Techne Corporation Releases Unaudited First Quarter Fiscal Year 2013 Financial Results
MINNEAPOLIS, Oct. 23, 2012 /PRNewswire/ -- Techne Corporation's (NASDAQ: TECH) financial results for the quarter ended September 30, 2012 include the following highlights:
- First quarter earnings were $25.7 million or $.70 per diluted share. Adjusted earnings for the quarter were $27.5 million (a decrease of 8.2% from the prior fiscal year period) or $.75 per diluted share. Earnings and adjusted earnings were negatively impacted by foreign currency fluctuations, which reduced reported sales and gross margins. Adjusted earnings and earnings per share exclude intangible asset amortization and costs recognized upon the sale of inventory that was written-up to fair value as part of acquisitions completed in the quarter ended June 30, 2011.
- Net sales as reported declined by 3.3% to $75.0 million for the quarter. The quarter ended September 30, 2012 had one less selling day as compared to the same prior-year period. Organic sales declined by 0.9% in the quarter and exclude changes in foreign currency rates. A stronger U.S. dollar as compared to foreign currencies reduced sales by $1.9 million in the quarter ended September 30, 2012 from the comparable prior-year period.
The Biotechnology segment includes sales made through R&D Systems' Biotechnology Division, R&D Systems Europe, Tocris, R&D Systems China, BiosPacific and Boston Biochem. Biotechnology net sales were $69.5 million, a decrease of 3.9% from $72.3 million for the quarter ended September 30, 2012. Biotechnology sales declined 1.2% for the quarter ended September 30, 2012 if foreign currency changes are excluded.
Organic sales growth for the Biotechnology segment from the same prior-year periods were:
| Quarter Ended |
||
| 9/30/12 |
9/30/11 |
|
| U.S. industrial, pharmaceutical and biotechnology |
(5.0%) |
9.3% |
| U.S. academic |
(4.0%) |
(2.5%) |
| Europe |
3.1% |
(0.7%) |
| China |
25.1% |
14.1% |
| Pacific Rim |
Unchanged |
Unchanged |
Hematology net sales for the quarter ended September 30, 2012 were $5.5 million, an increase of 4.3% from the comparable prior-year period.
The gross margin percentage declined to 74.1% in the quarter ended September 30, 2012 from 75.2% in the comparable prior-year quarter. The decline was caused by unfavorable exchange rates that were partially offset by lower costs recognized upon the sale of the inventory that was written-up to fair value as part of the acquisitions. Gross margins adjusted for costs recognized upon sale of acquired inventory and amortization of intangible assets were 76.8% and 79.0% the quarters ended September 30, 2012 and 2011, respectively. The decrease was primarily caused by unfavorable exchange rates.
Selling, general and administrative expenses for the quarter ended September 30, 2012 decreased $445,000 million or 4.1% from the quarter ended September 30, 2011. The decrease in selling, general and administrative expense was impacted by a $685,000 decrease in profit sharing expense for the quarter as compared to the prior-year period.
Research and development expenses for the quarter ended September 30, 2012 increased $785,000 (11.8%) from the quarter ended September 30, 2011. The increase in research and development expenses is mainly due to increases in personnel and supply costs associated with the continuous development and release of new high-quality biotechnology products.
Other non-operating expenses include foreign exchange transaction losses of $78,000 and $524,000 in the quarters ended September 30, 2012 and 2011, respectively.
The effective tax rate for the quarter ended September 30, 2012 was 32.4% as compared to 32.0% for the same prior-year period. Effective tax rates for fiscal 2013 are expected to be 31% to 33%.
The Company's investment in ChemoCentryx, Inc. (CCXI) is included in short-term available-for-sale investments at September 30, 2012 at a fair-value of $73.5 million. The Company's unrealized gain of $44.0 million on the investment, net of deferred tax liability of $15.8 million, was included in accumulated other comprehensive income at September 30, 2012.
The Company did not repurchase any shares of its common stock during the quarter ended September 30, 2012. Approximately $27.0 million remains available at September 30, 2012 for the repurchase and retirement of shares under the currently-open authorization.
Forward Looking Statements:
Our press releases may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements, including the expected effective tax rate, involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: the integration of acquired companies, the introduction and acceptance of new biotechnology and hematology products, the levels and particular directions of research by the Company's customers, the impact of the growing number of producers of biotechnology research products and related price competition, general economic conditions, the retention of hematology OEM and proficiency survey business, the impact of currency exchange rate fluctuations, and the costs and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships.
For additional information concerning such factors, see the section titled "Risk Factors" in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements we make in our press releases due to new information or future events. Investors are cautioned not to place undue emphasis on these statements.
Use of Adjusted Financial Measures:
The adjusted financial measures used in this press release quantify the impact the following events had on reported net sales, gross margin percentages, net earnings and earnings per share for the quarter ended September 30, 2012 as compared to the reported amounts for the same period ended September 30, 2011:
- fluctuations in exchange rates used to convert transactions in foreign currencies (primarily the Euro, British pound sterling and Chinese yuan) to U.S. dollars; and
- the impact of amortizing intangible assets and the recognition of costs upon the sale of inventory written-up to fair value resulting from the fiscal 2011 the acquisitions of Boston Biochem, Inc. and Tocris Holdings Ltd.
These adjusted financial measures are not prepared in accordance with generally accepted accounting principles (GAAP) and may be different from adjusted financial measures used by other companies. Adjusted financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We view these adjusted financial measures to be helpful in assessing the Company's ongoing operating results. In addition, these adjusted financial measures facilitate our internal comparisons to historical operating results and comparisons to competitors' operating results. We include these adjusted financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency related to supplemental information we use in our financial and operational analysis.
