☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
June 30, 2019
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
INCINC. (§ Non-accelerated filer ☐
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Class | Outstanding | |
Common Stock, no par value | 42,711,496 |
Page(s) | ||||||||
PART I. | ||||||||
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4-5 | ||||||||
6 | ||||||||
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Item 2. | ||||||||
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Item 3. | ||||||||
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Item | ||||||||
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PART II. | ||||||||
Item 1. | 28 | |||||||
Item 1A. | 28 | |||||||
Item 6. | 28 | |||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
NET REVENUES | $ | 51,480 | $ | 52,283 | ||||
COST OF SALES | 19,908 | 20,273 | ||||||
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GROSS PROFIT | 31,572 | 32,010 | ||||||
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OPERATING EXPENSES | ||||||||
Research and development | 3,967 | 4,420 | ||||||
Selling and marketing | 7,563 | 8,844 | ||||||
General and administrative | 8,902 | 9,202 | ||||||
Restructuring costs | — | 734 | ||||||
Litigation costs | 589 | 749 | ||||||
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Total operating expenses | 21,021 | 23,949 | ||||||
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OPERATING INCOME | 10,551 | 8,061 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 149 | 72 | ||||||
Interest expense | (363 | ) | (395 | ) | ||||
Other, net | 139 | (80 | ) | |||||
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Total other expense | (75 | ) | (403 | ) | ||||
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EARNINGS BEFORE INCOME TAXES | 10,476 | 7,658 | ||||||
INCOME TAX PROVISION | 2,370 | 1,356 | ||||||
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NET EARNINGS | $ | 8,106 | $ | 6,302 | ||||
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BASIC EARNINGS PER COMMON SHARE | $ | 0.19 | $ | 0.15 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.19 | $ | 0.15 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 42,446 | 42,263 | ||||||
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS | 459 | 399 | ||||||
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 42,905 | 42,662 | ||||||
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ANTI-DILUTIVE SECURITIES: | ||||||||
Common share options and restricted share units | 684 | 1,034 | ||||||
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DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.125 | $ | 0.125 | ||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
NET REVENUES | $ | 48,440 | $ | 51,737 | $ | 150,168 | $ | 160,471 | ||||||||
COST OF SALES | 20,181 | 19,775 | 60,999 | 61,930 | ||||||||||||
GROSS PROFIT | 28,259 | 31,962 | 89,169 | 98,541 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Research and development | 4,594 | 4,264 | 12,294 | 13,159 | ||||||||||||
Selling and marketing | 6,747 | 8,502 | 21,221 | 25,963 | ||||||||||||
General and administrative | 8,002 | 8,380 | 24,288 | 26,470 | ||||||||||||
Acquisition-related costs | 473 | — | 1,445 | — | ||||||||||||
Restructuring costs | 1,801 | 913 | 1,701 | 5,105 | ||||||||||||
Litigation costs | 178 | 1,168 | 1,370 | 3,370 | ||||||||||||
Total operating expenses | 21,795 | 23,227 | 62,319 | 74,067 | ||||||||||||
OPERATING INCOME | 6,464 | 8,735 | 26,850 | 24,474 | ||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest income | 194 | 109 | 547 | 271 | ||||||||||||
Interest expense | (448 | ) | (375 | ) | (1,158 | ) | (1,149 | ) | ||||||||
Other, net | 268 | 151 | (38 | ) | (94 | ) | ||||||||||
Total other income (expense) | 14 | (115 | ) | (649 | ) | (972 | ) | |||||||||
EARNINGS BEFORE INCOME TAXES | 6,478 | 8,620 | 26,201 | 23,502 | ||||||||||||
INCOME TAX PROVISION | 1,399 | 1,795 | 5,922 | 5,087 | ||||||||||||
NET EARNINGS | $ | 5,079 | $ | 6,825 | $ | 20,279 | $ | 18,415 | ||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.12 | $ | 0.16 | $ | 0.48 | $ | 0.44 | ||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.12 | $ | 0.16 | $ | 0.47 | $ | 0.43 | ||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 42,639 | 42,349 | 42,526 | 42,307 | ||||||||||||
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS | 271 | 409 | 381 | 405 | ||||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 42,910 | 42,758 | 42,907 | 42,712 | ||||||||||||
ANTI-DILUTIVE SECURITIES: | ||||||||||||||||
Common share options and restricted share units | 1,215 | 995 | 1,073 | 1,009 | ||||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | — | $ | 0.125 | $ | 0.250 | $ | 0.375 | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
NET EARNINGS | $ | 8,106 | $ | 6,302 | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | (716 | ) | 291 | |||||
Unrealized gain (loss) on cash flow hedge | (577 | ) | 341 | |||||
Income taxes related to items of other comprehensive income | 145 | (112 | ) | |||||
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Other comprehensive income (loss), net of tax | (1,148 | ) | 520 | |||||
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COMPREHENSIVE INCOME | $ | 6,958 | $ | 6,822 | ||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
NET EARNINGS | $ | 5,079 | $ | 6,825 | $ | 20,279 | $ | 18,415 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment | 1,692 | (1,912 | ) | 1,353 | (695 | ) | ||||||||||
Unrealized gain (loss) on cash flow hedge | (297 | ) | 109 | (1,184 | ) | 874 | ||||||||||
Income taxes related to items of other comprehensive income | 222 | (28 | ) | 445 | (247 | ) | ||||||||||
Other comprehensive income (loss), net of tax | 1,617 | (1,831 | ) | 614 | (68 | ) | ||||||||||
COMPREHENSIVE INCOME | $ | 6,696 | $ | 4,994 | $ | 20,893 | $ | 18,347 |
Three Months Ended December 31, | 2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings | $ | 8,106 | $ | 6,302 | ||||
Non-cash items included in net earnings: | ||||||||
Depreciation of property, plant and equipment | 1,253 | 1,146 | ||||||
Amortization of intangible assets | 829 | 938 | ||||||
Amortization of deferred instrument costs | — | 201 | ||||||
Stock-based compensation | 1,670 | 1,759 | ||||||
Deferred income taxes | 96 | (1,624 | ) | |||||
Change in: | ||||||||
Accounts receivable | 317 | (2,989 | ) | |||||
Inventories | (37 | ) | (2,353 | ) | ||||
Prepaid expenses and other current assets | 539 | 87 | ||||||
