In mid-day trading today, shares of Derma Sciences Inc. (OTCBB: DSCI) were down 3 cents to 68 cents per share on very light volume. This comes after a company announcement this morning about their positive financial results for the fourth quarter and year-end.
For the fourth quarter ended December 31, 2006, Derma Sciences reported net sales of $7.69 million and a net loss of $107 thousand, a 34 percent increase in net sales compared to net sales of $5.73 million and a net loss of $91 thousand for the fourth quarter of 2005.
For the year ended December 31, 2006, Derma Sciences reported net sales of $27.9 million and net income of $668,739 or 3 cents per share, a 22 percent increase in net sales compared to net sales of $22.8 million and a net loss of $1,099,990, or 9 cents per share in 2005. The $5.1 million sales increase was driven primarily by the contribution of $5.0 million of sales from Western Medical, which was acquired by the Company in April 2006 and growth of the private label business.
“Over the past year the company has significantly strengthened its financial condition and improved its liquidity. In 2006, the company operated profitably and cash flow from operations continued to improve,” says John Yetter – vice president and chief financial officer of Derma Sciences – in a press release. “Current year operating results include $211,756 for share based compensation expense and $200,000 for a goodwill impairment charge. Excluding these items, profitability would have exceeded $1 million. At year-end, the Company had $5.7 million of working capital, including $1.3 million of cash on hand.”
Gross profit for 2006 rose to $9.7 million from $7.0 million in 2005, a 37 percent increase and the gross profit percentage improved to 34.6 percent versus 30.9 percent in 2005, primarily due to the combined impact of higher sales, favorable product mix, improved manufacturing performance and the benefit of lower negotiated third party supplied product costs, according to the company.
“Last year was a turning point for Derma Sciences and it represents the platform from which we expect to progress into some exciting new territory in the coming months and years,” says Edward J. Quilty – president and chief executive of Derma Sciences – in a press release.
“Looking forward,” Quilty continued, “with the successful launch of our Active Manuka Honey product line and market acceptance of our additional products, 2007 is expected to be a good year. We expect that revenues could grow in the 15 percent to 19 percent range with gross margins between 30 percent and 35 percent.”
Derma Sciences provides a full range of skin care; wound management and specialty securement devices that are used primarily in the professional markets, specifically hospitals, nursing homes and home care settings. The company was incorporated in 1984 and is based in Princeton, New Jersey.