BMP Sunstone Reports First Quarter 2010 Financial Results
Revenue of $39.0 Million, Gross Margin of 53.8% and Adjusted EBITDA of $4.7 Million
Company Reiterates 2010 Financial Guidance
PLYMOUTH MEETING, Pa., May 10 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (Nasdaq: BJGP) ("BMP Sunstone" or the "Company") today announced financial results for the first quarter ended March 31, 2010.
David Gao, Chief Executive Officer of BMP Sunstone, stated, "This was a quarter of successful management transition at Sunstone. We replaced senior managers including the general manager and improved our sales organization which we expect will drive future top line growth, improve sales force effectiveness and save costs. These changes to our management team resulted in an incremental $1.2 million of salary, legal and other expenses during this quarter, which we expect to be non-recurring. We believe our first quarter 2010 performance was respectable considering the dramatic changes at Sunstone and the exceptional strength of our results in the first quarter of 2009 when revenues grew over 46% on a pro forma basis over 2008."
First Quarter 2010 Financial Results
Revenue in the first quarter of 2010 was $39.0 million, compared to $39.3 million in the first quarter of 2009. Revenue from manufacturing was $25.4 million, up 3.6% from the prior year period, reflecting continued demand for Sunstone Pharmaceutical Co., Ltd. (Sunstone) leading products offset by near-term disruption related to the Company's sales force reorganization completed in the first quarter of 2010. Revenue from licensed products increased by 29.4% year over year to $1.7 million, due to successful sales and marketing efforts for Propess, Anpo and Ferriprox. Revenue from distribution was $11.9 million, down 11.4% on a year over year basis, reflecting management's decision to proactively cease distribution of certain low margin wholesale products during the quarter. In addition, hospital bidding in Beijing has been delayed until the second quarter of 2010. Our effort of reducing low margin products impacted revenue performance but ultimately should improve gross margin in the division. Additionally, as of the first quarter of 2010, financial contributions from Sunstone Shengda Zhangjiakou Pharmaceutical Co., Ltd., were consolidated in the Company's manufacturing division.
Gross profit in the first quarter of 2010 was relatively flat at $21.0 million, compared to $20.7 million in the first quarter of 2009. Gross margin was 53.8%, compared to 52.6% in the prior year period. Gross margin performance was driven by sales of manufactured and licensed products, which carried gross margins of 74.7% and 63.1% respectively. This gross margin performance is in line with management's plan to enhance profitability through revenue mix shift over time, as higher margin revenue from manufacturing and licensed products contributed to a greater portion of total revenue in the first quarter of 2010 versus the year ago period.
The Company's operating income was $3.0 million in the first quarter of 2010, compared to $3.2 million in the first quarter of 2009. Operating expenses include approximately $1.2 million of additional general and administrative expenses compared to the prior year period, which reflect non-recurring charges related to compensation expenses, stock compensation charges and legal expenses at Sunstone. Non-GAAP operating income improved 4.1% to $4.9 million from $4.7 million in the prior year period.
Adjusted EBITDA was $4.7 million in the first quarter of 2010, compared to $4.6 million in the first quarter of 2009.
Non-GAAP net income was $2.6 million, or $0.05 per diluted share, compared to $3.0 million, or $0.07 per diluted share, in the first quarter of 2009. On a GAAP basis, the Company reported net income of $625,000, or $0.01 per diluted share, compared to net loss of $2.0 million, or ($0.05) per diluted share, in the first quarter of 2009. The earnings per share calculation is based on 51.0 million diluted shares outstanding, compared to 43.1 million diluted shares outstanding in the prior year period.
Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three month periods ended March 31, 2010 and 2009.
Balance Sheet
As of March 31, 2010, the Company had cash and cash equivalents of $23.0 million and notes receivable of $15.7 million, totalling $38.7 million. Notes receivables from customers for the settlement of trade receivable balances are guaranteed by established banks in China and have maturities of six months or less.
