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Synergetics Reports Record First Quarter

Stocks in this article: SURG

Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications, today reported growth in sales, gross margin, income from continuing operations and net income for the first quarter ended October 31, 2011.

The Company reported first quarter fiscal 2012 sales rose 12.0% to $13.5 million and net income from continuing operations increased 81.3% to $1.2 million, or $0.05 per diluted share, compared with the first quarter of fiscal 2011. Loss from discontinued operations for the first quarter of fiscal 2012 was $382,000, or $0.02 per diluted share. Net income increased 21.8% to $771,000, or $0.03 per diluted share, compared with the first quarter of fiscal 2011.

“Our record first quarter results benefited from the continued demand for Synergetics’ ophthalmic and neurosurgical products across all major market segments,” stated Dave Hable, President and CEO of Synergetics USA, Inc. “Sales of ophthalmic products rose 10.0% to $8.8 million and OEM sales were up 26.4% to $4.5 million compared with the first quarter of last year. New product sales, including the VersaPACK™ that was launched in fiscal 2011, continued to gain sales momentum. Our disposable product sales were also a major contributor to the quarter’s growth and accounted for 82% of total first quarter sales.”

First Quarter Results

First quarter sales increased 12.0% to $13.5 million compared $12.1 million in the first quarter of fiscal 2011. The increase in first quarter sales from last year was due primarily to growth in sales of ophthalmic disposable products and OEM sales.

  • Ophthalmic sales rose 10.0% to $8.8 million compared with $8.0 million the first quarter of fiscal 2011. The growth in ophthalmic sales benefited from higher volume of disposable products, including procedural kits, laser probes and cannulas to domestic and international customers.
  • Total OEM sales rose 26.4% to $4.5 million compared with $3.6 million in the first quarter of fiscal 2011. OEM sales beginning in fiscal 2012 includes sales to our marketing partners. The increase in OEM sales benefited primarily from increased shipments of disposable ultrasonic tips during the latest quarter. OEM sales also included deferred revenue of $398,000 recognized in the first quarter of fiscal 2012.
  • Disposable product sales grew 11.2%, or $1.1 million, to $11.1 million in the first quarter of fiscal 2012 compared with the first quarter of fiscal 2011. Disposable sales accounted for approximately 82% of total sales in the first quarter of fiscal 2012.
  • Capital equipment sales totaled $2.0 million in the first quarter of fiscal 2012 compared with $2.1 million in the first quarter of fiscal 2011.
  • Backorders totaled approximately $500,000 at the end of the first quarter of fiscal 2012.

“We experienced a temporary increase in backorders at the close of the first quarter as we rebalanced inventories as part of our lean manufacturing initiatives,” continued Mr. Hable. “We expect to reduce our backorders and improve customer fill orders on a more timely basis as we fully implement our lean initiatives across our production, inventory management and shipping processes. We also implemented a new ERP system during the quarter that will enhance our real-time information for inventory levels, shipments, sales information and production costs. Our goal is to provide our customers with world class products and services levels to match.”

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