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8-K - FORM 8-K - ROCHESTER MEDICAL CORPORATION | c11462e8vk.htm |
Exhibit 99.1
For Release 3:00 p.m., C.S.T. January 25, 2011 |
Rochester Medical Reports First Quarter Results and Recent Developments
Stewartville, MN January 25, 2011. Rochester Medical Corporation (NASDAQ:ROCM) today announced
operating results for its first quarter ended December 31, 2010.
The Company reported sales of $10,946,000 for the current quarter compared to $10,232,000 for the
first quarter of last year. The Company also reported net loss of ($169,000) or ($.01) per diluted
share for the quarter compared to an identical net loss of ($169,000) or ($.01) per diluted share
for the same period of last year.
The approximate 7% increase in sales (8% on constant currency basis) resulted from a 16% increase
in Rochester Medical Branded Sales (18% on a constant currency basis) partially offset by an 11%
decrease in Private Label Sales (11% decrease on a constant currency basis). Constant currency
basis assumes current exchange rates for all periods in order to exclude the impact of foreign
exchange variations. In the first quarter of fiscal 2011, the U.S. dollar was somewhat stronger
versus the pound sterling thus negatively affecting Rochester Medical Branded Sales growth levels
in actual U.S. dollars given the significant volume of our branded products sales in the United
Kingdom.
Net income adjusted for certain non-recurring unusual items and certain recurring non-cash
expenses, or Non-GAAP Net Income for the current quarter was $377,000 or $.03 per diluted share
compared to Non-GAAP Net Income of $148,000 or $.01 per diluted share for the first quarter of last
year. The increase for the current quarter is primarily attributable to increased sales revenues
and increased margin partially offset by increased investment in sales and marketing.
Commenting on the quarter results and other recent activities, Rochester Medicals CEO and
President Anthony J. Conway said, The first quarter of 2011 was a period of significant activity
for Rochester Medical. Our branded sales continue to grow nicely, reflecting our strategic focus
on that area. As we have often discussed, the quarterly fluctuations in Private Label Sales are
related to the timing of orders from our large Private Label Customers; we expect year over year
Private Label Sales to show modest growth. Also, though Branded Sales showed a solid constant
currency growth of 18%, they too were softened in Q1 due to timing of orders from several large
International Distributors whose sales of Rochester Medical Branded Products continue to grow
nicely year over year.
Conway continued, I am pleased to announce we have concluded a major nationwide recruitment and
training project to significantly expand our field sales representation in
the U.S. During the first quarter we added 34 full time sales professionals, more than tripling
our U.S. Sales Force. We believe this is a major step for the Company and expect this will
accelerate sales of Rochester Medical Branded Products as we go forward.
He added, Also in Q1, much dedicated time was spent on reaching agreement with Fornix N.V. to
purchase its subsidiary Laprolan B.V. in The Netherlands. I commend Rochester Medicals Corporate
Vice President Martyn Sholtis and Chief Financial Officer David Jonas for their dedicated and
tireless efforts on both sides of the Atlantic which made this possible. Laprolan distributes wound
care, ostomy care, and urology products into the Dutch market. For calendar 2010 it reported
revenues of approximately $11.2 million and pre-tax profit of approximately $3.5 million. When
finalized, the transaction is expected to significantly strengthen Rochester Medicals sales
revenues, margins, and earnings going forward from January 1, 2011 which will be the retroactive
effective date. We believe this acquisition will allow us to grow sales of Rochester Medical
Branded and other Products in the Netherlands and will also serve as a base for gaining new sales
into other European countries as well.
Conway concluded, I am very pleased with these recent accomplishments. I believe that the pending
acquisition of Laprolan B.V. and the expansion of our U.S. Sales Team have us well positioned for
meeting the objectives of our three year growth plan.
Rochester Medical has provided Non-GAAP Net Income in addition to net loss calculated in accordance
with generally accepted accounting principles (GAAP) because management believes Non-GAAP Net
Income provides a more consistent basis for comparisons that are not influenced by certain charges
and non-cash expenses and are therefore helpful in understanding Rochester Medicals underlying
operating results. Similarly, constant currency represents reported sales with the cost/benefit of
currency movements removed. Management uses the measure to understand the growth of the business
on a constant dollar basis, as fluctuations in exchange rates can distort the underlying growth of
the business both positively and negatively. While we recognize that foreign exchange volatility
is a reality for a global company, we routinely review our Company performance on a constant dollar
basis, and we believe this also allows our shareholders to understand better our Companys growth
trends.
