TECHNE CORPORATION RELEASES UNAUDITED SECOND QUARTER
RESULTS FOR FISCAL YEAR 2007
Minneapolis/January 30, 2007/--Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended December 31, 2006 increased
13.0% to $18.7 million or $0.47 per diluted share compared to $16.5 million
and $0.42 per diluted share for the quarter ended December 31, 2005. For the
six months ended December 31, 2006, Techne's consolidated net earnings
increased 14.3% to $38.3 million or $0.97 per diluted share compared with
$33.5 million or $0.84 per diluted share for the six months ended December
31, 2005. The improvement in results was mainly due to increased
consolidated net sales and improved gross margin percentages.
Consolidated net sales for the quarter and six months ended December 31, 2006
were $52.5 million and $104.9 million, respectively. This was an increase of
9.3% and 9.5% from the quarter and six months ended December 31, 2005.
Biotechnology net sales, which includes sales by R&D Systems' Biotechnology
Division, Fortron and BiosPacific, for the quarter and six months ended
December 31, 2006 were $33.4 million and $69.3 million, increases of 7.3% and
9.3%, respectively, from the same prior-year periods. Net sales for the
Biotechnology Division increased 11.1% and 10.9% for the quarter and six
months ended December 31, 2006, respectively, mainly as a result of increased
volume from the same prior-year periods. Approximately $500,000 and $1.2
million of the increase in Biotechnology Division net sales for the quarter
and six months ended December 31, 2006, respectively, was the result of price
increases. BiosPacific net sales increased for the quarter ended September
30, 2006 from the first quarter of the prior year, but decreased from the
prior year for the quarter ended December 31, 2006 due to the timing of large
shipments to diagnostic customers.
R&D Europe's net sales for the quarter and six months ended December 31, 2006
were $15.3 million and $28.2 million, increases of 16.4% and 12.8%,
respectively, from the same prior-year periods. In British pound sterling,
R&D Europe's net sales increased 4.3% and 3.5% for the quarter and six months
ended December 31, 2006. Hematology net sales for the quarter and six months
ended December 31, 2006 were $3.8 million and $7.3 million, increases of 1.2%
and 0.2%, respectively, compared to the quarter and six months ended December
31, 2005.
Consolidated gross margins were 79.6% and 79.1% for the quarter and six
months ended December 31, 2006, respectively, compared to 77.7% and 77.2% for
the quarter and six months ended December 31, 2005. Biotechnology gross
margins increased to 80.8% and 80.2% for the quarter and six months ended
December 31, 2006 from 78.4% and 77.9% for the same prior-year periods mainly
as a result of changes in product mix. Biotechnology gross margins were also
affected by the sale of inventory acquired from Fortron and BiosPacific in
fiscal 2006, which was valued at fair market under purchase accounting.
Included in cost of sales for the quarter and six months ended December 31,
2006 were $64,000 and $355,000, respectively, related to the sale of acquired
inventory compared to $281,000 and $856,000, respectively, for the same prior
year periods.
Consolidated net earnings and diluted earnings per share for the quarter and
six months ended December 31, 2006 were favorably impacted by the change in
exchange rates from the prior year used to convert R&D Europe results from
British pound sterling to U.S. dollars. The change in exchange rates from
the prior year increased consolidated net earnings approximately $466,000 and
$672,000 for the quarter and six months ended December 31, 2006,
respectively.
In October 2006, the Company repaid its mortgage debt. The total payment of
$13.8 million included the mortgage principal balance, accrued interest and a
5% prepayment penalty of $651,000. The prepayment penalty and $78,000 of
unamortized loan origination fees were included in interest expense for the
quarter ended December 31, 2006.
Forward Looking Statements:
This earnings release may contain forward-looking statements within the
meaning of the Private Litigation Reform Act. These statements 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 SIX MONTHS ENDED
------------------ ------------------
12/31/06 12/31/05 12/31/06 12/31/05
-------- -------- -------- --------
Net sales $52,509 $48,029 $104,860 $95,738
Cost of sales 10,714 10,695 21,951 21,791
-------- -------- -------- --------
Gross margin 41,795 37,334 82,909 73,947
Operating expenses:
Selling, general and administrative 8,830 7,980 15,897 14,434
Research and development 5,044 4,574 9,899 9,291
Amortization of intangible assets 404 492 807 984
-------- -------- -------- --------
Total operating expenses 14,278 13,046 26,603 24,709
-------- -------- -------- --------
Operating income 27,517 24,288 56,306 49,238
Other expense (income):
Interest expense 815 238 1,083 461
Interest income (1,956) (1,130) (3,632) (2,104)
Other non-operating
expense (income), net 428 281 913 492
-------- -------- -------- --------
Total other expense (income) (713) (611) (1,636) (1,151)
-------- -------- -------- --------
Earnings before income taxes 28,230 24,899 57,942 50,389
Income taxes 9,567 8,385 19,648 16,874
-------- -------- -------- --------
Net earnings $18,663 $16,514 $38,294 $33,515
======== ======== ======== ========
Earnings per share:
Basic $ 0.47 $ 0.42 $ 0.97 $ 0.86
Diluted $ 0.47 $ 0.42 $ 0.97 $ 0.84
Weighted average common
shares outstanding:
Basic 39,387 38,877 39,383 38,815
Diluted 39,511 39,761 39,483 39,730
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
12/31/06 6/30/06
-------- --------
ASSETS
Cash and equivalents $102,558 $ 89,634
Short-term available-for-sale investments 23,751 19,212
Trade accounts receivable 22,923 23,769
Other receivables 1,355 1,309
Inventory 9,210 9,024
Other current assets 7,426 6,874
-------- --------
Current assets 167,223 149,822
Available-for-sale investments 80,205 77,660
Property and equipment, net 90,045 88,772
Goodwill and intangible assets, net 31,215 32,021
Other non-current assets 28,954 22,237
-------- --------
Total assets $397,642 $370,512
======== ========
LIABILITIES
Current liabilities $ 12,160 $ 17,966
Long-term debt -- 12,198
Stockholders' equity 385,482 340,348
-------- --------
Total liabilities and equity $397,642 $370,512
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