Exhibit 99.1
TRANSGENOMIC INC. REPORTS SECOND QUARTER 2005 RESULTS
LOSS NARROWS TO HISTORIC LOW, FIRST POSITIVE EBITDA QUARTER IN COMPANY HISTORY
OMAHA, Neb., Aug 11 /PRNewswire-FirstCall/ -- Transgenomic Inc. (Nasdaq:
TBIO) today announced financial results for the quarter ended June 30, 2005. The
Company's financial results are presented in the tables attached.
Second Quarter 2005
Second quarter 2005 BioSystems revenue increased 5 percent to $6.9 million
from $6.6 million in the second quarter of 2004. Second quarter 2005 Nucleic
Acids revenue decreased to $0.7 million from $2.4 million in the second quarter
of 2004. The significant Nucleic Acids revenue decrease is due to customers'
fluctuating needs for specialty chemical phosphoramidites and the company's
strategic exit in late 2004 from contract manufacturing of synthetic
oligonucleotides.
Loss from operations for the second quarter of 2005 was $0.9 million, the
best figure reported in Transgenomic's history as a public company. EBITDA (as
defined herein) for the second quarter was $0.1 million, the first positive
quarter in company history. This compares to a loss from operations of $14.8
million in the second quarter of 2004 and $1.2 million in the first quarter of
2005. The loss from operations for the second quarter of 2004 included non-cash
charges of $12.0 million related to the company's Nucleic Acids segment.
Net loss for the second quarter of 2005, also an all-time best for the
company, was $1.0 million, representing a loss of $0.03 per share compared to a
net loss of $15.1 million, or $0.52 per share, in the second quarter of 2004.
The net loss for the second quarter of 2004 included non-cash charges of $12.0
million related to the Nucleic Acids segment. Net loss in the first quarter of
2005 was $2.9 million, or $0.10 per share. This included $1.3 million of
beneficial conversion and other non-cash charges.
Six Months Ended June 30, 2005
For the six months ended June 30, 2005, BioSystems revenue was
$13.8 million compared to $12.9 million in 2004, an increase of 7 percent. Six
month Nucleic Acids revenue was $1.2 million in 2005 compared to $4.7 million in
2004. Six month 2005 total revenues were $15.0 million compared to $17.6 million
in 2004. This decrease was largely driven by a $3.5 million decrease in Nucleic
Acids segment revenue. Net loss for the six months ended June 30, 2005 was $ 3.9
million, representing a loss of $0.12 per share, as compared to $19.0 million,
including non-cash charges of $12.5 million, representing a loss of $0.66 per
share, in the first six months in 2004.
Comment and Outlook
CEO Collin D'Silva said, "Our performance reflects a renewed focus on our
Biosystems business, which presents a better mix of current and future
opportunities for the company. Coupled with the restructuring completed at the
end of last year, we are positioned to achieve operating cash flow break even by
year end, driven by expected acceleration in revenue growth in our Biosystems
segment for the remainder of the fiscal year."
"Our customers continue to validate and demonstrate the unique value
proposition of our WAVE(R) System in studies with significant clinical
implications for personalized medicine and the development of targeted
therapeutics, particularly in oncology. This is reflected both in results
generated directly by WAVE System users as well as clients that have chosen to
take advantage of our Discovery Services offerings." D'Silva concluded, "We
believe the evidence supporting our competitive advantages in oncology
translational and clinical research bodes well for our ongoing opportunities to
realize revenue growth while providing products and services that will
ultimately have a significant impact on cancer patient care."
Mike Summers, Transgenomic's CFO, pointed out that operating cash flows
continued to validate the effectiveness of the company's 2004 restructuring
plan. According to Mr. Summers, "Cash used in operations for the three and six
months ended June 30, 2005, totaled $1.09 million and $1.30 million,
respectively, a significant improvement over historical levels of cash used in
operations that have ranged from $1.76 to $5.73 million per quarter. In
addition, we are pleased to report that EBITDA for the quarter was $0.12
million, the first positive EBITDA in the history of the company," Mr. Summers
also commented that the second quarter reported results were significantly less
complicated than recent past quarters due to the absence of significant non-cash
charges. "We anticipate that going forward, our reported results will represent
a more direct reflection of the performance of our business," he concluded.
Use of non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally
accepted accounting principles (GAAP), the company uses the non-GAAP measure of
EBITDA. EBITDA is defined as US GAAP net income (loss) plus the following items:
(a) interest expense net of interest income; (b) the provision for income taxes;
and (c) depreciation and amortization. EBITDA is not a measurement supported by
accounting principles generally accepted in the United States and may not be
used by other companies, including the company's competition. The company
believes EBITDA provides stakeholders with an indicator of operating
performance, especially given the significant capital investment in its Glasgow,
Scotland phosphoramidite manufacturing facility. Net investment in this facility
is approximately $8.3 million which represents approximately 65 percent of the
company's consolidated net investment in property and equipment, while the
revenue originating from that facility represents a much smaller portion of the
consolidated total. This facility has significant excess capacity and will not
require significant recurring investment.
The company believes that net income is the most directly comparable
financial measure to EBITDA under GAAP. EBITDA should not be considered in
isolation or as a substitute for consolidated statement of operations and cash
flows data prepared in accordance with GAAP. EBITDA is not a complete measure of
an entity's profitability because it does not include costs and expenses
identified above: nor is EBITDA a complete net cash flow measure because it does
not include reductions for cash payments for an entity's obligation to service
its debt, fund its working capital, capital expenditures and acquisitions and
pay its income taxes and dividends.