Investors are encouraged to review the reconciliations of adjusted financial measures used in this press release to their most directly comparable GAAP financial measures as provided with the financial statements attached to this press release.
* * * * * * * * * * * *
Techne Corporation has two operating subsidiaries: Research and Diagnostic Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe, Ltd. (R&D Europe) of Abingdon, England. R&D Systems is a specialty manufacturer of biological products. R&D Systems has three operating subsidiaries: BiosPacific, Inc. BiosPacific), located in Emeryville, California, Boston Biochem, Inc., located in Cambridge, Massachusetts and R&D Systems China Co. Ltd., (R&D China), located in Shanghai, China. BiosPacific is a worldwide supplier of biologics to manufacturers of in vitro diagnostic systems and immunodiagnostic kits. Boston Biochem is a leading developer and manufacturer of ubiquitin-related research products. R&D China and R&D Europe distribute biotechnology products. R&D Europe has two subsidiaries: Tocris Holdings Ltd (Tocris) of Bristol, England and R&D Systems GmbH, a German sales operation. Tocris is a leading supplier of reagents for non-clinical life science research.
| TECHNE CORPORATION |
||||
| QUARTER ENDED |
||||
| 9/30/12 |
9/30/11 |
|||
| Net sales |
$75,025 |
$77,596 |
||
| Cost of sales |
19,442 |
19,209 |
||
| Gross margin |
55,583 |
58,387 |
||
| Operating expenses: |
||||
| Selling, general and administrative |
10,328 |
10,773 |
||
| Research and development |
7,452 |
6,667 |
||
| Total operating expenses |
17,780 |
17,440 |
||
| Operating income |
37,803 |
40,947 |
||
| Other income (expense): |
||||
| Interest income |
661 |
728 |
||
| Other non-operating expense, net |
(478) |
(1,175) |
||
| Total other (expense) income |
183 |
(447) |
||
| Earnings before income taxes |
37,986 |
40,500 |
||
| Income taxes |
12,318 |
12,979 |
||
| Net earnings |
$25,668 |
$27,521 |
||
| Earnings per share: |
||||
| Basic |
$ 0.70 |
$ 0.74 |
||
| Diluted |
$ 0.70 |
$ 0.74 |
||
| Weighted average common shares outstanding: |
||||
| Basic |
36,828 |
37,095 |
||
| Diluted |
36,895 |
37,170 |
||
| TECHNE CORPORATION |
||
| ASSETS |
9/30/12 |
6/30/12 |
| Cash and equivalents |
$130,805 |
$116,675 |
| Short-term available-for-sale investments |
142,262 |
152,311 |
| Trade accounts receivable |
35,119 |
35,668 |
| Inventory |
38,397 |
38,277 |
| Other current assets |
3,560 |
3,576 |
| Current assets |
350,143 |
346,507 |
| Available-for-sale investments |
131,713 |
143,966 |
| Property and equipment, net |
94,920 |
93,788 |
| Goodwill and intangible assets, net |
133,009 |
132,158 |
| Other non-current assets |
2,844 |
2,905 |
| Total assets |
$712,629 |
$719,324 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||
| Accounts payable and accrued expenses |
$14,178 |
$ 13,836 |
| Payable for pending available-for-sale investment purchases |
0 |
4,429 |
| Income taxes – deferred and current |
8,723 |
17,485 |
| Current liabilities |
22,901 |
35,750 |
| Deferred taxes |
9,123 |
9,132 |
| Stockholders' equity |
680,605 |
674,442 |
| Total liabilities and stockholders' equity |
$712,629 |
$719,324 |
| TECHNE CORPORATION |
||||
| QUARTER ENDED |
||||
| 9/30/12 |
9/30/11 |
|||
| Net sales |
$75,025 |
$77,596 |
||
| Organic sales adjustments: |
||||
| Impact of foreign currency fluctuations |
1,906 |
0 |
||
| Organic sales |
$76,931 |
$77,596 |
||
| Organic sales growth |
(0.9%) |
3.2% |
||
| TECHNE CORPORATION |
||||
| QUARTER ENDED |
||||
| 9/30/12 |
9/30/11 |
|||
| Net earnings |
$25,668 |
$27,521 |
||
| Identified adjustments: |
||||
| Costs recognized upon sale of acquired inventory |
1,268 |
2,148 |
||
| Amortization of intangibles |
1,264 |
1,285 |
||
| Tax impact of above adjustments |
(679) |
(968) |
||
| 1,853 |
2,465 |
|||
| Net earnings – adjusted for identified items |
$27,521 |
$29,986 |
||
| Adjusted growth |
(8.2%) |
13.2% |
||
| Earnings per share – Diluted – adjusted |
$ 0.75 |
$ 0.81 |
||
| TECHNE CORPORATION |
||||
| QUARTER ENDED |
||||
| 9/30/12 |
9/30/11 |
|||
| Gross margin percentage |
74.1% |
75.2% |
||
| Identified adjustments: |
||||
| Costs recognized upon sale of acquired inventory |
1.7% |
2.8% |
||
| Amortization of intangibles |
1.0% |
1.0% |
||
| Gross margin percentage – adjusted |
76.8% |
79.0% |
||
| TECHNE CORPORATION |
||||
| QUARTER ENDED |
||||
| 9/30/12 |
9/30/11 |
|||
| Amortization of intangible assets included in: |
||||
| Cost of goods sold |
$ 753 |
$ 764 |
||
| Selling, general and administrative expenses |
519 |
521 |
||
| Total amortization of intangible assets |
$1,272 |
$1,285 |
||
SOURCE Techne Corporation
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