QIAGEN Reports Second Quarter 2005 Results

Aug 08, 2005, 01:00 ET from QIAGEN N.V.

    VENLO, The Netherlands, August 8 /PRNewswire-FirstCall/ --
     - Revenues In-Line - EPS Reached High-End of Guidance
     - Revenues Exceed $100 Million for First Time
     QIAGEN N.V. (NASDAQ:   QGEN; Frankfurt, Prime Standard: QIA) today
 announced the results of operations for its second quarter and the six-month
 period ended June 30, 2005.
     The reported consolidated net sales and operating income as well as
 diluted earnings per share were in-line with and on the high-end of the
 Company's projections for the second quarter 2005 as communicated on February
 15 and reiterated on May 3, 2005.
     The Company reported that consolidated net sales for its second quarter
 2005 increased 2% to $100.4 million from $98.6 million for the same period in
 2004. Using identical foreign exchange rates as used for the Company's
 guidance communicated on May 3, 2005, net sales would have increased to
 $101.9 million. At the end of the second quarter 2004, QIAGEN sold its
 synthetic DNA business unit. Excluding $9.9 million of net sales related to
 this former business unit in the second quarter of 2004, consolidated net
 sales increased 13% from $88.7 million in 2004. Reported operating income for
 the quarter decreased 6% to $21.6 million from $22.9 million in the same
 quarter of 2004, and net income for the quarter increased 57% to $13.8
 million from $8.8 million in the same quarter of 2004. Diluted earnings per
 share for the second quarter increased 50% to $0.09 in 2005 from $0.06 in
     Operating income in both periods includes acquisition-related
 amortization and charges. The impact of these costs and charges during the
 second quarter 2005 totaled $3.8 million ($2.7 million net of tax). In the
 second quarter of 2004, amortization on acquired intangibles and expenses
 related to the Company's relocation and restructuring efforts, primarily the
 relocation of QIAGEN's North American marketing and sales operations from
 Valencia, California to Germantown, Maryland, totaled $2.1 million ($1.4
 million net of tax), and charges related to the sale of QIAGEN's synthetic
 DNA business unit totaled $9.8 million ($4.7 million net of tax). Excluding
 these charges, adjusted second quarter operating income increased 2% to $25.4
 million in 2005 from $25.0 million in 2004, and second quarter 2005 adjusted
 net income increased 11% to $16.4 million from $14.9 million. Adjusted
 diluted earnings per share in the second quarter 2005 increased 10% to $0.11
 per share, from $0.10 per share in the second quarter 2004.
     For the six-month period ended June 30, 2005, net sales remained
 essentially unchanged at $195.4 million compared to $194.7 million in the
 comparable period of 2004. Excluding $20.3 million of net sales related to
 the former synthetic DNA business unit sold in the second quarter of 2004,
 consolidated net sales increased 12% from $174.4 million in the six-month
 period ended June 30, 2004. Operating income as reported for the first half
 of 2005 increased 5% to $43.0 million from $41.0 million for the same period
 in 2004, and net income increased 37% to $27.7 million from $20.2 million in
 2004, and diluted earnings per share increased 36% to $0.19 from $0.14.
 Excluding the effect of acquisition-related costs and charges of which $4.3
 million ($3.0 million net of tax) and $3.3 million ($2.2 million net of tax)
 was expensed in the six month periods ended June 30, 2005 and 2004,
 respectively, and the effect of charges related to the sale of QIAGEN's
 synthetic DNA business unit during the second quarter 2004, of $9.8 million
 ($4.7 million net of tax), operating income for the six-month period ended
 June 30, 2005 increased 7% to $47.3 million from $44.3 million in 2004, net
 income increased 14% to $30.8 million in 2005 from $27.1 million in 2004, and
 diluted earnings per share increased 17% to $0.21 from $0.18 in 2004.
     QIAGEN's Second Quarter 2005 at constant currencies:
                            2005      2005        2004
                             Q2        Q2         Q2         Growth Rates
                                    Constant                          Constant
                          Reported  Currency      Reported   Reported Currency
     Consumables             88%       89%         87%         15%      12%
     Instruments             10%       10%         11%          5%       3%
     Other                    2%        1%          2%        -17%     -20%
     Total revenues(1)      100%      100%        100%         13%      10%
     Gross profit            67%       66%         67%          2%      -2%
     Operating income        22%       21%         23%         -6%     -10%
     income, adj.(2)         25%       25%         25%          2%      -3%
     Net income              14%       13%          9%         57%      49%
     Net income, adj.
     (2)                     16%       16%         15%         11%       6%
     EPS in US$ per
     share                  0.09      0.09        0.06         50%      50%
     EPS in US$, adj.
