Chattem Announces 2001 Third Quarter and First Nine Months Financial Results Exceeding Earlier Guidance; Gives Initial Guidance for Fiscal 2002.Business Editors CHATTANOOGA, Tenn.--(BUSINESS WIRE)--Sept. 19, 2001 Chattem, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CHTT), a leading marketer and manufacturer of branded consumer products, announced today financial results for the fiscal third quarter and first nine months ended August 31, 2001. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter were $49.6 million, earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt was $2.7 million, or $.30 per share. Cash earnings - income before extraordinary items plus non-cash amortization - were $3.7 million, or $.41 per share. The fiscal third quarter results well exceeded the Company's earlier guidance of $46-48 million in net sales and $.18-.22 of earnings per share. For the first nine months of fiscal 2001 net sales were $153.6 million, EBITDA was $32.7 million, net income before extraordinary items was $6.7 million, or $.76 per share, and cash earnings were $9.7 million, or $1.09 per share. Comparisons to the third quarter and first nine months of fiscal 2000 are not meaningful because of the sale of the BAN(R) line of antiperspirants and deodorants in September 2000. In the third quarter and first nine months of fiscal 2000 BAN accounted for approximately $21.5 million and $58.3 million of sales, respectively. The stronger than anticipated third quarter results were led by a resurgence re·sur·gence n. 1. A continuing after interruption; a renewal. 2. A restoration to use, acceptance, activity, or vigor; a revival. of the Company's Gold Bond(R) business. Sales of Gold Bond Adult Powder, Foot Powder and Cream were up 8%, 18% and 10%, respectively, from the year-ago third quarter, aided by heavy media spending during the quarter. Sales of Dexatrim(R) Natural also continued to exceed expectations and now appear to be on track to achieve $23-25 million in annual sales for fiscal 2001. Dexatrim Natural sales also benefited from incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. media support. The Company's topical analgesic analgesic (ăn'əljē`zĭk), any of a diverse group of drugs used to relieve pain. Analgesic drugs include the nonsteroidal anti-inflammatory drugs (NSAIDs) such as the salicylates, narcotic drugs such as morphine, and synthetic drugs franchise continued to perform solidly, with sales increasing by 15% over the third quarter of fiscal 2000. Regarding individual brands within the portfolio, Icy Hot(R) continued its strong performance with sales exceeding the corresponding year-ago period by 68%, led by the performance of the Icy Hot Pain-Relieving Patch. The Icy Hot Patch is now the third fastest selling SKU (StockKeeping Unit) The number of one specific product available for sale. If a hardware device or software package comes in different versions, there is an SKU for each one. SKU - stock-keeping unit in Chattem's topical analgesic portfolio. Capzacin(R) sales also continued to far out-perform year-ago results with sales up 20% from third quarter 2000 levels. Finally, the strong 2001 performance of BullFrog bullfrog, common name of the largest North American frog, Rana catesbeiana. Native to the E United States, this species has been successfully introduced in the West and in other parts of the world. The body length is 4 to 8 in. (R) continued with sales for the first nine months of fiscal 2001 exceeding the same period for 2000 by 30%. The Company's international division again performed ahead of budget, led by Gold Bond in Canada where the Foot Powder product was launched, and improving export sales through the Chattem (UK) division. Partially offsetting these strong performances were year-over-year double-digit percentage declines in pHisoderm(R), Sun-In(R) and Ultra Swim(R). Pamprin(R) and Premsyn(R) sales were also off from the year-ago period due to the launch of a new competitive product in the menstrual menstrual /men·stru·al/ (men´stroo-al) pertaining to the menses or to menstruation. men·stru·al or men·stru·ous adj. Of or relating to menstruation. category, but the decline was less than the Company had budgeted. For the quarter, gross margins were 74.5% while selling, general and administrative expense as a percentage of sales was 18.8%. Advertising and promotion as a percentage of sales was 37.3%. For the nine months these measurements were 73.6%, 16.7% and 40.0%, respectively. For the third quarter the Company's EBITDA margin (EBITDA divided by net sales) was a strong 22.9%. Finally, days' sales outstanding Days' sales outstanding Average collection period. in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were 44 compared to 65 in the year-ago period, while inventories, adjusted for brands sold or discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: , declined from $16.2 million in the third quarter of fiscal 2000 to $13.0 million in the current period. During the quarter Chattem completed the repurchase of the remaining $21.7 million of 12 3/4% notes due June 15, 2004. This resulted in an extraordinary loss on early extinguishment of debt, net of taxes, of $.6 million, or $.06 per share. In its first quarter Chattem recorded an extraordinary gain of $7.6 million, or $.85 per share, on the early extinguishment of debt in connection with the consent solicitation Consent Solicitation A solicitation by one party to the stakeholders of a particular security for the consent of a material change. Notes: Should the majority of stakeholders provide valid consent prior to the consent expiry date, the issuer may then follow through with of the Company's 8 7/8% bonds. Included in the Company's income statement are substantial non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) related to the amortization of intangibles associated principally