E-Z-EM Reports Record Financial Results from Continuing Operations for First Quarter of Fiscal 2006; Increases Financial Guidance; Conference Call to Begin at 4:30 p.m. Eastern Time Tuesday, October 11, 2005.LAKE SUCCESS, N.Y. -- E-Z-EM, 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 : EZEM) today announced financial results for the first quarter of fiscal year 2006 ended September 3, 2005. Highlights of the quarter include: --Record 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 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $34.8 million, up 45% compared with the fiscal 2005 first quarter --Earnings from continuing operations grew to $2.6 million from $0.6 million in the prior year's fiscal first quarter, an increase of 305% --Earnings per diluted share from continuing operations almost quadrupled to $0.23 from $0.06 in the first quarter of fiscal 2005 Net sales for the 14 weeks ended September 3, 2005 were $34.8 million, up 45% compared with net sales of $24.0 million for the 13 weeks ended August 28, 2004. Sales growth continued to benefit from the voluntary recall of some liquid barium barium (bâr`ēəm) [Gr.,=heavy], metallic chemical element; symbol Ba; at. no. 56; at. wt. 137.33; m.p. 725°C;; b.p. 1,640°C;; sp. gr. 3.5 at 20°C;; valence +2. products by the Mallinckrodt division of Tyco International For the unrelated division of Mattel, see . Tyco International Ltd. NYSE: TYC is a diversified manufacturing conglomerate incorporated in Bermuda, with United States operational headquarters in New Jersey. Ltd. The Company estimates that between $5.5 and $6.0 million of sales growth for the quarter was attributable to this recall, which primarily affected CT imaging and X-ray fluoroscopy fluoroscopy /flu·o·ros·co·py/ (fldbobr-ros´kah-pe) examination by means of the fluoroscope. fluo·ros·co·py n. Examination by means of a fluoroscope. Also called radioscopy. products, with the balance attributable to organic growth of CT oral contrasts, the Empower(R) family of injectors, Reactive Skin Decontamination decontamination /de·con·tam·i·na·tion/ (de?kon-tam-i-na´shun) the freeing of a person or object of some contaminating substance, e.g., war gas, radioactive material, etc. de·con·tam·i·na·tion n. Lotion (RSDL (Reverse Spiral Dual Layer) A technique used with dual-layer DVD discs that allows the end of the first layer to seamlessly connect to the second layer. The first layer is recorded from the inside out, and the second layer is recorded from the outside in. ) sales and sales of contract manufacturing products. Net sales benefited from an additional week during the current quarter, as compared to the previous year, due to the timing of the Company's reporting period, which closed on the Saturday closest to August 31st. Gross profit improved to $15.9 million, from $10.0 million for the year-ago quarter and gross profit as a percentage of sales increased to 45.6% from 41.7%, reflecting favorable sales product mix, including the increase in sales of CT products to Tyco customers, and modest sales price increases. In addition, fixed manufacturing costs distributed over higher production volume contributed to the improvement in gross margin. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $11.9 million, compared with $10.1 million for the prior-year quarter, largely due to increased compensation costs and additional infrastructure for the support of our healthcare decontamination/RSDL business. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $4.0 million in the first quarter of fiscal 2006, compared with an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $0.1 million in the comparable prior-year quarter. Other expense for the 2006 first quarter was $0.1 million, compared with other income last year of $0.7 million reflecting the gain on the sale of a non-core equity security. For the 2006 first quarter, the Company's effective tax rate was 35%. For first quarter of fiscal 2005, we reported an income tax benefit of $41,000 against earnings from continuing operations before income taxes of $590,000 due primarily to the reversal of a valuation allowance relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a previously impaired, non-core equity security sold in last year's first quarter. Earnings from continuing operations for the 2006 first quarter were $2.6 million, or $0.23 per diluted share, compared with earnings from continuing operations of $0.6 million, or $0.06 per diluted share, for the prior-year quarter. E-Z-EM had cash, cash equivalents and short-term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has as of September 3, 2005 of $24.5 million, compared with $28.6 million as of May 28, 2005. Working capital was $63.7 million as of September 3, 