Net Sales and Net Income per Diluted Common Share for the First Six
Months and Second Quarter of 2007 were In Line with Outlook Range
AZUSA, Calif., Aug. 13 /PRNewswire-FirstCall/ -- Physicians Formula
Holdings, Inc. (NASDAQ:FACE) ("Physicians Formula" or the
"Company") today announced financial results for the six and three
months ended June 30, 2007. As outlined in the conference call on
July 10th, 2007, due to shifts in gross sales and trade spending
with retailers, the Company believes that a year to date comparison
between periods best reflects the financial results. First Six
Months of 2007 and Second Quarter of 2007 Compared to Same Periods
in 2006: * Net sales for the first six months of 2007 were $57.8
million, an increase of 13.8% from $50.8 million for the same
period in 2006. Gross sales for the first six months of 2007 were
$82.2 million, an increase of 26% from $65.2 million for the same
period in 2006. * Net income per diluted common share for the first
six months of 2007 was $0.26 on approximately 14.6 million diluted
common shares outstanding, and includes $0.05 per share of non-cash
charge for stock-based compensation after tax and $0.04 per share
of the one-time secondary equity offering costs after tax.
Excluding these items, adjusted net income per diluted common share
would have been $0.35 for the first six months of 2007. Net income
per diluted common share for the first six months of 2006 was $0.35
on approximately 11.6 million diluted common shares outstanding. *
Net sales for the second quarter of 2007 were $22.1 million, a
decrease of 4.2% from $23.1 million for the same period a year ago,
and in line with the outlook range of $21.0 million to $22.0
million. Gross sales for the second quarter of 2007 were $33.0
million, an increase of 10.0% over $30.0 million for the same
period in 2006, and in line with the outlook range of $31.9 million
to $32.9 million. * Net loss per diluted common share for the
second quarter of 2007 was $(0.04) on approximately 13.9 million
diluted common shares outstanding, and includes $0.02 per share of
non-cash charge for stock-based compensation after tax and $0.03
per share of the one-time secondary equity offering costs after
tax. Excluding these items, adjusted net income per diluted common
share would have been $0.01 for the second quarter of 2007. Net
income per diluted common share for the second quarter of 2006 was
$0.14 on approximately 11.6 million diluted common shares
outstanding. Both net income per diluted common share and adjusted
net income per diluted common share for the second quarter of 2007
were in line with the outlook range of $(0.07) to $(0.04) and
$(0.02) to $0.01, respectively. Ingrid Jackel, Chief Executive
Officer of Physicians Formula, stated, "We are pleased with our
sales growth and net income per diluted common share for the first
six months of the year, which were in line with our updated
outlook. We achieved this growth despite a softer consumer market
in the latter part of the second quarter. In addition, we
experienced a decrease in the purchase of our promotional pre-packs
during the latter portion of the second quarter from one of our top
four retailers, and a minor reduction in sales from a shift in some
plan-o-gram set ups that occurred later in the second quarter than
previously expected." The Company also noted that during the second
quarter it experienced an increase in co-operative advertising
expenses, a contra-revenue item that impacts net sales, and higher
markdowns due to plan-o-gram resets. Also, advertising costs during
the second quarter reflect the production of the Company's
infomercial and the strategic allocation of a portion of the
Company's annual advertising budget to the second quarter. These
expenses and costs during the second quarter were in line with
management's expectations. U.S. Market Share Data ($ Share) The
Company defines the masstige market as products sold in the mass
market channel under the following premium-priced brands:
Physicians Formula, Almay, L'Oreal, Max Factor, Neutrogena, Revlon
and Vital Radiance. The following table sets forth the approximate
market share, based on retail sales, of the Company's products in
total and for selected categories within the masstige market, as
the Company defines it, based on ACNielsen (1) data for the 52
weeks ended July 14, 2007: 52 Weeks Ended July 14, 2007 % Change
vs. Prior Masstige Year ($ Share) ($ Sales) Total Company 7.5% 15%
Face 13.9% 20% Eye 5.2% 2% (1) ACNielsen is an independent research
entity. ACNielsen data does not include Wal-Mart, which is the
Company's largest customer. Ms. Jackel continued, "The Physicians
Formula brand continues to gain masstige market share and to
outperform its peers. For the 52 weeks ended July 14, 2007,
sell-through data at food, drug and mass retail, as reported by
ACNielsen, shows Physicians Formula sales up 15% over the prior
year period, compared to 2% growth for the overall premium
category. We remain focused on maintaining our leadership position
by supporting our brand, gaining additional shelf space and
providing a compelling value proposition to our retailer
customers." OUTLOOK Ms. Jackel stated, "We have decided to lower
our quarterly and full year 2007 outlook due to recent developments
within the masstige market. There are two key reasons for this: *
In the past 30 days, we have experienced an unexpected change in
replenishment order patterns of basic stock from our top chain drug
retailers. As illustrated by recent ACNielsen data, which shows a
15% growth for the 4 weeks ended July 14, 2007, and by retailers'
point of sale data, we believe this is not a reflection of our
consumer retail sales in recent periods but indicates a marked and
recent change in inventory management strategy by these retailers.
