Hi-Tech Pharmacal Reports Sales of $64.3 Million and EPS of $0.43 for the
Third Quarter Ended January 31, 2013
AMITYVILLE, N.Y. -- March 7, 2013
Hi-Tech Pharmacal Co., Inc. (NASDAQ: HITK) today reported results for the
Company’s fiscal third quarter ended January 31, 2013.
Net sales for the three months ended January 31, 2013 were $64,331,000, an
increase of $8,706,000 or 16% compared to the net sales of $55,625,000, for
the three months ended January 31, 2012.
Net sales for generic pharmaceuticals for the three months ended January 31,
2013 were $54,148,000, an increase of $6,607,000 or 14%, compared to sales of
$47,541,000 for the respective prior fiscal period. Sales of Fluticasone
Propionate increased to $23,000,000 from $21,800,000 in the comparable quarter
as the Company sold more units at a lower average price. The Company also
benefited from sales of new products such as Nystatin oral suspension,
Lidocaine 5%, Levetiracetam oral solution and Paregoric, launched in February,
March, May and August 2012, respectively.
ECR Pharmaceuticals contributed $5,079,000 to sales in the current period, an
increase of $732,000 or 17%, compared to sales of $4,347,000 for the
respective fiscal 2012 period. The increase was primarily due to higher sales
Net sales for the Health Care Products division, which markets the Company’s
OTC branded products, were $5,104,000, an increase of $1,367,000 or 37%,
compared to $3,737,000 reported for the same period last year. The increase
was due to higher sales across all product lines. Most notably, sales of
Diabetic Tussin^® saw a significant increase over the same quarter in the
prior year. New product Sinus Buster^®, acquired March 2012, also contributed
to the increase.
Sales in all three divisions were impacted by the strong cough, cold and flu
season experienced during the quarter ended January 31, 2013. The Hi-Tech
generic division saw increases in hydrocodone/homatropine, HCP had strong
increases in Diabetic Tussin^® and ECR had a large increase in sales of
Cost of goods sold increased to $31,452,000 or 49% of net sales, for the three
months ended January 31, 2013 from $24,889,000, or 45% of net sales, for the
three months ended January 31, 2012. The increase in cost of goods sold as a
percentage of net sales is primarily due to pricing declines for Fluticasone
Propionate nasal spray. The Company anticipates that pricing declines will
continue, but the cost to manufacture Fluticasone Propionate nasal spray will
decline in the fourth quarter of the fiscal year due to lower input costs.
Higher margins at the ECR subsidiary partially offset this trend.
Research and product development costs for the three months ended January 31,
2013 increased 98% to $5,964,000, compared to $3,017,000 for the same period
ended January 31, 2012. The Company has increased spending on internal
projects for the generic division, which include five projects that require
clinical trials. Clinical trials for two of these projects were ongoing during
Selling, general and administrative expense increased to $16,538,000 from
$11,712,000 for the three months ended January 31, 2013 and 2012,
respectively. This increase is due to increased advertising expense primarily
in the Health Care Products division. Increases of marketing expenses in the
ECR division, legal expenses for the generic division and freight-out expense
in all divisions also contributed to the increase.
Amortization expense for the quarter ended January 31, 2013 increased to
$1,618,000 from $1,548,000, a 5% 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 January 31, 2013, the Company recorded net income
of $5,940,000, a decrease from net income of $10,806,000, for the same period
in the prior year. On a fully diluted share basis, EPS decreased to $0.43 from
$0.79 in the prior year.
David Seltzer, President and CEO, commented on the results: “We are very
pleased with our record sales this quarter. The higher spending in the period
reflects our confidence in the future of our business as we increased
development efforts for the generic division, increased advertising for the
HCP division and increased marketing efforts in the ECR division.”
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 800-798-2864, or 617-614-6206
for international callers, five minutes before the conference. The passcode
for the conference call is 41092358.
A replay of the conference call will be available after 12:00 p.m. on March 7,
2013, for one week by calling toll free 888-286-8010, or 617-801-6888 for
international callers. The passcode for the replay is 74613875. The call can
also be accessed on the Investor Relations page on the Company’s website
The following table shows Hi-Tech’s current R&D pipeline:
Hi-Tech Partnered Total
Products # Market # Market # Market
At FDA 11 $ 0.9 4 $ 1.6 15 $ 2.5
In development 16 $ 2.4 4 $ 1.4 20 $ 3.8
The pipeline includes sterile ophthalmic products, controlled substances, 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.
Nine Months (Unaudited) Three Months (Unaudited)
1/31/13 1/31/12 1/31/13 1/31/12
Net sales $ 173,911,000 $ 168,711,000 $ 64,331,000 $ 55,625,000
Cost of goods 86,122,000 71,343,000 31,452,000 24,889,000
Gross profit 87,789,000 97,368,000 32,879,000 30,736,000
general, 38,875,000 30,967,000 16,538,000 11,712,000
Amortization 5,136,000 3,723,000 1,618,000 1,548,000
product 13,779,000 8,884,000 5,964,000 3,017,000
Royalty income (1,403,000) (2,293,000) (368,000) (898,000)
research (2,000) (226,000) — (198,000)
Interest 441,000 247,000 138,000 201,000
income and (183,000) (696,000) (60,000) (390,000)
Total $ 56,643,000 $ 40,606,000 $ 23,830,000 $ 14,992,000
Income before 31,146,000 56,762,000 9,049,000 15,744,000
Provision for 10,278,000 18,400,000 3,109,000 4,938,000
Net income $ 20,868,000 $ 38,362,000 $ 5,940,000 $ 10,806,000
earnings per $ 1.58 $ 2.99 $ 0.44 $ 0.83
earnings per $ 1.53 $ 2.87 $ 0.43 $ 0.79
average shares 13,216,000 12,824,000 13,409,000 12,986,000
potential 387,000 554,000 321,000 697,000
average shares 13,603,000 13,378,000 13,730,000 13,683,000
Hi-Tech Pharmacal Co., Inc.
William Peters, 631-789-8228
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