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IRIS International Inc. Reports Operating Results (10-Q)

May 07, 2010 | About:
10qk

10qk

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IRIS International Inc. (IRIS) filed Quarterly Report for the period ended 2010-03-31.

Iris International Inc. has a market cap of $196.6 million; its shares were traded at around $10.81 with a P/E ratio of 27.7 and P/S ratio of 2.1. IRIS is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Consolidated revenues for the three months ended March 31, 2010 increased 20% over the prior year quarter. Revenues in the IVD urinalysis segment increased 24% to $22.3 million in the first quarter of 2010 from $18.0 million in the prior year quarter. Sales of IVD instruments increased 45% to $7.9 million in the first quarter of 2010 from $5.5 million in the prior year quarter. The increase in IVD instrument sales is primarily driven by strong international sales of both stand-alone Velocity units and iRICELL systems combined with a modest increase in domestic hospital spending for urinalysis systems as we have experienced a gradual improvement in the global capital equipment environment.

Marketing and selling expenses totaled $4.4 million and $3.9 million for the first quarter of 2010 and 2009, respectively, but decreased to 17% of revenues during the first quarter of 2010 as compared to 18% of revenues during the first quarter of 2009. The expense increase was due to additional personnel and related costs of $435,000, higher commissions and GPO fees of $65,000, increased travel and entertainment expenses of $60,000, higher outside professional services of $54,000, as well as $48,000 of other costs, offset by a decrease in tradeshow and meeting costs of $119,000. The increase in personnel and related costs is primarily the result of the initiation of direct sales in the United Kingdom and Germany in order to support the long-term strategy of our business. We expect to continue to invest in these areas to strengthen our global presence and support for the anticipated launches of our extensive product pipeline.

General and administrative expenses increased to $3.7 million and $3.1 million for the first quarter of 2010 and 2009, respectively, but decreased to 14% of revenues in the first quarter of 2010 as compared to 15% of revenues during the first quarter of 2009. This expense increase was due to an increase in personnel and related cost of $358,000, recruiting expense of $90,000 and other expenses of $142,000.

Operating Cash Flows. Cash provided by operations for the three months ended March 31, 2010 modestly decreased to $3.7 million compared to cash provided by operations of $4.1 million during the prior year three month period. We experienced a $4.3 million increase in accounts receivable and a $1.9 million decrease in cash from prepaid expenses and other current assets in the three months ended March 31, 2010 as compared to the prior year three months ended March 31, 2009. During the 2009 period, we benefited from a nonrecurring $1.5 million payment from IDEXX Labs, Inc. under our December 2008 manufacturing, supply and transition agreement. As of March 31, 2010, the number of days sales in accounts receivable decreased to 65 days compared to 74 days for the prior year first quarter. The number of days sales in accounts receivable varies and may increase with extended payment terms to our international distributors and end users.

Investing Activities. Cash used by investing activities totaled $1.0 million during the first three months of 2010, a $2.3 million increase over the first quarter of 2009, due primarily to an increase in purchases of property and equipment of $152,000 in the first three months of 2010 and the favorable impact of the sale of short-term marketable securities totaling $2.2 million in the first three months of 2009.

Financing Activities. Cash used in financing activities totaled $93,000 during the first three months of 2010, a $2.7 million decrease over the first three months of the prior year primarily as a result of the reduction in our repurchase of common stock, which amounted to $2.4 million during the first three months of 2009, and an increase in tax deduction benefits from the exercise of stock options of $274,000 during the first three months of 2010 compared to the prior year three month period.

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