BMP Sunstone Reports Second Quarter 2010 Financial Results
Revenue Increases 25.8% to $40.9 Million in the Quarter
Adjusted EBITDA of $4.3 Million in the Quarter, and $8.9 Million in the First Six Months of 2010
Company Reiterates 2010 Financial Guidance
PLYMOUTH MEETING, Pa., Aug. 9 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (Nasdaq: BJGP) ("BMP Sunstone" or the "Company") today announced financial results for the second quarter ended June 30, 2010.
-- Revenue increased to $40.9 million from $32.5 million in the prior year
period, an increase of 25.8%.
-- Gross profit rose to $18.7 million from $14.4 million in the second
quarter of 2009, coupled with gross margin expansion to 45.7% from
44.3% in the prior year period.
-- Operating income grew substantially to $2.3 million from $93,000 in the
prior year period.
-- Adjusted EBITDA was $4.3 million compared to $1.7 million in the prior
year period. Non-GAAP net income was $2.2 million, or $0.05 per diluted
share, compared to $300,000, or $0.01 per diluted share, in the second
quarter of 2009.
David Gao, Chief Executive Officer of BMP Sunstone, stated, "We are delighted to see the initial benefits of the organizational changes we made earlier in the year. With Mr. Tong at the helm, our manufacturing business is now operating with increased efficiency, particularly within our sales and marketing department, where the reorganization helped drive increased sales of Sunstone's products. We also are starting to see improved margin performance in our distribution business as we continued our push to focus on higher margin products. The managerial and operational improvements we made in the first half of the year are proving to be worthwhile, and we are optimistic about our ability to continue strong growth of revenue and profit for our shareholders in the back part of the year."
Second Quarter 2010 Financial Results
Revenue in the second quarter of 2010 increased 25.8% to $40.9 million from $32.5 million in the second quarter of 2009. Revenue from manufacturing was $22.5 million, up 33.8% from the prior year period, reflecting continued demand for the Company's leading products and the initial benefits of the salesforce reorganization completed earlier in the year. Additionally, as of the first quarter of 2010, financial contributions from Sunstone Shengda Zhangjiakou Pharmaceutical Co., Ltd., were consolidated in the Company's manufacturing division and accounted for $1.9 million. Revenue from licensed products increased 24.8% year over year to $1.9 million, primarily due to successful sales and marketing efforts for Propess, Anpo and Ferriprox and further hospital coverage expansion. Revenue from distribution was $16.4 million, up 16.3% on a year over year basis.
Gross profit in the second quarter of 2010 increased to $18.7 million from $14.4 million in the second quarter of 2009. Gross margin was 45.7%, compared to 44.3% in the prior year period. Gross margin performance was driven by increased sales of manufactured and licensed products, which carried gross margins of 71.7% and 64.6% respectively. Additionally, revenue mix in the second quarter of 2010 reflects anticipated seasonality in Sunstone's business, as well as improved gross margin performance in the distribution business, as management continued its plan to proactively cease distribution of certain low margin wholesale products. Revenue from distribution contributed to a higher portion of total revenue than in the first quarter of 2010, and did so at a gross margin of 7.9%, up from 7.6% in the first quarter of 2010.
The Company's operating income increased to $2.3 million in the second quarter of 2010 from $93,000 in the second quarter of 2009. The Company's sales and marketing expenses, particularly at Sunstone, as well as general and administration expenses, were closely aligned with revenue performance in the second quarter of 2010. Operating expenses include approximately $821,000 of purchase accounting adjustments related to prior acquisitions, as well as approximately $491,000 of stock compensation expense, which reflects fewer options granted to senior management and board members on a year over year basis. Excluding purchase accounting adjustments and stock compensation, non- GAAP operating income improved 138.0% to $3.8 million from $1.6 million in the prior year period.
Adjusted EBITDA was $4.3 million in the second quarter of 2010, compared to $1.7 million in the second quarter of 2009. Improvement in adjusted EBITDA performance reflects enhanced revenue performance and operational efficiencies across the Company.
