TECHNE CORPORATION RELEASES UNAUDITED SECOND QUARTER
RESULTS FOR FISCAL YEAR 2009
Minneapolis/February 3, 2009/--Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended December 31, 2008 were $23.6
million or $.62 per diluted share compared with $23.6 million or $.60 per
diluted share for the quarter ended December 31, 2007. For the six months
ended December 31, 2008, Techne's consolidated net earnings increased 11.8%
to $52.2 million or $1.36 per diluted share compared with $46.7 million or
$1.18 per diluted share for the six months ended December 31, 2007. Net
earnings as a percentage of net sales improved to 39.8% for the six months
ended December 30, 2008 from 38.9% in the first six months of last year.
Foreign currency fluctuations and general economic conditions had a negative
impact on consolidated net sales and earnings in the quarter ended December
31, 2008. The change in exchange rates used to convert foreign currencies
(primarily British pound sterling and Euros) to U.S. dollars reduced net
earnings by $1.5 million ($.04 per diluted share) for the quarter and $1.8
million ($.05 per diluted share) for the six months ended December 31, 2008,
as compared to the same periods in last fiscal year.
Consolidated net sales for the quarter and six months ended December 31, 2008
were $61.9 million and $131.2 million, respectively. This was a 0.4% decrease
and 9.2% increase from the quarter and six months ended December 31, 2007,
respectively. Consolidated net sales were negatively affected by the strength
of the U.S. dollar as compared to foreign currencies. Excluding the effect of
changes in foreign currency exchange rates, consolidated net sales increased
5.0% and 11.5% for the quarter ended and six months ended December 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 $40.3 million and $86.5
million for the quarter and six months ended December 31, 2008, increases of
3.0% and 10.8%, respectively, from the comparable prior-year periods. North
American biotechnology sales to industrial and academic customers grew at
less than 2% during the second quarter of fiscal 2009. The Company
attributes the lower second quarter sales growth rate to customer caution in
a time of economic uncertainty.
R&D Europe's net sales for the quarter and six months ended December 31, 2008
were $17.3 million and $36.2 million, a decrease of 9.2% and an increase of
5.1%, respectively, from the same prior-year periods. R&D Europe's net sales
increased 8.6% for the quarter and 13.0% for the six months ended December
31, 2008 when measured at currency rates in effect in the comparable prior-
year periods.
Hematology net sales for the quarter and six months ended December 31, 2008
were $4.3 million and $8.5 million, increases of 7.2% and 11.5%,
respectively, compared to the quarter and six months ended December 31, 2007.
Consolidated gross margins were 78.3% and 79.8% for the quarter and six
months ended December 31, 2008 respectively, compared to 79.5% and 79.3% for
the quarter and six months ended December 31, 2007. The decrease in gross
margins in the second quarter was primarily caused by lower gross margins in
Europe resulting from unfavorable exchange rates.
Selling, general and administrative expenses for the quarter and six months
ended December 31, 2008 decreased $942,000 (8.9%) and $192,000 (1.0%),
respectively from the quarter and six months ended December 31, 2007. The
decrease in selling, general and administrative expenses from the comparable
prior-year periods were the result of the following (in thousands):
Quarter Six Months
------- ----------
Change in exchange rates to convert
foreign expenses to U.S. dollars $ (685) $ (887)
Reduction in profit sharing expense (670) (617)
Other, including annual wage, salary
and benefits increases 413 1,312
------- -------
$ (942) $ (192)
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Second quarter selling, general and administrative expense increased from the
first quarter of fiscal 2009 due primarily to costs associated with
production, printing and mailing of the annual catalog and additional expense
as a result of the annual grant of stock options to the Company's Board of
Directors.
Research and development expenses increased $283,000 (5.1%) and $1.0 million
(9.4%), respectively, for the quarter and six months ended December 31, 2008
from the comparable prior-year periods.
Interest income decreased $1.0 million and $1.2 million for the quarter and
six months ended December 31, 2008, respectively, from the comparable prior-
year periods, primarily as a result of lower rates of return on cash and
available-for-sale investments and to a lesser extent to lower cash and
available-for-sale investment balances.
The effective tax rate was 30.8% for the quarter and 32.3% for the six months
ended December 31, 2008 as compared to 33.6% for the quarter and six months
ended December 31, 2007. Income tax expense in the second quarter of fiscal
2009 benefited from the renewal of the U.S. research and development credit.
The $695,000 research and development tax credit for the quarter ended
December 31, 2008, included credit for the January to June 2008 period in
addition to a credit for the current year six-month period. Without
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's common stock. The
Company repurchased approximately 960,000 shares of its common stock during
the second quarter of fiscal 2009 for approximately $62.7 million.
Approximately $20.0 million remains available for the repurchase of shares
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 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,
general economic conditions, 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
------------------ ------------------
12/31/08 12/31/07 12/31/08 12/31/07
-------- -------- -------- --------
Net sales $61,876 $62,142 $131,200 $120,129
Cost of sales 13,430 12,751 26,516 24,855
-------- -------- -------- --------
Gross margin 48,446 49,391 104,684 95,274
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 9,703 10,645 18,543 18,735
Research and development 5,846 5,562 11,756 10,743
Amortization of intangible assets 240 282 480 570
-------- -------- -------- --------
Total operating expenses 15,789 16,489 30,779 30,048
-------- -------- -------- --------
Operating income 32,657 32,902 73,905 65,226
Other income (expense):
Interest income 2,205 3,252 5,092 6,250
Other non-operating expense, net (712) (573) (1,899) (1,142)
-------- -------- -------- --------
Total other income 1,493 2,679 3,193 5,108
-------- -------- -------- --------
Earnings before income taxes 34,150 35,581 77,098 70,334
Income taxes 10,528 11,942 24,883 23,623
-------- -------- -------- --------
Net earnings $23,622 $23,639 $52,215 $46,711
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Earnings per share:
Basic $ 0.62 $ 0.60 $ 1.36 $ 1.18
Diluted $ 0.62 $ 0.60 $ 1.36 $ 1.18
Weighted average common
shares outstanding:
Basic 37,894 39,395 38,259 39,442
Diluted 37,992 39,497 38,370 39,542
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
12/31/08 6/30/08
-------- --------
ASSETS
Cash and equivalents $119,595 $166,992
Short-term available-for-sale investments 24,366 39,353
Trade accounts receivable 24,852 31,747
Other receivables 4,701 1,585
Inventory 9,877 9,515
Other current assets 9,732 9,241
-------- --------
Current assets 193,123 258,433
-------- --------
Available-for-sale investments 85,493 87,384
Property and equipment, net 98,352 101,722
Goodwill and intangible assets, net 28,552 29,032
Other non-current assets 28,010 30,798
-------- --------
Total assets $433,530 $507,369
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LIABILITIES
Current liabilities $ 13,036 $ 20,239
Stockholders' equity 420,494 487,130
-------- --------
Total liabilities and equity $433,530 $507,369
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