SonoSite’s Q4 net plunges on flat sales

SonoSite Inc. (NSDQ:SONO) posted fourth-quarter sales of $69.7 million for the three months ended Dec. 31, 2009, flat compared with $70.1 million during the same period in 2008. Net income fell 63.4 percent to $2.2 million, compared with $6 million during Q4 2008:

Press Release

SonoSite Achieves 9% Operating Margins in Spite of a 10% Revenue
Decline in FY 2009

Q4 2009 Operating Income Grows 117% as Operating Margins Hit 15.4%
Excluding Non-recurring Items

Conference Call Webcast Live Today at 1:30 pm Pacific/4:30 pm Eastern

BOTHELL, Wash.–(BUSINESS WIRE)–SonoSite, Inc. (Nasdaq:SONO), the world leader and specialist in
hand-carried ultrasound for the point-of-care, today reported financial
results for the fourth quarter and year ended December 31, 2009.

REVENUE

Revenues in the fourth quarter of 2009 were $69.7 million, a decrease of
1% compared to the fourth quarter of 2008. Full year of 2009 revenues
were $227.4 million, down 7% versus full year of 2008.

Revenues for the partial year acquisition of CardioDynamics were $4.2
million for the fourth quarter and $7.1 million for the full year of
2009.

Excluding partial year revenues from CDIC, SonoSite fourth quarter
revenues were $65.5 million, down 7% versus the fourth quarter of 2008.
Full year revenues excluding CDIC were $220.3 million, a decrease of 10%
compared to 2008.

Changes in foreign currency rates increased worldwide revenues by 4% in
the fourth quarter and decreased revenues by 2% for the full year.

OPERATING INCOME AND CASH FLOW

Fourth Quarter Results

Fourth quarter operating income was $6.8 million, an increase of 46%
compared to the fourth quarter of 2008. Operating income for the fourth
quarter 2009 included charges from CDIC of $3.3 million, related to
operating results as well as acquisition and integration.

Excluding CDIC, operating income in the fourth quarter of 2009 was $10.1
million, an increase of 117% compared to the fourth quarter of 2008.
Operating margins reached 15.4% for the quarter.

Full Year Results

For the full year of 2009, operating income was $13.7 million, including
charges from CDIC of $6.9 million; a decrease of 39% compared to the
full year of 2008.

Excluding CDIC, full year of 2009 operating income was $20.6 million,
down 8% versus the full year of 2008 on a $24 million or 10% revenue
decline versus full year 2008.

Cash Flow

Operating cash flow was $15.3 million for the quarter and $24.4 million
for the full year of 2009, as compared to $11.2 million and $29.2
million for the comparable periods of 2008. Operating cash flow for the
full year of 2009 reflects the $21 million received to settle a patent
dispute in the fourth quarter.

Net income

For the fourth quarter of 2009, the Company recorded net income of $2.2
million or $0.12 per share, compared to $6.0 million or $0.34 per share
in 2008. For the full year of 2009, net income was $3.2 million or $0.18
per share compared to $11.2 million or $0.64 per share for the full year
of 2008. Excluding non-recurring items such as bond gains, acquisition
expenses, and patent royalty revenue, net income would have been $0.36
per share for the full year of 2009 or essentially even with 2008.

COMMENTARY

“In a very tough year we simply got stronger as a company, improving our
operating model and tightening our capital allocation process,” said
Kevin M. Goodwin, SonoSite President and CEO. “We successfully
integrated CardioDynamics which included significant changes to their
sales force during the fourth quarter, while successfully closing out
our litigation matters and achieving 9% operating margins, a level
similar to 2008, despite core revenues falling by $24 million or 10%.”

“With a difficult year behind us we are stronger and more focused on
growth initiatives for 2010 and beyond. We have leaned out our ‘SG&A
structure’ and are deploying our strategy across four key vertical
markets,” said Mr. Goodwin.

“We have also initiated market development in cardiovascular disease
management markets enabling us to expand our role in the cardiovascular
health marketplace.”

“Additionally, we are at work on revising our capital structure with the
recently announced “Dutch Auction” tender offer to repurchase $100
million of our shares. Following a two year evaluation of investment
alternatives, it became clear to us that investing in our own stock was
our best choice,” Mr. Goodwin further commented.

As of December 31, 2009, the company held $257.7 million in cash and
investments and had outstanding senior convertible notes of $114.7
million for net liquidity of $143.0 million.

2010 FINANCIAL OUTLOOK

The company provided the following guidance:

  • Revenue growth of up to 10%
  • Level gross margin
  • Operating margin of 11 – 13%

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