Success of new product introductions and competitive in-market
performance of Mucinex(R)and Delsym(R) drove Adams' retail
consumption to grow more than $130 million, an increase of nearly
70 percent over fiscal 2006 CHESTER, N.J., Aug. 21
/PRNewswire-FirstCall/ -- Financial Highlights -- Fiscal 2007
fourth quarter net sales of $46.9 million declined 11 percent from
net sales of $52.8 million in the prior year period. Despite the
lower reported net sales growth, Adams' retail consumption
increased 44 percent during the fiscal 2007 fourth quarter,
according to Information Resources Inc. (IRI) data for the 52 weeks
ended July 1, 2007. Net sales in the fiscal 2006 fourth quarter
benefited from $11.0 million in sales related to the reduction in
the product backorder that was generated in the first half of
fiscal 2006. -- Net sales in fiscal 2007 increased 39 percent to
$331.6 million, in line with Adam's previously disclosed annual net
sales guidance range of $320 to $335 million. This growth was
driven by Adams' retail consumption that grew more than $130
million, an increase of nearly 70 percent over fiscal 2006,
according to IRI data. -- Income per diluted share of $0.82 for
fiscal 2007 includes pretax charges of $14.9 million (or $0.26 per
diluted share), comprised of $9.7 million related to the repurchase
of the Ft. Worth, Texas manufacturing operations in July 2006; a
$2.7 million non-cash charge related to the AlleRx(TM) royalty
interest recorded in December 2006; and a $2.5 million non-cash
charge related to the impairment of the Humibid(R) intangible asset
in June 2007. Other Highlights -- The Food and Drug Administration
(FDA) announced its intention to take enforcement action to remove
all unapproved timed-release guaifenesin products from the market,
including prescription versions of Adams' Mucinex DM and Mucinex D.
(May) -- Adams' dollar share of the total cough/cold/allergy/sinus
(CCAS) category increased nearly 4 market share points to 10.4
percent, from 6.6 percent in the prior year period, according to
IRI data for the 52 weeks ended July 1, 2007, compared to the prior
year period. -- Adams' portfolio expansion is underway with strong
initial trade shipments of the new Mucinex products, including
Maximum-Strength Mucinex, Mucinex Nasal Sprays and new items in the
Mucinex for Children product line. (August) Adams Respiratory
Therapeutics, Inc. (NASDAQ:ARxT) today announced financial results
for the fourth quarter and fiscal year ended June 30, 2007.
Commenting on the quarterly results, COO Robert D. Casale, said,
"Solid retail consumption and strong market share gains of our key
brands during this non-seasonal quarter represent a healthy
business." Casale added, "During the fiscal 2007 fourth quarter we
were intently focused on preparations for the market introduction
of our new OTC products. Our teams did a great job securing trade
distribution and promotional programs. At this time we already have
commitments and programs to support a 20 percent display increase
over last year. We're expecting another year of strong promotional
support across all our major drug customers. It is safe to say,
based on initial trade orders and acceptances, that we will have
all of our new products and segments in distribution at most
outlets in the Food, Drug and Mass channels. By the end of this
week, we expect to have shipped all of these products except grape
Delsym. The adult and children's versions of grape-flavored Delsym
are awaiting final FDA approval. We remain confident about the
potential for our new products to further strengthen our OTC
business." Summary of Fiscal 2007 Results Annual net sales of
$331.6 million were in line with the Company's previously disclosed
net sales projection of between $320 and $335 million, and
represent an increase of $92.5 million or 39 percent over net sales
of $239.1 million in fiscal 2006. The solid top-line growth was
primarily due to higher sales of new products such as the line of
Mucinex for Children products and Delsym, as well as the continued
market penetration of Mucinex DM and Mucinex D. The annual sales
growth was tempered by a decline in sales of Mucinex SE, primarily
due to a greater availability of and patient conversion to Mucinex
DM. Overall net sales in fiscal 2007 were tempered by a lower
severity of upper respiratory illness during the 2006-2007
cough/cold season. As a percentage of net sales, Adams produced a
gross margin of 71.1 percent for fiscal 2007, compared to 79.4
percent in fiscal 2006. The significant decline in the gross margin
was primarily due to $9.2 million of non-recurring expenses
relating to the repurchase of the Ft. Worth, Texas, manufacturing
operations in July 2006; year-over-year changes in the Company's
product sales mix resulting from the integration of new products
such as Delsym and the line of Mucinex for Children products and
higher sales of Mucinex DM, all of which carry lower margins than
single-ingredient Mucinex; and increases in raw material costs. The
fiscal 2007 gross margin was lower than the Company's projected 72
percent guidance primarily due to charges associated with the
disposal of some inventory. Selling, marketing and administrative
expenses in fiscal 2007 increased 65 percent to $162.9 million from
$99.0 million in fiscal 2006. The increase was primarily driven by
increased spending on sales, promotional and marketing programs,
including spending related to consumer advertising; higher costs
related to increased sales force size; and higher distribution and
storage fees. In addition, higher legal expenses were incurred
related to the patent infringement lawsuit against Mutual
Pharmaceutical Co., which the Company settled in March 2007. The
fiscal 2007 selling, marketing and administrative expenses were
slightly lower than the Company's previous guidance of between $165
and $168 million, due to lower than projected stock compensation
expense resulting from the non-achievement of certain financial
performance targets in fiscal 2007. Adams' effective tax rate for
fiscal 2007 was 35.8 percent compared to 39.1 percent in fiscal
2006, in line with the Company's projected effective tax rate of
35.5 percent. The year-over-year decline in the effective tax rate
was related to a tax deduction provided to U.S. manufacturers for
which Adams is now eligible as a result of repurchasing the
manufacturing assets in Ft. Worth; a shift in Adams' stock
compensation expense from non-deductible incentive stock options to
deductible non-qualified stock options; and an adjustment recorded
in the fiscal 2007 third quarter to align the Company's tax
liability with its 2006 tax returns, as filed during the third
quarter of 2007. Income per diluted share of $0.82 for fiscal 2007
includes pretax charges of $14.9 million (or $0.26 per diluted
share), comprised of $9.7 million related to the repurchase of the
Ft. Worth, Texas manufacturing operations in July 2006; a $2.7
million non-cash charge related to the AlleRx(TM) royalty interest
recorded in December 2006; and a $2.5 million non-cash charge
related to the impairment of the Humibid(R) intangible asset in
June 2007. Fiscal 2007 Earnings Per Share Reconciliation Net Income
Earnings Per Share Reported $30,529 $0.82 Repurchase of
manufacturing operations 6,206 0.17 AlleRx charge 1,733 0.05
Humibid impairment char 1,632 0.04 Proforma $40,100 $1.08 Product
Sales Net sales of the adult Mucinex franchise grew 7 percent in
fiscal 2007 to $254.7 million, led by growth in Mucinex DM which
generated sales of $94.6 million, an increase of 60 percent over
the prior year period. Mucinex DM sales were driven by the
product's increased market penetration and market share, benefiting
from its first-ever dedicated advertising campaign as well as
improved depth and quality of distribution. The Company believes
that a portion of Mucinex DM sales also resulted from the
conversion of some consumers from single-ingredient Mucinex, which
recorded net sales of $131.9 million, a decline of 17 percent over
the prior year period. Also contributing to the sales of the adult
Mucinex franchise were higher sales of Mucinex D, which increased
46 percent in fiscal 2007 to $28.2 million. The strong in-season
performance of the adult Mucinex line coupled with solid
post-season retail consumption, further strengthened the brand's
market position, resulting in a 9.1 percent share of the adult CCAS
category, according to IRI for the 52 weeks ended July 1, 2007.
This represents a year- over-year increase of 1.5 market share
points. For the second consecutive year, Mucinex was rated the No.