Accounts payable and accrued expenses | (4,081 | ) | 1,315 | |||||
Income taxes payable | 991 | 497 | ||||||
Other, net | (276 | ) | (108 | ) | ||||
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Net cash provided by operating activities | 9,407 | 5,171 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (1,109 | ) | (1,234 | ) | ||||
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Net cash used for investing activities | (1,109 | ) | (1,234 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends paid | (5,301 | ) | (5,288 | ) | ||||
Payments on term loan | (1,125 | ) | (1,125 | ) | ||||
Proceeds and tax benefits from exercises of stock options | 145 | — | ||||||
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Net cash used for financing activities | (6,281 | ) | (6,413 | ) | ||||
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Effect of Exchange Rate Changes on Cash and Equivalents and Restricted Cash | (257 | ) | 115 | |||||
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Net Increase (Decrease) in Cash and Equivalents and Restricted Cash | 1,760 | (2,361 | ) | |||||
Cash and Equivalents and Restricted Cash at Beginning of Period | 60,763 | 58,072 | ||||||
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Cash and Equivalents and Restricted Cash at End of Period | $ | 62,523 | $ | 55,711 | ||||
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Cash and Equivalents | $ | 61,523 | $ | 54,711 | ||||
Restricted Cash | 1,000 | 1,000 | ||||||
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Cash and Equivalents and Restricted Cash at End of Period | $ | 62,523 | $ | 55,711 | ||||
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Nine Months Ended June 30, | 2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings | $ | 20,279 | $ | 18,415 | ||||
Non-cash items included in net earnings: | ||||||||
Depreciation of property, plant and equipment | 3,984 | 3,320 | ||||||
Amortization of intangible assets | 2,778 | 2,732 | ||||||
Amortization of deferred instrument costs | — | 581 | ||||||
Stock-based compensation | 2,728 | 2,882 | ||||||
Deferred income taxes | (852 | ) | (71 | ) | ||||
Loss on disposition and write-down of fixed assets | 220 | — | ||||||
Change in the following, net of acquisition: | ||||||||
Accounts receivable | 1,014 | (52 | ) | |||||
Inventories | (67 | ) | (4,118 | ) | ||||
Prepaid expenses and other current assets | (1,849 | ) | (2,106 | ) | ||||
Accounts payable and accrued expenses | (1,703 | ) | 2,967 | |||||
Income taxes payable | 1,402 | (1,003 | ) | |||||
Other, net | 412 | 35 | ||||||
Net cash provided by operating activities | 28,346 | 23,582 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (3,314 | ) | (3,340 | ) | ||||
Acquisition of GenePOC business | (45,239 | ) | — | |||||
Net cash used for investing activities | (48,553 | ) | (3,340 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends paid | (10,612 | ) | (15,870 | ) | ||||
Proceeds from revolving credit facility | 75,824 | — | ||||||
Payment of debt issuance costs | (489 | ) | — | |||||
Payments on term loan | (50,250 | ) | (3,375 | ) | ||||
Proceeds and tax benefits from exercises of stock options | 614 | 183 | ||||||
Net cash provided by (used for) financing activities | 15,087 | (19,062 | ) | |||||
Effect of Exchange Rate Changes on Cash and Equivalents and Restricted Cash | (451 | ) | (322 | ) | ||||
Net Increase (Decrease) in Cash and Equivalents and Restricted Cash | (5,571 | ) | 858 | |||||
Cash and Equivalents and Restricted Cash at Beginning of Period | 60,763 | 58,072 | ||||||
Cash and Equivalents and Restricted Cash at End of Period | $ | 55,192 | $ | 58,930 | ||||
Cash and Equivalents | $ | 55,192 | $ | 57,930 | ||||
Restricted Cash | — | 1,000 | ||||||
Cash and Equivalents and Restricted Cash at End of Period | $ | 55,192 | $ | 58,930 | ||||
December 31, 2018 (Unaudited) | September 30, 2018 | |||||||
CURRENT ASSETS | ||||||||
Cash and equivalents | $ | 61,523 | $ | 59,763 | ||||
Accounts receivable, less allowances of $331 and $310 | 31,791 | 32,336 | ||||||
Inventories | 41,889 | 41,993 | ||||||
Prepaid expenses and other current assets | 4,411 | 4,961 | ||||||
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Total current assets | 139,614 | 139,053 | ||||||
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PROPERTY, PLANT AND EQUIPMENT, at Cost | ||||||||
Land | 1,158 | 1,160 | ||||||
Buildings and improvements | 32,443 | 32,444 | ||||||
Machinery, equipment and furniture | 59,637 | 50,606 | ||||||
Construction in progress | 1,727 | 1,631 | ||||||
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Subtotal | 94,965 | 85,841 | ||||||
Less: accumulated depreciation and amortization | 64,108 | 55,846 | ||||||
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Net property, plant and equipment | 30,857 | 29,995 | ||||||
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OTHER ASSETS | ||||||||
Goodwill | 54,403 | 54,637 | ||||||
Other intangible assets, net | 22,265 | 23,113 | ||||||
Restricted cash | 1,000 | 1,000 | ||||||
Deferred instrument costs, net | — | 1,239 | ||||||
Fair value of interest rate swap | 1,145 | 1,722 | ||||||
Deferred income taxes | 121 | 130 | ||||||
Other assets | 452 | 488 | ||||||
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Total other assets | 79,386 | 82,329 | ||||||
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TOTAL ASSETS | $ | 249,857 | $ | 251,377 | ||||
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June 30, | ||||||||
2019 | September 30, | |||||||
(Unaudited) | 2018 | |||||||
CURRENT ASSETS | ||||||||
Cash and equivalents | $ | 55,192 | $ | 59,763 | ||||
Accounts receivable, less allowances of $421 and $310 | 31,995 | 32,336 | ||||||
Inventories | 43,305 | 41,993 | ||||||
Prepaid expenses and other current assets | 6,897 | 4,961 | ||||||
Total current assets | 137,389 | 139,053 | ||||||
PROPERTY, PLANT AND EQUIPMENT, at Cost | ||||||||
Land | 1,157 | 1,160 | ||||||
Buildings and improvements | 32,430 | 32,444 | ||||||
Machinery, equipment and furniture | 63,344 | 50,606 | ||||||
Construction in progress | 1,292 | 1,631 | ||||||
Subtotal | 98,223 | 85,841 | ||||||
Less: accumulated depreciation and amortization | 66,398 | 55,846 | ||||||
Net property, plant and equipment | 31,825 | 29,995 | ||||||
OTHER ASSETS | ||||||||
Goodwill | 90,107 | 54,637 | ||||||
Other intangible assets, net | 62,001 | 23,113 | ||||||
Restricted cash | — | 1,000 | ||||||
Deferred instrument costs, net | — | 1,239 | ||||||
Fair value of interest rate swap | — | 1,722 | ||||||
