Caraco posts record sales for Q2, cash increases by $5.5 million

By Angela McDaniels

Seattle, Oct. 19 - Caraco Pharmaceutical Laboratories, Ltd. said its operating cash position continued to improve over the first half of fiscal 2007 and that it remains debt free.

"We generated $14.3 million in cash during the [first] six months of fiscal 2007, as compared to the utilization of $2.7 million from operations during the corresponding period of fiscal 2006," chief executive officer Daniel H. Movens said in a company news release.

"During the second quarter of fiscal 2007, we acquired a facility that currently houses our bottling operation for $1.7 million. We anticipate this acquisition and the subsequent transition will improve overall costs in packaging, increase our visibility in production and planning while improving throughput on a long-term basis.

"Additionally, we still have a short-term line of credit available from JP Morgan Chase Bank, NA of $10 million, which provides us with flexibility in determining expansion efforts for increased capacity."

Caraco had $17.4 million of cash and cash equivalents at June 30, a 46% increase over the $11.9 million of cash and cash equivalents the company had at March 31, 2006.

The company also posted record net sales for the second quarter and six months of fiscal 2007 ended Sept. 30 of $28.3 million and $53.0 million, respectively, compared with $19.8 million and $37.4 million for the corresponding periods of fiscal 2006. This represents an increase of 43% and 42% over the second quarter and six months of fiscal 2006, respectively.

Gross profit during the relevant periods improved to $14.2 million and $27.2 million, compared with $9.7 million and $17.9 million for the same periods of fiscal 2006. Caraco attributed the increase primarily to continued increase in sales and to an improved balance in the mix of customers partially offset by price erosion. It also reflects changes in product selection being sold.

Net income grew to $2.3 million and $7.3 million in the second quarter and six months of fiscal 2007, respectively, compared with a net loss of $4.8 million and $3.2 million during the corresponding periods of fiscal 2006.

Net income was $0.06 per diluted share for the second quarter and $0.19 per diluted share for the first six months, compared with a net loss of $0.18 per diluted share and $0.12 per diluted share for the second quarter and first six months of fiscal 2006, respectively.

During the second quarter, the company received approvals for three abbreviated New Drug Applications and filed three new abbreviated New Drug Applications, according to the release. Caraco now has 17 products pending approval at the Food and Drug Administration, including two tentative approvals.

Detroit-based Caraco develops generic and private-label pharmaceuticals.

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