Exhibit 99.1
EMBREX REPORTS FIRST-QUARTER 2005 FINANCIAL RESULTS
RESEARCH TRIANGLE PARK, N.C., May 3 /PRNewswire-FirstCall/ -- Embrex(R),
Inc., The In Ovo Company(R), (Nasdaq: EMBX) today announced financial results
for the first-quarter ended March 31, 2005.
Highlights
- First-quarter 2005 total revenues up 7%, or $0.8 million, over the same
period in 2004
- First-quarter 2005 recurring device lease fees increase 10% over the same
period in 2004
- 64% of first-quarter 2005 revenue increase occurred outside the United
States
Financial Summary Table
Embrex, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
Three Months Ended
March 31,
---------------------------
(Unaudited)
2005 2004
------------ ------------
Revenues 12,763 11,956
Cost of revenues 5,493 4,836
Gross profit 7,270 7,120
Operating expenses 6,304 5,396
Other income 143 32
Income before income taxes 1,109 1,756
Income tax expense 499 647
Net income $ 610 $ 1,109
Net income per share of Common Stock:
Basic $ 0.08 $ 0.14
Diluted $ 0.07 $ 0.13
No. of shares used in per share calculation:
Basic 7,935 8,034
Diluted 8,255 8,346
Results for First-Quarter 2005
For the quarter ended March 31, 2005, consolidated revenues were $12.8
million, a 7% increase compared to consolidated revenues of $12.0 million for
the first-quarter of 2004.
Product sales increased nearly two-and-one-half times in the first-quarter
2005 compared to the same period in 2004. First-quarter 2005 recurring device
lease fees, a component of device revenues, generated 10%, or $1.0 million, more
revenue than the first-quarter of 2004. These recurring fees generally
contribute more than 90% of device revenues. Device revenues also include device
sales, which tend to be sporadic in nature and which decreased $0.6 million in
the first-quarter of 2005 compared to the first-quarter of 2004. Overall, device
revenues totaled $11.9 million for the first-quarter of 2005 compared to $11.5
million for the same period in 2004, representing a 4% increase year over year.
First-quarter 2005 gross profit was $7.3 million, up $0.2 million compared
to the same period a year ago. This is primarily due to changes in Embrex's
product mix, including lower device sales.
Operating expenses increased $0.9 million, or 17%, to $6.3 million in the
first-quarter of 2005 compared to $5.4 million during the same period in 2004.
Details are described below.
General and administrative ("G&A") expenses were approximately $2.6 million
for both the first quarter of 2005 and 2004.
Sales & Marketing expenses were $1.0 million during first quarter 2005, an
increase of 52% or $0.3 million over the same period in 2004. The increase is
due primarily to support business growth and pre-launch activities for the
Inovocox(TM) vaccine.
Research & Development ("R&D") expenses increased $0.6 million or 25% over
first quarter 2004 expenses. This increase is primarily due to increases in
staff and preliminary production-related expenses associated with the new Embrex
Poultry Health Inovocox(TM) vaccine production facility and expenses related to
the gender sort project.
Income taxes totaled $0.5 million for first quarter 2005, which is $0.1
million lower than for the same period in 2004. The effective tax rate for first
quarter 2005 is 45%, compared to 37% for the same period in 2004. In the first
quarter of 2005, withholding taxes accounted for 17 percentage points of the 45%
tax rate, and U.S. and non-U.S. income taxes represented the remaining 28
percentage points. In the first quarter of 2004, withholding taxes accounted for
7 percentage points of the 37% tax rate, and U.S. and non-U.S. income taxes
represented the remaining 30 percentage points. Net operating loss
carry-forwards used in 2004 to offset income taxes in non-U.S. jurisdictions are
no longer available in 2005, which also contributes to the higher effective tax
rate.
Consolidated net income for the first-quarter 2005 decreased to $0.6 million
as compared to 2004 first-quarter net income of $1.1 million. Diluted earnings
per share were $0.07 for the first-quarter 2005 versus $0.13 for the same period
in 2004. The $0.5 million decrease in net income is primarily attributable to
the 2005 increase in operating expenses described above and the $0.6 million
decrease in device sales and is partially offset by revenue growth.
Embrex uses earnings before interest, taxes, depreciation and amortization
(EBITDA) as an additional performance measure. Embrex believes that EBITDA,
which is a non-GAAP financial measure, provides investors with supplemental
information about its financial performance. In accordance with the Securities
and Exchange Commission's Regulation G, the Company has provided a
reconciliation of EBITDA to GAAP net income, following the financial statements
below. EBITDA decreased $0.5 million to $2.7 million for the first- quarter of
2005 from $3.2 million for the same period in 2004 primarily due to the decrease
in net income described above.
At March 31, 2005, the Company's cash and cash equivalents totaled $3.2
million compared to $4.5 million at December 31, 2004. The decrease is primarily
attributable to $2.6 million for purchases of devices and other capital items,
as well as a $1.3 million reduction in non-debt current liabilities. In
addition, the decrease in cash reflects a $0.5 million investment in patents and
other non-current assets. This was partially offset by a $1.5 million increase
in cash provided by the draw down of short-term debt, and another $2.2 million
provided by net income after depreciation and amortization are added back.
"While we continue to have concerns about how 2005 will unfold in terms of
U.S. egg sets and avian influenza in Asia, the first three months of 2005 got us
off to a good start," said Randall L. Marcuson, President and Chief Executive
Officer. "While recurring device revenues and product sales increased by low
double digits, that rate may not sustain itself over the year, but we believe a
total revenue goal of $52.5 million or better for 2005 may be attainable. This
revenue goal represents nearly an 8% increase over 2004."
