TECHNE CORPORATION RELEASES UNAUDITED FIRST QUARTER
RESULTS FOR FISCAL YEAR 2011
Minneapolis/October 26, 2010/-- Techne Corporation's (NASDAQ: TECH)
consolidated net earnings for the quarter ended September 30, 2010 decreased
1.5% to $26.4 million or $.71 per diluted share compared with $26.8 million
or $.72 per diluted share for the quarter ended September 30, 2009. The
decrease in consolidated net earnings for the quarter was primarily due to
lower gross margins as a result of changes in the exchange rates used to
convert sales in foreign currencies (primarily British pound sterling and
euro) into U.S. dollars, changes in product mix and increased royalty
expense.
Consolidated net sales for the quarter ended September 30, 2010 were $67.9
million or a 2.1% increase from the quarter ended September 30, 2009.
Consolidated net sales for the quarter were negatively affected by a stronger
U.S. dollar as compared to foreign currencies for the quarter ended September
30, 2009. Excluding the effect of changes in foreign currency exchange rates,
consolidated net sales increased 4.0% for the quarter ended September 30,
2010 from the quarter ended September 30, 2009.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology
Division, R&D Systems China and BiosPacific, were $46.7 million for the
quarter ended September 30, 2010, an increase of 6.0% from $44.0 million for
the quarter ended September 30, 2009. North American biotechnology sales to
industrial pharmaceutical and biotechnology customers increased 3.1% during
the first quarter of fiscal 2011 as compared to the first quarter of fiscal
2010. Biotechnology sales to academic customers, Pacific Rim distributors
and sales in China grew 9.9%, 9.0% and 13.5%, respectively, in the first
quarter of fiscal 2011 as compared to the first quarter of fiscal 2010.
R&D Europe's net sales for the quarter ended September 30, 2010 were $16.4
million, a decrease of 8.1% from the same prior-year period. R&D Europe's
net sales decreased 1.2% for the quarter ended September 30, 2010 when
measured at currency rates in effect in the comparable prior-year period.
Hematology net sales for the quarter ended September 30, 2010 were $4.9
million, an increase of 5.1% from the comparable prior-year period.
Consolidated gross margin for the quarter ended September 30, 2010 decreased
$929,000 from the quarter ended September 30, 2009. Biotechnology gross
margin increased $797,000 for the quarter ended September 30, 2010 as a
result of increased net sales partially offset by a decrease in gross margin
percentage. R&D Europe gross margin decreased $1.8 million compared to the
quarter ended September 30, 2009. Approximately $1.2 million of the decrease
in R&D Europe gross margin was the result of changes in exchange rates used
to translate sales in foreign currencies into U.S. dollars. Approximately
13.9% and 6.3% of consolidated net sales for the quarter ended September 30,
2010 were made in euro and British pound sterling, respectively. The average
euro exchange rate declined 9.0% against the U.S. dollar for the quarter
ended September 30, 2010 (euro:$1.31) compared to the same prior-year period
(euro:$1.44). The average British pound sterling exchange rate declined 4.3%
against the U.S. dollar for the quarter ended September 30, 2010
(pound:$1.56) compared to the same prior-year period (pound:$1.63). The
remainder of R&D Europe's decrease in gross margin was the result of
decreased net sales and changes in product mix.
Consolidated gross margin, as a percentage of net sales, was 77.6% for the
quarter ended September 30, 2010, compared to 80.6% for the quarter ended
September 30, 2009. R&D Europe gross margin percentage for the quarter ended
September 30, 2010 was 47.4% compared to 53.5%, mainly as a result of the
effect of exchange rate changes on net sales discussed above. Biotechnology
gross margin percentage was 78.4% for the quarter ended September 30, 2010
compared to 80.9% for the quarter ended September 30, 2009. The decrease in
the Biotechnology gross margin percentage was mainly the result of changes in
product mix and $220,000 additional royalty expense and royalty initiation
fees related to new licensing agreements.
Selling, general and administrative expenses for the quarter ended September
30, 2010 decreased $486,000 (6.1%) from the quarter ended September 30, 2009.
The decrease in selling, general and administrative expense for the quarter
resulted primarily from decreased legal expenses of $108,000, lower profit
sharing expense of $224,000 and the effect of the change in exchange rates
used to convert foreign expenses to U.S. dollars of $134,000.
Research and development expenses for the quarter ended September 30, 2010
increased $465,000 (7.6%) from the quarter ended September 30, 2009. The
increase in research and development expenses is mainly due to increases in
personnel and supply costs associated with the continuous development and
release of new high-quality biotechnology products.
The effective tax rate for the quarter ended September 30, 2010 was 32.3% as
compared to 32.6% for the same prior-year period. The improvement in the
effective tax rate in the first quarter of fiscal 2011 was the result of an
increase in the deduction for qualified production activities partially
offset by the expiration of the U.S. credit for research and development
expenses on December 31, 2009.
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
-----------------
9/30/10 9/30/09
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Net sales $67,945 $66,534
Cost of sales 15,241 12,901
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Gross margin 52,704 53,633
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Operating expenses:
Selling, general and administrative 7,552 8,038
Research and development 6,619 6,154
Amortization of intangible assets 170 240
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Total operating expenses 14,341 14,432
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Operating income 38,363 39,201
Other income (expense):
Interest income 847 1,168
Other non-operating expense, net (257) (662)
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Total other (expense) income 590 506
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Earnings before income taxes 38,953 39,707
Income taxes 12,580 12,935
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Net earnings $26,373 $26,772
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Earnings per share:
Basic $ 0.71 $ 0.72
Diluted $ 0.71 $ 0.72
Weighted average common shares outstanding:
Basic 37,040 37,245
Diluted 37,107 37,339
TECHNE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
9/30/10 6/30/10
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ASSETS
Cash and equivalents $115,012 $ 94,139
Short-term available-for-sale investments 57,622 44,672
Trade accounts receivable 31,019 30,850
Other receivables 1,589 1,532
Inventory 13,818 13,737
Other current assets 14,139 16,110
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Current assets 233,199 201,040
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Available-for-sale investments 161,518 171,171
Property and equipment, net 96,322 97,400
Goodwill and intangible assets, net 26,942 27,112
Other non-current assets 21,643 22,093
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Total assets $539,624 $518,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 16,059 $ 17,024
Stockholders' equity 523,565 501,792
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Total liabilities and stockholders' equity $539,624 $518,816
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