Abaxis, Inc. reported financial results for the fourth quarter and fiscal year ended March 31, 2018.
Abaxis Reports Financial Performance for the Fourth Quarter and Fiscal 2018 and Declares a 13% Increase in Quarterly Cash Dividend
UNION CITY, Calif., April 26, 2018 /PRNewswire/ -- Abaxis, Inc. (Nasdaq: ABAX), a global diagnostics company manufacturing point-of-care blood analysis instruments and consumables for the medical and veterinary markets worldwide, today reported financial results for the fourth quarter and fiscal year ended March 31, 2018.
Fourth quarter and fiscal 2018 results include:
- Revenues of $67.9 million for the fourth quarter, up 17% over last year's comparable quarter, and $244.7 million for fiscal 2018, up 8% year-over-year.
- Diluted net income per share of $0.43 for the fourth quarter, compared to $0.33 in last year's comparable quarter. Diluted net income per share in the fourth quarter includes the effect of a pre-tax gain of $1.2 million ($0.8 million after tax) from the release of a holdback payment due to the sale of an equity method investment and a non-cash charge of $0.5 million as a result of the Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017. Excluding these effects, non-GAAP diluted net income per share was $0.42 for the fourth quarter, compared to $0.33 in last year's comparable quarter.
- Diluted net income per share of $1.17 in fiscal 2018 compared to $1.44 in fiscal 2017, down 19% year-over-year. Diluted net income per share in fiscal 2018 and 2017 includes the effect of a pre-tax gain of $1.2 million ($0.8 million after tax) and $6.1 million ($3.8 million after tax), respectively, due to the sale of an equity method investment and fiscal 2018 also includes a non-cash charge of $3.4 million due to the Tax Act. Excluding these effects, non-GAAP diluted net income per share was $1.29 for fiscal 2018, compared to $1.27 for fiscal 2017.
Revenues highlights:
- Medical market revenues of $10.2 million for the fourth quarter, up 8% over last year's comparable quarter, and $38.6 million for fiscal 2018, up 5% year-over-year.
- Veterinary market revenues of $56.6 million for the fourth quarter, up 19% over last year's comparable quarter, and $201.9 million for fiscal 2018, up 8% year-over-year.
- Revenues from sales of consumables, which include reagent discs, hematology reagent kits, VSpro specialty cartridges, i-STAT cartridges, rapid tests, urinalysis tests and sediment tests, of $53.4 million for the fourth quarter, up 19% over last year's comparable quarter, and $191.3 million for fiscal 2018, up 9% year-over-year.
- Total medical and veterinary reagent disc revenues of $35.2 million for the fourth quarter, up 8% over last year's comparable quarter, and $130.1 million for fiscal 2018, up 5% year-over-year.
- Total medical and veterinary reagent disc sales of 2.8 million units for the fourth quarter, up 5% over last year's comparable quarter, and 10.3 million units for fiscal 2018, up 4% year-over-year.
- Total medical and veterinary instrument revenues of $10.7 million for the fourth quarter, up 8% over last year's comparable quarter, and $39.1 million for fiscal 2018 compared to $39.3 million in fiscal 2017.
- Total medical and veterinary instrument sales of 1,964 units for the fourth quarter, compared to 1,461 units in last year's comparable quarter, and 7,470 units in fiscal 2018 compared to 5,822 units in fiscal 2017.
- North America revenues of $54.3 million for the fourth quarter, up 17% over last year's comparable quarter, and $194.7 million for fiscal 2018, up 7% year-over-year.
- International revenues of $13.6 million for the fourth quarter, up 16% over last year's comparable quarter, and $50.0 million for fiscal 2018, up 10% year-over-year.
Other financial highlights:
- Gross profit of $37.3 million for the fourth quarter, compared to $32.2 million, in last year's comparable quarter.
- Cash, cash equivalents and investments as of March 31, 2018 of $186.0 million.
- Abaxis paid dividends of $3.6 million, or $0.16 per share, during the fourth quarter of fiscal 2018.
Management Discussion
Clint Severson, Chairman and Chief Executive Officer of Abaxis said, "We are excited to report revenues of $67.9 million in the fourth quarter, an increase of 17% compared to the same period last year. This is our second consecutive quarter of double-digit revenue growth and we are pleased with the momentum in our business. Growth in our consumables was excellent. Our medical and veterinary reagent disc revenues grew 8% in the fourth quarter of fiscal 2018 over the same period last year and 5% in fiscal 2018 over last year. The growth in our reagent disc revenues reflects the continued strength of our core business."
