NEW BRIGHTON, Minn., May 12 /PRNewswire-FirstCall/ -- Compex Technologies reported today consolidated revenue for the third fiscal quarter ended March 31, 2004 increased 13% to $21.6 million compared with $19.1 million in the comparable quarter a year earlier. Net income for the quarter was $429,000 or $0.03 diluted earnings per share compared with net income of $1.3 million or $0.12 diluted earnings per share in the third fiscal quarter of 2003.
For the nine months ended March 31, 2004, consolidated revenue increased 14% to $63.3 million from $55.6 million during the nine months ended March 31, 2003. Net income for the first nine months of fiscal year 2004 was $2.0 million or $0.16 diluted earnings per share versus $3.3 million or $0.30 diluted earnings per share in the first nine months of fiscal year 2003.
U.S. revenue for the quarter was $13.3 million, up 11% from $12.1 million in the same period last year. International revenue was $8.4 million, an increase of 20% compared with $7.1 million in the prior year’s third quarter. Approximately 17% of international growth was generated by a favorable impact of exchange rates, reflecting the strength of the euro versus the dollar.
Consolidated revenue by product line for the quarter was roughly $4.4 million in rehabilitation products, $4.3 million in pain management products, $6.4 million in consumer products and $6.5 million in accessories and supplies.
Gross profit margin for the fiscal 2004 third quarter was 67.3%, compared with 70.2% last year. The decrease is primarily due to a reduction of our higher margin accessories and supplies as a percentage of total revenue and to lower average selling prices in Europe.
Selling, general and administrative expenses were $13.0 million, or 60.1% of revenue, compared with $10.6 million, or 55.6% of revenue in the fiscal 2003 third quarter. This is primarily due to increases in our domestic consumer marketing expenses and the adverse effect of the euro on our European operating expenses.
Compex President and CEO Dan W. Gladney said, “Our medical business in the United States posted a net revenue increase of 10% for the quarter primarily due to an increase in medical device sales and rentals by successfully expanding our selling efforts into the physician markets. Our consumer business in the United States is seeing a very modest, but steady increase in sales.”
“Our European revenue benefited largely from favorable exchange rates, the addition of the Slendertone product line and the Filsport acquisition in Italy. However, we are experiencing a weakening in our consumer markets, which we have somewhat offset with new product launches.
“As we announced two weeks ago, we missed our bottom line goal for the quarter primarily due to the weaker than expected consumer product sales in both Europe and the U.S. The domestic shortfall was essentially caused by the later than expected signing of our celebrity. We also announced that the expenses associated with the production and advertising of consumer product launches contributed to the earnings shortfall. We expect these expenses will continue to adversely impact our bottom line until our consumer product sales pick up,” Gladney said.
“Sarah Ferguson, the Duchess of York, has completed filming her commercials promoting our consumer products here in the U.S. and we expect those commercials to begin running in the next few weeks. As we have said previously, we believe it is essential to invest in advertising and promotion in order to build retail sales. We expect to continue to devote substantial resources to marketing our consumer products during the remainder of fiscal 2004, including increased promotion and advertising expenditures for both Slendertone and Compex over the next several months as part of our continuous marketing push,” Gladney said.
Looking forward, the company said its target for diluted earnings per share in the fourth fiscal quarter ending June 30, 2004 is in the range of $.06 to $.09 based on anticipated revenues of $22.0 million to $23.5 million. The foregoing statement regarding targets for the quarter are forward-looking and actual results may differ materially. These are the company’s targets, not predictions of actual performance.
Compex Technologies has scheduled an investor conference call at 1:00 p.m. Eastern Time, May 12th, 2004, to discuss third quarter results and to answer questions.
To participate in the live call, domestic callers should dial (866) 453-5550 and enter PIN 4402212. International callers should dial (678) 460-1860 and use the same PIN. A telephone replay will be available until 11:00 p.m. Eastern Time on May 26th by dialing (866) 453-6660 and reference number 148173.
An investment profile on Compex Technologies, Inc. may be found at http://www.hawkassociates.com/compex/profile.htm.
About Compex Technologies
Compex Technologies is a worldwide leader in designing and manufacturing transcutaneous electrical nerve stimulation and electrical muscle stimulation (EMS) products used for pain management, rehabilitation, fitness and sports performance enhancement in clinical, home healthcare, sports and occupational medicine settings. Compex is the first U. S. company to offer consumers EMS technology in FDA-cleared, over-the-counter products for sports-performance enhancement, improved physical fitness and general well being.
For investor relations information contact CFO Scott Youngstrom at (800) 676-6489 or Frank Hawkins or Julie Marshall, Hawk Associates at (305) 852-2383. Email: info@hawkassociates.com. Detailed information about Compex may be found on the websites http://www.compextechnologies.com/ and http://www.slendertone.com/. Copies of Compex press releases, price quotes, SEC filings, analyst reports and other valuable information for investors may be found on the website http://www.hawkassociates.com/.
