Kensey Nash Announces EPS of $0.26 for First Quarter, Exceeding
Previous Guidance of $0.23 to $0.24
- Also Reports 38% Increase in Net Sales for Its First Fiscal Quarter -
EXTON, Pa., Oct. 20 /PRNewswire-FirstCall/ -- Kensey Nash Corporation
(NASDAQ:KNSY) today announced earnings of $0.26 per share for its first fiscal
quarter of 2005, an increase of 44% over the prior year adjusted first quarter
results.
First Quarter Results. Total revenues for the first quarter increased 22% from
the prior year first quarter due to strong net sales and royalty income. Total
revenues were $15.1 million for the first fiscal quarter compared to $12.4
million in the prior year period. Net sales increased 38% to $10.1 million
from $7.3 million in the comparable quarter of the prior fiscal year. Angio-Seal end-user unit sales increased 25% to 360,000 units from 288,000
units in the comparable quarter of the prior year. In addition, our
partnership with Orthovita (NASDAQ:VITA) added $571,000 to royalty income for
the first quarter. The combination of strong Angio-Seal sales and the new
Orthovita royalty resulted in total royalty income of $4.7 million in the first
quarter of 2005 compared to $4.8 million in the prior year quarter. This
represents a decrease of only 3%, despite the 33% decrease in the contracted
Angio-Seal(TM) royalty rate during the fourth quarter of fiscal 2004. Net
income of $3.2 million, or $0.26 per share, for the first quarter of fiscal
2005 increased 44% over the previous year comparable period adjusted net income
of $2.3 million, or $0.18 per share, excluding a net $276,000, or $0.02 per
share, historic research and development tax credit (described below).
Reported earnings per share increased 26% in the first quarter 2005 from $0.20
per share on net income of $2.5 million in the prior year period including the
effect of the research and development tax credit.
As previously announced, during the fourth quarter of fiscal year 2003 the
Company performed a retrospective research and development tax credit study for
fiscal years 1993 through 2003. The net effect of the historical credit was
$276,000, or $0.02 per share in the first quarter of fiscal year 2004.
During the quarter, the Company generated cash from operations of $3.9 million
offset by cash used for share repurchases totaling $600,000 and capital
spending of $4.9 million including the $3.1 million purchase of land for our
new facility. The Company had cash and investments of $57.2 million, total
assets of $103.7 million and no debt as of September 30, 2004.
The following table summarizes the results for the Company for the three months
ended September 30, 2004 compared to the three months ended September 30, 2003: Three Months Ended
($ millions,
except per share data) September 30, 2004 September 30, 2003 % Change
Net Sales $10.1 $7.3 38%
Royalty Income $4.7 $4.8 (3%)
Total Revenues $15.1 $12.4 22%
Income from Operations $4.2 $3.0 39%
Diluted E.P.S. (excluding the
$0.02 historic R&D tax credit
in September 2003) $0.26 $0.18 44%
Diluted E.P.S. (as reported) $0.26 $0.20 30% CEO Comments on Results. "We are very pleased with our first quarter results,"
commented Joseph W. Kaufmann, president and CEO of Kensey Nash Corporation.
"Sales of our biomaterials products increased 38% over last year's comparable
quarter. We had $2.3 million of bone grafting product sales to Orthovita and
strong collagen product sales of $3.5 million to St. Jude Medical while sales
of sports medicine products were approximately flat year over year at $3.2
million," he added. "Our new royalty income from Orthovita on the Vitoss FOAM
products was impressive and we expect to see ongoing growth in both royalty
income and product sales throughout our fiscal year with a combination of
recently introduced products entering this market and new products to be
launched in the second half of our fiscal year. Additionally, the Angio-Seal
business continued to be stronger than anticipated with 1% sequential unit
growth in the quarter, a quarter that is traditionally the slowest quarter for
medical devices, and 25% over the prior year," concluded Mr. Kaufmann.
