TECHNE CORPORATION RELEASES UNAUDITED THIRD QUARTER
RESULTS FOR FISCAL YEAR 2007
Minneapolis/May 1, 2007/--Techne Corporation's (NASDAQ: TECH) consolidated
net earnings for the quarter ended March 31, 2007 increased 17.4% to $23.9
million or $0.60 per diluted share compared to $20.3 million and $0.52 per
diluted share for the quarter ended March 31, 2006. For the nine months
ended March 31, 2007, Techne's consolidated net earnings increased 15.5% to
$62.2 million or $1.57 per diluted share compared with $53.9 million or $1.36
per diluted share for the nine months ended March 31, 2006. The improvement
in results was mainly due to increased consolidated net sales and improved
gross margin percentages.
Consolidated net sales for the quarter and nine months ended March 31, 2007
were $60.2 million and $165.1 million, respectively. This was an increase of
9.8% and 9.6% from the quarter and nine months ended March 31, 2006.
Biotechnology net sales, which includes sales by R&D Systems' Biotechnology
Division, Fortron and BiosPacific, for the quarter and nine months ended
March 31, 2007 were $39.1 million and $108.5 million, increases of 6.9% and
8.4%, respectively, from the same prior-year periods. Approximately $1.2
million of the increase in Biotechnology net sales during the first six
months of fiscal 2007 was the result of price increases made in January 2006.
R&D Europe's net sales for the quarter and nine months ended March 31, 2007
were $17.4 million and $45.6 million, increases of 20.1% and 15.5%,
respectively, from the same prior-year periods. In British pound sterling,
R&D Europe's net sales increased 7.2% and 4.9% for the quarter and nine
months ended March 31, 2007. Hematology net sales of $3.7 million for the
quarter and $11.0 million for the nine months ended March 31, 2007 were
essentially flat from the same prior-year periods.
Consolidated gross margins were 80.0% and 79.4% for the quarter and nine
months ended March 31, 2007, respectively, compared to 77.9% and 77.5% for
the quarter and nine months ended March 31, 2006. Biotechnology gross margins
increased to 80.4% and 80.3% for the quarter and nine months ended March 31,
2007 from 78.8% and 78.2% for the same prior-year periods mainly as a result
of changes in product mix. Biotechnology gross margins were also positively
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 nine months ended March 31,
2007 were $100,000 and $455,000, respectively, related to the sale of
acquired inventory compared to $397,000 and $1.3 million, respectively, for
the same prior-year periods.
The income tax rate of 35.2% for the quarter ended March 31, 2007 increased
from 33.9% for the first and second quarter of fiscal 2007 as a result of
changes in state apportionment estimates. Income tax rates are expected to
range from approximately 33.5% to 34.5% in the fourth quarter of fiscal 2007.
Consolidated net earnings and diluted earnings per share for the quarter and
nine months ended March 31, 2007 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 $600,000 and
$1.3 million for the quarter and nine months ended March 31, 2007,
respectively.
Forward Looking Statements:
This earnings release contains forward-looking statements within the meaning
of the Private Litigation Reform Act. These statements, including the
Company's expectations as to income tax rates, 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 NINE MONTHS ENDED
---------------- ------------------
3/31/07 3/31/06 3/31/07 3/31/06
------- ------- -------- --------
Net sales $60,197 $54,813 $165,057 $150,551
Cost of sales 12,019 12,105 33,970 33,896
------- ------- -------- --------
Gross margin 48,178 42,708 131,087 116,655
------- ------- -------- --------
Operating expenses:
Selling, general and administrative 7,229 6,901 23,126 21,335
Research and development 5,169 4,761 15,068 14,052
Amortization of intangible assets 403 492 1,210 1,476
------- ------- -------- --------
Total operating expenses 12,801 12,154 39,404 36,863
------- ------- -------- --------
Operating income 35,377 30,554 91,683 79,792
Other expense (income):
Interest expense -- 245 1,083 706
Interest income (2,237) (1,082) (5,869) (3,186)
Other non-operating
expense (income), net 767 229 1,680 721
------- ------- -------- --------
Total other expense (income) (1,470) (608) (3,106) (1,759)
------- ------- -------- --------
Earnings before income taxes 36,847 31,162 94,789 81,551
Income taxes 12,954 10,815 32,602 27,689
------- ------- -------- --------
Net earnings $23,893 $20,347 $ 62,187 $ 53,862
======= ======= ======== ========
Earnings per share:
Basic $ 0.61 $ 0.52 $ 1.58 $ 1.38
Diluted $ 0.60 $ 0.52 $ 1.57 $ 1.36
Weighted average common
shares outstanding:
Basic 39,414 39,199 39,393 38,941
Diluted 39,543 39,425 39,498 39,631
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
3/31/07 6/30/06
-------- --------
ASSETS
Cash and equivalents $116,276 $ 89,634
Short-term available-for-sale investments 27,822 19,212
Trade accounts receivable 29,582 23,769
Other receivables 1,247 1,309
Inventory 9,574 9,024
Other current assets 7,891 6,874
-------- --------
Current assets 192,392 149,822
Available-for-sale investments 85,854 77,660
Property and equipment, net 89,172 88,772
Goodwill and intangible assets, net 30,571 32,021
Other non-current assets 29,184 22,237
-------- --------
Total assets $427,173 $370,512
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LIABILITIES
Current liabilities $ 15,710 $ 17,966
Long-term debt -- 12,198
Stockholders' equity 411,463 340,348
-------- --------
Total liabilities and equity $427,173 $370,512
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