E-Z-EM Reports Second Quarter Fiscal 2006 Financial Results; Increases Financial Guidance; Conference Call to Begin at 4:30 p.m. Eastern Time Tuesday, January 10, 2006.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 second quarter of fiscal year 2006 ended December 3, 2005. Highlights of the quarter include: --Net sales 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 $34.2 million, up 30% compared with the fiscal 2005 second quarter --Earnings from continuing operations reached $1.5 million from $0.8 million in the prior year's fiscal second quarter, an increase of 85% --Earnings per diluted share from continuing operations increased 75% to $0.14 from $0.08 in the second quarter of fiscal 2005 --The launch of IRiSCT(TM) Injector Reporting Information System and the works-in-progress demonstration of EZ Chem(TM) Blood Analyzer at the 2005 Radiological Society of North America The Radiological Society of North America (RSNA), founded in 1915, has the purpose to "promote and develop the highest standards of radiology and related sciences through education and research". (RSNA RSNA Radiological Society of North America, Inc. RSNA Robust Security Network Association ) --The presentation of studies confirming the efficacy of VoLumen(R) Oral Contrast at the 2005 RSNA 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 second quarter ended December 3, 2005 were $34.2 million, up 30% compared with net sales of $26.2 million for the second quarter ended November 27, 2004. The sales increase of $8.0 million for the quarter was attributable to: growth of CT and 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; the Empower(R) family of injectors systems; 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. ); and contract manufacturing products. The Company estimates that approximately $3.0 million to 3.2 million of the increase in net sales for the quarter resulted from the voluntary recall of some CT imaging and X-ray fluoroscopy 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. Gross profit improved by approximately 29% to $15.3 million, from $11.9 million for the year-ago quarter, while gross profit as a percentage of sales remained at 45%. Favorable changes in sales product mix and sale price increases, including the effects of lower distributor rebates as a percentage of sales, offset the effects of raw material cost increases. 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 $12.8 million, compared with $11.1 million for the prior-year quarter, largely due to increased sales and marketing costs, compensation costs and additional infrastructure for the support of our healthcare decontamination/RSDL business. Last year's quarter included plant closing and operational restructuring costs of $0.8 million. 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 $2.5 million in the second quarter of fiscal 2006, a more than 200% increase over $0.8 million in the comparable prior-year quarter. Other expense for the fiscal 2006 second quarter was $0.2 million, compared with other income during the same period last year of $0.3 million, which included the gains of $0.7 million on the sales of a non-core equity security. For the fiscal 2006 second quarter, the Company's effective tax rate was 34%. For the second quarter of fiscal 2005, the Company's effective tax rate of 25% differed from the Federal statutory rate of 34%, 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 during the quarter. Earnings from continuing operations for the 2006 second quarter were $1.5 million, or $0.14 per diluted share, compared with earnings from continuing operations of $0.8 million, or $0.08 per diluted share, for the prior-year quarter. The second quarter of 2005 benefited from an additional $0.6 million or $0.05 per diluted share from a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . For the six months (twenty-seven weeks) ended December 3, 2005, net sales were $69.0 million, up 37% compared with net sales of $50.2 million for the six months (twenty-six weeks) ended November 27, 2004. Gross profit increased 43% to $31.2 million from $21.9 million in the prior-year period, and, as a percentage of sales, improved to 45.2% from 43.6%. Operating profit was $6.5 million, compared with $0.7 million last year. Earnings from continuing operations for the first six months of fiscal 2006 were $4.1 million, or $0.37 per diluted share, up sharply compared with $1.5 million, or $0.14 per diluted share, in the prior-year period. 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 December 3, 2005 of $27.1 million, compared with $28.6 million as of May 28, 2005. Working capital was $66.3 million as of December 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, "We had an excellent quarter, marked by sales growth across all product lines, the introduction of IRiSCT, the presentation of additional data confirming the efficacy of our VoLumen oral contrast agent, and the demonstration as a works-in-progress of the EZ Chem Blood Analyzer. "Our CT injector systems grew 19% in the quarter over quarter comparison. CT imaging contrast products, excluding sales to Tyco customers, grew an estimated 11% quarter over quarter. Additionally, our total international sales, which are not affected by the Tyco recall, grew 19% quarter over quarter. Also, for the third consecutive quarter, our CT imaging products accounted for a greater proportion of sales than our X-ray fluoroscopy products, at 40% of sales versus 36%." Mr. Lombardo continued, "We recorded sales for RSDL of almost $1.1 million during the second quarter of fiscal 2006, attributable to sales to NATO NATO: see North Atlantic Treaty Organization. NATO in full North Atlantic Treaty Organization International military alliance created to defend western Europe against a possible Soviet invasion. member nations and to an initial order from Virginia Beach's First Response team. This compares with $0.2 million in sales in the second fiscal quarter last year. The U.S. Defense Department's final field testing on RSDL continues. Assuming successful completion of the tests and that the U.S. Department of Defense issues a fielding plan for the product for the U.S. government's fiscal 2007, we believe