TECHNE CORPORATION RELEASES UNAUDITED FIRST QUARTER
RESULTS FOR FISCAL YEAR 2009
Minneapolis/October 22, 2008/--Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended September 30, 2008 increased
23.9% to $28.6 million or $.74 per diluted share compared with $23.1 million
or $.58 per diluted share for the quarter ended September 30, 2007. Net
earnings as a percentage of net sales improved from 39.8% in the first
quarter of last year to 41.2% for the quarter ended September 30, 2008. The
improvement in net earnings was mainly due to increased consolidated net
sales. The unfavorable 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 $310,000 ($.01 per diluted share) for
the quarter ended September 30, 2008.
Consolidated net sales for the quarter ended September 30, 2008 were $69.3
million, an increase of 19.6% from the same prior-year quarter. 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 18.4% for the
quarter ended September 30, 2008 from the quarter ended September 30, 2007.
The quarter ended September 30, 2008 included one more selling day than the
comparable prior-year quarter.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology
Division, R&D Systems China and BiosPacific, for the quarter ended September
30, 2008, were $46.1 million, an increase of 18.7% from the same prior-year
quarter. R&D Europe's net sales for the quarter were $18.9 million, an
increase of 22.6% from the same prior-year quarter. R&D Europe's net sales
increased 18.4% for the quarter when measured at currency rates in effect in
the comparable prior periods. Hematology net sales for the quarter were $4.2
million, an increase of 16.1%. The timing of shipments to OEM customers
positively impacted Hematology sales results during the quarter ended
September 30, 2008 and will likely reduce the Hematology sales growth rate in
the quarter ending December 31, 2008 as compared to the comparable prior-year
quarter.
Consolidated gross margins were 81.1% and 79.1% in the first quarters of
fiscal 2009 and 2008, respectively. The increase in gross margins was due to
higher sales volume on relatively fixed costs and higher margins in Europe
due to favorable exchange rates.
Selling, general and administrative expenses decreased to 12.8% of
consolidated net sales for the quarter ended September 30, 2008 from 14.0%
for the quarter ended September 30, 2007. Selling, general and
administrative expenses for the quarter ended September 30, 2008 increased
$750,000 (9.3%) from the same prior-year period due mainly to annual wage and
salary increases and increased legal costs of $276,000. Research and
development expenses increased $729,000 (14.1%) for the quarter ended
September 30, 2008 mainly as a result of increased personnel costs.
The consolidated effective tax rate was 33.4% and 33.6% for the quarters
ended September 30, 2008 and 2007, respectively. As a result of the recent
renewal of the U.S. research and development credit, income tax expense in
the second quarter of fiscal 2008 will include a credit for the January to
June 2008 period in addition to a credit for the current-year six month
period. Including the increased research and development credit and without
other significant business developments, the Company expects its fiscal 2009
effective income tax rate to range from approximately 32.5% to 33.5%.
In November 2007, the Company's Board of Directors authorized the repurchase
and retirement of up to $150 million of the Company' common stock. The
Company repurchased approximately 214,000 shares of its common stock during
the first quarter of fiscal 2009 for approximately $15.6 million. Subsequent
to September 30, 2008, the Company has repurchased an additional 335,000
shares for approximately $22.7 million. In total, the Company has
repurchased approximately 1.3 million shares of its common stock for
approximately $90.8 million under this authorization.
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 Hematology sales and consolidated 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
-----------------
9/30/08 9/30/07
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Net sales $ 69,324 $ 57,987
Cost of sales 13,086 12,104
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Gross margin 56,238 45,883
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Operating expenses:
Selling, general and administrative 8,840 8,090
Research and development 5,910 5,181
Amortization of intangible assets 240 288
-------- --------
Total operating expenses 14,990 13,559
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Operating income 41,248 32,324
Other income (expense):
Interest income 2,887 2,998
Other non-operating expense, net (1,187) (569)
-------- --------
Total other income 1,700 2,429
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Earnings before income taxes 42,948 34,753
Income taxes 14,355 11,681
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Net earnings $ 28,593 $ 23,072
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Earnings per share:
Basic $ 0.74 $ 0.58
Diluted $ 0.74 $ 0.58
Weighted average common shares outstanding:
Basic 38,624 39,489
Diluted 38,747 39,587
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
9/30/08 6/30/08
-------- --------
ASSETS
Cash and equivalents $162,071 $166,992
Short-term available-for-sale investments 34,108 39,353
Trade accounts receivable 32,296 31,747
Other receivables 1,672 1,585
Inventory 9,699 9,515
Other current assets 9,542 9,241
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Current assets 249,388 258,433
-------- --------
Available-for-sale investments 101,270 87,384
Property and equipment, net 100,100 101,722
Goodwill and intangible assets, net 28,792 29,032
Other non-current assets 28,118 30,798
-------- --------
Total assets $507,668 $507,369
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LIABILITIES
Current liabilities $ 19,258 $ 20,239
Stockholders' equity 488,410 487,130
-------- --------
Total liabilities and equity $507,668 $507,369
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