Trinity Biotech Announces Quarter 3 Financial Results

DUBLIN, IRELAND--(Marketwire - October 20, 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 September 30, 2010.

Quarter 3 Results

Total revenues for the quarter were $18.7m which compares to $31.7m in quarter 3, 2009, a decrease of 40.9%. This decrease is principally due to the divestiture of the coagulation product line in Q2 2010.

Point-of-care revenues for the quarter increased by 8% when compared to quarter 3, 2009. This was due to improved sales in our two key markets of USA and Africa. Continuing clinical laboratory (i.e. excluding coagulation) revenues were $14.5m which represents a decrease of 8.9% when compared to quarter 3, 2009, which is attributable to the combined impact of moving to a distribution selling model in France, Germany and the UK following the coagulation divestiture and the weaker US Dollar. The impact of the slower Lyme season has been offset by modest organic growth in our Diabetes and Infectious Diseases product lines.

Revenues for quarter 3 by key product area were as follows:

 2009 2010 2010 Quarter 3 Quarter 2 Quarter 3 ------------ ------------ ------------ US$ ‘000 US$ ‘000 US$ ‘000 ------------ ------------ ------------ Point-of-Care 3,891 4,011 4,202 ------------ ------------ ------------ Continuing Clinical Laboratory 15,970 14,178 14,547 ------------ ------------ ------------ Continuing operations* 19,861 18,189 18,749 ------------ ------------ ------------ ------------ ------------ ------------ Coagulation 11,844 4,437 0 ------------ ------------ ------------ ------------ ------------ ------------ Total 31,705 22,626 18,749 ------------ ------------ ------------ 

* Continuing operations reflects the company’s divestiture of its coagulation product line (shown separately)

Gross profit for the quarter amounted to $9.5m representing a gross margin of approximately 50.6%. This compares favourably to the gross margin of 45.0% for the same period in 2009. The improvement in gross margin of 5.6% is largely attributable to the divestiture of coagulation, which traditionally had been our lowest gross margin product line. Excluding instrument service costs for the quarter, the gross margin would be 52.1%.

Research and Development expenses for the quarter amounted to $0.8m, which represents a decrease of 58.9% compared to quarter 3, 2009. In the same period, SG&A expenses decreased by 34.5% from $8.7m in quarter 3 of 2009 to $5.7m in the current quarter. In both cases the principal driver for the reduction has been the transfer of R&D, sales and administrative personnel to Stago as part of the coagulation divestiture.

The Company recognised an exceptional charge of $587,000 in the quarter. This principally relates to certain working capital adjustments associated with the divestiture of coagulation to Stago. In accordance with the sale agreement, these adjustments were only determinable in the period following the closure of the deal. Taking into account these adjustments, the total reported profit on the coagulation divestiture decreased from $47.4m to $46.8m.

Net financial income for the quarter was $0.4m which compares to a net financial expense of $0.3m in quarter 3, 2009. This improvement is attributable to the elimination of bank debt and the increase in cash balances to $53.8m.

Operating profit was $3.3m for the quarter, representing a decrease of $0.4m compared to quarter 3, 2009. However, the operating margin for the quarter has increased to 17.4%, which represents a significant improvement compared to 11.8% in quarter 3, 2009.

Excluding the non-recurring item, profit after tax increased by 14.7% from $3.1m in quarter 3, 2009 to $3.5m this quarter. Similarly, EPS for the quarter increased from 14.6 cent per share to 16.5 cent per share, an increase of 13.0%.

The tax charge for the quarter was $0.2m which represents an effective tax rate of 6.6%.

The following table excludes the impact of the non-recurring items:

 2009 2010 Increase/ Quarter 3 Quarter 3 (Decrease) US$'000 US$'000 % ------------ ------------ ----------- Profit before tax 3,442 3,712 7.8% ------------ ------------ ----------- Income Tax expense (385) (206) (46.5%) ------------ ------------ ----------- Profit after tax 3,057 3,506 14.7% ------------ ------------ ----------- Basic EPS - US cents 14.6 16.5 13.0% ------------ ------------ ----------- 

From a cash perspective the Company generated $4.9m of cash from operations which is an increase of almost 20% compared with the same period in 2009. In quarter 3, 2010 the company generated free cash flows of $3.8m, compared to $2.1m for the corresponding quarter in 2009.

Share Buy-back

The Company intends to undertake a share buy-back program, though certain legal hurdles need to be cleared first. As an initial step, the Company held an Extraordinary General Meeting on 30 September, 2010 which approved transferring share premium to reserves in order to eliminate the Company’s negative reserves. The Company is now seeking approval from the Irish Courts for this action, which if granted will allow the buy-back program to commence in December of this year.

Comments

Commenting on the results, Kevin Tansley, Chief Financial Officer, said, “The Company had a very strong third quarter. EPS of 16.5 cent represented an increase of 13% over the equivalent period last year. We also generated free cash flows of $3.8m, which brings our cash balance at the end of the quarter to over $53.8m. Taking into account the deferred consideration of $22.5m that we are due to receive over the next 18 months, the company effectively has cash resources of $76.3m or $3.59 per share.”

Ronan O’Caoimh, CEO of Trinity Biotech, stated, “Quarter 3 represents our first full quarter without coagulation and has demonstrated that despite the divestiture, our EPS continues to grow, with this quarter’s EPS reaching an all time high for the Company. Meanwhile from a strategic perspective we now have a very strong product development pipeline. Our new diabetes A1c instrument is due to launch in quarter 4 and the development of our new range of point-of-care tests in our research centres in San Diego and Ireland is progressing very well with first launches expected in 15 months.”

