LUMINEX CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 28, 2014

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Exhibit 99.1

LUMINEX CORPORATION REPORTS FIRST QUARTER 2014 RESULTS

AUSTIN, Texas (April 28, 2014) - Luminex Corporation (NASDAQ:LMNX) today announced financial results for the first quarter ended March 31, 2014. Financial and operating highlights include the following:

•
Consolidated first quarter revenues reached $56.6 million, a 6 percent increase over the first quarter of 2013
•
Consolidated gross profit margin was 71 percent for the first quarter of 2014
•
First quarter assay revenue of $21.7 million, an 18 percent increase over the first quarter of 2013. Infectious disease sales comprised approximately 65 percent of total assay revenue, with genetic testing representing 35 percent.
•
First quarter consumable sales of $12.8 million, a 7 percent increase over the first quarter of 2013
•
Operating income for the first quarter of 2014 was $8.2 million, compared to an operating loss of $1.6 million in the first quarter of 2013. Excluding the $7.0 million expense related to the resolution of our molecular diagnostics distribution agreements in the first quarter of 2013, operating income would have been $5.4 million. 
•
GAAP net income for the first quarter was $6.0 million, or $0.14 per diluted share. This compares to a GAAP net loss of $2.5 million, or ($0.06) per diluted share for the first quarter of 2013.
•
Non-GAAP net income for the first quarter was $9.9 million or $0.24 per diluted share. This compares to non-GAAP net income of $7.9 million, or $0.19 per diluted share in the first quarter of 2013. (see Non-GAAP reconciliation)

“We began 2014 with a quarter of solid financial performance, driven by strong growth in our assay business as highlighted above. We are optimistic about the continued prospects and future success of our assay segment, given our current portfolio and pipeline,” said Patrick J. Balthrop, president and chief executive officer of Luminex. “We are also pleased with the traction we are achieving in the adoption of our new products and their performance versus competition; principally our xTAG® infectious disease panels and our new pharmacogenomics tests.”


“In addition, our R&D team continues to achieve key development milestones with our pipeline products, including ARIES, our sample-to-answer real-time PCR instrument, which is on schedule and nearing initiation of clinical trials. As we prepare for the commercial launch of ARIES and our other exciting pipeline products throughout 2014, we will be showcasing them at industry trade shows and conferences demonstrating that the Company is positioned for strategic success.











REVENUE SUMMARY
(in thousands, except percentages)
 
Three Months Ended
 
 
 
 
 
March 31,
 
Variance
 
2014
 
2013
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
6,400

 
$
6,557

 
$
(157
)
 
(2
)%
Consumable sales
12,768

 
11,897

 
871

 
7
 %
Royalty revenue
10,049

 
10,109

 
(60
)
 
(1
)%
Assay revenue
21,660

 
18,324

 
3,336

 
18
 %
All other revenue
5,684

 
6,313

 
(629
)
 
(10
)%
 
$
56,561

 
$
53,200

 
$
3,361

 
6
 %

“We are pleased with the overall financial performance in the first quarter of 2014, which benefited from a concentration of our higher margin items, consumables, royalties and assays. In addition, by managing spending levels across our operating expense classes, we were able to deliver excellent operating leverage and improved performance at the net profit line,” said Harriss T. Currie, senior vice president and chief financial officer. 
 

LUMINEX CORPORATION
REPORTABLE SEGMENT HIGHLIGHTS
(in thousands, except percentages)
 
Three Months Ended
 
 
 
 
 
March 31,
 
Variance
 
2014
 
2013
 
($)
 
(%)
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Technology and strategic partnerships
$
32,061

 
$
31,869

 
$
192

 
1%
Assays and related products
24,500

 
21,331

 
3,169

 
15%
Total Revenue
56,561

 
53,200

 
3,361

 
6%
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Technology and strategic partnerships
9,934

 
7,681

 
2,253

 
29%
Assays and related products
(1,749
)
 
(9,233
)
 
7,484

 
81%
Total Operating income
$
8,185

 
$
(1,552
)
 
$
9,737

 
627%


FINANCIAL OUTLOOK AND GUIDANCE

The Company reaffirms its 2014 annual revenue guidance of between $225 and $240 million.


