TECHNE CORPORATION RELEASES UNAUDITED THIRD QUARTER
RESULTS FOR FISCAL YEAR 2010
Minneapolis/May 4, 2010/-- Techne Corporation's (NASDAQ: TECH) consolidated
net earnings for the quarter ended March 31, 2010 increased 17.2% to $32.4
million or $.87 per diluted share compared with $27.6 million or $.74 per
diluted share for the quarter ended March 31, 2009. The increase in net
earnings for the quarter was primarily due to a $4.7 million tax benefit,
equating to $.12 per share, resulting from a foreign exchange tax loss on
Techne's repatriation of 50 million pound sterling from R&D Systems Europe to
its U.S. based parent. Techne had previously paid U.S. income taxes on the
foreign earnings that were included in the repatriated funds.
For the nine months ended March 31, 2010, Techne's consolidated net earnings
increased 5.0% to $83.9 million or $2.25 per diluted share compared with
$79.9 million or $2.10 per diluted share for the nine months ended March 31,
2009. Net earnings for the nine month period would have decreased by
$636,000 (0.8%) without the tax benefit that resulted from the foreign
exchange tax loss from the repatriation of funds during the quarter ended
March 31, 2010. This decrease in consolidated net earnings for the nine
months was the result of lower interest income offset by increased sales and
slightly improved gross margins.
Consolidated net sales for the quarter and nine months ended March 31, 2010
were $70.3 million and $202.3 million, respectively. This was a 3.6% and 1.6%
increase from the quarter and nine months ended March 31, 2009, respectively.
Consolidated net sales were positively affected by the strength of the U.S.
dollar as compared to foreign currencies, primarily the euro and the British
pound sterling. Excluding the effect of changes in foreign currency exchange
rates, consolidated net sales increased 1.8% and 0.3% for the quarter and
nine months ended March 31, 2010, 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 $46.2 million for the
quarter ended March 31, 2010, an increase of 2.3% from $45.1 million in the
quarter ended March 31, 2009. North American biotechnology sales to
industrial pharmaceutical and biotechnology customers increased 2.0% during
the third quarter of fiscal 2010 as compared to the third quarter of fiscal
2009. Biotechnology sales to its academic customers and Pacific Rim
distributors and sales in China grew 3.5%, 12.6% and 10.3%, respectively, in
the third quarter of fiscal 2010.
Biotechnology sales were $132.6 million for the nine months ended March 31,
2010, an increase of 0.8% over the same period last year. North American
biotechnology sales to industrial pharmaceutical and biotechnology customers
decreased 2.5% during the nine months ended March 31, 2010 as compared to the
first nine months of fiscal 2009. Biotechnology sales to its academic
customers and Pacific Rim distributors and sales in China grew 4.0%, 10.6%
and 20.7%, respectively, in the first nine months of fiscal 2010.
R&D Europe's net sales for the quarter and nine months ended March 31, 2010
were $19.2 million and $55.8 million, increases of 4.7% and 2.3%,
respectively, from the same prior-year periods. R&D Europe's net sales
decreased 1.9% and 2.5% for the quarter and nine months ended March 31, 2010
when measured at currency rates in effect in the comparable prior periods.
The decreased net sales for the periods were mainly the result of lower sales
to pharmaceutical customers.
Hematology net sales for the quarter and nine months ended March 31, 2010
were $4.9 million and $13.9 million, increases of 11.4% and 7.7%,
respectively, compared to the quarter and nine months ended March 31, 2009.
Consolidated gross margins were 79.5% and 79.9% for the quarter and nine
months ended March 31, 2010, respectively, compared to 78.9% and 79.5% for
the quarter and nine months ended March 31, 2009, respectively. The increased
gross margins in fiscal 2010 are mainly the result of improved margins in the
biotechnology and hematology segments due to incremental profit on increased
sales volumes.