Cautionary Statement: All statements other than historical facts included in this release regarding future operations, and particularly on the outlook for 2004, are subject to the risks inherent in predictions and “forward-looking statements.” These statements are based on the beliefs and assumptions of management of Compex Technologies and on information currently available to management. Nevertheless, these forward-looking statements should not be construed as guarantees of future performance. They involve risks, uncertainties, and assumptions identified in Compex Technologies filings with the SEC, including, but not limited to:
* The increasing reliance on results of international operations; * The effect of fluctuating exchange rates on international results; * Compex Technologies substantial balances of third-party billing business and resulting accounts receivable and the sensitivity of its results to the accuracy of its reserve for uncollectible receivables; * Changes in, and Compex Technologies compliance with, regulation and industry practice that affects the rates at which its products are reimbursed, the way it manufactures its products, and the documentation which it submits for reimbursement; * The United States consumer market for electrical stimulation products is new and developing; * Our ability in the United States to establish consumer demand with a limited marketing budget and secure contracts with significant retailers; * Negative publicity about electrical stimulation products; * World events that affect the economies of the countries in which its products are sold; and * Other factors that affect the industry in which Compex Technologies functions. COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, March 31, ASSETS 2003 2004 CURRENT ASSETS Cash and cash equivalents $5,056,007 $2,124,411 Receivables, less reserves of $15,200,590 24,955,130 27,997,702 and $16,569,767 Inventories Raw materials 1,393,470 1,181,061 Work in process 33,670 29,024 Finished goods 10,301,198 13,283,373 Deferred tax assets 4,675,394 4,675,394 Prepaid expenses 2,378,044 1,984,895 Total current assets 48,792,913 51,275,860 Property, plant, and equipment, net 4,536,804 4,723,149 Goodwill 10,583,287 15,843,302 Other intangible assets, net 883,634 684,682 Deferred tax assets 750,926 805,084 Other assets 104,743 135,764 $65,652,307 $73,467,841 Total assets LIABILITIES & STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current maturities of long-term debt $5,363,850 $1,739,654 Notes payable 4,500,000 500,000 Accounts payable 4,028,608 5,201,328 Accrued liabilities Payroll 1,567,710 1,772,223 Commissions 679,015 925,912 Income taxes 2,725,341 1,389,488 Other 3,349,986 3,268,192 Total current liabilities 22,214,510 14,796,797 LONG-TERM LIABILITIES Long-term debt 1,217,268 2,458,400 Deferred tax liabilities 675,885 715,360 Total liabilities 24,107,663 17,970,557 STOCKHOLDERS’ EQUITY Common stock, $.10 par value: 30,000,000 shares authorized; issued and outstanding 10,948,469 and 12,392,349 shares, respectively 1,094,847 1,239,235 Preferred stock, no par value: 5,000,000 shares authorized; none issued and outstanding -- -- Additional paid in capital 21,650,978 32,685,534 Accumulated other non-owner changes in equity 1,870,183 2,632,404 Retained earnings 16,928,636 18,940,111 Total stockholders’ equity 41,544,644 55,497,284 Total liabilities and stockholders’ equity $65,652,307 $73,467,841 COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended March 31 March 31 2003 2004 2003 2004 Net sales and rental $19,143,348 $21,651,597 $55,616,168 $63,272,462 revenue Cost of sales and rentals 5,705,660 7,080,552 16,930,342 20,678,305 Gross profit 13,437,688 14,571,045 38,685,826 42,594,157 Operating expenses: Selling, general and administrative 10,647,803 13,005,369 31,358,340 36,897,777 Research and development 572,396 779,634 1,613,972 2,054,784 Total operating expenses 11,220,199 13,785,003 32,972,312 38,952,561 Income from operations 2,217,489 786,042 5,713,514 3,641,596 Other income (expense): Interest expense (102,375) (80,686) (316,490) (377,297) Other 34,328 9,379 77,677 87,176 Income before income taxes 2,149,442 714,735 5,474,701 3,351,475 Income tax provision 794,000 286,000 2,190,000 1,340,000 Net income $1,355,442 $428,735 $3,284,701 $2,011,475 Net income per common and common equivalent share Basic $0.12 $0.03 $0.30 $0.17 Diluted $0.12 $0.03 $0.30 $0.16 Weighted average number of shares outstanding Basic 10,934,858 12,257,734 10,945,773 11,612,383 Diluted 10,973,212 13,265,374 11,027,183 12,561,855
Compex Technologies
CONTACT: Scott Youngstrom, CFO of Compex Technologies, 1-800-676-6489;or Frank Hawkins or Julie Marshall, both of Hawk Associates, +1-305-852-2383,info@hawkassociates.com, for Compex Technologies