Full Year 2010 Financial Guidance
The Company continues to expect revenue to reach between $160 million and $170 million in fiscal 2010. Additionally, during fiscal 2010, the Company continues to expect adjusted EBITDA to reach between $16 million and $17 million and non-GAAP net income to reach between $9 million and $10 million.
Conference Call
The Company will hold a conference call at 5:00 pm ET on May 10, 2010 to discuss its results. Listeners may access the call by dialing 1-888-713-4211 or 1-617-213-4864 for international callers, access code: 66684143. Preregistration and a webcast will be available through the Company's website at http://www.bmpsunstone.com . A replay of the call will be accessible through May 24, 2010 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 82597028.
About BMP Sunstone Corporation
BMP Sunstone Corporation is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone the Company manufactures leading pediatric and women's health products, including two of China's most recognized brands, "Hao Wawa" and "Confort," sold in pharmacies throughout the country. The Company also markets a portfolio of products under exclusive multi-year licenses into China, primarily focused on women's health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone's main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit http://www.bmpsunstone.com .
Safe Harbor Statement
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts, including but not limited to statements regarding the impact of changes in the Company's management and revenue mix, the Company's expected financial performance in fiscal 2010 and the Company's expectations for its business units in fiscal year 2010. These statements are subject to uncertainties and risks including, but not limited to, operating performance, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company's products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For further information, please contact:
Integrated Corporate Relations, Inc.
(Investor Relations)
Ashley M. Ammon
Tel: +1-646-277-1227
Christine Duan
Tel: +1-203-682-8200
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
For the three months ended March 31,
2010 2009
Revenues:
Third parties $39,016 $35,521
Related parties -- 3,742
Total Revenues 39,016 39,263
Cost of Goods Sold 18,024 18,605
Gross Profit 20,992 20,658
Sales and Marketing Expenses 12,170 13,511
General and Administration Expenses 5,811 3,929
Total Operating Expenses 17,981 17,440
Profit From Operations 3,011 3,218
Other Income (Expense):
Interest Income 47 24
Interest Expense (1,352) (1,417)
Debt Issuance Cost Amortization (126) (128)
Equity Method Investment Income 0 17
Loss on Early Extinguishment of Debt 0 (4,573)
Gain on Derivatives 0 1,651
Total Other Income (Expense) (1,431) (4,426)
Profit (Loss) Before Provision For
Income Taxes 1,580 (1,208)
Provision For Income Taxes 916 782
Net Profit (Loss) Attributable to BMP
Sunstone Corporation $664 $(1,990)
Less: Net Profit Attributable to the
Noncontrolling Interest 39 --
Net Profit (Loss) Attributable to BMP
Sunstone Corporation $625 $(1,990)
Basic Profit (Loss) Per Share
Attributable to BMP Sunstone $0.01 $(0.05)
Fully-Diluted Profit (Loss) Per Share
Attributable to BMP Sunstone $0.01 $(0.05)
Basic Weighted-average Shares
Outstanding 41,963 40,765
Fully Diluted Weighted-average Shares
Outstanding 51,023 43,066
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
Non GAAP
For the three months ended March 31,
2010 2009
Revenues:
Third parties $39,016 $35,521
Related parties -- 3,742
Total Revenues 39,016 39,263
Cost of Goods Sold 17,860 18,490
Gross Profit 21,156 20,773
Sales and Marketing Expenses 11,360 12,785
General and Administration Expenses 4,942 3,325
Total Operating Expenses 16,302 16,110
Profit From Operations 4,854 4,663
Other Income (Expense):
Interest Income 16 24
