SHENZHEN, China, Aug. 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 second quarter and first half ended June 30, 2009.
Highlights for Second Quarter and First Half 2009 -- Second quarter 2009 net revenues were $160.1 million, an increase of 9.9% over the second quarter of 2008 and 19.3% over the first quarter of 2009. -- Fully diluted EPS in the second quarter of 2009 was $0.29, a 38.8% increase from the second quarter of 2008 and a 29.8% increase from the first quarter of 2009. -- EBITDA in the second quarter of 2009 was $46.7 million, a 38.8% increase from the second quarter of 2008. -- Gross margin in the second quarter of 2009 was 57.2%, up from 52.8% in the second quarter of 2008 and 55.7% in the first quarter of 2009. -- Net operating cash generated during the second quarter of 2009 was $34.5 million. -- Working capital days were 77 in the second quarter of 2009. -- A total of five products were launched in the first half of 2009. -- Mindray USA expanded its Group Purchase Organization ("GPO") contract base; the DPM product line has now been added to contracts in five of the largest GPOs, providing access to this product line to over 85% of the U.S. hospitals and surgery centers.
"Mindray continued to generate solid operational performance and earnings growth in the face of a global marketplace that remains very challenging," commented Xu Hang, Mindray's chairman and co-chief executive officer. "The ongoing realignment of core competencies within each region and continued integration of our Mahwah operations have and will continue to enable us to improve our cost structure and operational efficiency, while bringing new products to market and maintaining our competitive position in the marketplace."
SUMMARY - Second Quarter and First Half 2009 (in $ millions, except Three Months Ended Six Months Ended per-share data) June 30 June 30 2009 2008 % chg 2009 2008 % chg Net Revenues 160.1 145.7 9.9% 294.2 233.1 26.2% Revenues generated in China 76.0 57.9 31.3% 138.3 100.6 37.4% Revenues generated outside China 84.1 87.8 -4.2% 155.9 132.5 17.7% Gross Profit 91.6 77.0 18.9% 166.3 126.4 31.6% Non-GAAP Gross Profit 93.4 79.9 16.9% 169.7 130.1 30.4% Operating Income 39.0 27.8 40.2% 68.4 55.7 22.8% Non-GAAP Operating Income 43.9 40.0 9.8% 78.6 70.8 11.0% EBITDA 46.7 33.6 38.8% 82.3 64.9 26.7% Net Income 33.0 24.1 37.2% 58.4 49.1 18.8% Non-GAAP Net Income 37.8 35.2 7.5% 68.4 63.0 8.4% Diluted EPS 0.29 0.21 38.8% 0.52 0.43 19.9% Non-GAAP Diluted EPS 0.34 0.31 8.7% 0.61 0.56 9.4%
Mindray reported net revenues of $160.1 million for the second quarter of 2009, a 9.9% increase from $145.7 million in the second quarter of 2008. Net revenues generated in China in the second quarter of 2009 increased 31.3% to $76.0 million from $57.9 million in the second quarter of 2008, while net revenues generated in international markets in the second quarter of 2009 decreased 4.2% to $84.1 million from $87.8 million in the second quarter of 2008.
Performance by Segment
Patient Monitoring & Life Support Products: Patient monitoring & life support products segment revenues increased 2.1% to $69.1 million from $67.6 million in the second quarter of 2008. The patient monitoring & life support products segment contributed 43.2% to the total net revenues in the second quarter of 2009.
In-Vitro Diagnostic Products: In-vitro diagnostic products segment revenues increased 12.8% to $40.0 million from $35.5 million in the second quarter of 2008. The in-vitro diagnostic products segment contributed 25.0% to the total net revenues in the second quarter of 2009.
Medical Imaging Systems: Medical imaging systems segment revenues increased 16.5% to $41.9 million from $36.0 million in the second quarter of 2008. The medical imaging systems segment contributed 26.1% to the total net revenues in the second quarter of 2009.
Others: Other revenues, which are primarily comprised of service fees charged for post warranty period repair services, increased 37.4% to $9.1 million from $6.6 million in the second quarter of 2008. Other revenues contributed 5.7% to the total net revenues in the second quarter of 2009.
