TECHNE CORPORATION
RELEASES UNAUDITED THIRD QUARTER RESULTS
FOR FISCAL YEAR 2008
Minneapolis/April 29, 2008/--Techne Corporation's (NASDAQ: TECH) consolidated
net earnings for the quarter ended March 31, 2008 increased 23.8% to $29.6
million or $.76 per diluted share compared with $23.9 million or $.60 per
diluted share for the quarter ended March 31, 2007. For the nine months
ended March 31, 2008, Techne's consolidated net earnings increased 22.7% to
$76.3 million or $1.94 per diluted share compared with $62.2 million or $1.57
per diluted share for the nine months ended March 31, 2007.
Net earnings as a percentage of net sales improved to 40.2% for the nine
months ended March 31, 2008 from 37.7% in the first nine 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 foreign currencies (primarily British pound
sterling and Euros) to U.S. dollars was $251,000 ($.006 per diluted share)
for the quarter and $1.0 million ($.026 per diluted share) for the nine
months ended March 31, 2008.
Consolidated net sales for the quarter and nine months ended March 31, 2008
were $69.5 million and $189.7 million, respectively. This was an increase of
15.5% and 14.9% from the quarter and nine months ended March 31, 2007,
respectively. Consolidated net sales were favorably affected by the strength
of foreign currencies as compared to the U.S. dollar. Excluding the effect of
changes in foreign currency exchange rates, consolidated net sales increased
12.6% and 12.4% for the quarter ended and nine months ended March 31, 2008,
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 $45.1 million and $123.1
million, for the quarter and nine months ended March 31, 2008, increases of
15.2% and 13.5%, respectively. This improvement was primarily the result of
increased volume, including 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 13.2% and 12.6% for
the quarter ended and nine months ended March 31, 2008, respectively, from
the comparable prior year periods.
R&D Europe's net sales for the quarter and nine months ended March 31, 2008
were $20.2 million and $54.7 million, increases of 16.2% and 20.0%,
respectively, from the same prior-year periods. R&D Europe's net sales
increased 6.0% and 10.9% for the quarter and nine months ended March 31, 2008
when measured at currency rates in effect in the comparable prior periods.
Hematology net sales for the quarter and nine months ended March 31, 2008
were $4.2 million and $11.8 million, increases of 14.8% and 7.7%,
respectively, compared to the quarter and nine months ended March 31, 2007.
The timing of shipments to OEM customers positively impacted Hematology sales
results during the quarter ended March 31, 2008.
Tom Oland, President and Chief Executive Officer of Techne Corporation, said
"Sales exceeded our expectations in all segments of our business and in
nearly all product lines and geographical territories for the second straight
quarter. The Easter holiday had much less impact on sales than we anticipated
and we benefited from a large one-time $1.1 million sale to a diagnostic
customer."
Mr. Oland added, "While improvement in recent market demand has allowed the
Company to capitalize on its expanding product line and commitment to
quality, we continue to believe that, given current market conditions, our
long-term sales growth will be in a targeted range of 8% to 10%, excluding
the effect of changes in exchange rates."
Consolidated gross margins were 79.7% and 79.4% for the quarter and nine
months ended March 31, 2008, respectively, compared to 80.0% and 79.4% for
the quarter and nine months ended March 31, 2007, respectively. Biotechnology
gross margins decreased to 79.8% for both the quarter and nine months ended
March 31, 2008 from 80.4% and 80.3% 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 nine months
ended March 31, 2008 increased $1.8 million (24.4%) and $4.6 million (19.9%),
respectively. These increases include wage and salary increases and the
hiring of additional marketing and administrative personnel to support the
Company's sales growth. The third quarter increase also resulted from
increased legal fees of $559,000, additional profit sharing of $620,000,
increased bad debt expense of $124,000, R&D China selling, and general and
administrative expenses of $149,000.
Selling, general and administrative expenses for the nine months ended March
31, 2008 also increased because of additional profit sharing of $1.2 million,
increased legal fees of $930,000, R&D China selling, general and
administrative expenses of $392,000, the change in foreign currency exchange
rates used to convert British pounds to U.S. dollars of $310,000, increased
stock option expense of $196,000, and increased bad debt expense of $124,000.
The effective tax rates for the quarter and nine months ended March 31, 2008
were 31.2% and 32.7%, respectively, as compared to effective tax rates of
35.2% and 34.4%, respectively, from the same prior-year periods. Third
quarter rates in both fiscal years were impacted by changes in state
apportionment estimates. Without significant business developments, the
Company expects its fiscal 2008 effective income tax rate to range from
approximately 33.0% to 34.0%.
The Company repurchased approximately 437,000 shares of its common stock
during the third quarter of fiscal 2008 for approximately $28.7 million.
During fiscal 2008 and through March 31, 2008, the Company has repurchased
approximately 758,000 shares of its common stock for approximately $49.3
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 NINE MONTHS ENDED
---------------- ------------------
3/31/08 3/31/07 3/31/08 3/31/07
------- ------- -------- --------
Net sales $69,522 $60,197 $189,651 $165,057
Cost of sales 14,146 12,019 39,001 33,970
------- ------- -------- --------
Gross margin 55,376 48,178 150,650 131,087
------- ------- -------- --------
Operating expenses:
Selling, general and administrative 8,994 7,229 27,729 23,126
Research and development 5,839 5,169 16,582 15,068
Amortization of intangible assets 283 403 853 1,210
------- ------- -------- --------
Total operating expenses 15,116 12,801 45,164 39,404
------- ------- -------- --------
Operating income 40,260 35,377 105,486 91,683
------- ------- -------- --------
Other expense (income):
Interest expense -- -- -- 1,083
Interest income (3,155) (2,237) (9,405) (5,869)
Other non-operating expense, net 423 767 1,565 1,680
------- ------- -------- --------
Total other income (2,732) (1,470) (7,840) (3,106)
------- ------- -------- --------
Earnings before income taxes 42,992 36,847 113,326 94,789
Income taxes 13,402 12,954 37,025 32,602
------- ------- -------- --------
Net earnings $29,590 $23,893 $ 76,301 $ 62,187
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Earnings per share:
Basic $ 0.76 $ 0.61 $ 1.94 $ 1.58
Diluted $ 0.76 $ 0.60 $ 1.94 $ 1.57
Weighted average common
shares outstanding:
Basic 39,000 39,414 39,296 39,393
Diluted 39,108 39,543 39,396 39,498
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
3/31/08 6/30/07
-------- --------
ASSETS:
Cash and equivalents $162,849 $135,485
Short-term available-for-sale investments 42,947 29,289
Trade accounts receivable 32,798 29,559
Other receivables 1,407 1,407
Inventory 10,003 8,757
Other current assets 9,357 8,341
-------- --------
Current assets 259,361 212,838
-------- --------
Available-for-sale investments 75,097 91,433
Property and equipment, net 94,069 91,535
Goodwill and intangible assets, net 29,314 30,167
Other non-current assets 30,269 28,871
-------- --------
Total assets $488,110 $454,844
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LIABILITIES
Current liabilities $ 20,162 $ 17,193
Stockholders' equity 467,948 437,651
-------- --------
Total liabilities and equity $488,110 $454,844
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