Urologix, Inc. ( ULGX) Q3 2011 Earnings Call April 26, 2011 5:00 pm ET Executives Brian Smrdel – Chief Financial Officer Stryker Warren, Jr. – Chief Executive Officer Analysts Larry Haimovitch – HMTC Ernest Andberg – Feltl & Company Presentation Operator
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Before I share my perspective, I will ask Brian to review the financial results.Brian Smrdel Thank you, Stryker. Revenue for the third quarter was $3 million, 10% lower than the revenue reported in the second quarter of the 2011 fiscal year and 17% less than the $3.6 million reported in the same period of fiscal year 2010. The decrease in revenue compared to both the second quarter of fiscal year 2011 and the same period of the prior year is primarily the result of reduced order volume across our direct, mobile and third party mobile distribution channels. The net loss for the fiscal year 2011 third quarter was $983,000 or $0.07 per diluted share. This represents a 38% increase in net loss compared to the $712,000 loss or $0.05 per diluted share in the second quarter of the 2011 fiscal year and $386,000 increase compared to the net loss of $597,000 or $0.04 per diluted share in the third quarter of fiscal year 2010. Cash and cash equivalents were $3.8 million as of March 31 st, 2011 compared to $5.7 million at June 30 of 2010 and $5.8 million at March 31 st of 2010. Cash utilization was $498,000 in the third quarter, an increase of $85,000 from the prior quarter. In the third quarter of the prior fiscal year, the company utilized $247,000 in cash. On a trailing 90 days sales basis, our day sales outstanding at the end of the third quarter was 40 days, slightly lower than the 41 days reported at the end of the second quarter of fiscal year 2011, but above the 38 days reported at the end of fiscal year 2010. As mentioned in today’s press release, based on our fiscal year 2011 projections, management believes that the $3.8 million cash balance at March 31, 2011 will be sufficient to fund our working capital needs beyond the next 12 months.
Gross profit for the third quarter of fiscal year 2011 was $1.6 million or 54% of revenue, a decrease of two percentage points when compared to the gross profit rate in the prior quarter.Gross profit as a percentage of revenue was down one percentage point when compared to the prior year third quarter. The decrease in the gross profit rate is a result of allocating fixed manufacturing costs over the reduced volume of unit sales in the third quarter of fiscal year 2011. Reported third quarter operating expense totaled $2.6 million, an increase of $29,000 or 1% when compared to the second quarter of fiscal year 2011 and an increase of $22,000, also 1% increase when compared to the third quarter of fiscal year 2010. The increase in operating expense when compared to the second quarter of the 2011 fiscal year is a result of an increase in sales and marketing expense due to the launch of a new marketing campaign. The increase in operating expense when compared to the third quarter of the prior fiscal year is primarily the result of the company’s investment in additional R&D resources, which are up by 20% over the same period in the prior fiscal year. This increase was partially offset by lower sales expense due to the reduced revenue levels. I will now turn the call back to Stryker. Stryker Warren, Jr. Thank you, Brian. The third quarter’s results are disappointing and inconsistent with the efforts towards sustained sequential revenue growth. While we ended the calendar year with reimbursement uncertainty taken out of play and believing there would be more normality in the sales patterns as a result. We’ve experienced a market slowdown in procedural volume at the beginning of the calendar year, which many of our customers attributed to the resetting of annual deductibles and continuing economic conditions. Read the rest of this transcript for free on seekingalpha.com