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TECHNE CORPORATION RELEASES UNAUDITED SECOND QUARTER
AND SIX MONTH FISCAL YEAR 2012 RESULTS
Minneapolis/January 31, 2012/ Techne Corporation's (NASDAQ:TECH) financial
results for the second quarter and six months ended December 31, 2011 include
the following highlights:
Second quarter earnings were $25.8 million or $0.70 per diluted share.
Adjusted earnings for the quarter grew 5.1%, to $28.0 million or $0.76 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 the acquisitions of Boston Biochem, Inc. and Tocris Holdings
Limited completed in the quarter ended June 30, 2011.
Earnings for the six-month period ended December 31, 2011 were $53.3
million or $1.44 per diluted share. Adjusted earnings for the six-month
period ended December 31, 2011 grew 9.1%, to $58.0 million or $1.56 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.
Net sales as reported grew 10.3% to $74.7 million for the quarter ended
December 31, 2011. Organic sales grew 1.8% in the quarter. Organic sales
exclude sales from acquisitions and the changes in foreign currency rates.
Net sales as reported grew 12.2% to $152 million for the six months ended
December 31, 2011. Organic sales grew 2.5% in the six-month period.
A weaker U.S. dollar as compared to foreign currencies improved sales by
$238,000 and $2.1 million in the quarter and six-month period ended December
31, 2011, respectively, from the comparable prior-year periods.
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 segment net sales were $69.8
million for the quarter ended December 31, 2011, an increase of 10.7% from
$63.1 million for the quarter ended December 31, 2010. Biotechnology net
sales were $142 million for the six-month period ended December 31, 2011, an
increase of 12.7% from $126 million for the six-month period ended December
31, 2010. Biotechnology sales growth was 1.5% and 2.2% for the quarter and
six month period ended December 31, 2011, respectively, if the sales from the
acquisitions and foreign currency benefit are excluded.
Customer sales growth for the Biotechnology segment from the same prior-year
periods include:
Period Ended December 31, 2011
------------------------------
Quarter Six Months
------------- -------------
R&D Systems Biotechnology Division:
Industrial, pharmaceutical and
Biotechnology 4.6% 7.0%
Academic (4.1%) (3.3%)
Pacific Rim distributors 11.2% 5.8%
R&D Europe:
Reported 1.0% 5.9%
Organic (0.8%) (0.8%)
R&D China:
Reported 48.5% 36.7%
Organic 32.8% 23.8%
Hematology net sales for the quarter and six month period ended December 31,
2011 were $4.9 million and $10.1 million, increases of 4.9% and 6.5%,
respectively, from the comparable prior-year periods.
The gross margin percentage declined to 73.9% in the quarter ended December
31, 2011 from 77.4% in the comparable prior year quarter and to 74.6% in the
six-month period ended December 31, 2011 from 77.4% in the comparable prior-
year period, due costs recognized upon the sale of inventory that was
written-up to fair value as part of the acquisitions and amortization of
intangible assets. Gross margins were 77.3% and 77.6% for the quarters ended
December 31, 2011 and 2010, respectively, and 78.5% and 77.6% for the six-
month period ended December 31, 2011 and 2010, respectively, if such costs
were excluded in all periods.
Selling, general and administrative expenses for the quarter and six-month
period ended December 31, 2011 increased $2.2 million and $5.4 million from
the quarter and six-month period ended December 31, 2010. The acquired
businesses added $1.7 million and $3.3 million of selling, general and
administrative expenses, excluding intangible asset amortization, in the
quarter and six-month period ended December 31, 2011, respectively.
Intangible amortization increased $458,000 and $918,000 in the quarter and
six-month period ended December 31, 2011, respectively, from the same prior-
year periods. The increase in selling, general and administrative expense for
the six-month period ended December 31, 2011 was also impacted by increased
profit sharing expense of $832,000 from the comparable prior-year period.
Other non-operating expenses for the quarter and six-month period ended
December 31, 2011 included foreign exchange transaction losses of $104,000
and $629,000, respectively, compared to foreign exchange transaction losses
of $87,000 and foreign exchange transaction gains of $418,000 for the quarter
and six-month period ended December 31, 2010, respectively.
The effective tax rate for the quarter and six-month period ended December
31, 2011 was 31.8% and 31.9% as compared to 29.6% and 31.0% for the same
prior-year periods. The U.S. research and development credit was renewed in
late calendar 2010, reducing the effective tax rate in the quarter and six
months ended December 31, 2010. Effective tax rates for fiscal 2012 are
expected to be 31% to 33%.
Techne repurchased 113,167 and 263,027 shares of its common stock curing the
quarter and six months ended December 31, 2011, respectively, for
approximately $7.5 million and $18.2 million. Approximately $32.4 million
remains available at December 31, 2011 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 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 events had on reported net sales, gross margin
percentages, selling, general and administrative expenses, net earnings and
earnings per share for the quarter and six-month period ended December 31,
2011 as compared to the reported amounts for the same periods ended December
31, 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 on April 1, 2011 and Tocris 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 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.