Non-GAAP net income was $2.2 million, or $0.05 per diluted share, compared to $300,000, or $0.01 per diluted share, in the second quarter of 2009. On a GAAP basis, the Company reported net income of $660,000, or $0.02 per diluted share, compared to a net loss of $1.7 million, or ($0.04) per diluted share, in the second quarter of 2009. The earnings per share calculation is based on 51.1 million diluted shares outstanding, compared to 50.7 million diluted shares outstanding in the prior year period.
Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three month periods ended June 30, 2010 and 2009.
Balance Sheet
The Company paid down roughly $2.4 million of bank debt during the quarter, while keeping cash and cash equivalents fairly consistent with prior quarters, at $22.3 million as of June 30, 2010. The Company had cash and cash equivalents of $23.0 million at March 31, 2010, and ended 2009 with approximately $21.5 million in cash and cash equivalents. As of June 30, 2010, and including notes receivable of $15.1 million, total cash and cash equivalents including notes receivable totaled $37.4 million. Notes receivables from customers for the settlement of trade receivable balances are guaranteed by established banks in China and have maturities of six months or less.
First Half 2010 Financial Results
For the six months ended June 30, 2010, revenue increased 11.3% to $79.9 million from $71.7 million in the first six months of 2009. During this same time period, gross profit increased 13.2% to $39.7 million from $35.1 million. Income from operations increased 60.9% to $5.3 million, compared to $3.3 million in the first six months of 2009. Adjusted EBITDA was $8.9 million in the first six months of 2010, compared to $6.3 million in the prior year period. Non-GAAP net income was $4.8 million, or $0.11 per diluted share, compared to $3.3 million, or $0.08 per diluted share, in the prior year period. On a GAAP basis, net income was $1.3 million, or $0.03 per share, compared to a net loss of $3.7 million, or ($0.09) per share, in the first six months of 2009. The EPS calculation is based on 51.0 million diluted shares outstanding, compared to 46.9 million diluted shares outstanding in the prior year period.
Full Year 2010 Financial Guidance
The Company continues to expect revenue to reach between $160 million and $170 million in fiscal 2010. Additionally, during fiscal 2010, the Company continues to expect adjusted EBITDA to reach between $16 million and $17 million and non-GAAP net income to reach between $9 million and $10 million.
Conference Call
The Company will hold a conference call at 5:00 pm ET on August 9, 2010 to discuss its results. Listeners may access the call by dialing 1-866-713-8310 or 1-617-597-5308 for international callers, access code: 12154394. Preregistration and a webcast will be available through the Company's website at http://www.bmpsunstone.com . A replay of the call will be accessible through August 16, 2010 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 59487271.
About BMP Sunstone Corporation
BMP Sunstone Corporation is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone the Company manufactures leading pediatric and women's health products, including two of China's most recognized brands, "Hao Wawa" and "Confort," sold in pharmacies throughout the country. The Company also markets a portfolio of products under exclusive multi-year licenses into China, primarily focused on women's health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone's main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit http://www.bmpsunstone.com .
