The Female Health Company Reports First Quarter Operating Results and Reaffirms
Annual Guidance
--Highlights: - Gross Margin approximates 55.2% of net revenues - Operating
Profit of $0.4 million - Pretax Margin approximates 11.1% of net revenues - Cash
Flow from Operations $2.1 million - Unit sales decline due to timing of large
orders
CHICAGO, Feb. 4, 2011 /PRNewswire via COMTEX/ -- The Female Health Company
(FHCO), which manufactures and markets the FC2 Female Condom(R), today reported
its operating results for the first quarter of FY2011.
During the three months ended December 31, 2010, the Company's net revenues
decreased 33% to approximately $3.7 million, compared with approximately $5.5
million in the first quarter of the previous fiscal year. The results are
consistent with the guidance provided in 2010 fiscal year end press release
issued December 3, 2010, which stated that the first quarter FY2011 would reflect
a decrease over that of the prior year due to the delay in two large orders. The
fourth quarter of FY2010 was the Company's most profitable quarter to date,
without any contribution from these orders. With respect to one of the orders,
Brazil's Ministry of Health issued a request in November 2010 for bids on up to
10 million units of nitrile female condoms. This tender reflects an increase in
demand compared to the previous tender, awarded to the Company, which was for 4
million units. The Company submitted its bid in December 2010. The Company is
anxious to meet the increasing demand for FC2 in Brazil. The Brazil Ministry of
Health has not made public the tender award date.
The Company recorded net income of $386,668, or $0.01 per diluted share, in the
first quarter of FY2011, compared with a net loss of $(698,351), or $(0.03) per
diluted share, in the first quarter of FY2010.
Cost of sales decreased 28% to $1,634,450 in the first quarter of FY2011,
compared with $2,285,813 in the first quarter of FY2010, on a 36% decrease in
unit sales. Gross profit decreased 37% to $2,016,918 in the most recent quarter,
compared with $3,202,861 in the first quarter of FY2010. Gross profit as a
percentage of net revenues narrowed slightly to 55% in the quarter ended December
31, 2010, compared with 58% in the prior-year quarter.
Operating income increased $1,058,119 to $433,987 in the quarter ended December
31, 2010, versus an operating loss of $(624,132) in the three months ended
December 31, 2009, when the Company recognized a one-time restructuring expense
of $1,896,353.
As noted in previous news releases, the Company expects significant
quarter-to-quarter variations in its operating results, due to the timing of
large order receipts, production scheduling, and shipments.
"While such delays occur, we remain highly confident that the underlying demand
for FC2 Female Condoms will continue to increase, due to the increase in new
HIV/AIDS cases worldwide, the feminization of HIV/AIDS and the related role of
FC2 in protecting women," observed O.B. Parrish, Chief Executive Officer of The
Female Health Company. Women now account for more than 50% of all new HIV/AIDS
cases. HIV/AIDS is now the leading cause of death worldwide among women 15-44
years of age. "Based upon currently available information, we believe we will
receive the two large orders that have been delayed during the current fiscal
year."
"We ended the first quarter with a very strong balance sheet," continued Parrish.
"The Company's cash position as of December 31, 2010 approximated $3.6 million,
which represented a 23% improvement relative to cash of approximately $2.9
million at the end of fiscal year 2010. The Company generated $2.1 million in
cash from operations during the first quarter. We remain debt-free, and our
shareholders' equity totaled $15.4 million at the end of the most recent
quarter."
On January 14, 2011, the Company's Board of Directors declared a $0.05 per share
quarterly cash dividend to shareholders of record as of January 31, 2011. The
dividend payment will be paid on February 7, 2011 from the Company's cash on
hand. This represents the fifth consecutive quarterly cash dividend declared by
the Company.
FY 2011 Earnings Guidance
The Company reaffirmed its previous guidance, which anticipates a 15%-20%
increase in unit sales in the fiscal year ending September 30, 2011, relative to
unit shipments in FY2010. Operating earnings are expected to increase 10%-15%
over the $6.3 million in operating income recorded in FY2010 (exclusive of
restructuring charges of $1.9 million). The Company expects sales and earnings
during the first half of FY2011 to be lower than in prior-year periods, with unit
sales accelerating as the fiscal year progresses. As experienced in FY2010, the
principal challenge in providing guidance involves the timing of orders that can
represent a significant portion of the Company's annual revenues. As a result,
the Company's guidance could be impacted positively or negatively, depending on
the timing of such orders. Recognizing such variations will occur, the Company
remains positive regarding long term increased demand for FC2.
Investor Conference Call
Shareholders and other interested parties may participate in the conference call
by dialing 1-877-317-6789 (international participants dial 1-412-317-6789) and
asking to be connected to "The Female Health Company Conference Call", a few
minutes before 11:00 a.m. EST on February 4,2011. A replay of the call will be
available one hour after the call through 9:00 p.m. EST on Friday, February 18,
2011 by dialing 1-877-344-7529 (international callers dial 1-412-317-0088) and
entering the conference ID 447806.
