EXHIBIT 99.1
[COMPANY LOGO]
FOR IMMEDIATE RELEASE
MICROTEK MEDICAL HOLDINGS ANNOUNCES FOURTH QUARTER AND
FULL YEAR RESULTS
FY 2004 NET REVENUES INCREASE 28% OVER PRIOR YEAR TO $126.6 MILLION
FY 2004 EARNINGS APPROXIMATE $9.9 MILLION, OR $0.22 PER DILUTED SHARE
RELEASES REVENUE AND EARNINGS FORECASTS FOR FY 2005
ALPHARETTA, GA, February 25, 2005 - Microtek Medical Holdings, Inc. (Nasdaq:
MTMD), a leading manufacturer and marketer of infection control products, fluid
control products and safety products to healthcare professionals, today
announced results for the fourth quarter and year ended December 31, 2004.
"We are increasingly proud of our performance this year, particularly the growth
in our organic healthcare revenues, our improved operating profitability and the
contributions from our recently acquired businesses," said Dan R. Lee, the
Company's President and CEO. "Our sales and marketing infrastructure is in place
and is delivering results. Our net revenues increased 28 percent year over year.
Our income from operations, excluding the effect of disposition gains in each
year, increased 25 percent year over year. Our cash flow from operations for
2004 was approximately $12 million, and we ended the year with cash and
equivalents of $9 million and reduced debt by more than $3 million, net of
financing our recent acquisitions."
Highlights from the fourth quarter and full year of 2004 include:
o Fourth quarter net revenues increased 25.2 percent to $33.1 million,
compared to the fourth quarter of 2003;
o Full year 2004 net revenues increased 28.3 percent over 2003 to $126.6
million;
o Organic healthcare revenues grew 5.8 percent in fourth quarter of 2004
over the prior year quarter and 10.7 percent for the full year;
o Net income for the fourth quarter was $4.3 million, or $0.10 per
diluted share, including foreign currency exchange gains of $557
thousand, net of income taxes of $293 thousand, and non-cash deferred
income tax benefits of $1.7 million;
o Net income for the full year 2004 was $9.9 million, or $0.22 per
diluted share, including the previously mentioned foreign currency
exchange gains and non-cash deferred income tax benefits and gains on
the sale of certain property and equipment in the third quarter of
2004 of $215 thousand.
FOURTH QUARTER AND FULL YEAR RESULTS
Fourth quarter 2004 net revenues were $33.1 million, an increase of $6.7 million
or 25.2 percent over the fourth quarter of 2003. The Company's healthcare
revenues, including revenues attributable to recent acquisitions, totaled $31.5
million for the fourth quarter of 2004, an increase of 24.4 percent over the
2003 quarter. For the full year 2004, net revenues, including acquisitions,
increased by 28.3 percent over 2003 to $126.6 million. Healthcare revenues,
including acquisitions, increased 27.9 percent over 2003 to $119.2 million,
compared to $93.1 million in 2003.
Mr. Lee explained, "During the 2004 quarter as compared to the 2003 quarter, the
Company's domestic healthcare revenues grew 8 percent to $24.1 million as a
result of a 7 percent increase in our domestic branded hospital revenues and a 9
percent increase in our domestic OEM revenues. The Plasco acquisition, continued
growth in our CleanOp product sales and increased sales to private label
customers were the primary contributing factors to this growth. The Company's
international revenues for the 2004 quarter, including revenues from the
acquisition of IMP earlier in the year, demonstrated an impressive 146 percent
increase to $7.4 million. Excluding IMP revenues, international revenues for the
fourth quarter of 2004 increased by 25 percent."
Mr. Lee continued, "For the full year, domestic healthcare revenues increased by
$16.0 million, or 20 percent, as a result of 20 percent increases in both our
domestic branded and OEM revenues. Excluding the impact of recent acquisitions,
domestic healthcare revenues increased by 10 percent. On the international
front, full year 2004 revenues increased over 2003 by $10 million or 75 percent,
including $7.9 million in IMP revenues. Excluding IMP, international revenues
posted a 16 percent increase to $15.5 million."
Gross profit for the fourth quarter of 2004 was $13.3 million, or 40.0 percent
of net revenues, versus $10.8 million, or 40.9 percent of net revenues, for the
fourth quarter of 2003. For the full year, gross profit was $49.6 million, or
39.2 percent of net revenues, compared to $39.2 million or 39.7 percent of net
revenues in 2003.