Safe Harbor Statement
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning, the Company's expected financial performance in fiscal 2010 and the Company's expectations for its business units in fiscal year 2010. These statements are subject to uncertainties and risks including, but not limited to, the impact from the Company's recent organizational changes, changes in the Company's sales, marketing and distribution plans, changes in the Company's operating performance, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company's products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For more information, please contact:
ICR, LLC
(Investor Relations)
Ashley M. Ammon
Tel: +1-646-277-1227
Christine Duan
Tel: +1-203-682-8200
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
For the Three months For the Six months
ended June 30, ended June 30,
2010 2009 2010 2009
Revenues:
Third parties $40,863 $32,123 $79,879 $67,644
Related parties -- 360 -- 4,102
Total Revenues 40,863 32,483 79,879 71,746
Cost of Goods Sold 22,188 18,089 40,212 36,694
Gross Profit 18,675 14,394 39,667 35,052
Sales and Marketing Expenses 11,768 10,300 23,938 23,811
General and Administrative
Expenses 4,589 4,001 10,400 7,930
Total Operating Expenses 16,357 14,301 34,338 31,741
Profit From Operations 2,318 93 5,329 3,311
Other Income (Expense):
Interest Income 53 84 100 108
Interest Expense (995) (1,058) (2,347) (2,475)
Debt Issuance Cost
Amortization (109) (97) (235) (225)
Equity Method Investment
Income -- 65 -- 82
Loss on Early Extinguishment
of Debt -- -- -- (4,573)
Gain on Derivatives -- (447) -- 1,204
Total Other Expense (1,051) (1,453) (2,482) (5,879)
Profit (Loss) Before
Provision For Income Taxes 1,267 (1,360) 2,847 (2,568)
Provision For Income Taxes 669 372 1,585 1,154
Net Profit (Loss) $598 $(1,732) $1,262 $(3,722)
Less: Net Profit
Attributable to the
Noncontrolling Interest 62 16 23 16
Net Profit (Loss)
Attributable to BMP
Sunstone Corporation $660 $(1,716) $1,285 $(3,706)
Basic and Fully-Diluted
Profit (Loss) Per Share
Attributable to BMP
Sunstone $0.02 $(0.04) $0.03 $(0.09)
Basic Weighted-average
Shares Outstanding 42,145 41,539 42,055 41,154
Fully Diluted Weighted-
average Shares Outstanding 51,062 50,699 51,022 46,875
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
Non GAAP
For the Three months For the Six months
ended June 30, ended June 30,
2010 2009 2010 2009
Revenues:
Third parties $40,863 $32,123 $79,879 $67,644
Related parties -- 360 -- 4,102
Total Revenues 40,863 32,483 79,879 71,746
Cost of Goods Sold 22,024 17,974 39,884 36,464
Gross Profit 18,839 14,509 39,995 35,282
Sales and Marketing
Expenses 10,947 9,547 22,307 22,332
General and
Administrative
Expenses 4,078 3,359 9,020 6,684
Total Operating
Expenses 15,025 12,906 31,327 29,016
Profit From Operations 3,814 1,603 8,668 6,266
Other Income (Expense):
Interest Income 24 46 40 70
Interest Expense (995) (1,058) (2,347) (2,025)
Equity Method
Investment Income -- 65 -- 82
Total Other Expense (971) (947) (2,307) (1,873)
Profit Before Provision
For Income Taxes 2,843 656 6,361 4,393
Provision For Income
Taxes 669 372 1,585 1,154
Net Profit $2,174 $284 $4,776 $3,239
Less: Net Profit
Attributable to the
Noncontrolling
Interest 62 16 23 16
Net Profit Attributable
to BMP Sunstone
Corporation 2,236 300 4,799 3,255
Basic and Fully-
Diluted Profit Per
Share Attributable
to BMP Sunstone $0.05 $0.01 $0.11 $0.08
Basic Weighted-average
Shares Outstanding 42,145 41,539 42,055 41,154
Fully Diluted Weighted-
average Shares
Outstanding 51,062 50,699 51,022 46,875
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
($ amounts in thousands)
June 30, December 31,
