Abaxis Inc. F1Q11 (Qtr End 06/30/10) Earnings Call Transcript

Abaxis Inc. F1Q11 (Qtr End 06/30/10) Earnings Call Transcript
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Call End:

Abaxis Inc. (ABAX)

F1Q11 (Qtr End 06/30/10) Earnings Call

July 29, 2010 4:15 am ET


Clint Severson - Chairman and CEO

Al Santa Ines - CFO

Donald Wood - Chief Operations Officer

Martin Mulroy - VP, North American Animal Health Sales and Marketing

Brenton Hanlon - VP, North American Medical Sales and Marketing


James Sidoti - Sidoti & Company

David Clair - Piper Jaffray

Jonathan Block - SunTrust Robinson Humphrey

Ross Taylor - CL King

Neal Goldman - Goldman Capital Management

Daniel Owczarski - Avondale Partners

Shawn Bevec - SFG


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Welcome to the Abaxis Inc. first quarter 2011 financial results. All participants will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Joe Dorame. Please go ahead.

Joe Dorame

Good afternoon, and thank all of you for joining us today to review the financial results for Abaxis for the first fiscal quarter of 2011, which ended June 30, 2010. Again, my name is Joe Dorame. I am with Lytham Partners and we are the financial relations consulting firm for Abaxis.

With us today, representing the company are Mr. Clint Severson, Chairman and Chief Executive Officer, Mr. Al Santa Ines, Chief Financial Officer, Mr. Donald Wood, Chief Operations Officer, Mr. Martin Mulroy, Vice President, North American Animal Health Sales and Marketing and Mr. Brenton Hanlon, Vice President, North American Medical Sales and Marketing. At the conclusion of today's prepared remarks, we will open the call for Q&A session.

Before we begin, I would like to remind everyone this conference call includes statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements related to the company's cash position, financial resources and potential for future growth, market acceptance of new or planned product offerings, process improvements and product manufacturing quality and efficiencies in future production of company's products.

Abaxis claims protection of the Safe Harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by terms may, believe, projects, expects or anticipates or words of similar import and do not reflect historical facts. Specific forward-looking statements contained in this conference call may be affected by risks and uncertainties, including, but not limited to, those related to the market acceptance of the company's products and the continuing development of its products, required FDA clearance and other government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with entering the human diagnostic market on a larger scale, risks related to the protection of the company's intellectual property or claims of infringement of intellectual property asserted by third parties, risks related to condition of the United States economy, risks involved in carrying of inventory and other risks detailed under Risk Factors in the company's Annual Report on Form 10-K and other periodic reports filed from time to time with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.

With that having been said, I would like to turn the call over to Mr. Clint Severson, Chairman and Chief Executive Officer of Abaxis. Clint?

Clint Severson

I will spend a few minutes here reviewing the accomplishments and the challenges for Q1 2011, and some of the goals for Q2. After my short presentation, I will ask Marty Mulroy, our VP of North American Vet Sales and Marketing and Brenton Hanlon, our VP of North American Medical Sales and Marketing to give an update on their respective businesses, and then we will take questions.

Q1 was another record quarter for Abaxis even though we are operating in a very challenging environment. Our challenges were fewer than the past, but included lower government sales and the foreign exchange hit due to the weaker euro.

Other than that, we continued to perform setting many new records that include record total sales, record gross profit, record vet sales, record European sales, record Pac-Rim sales and then of course domestic sales were at record levels as well. We had record disc sales and we had a record low disc cost and a record operating income.

We finished Q1 2011 with sales of about $35 million, up 18% year-over-year and up 4% quarter-over-quarter. Record worldwide vet sales came in at $26.8 million, up 23% year-over-year and up 7% quarter-over-quarter.

Total medical sales finished at $6.4 million, up 12% year-over-year, but down about $458,000 quarter-over-quarter due to fewer disc sales, which were at record levels in Q4. Now if you exclude the government medical sales, total medical sales were up 29% compared to Q1 last year.

For the quarter we sold 1,025 instruments, up 23% year-over-year were about 192 instruments. Quarter-over-quarter instrument sales were down about 40 units. We sold 377 VetScans versus 388 Q1 last year and 399 last quarter.

We sold 163 Piccolos, which included 16 units sold to the government, versus 149 Q1 last year and 150 last quarter. We also completed 15 reagent rentals in Q1 and made a payment to distributor of 16 free Piccolos in exchange for our participation in the joint marketing and sales promotion and there is more to follow from Brenton in a few minutes.

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