The Ossur hf. interim Consolidated Financial Statements for the first quarter of 2003 was approved at a meeting of the Board of Directors on 28 April. The statement has been reviewed and endorsed by the auditors of the company.
The principal companies of the Ossur Consolidation are Ossur hf. in Iceland, the Ossur Holdings Inc. Consolidation in the USA, the Ossur Holding A.B. Consolidation in Sweden and Ossur Europe B.V. in the Netherlands.
Principal Operating Results for the First Quarter of 2003
|
Income Statements for the first quarter of 2003 |
Q1
2003 |
% of sales |
Q1
2002 |
% of sales |
Change |
|
|
|
|
|
|
|
|
Net sales |
21,692 |
100% |
18,593 |
100% |
17% |
|
Cost of goods sold |
-9,129 |
-42% |
-7,495 |
-40% |
22% |
|
Gross profit |
12,563 |
58% |
11,098 |
60% |
13% |
|
|
|
|
|
|
|
|
Other income |
82 |
0% |
222 |
1% |
-63% |
|
Sales and marketing expenses |
-4,872 |
-22% |
-4,197 |
-23% |
16% |
|
Research & development expenses |
-2,257 |
-10% |
-2,019 |
-11% |
12% |
|
General & administrative expenses |
-3,546 |
-16% |
-3,562 |
-19% |
0% |
|
|
|
|
|
|
|
|
Profit from operations |
1,970 |
9% |
1,542 |
8% |
28% |
|
|
|
|
|
|
|
|
Interest income/(expenses) |
-126 |
-1% |
-323 |
-2% |
-61% |
|
Income from associated companies |
0 |
0% |
56 |
0% |
-100% |
|
|
|
|
|
|
|
|
Profit before tax |
1,844 |
9% |
1,275 |
7% |
45% |
|
Income tax |
-440 |
-2% |
-244 |
-1% |
80% |
|
|
|
|
|
|
|
|
Net profit for the period |
1,404 |
6% |
1,031 |
6% |
36% |
|
|
|
|
|
|
|
|
EBITDA |
2,642 |
12% |
2,127 |
11% |
24% |
Balance Sheet at End of March:
|
Consolidated Balance Sheets (USD '000) |
31 March
2003 |
31 Dec
2002 |
Change |
|
|
|
|
|
|
Fixed assets |
33,407 |
32,836 |
2% |
|
Current assets |
39,322 |
38,589 |
2% |
|
Total assets |
72,729 |
71,425 |
2% |
|
|
|
|
|
|
Equity |
41,562 |
39,861 |
4% |
|
Long-term liabilities |
13,667 |
14,627 |
-7% |
|
Current liabilities |
17,500 |
16,937 |
3% |
|
Total equity and liabilities |
72,729 |
71,425 |
2% |
Cash Flow Q1:
|
Cash flow statements for the
first quarter of 2003 (USD '000) |
Q1
2003 |
Q1
2002 |
|
|
|
|
|
Working capital from operating activities |
2,171 |
1,989 |
|
|
|
|
|
Net cash provided by operating activities |
686 |
-443 |
|
Investing activities |
-145 |
-1,009 |
|
Financing activities |
-301 |
-59 |
|
Net increase/(decrease) in cash |
240 |
-1,511 |
Financial Ratios Q1
|
Financial ratios |
Q1
2003 |
Q1
2002 |
|
|
|
|
|
Earnings per share, EPS (US cents) |
3.23 |
2.76 |
|
P/E ratio |
19.5 |
17.3 |
|
Return on common equity |
29% |
32% |
|
Current ratio |
2.2 |
1.7 |
|
Equity ratio |
57% |
51% |
|
Market cap (Million USD) |
204 |
156 |
First Quarter Operations
Sales continued to exhibit the signs of strong organic growth. Sales in the first quarter of 2003 were the best ever in a single quarter, increasing by 17% from the preceding year. This is the sixth record set for single quarter sales since the beginning of 2001 (last nine quarters). No new companies have been acquired during this period, which means that the entire increase is the result of organic growth.
