Trinity Biotech Announces Quarter 4 Financial Results EPS of 17.1 Cent Per Share -- an Increase of 10.3%

DUBLIN, IRELAND--(Marketwire - March 03, 2011) - 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 December 31, 2010.

Quarter 4 Results

Total revenues for the quarter were $19.2m which compares to $30.8m in quarter 4, 2009, a decrease of 37.5%. This decrease is principally due to the divestiture of the coagulation product line in quarter 2 2010.

Point-of-care revenues for the quarter decreased by 4.2% when compared to quarter 4, 2009. This level of fluctuation, which is within the normal range that can be expected in this product line, reflects the timing of the shipment of certain large orders. However, this will have a corresponding positive impact on revenues in quarter 1, 2011 and this is being borne out by the strong level of HIV sales being seen in the first 2 months of 2011.

Continuing clinical laboratory (i.e. excluding coagulation) revenues were $15.7m, which represents an increase of 0.2% compared to quarter 4, 2009. However, when the impact of the slower lyme season, lower Fitzgerald sales and the move to a distribution selling model in France and Germany are taken into account the underlying increase in revenues from our core infectious diseases and diabetes business is 8.3% year on year. When compared to quarter 3, 2010 continuing laboratory sales have increased by 8.2%.

Revenues for quarter 4 by key product area were as follows:

 2009 2010 2010 Quarter 4 Quarter 3 Quarter 4 --------- --------- --------- US$'000 US$'000 US$'000 --------- --------- --------- Point-of-Care 3,659 4,202 3,507 --------- --------- --------- Continuing Clinical Laboratory 15,708 14,547 15,740 --------- --------- --------- Continuing operations* 19,367 18,749 19,247 --------- --------- --------- --------- --------- --------- Coagulation 11,427 0 0 --------- --------- --------- Total 30,794 18,749 19,247 --------- --------- --------- * Continuing operations reflects the company’s divestiture of its coagulation product line (shown separately) 

Gross profit for the quarter amounted to $9.8m, representing a gross margin of approximately 50.8%. This compares favourably to the gross margin of 44.5% for the same period in 2009. The improvement in gross margin of 6.3% is largely attributable to the divestiture of coagulation, which traditionally had been our lowest gross margin product line. At 50.8%, the gross margin is in line with the 50.6% reported in quarter 3, 2010 -- which was the first full quarter without coagulation.

Research and Development (R&D) expenses for the quarter amounted to $0.9m, which represents a decrease of 56.1% compared to quarter 4, 2009. In the same period, Selling, General and Administrative (SG&A) expenses decreased by 33.7% from $8.2m in quarter 4 of 2009 to $5.4m 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. When compared to quarter 3, 2010, R&D and SG&A expenses in aggregate have decreased by 3.1%. This decrease was achieved notwithstanding increased fees associated with the preparations for the share buyback.

Operating profit was $3.6m for the quarter, compared to $3.5m for quarter 4, 2009. However, the operating margin for the quarter has increased to 18.6%, which represents a significant improvement compared to 11.3% in quarter 4, 2009.

Net financial income for the quarter was $0.5m which compares to a net financial expense of $0.3m in quarter 4, 2009. This improvement is attributable to the elimination of bank debt and the increase in cash balances to $58.0m.

Profit after tax increased by 12.3% from $3.3m in quarter 4, 2009 to $3.7m this quarter. Similarly, EPS for the quarter increased from 15.5 cent per share to 17.1 cent per share, an increase of 10.3%. The tax charge for the quarter was $0.4m which represents an effective tax rate of 10%.

Free cash flows for the quarter increased by 81.6% from $2.4m to $4.4m. This was largely due to a 30.1% increase in cash from operations and the receipt of interest income from cash deposits.

2010 Results

The following are the key highlights with respect to the financial performance of the Company in 2010:

-- EPS (excluding non-recurring items) has increased from 56.5 cents to 64.1 cents, an increase of over 13%; -- When non-recurring items are included, the EPS for the year was $2.85; -- The divestiture of the company’s coagulation business resulted in a once-off profit of over $46m; -- Operating margin has improved from 11.2% to 15.7%; -- The Company has moved from a net debt position of $25.8m to a net cash position of $57.7m. In addition, the Company is due to receive further deferred consideration payments from Stago which will increase the net cash position by a further $22.5m over the next 14 months. -- The level of working capital in the Company has been reduced from $49.3m to $20.9m. 

