Strong Sales at Cephalon: Fool by Numbers

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On May 1, Cephalon (Nasdaq: CEPH) released earnings for its fiscal first quarter, ended March 31.

• Sales rose by 22.4%, backed by 35% growth in the company's central nervous system franchise. Cephalon's successful transition of its pain franchise to Fentora from Actiq ensured that sales ramped up smoothly.
  
  
• Strong top-line growth and a decline in operating expenses drove huge gains on the bottom line. Cephalon's margins are looking quite healthy.
  
  
• For fiscal 2007, the company expects sales of $1.675 billion to $1.725 billion, with the central nervous system franchise contributing $925 million to $950 million.
  
  
• Cephalon expects its EPS for fiscal 2007 to be $4.40 to $4.50. The stock is trading at just 18 times those estimates.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$437.0	$356.9	22.4%
Net Profit	$75.2	$3.6	2,007.8%
EPS	$0.99	$0.05	1,880.0%
Diluted Shares	75.8	73.5	3.2%

Get back to basics with a look at the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	80.2%	78.2%	2.0
Operating Margin	26.1%	5.0%	21.1
Net Margin	17.2%	1.0%	16.2

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$579.4	$541.5	7.0%
Accounts Rec.	$307.5	$225.4	36.5%
Inventory	$189.9	$150.5	26.2%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$77.0	$87.2	(11.6%)
Long-Term Debt	$1,247.6	$1,695.9	(26.4%)

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	$58.5	($33.8)	N/A
Capital Expenditures	$21.4	$31.8	(32.7%)
Free Cash Flow	$37.2	($65.5)	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• Cephalon's Earnings Surprise
• FDA Keeps Cephalon Waiting
• Cephalon's Supercharged Growth

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.