We believe this phenomenon is not specific to Physicians Formula
but is affecting the entire masstige industry; and * A continuation
of the softer consumer spending environment for the masstige
industry overall with the premium segment down 2% for the 4 weeks
ended July 14, 2007, which in turn explains the change in inventory
management strategy as previously indicated." The Company also
noted that their estimates assume seasonally lower costs in the
second half including a reduction in returns from retail customers,
lower cooperative advertising and coupon expenses and minimal
plan-o-gram reset markdowns, as well as lower advertising expenses
compared to the first half of 2007. Further, based on the initial
favorable response from the Company's major retailers, the
estimates also reflect the Company's expectations of shelf space
gain in the fourth quarter of 2007 when initial shipments of the
new 2008 line will take place. Ms. Jackel concluded, "While we are
clearly subject to the same economic forces as our peers, we
believe the Physicians Formula brand will continue to outpace the
industry." (in millions Outlook for Outlook for Outlook for except
per Three Months Ending Three Months Ending Year Ending share data)
September 30, 2007 December 31, 2007 December 31, 2007 Gross Sales
$29.0 - 31.0 $43.0 - 45.0 $154.0 - 158.0 Net Sales 18.5 - 20.5 31.0
- 33.0 107.0 - 111.0 Net Income per Diluted Common Share $(0.05 -
0.02) $0.31 - 0.34 $0.52 - 0.58 Diluted Common Shares 13.9 14.6
14.6 Please refer to "Non-GAAP Financial Measures" for a
reconciliation of net income per diluted common share to adjusted
net income per diluted common share excluding the effects of a
non-cash charge for stock based compensation for the third and
fourth quarters of 2007, along with full year 2007, and the
one-time secondary equity offering costs for the full year 2007.
Non-GAAP Financial Measures Physicians Formula presents gross sales
before giving effect to returns, allowances and discounts and net
income per diluted common share on an adjusted basis to exclude the
impact of non-cash charges associated with stock-based compensation
expense and certain one-time charges incurred in connection with
its secondary equity offering. Gross sales and adjusted net income
per diluted common shares are not in accordance with generally
accepted accounting principles in the United States ("GAAP"). The
items that are excluded from gross sales in arriving at net sales
are: returns, allowances and discounts. The Company presents gross
sales because the Company believes that gross sales reflect the
dollar value of shipments, and can facilitate a comparison of the
Company's current results with the Company's historical results and
provide useful information to investors on how the Company's
products are performing at retail, without regard to returns,
allowances and discounts. The Company believes that returns,
allowances and discounts can vary significantly from period to
period. The Company's management utilizes gross sales as an
operating performance measure. The items that are excluded from
adjusted net income per diluted common share are: a non-cash charge
for stock-based compensation and one-time charges incurred in
connection with the Company's secondary equity offering, which was
completed in April 2007. For purposes of adjusted net income per
diluted common share, the adjusted pre-tax result is adjusted for a
provision for income taxes at an assumed tax rate of 40%. The
Company presents adjusted net income per diluted common share
because the Company believes that adjusted net income per diluted
common share can facilitate a comparison of the Company's current
results with the Company's historical results and provide useful
information to investors on the Company's profitability without
regard to certain one-time items and certain non-cash items which
