Rochester Medical Reports Second Quarter Results

News provided by

Rochester Medical Corporation

Apr 29, 2010, 04:00 ET

STEWARTVILLE, Minn., April 29 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (Nasdaq: ROCM) today announced operating results for its second quarter ended March 31, 2010.

The Company reported sales of $9,845,000 for the current quarter compared to $8,445,000 for the second quarter of last year.  It also reported net loss of $351,000 or ($.03) per diluted share compared to net income of $361,000 or $.03 per diluted share for the same quarter of last year.

The approximate 17% increase in sales (14% on a constant currency basis) resulted from a 32% increase in Rochester Medical Branded Sales (27% on a constant currency basis), partially offset by a 12% decrease in Private Label Sales (12% decrease on a constant currency basis). Constant currency basis assumes current exchange rates for all periods in order to exclude the impact of foreign exchange variations.  In the second quarter of 2010 the U.S. dollar was somewhat weaker versus the pound sterling, thus having a positive effect on Rochester Medical Branded Sales levels in translated U.S. dollars given the significant volume of branded sales in the United Kingdom.

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 $140,000 or $.01 per diluted share compared to Non-GAAP Net Income of $207,000 or $.02 per diluted share for the second quarter of last year. The decrease for the current quarter is primarily attributable to increased investment in sales and marketing programs (particularly with respect to the Company's FemSoft® product) and lower gross margin due to rapid growth of advanced Rochester Medical Branded products which are not yet at sales volumes needed for margin efficiencies.

Commenting on today's announcement Rochester Medical CEO and President Anthony Conway said, "We are very pleased with our continuing excellent growth of Rochester Medical Branded Sales.  The overall 32% increase is very strong, and the growth in our main product areas of focus is even better.  Combined sales of Rochester Medical Branded products in the U.S. and U.K. market grew 35% due in large part to a 79% increase in Intermittent Catheter sales in the combined market, and also due to a 69% increase in Foley Catheter sales in the U.S. marketplace.  These results reflect the Company's ongoing strategy to invest in sales and marketing programs for our advanced Rochester Medical Branded products.  The Magic3™ Intermittent technology and the new StrataSI™ and StrataNF™ Foley Catheters are being very well received.  Rochester Medical Branded Sales were 74% of total sales revenue this quarter.  Private Label Sales, which were down 12%, continue to fluctuate on a quarterly basis."

Conway also commented on the pilot FemSoft® sales and marketing effort underway in North Carolina and Florida and also in the U.K. saying, "We started a significant Direct To Consumer pilot campaign in February in coordination with clinical institutions and a Distributor, primarily in the Charlotte N.C. and South Florida area. So far this year we have invested over $600,000 in the campaign, most of it in Q2.  As expected, consumer and clinician interest is very high, but it is still too early to tell how many of the interested women will begin using the product.  We expect to be able to evaluate the continuing campaign's progress and effectiveness later in the year and then map out the future course of action."

In conclusion Conway stated, "More than ever, the marketplace is recognizing and requesting the uniqueness and superiority of Rochester Medical's technology and products.  We look forward to continuing that trend."

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.  Similarly, constant currency represents reported sales with the cost/benefit of currency movements removed.  Management uses the measure to understand the growth of the business on a constant dollar basis, as fluctuations in exchange rates can distort the underlying growth of the business both positively and negatively.  While we recognize that foreign exchange volatility is a reality for a global company, we routinely review our company performance on a constant dollar basis, and we believe this also allows our shareholders to understand better our Company's growth trends.

Non-GAAP Net Income and constant currency are not measures 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 and constant currency are not comparable to information provided by other companies. Non-GAAP Net Income and constant currency have limitations as analytical tools 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, and reconciliations of sales under GAAP and sales on a constant currency basis, are presented at the end of this press release.

This press release contains "forward-looking statements" that are based on currently available information, operating plans and management's expectations about future events and trends.  They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements, including the uncertainty of estimated revenues and profits, the uncertainty of current domestic and international economic conditions that could adversely affect the level of demand for the Company's products and increased volatility in foreign exchange rates, 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, 2009 and reports on Forms 10-Q and 8-K.  Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.  The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company will hold a quarterly conference call to discuss its earnings report.  The call will begin at 3:30 p.m. central time (4:30 p.m. eastern time).

This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at www.rocm.com.  To listen live to the conference call via telephone, call:

Domestic:

888.679.8037

International:

617.213.4849

Pass code:

98857904

Pre Registration: https://www.theconferencingservice.com/prereg/key.process?key=PEEYXUKPQ

Replay will be available for seven days at www.rocm.com or via telephone at:

Domestic:

888-286-8010

International:

617-801-6888

Pass code:

31256772

Individual investors can listen to the call at 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 (www.streetevents.com).

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® brand and under existing private label arrangements.

For further information, please contact Anthony J. Conway, President and Chief Executive Officer or David A. Jonas, Chief Financial 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 Revenue to Non-GAAP Revenue in Constant Currency

For the Three and Six months ended

March 31, 2010







(unaudited)

(unaudited)

Three months ended

Six months ended

March 31,

March 31,

2010

2009

2010

2009






GAAP Sales as Reported

$     9,845,480

$    8,445,029

$    20,077,292

$     16,881,114

        Exchange rate as Reported

1.56

1.43

1.60

1.51












Constant Currency Sales

$     9,845,480

$    8,661,240

$    20,077,292

$     17,204,829

 (1)  Exchange rate used for Constant Currency Purposes

1.56

1.56

1.60

1.60












Net Effect of Constant Currency Illustration

$                    -

$       216,211

$                     -

$          323,715






(1) For illustrative purposes Constant currency translates prior period foreign sales at current exchange rates. For Rochester Medical Corporation this is the conversion rate of British pounds to US dollars.  The rate represents the average exchange rate for the respective three or six month period.

