PHOENIX, Dec. 11 /PRNewswire-FirstCall/ -- Matrixx Initiatives, Inc. , announced today that 2006 net sales and net income are not expected to reach the lower end of the Company's previously announced guidance due to a slow start to the 2006/2007 cold season. The overall season-to-date incidence level is approximately 3% below last year and is negatively affecting the Company's net sales growth. Notwithstanding the slow start to the cold season, for the 12 weeks ended November 5, 2006, retail sales (three-outlet syndicated scanner data, not including Wal-Mart) of Zicam Cold Remedy products increased approximately 39%.
The Company now expects net sales growth of 15-20% over the $90.5 million recorded in 2005, and net income growth of 2%-7% above the adjusted $7.6 million level reported for 2005. The adjusted net income for 2005 excludes the impact of an $8.5 million (approximately $5.0 million net of tax) charge recorded in the fourth quarter of 2005 for settling Arizona product liability litigation and recording a reserve for the remaining product liability lawsuits, offset by tax credits of approximately $477,000.
"The Zicam(R) brand continues to be one of the fastest growing brands in the cough and cold category, and Zicam product sales continue to grow faster than the overall category. It is difficult to predict the timing of the cold season and due to the seasonal nature of the Company's products, this year's late cold season has had a large impact on fourth quarter and year-end results," stated Carl Johnson, President and Chief Executive Officer. "Generally, this trend would indicate a late cold season that should peak in the first quarter of 2007. While our core Cold Remedy products continue to achieve high growth, we have not seen growth in our cough and cold and flu relief products. We will continue to capitalize on the Cold Remedy products' strong growth and also advertise the cough and multi-symptom cold and flu relief products early in 2007. We are optimistic that sales of our Zicam products for the entire cold season (October through March) will increase if, as expected, the incidence of illness rises."
Mr. William Hemelt, Executive Vice President & Chief Financial Officer, commented on the growth in net income saying, "while most operating expenses are in line with revenue growth, legal expenses for the year have been above originally anticipated levels. These increases could not be offset when revenues did not reach our anticipated level due to the weakness in the cold season."
About Matrixx Initiatives, Inc.
Matrixx Initiatives, Inc. is engaged in the development, manufacture and marketing of over-the-counter healthcare products that utilize innovative drug delivery systems. Zicam, LLC, its wholly-owned subsidiary, produces, markets and sells Zicam(R) and Nasal Comfort(TM) products in the cough and cold category. The Company's flagship product, Zicam Cold Remedy nasal gel, is a patented, homeopathic remedy that has been clinically proven to reduce the duration and severity of the common cold. In studies published in the October 2000 issue of ENT -- Ear, Nose and Throat Journal, and separately in the January 2003 issue of QJM: An International Journal of Medicine, the Zicam Cold Remedy product was shown to reduce the duration of the common cold. The Company also manufactures and markets a full line of Zicam brand pharmaceuticals, including Zicam Cold Remedy in five oral delivery forms (including the new Zicam RapidMelts(TM) + Vitamin C and Zicam ChewCaps(TM)); three Zicam allergy and congestion relief products, four Zicam Cough Spray items and our new Zicam Cough Melts, four Zicam Cold & Flu Relief products, and two Nasal Comfort products. For more information regarding Matrixx products, go to www.Zicam.com. To find out more about Matrixx Initiatives, Inc , visit our website at www.matrixxinc.com. For additional information, contact William Hemelt, Chief Financial Officer, 602-385-8888, or Bill Barba, Director of Investor Relations, at 602-385-8881. Matrixx is located at 4742 N. 24th Street, Suite 455, Phoenix, Arizona 85016.
Matrixx Initiatives, Inc. Forward-Looking Statement Disclaimer:
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "plan," "anticipate," and other similar statements of expectation identify forward-looking statements and include statements regarding: (i) our belief that previously announced guidance will not be met; (ii) our belief that significant growth opportunity continues to exist; (iii) our expectation of sales increasing; and (iv) our expectations regarding the success of our marketing plans for the cold season. These forward-looking statements are based on the Company's current expectations and are subject to a number of risks and uncertainties, many of which cannot be predicted or quantified and are beyond the Company's control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include: (a) the severity of the cold season; (b) the possibility that future sales of our products will not be as strong as expected; (c) the possibility that supply issues may impact future sales of our products; (d) the possibility that our products may face increased competition or negative publicity; (e) the potential impact of current and future product liability litigation; (f) regulatory issues or public relations challenges; (g) the possibility of delays or other difficulties in implementing new product improvements and introducing to the marketplace new products and brands; and (h) the possibility that expenses, including legal expenses, product reserves, and expenses associated with adverse litigation outcomes and the pending FTC inquiry, may exceed budgeted amounts. Other factors that could cause actual results to differ materially from the Company's expectations are described in the Company's Annual Report on Form 10-K filed in March 2006, under the heading "Risk Factors," filed pursuant to the Securities Exchange Act of 1934. We do not undertake, and we specifically disclaim, any obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise.
Matrixx Initiatives, Inc.CONTACT: William Hemelt, Chief Financial Officer, +1-602-385-8888, or BillBarba, Director of Investor Relations, +1-602-385-8881, both of MatrixxInitiatives, Inc.
Web site: http://www.matrixxinc.com/
