Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
COMPANY CONTACT: INVESTORS CONTACT:
Anthony J. Simonetta Hayden Communications
Chief Financial Officer Brett Maas (brett@haydenir.com)
(302) 456-6789 Matt Hayden (matt@haydenir.com)
www.sdix.com (843) 272-4653
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STRATEGIC DIAGNOSTICS REPORTS FOURTH QUARTER AND YEAR-END RESULTS
o Revenues for the fourth quarter increased 6.8% to $6.7 million compared
to Q4 2003
o Gross Margins for 2004 increased to 56.5% compared to 43.3% for 2003
o Cash and cash equivalents increased to $8.1 million, up from $5.2
million in 2003.
o Management team is in place after a year of recruiting and
reorganization.
NEWARK, DEL., MARCH 3, 2005 - STRATEGIC DIAGNOSTICS INC. (NASDAQ: SDIX) - a
leading provider of biotechnology-based detection solutions for a broad range of
food, water, agricultural, industrial, environmental applications, today
reported financial results for the fourth quarter and fiscal year ended December
31, 2004.
Revenues for the fourth quarter of 2004 increased 6.8% to $6.7 million, compared
to $6.3 million for the fourth quarter of 2003. Operating expenses for the
fourth quarter decreased 34% to $6.1 million, compared to $9.1 million for the
fourth quarter of 2003, which was primarily due to the Company incurring a
non-cash charge of $3.0 million in connection with the write-down of certain
antibody inventories during 2003. Pre-tax income totaled $654,000 for the three
months compared to pre-tax loss of $2.9 million for the same period in 2003. Net
income in the fourth quarter of 2004 was $666,000, or $0.03 per diluted share,
compared to net loss of $1.7 million, including the $3.0 million non-cash charge
described above, or $0.09 per diluted share, in the fourth quarter of 2003.
Matthew H. Knight, the Company's President and CEO, commented: "We have made
significant progress in our efforts to restructure the Company, and are
delivering on our commitment to sequential quarterly revenue improvement. We
continue to focus a disciplined effort to capitalize upon a number of
significant growth opportunities before us. We continue to rationalize our
product lines, build our sales and marketing organizations, strengthen our
management team, and re-engineer our product development and manufacturing
processes to support growth across key product lines. These initiatives are
producing meaningful results as evidenced by solid traction and positive trends
in several market segments. Revenues in the fourth quarter of 2004 increased
6.8%, while gross margins and net income for the quarter all displayed the same
positive trends. SDI is well-positioned as a technology and solutions leader in
industrial bio-testing and custom antibody production, and we expect to build
upon our fourth quarter performance in 2005."
For the year ended December 31, 2004, revenues were $24.0 million, versus $25.6
million in the prior year, a decrease of 6.1%. Operating expenses for 2004 were
$22.2 million, versus $27.2 million in the prior year, a decrease of 18.1%.
Gross profit (defined as total revenues less manufacturing costs) increased $2.5
million to $13.6 million during 2004 primarily due to the $3.0 million non-cash
charge discussed above. Gross margin improved from 43.3% in 2003 to 56.5% in
2004. The improvement in gross margin is attributable to both the non-cash
charge in 2003, $389,000 of revenue in 2004 related to the Company's sale of
certain antibody inventories written-off during 2003, and a reduction in
manufacturing expenses of $1.1 million during 2004, reflecting the benefit of
the Company's ongoing efforts on manufacturing process improvement and supply
chain management. The Company continues to aggressively introduce new, higher
value product offerings, as well as move to discontinue low margin products and
services. Research and development expenses were $2.6 million in 2004 and 2003,
reflecting the Company's continuing development efforts in the Company's food
safety and water toxicity product lines. Selling, general and
administrative expenses declined $805,000 in 2004 compared to 2003. Included in
selling, general and administrative expenses for 2003 was a $605,000 provision
for severance and related expenses associated with the Company's termination of
its former CEO in May 2003 and COO in late December 2003. During 2004, the
Company also benefited from the recovery of a $100,000 receivable it had
written-off in 2001. Pre-tax income totaled $1.8 million for the 2004 year
compared to a pre-tax loss of $1.6 million for 2003. Net income for the year
ended December 31, 2004 was $1.5 million, or $0.08 per diluted share, compared
to a net loss of $854,000, or $0.04 per diluted share in 2003.