Deferred income taxes | 125 | 130 | ||||||
Other assets | 989 | 488 | ||||||
Total other assets | 153,222 | 82,329 | ||||||
TOTAL ASSETS | $ | 322,436 | $ | 251,377 | ||||
December 31, 2018 (Unaudited) | September 30, 2018 | |||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 6,228 | $ | 6,260 | ||||
Accrued employee compensation costs | 4,779 | 7,263 | ||||||
Other accrued expenses | 3,035 | 5,065 | ||||||
Current portion of long-term debt | 5,625 | 5,250 | ||||||
Income taxes payable | 1,023 | 335 | ||||||
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Total current liabilities | 20,690 | 24,173 | ||||||
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NON-CURRENT LIABILITIES | ||||||||
Post-employment benefits | 2,490 | 2,646 | ||||||
Long-term debt | 43,438 | 44,930 | ||||||
Long-term income taxes payable | 736 | 441 | ||||||
Deferred income taxes | 3,861 | 3,769 | ||||||
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Totalnon-current liabilities | 50,525 | 51,786 | ||||||
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COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Preferred stock, no par value; 1,000,000 shares authorized; none issued | — | — | ||||||
Common shares, no par value; 71,000,000 shares authorized, 42,488,602 and 42,399,962 shares issued, respectively | — | — | ||||||
Additionalpaid-in capital | 130,876 | 129,193 | ||||||
Retained earnings | 52,291 | 49,602 | ||||||
Accumulated other comprehensive loss | (4,525 | ) | (3,377 | ) | ||||
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Total shareholders’ equity | 178,642 | 175,418 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 249,857 | $ | 251,377 | ||||
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June 30, | ||||||||
2019 | September 30, | |||||||
(Unaudited) | 2018 | |||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 8,381 | $ | 6,260 | ||||
Accrued employee compensation costs | 6,795 | 7,263 | ||||||
Other accrued expenses | 3,214 | 5,065 | ||||||
Current portion of long-term debt | — | 5,250 | ||||||
Income taxes payable | 1,432 | 335 | ||||||
Total current liabilities | 19,822 | 24,173 | ||||||
NON-CURRENT LIABILITIES | ||||||||
Post-employment benefits | 2,384 | 2,646 | ||||||
Long-term debt | 75,824 | 44,930 | ||||||
Long-term income taxes payable | 736 | 441 | ||||||
Deferred income taxes | 2,917 | 3,769 | ||||||
Acquisition consideration | 32,200 | — | ||||||
Total non-current liabilities | 114,061 | 51,786 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Preferred stock, no par value; 1,000,000 shares authorized; none issued | — | — | ||||||
Common shares, no par value; 71,000,000 shares authorized, 42,670,805 and 42,399,962 shares issued, respectively | — | — | ||||||
Additional paid-in capital | 132,311 | 129,193 | ||||||
Retained earnings | 59,005 | 49,602 | ||||||
Accumulated other comprehensive loss | (2,763 | ) | (3,377 | ) | ||||
Total shareholders’ equity | 188,553 | 175,418 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 322,436 | $ | 251,377 | ||||
Common Shares Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||
Balance at September 30, 2018 | 42,400 | $ | 129,193 | $ | 49,602 | $ | (3,377 | ) | $ | 175,418 | ||||||||||
Cash dividends paid - $0.125 per share | — | — | (5,301 | ) | — | (5,301 | ) | |||||||||||||
Conversion of restricted share units and exercise of stock options | 89 | 13 | — | — | 13 | |||||||||||||||
Stock compensation expense | — | 1,670 | — | — | 1,670 | |||||||||||||||
Net earnings | — | — | 8,106 | — | 8,106 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (716 | ) | (716 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | (432 | ) | (432 | ) | |||||||||||||
Adoption of ASU2014-09 | — | — | (116 | ) | — | (116 | ) | |||||||||||||
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Balance at December 31, 2018 | 42,489 | $ | 130,876 | $ | 52,291 | $ | (4,525 | ) | $ | 178,642 | ||||||||||
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Balance at September 30, 2017 | 42,207 | $ | 125,608 | $ | 46,923 | $ | (2,946 | ) | $ | 169,585 | ||||||||||
Cash dividends paid - $0.125 per share | — | — | (5,288 | ) | — | (5,288 | ) | |||||||||||||
Conversion of restricted share units | 100 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 1,759 | — | — | 1,759 | |||||||||||||||
Net earnings | — | — | 6,302 | — | 6,302 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 291 | 291 | |||||||||||||||
Hedging activity, net of tax | — | — | — | 229 | 229 | |||||||||||||||
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Balance at December 31, 2017 | 42,307 | $ | 127,367 | $ | 47,937 | $ | (2,426 | ) | $ | 172,878 | ||||||||||
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Common Shares Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||
THREE MONTHS ENDED JUNE 30, 2019 | ||||||||||||||||||||
Balance at March 31, 2019 | 42,515 | $ | 131,951 | $ | 54,074 | $ | (4,380 | ) | $ | 181,645 | ||||||||||
Conversion of restricted share units and exercise of stock options | 156 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 360 | — | — | 360 | |||||||||||||||
Net earnings | — | — | 5,079 | — | 5,079 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 1,692 | 1,692 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (223 | ) | (223 | ) | |||||||||||||
Adoption of ASU 2018-02 | — | — | (148 | ) | 148 | — | ||||||||||||||
Balance at June 30, 2019 | 42,671 | $ | 132,311 | $ | 59,005 | $ | (2,763 | ) | $ | 188,553 | ||||||||||
THREE MONTHS ENDED JUNE 30, 2018 | ||||||||||||||||||||
Balance at March 31, 2018 | 42,344 | $ | 127,583 | $ | 47,936 | $ | (1,183 | ) | $ | 174,336 | ||||||||||
Cash dividends paid - $0.125 per share | — | — | (5,293 | ) | — | (5,293 | ) | |||||||||||||
Conversion of restricted share units and exercise of stock options | 14 | 183 | — | — | 183 | |||||||||||||||
Stock compensation expense | — | 907 | — | — | 907 | |||||||||||||||
Net earnings | — | — | 6,825 | — | 6,825 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (1,912 | ) | (1,912 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | 81 | 81 | |||||||||||||||
Balance at June 30, 2018 | 42,358 | $ | 128,673 | $ | 49,468 | $ | (3,014 | ) | $ | 175,127 | ||||||||||
NINE MONTHS ENDED JUNE 30, 2019 | ||||||||||||||||||||
Balance at September 30, 2018 | 42,400 | $ | 129,193 | $ | 49,602 | $ | (3,377 | ) | $ | 175,418 | ||||||||||
Cash dividends paid - $0.250 per share | — | — | (10,612 | ) | — | (10,612 | ) | |||||||||||||
