TECHNE CORPORATION RELEASES UNAUDITED FIRST QUARTER
RESULTS FOR FISCAL YEAR 2007
Minneapolis/October 25, 2006/--Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended September 30, 2006 increased
15.5% to $19.6 million and its earnings per diluted share increased 16.3% to
$0.50 compared with $17.0 million and $.43 per diluted share for the quarter
ended September 30, 2005. The improvement in results was mainly due to
increased consolidated net sales and improved gross margin percentages.
Consolidated net sales for the quarter ended September 30, 2006 were $52.4
million, an increase of 9.7% from the quarter ended September 30, 2005.
Biotechnology net sales for the quarter ended September 30, 2006 were $35.9
million, an increase of 11.2% from the quarter ended September 30, 2005.
Approximately $700,000 of the increase in biotechnology net sales for the
quarter was the result of price increases. R&D Europe's net sales for the
quarter ended September 30, 2006 were $12.9 million, an increase of 8.9% from
the first quarter of the prior year. In British pound sterling, R&D Europe's
net sales increased 2.7% from the same quarter of the prior year. Hematology
net sales for the quarter ended September 30, 2006 were $3.5 million, a
decrease of 0.9% as compared to the quarter ended September 30, 2005.
Consolidated gross margins were 78.5% for the quarter ended September 30,
2006 compared to 76.7% for the quarter ended September 30, 2005.
Biotechnology gross margins were 79.6% for the quarter ended September 30,
2006 compared to 77.5% for the quarter ended September 30, 2005, mainly as a
result of changes in product mix. Biotechnology gross margins were also
affected by purchase accounting related to inventory on hand at the
acquisition date of Fortron and BiosPacific in fiscal 2006. Included in cost
of sales for the quarters ended September 30, 2006 and 2005 were $291,000 and
$575,000, respectively, related to inventory purchase accounting.
Consolidated net earnings and diluted earnings per share for the quarter
ended September 30, 2006 were impacted slightly by the change in exchange
rates from the quarter ended September 30, 2006, used to convert R&D Europe
results from British pound sterling to U.S. dollars. The change in exchange
rates increased consolidated net earnings approximately $206,000 for the
quarter ended September 30, 2006.
In September 2006, the Company invested $7.2 million for an 18% equity
interest in Nephromics, LLC. Nephromics has licensed technology related to
the diagnosis of preeclampsia and has sub-licensed the technology to several
major diagnostic companies for the development of diagnostic assays.
The Company is currently considering paying off its $13.1 million mortgage
debt during the quarter ended December 31, 2006. The interest rate on the
mortgage is at a floating rate, which is currently at 7.8%. Interest expense
for the quarter ended September 30, 2006 was $268,000. The mortgage note has
a 5% prepayment penalty. The Company estimates that prepayment of the
mortgage would result in a reduction in diluted earnings per share of
approximately $.01 in the quarter of payment.
Forward Looking Statements:
This earnings release contains forward-looking statements within the meaning
of the Private Litigation Reform Act. These statements, including the
possibility of prepaying the mortgage and the associated financial impact,
involve risks and uncertainties that may affect the actual results of
operations. The following important factors, among others, have affected
and, in the future, could affect the Company's actual results: the
introduction and acceptance of new biotechnology and hematology products, the
levels and particular directions of research by the Company's customers, the
impact of the growing number of producers of biotechnology research products
and related price competition, the retention of hematology OEM and
proficiency survey business, the impact of currency exchange rate
fluctuations, and the costs and results of research and product development
efforts of the Company and of companies in which the Company has invested or
with which it has formed strategic relationships. For additional information
concerning such factors, see the Company's annual report on Form 10-K and
quarterly reports on Form 10-Q as filed with the Securities and Exchange
Commission. We undertake no obligation to update or revise any forward-
looking statements we make in this release due to new information or future
events. Investors are cautioned not to place undue emphasis on these
statements.
* * * * * * * * * * * * * *
Techne Corporation has two operating subsidiaries: Research and Diagnostic
Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe,
Ltd. (R&D Europe) of Abingdon, England. R&D Systems is a specialty
manufacturer of biological products. R&D Systems has two subsidiaries,
Fortron Bio Science, Inc. (Fortron), located in Minneapolis, and BiosPacific,
Inc. (BiosPacific), located in Emeryville, California. Fortron develops and
manufactures antibodies and BiosPacific is a worldwide supplier of biologics
to manufacturers of in vitro diagnostic systems and immunodiagnostic kits.
R&D Europe is a distributor of biotechnology products.
Contact: Greg Melsen, Chief Financial Officer
Kathy Backes, Controller
(612) 379-8854
TECHNE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED
-----------------
9/30/06 9/30/05
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Net sales $52,351 $47,709
Cost of sales 11,237 11,096
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Gross margin 41,114 36,613
Operating expenses:
Selling, general and administrative 7,067 6,454
Research and development 4,855 4,717
Amortization of intangible assets 403 492
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Total operating expenses 12,325 11,663
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Operating income 28,789 24,950
Other expense (income):
Interest expense 268 223
Interest income (1,676) (974)
Other non-operating expense (income), net 485 211
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Total other expense (income) (923) (540)
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Earnings before income taxes 29,712 25,490
Income taxes 10,081 8,489
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Net earnings $19,631 $17,001
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Earnings per share:
Basic $ 0.50 $ 0.44
Diluted $ 0.50 $ 0.43
Weighted average common shares outstanding:
Basic 39,379 38,754
Diluted 39,469 39,669
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
9/30/06 6/30/06
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ASSETS
Cash and equivalents $ 97,827 $ 89,634
Short-term available-for-sale investments 22,704 19,212
Trade accounts receivable 24,466 23,769
Other receivables 1,218 1,309
Inventory 8,982 9,024
Other current assets 7,286 6,874
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Current assets 162,483 149,822
Available-for-sale investments 76,596 77,660
Property and equipment, net 89,418 88,772
Goodwill and intangible assets, net 31,618 32,021
Other non-current assets 29,090 22,237
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Total assets $ 389,205 $ 370,512
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LIABILITIES
Current liabilities $ 15,606 $ 17,966
Long-term debt 11,902 12,198
Stockholders' equity 361,697 340,348
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Total liabilities and equity $ 389,205 $ 370,512
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