Interest Expense (1,352) (967)
Equity Method Investment Income -- 17
Total Other Income (Expense) (1,336) (926)
Profit Before Provision For Income
Taxes 3,518 3,737
Provision For Income Taxes 916 782
Net Profit $2,602 $2,955
Less: Net Profit Attributable to the
Noncontrolling Interest 39 --
Net Profit Attributable to BMP
Sunstone Corporation 2,563 2,955
Basic Profit Per Share $0.06 $0.07
Fully Diluted Profit Per Share $0.05 $0.07
Basic Weighted-average Shares
Outstanding 41,963 40,765
Fully Diluted Weighted-average Shares
Outstanding 51,023 43,066
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
($ amounts in thousands)
March 31, December 31,
2010 2009
Assets
Current Assets:
Cash and Cash Equivalents $22,956 $21,544
Restricted Cash 1,125 1,125
Notes Receivable 15,738 17,541
Accounts Receivable, net of allowance
for doubtful accounts of $944 and
$481 45,234 37,752
Inventory, net of allowance for
obsolescence of $122 and $98 11,846 9,811
Receivable from Alliance Unichem -- 7,550
Other Receivables 3,892 3,648
VAT Receivable 903 1,093
Prepaid Expenses and Other Current
Assets 6,660 6,322
Total Current Assets $108,354 106,386
Property and Equipment, net 31,694 30,967
Investment in Shengda -- 2,950
Investments, at Cost 146 146
Goodwill 70,044 70,033
Other Assets 294 405
Land Use Rights, net of accumulated
amortization 3,047 2,860
Intangible Assets, net of accumulated
amortization 40,798 38,508
Total Assets $254,377 $252,255
Liabilities and Equity
Current Liabilities:
Notes Payable and Bank Borrowings,
net of debt discounts $2,813 $6,406
Accounts Payable 22,724 24,465
Due to Related Parties 1,309 1,437
Deferred Revenues 128 208
Accrued Expenses 21,582 18,478
Total Current Liabilities 48,556 50,994
Long-Term Debt, including debt
premium 36,320 36,749
Deferred Taxes 8,956 9,097
Total Liabilities 93,832 96,840
Commitment and Contingencies -- --
Equity:
Common Stock, $.001 Par Value;
75,000,000 and 50,000,000 Shares;
42,125,320 and 41,931,987 Shares
Issued and Outstanding as of
March 31, 2010 and December 31,
2009, respectively 42 42
Additional Paid in Capital 170,208 168,772
Common Stock Warrants 8,621 8,621
Accumulated Deficit (32,321) (32,946)
Accumulated Other Comprehensive
Income 9,520 9,486
Total BMP Sunstone Corporation
Stockholders' Equity 156,070 153,975
Noncontrolling Interest 4,475 1,440
Total Liabilities and Equity 254,377 $252,255
BMP Sunstone Corporation and Subsidiaries
Non GAAP Reconciliations
($ amounts, except per share in thousands)
Three months Ended March 31,
2010 2009
GAAP Gross Profit $20,992 $20,658
Amortization Related to Acquisition 164 115
Non GAAP Gross Profit $21,156 $20,773
Three months Ended March 31,
2010 2009
GAAP Operating Income $3,011 $3,218
Stock Based Compensation 850 585
Amortization Related to Acquisitions 993 860
Non GAAP Operating Income $4,854 $4,663
Three months Ended March 31,
(all amounts in $000) 2010 2009
GAAP Net Income (Loss) $625 $(1,990)
GAAP Basic and Fully Diluted EPS $0.01 $(0.05)
Stock Based Compensation 850 585
Debt Discount and Premium
Amortization and Issuance Cost 95 578
Amortization Related to Acquisitions 993 860
Loss on Early Extinguishment of Debt -- 4,573
Gain (Loss) on Derivatives -- (1,651)
Non GAAP Net Income $2,563 $2,955
Non GAAP EPS $0.06 $0.07
BMP Sunstone Corporation and Subsidiaries
Adjusted EBITDA Reconciliation
($ amounts in thousands)
For the three months Ended March 31,
(all amounts in $000) 2010 2009
Net Income (Loss) $625 $(1,990)
Net Income Reconciliation to Adjusted
EBITDA:
Interest expense, net 1,336 943
Income taxes 916 782
Depreciation 720 522
Amortization of intangibles and fair
value of inventory increase 993 860
Loss on Early Extinguishment of Debt 0 4,573
Gain on derivatives 0 (1,651)
Amortization of debt discount and
debt issuance costs 95 577
ADJUSTED EBITDA $4,685 $4,616
SOURCE BMP Sunstone Corporation
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