Earnings Call
The company will discuss its second quarter 2005 financial results via
teleconference on Thursday, August 11, at 5:00 p.m. EST. To access the call via
telephone, call 800-362-0571. The company will also host a live broadcast of the
call over the Internet. To listen to the webcast, investors should log on to the
company's Investor Relations web page at
http://www.transgenomic.com/events.asp?id=6 and follow the instructions listed.
An archived recording of the conference call will be available and can be
accessed via the web using the same link listed above for 14 days after the
call. Investors can also listen to a replay via telephone until 11:59 p.m. EST
on Thursday, August 25, 2005. Simply dial 402-220-0863 or 800-283-5758 from any
telephone.
About Transgenomic
Transgenomic is a global company that markets and sells versatile and
innovative products and related services to the medical research and
pharmaceutical markets for use in genetic variation analysis. The company's WAVE
System, with over 1200 installed in more than thirty countries, has broad
applicability to genetic research and molecular diagnostics. Transgenomic also
provides genomic biomarker analysis services to pharmaceutical and
biopharmaceutical companies to support preclinical and clinical development of
targeted therapeutics. The high sensitivity of the WAVE System in detecting
genetic variation makes it a uniquely enabling technology for the advancement of
personalized medicine. For more information about the innovative genomics
research tools developed and marketed by Transgenomic, please visit the
company's Web site at www.transgenomic.com.
Forward-Looking Statement
Certain statements in this press release constitute "forward-looking
statements" of Transgenomic within the meaning of the Private Securities
Litigation Reform Act of 1995, which involve known and unknown risks,
uncertainties and other factors that may cause our actual results to be
materially different from any future results, performance or achievements
expressed or implied by such statements. Forward-looking statements include, but
are not limited to, those with respect to management's current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results, including achieving positive operating cash
flows or profitability, and achieving accelerated revenue growth in the second
half of 2005 by the BioSystems segment. The known risks, uncertainties and other
factors affecting these forward-looking statements are described from time to
time in Transgenomic's reports to the Securities and Exchange Commission. Any
change in such factors, risks and uncertainties may cause the actual results,
events and performance to differ materially from those referred to in such
statements. Accordingly, the company claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995 with respect to all statements contained in this press
release. All information in this press release is as of the date of the release
and Transgenomic does not undertake any duty to update this information,
including any forward-looking statements, unless required by law.
TRANSGENOMIC INC.
SUMMARY FINANCIAL RESULTS
(In thousands, except per share amounts)
STATEMENTS OF OPERATIONS
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net Sales $ 7,633 $ 9,011 $ 15,005 $ 17,640
Cost of Sales 4,450 5,858 8,848 11,627
Gross Margin 3,183 3,153 6,157 6,013
Operating Expenses:
Selling, General
and Administrative 3,537 4,268 7,138 8,513
Research and
Development 581 1,672 1,186 3,601
Impairment charges -- 11,964 -- 11,964
Operating Loss (935) (14,751) (2,167) (18,065)
Other Income/(Expenses) (49) (379) (1,704) (1,022)
Loss Before Income Taxes (984) (15,130) (3,871) (19,087)
Income Tax Expense
(Benefit) 14 2 19 (95)
Net Loss $ (998) $ (15,132) $ (3,890) $ (18,992)
Shares Used in Computing
Net Loss Per Share
Basic and Diluted 34,237 29,053 32,123 28,887
Basic and Diluted Net
Loss Per Share $ (0.03) $ (0.52) $ (0.12) $ (0.66)
TRANSGENOMIC INC.
RECONCILIATION TO NON-GAAP CONCEPTS
(In thousands)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
EBITDA
Net loss $ (998) $ (15,132)(1) $ (3,890)(2) $ (18,992)(1)
Current income
tax expense
(benefit) 14 2 19 (95)
Interest expense 83 346 1,738 935
Depreciation and
amortization 1,016 1,208 2,065 2,410
EBITDA $ 115 $ (13,576) $ (68) $ (15,742)
(1) Includes non-cash impairment charges of $11,964 related to the company's
nucleic acids segment.
(2) Includes amortization of discounts and premiums and other non-cash charges
of $1,337.
TRANSGENOMIC INC.
SUMMARY FINANCIAL POSITION
(In thousands)
BALANCE SHEETS
June 30, December 31,
2005 2004
------------ ------------
Cash, Cash Equivalents and Short-term
Investments $ 1,714 $ 1,002
Other Current Assets 14,179 16,906
Current Assets 15,893 17,908
Net Property and Equipment 11,737 13,525
Other Assets 5,335 6,025
Total Assets $ 32,965 $ 37,458
Current Liabilities $ 15,712 $ 18,724
Long-term Debt 1,494 2,199
Stockholders' Equity 15,759 16,535
Total Liabilities and Stockholders Equity $ 32,965 $ 37,458
SOURCE Transgenomic Inc.
-0- 08/11/2005
/CONTACT: Robert J. Pogulis, Ph.D., of Transgenomic Inc., +1-845-782-9617,
rpogulis@transgenomic.com; or Investors, Paul G. Henning of Cameron Associates,
+1-212-554-5462, phenning@cameronassoc.com, for Transgenomic Inc./