Kensey Nash Reports Better Than Expected Second Quarter EPS of
$0.27, an Increase of 18% Over Prior Year Period
-Net Sales Increases 27% Over Prior Year Period-
EXTON, Pa., Jan. 19 /PRNewswire-FirstCall/ -- Kensey Nash Corporation
(NASDAQ:KNSY) today reported earnings per share of $0.27 for its second fiscal
quarter of 2005, ahead of its previous guidance of $0.25 to $0.26 per share.
Net sales increased 27% over the prior year comparable period.
Second Quarter Results. Total revenues were $15.2 million for the second
fiscal quarter compared to $13.7 million in the prior year period, an increase
of 11%. Net sales increased 27% to $10.2 million from $8.0 million in the
comparable quarter of the prior fiscal year, primarily due to sales of spine-
related products. Net income of $3.3 million, or $0.27 per share, for the
second quarter of fiscal 2005 increased 18% over the previous year comparable
period net income of $2.8 million, or $0.23 per share.
Royalty income of $5.0 million increased 7% sequentially and included $4.5
million in Angio-Seal(TM) royalties and $519,000 in royalties from Orthovita
(NASDAQ:VITA). The Angio-Seal royalty of $4.5 million represents an increase
of approximately 21% over the prior year quarter after adjustment for the
royalty rate decline from 9% to 6%, a 33% change, which occurred in April 2004. In addition, Kensey Nash's new source of royalty income from Orthovita helped
to offset the impact of the decline in the Angio-Seal royalty rate. With
launches by Orthovita of co-developed products continuing, ongoing strength of
Angio-Seal end-user sales, and other sources of royalty income in progress, the
Company expects royalty income to increase going forward.
As of December 31, 2004, the Company had cash and investments of $52.7 million,
total assets of $102.6 million and no debt. During the quarter, the Company
generated cash from operations of $2.9 million offset primarily by cash used
for share repurchases totaling $4.5 million and capital spending of $3.1
million, including construction costs of our new facility.
The following table summarizes the results for the Company for the three months
ended December 31, 2004 compared to the three months ended December 31, 2003: ($ millions, except Three months ended Three months ended Percentage
per share data) December 31, 2004 December 31, 2003 Change
Net Sales $10.2 $8.0 27%
Royalty Income $5.0 $5.6 (10%)
Total Revenues $15.2 $13.7 11%
Income from Operations $4.4 $3.9 14%
Earnings Per Share $0.27 $0.23 18% Year-to-Date Results
Total revenues for the six months ended December 31, 2004 increased 16% to
$30.3 million compared to $26.1 million in the prior year period. Net sales
increased 32% to $20.3 million from $15.4 million in the comparable six months
of the prior fiscal year. Net income for the six months increased 22% to $6.4
million, or $0.53 per share, compared to $5.3 million, or $0.43 per share, for
the prior year period.
The following table summarizes the results for the Company for the six months
ended December 31, 2004 compared to the six months ended December 31, 2003: ($ millions, except Six months ended Six months ended Percentage
per share data) December 31, 2004 December 31, 2003 Change
Net Sales $20.3 $15.4 32%
Royalty Income $9.7 $10.4 (7%)
Total Revenues $30.3 $26.1 16%
Income from Operations $8.6 $6.9 25%
Earnings Per Share $0.53 $0.43 23% CEO Comments on Results. "Our second quarter results exceeded our
expectations," commented Joseph W. Kaufmann, President and CEO of Kensey Nash
Corporation. "Biomaterials products showed strong growth year over year at 26%
for our second quarter. Sales to Orthovita of VITOSS(R) FOAM products were
$2.4 million for our second fiscal quarter 2005, a 3% increase over our first
fiscal quarter, reflecting strong and consistent post-launch end-user sales by
Orthovita. Angio-Seal component sales to St. Jude Medical of $3.9 million
increased 24% over the prior year quarter. Sales of sports medicine products
were $3.0 million, down 7% from our first fiscal quarter, as expected," he
added. "Our biomaterials business continues to expand as we develop and
enhance our biomaterials technologies. We are especially pleased to see the 9%
sequential growth in Angio-Seal royalty income during the quarter as St. Jude
Medical continues to demonstrate their market leadership in vascular closure
devices," Mr. Kaufmann stated.