Non-GAAP Net Income and constant currency are not measures of financial performance under GAAP, and
should not be considered an alternative to net income or any other measure of performance or
liquidity under GAAP. Non-GAAP Net Income and constant currency are not comparable to information
provided by other companies. Non-GAAP Net Income and constant currency have limitations as
analytical tools and should not be considered in isolation or as a substitution for analysis of our
results as reported under GAAP. Reconciliations of Net Loss and Non-GAAP Net Income, and
reconciliations of sales under GAAP and sales on a constant currency basis, are presented at the
end of this press release.
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This press release contains forward-looking statements with the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about
the expected completion of the acquisition and financial results of Laprolan and future financial
and operating results of Rochester Medical. Such
statements are based on currently available information, operating plans and managements
expectations about future events and trends. Such statements inherently involve significant risks
and uncertainties that could cause actual results to differ materially from those predicted in such
forward-looking statements, including the uncertainty of estimated revenues and profits, the
uncertainty of current domestic and international economic conditions that could adversely affect
the level of demand for the Companys products and increased volatility in foreign exchange rates,
the uncertainty of market acceptance of new product introductions, and our level of success in
marketing our Rochester Medical branded products, the uncertainty of gaining new strategic
relationships or locating and capitalizing on strategic opportunities, the uncertainty of timing of
Private Label Sales revenues (particularly international customers), FDA and other regulatory
review and response times, and other risk factors listed from time to time in the Companys SEC
reports and filings, including, without limitation, the section entitled Risk Factors in the
Companys Annual Report on Form 10-K for the year ended September 30, 2010 and reports on Forms
10-Q and 8-K. Readers are cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date they are made. The Company undertakes no obligation to
update any forward-looking statements, whether as a result of new information, future events or
otherwise.
The Company will hold a quarterly conference call to discuss its earnings report and its updated
strategic business plan. The call will begin at 3:30 p.m. central time (4:30 p.m. eastern time).
This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medicals website at www.rocm.com. To listen live to the conference call via telephone, call:
This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medicals website at www.rocm.com. To listen live to the conference call via telephone, call:
Domestic:
|
888.679.8040 | |
International:
|
617.213.4851 | |
Pass code:
|
70488311 | |
Pre Registration: |
https://www.theconferencingservice.com/prereg/key.process?key=PGQ9HKPHX
Replay will be available for seven days at www.rocm.com or via telephone at:
Domestic:
|
888-286-8010 | |
International:
|
617-801-6888 | |
Pass code:
|
98617625 |
Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBNs individual
investor portal, powered by StreetEvents. Institutional investors can access the call via
Thomsons password-protected event management site, StreetEvents (www.streetevents.com).
Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and
devices for urological and continence care applications. The Company markets under its own
Rochester Medical® brand and under existing private label arrangements.
For further information, please contact Anthony J. Conway, President and Chief Executive Officer or
David A. Jonas, Chief Financial Officer of Rochester Medical Corporation at (507) 533-9600. More
information about Rochester Medical is available on its website at http://www.rocm.com.
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ROCHESTER MEDICAL CORPORATION
Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income
For the Three months ended
December 31, 2010
Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income
For the Three months ended
December 31, 2010
(unaudited) | ||||||||
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
GAAP Net Loss as Reported |
$ | (169,000 | ) | $ | (169,000 | ) | ||
Loss Per Share as Reported |
$ | (0.01 | ) | $ | (0.01 | ) | ||
Adjustments for non-recurring unusual items: |
||||||||
Recruitment Costs for Additional US Sales Force (1) |
132,000 | | ||||||
Merger and Acquisition Costs for Laprolan B.V. (2) |
90,000 | | ||||||
Subtotal |
222,000 | | ||||||
Adjustments for recurring non-cash expenses: |
||||||||
Intangible Amortization (3) |
129,000 | 129,000 | ||||||
Share-based Compensation Expense (4) |
195,000 | 188,000 | ||||||
Subtotal |
324,000 | 317,000 | ||||||
Non-GAAP Net Income |
$ | 377,000 | $ | 148,000 | ||||
Non-GAAP Diluted EPS |
$ | 0.03 | $ | 0.01 | ||||
Weighted Average Shares Diluted |
12,605,122 | 12,669,675 |
(1) | Costs associated with recruitment firm to locate and hire 34 additional sales staff in the US.
The gross amount
of recruiting costs are $200,500 net of taxes of $68,500 for a net amount of $132,000. |
|
(2) | Merger and acquisition related expenses net of taxes pertaining to the agreement to purchase
Laprolan B.V.
The gross amount of acquisition costs are $136,000 net of taxes of $46,000 for a net amount
of $90,000. |
|
(3) | Amortization of the intangibles acquired in June 2006 asset acquisition from Coloplast AS and
Mentor
Corporation. Management believes these assets are appreciating. This adjustment adds back
amortization
expense for the three months ended December 31, 2010 and 2009 related to certain intangibles.