     (2)                    0.11      0.11        0.10         10%      10%
     1 excluding revenues related to synthetic DNA business unit, sold in Q2
     2 excluding acquisition, restructuring and related charges as well as
       amortization on acquired IP
     "We are very pleased with the results of the second quarter. We met our
 financial targets and are experiencing a very dynamic phase of execution on
 our strategic plan. We are recording strong organic growth and are building
 an exceptional product pipeline," said Peer M. Schatz, QIAGEN's Chief
 Executive Officer. "In addition we are also executing well on our strategic
 plan in terms of external growth opportunities and have initiated several key
 partnerships and closed a number of transactions, including six acquisitions
 since April, to leverage our internal capabilities and to further increase
 our leadership and growth in QIAGEN's area of focus."
     "QIAGEN experienced a successful second quarter in 2005. Reported
 revenues were in line with the Company's guidance adjusted for on the January
 2005 foreign exchange rates and operating income exceeded the Company's
 expectations and EPS were on the high end of company's projections for the
 second quarter 2005," said Roland Sackers, QIAGEN's Chief Financial Officer.
 "The business environment is comparable to what we expected and we remain
 committed to our financial and strategic targets set for the second half of
     - Acquired key assets of LumiCyte, Inc. and SuNyx GmbH:
 nanotechnology-based "on-chip" sample preparation for MALDI mass spectrometry.
     - Acquired Nextal Biotechnologies: building leadership in sample
 preparation for protein crystallization.
     - Acquired artus GmbH: optimized and synchronized combination of sample
 preparation and assay solutions and increases QIAGEN's value as a partner to
 the molecular diagnostic industry.
     - PreAnalytiX's PAXgeneTM Blood RNA System received 510(k) clearance ("de
 novo" classification) from the U.S. Food and Drug Administration (FDA),
 received CE mark for the European markets and the ISO 9001:2000 and EN ISO
 13485:2003 certification.
     - Launched a focused sales initiative targeting pharmacogenomics.
     - Acquired the RNAture nucleic acid purification ("smart plastics")
 product portfolio from Hitachi Chemical Research, Inc.
     - Launched what is believed to be the world's first and largest product
 portfolio for integrated genome-wide RNAi and SYBR(R) Green-based RT-PCR
     - Announced the launch of the new GeneChip(R) Globin-Reduction kits for
 Affymetrix Inc. and associated protocol developed in conjunction with
 PreAnalytiX - a joint venture between QIAGEN N.V. and BD (Becton, Dickinson
 and Company).
     - Extended its distribution agreement with Abbott for QIAGEN's RealArtTM
 molecular diagnostic tests.
     - Obtained an exclusive license from Procognia Limited to market and sell
 Procognia's proprietary "on-chip" protein glycoanalysis technology targeting
 novel, "guided protein fractionation" solutions.
     - Entered into a strategic collaboration with Epigenomics to jointly
 develop and introduce a gold-standard, preanalytical solution portfolio for
 DNA methylation testing in diagnostics and research.
     - Entered into a manufacturing and supply agreement with Veridex, LLC, a
 Johnson & Johnson company, to add QIAGEN preanalytical solutions as a
 component of the Veridex' diagnostics.
     - Acquired Beijing-based Tianwei Times, a leading developer, manufacturer
 and supplier of nucleic acid sample preparation consumables in China.
     - Opened a subsidiary in Stockholm, Sweden to directly distribute
 QIAGEN's complete range of products and services to QIAGEN's customers in
     - Opened a subsidiary in Vienna, Austria to directly distribute QIAGEN's
 complete range of products and services to QIAGEN's customers in Austria.
     - PreAnalytiX Distribution Channel Changes: Following its first 510(k)
 clearance, PreAnalytiX is expected to continue very rapid growth and to
 expand its role as a standard in the molecular diagnostic testing market.
 PreAnalytiX obtained a 510(k) clearance from the FDA of the PAXgeneTM Blood
 RNA System earlier than expected. The parties of PreAnalytiX GmbH, a joint
 venture between QIAGEN N.V. and BD (Becton, Dickinson and Company), have
 therefore decided to change the distribution structure for the PreAnayltiX
 IVD-labeled products (regulated products, for in vitro diagnostic use).
 PreAnayltiX products typically consist of a tube component and a nucleic acid
 purification component. Under the new distribution structure, BD will
 distribute the newly 510(k) approved PreAnayltiX tube components. QIAGEN will
 distribute all nucleic acid purification components as well as tubes labelled
 for research use only (RUO). This distribution solution allows customers
 requiring an FDA-approved device to purchase PreAnalytiX IVD labeled tube
 components together with other tube products from BD through their current,
 highly standardized purchasing channels and is expected to further increase
 the speed of standardization of all PreAnalytiX products. As a result of this
 new distribution solution, QIAGEN will recognize approximately 2% less
 revenue in the second half of 2005 and fiscal year 2006. These changes will
 not result in a change in earnings per share compared to the current guidance
 for QIAGEN, as the joint venture's profit will continue to be shared 50/50,
 regardless of the distribution channel being used.