TriActiv Update. "We are very excited about our planned US launch of the
TriActiv. While we are awaiting FDA clearance to begin marketing, we have
expanded our US sales organization, completed our initial sales training
program and will be ready to launch once approval is obtained. When we receive
FDA approval we will provide further TriActiv sales guidance for fiscal 2005,"
commented Mr. Kaufmann. "Meanwhile, our development team continues to make
significant progress toward the next-generation products in the TriActiv
product platform. We are building a foundation that will serve our company for
many years to come," he concluded.
Third Quarter and Fiscal Year Guidance. For the third quarter, guidance for
earnings is $0.30 to $0.31 per share, an increase of 7% to 11% over the prior
year comparable period. Our projections for total revenue are $16.0 to $16.3
million, including forecasts for net sales of $10.6 to $10.8 million and
royalty income of $5.4 to $5.5 million. For the fiscal year 2005, the Company
continues to estimate earnings per share of $1.18 to $1.21. Total fiscal year
revenues are currently estimated to be in a range of $66 to $69 million, an
approximate increase of 13% to 19% over the previous fiscal year. Included in
this estimate are net sales of $45 to $47 million and royalties of
approximately $21 to $22 million.
Share Repurchase. During the second fiscal quarter 2005, the Company
repurchased 174,867 shares for approximately $4.5 million. These shares were
part of the previously authorized and announced share repurchase program, under
which approximately 59,000 shares remain authorized for repurchase.
Conference Call and Webcast. The Company will be holding a conference call to
discuss the first quarter earnings results on Thursday, January 20, 2005 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 612-332-0802. A replay of the call will also be
available starting January 20, 2005 at 2:30 PM eastern time until Tuesday,
January 25, 2005 at midnight eastern time by calling 800-475-6701, access code
765129.
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(TM) 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 third 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.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) Three Months Six Months
Ended December 31, Ended December 31,
2004 2003 2004 2003
Revenues:
Net sales $10,193,030 $8,041,754 $20,299,662 $15,353,705
Research and
development - 91,807 253,292 327,108
Royalty income 5,027,687 5,583,696 9,745,157 10,423,291
Total revenues 15,220,717 13,717,257 30,298,111 26,104,104
Operating costs and
expenses:
Cost of products
sold 4,303,856 3,537,701 8,350,360 6,879,831
Research and
development 3,734,925 4,247,574 8,118,449 8,325,555
Selling, general
and administrative 2,789,267 2,072,275 5,263,456 4,032,365
Total operating
costs and
expenses 10,828,048 9,857,550 21,732,265 19,237,751
Income from operations 4,392,669 3,859,707 8,565,846 6,866,353
Interest and other
income, net 306,813 273,682 641,760 546,034
Pre-tax income 4,699,482 4,133,389 9,207,606 7,412,387
Income tax expense 1,409,845 1,364,018 2,762,282 2,135,773
Net income $3,289,637 $2,769,371 $6,445,324 $5,276,614
Income per common
share, assuming dilution $0.27 $0.23 $0.53 $0.43
Weighted average common
shares outstanding 12,189,891 12,154,675 12,226,596 12,237,931 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) December 31, June 30,
2004 2004
Assets
Current assets:
Cash, cash equivalents and
investments $52,689,072 $61,096,487
Trade receivables 6,831,822 6,005,702
Other receivables 5,375,185 4,943,878
Inventory 3,659,735 3,481,599
Prepaids and other assets 2,560,658 1,418,528
Deferred tax asset, current 1,247,620 2,607,669
Total current assets 72,364,092 79,553,863
Property, plant and equipment, net 22,300,818 15,984,900
Acquired patents and proprietary
rights, net 4,662,443 2,410,623
Deferred tax asset, non-current - 2,825
Goodwill 3,284,303 3,284,303
Total assets $102,611,656 $101,236,514 Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
expenses $4,483,519 $6,483,366
Current portion of debt - 219,147
Deferred revenue 17,159 109,773
Total current liabilities 4,500,678 6,812,286
Deferred tax liability, non-current 502,560 -
Total stockholders' equity 97,608,418 94,424,228
Total liabilities and stockholders'
equity $102,611,656 $101,236,514
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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