D&K Healthcare Resources Reports Record Q1 Sales of $351 Million and EPS of $0.36; EBITDA Increases 25.9% to $6.2 Million.Business Editors ST. LOUIS--(BUSINESS WIRE)--Oct. 24, 2000 D&K Healthcare Resources, Inc. (Nasdaq: DKWD DKWD Disk Write Data ) today reported record first quarter 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 three months ended September September: see month. 30, 2000 of $350.9 million, an 8.4% increase over the $323.6 million reported a year ago. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the quarter increased 25.9% to $6.2 million from $4.9 million in fiscal 2000. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of increased 2.9% to $0.36 in the first quarter of fiscal 2001 compared to $0.35 last year. Net income was $1.5 million versus $1.6 million a year ago. Weighted average diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding decreased to 4,470,000 in the first quarter of fiscal 2001 from 4,732,000 in the same period a year ago. "In what is a seasonally slow quarter industry-wide," said J. Hord Armstrong, III, Chairman and Chief Executive Officer, "our strategic focus on higher opportunity customer relationships enabled D&K to achieve sales, gross profit, EBITDA and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. increases in the first full quarter without any contribution from two high profile mail order accounts whose contracts ended in the fourth quarter of fiscal 2000." As previously reported, D&K elected not to pursue the renewal of contracts with these two customers at prices that would have been required to retain the business. Mr. Armstrong continued, "Excluding the revenues that these customers contributed in fiscal 2000, internal sales growth for the quarter was approximately 47%." Sales growth was achieved primarily in the chain and independent pharmacy An independent pharmacy is a retail pharmacy that is not directly affiliated with any chain pharmacy, such as CVS/pharmacy, Walgreens or Eckerd. However, owners of independent pharmacies will often form alliances with other independents and use their power in numbers to bargain for trade classes. Chain sales in particular increased $89 million, or 95%, over the first quarter of fiscal 2000 due to infrastructure investments and a focused effort on this trade class. Gross profit for the first quarter increased by 23.1% to $14.6 million versus the same period a year ago. The gross margin percentage for the first quarter increased to 4.16% from 3.67%, due primarily to D&K's focus on higher opportunity, more value-added relationships and the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of lower gross margin business from the mail order customers mentioned above. Income from operations increased 28.5% to $5.4 million compared to $4.2 million a year ago. Net interest expense increased 68.7% to $3.1 million driven by higher interest rates and higher average borrowings related to the Company's continued growth. During the quarter, D&K negotiated a one-year extension, to August 2002, of its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and increased availability under the facility to $130 million year round. The facility had been capped at $95 million with a $25 million seasonal overline. Commenting on the remainder of the year, Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs S. Hilton, Senior Vice President and Chief Financial Officer stated, "Based on our current outlook, we continue to project earnings per share for fiscal 2001 of approximately $1.85. Despite the previously reported loss of two mail order customers that accounted for approximately 23% of last year's sales, we believe D&K's fiscal 2001 sales should reach the level achieved in fiscal 2000, with gross margins improving to about 4.3%. However, we expect higher operating costs operating costs npl → gastos mpl operacionales related to the change in sales mix sales mix See product mix. , combined with higher interest expense, to offset a substantial portion of the gross profit improvement. We anticipate that about 60% of our earnings will be generated in the second half of the fiscal year, reflecting the typical seasonal pattern of our business." Conference Call Notification D&K Healthcare Resources' first quarter conference call will take place Tuesday, October 24, beginning at 9:00 a.m. (CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ). D&K is broadcasting the call live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the for the media and general public at http://www.dkwd.com/irevents.htm (the Webcast will also be archived for later listening at the same web address). About D&K Healthcare Resources With fiscal 2000 revenues of $1.5 billion, St. Louis-based D&K Healthcare Resources, Inc., is a full-service regional wholesale drug distributor supplying customers from facilities in Cape Girardeau Cape Girardeau (jĭrär`dō, jērərdō`), city (1990 pop. 61,633), Cape Girardeau co., SE Mo., overlooking the Mississippi River; founded 1793, inc. as a city 1843. , MO; Davie, FL; Lexington, KY; Minneapolis, MN; and, through its subsidiary Jewett Drug Co., in Aberdeen, SD. D&K also develops and markets sophisticated pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. systems software through two wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Tykon, Inc., and Viking Computer Services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. . In addition, D&K owns a 50% equity interest in Pharmaceutical Buyers, Inc., a leading alternate site group purchasing organization A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. Many GPOs are funded by administrative fees that are actually paid by the vendors. . D&K invites you to visit its Web site at http://www.dkwd.com. 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. Provisions This press release may contain 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 safe harbor provisions 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. Such forward-looking statements are inherently subject to risks and uncertainties. D&K's actual results could differ materially from those currently anticipated due to a number of factors, including without limitation, the competitive nature of the wholesale pharmaceutical distribution industry, with many competitors having substantially greater resources than D&K, and D&K's customers generally having the right to terminate or reduce their purchases on relatively short notice, the changing business and regulatory environment of the healthcare industry in which D&K operates, change in interest rates and other factors set forth in reports and other documents filed by D&K with the Securities and Exchange Commission from time to time. D&K undertakes no obligation to publicly update or revise any forward-looking statements.
