TECHNE CORPORATION RELEASES UNAUDITED FOURTH QUARTER
RESULTS FOR FISCAL YEAR 2007
Minneapolis/August 7, 2007/--Techne Corporation's (NASDAQ: TECH) consolidated
net earnings for the quarter ended June 30, 2007 increased 17.6% to $22.9
million or $.58 per diluted share compared with $19.5 million or $.49 per
diluted share for the quarter ended June 30, 2006. Net earnings as a
percentage of net sales improved from 37.4% in the fourth quarter of last
year to 39.2% for the quarter ended June 30, 2007. For the fiscal year ended
June 30, 2007, Techne's consolidated net earnings increased 16.0% to $85.1
million or $2.15 per diluted share compared with $73.4 million or $1.85 per
diluted share for the fiscal year ended June 30, 2006. Net earnings as a
percentage of net sales improved from 36.2% last year to 38.1% for fiscal
2007. The improvement in net earnings was mainly due to increased
consolidated net sales.
Consolidated net sales for the quarter and fiscal year ended June 30, 2007
were $58.4 million and $223.5 million, respectively. This was an increase of
12.2% and 10.3% from the fourth quarter and fiscal year ended June 30, 2006,
respectively. Fiscal 2007 net sales and earnings were favorably affected by
the strength of the British pound as compared to the U.S. dollar. Excluding
the effect of changes in foreign currency exchange rates, consolidated net
sales increased 10.1% and 7.7% for the quarter and fiscal year ended June 30,
2007, respectively.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology
Division, Fortron and BiosPacific, for the quarter and fiscal year ended June
30, 2007 were $38.1 million and $146.6 million, increases of 11.0% and 9.1%,
respectively, from the same prior-year periods. R&D Europe's net sales for
the quarter and fiscal year were $16.2 million and $61.8 million, increases
of 20.1% and 16.6%, respectively, from the same prior-year periods. In
British pound sterling, R&D Europe's net sales increased 12.0% and 6.6% for
the quarter and fiscal year ended June 30, 2007, respectively. Hematology
net sales for the quarter and fiscal year were $4.1 million and $15.2
million, decreases of 2.7% and 0.9%, respectively.
Gross margins were 78.3% and 77.3% in the fourth quarter of fiscal 2007 and
2006, respectively, and 79.1% and 77.4% for the fiscal years 2007 and 2006,
respectively. The improvement in gross margins resulted from lower cost of
goods sold related to inventories acquired from Fortron and BiosPacific that
were valued at fair market value under purchase accounting, higher margins in
Europe due to favorable exchange rates and changes in sales mix as a result
of sales growth in the Biotechnology Division as compared to sales declines
in the lower margin Hematology Division. Fourth quarter fiscal 2007 margins
declined from the third quarter of fiscal 2007 mainly due to changes in
product mix and valuation estimates in the Biotechnology Division.
Selling, general and administrative expenses for the quarter and fiscal year
ended June 30, 2007 increased $1.6 million (25.1%) and $3.4 million (12.2%),
respectively. The fiscal year expense increase resulted from the change in
foreign currency exchange rates (approximately$750,000) and increases in
personnel and benefit costs, profit sharing and professional fee expenses.
Fourth quarter expenses increased approximately $600,000 from the third
quarter of fiscal 2007 due primarily to the timing of promotional marketing
costs (approximately $300,000) and increased profit sharing costs
(approximately $125,000).
The effective tax rate was 32.9% for the quarter ended June 30, 2007 as
compared to 35.2% for the prior quarter ended March 31, 2007. The fourth
quarter fiscal 2007 effective tax rate was lower than in the third quarter of
fiscal 2007 due to changes in state apportionment estimates that were made in
the third quarter and a $420,000 reduction in estimated tax contingency
reserves made in the fourth quarter. The effective tax rate was 34.0% for
the fiscal years ended both June 30, 2006 and 2007. Without significant
business developments, the Company expects its fiscal 2008 effective income
tax rate to range from approximately 33.5% to 34.5%.
The impact on consolidated net earnings of the change in exchange rates used
to convert R&D Europe results from British pounds to U.S. dollars was
approximately $368,000 ($.01 per diluted share) and $1.6 million ($.04 per
diluted share) for the quarter and fiscal year ended June 30, 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 to subsidiaries,
BiosPacific, Inc. (BiosPacific), located in Emeryville, California and R&D
Systems China Co. Ltd., (R&D China), located in Shanghai, China. BiosPacific
is a worldwide supplier of biologics to manufacturers of in vitro diagnostic
systems and immunodiagnostic kits. R&D China and R&D Europe distribute
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 FISCAL YEAR ENDED
---------------- ------------------
6/30/07 6/30/06 6/30/07 6/30/06
------- ------- -------- --------
Net sales $58,425 $52,066 $223,482 $202,617
Cost of sales 12,697 11,822 46,667 45,718
------- ------- -------- --------
Gross margin 45,728 40,244 176,815 156,899
------- ------- -------- --------
Operating expenses:
Selling, general and administrative 7,839 6,269 30,965 27,604
Research and development 5,014 4,773 20,082 18,825
Amortization of intangible assets 404 491 1,614 1,967
------- ------- -------- --------
Total operating expenses 13,257 11,533 52,661 48,396
------- ------- -------- --------
Operating income 32,471 28,711 124,154 108,503
Other expense (income):
Interest expense -- 258 1,083 964
Interest income (2,565) (1,522) (8,434) (4,708)
Other non-operating expense, net 894 363 2,574 1,084
------- ------- -------- --------
Total other income (1,671) (901) (4,777) (2,660)
------- ------- -------- --------
Earnings before income taxes 34,142 29,612 128,931 111,163
Income taxes 11,218 10,123 43,820 37,812
------- ------- -------- --------
Net earnings $22,924 $19,489 $ 85,111 $ 73,351
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Earnings per share:
Basic $ 0.58 $ 0.50 $ 2.16 $ 1.88
Diluted $ 0.58 $ 0.49 $ 2.15 $ 1.85
Weighted average common
shares outstanding:
Basic 39,444 39,374 39,406 39,049
Diluted 39,555 39,487 39,513 39,594
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
6/30/07 6/30/06
-------- --------
ASSETS
Cash and equivalents $135,485 $ 89,634
Short-term available-for-sale investments 29,289 19,212
Trade accounts receivable 29,559 23,769
Other receivables 1,407 1,309
Inventory 8,757 9,024
Other current assets 8,341 6,874
-------- --------
Current assets 212,838 149,822
Available-for-sale investments 91,433 77,660
Property and equipment, net 91,535 88,772
Goodwill and intangible assets, net 30,167 32,021
Other non-current assets 28,871 22,237
-------- --------
Total assets $454,844 $370,512
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LIABILITIES
Current liabilities $ 17,193 $ 17,966
Long-term debt -- 12,198
Stockholders' equity 437,651 340,348
-------- --------
Total liabilities and equity $454,844 $370,512
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