Selling, general and administrative expenses for the quarter and nine months
ended March 31, 2010 increased $605,000 (8.6%) and decreased $893,000 (3.5%),
respectively from the quarter and nine months ended March 31, 2009. The
increase in selling, general and administrative expense for the quarter ended
March 31, 2010 from the comparable prior-year period resulted from higher
profit sharing expense of $290,000 and annual wage, salary and benefit
increases. The decrease in selling, general and administrative expenses for
the nine months ended March 31, 2010 from the comparable prior-year period
was due to lower stock compensation expense of $343,000 and lower profit
sharing expense of $435,000.
Research and development expenses for the quarter and nine months ended March
31, 2010 increased $516,000 (8.9%) and $1.3 million (7.4%), respectively,
from the quarter and nine months ended March 31, 2009. The increase in
research and development expenses is the result of continuous development and
release of new high-quality biotechnology products upon which the Company's
future sales revenue growth is dependent.
Interest income decreased $464,000 and $3.2 million for the quarter and nine
months ended March 31, 2010, respectively, from the comparable prior-year
periods, primarily as a result of lower rates of return on cash and
available-for-sale investments, offset in part by higher cash and available-
for-sale investment balances.
The effective tax rates for the quarter and nine months ended March 31, 2010
were 21.8% and 28.8%, respectively. These effective rates were abnormally low
due to the tax benefit received following repatriation of funds from the U.K.
to the U.S. Excluding this benefit, the effective tax rates for the quarter
and nine months ended March 31, 2010 would have been 33.1% and 32.8% for the
quarter and nine months ended March 31, 2010, respectively, as compared to
effective tax rates of 32.3% in both of the same prior-year periods. The
Company expects its fiscal 2010 effective income tax rate to range from
approximately 32.0% to 33.0%.
The Company repurchased 22,862 shares of its common stock during the third
quarter of fiscal 2010 for approximately $1.4 million. Approximately $66.1
million remains available for the repurchase of shares under currently open
authorizations.
Forward Looking Statements:
Our press releases may contain forward-looking statements within the meaning
of the Private Litigation Reform Act. Such statements 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 our press releases 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
---------------- ------------------
3/31/10 3/31/09 3/31/10 3/31/09
------- ------- -------- --------
Net sales $70,278 $67,866 $202,333 $199,066
Cost of sales 14,399 14,316 40,629 40,832
------- ------- -------- --------
Gross margin 55,879 53,550 161,704 158,234
------- ------- -------- --------
Operating expenses:
Selling, general and administrative 7,666 7,061 24,711 25,604
Research and development 6,325 5,809 18,870 17,565
Amortization of intangible assets 240 240 720 720
------- ------- -------- --------
Total operating expenses 14,231 13,110 44,301 43,889
------- ------- -------- --------
Operating income 41,648 40,440 117,403 114,345
Other income (expense):
Interest income 1,040 1,504 3,364 6,596
Other non-operating expense, net (1,249) (1,103) (2,922) (3,002)
------- ------- -------- --------
Total other (expense) income (209) 401 442 3,594
------- ------- -------- --------
Earnings before income taxes 41,439 40,841 117,845 117,939
Income taxes 9,051 13,200 33,964 38,083
------- ------- -------- --------
Net earnings $32,388 $27,641 $ 83,881 $ 79,856
======= ======= ======== ========
Earnings per share:
Basic $ 0.87 $ 0.74 $ 2.25 $ 2.10
Diluted $ 0.87 $ 0.74 $ 2.25 $ 2.10
Weighted average common
shares outstanding:
Basic 37,292 37,427 37,263 37,986
Diluted 37,380 37,499 37,357 38,085
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
3/31/10 6/30/09
-------- --------
ASSETS
Cash and equivalents $108,236 $160,940
Short-term available-for-sale investments 44,922 41,947
Trade accounts receivable 34,527 29,516
Other receivables 1,395 1,637
Inventory 13,451 11,269
Other current assets 16,791 10,158
-------- --------
Current assets 219,322 255,467
Available-for-sale investments 154,360 61,863
Property and equipment, net 97,745 100,133
Goodwill and intangible assets, net 27,352 28,072
Other non-current assets 23,113 26,470
-------- --------
Total assets $521,892 $472,005
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 19,748 $ 15,523
Stockholders' equity 502,144 456,482
-------- --------
Total liabilities and stockholders' equity $521,892 $472,005
======== ========