MENLO PARK, Calif., May 14, 2001 (PRIMEZONE) -- PharmChem, Inc. (Nasdaq:PCHM) announced that its net sales for the first quarter ended March 31, 2001 were $11,549,000, or 8.9% higher than first quarter 2000's sales of $10,608,000. The Company reported a net loss for the quarter of $700,000, or $0.12 per diluted share, vs. net income of $282,000, or $0.05 per diluted share, earned a year ago.
This year's results include $561,000 of nonrecurring costs associated with the Company's relocation of its Menlo Park, Calif. headquarters and laboratory to Haltom City, Texas. Excluding these expenses, the net loss, on a pro forma basis, would have been $147,000, or $0.02 per diluted share.
In the U.S., laboratory specimen volume fell by 2.0%, offset by an 8.5% increase in average selling prices as workplace sales grew to 42% of laboratory revenue from 39% a year ago. Domestic product sales and other non-laboratory services grew to $1.4 million, or 12.2% of consolidated sales, from $0.9 million, and 8.9% of last year's consolidated sales.
Medscreen, the Company's London-based subsidiary, reported local currency sales gains of 8.9% while operating income was lower by 15.5% resulting principally from increased costs. The U.S. dollar values were lower by 9.3% as the pound sterling weakened.
On a consolidated basis, sales of products and other non-laboratory services were 13.6% of total sales compared to 10.5% for the same period last year.
Commenting on the first quarter results, Mr. Joseph W. Halligan, the Company's President and Chief Executive Officer, said, "We have transferred nearly all of our specimen volume to our existing Fort Worth, Texas facility, with Menlo Park now in a shutdown mode. To accomplish this, we hired a duplicate laboratory work force in Fort Worth and sent many of our Menlo Park technicians there to train the new people. The cost of this duplicate work force, together with training, lab materials, travel, subsistence and accommodations, comprise the bulk of the nonrecurring costs noted above. These costs are expected to continue through June 30, 2001 as we work very hard to minimize any disruptions to our customers. Also, we will record severance and associated costs related to the Menlo Park closure together with moving expenses in the second quarter."
Mr. Halligan continued, "Our administrative staff will start moving into our new Haltom City facility on May 14, after which the laboratory operations will be moved from Forth Worth to the new lab. A number of managers, including all the officers, are relocating from California to Texas, which will provide a great foundation for moving forward."
Capital expenditures for the current quarter were $867,000 vs. $672,000 in last year's first quarter; depreciation and amortization expenses were $568,000 this year compared to $547,000 last year; and EBITDA was $46,000 (0.4% of sales) in 2001 and $1,063,000 (10.0% of sales) in 2000.
The foregoing includes certain forward-looking statements that involve risks and uncertainties, including, without limitation, competitive conditions and the possibility that contracts may be terminated or not renewed, customer acceptance of new products, regulatory issues and other factors affecting operating results included in the Company's Form 10-K for the year ended December 31, 2000.
PharmChem is a leading independent laboratory providing integrated drug testing services to corporate and governmental clients seeking to detect and deter the use of illegal drugs. PharmChem operates fully certified forensic drug testing laboratories in Menlo Park, Fort Worth and London.
PHARMCHEM, INC.
Consolidated Statements of Operations
(000's omitted except per share amounts)
Three Months Ended March 31,
2001 2000
Net Sales $ 11,549 $ 10,608
Cost of sales 8,707(a) 7,210
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Gross profit 2,842 3,398
Operating expenses and goodwill
Amortization 3,364 2,882
-------- --------
Income (loss) from operations (522) 516
-------- --------
Interest expense 69 80
Other income, net (38) (15)
-------- --------
31 65
-------- --------
Income (loss) before income taxes (553) 451
Provision for income taxes 147 169
-------- --------
Net income (loss) $ (700) $ 282
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Net income (loss) per diluted share $ (0.12) $ 0.05
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Weighted average shares 5,847 6,170
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EBITDA:(b)
Amount $ 46 $ 1,063
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Margin 0.4% 10.0%
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(a) Includes $476,000 in cost of sales and $85,000 in operating
expenses of nonrecurring costs associated with relocating to
Texas.
(b) Earnings before taxes, interest, other expense (income),
depreciation and amortization.
Condensed Consolidated Balance Sheets
(000's omitted)
March 31, December 31,
2001 2000
---------- -----------
Current assets $12,559 $12,793
Non-current assets 14,904 14,472
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Total $27,463 $27,265
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Current liabilities $10,174 $10,386
Non-current liabilities 3,130 1,884
Shareholders' equity 14,159 14,995
---------- -----------
Total $27,463 $27,265
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