Including the start-up expenses from the ENZO Division, net income for the second quarter of 2005 was $303,000, or $0.02 per fully diluted share, compared to $0.04 per fully diluted share in the second quarter of 2004 and in-line with the Company's previously announced guidance.
Gross profit in the second quarter rose to $4.62 million, or approximately 24 percent of sales, up nearly 20 percent from $3.87 million, or approximately 24 percent of sales a year earlier. Along with the slight widening of margins year over year, gross margins have been rising sharply on a sequential basis, from 21 percent in the first quarter of 2005 and 17 percent from the fourth quarter of 2004.
The Company indicated that this was due to a different product mix and expects gross margins to stabilize between 20-22 percent for the full-year. However, the Company expects gross margins to improve significantly over time as sales from its higher margin ENZO retail stores begin to represent a higher percentage of total revenues. The Company noted that a typical ENZO store is expected to achieve gross margins of at least 50 percent.
For the six months ending June 30, 2005, revenues reached a record $36.51 million, an increase of nearly 19 percent over revenues of $30.76 million in the first half of 2004. First-half net income, excluding approximately $600,000 in expected start-up expenses for the ENZO Division, was $1,152,000, up 38 percent from $829,000 in the first half of 2004. Including these start-up expenses, first half net income was $552,000, or $0.04 per fully diluted share compared to $0.07 per fully diluted share in the first half of 2004.
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