Prism Medical Reports Fourth Quarter and Fiscal 2011 Results

TORONTO, March 5, 2012 /CNW/ - Prism Medical Ltd., ("Prism Medical" or "the Company") (TSXV: PM), a leading provider of durable medical equipment and related services to the mobility challenged, today reported financial results for the fourth quarter (Q4) and fiscal year ended November 30, 2011.

Financial Summary

(in thousands of Canadian dollars)	Three months ended November 30			Twelve months ended November 30
	2011	2010	% Change	2011	2010	% Change
Revenues	20,477	18,903	8.3%	73,842	66,657	10.8%
Gross profit	8,949	7,913	13.1%	30,867	28,387	8.7%
(as % of revenues)	43.7%	41.9%		41.8%	42.6%
Net income	1,583	1,808	(12.4%)	4,042	3,572	13.2%
(as % of revenues)	7.7%	9.6%		5.5%	5.4%
EBITDA^1	3,117	3,330	(6.4%)	9,751	8,758	11.3%
(as % of revenues)	15.2%	17.6%		13.2%	13.1%
Earnings per share
Basic	0.24	0.32	(25.0%)	0.66	0.64	3.1%
Diluted	0.22	0.25	(12.0%)	0.58	0.52	11.5%

Q4 and Fiscal Year 2011 Highlights

• Subsequent to November 30th, Prism Medical increased its quarterly dividend to $0.080 per share from $0.075 per share
• Revenues from the US grew by 27.1% in Q4 2011 compared to Q4 2010
• Canadian revenues grew by 34.3% in Q4 2011 compared to the same period last year
• Acquired 100% of Movement 2 Limited in April 2011, a UK provider of home care patient moving and handling equipment as well as servicing and repair
• In August 2011, convertible debentures with a face value of $8.6 million were redeemed in exchange for 2,279,999 common shares, strengthening the Company's balance sheet and positioning it for future growth

"During fiscal 2011, US institutional demand for safe patient handling equipment grew strongly and our investments in local manufacturing, selling and distribution worked together to accelerate our market penetration. Going forward, we expect to grow further in this area as well as to continue to win large contracts in the UK, where cost-focused customers are looking for a broader product and service offering, delivered on a regional basis," said Stuart Meldrum, Chief Executive Officer of Prism Medical. "With a significantly improved balance sheet over last year, we are in an ideal position to execute our core organic and acquisition strategies. We are focused on expanding geographically in North America with a focus on the institutional market, developing the early-stage North American home care market and expanding our leading home care presence in the UK."

Financial Review

Revenues

Total revenues for fiscal 2011 grew by 10.8% to $73.8 million compared to $66.7 million in fiscal 2010. North America accounted for 45.9% of revenues in fiscal 2011 compared to 40.4% in 2010. North American revenues grew by 25.8% year-over-year. During the year, US institutional budgets expanded and Prism Medical was able to win additional market share through geographic expansion and targeted sales initiatives. In the Canadian market, increased government spending levels and geographic expansion were the primary drivers of revenue growth. The UK comprised 54.1% of the Company's revenues compared to 59.6% last year. Revenues in the UK grew by 0.6% year-over-year, primarily due to the acquisition of Movement 2.

Gross Profit

Gross profit for the year grew by 8.7% to $30.9 million or 41.8% of revenues compared to $28.4 million or 42.6% of revenues in 2010. Gross profit increased from last year as higher margins in North America were achieved through higher sales combined with cost savings. The higher gross profit in North America was partially offset by lower gross margins in the UK, which were primarily the result of a difference in sales mix year-over-year.

Selling, General and Administrative

Selling, General and Administrative expenses in Q4 of fiscal 2011 were $5.9 million, or 28.8% of revenues compared to $4.8 million, or 25.5% of revenues in Q4 of fiscal 2010. Selling, general and administrative costs for the year were $21.8 million, or 29.5% of revenues, compared to $20.8 million, or 31.2% of revenues in fiscal 2010. The increase in selling, general and administrative expenses year-over-year is related to: the higher salaries and benefits required to support the growth in revenues over 2010 and the strengthening of the management and sales teams; selling, general and administrative costs associated with the Movement 2 acquisition; and various professional and legal fees primarily related to corporate governance and the transition to IFRS.

EBITDA¹

EBITDA for the year grew by 11.3% to $9.8 million, or 13.2% of revenues, compared to $8.8 million, or 13.1% of revenues last year.

