2014

Techne Corporation Releases Unaudited First Quarter Fiscal Year 2012 Financial Results

MINNEAPOLIS, Oct. 25, 2011 /PRNewswire/ -- Techne Corporation's (NASDAQ: TECH) financial results for the quarter ended September 30, 2011 include the following highlights:

  • First quarter earnings were $27.5 million or $.74 per diluted share.  Adjusted earnings for the quarter grew 13.2% to $30.0 million or $.81 per diluted share after adjustment for 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.
    • Foreign exchange transaction losses for the quarter ended September 30, 2011 were $524,000 compared to foreign exchange transaction gains of $505,000 for the quarter ended September 30, 2010 causing a negative $.02 impact on comparable earnings per diluted share.
  • Net sales as reported grew 14.2% to $77.6 million for the quarter.  Organic sales grew 3.2% in the quarter.  

Consolidated net sales and earnings for the quarter ended September 30, 2011 were impacted by the acquisition of Boston Biochem, Inc. (Boston Biochem) on April 1, 2011 and Tocris Holdings Limited (Tocris) on April 28, 2011, including the cost recognized upon the sale of inventory that was written-up to fair value as part of the acquisitions and increased amortization of acquired intangible assets.  Consolidated net sales for the quarter ended September 30, 2011 includes $5.6 million of sales from the acquired companies.

A weaker U.S. dollar as compared to foreign currencies improved sales by $1.9 million in the quarter ended September 30, 2011 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 $72.3 million, an increase of 14.7% from $63.0 million for the quarter ended September 30, 2010.  Biotechnology growth was 2.8% for the quarter ended September 30, 2011 if the sales from the acquisitions and foreign currency benefit are excluded.

Customer sales growth for the Biotechnology segment, excluding sales from products of the acquired entities, from the same prior-year period include:



Quarter Ended


September 30, 2011

R&D Systems Biotechnology Division:


   Industrial, pharmaceutical  and biotechnology

9.3%

   Academic

(2.5%)

   Pacific Rim distributors

Unchanged

R&D Europe:


    Reported

11.6%

    In constant currency

(0.7%)

R&D China:


   Reported

24.0%

   In constant currency

14.1%




Hematology net sales for the quarter ended September 30, 2011 were $5.3 million, an increase of 7.9% from the comparable prior-year period.

The gross margin percentage declined to 75.2% in the quarter ended September 30, 2011 from 77.4% in the comparable prior-year quarter due to the cost recognized upon the sale of the inventory that was written-up to fair value as part of the acquisitions and amortization of acquired intangible assets.  Gross margins were 79.0% and 77.6% the quarters ended September 30, 2011 and 2010, respectively, if such costs and amortization are excluded in both periods.

Selling, general and administrative expenses for the quarter ended September 30, 2011 increased $3.2 million from the quarter ended September 30, 2010. The acquisitions added $1.6 million of selling, general and administrative expenses in the quarter, excluding intangible amortization that increased $461,000 in the quarter.  The increase in selling, general and administrative expense for the quarter was also impacted by increased profit sharing expense of $885,000 for the quarter.

The effective tax rate for the quarter ended September 30, 2011 was 32.0% as compared to 32.3% for the same prior-year period.  Effective tax rates for fiscal 2012 are expected to be 31% to 33%.

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 the 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 had on reported net sales, gross margin percentages, selling, general and administrative expenses, net earnings and earnings per share for the quarter year ended September 30, 2011 as compared to the reported amounts for the same period ended September 30, 2010:

  • 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 acquisitions of Boston Biochem, Inc. on April 1, 2011 and Tocris Holdings, Ltd on April 28, 2011, including the impact of amortizing intangible assets and the recognition of costs upon the sale of inventory written-up to fair value.