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
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Net sales $ 74,662 $ 67,708 $152,258 $135,653
Cost of sales 19,492 15,327 38,701 30,677
-------- -------- -------- --------
Gross margin 55,170 52,381 113,557 104,976
Operating expenses:
Selling, general and
administrative 10,651 8,427 21,424 16,040
Research and development 6,837 6,603 13,504 13,222
-------- -------- -------- --------
Total operating expenses 17,488 15,030 34,928 29,262
-------- -------- -------- --------
Operating income 37,682 37,351 78,629 75,714
Other income (expense):
Interest income 798 1,020 1,526 1,867
Other non-operating expense, net (607) (698) (1,782) (955)
-------- -------- -------- --------
Total other (expense) income 191 322 (256) 912
-------- -------- -------- --------
Earnings before income taxes 37,873 37,673 78,373 76,626
Income taxes 12,060 11,139 25,039 23,719
-------- -------- -------- --------
Net earnings $ 25,813 $ 26,534 $ 53,334 $ 52,907
======== ======== ======== ========
Earnings per share:
Basic $ 0.70 $ 0.72 $ 1.44 $ 1.43
Diluted $ 0.70 $ 0.71 $ 1.44 $ 1.42
Weighted average common
shares outstanding:
Basic 36,966 37,093 37,030 37,066
Diluted 37,028 37,156 37,099 37,131
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
12/31/11 6/30/11
-------- --------
ASSETS
Cash and equivalents $ 80,994 $ 77,613
Short-term available-for-sale investments 56,758 63,200
Trade accounts receivable 32,351 35,914
Other receivables 2,194 1,946
Inventory 40,978 44,906
Other current assets 13,941 6,838
-------- --------
Current assets 227,216 230,417
-------- --------
Available-for-sale investments 148,114 131,988
Property and equipment, net 94,604 95,398
Goodwill and intangible assets, net 133,919 138,915
Other non-current assets 20,395 20,952
-------- --------
Total assets $624,248 $617,670
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 14,123 $ 18,188
Deferred taxes 12,619 13,360
Stockholders' equity 597,506 586,122
-------- --------
Total liabilities and stockholders' equity $624,248 $617,670
======== ========
TECHNE CORPORATION
RECONCILIATION of ORGANIC SALES
(In thousands)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Net sales $ 74,662 $ 67,708 $152,258 $135,653
Organic sales adjustments:
Acquisitions (5,515) 0 (11,055) 0
Impact of foreign currency
fluctuations (238) 0 (2,116) 0
-------- -------- -------- --------
Organic sales $ 68,909 $ 67,708 $139,087 $135,653
======== ======== ======== ========
TECHNE CORPORATION
RECONCILIATION of NET EARNINGS and EARNINGS per SHARE
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Net earnings $ 25,813 $ 26,534 $ 53,334 $ 52,907
Identified adjustments:
Costs recognized upon sale of
acquired inventory 1,767 0 3,915 0
Amortization of intangibles 1,268 171 2,553 341
-------- -------- -------- --------
3,035 171 6,468 341
Tax impact of adjustments (858) (63) (1,826) (126)
-------- -------- -------- --------
2,177 108 4,642 215
-------- -------- -------- --------
Net earnings - Adjusted for
identified items $ 27,990 $ 26,642 $ 57,976 $ 53,122
======== ======== ======== ========
Earnings per share - Diluted -
Adjusted $ 0.76 $ 0.72 $ 1.56 $ 1.43
TECHNE CORPORATION
RECONCILIATION of GROSS MARGIN PERCENTAGES
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Gross margin percentage 73.9% 77.4% 74.6% 77.4%
Identified adjustments:
Costs recognized upon sale of
acquired inventory 2.4% 0.0% 2.6% 0.0%
Amortization of intangibles 1.0% 0.2% 1.0% 0.2%
-------- -------- -------- --------
Gross margin percentage - Adjusted 77.3% 77.6% 78.2% 77.6%
======== ======== ======== ========
TECHNE CORPORATION
RECONCILIATION of SELLING, GENERAL and ADMINISTRATIVE EXPENSES
(In thousands)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Selling, general and
administrative expenses $ 10,651 $ 8,427 $ 21,424 $ 16,040
Identified selling, general and
administrative expense adjustments:
Acquired companies' expense,
excluding intangible
amortization (1,720) 0 (3,282) 0
Amortization of intangibles (519) (61) (1,040) ( 122)
-------- -------- -------- --------
Selling, general and administrative
expenses - Adjusted $ 8,412 $ 8,366 $ 17,102 $ 15,918
======== ======== ======== ========
TECHNE CORPORATION
RECONCILIATION of INTANGIBLE AMORTIZATION
(In thousands)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
------------------ -------------------
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Amortization of intangible assets
was included in:
Cost of goods sold $ 749 $ 110 $ 1,513 $ 219
Selling, general and
administrative expenses 519 61 1,040 122
-------- -------- -------- --------
Total amortization of
intangible assets $ 1,268 $ 171 $ 2,553 $ 341
======== ======== ======== ========