Recent Developments

-- The Company was pleased to announce that it had entered into an agreement to exclusively supply Menarini Diagnostics with the new Premier Hb9210 (PDx) instrument for distribution in European territories. As one of Europe’s leading pharmaceutical and diagnostics companies, Menarini, with a turnover of EUR 2.6 billion and 12,000 employees, is the market leader in HbA1c measurement in Europe. Menarini has a market share of 40% in the European HbA1c market, a large installed base of equipment and over 20 years experience in HbA1c measurement. The launch of this instrument in April, 2011 will allow us to target a rapidly growing global market estimated to be worth $272m by 2012 with a best in class product. In addition, we will file a US FDA submission in April and simultaneously we will file for registration in China, Brazil and other significant markets. -- The Company completed the acquisition of Phoenix Biotech Corp. for $2.5m. Phoenix manufactures and sells a syphilis total antibody (IgG and IgM) test and is the only such FDA approved elisa test on the market. With the incidence of syphilis growing significantly in both the USA and in international markets, this will be a major growth opportunity for Trinity. -- In recent weeks, the Company has received approval from the Irish courts to restructure its balance sheet in order to facilitate a share buyback program. As the Company has been in a blackout period since that date, no buyback of shares has taken place yet. It is the Board’s intention to commence buying back shares during this quarter. In carrying this out, the Company will pay particular attention to the prevailing share price and volumes whilst at the same time adhering to the strict SEC rules governing such buybacks. 

Dividend Policy

Trinity has now established a track record of reliable and growing profitability. This has been accompanied by strong free cash flows which have allowed the Company to fund its development activities, whilst at the same time increasing its cash reserves. For this reason, the Board of Trinity has determined that it is now an appropriate time to commence a dividend policy, to be paid once a year. The Board is proposing a final dividend of 10 cent per ADR in respect of 2010. This proposal will be submitted to shareholders for approval at the Company’s next Annual General Meeting which is expected to take place in May of this year.

Comments

Commenting on the results, Kevin Tansley, Chief Financial Officer, said, “We are very pleased with this quarter’s results. Profit before tax has increased by over 26% and EPS has increased by 10.3% when compared with quarter 4, 2009. We have also grown operating profits versus quarter 4, 2009. This is significant as this is the first quarter in which we have achieved this since the divestiture of our coagulation business. We have also continued to generate very healthy cash flows of $4.4m. In this quarter we achieved an increase in free cash flows of over 81%, even after the investment that we are making in our R&D pipeline.”

Ronan O’Caoimh, CEO, stated, “We are pleased with our progress in 2010. We were successful in growing our EPS every quarter versus the comparable quarter in 2009 resulting in an annual increase in EPS of over 13%. We divested our coagulation business for what we believe was a very good price for shareholders and in so doing have greatly strengthened our balance sheet. From a strategic point of view we have repositioned the Company with an emphasis on growth, particularly in the A1c and point-of-care markets. The development of our new A1c instrument is now completed and we are extremely pleased with the distribution agreement we have entered into with Menarini. The development of our new range of point-of-care products is proceeding well and will form the bedrock of future growth for our company.

Given the reliable and growing nature of its profits and strong future growth prospects, the Board now feels it is appropriate for the Company to initiate a dividend policy for the first time in its history. The Board of the Company will submit a proposal to pay a dividend of 10 cent per ADR at the AGM. In addition to this, we have now received all of the authorisations necessary to commence a share buyback process. This process will commence once we have exited the current blackout period.”

