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TECHNE CORPORATION RELEASES UNAUDITED SECOND QUARTER
RESULTS FOR FISCAL YEAR 2011
Minneapolis/February 1, 2011/ Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended December 31, 2010 increased
7.3% to $26.5 million or $0.71 per diluted share compared with $24.7 million
or $0.66 per diluted share for the quarter ended December 31, 2009. The
increase in consolidated net earnings for the quarter resulted from an
increase in sales and a decrease in income taxes due to the renewal of the
U.S. research and development credit. The $898,000 benefit ($0.02 per share)
from the renewal of the research and development credit includes $659,000
that relates to the previous three calendar quarters. For the six months
ended December 31, 2010, Techne's consolidated net earnings increased 2.8% to
$52.9 million or $1.42 per share compared with $51.5 million or $1.38 per
share for the six months ended December 31, 2009.
Consolidated net sales for the quarter and six months ended December 31, 2010
were $67.7 million and $135.7 million, increases of 3.3% and 2.7%,
respectively, from the quarter and six months ended December 31, 2009.
Consolidated net sales for the quarter and six months were negatively
affected by a stronger U.S. dollar as compared to foreign currencies for the
quarter and six months ended December 31, 2009. Excluding the effect of
changes in foreign currency exchange rates, consolidated net sales increased
5.1% and 4.5% for the quarter and six months ended December 31, 2010,
respectively, from the comparable prior-year periods.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology
Division, R&D Systems China and BiosPacific, were $44.4 million for the
quarter ended December 31, 2010, an increase of 4.8% from $42.4 million for
the quarter ended December 31, 2009. North American biotechnology sales to
industrial pharmaceutical and biotechnology customers increased 3.9% during
the second quarter of fiscal 2011 as compared to the second quarter of fiscal
2010. Biotechnology sales to academic customers and sales in China grew 6.7%
and 19.2%, respectively, while sales to Pacific Rim distributors declined
4.5%, in the second quarter of fiscal 2011 as compared to the second quarter
of fiscal 2010. Biotechnology sales for the six months ended December 31,
2010, were $91.1 million, an increase of 5.4% from $86.4 million for the six
months ended December 31, 2009. North American biotechnology sales to
industrial pharmaceutical and biotechnology customers increased 3.5% during
the six months ended December 31, 2010 as compared to the first six months of
fiscal 2010. Biotechnology sales to academic customers, to Pacific Rim
distributors, and sales in China grew 8.4%, 1.8% and 16.4%, respectively, in
the first six months of fiscal 2011.
R&D Europe's net sales for the quarter and six months ended December 31, 2010
were $18.6 million and $35.0 million, decreasing 0.7% and 4.3%, respectively,
from the same prior-year periods. R&D Europe's net sales increased 5.5% and
2.2% for the quarter and six months ended December 31, 2010 when measured at
currency rates in effect in the comparable prior-year period. Hematology net
sales for the quarter and six months ended December 31, 2010 were $4.6
million and $9.5 million, increases of 7.0% and 6.0% from the comparable
prior-year periods.
Consolidated gross margin for the quarter ended December 31, 2010 increased
$298,000, but decreased $631,000 for the six months ended December 31, 2010
from the same prior-year periods. Biotechnology gross margin increased
$973,000 and $1.8 million for the quarter and six months ended December 31,
2010 as a result of increased net sales partially offset by a decrease in
gross margin percentage. R&D Europe gross margin decreased $564,000 and $2.3
million for the quarter and six months ended December 31, 2010 as compared to
the same prior-year periods. Approximately $1.2 million and $2.4 million of
the decrease in R&D Europe gross margins, respectively, was the result of
changes in exchange rates used to translate sales in foreign currencies into
U.S. dollars. Approximately 15.0% and 6.4% of consolidated net sales for the
six months ended December 31, 2010 were made in euro and British pound
sterling, respectively. The average euro exchange rate declined 8.8% and
8.3% against the U.S. dollar for the quarter and six months ended December
31, 2010 (euro:$1.34 and euro:$1.33) compared to the same prior-year periods
(euro:$1.47 and euro:$1.45). The average British pound sterling exchange
rate declined 3.7% and 4.3% against the U.S. dollar for the quarter and six
months ended December 31, 2010 (British pound:$1.57 and British pound:$1.56)
compared to the same prior-year periods (British pound:$1.63 and British
pound:$1.63). Excluding the effect of the exchange rate on sales, gross
margins for R&D Europe increased $605,000 and $62,000 for the quarter and six
months ended December 31, 2010.