     - Contract manufacturing: QIAGEN has a leading presence in DNA
 purification for gene therapy purposes. The Company's primary strategic
 interest is to sell consumable purification technologies to such customers.
 In order to facilitate some customers' move into this field, QIAGEN has
 marketed plasmid DNA contract manufacturing services. The service was
 performed by partners under guidance of QIAGEN and with use of QIAGEN
 purification technology. QIAGEN has decided to modify the format under which
 such services are offered which will change the accounting for such services
 and result in QIAGEN no longer recognizing revenue on these service
 offerings. QIAGEN expects the effect of this change to reduce expected
 revenues for remainder of 2005 by approximately US$ 2.5 million. QIAGEN
 expects no impact on expected earnings per share.
     Detailed information on the Company's business and financial performance
 will be presented in the Company's conference call on August 9, 2005 at
 9:30am EDT. The corresponding presentation slides will be available 60
 minutes ahead of the conference call on the Company's website at
 www.qiagen.com/goto/080905. A webcast of the conference call will be
 available at www.qiagen.com/goto/080905.
     About QIAGEN:
     QIAGEN N.V., a Netherlands holding company with subsidiaries in Germany,
 the United States, Japan, the United Kingdom, Switzerland, France, Italy,
 Australia, Norway, Austria, Canada, Sweden, and the Netherlands believes it
 is the world's leading provider of innovative enabling technologies and
 products for the separation, purification and handling of nucleic acids and
 proteins. QIAGEN has developed a comprehensive portfolio of more than 320
 proprietary, consumable products for nucleic acid and protein separation,
 purification and handling, nucleic acid amplification, as well as automated
 instrumentation, synthetic nucleic acid products and related services.
 QIAGEN's products are sold in more than 42 countries throughout the world to
 academic research markets and to leading pharmaceutical and biotechnology
 companies. In addition, QIAGEN is positioning its products for sale into
 developing commercial markets, including applied testing markets, clinical
 research, nucleic acid-based molecular diagnostics, and genetic vaccination
 and gene therapy. QIAGEN employs more than 1,500 people worldwide. Further
 information on QIAGEN can be found at www.qiagen.com.
     Certain of the statements contained in this news release may be
 considered forward-looking statements within the meaning of Section 27A of
 the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S.
 Securities Exchange Act of 1934, as amended. To the extent that any of the
 statements contained herein relating to QIAGEN's products, markets, strategy
 or operating results are forward-looking, such statements are based on
 current expectations that involve a number of uncertainties and risks. Such
 uncertainties and risks include, but are not limited to, risks associated
 with management of growth and international operations (including the effects
 of currency fluctuations and risks of dependency on logistics), variability
 of operating results, the commercial development of the applied testing
 markets, clinical research markets and proteomics markets, nucleic acid-based
 molecular diagnostics market, and genetic vaccination and gene therapy
 markets, competition, rapid or unexpected changes in technologies,
 fluctuations in demand for QIAGEN's, products (including fluctuations due to
 the level and timing of customers' funding, budgets, and other factors),
 difficulties in successfully adapting QIAGEN's products to integrated
 solutions and producing such products, the ability of QIAGEN to identify and
 develop new products and to differentiate its products from competitors'
 products, market acceptance of QIAGEN's new products and the integration of
 acquisitions of technologies and businesses. For further information, refer
 to the discussions in reports that QIAGEN has filed with, or furnished to,
 the U.S. Securities and Exchange Commission (SEC).
                                                       Three months
                                                       ended June 30,
                                                2005                 2004
                                            $ 100,354,000        $ 98,637,000
                                               32,811,000          32,494,000
                                                  253,000              -
     Gross profit                              67,290,000          66,143,000
     Research and development                   9,421,000           9,257,000
     Sales and marketing                       23,495,000          21,402,000
     General and administrative                10,006,000          10,789,000
     In-process research and development          714,000              -
     Acquisition and related costs              2,056,000              -
     Relocation and restructuring costs            -                1,805,000
                                               45,692,000          43,253,000
                                               21,598,000          22,890,000
     Interest income                            1,859,000             496,000
     Interest expense                          (1,533,000)           (970,000)
     Research and development grants              966,000             381,000
     Gain (loss) on foreign currency transactions 225,000            (513,000)
     Loss from equity method investees           (649,000)           (696,000)
     Other miscellaneous expense, net             (88,000)         (9,876,000)
                                                  780,000         (11,178,000)
     Income before provision for income taxes  22,378,000          11,712,000
     Provision for income taxes                 8,601,000           2,910,000
     Net income                              $ 13,777,000         $ 8,802,000
     Weighted average number of diluted
     common shares                            149,460,000         148,544,000
     Diluted net income per common share         $ 0.09              $ 0.06
     Adjusted diluted net income per common share
     as well as amortization on acquired IP      $ 0.11              $ 0.10
                                                   QIAGEN N.V.
