First Quarter 2003 Highlights:
* Revenues increased 40% to $64.0 million, as compared to the prior year
period
* Earnings were $0.25 per diluted share
* Received FDA approval and commercially launched Azasan(TM) 75 and
100 mg and Calcitriol vial
* DSOs were a record low of 40 days
* Debt reduction of $8.5 million
WILMINGTON, N.C., April 21 /PRNewswire-FirstCall/ --
aaiPharma Inc. (Nasdaq: AAII), a science-based specialty pharmaceutical
company, today reported financial results for the three-month period ended
March 31, 2003. Total revenues for the first quarter of 2003 increased 40% to
$64.0 million, compared with $45.6 million reported for the first quarter of
2002. For the quarter, the Company reported net income of $7.2 million, or
$0.25 per diluted share, as compared to income before extraordinary loss of
$2.1 million, or $0.07 per diluted share, in the 2002 first quarter.
Dr. Philip S. Tabbiner, President and Chief Executive Officer, stated, "In
addition to aaiPharma's strong financial performance for the first quarter,
the Company achieved several key milestones with the expansion of our sales
force to 80 professionals as well as the marketing approval and launch of
Azasan(TM) 75 and 100 mg and our Calcitriol vial. In addition, the Company is
on track to launch its first Darvon line extension and file a supplemental new
drug application (sNDA) for Brethine(R) in the second quarter. Azasan(TM),
Calcitriol and our pain management line extensions as well as continued
success with our core brands will be drivers of the Company's organic revenues
growth over the next three quarters."
Financial Results
Product sales revenues of $40.0 million increased 98% during the first
quarter of 2003 versus the first quarter of 2002, primarily due to sales of
the Darvon(R)/Darvocet-N(R) family of products, which the Company acquired in
late March of 2002. Gross margins for pharmaceutical products were 75% for
the first quarter ended March 31, 2003, reflecting an improvement of
approximately 14 percentage points versus the prior year quarter, primarily
due to sales mix.
Product development revenues (royalties and fees) for the first quarter of
2003 represented 6% of overall Company revenues, or $3.8 million, as compared
to $2.1 million for the first quarter of 2002. Product development revenues
remain in line with management's expectations. Development services revenues
for the first quarter of 2003 were $20.2 million, as compared to $23.3 million
in the prior year period.
While in absolute terms, selling, general and administrative expenses were
higher than the prior year quarter, on a percentage of revenues basis, they
represented 28% percent in the quarter, compared to 29% in the prior year
quarter.
Income from operations for the first quarter of 2003 increased by
$12.1 million, versus the first quarter of 2002, to $17.2 million and was 27%
of revenues. Net cash provided by operating activities for the first quarter
of 2003 was $15.3 million.
Days' sales outstanding (DSOs) were a record low of 40 days at March 31,
2003, improving upon the prior record of 44 days established at December 31,
2002.
Since March 31, 2002, the Company has repaid $60.4 million of senior bank
debt, including an additional $8.5 million during the first quarter of 2003,
providing $34.0 million in borrowing availability as of March 31, 2003. The
total leverage ratio, or total debt divided by income from operations plus
depreciation and amortization, at quarter-end was 3.4x, compared to 4.2x at
March 31, 2002. At March 31, 2003, aaiPharma's cash position was
$10.7 million.
Outlook
aaiPharma also updated its financial guidance for 2003 as follows:
Revenues and Earnings Per Q2 2003 Full Year 2003
Share (EPS) Guidance Ranges Ranges
Product Sales: (millions)
Pain Management $65 to $67
Critical Care $106 to $110
Commercial Manufacturing $4 to $5
Product Development $14 to $15
Development Services $91 to $93
Total Revenues $280 to $290
Diluted EPS $0.26 to $0.28 $1.11 to $1.17
aaiPharma management will conduct a conference call to review the
financial results for the first quarter of 2003 tomorrow, Tuesday, April 22,
2003 at 8:00 a.m., Eastern Daylight Time. A simultaneous web cast of the call
for interested investors and others may be accessed by visiting aaiPharma's
website at http://www.aaipharma.com. A replay of the web cast will be available on
this website a few hours after the call through 5:00 p.m. on May 6, 2003.
For those wishing to access the live web cast, visit aaiPharma's website at
http://www.aaipharma.com and follow directions to the Investor Relations web page.
Presentation slides will accompany the web cast and will also be available for
viewing just prior to the web cast.
About aaiPharma
aaiPharma Inc. is a science-based specialty pharmaceutical company with
more than 23 years of drug development experience. Focusing on targeted
therapeutic areas, the Company markets a growing portfolio of established
branded products and applies innovative technologies to increase the
commercial potential of these products. At the same time, aaiPharma's
research and development organization is developing an impressive pipeline of
products to position the Company for near-term and long-term growth in its
targeted therapeutic areas. In addition to developing and marketing its own
line of proprietary pharmaceutical products, aaiPharma continues to be a
leader in providing contract pharmaceutical development services through its
AAI International division. For more information on the Company, please visit
us on the web at http://www.aaipharma.com.
Forward-Looking Statements
Information in this press release contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities and Exchange Act of 1934, including the
statements by Dr. Tabbiner and those pertaining to the Company's plans and
expectations as to earnings and revenues outlooks and commercialization and
growth of products in the Company's pipeline and of its product portfolio.
