The Female Health Company Reports Third Quarter Operating Results
--Highlights: - Company generates $4.6 million in cash from operations in first
nine months of FY2011 - Revenues increase 101% over the same period last year -
Company records net income of $416,667 for Q3 of FY2011, up 454% from Q3 of
FY2010, in spite of order delays - Company to pay quarterly dividend of $0.05 per
share on August 9, 2011
CHICAGO, Aug. 5, 2011 /PRNewswire via COMTEX/ -- The Female Health Company
(nasdaq-cm:FHCO), which manufactures and markets the FC2 Female Condom?, today
reported its operating results for the third quarter and first nine months of
FY2011.
For the three months ended June 30, 2011, the Company's net revenues increased
101% to approximately $3.5 million, compared with approximately $1.8 million in
the third quarter of the previous fiscal year. Revenues in the third quarter of
FY2010 were unusually low. Revenues for the third quarter of FY 2011, a
significant improvement over those of the prior year, reflect the Company's
quarter to quarter volatility in unit sales.
In the third quarter of FY2011, the Company recorded net income of $416,667, or
$0.01 per diluted share, compared with net income of $75,159, or $0.00 per
diluted share, in the third quarter of FY2010.
Cost of sales increased 109% to $1,703,754 in the third quarter of FY2011,
compared with $814,764 in the prior-year quarter, as a result of increased unit
sales. Gross profit increased 93% to $1,813,685 in the most recent quarter,
compared with $939,447 in the third quarter of FY2010. The gross profit margin
declined to 52% of net revenues, versus 54% in the prior-year quarter, primarily
due to one-time production costs.
Operating expenses for the quarter ended June 30, 2011 increased 48% to
$1,363,184 when compared with operating expenses of $918,397 in the third quarter
of FY2010. The major components of the increase in operating expenses included
increased compensation-related expenses along with expansion of the FC2 education
programs in several U.S. cities, partially offset by decreased selling and
marketing expenses and consulting fees. The comparison was somewhat hampered by
the fact that FY2010 third quarter expenses were significantly reduced by the
reversal of an incentive-related accrual.
Operating income for the three months ended June 30, 2011 increased 2,040% to
$450,501, versus $21,050 in the year-earlier quarter. The increase reflects
significantly increased gross profit resulting from higher unit sales, somewhat
offset by higher operating expenses.
On July 15, 2011, the Company announced that it had encountered additional
bureaucratic delays involving two significant orders: the tender for up to 20
million units previously awarded by the Brazilian Ministry of Health to the
Company's distributor in Brazil and the award of a Republic of South Africa
tender for up to 11 million units. The Company now projects that these orders may
favorably impact its FY2012 operating results. "Given this volatility in the
timing of large orders and shipments, we are pleased that our business model has
generated sustained profitability and payment of cash dividends during Fiscal
2011, while allowing the Company to remain debt free," observed O.B. Parrish,
Chief Executive Officer of The Female Health Company.
"We believe the long-term outlook for the Company is very bright," continued
Parrish. "HIV/AIDS remains a major worldwide healthcare issue, and a growing
number of public health care agencies and donor organizations now realize that
prevention is critical to controlling the epidemic and reducing treatment costs.
The United Nations Joint Programs on AIDS (UNAIDS) estimates that the annual
global public sector market for male and female condoms will grow to 19 billion
units within the next ten years, compared with approximately 10 billion in 2010.
Women now account for more than 50% of all new adult HIV/AIDS infections, and the
FC2 Female Condom is the only available product controlled by a woman and
approved by the FDA and cleared by the World Health Organization for purchase by
UN agencies that helps prevent HIV/AIDS. This highlights the remarkable long-term
opportunity for FC2."
"We are confident the feminization of HIV/AIDS, along with the importance of
empowering women to protect themselves, will increase the long-term demand for
FC2. We are proud of The Female Health Company's role in addressing critical
issues involving women's health and will continue to work with public health
agencies and non-profit organizations to increase the availability and acceptance
of female condoms around the world," concluded Parrish.
For the nine months ended June 30, 2011, the Company reported net revenues of
approximately $11.5 million, which represented a 21% decrease when compared with
net revenues of approximately $14.4 million in the prior-year period. The decline
in net revenues reflected the previously announced delay in the receipt of two
large orders. For the nine months ended June 30, 2011, net income decreased to
$884,333, or $0.03 per diluted share, compared with $1,221,341, or $0.04 per
diluted share, in the corresponding period of the previous fiscal year.
In the first nine months of FY2011, cost of sales decreased 5% due to lower unit
sales. Gross profit decreased 32% to approximately $5.6 million (49% of net
revenues) in the first nine months of FY2011, compared with approximately $8.3
million (58% of net revenues) in the first nine months of FY2010, reflecting the
impact of lower year-to-date unit volumes upon manufacturing overhead absorption
rates.
Operating expenses for the first nine months of FY2011 decreased 34% to
$4,652,064, compared with operating expenses of $7,034,704 in the first nine
months of FY2010. Operating expenses for the nine months ended June 30, 2010
included a one-time restructuring charge of $1,926,444.
Operating income for the nine months ended June 30, 2011 decreased 23% to
$985,772, versus $1,287,627 in the year-earlier period. The reduction in gross
profit was somewhat offset by the 34% reduction in total operating expenses for
the nine months ended June 30, 2011.
The Company recorded a foreign currency transaction loss of $18,022 in the third
quarter of FY2011, versus a foreign currency transaction gain of $17,190 in the
quarter ended June 30, 2010. For the nine months ended June 30, 2011, the Company
recorded a foreign currency transaction loss of $74,251, compared with a foreign
currency transaction loss of $62,259 in the corresponding period of the previous
fiscal year.