                                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                  Six months
                                               ended June 30, 2004
                                                       2005          2004
     Net sales                                    $ 195,379,000 $ 194,695,000
     Cost of sales                                   63,414,000    65,126,000
     Cost of sales-acquisition related                  253,000        -
         Gross profit                               131,712,000   129,569,000
     Operating Expenses:
         Research and development                    19,474,000    18,629,000
         Sales and marketing                         45,799,000    45,005,000
         General and administrative                  20,678,000    22,208,000
         Purchased in-process research and
         development                                    714,000        -
         Acquisition and related costs                2,056,000        -
         Relocation and restructuring costs              -          2,746,000
     Total operating expenses                        88,721,000    88,588,000
     Income from operations                          42,991,000    40,981,000
     Other Income (Expense):
         Interest income                              3,732,000       928,000
         Interest expense                            (3,010,000)   (1,992,000)
         Research and development grants              1,174,000       913,000
         Gain (loss) on foreign currency transactions   232,000      (257,000)
         Loss from equity method investee            (1,142,000)   (1,193,000)
         Other miscellaneous income, net                 94,000    (9,461,000)
     Total other income (expense)                     1,080,000   (11,062,000)
         Income before provision for income taxes    44,071,000    29,919,000
         Provision for income taxes                  16,346,000     9,696,000
         Net income                                $ 27,725,000  $ 20,223,000
         Weighted average number of diluted
         common shares                              149,298,000   148,669,000
         Diluted net income per common share          $ 0.19        $ 0.14
         Adjusted diluted net income per common share
         excluding acquisition, restructuring and
         related charges as well as amortization on
         acquired IP                                  $ 0.21        $ 0.18
                                                      QIAGEN N.V.
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                               June 30,          December 31,
                                                2005                2004
     Assets                                  (unaudited)
     Current Assets:
         Cash and cash equivalents         $ 156,995,000       $ 196,375,000
         Marketable securities                51,759,000          30,153,000
         Notes receivable                      3,578,000           4,630,000
         Accounts receivable, net             66,593,000          66,098,000
         Income taxes receivable               3,606,000           3,551,000
         Inventories                          49,311,000          60,164,000
         Deferred income taxes                 9,452,000          11,785,000
         Prepaid expenses and other           20,123,000          14,328,000
             Total current assets            361,417,000         387,084,000
     Long-Term Assets:
         Property, plant and equipment, net  197,922,000         217,108,000
         Goodwill                             81,532,000          56,263,000
         Intangible assets, net               62,239,000          34,758,000
         Deferred income taxes                 8,126,000           3,114,000
         Other assets                         21,803,000          16,272,000
             Total long-term assets          371,622,000         327,515,000
             Total assets                  $ 733,039,000       $ 714,599,000
     Liabilities and Shareholders' Equity
     Current Liabilities:
         Line of credit                         $ 65,000            $ -
         Current portion of long-term debt     6,100,000           6,769,000
         Current portion of capital lease
         obligations                           1,022,000           1,201,000
         Accounts payable                     17,417,000          20,157,000
         Accrued and other liabilities        53,432,000          46,879,000
         Income taxes payable                  9,671,000          10,283,000
         Deferred income taxes                 1,732,000           2,766,000
             Total current liabilities        89,439,000          88,055,000
     Long-Term Liabilities:
         Long-term debt, net of current
         portion                             192,344,000         197,383,000
         Capital lease obligations, net
         of current portion                   11,822,000          13,737,000
         Deferred income taxes                17,814,000          10,372,000
         Other                                 8,668,000           4,676,000
             Total long-term liabilities     230,648,000         226,168,000
     Commitments and Contingencies
     Shareholders' Equity:
         Common shares, EUR .01 par value:
           Authorized--260,000,000 shares
           Issued and outstanding--
           in 2004 and 146,217,518
           shares in 2003                      1,505,000           1,495,000
         Additional paid-in-capital          152,607,000         146,231,000
         Retained earnings                   239,700,000         211,975,000
         Accumulated other comprehensive
         income                               19,140,000          40,675,000
         Total shareholders' equity          412,952,000         400,376,000
         Total liabilities and shareholders'
         equity                            $ 733,039,000       $ 714,599,000
                                                  -                   -