Hi-Tech Pharmacal Reports Sales of $57.5 Million and EPS of $0.66 for the
Second Quarter Ended October 31, 2012
AMITYVILLE, N.Y. -- December 06, 2012
Hi-Tech Pharmacal Co., Inc. (NASDAQ: HITK) today reported results for the
Company’s fiscal second quarter ended October 31, 2012.
Net sales for the three months ended October 31, 2012 were $57,537,000, an
increase of $662,000 compared to the net sales of $56,875,000 for the three
months ended October 31, 2011.
Net sales for generic pharmaceuticals for the three months ended October 31,
2012 were $47,286,000, a decrease of $1,381,000 or 3%, compared to sales of
$48,667,000 for the respective prior fiscal period. The decrease was primarily
due to lower sales of Fluticasone Propionate nasal spray. Sales of Fluticasone
decreased to $21,500,000 from $23,000,000 in the comparable quarter as the
Company sold more units at a lower average price. This decline was partially
offset by sales of new products such as Nystatin oral suspension, Lidocaine
5%, Levetiracetam oral concentrate and Paregoric, launched in February, March,
May and August 2012, respectively.
ECR Pharmaceuticals contributed $5,593,000 to sales in the current period, an
increase of $2,082,000 or 59%, compared to sales of $3,511,000 for the
respective fiscal 2012 period. The increase was primarily due to higher sales
of Bupap^® and Tussicaps^®. Sales of Bupap^® increased as some customers
purchased larger than typical quantities ahead of an announced price increase.
Sales from Dexpak^® and Orbivan^® also contributed to the increase in ECR
Net sales for the Health Care Products division, which markets the Company’s
OTC branded products, were $4,658,000, a decrease of $39,000 compared to
$4,697,000 reported for the same period last year. The decrease was primarily
due to consumer discounts and promotional pricing on the Nasal Ease^® brand.
These declines were partially offset by sales of our Sinus Buster^® product,
acquired March 2012.
Sales of the Hi-Tech generic division and the Health Care Products division
were both adversely affected by superstorm Sandy. Hi-Tech Pharmacal’s
facilities in Amityville, NY were without power from October 29, 2012 through
November 1, 2012, therefore, the Company was unable to produce and ship
products during this period. The Company anticipates that sales lost during
this week will be made up in the quarter ending January 2013.
Cost of goods sold increased to $27,948,000, or 49% of net sales, for the
three months ended October 31, 2012 from $23,479,000, or 41% of net sales, for
the three months ended October 31, 2011. The increase in cost of goods sold as
a percentage of net sales is primarily due to pricing declines for both
Fluticasone Propionate nasal spray and Dorzolamide ophthalmic products.
Additionally, consumer discounts related to an in-store promotion of Nasal
Ease^® lowered margins in the Health Care Products division.
Research and product development costs for the three months ended October 31,
2012 increased to $3,343,000, compared to $2,468,000 for the same period ended
October 31, 2011. The increase in Research and Development expenditures is due
to increased spending on internal projects for the generic division, which
include four projects that require clinical trials. Three of these projects
requiring clinical trials were undertaken in partnership with other companies.
Additionally, the Company incurred a onetime expense of $209,000, in the
quarter ended October 31, 2012, relating to fees required by the FDA’s new
Generic Drug User Fee Act. The fee was based on the number of ANDAs currently
awaiting FDA approval.
Selling, general and administrative expenses increased to $11,706,000 from
$10,459,000 for the three months ended October 31, 2012 and 2011,
respectively. This increase is primarily due to increased freight-out expense
and increased advertising expense in the Health Care Products division.
Amortization expense for the quarter ended October 31, 2012 increased to
$1,761,000 from $1,400,000, a 26% increase compared to the same fiscal 2012
period. The increase was due to intangible asset purchases over the last year
which includes acquisitions of Tussicaps^® and Sinus Buster^®.
For the three months ended October 31, 2012, the Company recorded net income
of $8,924,000, a 35% decrease from net income of $13,783,000, for the same
period in the prior year. On a fully diluted share basis, EPS decreased to
$0.66 from $1.04 in the prior year.
David Seltzer, President and CEO, commented on the results: “We are pleased
with the results reported today. Superstorm Sandy forced us to lose four days
of shipping and a full week of manufacturing, but we were very fortunate not
to have sustained damage to any of our facilities, and that all of our
employees are safe. The lost week of production and a surge in cough, cold and
flu item orders in the month of November has forced us into a backorder
situation on several products. Our staff is working overtime to make up for
lost production time, and we are confident that we will restock our inventory
position in the coming weeks.”