D&K Healthcare Resources, Inc.
Condensed Consolidated Statement of Operations
Unaudited
(In thousands, except per share data)
Three Months Ended
Sept. 30, % of Sept. 30, % of %
2000 Net Sales 1999 Net Sales Change
----------------------------------------------------------------------
Net Sales $ 350,902 100.00% $ 323,565 100.00% 8.4%
Cost of Sales 336,301 95.84% 311,700 96.33% 7.9%
--------- ---------
Gross profit 14,601 4.16% 11,865 3.67% 23.1%
Operating Expenses 9,219 2.63% $ 7,678 2.37% 20.1%
--------- ---------
Income from Operations 5,382 1.53% 4,187 1.29% 28.5%
Other Income (expense):
Interest Expense, Net (3,063) -0.87% (1,816) -0.56% 68.7%
Other, Net 209 0.06% 250 0.08% -16.4%
Pretax Earnings 2,528 0.72% 2,621 0.81% -3.5%
Income Tax Provision 986 0.28% 1,009 0.31% -2.3%
--------- ---------
Net Income $ 1,542 0.44% $ 1,612 0.50% -4.3%
========= =========
EBITDA $ 6,211 1.77% $ 4,932 1.52% 25.9%
Basic earnings
per share $ 0.37 $ 0.37
Diluted earnings
per share $ 0.36 $ 0.35
EBITDA per full
diluted share $ 1.39 $ 1.04
EPS Calculation: Three months ended Three months ended
Sept. 30, 2000 Sept. 30, 1999
Income Shares Per Share Income Shares Per Share
------ ------ --------- ------ ------ ---------
Basic Earnings
per Share:
Net income available
to common
Shareholders $1,542 4,200 $ 0.37 $1,612 4,377 $ 0.37
Effect of Diluted
Securities:
Options and
warrants - 70 - 155
Convertible PBI
stock 63 200 66 200
--------------- ---------------
Diluted EPS:
Net income available
to common
Shareholders
plus assumed
conversions $1,605 4,470 $ 0.36 $1,678 4,732 $ 0.35
=============== ===============
D&K Healthcare Resources, Inc.
Condensed Consolidated Balance Sheet
(In thousands)
Sept. 30, 2000 June 30, 2000
(unaudited)
Assets
Cash $ 6,845 $ 3,661
Accounts receivable 51,383 29,923
Inventories 176,851 202,467
Other current assets 1,639 1,443
----------- -----------
Total current assets 236,718 237,494
----------- -----------
Property and equipment, net 8,584 8,184
Investment in affiliates 5,530 5,199
Other assets 42,960 43,542
----------- -----------
Total assets $ 293,792 $ 294,419
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable $ 151,142 $ 134,834
Current portion long term debt 299 305
Other current liabilities 8,601 8,799
----------- -----------
Total current liabilities 160,042 143,938
Long-term liabilities 705 700
Long-term debt 81,277 99,647
Deferred income taxes 4,869 4,869
Stockholders' equity 46,899 45,265
----------- -----------
Total liabilities and
Stockholders' equity $ 293,792 $ 294,419
=========== ===========
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