Rochester Medical Reports Third Quarter Results

STEWARTVILLE, Minn., July 26, 2012 /PRNewswire/ -- Rochester Medical Corporation (NASDAQ:ROCM) today announced operating results for its third quarter ended June 30, 2012.

The Company reported sales of $15,252,000 for the current quarter compared to $14,281,000 for the third quarter of last year. It also reported net income of $496,000 or $0.04 per diluted share compared to net loss of ($294,000) or ($0.02) per diluted share for the same quarter of last year.

The approximate 7% increase (10% on a constant currency basis) in sales resulted from a 5% increase in Rochester Medical Direct Sales (9% on a constant currency basis) and a 16% increase in Private Label Sales (16% on a constant currency basis).  Direct Sales include sales made directly to the end consumer and include all Rochester branded sales, U.K. Script Easy sales, and all Laprolan sales.  Constant currency basis assumes current exchange rates for all periods in order to exclude the impact of foreign exchange variations.  In the third quarter of fiscal 2012, the U.S. dollar was stronger versus the pound sterling and the Euro, thus negatively affecting Rochester Medical Direct Sales by $425,000 due to foreign currency translations.

Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter was $838,000 or $0.07 per diluted share compared to Non-GAAP Net Income of $442,000 or $0.04 per diluted share for the third quarter of last year.  The increase for the current quarter is primarily due to increased gross profits as a result of increased sales.

Commenting on the quarter results, Rochester Medical's CEO and President Anthony J. Conway said, "The Company's direct business is doing very well, especially in the United States and United Kingdom.  U.S. Direct Sales grew 34% and U.K. Direct Sales rose 13% (17% on a constant currency basis).  European sales fell below our expectations with Laprolan sales down 17% (6% on a constant currency basis), and the rest of Europe and the Middle East (EME) down 32%.  The decline in EME sales is due primarily to the timing of orders, which we expect will rebound in the next quarter.  We believe our recent investments to strengthen the Laprolan team will begin to produce significant gains by mid fiscal 2013. Looking ahead we expect a strong final quarter for fiscal 2012 and increasing top and bottom line strength in fiscal 2013."

Conference Call and Webcast

The Company will hold a quarterly conference call tomorrow (July 27, 2012) to discuss its earnings report.  The call will begin at 10:00 a.m. central time (11:00 a.m. eastern time).

This call is being webcast by Thomson Reuters and can be accessed at Rochester Medical's website at www.rocm.com.  To listen live to the conference call via telephone, call:

Domestic:

888 680.0894

International:

617 213.4860

Pass code:

51614892

Preregistration:

https://www.theconferencingservice.com/prereg/key.process?key=PXYJ838DM

Replay will be available for seven days at www.rocm.com or via telephone at:

Domestic:

888 286.8010

International:

617 801.6888

Pass code:

48884549

Individual investors can listen to the call at www.fulldisclosure.com, Thomson Reuters individual investor portal, powered by StreetEvents.  Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com). 

Forward-Looking Statements

This press release contains "forward-looking statements" with the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements include, but are not limited to, statements about the future financial and operating results of Rochester Medical.  Such statements are based on currently available information, operating plans and management's expectations about future events and trends.  Such statements inherently involve significant risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements, including the uncertainty of estimated revenues and profits, the uncertainty of current domestic and international economic conditions that could adversely affect the level of demand for the Company's products and increased volatility in foreign exchange rates, the uncertainty of market acceptance of new product introductions, and  our level of success in increasing  Rochester Medical Direct Sales revenue, the uncertainty of gaining new strategic relationships or locating and capitalizing on strategic opportunities, the uncertainty of timing of Private Label Sales revenues (particularly international customers), FDA and other regulatory review and response times, and other risk factors listed from time to time in the Company's SEC reports and filings, including, without limitation, the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended September 30, 2011, and quarterly reports on Forms 10-Q.  Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.  The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

Rochester Medical has provided Non-GAAP Net Income in addition to net income calculated in accordance with generally accepted accounting principles (GAAP) because management believes Non-GAAP Net Income provides a more consistent basis for comparisons that are not influenced by certain charges and non-cash expenses and are therefore helpful in understanding Rochester Medical's underlying operating results.  Similarly, constant currency represents reported sales with the cost/benefit of currency movements removed.  Management uses the measure to understand the growth of the business on a constant dollar basis, as fluctuations in exchange rates can distort the underlying growth of the business both positively and negatively.  While we recognize that foreign exchange volatility is a reality for a global company, we routinely review our Company performance on a constant dollar basis, and we believe this also allows our shareholders to understand better our Company's growth trends.

Non-GAAP Net Income and constant currency are not measures of financial performance under GAAP, and should not be considered an alternative to net income or any other measure of performance or liquidity under GAAP. Non-GAAP Net Income and constant currency are not comparable to information provided by other companies. Non-GAAP Net Income and constant currency have limitations as analytical tools and should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP.  Reconciliations of GAAP Net Income and Non-GAAP Net Income, and reconciliations of sales under GAAP and sales on a constant currency basis, are presented at the end of this press release.