1 adult expectorant, with 62.6 percent of pharmacist
recommendations, in the recently published Pharmacy Times 2007 OTC
Survey of Pharmacist Recommendations. The new line of Mucinex for
Children products, launched in August 2006, generated sales of
$29.2 million in fiscal 2007. These new products have rapidly
penetrated the pediatric segment of the Children's CCAS category,
gaining nearly 6 market share points in their first year on the
market, according to IRI data for the 52 weeks ended July 1, 2007.
The Delsym line of 12-hour OTC cough liquids, which Adams acquired
in June 2006, produced revenue of $48.3 million in fiscal 2007.
After its first-ever season of consumer advertising, Delsym
achieved strong market penetration and grew 2.5 market share points
to 12.3 percent in the OTC liquid cough/congestion segment of the
CCAS category, according to IRI data for the 52 weeks ended July 1,
2007. In its first year of marketing under Adams' ownership, Delsym
ranked No. 1 in both the Children's and Adult Cough categories, in
the recently published Pharmacy Times 2007 OTC Survey of Pharmacist
Recommendations. Business Outlook Michael J. Valentino, president
& CEO, said, "Based on our current planning assumptions, we
expect to continue to execute effectively in the marketplace and
produce top-line growth in excess of 20 percent in fiscal 2008,
while experiencing meaningful financial leverage that should
produce diluted earnings per share growth in excess of 40 percent."
Valentino added, "In fiscal 2009, our regulatory and marketing
strategies should continue to bear fruit. An FDA approval of our
Mucinex with Codeine product would allow us to begin bridging to
our long-term diversification strategy which includes building a
portfolio of prescription respiratory products. We have confidence
in our ability to continue to deliver strong growth over the long
term, which will be driven by meaningful financial leverage from
our existing business. As a result, diluted earnings per share
growth should continue to exceed top-line growth for the next
several years." Revenue -- Adams expects fiscal 2008 net sales to
be in the range of $400 to $440 million, reflecting solid growth in
the base OTC business and incremental revenue from newly launched
products. Gross Margin -- As a ratio to net sales, Adams expects to
produce a gross margin in the range of 73 to 74 percent for fiscal
year 2008, reflecting anticipated higher revenue of lower-margin
products, including Maximum Strength Mucinex, Mucinex D (related to
the FDA enforcement action), Mucinex for Children and Delsym.
Operating Expenses -- In general, the rate of growth in Adams'
fiscal 2008 expenses is expected to trail the rate of top-line
sales growth, as the Company begins to experience meaningful
leverage in its business. Diluted Earnings Per Share (EPS) -- In
fiscal 2008, Adams expects diluted EPS to be in the range of $1.55
to $1.75, reflecting higher revenue and expenses related to the
launch and promotion of its new OTC products and pre-launch
spending for Mucinex with Codeine; growth in the base OTC business;
and the anticipated benefit from the recent FDA enforcement action.
In addition, Adams' estimated effective tax rate for fiscal 2008 is
expected to be approximately 36 percent. Fiscal Fourth Quarter 2007
Conference Call and Webcast Adams Respiratory Therapeutics, Inc.