that RSDL can become a major contributor to the company's future revenue growth. "During the quarter, we announced the launch of our IRiSCT(TM) Injector Reporting Information System, which represents a new concept in CT suite management. IRiSCT is a patent-pending software package that automates the data collection process for all critical functions of our EmpowerCT(R) and Empower CTA An abbreviation for cum testamento annexo, Latin for "with the will annexed." (R) injectors. IRiSCT can also link multiple Empower injectors through a hospital's existing data network, including those in remote locations, creating an integrated data management system that radiology administrators can access from the convenience of their offices. As there are no other contrast agent management products on the market, this offers our injector systems a unique and competitive advantage. "In addition, we also demonstrated as a `works-in-progress' the EZ Chem Blood Analyzer at the 2005 RSNA. This is a convenient point-of-care device for conducting blood assays in patients prior to certain imaging procedures. Developed in conjunction with Nova Biomedical bi·o·med·i·cal adj. 1. Of or relating to biomedicine. 2. Of, relating to, or involving biological, medical, and physical sciences. , E-Z-EM has exclusive rights to market the product to radiologists and gastroenterologists in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , with additional marketing rights worldwide. We expect to submit an application to 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. for regulatory clearance in our third fiscal quarter, and, assuming regulatory clearance is granted, anticipate marketing the product in the U.S. during the fourth quarter of our fiscal 2006. "Three studies were presented at the recently completed Radiological Society of North America conference describing VoLumen's benefits for small bowel small bowel n. See small intestine. imaging and PET/CT PET/CT Positron Emission Tomography and Computed Tomography , and we were pleased with the response to this evidence among radiologists in attendance. We believe that this and other previously published research has helped validate the concept behind this product, and will support its continued adoption as the potential new standard for these types of procedures," 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 $135 million to $139 million, compared with previous guidance of $124 million to $127 million. Net earnings are expected to be $6.8 million to $7.4 million, compared with prior guidance of $5.0 million to $5.6 million. Conference Call E-Z-EM management will host a conference call to discuss these results on Tuesday, January 10, 2006 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 3986626. 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) 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 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, the impact of Mallinckrodt's return to the marketplace; continued growth in CT injector systems and CT imaging contrast product sales; successful completion of DoD field testing and placement of DoD orders for RSDL, general military and first-responder market acceptance and sales of RSDL, market acceptance and sales of IRiSCT, successful development and the receipt of regulatory clearance for EZ Chem, market acceptance and future sales of VoLumen(R); future actions by the FDA or other regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. , 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 Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 3, 2005 and 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)
December 3, May 28,
2005 2005
---------- --------
Assets
Current assets
Cash, cash equivalents and debt and equity
securities $ 27,096 $ 28,602
Accounts receivable, net 22,098 17,677
Inventories, net 27,460 22,822
Other current assets 4,845 6,149
---------- --------
Total current assets 81,499 75,250
Property, plant & equipment - at cost, net 13,377 13,256
Other non-current assets 14,859 13,549
Non-current assets held for disposal 3,554 3,593
---------- --------
Total assets $113,289 $105,648
========== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 5,301 $ 5,069
Accrued liabilities 9,013 9,916
Other current liabilities 854 653
---------- --------
Total current liabilities 15,168 15,638
Long-term liabilities 5,045 4,290
Stockholders' equity 93,076 85,720
---------- --------
Total liabilities and stockholders' equity $113,289 $105,648
========== ========
E-Z-EM, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(in thousands, except per share data)
Twenty- Twenty-
seven six
Thirteen weeks weeks
weeks ended ended ended
Dec. 3, Nov. 27, Dec. 3, Nov. 27,
2005 2004 2005 2004
-------- -------- ------- -------
Net sales $34,204 $26,222 $68,988 $50,234
Cost of goods sold 18,876 14,360 37,787 28,356
-------- -------- ------- -------
Gross profit 15,328 11,862 31,201 21,878
Operating expenses 12,806 11,081 24,705 21,192
-------- -------- ------- -------
Operating profit 2,522 781 6,496 686
Other income (expense), net (198) 323 (254) 1,008
-------- -------- ------- -------
Earnings from continuing
operations before income taxes 2,324 1,104 6,242 1,694
Income tax provision 799 281 2,164 240
-------- -------- ------- -------
Earnings from continuing
operations 1,525 823 4,078 1,454
Earnings from discontinued
operation, net of income tax
provision 608 1,228
-------- -------- ------- -------
Net earnings $ 1,525 $ 1,431 $ 4,078 $ 2,682
======== ======== ======= =======
Basic earnings per common share
From continuing operations $ 0.14 $ 0.08 $ 0.38 $ 0.14
From discontinued operation, net
of income tax provision 0.05 0.11
-------- -------- ------- -------
Net earnings $ 0.14 $ 0.13 $ 0.38 $ 0.25
======== ======== ======= =======
Diluted earnings per common share
From continuing operations $ 0.14 $ 0.08 $ 0.37 $ 0.14
From discontinued operation, net
of income tax provision 0.05 0.11
-------- -------- ------- -------
Net earnings $ 0.14 $ 0.13 $ 0.37 $ 0.25
======== ======== ======= =======
Weighted average common shares
Basic 10,847 10,749 10,842 10,741
Diluted 11,110 10,936 11,055 10,934
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