Ocular Sciences has announced net sales of $80.6 million for the first quarter ended March 31, up 14 percent in dollars and up 6.2 percent in constant currencies. Net income stood at $6.0 million, but it would have reached $8.6 million before restructuring and expenses associated with the manufacturing consolidation program launched in 2002. These figures compare with net profit of $6.9 million in the same period a year ago.
Stephen J Fanning, president and CEO of the California-based soft contact lenses company, attributed the growth to an increased international presence, expansion in speciality lens product lines, and reduction in manufacturing costs, which resulted in a 3.1 percentage point improvement. Sales outside the USA grew by 29 percent in the quarter, or by 14 percent in constant currencies. Sales rose by 28 percent in Europe and by 29 percent in Japan.
Growth was especially significant in speciality lenses, which represented 36 percent of revenue, as compared to under 5 percent of revenue for the same period of 2004. Toric lens revenues grew by 70 percent, representing over 10 percent of total revenue, while daily disposable lens revenue grew by over 50 percent, representing over 17 percent of total revenue.
Following an increased investment of 31 percent in R&D for new product development, the company is launching a new speciality sphere product ? designed with aspheric optics and a new patented edge ? in the latter part of the second quarter. Other product launches will follow, in a bid to boost the company's US growth rate in disposable lenses. However, US sales of two-week disposable spherical lenses were down as customers reduced their inventories ahead of the new product launch.
Including these investments, operating income prior to restructuring and related expenses grew by 38 percent, while earnings prior to restructuring and related expenses grew by 26 percent. This resulted in cash flow from operations of over $20 million during the quarter. Meanwhile, debt was reduced to $13.7 million, a $3.6 million decline from the beginning of the year, and capital expenditures ? chiefly spent on expanding manufacturing capacity for toric lenses and daily disposable lenses ? totalled $7.9 million.
For the calendar year ending next Dec. 31, sales are expected to grow 8 percent to 10 percent in constant currency and gross margins should to be in the 56 to 57 percent range. The manufacturing transition program initiated in December 2002 is expected to be completed and $8 to $10 million in related pre-tax consolidation expenses are expected to be incurred. The company says it plans to double its investment in product development, focusing largely on continuous wear, silicone-hydrogel product development with a targeted market launch in 2005.