Contact:
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| George Longo |
Carl Hymans |
| Vice President, CFO |
G.S. Schwartz & Co. |
| (215) 345-0919 |
(212) 725-4500 |
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carlh@schwartz.com |
Quigley Increases Revenues to $53.7 Million;
Net Income to $3.2 Million for Fiscal Year;
- 2005 Profitability Continues while Investing $3.8 Million in R&D -
DOYLESTOWN, PA. - February 23, 2006 - The Quigley Corporation (Nasdaq:
QGLY) today reported net sales of $17.7 million, for the fourth quarter
ended December 31, 2005, compared to $17.8 million reported for the same period
in 2004. For the year ended December 31, 2005, net sales were $53.7 million, an
increase of 22.1%, compared to $44.0 million in 2004.
Net sales of the Company's Cold Remedy and Health and Wellness segments
remained relatively unchanged during the fourth quarter of 2005 as compared to
2004. Even though the Health and Wellness segment was relatively unchanged,
there was a continued shift from the number of active domestic independent
representatives to active international independent representatives, which
reflected an increase of 91.8% for this segment's international sales as
compared to 2004.
The increase in net sales for the year ended December 31, 2005 reflects an
28.2% increase in the Company's Cold Remedy segment; a 418.4% increase in the
Contract Manufacturing segment, which is due to an entire year's activity in
2005 as compared to three months for 2004; and also reflects the Health and
Wellness segment remaining relatively unchanged. As in the quarter, sales of
the Health and Wellness segment remained relatively unchanged due to a decline
in the number of active domestic independent representatives, which were offset
by this segment's gains in international distribution of 54.3%.
The Company's Cold Remedy net sales for the year outpaced its category as the
further expansion of the Cold Remedy segment reflects the success of strategic
marketing initiatives; new product extensions of COLD- EEZE®; and a notable
increase in consumer acceptance and expanded household penetration. The
incidence of colds can vary each year with the early part of 2005 reflecting
more colds and higher sales than the previous year, thereby affecting
subsequent quarterly sales for the remainder of the year and comparisons as was
present in the fourth quarter of 2005 as compared to 2004.
Net income for the fourth quarter ended December 31, 2005 was $2.2 million, or
$0.16 per share, compared to net income of $2.0 million, or $0.13 per share,
for the same period last year. Net income for the year ended December 31, 2005
was $3.2 million, or $0.24 per share, compared to a net income of $453,000, or
$0.03 per share, for the same period last year.
Net income gains for the fiscal year 2005 are principally attributed to the
significant increase in cold-remedy sales, which has a greater gross profit
percentage and dollar margin and fewer fixed and directly variable costs than
the other operating segments. During the fourth quarter and year ended December
31, 2005, the Company incurred research and development costs of $845,000 and
$3.8 million, respectively, as compared to $837,000 and $3.2 million, for the
comparable periods of 2004.
Gross profit percentage and dollar margins for the Cold Remedy segment for the
year ended December 31, 2005 increased due to; increased cold remedy sales
volume; the expiration in May 2005 of the founder's commission and to the
discontinuation of a cold remedy product, which reflected a charge of $1.4
million during the third quarter of 2004. This charge included a $422,000
write-off for inventory and a $974,000 reduction in net sales resulting from
anticipated customer returns of the product. The gross profit percentage
margins for the Health and Wellness declined due to inventory obsolescence and
other charges. These gross profit gains of the Cold Remedy segment were also
offset by substantially lower gross profit margins for the Contract
Manufacturing segment, which is significantly lower than the other operating
segments.
In addition to the foregoing net changes in gross profit, net income for the
quarter and year ended December 31, 2005 as compared with the net income for
the quarter and year ended 2004, was impacted by increased operating costs of
all business segments, including non-manufacturing operating costs of the
Contract Manufacturing segment in current operations rather than being carried
as inventory. Net income results for the Cold-Remedy segment are substantially
higher for the year 2005 as attained in 2004, which were affected by the
relatively unchanged net income results of the Health and Wellness segment and
were negatively impacted by the results of the Contract Manufacturing segment.