About Rochester Medical Corporation

Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and devices for urological and continence care applications.  The Company also sells certain ostomy and wound and scar care products and other brands of urological products into the European marketplace.

For further information, please contact Anthony J. Conway, President and Chief Executive Officer or David A. Jonas, Chief Financial Officer of Rochester Medical Corporation at (507) 533-9600 or Parice Halbert, CFA, at Westwicke Partners (443) 213-0500.  More information about Rochester Medical is available on its website at http://www.rocm.com.

 

ROCHESTER MEDICAL CORPORATION

Reconciliation of Reported GAAP Revenue to Non-GAAP Revenue in Constant Currency

For the Three and Nine months ended

June 30, 2012 and 2011

             
             
   

(unaudited)

 

(unaudited)

   

Three months ended

 

Nine months ended

   

June 30,

 

June 30,

   

2012

2011

 

2012

2011

             

GAAP Sales as Reported

 

$ 15,252,218

$ 14,280,558

 

$ 44,356,495

$ 38,079,564

         British Sterling Exchange rate as Reported

 

1.58

1.63

 

1.58

1.60

         Euro Exchange rate as Reported

 

1.28

1.44

 

1.31

1.41

             
             

Constant Currency Sales

 

$ 15,252,218

$ 13,855,283

 

$ 44,356,495

$ 37,450,372

  (1)  Exchange rate used for Constant Currency Purposes

1.58

1.58

 

1.58

1.58

  (2)  Exchange rate used for Constant Currency Purposes

1.28

1.28

 

1.31

1.31

             
             

Net Effect of Constant Currency Illustration - British Sterling

$                   -

$     (142,238)

 

$                   -

$     (249,591)

Net Effect of Constant Currency Illustration - Euros

 

$                   -

$     (283,037)

 

$                   -

$     (379,601)

             

Total Net Effect of Constant Currency Illustration

 

$                   -

$     (425,275)

 

$                   -

$     (629,192)

             
             

(1) For illustrative purposes constant currency translates prior period foreign sales at current exchange rates.

   For Rochester Medical Corporation this is the conversion rate of British pounds to US dollars.  The rate represents the

   average exchange rate for the respective three or nine month period.

(2) For illustrative purposes constant currency translates prior period foreign sales at current exchange rates.

   For Rochester Medical Corporation this is the conversion rate of Euros to US dollars.  The rate represents the

   average exchange rate for the respective three or nine month period.  

 

 

ROCHESTER MEDICAL CORPORATION

           

Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income

     

For the Three and Nine months ended

           

June 30, 2012 and 2011

           
             
             
   

(unaudited)

 

(unaudited)

   

Three months ended

 

Nine months ended

   

June 30,

 

June 30,

   

2012

2011

 

2012

2011

             

GAAP Net Income (Loss) as Reported

 

$     496,000

$   (294,000)

 

$ 1,023,000

$  (1,722,000)

             

Diluted EPS as Reported

 

$           0.04

$          (0.02)

 

$           0.08

$            (0.14)

             
             

Adjustments for non-recurring unusual items:

           

   Merger and acquisition costs for Laprolan (1)

   

304,000

   

695,000

Subtotal

 

-

304,000

 

-

695,000

             
             

Adjustments for recurring non-cash expenses:

           

   Intangible amortization (2)

 

158,000

195,000

 

474,000

518,000

   ASC 718 compensation expense (3)

 

184,000

237,000

 

644,000

883,000

Subtotal

 

342,000

432,000

 

1,118,000

1,401,000

             
             

Non-GAAP Net Income

 

$     838,000

$     442,000

 

$ 2,141,000

$      374,000

             

Non-GAAP Diluted EPS

 

$           0.07

$           0.04

 

$           0.17

$             0.03

             

Weighted Average Shares - Diluted

 

12,373,340

12,587,175

 

12,340,045

12,616,838

             
             

(1) Merger and acquisition costs related to the purchase of Laprolan B.V. from Fornix N.V.

             

(2) Amortization of the intangibles acquired in June 2006 asset acquisition from Coloplast AS and Mentor

      Corporation and the intangibles acquired in the January 2011 acquisition of Laprolan from Fornix N.V.  

      Management believes these assets are appreciating.  This adjustment adds back amortization

      expense for the three and nine months ended June 30, 2012 and 2011 related to certain intangibles.

      The gross amount of amortization expense for the three months ended June 30, 2012 and 2011 is 

       $218,000 and $251,000 net of taxes of $60,000 and $56,000 for net amounts of $158,000 and $195,000

       respectively.  The gross amount of amortization expense for the nine months ended June 30, 2012 and 2011

       is $654,000 and $665,000 net of taxes of $180,000 and $147,000 for net amounts of $474,000 and $518,000

       respectively.

