NEW BRIGHTON, Minn., Feb. 7 /PRNewswire-FirstCall/ -- Compex Technologies reported today consolidated revenue increased 17% to $29.5 million for its second fiscal quarter of 2006 ended December 31, 2005, compared with $25.2 million a year earlier. Net income for the quarter was $1.2 million, or $0.10 diluted earnings per share, compared with net income of $1.0 million or $0.08 diluted earnings per share in the comparable quarter a year earlier.
For the first six months of fiscal year 2006, consolidated revenue rose 22% to $57.2 million from $46.9 million in the first six months of fiscal year 2005. Net income for the six-month period was $2.6 million, as compared to $1.3 million for the first six months of fiscal year 2005.
U.S. Medical revenue for the quarter was $18.2 million, up 22% from $14.9 million in the same period last year. U.S. Consumer revenue was $4.3 million, up from $1.5 million in the second fiscal quarter of 2005. International revenue was $7.0 million, down from $8.8 million in the comparable quarter a year earlier.
Gross profit margin for the quarter was 65.6%, compared with 66.4% a year ago primarily due to growth in U.S. Consumer and wholesale/OEM revenue. Margins on the U.S. Consumer and the OEM products are lower than those generated by the company’s direct U.S. Medical and International businesses. As U.S. Consumer revenue continues to be a larger percentage of total revenue, gross margin will ultimately settle into the low to mid 60% range.
Operating expenses for the quarter increased 13% to $16.9 million from $14.9 million, reflecting increased sales expenses in the U.S. Medical business and U.S. Consumer business and compensation expenses related to stock-based employee benefits due to the implementation of FAS123(R). Although the expenses increased in absolute dollars, operating expenses decreased as a percentage of revenue.
Compex Chairman and CEO Dan W. Gladney said, “U.S. Medical, our largest business segment, rose 22% in the quarter as we continued to grow the physician-direct sales force. Our wholesale business, benefiting from large OEM revenue, contributed $0.6 million of the increase, and SpectraBrace, which we acquired in June of 2005, contributed $1.2 million.”
“Strong growth in U.S. Consumer sales was generated through The Home Shopping Network, our direct television infomercial and General Nutrition Centers. We continue to focus on landing additional major retail chains.”
Gladney continued, “International revenues were $7 million, a decrease from $8.8 million a year earlier. Although the number of Compex units sold was actually up 7% over comparable unit sales for the prior year, we continue to face competition from lower-priced competitors, especially in the Italian market.”
Compex Technologies has scheduled an investor conference call at 1 p.m. Eastern Time today, February 7, 2006, to discuss the quarterly results and to answer questions. To participate in the live call, domestic callers should dial (866) 812-6491 and enter PIN 183606. International callers should dial (678) 460-1872 and use the same PIN. A telephone replay will be available until 11 p.m. Eastern Time on February 21, 2006 by dialing (888) 284-7564 and reference number 183606. For international replay dial (904) 596-3175 and use the same reference number.
An investment profile on Compex Technologies, Inc. may be found athttp://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. Detailed information about Compex may be found at http://www.compextechnologies.com andhttp://www.slendertone.com.
For investor relations information, contact CFO Scott Youngstrom at (800) 676-6489, or Frank Hawkins or Julie Marshall, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com .
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 and http://www.americanmicrocaps.com .
Cautionary Statement: All statements other than historical facts included in this release regarding future operations, and particularly on the outlook for fiscal year 2006, 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 U.S. consumer market for electrical stimulation products is new and developing;
* Compex Technologies’ 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. -Tables to Follow- COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, ASSETS 2005 2005 CURRENT ASSETS (unaudited) Cash and cash equivalents $3,044,158 $3,963,420 Receivables, less reserves of $19,250,165 and $20,811,395 at June 30, 2005 and December 31, 2005, respectively 37,268,582 43,859,809 Inventories, net 15,353,472 16,738,344 Deferred tax assets 6,108,627 6,105,622 Prepaid expenses 3,217,406 2,616,194 Total current assets 64,992,245 73,283,389 Property, plant, and equipment, net 5,902,780 6,609,959 Goodwill 16,630,871 16,538,988 Other intangible assets, net 1,636,682 1,364,124 Deferred tax assets 13,396 -- Other assets 142,617 139,395 Total assets $89,318,591 $97,935,855 LIABILITIES & STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current maturities of long-term debt $1,614,596 $2,913,963 Notes payable 7,500,000 14,000,000 Accounts payable 7,421,609 7,668,319 Accrued liabilities - Payroll 2,719,545 1,446,062 Commissions 1,073,365 1,486,681 Income taxes 1,368,679 223,621 Other 4,735,831 5,032,919 Total current liabilities 26,433,625 32,771,565 LONG-TERM LIABILITIES Long-term debt 4,127,019 2,727,661 Deferred tax liabilities 438,734 510,183 Total liabilities 30,999,378 36,009,409 STOCKHOLDERS’ EQUITY Common stock, $.10 par value: 30,000,000 shares authorized; issued and outstanding 12,526,880 and 12,659,143 shares at June 30, 2005 and December 31, 2005, respectively 1,252,688 1,265,914 Preferred stock, no par value: 5,000,000 shares authorized; none issued and outstanding -- -- Additional paid in capital 33,440,966 34,428,853 Unearned compensation on restricted stock (47,329) -- Accumulated other non-owner changes in equity 1,142,604 1,115,526 Retained earnings 22,530,284 25,116,153 Total stockholders’ equity 58,319,213 61,926,446 Total liabilities and stockholders’ equity $89,318,591 $97,935,855 COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended December 31 December 31 (unaudited) (unaudited) 2004 2005 2004 2005 Net sales and rental revenue $25,212,349 $29,537,585 $46,866,088 $57,181,573 Cost of sales and rentals 8,467,434 10,157,093 15,382,052 19,294,899 Gross profit 16,744,915 19,380,492 31,484,036 37,886,674 Operating expenses: Selling and marketing 10,353,246 12,366,427 20,196,876 23,716,157 General and administrative 3,933,364 3,962,379 7,677,895 7,982,259 Research and development 656,892 577,629 1,379,427 1,117,413 Total operating expenses 14,943,502 16,906,435 29,254,198 32,815,829 Income from operations 1,801,413 2,474,057 2,229,838 5,070,845 Other income (expense): Interest expense (104,232) (302,646) (183,817) (533,506) Other 15,142 2,709 46,025 6,530 Income before income taxes 1,712,323 2,174,120 2,092,046 4,543,869 Income tax provision 684,000 940,000 835,000 1,958,000 Net income $1,028,323 $1,234,120 $1,257,046 $2,585,869 Net income per common and common equivalent share Basic $0.08 $0.10 $0.10 $0.21 Diluted $0.08 $0.10 $0.10 $0.20 Weighted average number of shares outstanding Basic 12,454,759 12,634,016 12,454,433 12,613,171 Diluted 12,912,695 12,984,520 12,968,667 12,757,927
Compex Technologies
CONTACT: Scott Youngstrom, CFO, Compex, +1-800-676-6489, or investors,Frank Hawkins or Julie Marshall, both of Hawk Associates, +1-305-451-1888,or info@hawkassociates.com, for Compex
Web site: http://www.compextechnologies.com/