Mr. Severson continued, "To drive our growth strategy and long-term revenues, we significantly increased our investment in research and development and sales and marketing expenses in fiscal 2018, which resulted in lower income during the year. We successfully launched three new products, our i-STAT Alinity, VetScan SA Sediment Analyzer and VetScan FLEX4 Rapid Test, during the fourth quarter of fiscal 2018, complementing our existing portfolio of diagnostic products. The VetScan SA Sediment Analyzer and VetScan FLEX4 Rapid Test contributed over half of our revenue growth in the quarter, reflecting their significance to our business. "
Mr. Severson concluded, "During fiscal 2018, we took very important strategic steps forward, including expanding our field sales force, launching six new products and making continued investments in new product innovation. We continued to manage the company conservatively and fund operations, as well as our quarterly dividend, from internally generated cash flow. We look forward to strong growth in fiscal 2019 and we are optimistic about our future."
Dividend Declared
Abaxis today announced that its Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock, to be paid on June 15, 2018, to all shareholders of record as of the close of business on June 1, 2018. This represents a 13% increase compared to the prior quarterly dividend of $0.16 per share of common stock.
Results of Operations
Quarterly Results
For the fiscal quarter ended March 31, 2018, Abaxis reported revenues of $67.9 million, as compared with revenues of $58.2 million for the comparable period last year. Revenues from sales of instruments, which include chemistry analyzers, hematology instruments, VSpro specialty analyzers, i?STAT analyzers, urinalysis instruments and sediment analyzers, increased by $0.7 million, or 8%, compared to the same period last year. Revenues from sales of consumables, which include reagent discs, hematology reagent kits, VSpro specialty cartridges, i?STAT cartridges, rapid tests, urinalysis tests and sediment tests, increased by $8.6 million, or 19%, over the same period last year.
Abaxis reported income from continuing operations before income tax provision of $14.0 million and net income from continuing operations of $10.0 million for the fiscal quarter ended March 31, 2018, compared to $11.6 million and $7.5 million for the fiscal quarter ended March 31, 2017, respectively. Abaxis' effective tax rate in the fiscal quarter ended March 31, 2018 was 28%, compared to 35% for the same period last year. During the fiscal quarter ended March 31, 2018, Abaxis recorded a non-cash charge of $0.5 million resulting from the Tax Act.
Abaxis reported diluted net income per share of $0.43 (calculated based on 23,339,000 shares) for the fiscal quarter ended March 31, 2018, compared to $0.33 per share (calculated based on 22,870,000 shares) for the same period last year. Diluted net income per share for the fiscal quarter ended March 31, 2018 includes the effect of a pre-tax gain of $1.2 million ($0.8 million after tax) from the release of a holdback payment due to the sale of an equity method investment in Scandinavian Micro Biodevices APS ("SMB") in August 2016 and the effect of a non-cash charge of $0.5 million due to a reduction in deferred tax assets resulting from the reduction of the federal tax rate from 35% to 21% as a result of the Tax Act. Excluding these effects, non-GAAP diluted net income per share was $0.42 for the fiscal quarter ended March 31, 2018.
Fiscal 2018 Results
For the fiscal year ended March 31, 2018, Abaxis reported revenues of $244.7 million, as compared with revenues of $227.2 million for the fiscal year ended March 31, 2017. Revenues from instruments sales decreased by $0.2 million, or 0.4%, compared to fiscal 2017. Revenues from consumables sales increased by $16.0 million, or 9%, over fiscal 2017.
Abaxis reported income from continuing operations before income tax provision of $43.4 million and net income from continuing operations of $27.2 million for fiscal 2018, compared to $51.1 million and $32.8 million for fiscal 2017, respectively. Abaxis' effective tax rate in the fiscal year ended March 31, 2018 was 37%, compared to 36% for the fiscal year ended March 31, 2017. During the fiscal year ended March 31, 2018, Abaxis recorded a non-cash charge of $3.4 million resulting from the Tax Act.
Abaxis reported diluted net income per share of $1.17 (calculated based on 23,135,000 shares) for the fiscal year ended March 31, 2018, compared to $1.44 per share (calculated based on 22,797,000 shares) for the fiscal year ended March 31, 2017. Diluted net income per share for fiscal 2018 includes the effect of a pre-tax gain of $1.2 million ($0.8 million after tax) from the release of a holdback payment due to the sale of an equity method investment and a non-cash charge of $3.4 million due to the Tax Act. Excluding these effects, non-GAAP diluted net income per share was $1.29 for fiscal 2018 compared to $1.27 for fiscal 2017.
