From the press release:
In 2003, we are committed to maintaining growth of the Zicam brand and expect a 30 percent increase in revenue while working to provide shareholders with increased value on a year-over-year basis by growing earnings at an even faster rate than last year," Mr. Johnson continued.
Management affirmed their 30% top line growth guidance and maintained their 70% gross profit margin in Q1. Based on previous guidance for operating expenses about equal to last year (I increased them 5% from 2002 for good measure) and R&D expenditures equal to 6% of sales, Matrixx would earn about 26 cents per share in 2003. That would represent an 86% increase in earnings over last year. Personally I think that they are low-balling the guidance like last year so they can beat the expectation. With several growing products already on the market and at least two new products scheduled to be introduced this year, Matrixx is more likely to grow the top line at least 40% this year, which would translate into earnings per share of 37 cents, or a 164% increase over 2002. The stock closed today at a forward PE of about 30. It is worth a lot more based on an 86% growth in earnings and it's worth even more if they grow earnings 164%.
Proforma Income Statement at various sales levels:
2003E 25% revenue 30% revenue 40% revenue
increase increase increase
Revenue 29,435,259 30,612,669 32,967,490
Cost of sales 8,536,225 8,877,674 9,560,572
Gross Profit 20,899,034 21,734,995 23,406,918
Operating exp 16,321,392 16,321,392 16,321,392
R&D expense 1,766,116 1,836,760 1,978,049
Total expenses 18,087,508 18,158,152 18,299,442
EBIT 2,811,526 3,576,843 5,107,476
Other income 113,693 310,635 310,635
Interest expense 182,213 169,006 169,006
EBT 2,743,006 3,718,472 5,249,105
Income tax 932,622 1,264,280 1,784,696
Net Income 1,810,384 2,454,191 3,464,409
Avg shares out 9,422,684 9,422,659 9,422,659
Net EPS $0.19 $0.26 $0.37
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