The gross amount of amortization is $163,000 per quarter after taxes of $34,000 for a net
amount of $129,000. |
|
(4) | This adjustment adds back the share-based compensation expense for the three months ended
December 31,
2010 and 2009. The gross amount of compensation expense for each of the three months ended
December 31, 2010 and 2009 is $295,000 and $285,000, is shown net of taxes of $100,000 and
$97,000 for net
amounts of $195,000 and $188,000, respectively. |
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Rochester Medical Corporation
Press Release F11 First Quarter
Press Release F11 First Quarter
Condensed Balance Sheets
(unaudited) | ||||||||
December 31, | September 30, | |||||||
2010 | 2010 | |||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and equivalents |
$ | 4,829,288 | $ | 4,545,907 | ||||
Marketable securities |
29,267,466 | 30,967,007 | ||||||
Accounts receivable |
6,601,443 | 7,858,540 | ||||||
Inventories |
9,528,427 | 9,240,291 | ||||||
Prepaid expenses and other assets |
1,434,309 | 846,899 | ||||||
Deferred income tax asset |
863,051 | 872,849 | ||||||
Total current assets |
52,523,984 | 54,331,493 | ||||||
Property and equipment, net |
10,032,740 | 10,017,239 | ||||||
Deferred income tax asset |
1,093,280 | 1,175,052 | ||||||
Intangible assets, net |
5,426,546 | 5,580,726 | ||||||
Goodwill |
4,533,151 | 4,561,781 | ||||||
Total Assets |
$ | 73,609,701 | $ | 75,666,291 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 1,993,978 | $ | 2,016,058 | ||||
Accrued expenses |
1,230,089 | 2,069,222 | ||||||
Short-term debt |
994,093 | 2,641,233 | ||||||
Total current liabilities |
4,218,160 | 6,726,513 | ||||||
Long-term liabilities |
||||||||
Other long term liabilities |
52,311 | 46,327 | ||||||
Long-term debt |
| | ||||||
Total long term liabilities |
52,311 | 46,327 | ||||||
Stockholders equity |
69,339,230 | 68,893,451 | ||||||
Total Liabilities and Stockholder Equity |
$ | 73,609,701 | $ | 75,666,291 | ||||
5
Rochester Medical Corporation
Press Release F11 First Quarter
Press Release F11 First Quarter
Summary Statements Of Operations
(unaudited) | ||||||||
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Sales |
$ | 10,946,405 | $ | 10,231,812 | ||||
Cost of sales |
5,542,274 | 5,618,704 | ||||||
Gross profit |
5,404,131 | 4,613,108 | ||||||
Gross profit % |
49.4 | % | 45.1 | % | ||||
Costs and expense: |
||||||||
Marketing and selling |
3,881,980 | 2,777,317 | ||||||
Research and development |
277,855 | 443,028 | ||||||
General and administrative |
1,709,093 | 1,690,747 | ||||||
Total operating expenses |
5,868,928 | 4,911,092 | ||||||
Loss from operations |
(464,797 | ) | (297,984 | ) | ||||
Other income (expense) |
||||||||
Interest income |
52,570 | 55,656 | ||||||
Interest expense |
(31,259 | ) | (41,118 | ) | ||||
Other income (expense) |
(16,282 | ) | (26,647 | ) | ||||
Net loss before income taxes |
(459,768 | ) | (310,093 | ) | ||||
Income tax benefit |
(290,686 | ) | (140,935 | ) | ||||
Net loss |
$ | (169,082 | ) | $ | (169,158 | ) | ||
Net loss per common share Basic |
$ | (0.01 | ) | $ | (0.01 | ) | ||
Net loss per common share Diluted |
$ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted Average Shares: |
||||||||
Basic |
12,127,268 | 12,191,590 | ||||||
Weighted Average Shares: |
||||||||
Diluted |
12,127,268 | 12,191,590 | ||||||
6
ROCHESTER MEDICAL CORPORATION
Reconciliation of Reported GAAP Revenue to Non-GAAP Revenue in Constant Currency
For the Three months ended
December 31, 2010
Reconciliation of Reported GAAP Revenue to Non-GAAP Revenue in Constant Currency
For the Three months ended
December 31, 2010
(unaudited) | ||||||||
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
GAAP Sales as Reported |
$ | 10,946,405 | $ | 10,231,812 | ||||
Exchange rate as Reported |
1.58 | 1.63 | ||||||
Constant Currency Sales |
$ | 10,946,405 | $ | 10,109,731 | ||||
(1) Exchange rate used for Constant Currency Purposes |
1.58 | 1.58 | ||||||
Net Effect of Constant Currency Illustration |
$ | | $ | (122,081 | ) | |||
(1) | For illustrative purposes constant currency translates prior period foreign sales at
current exchange rates. For Rochester Medical Corporation this is the conversion rate of pound
sterling to US dollars. The rate represents the average exchange rate for the respective
three month period. |
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