*NEWS*M.SCIENCES REPORTS RECORD REVENUES
*NEWS*M.SCIENCES REPORTS RECORD REVENUES
2006-09-15 at 12:30:00 pm #16458
Media Sciences Reports Record Revenues, Earnings and Cash Flow for Fiscal 2006
OAKLAND, N.J., Sept. 06 Media Sciences International, Inc. GFX, the leading independent manufacturer of color toner cartridges and solid ink sticks for business color printers, today announced its financial results for the year ended June 30, 2006, which included record revenues, earnings and cash flows. The Company will host a conference call Wednesday, September 13, 2006, at 8:45 a.m. ET to discuss its fiscal 2006 annual results, its strategic objectives for the current 2007 fiscal year, and the status of its patent litigation with Xerox.
Financial highlights for the fiscal 2006 year include: — Net revenue increase of 18% year over year — Gross margin improvement of 900 bp over the prior year — Full year EPS of $0.19 per share basic and $0.18 per share diluted — 4th Quarter EPS of $0.07 per share basic and $0.06 per share diluted — Effective tax rate reduction of 500 bp on continuing operations — EBITDA of $4.0 million, up $2.7 million or 203% over the prior year
Michael W. Levin, President and Chairman of Media Sciences International, Inc. commented on the year’s success, “We are very pleased with our 2006 results. The execution by our recently expanded, exceptional team of professionals included strong product launches, significant manufacturing efficiencies and the implementation of processes and controls required to scale Media Sciences’ business. These efforts translated into significant margin enhancement and strong earnings and cash flow, and set the stage for our continued and accelerated growth and profitability.”
Consolidated net sales for the fiscal year ended June 30, 2006 increased approximately $3.3 million, or 18 percent, to $21.3 million from $18.0 million in the prior year. The Company’s sales of color toner cartridges increased by approximately 39 percent over the same period in 2005 while sales of solid ink sticks increased approximately 18 percent. Sales of Media Sciences branded products increased by 500 bp to 55 percent of revenues and the Company’s international business increased by 200 bp to 18 percent of revenuesConsolidated net sales for the quarter ended June 30, 2006 increased approximately 25 percent to $5.96 million from $4.76 million in the prior year.Overall, net revenue growth in fiscal 2006 is attributed to new product introductions, increased market share for some existing products, and growth in the installed base of color business printers for which Media Sciences manufactures supplies. The trend toward these lower-priced, faster color printers is expected to continue.
Consolidated gross profit for the year ended June 30, 2006 increased by $3.3 million or 45 percent to $10.8 million from $7.5 million in the prior year. In 2006, the Company’s gross margin increased by 900 bp from 42 percent of net revenues in 2005 to 51 percent in 2006.
Media Sciences has benefited from margin expansion due to increased efficiencies in solid ink manufacturing and the mix of product sales. Favorable reductions in costs of goods sold were partially offset by increased prices of certain raw materials and their associated shipping costs. In fiscal 2007, the Company does not expect significant additional yield improvements in solid ink production or further product transitions that would reduce costs. Therefore, any further increases in raw material or inbound shipping costs may increase product costs, unless offset by other manufacturing efficiencies.
Net income for the year ended June 30, 2006 was $2.13 million or $0.19 per share basic and $0.18 per share diluted, as compared to a net loss of $0.08 million or $(0.01) per share (basic and diluted) for the year ended June 30, 2005.During the quarter ended June 30, 2005, the Company ceased all electronic pre-press system sales and service operations, which represented a majority of the operations of the Company’s Cadapult subsidiary. The results of operations for that line of business are classified as a discontinued operation and are reflected in the Company’s $0.08 million net loss in 2005.
Effective Tax Rate
For the years ended June 30, 2006 and 2005, the Company’s effective tax rate was 34 percent and 39 percent, respectively. The 500 bp decrease reflects the current year realization of the Company’s tax planning efforts and improved tax compliance processes to take advantage of all of the state and federal credits and income exemptions for which the Company is entitled. The Company expects its consolidated effective tax rate to remain at about 35 percent through fiscal 2007.
For the fiscal year, cash flows from operating activities were $3.4 million, a $3.24 million increase over the prior year of $0.16 million. The $3.4 million of operating cash flows generated in 2006 resulted from $2.1 million of income from operations and the add-back of non-cash expenses totaling $1.3 million