NEWS RELEASE
FOR IMMEDIATE RELEASE Company Contact:
Arthur A. Koch, Jr.
Chief Operating Officer
(302) 456-6789
www.sdix.com
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Investor Relations Contact:
Lippert/Heilshorn & Associates, Inc.
William A. Walkowiak, CFA
Klea Theoharis
(212) 838-3777
klea@lhai.com
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Strategic Diagnostics Reports 49% Revenue Growth in Third Quarter
Ten-fold Increase in Net Income
NEWARK, Del., Oct. 25, 2001 - Strategic Diagnostics Inc. (Nasdaq: SDIX) - a
leading provider of antibody products and analytical test kits for the food
safety and water quality markets, today reported financial results for the third
quarter ended Sept. 30, 2001.
Revenue for the quarter increased 49% to $8.5 million from $5.7 million in the
third quarter of 2000. Operating income increased five-fold, to $1,419,000 from
$281,000, with a corresponding ten-fold increase in net income, to $896,000 from
$89,000 in the prior year. On a per share basis, fully diluted net income was
$0.05 versus $0.01 for the same period last year. These results for the third
quarter of 2001 include approximately $150,000 in expenses related to the
previously announced consolidation of the Company's Strategic BioSolutions
division, approximately $0.01 per diluted share after related income tax
effects.
For the nine months ended Sept. 30, 2001, revenues were $22.8 million, versus
$17.3 million in the prior year, an increase of 32%. Operating income for the
nine-month period was $3.0 million versus $1.1 million in the prior year. Net
income for the first nine months was $1,889,000, or $0.11 per fully diluted
share, up 187% from $659,000, or $0.04 per fully diluted share in the prior
year.
Financial results for the nine-month periods in the past two fiscal years
included a number of one-time items. The first nine months of fiscal 2001
included the $150,000 expense mentioned above, in addition to the $253,000
severance charge recorded in the second quarter, both related to the
consolidation of the Company's Strategic BioSolutions division. The Company also
recorded gains on the sale of assets of $76,000 in the first nine months of 2001
and $283,000 in the first nine months of 2000. Excluding these charges and
gains, after related effects on income taxes, adjusted net income for the first
nine months of 2001 was $2,093,000 or $0.12 per diluted share, an increase of
over 300% from the adjusted $489,000, or $0.03 per diluted share, in the prior
year.
Revenues increased in all three business categories during the quarter. Revenue
in the food safety category grew more than 115%, to $3.3 million, as demand for
GMO (genetically modified organism) tests continues to build. Water safety
revenues increased 80%, to $2.2 million, on strong sales of the Company's
recently acquired Microtox(R) water toxicity test system. Sales of antibody
products from the Strategic BioSolutions division increased 3% to $2.8 million.
Commenting on the Company's strong results, President and CEO Richard C.
Birkmeyer stated, "We are extremely pleased with the success of our strategic
approach, building on existing market leading positions. As a result, we believe
it is now clear that we will meet or exceed our 20% revenue growth target and
achieve net earnings growth on a fully diluted basis of 60% - 70%, exceeding our
previous target of 25% - 30% for the full year. We attribute these results to
the strategy of marketing a full testing solution, not simply individual tests.
These unique testing solutions are based on reliable technology that is
affordable and easy to use.
"For example, our Microtox(R) water system is the only broad screen for chemical
toxicity in water available in the country. While others have tests for
individual chemicals, Microtox(R) responds to a very broad range of toxins and
classes of chemical agents including metals, pesticides, fungicides, chlorinated
solvents, industrial chemicals, and similar materials. Nearly 20 years of
scientific studies have documented the sensitivity of Microtox(R) to more than a
thousand different simple and complex chemicals.
"The Microtox(R) test system is increasingly being used to monitor drinking
water supplies in various countries and major U.S. cities where either
accidental or deliberate contamination is a concern. The test can be completed
in as little as 15 minutes, allowing for a quick response to changes in water
quality. The US Army Corps of Engineers and the Washington Aqueduct system are
currently using Microtox(R) systems to monitor the drinking water that is
supplied to the Pentagon to protect personnel from the terrorist threat of
contaminated drinking water.
"Our strategy has been equally successful in food safety. As we entered this
year's harvest, our customers had the full complement of testing tools needed to
detect all of the major genetic traits in commercial production. This testing
capability gives farmers, grain handlers and food processors a fast and
inexpensive tool for consigning grain to meet the expectations of their
customers and ensure appropriate distribution. For example, TraitCheck(TM) RUR
is the only commercially available test for NK603 Roundup Ready(R) Corn.
"In our antibody business, we have made significant progress with our plans to
consolidate our production operations. Our designs to streamline production
systems and increase efficiency through automation are being realized with the
opening of the first of two 36,000 square foot facilities in Windham, Maine. We
have begun to initiate new customer projects at this facility and we are
well-positioned for improved production margins beginning in 2002. Also, during
the third quarter, we took significant steps to streamline manufacturing in our
preparation for full scale production of test kits under our Bayer program."