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 four subsidiaries, BiosPacific, Inc. (BiosPacific), located in Emeryville, California, Boston Biochem, Inc., located in Cambridge, Massachusetts, R&D Systems China Co. Ltd., (R&D China), located in Shanghai, China and Tocris Cookson, Inc, located in Saint Louis, Missouri.  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 Holding, 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

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)


QUARTER ENDED


9/30/11

9/30/10

Net sales

$77,596

$67,945

Cost of sales

19,209

15,350

Gross margin

58,387

52,595

Operating expenses:



  Selling, general and administrative

10,773

7,613

     Research and development

6,667

6,619

     Total operating expenses

17,440

14,232

Operating income

40,947

38,363

Other income (expense):



  Interest income

728

847

  Other non-operating expense, net

(1,175)

(257)

      Total other (expense) income

(447)

590

Earnings before income taxes

40,500

38,953

Income taxes

12,979

12,580

Net earnings

$27,521

$26,373

Earnings per share:



  Basic

$   0.74

$   0.71

  Diluted

$   0.74

$   0.71

Weighted average common shares outstanding:



  Basic

37,095

37,040

  Diluted

37,170

37,107




TECHNE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

ASSETS

9/30/11

6/30/11

Cash and equivalents

$  79,235

$ 77,613

Short-term available-for-sale investments

54,120

63,200

Trade accounts receivable

34,092

35,914

Other receivables

1,547

1,946

Inventory

42,116

44,906

Other current assets

7,900

6,838

  Current assets

219,010

230,417

Available-for-sale investments

148,949

131,988

Property and equipment, net

94,352

95,398

Goodwill and intangible assets, net

135,390

138,915

Other non-current assets

30,735

20,952

  Total assets

$628,436

$617,670

LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities

$  26,236

$  18,188

Deferred taxes

12,846

13,360

Stockholders' equity

589,354

586,122

  Total liabilities and stockholders' equity

$628,436

$617,670




TECHNE CORPORATION

RECONCILIATION of ORGANIC SALES

(In thousands)

(Unaudited)


QUARTER ENDED


9/30/11

9/30/10

Net sales

$77,596

$67,945

Organic sales adjustments:



    Acquisitions

(5,619)

0

     Impact of foreign currency fluctuations

(1,878)

  0

Organic sales  

$70,099

$67,945




TECHNE CORPORATION

RECONCILIATION of  NET EARNINGS and EARNINGS per SHARE

(In thousands, except per share data)

(Unaudited)



QUARTER ENDED


9/30/11

9/30/10

Net earnings

$27,521

$26,373

Identified adjustments:



    Costs recognized upon sale of acquired inventory

2,148

0

    Amortization of intangibles

1,285

170


3,433

170

    Tax impact of adjustments

(968)

(63)


2,465

107

Net earnings – Adjusted for identified  items

$29,986

$26,480




Earnings per share – Diluted – Adjusted

$   0.81

$   0.71




TECHNE CORPORATION

RECONCILIATION of GROSS MARGIN PERCENTAGES

(Unaudited)



QUARTER ENDED


9/30/11

9/30/10

Gross margin percentage

75.2%

77.4%

Identified adjustments:



    Costs recognized upon sale of acquired inventory

2.8%

0.0%

     Amortization of intangibles

1.0%

0.2%

Gross margin percentage – Adjusted

79.0%

77.6%




TECHNE CORPORATION

RECONCILIATION of SELLING, GENERAL and ADMINISTRATIVE EXPENSES

(In thousands)

(Unaudited)



QUARTER ENDED


9/30/11

9/30/10

Selling, general and administrative expenses

$10,773

$7,613

Identified selling, general and administrative expense  adjustments:



     Acquired companies' expense, excluding intangible amortization

(1,562)

0

     Amortization of intangibles

(521)

(61)

Selling, general and administrative expenses – Adjusted

$8,690

$7,552




TECHNE CORPORATION

RECONCILIATION to INTANGIBLE AMORTIZATION

(In thousands)

(Unaudited)



QUARTER ENDED


9/30/11

9/30/10

Amortization of intangible assets was included in:



    Cost of goods sold

$764

$109

    Selling, general and administrative expenses

521

61

Total amortization of intangible assets

$1,285

$170




SOURCE Techne Corporation



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