Unilens Vision Reports Royalty Income Increased in Q2 2013

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LARGO, Fla.— Unilens Vision Inc. (OTCQB: UVIC), which develops, licenses, manufactures, distributes and markets specialty contact lenses, reported its operating results for the second quarter and first half of FY 2014.

For the three months ended Dec. 31, 2013, the company reported total product sales increased slightly to $1,430,042, compared with $1,429,475 in the second quarter of FY 2013. Disposable lens sales increased 1.0 percent, while sales in the custom soft lens category increased 8.4 percent when compared with the prior-year period.

Royalty income increased, for the first time in six quarters, by 0.7 percent to $586,660, versus $582,574 in the second quarter of FY 2013. Operating income declined 8.0 percent relative to the corresponding quarter in FY 2013.

The company noted that in late October 2013, Bausch + Lomb announced the U.S. launch of its PureVision2(R) for Presbyopia multifocal lens, which features a next-generation multifocal design licensed from Unilens Vision.

"We are very encouraged by certain 'leading indicators' that suggest we are approaching a turnaround in our financial performance and a resumption in revenue and earnings growth," stated Michael Pecora, Unilens’ CEO. "In particular, we are pleased to report that royalty income increased during the second quarter, for the first time in the past six quarters.

In addition, our branded lens sales increased for the third consecutive quarter, following an extended period of lower sales during the past several years. We attribute this encouraging trend to incremental growth of our new C-Vue HydraVUE Multifocal disposable lenses, along with continued growth in the popularity of our C-Vue Advanced HydraVUE line of completely customizable silicone hydrogel contact lenses for monthly replacement."

"We continue our work on new technological improvements that have the potential to generate future incremental licensing income and/or product sales," continued Pecora. "The demand for effective multifocal vision-correction products that can address the challenges of presbyopia should continue to increase well into the next decade with the aging of America's 'baby boom' generation, and our goal is to enhance shareholder value by capturing a larger share of this market."

"In early October 2013, we repurchased 618,522, or approximately 26 percent of the company's total common shares outstanding, from the company's largest outside shareholder,” he added, “at an aggregate purchase price of approximately $3.1 million, or $4.97 per share. This transaction was accretive to earnings per share in the most recent quarter, and we believe it reflects our commitment to the enhancement of long-term shareholder value. We funded the repurchase through a $3.3 million expansion and modification of our existing term loan with Hancock Bank. The term loan bank facility will be amortized over a longer seven-year period and bears interest at a floating rate of 30-day LIBOR plus 3.5 percent. The elimination of cash dividend payments on the repurchased shares, which were returned to the treasury, when combined with a seven-year principal amortization schedule, should allow Unilens to service the expanded debt facility without limiting our ability to fund new growth initiatives."

For the period, total revenue including royalty income was largely unchanged at $2,016,702, compared with total revenue of $2,012,049 in the second quarter of FY 2013. Total product sales increased slightly to $1,430,042 in the most recent quarter, versus $1,429,475 in the corresponding period of the previous fiscal year.

Royalty income from Bausch + Lomb increased 0.7 percent to $586,660 in the quarter, compared with $582,574 in the prior-year quarter.

For the six months ended Dec. 31, total revenue including royalty income rose 0.6 percent to $4,075,521, compared with total revenue of $4,050,660 in the first half of FY 2013. Total product sales increased 2.4 percent to $3,009,247 in the first half of FY 2014, versus $2,939,129 in the corresponding period of the previous fiscal year. Sales in the disposable lens category increased 1.7 percent, while sales of custom soft lenses rose 10.6 percent, relative to year-earlier levels.

Royalty income from Bausch + Lomb declined 4.1 percent to $1,066,274 in the first half of FY 2014, compared with $1,111,531 a year earlier. First quarter royalty income declined 9.3 percent while second quarter royalty income increased 0.7 percent, respectively, when compared with prior-year periods.