Conversion of restricted share units and exercise of stock options | 271 | 390 | — | — | 390 | |||||||||||||||
Stock compensation expense | — | 2,728 | — | — | 2,728 | |||||||||||||||
Net earnings | — | — | 20,279 | — | 20,279 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 1,353 | 1,353 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (887 | ) | (887 | ) | |||||||||||||
Adoption of ASU 2014-09 | — | — | (116 | ) | — | (116 | ) | |||||||||||||
Adoption of ASU 2018-02 | — | — | (148 | ) | 148 | — | ||||||||||||||
Balance at June 30, 2019 | 42,671 | $ | 132,311 | $ | 59,005 | $ | (2,763 | ) | $ | 188,553 | ||||||||||
NINE MONTHS ENDED JUNE 30, 2018 | ||||||||||||||||||||
Balance at September 30, 2017 | 42,207 | $ | 125,608 | $ | 46,923 | $ | (2,946 | ) | $ | 169,585 | ||||||||||
Cash dividends paid - $0.375 per share | — | — | (15,870 | ) | — | (15,870 | ) | |||||||||||||
Conversion of restricted share units and exercise of stock options | 151 | 183 | — | — | 183 | |||||||||||||||
Stock compensation expense | — | 2,882 | — | — | 2,882 | |||||||||||||||
Net earnings | — | — | 18,415 | — | 18,415 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (695 | ) | (695 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | 627 | 627 | |||||||||||||||
Balance at June 30, 2018 | 42,358 | $ | 128,673 | $ | 49,468 | $ | (3,014 | ) | $ | 175,127 | ||||||||||
1. |
|
2. |
|
Balance at September 30, 2018 | New Revenue Standard Adjustment | Balance at October 1, 2018 | ||||||||||
PROPERTY, PLAN AND EQUIPMENT | ||||||||||||
Machinery, equipment and furniture | $ | 50,606 | $ | 8,696 | $ | 59,302 | ||||||
Accumulated depreciation and amortization | (55,846 | ) | (7,611 | ) | (63,457 | ) | ||||||
OTHER ASSETS | ||||||||||||
Deferred instrument costs, net | 1,239 | (1,239 | ) | — | ||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Deferred income taxes | (3,769 | ) | 38 | (3,731 | ) | |||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
Retained earnings | (49,602 | ) | 116 | (49,486 | ) |
Balance at September 30, 2018 | New Revenue Standard Adjustment | Balance at October 1, 2018 | ||||||||||
PROPERTY, PLAN AND EQUIPMENT | ||||||||||||
Machinery, equipment and furniture | $ | 50,606 | $ | 8,696 | $ | 59,302 | ||||||
Accumulated depreciation and amortization | (55,846 | ) | (7,611 | ) | (63,457 | ) | ||||||
OTHER ASSETS | ||||||||||||
Deferred instrument costs, net | 1,239 | (1,239 | ) | — | ||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Deferred income taxes | (3,769 | ) | 38 | (3,731 | ) | |||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
Retained earnings | (49,602 | ) | 116 | (49,486 | ) |
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Americas | $ | 31,147 | $ | 31,575 | (1 | )% | ||||||
EMEA | 5,085 | 5,415 | (6 | )% | ||||||||
ROW | 433 | 500 | (13 | )% | ||||||||
|
|
|
|
|
| |||||||
Total Diagnostics | 36,665 | 37,490 | (2 | )% | ||||||||
|
|
|
|
|
| |||||||
Life Science- | ||||||||||||
Americas | 4,534 | 5,250 | (14 | )% | ||||||||
EMEA | 7,455 | 5,185 | 44 | % | ||||||||
ROW | 2,826 | 4,358 | (35 | )% | ||||||||
|
|
|
|
|
| |||||||
Total Life Science | 14,815 | 14,793 | — | % | ||||||||
|
|
|
|
|
| |||||||
Consolidated | $ | 51,480 | $ | 52,283 | (2 | )% | ||||||
|
|
|
|
|
|
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||
2019 | 2018 | Inc (Dec) | 2019 | 2018 | Inc (Dec) | |||||||||||||||||||
Diagnostics- | ||||||||||||||||||||||||
Americas | $ | 27,356 | $ | 30,585 | (11 | )% | $ | 85,782 | $ | 95,511 | (10 | )% | ||||||||||||
EMEA | 5,076 | 5,144 | (1 | )% | 15,695 | 16,469 | (5 | )% | ||||||||||||||||
ROW | 686 | 639 | 7 | % | 1,806 | 1,660 | 9 | % | ||||||||||||||||
Total Diagnostics | 33,118 | 36,368 | (9 | )% | 103,283 | 113,640 | (9 | )% | ||||||||||||||||
Life Science- | ||||||||||||||||||||||||
Americas | 4,369 | 5,500 | (21 | )% | 14,347 | 15,875 | (10 | )% | ||||||||||||||||
EMEA | 6,389 | 5,756 | 11 | % | 21,608 | 18,307 | 18 | % | ||||||||||||||||
ROW | 4,564 | 4,113 | 11 | % | 10,930 | 12,649 | (14 | )% | ||||||||||||||||
Total Life Science | 15,322 | 15,369 | — | % | 46,885 | 46,831 | — | % | ||||||||||||||||
Consolidated | $ | 48,440 | $ | 51,737 | (6 | )% | $ | 150,168 | $ | 160,471 | (6 | )% |
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Molecular assays | $ | 7,298 | $ | 8,717 | (16 | )% | ||||||
Immunoassays & blood chemistry assays | 29,367 | 28,773 | 2 | % | ||||||||
|
|
|
|
|
| |||||||
Total Diagnostics | $ | 36,665 | $ | 37,490 | (2 | )% | ||||||
|
|
|
|
|
| |||||||
Life Science- | ||||||||||||
Molecular reagents | $ | 6,589 | $ | 5,688 | 16 | % | ||||||
Immunological reagents | 8,226 | 9,105 | (10 | )% | ||||||||
|
|
|
|
|
| |||||||
Total Life Science | $ | 14,815 | $ | 14,793 | — | % | ||||||
|
|
|
|
|
|
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||
2019 | 2018 | Inc (Dec) | 2019 | 2018 | Inc (Dec) | |||||||||||||||||||
Diagnostics- | ||||||||||||||||||||||||
Molecular assays | $ | 5,937 | $ | 7,509 | (21 | )% | $ | 20,371 | $ | 26,200 | (22 | )% | ||||||||||||
Immunoassays & blood chemistry assays | 27,181 | 28,859 | (6 | )% | 82,912 | 87,440 | (5 | )% | ||||||||||||||||
Total Diagnostics | $ | 33,118 | $ | 36,368 | (9 | )% | $ | 103,283 | $ | 113,640 | (9 | )% | ||||||||||||
Life Science- | ||||||||||||||||||||||||
Molecular reagents | $ | 5,495 | $ | 6,049 | (9 | )% | $ | 17,495 | $ | 17,882 | (2 | )% | ||||||||||||
Immunological reagents | 9,827 | 9,320 | 5 | % | 29,390 | 28,949 | 2 | % | ||||||||||||||||
Total Life Science | $ | 15,322 | $ | 15,369 | — | % | $ | 46,885 | $ | 46,831 | — | % |
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Gastrointestinal assays | $ | 18,633 | $ | 20,270 | (8 | )% | ||||||
Respiratory illness assays | 7,977 | 7,486 | 7 | % | ||||||||
Blood chemistry assays | 4,466 | 4,266 | 5 | % | ||||||||
Other | 5,589 | 5,468 | 2 | % | ||||||||
|
|
|
|
|
| |||||||
Total Diagnostics | $ | 36,665 | $ | 37,490 | (2 | )% | ||||||
|
|
|
|
|
|
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||
2019 | 2018 | Inc (Dec) | 2019 | 2018 | Inc (Dec) | |||||||||||||||||||
Diagnostics- | ||||||||||||||||||||||||
Gastrointestinal assays | $ | 17,232 | $ | 20,212 | (15 | )% | $ | 52,024 | $ | 59,631 | (13 | )% | ||||||||||||
Respiratory illness assays | 5,708 | 5,749 | (1 | )% | 21,242 | 22,779 | (7 | )% | ||||||||||||||||
Blood chemistry assays | 4,750 | 5,005 | (5 | )% | 13,510 | 13,528 | — | % | ||||||||||||||||
Other | 5,428 | 5,402 | — | % | 16,507 | 17,702 | (7 | )% | ||||||||||||||||
Total Diagnostics | $ | 33,118 | $ | 36,368 | (9 | )% | $ | 103,283 | $ | 113,640 | (9 | )% |
statements.
