Trinity Biotech Announces Quarter 1 Financial Results

DUBLIN, IRELAND--(Marketwire - May 11, 2010) - Trinity Biotech plc (NASDAQ: TRIB), a leading developer and manufacturer of diagnostic products for the point-of-care and clinical laboratory markets, today announced results for the quarter ended March 31, 2010.

Quarter 1 Results

Total revenues for the quarter were $29.0m which compares to $31.1m in quarter 1, 2009, a decrease of 6.7%.

Point-of-care revenues for the quarter decreased by 6.6% when compared to quarter 1, 2009. This decline is still largely attributable to the company’s decision to restrict shipments to a major HIV customer due to credit related issues. This was partly offset by the continued growth of HIV sales in the USA which increased by 6% quarter on quarter.

Continuing clinical laboratory (i.e. excluding coagulation) revenues were $13.3m which represents a decrease of 3.5% when compared to $13.8m in quarter 1 2009. This decrease does not reflect an underlying reduction in business levels but rather that lyme sales, which are very seasonal in nature, are lower this quarter than in the corresponding quarter last year.

Coagulation revenues fell from $12.7m in quarter 1, 2009 to $11.4m in quarter 1, 2010, a decrease of 10.3%.

Revenues for quarter 1 by key product area were as follows:

 2009 2010 Increase/ Quarter 1 Quarter 1 Decrease ------------ ------------ ----------- US$ ‘000 US$ ‘000 % ------------ ------------ ----------- Point-of-Care 4,671 4,362 -6.6% ------------ ------------ ----------- Continuing Clinical Laboratory 13,751 13,274 -3.5% ------------ ------------ ----------- Continuing operations* 18,422 17,636 -4.3% ------------ ------------ ----------- ------------ ------------ ----------- Coagulation 12,684 11,377 -10.3% ------------ ------------ ----------- ------------ ------------ ----------- Total 31,106 29,013 -6.7% ------------ ------------ ----------- * Continuing operations reflects the company’s divestiture of its coagulation business (shown separately) 

Gross profit for the quarter amounted to $13.5m representing a gross margin of approximately 46.6%, which represents an increase of 0.6% over the same period in 2009. This improvement in gross margin is attributable to improved cost control and a change in product mix. Excluding instrument service costs for the quarter, the gross margin would be 50.2%.

Research and Development expenses for the quarter amounted to $1.8m, which is consistent with quarter 1, 2009 and represents 6.2% of revenues. SG&A expenses have fallen by 17% from $9.6m in quarter 1 of 2009 to $7.9m in the current quarter. The fall in SG&A expenses is due to continued cost control, including the impact of the rationalisation of the French sales and US finance functions undertaken during 2009.

The tax charge for the quarter was $288k (versus $250k in quarter 1, 2009), which represents an effective tax rate of 8.4% -- which is lower than the company’s long term tax rate, partially due to the receipt of R&D tax credits in Ireland.

Operating profit increased from $3.0m in quarter 1, 2009 to $3.7m in the current quarter, representing an increase of 21% and giving an operating margin of 12.7% (compared with 9.8% in quarter 1, 2009). Similarly, profit after tax increased from $2.5m to $3.2m, an increase of 26% in the same period. EPS for the quarter increased from 12 cent per ADR to 15 cent per ADR, an increase of 25%.

From a cash perspective the Company generated more than $5.1m of cash from operations which is an increase of 122% compared with the same period in 2009. In quarter 1, 2010 the company generated positive free cash flows of $2.6m, compared to a free cash outflow of $0.4m for the corresponding quarter in 2009.

Commenting on the results, Kevin Tansley, Chief Financial Officer, said, “We are very happy to announce that Trinity is continuing to show significant earnings growth this quarter. 2009 was a year of record profit growth for Trinity and this trend is being continued into 2010, with an increase in earnings of 25%.

Furthermore, Trinity has generated very strong cash flows this quarter with cash from operations up over 120% to $5.1m resulting in free cash flows of $2.6m.”

Divestiture of the Coagulation business

Following the quarter Trinity closed the sale of its coagulation business to the Stago Group for $90m.

The principal impacts of this divestiture are as follows

-- whilst revenues will fall by approximately 40%, earnings will remain at 100-110% of pre-divestiture levels (this is an upward revision to our original estimate); -- bank debt has been eliminated and post-close cash balances have increased to in excess of $45m. Taking into account the receipt of deferred consideration of $22.5m over the next two years and a reduction in working capital levels of $4m, this will bring the cash and cash equivalent balance of the company to approximately $72m ($3.39 per share); -- a reduction in operating costs of $31m largely attributable to a reduction of 320 in employee numbers. 

The divestiture will have a significant impact on Trinity’s balance sheet. The principal balance sheet captions will be impacted as follows:

 March 31, Post Increase/ 2009 Close (decrease) $million $million $million ------------ ------------ ----------- Cash 6.2 49.0 42.8 ------------ ------------ ----------- Deferred consideration 0.0 22.5 22.5 ------------ ------------ ----------- Bank debt (27.2) 0.0 27.2 ------------ ------------ ----------- Net cash (debt)* (21.0) 71.5 92.5 ------------ ------------ ----------- ------------ ------------ ----------- Property, plant and equipment 12.1 5.4 (6.7) ------------ ------------ ----------- Goodwill and intangibles 46.2 35.3 (10.9) ------------ ------------ ----------- Inventories 39.7 18.7 (21.0) ------------ ------------ ----------- Trade and other receivables 20.4 10.5 (9.9) ------------ ------------ ----------- Trade and other payables 11.5 6.8 (4.7) ------------ ------------ ----------- * for illustration purposes deferred consideration has been included in net cash as it is unconditional and bank guaranteed 

The process of transferring the coagulation business from Trinity to Stago is well advanced. During the next 12 months Trinity will be providing a limited number of services to Stago which will complete the transition.