TriActiv Update. "We are very excited about some anticipated upcoming
milestones for the company, including FDA approval of the TriActiv, which is
expected by the end of the second fiscal quarter, and the launch in the U.S. with our direct sales force," said Mr. Kaufmann. "We continue to prepare for
our U.S. launch and are enthusiastic about the potential for this platform
technology in the embolic protection markets. " Fiscal Year and Second Quarter Guidance. The Company is reiterating its
previous fiscal year 2005 earnings per share guidance of $1.18 to $1.21. Total
revenues are currently projected to be in a range of $68.0 to $70.0 million.
Included in this estimate are net sales of $46.0 to $48.0 million and royalties
of $21.5 to $22.0 million. For the second quarter, guidance for earnings is
$0.25 to $0.26 per share, an increase of 9% to 13% over the prior year second
quarter. Our estimates for total revenue are $15.0 to $15.3 million, including
forecasts for net sales of $9.5 to $10.0 million and royalty income of $5.2 to
$5.3 million.
Share Repurchase. As announced in August 2004, the Company reinstated its
share repurchase program authorizing the repurchase of 259,000 shares of the
Company's stock. During the first quarter, the Company repurchased 25,000
shares for approximately $600,000. During the month of October 2004, the
Company repurchased an additional 174,867 shares for approximately $4.5
million, leaving approximately 59,000 shares authorized for repurchase under
the current authorized plan.
Conference Call and Webcast. The Company will be holding a conference call to
discuss the first quarter earnings results on Thursday, October 21, 2004 at
11:00 AM eastern time. A live webcast of the conference call will be
broadcast. Please visit the investor relations page at
http://www.kenseynash.com/ for the link. To participate in the conference
call, interested parties may call 612-332-0228. A replay of the call will also
be available starting October 21, 2004 at 2:30 PM eastern time until Tuesday,
October 26, 2004 at midnight eastern time by calling 800-475-6701, access code
750544.
About Kensey Nash Corporation. Kensey Nash Corporation is a leading developer
and manufacturer of absorbable biomaterials-based products with applications in
the cardiology, orthopaedics, spine, drug and biologics delivery,
periodontal/dental, surgical and wound care markets. The Company was a pioneer
in the field of arterial puncture closure, as the inventor and developer of the
Angio-Seal(R) Vascular Closure Device. Angio-Seal is licensed to St. Jude
Medical, Inc. The Company's TriActiv(R) Balloon Protected Flush Extraction
System for the treatment of saphenous vein graft disease is commercialized in
the European Union. The Company has submitted an application for 510(k)
clearance for its TriActiv(R) System to the U.S. Food and Drug Administration,
following the completion of a major clinical study.
Cautionary Note for Forward Looking Statements. This press release contains
forward-looking statements that reflect the Company's current expectations
about its prospects and opportunities, including, without limitation, the
revenue and earnings guidance provided by the Company for its second quarter
and fiscal year 2005. The Company tried to identify these forward looking
statements by using words such as "expects," "anticipates," "estimates,"
"plans," "will," "forecasts," "guidance," or similar expressions, but these
words are not the exclusive means for identifying such statements. The Company
cautions that a number of risks, uncertainties, and other important factors
could cause the Company's actual results to differ materially from those in the
forward-looking statements including, without limitation, St. Jude Medical's
success in marketing the Angio-Seal(TM) device, demand for and the Company's
ability to develop and manufacture biomaterial products, including
Angio-Seal(TM) components, clinical, sales and marketing success of the
TriActiv(R) System, additional regulatory approvals, and competition from other
technologies in the marketplace. For a more detailed discussion of these and
other factors, please see the Company's SEC filings. Except as expressly
required by the federal securities laws, the Company undertakes no obligation
to update or revise any forward-looking statements, whether as a result of new
information, changed circumstances or future events or for any other reason.
The Company also cautions that results of operations in any past period should
not be considered indicative of the results to be expected for future periods.
Fluctuations in operating results may also result in fluctuations in the price
of the Common Stock.
