The Nanosonics Ltd (ASX: NAN) share price will be one to watch this morning following the announcement of a strong profit result in FY 2019.
What did Nanosonics announce?
For the 12 months to June 30, Nanosonics reported record full year sales of $84.3 million, which was a 39% increase on the prior corresponding period.
This top line result was driven by strong growth in both Capital revenue and Consumable and Service revenue. Capital revenue increased 28% to $32.8 million and Consumables and Service revenue jumped 47% to $51.5 million. The latter reflected the annuity revenue associated with continuing strong growth in the company's installed base.
That installed base continued its solid growth in FY 2019. Management advised that its global installed base reached 20,930 units at the end of the period, which was an 18% increase year on year.
Operating expenses for the year were $49.2 million, including $11.4 million in Research and Development, which was up 16% on prior corresponding period.
This ultimately led to Nanosonics posting operating profit before tax of $16.8 million, which was up a massive 201% on the prior corresponding period.
Nanosonics' Chief Executive Officer and President, Michael Kavanagh, was very pleased with the company's performance in FY 2019.
He said: "The organisation has continued to go from strength to strength delivering excellent growth in our core trophon business while making significant investments in our long term strategy of establishing Nanosonics as a globally recognised leader in infection prevention."
"During the year the 2nd generation trophon, trophon2, was successfully launched receiving very positive customer feedback. Importantly, large investments in our product expansion strategy were made with significant development milestones achieved towards meeting the goal of introducing the first major new product by end of FY20, subject to regulatory approval," added Mr Kavanagh.
In FY 2020 the company expects continued growth in the installed base in North America with an adoption rate similar to FY 2019. It also expects adoption in Europe to grow thanks to its expanded geographical reach and growing awareness.
In addition to this, it advised that its renegotiated distribution agreement with GE Healthcare in the USA has now come into effect. This new agreement expands distribution opportunities globally and also results in a material increase in both sales and margin from consumables in the region. The full impact of which will be realised from the second half of FY 2020.
Operating costs are expected to increase by a sizeable 36% to $67 million this year due to its accelerated investment in growth. This includes $15 million in R&D spending.
Overall, "FY20 profit will be heavily weighted to H2 FY20, taking into consideration: the planned increased investment in new products and geographical expansion of the base trophon business; phasing of trophon sales; and the realisation of consumables margin benefit associated with the new GE Healthcare distribution agreement, the full benefit of which comes into effect in H2 FY20."