Page 10
3. |
|
(i) | a $50,000 cash payment on June 3, 2019, subject to a working capital adjustment and a holdback of $5,000 to secure selling party’s performance of certain post-closing obligations; |
(ii) | two $10,000 installments contingent upon the achievement of certain product development milestones if achieved by September 30, 2020 and March 31, 2021, respectively; and |
(iii) | up to $50,000 of contingent consideration payable if certain financial performance targets are achieved during the twelve-month period ending September 30, 2022. |
PRELIMINARY | ||||
Fair value of assets acquired - | ||||
Accounts receivable | $ | 58 | ||
Inventories | 1,617 | |||
Other current assets | 77 | |||
Property, plant and equipment | 1,520 | |||
Goodwill | 34,482 | |||
Other intangible assets (estimated useful life): | ||||
License agreement (10 years) | 5,990 | |||
Technology (15 years) | 34,040 | |||
Government grant (1.33 years) | 800 | |||
78,584 | ||||
Fair value of liabilities assumed - | ||||
Accounts payable and accrued expenses | 1,082 | |||
Total consideration (including contingent consideration currently estimated at $27,200) | $ | 77,502 | ||
Three Months | Nine Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Revenues | $ | 48,505 | $ | 51,771 | $ | 150,376 | $ | 160,584 | |||||||
Net Earnings | $ | 3,129 | $ | 2,605 | $ | 11,869 | $ | 7,439 | |||||||
Three Months | Nine Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Adjustments to Net Revenues | ||||||||||||||||
GenePOC pre-acquisition revenues | $ | 65 | $ | 34 | $ | 208 | $ | 113 | ||||||||
Adjustments to Net Earnings | ||||||||||||||||
GenePOC pre-acquisition net loss | $ | (3,263 | ) | $ | (3,838 | ) | $ | (9,578 | ) | $ | (9,834 | ) | ||||
Pro forma adjustments: | ||||||||||||||||
Meridian acquisition-related costs | 473 | — | 1,445 | — | ||||||||||||
GenePOC transaction-related costs | 1,245 | — | 1,245 | — | ||||||||||||
Expenses related to non-continuing personnel, locations or activities | 385 | 659 | 1,576 | 1,982 | ||||||||||||
Incremental depreciation and amortization | (585 | ) | (878 | ) | (2,341 | ) | (2,638 | ) | ||||||||
Incremental interest costs | (123 | ) | (211 | ) | (546 | ) | (634 | ) | ||||||||
Tax effects of pro forma adjustments | (82 | ) | 48 | (211 | ) | 148 | ||||||||||
Total Adjustments to Net Earnings | $ | (1,950 | ) | $ | (4,220 | ) | $ | (8,410 | ) | $ | (10,976 | ) |
4. | Cash and Equivalents |
December 31, 2018 | September 30, 2018 | |||||||||||||||
Cash and Equivalents | Other Assets | Cash and Equivalents | Other Assets | |||||||||||||
Institutional money market funds | $ | 20,540 | $ | — | $ | 20,421 | $ | — | ||||||||
Cash on hand - | ||||||||||||||||
Restricted | — | 1,000 | — | 1,000 | ||||||||||||
Unrestricted | 40,983 | — | 39,342 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 61,523 | $ | 1,000 | $ | 59,763 | $ | 1,000 | ||||||||
|
|
|
|
|
|
|
|
June 30, 2019 | September 30, 2018 | |||||||||||||||
Cash and Equivalents | Other Assets | Cash and Equivalents | Other Assets | |||||||||||||
Institutional money market funds | $ | 20,795 | $ | — | $ | 20,421 | $ | — | ||||||||
Cash on hand - | ||||||||||||||||
Restricted | — | — | — | 1,000 | ||||||||||||
Unrestricted | 34,397 | — | 39,342 | — | ||||||||||||
Total | $ | 55,192 | $ | — | $ | 59,763 | $ | 1,000 | ||||||||
|
December 31, 2018 | September 30, 2018 | |||||||
Raw materials | $ | 7,123 | $ | 6,689 | ||||
Work-in-process | 12,037 | 12,098 | ||||||
Finished goods - instruments | 1,224 | 1,191 | ||||||
Finished goods - kits and reagents | 21,505 | 22,015 | ||||||
|
|
|
| |||||
Total | $ | 41,889 | $ | 41,993 | ||||
|
|
|
|
June 30, 2019 | September 30, 2018 | |||||||
Raw materials | $ | 8,394 | $ | 6,689 | ||||
Work-in-process | 12,982 | 12,098 | ||||||
Finished goods - instruments | 1,212 | 1,191 | ||||||
Finished goods - kits and reagents | 20,717 | 22,015 | ||||||
Total | $ | 43,305 | $ | 41,993 | ||||
|
December 31, 2018 | September 30, 2018 | |||||||||||||||
Gross Carrying Value | Accumulated Amortization | Gross Carrying Value | Accumulated Amortization | |||||||||||||
Manufacturing technologies, core products and cell lines | $ | 22,268 | $ | 14,243 | $ | 22,297 | $ | 13,974 | ||||||||
Trade names, licenses and patents | 8,613 | 5,463 | 8,647 | 5,267 | ||||||||||||
Customer lists, customer relationships and supply agreements | 24,385 | 13,295 | 24,461 | 13,051 | ||||||||||||
Non-compete agreements | 720 | 720 | 720 | 720 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 55,986 | $ | 33,721 | $ | 56,125 | $ | 33,012 | ||||||||
|
|
|
|
|
|
|
|
Page 11
June 30, 2019 | September 30, 2018 | |||||||||||||||
Gross Carrying Value | Accumulated Amortization | Gross Carrying Value | Accumulated Amortization | |||||||||||||
Manufacturing technologies, core products and cell lines | $ | 56,962 | $ | 15,029 | $ | 22,297 | $ | 13,974 | ||||||||
Trade names, licenses and patents | 14,775 | 5,958 | 8,647 | 5,267 | ||||||||||||
Customer lists, customer relationships and supply agreements | 24,377 | 13,899 | 24,461 | 13,051 | ||||||||||||
Government grants | 824 | 51 | — | — | ||||||||||||
Total | $ | 96,938 | $ | 34,937 | $ | 55,405 | $ | 32,292 | ||||||||
|
2018, with an additional $1,801 recorded during the three and nine month periods ended June 30, 2019.
December 31, 2018 | September 30, 2018 | |||||||
Severance, other termination benefits and related costs | $ | 368 | $ | 987 | ||||
Lease and other contract termination fees | 8 | 33 | ||||||
Other | 5 | 6 | ||||||
|
|
|
| |||||
Total | $ | 381 | $ | 1,026 | ||||
|
|
|
|
June 30, 2019 | September 30, 2018 | |||||||
Severance, other termination benefits and related costs | $ | 888 | $ | 987 | ||||
Lease and other contract termination fees | — | 33 | ||||||
Other | — | 6 | ||||||
Total | $ | 888 | $ | 1,026 |
|
Page 12
|
In order to limit exposure to volatility in the LIBOR interest rate, the Company and the commercial bank also entered into an interest rate swap that effectively converts the variable interest rate on the term loan to a fixed rate
The term loan and the revolving credit facility areis collateralized by the business assets of the Company’s U.S. subsidiaries and requirerequires compliance with financial covenants that limit the amount of debt obligations and require a minimum level of coverage of fixed charges, as defined in the borrowingcredit facility agreement. As of December 31, 2018,June
|
Page 13
Amounts due from
Diagnostics | Life Science | Corporate(1) | Eliminations(2) | Total | ||||||||||||||||
Three Months Ended December 31, 2018 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-Party | $ | 36,665 | $ | 14,815 | $ | — | $ | — | $ | 51,480 | ||||||||||
Inter-segment | 163 | 176 | — | (339 | ) | — | ||||||||||||||
Operating income | 8,786 | 5,129 | (3,391 | ) | 27 | 10,551 | ||||||||||||||
