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TECHNE CORPORATION RELEASES UNAUDITED FIRST QUARTER
FISCAL YEAR 2012 FINANCIAL RESULTS
Minneapolis/October 25, 2011/ 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.
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
----------------
9/30/11 9/30/10
------- -------
Net sales $77,596 $67,945
Cost of sales 19,209 15,350
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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)
9/30/11 6/30/11
-------- --------
ASSETS
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
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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%
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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)
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Selling, general and administrative expenses
- Adjusted $ 8,690 $ 7,552
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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
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