CONFERENCE CALL

Management will host a conference call to discuss the operating highlights and financial results for the first quarter ended March 31, 2014, at 4:00 p.m. CST/5:00 p.m. EST, Monday, April 28, 2014. The conference call will be webcast live and will be accompanied by a slide presentation, both of which may be accessed at Luminex Corporation’s website at http://www.luminexcorp.com. Simply log on to the web at the address above, go to the Company section and access the Investor Relations link. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary audio/video software. If you are unable to participate during the live webcast, the call and slides will be archived for six months on the website using the ‘replay’ link.





Luminex develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry. The Company’s xMAP system is an open-architecture, multi-analyte technology platform that delivers fast, accurate and cost-effective bioassay results to markets as diverse as pharmaceutical drug discovery, clinical diagnostics and biomedical research, including the genomics and proteomics research markets. The Company’s xMAP technology is sold worldwide and is in use in leading research laboratories as well as major pharmaceutical, diagnostic and biotechnology companies. Further information on Luminex or xMAP can be obtained on the Internet at http://www.luminexcorp.com.

Statements made in this release that express Luminex’s or management’s intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. Forward-looking statements in this release include statements regarding: growth in our partner business, including systems, consumables and royalties; our efforts to sell our molecular diagnostic products directly to end users; the development progress of our pipeline products, including ARIES systems and assay menu, market acceptance of our genetic and infectious disease products, regulatory clearance of our products; the ability of our investment in current initiatives and new products to drive long-term value for our shareholders, management of expenses to create operating leverage; and, projected 2014 revenue. The words "believe," "expect," "intend," "estimate," "anticipate," "will," "could," "should" and similar expressions are intended to further identify such forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. It is important to note that the Company’s actual results or performance could differ materially from those anticipated or projected in such forward-looking statements. Factors that could cause Luminex’s actual results or performance to differ materially include risks and uncertainties relating to, among others, market demand and acceptance of Luminex’s products and technology, the Company’s dependence on strategic partners for development, commercialization and distribution of products, concentration of the Company’s revenue in a limited number of strategic partners, fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and bulk purchases of consumables, our ability to sell products directly to end users, our ability to launch products on time that satisfy market needs with products that we sell, setting of medicare reimbursement codes that adequately reflect the value of our products, Luminex’s ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels, potential shortages of components, competition, the timing of regulatory approvals, the implementation, including any modification, of the Company’s strategic operating plans, the uncertainty regarding the outcome or expense of any litigation brought against Luminex, risks relating to Luminex’s foreign operations, risks and uncertainties associated with implementing our acquisition strategy and the ability to integrate acquired companies, or selected assets into our consolidated business operations, including the ability to recognize the benefits of our acquisitions, as well as the risks discussed under the heading "Risk Factors" in Luminex’s Reports on Forms 10-K and 10-Q, as filed with the Securities and Exchange Commission. The forward-looking statements, including the financial guidance and 2014 outlook, contained herein represent the judgment of Luminex as of the date of this press release, and Luminex expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Luminex’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.






LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
March 31,
 
December 31,
 
2014
 
2013
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
77,386

 
$
67,924

Short-term investments
4,516

 
4,517

Accounts receivable, net
26,994

 
30,948

Inventories, net
30,850

 
30,487

Deferred income taxes
6,561

 
7,265

Prepaids and other
4,014

 
5,229

Total current assets
150,321

 
146,370

Property and equipment, net
33,148

 
32,793

Intangible assets, net
59,275

 
60,295

Deferred income taxes
11,913

 
11,913

Goodwill
50,836

 
50,738

Other
4,463

 
3,937

Total assets
$
309,956

 
$
306,046

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
8,401

 
$
10,698

Accrued liabilities
10,783

 
11,624

Deferred revenue
5,307

 
4,980

Current portion of long term debt
1,548

 
1,194

Total current liabilities
26,039

 
28,496

Long-term debt
62

 
463

Deferred revenue
2,374

 
2,482

Other
5,339

 
4,985

Total liabilities
33,814

 
36,426

Stockholders' equity:
 
 
 
Common stock
41

 
41

Additional paid-in capital
297,720

 
296,931

Accumulated other comprehensive gain
186

 
419

Accumulated deficit
(21,805
)
 
(27,771
)
Total stockholders' equity
276,142

 
269,620

Total liabilities and stockholders' equity
$
309,956

 
$
306,046






LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2014
 
2013
 
(unaudited)
 
 
 