Goodwill (December 31, 2018) | 35,213 | 19,190 | — | — | 54,403 | |||||||||||||||
Other intangible assets, net (December 31, 2018) | 21,386 | 879 | — | — | 22,265 | |||||||||||||||
Total assets (December 31, 2018) | 178,863 | 71,283 | — | (289 | ) | 249,857 | ||||||||||||||
Three Months Ended December 31, 2017 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-Party | $ | 37,490 | $ | 14,793 | $ | — | $ | — | $ | 52,283 | ||||||||||
Inter-segment | 121 | 192 | — | (313 | ) | — | ||||||||||||||
Operating income | 8,569 | 2,943 | (3,555 | ) | 104 | 8,061 | ||||||||||||||
Goodwill (September 30, 2018) | 35,213 | 19,424 | — | — | 54,637 | |||||||||||||||
Other intangible assets, net (September 30, 2018) | 22,068 | 1,045 | — | — | 23,113 | |||||||||||||||
Total assets (September 30, 2018) | 180,978 | 70,341 | — | 58 | 251,377 |
Diagnostics | Life Science | Corporate (1) | Eliminations (2) | Total | ||||||||||||||||
Three Months Ended June 30, 2019 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 33,118 | $ | 15,322 | $ | — | $ | — | $ | 48,440 | ||||||||||
Inter-segment | 146 | 44 | — | (190 | ) | — | ||||||||||||||
Operating income | 5,078 | 4,289 | (2,926 | ) | 23 | 6,464 | ||||||||||||||
Goodwill (June 30, 2019) | 70,943 | 19,164 | — | — | 90,107 | |||||||||||||||
Other intangible assets, net (June 30, 2019) | 61,401 | 600 | — | — | 62,001 | |||||||||||||||
Total assets (June 30, 2019) | 252,575 | 69,242 | — | 619 | 322,436 | |||||||||||||||
Three Months Ended June 30, 2018 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 36,368 | $ | 15,369 | $ | — | $ | — | $ | 51,737 | ||||||||||
Inter-segment | 80 | 96 | — | (176 | ) | — | ||||||||||||||
Operating income | 8,591 | 3,706 | (3,646 | ) | 84 | 8,735 | ||||||||||||||
Goodwill (September 30, 2018) | 35,213 | 19,424 | — | — | 54,637 | |||||||||||||||
Other intangible assets, net (September 30, 2018) | 22,068 | 1,045 | — | — | 23,113 | |||||||||||||||
Total assets (September 30, 2018) | 180,978 | 70,341 | — | 58 | 251,377 | |||||||||||||||
Nine Months Ended June 30, 2019 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 103,283 | $ | 46,885 | $ | — | $ | — | $ | 150,168 | ||||||||||
Inter-segment | 398 | 273 | — | (671 | ) | — | ||||||||||||||
Operating income | 20,455 | 14,781 | (8,450 | ) | 64 | 26,850 | ||||||||||||||
Nine Months Ended June 30, 2018 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 113,640 | $ | 46,831 | $ | — | $ | — | $ | 160,471 | ||||||||||
Inter-segment | 281 | 363 | — | (644 | ) | — | ||||||||||||||
Operating income | 25,701 | 10,286 | (11,744 | ) | 231 | 24,474 |
(1) | Includes Restructuring and Litigation Costs of |
(2) | Eliminations consist of inter-segment transactions. |
|
Page 14
nine months ended June 30, 2018.
12. | FDA Matters Related to LeadCare |
Page 15
June 30, 2019
Life Science revenues were flat (2% increase in constant-currency).
1) | These measures help to appropriately evaluate and compare the results of operations from period to period by removing the impacts of these |
2) | These measures are used by our management for various purposes, including evaluating performance against incentive bonus achievement targets, comparing performance from period to period in presentations to our board of directors, and as a basis for strategic planning and forecasting. |
Three Months | ||||||||
Ended December 31, | ||||||||
2018 | 2017 | |||||||
Operating Expenses - | ||||||||
U.S. GAAP basis | $ | 21,021 | $ | 23,949 | ||||
Restructuring costs | — | (734 | ) | |||||
Litigation costs | (589 | ) | (749 | ) | ||||
|
|
|
| |||||
Adjusted Operating Expenses | $ | 20,432 | $ | 22,466 | ||||
|
|
|
| |||||
Operating Income - | ||||||||
U.S. GAAP basis | $ | 10,551 | $ | 8,061 | ||||
Restructuring costs | — | 734 | ||||||
Litigation costs | 589 | 749 | ||||||
|
|
|
| |||||
Adjusted Operating Income | $ | 11,140 | $ | 9,544 | ||||
|
|
|
| |||||
Net Earnings - | ||||||||
U.S. GAAP basis | $ | 8,106 | $ | 6,302 | ||||
Restructuring costs(1) | — | 535 | ||||||
Litigation costs(1) | 452 | 545 | ||||||
One-time benefit from tax law change | — | (1,695 | ) | |||||
Repatriation transition tax | — | 854 | ||||||
|
|
|
| |||||
Adjusted Net Earnings | $ | 8,558 | $ | 6,541 | ||||
|
|
|
| |||||
Net Earnings per Basic Common Share - | ||||||||
U.S. GAAP basis | $ | 0.19 | $ | 0.15 | ||||
Restructuring costs(1) | — | 0.01 | ||||||
Litigation costs(1) | 0.01 | 0.01 | ||||||
One-time benefit from tax law change | — | (0.04 | ) | |||||
Repatriation transition tax | — | 0.02 | ||||||
|
|
|
| |||||
Adjusted Basic EPS | $ | 0.20 | $ | 0.15 | ||||
|
|
|
| |||||
Net Earnings per Diluted Common Share - | ||||||||
U.S. GAAP basis | $ | 0.19 | $ | 0.15 | ||||
Restructuring costs(1) | — | 0.01 | ||||||
Litigation costs(1) | 0.01 | 0.01 | ||||||
One-time benefit from tax law change | — | (0.04 | ) | |||||
Repatriation transition tax | — | 0.02 | ||||||
|
|
|
| |||||
Adjusted Diluted EPS | $ | 0.20 | $ | 0.15 | ||||
|
|
|
|
Three Months | Nine Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating Expenses - | ||||||||||||||||
U.S. GAAP basis | $ | 21,795 | $ | 23,227 | $ | 62,319 | $ | 74,067 | ||||||||
Acquisition-related costs | (473 | ) | — | (1,445 | ) | — | ||||||||||
Restructuring costs | (1,801 | ) | (913 | ) | (1,701 | ) | (5,105 | ) | ||||||||
Litigation costs | (178 | ) | (1,168 | ) | (1,370 | ) | (3,370 | ) | ||||||||
Adjusted Operating Expenses | $ | 19,343 | $ | 21,146 | $ | 57,803 | $ | 65,592 | ||||||||
Operating Income - | ||||||||||||||||
U.S. GAAP basis | $ | 6,464 | $ | 8,735 | $ | 26,850 | $ | 24,474 | ||||||||
Acquisition-related costs | 473 | — | 1,445 | — | ||||||||||||
Restructuring costs | 1,801 | 913 | 1,701 | 5,105 | ||||||||||||
Litigation costs | 178 | 1,168 | 1,370 | 3,370 | ||||||||||||
Adjusted Operating Income | $ | 8,916 | $ | 10,816 | $ | 31,366 | $ | 32,949 | ||||||||
Net Earnings - | ||||||||||||||||
U.S. GAAP basis | $ | 5,079 | $ | 6,825 | $ | 20,279 | $ | 18,415 | ||||||||
Acquisition-related costs (1) | 363 | — | 1,108 | — | ||||||||||||
Restructuring costs (1) | 1,381 | 685 | 1,305 | 3,737 | ||||||||||||
Litigation costs (1) | 137 | 864 | 1,051 | 2,467 | ||||||||||||
One-time benefit from tax law change | — | (652 | ) | — | (2,347 | ) | ||||||||||
Repatriation transition tax | — | — | — | 854 | ||||||||||||
Adjusted Net Earnings | $ | 6,960 | $ | 7,722 | $ | 23,743 | $ | 23,126 | ||||||||
Net Earnings per Basic Common Share - | ||||||||||||||||
U.S. GAAP basis | $ | 0.12 | $ | 0.16 | $ | 0.48 | $ | 0.44 | ||||||||
Acquisition-related costs | 0.01 | — | 0.03 | — | ||||||||||||
Restructuring costs | 0.03 | 0.02 | 0.03 | 0.09 | ||||||||||||
Litigation costs | — | 0.02 | 0.02 | 0.06 | ||||||||||||
One-time benefit from tax law change | — | (0.02 | ) | — | (0.06 | ) | ||||||||||
