Urologix, Inc. (ULGX)
F3Q10 (Qtr End 03/31/10) Earnings Call Transcript
April 27, 2010 5:00 pm ET
Stryker Warren, Jr. – CEO
Rebecca Weber – Director of Finance & Controller
Greg Fluet – EVP & COO
Ernest Andberg – Feltl & Company
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Good day, ladies and gentlemen, and welcome to the Urologix Inc. fiscal 2010 third quarter conference call. My name is Crystal, and I will be your operator for today. At this time all participants and in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.
Statements made at this presentation may contain forward-looking statements that are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statements due to risks and uncertainties. A detailed discussion of risks and uncertainties maybe found in Urologix recent Annual Report on Form 10-K for the year ended June 30, 2009, and other documents filed with the Securities and Exchange Commission.
At this time, I will turn the call over to Mr. Stryker Warren, Jr., Chief Executive Officer; please proceed sir.
Stryker Warren, Jr.
Good afternoon. This is Stryker Warren, and as the Chief Executive Officer of Urologix, I welcome you to this earnings call. We are pleased you are interested in the company and at its performance. Joining me are Rebecca Weber, Director of Finance and Controller; and Greg Fluet, Executive Vice President and Chief Operating Officer.
Before I share my perspective on the third quarter of fiscal 2010, I will ask Rebecca to review the financial results.
Thank you, Stryker. Revenue for the third was $3.6 million, an increase of 8% over the $3.3 million reported in the third quarter of fiscal 2009. Revenue decreased 12% from the $4.1 million reported in the second quarter of this fiscal year.
The 8% increase in revenue over the prior year quarter is due to increased sales in all distribution channel, direct third party mobile and Urologix mobile service. The decrease in the revenue from the second quarter of fiscal 2010 is due to decreased sales in all distribution channels.
Revenue derived from the Urologix mobile service contributed 46% of overall revenue in the third quarter of fiscal 2010, compared to 48% in the second quarter of fiscal 2010.Revenue from catheter sales to direct accounts contributed 36% of overall revenue in the third quarter of this fiscal year, compared with 35% of revenue in the prior quarter.
And finally third party mobile revenue contributed 15% of overall revenue in the third quarter of fiscal 2010 consistent with the second quarter of this fiscal year. Cash and cash equivalents were $5.8 million as of March 31, 2010.
We utilized approximately $247,000 of cash in the current quarter compared to cash utilization of $897,000 in the third quarter of fiscal 2009 and cash generation of approximately $22,000 in the previous quarter.
The decrease in our cash utilization when compared to the third quarter of fiscal year 2009 is due to our improvement in our gross margin of 5 percentage points as well as a $283,000 decrease in our operating expenses. The increase in our cash utilization was from the prior quarter is result of lower sales as well as an increase in our day sales outstanding, our day sales outstanding at the end of the third quarter were 46 days up six days when compared to 40 days for the quarter ended December 31, 2009.
Our day sales outstanding is usually lower at the end of the second quarter of our fiscal year as many customers pay down their outstanding accounts receivable balance prior to end of the calendar year for taxes purposes. Management believes that the $5.8 million cash balance at March 31, 2010 will be sufficient to fund our operations beyond the next 12 months.
The net loss for the third quarter was $597,000 or $0.04 per diluted share. A reduction of 50% when compared to the net loss of $1.2 million or $0.08 per diluted share reported in the third quarter of the prior fiscal year.
However, the net loss increased when compared to the second quarter of fiscal 2010 net loss of $273,000 or $0.02 per diluted share. Gross profit for the third quarter fiscal 2010 was $2 million or 55% of revenue, a 5 percentage point increase when compared to the gross profit of $1.7 million or 50% of revenue reported in the third quarter of fiscal 2009.
The 5 percentage point increase in gross margin as compared to the prior fiscal year third quarter is a result of increased production volume to meet increased demand. Gross profit as a percentage of revenue, decreased by 2 percentage points when compared to the 57% reported in the second quarter of fiscal 2010.
The decrease in the gross margin over the prior quarter is primarily due to an inventory adjustment. Operating expenses decreased 10% to $2.6 million when compared to the $2.9 million reported in the third quarter of fiscal 2009 as a result of continued expense management.
Operating expenses remain consistent with the $2.6 million reported in the second quarter of fiscal 2010 increasing $35,000 or 1%. As mentioned in the previous quarter, we are planning to increase our investment in certain areas of the business but only in those areas where we have identified clear resource needs to support the growth of the business.