Stephan Company (TSC) filed Quarterly Report for the period ended 2009-06-30.
STEPHAN CO. is engaged in the manufacture sale and distribution of hair care and personal care products on both a wholesale and retail level.STEPHAN also manufactures and sells products under the name ``STEPHAN\'S``. Such products consist of different types of shampoos hair treatments after shave lotion dandruff lotion hair conditioners and hair spray which are distributed throughout the United States to approximately 350 beauty and barber distributors. Stephan Company has a market cap of $10.6 million; its shares were traded at around $2.51 with a P/E ratio of 11.4 and P/S ratio of 0.6. The dividend yield of Stephan Company stocks is 3.2%.
Highlight of Business Operations:
As of June 30, 2009, we had cash and cash equivalents of approximately $8.2 million. Our long-term debt was less than $0.5 million and was comprised primarily of that issued to the former owner of Bowman. Cash and cash equivalents increased by $235,000 during the first six months of 2009. The increase was due principally to cash flow from operations of $498,000 exceeding spending for dividends ($170,000), repayment of Bowman debt ($36,000) and treasury stock purchases ($30,000).
Net income increased to $212,000 in the second quarter of 2009 compared to $136,000 in the comparable period of 2008. Earnings per share were $0.05 in 2009 compared to $0.03 in 2008. Revenue for the second quarter of calendar 2009 was $4.4 million compared to $4.3 million in the comparable period of 2008. Expenses declined to $1,778,000 (this amount included Bowman expenses of approximately $200,000) from $1,995,000. The total expense decline, excluding Bowman in 2009, was over $400,000 versus the prior year amount.
In our Distributors segment revenue for the second quarter of 2009 exceeded that in the second quarter of 2008 by about $260,000. Distributor revenue in 2009 for Bowman, acquired in August 2008, was approximately $680,000. Bowman s operating income in the second quarter was not significant. In our Brands segment revenue was $130,000 less than that in the second quarter of 2008. Our Distributor and Brands segments represented approximately 77% and 23% of consolidated revenue, respectively.
Net income increased to $381,000 for the six months ended June 30, 2009, compared to $296,000 in the comparable period of 2008. Earnings per share were $0.09 in 2009 compared to $0.07 in 2008. Revenue for the six-month period of calendar 2009 was $9.0 million compared to $8.7 million during the comparable period of 2008. Expenses declined to $3,757,000 (this amount included Bowman expenses of approximately $400,000) from $3,936,000. The total expense decline, excluding Bowman in 2009, was over $550,000 versus the prior year amount.
Our Distributors segment revenue for the first six months of 2009 exceeded that in the comparable period of 2008 by about $580,000. Distributor revenue in 2009 for Bowman, acquired in August 2008, was approximately $1.3 million. Bowman s operating profit was approximately $75,000 for the six months ended June 30, 2009. Our Brands segment revenue was approximately $280,000 less than that in the first six months of 2008.
On July 6, 2005, the landlord, Shaheen & Co., Inc., the former owner of Morris Flamingo, notified the Company that its interpretation of the Amendment differed from that of the Company as to the existence of the 90-day right of termination. In October 2005, the landlord filed a lawsuit in the Circuit Court for the 17th Circuit of Florida in and for Broward County, FL, styled Shaheen & Co., Inc. (Plaintiff) v. The Stephan Co., Case number 05-15175 seeking a declaratory judgment with respect to the validity of the 90-day right of termination. In addition, the lawsuit alleges damages with respect to costs incurred and the weakening marketability of the property. This matter is currently unresolved and the Company is unable, at this time, to determine the outcome of the litigation. However, if it is ultimately determined that the early termination provision has been eliminated with the Amendment, the Company s minimum lease obligation would amount to $320,000 in each of the years 2009 through 2013 and approximately $480,000 thereafter, subject to adjustments for increases in the Consumer Price Index. We believe that we will prevail in this matter since the lease has a specific clause stating that it is cancelable upon 90 days notice of termination to the landlord. Shouky A. Shaheen, a minority owner of Shaheen & Co., Inc., is currently a member of the Board of Directors and a significant shareholder of the Company.
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