Other Reported Information
Non-cash compensation expense recognized for share-based awards during the three months ended March 31, 2018 and 2017 was $3.5 million and $3.0 million, respectively. Abaxis paid $3.6 million in cash dividends to shareholders during the fourth quarter of fiscal 2018.
Conference Call
Abaxis has scheduled a conference call to discuss its financial results at 4:15 p.m. Eastern Time on Thursday, April 26, 2018. Participants can dial (844) 855-9498 or (412) 317-5496 to access the conference call, or can listen via a live Internet webcast, which is available in the Investor Relations section of the company's website at http://www.abaxis.com. A replay of the call will be available by visiting http://www.abaxis.com for the next 30 days or by calling (877) 344-7529 or (412) 317-0088, confirmation code 10119767, through May 3, 2018. This press release is also available prior to and after the call via Abaxis' website or the Securities and Exchange Commission's website at http://www.sec.gov.
About Abaxis
Abaxis, Inc. is a worldwide developer, manufacturer and marketer of portable blood analysis systems that are used in a broad range of medical specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements. Our mission is to improve the efficiency of care delivery to and the quality of life of patients in the medical and veterinary markets. We provide leading edge technology and tools that support best medical practices, enabling physicians and veterinarians to respond to the health needs of their clients at the point of care while operating economical and profitable practices. For more information, visit http://www.abaxis.com.
Non-GAAP Financial Measure
To supplement the financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Abaxis uses the non-GAAP financial measure of non-GAAP diluted net income per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Abaxis defines non-GAAP diluted net income per share as net income per share on a diluted basis excluding from net income the recognized gain from the sale of an equity method investment and related costs, including the portion of our income tax provision associated with such gain and excluding from net income the non-cash charge due to a reduction in deferred tax assets as a result of the Tax Act enacted on December 22, 2017. Abaxis uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. Management believes that this non-GAAP financial measure provides meaningful supplemental information regarding Abaxis' performance and liquidity by excluding items that we do not believe are indicative of our core business operating results or operating performance. A reconciliation from GAAP net income and GAAP diluted net income per share to non-GAAP net income and non-GAAP diluted net income per share, respectively, has been provided in the financial statement tables included below in this press release.
Forward Looking Statements
This press release includes statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), including but not limited to statements related to Abaxis' outlook for fiscal 2019 and its future success, growth strategy and long-term revenues, the continuing strength of Abaxis' core business, the significance of Abaxis' new products to its future results and Abaxis' payment of quarterly dividends. Abaxis claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," "anticipates," or words of similar import, and do not reflect historical facts. Forward-looking statements contained in this press release may be affected by risks and uncertainties that may cause actual results to differ materially from those projected or implied in such forward-looking statements, including, but not limited to, risks and uncertainties related to Abaxis' manufacturing operations, including the vulnerability of its manufacturing operations to potential interruptions and delays and its ability to manufacture products free of defects, Abaxis' ability to compete effectively, market acceptance of Abaxis' products, fluctuations in quarterly operating results and difficulty in predicting future results, the performance of Abaxis' independent distributors and Abaxis' ability to manage their inventory levels effectively, expansion of Abaxis' sales and marketing and distribution efforts, Abaxis' dependence on Abbott Point of Care, Inc. for its U.S. medical sales, dependence on sole or limited source suppliers, the effect of exchange rate fluctuations on international operations, dependence on key personnel, risks related to the protection of Abaxis' intellectual property or claims of infringement of intellectual property asserted by third parties. Readers should also refer to the section entitled "Risk Factors" in Abaxis' Annual Report on Form 10-K, and subsequently filed quarterly reports on Form 10-Q filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.