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 Three Months Three Months (US$000’s Ended Dec 31, Ended Dec 31, Year Ended Year Ended except share 2010 2009 Dec 31, 2010 Dec 31, 2009 data) (unaudited) (unaudited) (unaudited) (audited) Revenues 19,247 30,794 89,635 125,907 Cost of sales (9,475) (17,102) (45,690) (68,891) -------------- -------------- ------------ ------------ Gross profit 9,772 13,692 43,945 57,016 Gross profit % 50.8% 44.5% 49.0% 45.3% Other operating income 382 22 1,616 437 Research & development expenses (853) (1,941) (4,603) (7,341) Selling, general and administrative expenses (5,423) (8,178) (25,849) (35,519) Indirect share based payments (301) (110) (1,080) (494) -------------- -------------- ------------ ------------ Operating profit 3,577 3,485 14,029 14,099 Non-recurring items - - 46,474 - Financial income 560 4 1,352 8 Financial expenses (69) (263) (495) (1,192) -------------- -------------- ------------ ------------ Net financing income/(expense) 491 (259) 857 (1,184) -------------- -------------- ------------ ------------ Profit before tax 4,068 3,226 61,360 12,915 Income tax (expense)/credit on operating activities (408) 32 (1,296) (1,091) Income tax credit on non-recurring items - - 354 - -------------- -------------- ------------ ------------ Profit for the period 3,660 3,258 60,418 11,824 -------------- -------------- ------------ ------------ Profit for the period (excluding non-recurring items) 3,660 3,258 13,590 11,824 -------------- -------------- ------------ ------------ Earnings per ADR (US cents) 17.1 15.5 285.2 56.5 Earnings per ADR (US cents) - excluding non-recurring items 17.1 15.5 64.1 56.5 Diluted earnings per ADR (US cents) 16.6 15.4 278.9 56.5 Diluted earnings per ADR (US cents) - excluding non-recurring items 16.6 15.4 62.7 56.5 Weighted average no. of ADRs used in computing basic earnings per ADR 21,348,986 21,080,998 21,183,594 20,934,471 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 Dec 31, 2010 Sept 30, 2010 December 31, 2009 US$ ‘000 US$ ‘000 US$ ‘000 (unaudited) (unaudited) (audited) ASSETS Non-current assets Property, plant and equipment 5,999 5,535 12,174 Goodwill and intangible assets 37,248 36,120 44,822 Deferred tax assets 4,680 4,490 5,801 Other assets 11,623 11,738 1,212 -------------- -------------- -------------- Total non-current assets 59,550 57,883 64,009 -------------- -------------- -------------- Current assets Inventories 17,576 18,758 39,198 Trade and other receivables 25,529 27,371 22,931 Income tax receivable 217 168 229 Cash and cash equivalents 58,002 53,802 6,078 -------------- -------------- -------------- Total current assets 101,324 100,099 68,436 -------------- -------------- -------------- -------------- -------------- -------------- TOTAL ASSETS 160,874 157,982 132,445 ============== ============== ============== EQUITY AND LIABILITIES Equity attributable to the equity holders of the parent Share capital 1,092 1,087 1,080 Share premium 161,599 161,220 160,683 Accumulated deficit (25,412) (29,483) (87,070) Translation reserve (544) (544) 206 Other reserves 4,552 4,463 4,445 -------------- -------------- -------------- Total equity 141,287 136,743 79,344 -------------- -------------- -------------- Current liabilities Interest-bearing loans and borrowings 162 265 12,625 Income tax payable 597 366 24 Trade and other payables 11,447 12,831 12,844 Derivative Financial Instruments - 88 58 Provisions 50 50 50 -------------- -------------- -------------- Total current liabilities 12,256 13,600 25,601 -------------- -------------- -------------- Non-current liabilities Interest-bearing loans and borrowings 111 205 19,231 Other payables 30 519 59 Deferred tax liabilities 7,190 6,915 8,210 -------------- -------------- -------------- Total non-current liabilities 7,331 7,639 27,500 -------------- -------------- -------------- -------------- -------------- -------------- TOTAL LIABILITIES 19,587 21,239 53,101 -------------- -------------- -------------- -------------- -------------- -------------- TOTAL EQUITY AND LIABILITIES 160,874 157,982 132,445 ============== ============== ============== 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 Three Months Three Months Ended Dec 31, Ended Dec 31, 2010 2009 (US$000’s) (unaudited) (unaudited) Cash and cash equivalents at beginning of period 53,802 3,697 Operating cash flows before changes in working capital 4,668 5,282 Changes in Working Capital 1,607 (459) -------------- -------------- Cash generated from operations 6,275 4,823 Net Interest and Income taxes received/(paid) 330 (12) Capital Expenditure & Financing (net) (2,211) (2,391) -------------- -------------- Free cash flow 4,394 2,420 Repayment of bank debt (194) (39) -------------- -------------- Cash and cash equivalents at end of period 58,002 6,078 -------------- -------------- 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).