TECHNE CORPORATION
RELEASES UNAUDITED SECOND QUARTER RESULTS
FOR FISCAL YEAR 2008
Minneapolis/January 29, 2008/--Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended December 31, 2007 increased
26.7% to $23.6 million or $.60 per diluted share compared with $18.7 million
or $.47 per diluted share for the quarter ended December 31, 2006. For the
six months ended December 31, 2007, Techne's consolidated net earnings
increased 22.0% to $46.7 million or $1.18 per diluted share compared with
$38.3 million or $0.97 per diluted share for the six months ended December
31, 2006.
Net earnings as a percentage of net sales improved to 38.9% for the six
months ended December 30, 2007 from 36.5% in the first six months of last
year. The improvement in net earnings was mainly due to increased
consolidated net sales. The favorable 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 $339,000 ($.01 per diluted share) for the quarter
and $742,000 ($.02 per diluted share) for the six months ended December 31,
2007.
Consolidated net sales for the quarter and six months ended December 31, 2007
were $62.1 million and $120.1 million, respectively. This was an increase of
18.4% and 14.6% from the quarter and six months ended December 31, 2006,
respectively. Consolidated net sales 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
16.5% and 12.6% for the quarter ended and six months ended December 31, 2007,
respectively, from the comparable prior year periods.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology
Division, R&D Systems China and BiosPacific, were $39.1 million and $78.0
million, for the quarter and six months ended December 31, 2007, increases of
17.1% and 12.5%, respectively. This improvement was primarily the result of
increased volume and the timing of shipments to diagnostic customers. The
timing of diagnostic customer sales is not predictable and these sales
increases are not necessarily indicative of future sales. Excluding the
increased sales to diagnostic customers, Biotechnology net sales increased
12.9% and 12.3% for the quarter ended and six months ended December 31, 2007,
respectively, from the comparable prior year periods.
R&D Europe's net sales for the quarter and six months ended December 31, 2007
were $19.0 million and $34.5 million, increases of 24.7% and 22.3%,
respectively, from the same prior-year periods. In British pounds, R&D
Europe's net sales increased 18.5% and 14.8% for the quarter and six months
ended December 31, 2007. Hematology net sales for the quarter and six months
ended December 31, 2007 were $4.0 million and $7.6 million, increases of 3.8%
and 4.1%, respectively, compared to the quarter and six months ended December
31, 2006.
Tom Oland, President and Chief Executive Officer of Techne Corporation, said
"Second quarter sales exceeded our expectations in all segments of our
business and in nearly all product lines and geographical territories.
However, given the exceptionally strong sales growth rate in this quarter and
due to the Easter holiday falling in March 2008, we caution our shareholders
not to expect a similar sales growth rate in our third fiscal quarter."
Mr. Oland added, "Our business is doing well. We continue to release new
products and build for our future. For fiscal 2008, given current trends for
our specific products, we continue to target revenue growth in the range of
8% to 11%."
Consolidated gross margins were 79.5% and 79.3% for the quarter and six
months ended December 31, 2007 respectively, compared to 79.6% and 79.1% for
the quarter and six months ended December 31, 2006. Biotechnology gross
margins decreased to 79.4% and 79.8% for the quarter and six months ended
December 31, 2007 from 80.8% and 80.2% for the same prior-year periods mainly
as a result of higher volume sales to diagnostic customers. The decrease in
Biotechnology gross margins was partially offset by higher margins in Europe
due to favorable exchange rates and changes in sales mix as a result of
higher sales growth in the Biotechnology Division as compared to the sales
growth in the lower margin Hematology Division.
Selling, general and administrative expenses for the quarter and six months
ended December 31, 2007 increased $1.8 million (20.6%) and $2.8 million
(17.9%), respectively. These increases primarily resulted because of wage and
salary increases and the hiring of additional marketing and administrative
personnel to support the Company's sales growth. The second quarter increase
also resulted from increased professional fees of $340,000, increased stock
option expense of $352,000, additional profit sharing of $331,000, R&D China
selling, general and administrative expenses of $144,000, and the change in
foreign currency exchange rates used to convert British pounds to U.S.
dollars of $116,000. Second quarter selling, general and administrative
expenses increased approximately $2.5 million from the first quarter of
fiscal 2008 due primarily because of costs associated with production and
printing of the annual catalogs and the annual granting of stock options to
the Company's Board of Directors (approximately $1.2 million).
Selling, general and administrative expenses for the six months ended
December 31, 2007 also increased because of increased professional fees of
$386,000, increased stock option expense of $357,000, additional profit
sharing of $536,000, R&D China selling, general and administrative expenses
of $244,000 and the change in foreign currency exchange rates used to convert
British pounds to U.S. dollars of $283,000.
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.
The effective tax rate was 33.6% for the quarter and six months ended
December 31, 2007 as compared to 33.9% for the quarter and six months ended
December 31, 2006. Without significant business developments, the Company
expects its fiscal 2008 effective income tax rate to range from approximately
33.5% to 34.5%.
The Company repurchased approximately 321,000 shares of its common stock
during the second quarter of fiscal 2008 for approximately $20.6 million.
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 growth rates and 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,
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 SIX MONTHS ENDED
------------------ ------------------
12/31/07 12/31/06 12/31/07 12/31/06
-------- -------- -------- --------
Net sales $ 62,142 $ 52,509 $120,129 $104,860
Cost of sales 12,751 10,714 24,855 21,951
-------- -------- -------- --------
Gross margin 49,391 41,795 95,274 82,909
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 10,645 8,830 18,735 15,897
Research and development 5,562 5,044 10,743 9,899
Amortization of intangible assets 282 404 570 807
-------- -------- -------- --------
Total operating expenses 16,489 14,278 30,048 26,603
-------- -------- -------- --------
Operating income 32,902 27,517 65,226 56,306
Other expense (income):
Interest expense -- 815 -- 1,083
Interest income (3,252) (1,956) (6,250) (3,632)
Other non-operating expense, net 573 428 1,142 913
-------- -------- -------- --------
Total other income (2,679) (713) (5,108) (1,636)
-------- -------- -------- --------
Earnings before income taxes 35,581 28,230 70,334 57,942
Income taxes 11,942 9,567 23,623 19,648
-------- -------- -------- --------
Net earnings $ 23,639 $ 18,663 $ 46,711 $ 38,294
======== ======== ======== ========
Earnings per share:
Basic $ 0.60 $ 0.47 $ 1.18 $ 0.97
Diluted $ 0.60 $ 0.47 $ 1.18 $ 0.97
Weighted average common
shares outstanding:
Basic 39,395 39,387 39,442 39,383
Diluted 39,497 39,511 39,542 39,483
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
12/31/07 6/30/07
-------- --------
ASSETS
Cash and equivalents $148,657 $135,485
Short-term available-for-sale investments 40,139 29,289
Trade accounts receivable 29,273 29,559
Other receivables 1,465 1,407
Inventory 9,409 8,757
Other current assets 8,974 8,341
-------- --------
Current assets 237,917 212,838
-------- --------
Available-for-sale investments 95,663 91,433
Property and equipment, net 94,478 91,535
Goodwill and intangible assets, net 29,597 30,167
Other non-current assets 30,558 28,871
-------- --------
Total assets $488,213 $454,844
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LIABILITIES
Current liabilities $ 19,858 $ 17,193
Stockholders' equity 468,355 437,651
-------- --------
Total liabilities and equity $488,213 $454,844
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