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with U.S. generally accepted
accounting principles ("GAAP") included in this release, the Company has provided
certain non-GAAP financial information, specifically operating income exclusive
of the $1.9 million restructuring charge. Management believes that the
presentation of this non-GAAP financial measure provides useful information to
investors because this information may allow investors to better evaluate ongoing
business performance and certain components of the Company's results. In
addition, because the restructuring charge related to a non-recurring event in
the first quarter of FY2010, the Company believes that the presentation of this
non-GAAP financial measure enhances an investor's ability to make
period-to-period comparisons of the Company's operating results. This information
should be considered in addition to the results presented in accordance with
GAAP, and should not be considered a substitute for the GAAP results. The Company
has reconciled the non-GAAP financial information included in this release in a
table below.
About The Female Health Company
The Female Health Company, based in Chicago, Illinois, manufactures and markets
the FC2 Female Condom(R) (FC2), which is available in the U.S. and about 100
other countries around the world. The Company owns certain worldwide rights to
the FC2 Female Condom(R), including patents that have been issued in the U.S.,
Europe, Canada, Australia, South Africa, Japan, China, Spain, Mexico, Greece and
Turkey and are pending in various countries. The FC2 Female Condom(R) is the only
available FDA-approved product controlled by a woman that offers dual protection
against sexually transmitted diseases, including HIV/AIDS, and unintended
pregnancy. The World Health Organization (WHO) has cleared FC2 for purchase by
U.N. agencies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995:
The statements in this release which are not historical fact are "forward-looking
statements" as that term is defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements in this release include statements
regarding the timing of receipt by the Company of the two large orders,
underlying demand for FC2 and FY2011 earnings guidance. These statements are
based upon the Company's current plans and strategies, and reflect the Company's
current assessment of the risks and uncertainties related to its business, and
are made as of the date of this release. The Company assumes no obligation to
update any forward-looking statements contained in this release as a result of
new information or future events, developments or circumstances. Such
forward-looking statements are inherently subject to known and unknown risks and
uncertainties. The Company's actual results and future developments could differ
materially from the results or developments expressed in, or implied by, these
forward-looking statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
but are not limited to, the following: product demand and market acceptance;
competition in the Company's markets and the risk of new competitors and new
competitive product introductions; the Company's reliance on its international
partners in the consumer sector and on the level of spending on the female condom
by country governments, global donors and other public health organizations in
the global public sector; the economic and business environment and the impact of
government pressures; risks involved in doing business on an international level,
including currency risks, regulatory requirements, political risks, export
restrictions and other trade barriers; the Company's production capacity,
efficiency and supply constraints; and other risks detailed in the Company's
press releases, shareholder communications and Securities and Exchange Commission
filings, including the Company's Form10-K for the fiscal year ended September30,
2010. Actual events affecting the Company and the impact of such events on the
Company's operations may vary from those currently anticipated.
For more information about the Female Health Company visit the Company's website
at femalehealth.com and femalecondom.org. If you would like
to be added to the Company's e-mail alert list, please send an e-mail to
FHCInvestor@femalehealthcompany.com.
(Financial Highlights Follow)
The Female Health Company
Unaudited Condensed Consolidated Balance Sheet
December 31,September 30,
20102010
----------------------------
Cash$3,577,188$2,918,776
Restricted cash4,4804,578
Certificate of deposit61,630-
Accounts receivable, net2,357,3234,460,517
Income tax receivable29,95028,179
Inventory2,842,0842,194,330
Prepaid expenses and other current assets200,190284,948
Deferred income taxes1,900,0001,900,000
Total current assets10,972,84511,791,328
Other non-current assets117,234178,713
Net property, plant & equipment2,306,4972,398,060
Deferred income tax4,000,0004,000,000
----------------------------
Total assets$17,396,576$18,368,101
Accounts payable$859,987$586,596
Accrued expenses and other current liabilities 553,832906,994
Accrued compensation279,757444,843
Total current liabilities1,693,5761,938,433
Obligations under capital leases8,65912,999
Deferred grant income126,104132,312
Deferred income taxes152,345152,227
Total liabilities1,980,6842,235,971
Total stockholders' equity15,415,89216,132,130
----------------------------
Total liabilities and stockholders' equity$17,396,576$18,368,101
The Female Health Company
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended
December 31,
20102009
----------------------------
Net revenues$3,651,368$5,488,674
Cost of sales1,634,4502,285,813
----------------------------
Gross profit2,016,9183,202,861
Advertising and promotion19,40069,851
Selling, general and administrative1,563,5311,860,408
Research and development-381
Restructuring costs, net-1,896,353
----------------------------
Total operating expenses1,582,9313,826,993
----------------------------
Operating income (loss)433,987(624,132)
----------------------------
Non-operating income (expense):
Interest, net and other income71712,331
Foreign currency transaction loss(30,906)(48,689)
----------------------------
Income (loss) before income taxes403,798(660,490)
Income tax expense17,13037,861
----------------------------
Net income (loss)386,668(698,351)
Net income (loss) per basic common share outstanding$ 0.01$ (0.03)
Basic weighted average common shares outstanding27,245,56026,300,571
Net income (loss) per diluted common share outstanding $ 0.01$ (0.03)
Diluted weighted average common shares outstanding28,997,49726,300,571
Reconciliation of Non-GAAP Financial Information
Following is a reconciliation of the Non-GAAP financial measure of operating
income exclusive of restructuring charge to the nearest GAAP financial measure of
operating income for the twelve months ended September30, 2010.
For Twelve Months
Ended
September30, 2010
-----------------
Operating income exclusive of restructuring charge $6,279,082
Less: Restructuring charge$1,929,922
-----------------
Operating Income$4,349,160 |