Net Income

Net Income for the year grew by 13.2% to $4.0 million compared to $3.6 million in fiscal 2010. The growth in net income in fiscal 2011 can primarily be attributed to an increase in revenues and lower selling, general and administrative expenses as a percentage of revenues, which were partially offset by a higher tax expense in fiscal 2011 due to some favourable tax adjustments in 2010.

Liquidity

At November 30, 2011, total debt net of cash was $12.6 million, compared with $23.2 million at November 30, 2010. The conversion of $8.6 million in convertible debentures for 2,279,999 common shares in August 2011 strengthened the Company's balance sheet and solidly positioned the Company for future growth.

Outlook

The Company intends to grow sales, profitability and return on shareholders' equity. The Company believes that performance will be positively affected by a continued North American institutional demand for our products, improved manufacturing efficiencies, greater geographic coverage and revenues and profits from new product introductions. Through its growth strategies, the Company hopes to achieve continued profitable growth in the UK and North America.

Government funding for our products, particularly in Canada and the UK is a key driver of sales. Budgetary pressures on health care spending  is causing government agencies to look for increasingly cost effective solutions for healthcare provision and in this respect the company believes it is well positioned to win more business. On this basis, we believe that our business will continue to grow in all geographies and that the long term trend continues to be favourable.

Notice of Conference Call
Prism Medical will host a conference call on March 5, 2012 at 9:00 a.m. EST to discuss its financial results.  Stuart Meldrum, CEO, will Chair and George Chiarucci, CFO, will co-chair the call. All interested parties can join the call by referring to the information below:

Conference call details
Dial-In Number:	[phone] or [phone]
Taped Replay:	[phone] or [phone]
Reference Number:	56960892

Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at www.prismmedicalltd.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About Prism Medical Ltd.

Prism Medical Ltd. is one of the largest providers and manufacturers of durable medical equipment and related services to the mobility challenged in Canada, the US and the UK, with more than 100,000 installations and 200,000 product solutions sold. The Prism Medical brands include Waverley Glen and ErgoSafe, North America's leading supplier of lifting, handling and repositioning aid products and services across Canada and the US Freeway and Prism Service & Repair are leading suppliers of moving and handling products and services in the UK. For further information visit Prism Medical's website at www.prismmedicalltd.com or www.sedar.com.

¹Non-GAAP Financial Measures

Prism Medical's consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). The Company also uses non-GAAP measures such as EBITDA to measure its financial performance. EBITDA consists of earnings before interest, income taxes, depreciation, amortization and stock-based compensation expense. EBITDA is a financial metric used by many investors to compare companies on the basis of operating results, asset value and the ability to incur and service debt. Management believes that EBITDA is a useful measure for evaluating the performance of the Company. EBITDA is not a recognized measure under GAAP and does not have a standardized meaning prescribed by GAAP and may not be comparable to similarly titled financial metrics reported by other companies.

Forward-Looking Information

This document contains forward‐looking statements relating to our operations and to the environment in which we operate and our strategy, action plans and investments, which may involve estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward‐looking statements. These factors include those set forth in this report and our other public filings. Consequently, readers should not place any undue reliance on such forward‐looking statements. These forward‐looking statements are made as of the date of this report. Prism Medical is under no obligation to update any forward‐looking statements contained herein should material facts change due to new information, future events or other factors. All forward‐looking statements attributable to Prism Medical are expressly qualified by these cautionary statements. 

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

PRISM MEDICAL LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at November 30 (thousands of Canadian dollars)	2011 $	2010 $
ASSETS
Current assets
Cash and cash equivalents	3,113		946
Accounts receivable, net	16,870		16,127
Inventories	11,689		12,444
Prepaid expenses	970		881
Other receivables	1,051		932
Income taxes recoverable	139		289
Total current assets	33,832		31,619
Property, plant and equipment	3,795		4,007
Goodwill	18,645		18,279
Intangible assets	5,049		4,013
Future income tax assets	265		377
Total Assets	61,586		58,295
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness	10,850		8,060
Accounts payable and accrued liabilities	9,433		11,161
Income taxes payable	1,048		643
Current portion of long-term debt	2,096		12,430
Total current liabilities	23,427		32,294
Long-term debt	2,768		3,641
Future income tax liabilities	1,631		1,289
Total liabilities	27,826		37,224
Shareholders' equity	33,760		21,071
Total liabilities and shareholders' equity	61,586		58,295

On behalf of the Board:
Director						Director
"Andrew McIntyre"						"Howard Taylor"
______________						______________
Andrew McIntyre						Howard Taylor

