Zoll sees slight revenue, income decline in Q1

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Zoll Medical, a manufacturer of resuscitation devices and software products, has reported its revenues for the 2009 first fiscal quarter were $89.5 million, compared to revenues in the first quarter of last year of $93 million, representing a decline of 4 percent.

Prior-year revenues included approximately $8 million related to a contract with the State of California, which was not expected to reoccur. There was a negative foreign exchange impact on revenue of almost $3 million as compared to Q1 of 2008.

The Chelmsford, Mass-based Zoll said its net income was $2.89 million for the quarter, compared to $3.18 million in the prior year. Backlog at the end of the first quarter was approximately $8.3 million.

First quarter sales to the North American market were $65.7 million, a decrease of 7 percent compared to $70.9 million for the prior year period, according to Zoll. Sales to the North American hospital market decreased 39 percent to $20.3 million, compared to $33.2 million for the same period last year. North American hospital revenues, including U.S. military/government, sales of $5.6 million in first quarter of 2009, compared to $11 million (including California) in first quarter of 2008.  

“As anticipated, we needed to fight three major effects on this quarter’s business: the absence of any single transaction comparable in size to last year’s California contract; a strengthening of the U.S. dollar; and an increasingly challenging capital equipment spending environment in North America,” said Richard A. Packer, CEO of Zoll.

“As we had previously disclosed,” Packer continued, “we did not expect a deal comparable to last year’s big California shipment in the quarter. This cost us about 9 percent at the top line, but fortunately only a small amount at the bottom line due to that deal’s low gross margin. The negative impact of changes in foreign exchange rates was sizeable, particularly at the bottom line, but again in line with our previous discussions. Finally, we saw weakness related to spending constraints in a number of our markets, with the most acute effect showing this quarter in our North American hospital business. Toward the end of the quarter, hospitals seemed to curtail their capital spending as they paused to assess general economic conditions and plan for 2009.”