PROCYTE ANNOUNCES FINANCIAL RESULTS FOR FIRST QUARTER 2004
PRODUCT SALES INCREASE 24%
Redmond, Wash.—May 5, 2003—ProCyte Corporation (OTCBB:
PRCY.OB), a company
that develops and markets skin care and procedure related products for
the dermatology, cosmetic surgery and spa markets based on its patented
GHK Copper Peptide Complex® technologies,
today announced the financial results for the first quarter 2004.
Product sales in
the 2004 first quarter, excluding Copper Peptide compound sales,
increased from $2.0 million to $2.4 million, a 24 percent increase over
the comparable prior-year quarter. A significant portion of the sales
increase came from sales to US physicians and distributors. Sales
related to the newly acquired spa products distribution business also
contributed to the product sales increase. With the addition of the spa
sales representatives hired during the first quarter, the Company
expects spa product sales to begin making a more significant
contribution later in the year. Shipments of ProCyte’s patented Copper
Peptide compound during the 2004 first quarter were $483,000 lower than
the 2003 first quarter as a result of an unusually large order received
from Neutrogena in the 2003 first quarter that was not repeated in 2004.
In addition, royalties for the quarter decreased 23%, or $105,000 from
the comparable 2003 quarter, principally due to a large, one-time
customer shipment by Neutrogena in the 2003 first quarter not repeated
in 2004. As a result, total revenues for the 2004 first quarter were
$3.2 million, compared with $3.3 million in the same period last year.
Gross margins on all products increased from 65% in the first quarter
2003 to 73% in the first quarter 2004. The increase in the margin is
attributable to the change in overall revenue mix, with a greater
portion of sales in first quarter 2004 coming from the more profitable
medical products.
Operating expenses
for the 2004 first quarter were $2.3 million, a decrease of 3 percent
from the $2.4 million in the 2003 first quarter. Expenses in the 2003
quarter included $540,000 related to the production and market testing
of an infomercial. Expenses in the 2004 quarter included $189,000
related to the spa distribution business and $91,000 in facility costs
not paid by Emerald Pharmaceutical due to their cessation of business
operations in February 2004.
Net earnings for
the 2004 quarter were $50,000 or $0.00 per diluted share versus a loss
of $133,000 or ($0.01) per diluted share in the 2003 quarter.
The Company’s cash
balance increased by $575,000 to $4.4 million at the quarter-end March
31, 2004 from $3.8 million at year-end December 31, 2003.
“On December 30,
2003 we completed the acquisition of Annette Hanson’s spa product
distribution business, expanding our customer base in the rapidly
growing $5 billion spa industry, where we can further leverage our
technologies, sales and marketing expertise. During the first quarter of
2004, we participated in several spa trade events. At these shows,
reaction to our products was very positive and the overall recognition
of ProCyte and our Copper Peptide technology exceeded our expectations,
which we believe confirms our present strategy. As previously reported,
we anticipate that the acquistion will have a positive impact on
revenues and earnings by the end of the year. Initially, we expect
operating results may be temporarily reduced as we invest in building a
sales organization and focus on marketing and product development
activities,” said Jack Clifford, President and Chief Executive Officer.
“In the first quarter, strong revenues from our physician customers
offset the costs of building the spa business. We are very pleased that
our product sales have seen an improvement over comparable quarters.
ProCyte is profitable and is generating cash which should enable us to
seek out profitable and synergistic product opportunities."
A conference call
is scheduled for 11:30 a.m. Eastern Time today to discuss this
announcement and answer questions. The call in number is 800-261-2045
and the access code is 45983#. If you are unable to participate in the
live call, a replay will be available from Wednesday, May 5th to Sunday,
May 9th at 9:00 p.m. Eastern Time. To listen to the replay,
dial 800-294-1193 and use access code 135554#.