 
Revenue
$
56,561

 
$
53,200

Cost of revenue
16,607

 
15,243

Gross profit
39,954

 
37,957

Operating expenses:
 
 
 
Research and development
11,084

 
12,714

Selling, general and administrative
19,445

 
25,766

Amortization of acquired intangible assets
1,020

 
1,029

Restructuring costs
220

 
—

Total operating expenses
31,769

 
39,509

Income (loss) from operations
8,185

 
(1,552
)
Interest expense from long-term debt
(6
)
 
(28
)
Other expense, net
(19
)
 
(7
)
Income (loss) before income taxes
8,160

 
(1,587
)
Income taxes
(2,194
)
 
(924
)
Net income (loss)
$
5,966

 
$
(2,511
)
 
 
 
 
Net income (loss) per share, basic
$
0.14

 
$
(0.06
)
Shares used in computing net income (loss) per share, basic
41,209

 
40,887

 
 
 
 
Net income per share, diluted
$
0.14

 
$
(0.06
)
Shares used in computing net income per share, diluted
41,825

 
40,887





LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2014
 
2013
 
(unaudited)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
5,966

 
$
(2,511
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
3,928

 
3,804

Stock-based compensation
1,629

 
2,432

Deferred income tax expense
678

 
700

Excess income tax expense from employee stock-based awards
—

 
274

Loss on disposal of assets
5

 
18

Non-cash restructuring charges
772

 
—

Other
(192
)
 
198

Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
4,017

 
8,095

Inventories, net
(899
)
 
(2,404
)
Other assets
332

 
(896
)
Accounts payable
(2,581
)
 
(1,731
)
Accrued liabilities
(2,434
)
 
1,777

Deferred revenue
216

 
263

Net cash provided by operating activities
11,437

 
10,019

Cash flows from investing activities:
 
 
 
Purchases of available-for-sale securities
(2,996
)
 
(2,995
)
Sales and maturities of available-for-sale securities
2,997

 
13,033

Purchase of property and equipment
(3,105
)
 
(2,791
)
Proceeds from sale of assets
—

 
31

Acquired technology rights
—

 
(930
)
Net cash (used in) provided by investing activities
(3,104
)
 
6,348

Cash flows from financing activities:
 
 
 
Proceeds from issuance of common stock
1,102

 
1,401

Payments for stock repurchases
—

 
(5,775
)
Excess income tax expense from employee stock-based awards
—

 
(274
)
Net cash provided by (used in) financing activities
1,102

 
(4,648
)
Effect of foreign currency exchange rate on cash
27

 
(219
)
Change in cash and cash equivalents
9,462

 
11,500

Cash and cash equivalents, beginning of period
67,924

 
42,789

Cash and cash equivalents, end of period
$
77,386

 
$
54,289






LUMINEX CORPORATION
NON-GAAP RECONCILIATION
(in thousands)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2014
 
2013
 
(unaudited)
 
 
 
 
Income (loss) from operations
$
8,185

 
$
(1,552
)
Stock-based compensation
1,629

 
2,432

Amortization of acquired intangible assets
1,020

 
1,029

Costs associated with legal proceedings
790

 
113

Resolution of molecular diagnostic distribution agreements
—

 
7,000

Severance costs
45

 
330

Restructuring costs
810

 
—

Adjusted income from operations
$
12,479

 
$
9,352

 
 
 
 
Interest expense from long-term debt
(6
)
 
(28
)
Other income, net
(19
)
 
(7
)
Income taxes
(2,194
)
 
(924
)
Income tax effect of above adjusting items
(388
)
 
(535
)
Adjusted net income
$
9,872

 
$
7,858

 
 
 
 
Adjusted net income per share, basic
$
0.24

 
$
0.19

Shares used in computing adjusted net income per share, basic
41,209

 
40,887

 
 
 
 
Adjusted net income per share, diluted
$
0.24

 
$
0.19

Shares used in computing adjusted net income per share, diluted
41,825

 
41,750



The Company makes reference in this release to “non-GAAP operating income” and “non-GAAP net income” which excludes the impact of costs associated with the ENZO Life Sciences, Inc. and Irori Technologies, Inc. complaints discussed in the Legal Proceedings section of our previously filed 10-Ks and certain other recurring and non-recurring expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company’s ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company’s past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for income from operations, net income, net income per share or expense information prepared in accordance with GAAP.




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