LAVAL, QC, Aug. 10 /PRNewswire-FirstCall/ - LAB Research Inc. (“LAB Research” or “LRI”), a rapidly growing non-clinical contract research organization, announced today financial results for the second quarter ended June 30, 2006 based on the segment of LAB International’s results pertaining to its activities.
Highlights: - Successful completion of the IPO for gross proceeds of $15,000,000 - Net earnings up 19% for the second quarter and 23% for the first 6 months - Revenues up 11% for the first 6 months - Year-to-date Adjusted EBITDA up 22% - Canadian expansion on track
“LRI is having a very exciting year so far; we continued to deliver a solid operating performance and earning growth for the first six months prior to taking LRI public in a challenging market. The 49,000 sq. ft. expansion to the Canadian facility is on track to be completed by the end of 2006 and will provide the required capacity to sustain our growth while we commence expansion of our two European sites”, stated Luc Mainville, CEO of LRI.
“Following our IPO, we now can count on our cash position as well as our access to our operating cash flows to pursue our strategic initiatives”, added Mr. Mainville.
LRI’s revenues were $12.3 million for the second quarter down by 2.1% from the same period last year but up 4.4% compared to the first quarter of 2006. Year-to-date, LRI revenues totaled $24.1 million, and were 11% higher than the first six months of 2005. The comparative period included the results of operations of LAB Denmark from the date of its acquisition on February 9, 2005.
Net earnings for the second quarter of 2006 were $1.0 million compared to $0.8 million in the corresponding period in 2005, representing an increase of 19%. Net earnings for the first six months of 2006 were $2.0 million compared to $1.6 million in the corresponding period in 2005, representing an increase of 23%.
EBITDA for the second quarter of 2006 was $2.2 million, compared to $2.1 million in the corresponding period in 2005, representing an increase of 1%. After adjusting for the impact of the Laval facility sale-leaseback transaction, Adjusted EBITDA for the second quarter of 2006 was $2.4 million, compared to $2.1 million in the corresponding period in 2005, representing an increase of 13%. Adjusted EBITDA for the first six-months of 2006 was $5.0 million, compared to $4.1 million in the corresponding period in 2005, representing an increase of 22%. Adjusted EBITDA margin for the second quarter and six-month period of 2006 was 20% and 21% respectively compared to 17% and 19% for the corresponding period in 2005.
Amortization expense for the second quarter of 2006 was in line with last year at $0.8 million. For the first six months of the year, amortization expenses totalled $1.6 million compared to $1.5 million in the corresponding period in 2005. The increase is due to the incremental capital expenditures over the previous 12 months for improvements to the LAB Denmark facility and data management software and reflects the amortization of customer contracts and relationships acquired as part of the LAB Denmark acquisition for the full period in 2006.
Interest expense for the second quarter of 2006 was $0.15 million compared to $0.25 million in the corresponding period in 2005. For the period of 6 months in 2006, interest expense was $0.3 million compared to $0.45 million for the corresponding period last year. The decrease in interest expense resulted primarily from the repayment of long-term debt with proceeds of the Laval facility sale-leaseback transaction.
Foreign exchange for the second quarter and first six-month periods of 2006 were nominal and a $0.1 million recovery compared to $0.1 million loss and a $0.1 million recovery for the corresponding periods in 2005. The company had significant exposure to U.S. dollar during these periods, for that reason it purchased forward contracts to mitigate its exposure to foreign exchange fluctuations. To June 30, 2006, approximately 87% (89% - 2005) of revenue was billed in currencies other than the reporting currency (primarily euros, US$,), while approximately 78% (72% - 2005) of direct costs were incurred in similar non-reporting currencies.
Provision for income taxes for the second quarter of 2006 and 2005 were the same at $0.2 million while provision for income taxes for the six months period of 2006 and 2005 were $0.7 million and $0.6 million respectively reflecting an increased profitability.
On August 3, 2006 LRI announced the successful completion of its initial public offering of 10,000,000 common shares including 6,250,000 common shares sold by LAB International and 3,750,000 shares issued by LAB Research from treasury, at a price of $4.00 per share for gross proceeds of $25 million and $15 million to LAB International and LRI respectively. The net proceeds from the offering will be used to support the expansion of its three main sites over the next 12 months and the balance will be used for working capital purposes and to support the growth of our activities.
The LAB Research’s common shares commenced trading on August 3, 2006 on the TSX under the trading symbol LRI. LRI has a total of 18,035,714 common shares outstanding.
Conference Call
LRI will host a conference call at 2:00 p.m., on Thursday August 10, 2006. Interested parties may also access the conference call by webcast at www.labresearch.com or www.cnw.ca. The telephone number to access the conference call is 1-866-249-5221. A replay of the call will be available until August 17, 2006. The telephone numbers to access the replay are 416-640-1917 and 1-877-289-8525 with code number 21199301(pound key).
About LAB Research Inc.
LAB Research is a non-clinical contract research organization (CRO) that provides contract research services primarily to the pharmaceutical and biotechnology industries. LAB Research supports the development of its customers’ products from five state-of-the-art facilities located in Canada, the United States, Denmark and Hungary.
This news release contains certain forward-looking statements that reflect the current views and/or expectations of LAB Research Inc. with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.