Repatriation transition tax | — | — | — | 0.02 | ||||||||||||
Adjusted Basic EPS | $ | 0.16 | $ | 0.18 | $ | 0.56 | $ | 0.55 | ||||||||
Net Earnings per Diluted Common Share - | ||||||||||||||||
U.S. GAAP basis | $ | 0.12 | $ | 0.16 | $ | 0.47 | $ | 0.43 | ||||||||
Acquisition-related costs | 0.01 | — | 0.03 | — | ||||||||||||
Restructuring costs | 0.03 | 0.02 | 0.03 | 0.09 | ||||||||||||
Litigation costs | — | 0.02 | 0.02 | 0.06 | ||||||||||||
One-time benefit from tax law change | — | (0.02 | ) | — | (0.05 | ) | ||||||||||
Repatriation transition tax | — | — | — | 0.02 | ||||||||||||
Adjusted Diluted EPS (2) | $ | 0.16 | $ | 0.18 | $ | 0.55 | $ | 0.54 | ||||||||
(1) | These acquisition-related costs, restructuring costs, and litigation costs are net of the following income tax year-to-date period; and $0, $1,368 and $903, respectively, for the fiscal 2018year-to-date period. These tax effects were calculated using the effective tax rates of the jurisdictions in which the costs were incurred. |
(2) | Net Earnings per Diluted Common Share for the fiscal 2018 year-to-date period does not sum to the Adjusted EPS amounts due to rounding. |
Below are analyses of the Company’s revenue, provided for each of the following:
By Reportable Segment & Geographic Region
By Product Platform/Type
Revenue Overview- By Reportable Segment & Geographic Region
Our reportable segments are Diagnostics and Life Science, with products sold and distributed in the countries comprising North and Latin America (the “Americas”); Europe, Middle East and Africa (“EMEA”); and other countries outside of the Americas and EMEA (rest of the world, or “ROW”). A full description of our segments is set forth in Note 9 10,
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Inc (Dec) | ||||||||||
Diagnostics - | ||||||||||||
Americas | $ | 31,147 | $ | 31,575 | (1 | )% | ||||||
EMEA | 5,085 | 5,415 | (6 | )% | ||||||||
ROW | 433 | 500 | (13 | )% | ||||||||
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Total Diagnostics | 36,665 | 37,490 | (2 | )% | ||||||||
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Life Science - | ||||||||||||
Americas | 4,534 | 5,250 | (14 | )% | ||||||||
EMEA | 7,455 | 5,185 | 44 | % | ||||||||
ROW | 2,826 | 4,358 | (35 | )% | ||||||||
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Total Life Science | 14,815 | 14,793 | — | % | ||||||||
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Consolidated | $ | 51,480 | $ | 52,283 | (2 | )% | ||||||
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% of total revenues - | ||||||||||||
Diagnostics | 71 | % | 72 | % | ||||||||
Life Science | 29 | % | 28 | % | ||||||||
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Total | 100 | % | 100 | % | ||||||||
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Ex-Americas | 31 | % | 30 | % | ||||||||
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Revenue Overview- By Product Platform/Type
The revenues generated by each of our reportable segments result primarily from the sale Note 2,
Diagnostics
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Revenuesaccompanying Condensed Consolidated Financial Statements for each product platform/type, as well as its relative percentage of segment revenues, are shown below.
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Molecular assays | $ | 7,298 | $ | 8,717 | (16 | )% | ||||||
Immunoassays & blood chemistry assays | 29,367 | 28,773 | 2 | % | ||||||||
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Total Diagnostics | $ | 36,665 | $ | 37,490 | (2 | )% | ||||||
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Life Science- | ||||||||||||
Molecular reagents | $ | 6,589 | $ | 5,688 | 16 | % | ||||||
Immunological reagents | 8,226 | 9,105 | (10 | )% | ||||||||
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Total Life Science | $ | 14,815 | $ | 14,793 | — | % | ||||||
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% of Diagnostics revenues- | ||||||||||||
Molecular assays | 20 | % | 23 | % | ||||||||
Immunoassays & blood chemistry assays | 80 | % | 77 | % | ||||||||
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Total Diagnostics | 100 | % | 100 | % | ||||||||
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% of Life Science revenues- | ||||||||||||
Molecular reagents | 44 | % | 38 | % | ||||||||
Immunological reagents | 56 | % | 62 | % | ||||||||
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Total Life Science | 100 | % | 100 | % | ||||||||
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detailed revenue disaggregation information.
Contributing to the competitive pressures being faced in this product category, the
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respectively.
2018
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Change | ||||||||||
Gross Profit | $ | 31,572 | $ | 32,010 | (1 | )% | ||||||
Gross Profit Margin | 61 | % | 61 | % | — |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||||
Gross Profit | $ | 28,259 | $ | 31,962 | (12 | )% | $ | 89,169 | $ | 98,541 | (10 | )% | ||||||||||||
Gross Profit Margin | 58 | % | 62 | % | -4 points | 59 | % | 61 | % | -2 points |
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2018 First Quarter: |
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Diagnostics | $ | 3,705 | $ | 6,456 | $ | 5,114 | $ | — | $ | 15,275 | ||||||||||
Life Science | 715 | 2,388 | 2,016 | — | 5,119 | |||||||||||||||
Corporate | — | — | 2,072 | 1,483 | 3,555 | |||||||||||||||
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Total 2018 First Quarter Expenses | $ | 4,420 | $ | 8,844 | $ | 9,202 | $ | 1,483 | $ | 23,949 | ||||||||||
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Fiscal 2019 First Quarter: |
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Diagnostics | $ | 3,196 | $ | 6,041 | $ | 4,609 | $ | — | $ | 13,846 | ||||||||||
Life Science | 771 | 1,522 | 1,491 | — | 3,784 | |||||||||||||||
Corporate | — | — | 2,802 | 589 | 3,391 | |||||||||||||||
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Total 2019 First Quarter Expenses | $ | 3,967 | $ | 7,563 | $ | 8,902 | $ | 589 | $ | 21,021 | ||||||||||
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Three Months Ended June 30, 2019 | ||||||||||||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2018: | ||||||||||||||||||||
Diagnostics | $ | 3,479 | $ | 6,011 | $ | 4,570 | $ | 249 | $ | 14,309 | ||||||||||
Life Science | 785 | 2,491 | 1,996 | — | 5,272 | |||||||||||||||
Corporate | — | — | 1,814 | 1,832 | 3,646 | |||||||||||||||
Total Expenses (2018 Quarter) | $ | 4,264 | $ | 8,502 | $ | 8,380 | $ | 2,081 | $ | 23,227 | ||||||||||
Fiscal 2019: | ||||||||||||||||||||
Diagnostics | $ | 3,855 | $ | 5,525 | $ | 4,483 | $ | 1,372 | $ | 15,235 | ||||||||||
Life Science | 739 | 1,222 | 1,673 | — | 3,634 | |||||||||||||||
