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First Quarter Net Sales Growth of 24.0% Versus Same Period Last Year
Diluted Earnings Per Common Share of
Raises Full-Year Outlook for Revenue and EPS
Results for the First Quarter of 2012
Net sales for the first quarter of 2012 were
The Company also noted that, in the food, drug and mass channel, its products achieved 9% point-of-sale dollar growth over the last 52 weeks versus the prior year period, whereas the overall masstige color cosmetics category only grew 7%, as reported by AC Nielsen. This made Physicians Formula the fastest-growing masstige color cosmetics brand in dollar sales among the major five masstige brands in food, drug and mass during this period.
Gross margin for the first quarter of 2012 improved 2.5% to 51.1% of net sales versus 48.6% in the prior year period. This improvement was primarily driven by positive product mix, reduction of manufacturing costs and lower usage of air freight.
Overall, selling, general and administrative ("SG&A") expenses as a percentage of net sales declined to 37.3% from 41.7% in the prior year period as a result of the sales increase. SG&A expenses increased
Net income for the first quarter of 2012 was
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the first quarter of 2012, calculated in accordance with Company's senior credit agreement, was
Ms. Jackel continued, "During the quarter, our retail partners made the decision to shift certain marketing programs to later in the year. Overall, we expect our total marketing and brand investments to remain at originally planned levels for 2012."
Liquidity Considerations
Net cash provided by operating activities for the first quarter of 2012 was
During the first quarter of 2011, net cash provided from operating activities was
As of
Outlook
Ms. Jackel commented, "Due to our strong first quarter performance and the strength of our 2012 new color cosmetics product launch, we are increasing our expectations for net sales to grow between 8% and 11% for the full year 2012 from the 7% to 10% range we previously projected. Additionally, we expect earnings per diluted common share to be between
Conference Call
The conference call is scheduled to begin at
About
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, forward-looking statements can be identified by words such as "anticipates," "estimates," "expects," "believes," "plans," "predicts," and similar terms. In particular, this press release may include forward-looking statements about management's expectations regarding the Company's refinancing, strategy, liquidity, financial performance and outlook. These forward-looking statements are based on current expectations, estimates and projections about the Company's business and its industry, based on management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to: our dependence on a limited number of retailer customers, the loss of any of our retailer customers, fluctuations in buying decisions of our retailer customers, changes in general economic or market conditions, our ability to comply with covenants in our new senior credit agreement, our ability to repay or refinance borrowings under the senior credit agreement, the competitive environment in our industry, the demand for our products, loss of any of our key employees, our ability to expand our product offerings, our ability to expand through new and existing distribution channels, our ability to manage our growth and sustain profitability, our ability to protect our intellectual property, our cash needs and financial performance, variations in product quality or delays
in order fulfillment, our operations and our ability to achieve cost savings, our dependence on third party suppliers, increases in minimum wages, catastrophic losses or other disruptions at any of our facilities, the effect of regulatory and technological changes, risks associated with doing business outside of the U.S.; and other factors discussed in the Company's filings with the
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| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (Unaudited) | ||
| (In thousands, except share and per share data) | ||
|
Three Months Ended March 31, |
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| 2012 | 2011 | |
| NET SALES | $ 26,205 | $ 21,138 |
| COST OF SALES | 12,803 | 10,870 |
| GROSS PROFIT | 13,402 | 10,268 |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 9,782 | 8,819 |
| INCOME FROM OPERATIONS | 3,620 | 1,449 |
| INTEREST EXPENSE, NET | 156 | 595 |
| OTHER INCOME | (33) | (12) |
| INCOME BEFORE PROVISION FOR INCOME TAXES | 3,497 | 866 |
| PROVISION FOR INCOME TAXES | 1,073 | 415 |
| NET INCOME | $ 2,424 | $ 451 |
| NET INCOME PER COMMON SHARE: | ||
| Basic | $ 0.18 | $ 0.03 |
| Diluted | $ 0.16 | $ 0.03 |
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | ||
|
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13,669,247 | 13,589,668 |
| Diluted | 14,797,049 | 14,843,060 |
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited) | ||
| (In thousands) | ||
|
March 31, 2012 |
December 31, 2011 |
|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 63 | $ 3 |
| Accounts receivable, net | 21,502 | 25,758 |
| Inventories | 24,186 | 25,223 |
| Prepaid expenses and other current assets | 2,638 | 1,940 |
| Income taxes receivable | 273 | 437 |
| Deferred tax assets, net | 8,237 | 8,677 |
| Total current assets | 56,899 | 62,038 |
| PROPERTY AND EQUIPMENT, NET | 2,402 | 2,597 |
| OTHER ASSETS, NET | 5,536 | 5,357 |
| INTANGIBLE ASSETS, NET | 30,045 | 30,486 |
| TOTAL ASSETS | $ 94,882 | $ 100,478 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 7,511 | $ 10,445 |
| Accrued expenses | 2,489 | 3,739 |
| Trade allowances | 10,079 | 7,457 |
| Sales returns reserve | 8,640 | 10,941 |
| Income taxes payable | 429 | -- |
| Line of credit borrowings | -- | 4,690 |
| Current portion of long-term debt | 1,000 | 1,000 |
| Total current liabilities | 30,148 | 38,272 |
| DEFERRED TAX LIABILITIES, NET | 8,155 | 8,155 |
| LONG-TERM DEBT | 2,667 | 2,917 |
| OTHER LONG-TERM LIABILITIES | 307 | 272 |
| Total liabilities | 41,277 | 49,616 |
| STOCKHOLDERS' EQUITY: | ||
| Series A preferred stock | -- | -- |
| Common stock | 137 | 136 |
| Additional paid-in capital | 63,129 | 62,811 |
| Accumulated deficit | (9,661) | (12,085) |
| Total stockholders' equity | 53,605 | 50,862 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 94,882 | $ 100,478 |
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| RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||
| (Unaudited) | ||||
| (In thousands) | ||||
| Pursuant to our senior credit agreement, Adjusted EBITDA is defined as net income (loss) before depreciation, amortization, interest expense, income taxes, goodwill and intangible asset impairment charges, stock-based compensation and non-cash inventory obsolescence charges. | ||||
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Adjusted EBITDA is a financial measure not computed in accordance with |
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| A reconciliation of net income to EBITDA and Adjusted EBITDA follows (in thousands): | ||||
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Three Months Ended March 31, |
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| 2012 | 2011 | |||
| Net income | $ 2,424 | $ 451 | ||
| Plus: | ||||
| Depreciation and amortization | 1,200 | 1,194 | ||
| Interest expense, net | 156 | 595 | ||
| Provision for income taxes | 1,073 | 415 | ||
| EBITDA | 4,853 | 2,655 | ||
| Stock-based compensation | 126 | 222 | ||
| Non-cash inventory obsolescence charges | (475) | 260 | ||
| Adjusted EBITDA | $ 4,504 | $ 3,137 | ||
(FACE/F)
CONTACT:Source:Anne Rakunas ICR, Inc. (310) 954-1113
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