(NASDAQ:ARxT) is scheduled to announce its sales and earnings
results for the fiscal 2007 fourth quarter and full year on
Tuesday, Aug. 21, 2007, before the market opens. At 9:00 a.m. (EDT)
on that day, Adams management will conduct a conference call to
review the fiscal fourth quarter and full year results. To listen
live to the call, dial 1-877-669-8882 or 1-706-758-9391. A replay
of the call will be available starting at approximately 12 p.m. on
Aug. 21 through 5 p.m. on Aug. 28. To listen to the replay, dial
1-800-642-1687 or 1-706-645-9291 and enter the conference ID#
6835936. A live audio webcast of the conference call also will be
available by going to the Investor Relations section of the Adams
web site, http://www.adamsrt.com/. A replay of the webcast will be
available starting at approximately 11 a.m. on Aug. 21 through 5
p.m. on Sept. 21. PLEASE NOTE: A slide presentation to accompany
the audio webcast of the conference call will be available by going
to the Investor Relations/News and Events section of Adams' web
site, http://www.adamsrt.com/. About Adams Respiratory
Therapeutics, Inc. Adams is a specialty pharmaceutical company
focused on the late-stage development, commercialization and
marketing of over-the-counter and prescription pharmaceuticals for
the treatment of respiratory disorders. Forward-Looking Statements
This press release contains certain "forward-looking" statements,
including the FDA's removal from the market of unapproved
timed-release guaifenesin products; the FDA's review of the
Company's NDA for Mucinex with Codeine; the FDA's approval of
grape-flavored Delsym; the expansion and diversification of the
Company's product portfolio; and the Company's future financial
performance and growth. Such forward-looking statements can be
identified by the words "believe," "will," "intend," "expect,"
"estimate," "anticipate" and similar expressions and are subject to
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially include, among
others, the Company's ability to maintain the success of its
existing products and successfully introduce and commercialize new
products; the Company's ability to achieve projected growth and
sales; competition from other branded and generic products; the
FDA's failure to take enforcement action to remove from the market
unapproved timed-release guaifenesin products; an FDA decision not
to approve grape-flavored Delsym or Mucinex with Codeine; the
severity of the cough and cold season; seasonality of product sales
and other risk factors set forth Item 1A. Risk Factors in the
Company's Annual Report on Form 10-K for the fiscal year ended June
30, 2006 and under Item 1A. Risk Factors in Adams' Quarterly Report
on Form 10-Q for the period ended March 31, 2007. Except to the
extent required by applicable securities laws, Adams is not under
any obligation to (and expressly disclaims any such obligation to)
update its forward-looking statements, whether as a result of new
information, future events, or otherwise. All statements contained
in this press release are made only as of the date of this release.
Adams Respiratory Therapeutics, Inc. Consolidated Statements of
Operations (Amounts in thousands, except per share amounts) Three
Months Ended Year Ended June 30, June 30, 2007 2006 2007 2006
(unaudited) Net sales $46,861 $52,839 $331,603 239,105 Cost of
goods sold 16,152 10,751 95,799 49,358 Gross margin 30,709 42,088
235,804 189,747 Selling, marketing & administrative 24,286
24,996 162,861 98,998 Product development 5,798 7,545 23,855 18,904
AlleRx charge - - 2,699 - Other, net 1,680 (1,439) (1,187) (4,307)
31,764 31,102 188,228 113,595 (Loss)/income before income taxes
(1,055) 10,986 47,576 76,152 (Benefit)/provision for income taxes
(19) 4,632 17,047 29,801 Net (loss)/income $(1,036) $6,354 $30,529
$46,351 (Loss)/income per common share Basic $(0.03) $0.18 $0.86
$1.42 Diluted $(0.03) $0.17 $0.82 $1.28 Weighted-average number of
common shares used in (loss)/income per share calculation Basic
35,646 34,840 35,340 32,616 Diluted 35,646 36,933 37,113 36,349
Adams Respiratory Therapeutics, Inc. Net Sales by Product (Amounts
in thousands, except per share amounts) Three Months Ended Year
Ended June 30, June 30, 2007 2006 2007 2006 (unaudited) Mucinex SE
$21,989 $29,205 $131,871 $158,575 Mucinex DM 13,140 17,863 94,633
59,235 Mucinex D 3,929 4,982 28,204 19,347 Adult Mucinex Franchise
39,058 52,050 254,708 237,157 Mucinex products for Children 2,601 -
29,190 - Humibid (281) 137 (639) 1,296 Delsym 5,483 652 48,344 652
Total $46,861 $52,839 $331,603 $239,105 DATASOURCE: Adams
Respiratory Therapeutics, Inc. CONTACT: Janet M. Barth for Adams
Respiratory, +1-908-879-2428, Therapeutics, Inc. Web site:
http://www.adamsrt.com/
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