Sales have increased substantially in Europe, both Western Europe and Scandinavia, but the North American market has been showing some signs of stagnation. More precisely, external sales of the Consolidation were as follows divided by market area:
|
Thousand USD |
Q1
2003 |
% |
Q1
2002 |
% |
Change % |
|
|
|
|
|
|
|
|
Ossur North America, Inc. |
10,209 |
47% |
10,060 |
54% |
1% |
|
Ossur Europe, B.V. |
5,615 |
26% |
3,571 |
19% |
57% |
|
Ossur Nordic, A.B. |
3,241 |
15% |
2,292 |
12% |
41% |
|
Other markets |
1,920 |
9% |
1,821 |
10% |
5% |
|
Mauch, Inc. |
707 |
3% |
849 |
5% |
-17% |
|
|
|
|
|
|
|
|
Total |
21,692 |
100% |
18,593 |
100% |
17% |
Gross profit in the first quarter amounted to 58% of sales. This is slightly below the corresponding period in 2002, when gross profit came to 60%. The gross profit for the year 2002 was 59%. The strengthening of the Icelandic krona has continued to raise the Company's manufacturing costs in Iceland, with a resulting negative impact on operations.
Sales and marketing expenses amounted to 22% of sales, slightly down from the 23% of the corresponding period last year. Sales and marketing costs in 2002 amounted to slightly less than 21%.
Research and development expenses amounted to 10% of sales in the first quarter, as compared to 11% for the corresponding period last year and 9% for 2002 as a whole. Research and development costs of the Company are frontloaded, with numerous first-quarter projects relating to the marketing of new products later in the year As before, all research and development costs are expensed at the time that they are incurred.
General and administrative expenses have been decreasing, amounting to 16% of sales in the first quarter, as compared to 19% for the corresponding quarter last year. However, the ratio is consistent with 2002 results.
On the whole, the Company achieved its profit goals, which were fully according to plan for the first quarter. The management is also pleased to note that the excellent growth in sales is fully reflected in the increased operating profit.
Ossur Affiliated Facilities
Ossur North America, Inc. has introduced a new orthotic and prosthetic sales network known as the Ossur Affiliated Facilities Program. Already, about 600 orthotic and prosthetic facilities have registered in the Ossur Affiliated Facilities Program, making it the largest network of such facilities in the United States. The objective of Ossur with the founding of the Ossur Affiliated Facilities is to provide professionals in the field with access to superior training and extensive information about current technology with a view to providing each user with the appropriate products and the appropriate training in their proper use.
Establishment of Consultancy Firm
At the beginning of the year Empower - Health Care Solutions AB, a new consultancy company owned by Ossur hf., started operations in Sweden. Empower will concentrate on providing health care professionals, especially in the field of prosthetics and orthotics, with advice on the organization of rehabilitation and training programs. These programs have proven both effective and efficient. The first program offered by Empower is known as SMARTSM, which is intended primarily for physicians, physiotherapists and prosthetists and has the objective of substantially cutting the time from amputation until the amputee is up and walking.
CAD/CAM
Ossur's first CAD/CAM solution, a manufacturing technology acquired by Ossur from the Swedish company Capod last year, has been sold and set up in China. This is the first Ossur sale to China.
Ossur North America Houses University Studies
As revealed in an earlier press release, Ossur hf. and the California State University, Dominguez Hills (CSUDH) signed an agreement in late January on the transfer of the CSUDH Prosthetic Education Program to Ossur North America Headquarters. Ossur has agreed to accommodate the Cal State O&P Program for a period of five years, rent-free. The added capacity at Ossur will allow CSUDH to offer a new type of baccalaureate degree, where undergraduate students will first complete 3 years of college in general education, and then go on to complete their final year in clinical training in prosthetics at the off-site facility provided by Ossur.
Proceedings Against Freedom Innovations
In March, Ossur North America Inc. initiated proceedings against Freedom Innovations Inc., citing four counts of infringement of Ossur patents. The litigation is directed at Freedom's line of prosthetic feet.
Products
The first quarter saw the launch of the first prosthetic foot designed specifically for women. Marketed under the name Elationä, the foot has an adjustable heel height and is the first foot marketed exclusively for women. The Elationä also marks the first stage of targeting specific lifestyles in the marketing of Ossur products .
Meeting with Managers
Tomorrow morning investors and other interested parties are invited to participate in an open conference with the Company's Management. At the conference, Mr. Jon Sigurdsson, President & CEO, will review the results of the quarter and discuss the results with investors together with Mr. Hjorleifur Palsson, CFO. Gary Wertz, President of Ossur North America, Inc., will give a brief account of operations in North America.
The conference will be held tomorrow, Wednesday 30 April, at 08:30 a.m. at the office of Ossur hf. at Grjothals 5, Reykjavik. The meeting will be conducted in English and can be observed on the Internet through the Ossur hf. website at www.ossur.com
# # #
The 1st Quarter 2003 Report is available on the following link: http://reports.huginonline.com/900989/116646.pdf
The 1st Quarter 2003 Presentation is available on the following link: http://reports.huginonline.com/900962/116632.pdf