No tax or tax benefits to reduce income or losses are provided for the quarters
and year ended December 31, 2005 and 2004, except for limitations imposed by
the alternative minimum tax for 2005, since the Company is in a net operating
loss carry-forward position.
Guy J. Quigley, Chairman, President and Chief Executive Officer stated,
"We are pleased with the results for 2005 in which The Company's Cold
Remedy net sales for the year far outpaced its category for the second
consecutive year. The dramatic increase in net sales is due largely to the
further success of our Cold Remedy segment which generated greater profit
margins, market penetration and customer acceptance of our COLD- EEZEŽ Cold
Remedy products. The further expansion of the Cold Remedy segment continues to
reap the benefits of our strategic marketing initiatives; new product
extensions of COLD-EEZEŽ; and ongoing efforts to generate greater consumer
acceptance and expand household penetration.
The increase in net sales for the year also reflects a significant increase in
our Contract Manufacturing segment, which incorporates sales for the entire
year of 2005 as compared to three months for 2004. Although the Health and
Wellness segment remained relatively unchanged, the Company generated a greater
than 50% increase in its international distribution and we remain focused on
expanding this international growth."
"While the incidence of colds can vary each year, we are encouraged by the
growth potential of our Cold Remedy segment to garner further consumer
acceptance and enhance product sales. We are committed to developing products
that provide potential to be an opportunity for expansion, market penetration
and future growth by appealing to the broadest possible demographics of both
younger and older adults."
"We also remain focused on expanding our wholly-owned Ethical
Pharmaceuticals subsidiary, Quigley Pharma, which is in the process of
developing natural-source potential prescription medicinals for Diabetic
Neuropathy, Systemic Radiation, Rheumatoid Arthritis, Avian Flu, Multiple
Sclerosis and Ocular and Genital Herpes. In addition, we have received all
eight Investigational New Animal Drug (INAD) numbers from the Center for
Veterinary Medicine of the Food and Drug Administration species the Company
applied for relative to its anti- viral compound, firmly establishing the
Company's veterinary commitment in parallel to the human drug development
program. We continue moving forward with our development and testing phases of
ethical pharmaceutical drugs and are confident that this segment of our
business will be a source of future growth for the Company," concluded Mr.
Quigley.
The following is a list of formulations currently in the Quigley Pharm pipeline
and an update on their progress:
Diabetic Neuropathy - QR-333: Two pre-clinical
toxicity studies determined the compound to be safe for topical application.
The next step is to secure the permission of the FDA to begin a Phase II B
study to develop the most efficacious dose range of this topical compound on
human patients.
Systemic Radiation - QR-336: There were encouraging results in
a preliminary non-GLP animal study of this naturally derived radio protective
compound against ionizing radiation. A pre-IND meeting was held at the FDA in
October of 2004 with the Division of Medical Imaging and Radiopharmaceutical
Drug Products. A GLP controlled animal study of the QR 336 formulation for the
Radioprotection/Treatment of Radiation Lethality Induced by Four MeV Photons in
the C3H Mouse may begin this year.
Rheumatoid Arthritis - QR-440: Quigley Pharma received an additional
Investigational New Animal Drug (INAD) number from the Center for Veterinary
Medicine of the Food and Drug Administration. In previous studies, QR-440 has
been shown to reduce inflammation and also suggests possible disease-modifying
potential.
Avian Flu Compound - QR-441: Studies show that QR-441 impregnated masks
prevented up to 99% of the viruses whereas the masks not treated with QR-441
had the ability to prevent up to 90% of the viruses passing through. More
important and significant findings show that the QR-441 compound proved to
deactivate the live viruses passing through these filters. Deactivation of live
viruses in a range of 95.1 to 98.7% were observed in these studies. The Company
is pursuing several development plans with all relevant government agencies and
private organizations for various levels of approval.