 

PRISM MEDICAL LTD. CONSOLIDATED STATEMENTS OF INCOME
Year Ended November 30 (thousands of Canadian dollars, except per share amounts)		2011 $	2010 $
Revenues		73,842	66,657
Cost of products and services sold (including amortization  of $866  (2010 - $807)		42,975	38,270
Gross profit		30,867	28,387
Expenses
	Selling, general and administration	21,818	20,822
	Stock-based compensation	254	138
	Amortization	1,358	1,353
	Interest on bank indebtedness	439	678
	Interest on long-term debt	950	1,034
	Foreign exchange losses (gains)	164	(386)
Total expenses		24,983	23,639
Income before income taxes		5,884	4,748
Income tax provision
	Current	1,382	1,055
	Future	460	121
Income tax provision		1,842	1,176
Net income for the year		4,042	3,572
Earnings per share
	Basic	0.66	0.64
	Diluted	0.58	0.52

 

PRISM MEDICAL LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended November 30 (thousands of Canadian dollars)		2011 $		2010 $
Net income for the year		4,042		3,572
Other comprehensive income (loss)
	Unrealized gain (loss) on translation of self-sustaining foreign  subsidiaries	57		(2,386)
Comprehensive income for the year		4,099		1,186

 

PRISM MEDICAL LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(thousands of Canadian dollars and number of common shares)		Number of Common Shares #	Share Capital $	Other Paid In Capital $	Contributed Surplus $	Retained Earnings $	Accumulated Other Comprehensive Loss $	Shareholders' Equity $
Balance as at November 30, 2009		5,521	11,667	1,069	340	14,430	(6,746)	20,760
Issued on redemption of convertible debentures		66	250	(9)	-	-	-	241
Dividends paid on common shares		-	-	-	-	(1,255)	-	(1,255)
Comprehensive income (loss)
	Net income for the year	-	-	-	-	3,572	-	3,572
	Unrealized loss on translation of self-sustaining foreign subsidiaries	-	-	-	-	-	(2,386)	(2,386)
Stock-based compensation		-	-	-	139	-	-	139
Balance as at November 30, 2010		5,587	11,917	1,060	479	16,747	(9,132)	21,071
Issued on exercise of stock option plan		120	523	-	(90)	-	-	433
Issued on redemption of convertible debentures		2,627	10,880	(1,060)	-	-	-	9,820
Dividends paid on common shares			-	-	-	(1,917)	-	(1,917)
Comprehensive income (loss)
	Net income for the year	-	-	-	-	4,042	-	4,042
	Unrealized gain on translation of self-sustaining foreign subsidiaries	-	-	-	-	-	57	57
Stock-based compensation		-	-	-	254	-	-	254
Balance as at November 30, 2011		8,334	23,320	-	643	18,872	(9,075)	33,760

 

PRISM MEDICAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended November 30 (thousands of Canadian dollars)		2011 $	2010 $
Cash flows from operating activities
Net income for the year		4,042	3,572
Add (deduct) items not affecting cash
	Future income taxes	258	(156)
	Amortization	2,224	2,160
	Loss on sale of property, plant, and equipment	-	13
	Stock-based compensation	254	138
	Interest accretion on convertible debt	122	176
	Foreign exchange losses (gains)	164	(386)
Net change in non-cash working capital balances related to  operations		(1,814)	(1,410)
Cash provided by operating activities		5,250	4,107
Cash flows from investing activities
	Intangible assets	(636)	(470)
	Purchase of property, plant and equipment	(1,109)	(1,909)
	Purchase of a business	(402)	-
Cash used in investing activities		(2,147)	(2,379)
Cash flows from financing activities
	Increase in bank indebtedness	2,790	3,698
	Increase in long-term debt	625	-
	Repayment of long-term debt	(2,707)	(3,583)
	Issuance of share capital	433	-
	Dividends paid	(1,917)	(1,255)
Cash used in financing activities		(776)	(1,140)
Effect of foreign exchange rate changes on cash and cash equivalents		(160)	108
Net (decrease) increase in cash and cash equivalents during the year		2,167	696
Cash and cash equivalents, beginning of year		946	250
Cash and cash equivalents, end of year		3,113	946
Supplemental cash flow information
	Interest paid	1,520	1,761
	Income taxes paid	947	1,578

 

George Chiarucci
Chief Financial Officer
[email protected]
416-260-2145 ext. 229

Jonathan Ross
TMX Equicom
[email protected]
416-815-0700 ext. 248