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Derma Sciences Inc. has a market cap of $55.91 million; its shares were traded at around $8.5 with and P/S ratio of 0.99.
Highlight of Business Operations: Net sales increased $2,649,503, or 20.0% (18.2% adjusted for exchange), in 2011 versus 2010. Advanced wound care sales increased $1,220,467, or 47.2%, to $3,808,092 in 2011 from $2,587,625 in 2010. All other sales (core sales) increased $1,429,036, or 13.4%, to $12,071,517 in 2011 from $10,642,481 in 2010.
Sales in the United States increased $2,006,441, or 21.4%, to $11,381,171 in 2011 from $9,374,730 in 2010. The increase was driven by higher advanced wound care sales of $962,596, or 43.6%, coupled with a core sales increase of $1,043,845, or 14.6%, lead by first aid products. Sales in Canada increased $438,618, or 12.3%, to $3,997,769 in 2011 from $3,559,151 in 2010. This increase was driven by favorable exchange of $218,467 associated with a 5.9% strengthening of the Canadian dollar and sales growth of $220,151 due to higher demand, partially offset by an inventory reduction on the part of our exclusive Canadian distributor. Real growth as measured by sales of the Company s products reported by its exclusive distributor, unadjusted for foreign exchange, was 17.7%. At the product line level, the increase was driven by higher advanced wound care sales of $58,344, or 71.8%, coupled with a core sales increase of $380,274, or 10.9%. International sales increased $204,444, or 69.0% ($176,614 or 59.6% excluding exchange), to $500,669 in 2011 from $296,225 in 2010. The increase was driven by higher advanced wound care sales of $199,527 and core sales of $4,917. The increase in advanced wound care product sales continues to reflect our expanded sales and marketing efforts to grow these products.
Gross profit increased $713,711, or 18.2%, in 2011 versus 2010. Consolidated advanced wound care gross profit increased $706,630, or 62.7%, to $1,833,433 in 2011 from $1,126,803 in 2010. All other gross profit (core gross profit) increased $7,081, or 0.3%, to 2,793,382 in 2011 from $2,786,301 in 2010. The consolidated gross profit margin percentage decreased to 29.1% in 2011 from 29.6% in 2010. The increase in gross profit dollars reflects higher sales, partially offset by the lower gross profit margin percentage. The lower gross margin percentage reflects an increase in lower margin core sales, unfavorable core sales mix towards lower margined products and higher product costs, partially offset by the benefit of increasing higher margin advanced wound care sales.
Sales expense increased $201,857, or 12.1% (10.4% adjusted for exchange), in 2011 versus 2010. Expenses in the United States increased $160,438. This increase is attributable to incremental costs of $158,328 consisting of compensation and benefits, commission, travel and sample expenses associated with the expansion of the advanced wound care sales force from 10 to 20 representatives that was started late in the first quarter 2010. Expenses in Canada increased $47,795 (including a $13,582 increase related to exchange) due to higher compensation and benefit, travel, consulting and sales volume related group purchasing organization expenses and bid related fees. International expenses decreased $6,376 (including a $14,966 increase related to exchange) due principally to the non-recurrence of recruiting expense incurred in 2010, partially offset by higher compensation and benefit, commission and travel associated with build up of the international sales force throughout 2010.
General and administrative expenses increased $80,228, or 4.2% (2.6% adjusted for exchange), in 2011 versus 2010. Expenses in the United States increased $39,364. This increase reflects higher board, professional services and compensation and benefit expenses, partially offset by lower travel, amortization and investor relation expenses. Expenses in Canada increased $70,357 (including a $25,242 increase related to exchange). Net of exchange, expenses increased $45,115 due principally to higher compensation and benefit, professional services expenses and the addition of one new position in the second quarter of 2010. International expenses decreased $29,493 (including a $4,818 increase related to exchange). Net of exchange, expenses decreased $34,311 due principally to legal and consulting expenses associated with the start up of the business in 2010.
Other income decreased $27,304 to $41,321 in 2011 from $68,625 in 2010 due to lower exchange gains of $19,528 and lower royalty income of $16,284, partially offset by lower miscellaneous expense of $8,508.
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