2005, compared with $59.6 million as of the previous year-end. Commenting on the results, Anthony A. Lombardo, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of E-Z-EM, said, "Once again we had an outstanding quarter, a performance primarily driven by excellent growth in sales of our CT imaging products, which partly resulted from larger than normal backlog at the beginning of the quarter and stronger sales order The sales order, sometimes abbreviated as SO, is an order received by a business from a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be fulfilled in several ways. bookings due to the Tyco recall, as well as the extra week in the current quarter. "Beyond the impact of our competitor's recall, it is important to note that we also recorded excellent growth in our core CT products this quarter, with CT injector systems growing at 42.5% quarter over quarter, and CT imaging contrast products, ex-Tyco, growing an estimated 33% quarter over quarter. Additionally, our international sales, which are also not affected by the Tyco recall, grew 31% quarter over quarter. Also, for the second consecutive quarter, our CT imaging products accounted for a greater proportion of sales than our X-ray fluoroscopy products, at 48% of sales versus 39%. CT imaging products are more technologically innovative products that carry higher margins than the fluoroscopy products. "We recorded sales of RSDL of almost $0.8 million during the first quarter of fiscal 2006, attributable primarily to a single reorder re·or·der v. re·or·dered, re·or·der·ing, re·or·ders v.tr. 1. To order (the same goods) again. 2. To straighten out or put in order again. 3. To rearrange. v. by the Canadian government, compared with minimal sales in the first fiscal quarter last year. Assuming the Department of Defense successfully completes its field testing of the product in the U.S. government's fiscal 2007, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that RSDL will become a major source of revenue for E-Z-EM in the future," Mr. Lombardo concluded. Fiscal Year 2006 Financial Guidance The Company is revising its guidance for fiscal 2006 upwards. Sales are now expected to fall in a range of $124 million to $127 million, or $2.0 million more than previous guidance. Net earnings are expected to be $5.0 million to $5.6 million, compared with prior guidance of $4.5 million to $5.2 million. Conference Call E-Z-EM management will host a conference call to discuss these results on Tuesday, October 11, 2005 beginning at 4:30 p.m. Eastern Time. To participate in the call, please dial (877) 815-7177 from the U.S., or (706) 679-0753 from outside the U.S. A telephone replay of the call will be accessible for a limited time following completion of the call by dialing (800) 642-1687 or (706) 645-9291, and entering reservation number 1164964. In addition, participants may access the call over the Internet by visiting the Company's Web site at www.ezem.com. The call will be archived there for a limited period of time. About E-Z-EM, Inc. E-Z-EM is a leading manufacturer of contrast agents for gastrointestinal radiology. The Company recently introduced VoLumen(R) the next generation low density barium sulfate suspension Barium sulfate suspension is barium sulfate (powder) turned into a liquid form by suspending it in a quick-flowing drink to aid in CT scans of the gastrointestinal region. Use for use as an oral contrast in Multidetector CT (MDCT MDCT Modified Discrete Cosine Transform MDCT Multi-detector Computed Tomography MDCT Multiple Description Correlating Transform MDCT Motorsport Dual Clutch Transmission ) and Positron Emission Tomography positron emission tomography: see PET scan. positron emission tomography (PET) Imaging technique used in diagnosis and biomedical research. (PET/CT PET/CT Positron Emission Tomography and Computed Tomography ) studies. The Company also offers Empower(R) -- the only family of CT injectors on the market with patented EDA (1) (Electronic Design Automation) Using the computer to design, lay out, verify and simulate the performance of electronic circuits on a chip or printed circuit board. (TM) technology that can help detect contrast extravasation extravasation /ex·trav·a·sa·tion/ (ek-strav?ah-za´shun) 1. a discharge or escape, as of blood, from a vessel into the tissues; blood or other substance so discharged. 2. the process of being extravasated. -- and offers a complete product set for the virtual colonoscopy virtual colonoscopy n. A screening examination of the colon in which x-rays obtained by CAT scan are used to generate computerized three-dimensional images of the colonic mucosa. practitioner. This product line consists of virtual colonoscopy hardware, software, nutritional prep kits and bowel cleaners, tagging agents and a carbon dioxide carbon dioxide, chemical compound, CO2, a colorless, odorless, tasteless gas that is about one and one-half times as dense as air under ordinary conditions of temperature and pressure. colon insufflation insufflation /in·suf·fla·tion/ (-sah-fla´shun) 1. the act of blowing a powder, vapor, or gas into a body cavity. 