Selling, general and administrative ("SG&A") expenses for the fourth quarter of
2004 were $10.5 million, or 31.7 percent of net revenues, as compared to $8.7
million, or 32.8 percent of net revenues in the fourth quarter of 2003. For the
full year 2004, SG&A expenses were $39.5 million, or 31.2 percent of net
revenues, versus $31.3 million, or 31.7 percent, of net revenues in 2003.
Income from operations for the fourth quarter and full year 2004 was $2.2
million and $8.4 million, respectively, as compared to $1.8 million in the
fourth quarter of 2003 and $7.6 million for the full year 2003. Excluding gains
on dispositions of property and equipment in 2004 and 2003 of $215 thousand and
$982 thousand, respectively, the Company's income from operations for the full
year 2004 increased by $1.6 million or 25.1 percent over the full year 2003.
Net income for the 2004 fourth quarter was $4.3 million, or $0.10 per diluted
share, including deferred income tax benefits of $1.7 million and foreign
currency exchange gains of $557 thousand, net of income taxes of $293 thousand.
In the fourth quarter of 2003, net income, including $3.9 million in deferred
income tax benefits, was $5.7 million, or $0.13 per diluted share. Excluding
non-cash deferred income tax benefits and foreign currency exchange gains in the
respective quarters, the Company's net income for the fourth quarter of 2004
increased by 18.7 percent over the 2003 quarter.
For the full year 2004, the Company earned $9.9 million, or $0.22 per diluted
share, including non-cash deferred income tax benefits of $1.7 million,
disposition gains of $215 thousand, and the previously mentioned foreign
currency exchange gains. By comparison, net income for 2003 was $16.0 million,
or $0.37 per diluted share, and included $8.8 million in non-cash deferred
income tax benefits and disposition gains of $982 thousand. Excluding non-cash
deferred income tax benefits, disposition gains and foreign currency exchange
gains in the respective years, net income for 2004 increased 19.7 percent over
2003.
At December 31, 2004, the Company's cash and investments approximated $9.0
million and its borrowings under its credit facility were $4.5 million, as
compared to cash and investments of $9.5 million and credit facility borrowings
of $7.2 million at December 31, 2003. The Company's cash flows from operating
activities in 2004 of approximately $12 million enabled the financing of the IMP
acquisition and the Company's other capital needs while improving the Company's
net cash position (which is defined as cash and investments less the Company's
credit facility borrowings) by $2.2 million.
Mr. Lee concluded, "Based on our initiatives for 2005 and excluding the effect
of any possible future acquisitions, we believe that our revenues for 2005 will
be in the range of $137 million to $142 million, and we believe our earnings
will be in the range of $0.23 to $0.25 per diluted share, excluding the impact
of any future deferred income tax benefits. Our forecasted earnings for 2005 of
$0.23 to $0.25 per diluted share compares favorably to earnings of $0.185 in
2004, excluding the $1.7 million in deferred income tax benefits. During 2005,
we are looking for gross margin and operating income improvements by improving
our leverage through increasing our net revenues, all of which equates to
stronger earnings. As we have mentioned previously, we continue to seek
attractive acquisition candidates which complement our core manufacturing,
distribution and sales and marketing competencies. During 2005, we hope to
strengthen Microtek's position as a leading supplier of high quality infection
control products to hospitals and outpatient facilities both domestically and
abroad."
CONFERENCE CALL: The Company invites its shareholders and other interested
parties to join its conference call which will be conducted by Dan R. Lee,
President and Chief Executive Officer, and Jerry Wilson, Chief Financial
Officer, at 10:00 a.m. Eastern Time on Friday, February 25, 2005. This
conference call will be accessible to the public by calling 1-877-407-9210
(U.S.), Reference: Microtek Medical. International callers dial 1-201-689-8049.
Callers should dial in approximately 10 minutes before the call begins. To
access the live broadcast of the call over the Internet, go to Investor
Relations page at www.MicrotekMed.com.
A conference call replay will be available through 11:59 p.m. Eastern Time on
March 4, 2005 and can be accessed by calling 1-877-660-6853 (U.S.) or
1-201-612-7415 (international); for both reference conference call account
#1628, Conference ID #135956.
ACTUAL RESULTS COULD DIFFER FROM FORWARD-LOOKING STATEMENTS: This Press Release
contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such statements
include, but are not limited to, the Company's forecasted revenues and
forecasted earnings for 2005, the Company's statement that it is looking for
gross margin and operating margin improvements by improving its leverage through
increasing its net revenues, the Company's ability to consummate acquisitions
which complement the Company's core competencies, and the Company's plan to
strengthen its position as a leading supplier of high quality infection control
products to hospitals and out-patient facilities both domestically and abroad.