Ronan O’Caoimh, CEO of Trinity Biotech, stated, “Following the divestiture of our coagulation business line the company is in an extremely strong position. We have eliminated all of our bank debt and accumulated significant cash reserves. We will also continue to be highly profitable and are confident that future profit levels will be 100-110% of pre-divestiture levels, which represents an increase on our initial estimated range of 90-100%.

From a strategic point of view we are very excited to be embarking upon our new point of care strategy which will concentrate on Infectious Diseases, HbA1c and Coagulation, each of which have a market size exceeding $300m and double digit annual growth. We are ideally positioned to successfully implement this strategy given our newly expanded R&D teams in San Diego and Bray, our strong sales and distribution infrastructure and access to the relevant licenses.”

Forward-looking statements in this release are made pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other risks detailed in the Company’s periodic reports filed with the Securities and Exchange Commission.

Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and blood coagulation disorders, and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company’s website: www.trinitybiotech.com.

 Trinity Biotech plc Consolidated Income Statements Three Three Months Months Ended Ended March 31, March 31, 2010 2009 (US$000’s except share data) (unaudited) (unaudited) Revenues 29,013 31,106 Cost of sales (excluding service costs) (14,434) (15,423) ------------ ------------ Gross profit (excluding service costs) 14,579 15,683 Gross profit % (excluding service costs) 50% 50% ------------ ------------ Cost of sales - instrument servicing costs (1,050) (1,370) Gross profit (including service costs) 13,529 14,313 Gross profit % (including service costs) 47% 46% Other operating income 56 204 Research & development expenses (1,794) (1,776) Selling, general and administrative expenses (7,939) (9,601) Indirect share based payments (176) (98) ------------ ------------ Operating profit 3,676 3,042 Financial income 10 1 Financial expenses (241) (289) ------------ ------------ Net financing costs (231) (288) ------------ ------------ Profit before tax 3,445 2,754 Income tax expense (288) (250) ------------ ------------ Profit for the period 3,157 2,504 Earnings per ADR (US cents) 15.0 12.0 Diluted earnings per ADR (US cents) 14.8 12.0 Weighted average no. of ADRs used in computing basic earnings per ADR 21,089,733 20,854,395 The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting). Trinity Biotech plc Consolidated Balance Sheets March December 31, 2010 31, 2009 US$ ‘000 US$ ‘000 (unaudited) (audited) ASSETS Non-current assets Property, plant and equipment 12,131 12,174 Goodwill and intangible assets 46,247 44,822 Deferred tax assets 5,627 5,801 Other assets 1,330 1,212 ----------- ----------- Total non-current assets 65,335 64,009 ----------- ----------- Current assets Inventories 40,033 39,198 Trade and other receivables 20,415 22,931 Income tax receivable 260 229 Cash and cash equivalents 6,222 6,078 ----------- ----------- Total current assets 66,930 68,436 ----------- ----------- ----------- ----------- TOTAL ASSETS 132,265 132,445 =========== =========== EQUITY AND LIABILITIES Equity attributable to the equity holders of the parent Share capital 1,080 1,080 Share premium 160,739 160,683 Accumulated deficit (83,717) (87,071) Translation reserve (385) 206 Other reserves 4,241 4,446 ----------- ----------- Total equity 81,958 79,344 ----------- ----------- Current liabilities Interest-bearing loans and borrowings 13,429 12,625 Income tax payable 207 24 Trade and other payables 11,732 12,844 Derivative Financial Instruments 279 58 Provisions 50 50 ----------- ----------- Total current liabilities 25,697 25,601 ----------- ----------- Non-current liabilities Interest-bearing loans and borrowings 16,409 19,231 Other payables 38 59 Deferred tax liabilities 8,163 8,210 ----------- ----------- Total non-current liabilities 24,610 27,500 ----------- ----------- ----------- ----------- TOTAL LIABILITIES 50,307 53,101 ----------- ----------- ----------- ----------- TOTAL EQUITY AND LIABILITIES 132,265 132,445 =========== =========== The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting). Trinity Biotech plc Consolidated Statement of Cash Flows March 31, March 31, 2010 2009 US$ ‘000 US$ ‘000 (unaudited) (unaudited) Cash and cash equivalents at beginning of period 6,078 5,184 Operating cash flows before changes in working capital 4,911 4,081 Changes in Working Capital 221 (1,769) ----------- ----------- Cash generated from operations 5,132 2,312 Net Interest and Income taxes paid (225) (260) Capital Expenditure (net) (2,324) (2,501) Repayment of bank debt (2,439) (2,146) ----------- ----------- Cash and cash equivalents at end of period 6,222 2,589 ----------- -----------