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Bentley Pharmaceuticals Reports Record Revenues in Second Quarter
of 2004
- Conference call and webcast to be held today at 10:00 A.M. (EDT) -
EXETER, N.H., July 28 /PRNewswire-FirstCall/ -- Bentley Pharmaceuticals, Inc.
(NYSE:BNT), a technology-based specialty pharmaceutical and drug delivery
company with a growing branded and generic product line in Europe, today
announced financial results for the second quarter and six months ended June
30, 2004.
Total revenues for the 2004 second quarter increased 10.2% to a record $18.5
million from $16.8 million in the prior-year's second quarter. At constant
exchange rates, revenues were up 4.0%. Net product sales grew 4.9%, to $17.4
million from $16.6 million in last year's second quarter; however, net product
sales remained consistent when expressed in constant currency. Licensing and
collaboration revenues increased significantly to $1.1 million from $158,000 in
the comparable year-ago quarter.
In addition to the favorable impact of exchange rates, second quarter revenues
reflected:
-- Continued volume growth in Spain, partially offsetting price reductions
announced last year;
-- Increased royalties from sales of Testim(R), the first marketed product
to incorporate Bentley's CPE-215 drug delivery technology;
-- Continued rapid growth in pharmaceutical product sales outside Spain.
Factors which partially offset growth in the second quarter included:
-- The continued effect of pharmaceutical pricing regulations implemented
in December 2003 in Spain, which impacted several product lines;
-- Elevated levels of product returns in April and May 2004 (totaling
approximately $500,000) of older pharmaceutical products associated
with the implementation of pharmaceutical pricing regulations in
December of 2003.
Sales outside of Spain continued to grow strongly, rising 60% to $3.8 million
from $2.3 million in last year's second quarter. As a percentage of total
revenues, sales outside of Spain grew to 20% from 14% in the year ago quarter,
driven by license and supply agreements with more than 25 entities, primarily
in Europe. The Company expects sales outside of Spain to continue to be a
major contributor to its growth throughout 2004 and beyond.
Second quarter operating income totaled $2.6 million compared to $3.3 million a
year earlier, reflecting higher operating expenses due to increased costs in
the current year necessary to support current and future growth. Net income
for the 2004 second quarter was $1.5 million, or $0.07 per diluted share,
compared to $1.5 million, or $0.07 per diluted share, in the year-ago period.
Diluted shares outstanding increased 9% from the second quarter of 2003,
primarily as a result of the exercise of the Company's Class B Redeemable
Warrants.
Net income was positively affected by a reversal of previously accrued expenses
related to pharmaceutical tax assessments in Spain which are no longer
considered due or payable as a result of changes in Spain. The Company has
recorded a pretax benefit totaling $1.47 million ($954,000 after taxes) as a
component of other income and expenses. These assessments were accrued to be
paid to the Spanish government as a vehicle to help reduce the impact of the
rising health care costs in Spain. Due to recent changes in the pharmaceutical
industry in Spain and a change in the Spanish political environment, these
liabilities no longer exist. Accordingly, these amounts have been reversed
during the quarter ended June 30, 2004. In addition, a tax audit of the
Company's Spanish subsidiary for tax years 1998 through 2000 has been completed
by the Spanish tax authorities during the quarter ended June 30, 2004. As a
result of this audit, the Company has been assessed an additional tax liability
of approximately $600,000, which has been recorded as a component of the
provision for income taxes, and related interest and penalties totaling
approximately $190,000, which have been recorded as a component of other income
and expenses.
James R. Murphy, President and CEO, stated, "Our revenues for the second
quarter were primarily driven by increases in sales of Paroxetine and Codeisan
within Spain, the growth of our sales outside of Spain and a significant
increase in royalties from sales of Auxilium's Testim. The performance of our
Spanish operations reflects continued market share gains, which were offset by
the pharmaceutical pricing regulations effected in December 2003."
Revenues for the six months ended June 30, 2004 grew 12.7% (1.6% at constant
currency) to $35.8 million from $31.7 million in the same period of the prior
year, in spite of the lower prices. Operating income totaled $4.3 million
compared to $6.0 million in the six months ended June 30, 2003, reflecting the
previously disclosed product price reductions, product returns and higher
operating expenses in 2004. Net income for the first six months of 2004
totaled $2.3 million, or $0.10 per diluted share, compared to $3.1 million, or
$0.15 per diluted share in the year ago period. Diluted shares outstanding
increased 11% from the 2003 six-month period primarily as a result of the
exercise of the Company's Class B Redeemable Warrants.