LAB RESEARCH SEGMENT Combined Carve-Out Balance Sheets (Unaudited) June 30, 2006 and December 31, 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- December June 30, 31, 2006 2005 ------------------------------------------------------------------------- (Audited) Assets Current assets: Cash $ 2,506 $ 3,727 Accounts and other receivables 11,489 6,923 Work in progress 2,287 2,314 Prepaid expenses 985 862 ----------------------------------------------------------------------- 17,267 13,826 Property and equipment 18,482 17,937 Intangible assets 2,803 2,944 Other assets 2,518 1,745 Future income taxes 535 578 ------------------------------------------------------------------------- $ 41,605 $ 37,030 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and LAB International’s Net Investment Current liabilities: Bank loan $ 223 $ 432 Accounts payable and accrued liabilities 8,925 7,165 Income taxes payable 2,345 1,573 Deferred revenue 5,458 4,673 Current portion of long-term debt 2,304 2,320 Deferred gain on sale of property 84 68 Future income taxes 258 517 Advances from companies under common control 3,372 2,897 ----------------------------------------------------------------------- 22,969 19,645 Deferred rent liability 144 37 Deferred gain on sale of property 1,532 1,603 Long-term debt 7,544 8,049 Future income taxes 2,212 1,821 LAB International’s net investment: Segment equity 8,686 7,337 Cumulative translation adjustment (1,482) (1,462) ----------------------------------------------------------------------- 7,204 5,875 Subsequent event ------------------------------------------------------------------------- $ 41,605 $ 37,030 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Approved on behalf of the Board of Directors: ------------------- Director ------------------- Director Combined Carve-Out Statements of Earnings (Unaudited) Periods ended June 30, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, ---------------------- ---------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenues $ 12,325 $ 12,593 $ 24,132 $ 21,758 Expenses: Direct costs 7,414 7,886 14,495 13,010 Selling, general and administrative 2,438 2,154 4,589 4,120 Allocated costs 285 275 570 550 Stock-based compensation 15 26 35 49 Amortization of property and equipment 689 715 1,323 1,261 Amortization of intangible assets 125 129 246 198 Interest on long-term debt 147 251 290 449 Foreign exchange 9 105 (77) (93) ----------------------------------------------------------------------- 11,122 11,541 21,471 19,544 ------------------------------------------------------------------------- Earnings before income taxes 1,203 1,052 2,661 2,214 Provision for income taxes 210 215 716 627 ------------------------------------------------------------------------- Net earnings $ 993 $ 837 $ 1,945 $ 1,587 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Combined Carve-Out Statements of Segment Equity (Unaudited) Periods ended June 30, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, ---------------------- ---------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Segment equity, beginning of period $ 9,113 $ 5,157 $ 7,337 $ 4,638 Net earnings 993 837 1,945 1,587 Net change in tax liabilities or assets of LAB Canada that will not be transferred to LAB Research Inc. (1,435) (410) (631) (664) Additional paid-in capital relating to stock-based compensation 15 26 35 49 ------------------------------------------------------------------------- Segment equity, end of period $ 8,686 $ 5,610 $ 8,686 $ 5,610 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Combined Carve-Out Statements of Cash Flows (Unaudited) Periods ended June 30, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, ---------------------- ---------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 993 $ 837 $ 1,945 $ 1,587 Adjustments for: Amortization of property and equipment 689 715 1,323 1,261 Write-off of property and equipment 10 65 12 66 Amortization of intangible assets 125 129 246 198 Amortization of deferred financing fees 10 4 19 4 Stock-based compensation 15 26 35 49 Amortization of deferred gain of property (32) - (55) - Deferred rent liability 54 - 107 - Future income taxes (867) (244) (998) (523) Changes in research tax credit receivable that will not be transferred by LAB Canada (1,411) 189 (506) 190 Net changes in operating assets and liabilities 442 1,756 (840) 1,165 ----------------------------------------------------------------------- 28 3,477 1,288 3,997 Cash flows from financing activities: Proceeds from issuance of long-term debt - 236 - - Repayment of long-term debt (310) (637) (656) (637) Repayment of capital leases (263) - (612) - Net advances from companies under common control 2,409 (2,590) 475 4,426 Proceeds from bank loan 224 38 - - Repayments under bank credit facilities - (127) (209) (15) ----------------------------------------------------------------------- 2,060 (3,080) (1,002) 3,774 Cash flows from investing activities: Business acquisitions, net of cash acquired - (42) - (6,191) Payment of holdback payable - - - (65) Additions to property and equipment (708) (536) (1,455) (912) Other assets (698) 641 (733) 634 ----------------------------------------------------------------------- (1,406) 63 (2,188) (6,534) ------------------------------------------------------------------------- Net increase (decrease) in cash 682 460 (1,902) 1,237 Cash beginning of period 1,151 2,919 3,727 1,694 Effect of exchange rate changes 673 (375) 681 73 ------------------------------------------------------------------------- Cash end of period $ 2,506 $ 3,004 $ 2,506 $ 3,004 ------------------------------------------------------------------------- -------------------------------------------------------------------------
LAB RESEARCH INC.
CONTACT: LAB Research Inc.: Luc Mainville, Chief Executive Officer, (450)973-2240, Ext.: 1206, mainvillel@labinc.ca; Media and Investor: EchoesFinancial Network Inc.: Dominic Sicotte, 866-633-9551, ext. 101, (514)907-1653, dsicotte@echoesfinancial.com, www.roadshows.tv