ProCyte Corporation develops and markets products based on its patented,
clinically proven Copper Peptide technology for skin health, hair care
and wound care. The Company sells directly to dermatologists, plastic
and cosmetic surgeons, spas and salons and through licenses with
strategic partners into the consumer market, including its long-term
worldwide license agreement with Neutrogena®, a Johnson &
Johnson company. ProCyte brands include Neova®,
VitalCopper™,
Simple Solutions® and AquaSanté®
Skin Care products; Complex Cu3®
Post-Procedure Skin Care; GraftCyte®
Hair Transplant Care; and Tricomin®
Advanced Care for Thinning Hair. The Company also has the exclusive
distribution rights for Cutanix Corporation’s Quadrinone®
technology in the U.S., Canada and Puerto Rico. Additional information
is available by visiting the Company’s website at www.procyte.com.
###
This release may contain forward-looking statements relating to the
research, development, commercialization, production, marketing and
distribution of the Company's products and future operating results,
which are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. The
words “believe,” “expect,” “intend,” “anticipate,” variations of such
words, and similar expressions
identify forward-looking statements, but their absence does not mean
that the statement is not forward-looking. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Factors
that could affect the Company’s actual results include its ability to
develop, commercialize and produce new products; the market acceptance
of existing and potential future products; the availability, cost and
timely delivery of materials and services from and performance of
third-party suppliers, manufacturers, distributors, licensees and other
collaborative partners; the satisfaction of regulatory requirements, and
the receipt, timing, terms and conditions of required regulatory
approvals. Reference is made to the Company’s Annual Report on Form
10-K for the year ended December 31, 2003 filed with the Securities and
Exchange Commission for a more detailed description of such factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. The Company undertakes no obligation to publicly update any
forward-looking statement to reflect new information, events or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events.
Summary Financial Information
(in 000's except per share amounts)
| Statements of
Operations Data: |
Three months ended March
31, |
|
2004 |
2003 |
| REVENUES |
|
|
| Product and Copper Peptide compound sales |
$ 2,861 |
$ 2,882 |
| Licenses, royalties and other |
359 |
464 |
|
Total Revenue |
3,220 |
3,346 |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of product sales |
861 |
1,183 |
|
Gross Profit |
2,359 |
2,163 |
|
|
|
|
|
|
|
|
|
|
|
|
| OPERATING EXPENSES |
|
|
| Marketing & selling
|
1,198 |
1,400 |
|
General, research & administrative
|
1,091 |
966 |
|
Provision for impairment
|
- |
- |
|
Total costs and expenses
|
2,289 |
2,366 |
|
|
|
|
|
|
|
|
|
|
|
|
| OPERATING INCOME
(LOSS) |
70 |
(203) |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest & Other
Income |
7 |
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) before taxes |
77 |
(115) |
|
Provision for income tax |
(27) |
(18) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) |
$ 50 |
$ (133) |
|
|
|
|
|
|
| Net Loss (loss) per
share |
|
|
| Basic |
$ 0.00 |
$ (0.01) |
| Diluted |
$ 0.00 |
$ (0.01) |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares used in per
share computation |
|
|
| Basic |
$ 0.02 |
$ 0.02 |
|
Diluted
|
16,048 |
15,746 |
| |
|
|
|
|
|
|
|
|
| Balance
Sheet Data: |
March 31,
2004 |
December 31,
2003 |
|
| Cash and cash equivalents |
$ 4,371 |
$ 3,796 |
| Accounts
receivable, net of allowance |
1,516 |
1,336 |
| Inventory |
2,594 |
2,942 |
| Property
and equipment, net |
505 |
541 |
| Intangibles,
net |
3,212 |
3,212 |
| Other
assets |
8,091 |
8,176 |
|
Total Assets |
$ 20,289 |
$ 20,003 |
|
|
|
| Total
liabilities |
$ 1,006 |
$ 785 |
| Stockholders'
equity |
19,283 |
19,218 |
|
Total Liabilities and Stockholders' Equity |
$ 20,289 |
$ 20,003 |
|