with the acquisition of certain brands. These expenses, net of tax, amounted to $1.0 million, or $.11 per share, for the third fiscal quarter. For the 2001 fiscal year, these expenses are expected to be $3.9 million, or $.44 per share. The Company is currently required to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. the intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. resulting from acquired brands for accounting purposes, while at the same time it attempts to increase these brands' value through advertising and promotional programs, product enhancements and line extensions. The Company thus believes cash earnings are the most appropriate measure of financial performance. Effective the first quarter of the Company's 2002 fiscal year, with the adoption of Statement of Financial Accounting No. 142 "Goodwill and Other Intangible Assets", the amortization of goodwill and intangibles with indefinite lives will be eliminated and should positively impact the Company's fiscal 2002 income statement by approximately $.39 per share. For the 2001 fiscal year fourth quarter, the Company currently anticipates net sales of $43-45 million, earnings per share of $.12-.16 and EBITDA of $9-10 million. For fiscal 2002, the Company's present expectations are for sales to grow 3-5% over fiscal 2001 results, with earnings per share growth in the 6-8% range. Chattem recently announced four new product launches for fiscal 2002. Gold Bond Foot Spray is an aerosol aerosol (âr`əsōl,–sŏl): see colloid. aerosol System of tiny liquid or solid particles evenly distributed in a finely divided state through a gas, usually air. delivery of the same formula as the highly successful Gold Bond Foot Powder without the powder mess. Dexatrim Results(R), to be shipped in 60-count bottles in both an ephedrine ephedrine (ĭfĕd`rĭn, ĕf`ĭdrēn'), drug derived from plants of the genus Ephedra (see Pinophyta), most commonly used to prevent mild or moderate attacks of bronchial asthma. and ephedrine-free formula, is an all new, patented formula, nutrition-based diet pill diet pill Drug slang A euphemism for an amphetamine Vox populi An agent that either ↓ appetite or ↑ basal metabolic rate–eg, amphetamines–by prescription and OTC diet aids–eg phenylpropanolamine, ephedrine, caffeine; in high doses, DPs . Finally, Chattem will launch pHisoderm body wash and pHisoderm acne acne, common inflammatory disease of the hair follicles and sebaceous glands characterized by blackheads, whiteheads, pustules, nodules and, in the more severe forms, by cysts and scarring. The lesions appear on the face, neck, back, chest, and arms. masque masque, courtly form of dramatic spectacle, popular in England in the first half of the 17th cent. The masque developed from the early 16th-century disguising, or mummery, in which disguised guests bearing presents would break into a festival and then join with their to supplement its already fast-growing pHisoderm acne cleanser business. Additionally, the entire pHisoderm line will be repackaged in contemporary, upscale bottles. No shares of the Company's stock nor any of its 8 7/8% notes were repurchased during the quarter. The Company continues to review opportunities for accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. , divestitures of non-core brands and strategic alliances. Paragraphs 6, 10 and 11 of this press release contain forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, which contains a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward looking statements. The Company relies on this safe harbor in making such disclosures. The forward looking statements are based on management's current beliefs and assumptions about expectations, estimates, strategies and projections for the Company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward looking statements. The Company undertakes no obligations to update publicly any forward looking statements whether as a result of new information, future events or otherwise. The risks, uncertainties and assumptions regarding forward looking statements include, but are not limited to, the impact of brand acquisitions and divestitures; the impact of extraordinary gains or loss resulting from product acquisitions or divestitures or financings or debt repayment; the impact of the loss of sales from Dexatrim with ephedrine; the increased likelihood that claims relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the existence of PPA PPA 1. Palpation, Percussion & Ausculation 2. Pittsburgh pneumonia agent 3. Postpartum amenorrhea 4. Price per accession 5. Pure pulmonary atresia in Dexatrim will be filed against the Company; product demand and market acceptance risks; product development risks, such as delays or difficulties in developing, producing and marketing new products or line extensions; the impact of competitive products, pricing and advertising; constraints resulting from the financial condition of the Company, including the degree to which the Company is leveraged, debt service requirements and restrictions under indentures; government regulations; risk of loss of material customers; public perception regarding the Company's products; dependence on third party manufacturers; environmental matters; product liability insurance and other risks described in the Company's Securities and Exchange Commission filings. Chattem will provide an online Web simulcast and rebroadcast of its third quarter 2001 conference call. The live broadcast of the call will be available online at www.chattem.com and www.streetevents.com on Thursday, September 20, 2001 beginning at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The online replay will follow shortly after the call and continue through October 22, 2001. Please note Webcast requires Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. to participate in the conference call.