The segment revenue amounts discussed above include shipping and handling fees charged to customers.
Second quarter 2009 gross profit was $91.6 million, an 18.9% increase from $77.0 million in the second quarter of 2008. Second quarter 2009 non-GAAP gross profit was $93.4 million, a 16.9% increase from $79.9 million in the second quarter of 2008. Second quarter 2009 gross margin was 57.2% compared to 52.8% in the second quarter of 2008 and 55.7% in the first quarter of 2009. Non-GAAP gross margin was 58.3% in the second quarter of 2009 compared to 54.8% in the second quarter of 2008 and 56.9% in the first quarter of 2009.
Selling expenses for the second quarter of 2009 were $26.4 million, or 16.5% of the total net revenues, compared to 14.2% in the second quarter of 2008 and 16.2% in the first quarter of 2009. Non-GAAP selling expenses for the second quarter of 2009 were $24.9 million, or 15.5% of the total net revenues, compared to 13.3% in the second quarter of 2008 and 15.0% in the first quarter of 2009.
General and administrative expenses for the second quarter of 2009 were $11.4 million, or 7.1% of the total net revenues, compared to 6.6% in the second quarter of 2008 and 6.6% in the first quarter of 2009. Non-GAAP general and administrative expenses for the second quarter of 2009 were $10.7 million, or 6.7% of the total net revenues, compared to 6.1% in the second quarter of 2008 and 5.7% in the first quarter of 2009.
Research and development expenses for the second quarter of 2009 were $14.7 million, or 9.2% of the total net revenues, compared to 8.5% in the second quarter of 2008 and 11.0% in the first quarter of 2009. Non-GAAP research and development expenses for the second quarter of 2009 were $13.9 million, or 8.7% of the total net revenues, compared to 7.9% in the second quarter of 2008 and 10.4% in the first quarter of 2009.
Total share-based compensation expenses, which were allocated to cost of revenues and related operating expenses, were $2.6 million in the second quarter of 2009 compared to $3.0 million in the first quarter of 2009 and $2.4 million in the second quarter of 2008.
Operating income was $39.0 million in the second quarter of 2009, a 40.2% increase from $27.8 million in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $43.9 million, a 9.8% increase from $40.0 million in the second quarter of 2008. Operating margin was 24.4% in the second quarter of 2009 compared to 19.1% in the second quarter of 2008 and 21.9% in the first quarter of 2009. Non-GAAP operating margin was 27.4% in the second quarter of 2009 compared to 27.5% in the second quarter of 2008 and 25.9% in the first quarter of 2009.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
Second quarter 2009 EBITDA increased 38.8% year-over-year to $46.7 million from $33.6 million in the second quarter of 2008 and increased 31.2% from $35.6 million in the first quarter of 2009.
Net income increased 37.2% year-over-year to $33.0 million from $24.1 million in the second quarter of 2008. Non-GAAP net income increased 7.5% year-over-year to $37.8 million from $35.2 million in the second quarter of 2008. Net margin was 20.6% in the second quarter of 2009 compared to 16.5% in the second quarter of 2008 and 18.9% in the first quarter of 2009. Non-GAAP net margin was 23.6% in the second quarter of 2009 compared to 24.2% in the second quarter of 2008 and 22.7% in the first quarter of 2009. Second quarter 2009 income tax expense was $6.3 million representing an effective tax rate of 16.1%.
Second quarter 2009 basic and diluted earnings per share were $0.30 and $0.29, respectively, compared to $0.22 and $0.21 in the second quarter of 2008. Basic and diluted non-GAAP earnings per share were $0.35 and $0.34, respectively, compared to $0.33 and $0.31 in the second quarter of 2008. Shares used in the computation of diluted earnings per share for the second quarter 2009 were 112.6 million.
Other Select Data
Average accounts receivable days outstanding were 54 days in the second quarter of 2009 compared to 60 days in the first quarter of 2009. Average inventory days were 82 days in the second quarter of 2009 compared to 88 days in the first quarter of 2009. Average accounts payable days outstanding were 59 days in the second quarter of 2009 compared to 58 days in the first quarter of 2009. Mindray calculates the above working capital days using the average of beginning and ending balances of the quarter. Historically, the company used the average of beginning of the year and ending of the quarter balances. Mindray believes this new method provides more useful information on underlying operations.
As of June 30, 2009, the company had $284.5 million in cash and cash equivalents and restricted cash, compared to $261.2 million as of March 31, 2009. Net cash generated from operating activities and net cash outflow from capital expenditures during the quarter were $34.5 million and $12.6 million, respectively.
As of June 30, 2009, the company had 5,660 employees.
First Half 2009 Results
Mindray reported net revenues of $294.2 million in the first half of 2009, representing a 26.2% increase from $233.1 million in the first half of 2008.
-- Net revenues generated in China in the first half of 2009 increased 37.4% to $138.3 million from $100.6 million in the first half of 2008. -- Net revenues generated in international markets in the first half of 2009 increased 17.7% to $155.9 million from $132.5 million in the first half of 2008.
First half 2009 EBITDA increased 26.7% year-over-year to $82.3 million from $64.9 million in the first half of 2008 and increased 2.9% from $79.9 million in the second half of 2008.
First half 2009 net income increased 18.8% year-over-year to $58.4 million from $49.1 million in the first half of 2008. First half 2009 non-GAAP net income increased 8.4% year-over-year to $68.4 million from $63.0 million in the first half of 2008.
First half 2009 diluted earnings per share increased 19.9% year-over-year to $0.52 from $0.43 in the first half of 2008. First half 2009 non-GAAP diluted earnings per share increased 9.4% to $0.61 from $0.56 in the first half of 2008.
Business Outlook for Full Year 2009
Mindray maintains its current outlook for the full year 2009, which includes:
-- 2009 net revenue to grow at a rate of at least 10% year-over-year. -- Non-GAAP EPS to grow 10% over 2008. -- Capital expenditure in the range of $50 million to $60 million. -- Share based compensation to be $12 million, based on issuances to date, which does not take into account any additional share grant that may come later this year, if any. -- Amortization of intangible assets to be $10 million including April 2006 acquisition of minority interest and May 2008 acquisition of Datascope patient monitoring business.
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.
"Based on what we continue to see from a world economy and hospital spending perspective, we are maintaining our guidance for the year," commented Mr. Li Xiting, Mindray's president and co-chief executive officer. "We experienced excellent growth in China through the first half of the year and expect that to continue, as we look forward to the government continuing with its strong spending in the second half of 2009. China still represents our best growth prospect this year. International growth is mixed, with Africa, Asia and the Middle East performing well; distributor funding and hospital spending issues, however, continue to affect our other regions. Not surprisingly, the U.S. hospital market remains difficult to predict, as capital spending remains constrained and healthcare reform has yet to be established. That said, we remain firm in our belief that Mindray's unique vertically integrated business model, excellent financial position and focus on core competencies within each region, provide us with key advantages in these fast-changing markets."
Conference Call Information
Mindray's management will hold an earnings conference call at 8:00 AM on August 11, 2009 U.S. Eastern Time (8:00 PM on August 11, 2009 Beijing/Hong Kong Time)
Dial-in details for the earnings conference call are as follows: Hong Kong: +852-3002-1672 U.S. Toll Free: +1-866-700-7477 International: +1-617-213-8840 Pass code for all regions: Mindray
A replay of the conference call may be accessed by phone at the following numbers until August 22, 2009.
U.S. Toll Free: +1-888-286-8010 International: +1-617-801-6888 Pass code: 7624 2299
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of Mindray's website at http://ir.mindray.com .
Use of Non-GAAP Financial Measures
Mindray provides gross profit, R&D expenses, selling expenses, general and administrative expenses, operating income, EBITDA, net income and earnings per share on a non-GAAP basis that excludes share-based compensation expense and acquired intangible assets amortization expense, in progress research and development expenses, as well as termination payments, and 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 second quarter of 2009 and provided guidance for full year 2009 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, termination payments, and amortization of acquired intangible assets including, but not limited to, in progress research and development ("IPR&D"). -- Non-GAAP net income represents net income reported in accordance with GAAP, adjusted for the effects of share-based compensation, termination payments, and amortization of acquired intangible assets including, but not limited to, IPR&D, 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 deemed dividends for the basic calculation.