Corporate | — | — | 1,846 | 1,080 | 2,926 | |||||||||||||||
Total Expenses (2019 Quarter) | $ | 4,594 | $ | 6,747 | $ | 8,002 | $ | 2,452 | $ | 21,795 | ||||||||||
Nine Months Ended June 30, 2019 | ||||||||||||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2018: | ||||||||||||||||||||
Diagnostics | $ | 10,904 | $ | 18,537 | $ | 14,472 | $ | 2,447 | $ | 46,360 | ||||||||||
Life Science | 2,255 | 7,426 | 6,282 | — | 15,963 | |||||||||||||||
Corporate | — | — | 5,716 | 6,028 | 11,744 | |||||||||||||||
Total Expenses (2018 Year-to-Date) | $ | 13,159 | $ | 25,963 | $ | 26,470 | $ | 8,475 | $ | 74,067 | ||||||||||
Fiscal 2019: | ||||||||||||||||||||
Diagnostics | $ | 10,141 | $ | 17,048 | $ | 13,507 | $ | 2,219 | $ | 42,915 | ||||||||||
Life Science | 2,153 | 4,173 | 4,603 | 25 | 10,954 | |||||||||||||||
Corporate | — | — | 6,178 | 2,272 | 8,450 | |||||||||||||||
Total Expenses (2019 Year-to-Date) | $ | 12,294 | $ | 21,221 | $ | 24,288 | $ | 4,516 | $ | 62,319 | ||||||||||
Operating Expenses – Comparisons to Prior Year Periods | ||||||||||||||||||||
Three Months Ended June 30, 2019 | ||||||||||||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2018 Expenses | $ | 4,264 | $ | 8,502 | $ | 8,380 | $ | 2,081 | $ | 23,227 | ||||||||||
% of Revenues | 8 | % | 16 | % | 16 | % | 4 | % | 45 | % | ||||||||||
Fiscal 2019 Increases/(Decreases): | ||||||||||||||||||||
Diagnostics | 376 | (486 | ) | (87 | ) | 1,123 | 926 | |||||||||||||
Life Science | (46 | ) | (1,269 | ) | (323 | ) | — | (1,638 | ) | |||||||||||
Corporate | — | — | 32 | (752 | ) | (720 | ) | |||||||||||||
2019 Expenses | $ | 4,594 | $ | 6,747 | $ | 8,002 | $ | 2,452 | $ | 21,795 | ||||||||||
% of Revenues | 9 | % | 14 | % | 17 | % | 5 | % | 45 | % | ||||||||||
% Increase/(Decrease) | 8 | % | (21 | )% | (5 | )% | 18 | % | (6 | )% |
Operating Expenses – Comparison to Prior Year Periods
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2018 First Quarter Expenses | $ | 4,420 | $ | 8,844 | $ | 9,202 | $ | 1,483 | $ | 23,949 | ||||||||||
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% of Revenues | 8 | % | 17 | % | 18 | % | 3 | % | 46 | % | ||||||||||
Fiscal 2019 Increases (Decreases): |
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Diagnostics | (509 | ) | (415 | ) | (505 | ) | — | (1,429 | ) | |||||||||||
Life Science | 56 | (866 | ) | (525 | ) | — | (1,335 | ) | ||||||||||||
Corporate | — | — | 730 | (894 | ) | (164 | ) | |||||||||||||
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2019 First Quarter Expenses | $ | 3,967 | $ | 7,563 | $ | 8,902 | $ | 589 | $ | 21,021 | ||||||||||
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% of Revenues | 8 | % | 15 | % | 17 | % | 1 | % | 41 | % | ||||||||||
% Increase (Decrease) | (10 | )% | (14 | )% | (3 | )% | (60 | )% | (12 | )% |
Nine Months Ended June 30, 2019 | ||||||||||||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2018 Expenses | $ | 13,159 | $ | 25,963 | $ | 26,470 | $ | 8,475 | $ | 74,067 | ||||||||||
% of Revenues | 8 | % | 16 | % | 16 | % | 5 | % | 46 | % | ||||||||||
Fiscal 2019 Increases/(Decreases): | ||||||||||||||||||||
Diagnostics | (763 | ) | (1,489 | ) | (965 | ) | (228 | ) | (3,445 | ) | ||||||||||
Life Science | (102 | ) | (3,253 | ) | (1,679 | ) | 25 | (5,009 | ) | |||||||||||
Corporate | — | — | 462 | (3,756 | ) | (3,294 | ) | |||||||||||||
2019 Expenses | $ | 12,294 | $ | 21,221 | $ | 24,288 | $ | 4,516 | $ | 62,319 | ||||||||||
% of Revenues | 8 | % | 14 | % | 16 | % | 3 | % | 41 | % | ||||||||||
% Decrease | (7 | )% | (18 | )% | (8 | )% | (47 | )% | (16 | )% |
1) | Decreased year-to-date Research & Development costs due primarily to the timing of product development projects and the clinical trials for our cCMV test in fiscal 2018, while the quarterly increase reflects the addition of the GenePOC business; |
2) | Decreased Selling & Marketing costs due to: (i) the effects of the fiscal 2018 organization streamlining initiatives; and (ii) lower sales commissions resulting from the decrease in sales levels; |
3) | Decreased General & Administrative costs due to: (i) the effects of the fiscal 2018 organization streamlining initiatives; and (ii) lower Quality System remediation costs related to our blood-lead manufacturing facility; and |
4) | Decreased restructuring & litigation costs, along with the effects of the current year acquisition-related costs (reflected within “Other” in the above tables). |
Decreased Selling & Marketing costs due to: (i) lower sales commissions resulting from the decrease in sales levels;2019, and (ii) the effects of the fiscal 2018 organization streamlining initiatives;
Decreased General & Administrative costs due to: (i) lower Quality System remediation costs relatedincreased 10% to our blood-lead manufacturing facility; and (ii) the effects of the fiscal 2018 organization streamlining initiatives; and
Decreased restructuring & litigation costs (reflected with “Other” in the above tables), noting that the only such costs incurred during the fiscal 2019 first quarter were litigation costs related to the matters discussed in Note 10 of the accompanying Condensed Consolidated Financial Statements.
Operating Income
Operating income increased 31% to $10,551$26,850 for the first quarternine months of fiscal 2019, as a result of the factors discussed above, including the costs associated with acquisition and restructuring activities, and litigation costs.
Application of an approximate 24.5% blended rate due to including: (i) the lowering of the applicable rate from 35% to 21% on aphased-in basis;
Recognizing aone-time $1,695 tax benefit, includingrate; (ii) the accompanying
Recording a provisionalone-time $854 tax expense related to (iii) the estimatedvarious foreign income-related items, such as the repatriation transition tax on foreign earnings.
Page 21
potential acquisitions.
The indicated annual cash dividend rate for fiscal 2019 was established at $0.50 per share. Consistent with this annual indicated dividend rate, a cash dividend of $0.125 was declared for the first quarter of fiscal 2019.
In 2016, the Company entered into a $60,000 five-year term loan and related interest rate swap agreement with a commercial bank, the details of which are set forth
GenePOC business.
Page 22
June 30, 2019.
During the quarter ended December 31, 2018, the Company enacted additional controls associated with the adoption of ASU2014-09,Revenue from Contracts with Customers.
31.1 | ||||
31.2 | ||||
32 | ||||
101 | The following financial information from Meridian Bioscience Inc.’s Quarterly Report on Form 10-Q for the quarter ended |
MERIDIAN BIOSCIENCE, INC. | ||||||
Date: August 7, 2019 | By: | /s/ Bryan T. Baldasare | ||||
Bryan T. Baldasare | ||||||
Interim Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer) |