Such statements are subject to certain factors, risks and uncertainties that may
cause actual results, events and performance to differ from those referred to in
such statements. These risks include, without limitation, those identified in
Risk Factors in the Company's Annual Report on Form 10-K for the year ended
December 31, 2003, including, without limitation, the risks described in Risk
Factors under the captions "-Reliance upon Microtek", "-History of Net Losses",
"-Competition", "-Product Liability", "-Stock Price Volatility", "-Dependence on
Key Personnel", "-Anti-takeover Provisions", "-Low Barriers to Entry for
Competitive Products", "-Potential Erosion of Profit Margins", "-Risks of
Completing Acquisitions", "-Risks of Successfully Integrating Acquisitions",
"-Small Sales and Marketing Force", "-Reliance upon Distributors", "-Reliance
Upon Large Customers", "-Microtek Regulatory Risks", "-Risks of Obsolescence",
"-Reduced OREX Market Potential", " OREX Commercialization Risks", "-OREX
Manufacturing and Supply Risks", "-Risks Affecting Protection of Technology",
"-Risks of Technological Obsolescence" and "-OTI Regulatory Risks". We do not
undertake to update our forward-looking statements to reflect future events or
circumstances.
ABOUT MICROTEK: The Company, a market leader in the healthcare industry,
develops, manufactures and sells infection control products, fluid control
products and safety products to healthcare professionals for use in environments
such as operating rooms and outpatient surgical centers.
FOR MORE INFORMATION, PLEASE CALL (800) 476-5973
Dan R. Lee, President & CEO
Jerry Wilson, CFO
John Mills, Investor Relations
InvestorRelations@MicrotekMed.com
-TABLES FOLLOW -
MICROTEK MEDICAL HOLDINGS, INC.
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except for per share data) THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
------------------------------------------ -----------------------------------
2004 2003 2004 2003
-------------------- ------------------ --------------- ----------------
Net revenues $ 33,143 $ 26,462 $ 126,581 $ 98,664
Gross profit 13,260 10,828 49,564 39,216
Operating expenses:
Selling, general and administrative 10,505 8,670 39,483 31,261
Research and development 236 227 1,048 940
Amortization of intangibles 344 113 809 440
-------------------- ------------------ --------------- ----------------
Total operating expenses 11,085 9,010 41,340 32,641
-------------------- ------------------ --------------- ----------------
Gain on dispositions - - 215 982
-------------------- ------------------ --------------- ----------------
Income from operations 2,175 1,818 8,439 7,557
Interest expense, net (71) (45) (265) (179)
Foreign currency exchange gain 850 - 850 -
Other income, net 25 56 133 135
-------------------- ------------------ --------------- ----------------
Income before income taxes 2,979 1,829 9,157 7,513
Income taxes:
Current tax expense (348) (81) (926) (300)
Deferred tax benefit 1,690 3,930 1,690 8,810
-------------------- ------------------ --------------- ----------------
Total income tax benefit (expense) 1,342 3,849 764 8,510
-------------------- ------------------ --------------- ----------------
Net income $ 4,321 $ 5,678 $ 9,921 $ 16,023
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Net income per share - basic $ 0.10 $ 0.13 $ 0.23 $ 0.38
==================== ================== =============== ================
Net income per share - diluted $ 0.10 $ 0.13 $ 0.22 $ 0.37
==================== ================== =============== ================
Weighted average shares outstanding - basic 43,165 42,490 43,005 42,206
==================== ================== =============== ================
Weighted average shares outstanding - diluted 44,459 44,016 44,500 43,251
==================== ================== =============== ================
BALANCE SHEET DATA: DECEMBER 31, 2004 DECEMBER 31, 2003
-------------------- ------------------
Cash and cash equivalents $ 8,964 $ 9,462
Other current assets 55,366 54,749
-------------------- ------------------
Total current assets 64,330 64,211
Total assets 131,069 118,299
==================== ==================
Current liabilities $ 15,511 $ 11,691
Long term debt, net of current portion 4,984 8,056
Other liabilities 1,931 2,008
-------------------- ------------------
Total liabilities 22,426 21,755
Shareholders' equity 108,643 96,544
-------------------- ------------------
Total liabilities and shareholders'
equity $ 131,069 $ 118,299
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