ev3's first-quarter 2010 net sales up 21%

ev3 Inc. (Nasdaq:EVVV), a global endovascular device company, today reported financial results for its fiscal first quarter and updated financial guidance for 2010. ev3's net sales totaled $123.9 million in the first quarter of 2010 compared to $100.4 million in the same quarter of the prior year. Excluding $2.9 million of positive impact due to foreign currency exchange rates, net sales increased 21% versus the prior year quarter.

Reconciliations of non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found immediately following the detail of net sales by geography in this release.

Robert Palmisano, president and chief executive officer of ev3 Inc., commented, "We achieved another quarter of significant sales growth in both our neurovascular and peripheral vascular segments that outpaced market growth rates in U.S. and international markets. Our neurovascular segment, which grew 44% in the first quarter compared to the prior year quarter, reflects the broad penetration we are making across our entire product line and the positive response to the international launch of our Pipeline Embolization Device and Solitaire FR Revascularization Device for ischemic stroke."

Palmisano continued, "I am especially pleased by the 13% sales growth we saw in our peripheral vascular segment during the quarter, which was led by an outstanding performance from our U.S. sales organization and the launch of our TurboHawk Plaque Excision System, TrailBlazer Support Catheter and new PowerCross PTA balloon."

ev3's GAAP net income for the first quarter of 2010 was $9.9 million, or $0.09 per diluted share, compared to a net loss of $(1.8) million, or $(0.02) per diluted share, in the first quarter of 2009. Non-GAAP adjusted net income in the first quarter of 2010 was $22.3 million, or $0.20 per diluted share, compared to adjusted net income of $7.1 million, or $0.07 per diluted share, in the first quarter of 2009.

Cash and cash equivalents totaled $116.8 million as of the end of the first quarter of 2010, an increase of $18.8 million compared to the end of the fourth quarter of 2009. 

Palmisano concluded, "Operationally, this was another very strong quarter for ev3. In addition to sales growth, we continue to emphasize gross margin improvement and profitability as our primary objectives, so I was very pleased to see sequential quarter gross margin expansion of 50 basis points to 76.4%. We will continue to focus on improving execution, driving manufacturing efficiencies and increasing leverage." 

Sales Review

By product segment, peripheral vascular net sales increased 13% in the first quarter of 2010 versus the prior year quarter and 11% on a constant currency basis. Neurovascular net sales increased 44% versus the prior year quarter and 38% on a constant currency basis.

On a geographic basis, U.S. net sales increased 18% versus the prior year quarter. International net sales increased 31% versus the prior year quarter and 24% on a constant currency basis. Changes in foreign currency exchange rates had a positive impact of $2.9 million on net sales compared to the first quarter of the prior year.

An investor presentation summarizing the company's first quarter of 2010 results is available at http://ir.ev3.net.

Outlook 

ev3 has increased its full-year guidance and now expects fiscal year 2010 net sales to be in the range of $520 to $530 million compared to $449.1 million of net sales in 2009. Net sales growth is expected to be approximately 16% to 18%. At current average rates, foreign currency exchange rate fluctuations are expected to have a minimal impact on revenue in 2010 compared to 2009. ev3 expects non-GAAP adjusted earnings per share to be in the range of $0.87 to $0.92 per diluted share, an increase of 43% to 51% over prior year based on approximately 115.4 million shares outstanding. ev3's adjusted net earnings per share guidance excludes estimated amortization expense of approximately $26.0 million, non-cash stock-based compensation of approximately $15.5 million, and charges relating to the estimated change in fair value of the future contingent consideration associated with the Chestnut acquisition of $17.2 million.

The company expects second quarter of 2010 net sales to be in the range of $129 to $133 million, an increase of 18% to 22% over the second quarter of 2009. At current average rates, foreign currency exchange rate fluctuations are expected to have a minimal impact on revenue growth in the second quarter of 2010. ev3 expects non-GAAP adjusted earnings per share to be in the range of $0.18 to $0.21 per diluted share, based on approximately 115.1 million shares outstanding, compared to $0.14 per diluted share in the second quarter of 2009.  ev3's non-GAAP adjusted earnings per share for the second quarter of 2010 excludes estimated amortization expense of approximately $6.5 million, non-cash stock-based compensation of approximately $3.9 million and charges relating to the estimated change in fair value of the future contingent consideration associated with the Chestnut acquisition of $8.1 million.