LUMINEX CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 3, 2014

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Exhibit 99.1

LUMINEX CORPORATION REPORTS FOURTH QUARTER
AND FULL YEAR 2013 RESULTS


AUSTIN, Texas (February 3, 2014) - Luminex Corporation (NASDAQ:LMNX) today announced financial results for the fourth quarter and year ended December 31, 2013. Financial and operating highlights include the following:

•
Consolidated fourth quarter revenue of $55.2 million, a 1 percent decline compared to the fourth quarter of 2012; full-year 2013 revenue was $213.4 million, a 5 percent increase over 2012
•
Fourth quarter royalty revenue of $9.3 million, a 23 percent increase over the fourth quarter of 2012; full-year 2013 royalty revenue was $37 million, a 19 percent increase over 2012
•
Fourth quarter system sales of $10 million, a 40 percent increase over the fourth quarter of 2012
•
Fourth quarter shipments of 327 multiplexing analyzers, which included 162 MAGPIX systems, 132 LX systems, and 33 FLEXMAP 3D systems. Cumulative life-to-date multiplexing analyzer shipments are 10,737, up 11 percent from a year ago.
•
Cash and investments balance at year-end of $72.4 million
•
Operating income for the fourth quarter of 2013 was $5.5 million. Non-GAAP operating income for the fourth quarter of 2013 was $10 million (see Non-GAAP reconciliation)
•
GAAP net income for the fourth quarter and full-year of 2013 was $5.1 million and $7.1 million, or $0.12 and $0.17 per diluted share, respectively. Non-GAAP net income for the fourth quarter and 2013 was $8.8 million and $26.2 million or $0.21 and $0.62 per diluted share, respectively (see Non-GAAP reconciliation)

“Although 2013 was a year marked by unexpected challenges, Luminex responded to these challenges by remaining committed to our strategic programs and long term financial objectives.  We have remained focused on accelerating both revenue and earnings growth driven by several key company initiatives in our molecular diagnostics business,” said Patrick J. Balthrop, president and chief executive officer of Luminex. “In 2014, we expect to build momentum with an exciting pipeline and a full year of our direct sales force in the molecular diagnostics market.  We are also excited about the traction we are seeing in new product adoption in the molecular segment and expect these new products to drive growth in 2014.”

“Our R&D team is on track in the development of new products that will provide value to our laboratory customers by improving workflow, simplifying sample preparation and enabling our customers to run a wide variety of tests in an automated manner.  These products include our sample-to-answer real-time PCR instrument, ARIES, which is on schedule to launch in Europe this year and in the U.S. early in 2015. We look forward to reviewing our achievements and progress with our investors as we move through 2014.”





REVENUE SUMMARY
(in thousands, except percentages)

 
Three Months Ended
 
 
 
 
 
December 31,
 
Variance
 
2013
 
2012
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
10,014

 
$
7,149

 
$
2,865

 
40
 %
Consumable sales
12,056

 
12,412

 
(356
)
 
(3
)%
Royalty revenue
9,267

 
7,513

 
1,754

 
23
 %
Assay revenue
17,963

 
23,774

 
(5,811
)
 
(24
)%
All other revenue
5,856

 
4,687

 
1,169

 
25
 %
 
$
55,156

 
$
55,535

 
$
(379
)
 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
December 31,
 
Variance
 
2013
 
2012
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
31,786

 
$
31,083

 
$
703

 
2
 %
Consumable sales
48,540

 
48,012

 
528

 
1
 %
Royalty revenue
36,950

 
31,160

 
5,790

 
19
 %
Assay revenue
74,101

 
75,020

 
(919
)
 
(1
)%
All other revenue
22,046

 
17,307

 
4,739

 
27
 %
 
$
213,423

 
$
202,582

 
$
10,841

 
5
 %
 
 
 
 
 
 
 
 






LUMINEX CORPORATION
REPORTABLE SEGMENT HIGHLIGHTS
(in thousands, except percentages)

 
 
Three Months Ended
 
 
 
 
 
 
December 31,
 
Variance
 
 
2013
 
2012
 
($)
 
(%)
 
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Technology and strategic partnerships
$
35,671

 
$
29,674

 
$
5,997

 
20
 %
Assays and related products
19,485

 
25,861

 
(6,376
)
 
(25
)%
Total Revenue
55,156

 
55,535

 
(379
)
 
(1
)%
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Technology and strategic partnerships
10,393

 
6,104

 
4,289

 
70
 %
Assays and related products
(4,921
)
 
1,151

 
(6,072
)
 
(528
)%
Total Operating income
5,472

 
7,255

 
(1,783
)
 
(25
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
December 31,
 
Variance
 
 
2013
 
2012
 
($)
 
(%)
 
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Technology and strategic partnerships
$
132,023

 
$
121,032

 
$
10,991

 
9
 %
Assays and related products
81,400

 
81,550

 
(150
)
 
