Message #11 From:
NewsBot Date: November 14, 2005 04:06:00 AM
DSCI News Derma Sciences Announces Third Quarter 2005 Results; Conference Call to Be Held November 14, 2005 at 12:30 p.m. ET
PRINCETON, N.J.--(BUSINESS WIRE)--Nov. 14, 2005--Derma Sciences, Inc. (OTC Bulletin Board: DSCI.OB), a manufacturer and full line supplier of wound and skin care products, today reported financial results for the third quarter and nine months ended September 30, 2005.
Net sales for the third quarter of 2005 were $5,712,457 compared to $4,969,824 in the third quarter 2004, a 15% increase, led by a 25% increase in wound care sales, partially offset by a 9% decrease in wound closure-fastener and a 27% decrease in skin care sales. The increase in wound care sales was driven by the exclusive distribution agreement that commenced in the second quarter 2005 with a large Canadian customer, favorable exchange rates, and higher sales of U.S. private label products.
The Company's reported net income was $43,105, or $0.00 per share (basic and fully diluted) in the third quarter 2005, compared to a $243,355 net loss, or $0.03 per share (basic and fully diluted) in 2004 due in large part to a 42% improvement in gross margin to 34.3% compared with 24.2% in 2004. The improved gross margin was attributable to higher wound care margins resulting from lower basic and advanced wound care product costs and improved manufacturing efficiencies.
Net sales for the nine months ended September 30, 2005 increased $2,626,865, or 18% to $17,540,122 compared to $14,913,257 for the nine months ended September 30, 2004. This increase was attributable to a 34% increase in wound care sales, partially offset by a 26% decrease in wound closure-fastener due to the loss of a $750,000 contract and a 23% decrease in skin care sales that led to the company's decision to outsource that product line. Gross profit margin percentage climbed to 31.5% in the first nine months of 2005 from 27.0% in 2004, due to improved manufacturing efficiencies. The Company incurred a net loss of $11,763, or $0.00 per share (basic and fully diluted) in the first nine months of 2005 compared to a $1,550,120 net loss, or $0.17 per share (basic and fully diluted) in 2004.
Working capital grew by $412,390 to $3,261,986, line of credit obligations fell $1,458,512, or 52% to $1,361,722, and long-term debt was cut by 47% to $461,223, since the beginning of the year.
CEO and President Ed Quilty commented, "Our third quarter financial results showed significant improvements over the year-ago quarter, and we are pleased to report our second consecutive quarter of profitability. Our Canadian operation represented 51% of our revenues as our exclusive distribution agreement with Source Medical significantly expanded our reach into the Canadian wound care markets and was a significant driver of our financial performance. We expect this contract will continue to drive our Canadian business as we move forward. And while we had hoped for more rapid top- line growth in the quarter, particularly in the U.S., we are beginning to see some traction in our U.S. private label growth initiatives. We're pursuing relationships with other large distributors to further penetrate our target markets and grow the top-line.
"On the cost side, our improved profitability has been a result of our commitment to aggressively look for ways to reduce our cost structure: during the year we negotiated lower materials costs in China, rationalized certain facilities, implemented manufacturing upgrades in our Toronto facility, and decided to outsource our Skin Care product lines. We are confident that we've positioned Derma Sciences to take advantage of some new exciting opportunities that lie in front of us to increase our volumes and we are committed to taking steps that will accelerate our profitability," concluded Quilty.
Conference Call Information:
What: Derma Sciences Third Quarter 2005 Conference Call
When: Monday, November 14, 2005 at 12:30 P.M. ET
Where Webcast address: www.dermasciences.com,
www.streetevents.com
Dial-in numbers: 866-203-3206 (domestic), and 617-213-8848
(international); the passcode is 14317990
Contact: Peter Seltzberg, Cameron Associates, 212-554-5487,
peter@cameronassoc.com
If you are unable to participate, an audio digital replay of the call will be available from November 14, 2005, at 3:30 P.M. ET until Midnight ET on November 21 2005, by dialing 888-286-8010 (domestic) or 617-801-6888 (international); the confirmation code is 77596991. A web archive will be available for 30 days at www.dermasciences.com and www.streetevents.com
About Derma Sciences, Inc.
Derma Sciences, Inc. provides a full range of skin care, wound management and specialty securement devices that are used primarily in the professional markets, specifically hospitals, nursing homes and home care settings. For more information about Derma Sciences, Inc., visit its home page on the Internet at http://www.dermasciences.com.
Forward-Looking Statement
Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned, that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company's results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission.
TABLE FOLLOWS
DERMA SCIENCES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
Consolidated Statements of Operations (Unaudited)
Three months ended
September 30,
2005 2004
----------------------------------------------------------------------
Net sales $5,712,457 $4,969,824
Cost of sales 3,750,384 3,768,367
----------------------------------------------------------------------
Gross Profit 1,962,073 1,201,457
----------------------------------------------------------------------
Operating expenses 1,831,780 1,393,822
Interest expense, net 75,929 61,242
Other expense (income), net 11,259 (10,252)
----------------------------------------------------------------------
Total Expenses 1,918,968 1,444,812
----------------------------------------------------------------------
Income (loss) before provision for income taxes 43,105 (243,355)
Provision for income taxes - -
----------------------------------------------------------------------
Net Income (Loss) $43,105 $(243,355)
----------------------------------------------------------------------
Income (loss) per common share - basic and fully
diluted $0.00 $(0.03)
----------------------------------------------------------------------
Shares used in computing income (loss) per
common share - basic 12,285,768 9,524,007
----------------------------------------------------------------------
Shares used in computing income (loss) per
common share - diluted 15,804,912 9,524,007
----------------------------------------------------------------------
Consolidated Statements of Operations (Unaudited)
Nine months ended
September 30,
2005 2004
----------------------------------------------------------------------
Net sales $17,540,122 $14,913,257
Cost of sales 12,018,056 10,885,070
----------------------------------------------------------------------
Gross Profit 5,522,066 4,028,187
----------------------------------------------------------------------
Operating expenses 5,412,992 5,317,681
Interest expense, net 255,782 159,388
Other (income) expense, net (134,945) 101,238
----------------------------------------------------------------------
Total Expenses 5,533,829 5,578,307
----------------------------------------------------------------------
Loss before provision for income taxes (11,763) (1,550,120)
Provision for income taxes - -
----------------------------------------------------------------------
Net Loss $(11,763)$(1,550,120)
----------------------------------------------------------------------
Loss per common share - basic and fully
diluted $0.00 $(0.17)
----------------------------------------------------------------------
Shares used in computing loss per common share
- basic and fully diluted 12,193,816 9,285,722
