Matrixx Initiatives, Inc. (
F2Q2011 Earnings Conference Call
October 26, 2010 11 AM ET
Bill Hemelt – President and CEO
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Good day, everyone and welcome to the Matrixx Initiatives Incorporated fiscal 2011, second quarter earnings results conference call. Just a reminder that today’s call is being recorded. At this time it is my pleasure to turn the conference over to Mr. Bill Barba. Please go ahead, sir.
Bill Barba: Thank you Laurie. Good morning, everyone and thank you for joining the Matrixx Initiatives fiscal 2011 second quarter conference call. At the conclusion of today’s prepared remarks, we will open the call for a brief Q&A session.
Before we begin, I need to advise you this call may contain forward-looking statements, not limited to historical facts, but reflecting our current beliefs, expectations or intentions regarding future events.
A number of factors could cause actual these results to differ materially from those in the forward-looking statements, because the actual results may differ from expectations, we caution you not to place undue reliance on these statements. Additional information concerning risk factors that could affect our results are described in our filings with the SEC, including our 2010 10-K and quarterly 10-Qs.
I would now like to turn the call over to Mr. Bill Hemelt. Go ahead, Bill.
Thank you Bill. Good morning, everyone and thank you for participating in our conference call this morning to discuss our financial results for the second quarter of fiscal 2011. Net sales for the quarter were $21.3million, approximately $4.3 million less from the same quarter last year.
The sales in the quarter however were inline with our projections for the year. The decrease is largely attributable to lower upfront buys by retailers due to the absence of the H1N1 virus publicity which so dominated the category last year. I think when you eliminate the H1N1 effect last year both on takeaway and pre-season stocking, this year’s sales numbers are probably more reflective of what a normal year might be.
Consistent with that view in fact, inventory levels at retailer are lower than last year particularly, in our drug accounts. Therefore as illness levels increases in coming quarters, we expect a higher level of reorders than we experienced last year. Earnings for the quarter were $5.3 million or $0.57 per share. There are a number of factors in addition to the sales change which impact the comparison of EPS last year, Bill Barba will detail those changes in his comments shortly.
We are excited about our plans for promoting and advertising Zicam products this year. Anyone who has followed us over the years knows that we believe there is still significant growth to be captured in the Zicam brand. Due to the high number of consumers you still don’t know about the unique benefits that Zicam Cold Remedy products offer. Mainly the ability to help consumers get over their colds faster. Communicating that methods effectively has been our principal marketing challenge. While one never knows how effective a program is going to be until is gets tested in the marketplace, we believe this years advertising may provide the right messaging to address that issue and extend the franchise to new users.
It is tested well in numerous focus groups, but moreover it is coupled with other promotional campaigns including an internet element that we think drives point that yes, you can do something about how long a cold lasts if you take Zicam at the first sign. One part of our program was the Mom Squad video, which was referenced in our earnings press release. I hope that you take a couple of minutes to watch this humorous video featuring three iconic mom’s Florence Henderson from the Brady Bunch, Meredith Baxter from Family Ties, and Estelle Harris from Seinfeld has a battle various misdirected attempts to combat the common cold.
In one week we have had almost 200,000 hits for the video website. And we hope to grow that significantly in coming weeks. It can be reached by going on zicam.com. It is the first part of a comprehensive campaign directed at various myths surrounding the common cold, including the one that you can't do anything about it.
Last weekend we dropped a seasonal (inaudible) in Layman’s language, a Sunday coupon, maybe you saw it. Last week we issued a press release that reported on a survey that we conducted regarding various misconceptions about the common cold. This survey will be highlighted by our public relations spokesperson this year by Dr. Andrea Pennington (ph). She is nationally known and will address common myths about colds including how you get them, what to do about them and how you can shorten their duration by taking Zicam at the first time.
That effort will extend over the next few weeks. All of this is a prelude to our new commercial which will air the week after the election and run throughout the entire cold season. As I said earlier, the message in that commercial was very well received in consumer tests. Finally, all of these efforts will be supported by strong retail promotional support that has already begun.
In summary, I am very pleased by our marketing and sales support program this year and I’m looking forward to seeing their effect on building the brand in coming weeks and months. With that I would like Bill Barba, our Vice President of Finance and Accounting, to detail the financial results for the recent quarter.