-- FY02 Raw Materials Sales Climb Nearly 21% to $6.5 Million
-- FY02 Specialty Manufacturing Revenues More Than Double To $2.6 Million
-- Q4 Revenues Increase 15%; FY02 Revenues Up 2.5%
-- FY02 Loss Of $3.4 Million Attributed Largely To Investments In Growth
-- Substantial Benefits Expected In FY03 From Year-End Acquisition
IRVING, Texas, March 27 /PRNewswire-FirstCall/ -- Carrington Laboratories, Inc. (Nasdaq: CARN), completing a year in which it achieved its primary goals of increasing raw material and specialty manufacturing revenues and capabilities, today reported fourth quarter revenues increased 15 percent to $4.9 million from $4.2 million a year earlier. The net loss for the quarter was $937,000, or 9 cents per diluted share, compared with net income of $15,000, or about break even per diluted share, a year earlier. Fourth-quarter 2002 expenditures included a $606,000 investment in research and development through the company's DelSite subsidiary, which is further developing the promising GelSite(TM) technology for controlled delivery of drugs, compared with none a year earlier. That was partially offset by about a $313,000 decrease in specialized R&D expenditures to $330,000.
For the year ended December 31, 2002, total revenues increased $447,000 to $18 million from $17.6 million. The net loss was $3.4 million, or 34 cents per diluted share, compared with net income of $378,000, or 4 cents per diluted share, a year earlier. Fiscal 2002 research and development expenses for DelSite were $1.9 million, compared with none the prior year. Specialized R&D expenses declined about $741,000 to $1.7 million. The company also spent approximately $1 million during the year to enhance production capabilities, improve efficiencies and meet the highest standards for manufacturing its products, and an additional $327,000 in general and administrative areas to improve the infrastructure of the company and position it for growth. The company also recorded $1.1 million in additional manufacturing costs related to excess plant capacity, which should be mitigated in future years by the acquisition of the Custom Division of Creative Beauty Innovations, Inc. (CBI).
"Fiscal 2002 was a pivotal year for Carrington Laboratories, with substantial progress on our key operating goals, significant investments in future growth and the launch of the DelSite Biotechnologies subsidiary to further develop and ultimately commercialize our proprietary drug-delivery technology," said Dr. Carlton E. Turner, president and chief executive officer. "Among our objectives for 2002 were to increase raw material sales and specialty manufacturing revenues -- both of which we achieved.
"Sales of Manapol(R) raw material by our Caraloe subsidiary increased 21.0 percent to $6.5 million from $5.4 million," Turner said. "Revenue from specialty manufacturing services, which include formulation research, product development and manufacturing for our customers, more than doubled to $2.6 million from $1.1 million."
Sales of Carrington's wound-care products, including royalties from its licensing and distribution agreement, declined to $8.4 million in 2002 from $10.4 million in 2001. Turner attributed the decline largely to initial stocking by the distributor at the beginning of 2001, the beginning of the distribution arrangement, as well as increased competition from low-cost, "commodity-type" products.
Investing In Future
"In order to further augment our specialty manufacturing operations, we spent $1 million in mid December to acquire the Custom Division of Creative Beauty Innovations Inc.," Turner said. "Not only will this acquisition substantially increase our customer base for manufacturing services, it also will significantly improve our capacity utilization and increase our profitability for these operations." In addition to $1 million cash, Carrington will pay up to $700,000 for CBI's useable inventory and a percentage of net sales to existing customers over the next five years.
Turner also noted that the investments in improving the manufacturing processes and equipment at both its Texas and Costa Rica plants, and further building its general and administrative infrastructure, has placed Carrington in a much better position to handle the company's programs for increased future growth.
Progress On GelSite Technology
"Since beginning DelSite operations in January 2002, we have completed several important steps toward eventual commercialization of the proprietary DelSite technology," Turner said. "We completed proof-of-concept studies for both sustained-release injectable and intra-nasal vaccine delivery applications. DelSite's strategic partner, Southern Research Institute, performed formulation, kinetic and resorption studies."
Turner added that Carrington's specialized product development group, which operates separately from DelSite, made substantial progress on 32 projects initiated during the year, with 10 of them completed through production. The group is responsible for formulation, technology transfer to production and oversight of initial production.
"We already have 115 formulation projects in house for the first half of 2003, with 30 completed through production," Turner said.
Solid Balance Sheet
Carrington completed 2002 with a cash balance of $3.6 million compared with $3.5 million at year-end 2001.
Conference Call Today
Management will host a conference call today to discuss fourth-quarter results. The call is scheduled to begin Thursday, March 27, 2003, at 4:30 p.m. Eastern, 3:30 p.m. Central, 2:30 p.m. Mountain and 1:30 p.m. Pacific. U.S. callers may dial 800-231-5571 (toll free) and international callers may dial 973-582-2703.
The call will also be webcast live and archived for three months. The webcast can be accessed at http://www.viavid.com/detailpage.asp?sid=1946 .
A playback of the call will be available through Monday, April 7, 2003. The playback numbers are 877-519-4471 (toll free) and 973-341-3080 (international). Playback Pass Code: 3836788 (required only for playback).
Carrington Laboratories, Inc., is an ISO 9001-certified, research-based biopharmaceutical and consumer products company currently utilizing naturally occurring complex carbohydrates to manufacture and market products for mucositis, radiation dermatitis, wound and oral care; manufacture and market the nutraceutical raw material Manapol(R) and the raw material Hydrapol(TM) for use in cosmetic formulations. Carrington also manufactures and markets consumer products sold under its AloeCeuticals(R) brand and manufactures quality products for other companies. Manufacturing operations comply with cGMP standards. The company's DelSite subsidiary is developing its proprietary GelSite(TM) technology designed to provide controlled release of peptide- and protein-based drugs. Carrington's technology is protected by more than 120 patents in 26 countries. Select products are honored with the internationally coveted CE mark, recognized by more than 20 countries around the world.
Certain statements in this release concerning Carrington may be forward- looking. Actual events will be dependent upon a number of factors and risks including, but not limited to: subsequent changes in plans by the company's management; delays or problems in production; changes in the regulatory process; changes in market trends; and a number of other factors and risks described from time to time in the company's filings with the Securities & Exchange Commission, including the Form 10Q filed November 14, 2002.