Mr. Murphy continued, "We expect to continue to increase future sales volume
through our pipeline of approximately 100 products, consisting of roughly 20
chemical entities. We are pleased with the significant increase in our sales
outside of Spain and expect that part of our business to continue to grow and
become a larger component of our pharmaceutical product sales. Additionally, to
further enhance our productivity, we have implemented several initiatives
directed at cost reductions and achieving manufacturing efficiencies. We will
continue to focus on acquiring, developing and launching new products that will
further enhance our product mix," Mr. Murphy added.
Michael D. Price, Vice President and Chief Financial Officer, commented, "We
expect gross margins to continue to move back toward our historic 54% - 56%
range. Future gross margins and profits should gradually benefit from the
launch of new pharmaceutical products, increased efficiencies in our
manufacturing processes and economies of scale.
"We continue to have a strong balance sheet, with $36 million in cash and
investments, and a healthy current ratio of approximately 2.5 to 1. Our total
assets are approximately $110 million with essentially no long-term debt,
putting us in an excellent position to invest in our growth as quality
opportunities arise. We believe that our impressive and growing product
portfolio and our highly efficient manufacturing processes will drive continued
sales growth both inside and outside of Spain, as well as productivity
improvements which garner added operating leverage."
Mr. Murphy concluded, "We are well positioned for continued financial and
strategic progress, and reaffirm our full year 2004 expectations for revenues
in the range of $70 million to $80 million."
Significant components of Bentley's revenues for the three months ended June
30, 2004 and 2003 are as follows:
For the Three Months Ended June 30, 2004:
Sales Within Spain
% of
Branded Generic Contract Other Total
Product Line Products Products Manufacturing Revenues Total Revenues
Omeprazole $647 $3,204 $ -- $ -- $3,851 21%
Simvastatin 354 868 -- -- 1,222 7%
Enalapril 893 327 -- -- 1,220 7%
Paroxetine 228 765 -- -- 993 5%
Codeisan 608 -- -- -- 608 3%
All other
products 1,535 1,646 -- 264 3,445 19%
Contract
manufacturing -- -- 2,304 -- 2,304 12%
Sales outside
of Spain -- -- -- 3,764 3,764 20%
Licensing and
collaborations -- -- -- 1,063 1,063 6%
Total Revenues $4,265 $6,810 $2,304 $5,091 $18,470 100%
% of Total
Revenues 23% 37% 12% 28% 100%
For the Three Months Ended June 30, 2003:
Sales Within Spain
% of
Branded Generic Contract Other Total
Product Line Products Products Manufacturing Revenues Total Revenues
Omeprazole $1,694 $3,431 $ -- $ -- $5,125 31%
Simvastatin 588 1,128 -- -- 1,716 10%
Enalapril 743 460 -- -- 1,203 7%
Paroxetine -- 207 -- -- 207 1%
Codeisan 524 -- -- -- 524 3%
All other
products 1,236 1,629 -- -- 2,865 17%
Contract
manufacturing -- -- 2,607 -- 2,607 16%
Sales outside
of Spain -- -- -- 2,349 2,349 14%
Licensing and
collaborations -- -- -- 158 158 1%
Total Revenues $4,785 $6,855 $2,607 $2,507 $16,754 100%
% of Total Revenues 28% 41% 16% 15% 100%
NOTICE OF CONFERENCE CALL
The Company will host a conference call to discuss these results and the
outlook for the remainder of 2004 today at 10:00 A.M. EDT. To participate in
the call, please dial (800) 399-3081 approximately 10 minutes prior to the
scheduled start time and give the password "BENTLEY". International
participants may dial (706) 679-0718; the password is the same. The conference
call will also be broadcast live on the Internet and may be accessed via the
Company's website, http://www.bentleypharm.com/.
A replay of the conference call will be available through August 4, 2004.
Listeners may access the replay via the Company's website,
http://www.bentleypharm.com/, or by dialing (800) 642-1687 from within the U.S.
and Canada and using access code 8816411. A replay of the conference call from
international locations may be accessed by dialing (706) 645-9291 using the
same access code.
