MINNEAPOLIS, Jan. 30 /PRNewswire-FirstCall/ -- Techne Corporation’s consolidated net earnings for the quarter ended December 31, 2006 increased 13.0% to $18.7 million or $0.47 per diluted share compared to $16.5 million and $0.42 per diluted share for the quarter ended December 31, 2005. For the six months ended December 31, 2006, Techne’s consolidated net earnings increased 14.3% to $38.3 million or $0.97 per diluted share compared with $33.5 million or $0.84 per diluted share for the six months ended December 31, 2005. The improvement in results was mainly due to increased consolidated net sales and improved gross margin percentages.
Consolidated net sales for the quarter and six months ended December 31, 2006 were $52.5 million and $104.9 million, respectively. This was an increase of 9.3% and 9.5% from the quarter and six months ended December 31, 2005.
Biotechnology net sales, which includes sales by R&D Systems’ Biotechnology Division, Fortron and BiosPacific, for the quarter and six months ended December 31, 2006 were $33.4 million and $69.3 million, increases of 7.3% and 9.3%, respectively, from the same prior-year periods. Net sales for the Biotechnology Division increased 11.1% and 10.9% for the quarter and six months ended December 31, 2006, respectively, mainly as a result of increased volume from the same prior-year periods. Approximately $500,000 and $1.2 million of the increase in Biotechnology Division net sales for the quarter and six months ended December 31, 2006, respectively, was the result of price increases. BiosPacific net sales increased for the quarter ended September 30, 2006 from the first quarter of the prior year, but decreased from the prior year for the quarter ended December 31, 2006 due to the timing of large shipments to diagnostic customers.
R&D Europe’s net sales for the quarter and six months ended December 31, 2006 were $15.3 million and $28.2 million, increases of 16.4% and 12.8%, respectively, from the same prior-year periods. In British pound sterling, R&D Europe’s net sales increased 4.3% and 3.5% for the quarter and six months ended December 31, 2006. Hematology net sales for the quarter and six months ended December 31, 2006 were $3.8 million and $7.3 million, increases of 1.2% and 0.2%, respectively, compared to the quarter and six months ended December 31, 2005.
Consolidated gross margins were 79.6% and 79.1% for the quarter and six months ended December 31, 2006, respectively, compared to 77.7% and 77.2% for the quarter and six months ended December 31, 2005. Biotechnology gross margins increased to 80.8% and 80.2% for the quarter and six months ended December 31, 2006 from 78.4% and 77.9% for the same prior-year periods mainly as a result of changes in product mix. Biotechnology gross margins were also affected by the sale of inventory acquired from Fortron and BiosPacific in fiscal 2006, which was valued at fair market under purchase accounting. Included in cost of sales for the quarter and six months ended December 31, 2006 were $64,000 and $355,000, respectively, related to the sale of acquired inventory compared to $281,000 and $856,000, respectively, for the same prior year periods.
Consolidated net earnings and diluted earnings per share for the quarter and six months ended December 31, 2006 were favorably impacted by the change in exchange rates from the prior year used to convert R&D Europe results from British pound sterling to U.S. dollars. The change in exchange rates from the prior year increased consolidated net earnings approximately $466,000 and $672,000 for the quarter and six months ended December 31, 2006, respectively.
In October 2006, the Company repaid its mortgage debt. The total payment of $13.8 million included the mortgage principal balance, accrued interest and a 5% prepayment penalty of $651,000. The prepayment penalty and $78,000 of unamortized loan origination fees were included in interest expense for the quarter ended December 31, 2006.
Forward-Looking Statements:
This earnings release may contain forward-looking statements within the meaning of the Private Litigation Reform Act. These 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 introduction and acceptance of new biotechnology and hematology products, the levels and particular directions of research by the Company’s customers, the impact of the growing number of producers of biotechnology research products and related price competition, the retention of hematology OEM and proficiency survey business, 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 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 this release due to new information or future events. Investors are cautioned not to place undue emphasis on these statements.
Techne Corporation has two operating subsidiaries: Research and Diagnostic Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe, Ltd. (R&D Europe) of Abingdon, England. R&D Systems is a specialty manufacturer of biological products. R&D Systems has two subsidiaries, Fortron Bio Science, Inc. (Fortron), located in Minneapolis, and BiosPacific, Inc. (BiosPacific), located in Emeryville, California. Fortron develops and manufactures antibodies and BiosPacific is a worldwide supplier of biologics to manufacturers of in vitro diagnostic systems and immunodiagnostic kits. R&D Europe is a distributor of biotechnology products.
TECHNE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) QUARTER ENDED SIX MONTHS ENDED 12/31/06 12/31/05 12/31/06 12/31/05 Net sales $52,509 $48,029 $104,860 $95,738 Cost of sales 10,714 10,695 21,951 21,791 Gross margin 41,795 37,334 82,909 73,947 Operating expenses: Selling, general and administrative 8,830 7,980 15,897 14,434 Research and development 5,044 4,574 9,899 9,291 Amortization of intangible assets 404 492 807 984 Total operating expenses 14,278 13,046 26,603 24,709 Operating income 27,517 24,288 56,306 49,238 Other expense (income): Interest expense 815 238 1,083 461 Interest income (1,956) (1,130) (3,632) (2,104) Other non-operating expense (income), net 428 281 913 492 Total other expense (income) (713) (611) (1,636) (1,151) Earnings before income taxes 28,230 24,899 57,942 50,389 Income taxes 9,567 8,385 19,648 16,874 Net earnings $18,663 $16,514 $38,294 $33,515 Earnings per share: Basic $0.47 $0.42 $0.97 $0.86 Diluted $0.47 $0.42 $0.97 $0.84 Weighted average common shares outstanding: Basic 39,387 38,877 39,383 38,815 Diluted 39,511 39,761 39,483 39,730 TECHNE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) ASSETS 12/31/06 6/30/06 Cash and equivalents $102,558 $89,634 Short-term available-for-sale investments 23,751 19,212 Trade accounts receivable 22,923 23,769 Other receivables 1,355 1,309 Inventory 9,210 9,024 Other current assets 7,426 6,874 Current assets 167,223 149,822 Available-for-sale investments 80,205 77,660 Property and equipment, net 90,045 88,772 Goodwill and intangible assets, net 31,215 32,021 Other non-current assets 28,954 22,237 Total assets $397,642 $370,512 LIABILITIES Current liabilities $12,160 $17,966 Long-term debt -- 12,198 Stockholders’ equity 385,482 340,348 Total liabilities and equity $397,642 $370,512
Techne Corporation
CONTACT: Greg Melsen, Chief Financial Officer, or Kathy Backes,Controller, both of Techne Corporation, +1-612-379-8854