WATER AND ENVIRONMENTAL PRODUCTS
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Revenue increased 11% to $1.6 million for the fourth quarter of 2004 compared to
$1.4 million for the same quarter in the prior year, and decreased by 11.4% to
$6.1 million for the year-ended December 31, 2004, compared to $6.9 million in
2003. In aggregate, the year over year decline relates primarily to a decrease
in the number of remediation projects and correlated use of on-site testing in
the U.S. Alternatively, in Europe, water quality revenues grew 21% in 2004.
Pricing pressure from direct competitors and lab-based testing services
contributed to the decline, as did the Company's efforts to discontinue
production and sales of low margin products, including several "build-to-order"
test kits.
FOOD SAFETY PRODUCTS
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Food safety revenues were $2.2 million in the fourth quarter of both 2004 and
2003, and increased by 3.3% to $7.4 million for the year ended December 31, 2004
when compared to the prior year.
Food pathogen test sales in the fourth quarter were up 125% compared to the same
quarter of 2003 and 27% over the third quarter of 2004, the continuation of the
positive trend, which saw sales increase 91% and 46% for the third and second
quarters of 2004, respectively, compared to the corresponding year-ago periods.
The increase was led by sales of test kits for E. coli, Salmonella and Listeria,
which grew by 77%. The Company launched its Listeria test kit in June 2004, and
it has become the fastest growing product in the Company's food pathogen line of
products.
Sales of the Company's products to detect genetically modified (GM) traits,
other than StarLink(TM), were essentially flat in 2004 when compared to 2003. In
2004, results were favorably impacted by a sizeable sale of new tests for
soybean trait detection in the Brazilian market, which was offset by declining
sales in the U.S. due to changes in customer requirements that reduced order
sizes. Sales of the Company's test kits to detect StarLink(TM) were
approximately $1.1 million and $1.6 million in 2004 and 2003, respectively, and
management expects StarLink(TM) test kit sales to continue to decrease in 2005.
The Company also saw a significant decrease in cottonseed testing, which was
down 33% for 2004 as compared to 2003, due primarily to changes in the
industry's statistical analysis for seed quality and the impact of inclement
weather on the U.S. cotton harvest.
ANTIBODY PRODUCTS
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Antibody revenues increased 10% to $2.9 million for the fourth quarter of 2004
compared to $2.6 million for the same quarter in the prior year, but decreased
7.9% for 2004 compared to 2003. The fourth quarter increase over the prior year,
in addition to a 14% increase over the third quarter of 2004, is an extension of
a continuing improvement in business, which saw a steep decline in revenues in
the first half of the year that was associated with several large, one-time
customer projects in 2003, and the discontinuation of low margin business.
Included in the antibody revenues for 2004 was $389,000 associated with
inventories written-off during 2003. Custom and made-to-order antibody services
and products are at the core of SDI technology and management is encouraged by
this improvement in this key business area.
2005 CORPORATE AND GROWTH INITIATIVES
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o FOOD PATHOGENS: The Company continues to focus on gaining broader market
acceptance for both the technical and commercial benefits of its food
pathogen testing technology. SDI's food pathogen tests provide customers
with actionable information, meeting or exceeding their requirements for
both sensitivity and specificity. These tests are faster, easy to
interpret, formatted for point of use, and can dramatically lower the
customers total cost in use when compared to traditional laboratory or
instrument-based methods.
o ANTIBODY SERVICES: THE COMPANY Continues its expansion of our customized
antibody production and solutions to existing customers while targeting
new customers in the pharmaceutical, diagnostic, and research verticals
within the $300 million antibody services market.
o WATER QUALITY SAFETY: THE COMPANY Continues to work with key decision
makers in the food and beverage sectors to create a results-based total
water quality monitoring service drawing from our current base of
customized Water Safety tests.
o GENETIC IMMUNIZATION AND PROTEOMICS: The Company is investing in a new
research and production facility to commercialize important new
technologies for high throughput production of antibodies and has
recruited two expert scientists to drive this effort. This technology is
specifically targeted at the rapidly developing proteomics market and
the enablement of customer research, development and commercialization
in the diagnostics, pharmaceutical and research markets.
o ENVIRONMENTAL TESTING: The Company is expanding both its domestic and
international channel partnerships to improve awareness, achieve greater
distribution and increased market penetration. Richard Simmonds joined
the Company in October 2003 as Director of International Distribution
and Sales, and is leading the Company's channel partner strategy outside
the U.S. for environmental testing, expanding its ability to sell into
established and emerging markets without incurring significant sales and
marketing costs.