Copies of Bentley Pharmaceuticals' press releases and other information may be
obtained through Bentley's web site at http://www.bentleypharm.com/.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: This press release contains forward looking statements, including without
limitation, statements regarding our anticipated 2004 revenues, our 2004
operating performance including gross margin and profit expectations,
anticipated sources of future revenue, the prospects for growth of our business
outside of Spain, and expectations for launching new products. These
forward-looking statements are subject to a number of risks and uncertainties
that could cause actual results to differ materially from future results
expressed or implied by such statements. Factors that may cause such
differences include, but are not limited to risks associated with expanding
generic and branded drug operations, changes in third-party reimbursement and
government mandates which impact pharmaceutical pricing, development and
commercialization of new products, our relationships with our strategic
partners, clinical trials, regulatory approval processes, the unpredictability
of patent protection, technological changes, the effects of economic
conditions, risks associated with international operations, competition from
other manufacturers of generic, and proprietary pharmaceuticals and other
uncertainties detailed in Bentley's most recent Annual Report on Form 10-K and
its other subsequent periodic reports filed with the Securities and Exchange
Commission. Bentley cautions investors not to place undue reliance on the
forward-looking statements contained in this release. These statements speak
only as of the date of this document, and Bentley undertakes no obligation to
update or revise the statements, except as may be required by law.
- TABLES TO FOLLOW -
BENTLEY PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Revenues:
Net product sales $17,407 $16,596 $34,013 $30,831
Licensing and collaboration
revenues 1,063 158 1,759 911
Total revenues 18,470 16,754 35,772 31,742
Cost of net product sales 8,396 6,819 16,592 12,940
Gross profit 10,074 9,935 19,180 18,802
Operating expenses:
Selling and marketing 3,851 3,626 7,721 6,979
General and administrative 2,287 1,786 4,451 3,345
Research and development 946 879 1,941 1,897
Depreciation and amortization 407 328 813 611
Total operating expenses 7,491 6,619 14,926 12,832
Income from operations 2,583 3,316 4,254 5,970
Other income (expenses):
Interest income 132 82 242 165
Interest expense (58) (64) (111) (118)
Other, net 1,274 -- 1,274 --
Income before income taxes 3,931 3,334 5,659 6,017
Provision for income taxes 2,441 1,805 3,361 2,956
Net income $1,490 $1,529 $2,298 $3,061
Net income per common share:
Basic $0.07 $0.09 $0.11 $0.17
Diluted $0.07 $0.07 $0.10 $0.15
Weighted average common shares
outstanding:
Basic 20,644 17,534 20,620 17,495
Diluted 22,800 20,878 22,787 20,617
BENTLEY PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
June 30, December 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $35,743 $39,393
Marketable securities 465 1,252
Receivables, net 23,772 18,036
Inventories, net 9,605 7,106
Deferred taxes 237 213
Prepaid expenses and other 1,857 899
Total current assets 71,679 66,899
Non-current assets:
Fixed assets, net 23,057 18,566
Drug licenses and related
costs, net 13,889 13,818
Restricted cash 1,000 1,000
Other 162 180
Total non-current assets 38,108 33,564
$109,787 $100,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,949 $10,154
Accrued expenses 8,355 7,103
Short-term borrowings 1,871 1,915
Current portion of long-term debt -- 70
Deferred income 3,167 1,956
Total current liabilities 28,342 21,198
Non-current liabilities:
Deferred taxes 2,353 2,555
Long-term debt 360 369
Other 75 176
Total non-current liabilities 2,788 3,100
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par
value, authorized 2,000 shares,
issued and outstanding, none -- --
Common stock, $.02 par value,
authorized 100,000 shares,
issued and outstanding,
20,787 and 20,573 shares 416 412
Stock purchase warrants (to
purchase 400 and 420
shares of common stock) 333 333
Additional paid-in capital 138,578 136,850
Accumulated deficit (64,301) (66,599)
Accumulated other
comprehensive income 3,631 5,169
Total stockholders' equity 78,657 76,165
$109,787 $100,463
DATASOURCE: Bentley Pharmaceuticals, Inc.
CONTACT: Michael D. Price, Vice President, Chief Financial Officer of
Bentley Pharmaceuticals, Inc., +1-603-658-6100; or Investors: Jonathan Birt,
Lanie Marcus, or Sean Leous, all of Financial Dynamics, +1-212-850-5600, for
Bentley Pharmaceuticals, Inc.
Web site: http:/www.bentleypharm.com