Continued sales growth for Immunotec in the third quarter, however reports
net loss on close of Korean market and increase in expenses relating to
growth strategies
VAUDREUIL-DORION, QC,
NET EARNINGS (LOSS)
The Company incurred a net loss for the third quarter ended
For the nine-month period ended
On
The largest component of the third quarter loss and the nine-month period loss is attributable to the closure of the
NET SALES
The Company, for the third quarter ended
For the nine-month period ended
SELECTED CONSOLIDATED FINANCIAL INFORMATION
For the three-month For the nine-month
period ended period ended
July 31, July 31,
------------------------ ------------------------
2009 2008 2009 2008
($) ($) ($) ($)
unaudited unaudited unaudited unaudited
------------------------ ------------------------
Net Sales 11,967,395 8,942,007 34,762,679 26,766,768
Cost of Sales 2,370,257 1,573,609 6,682,627 4,940,520
Sales Incentives 5,644,625 3,697,379 16,103,001 10,971,475
Selling, General and
Administrative 5,052,710 3,173,318 14,051,525 9,099,446
Costs of closing
operations in
South Korea 1,424,458 - 1,424,458 -
(Loss) Earnings before
income taxes (2,524,655) 497,701 (3,504,932) 1,755,327
Net (Loss) Earnings (2,528,203) 354,168 (3,346,944) 1,099,278
Net (Loss) Earnings
per share:
Basic (0.036) 0.005 (0.048) 0.016
Diluted (0.036) 0.005 (0.048) 0.016
Weighted average number
of common shares
outstanding:
Basic 69,994,300 69,994,300 69,994,300 69,994,300
Diluted 69,994,300 69,994,805 69,994,300 70,055,040
As at As at As at
July 31, April 30, October 31,
2009 2009 2008
($) ($) ($)
unaudited unaudited audited
------------ ----------- ------------
ASSETS:
-------
Cash and cash equivalents 1,749,168 2,463,783 6,138,454
Restricted cash 970,197 760,770 -
Accounts receivable 638,372 1,129,416 812,914
Other current Assets 6,928,497 7,137,186 4,683,255
------------ ----------- ------------
Total current Assets 10,286,234 11,491,155 11,634,623
------------ ----------- ------------
Other Assets 11,245,744 11,119,943 11,028,777
------------ ----------- ------------
TOTAL ASSETS 21,531,978 22,611,098 22,663,400
---------- ---------- ----------
---------- ---------- ----------
LIABILITIES:
------------
Current Liabilities 6,484,744 5,119,813 4,552,187
------------ ----------- ------------
TOTAL LIABILITIES 6,484,744 5,119,813 4,552,187
--------- ---------- ---------
--------- ---------- ---------
SHAREHOLDERS' EQUITY:
----------------------
Share Capital 3,465,548 3,465,548 3,465,548
Other Equity-Stock Options 1,692,197 1,608,045 1,414,885
Contributed surplus 11,337,796 11,337,796 11,332,143
Retained Earnings (1,448,307) 1,079,896 1,898,637
------------ ----------- ------------
TOTAL SHAREHOLDERS' EQUITY 15,047,234 17,491,285 18,111,213
---------- ---------- ----------
---------- ---------- ----------
SALES INCENTIVES
Sales incentives are the largest operating expenses of the Company and depend directly on the sales volume of each independent distributor. Sales incentives include both commissions related to commissionable net sales and various incentives which can be earned by independent distributors.
Sales incentives were 46.3% of net sales for the nine-month period ended
SELLING, GENERAL AND ADMINISTRATIVE
The selling, general and administrative expenses were
- Selling, general and administrative costs in operating the Korean
business prior to shut down amounted to $1,238,066;
- The increase in salaries and related expenses of $1,452,583 resulting
from the hiring of new personnel in the sales, marketing, purchasing,
customer service and executive areas;
- The timing of the spring incentive trip and the introduction of
regional meetings of $489,286, as well as $678,298 incurred for higher
sales support expenses in the United States;
- $681,819 for special programs and printed material to support the
introduction of the new compensation plan;
- The increase costs in credit card fees and shipping and packaging costs
of $334,858, resulting from the increase in sales;
- The launch of the United Kingdom and the Republic of Ireland operations
in May 2009 resulted in operational expenses of $211,080 for the third
quarter 2009, which mainly included selling, marketing and executive
expenses.
Other operating expenses such as bank fees, foreign exchange and a reduction in interest income contributed to the unfavourable variation.
FINANCIAL SITUATION AND LIQUIDITY
As at
As at
INTERNATIONAL
The Company has for many years exported products internationally under exclusive distribution agreements based on geographic territories. Going forward, the Company has made a strategic decision to expand internationally using the same seamless network marketing model successfully employed in
OUTLOOK
The Company's new compensation plan intrinsically reinforces key recruiting and leadership development initiatives, however the component which incents leadership development has proven to be too costly, and as a result, the Company will be implementing changes to that component of the plan taking effect on
Although gratified with the sales performance in the first nine months of the year the Company has incurred losses. Much of these losses were either one time or transitional associated with the implementation of our growth strategies. It is the Company's expectation that the growth in the distributors' network and in new leaders will yield long term growth and benefits, growing the revenue of the Company in the coming quarters and better leveraging the investments we have made in human capital and infrastructure to improve our bottom line results.
In support of this more rapid expansion plan, the Company has expanded its manufacturing capability at its production facility in Blainville,
In
On
On
FORWARD LOOKING STATEMENTS
Some statements included in this management report contain forward-looking information about the Company's future financial positions, operating results and sales. They may be based on market expectations, management opinions and assumptions. Such information involves significant risks and uncertainties that are difficult to predict and rely on assumptions that may prove inaccurate. Actual results and events may differ materially from these forward-looking statements.
ABOUT IMMUNOTEC
Immunotec operates its business from a 37,000 square foot facility located in Vaudreuil-Dorion,
The Company files its consolidated financial statements, its management and discussion analysis report, its press releases and such other required documents on the SEDAR database at www.sedar.com and on the Company's website at www.immunotec.com. The common shares of the Company are listed on the TSX Venture Exchange under the ticker symbol IMM.
The TSX Venture does not accept responsibility for the adequacy or
accuracy of this release.
For further information: Richard Patte, CA, Executive Vice-President and Chief Financial Officer, (450) 510-4445
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