The consolidated gross margin, as a percentage of net sales, was 77.5% for
both the quarter and six months ended December 31, 2010, compared to 79.7%
and 80.1% for the quarter and six months ended December 31, 2009,
respectively. R&D Europe gross margin percentages for the quarter and six
months ended December 31, 2010 were 51.2% and 49.4% compared to 53.9% and
53.7%. The decrease was a result of the effect of exchange rate changes on
net sales as discussed above. Biotechnology gross margin percentages were
77.8% and 78.1% for the quarter and six months ended December 31, 2010
compared to 80.0% and 80.5% for the quarter and six months ended December 31,
2009. The decrease in the Biotechnology gross margin percentage was mainly
the result of changes in product mix and $220,000 additional royalty expense
and royalty initiation fees related to new licensing agreements in the first
quarter of fiscal 2011. Royalty initiation fees in the second quarter of
fiscal 2011 were not material.
Selling, general and administrative expenses for the quarter and six months
ended December 31, 2010 decreased $642,000 (7.1%) and $1.1 million (6.6%)
from the quarter and six months ended December 31, 2009. The decrease in
selling, general and administrative expense for the quarter and six months
resulted primarily from decreased legal expenses, lower printing costs due to
the timing of the printing of the annual Biotechnology catalog and the effect
of the change in exchange rates used to convert foreign expenses to U.S.
dollars.
Research and development expenses for the quarter and six months ended
December 31, 2010 increased $212,000 (3.3%) and $677,000 (5.4%) from the
quarter and six months ended December 31, 2009. 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.
The effective tax rate for the quarter and six months ended December 31, 2010
was 29.6% and 31.0% as compared to 32.6% for both of the same prior-year
periods. The improvement in the effective tax rate in fiscal 2011 was the
result of renewal of the U.S. research and development credit discussed above
and an increase in the deduction for qualified production activities.
Forward Looking Statements:
Our press releases may contain forward-looking statements within the meaning
of the Private Litigation Reform Act. Such statements 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 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 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.
* * * * * * * * * * * *
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 two subsidiaries,
BiosPacific, Inc. (BiosPacific), located in Emeryville, California 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. R&D China and R&D Europe distribute
biotechnology products.
Contact: Greg Melsen, Chief Financial Officer
Kathy Backes, Controller
(612) 379-8854
TECHNE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ ------------------
12/31/10 12/31/09 12/31/10 12/31/09
-------- -------- -------- --------
Net sales $67,708 $65,521 $135,653 $132,055
Cost of sales 15,218 13,329 30,459 26,230
-------- -------- -------- --------
Gross margin 52,490 52,192 105,194 105,825
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 8,365 9,007 15,917 17,045
Research and development 6,603 6,391 13,222 12,545
Amortization of intangible assets 171 240 341 480
-------- -------- -------- --------
Total operating expenses 15,139 15,638 29,480 30,070
-------- -------- -------- --------
Operating income 37,351 36,554 75,714 75,755
Other income (expense):
Interest income 1,020 1,156 1,867 2,324
Other non-operating expense, net (698) (1,011) (955) (1,673)
-------- -------- -------- --------
Total other (expense) income 322 145 912 651
-------- -------- -------- --------
Earnings before income taxes 37,673 36,699 76,626 76,406
Income taxes 11,139 11,978 23,719 24,913
-------- -------- -------- --------
Net earnings $26,534 $24,721 $ 52,907 $ 51,493
======== ======== ======== ========
Earnings per share:
Basic $ 0.72 $ 0.66 $ 1.43 $ 1.38
Diluted $ 0.71 $ 0.66 $ 1.42 $ 1.38
Weighted average common
shares outstanding:
Basic 37,093 37,252 37,066 37,248
Diluted 37,156 37,353 37,131 37,346
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
12/31/10 6/30/10
-------- --------
ASSETS
Cash and equivalents $135,875 $ 94,139
Short-term available-for-sale investments 58,987 44,672
Trade accounts receivable 28,228 30,850
Other receivables 1,986 1,532
Inventory 13,736 13,737
Other current assets 14,748 16,110
-------- --------
Current assets 253,560 201,040
-------- --------
Available-for-sale investments 158,666 171,171
Property and equipment, net 95,096 97,400
Goodwill and intangible assets, net 26,771 27,112
Other non-current assets 21,515 22,093
-------- --------
Total assets $555,608 $518,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 13,672 $ 17,024
Stockholders' equity 541,936 501,792
-------- --------
Total liabilities and stockholders' equity $555,608 $518,816
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