Staff Photo by Dan McLaughlin Chattem employee Jimmie West watches for flaws in bottles of Selson Blue shampoo along an assembly line in the Chattanooga factory.
Chattem continues to show growth during the economic recession posting revenues for the second quarter that were up 4.4 percent from the same quarter a year ago.
The Chattanooga-based consumer products company said its revenues for the three months ending May 31 totaled $121.8 million, up from $116.7 million for the same time last year.
"We feel good about the business, particularly with the difficult economic environment we are facing," said Bob Bosworth, Chattem president. "We feel good about where we are from a revenue perspective, good about where we are from an earnings perspective, and the thing we feel best about is the good cash flow characteristics."
Chattem reported net income in its most recent quarter of $24.2 million, an almost 17 percent gain from $20.7 million generated in the same period a year ago. Net income per common share on a diluted basis was $1.26 in the latest period, up from $1.06 in the same quarter last year.
Zan Guerry, chairman and chief executive, touted the performance of many of Chattem's key products over the last 13 weeks.
Sales for Gold Bond were up 13 percent, and ACT mouthwash was up 24 percent. Icy Hot and Cortizone sales each were up 7 percent, he said.
"When you look at the major brands and the struggles with the economy, it makes the numbers truly outstanding," he said. "We are pleased and lucky to have such numbers at this time."
Robert Long, the company's chief financial officer, said international sales were down considerably, but domestic sales, which make up 95 percent of total sales, were up 7 percent during the recent quarter.
"Revenues continue to be strong," Mr. Long said. "It's a difficult economic environment, but the brands continue to perform well --- particularly the domestic business. We remain excited about where we are."
Chattem maintained its guidance of $4.80 to $4.90 a share for the fiscal year.
"We remain very optimistic about the future," Mr. Bosworth said.
However, Michael Kelter, an analyst with Goldman Sachs isn't as optimistic.
He noted a "less than robust" product launch pipeline for the remainder of the year and believes Chattem's sales growth targets are out of reach.
"The company posted four percent sales growth in the quarter and is now flat overall for the first half (of the year)," he said. "We would advise investors to sell on any strength as we are growing increasingly pessimistic about the company's prospects in the back half of the year."
Chattem recently broke ground on a $35 million expansion at their 3850 Broad St. facility that will house their ACT mouthwash manufacturing line. Officials said ACT will occupy about half of the 85,000-square-foot facility, which will have room for future acquisitions.
The expansion will improve efficiency, save money and allow Chattem to be more responsive to retailers, officials said. Benefits from the expansion will not be realized until 2011.
On Thursday, Chattem's stock closed at $63.09 a share, up 15 cents from Wednesday's close.