do not directly affect the Company's operating performance. The
Company also believes that it is useful to investors to provide
disclosure of the Company's results on the same basis as that used
by its management. Gross sales and adjusted net income per diluted
common share have limitations as analytical tools, and you should
not consider them in isolation or as substitutes for, analysis of
the Company's results as reported under GAAP. Because of these
limitations, gross sales and adjusted net income per diluted common
share should not be considered as replacements for net sales and
net income (loss) per diluted common share on a GAAP basis. The
Company compensates for these limitations by relying primarily on
its GAAP results and using gross sales and adjusted net income per
diluted common share only supplementally. Reconciliations of net
sales in accordance with GAAP to gross sales are presented below
(in millions): Three Months Ended June 30, Six Months Ended June
30, 2007 2006 2007 2006 Gross Sales $33.0 $30.0 $82.2 $65.2
Returns, Allowances and Discounts (10.9) (6.9) (24.4) (14.4) Net
Sales $22.1 $23.1 $57.8 $50.8 Reconciliations of net (loss) income
per diluted common share in accordance with GAAP to adjusted net
income per diluted common share are presented below: Three Months
Ended Six Months Ended June 30, 2007 June 30, 2007 Net (Loss)
Income per Diluted Common Share $(0.04) $0.26 Adjustments to Net
(Loss) Income per Diluted Common Share: Secondary Offering Expense,
net of tax effect 0.03 0.04 Stock-Based Compensation Expense, net
of tax effect 0.02 0.05 Adjusted Net Income per Diluted Common
Share $0.01 $0.35 Reconciliations of net sales outlook in
accordance with GAAP to gross sales outlook are presented below (in
millions): Outlook for Outlook for Outlook for Three Months Ending
Three Months Ending Year Ending September 30, 2007 December 31,
2007 December 31, 2007 Gross Sales $29.0 - 31.0 $43.0 - 45.0 $154.0
- 158.0 Returns, Allowances and Discounts (10.5) (12.0) (47.0) Net
Sales $18.5 - 20.5 $31.0 - 33.0 $107.0 - 111.0 Reconciliations of
net (loss) income per diluted common share outlook in accordance
with GAAP to adjusted net income per diluted common share outlook
are presented below: Outlook for Outlook for Outlook for Three
Months Ending Three Months Ending Year Ending September 30, 2007
December 31, 2007 December 31, 2007 Net (Loss) Income per Diluted
Common Share $(0.05) - (0.02) $0.31 - 0.34 $0.52 - 0.58 Adjustments
to Net Income per Diluted Common Share: Secondary Offering Expense,
net of tax effect -- -- 0.04 Stock-Based Compensation Expense, net
of tax effect 0.02 0.02 0.10 Adjusted Net (Loss) Income per Diluted
Common Share $(0.03) - 0.00 $0.33 - 0.36 $0.66 - 0.72 Conference
Call The conference call is scheduled to begin at 2:00 pm Pacific
Time on Monday, August 13, 2007. Participants may access the call
by dialing 800-811- 8845 (domestic) or 913-981-4905
(international). In addition, the call will be webcast via the
Company's Web site at http://www.physiciansformula.com/, Investor
Relations, where it will also be archived. A telephone replay will
be available through Monday, August 27, 2007. To access the replay,
please dial 888-203-1112 (domestic) or 719-457-0820
(international), passcode 2682414. About Physicians Formula
Holdings, Inc. Physicians Formula is one of the fastest growing
cosmetics companies operating in the mass market prestige, or
"masstige", market. Under its Physicians Formula brand name,
created in 1937, the Company develops, markets and distributes
innovative, premium-priced products for the mass market channel.
Physicians Formula differentiates itself by addressing skin
imperfections through a problem-solving approach, rather than
focusing on changing fashion trends. Currently, Physicians Formula
products are sold in over 26,000 stores throughout the U.S.
