Edap Tms SA (EDAP) 2003 Q4 法說會逐字稿

Good day. All sites on the conference line in a listen only mode. I would like to turn the program over to your host Mr. Ian Vawter.

Thank you Leo, and good morning everyone. On behalf of EDAP TMS I would like to welcome you to the company's conference call to discuss the financial results for the fourth quarter and fiscal year ended 2003.

On the call with me today is colleague Chauveau, Chairman and Chief Executive Officer of EDAP TMS and Huques de Bantel (ph), President of the company's two operating divisions.

Before we begin, I would to remind everyone that that some of the management's remarks today may contain forward-looking statements regarding the company's growth and expansion plan.

These forward-looking statements are based on the management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described there in.

Factors that may cause such differences include but are not limited to describe under the risk factors of the company's filings with the SEC. These forward-looking statements speak only as of today's date and the company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the company's expectations or future events.

With that said I'll now turn the call over to Philippe Chauveau.

Thank you, Ian. Thank you and welcome to our fourth quarter and fiscal year end 2003 financial results conference call.

We'll follow a slightly different format today. First Ian will review the results that we released yesterday with some additional financial comments.

And then Huques will continue with comments relating the 2003 operations of the business and conclude with the discussion of the future course of the business in 2004 and beyond. Following Huques's comments, he will then open the call for a question and answer period where Ian and I will join Huques in responding to your questions.

With that I'll turn the call over to Ian for comments on the results.

Thank you and as Philippe mentioned I'll began with the review of the results released yesterday and then will follow up with some comments detailing some of the specific financial events that occurred during the year and in the fourth quarter.

As always please note that all of the figures that I discuss here today are in euros. For your convenience these numbers are translated into US dollars in the tables attached to the press release.

Revenues for the fourth quarter 2003 were 4.6 million euros compared to 6 million euros in the same quarter of 2002. Total year 2003 revenues were 18.5 million euros versus 20 million euros in year 2002. This decline was largely due to the strength of the euro in 2003 and lower than expected revenues in the company's HIFU division.

Gross margin as a percent of sales decreased to 16.6% in the fourth quarter of 2003 versus 46.1% in the third quarter of 2000 - in the fourth quarter of 2002 and decreased to 28.8% in the fiscal year 2003 versus 42.9% in the fiscal year 2002.

The decreases were related to several factors. In the UDS division because of the strength of the euro and the decision to increase pricing in order to gain market share. The ASP of the devices sold was lower than previous year's. That's making it necessary to sell more units at a lower margin to maintain revenue levels.

The company also took a reserve against inventories during the fourth quarter in the amount of 600,000 euros.

Finally on gross margins, the HIFU division has a significant amount of fixed cost related to it's cost of sales that were not sufficiently offset by the revenues generated by the division in 2003.

Operating loss for the fourth quarter of 2003 was 4.3 million euros compared to 1.4 million euros in the fourth quarter of 2002.

Operating loss for the full year 2003 was 8.1 million euros compared to a full year 2002 operating loss of 4.8 million euros. Net loss for the fourth quarter of 2003 was 4.2 million euros and 2.5 million euros for full year 2002.

Net Loss for the full year 2003 was 9 million euros versus 4 million euros in 2002. Net Loss for the fourth quarter of 2003 was 56 euro-cents per share and 1.15 euros per share for total year 2003.

At year-end 2003 the company had 10.4 million euros in cash on hand or 1.33 euros per diluted share and a net book value of 90 million euros or 2.43 euros per diluted share. The companies HIFU division had a disappointing year.

But as we mentioned in the press release the division continues to see acceptance of the Ablatherm albeit at a rate slower than anticipated.

During the year, 1477 Ablatherm treatments were performed, which represents an increase of 34% versus the prior year. Total revenues for 2003 for the division was 2.9 million euros.

The companies urology devices and services division experienced another record year for the number of units sold with 34 lithotripters.

But as even more interesting about this number is that of the 34 units sold 23 units went to site that did not previously own a TMS machine. This shows that the divisions plan to lower price and to gain market share had a desired effect.

However, the UDS division's results were significantly impacted by the strength of the euro.

As, we discussed in the press release and showed in the table if the euro had remained consistent during the year the division would have recognized an addition of 2 million euros in gross profit.

The division for fiscal year 2003 had 17.5 million euros in total revenue. Moving on to the balance sheet the company's cash position at the end of the year as I mentioned was 10.4 million euros.

The company continues to manage aggressively its cash balance to ensure enough liquidity to realize our business plans and reach profitability.

I will now turn the call over to Huques de Bantel to give more specifics on the results of 2003 from an operational point of view and to discuss the prospects with the business in 2004 and beyond.

Hugues?

Thank you, Ian and good morning everyone. Before we open the call to questions, I will like to reinforce my comments on the press release. The financial results of fiscal 2003 are by all means unsatisfactory.

Only 3 months into my new role as head of both divisions I am possibly driven to a 5point action plan, which I began executing on in December 2003.

The plan is as follows. First, putting a stop to the multi million operating losses with a total company restructuring, which has now been completed. But this is only the first step.

Second, maintaining strong cash management. This is an ongoing and tough discipline that I am committed to ensure at all times. Currently the company's cash balances are tracking returnably (ph)

Third, increasing revenues with double-digit growth is a personal commitment that I am devoted to in every market segment of the business. This is a challenge but one that I feel is attainable. Fourth, the major cause of sales reduction program is being implemented with all of our suppliers and partners.

And finally the discipline control of already which is operating expenses, is every managers commitment and is reduced by (inaudible).

As president of the operating divisions, my personal objectives is operating income and positive cash flow for the company and I'm ready to review these plan now and report quarterly on the company's results against these objectives going forward. With that, I will turn the call back over to Leo for questions.

(Operator Instructions)

And it appears that we have no questions at this time, I will turn the program back over to our host.

With that, we will conclude the conference call for today. Philippe, Huques and myself are remain available to answer any questions.

Thank you for your participation and we look forward to reporting the first quarter 2004 numbers in May of this year.

Thank you and have a good day.