CV Technologies Inc. (TSX:CVQ) today announced that revenue for the fiscal first quarter ended December 31, 2008 fell to $19.7 million from $21.3 million in the fiscal 2008 first quarter. Net earnings decreased to $2.8 million ($0.03 per diluted common share) in the fiscal 2009 first quarter from net earnings of $6.8 million ($0.06 per diluted common share) in the quarter ended December 31, 2008.
Demand for both COLD-FX® and COLD-FX® Extra Strength has been very strong as per point of sales data received from ACNielsen. Consumer purchases of COLD-FX® from the Company's retail clients for the 12 weeks ended December 20, 2008 was 11% higher than in the corresponding period in 2007. The Company was well positioned to meet this demand as product shipments in the Company's fourth quarter of 2008 were well timed and store shelves well filled at the beginning of the quarter. Despite the increase in store sales per retail point of sale data, revenue for the Company's first quarter was lower than the previous year's first quarter, due principally to lower sales to one of the Company's major accounts. This decrease was a result of negotiating a new customer specific size bottle for this account, and production and shipping time resulted in reduced revenue from this account in the quarter. In addition, revenue in the first quarter of fiscal 2008 was increased due to the launch and sale of COLD-FX® Extra Strength to retail stores in November 2008 resulting in high initial orders and pipeline fill. No similar launch was made in the first quarter of the current fiscal year. According to the ACNielsen 52-month data for the period ended December 20, 2008, COLD-FX® remains Canada's best-selling cold and flu remedy.
"Reduced net earnings are primarily a result of investments in Marketing, Science, and Sales infrastructure," said Executive Chairman Jack Moffatt. "Last year significant marketing investment was held off until the second quarter of the year because of the low incidence of colds and flu to start the cold season. This year the cold season started very strong and earlier, and our marketing investments were much more aggressive in the first quarter. Cash flow prior to working capital changes was $2.9 million in the fiscal 2009 first quarter compared to $7.2 million in the same quarter last year, while working capital rose to $17.5 million from $13.7 million period over period."
Cold and flu incidences in Canada remain above the five-year historical average and store inventory is reduced based on store point of sale data being received by the Company. Management believes that the Company is on track to achieve another year of positive earnings in fiscal 2009, economic conditions permitting.
CV Technologies is devoting increasing resources to exploiting its scientific capabilities in order to capitalize on attractive markets in Canada for introducing new products and broadening the Company's customer base.
A number of clinical trials are underway involving the Company's existing and potential products and applications. These include a United States National Cancer Institute sponsored multi-centre clinical trial on the safety and efficacy of COLD-FX® for preventing colds and flu and strengthening immune systems in patients with chronic lymphocytic leukemia. Recruitment of clinical subjects was completed as planned at the end of December 2008 and the study has entered the treatment phase. Other trials planned or ongoing address various immunological, neurological and metabolic conditions. The Company plans to launch at least one new product this year.
On January 20, 2009, CV Technologies announced that it will be the cold and flu remedy Official Supplier to the 2010 Olympic and Paralympic Winter Games in Vancouver and Whistler, British Columbia (VANOC). A significant amount of the Company's marketing efforts over the next few years will centre on this designation, as the four-year partnership with VANOC also provides sponsorship rights for COLD-FX® to serve as Official Supplier to Canadian Olympic Teams competing at both the 2010 Winter Games and London, England's 2012 Olympic Games.
The Company continues its recruitment process for a new Chief Executive Officer. A selection committee of independent Directors has been established by the Board of Directors and interviews have begun with candidates for the position.
Management continues to believe that the current market price of the Company's shares does not accurately reflect their underlying value. In October 2008, CV Technologies announced a Normal Course Issuer Bid to purchase up to 5,386,175 (5%) of its issued and outstanding common shares. Corporate trading blackouts related to financial reporting schedules have so far prevented share purchases from taking place but they are expected to begin as soon as permitted.
Detailed Financial Statements and Management's Discussion and Analysis
A complete set of Financial Statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Company's web site today. The financial results presented in this news release are a summary only and readers are encouraged to read the full text of the Financial Statements and Management's Discussion and Analysis for important additional information.
ABOUT CV TECHNOLOGIES INC.
CV Technologies, founded in 1992, strives to transform people's lives to be healthier and happier by focusing on prevention and recovery through the use of evidence-based naturally-derived health products. The Company's lead product COLD-FX® strengthens the immune system and is widely used as a leading over the counter remedy ("OTC") for helping to prevent and relieve cold and flu infections.
This news release and the referenced Management Discussion and Analysis ("MD&A") contain certain forward-looking information within the meaning of applicable securities laws. The forward-looking information included in these documents does not guarantee future performance and should not be unduly relied upon. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information including, without limitation: those comments predicting the timing and/or initiation of clinical trials, clinical trial results, and associated regulatory clearances, financing and acceptance of COLD-FX® in the marketplace. The use of any of the words "aims", "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "would", "project", "could", "should", "believe", "plans", "targets", "intends" and similar expressions are intended to identify forward-looking information. In addition to the risks outlined in the Risks and Uncertainties section of the MD&A, the MD&A and this news release contain forward-looking information pertaining to the following: the impact of competition; incidence of cold and flu; consumer confidence and spending levels; general economic conditions; interest and currency exchange rates; unseasonable weather patterns; the cost and availability of capital; the cost and availability of grants/funding; and product development. The Company can give no assurance that the recruitment process will lead, in a timely fashion, to the hiring of a Chief Executive Officer or that the restructuring will lead to new product commercialization. The Company believes that the expectations and assumptions reflected in the forward-looking information contained herein are reasonable but no assurance can be given that these expectations and assumptions are correct and that the results, performance or achievements expressed in, or implied by, forward-looking information within this disclosure will occur, or if they do, that any benefits may be derived from them. All forward-looking information is expressly qualified in its entirety by this cautionary statement. The Company assumes no duty to update or revise forward looking information, except as may be required pursuant to applicable laws. The Company claims exemption under U.S. SEC Rule 12g3-2(b).