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 and six months period ended June 30, 2008 and 2009, respectively, 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 market performance, the business outlook for the fiscal year 2009 with respect to net revenues, Non-GAAP EPS, capital expenditure, share based compensation and amortization of intangible assets, the company's ability to grow in various geographic markets, to adapt to changing market environments, to take advantage of cost advantages, to capture growth opportunities, to improve cost structures and operational efficiencies and to benefit from government spending in China. These statements are not historical facts but instead represent only our belief regarding future events, 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 5 of our annual report on Form 20-F, filed on May 8, 2009. Our results of operations for the second quarter of 2009 and for fiscal year 2009 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.
We are a leading developer, manufacturer and marketer of medical devices worldwide. We maintain global headquarters in Shenzhen, China, U.S. headquarters in Mahwah, New Jersey and multiple sales offices in major international markets. From our main manufacturing and engineering base in China and through our worldwide distribution network, we are able to 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 further information, please contact: In the U.S: FD Evan Smith, CFA Tel: +1-212-850-5606 Email: firstname.lastname@example.org John Capodanno Tel: +1-212-850-5705 Email: email@example.com In China: May Li Tel: +86-755-2658-2518 Email: firstname.lastname@example.org Exhibit 1 MINDRAY MEDICAL INTERNATIONAL LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) As of December As of June 31, 2008 30, 2009 US$ US$ (audited) (unaudited) ASSETS Current assets: Cash and cash equivalents 96,370 118,681 Restricted cash (note 1) 119,711 99,790 Short-term investments (note 1) 36,780 2,251 Accounts receivable, net 89,735 101,086 Inventories 57,466 65,683 Value added tax receivables 13,566 8,325 Other receivables 7,471 6,636 Prepayments and deposits 4,503 8,251 Deferred tax assets 1,812 2,299 Total current assets 427,414 413,002 Restricted cash - long-term (note 1) -- 66,000 Other assets 1,724 2,425 Advances for purchase of plant and equipment 46,275 26,328 Property, plant and equipment, net 126,399 142,601 Land use rights, net 2,721 26,038 Deferred tax assets, net -- 1,241 Intangible assets, net 67,004 65,585 Goodwill 114,234 115,044 Total assets 785,771 858,264 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term bank loans (note 1) 157,007 103,100 Notes payable 7,449 6,213 Accounts payable 29,009 42,360 Advances from customers 7,523 5,552 Salaries payables 16,797 12,078 Other payables 46,911 53,932 Income taxes payable 10,727 10,992 Other taxes payable 4,398 3,218 Total current liabilities 279,821 237,445 Bank loans - long-term (note 1) -- 66,000 Other long-term payables 7,120 7,441 Deferred tax liabilities, net 736 1,701 7,856 75,142 Shareholders' equity: Ordinary shares 14 14 Additional paid-in capital 274,993 285,427 Retained earnings 183,886 220,645 Accumulated other comprehensive income 39,199 39,589 Total shareholders' equity 498,092 545,675 Non-controlling interest 2 2 Total equity 498,094 545,677 Total liabilities and shareholders' equity 785,771 858,264 (1) Restricted as the security package required for the bank loans as of June 30, 2009. Use of such funds are permitted provided that the proportionate amount of debt must be retired concurrently. As of June 30, 2009, (a) the short-term bank loans can be fully repaid from such short-term restricted cash and short-term investments; and (b) the long-term bank loans can be fully repaid from such long-term restricted cash. Exhibit 2 MINDRAY MEDICAL INTERNATIONAL LIMITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except for share and per share data) Three months ended June 30, Six months ended June 30, 2008 2009 2008 2009 US$ US$ US$ US$ (unaudited) (unaudited) (unaudited) (unaudited) Net revenues - PRC 57,846 75,944 100,637 138,314 - International 87,821 84,116 132,458 155,911 Net revenues 145,667 160,060 233,095 294,225 Cost of revenues (note 2) (68,695) (68,505) (106,697) (127,929) Gross profit 76,972 91,555 126,398 166,296 Selling expenses (note 2) (20,639) (26,410) (31,123) (48,199) General and administrative expenses (note 2) (9,595) (11,436) (12,202) (20,233) Research and development expenses (note 2) (12,322) (14,723) (20,757) (29,468) Expense of in- progress research & development (6,600) -- (6,600) -- Operating income 27,816 38,986 55,716 68,396 Other income, net 1,122 784 1,624 352 Interest income 2,171 1,321 4,529 2,941 Interest expense (955) (1,765) (960) (2,790) Income before income taxes and non- controlling interests 30,154 39,326 60,909 68,899 Provision for income taxes (6,097) (6,312) (11,800) (10,544) Non-controlling interests -- -- -- -- Net Income 24,057 33,014 49,109 58,355 Basic earnings per share 0.22 0.30 0.46 0.54 Diluted earnings per share 0.21 0.29 0.43 0.52 Shares used in the computation of: Basic earnings per share 107,263,477 108,283,992 107,113,068 108,079,235 Diluted earnings per share 113,800,224 112,553,875 113,399,242 112,374,573 (2) Share-based compensation charges incurred during the period related to: Cost of revenues 111 118 221 249 Selling expenses 811 929 1,616 1,980 General and administrative expenses 658 789 1,230 1,742 Research and development expenses 770 796 1,518 1,642 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 June 30, Six months ended June 30, 2008 2009 2008 2009 (unaudited) (unaudited) (unaudited) (unaudited) Non-GAAP net income 35,205 37,840 63,031 68,350 Non-GAAP net margin 24.2% 23.6% 27.0% 23.2% Amortization of acquired intangible assets (9,833) (2,141) (10,490) (4,349) Deferred tax impact related to acquired intangible assets 1,035 94 1,153 198 Termination payments -- (147) -- (231) Share-based compensation (2,350) (2,632) (4,585) (5,613) GAAP net income 24,057 33,014 49,109 58,355 GAAP net margin 16.5% 20.6% 21.1% 19.8% Non-GAAP income per share - basic 0.33 0.35 0.59 0.63 Non-GAAP income per share - diluted 0.31 0.34 0.56 0.61 GAAP income per share - basic 0.22 0.30 0.46 0.54 GAAP income per share - diluted 0.21 0.29 0.43 0.52 Shares used in computation of: Basic earnings per share 107,263,477 108,283,992 107,113,068 108,079,235 Diluted earnings per share 113,800,224 112,553,875 113,399,242 112,374,573 Non-GAAP operating income 39,999 43,906 70,791 78,589 Non-GAAP operating margin 27.5% 27.4% 30.4% 26.7% Amortization of acquired intangible assets (9,833) (2,141) (10,490) (4,349) Termination payments -- (147) -- (231) Share-based compensation (2,350) (2,632) (4,585) (5,613) GAAP operating income 27,816 38,986 55,716 68,396 GAAP operating margin 19.1% 24.4% 23.9% 23.2% Non-GAAP gross profit 79,896 93,376 130,089 169,653 Non-GAAP gross margin 54.8% 58.3% 55.8% 57.7% Amortization of acquired intangible assets (2,813) (1,703) (3,470) (3,108) Share-based compensation (111) (118) (221) (249) GAAP gross profit 76,972 91,555 126,398 166,296 GAAP gross margin 52.8% 57.2% 54.2% 56.5% Exhibit 4 MINDRAY MEDICAL INTERNATIONAL LIMITED RECONCILIATION OF GAAP NET INCOME TO EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION (Dollars in thousands) Six Six months Six months ended months Three months ended December ended ended June 30, June 30, 31, June 30, 2008 2009 2008 2008 2009 US$ US$ US$ US$ US$ (unaudit(unaudit(unaudit(unaudit(unaudit -ed) -ed) -ed) -ed) -ed) GAAP net income $24,057 33,014 49,109 59,578 58,355 Interest income (2,171) (1,321) (4,529) (3,832) (2,941) Interest expense 955 1,765 960 4,203 2,790 Provision for income taxes 6,097 6,312 11,800 5,148 10,544 Earnings Before Interest and Tax (EBIT) 28,938 39,770 57,340 65,097 68,748 Depreciation 3,150 4,687 5,400 8,432 9,050 Amortization 1,525 2,201 2,187 6,381 4,452 Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) 33,613 46,658 64,927 79,910 82,250
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