MINNEAPOLIS, Oct. 28, 2014 /PRNewswire/ -- Techne Corporation (NASDAQ:TECH), (d/b/a Bio-Techne) today reported its financial results for the first quarter ended September 30, 2014.
First Quarter Highlights
- Increased first quarter revenue by 27% to $108.5 million.
- Grew first quarter adjusted earnings by 4% to $31.7 million.
- Generated operating cash flow of $35.7 million in the first quarter, a 10% increase from the prior year.
- Completed the acquisition of ProteinSimple to enhance our solution offering to customers by providing them with tools that revolutionize the analysis of proteins and provide a level of reliability, ease of use and performance that improves overall productivity and consistency in lab results.
- Completed the acquisition of Novus Biologicals, LLC (Novus) which expands our offering of antibodies and other reagents to over 250,000 products and provides our customers a unique, one-stop shopping experience delivered through an innovative digital commerce platform.
“Our teams executed very well considering the market softness in Europe and the continued price sensitivity of our Academic customers,” said Chuck Kummeth, President and Chief Executive Officer of Bio-Techne. “I am especially pleased with the progress our integration teams have made executing our brand strategy made possible with our recent acquisitions of PrimeGene and Novus, with roll-out scheduled in Q2. And of course, I can’t say enough about our new Protein Platforms segment, which consists of our newly acquired ProteinSimple brand; they have not missed a beat since the acquisition and have demonstrated great intensity in achieving amazing growth in both the Simple WesternTM as well as iCE and Micro-Flow Imaging product lines.”
Financial Results
Net sales as reported for the first quarter increased 27% to $108.5 million. Organic growth was 3% in the quarter, with currency translation having a negligible impact and acquisitions contributing 24% to the revenue growth. Adjusted earnings for the first quarter were $31.7 million (an increase of 4% from the prior fiscal year period) or $0.85 per diluted share. Adjusted earnings and adjusted earnings per share exclude intangible asset amortization, costs recognized upon the sale of inventory that was written-up to fair value as part of acquisitions, and other one-time costs related to acquisition activity. GAAP earnings for the quarter were $23.9 million or $0.64 per diluted share.
Adjusted gross margins were 72.1% for the first quarter of fiscal 2014 compared to 74.4% for the same quarter in fiscal 2014. The decrease in adjusted gross margins for the quarter compared to last year was primarily caused by a change in product mix from lower margin acquisitions. Adjusted gross margins exclude the costs recognized upon sale of acquired inventory and amortization of intangible assets. GAAP gross margin was 67.4% and 71.3% for the quarters ended September 30, 2014 and 2013 respectively.
Selling, general and administrative expenses for the quarter ended September 30, 2014 increased $14.7 million from the same prior-year quarter. This increase in expenses included the acquired run-rate expenses from recent acquisitions, intangible asset amortization from recent acquisitions, and other costs associated with on-going acquisitions as illustrated in the accompanying table. The remaining increase includes investments made in commercial resources and administrative infrastructure.
Cash generated from operations for the first quarter of fiscal 2015 were $35.7 million. Capital expenditures for the first quarter of fiscal 2015 were $4.9 million.
Segment Results
Management uses operating results to monitor and evaluate performance of the Company’s three business segments, as highlighted below. Segment operating results exclude intangible asset amortization, costs recognized upon the sale of inventory that was written-up to fair value as part of acquisitions and other one-time costs related to acquisition activity.
Biotechnology Segment
The Company’s Biotechnology segment provides proteins, antibodies, immunoassays, flow cytometry products, intracellular signaling products, and biologically active chemical compounds used in biological research. Biotechnology segment’s first quarter 2015 net sales were $81.5 million, an increase of 11% from $73.2 million for the first quarter ended September 30, 2013. Organic growth for the Biotechnology segment was 1% for the first quarter of fiscal 2015. Biotechnology segment operating margin was 51.6% in the first quarter of fiscal 2015 compared to 56.0% in the first quarter of fiscal 2014. The lower margin is driven by a product mix shift as a result of the acquisition of Novus in the current quarter.
Clinical Controls Segment
The Company’s Clinical Controls segment provides a range of hematology controls, calibrators, and products used as proficiency testing tools by clinical laboratories and proficiency certifying agencies. Clinical Controls segment’s first quarter 2015 net sales were $14.1 million, an increase of 13% from $12.5 million for the quarter ended September 30, 2013. Organic sales growth for the Clinical Controls segment was 10% for the quarter ended September 30, 2014, excluding the impact of the Bionostics acquisition on July 22, 2014. The Clinical Controls segment operating margin was 32.2% for both the quarter ended September 30, 2015 and 2014, respectively.
Protein Platforms Segment
With the previously announced acquisition of ProteinSimple, the Company has a new Protein Platforms reporting segment. Protein Platforms expands the Company’s solutions that it can offer its customers by developing and commercializing proprietary systems and consumables for protein analysis. In the first quarter of fiscal 2015, which as of the acquisition date only included the months of August and September, segment revenue was $12.9 million and operating margin was 20.2%.
Forward Looking Statements:
Our press releases may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company’s actual results: the effect of new branding and marketing initiatives, the integration of new leadership, the introduction and acceptance of new products, the funding and focus of the types of research by the Company’s customers, the impact of the growing number of producers of biotechnology research products and related price competition, general economic conditions, the impact of currency exchange rate fluctuations, and the costs and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships.
For additional information concerning such factors, see the section titled “Risk Factors” in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements we make in our press releases due to new information or future events. Investors are cautioned not to place undue emphasis on these statements.
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