Conference Call Info
Embrex's management, led by Mr. Marcuson, will discuss first-quarter
financial results in a conference call on Wednesday, May 4 at 11:00 AM EDT. To
join the conference call, dial (877) 866-3175 (domestic and Canada), or (706)
679-7358 (international), identify Randall Marcuson as the conference leader,
and provide conference identification number 5447699. The live conference call
will be publicly available online at www.embrex.com . Click the Investor Info
button and then on the Live Webcast icon. A telephone replay will be available
from 2 p.m. EDT May 4 to midnight EDT May 18, by dialing 800-642- 1687 (domestic
and Canada), or (706) 645-9291 (international), conference ID 5447699 A replay
of the call can also be accessed via the company's website using the same
instructions as above for the live webcast.
About Embrex
Now in its 20th year, Embrex(R), Inc., The In Ovo Company(R), headquartered
in Research Triangle Park, NC, is an international agricultural biotechnology
company engaged in the development of innovative in ovo (in the egg) solutions
that meet the needs of today's global poultry industry. The company's unique
integration of several scientific and engineering disciplines enables it to be
the leading provider of in ovo, value-added solutions with its automated
injection and detection devices as well as its select vaccines. For additional
information, visit the company web site at www.embrex.com .
The tables attached to this release are an integral part of this release.
This release contains forward-looking statements, including statements with
respect to future financial results, products, services, and markets. These
statements involve risks and uncertainties that could cause actual results to
differ materially. Risks include without limitation the degree of growth in the
poultry industry in the U.S. and globally, competition arising in the United
States, possible decreases in production by our customers, avian disease
outbreaks in Embrex's markets, market acceptance and cost of expansion in new
geographic markets and with new products, such as Newplex(TM), including the
Company's ability to penetrate new markets and the degree of market acceptance
of new products, the complete commercial development of potential future
products on a cost effective basis, including Gender Sort and Inovocox(TM), and
the ability to obtain regulatory approval of products. Such approval is
dependent upon a number of factors, such as results of trials, the discretion of
regulatory officials, and potential changes in regulations. Additional
information on these risks and other factors, which could affect the Company's
financial results, is included in the Company's Forms 10-K, 10-Q and other
filings with the Securities and Exchange Commission.
Embrex(R), Inovoject(R), Bursaplex(R), Newplex(TM), Egg Remover(R), Vaccine
Saver(R), Inovocox(TM), and The In Ovo Company(R) are trademarks of Embrex, Inc.
Financial Tables Follow
Please see Embrex's Form 10-Q filed with the SEC for detailed GAAP financial
statements.
Consolidated Statement of Operations
(In thousands except per share amounts)
Three Months Ended
March 31,
---------------------------
(Unaudited)
2005 2004
------------ ------------
Revenues
Device revenues $ 11,922 $ 11,501
Product sales 699 292
Other revenue 142 163
Total revenues 12,763 11,956
Cost of device revenues and product sales 5,493 4,836
Gross profit 7,270 7,120
Operating expenses:
General & administrative 2,574 2,552
Sales & marketing 979 645
Research & development 2,751 2,199
Total operating expenses 6,304 5,396
Operating income 966 1,724
Other income (expense)
Interest income 22 21
Interest expense (6) (12)
Foreign currency gain 127 23
Total other income (expense) 143 32
Income before income tax expense 1,109 1,756
Income tax expense (benefit) 499 647
Net income $ 610 $ 1,109
Net income per share of Common Stock:
Basic $ 0.08 $ 0.14
Diluted $ 0.07 $ 0.13
No. of shares used in per share calculation:
Basic 7,935 8,034
Diluted 8,255 8,346
EBITDA $ 2,659 $ 3,165
GAAP Reconciliation of Net Income to EBITDA
(In thousands)
Three Months Ended
March 31,
---------------------------
2005 2004
------------ ------------
Net income $ 610 $ 1,109
Add back:
Depreciation and amortization 1,544 1,397
Interest expense 6 12
Income tax expense (benefit) 499 647
EBITDA $ 2,659 $ 3,165
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2005 2004
------------ ------------
(unaudited)
ASSETS
Current assets $ 18,935 $ 19,507
Non-current assets 44,479 43,073
Total assets $ 63,414 $ 62,580
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 7,206 $ 7,040
Non-current liabilities 8,422 8,518
Shareholders' equity 47,786 47,022
Total liabilities and shareholders' equity $ 63,414 $ 62,580
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
---------------------------
2005 2004
------------ ------------
Net cash provided by operating activities $ 310 $ 2,508
Net cash used in investing activities (3,008) (2,302)
Net cash provided by (used in)
financing activities 1,542 (476)
Decrease in cash and cash equivalents (1,156) (270)
Currency translation adjustments (67) 95
Cash and cash equivalents at beginning of
period 4,469 9,629
Cash and cash equivalents at end of period $ 3,246 $ 9,454
CONTACT: Ellen Corliss Moore
Vice President, Investor Relations
& Corporate Communications
(919) 314-2561
SOURCE Embrex, Inc.
-0- 05/03/2005
/CONTACT: Ellen Corliss Moore, Vice President, Investor Relations &
Corporate Communications of Embrex, Inc., +1-919-314-2561/
/Web site: http://www.embrex.com /
_