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RTI Biologics, Inc. (RTIX)
Q1 2010 Earnings Call
April 28, 2010 9:00 am ET
Wendy Crites Wacker - Director of Corporate Communications
Brian Hutchison - Chairman and CEO
Tom Rose - EVP and CFO
Shawn Fitz - Stephens
David Turkaly - SIG
Brooks West - Craig-Hallum Capital
Bill Plovanic - Canaccord Adams
Greg Brash - Sidoti & Company
Neil Gagnon - Gagnon Securities
Previous Statements by RTIX
» RTI Biologics, Inc. Q4 2009 Earnings Call Transcript
» RTI Biologics, Inc., Q3 2009 Earnings Call Transcript
» RTI Biologics Inc. Q1 2009 Earnings Call Transcript
I would now like to introduce your host for today's conference Wendy Crites Wacker, Director of Corporate Communications. You may begin.
Wendy Crites Wacker
Good morning and thank you for joining RTI Biologics for our first quarter 2010 conference call. Today, we will hear from Brian Hutchison, Chairman and CEO, who will discuss operational highlights and future activities for the company, as well as Tom Rose, Executive Vice President and Chief Financial Officer, who will provide an overview of our financial results.
Before we start, let me make the following disclosure about forward-looking statements. The earnings and other matters we will be discussing on this conference call will involve statements that are forward-looking. These statements are based on our management’s current expectations, but they are subject to various risks and uncertainties associated with our lines of business and with the economic environment in general.
Our actual results may vary from any statements concerning our expectations about future events that are made during the course of this meeting and we make no guarantees as to the accuracy of these statements. Accordingly, we urge you to consider all information about the company and not to place undue reliance on these forward-looking statements.
Now I'll turn the call over to Brian Hutchison.
Good morning, everyone. As many of you saw in our press release this morning, we reported quarterly revenues of $37.8 million with a small net loss of $54,000, or breakeven per share.
Sports medicine and surgical specialties continued to be our fastest growing segments. We also saw an increasing growth in our bone graft substitutes and domestic dental offsetting declines in spine in international revenues.
Our direct sports medicine business continues to do very well. Revenues were $10.3 million, or about 27% of our overall revenue this quarter. Domestic sports medicine grew by 20%.
In the first quarter, we launched the next-generation of our BTB Select implant, which allows for precision, sized matching relative an intra-articular length of BTB allografts. The BTB Select is an exciting allograft solution that addresses an overall market shift toward shorter BTBs, which are more difficult to recover naturally.
This implant enhances our sports medicine line, addresses a significant clinical need and ensures that we maximize every gift of donation received. We are estimating revenues from these two implants to be approximately $1 million in 2010.
Surgical specialties grew 28% compared to first quarter last year, continuing its strong growth pattern. The most significant growth rate in our domestic surgical specialties line is in breast reconstruction for the growth of 75% over the first quarter of 2009. We are particularly pleased at how well our new distributor has worked with this product line.
U.S. hernia revenues have increased 17% over the same period last year, while urology and ophthalmology domestic revenues increased by 55% and 38%, respectively.
Our bone graft substitutes revenue were up 14% for the first quarter, the increase related to increased distribution orders, principally of products introduced in 2009, as well as an increased market penetration through our direct distribution force. BGS revenues, through our direct distribution channel, grew 14% over the first quarter 2009.
General orthopedics saw growth of 2% worldwide. This is also an area where we were able to leverage our direct distribution. General ortho revenues through our direct channel more than doubled over the first quarter of last year.
The growth at BGS and general orthopedics revenues illustrates the continued success of our direct distribution team. In addition to our sports medicine line in many territories, we are providing a total tissue solution to hospitals. We expect this business to grow.
Domestic dental revenues showed a slight increase of 2% over the previous year indicating some stabilization in the market.
International revenues, which include exports and distribution from our German and French facilities, were $4.8 million in the first quarter, down 24% over Q1 2009. These decreases were directly related to lower orders from several European countries, many of which are still suffering from poor economic conditions.
Over coming months, we will be focused on increasing our distribution network for better market penetration as well as initiating pricing and payment strategies to remain competitive in down markets.
Our spine revenues for the first quarter decreased 33% from Q1 2009 as a result of an inventory reduction of about $4 million by our largest spine distributor. This is a continuation of the reductions we saw in the fourth quarter and as we said last quarter we are working with all of our distributors to support their focus on inventory management and use of the cash in their business.
We anticipate a small reduction in the second quarter from our largest distributor then orders should normalize from the mid Q2 through the remainder of the year to bring spine revenues flat for the full year compared to 2009, which was our assumption in our original guidance for 2010.