Conference call information
The Company will hold a conference call today to discuss its financial results
at 10 a.m. Eastern Time.
To access the conference call, dial toll free 800-591-6944, or 617-614-4910
for international callers, five minutes before the conference. The passcode
for the conference call is 70577202.
A replay of the conference call will be available after 12:00 p.m. on December
6, 2012, for one week by calling toll free 888-286-8010, or 617-801-6888 for
international callers. The passcode for the replay is 31691417. The call can
also be accessed on the Investor Relations page on the Company’s website
Hi-Tech currently has twelve products awaiting approval at the FDA, targeting
brand and generic sales of over $1.5 billion, including one product for which
the Company has a financial interest which was filed by another company. In
addition, Hi-Tech has approximately twenty products in active development
targeting brand sales of over $3 billion, including sterile ophthalmic
products, oral solutions and suspensions and solid dosage forms.
Hi-Tech is a specialty pharmaceutical company developing, manufacturing and
marketing generic and branded prescription and OTC products. The Company
specializes in difficult to manufacture liquid and semi-solid dosage forms and
produces a range of sterile ophthalmic, otic and inhalation products. The
Company’s Health Care Products Division is a leading developer and marketer of
OTC products for the diabetes marketplace. Hi-Tech’s ECR Pharmaceuticals
subsidiary markets branded prescription products.
This press release contains certain future projections and forward-looking
statements (statements which are not historical facts) with respect to the
anticipated future performance of Hi-Tech made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
future projections and forward-looking statements are not assurances, promises
or guarantees and investors are cautioned that all future projections and
forward-looking statements involve significant business, economic and
competitive risks and uncertainties, many of which are beyond Hi-Tech's
ability to control or estimate precisely, including, but not limited to, the
impact of competitive products and pricing, product demand and market
acceptance, new product development, the regulatory environment, including
without limitation, reliance on key strategic alliances, availability of raw
materials, fluctuations in operating results, loss of customers or employees,
the possibility that legal proceedings may be instituted against Hi-Tech and
other results and other risks detailed from time to time in Hi-Tech’s filings
with the Securities and Exchange Commission. The actual results will vary from
the projected results and such variations may be material. These statements
are based on management's current expectations and assumptions concerning the
future performance of Hi-Tech and are naturally subject to uncertainty and
changes in circumstances. No representations or warranties are made as to the
accuracy or completeness of any of the information contained herein,
including, but not limited to, any assumptions or projections contained herein
or forward-looking statements based thereon. We caution you not to place undue
reliance upon any such forward-looking statements which speak only as of the
date made, except to the extent specifically dated as of an earlier date.
Hi-Tech is under no obligation, and expressly disclaims any such obligation,
to update, alter or correct any inaccuracies herein, whether as a result of
new information, future events or otherwise.
Six Months (Unaudited) Three Months (Unaudited)
10/31/12 10/31/11 10/31/12 10/31/11
Net sales $ 109,580,000 $ 113,086,000 $ 57,537,000 $ 56,875,000
Cost of goods 54,670,000 46,454,000 27,948,000 23,479,000
Gross profit 54,910,000 66,632,000 29,589,000 33,396,000
general, 22,337,000 19,255,000 11,706,000 10,459,000
Amortization 3,518,000 2,175,000 1,761,000 1,400,000
product 7,815,000 5,867,000 3,343,000 2,468,000
Royalty income (1,035,000) (1,395,000) (400,000) (829,000)
research (2,000) (28,000) (2,000) (1,000)
Interest 303,000 46,000 147,000 31,000
income and (123,000) (306,000) (77,000) (282,000)
Total $ 32,813,000 $ 25,614,000 $ 16,478,000 $ 13,246,000
Income before 22,097,000 41,018,000 13,111,000 20,150,000
Provision for 7,169,000 13,462,000 4,187,000 6,367,000
Net income $ 14,928,000 $ 27,556,000 $ 8,924,000 $ 13,783,000
earnings per $ 1.13 $ 2.16 $ 0.67 $ 1.08
earnings per $ 1.10 $ 2.08 $ 0.66 $ 1.04
average shares 13,154,000 12,744,000 13,238,000 12,761,000
potential 419,000 483,000 346,000 543,000
average shares 13,573,000 13,227,000 13,584,000 13,304,000
Hi-Tech Pharmacal Co., Inc.
William Peters, 631-789-8228
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