Mr. Birkmeyer concluded, "Strategic Diagnostics is moving ahead on a number of
fronts with the commercialization of our technology. At the same time, revenue
and profitability continue to improve and our balance sheet is stronger than
ever. I believe that the Company is well-positioned for sustained, long-term
growth."
Conference Call
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A conference call to review third quarter results is scheduled for 11:00 a.m.
EDT today. The dial-in number for the live conference call will be 212-896-6092.
A live webcast of the conference call will be available on the company's Web
site, www.sdix.com, as well as www.vcall.com. For those who cannot listen to the
live broadcast, an audio replay of the call will be available on these sites for
30 days. Telephone replays of the call will be available for 24 hours, from 1:00
p.m. EDT on Oct. 25 until 1:00 p.m. EDT on Oct. 26. To listen to the telephone
replay, dial 800-633-8284 (858-812-6440 outside the U.S.) and enter reservation
number 19866701.
About Strategic Diagnostics Inc.
--------------------------------
SDI is a leading provider of biotechnology-based diagnostic tests for a broad
range of agricultural, industrial, and water treatment applications. Through its
antibody business, Strategic BioSolutions, Strategic Diagnostics also provides
antibody and immunoreagent research and development services. SDI's test kits
are produced in a variety of formats suitable for field and laboratory use,
offering advantages of accuracy, cost-effectiveness, portability, and rapid
response. Trait Check(TM), GMO QuickCheck(TM), and GMO Check(TM) are pending
trademarks for SDI.
This news release contains forward-looking statements reflecting SDI's current
expectations. When used in this press release, the words "anticipate", "enable",
"estimate", "intend", "expect", "believe", "potential", "will", "should",
"project" and similar expressions as they relate to SDI are intended to identify
said forward-looking statements. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, which may cause
actual results to differ from those anticipated by SDI at this time. Such risks
and uncertainties include, without limitation, changes in demand for products,
delays in product development, delays in market acceptance of new products,
retention of customers and employees, adequate supply of raw materials,
inability to obtain required government approvals, the ability to meet increased
market demand, competition, protection of intellectual property,
non-infringement of intellectual property, seasonality, and other factors more
fully described in SDI's public filings with the U.S. Securities and Exchange
Commission.
STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
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NET REVENUES:
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Product related $ 8,270 $ 5,462 $ 22,160 $ 16,272
Contract and other 205 239 590 993
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Total net revenues 8,475 5,701 22,750 17,265
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OPERATING EXPENSES:
Manufacturing 3,671 2,408 10,252 7,227
Research and development 718 700 2,142 2,135
Selling, general and administrative 2,667 2,312 7,317 6,755
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Total operating expenses 7,056 5,420 19,711 16,117
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Operating income 1,419 281 3,039 1,148
Interest expense, net (4) (120) (52) (333)
Gain on sale of assets -- -- 76 283
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Income before taxes 1,415 161 3,063 1,098
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Income tax expense 519 72 1,174 439
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Net income 896 89 1,889 659
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Basic net income per share $ 0.05 $ 0.01 $ 0.11 $ 0.04
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Shares used in computing basic net income
net income per share 16,856,000 16,583,000 16,807,000 16,534,000
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Diluted net income per share $ 0.05 $ 0.01 $ 0.11 $ 0.04
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Shares used in computing diluted net income
net income per share 17,473,000 17,362,000 17,353,000 17,494,000
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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
September 30, December 31,
2001 2000
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ASSETS
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Current Assets:
Cash and cash equivalents $ 2,459 $ 1,288
Receivables, net 5,537 4,298
Inventories 7,558 6,844
Deferred tax asset 1,070 1,070
Other current assets 563 216
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Total current assets 17,187 13,716
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Property and equipment, net 3,442 2,919
Other assets 272 438
Deferred tax asset 5,517 5,416
Intangible assets, net 4,576 4,019
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Total assets $30,994 $26,508
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
Accounts payable $ 1,568 $ 655
Accrued expenses 860 1,129
Deferred revenue 62 162
Current portion of long term debt 1,333 1,339
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Total current liabilities 3,823 3,285
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Long-term debt 559 1,889
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Stockholders' Equity
Preferred stock, $.01 par value, 17,500,000 shares authorized,
no shares issued or outstanding -- --
Series A preferred stock, $.01 par value, 2,164,362 shares
authorized, no shares issued or outstanding -- --
Series B preferred stock, $.01 par value, 556,286 shares
authorized, no shares issued or outstanding -- -
Series C preferred stock, $.01 par value, 700,000 shares
authorized, issued and outstanding 7 --
Common stock, $.01 par value, 35,000,000 shares authorized,
16,915,472 and 16,699,052 issued and outstanding
at September 30, 2001 and December 31, 2000, respectively 168 167
Additional paid-in capital 30,194 26,814
Accumulated deficit (3,733) (5,622)
Cumulative translation adjustments (25) (25)
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Total stockholders' equity 26,611 21,334
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Total liabilities and stockholders' equity $30,994 $26,508
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