Financial Tables to Follow
ABAXIS, INC.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended Three Months Ended
March 31, March 31,
--------- ---------
2018 2017 2018 2017
---- ---- ---- ----
Revenues $67,918 $58,200 $244,700 $227,220
Cost
of
revenues 30,590 26,018 111,091 101,375
Gross
profit 37,328 32,182 133,609 125,845
------ ------ ------- -------
Operating expenses:
Research
and
development 5,660 4,880 23,332 19,795
Sales
and
marketing 14,649 11,542 53,291 45,249
General
and
administrative 4,837 4,600 18,331 16,314
Total
operating
expenses 25,146 21,022 94,954 81,358
------ ------ ------ ------
Income
from
operations 12,182 11,160 38,655 44,487
Interest
and
other
income
(expense),
net 1,783 428 4,745 6,625
----- --- ----- -----
Income
from
continuing
operations
before
income
tax
provision 13,965 11,588 43,400 51,112
Income
tax
provision 3,945 4,045 16,223 18,333
----- ----- ------ ------
Income
from
continuing
operations 10,020 7,543 27,177 32,779
Discontinued operations
Income
(loss)
from
discontinued
operations,
net
of
tax - 7 - (63)
Net
income $10,020 $7,550 $27,177 $32,716
======= ====== ======= =======
Net income per share:
Basic
Continuing
operations $0.44 $0.33 $1.20 $1.46
Discontinued
operations - - - (0.01)
--- --- --- -----
Basic
net
income
per
share $0.44 $0.33 $1.20 $1.45
===== ===== ===== =====
Diluted
Continuing
operations $0.43 $0.33 $1.17 $1.44
Discontinued
operations - - - -
--- --- --- ---
Diluted
net
income
per
share $0.43 $0.33 $1.17 $1.44
===== ===== ===== =====
Shares used in the
calculation of net income
per share:
Weighted
average
common
shares
outstanding
-
basic 22,698 22,539 22,672 22,515
====== ====== ====== ======
Weighted
average
common
shares
outstanding
-
diluted 23,339 22,870 23,135 22,797
====== ====== ====== ======
Cash
dividends
declared
per
share $0.16 $0.14 $0.60 $0.52
===== ===== ===== =====
ABAXIS, INC.
Condensed Consolidated Balance Sheets
(Unaudited and in thousands)
March 31, March 31,
2018 2017
---- ----
Current assets:
Cash and cash equivalents $46,277 $91,332
Short-term investments 120,506 51,561
Receivables, net 48,164 40,568
Inventories 44,121 39,010
Prepaid expenses and other current
assets 5,138 4,997
Net deferred tax assets, current - 5,644
Current assets of discontinued
operations 42 66
Total current assets 264,248 233,178
Long-term investments 19,240 22,171
Investment in unconsolidated
affiliates 3,846 2,850
Property and equipment, net 35,419 34,260
Intangible assets, net 1,017 1,171
Net deferred tax assets, non-current 7,913 4,392
Other assets 9,420 7,624
Total assets $341,103 $305,646
======== ========
Current liabilities:
Accounts payable $11,775 $7,517
Accrued payroll and related expenses 11,280 9,606
Accrued taxes 1,456 2,151
Current liabilities of discontinued
operations 66 85
Other accrued liabilities 16,234 11,006
Deferred revenue 816 1,415
Warranty reserve 2,253 1,663
Total current liabilities 43,880 33,443
------ ------
Non-current liabilities:
Deferred revenue 1,524 1,460
Warranty reserve 3,037 2,695
Net deferred tax liabilities 203 234
Notes payable, less current portion 177 278
Other non-current liabilities 1,589 1,312
Total non-current liabilities 6,530 5,979
----- -----
Total liabilities 50,410 39,422
------ ------
Shareholders' equity:
Common stock 147,000 135,932
Retained earnings 143,870 130,304
Accumulated other comprehensive loss (177) (12)
Total shareholders' equity 290,693 266,224
------- -------
Total liabilities and shareholders'
equity $341,103 $305,646
======== ========
Revenues by Geographic Region and Customer Group
(Unaudited and in thousands)
The following table presents our revenues by source for the three and twelve months ended March 31, 2018 and 2017.
Three Months Ended Twelve Months Ended
March 31, March 31,
--------- ---------
2018 2017 2018 2017
---- ---- ---- ----
Revenues by Geographic Region
North America $54,329 $46,525 $194,660 $181,853
International 13,589 11,675 50,040 45,367
Total revenues $67,918 $58,200 $244,700 $227,220
======= ======= ======== ========
Revenues by Customer Group
Medical Market $10,217 $9,472 $38,554 $36,602
Veterinary Market 56,576 47,442 201,904 186,661
Other 1,125 1,286 4,242 3,957
Total revenues $67,918 $58,200 $244,700 $227,220
======= ======= ======== ========
Reconciliation from GAAP Net Income to Non-GAAP Net Income and GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
(In thousands, except per share data)
(Unaudited)
The following tables presents our calculation of non-GAAP net income and non-GAAP diluted net income per share to exclude adjustments for a gain on sale of an equity method investment and related income tax effect recorded in the three and twelve months ended March 31, 2018 and 2017 and a non-
cash charge in the three and twelve months ended March 31, 2018, respectively, due to a reduction in deferred tax assets resulting from a reduction of the United States federal tax rate from 35% to 21% as a result of the Tax Act.