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 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 (US$000’s except share data) Three Months Three Months Nine Months NineMonths Ended Ended Ended Ended Sept 30 Sept 30 Sept 30 Sept 30 2010 2009 2010 2009 (unaudited) (unaudited) (unaudited) (unaudited) Revenues 18,749 31,705 70,388 95,113 Cost of sales (9,262) (17,434) (36,215) (51,789) ----------- ----------- ----------- ----------- Gross profit 9,487 14,271 34,173 43,324 Gross profit % 50.6% 45.0% 48.5% 45.6% Other operating income 651 143 1,234 415 Research & development expenses (758) (1,843) (3,750) (5,400) Selling, general and administrative expenses (5,721) (8,729) (20,426) (27,341) Indirect share based payments (392) (111) (779) (384) ----------- ----------- ----------- ----------- Operating profit 3,267 3,731 10,452 10,614 Non-recurring items (587) - 46,474 - Financial income 514 - 792 4 Financial expenses (69) (289) (426) (929) ----------- ----------- ----------- ----------- Net financing income/(expense) 445 (289) 366 (925) ----------- ----------- ----------- ----------- Profit before tax 3,125 3,442 57,292 9,689 Income tax expense on operating activities (206) (385) (888) (1,123) Income tax credit on non-recurring items - - 354 - ----------- ----------- ----------- ----------- Profit for the period 2,919 3,057 56,758 8,566 ----------- ----------- ----------- ----------- Profit for the period (excluding non-recurring items) 3,506 3,057 9,930 8,566 ----------- ----------- ----------- ----------- Earnings per ADR (US cents) 13.8 14.6 268.6 41.0 Earnings per ADR (US cents) - excluding non-recurring items 16.5 14.6 47.0 41.0 Diluted earnings per ADR (US cents) 13.5 14.5 263.9 41.0 Diluted earnings per ADR (US cents) - excluding non-recurring items 16.2 14.5 46.2 41.0 Weighted average no. of ADRs used in computing basic earnings per ADR 21,183,785 20,943,038 21,127,858 20,885,092 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 Sept 30, June 30, March 31, December 31, 2010 2010 2010 2009 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 (unaudited) (unaudited) (unaudited) (audited) ASSETS Non-current assets Property, plant and equipment 5,535 5,339 12,131 12,174 Goodwill and intangible assets 36,120 35,127 46,247 44,822 Deferred tax assets 4,490 4,073 5,627 5,801 Other assets 11,738 11,762 1,330 1,212 ---------- ---------- ---------- ---------- Total non-current assets 57,883 56,301 65,335 64,009 ---------- ---------- ---------- ---------- Current assets Inventories 18,758 18,064 40,033 39,198 Trade and other receivables 27,371 28,592 20,415 22,931 Income tax receivable 168 257 260 229 Cash and cash equivalents 53,802 50,042 6,222 6,078 ---------- ---------- ---------- ---------- Total current assets 100,099 96,955 66,930 68,436 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL ASSETS 157,982 153,256 132,265 132,445 ---------- ---------- ---------- ---------- EQUITY AND LIABILITIES Equity attributable to the equity holders of the parent Share capital 1,087 1,083 1,080 1,080 Share premium 161,220 160,817 160,739 160,683 Accumulated deficit (29,483) (32,811) (83,717) (87,070) Translation reserve (544) (544) (385) 206 Other reserves 4,463 4,144 4,241 4,445 ---------- ---------- ---------- ---------- Total equity 136,743 132,689 81,958 79,344 ---------- ---------- ---------- ---------- Current liabilities Interest-bearing loans and borrowings 265 246 13,429 12,625 Income tax payable 366 148 207 24 Trade and other payables 12,831 12,241 11,732 12,844 Derivative Financial Instruments 88 406 279 58 Provisions 50 50 50 50 ---------- ---------- ---------- ---------- Total current liabilities 13,600 13,091 25,697 25,601 ---------- ---------- ---------- ---------- Non-current liabilities Interest-bearing loans and borrowings 205 294 16,409 19,231 Other payables 519 607 38 59 Deferred tax liabilities 6,915 6,575 8,163 8,210 ---------- ---------- ---------- ---------- Total non-current liabilities 7,639 7,476 24,610 27,500 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL LIABILITIES 21,239 20,567 50,307 53,101 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL EQUITY AND LIABILITIES 157,982 153,256 132,265 132,445 ---------- ---------- ---------- ---------- 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 (US$000’s) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Sept 30, Sept 30, Sept 30, Sept 30, 2010 2009 2010 2009 (unaudited) (unaudited) (unaudited) (unaudited) Cash and cash equivalents at beginning of period 50,042 4,791 6,078 5,184 Operating cash flows before changes in working capital 5,260 4,701 14,586 13,710 Changes in Working Capital (332) (584) 1,357 (3,060) ----------- ----------- ----------- ----------- Cash generated from operations 4,928 4,117 15,943 10,650 Net Interest and Income taxes paid 347 (396) (230) (789) Capital Expenditure (net) (1,515) (1,600) (4,950) (5,987) ----------- ----------- ----------- ----------- Free cash flow 3,760 2,121 10,763 3,874 Repayment of bank debt - (3,215) (29,556) (5,361) Proceeds from sale of Coagulation Product Line - - 66,517 - ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period 53,802 3,697 53,802 3,697 ----------- ----------- ----------- ----------- 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).