CHATTEM, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
For the Three Months For the Nine Months
Ended August 31, Ended August 31,
------------------ -------------------
2001 2000 2001 2000
---- ---- ---- ----
NET SALES $ 49,641 $ 73,253 $153,603 $215,260
------------------ -------------------
COSTS AND EXPENSES:
Cost of sales 12,663 19,159 40,553 57,296
Advertising and promotion 18,528 28,108 61,391 82,447
Selling, general and
administrative 9,348 8,539 25,670 24,197
------------------ -------------------
Total costs and expenses 40,539 55,806 127,614 163,940
------------------ -------------------
INCOME FROM OPERATIONS 9,102 17,447 25,989 51,320
------------------ -------------------
OTHER INCOME (EXPENSE):
Interest expense (4,959) (9,139) (17,024) (27,329)
Investment and other
income, net 289 1 1,910 128
------------------ -------------------
Total other income
(expense) (4,670) (9,138) (15,114) (27,201)
------------------ -------------------
Income before income taxes,
extraordinary items, and
accounting change 4,432 8,309 10,875 24,119
Provision for income taxes (1,684) (3,158) (4,132) (9,141)
------------------ -------------------
Income before extraordinary
(loss) gain and accounting
change 2,748 5,151 6,743 14,978
Extraordinary (loss) gain
on early extinguishment
of debt, net of taxes (603) - 6,948 (110)
Cumulative effect of
change in accounting
principle, net of taxes - - - (542)
------------------ -------------------
NET INCOME $ 2,145 $ 5,151 $13,691 $14,326
================== ===================
Diluted shares outstanding 9,031 9,379 8,917 9,611
================== ===================
NET INCOME PER COMMON SHARE
(DILUTED):
Income before extraordinary
(loss) gain and accounting
change $ 0.30 $ 0.55 $ 0.76 $ 1.56
Extraordinary (loss) gain $ (0.06) $ - $ 0.78 $ (0.01)
Accounting change $ - $ - $ - $ (0.06)
------------------ -------------------
Net income per common share $ 0.24 $ 0.55 $ 1.54 $ 1.49
================== ===================
CASH EARNINGS:
Cash earnings from operations $ 3,741 $ 6,823 $ 9,690 $19,969
================== ===================
Cash earnings per share $ 0.41 $ 0.73 $ 1.09 $ 2.08
================== ===================
EBITDA $ 11,347 $ 20,792 $32,654 $61,144
EBITDA margin 22.9% 28.4% 21.3% 28.4%
Depreciation & amortization $ 2,517 $ 3,873 $ 7,555 $11,403
Capital expenditures $ 610 $ 999 $ 1,512 $ 5,293
At August 31,
2001 2000
---------------------
BALANCE SHEET DATA:
Cash and cash equivalents $ 27,965 $ 3,237
Accounts receivable $ 24,476 $ 53,116
Inventories $ 12,975 $ 23,348
Accounts payable $ 4,806 $ 11,408
Senior bank debt $ - $ 52,100
Subordinated debt 204,748 307,030
---------------------
Total debt $ 204,748 $359,130
=====================
Shareholders' equity $ 51,880 $ 56,051
Total assets $ 303,454 $482,070
Statements in this press release which are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and assumptions including, but not limited to, those described in Paragraph 15 of this press release. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion