MINNEAPOLIS, Feb. 3 /PRNewswire-FirstCall/ -- Techne Corporation's (Nasdaq: TECH) consolidated net earnings for the quarter ended December 31, 2008 were $23.6 million or $.62 per diluted share compared with $23.6 million or $.60 per diluted share for the quarter ended December 31, 2007. For the six months ended December 31, 2008, Techne's consolidated net earnings increased 11.8% to $52.2 million or $1.36 per diluted share compared with $46.7 million or $1.18 per diluted share for the six months ended December 31, 2007. Net earnings as a percentage of net sales improved to 39.8% for the six months ended December 30, 2008 from 38.9% in the first six months of last year.
Foreign currency fluctuations and general economic conditions had a negative impact on consolidated net sales and earnings in the quarter ended December 31, 2008. The change in exchange rates used to convert foreign currencies (primarily British pound sterling and Euros) to U.S. dollars reduced net earnings by $1.5 million ($.04 per diluted share) for the quarter and $1.8 million ($.05 per diluted share) for the six months ended December 31, 2008, as compared to the same periods in last fiscal year.
Consolidated net sales for the quarter and six months ended December 31, 2008 were $61.9 million and $131.2 million, respectively. This was a 0.4% decrease and 9.2% increase from the quarter and six months ended December 31, 2007, respectively. Consolidated net sales were negatively affected by the strength of the U.S. dollar as compared to foreign currencies. Excluding the effect of changes in foreign currency exchange rates, consolidated net sales increased 5.0% and 11.5% for the quarter ended and six months ended December 31, 2008, respectively, from the comparable prior-year periods.
Biotechnology net sales, which include sales by R&D Systems' Biotechnology Division, R&D Systems China and BiosPacific, were $40.3 million and $86.5 million for the quarter and six months ended December 31, 2008, increases of 3.0% and 10.8%, respectively, from the comparable prior-year periods. North American biotechnology sales to industrial and academic customers grew at less than 2% during the second quarter of fiscal 2009. The Company attributes the lower second quarter sales growth rate to customer caution in a time of economic uncertainty.
R&D Europe's net sales for the quarter and six months ended December 31, 2008 were $17.3 million and $36.2 million, a decrease of 9.2% and an increase of 5.1%, respectively, from the same prior-year periods. R&D Europe's net sales increased 8.6% for the quarter and 13.0% for the six months ended December 31, 2008 when measured at currency rates in effect in the comparable prior-year periods.
Hematology net sales for the quarter and six months ended December 31, 2008 were $4.3 million and $8.5 million, increases of 7.2% and 11.5%, respectively, compared to the quarter and six months ended December 31, 2007.
Consolidated gross margins were 78.3% and 79.8% for the quarter and six months ended December 31, 2008 respectively, compared to 79.5% and 79.3% for the quarter and six months ended December 31, 2007. The decrease in gross margins in the second quarter was primarily caused by lower gross margins in Europe resulting from unfavorable exchange rates.
Selling, general and administrative expenses for the quarter and six months ended December 31, 2008 decreased $942,000 (8.9%) and $192,000 (1.0%), respectively from the quarter and six months ended December 31, 2007. The decrease in selling, general and administrative expenses from the comparable prior-year periods were the result of the following (in thousands):
Quarter Six Months Change in exchange rates to convert foreign expenses to U.S. dollars $(685) $(887) Reduction in profit sharing expense (670) (617) Other, including annual wage, salary and benefits increases 413 1,312 $(942) $(192)
Second quarter selling, general and administrative expense increased from the first quarter of fiscal 2009 due primarily to costs associated with production, printing and mailing of the annual catalog and additional expense as a result of the annual grant of stock options to the Company's Board of Directors.
Research and development expenses increased $283,000 (5.1%) and $1.0 million (9.4%), respectively, for the quarter and six months ended December 31, 2008 from the comparable prior-year periods.
Interest income decreased $1.0 million and $1.2 million for the quarter and six months ended December 31, 2008, respectively, from the comparable prior-year periods, primarily as a result of lower rates of return on cash and available-for-sale investments and to a lesser extent to lower cash and available-for-sale investment balances.
The effective tax rate was 30.8% for the quarter and 32.3% for the six months ended December 31, 2008 as compared to 33.6% for the quarter and six months ended December 31, 2007. Income tax expense in the second quarter of fiscal 2009 benefited from the renewal of the U.S. research and development credit. The $695,000 research and development tax credit for the quarter ended December 31, 2008, included credit for the January to June 2008 period in addition to a credit for the current year six-month period. Without significant business developments, the Company expects its fiscal 2009 effective income tax rate to range from approximately 32.5% to 33.5%.
In November 2007, the Company's Board of Directors authorized the repurchase and retirement of up to $150 million of the Company's common stock. The Company repurchased approximately 960,000 shares of its common stock during the second quarter of fiscal 2009 for approximately $62.7 million. Approximately $20.0 million remains available for the repurchase of shares under this authorization.
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 consolidated 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, general economic conditions, 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.
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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, BiosPacific, Inc. (BiosPacific), located in Emeryville, California and R&D Systems China Co. Ltd., (R&D China), located in Shanghai, China. BiosPacific is a worldwide supplier of biologics to manufacturers of in vitro diagnostic systems and immunodiagnostic kits. R&D China and R&D Europe distribute biotechnology products.
TECHNE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) QUARTER ENDED SIX MONTHS ENDED 12/31/08 12/31/07 12/31/08 12/31/07 Net sales $61,876 $62,142 $131,200 $120,129 Cost of sales 13,430 12,751 26,516 24,855 Gross margin 48,446 49,391 104,684 95,274 Operating expenses: Selling, general and administrative 9,703 10,645 18,543 18,735 Research and development 5,846 5,562 11,756 10,743 Amortization of intangible assets 240 282 480 570 Total operating expenses 15,789 16,489 30,779 30,048 Operating income 32,657 32,902 73,905 65,226 Other income (expense): Interest income 2,205 3,252 5,092 6,250 Other non-operating expense, net (712) (573) (1,899) (1,142) Total other income 1,493 2,679 3,193 5,108 Earnings before income taxes 34,150 35,581 77,098 70,334 Income taxes 10,528 11,942 24,883 23,623 Net earnings $23,622 $23,639 $52,215 $46,711 Earnings per share: Basic $0.62 $0.60 $1.36 $1.18 Diluted $0.62 $0.60 $1.36 $1.18 Weighted average common shares outstanding: Basic 37,894 39,395 38,259 39,442 Diluted 37,992 39,497 38,370 39,542 TECHNE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) ASSETS 12/31/08 6/30/08 Cash and equivalents $119,595 $166,992 Short-term available-for-sale investments 24,366 39,353 Trade accounts receivable 24,852 31,747 Other receivables 4,701 1,585 Inventory 9,877 9,515 Other current assets 9,732 9,241 Current assets 193,123 258,433 Available-for-sale investments 85,493 87,384 Property and equipment, net 98,352 101,722 Goodwill and intangible assets, net 28,552 29,032 Other non-current assets 28,010 30,798 Total assets $433,530 $507,369 LIABILITIES Current liabilities $13,036 $20,239 Stockholders' equity 420,494 487,130 Total liabilities and equity $433,530 $507,369
|SOURCE Techne Corporation|
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