News...AGM points.Sonomax Hearing talks about "P" plan for success at AGM
2008-07-02 11:58 ET - News Release
Mr. Dan Casey reports
HIGHLIGHTS FROM SONOMAX'S ANNUAL GENERAL MEETING AND JUNE MONTHLY UPDATE CONFERENCE CALL
Sonomax Hearing Healthcare Inc. has provided a summary of thehighlights of the annual general meeting held on June 26, 2008, and themonthly update conference call held on June 27, 2008.
Highlights
There were over 100 attendees at this year's AGM that lasted two hours and 30 minutes. Here are some of the most salient points.
Sonomaxintroduced the framework of managing the business using the five Psmodel. The five Ps are: people, profitability, products, potential andpredictability. The company will continue to develop and enhance itsbusiness plan using this framework.
Dan Casey, Sonomax's chief executive officer provided several insights pertaining to each "P" and where the company is today.
People
The Sonomax team is a group of focused,dedicated and persevering people that are embracing the change thecompany is currently undergoing.
Profitability
The company has not been there yet but has a detailed plan inplace to show improvements on a quarter-to-quarter basis. It isanticipated that the company will get to positive cash and break evensometime in the first half of 2009. The company is preparing a businessplan with the long-term objective to reach a $25-million sales targetin 2011.
Products
Sonomax has four products that are the main focus for 2008 and 2009. They are:
- Hearing protection devices (HPD) -- SonoCustom - this product is mature and of the highest quality and best of class. It is showing quarter-to-quarter growth and penetrating new customers every month.
- Proof of performance software -- SonoPass -- the only objective testing software to measure the attenuation level of any HPD. Sonomax's strong IP position provides the company with a significant competitive edge and as this product is embraced by more and more companies it will become an important revenue stream.
- MP3 earphones sold under the brand Soundcage -- the Soundcage products have great potential and the balance of the year will be used to finalize the channel strategy for these products.
- Push to talk -- the communication headset used for two-way radios that allows wearers to talk and listen through the earpiece. The product is being test marketed in Europe and the company is confident that it will be another winning product for Sonomax.
Potential
During the May 28, 2008, conference call the potential of eachproduct line was explained. The company is playing in areas of greatpotential with very little market share. The upside is significant.
Predictability
This P has not been strength in the pastand will improve as the company obtains the necessary data to improveits decision making and create a more efficient supply chain. Greatprogress has been made so far. It is expected that by the end of thethird quarter of 2008 the sales forecasting element will be a tool thatcan be used to plan production, optimize inventory turns and increasethe company's working capital.
An update pertaining to many of the actions that have takenplace since the beginning of the year was provided. Some of thosehighlights are:
- Channel inventory has been reduced by 50 per cent;
- Finished goods inventory will be reduced by 50 per cent by the early part of next year;
- The company has reduced expenses and consequently the cash burn is down by about 50 per cent;
- The sales to Vitasound will start in the late third quarter of 2008 as they start successfully penetrating the hearing-aid market;
- The sales team is being built, sales process are being developed and being implemented. This is one of the key elements of the success of Sonomax going forward;
- Overall company and department objectives are in place and tracked regularly. This is an essential management process to ensure that the company executes in a timely fashion.
It was repeatedly stressed that the company clearly understands its No.1 priority is to get to positive cash, then break even and then profit.
The company will make progress in the second quarter of 2008over the first quarter of 2008 and it is working diligently to achieveits objective of quarter-to-quarter improvements. The second half ofthe year will be better than the first half.
The company is growing with its licensee network in Europe andAustralia and is struggling in North America. MSA in South America hasfinally received the CA certifications for Brazil and is ready to startselling. The company is optimistic that it should see some reasonableprogress by the end of the year.
Overall, the organization must execute on these items over the short term:
- A focused organization on the top line;
- Consistent and conservative cash management;
- Aggressive pursuit of any areas related to margin improvement and cost reduction;
- A rapid and significant improvement in the sales situation in North America;
- The proper level of financing for the next six quarters.
The summary of the material presented ended with anexplanation as to why the Sonomax team is very confident. The reasonsare: a) a new management team that has a proven record in sales,operations, supply chain and the execution of objectives within abusiness plan, which will be complementary to the founders' vision andsuccess in developing best-in-class products; b) organization changesand processes are now in place and working well; c) the company hasgreat products, they are unique with strong IP protection and limitedcompetition, and d) a plan is in place, there will be focused executionand the organization will hold itself accountable on a daily basis.
In addition to the above items, Bruce Jones, the new Sonomaxvice-president of sales and marketing, presented a summary of his salesstrategy and processes for the organization.
Summary
The company is excited by its potential in growing marketsegments and will execute to the plan in place. It is focused on thetop line and will make Sonomax a great company. As previouslymentioned, it will take time. The company thanks all the shareholdersfor their patience and continued support.
We seek Safe Harbor.