-FINANCIAL INFORMATION TO FOLLOW- KENSEY NASH CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) Three Months
Ended September 30,
2004 2003
Revenues:
Net sales $10,106,632 $7,311,950
Research and development 253,292 235,301
Royalty income 4,717,470 4,839,595
Total revenues 15,077,394 12,386,846
Operating costs and expenses:
Cost of products sold 4,046,504 3,342,131
Research and development 4,383,524 4,077,981
Selling, general and
administrative 2,474,189 1,960,090
Total operating costs and
expenses 10,904,217 9,380,202
Income from operations 4,173,177 3,006,644
Interest and other income, net 334,947 272,353
Pre-tax income 4,508,124 3,278,997
Income tax expense 1,352,437 771,755
Net income $3,155,687 $2,507,242
Income per common share, assuming
dilution $0.26 $0.20
Weighted average common shares
outstanding 12,281,315 12,312,776 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, June 30,
2004 2004
Assets
Current assets:
Cash, cash equivalents and
investments $57,171,844 $61,096,487
Trade receivables 5,358,199 6,005,702
Other receivables 5,206,488 4,943,878
Inventory 3,821,815 3,481,599
Prepaids and other assets 1,463,880 1,418,528
Deferred tax asset, current 2,611,094 2,607,669
Total current assets 75,633,320 79,553,863
Property, plant and equipment, net 20,053,798 15,984,900
Acquired patents and proprietary
rights, net 4,765,555 2,410,623
Deferred tax asset, non-current 2,825 2,825
Goodwill 3,284,303 3,284,303
Total assets $103,739,801 $101,236,514 Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
expenses $5,722,298 $6,483,366
Current portion of debt - 219,147
Deferred revenue 18,534 109,773
Total current liabilities 5,740,832 6,812,286
Total stockholders' equity 97,998,969 94,424,228
Total liabilities and stockholders'
equity $103,739,801 $101,236,514
Non-GAAP Financial Measures and Reconciliations We use various numerical measures in conference calls, investor meetings and other forums which are or may be considered "Non-GAAP financial measures" under Regulation G. We have provided below for your reference supplemental financial disclosure for these measures, including the most directly
comparable GAAP measure and an associated reconciliation. Kensey Nash Corporation
Non-GAAP Financial Measures and Reconciliations
Adjusted Income and Earnings Per Share Reconciliation
(In Millions, except per share data) Three Months Ended
September 30,
2003
Adjusted Income
Net Income, as reported $2.5
Exclude:
Historical R&D Tax Credits (0.3)
Historical R&D Tax Credit Engagement Fees 0.1
Net Income, as adjusted $2.3 Diluted Earnings Per Share
Earnings Per Share, as reported $0.20
Exclude:
Historical R&D Tax Credits (0.02)
Historical R&D Tax Credit Engagement Fees 0.00
Earnings Per Share, as adjusted $0.18 Diluted weighted average common shares outstanding 12.313 Note:
To supplement our consolidated financial statements presented in accordance
with GAAP, Kensey Nash Corporation used non-GAAP measures of pro forma net
income and earnings per share, which were adjusted from our GAAP results to
exclude certain general and administrative expenses and historic research and
development tax credits. These non-GAAP adjustments were provided to enhance
the user's overall understanding of our historical and current financial
performance and our prospects for the future. By disclosing these non-GAAP
results, excluding these expenses and tax credits that we believe are not
indicative of our core operating results, we believe we provide useful
information to both management and investors.
The non-GAAP measures are included to provide investors and management with an
alternative method for assessing Kensey Nash's operating results in a manner
that is focused on the performance of Kensey Nash's ongoing operations and to
provide a more consistent basis for comparison between years. Further, these
non-GAAP results are one of the primary indicators management uses for planning
and forecasting in future periods. The presentation of this additional
information should not be considered in isolation or as a substitute for
results prepared in accordance with accounting principles generally accepted in
the United States. DATASOURCE: Kensey Nash Corporation CONTACT: Joseph W. Kaufmann, President and Chief Executive Officer, Kensey Nash Corporation, +1-610-524-0188 Web site: http://www.kenseynash.com/
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