations and prospects, see "Risk
Factors" beginning on page 7 of our annual report on Form 20-F,
filed on May 7, 2010. Our results of
operations for the first quarter of 2010 are not necessarily
indicative of our operating results for any future periods. Any
projections in this release are based on limited information
currently available to us, which is subject to change. Although
such projections and the factors influencing them will likely
change, we will not necessarily update the information. Such
information speaks only as of the date of this release.
All references to "shares" are to our ordinary shares, which are
divided into two classes, Class A and Class B. Each of our American
Depositary Shares, which trade on the New York Stock Exchange,
represents one Class A ordinary share.
About Mindray
We are a leading developer, manufacturer and marketer of medical
devices worldwide. We maintain our global operational headquarters
in Shenzhen, China, and multiple
sales offices in major domestic and international markets. From our
main manufacturing and engineering base in China and through our worldwide distribution
network, we supply internationally a broad range of products across
three primary business segments, comprised of patient monitoring
and life support products, in-vitro diagnostic products and medical
imaging systems. For more information, please visit
http://ir.mindray.com .
For investor and media inquiries please contact:
In the U.S.:
John Capodanno
FD
Tel: +1-212-850-5705
Email: john.capodanno@fd.com
Bryan Armstrong
FD
Tel: +1-312-553-6707
Email: bryan.armstrong@fd.com
In China:
May Li
Mindray Investor Relations
Tel: +86-755-2658-2518
Email: may.li@mindray.com
Exhibit 1
MINDRAY MEDICAL INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
As of December As of March
31, 2009 31, 2010
US$ US$
(audited) (unaudited)
ASSETS
Current assets:
Cash and cash
equivalents 204,228 255,084
Restricted cash (Note 1) 10,657 53,792
Restricted investments 91,600 --
Short-term investments -- 121,751
Accounts receivable,
net 113,340 106,910
Inventories 64,518 69,212
Value added tax
receivables 8,519 8,954
Other receivables 8,999 8,725
Prepayments and
deposits 7,466 5,301
Deferred tax assets 2,338 4,187
Total current assets 511,665 633,916
Restricted investments 66,000 --
Other assets 1,585 1,545
Advances for purchase
of plant and equipment 28,395 32,199
Property, plant and
equipment, net 153,726 159,581
Land use rights, net 25,776 25,642
Intangible assets, net 64,065 63,017
Goodwill 115,053 115,056
Total assets 966,265 1,030,956
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans
(Note 1) 103,128 54,137
Notes payable 5,647 5,164
Accounts payable 35,752 36,747
Advances from customers 10,081 7,990
Salaries payables 19,877 12,928
Other payables 56,592 75,446
Income taxes payable 16,199 12,558
Deferred tax
liabilities 1,499 --
Other taxes payable 5,863 6,517
Total current
liabilities 254,638 211,487
Bank loans-long term 66,000 --
Other long-term payables 1,342 1,498
Deferred tax liabilities,
net 3,734 5,505
71,076 7,003
Shareholders' equity:
Ordinary shares 14 15
Additional paid-in
capital 298,408 456,121
Retained earnings 301,476 314,872
Accumulated other
comprehensive income 40,651 41,456
Total shareholders'
equity 640,549 812,464
Noncontrolling interest 2 2
Total equity 640,551 812,466
Total liabilities and
shareholders' equity 966,265 1,030,956
(1) Restricted as the security package required for the bank
loans. Use of such funds are permitted provided that the
proportionate amount of debt must be retired concurrently. As
of March 31, 2010, the bank loans can be fully repaid from such
restricted cash and the related interest income receivable.
Exhibit 2
MINDRAY MEDICAL INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
Three months ended March 31,
2009 2010
US$ US$
(unaudited) (unaudited)
Net revenues
-PRC 62,370 62,154
- International 71,795 83,691
Net revenues 134,165 145,845
Cost of revenues (Note 2) (59,424) (63,595)
Gross profit 74,741 82,250
Selling expenses (Note 2) (21,789) (23,664)
General and administrative
expenses (Note 2) (8,797) (12,246)
Research and development
expenses (Note 2) (14,745) (14,435)
Operating income 29,410 31,905
Other (expense) income, net (432) 117
Interest income 1,620 2,134
Interest expense (1,025) (1,406)
Income before income taxes and
noncontrolling interests 29,573 32,750
(Provision)/ benefit for income
taxes (4,232) 3,447
Net Income 25,341 36,197
Less: Net income attributable
to noncontrolling interests -- --
Net income attributable to the
Company 25,341 36,197
Basic earnings per share 0.23 0.33
Diluted earnings per share 0.23 0.31
Shares used in the computation of:
Basic earnings per share 107,872,202 111,242,484
Diluted earnings per share 112,118,964 115,743,576
(2) Share-based compensation charges
incurred during the period related to:
Cost of revenues 131 99
Selling expenses 1,051 665
General and administrative
expenses 953 478
Research and development
expenses 846 664
Exhibit 3
MINDRAY MEDICAL INTERNATIONAL LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE
NEAREST COMPARABLE GAAP MEASURES
(Dollars in thousands, except for share and per share data)
Three months ended March 31,
2,009 2010
(unaudited) (unaudited)
Net revenues 134,165 145,845
Non-GAAP net income 30,510 40,145
Non-GAAP net margin 22.7% 27.5%
Amortization of acquired
intangible assets (2,208) (2,132)
Deferred tax impact related to
acquired intangible assets 104 90
Realignment costs- post
acquisition (84) --
Share-based compensation (2,981) (1,906)
GAAP net income 25,341 36,197
GAAP net margin 18.9% 24.8%
Non-GAAP basic earnings per
share 0.28 0.36
Non-GAAP diluted earnings per
share 0.27 0.35
GAAP basic earnings per share 0.23 0.33
GAAP diluted earnings per share 0.23 0.31
Shares used in computation of:
Basic earnings per share 107,872,202 111,242,484
Diluted earnings per share 112,118,964 115,743,576
Non-GAAP operating income 34,683 35,943
Non-GAAP operating margin 25.9% 24.6%
Amortization of acquired
intangible assets (2,208) (2,132)
Realignment costs- post
acquisition (84) --
Share-based compensation (2,981) (1,906)
GAAP operating income 29,410 31,905
GAAP operating margin 21.9% 21.9%
Non-GAAP gross profit 76,277 83,859
Non-GAAP gross margin 56.9% 57.5%
Amortization of acquired
intangible assets (1,405) (1,510)
Share-based compensation (131) (99)
GAAP gross profit 74,741 82,250
GAAP gross margin 55.7% 56.4%
Exhibit 4
MINDRAY MEDICAL INTERNATIONAL LIMITED
RECONCILIATION OF GAAP NET INCOME TO EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION
(Dollars in thousands)
Three months ended March 31,
2009 2010
US$ US$
(unaudited) (unaudited)
GAAP net income 25,341 36,197
Interest income (1,620) (2,134)
Interest expense 1,025 1,406
Provision for income taxes 4,232 (3,447)
Earnings before interest and
taxes ("EBIT") 28,978 32,022
Depreciation 4,363 4,533
Amortization 2,251 2,250
Earnings before interest,
taxes, depreciation, and
amortization ("EBITDA") 35,592 38,805
SOURCE Mindray Medical International Limited