Rochester Medical Corp. (MM) (NASDAQ:ROCM)
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STEWARTVILLE, Minn., July 31 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (NASDAQ:ROCM) today announced operating results for its third quarter ended June 30, 2008.
The Company reported sales of $8,241,000 for the current quarter compared to $8,367,000 for the third quarter of last year. The Company also reported net income of $312,000 or $.02 per diluted share for the quarter compared to a net income of $807,000 or $.06 per diluted share for the same period of last year.
The approximately 2% decrease in sales resulted from a 23% increase in Rochester Medical Branded Sales offset by a 36% decrease in Private Label Sales. Sales of the Company's Branded products hit an all time quarterly high of $6,019,000 and accounted for 73% of total sales. The Company believes the decrease in Private Label Sales is attributable to the timing of orders and ordering patterns of large private label customers that can vary up and down in any given quarter; they are expected to strengthen again in the fourth quarter.
Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter was $770,000 or $.06 per diluted share compared to Non-GAAP Net Income of $1,315,000 or $0.10 per diluted share for the third quarter of last year. The decrease for the current quarter is primarily attributable to increased investment in Sales and Marketing programs as part of our strategic plan for this fiscal year, and increased cost of sales.
Regarding today's announcement, Rochester Medical's CEO and President Anthony J. Conway said, "The 23% growth rate in our Rochester Medical Branded Sales is very gratifying and reflects the continued excellent acceptance of our branded products in the marketplace. All three of our major branded product lines -- Foleys, Intermittents, and Male External Catheters -- are showing very solid growth. Clearly our focused investment in Sales and Marketing is having productive results. As part of this Marketing Investment the Company has created a new corporate website which went live today. We encourage your visit to http://www.rocm.com/. Our Private Label Sales have fluctuated over the last three quarters; those ups and downs are reflective of the irregularity in ordering patterns of our large Private Label customers. We expect fourth quarter Private Label Sales levels to be considerably stronger. We also expect gross margins to improve as sales volumes of Foleys and Intermittents continue to rise.
"We are seeing strong interest in our Infection Control products, and we are beginning to see increased growth in the Intermittent Catheter marketplace as a result of the new Medicare reimbursement policy which reimburses patients for up to 200 catheters per month instead of four catheters per month under the previous policy. We are looking forward to introducing new advancements in our product lines during this calendar year, and I believe these introductions will further establish Rochester Medical's reputation as an industry leader and provide increased sales opportunities for the Company."
Rochester Medical has provided Non-GAAP Net Income in addition to earnings calculated in accordance with generally accepted accounting principles (GAAP) because management believes Non-GAAP Net Income provides a more consistent basis for comparisons that are not influenced by certain charges and non-cash expenses and are therefore helpful in understanding Rochester Medical's underlying operating results. Non-GAAP Net Income is not a measure of financial performance under GAAP, and should not be considered an alternative to net income or any other measure of performance or liquidity under GAAP. Non-GAAP Net Income is not comparable to information provided by other companies. Non-GAAP Net Income has limitations as an analytical tool and should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP.
Reconciliations of Net Income and Non-GAAP Net Income are presented at the end of this press release.
The Company will hold a quarterly conference call this afternoon to discuss its earnings report. The call will begin at 4:00 p.m. Central Daylight Time (5:00 p.m. eastern time).This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at http://www.rocm.com/. To listen live to the conference call via telephone, call:
Domestic: 888.680.0860, password 56839487
International: 617.213.4852, password 56839487
Pre Registration:
https://www.theconferencingservice.com/prereg/key.process?key=PJ47TFMGM
Replay will be available for seven days at http://www.rocm.com/ or via telephone at:
Domestic: 888-286-8010, password 66511681
International: 617-801-6888, password 66511681
The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com/, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (http://www.streetevents.com/).
This press release contains forward-looking statements that involve risks and uncertainties, including the uncertainty of estimated revenues and profits, as well as the uncertainty of market acceptance of new product introductions, the uncertainty of gaining new strategic relationships or locating and capitalizing on strategic opportunities, the uncertainty of timing of private label sales revenues (particularly international customers), FDA and other regulatory review and response times, and other risk factors listed from time to time in the Company's SEC reports and filings, including, without limitation, the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended September 30, 2007.
Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and devices for urological and continence care applications. The Company markets under its own Rochester Medical(R) brand and under existing private label arrangements.
For further information, please contact Anthony J. Conway, President and Chief Executive Officer of Rochester Medical Corporation at (507) 533-9600. More information about Rochester Medical is available on its website at http://www.rocm.com/.