"We achieved several milestones during the quarter, including key new hires
while continuing to focus on refining our customer-centric product development
approach," continued Mr. Knight. "The addition of a veteran chief financial
officer, an exceptional vice president of marketing, and several recognized
scientific leaders, has significantly strengthened our management and
development team. We have made great progress in controlling our operating
expenses and manufacturing processes to increase operating leverage. The
utilization of our customer-centric, stage-and-gate product development strategy
will yield further top-line improvements in 2005."
Conference Call
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A conference call to review fourth quarter results is scheduled for 11:00 a.m.
Eastern-time today. The dial-in number for the live conference call will be
877-407-8031 (201-689-8031 outside the U.S.). A live webcast of the conference
call will be available on the Company's website, 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 each of these websites for 90 days.
Telephone replays of the call will be available from 2:00 p.m. Eastern-time on
March 3 through 11:59 p.m. on March 4. To listen to the telephone replay, dial
877-660-6853 (201-612-7415 outside the U.S.) and enter account number 1628 and
conference ID 139036.
About Strategic Diagnostics Inc.
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SDI develops and markets biotechnology based detection solutions for a broad
range of agricultural, industrial, environmental and water management
applications. By leveraging its expertise in immunology, proteomics,
bio-luminescence, and other bio-reactive technologies with innovative
application and production capabilities, the Company is able to provide
sophisticated diagnostic testing and immunoreagent systems to a diverse customer
base serving Food, beverage, agronomic and pharmaceutical markets. The Strategic
BioSolutions business unit of SDI serves the research, human diagnostic and
pharmaceutical sectors with a wide range of services including complete
outsourcing for the production of monoclonal and polyclonal antibodies used in
commercialized products offered by leading diagnostic and pharmaceutical
companies. FeedChek(TM), Trait Chek(TM), GMO QuickChek(TM), and GMO Chek(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", "could",
"enable", "estimate", "intend", "expect", "believe", "potential", "will",
"should", "project" "plan" 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, the successful integration and consolidation of the Maine production
facilities, inability to obtain or delays in obtaining fourth party, including
AOAC, or 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 SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
December 31,
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2004 2003
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ASSETS
Current Assets:
Cash and cash equivalents $ 8,096 $ 5,158
Receivables, net 3,858 3,795
Inventories 3,090 3,230
Deferred tax asset 1,071 1,336
Other current assets 336 502
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Total current assets 16,451 14,021
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Property and equipment, net 3,605 3,947
Other assets 2 3
Deferred tax asset 8,288 8,347
Intangible assets, net 6,996 6,957
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Total assets $ 35,342 $ 33,275
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 868 $ 788
Accrued expenses 1,525 1,342
Current portion of long term debt 211 211
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Total current liabilities 2,604 2,341
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Long-term debt 773 983
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Stockholders' Equity
Preferred stock, $.01 par value, 20,920,648 shares authorized,
no shares issued or outstanding - -
Common stock, $.01 par value, 35,000,000 shares authorized,
19,379,602 and 19,200,488 issued and outstanding
at December 31, 2004 and December 31, 2003, respectively 194 192
Additional paid-in capital 36,596 36,140
Accumulated deficit (4,759) (6,262)
Deferred compensation (206) (192)
Cumulative translation adjustments 140 73
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Total stockholders' equity 31,965 29,951
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Total liabilities and stockholders' equity $ 35,342 $ 33,275
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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
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2004 2003 2004 2003
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NET REVENUES:
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Product related $ 6,695 $ 6,270 $ 24,011 $ 25,466
Contract and other - - - 117
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Total net revenues 6,695 6,270 24,011 25,583
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OPERATING EXPENSES:
Manufacturing 2,959 5,749 10,442 14,511
Research and development 649 617 2,557 2,603
Selling, general and administrative 2,455 2,778 9,241 10,046
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Total operating expenses 6,063 9,144 22,240 27,160
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Operating income (loss) 632 (2,874) 1,771 (1,577)
Interest income (expense), net 22 (6) 53 (40)
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Income before taxes 654 (2,880) 1,824 (1,617)
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Income tax expense (12) (1,216) 321 (763)
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Net income (loss) 666 (1,664) 1,503 (854)
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Basic net income per share $ 0.03 $ (0.09) $ 0.08 $ (0.04)
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Shares used in computing basic
net loss per share 19,270,000 19,122,000 19,242,000 18,999,000
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Diluted net loss per share $ 0.03 $ (0.09) $ 0.08 $ (0.04)
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Shares used in computing diluted
net loss per share 19,361,000 19,122,000 19,495,000 18,999,000
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