CARSON, Calif., Feb 07, 2007 (BUSINESS WIRE) -- Leiner Health Products Inc. today announced its financial results for the third quarter ended December 30, 2006.
Net sales for the quarter were $198.1 million compared to $181.2 million for the same period in fiscal 2006, a 9.3% increase. Net US sales increased $18.3 million or 11.0% in the third quarter of fiscal 2007 compared to the same period in fiscal 2006, while net Canadian sales decreased by $1.5 million or 10.2% in the same periods. The net US sales increase resulted from growth in consumer demand for Leiner products in certain key targeted categories, such as multivitamins and heart health, as well as growth in the Company's contract manufacturing segment.
Leiner reported net income of $8.9 million for the quarter, compared to net income of $1.5 million for the same period in fiscal 2006. Gross margin improved in the third quarter of fiscal 2007 to 25.9% versus 23.1% in the third quarter of fiscal 2006 primarily due to continued stabilization of certain raw material costs and improved fixed cost absorption from higher plant utilization.
For the first nine months of fiscal 2007, net sales totaled $560.0 million compared to $495.8 million in the first nine months of fiscal 2006, a 13% increase. Net sales in the nine months of fiscal year 2007 included an additional week versus the same period in the prior year. In addition, fiscal 2006 sales were impacted by the establishment of return reserves related to certain branded products and inventory reductions carried out by the Company's biggest customers. For the first nine months of fiscal 2007, Leiner realized net income of $16.9 million, compared to a net loss of $4.1 million in the first nine months of fiscal 2006.
Credit Agreement EBITDA for the quarter was $26.7 million, compared to $22.6 million for the same period in fiscal 2006. For the first nine months of fiscal 2007, Credit Agreement EBITDA was $70.9 million, compared to $54.0 million during the first nine months of fiscal 2006.
Leiner was in compliance with all of its financial covenants as of December 31, 2006.
Robert Kaminski, Chief Executive Officer, commented, "We are pleased with the strong sales and improved margins that we experienced this past quarter. We are grateful to our customers, vendors and employee partners for their support and commitment to continuing to understand consumer preferences for high quality, low cost self care products."
Conference Call Information
The Company will hold a conference call to discuss its third-quarter results on Thursday, February 8, 2007, at 11:00 a.m. Eastern Time. The public is invited to attend. The dial-in number for the conference call is 706-634-0167. The call is also being webcast, and can be accessed through the "Investor Information" section of the company's website, www.leiner.com. For those who cannot listen to the live broadcast, a telephone replay of the call will be available from February 8, 2007, at 2:00 p.m. Eastern Time through February 15, 2007, and can be accessed by dialing 706-645-9291, conference ID #5699132. An archived webcast will also be available on Leiner's website.
Additional information regarding Leiner's fiscal 2007 will be contained in the Company's Quarterly Report on Form 10-Q, which will be posted on the company's website, www.leiner.com, by 5:00 p.m. PT, February 13, 2007. Alternatively, the Quarterly Report on Form 10-Q will also be available through the SEC's website, www.sec.gov.
Use of Non-GAAP Financial Measures
In our earnings release and conference call we may use or discuss non-GAAP financial measures as defined by SEC Regulation G. We use Credit Agreement EBITDA to measure our performance. Credit Agreement EBITDA is a non-GAAP measure that should not be considered as an alternative to income from operations or net income (loss) as a measure of operating results or cash flows as a measure of liquidity. Credit Agreement EBITDA is the basis for the calculation of significant financial covenants in the Company's credit facility, as amended, which requires Leiner to meet specified Consolidated Indebtedness to Credit Agreement EBITDA Leverage Ratio and a Credit Agreement EBITDA to Consolidated Interest Expense Ratio as such terms are defined in the Credit Agreement Amendment. Management believes that availability of Credit Agreement EBITDA will assist investors in evaluating Leiner's financial performance and our performance relative to credit agreement covenants. See the "Calculation of Credit Agreement EBITDA" in this release for a reconciliation of Credit Agreement EBITDA to net income (loss) computed under U.S. generally accepted accounting principles (GAAP).
About Leiner Health
Founded in 1973, Leiner Health Products, headquartered in Carson, Calif., is America's leading manufacturer of store brand vitamins, minerals, and nutritional supplements and its second largest supplier of over-the-counter pharmaceuticals in the food, drug, mass merchant and warehouse club (FDMC) retail market, as measured by retail sales. Leiner provides nearly 50 FDMC retailers with over 3,000 products to help its customers create and market high quality store brands at low prices. It also is the largest supplier of vitamins, minerals and nutritional supplements to the US military. Leiner markets its own brand of vitamins under YourLife(R) and sells over-the-counter pharmaceuticals under the Pharmacist's Formula(R) name. In 2006, Leiner distributed more than 31 billion doses that help offer consumers high quality, affordable choices to improve their health and wellness.
This press release contains "forward-looking statements" that are subject to risks and uncertainties. These statements often include words such as "may," "will," "could," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or similar expressions. These statements are only predictions. In addition to risks and uncertainties noted in this press release, there are risks and uncertainties that could cause the company's actual operating results to differ materially from those anticipated by some of the statements made. Such risks and uncertainties include: (i) slow or negative growth in the vitamin, mineral, supplement or over-the-counter pharmaceutical industry; (ii) adverse publicity regarding the consumption of vitamins, minerals, supplements or over-the-counter pharmaceuticals; (iii) increased competition; (iv) increased costs; (v) increases in the cost of borrowings and/or unavailability of additional debt or equity capital; (vi) changes in general worldwide economic and political conditions in the markets in which the company may compete from time to time; (vii) the inability of the company to gain and/or hold market share of its customers; (viii) exposure to and expenses of defending and resolving product liability claims and other litigation; (ix) the ability of the company to successfully implement its business strategy; (x) the inability of the company to manage its operations efficiently; (xi) consumer acceptance of the company's products; (xii) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators; (xiii) the mix of the company's products and the profit margins thereon; and (xiv) the availability and pricing of raw materials. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.