ROCHESTER MEDICAL CORPORATION
Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income
For the Three and Nine months ended
June 30, 2008
(unaudited) (unaudited)
Three months ended Nine months ended
June 30, June 30,
2008 2007 2008 2007
GAAP Net Income as
Reported $312,248 $806,563 $416,944 $33,316,697
Diluted EPS as Reported $0.02 $0.06 $0.03 $2.69
Adjustments for non-
recurring unusual items:
Settlement income
after taxes (1) - - - (31,305,000)
Deferred revenue (2) - - - (564,286)
Subtotal - - - (31,869,286)
Adjustments for recurring
non-cash expenses:
Intangible
Amortization (3) 163,000 163,000 489,000 489,000
FAS 123R Compensation
Expense (4) 295,000 345,000 1,081,000 1,806,000
Subtotal 458,000 508,000 1,570,000 2,295,000
Non-GAAP Net Income $770,248 $1,314,563 $1,986,944 $3,742,411
Non-GAAP Diluted EPS $0.06 $0.10 $0.16 $0.30
Weighted Average
Shares -Diluted 12,550,317 12,565,278 12,561,535 12,400,531
(1) Settlement income received November 20, 2006 from Premier, Inc. of
$5,155,000 and December 14, 2006 from CR Bard, Inc. of $33,450,000
after taxes of $7,300,000. This adjustment reduces net income for
amounts received net of taxes paid in connection with one-time
settlement of certain litigation. These amounts were recorded in
Other Income in the Statement of Operations for the fiscal year ended
September 30, 2007.
(2) Deferred revenue from a $1,000,000 fee paid by Coloplast A/S in June
2002 for marketing rights to our antibacterial Release NF foley
catheter. These rights with Coloplast A/S were cancelled by mutual
agreement in March 2007, thus accelerating the recognition of the
remaining amount as all conditions for revenue recognition have now
been met. Also includes a $200,000 fee paid by Hollister for
marketing rights to our hydorphilic intermittent catheter in September
2003. The fee paid by Hollister was fully recognized in December
2006. This adjustment reduces net income related to the realization
of certain one-time revenue from marketing rights. The amounts were
recorded in net sales in the Statement of Operations.
(3) Amortization of the intangibles acquired in June 2006 asset
acquisition from Coloplast AS and Mentor Corporation. Management
believes these assets are appreciating. This adjustment adds back
amortization expense for the three and nine months ended June 30, 2008
and 2007 related to certain intangibles.
(4) Compensation expense mandated by SFAS 123R. This adjustment adds back
the compensation expense recorded when stock options are granted to
employees and directors for the three and nine months ended June 30,
2008 and 2007.
Condensed Balance Sheets
(unaudited)
June 30, September 30,
2008 2007
Assets
Current Assets
Cash and equivalents $7,723,694 $6,671,356
Marketable securities 28,743,696 30,465,244
Accounts receivable 5,279,510 5,527,518
Inventories 8,049,782 7,698,889
Prepaid expenses and other
assets 2,606,340 6,480
Deferred income tax asset 1,030,035 876,032
Total current assets 53,433,057 51,245,519
Property and equipment, net 9,871,693 9,679,035
Deferred income tax asset 883,357 571,721
Patents, net 228,191 257,353
Intangible assets, net 7,266,934 7,821,562
Goodwill 5,780,008 5,920,255
Total Assets $77,463,240 $75,495,445
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,206,570 $1,091,874
Accrued expenses 1,111,891 1,978,937
Short-term debt 1,940,987 1,849,463
Total current liabilities 5,259,448 4,920,274
Long-term liabilities
Other long-term liabilities 232,546 -
Long-term debt 4,296,745 6,066,246
Total long term liabilities 4,529,291 6,066,246
Stockholders' equity 67,674,501 64,508,925
Total Liabilities and
Stockholder Equity $77,463,240 $75,495,445
Summary Statements Of Operations
(unaudited) (unaudited)
Three months ended Nine months ended
June 30, June 30,
2008 2007 2008 2007
Sales $8,241,232 $8,367,140 $25,679,758 $24,225,709
Cost of sales 4,568,736 3,918,614 13,594,196 11,574,203
Gross profit 3,672,496 4,448,526 12,085,562 12,651,506
Gross profit % 45% 53% 47% 52%
Costs and expense:
Marketing and selling 2,349,911 1,809,928 6,954,582 4,564,275
Research and
development 202,092 267,235 735,292 710,500
General and
administrative 1,578,410 1,443,932 5,210,295 5,202,631
Total operating
expenses 4,130,413 3,521,095 12,900,169 10,477,406
Income (loss) from
operations (457,917) 927,431 (814,607) 2,174,100
Other income (expense)
Interest income 232,705 393,594 1,041,692 907,947
Interest expense (116,563) (89,626) (394,887) (402,448)
Other income - - - 38,605,000
Net income (loss)
before income taxes $(341,775) $1,231,399 $(167,802) $41,284,599
Income tax
expense(benefit) (654,023) 424,836 (584,746) 7,967,902
Net income 312,248 806,563 416,944 33,316,697
Earnings per common
share - Basic $0.03 $0.07 $0.04 $2.93
Earnings per common
share - Diluted $0.02 $0.06 $0.03 $2.69
Weighted Average
Shares: 11,832,240 11,649,268 11,794,733 11,371,894
Basic
Weighted Average
Shares:
Diluted 12,550,317 12,565,278 12,561,535 12,400,531
DATASOURCE: Rochester Medical Corporation
CONTACT: Anthony J. Conway, President and Chief Executive Officer of
Rochester Medical Corporation, +1-507-533-9600
Web site: http://www.rocm.com/