Food and drug merchandiser Chattem, Inc. (CHTT) reported Thursday an increase in second-quarter profit that surpassed analyst estimates, reflecting a 4.4% growth in sales. The company also maintained its earlier adjusted earnings guidance range for the fiscal year 2009.
For the second quarter, net income rose to $24.23 million or $1.26 per share from $20.73 million or $1.06 per share in the previous year.
The results of the latest quarter included $2.06 million employee stock option expense under SFAS 123R, which was $1.24 million in the year-ago period. Excluding the SFAS 123R expense and other items, net income for the quarter grew to $25.5 million or $1.33 per share from $21.5 million or $1.10 per share in the prior-year period.
On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of $1.21 per share. Analysts' estimates typically exclude special items.
Total revenues for the quarter rose 4.4% to $121.83 million from $116.72 million in the same period last year. Eight analysts were expecting revenue of $123.37 million in the second quarter.
Zan Guerry, chief executive of Chattem, said, "The strength of our business behind Gold Bond, ACT, Icy Hot, Cortizone-10 and Selsun Blue and the early success of the 2009 new product launches for these brands has continued to produce strong earnings and operating results."
Total domestic revenues increased 6.8 % to $116.1 million from $108.7 million in the same quarter last year, attributable to strong sales of Gold Bond, ACT, Icy Hot, Cortizone-10 and Selsun Blue, partially offset by lower sales of Unisom and other smaller brands.
International revenues dipped 29% due to change in distributors in Latin America, general sales weakness in our European markets due to the weak economy and an adverse foreign exchange rate impact. On a constant currency basis, international revenues decreased $1.4 million, or 17%, compared to the prior year period.
Advertising and promotion costs were reduced year-over-year to $26.97 million from $30.25 million, while selling, general and administrative expenses decreased to $14.33 million from $15.19 million in the past year.
For the six-month period, net income increased to $43.80 million or $2.26 per share from $35.61 million or $1.82 per share in fiscal 2008.
Adjusted net income for the period increased to $46.5 million or $2.40 a share from $41.5 million or $2.12 a share in the prior year period.
For the first half of the year, total revenues inched up 0.2% to $237.9 million from $237.5 million in the same period in fiscal 2008.
Looking ahead to fiscal year 2009, the company reiterated its adjusted earnings guidance range of $4.80 to $4.90 per share, excluding the stock option expense under SFAS 123R of $0.26 per share, any asset value impairment charge and any non-cash loss on debt extinguishment, which was $0.02 per share in the first six months of fiscal 2009.
Analysts are currently looking for earnings of $4.51 per share on revenue of $471.36 million in fiscal 2009.
CHTT closed Wednesday's regular trading hours at $62.94 on the NASDAQ.
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