ROCHESTER MEDICAL CORPORATION

Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income

For the Three and Six months ended

March 31, 2010 and 2009







(unaudited)

(unaudited)

Three months ended

Six months ended

March 31,

March 31,

2010

2009

2010

2009






GAAP Net Income (Loss) as Reported

$      (351,000)

$      361,000

$       (521,000)

$         415,000






Diluted EPS as Reported

$           (0.03)

$            0.03

$             (0.04)

$                0.03












Adjustments for non-recurring unusual items:




  Settlement income after taxes (1)

  -

(637,000)

  -

(637,000)

Subtotal

-

(637,000)

-

(637,000)












Adjustments for recurring non-cash expenses:




  Intangible amortization (2)

129,000

129,000

258,000

258,000

  ASC 718 compensation expense (3)

362,000

354,000

550,000

476,000

Subtotal

491,000

483,000

808,000

734,000












Non-GAAP Net Income

$        140,000

$       207,000

$         287,000

$          512,000






Non-GAAP Diluted EPS

$              0.01

$             0.02

$               0.02

$                0.04






Weighted Average Shares - Diluted

12,768,464

12,671,119

12,703,486

12,663,538






(1) Settlement income received January 15, 2009 from Covidien Ltd. of $1,000,000, $637,000 after taxes of $363,000. 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, 2009.

(2) 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 sixth months ended March 31, 2010 and 2009 related to certain intangibles. The gross amount of amortization is $163,000 per quarter after taxes of $34,000 for a net amount of $129,000.

(3) Compensation expense mandated by ASC 718.  This adjustment adds back the compensation expense recorded for stock options granted to employees and directors that vested during the three and sixth months ended March 31, 2010 and 2009.  The gross amount of compensation expense for the three months ended March 31, 2010 and 2009 is $565,000 and $478,000 net of taxes of $203,000 and $172,000 for net amounts of $362,000 and $354,000 respectively.  The gross amount of compensation expense for the six months ended March 31, 2010 and 2009 is $850,000 and $743,000 net of taxes of $300,000 and $267,000 for net amounts of $550,000 and $476,000 respectively.

Condensed Balance Sheets








           (unaudited)







March 31,

September 30,






2010

2009









Assets












Current Assets






Cash and equivalents

$    3,847,848

$    6,365,584


Marketable securities

31,943,237

29,896,740


Accounts receivable

7,364,565

6,418,656


Inventories

9,031,412

9,710,234


Prepaid expenses and other assets

1,313,918

1,076,183


Deferred income tax

1,118,207

1,153,964












Total current assets

54,619,187

54,621,361










Property and equipment, net

10,111,072

9,683,808

Deferred income tax

1,003,902

768,874

Patents, net

224,473

224,815

Intangible assets, net

5,612,826

6,017,944

Goodwill


4,407,481

4,648,165










Total Assets

$  75,978,941

$  75,964,967









Liabilities and Stockholders' Equity












Current liabilities:






Accounts payable

$    2,199,712

$    1,755,472


Accrued expenses

1,418,187

1,527,352


Short-term debt

2,752,014

2,786,622












Total current liabilities

6,369,913

6,069,446










Long-term liabilities






Other long-term liabilities

62,424

55,889


Long-term debt

1,056,526

1,019,735












Total long-term liabilities

1,118,950

1,075,624










Stockholders' equity

68,490,078

68,819,897










Total Liabilities and Stockholder's Equity

$  75,978,941

$  75,964,967

Summary Statements Of Operations




(unaudited)

(unaudited)


Three months
ended

Six months
ended


March 31,

March 31,


2010

2009

2010

2009


















Sales

$   9,845,480

$   8,445,029

$   20,077,292

$   16,881,114









Cost of sales

5,186,396

4,030,671

10,805,100

8,541,842









Gross profit

4,659,084

4,414,358

9,272,192

8,339,272

Gross profit %

47%

52%

46%

49%









Costs and expenses:







Marketing and selling

2,871,675

2,448,122

5,648,992

5,014,384

Research and development

241,390

299,103

684,418

616,763

General and administrative

1,747,604

1,757,499

3,438,351

3,123,255









Total operating expenses

4,860,669

4,504,724

9,771,761

8,754,402









Loss from operations

(201,585)

(90,366)

(499,569)

(415,130)









Other income (expense)
















Interest income

14,943

34,256

43,952

201,528

Interest expense

(39,435)

(80,354)

(80,553)

(164,128)

Other income

-

1,000,000

-

1,200,442









Net income (loss) before income taxes

(226,077)

863,536

(536,170)

822,712









Income tax expense(benefit)

125,339

502,334

(15,596)

407,883









Net income (loss)

$    (351,416)

$      361,202

$      (520,574)

$        414,829


















Earnings (loss) per common share - Basic

$          (0.03)

$            0.03

$            (0.04)

$              0.03









Earnings (loss) per common share - Diluted

$          (0.03)

$            0.03

$            (0.04)

$              0.03








Weighted Average Shares:







Basic

12,195,334

12,083,169

12,193,441

12,031,460









Weighted Average Shares:







Diluted

12,195,334

12,671,119

12,193,441

12,663,538

SOURCE Rochester Medical Corporation

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

icon3
440k+
Newsrooms &
Influencers
icon1
9k+
Digital Media
Outlets
icon2
270k+
Journalists
Opted In
GET STARTED