Three Months Ended Twelve Months Ended
March 31, 2018 March 31, 2018
-------------- --------------
GAAP Non-GAAP GAAP Non-GAAP
Results Adjustments (1) Adjustments (2) Results Results Adjustments (1) Adjustments (2) Results
------- -------------- -------------- ------- ------- -------------- -------------- -------
Income from
operations $12,182 $ - $ - $12,182 $38,655 $ - $ - $38,655
Interest and other
income (expense),
net 1,783 (1,181) - 602 4,745 (1,181) - 3,564
----- ------ --- --- ----- ------ --- -----
Income from
continuing
operations before
income tax
provision 13,965 (1,181) - 12,784 43,400 (1,181) - 42,219
Income tax
provision 3,945 (410) (478) 3,057 16,223 (410) (3,417) 12,396
----- ---- ---- ----- ------ ---- ------ ------
Income from
continuing
operations 10,020 (771) 478 9,727 27,177 (771) 3,417 29,823
Discontinued operations
Income (loss) from
discontinued
operations, net
of tax - - - - - - - -
Net income $10,020 $(771) $478 $9,727 $27,177 $(771) $3,417 $29,823
======= ===== ==== ====== ======= ===== ====== =======
Net income per share:
Basic
Continuing
operations $0.44 $0.43 $1.20 $1.32
Discontinued
operations - - - -
Basic net income
per share $0.44 $0.43 $1.20 $1.32
===== ===== ===== =====
Diluted
Continuing
operations $0.43 $0.42 $1.17 $1.29
Discontinued
operations - - - -
Diluted net income
per share $0.43 $0.42 $1.17 $1.29
===== ===== ===== =====
Shares used in the calculation of net income per
share:
Weighted average
common shares
outstanding -
basic 22,698 22,698 22,672 22,672
====== ====== ====== ======
Weighted average
common shares
outstanding -
diluted 23,339 23,339 23,135 23,135
====== ====== ====== ======
(1) To exclude an adjustment for
a gain on sale of an equity
method investment from the
release of a holdback payment
and related income tax effect
of $0.8 million recorded in the
three and twelve months ended
March 31, 2018.
(2) To exclude the effect of a
non-cash charge of $0.5
million and $3.4 million in the
three and twelve months ended
March 31, 2018, respectively,
due to a reduction in deferred
tax assets resulting from a
reduction of the United States
federal tax rate from 35% to
21% as a result of the Tax Act.
Three Months Ended Twelve Months Ended
March 31, 2017 March 31, 2017
-------------- --------------
GAAP Non-GAAP GAAP Non-GAAP
Results Adjustments Results Results Adjustments (1) Results
------- ----------- ------- ------- -------------- -------
Income from
operations $11,160 $ - $11,160 $44,487 $ - $44,487
Interest and other
income (expense),
net 428 - 428 6,625 (6,054) 571
--- --- --- ----- ------ ---
Income from
continuing
operations before
income tax
provision 11,588 - 11,588 51,112 (6,054) 45,058
Income tax
provision 4,045 - 4,045 18,333 (2,292) 16,041
----- --- ----- ------ ------ ------
Income from
continuing
operations 7,543 - 7,543 32,779 (3,762) 29,017
Discontinued
operations
Income (loss) from
discontinued
operations, net
of tax 7 - 7 (63) - (63)
Net income $7,550 $ - $7,550 $32,716 $(3,762) $28,954
====== =============== ====== ======= ======= =======
Net income per
share:
Basic
Continuing
operations $0.33 $0.33 $1.46 $1.29
Discontinued
operations - - (0.01) -
Basic net income
per share $0.33 $0.33 $1.45 $1.29
===== ===== ===== =====
Diluted
Continuing
operations $0.33 $0.33 $1.44 $1.27
Discontinued
operations - - - -
Diluted net income
per share $0.33 $0.33 $1.44 $1.27
===== ===== ===== =====
Shares used in the
calculation of
net income per
share:
Weighted average
common shares
outstanding -
basic 22,539 22,539 22,515 22,515
====== ====== ====== ======
Weighted average
common shares
outstanding -
diluted 22,870 22,870 22,797 22,797
====== ====== ====== ======
(1) To exclude an adjustment
for a gain on sale of an
equity method investment and
related income tax effect of
$3.8 million recorded in the
twelve months ended March
31, 2017.