2010 2009
Assets
Current Assets:
Cash and Cash Equivalents $22,284 $21,544
Restricted Cash 1,125 1,125
Notes Receivable 15,087 17,541
Accounts Receivable, net of allowance
for doubtful accounts of $771 and
$481 47,590 37,752
Inventory, net of allowance for
obsolescence of $178 and $98 10,461 9,811
Receivable from Alliance Unichem -- 7,550
Other Receivables 3,634 3,648
VAT Receivable 1,009 1,093
Prepaid Expenses and Other Current
Assets 7,336 6,322
Total Current Assets $108,526 106,386
Property and Equipment, net 31,492 30,967
Investment in Shengda -- 2,950
Investments at Cost 367 146
Goodwill 70,317 70,033
Other Assets 327 405
Land Use Rights, net of accumulated
amortization 2,991 2,860
Intangible Assets, net of accumulated
amortization 39,980 38,508
Total Assets $254,000 $252,255
Liabilities and Equity
Current Liabilities:
Notes Payable and Bank Borrowings $2,791 $6,406
Accounts Payable 24,047 24,465
Due to Related Parties 1,315 1,437
Deferred Revenues 128 208
Accrued Expenses 20,521 18,478
Total Current Liabilities 48,802 50,994
Long-Term Debt, including debt
premium 33,991 36,749
Deferred Taxes 8,834 9,097
Total Liabilities 91,627 96,840
Commitment and Contingencies -- --
Equity:
Common Stock, $.001 Par Value;
75,000,000 and 50,000,000 Shares;
42,145,320 and 41,931,987 Shares
Issued and Outstanding as of June
30, 2010 and December 31, 2009,
respectively 42 42
Additional Paid in Capital 170,722 168,772
Common Stock Warrants 8,621 8,621
Accumulated Deficit (31,661) (32,946)
Accumulated Other Comprehensive
Income 10,235 9,486
Total BMP Sunstone Corporation
Stockholders' Equity 157,959 153,975
Non controlling Interest 4,414 1,440
Total Liabilities and Equity 254,000 $252,255
BMP Sunstone Corporation and Subsidiaries
Non GAAP Reconciliations
($ amounts, except per share in thousands)
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
GAAP Gross Profit $18,675 $14,394 $39,667 $35,052
Amortization Related
to Acquisition 164 115 328 230
Non GAAP Gross Profit $ 18,839 $14,509 $ 39,995 $35,282
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
GAAP Operating Income $ 2,318 $93 $ 5,329 $3,311
Stock Based Compensation 491 599 1,341 1,184
Amortization Related
to Acquisitions 1,005 911 1,998 1,771
Non GAAP Operating
Income $ 3,814 $1,603 $ 8,668 $6,266
Three months ended June 30, Six months ended June 30,
(all amounts in $000) 2010 2009 2010 2009
GAAP Net Income
(Loss) $ 660 $(1,716) $ 1,285 $(3,706)
GAAP Basic and Fully
Diluted EPS $ 0.02 $(0.04) $ 0.03 $(0.09)
Stock Based Compensation 491 599 1,341 1,184
Debt Discount and Premium
Amortization and Issuance
Cost 80 59 175 637
Amortization Related to
Acquisitions 1,005 911 1,998 1,771
Loss on Early
Extinguishment of Debt -- -- -- 4,573
Gain (Loss) on
Derivatives -- 447 -- (1,204)
Non GAAP Net Income $ 2,236 $300 $ 4,799 $3,255
Non GAAP EPS $ 0.05 $0.01 $ 0.11 $0.08
BMP Sunstone Corporation and Subsidiaries
Adjusted EBITDA Reconciliation
($ amounts in thousands)
For the Three months For the Six months
ended June 30, ended June 30,
(all amounts in $000) 2010 2009 2010 2009
Net Income (Loss) $ 660 $(1,716) $1,285 $(3,706)
Net Income Reconciliation to
Adjusted EBITDA:
Interest expense, net 1,048 1,019 2,384 1,962
Income taxes 669 372 1,585 1,154
Depreciation 796 631 1,516 1,153
Amortization of intangibles and
fair value of inventory increase 1,005 911 1,998 1,771
Loss on Early Extinguishment of
Debt -- -- -- 4,573
Gain on derivatives -- 447 -- (1,204)
Amortization of debt discount and
debt issuance costs 80 59 175 636
ADJUSTED EBITDA $ 4,258 $1,723 $8,943 $6,339
SOURCE BMP Sunstone Corporation
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