The "forward-looking statements" herein involve risks and uncertainties that
could cause actual results to differ materially, including, without
limitation, risks and uncertainties pertaining to the Company's ability to
timely and successfully find, acquire, finance, develop, improve, enhance,
obtain timely regulatory approval for, maximize the value of, extend product
life cycles of, conduct successful research on, renew marketing of, and sell,
on a commercially profitable basis, pharmaceutical products without adversely
affecting its client relationships or business opportunities and without
future litigation or resulting damages or injunctive relief; to obtain, use,
enforce, defend and license valid and commercially valuable patents; to obtain
and enforce existing and future contracts with major pharmaceutical companies
for significant royalties and other consideration; and on the commercial
success of the contemplated products. Additional factors that may cause the
actual results to differ materially are discussed in aaiPharma's recent
filings with the Securities and Exchange Commission, including, but not
limited to, its Annual Report on Form 10-K filed on March 28, 2003, including
its Exhibit 99.1 and other exhibits; its Form 8-Ks; and its other periodic
filings.
Darvon(R), Darvocet-N(R) and Brethine(R) are registered trademarks, and
Azasan(TM) is a trademark, of aaiPharma Inc.
aaiPharma Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
March 31,
2003 2002
Product sales $40,008 $20,177
Product development (royalties & fees) 3,810 2,135
Development services 20,212 23,308
Total revenues 64,030 45,620
Operating costs and expenses:
Direct costs (excluding depreciation):
Product sales 9,951 7,805
Development services 12,004 13,545
Total direct costs 21,955 21,350
Selling expenses 7,734 4,274
General and administrative expenses 10,029 8,758
Depreciation and amortization 2,651 1,801
Research and development 4,486 4,378
46,855 40,561
Income from operations 17,175 5,059
Other income (expense):
Interest, net (5,550) (1,823)
Other, net (83) 134
(5,633) (1,689)
Income before income taxes and extraordinary loss 11,542 3,370
Provision for income taxes 4,386 1,281
Income before extraordinary loss 7,156 2,089
Extraordinary loss, net of a tax benefit of $2,714 -- (5,339)
Net income (loss) $7,156 $(3,250)
Basic earnings (loss) per share:
Income before extraordinary loss $0.26 $0.08
Extraordinary loss -- (0.20)
Net income (loss) $0.26 $(0.12)
Weighted average shares outstanding 27,558 27,107
Diluted earnings (loss) per share:
Income before extraordinary loss $0.25 $0.07
Extraordinary loss -- (0.19)
Net income (loss) $0.25 $(0.11)
Weighted average shares outstanding 28,435 28,589
aaiPharma Inc.
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $10,705 $6,532
Accounts receivable, net 28,663 29,467
Work-in-progress 12,292 10,515
Inventories 19,476 17,004
Prepaid and other current assets 7,312 7,633
Total current assets 78,448 71,151
Property and equipment, net 54,604 53,125
Goodwill, net 211,178 210,792
Intangibles, net 88,855 89,078
Other assets 13,782 16,179
Total assets $446,867 $440,325
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt
and short-term debt $5,921 $5,921
Accounts payable 17,929 17,671
Customer advances 14,287 15,051
Accrued wages and benefits 7,941 6,718
Interest payable 9,940 5,232
Other accrued liabilities 3,284 5,201
Total current liabilities 59,302 55,794
Long-term debt, less current portion 266,487 277,899
Other liabilities 13,313 7,182
Stockholders' equity:
Common stock 28 27
Paid-in capital 79,476 79,049
Retained earnings 27,748 20,592
Accumulated other comprehensive income (loss) 513 (218)
Total stockholders' equity 107,765 99,450
Total liabilities and stockholders' equity $446,867 $440,325
aaiPharma Inc.
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
2003 2002
Cash flows from operating activities:
Income before extraordinary loss $7,156 $2,089
Adjustments to reconcile income before
extraordinary loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 2,651 1,801
Other 52 78
Changes in operating assets and liabilities:
Trade and other receivables 882 (3,951)
Work-in-progress (1,640) (2,850)
Inventories (2,451) 1,082
Prepaid and other assets 856 (14,118)
Accounts payable 204 (1,991)
Customer advances (843) (222)
Interest payable 4,708 (175)
Accrued wages and benefits and
other accrued liabilities 3,752 (1,348)
Net cash provided by (used in) operating activities 15,327 (19,605)
Cash flows from investing activities:
Purchases of property and equipment (3,212) (1,549)
Purchase of property and equipment
previously leased -- (14,145)
Acquisitions (500) (211,772)
Other (232) 2
Net cash used in investing activities (3,944) (227,464)
Cash flows from financing activities:
Net proceeds from short-term borrowings -- 5,000
Proceeds from long-term borrowings -- 240,274
Payments on long-term borrowings (8,500) --
Proceeds from interest rate swap, net 435 --
Issuance of common stock 428 1,980
Other 409 10
Net cash (used in) provided by financing activities (7,228) 247,264
Net increase in cash and cash equivalents 4,155 195
Effect of exchange rate changes on cash 18 (15)
Cash and cash equivalents, beginning of period 6,532 6,371
Cash and cash equivalents, end of period $10,705 $6,551
SOURCE aaiPharma Inc.
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Related links:
http://www.aaipharma.com
CONTACT:
Investors - William L. Ginna, Jr., EVP & CFO,
or James B. Sloan, Jr., SVP, Corporate Finance, +1-910-254-7690;
or Media - Andrea L. Johnston, VP, Corporate Communications,
+1-910-254-7340, all of aaiPharma Inc.
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