MINNEAPOLIS, May 1 /PRNewswire-FirstCall/ -- Techne Corporation’s consolidated net earnings for the quarter ended March 31, 2007 increased 17.4% to $23.9 million or $0.60 per diluted share compared to $20.3 million and $0.52 per diluted share for the quarter ended March 31, 2006. For the nine months ended March 31, 2007, Techne’s consolidated net earnings increased 15.5% to $62.2 million or $1.57 per diluted share compared with $53.9 million or $1.36 per diluted share for the nine months ended March 31, 2006. The improvement in results was mainly due to increased consolidated net sales and improved gross margin percentages.
Consolidated net sales for the quarter and nine months ended March 31, 2007 were $60.2 million and $165.1 million, respectively. This was an increase of 9.8% and 9.6% from the quarter and nine months ended March 31, 2006.
Biotechnology net sales, which includes sales by R&D Systems’ Biotechnology Division, Fortron and BiosPacific, for the quarter and nine months ended March 31, 2007 were $39.1 million and $108.5 million, increases of 6.9% and 8.4%, respectively, from the same prior-year periods. Approximately $1.2 million of the increase in Biotechnology net sales during the first six months of fiscal 2007 was the result of price increases made in January 2006.
R&D Europe’s net sales for the quarter and nine months ended March 31, 2007 were $17.4 million and $45.6 million, increases of 20.1% and 15.5%, respectively, from the same prior-year periods. In British pound sterling, R&D Europe’s net sales increased 7.2% and 4.9% for the quarter and nine months ended March 31, 2007. Hematology net sales of $3.7 million for the quarter and $11.0 million for the nine months ended March 31, 2007 were essentially flat from the same prior-year periods.
Consolidated gross margins were 80.0% and 79.4% for the quarter and nine months ended March 31, 2007, respectively, compared to 77.9% and 77.5% for the quarter and nine months ended March 31, 2006. Biotechnology gross margins increased to 80.4% and 80.3% for the quarter and nine months ended March 31, 2007 from 78.8% and 78.2% for the same prior-year periods mainly as a result of changes in product mix. Biotechnology gross margins were also positively 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 nine months ended March 31, 2007 were $100,000 and $455,000, respectively, related to the sale of acquired inventory compared to $397,000 and $1.3 million, respectively, for the same prior-year periods.
The income tax rate of 35.2% for the quarter ended March 31, 2007 increased from 33.9% for the first and second quarter of fiscal 2007 as a result of changes in state apportionment estimates. Income tax rates are expected to range from approximately 33.5% to 34.5% in the fourth quarter of fiscal 2007.
Consolidated net earnings and diluted earnings per share for the quarter and nine months ended March 31, 2007 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 $600,000 and $1.3 million for the quarter and nine months ended March 31, 2007, respectively.
Forward Looking Statements:
This earnings release contains forward-looking statements within the meaning of the Private Litigation Reform Act. These statements, including the Company’s expectations as to income tax rates, 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 NINE MONTHS ENDED 3/31/07 3/31/06 3/31/07 3/31/06 Net sales $60,197 $54,813 $165,057 $150,551 Cost of sales 12,019 12,105 33,970 33,896 Gross margin 48,178 42,708 131,087 116,655 Operating expenses: Selling, general and administrative 7,229 6,901 23,126 21,335 Research and development 5,169 4,761 15,068 14,052 Amortization of intangible assets 403 492 1,210 1,476 Total operating expenses 12,801 12,154 39,404 36,863 Operating income 35,377 30,554 91,683 79,792 Other expense (income): Interest expense -- 245 1,083 706 Interest income (2,237) (1,082) (5,869) (3,186) Other non-operating expense (income), net 767 229 1,680 721 Total other expense (income) (1,470) (608) (3,106) (1,759) Earnings before income taxes 36,847 31,162 94,789 81,551 Income taxes 12,954 10,815 32,602 27,689 Net earnings $23,893 $20,347 $62,187 $53,862 Earnings per share: Basic $0.61 $0.52 $1.58 $1.38 Diluted $0.60 $0.52 $1.57 $1.36 Weighted average common shares outstanding: Basic 39,414 39,199 39,393 38,941 Diluted 39,543 39,425 39,498 39,631 TECHNE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) ASSETS 3/31/07 6/30/06 Cash and equivalents $116,276 $89,634 Short-term available-for-sale investments 27,822 19,212 Trade accounts receivable 29,582 23,769 Other receivables 1,247 1,309 Inventory 9,574 9,024 Other current assets 7,891 6,874 Current assets 192,392 149,822 Available-for-sale investments 85,854 77,660 Property and equipment, net 89,172 88,772 Goodwill and intangible assets, net 30,571 32,021 Other non-current assets 29,184 22,237 Total assets $427,173 $370,512 LIABILITIES Current liabilities $15,710 $17,966 Long-term debt -- 12,198 Stockholders’ equity 411,463 340,348 Total liabilities and equity $427,173 $370,512
Techne Corporation
CONTACT: Greg Melsen, Chief Financial Officer, or Kathy Backes,Controller, both of Techne Corporation, +1-612-379-8854