2. finely powdered or liquid drugs carried into the respiratory passages by such devices as aerosols. system. The Company is also the exclusive global manufacturer and marketer of Reactive Skin Decontamination Lotion (RSDL) for first-responder organizations and military services in many countries. RSDL is a liquid skin decontaminant that breaks down chemical agents such as Sarin sarin (zärēn`), volatile liquid used as a nerve gas. It boils at 147°C; but evaporates quickly at room temperature; its vapor is colorless and odorless. or VX in seconds, leaving a non-toxic liquid that can be washed away with water. The statements made in this document contain certain 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. . Words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates" or variations of such words and similar expressions, are intended to identify such forward-looking statements. The forward-looking statements contained in this release may involve numerous risks and uncertainties, known and unknown, beyond the Company's control. Such risks and uncertainties include: the ability of the Company to develop its products; the extent and duration of the Mallinckrodt recall of liquid barium products, impact of Mallinckrodt's return to the marketplace; continued growth in CT injector systems and CT imaging contrast product sales; the results of future research studies, successful completion of DoD field testing and placement of DoD order for RSDL, general military and first-responder market acceptance and sales of RSDL, market acceptance and sales of VoLumen(R); future actions by the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. or other regulatory agencies, overall economic conditions, general market conditions, price increases of raw materials and components, foreign currency exchange rate fluctuations as well as the risk factors listed from time to time in the SEC filings of E-Z-EM, Inc., including but not limited to its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended May 28, 2005. Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements, and investors are cautioned not to place undue reliance on the forward-looking statements included in this release.
E-Z-EM, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
September 3, May 28,
2005 2005
------------ ---------
Assets
Current assets
Cash, cash equivalents and debt and equity
securities $ 24,484 $ 28,602
Accounts receivable, net 21,853 17,677
Inventories, net 26,119 22,822
Other current assets 5,791 6,149
-------- --------
Total current assets 78,247 75,250
Property, plant & equipment - at cost, net 13,462 13,256
Other non-current assets 14,871 13,549
Non-current assets held for disposal 3,553 3,593
-------- --------
Total assets $110,133 $105,648
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 6,093 $ 5,069
Accrued liabilities 7,766 9,916
Other current liabilities 689 653
-------- --------
Total current liabilities 14,548 15,638
Long-term liabilities 4,995 4,290
Stockholders' equity 90,590 85,720
-------- --------
Total liabilities and stockholders' equity $110,133 $105,648
======== ========
E-Z-EM, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(in thousands, except per share data)
Fourteen Thirteen
weeks ended weeks ended
September 3, August 28,
2005 2004
------------ -----------
Net sales $ 34,784 $24,012
Cost of goods sold 18,911 13,996
--------- --------
Gross profit 15,873 10,016
Operating expenses 11,899 10,111
--------- --------
Operating profit (loss) 3,974 (95)
Other income (expense), net (56) 685
--------- --------
Earnings from continuing operations before
income taxes 3,918 590
Income tax provision (benefit) 1,365 (41)
--------- --------
Earnings from continuing operations 2,553 631
Earnings from discontinued operation, net of
income tax provision 620
--------- --------
Net earnings $ 2,553 $ 1,251
========= ========
Basic earnings per common share
From continuing operations $ 0.24 $ 0.06
From discontinued operation, net of income
tax provision 0.06
--------- --------
Net earnings $ 0.24 $ 0.12
========= ========
Diluted earnings per common share
From continuing operations $ 0.23 $ 0.06
From discontinued operation, net of income
tax provision 0.05
--------- --------
Net earnings $ 0.23 $ 0.11
========= ========
Weighted average common shares
Basic 10,837 10,732
Diluted 11,000 10,932
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