             

(3) Compensation expense mandated by ASC 718.  This adjustment adds back the compensation expense

      recorded for stock options granted to employees and directors that vested during the three and nine months ended

      June 30, 2012 and 2011.  The gross amount of compensation expense for the three months ended June 30, 2012

      and 2011 is $212,000 and $302,000 net of taxes of $28,000 and $65,000 for net amounts of $184,000 and

      $237,000 respectively.  The gross amount of compensation expense for the nine months ended June 30, 2012  

      and 2011 is $776,000 and $1,179,000 net of taxes of $132,000 and $296,000 for net amounts of $644,000 and

      $883,000 respectively.

 

 

Rochester Medical Corporation

           

Press Release - F12 Third Quarter

           
                       
                       
                       

Summary Statements Of Operations 

                       
         

(unaudited)

 

(unaudited)

         

Three months ended

 

Nine months ended

         

June 30,

 

June 30,

         

2012

 

2011

 

2012

 

2011

                       
                       

Sales

   

$  15,252,218

 

$  14,280,558

 

$   44,356,495

 

$   38,079,563

                       

Cost of sales

   

7,801,896

 

7,280,930

 

22,507,964

 

19,316,610

                       

Gross profit

   

7,450,322

 

6,999,628

 

21,848,531

 

18,762,953

 

Gross profit %

   

48.8%

 

49.0%

 

49.3%

 

49.3%

                       

Costs and expenses:

               
 

Marketing and selling

 

4,435,912

 

4,991,626

 

13,159,524

 

13,649,370

 

Research and development

358,552

 

222,974

 

982,710

 

752,500

 

General and administrative

1,942,941

 

2,276,495

 

6,179,778

 

6,626,269

                       

Total operating expenses

 

6,737,405

 

7,491,095

 

20,322,012

 

21,028,139

                       

Income (loss) from operations

 

712,917

 

(491,467)

 

1,526,519

 

(2,265,186)

                       

Other income (expense)

               
                       
 

Interest income

   

8,917

 

49,601

 

28,117

 

154,148

 

Interest expense

 

-

 

(70,239)

 

(89,545)

 

(225,094)

 

Other income

   

13,335

 

(22,603)

 

42,392

 

(51,750)

                       

Net income (loss) before income taxes

735,169

 

(534,708)

 

1,507,483

 

(2,387,882)

                       

Income tax expense (benefit)

 

239,245

 

(240,744)

 

484,392

 

(665,439)

                       

Net income (loss)

   

$      495,924

 

$      (293,964)

 

$     1,023,091

 

$    (1,722,443)

                       
                       

Earnings (loss) per common share - Basic

$           0.04

 

$           (0.02)

 

$             0.09

 

$            (0.14)

                       

Earnings (loss) per common share - Diluted

$           0.04

 

$           (0.02)

 

$             0.08

 

$            (0.14)

                       

Weighted Average Shares:

 

12,008,420

 

12,316,878

 

12,036,124

 

12,222,146

 

Basic

                 
                       

Weighted Average Shares:

               
 

Diluted

   

12,373,340

 

12,316,878

 

12,340,045

 

12,222,146

                       

 

 

Rochester Medical Corporation

         

Press Release - F12 Third Quarter 

         
                 
                 
                 

Condensed Balance Sheets

                 
           

(unaudited)

   
           

June 30,

 

September 30,

           

2012

 

2011

                 

Assets

         
                 
 

Current Assets

         
   

Cash and equivalents

   

$  11,589,268

 

$     8,722,935

   

Marketable securities

   

6,792,119

 

26,182,308

   

Accounts receivable

   

8,906,666

 

8,644,332

   

Inventories

   

10,417,080

 

11,278,694

   

Prepaid expenses and other assets

 

1,529,736

 

1,361,259

   

Deferred income tax asset

   

2,006,611

 

1,618,495

                 
     

Total current assets

   

41,241,480

 

57,808,023

                 
 

Property and equipment, net

   

11,874,770

 

12,052,685

 

Deferred income tax asset

   

1,176,252

 

1,242,010

 

Intangible assets, net

   

9,509,672

 

10,272,671

 

Goodwill

     

8,860,377

 

9,094,725

                 
 

Total Assets

   

$  72,662,551

 

$    90,470,114

                 

Liabilities and Stockholders' Equity

         
                 
 

Current liabilities:

         
   

Accounts payable

   

$    2,729,040

 

$     2,773,398

   

Accrued expenses

   

2,408,064

 

2,961,270

   

Short-term debt

   

-

 

17,862,185

                 
     

Total current liabilities

   

5,137,104

 

23,596,853

                 
 

Long-term liabilities

   

1,198,635

 

896,414

                 
 

Stockholders' equity

   

66,326,812

 

65,976,847

                 
 

Total Liabilities and Stockholder Equity

 

$  72,662,551

 

$    90,470,114

                 

 

SOURCE Rochester Medical Corporation

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