Sales & Earnings In Brief

Prestige Brands rolls out FiberChoice, BC Powder brand extensions; subsidiary cross-selling aids Atrium Innovations; Dr. Reddy’s downplays switch outlook; Nu Skin gears up for ageLOC weight management launch; more Sales & Earnings In Brief.

Prestige rolls out brand extensions

Prestige Brands Holdings Inc. launches line extensions for brands acquired in 2012 – the FiberChoice Fruity Bites fiber supplement and a cherry-flavored version of BC Powder (aspirin/caffeine) – and executives promise additional launches in the first half of the firm’s fiscal 2014, April through September 2013. A year after acquiring FiberChoice, BC and other OTC brands from GlaxoSmithKline PLC, Prestige CEO Matthew Mannelly says the products are fully integrated in terms of supply chains and marketing (Also see "Rapidly Growing Prestige Brands Still Positioned For OTC Pickups" - Pink Sheet, 13 Aug, 2012.). In addition to pipeline development, the firm is investing in digital marketing initiatives for 11 brands and in sports sponsorships. Prestige’s advertising and promotion expense climbed 58.6% to $90.6 million in fiscal 2013, ended March 31, the company said May 16.

Tarrytown, N.Y.-based Prestige increased fiscal 2013 revenue 41.4% to $623.6 million, thanks to 5.9% growth of its 14 core OTC brands and the benefit of a full year of owning the GSK products. Net income of $19.3 million in the quarter was up from a breakeven year-ago period, when Prestige absorbed costs associated with the Glaxo deal and the evaluation of a takeover bid from Genomma Lab Internacional SAB de CV; full-year net income was $65.5 million, up 76%. Prestige also paid down $154 million in debt during fiscal 2013, strengthening its ability to pursue additional acquisitions.

Subsidiary cross-selling aids Atrium

North American retail and health care practitioner sales help boost Atrium Innovations Inc.in its first quarter, as the Quebec City firm reports an 8.6% increase in revenues to $119.5 million. Executives said during a May 14 earnings call that Atrium is leveraging cross-selling opportunities among subsidiaries; Garden of Life LLC recently launched Trophic Canada’s Wild Rose herbal detox brand in the U.S., while Trophic is serving as a platform for bringing GoL products to the Canadian market. Additionally, Douglas Laboratories’ Klean Athlete sports nutrition has expanded to Canada after a 2012 U.S. launch (Also see "New Products In Brief" - Pink Sheet, 15 Oct, 2012.). Outside of North America, however, Atrium’s European business continues to fight against economic headwinds, growing sales 1.7% in the January-March period. A strong performance in Eastern Europe helped offset a decline in Germany, where Atrium is transitioning brands. The firm’s overall first-quarter net income was $14.1 million, up from $11.7 million.

Dr. Reddy’s downplays switch outlook

Dr. Reddy's Laboratories Ltd. Vice Chairman and Managing Director Satish Reddy says OTC product sales now represent 34% of the company’s revenue – which translates to $725.2 million in fiscal 2013, ended March 31. However, the Indian generics firm is playing down growth expectations for Rx-to-OTC switches. “There are not a whole lot of big OTC switches one has seen – even the last switch of lansoprazole [equivalent to proton pump inhibitor Prevacid 24HR] was not a great success in the market, not just for us,” said Abhijit Mukherjee, president of global generics, on a May 14 earnings call. “Being an active Rx player in the U.S. market, I think as the switches happen, we will be better positioned,” Mukherjee added. In contrast to Dr. Reddy’s temperate stance, competitor Perrigo Co. PLCfrequentlyhighlights the value of potential long-term switches (Also see "Perrigo Eyes $115 Bil. Worth Of Rx-To-OTC Switches On The Horizon" - Pink Sheet, 26 Nov, 2012.).

For the fourth quarter, Dr. Reddy’s tallied $613 million in revenue, up 25.6%, while full-year revenue grew 20.2% to $2.13 billion. Revenue from global generics, the company’s main business segment, increased 18% in fiscal 2013 thanks to North American and emerging market growth. However, the loss of generic exclusivity for olanzapine, equivalent to the antipsychotic Zyprexa, carved 19 percentage points off North American revenue growth. Dr. Reddy’s net profit in 2013 was $308 million, up 17.6%.

Nu Skin gears up for weight management

Nu Skin Enterprises Inc. unveils details about its ageLOC weight-management system slated to launch on a limited basis in October 2013 with regional rollouts planned for 2014. The ageLOC TR90 product line will focus on improving overall body composition in 90 days by supporting lean muscle maintenance and healthy weight loss, the firm said May 13. Nu Skin anticipates the system will generate sales between $350 million and $400 million in 2013, including the impact of cannibalization on other Nu Skin products.

On May 2, the Provo, Utah-based multilevel marketer elevated its full-year earnings-per-share guidance to a range of $4.18-$4.30, compared to a previous $3.77-$3.92 projection. Despite 3 percentage points of negative foreign exchange effects, Nu Skin reported first-quarter revenue up 19.1% to $550.1 million. Sales in greater China nearly doubled to $175.7 million, with 2 percentage points of positive currency exchange impact, while negative exchange effects flattened sales growth in North Asia, which includes Japan and South Korea. Nu Skin’s net income expanded 13.5% to $54.3 million during the January-March period.

Mannatech inches back to profitability

Despite declining net sales, [Mannatech Inc.] reports a profitable first quarter after cutting operating expenses by 13% year-over-year. The Coppell, Texas, nutritional product direct seller said May 9 net sales declined 6.4% in the January-March period but it recorded net income of $644,000, compared to a $1.4 million loss a year ago. Mannatech’s independent associate ranks also grew, ending the first quarter with a total of 231,000, up from 227,000. CEO Robert Sinnott said on a same-day earnings call that he expects to “see a reinvigoration of our business” in 2013, after several unprofitable years. Mannatech in March hired former USANA Health Sciences Inc. executive Roy Truett as chief operating officer and president of international; the firm also announced May 15 the addition of direct-selling veteran Bo Short as president of business and field development for North America (Also see "People In Brief" - Pink Sheet, 18 Mar, 2013.).

Europe remains Reliv’s bright spot

Chesterfield, Mo.-based [Reliv International Inc.] reports European sales growth of 26.6% to $2 million and a 44.7% increase in active European distributors. The multilevel marketer of LunaRich soy products and other nutritionals said May 1 it now has 14 consecutive quarters of net sales growth in Europe, and recently began operations in France, its 16th market. But Reliv’s struggles continue in the U.S., which comprises 80% of its business; U.S. sales declined 4.2% to $15.1 million in the first quarter. Sales of LunaRich X, introduced in January 2013, made up 7.2% of U.S. revenue, the company said. Overall sales in the quarter ended March 31 dipped 4.5% to $18.9 million, while net income dropped 63.4% to $194,801.

Star Scientific ramps up investments

Significantly higher expenditures in sales and marketing – in support of the Anatabloc anti-inflammatory support supplement – as well as in research and development, drove up Star Scientific Inc.’s total operating expenses 82.4% to $9.3 million in the first quarter. The Glen Allen, Va., company reported May 10 it lost $8.2 million in the January-March period, 59% more than a year ago, despite net sales more than doubling to $2.5 million. Sales and marketing costs related to Anatabloc are expected to level out in the remainder of 2013, though legal fees – including those connected to a class action lawsuit alleging public misrepresentations about a federal investigation and ingredient research – likely will increase beyond the $1.7 million recorded in the first quarter (Also see "In Brief" - Pink Sheet, 1 Apr, 2013.).