Theragenics Corporation (
Q4 2011 Earnings Call
February 23, 2012 11:00 am ET
Christine Jacobs - Chairman and CEO
Frank Tarallo - CFO
Joe Munda - Sidoti & Company
Ezekiel Kruglick - Ardent Research
Jeff Anderson - Encore Group
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Greetings and welcome to the Theragenics' fourth quarter and yearend 2011 earnings conference call. It is now my pleasure to introduce, Ms. Christine Jacobs, Chairman and CEO of Theragenics.
Good morning and welcome to Theragenics' fourth quarter and yearend 2011 conference call. Thank you for joining us today. In just a few minutes, I'll provide comments on the past quarter and 2011 and a little about the outlook for 2012. I will also talk about our just announced acquisition of the Core Oncology prostate brachytherapy customers, but first I am going to turn the call over to Frank Tarallo, our Chief Financial Officer, he's going to provide a review of the financials.
Thank you, Chris. This morning we released our consolidated financial results for the fourth quarter and yearend 2011. If you did not receive this news release or if you would like to be added to either our fax or email distribution list, please contact Investor Relations at 800-998-8479, or 770-271-0233.
Before I begin my review, please be aware that some comments made during this conference call may contain forward-looking statements involving risks and uncertainties regarding our operations and future results. Please see our press release issued today and our filings with the Securities and Exchange Commission, including without limitation, the company's Form 10-K and Forms 10-Q, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Now let's move to our results. Our consolidated revenue in the fourth quarter was $19.9 million, which is a decline of 4% from 2010. For the year, consolidated revenue was $82.7 million, an increase of 1% over 2010. This was also our highest annual revenue ever. Moving to profitability, EPS was $0.01 in the fourth quarter, the same as the fourth quarter of 2010. For the year, EPS was $0.09 versus $0.06 in 2010, which is an increase of 50%.
Let me move now to our segment results. Revenue in our surgical products segment decreased 5% in the fourth quarter from 2010. For the full-year surgical products revenue was up 1%. Revenues continue to be affected by the variability in the ordering patterns of our larger customers. ERP implementation at one business unit also affected our revenues in Q4. Open orders at the end of 2011 were $13.9 million a 7% increase from the end of '010. So fundamental demand remained strong and is building.
Moving to profitability, our surgical business incurred in operating loss of $480,000 in the fourth quarter compared to an operating profit of $63,000 last year. For the year, operating income was $607,000 compared to $215,000 in 2010. Special items which are detailed in our press release affected our operating results in this segment. In addition to the special items profitability in our surgical product segment was also affected by a decline in gross margins on sales in 2011. Gross margins were 30% in Q4 of this year compared to 33% last year.
Customer ordering patterns had a negative impact on gross margins. We also began implementation of our ERP system at the last of our four locations in Q4. This implementation caused some inefficiencies resulting in over time and lengthening the lead time on orders. So this affected both sales and margins in Q4.
For the year, our gross margin on product sales was 35% compared to 36% in 2010. Looking forward for 2012, we expect customer behavior, product and channel mix and increase in raw material prices to continue to affect our margins in the surgical business.
Turning to our brachytherapy business, revenue increased 1% in the fourth quarter over 2010. Brachy revenue was also up 1% for the full-year, this is the first time in six years that we saw year-over-year revenue growth for a full calendar year in this business.
Operating income in our brachy business remained strong at $1.1 million in Q4 this year compared to $439,000 in 2010. For the full-year, operating income was $4.9 million compared to $3.7 million last year. We did incur special items in each of these years which affected our results and those special items are detailed in our press release.
Returning to consolidated results, adjusted EBITDA was $2.6 million for the fourth quarter of 2011 and $13.5 million for the full-year. Our capital expenditures totaled $2 million for the year. And we expect our CapEx spend for 2012 to be similar to 2011 exclusive of the purchase price for the core asset acquisition.
We ended 2011 with $41.2 million in cash, cash equivalents and marketable securities. We have $23.7 million outstanding under our credit agreement resulting in a net positive position of $17.5 million.
That wraps up my comments. And I'd now like to turn the call back over to Chris.
Thank you, Frank, and good morning, again. My comments this morning are going to be grouped into three sections. The first will be yearend results for both segments including some specific discussion of the fourth quarter. Second, I'll talk about our new transactions; and third, outlook for 2012 and beyond.