Multiple Sclerosis - QR-442: Results of a mouse multiple sclerosis model (EAE)
study has shown that the compound was found to delay onset of disease as well
as considerably lowering severity. The data is sufficient to proceed with
further studies, which may lead to an IND submission to the FDA.
Ocular and Genital Herpes - QR-435: In pre-clinical studies, the antiviral
formulation demonstrates antiviral activity against Ocular and Genital Herpes,
indicating a new research and development path for the versatile compound. The
Company is pleased with the progress and indicated that continued research is
required to confirm the compound's safety and efficacy profiles.
The Quigley Corporation makes no representation that the US Food and Drug
Administration or any other regulatory agency will grant an Investigational New
Drug ("IND") or take any other action to allow its formulations to be
studied or marketed. Furthermore, no claim is made that potential medicine
discussed herein is safe, effective, or approved by the Food and Drug
Administration. Additionally, data that demonstrates activity or effectiveness
in animals or in vitro tests do not necessarily mean the formula test compound,
referenced herein will be effective in humans. Safety and effectiveness in
humans will have to be demonstrated by means of adequate and well controlled
clinical studies before the clinical significance of the formula test compound
is known. Readers should carefully review the risk factors described in filings
the Company files from time to time with the Securities and Exchange
Commission.
The Quigley Corporation (Nasdaq: QGLY, http://www.Quigleyco.com) is a leading
developer and marketer of diversified health products including the COLD-EEZE®
family of patented zinc gluconate glycine (ZIGG(tm)) lozenges, gum and sugar
free tablets. In October of 2004, The Company, through its wholly owned
subsidiary, Quigley Manufacturing Inc. acquired two FDA approved facilities to
manufacture its COLD- EEZE® branded lozenges. InnerLight Inc., a wholly owned
subsidiary, was formed in December 2000 for the purpose of introducing new
products to the marketplace through a network of independent distributors. In
addition to Over- The-Counter (OTC) products, the Company has formed Quigley
Pharma Inc. (http://www.QuigleyPharma.com), a wholly owned ethical
pharmaceutical subsidiary, to introduce a line of naturally derived patented
prescription drugs. The Quigley Corporation's customers include leading
national wholesalers and distributors, as well as independent and chain food,
drug and mass merchandise stores and pharmacies.
Forward-Looking Statements
Certain statements in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 and involve known and unknown risk, uncertainties and other factors
that may cause the Company's actual performance or achievements to be
materially different from the results, performance or achievements expressed or
implied by the forward-looking statement. Factors that impact such
forward-looking statements include, among others, changes in worldwide general
economic conditions, changes in interest rates, government regulations, and
worldwide competition.
(Tables Follow)
Consolidated Statements of Operations (Unaudited)
The following represents condensed financial
data (in thousands) except per share data:
Three-Months Three-Months Year Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
($) ($) ($) ($)
Net Sales 17,741 17,750 53,658 43,947
Gross profit 10,803 9,278 27,834 20,375
Sales & marketing expenses 4,060 3,767 8,414 7,140
Administrative expenses 3,777 2,701 12,656 9,820
Research & development 845 837 3,784 3,233
Income taxes 65 - 65 -
Net income 2,163 1,970 3,217 453
Diluted income per share:
Net income $0.16 $0.13 $0.24 $0.03
Diluted weighted average
common shares outstanding: 13,340,358 14,602,716 13,299,162 14,449,334
Consolidated Balance Sheets (Unaudited)
The following represents condensed financial
data (in thousands) at December 31:
2005 2004
($) ($)
Cash & cash equivalents 16,885 14,366
Accounts receivable, net 7,880 6,376
Inventory 3,900 3,455
Total current assets 30,248 24,961
Total assets 35,976 31,530
Total current liabilities 9,566 7,109
Long-term debt 1,036 2,464
Total stockholders' equity 25,320 21,902
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