including stores operated by Wal-Mart, Target, CVS, Walgreens and
Albertsons. Safe Harbor Statement This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In some cases,
forward- looking statements can be identified by words such as
"anticipates," "estimates", "expects," "believes," "plans,"
"predicts," and similar terms. These forward-looking statements are
based on current expectations, estimates and projections about the
Company's business and its industry, based on management's beliefs
and assumptions. Forward-looking statements are not guarantees of
future performance and the Company's actual results may differ
significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but
are not limited to: the demand for the Company's products; the
Company's ability to expand its product offerings; the competitive
environment in the Company's business; the Company's operations and
ability to achieve cost savings; the effect of technological and
regulatory changes; the Company's cash needs and financial
performance; changes in general economic or market conditions; and
other factors discussed in the Company's filings with the
Securities and Exchange Commission (the "SEC"), including the Risk
Factors contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2006, filed March 16, 2007, and
available at http://www.physiciansformula.com/ and the SEC's
website at http://www.sec.gov/. You are urged to consider these
factors carefully in evaluating the forward-looking statements in
this release and are cautioned not to place undue reliance on such
forward-looking statements, which are qualified in their entirety
by this cautionary statement. Unless otherwise required by law, the
Company expressly disclaims any obligation to update publicly any
forward- looking statements, whether as result of new information,
future events or otherwise. PHYSICIANS FORMULA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(dollars in thousands, except per share data) Three Months Ended
June 30, Six Months Ended June 30, 2007 2006 2007 2006 NET SALES
$22,102 $23,083 $57,825 $50,772 COST OF SALES 9,920 9,341 25,023
21,379 GROSS PROFIT 12,182 13,742 32,802 29,393 SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 12,458 9,331 25,567 19,282 (LOSS)
INCOME FROM OPERATIONS (276) 4,411 7,235 10,111 INTEREST EXPENSE
312 1,742 716 3,512 OTHER (INCOME) EXPENSE (49) 20 (54) (1) (LOSS)
INCOME BEFORE INCOME TAXES (539) 2,649 6,573 6,600 (BENEFIT)
PROVISION FOR INCOME TAXES (16) 1,023 2,794 2,559 NET (LOSS) INCOME
$(523) $1,626 $3,779 $4,041 NET (LOSS) INCOME PER COMMON SHARE:
Basic $(0.04) $0.16 $0.27 $0.39 Diluted $(0.04) $0.14 $0.26 $0.35
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: Basic 13,927,055
10,421,916 13,896,890 10,421,916 Diluted 13,927,055 11,607,824
14,549,682 11,604,836 PHYSICIANS FORMULA HOLDINGS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (dollars in thousands,
except share data) June 30, December 31, 2007 2006 ASSETS CURRENT
ASSETS: Cash and cash equivalents $81 $26 Accounts receivable, net
of allowance for bad debts of $370 and $348 16,610 26,654
Inventories 27,470 23,472 Prepaid expenses and other current assets
1,285 1,775 Income tax receivables 1,567 -- Deferred income
taxes-net 4,730 5,139 Total current assets 51,743 57,066 PROPERTY
AND EQUIPMENT-Net 2,726 2,506 OTHER ASSETS-Net 1,177 968 INTANGIBLE
ASSETS-Net 55,429 56,311 GOODWILL 17,463 17,463 TOTAL $128,538
$134,314 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES:
Accounts payable $10,009 $12,670 Accrued expenses 1,633 1,915 Trade
allowances 4,873 3,479 Sales returns reserve 6,942 9,440 Income
taxes payable -- 378 Line of credit borrowings 2,944 7,522 Current
portion of long-term debt 2,438 2,063 Total current liabilities
28,839 37,467 DEFERRED COMPENSATION 811 721 DEFERRED INCOME
TAXES-Net 20,725 21,617 LONG-TERM DEBT 11,812 12,937 COMMITMENTS
AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series A preferred stock,
$.01 par value-10,000,000 shares authorized, 0 and 0 shares issued
and outstanding -- -- Common stock, $.01 par value-50,000,000
shares authorized, 13,927,055 and 13,843,056 shares issued and
outstanding 139 138 Additional paid-in capital 58,046 57,047
Retained earnings 8,166 4,387 Total stockholders' equity 66,351
61,572 TOTAL $128,538 $134,314 (FACE/F) Contact: John Mills / Anne
Rakunas Integrated Corporate Relations, Inc. (310) 954-1100
DATASOURCE: Physicians Formula Holdings, Inc. CONTACT: John Mills
or Anne Rakunas both of Integrated Corporate Relations, Inc.,
+1-310-954-1100, for Physicians Formula Holdings, Inc. Web site:
http://www.physiciansformula.com/
Copyright
Physicians Formula Holdings, Inc. (MM) (NASDAQ:FACE)
Historical Stock Chart
From Jun 2024 to Jul 2024
Physicians Formula Holdings, Inc. (MM) (NASDAQ:FACE)
Historical Stock Chart
From Jul 2023 to Jul 2024