During the first nine months of FY2011, the Company generated $4.6 million in
cash from operations, and unrestricted cash balances totaled approximately $3.3
million as of June 30, 2011. The Company had no outstanding debt and $2.0 million
in unused credit lines at the end of the most recent quarter.
On July 15, 2011, the Company announced that, due to the delay in two large
orders from Brazil and the Republic of South Africa, its earlier earnings
guidance for FY2011 would not be achieved. The Company believes the fourth
quarter and full year ending September 30, 2011 will be profitable and cash flow
positive, but that unit sales and operating income for FY2011 will be lower than
previous guidance. As stated earlier, FHC now expects that the two delayed orders
may favorably impact FY2012 operating results.
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.
On July 14, 2011, the Board of Directors announced that the Company will pay its
seventh consecutive quarterly cash dividend in the amount of approximately $1.4
million ($0.05 per share) on August 9, 2011 to shareholders of record as of
August 2, 2011. The Company expects to pay this dividend from its cash on hand.
Any future quarterly dividends and the record date for such dividends must be
approved each quarter by the Company's Board of Directors and announced by the
Company. Payment of any future dividends will be at the discretion of the Board
of Directors and will be based upon cash flows, alternative demands upon cash
resources, and other factors.
Investor Conference Call
Shareholders and other interested parties may participate in the conference call
by dialing 1-877-374-8416 (international participants dial 1-412-317-6716) and
asking to be connected to "The Female Health Company Conference Call" a few
minutes before 11:00 a.m. EDT on August 5, 2011. A replay of the call will be
available one hour after the call through 9:00 a.m. EDT on Monday, August 22,
2011 by dialing 877-344-7529 (international callers dial 412-317-0088) and
entering the conference ID 10002775.
About The Female Health Company
The Female Health Company, based in Chicago, Illinois, manufactures and markets
the FC2 Female Condom? (FC2), which is available in the U.S. and in about 120
other countries globally. The Company owns certain worldwide rights to the FC2
Female Condom?, including patents that have been issued in the U.S., the European
Union, Canada, Australia, South Africa, Japan, The People's Republic of China,
Spain, Mexico, Greece and Turkey and are pending in various countries. The FC2
Female Condom? 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, FY2011 earnings guidance and the continuation of cash
dividends in future periods. 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 Form 10-K for the fiscal year ended September 30, 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 Sheets
June 30,September 30,
20112010
--------------------------------------------------
Cash$3,284,070$2,918,776
Certificate of deposit63,062-
Restricted cash4,6394,578
Accounts receivable, net1,338,7354,460,517
Income tax receivable28,56128,179
Inventories, net2,127,5512,194,330
Prepaid expenses and other current assets369,412284,948
Deferred income taxes1,900,0001,900,000
Total current assets9,116,03011,791,328
Other non-current assets120,344178,713
Net property, plant & equipment2,083,5322,398,060
Deferred income taxes4,000,0004,000,000
----------------------------------------
Total assets$15,319,906$18,368,101
Accounts payable$573,061$586,596
Accrued expenses and other current liabilities 629,056906,994
Accrued compensation300,663444,843
Total current liabilities1,502,7801,938,433
Obligations under capital leases-12,999
Deferred rent90,206-
Deferred income taxes113,689152,227
Deferred grant income152,227132,312
Total liabilities1,858,9022,235,971
Total stockholders' equity13,461,00416,132,130
----------------------------------------
Total liabilities and stockholders' equity$15,319,906$18,368,101
The Female Health Company
Unaudited Condensed Consolidated Statements of Income
Three Months Ended
June 30,
----------------------------------------
20112010
Net revenues$3,517,439$1,754,211
Cost of sales1,703,754814,764
----------------------------------------
Gross profit1,813,685939,447
Advertising and promotion114,22638,029
Selling, general and administrative1,246,890922,024
Research and development2,068-
Restructuring costs, net-(41,656)
----------------------------------------
Total operating expenses1,363,184918,397
----------------------------------------
Operating income450,50121,050
----------------------------------------
Non-operating (expense) income:
Interest, net and other (expense) income(546)10,566
Foreign currency transaction (loss) gain(18,022)17,190
----------------------------------------
Income before income taxes431,93348,806
Income tax expense (benefit)15,266(26,353)
----------------------------------------
Net income$416,667$75,159
Net income per basic common share outstanding$0.02$0.00
Basic weighted average common shares outstanding27,301,42227,216,798
Net income per diluted common share outstanding$0.01$0.00
Diluted weighted average common shares outstanding 28,971,51028,819,516
The Female Health Company
Unaudited Condensed Consolidated Statements of Income
Nine Months Ended
June 30,
--------------------------------------
20112010
Net revenues$11,456,052$14,422,032
Cost of sales5,818,2166,099,701
--------------------------------------
Gross profit5,637,8368,322,331
Advertising and promotion245,444197,190
Selling, general and administrative4,395,6914,910,689
Research and development10,929381
Restructuring costs, net-1,926,444
--------------------------------------
Total operating expenses4,652,0647,034,704
--------------------------------------
Operating income985,7721,287,627
--------------------------------------
Non-operating (expense) income:
Interest, net and other (expense) income(2,922)27,904
Foreign currency transaction (loss)(74,251)(62,259)
--------------------------------------
Income before income taxes908,5991,253,272
Income tax expense24,26631,931
--------------------------------------
Net income$884,333$1,221,341
Net income per basic common share outstanding$0.03$0.05
Basic weighted average common shares outstanding27,282,59726,906,295
Net income per diluted common share outstanding$0.03$0.04
Diluted weighted average common shares outstanding 28,987,26328,491,308 |