—
 %
Total Revenue
213,423

 
202,582

 
10,841

 
5
 %
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Technology and strategic partnerships
33,761

 
27,829

 
5,932

 
21
 %
Assays and related products
(28,994
)
 
(5,113
)
 
(23,881
)
 
(467
)%
Total Operating income
4,767

 
22,716

 
(17,949
)
 
(79
)%

“In the fourth quarter, we maintained steady sales with double digit growth from systems and royalty revenue, offset by what we believe to be temporary softness in our assay segment. During 2013, our assays and related products segment profitability was significantly affected by a number of items, including resolution of our molecular diagnostics distribution agreements, restructuring costs, and the write off of the Natural Molecular Testing Corporation receivable,” said Harriss T. Currie, senior vice president and chief financial officer.  “Our 2014 revenue guidance takes into account increasing contributions from our assay product portfolio, combined with a prudent view of the macro environment in the near term.”


FINANCIAL OUTLOOK AND GUIDANCE

The Company intends to provide annual revenue guidance, to be updated, as appropriate, at each quarterly reporting period. Guidance for fiscal 2014 is as follows:
•
The Company expects fiscal 2014 revenue to be between $225 million and $240 million, or an increase of 5 to 12 percent over reported 2013 revenue.





CONFERENCE CALL

Management will host a conference call to discuss the operating highlights and financial results for the fourth quarter ended December 31, 2013, at 4:00 p.m. CST/5:00 p.m. EST, Monday, February 3, 2014. The conference call will be webcast live and will be accompanied by a slide presentation, both of which may be accessed at Luminex Corporation’s website at http://www.luminexcorp.com. Simply log on to the web at the address above, go to the Company section and access the Investor Relations link. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary audio/video software. If you are unable to participate during the live webcast, the call and slides will be archived for six months on the website using the ‘replay’ link.

Luminex develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry. The Company’s xMAP system is an open-architecture, multi-analyte technology platform that delivers fast, accurate and cost-effective bioassay results to markets as diverse as pharmaceutical drug discovery, clinical diagnostics and biomedical research, including the genomics and proteomics research markets. The Company’s xMAP technology is sold worldwide and is in use in leading research laboratories as well as major pharmaceutical, diagnostic and biotechnology companies. Further information on Luminex or xMAP can be obtained on the Internet at http://www.luminexcorp.com.

Statements made in this release that express Luminex’s or management’s intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. Forward-looking statements in this release include statements regarding: the expansion of our installed base of multiplexing systems; our efforts to sell our molecular diagnostic products directly to end users; the development progress of our pipeline products, including ARIES systems and assay menu, market acceptance of our genetic and infectious disease products, regulatory clearance of our products; the ability of our investment in current initiatives and new products to drive long-term value for our shareholders, status of molecular codes, the impact of Medicare reimbursement on our customers and current and future impact on our business; and, projected 2014 revenue. The words "believe," "expect," "intend," "estimate," "anticipate," "will," "could," "should" and similar expressions are intended to further identify such forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. It is important to note that the Company’s actual results or performance could differ materially from those anticipated or projected in such forward-looking statements. Factors that could cause Luminex’s actual results or performance to differ materially include risks and uncertainties relating to, among others, market demand and acceptance of Luminex’s products and technology, the Company’s dependence on strategic partners for development, commercialization and distribution of products, concentration of the Company’s revenue in a limited number of strategic partners, fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and bulk purchases of consumables, our ability to sell products directly to end users, our ability to launch products on time that satisfy market needs with products that we sell, setting of medicare reimbursement codes that adequately reflect the value of our products, Luminex’s ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels, potential shortages of components, competition, the timing of regulatory approvals, the implementation, including any modification, of the Company’s strategic operating plans, the uncertainty regarding the outcome or expense of any litigation brought against Luminex, risks relating to Luminex’s foreign operations, risks and uncertainties associated with implementing our acquisition strategy and the ability to integrate acquired companies, or selected assets into our consolidated business operations, including the ability to recognize the benefits of our acquisitions, as well as the risks discussed under the heading "Risk Factors" in Luminex’s Reports on Forms 10-K and 10-Q, as filed with the Securities and Exchange Commission. The forward-looking statements, including the financial guidance and 2014 outlook, contained herein represent the judgment of Luminex as of the date of this press release, and Luminex expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Luminex’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.





LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
December 31,
 
December 31,
 
2013
 
2012
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
67,924

 
$
42,789

Short-term investments
4,517

 
13,607

Accounts receivable, net
30,948

 
33,273

Inventories, net
30,487

 
29,937

Deferred income taxes
7,265

 
4,783

Prepaids and other
5,229

 
4,388

 
 
 
 
Total current assets
146,370

 
128,777

 
 
 
 
Property and equipment, net
32,793

 
26,229

Intangible assets, net
60,295

 
65,218

Deferred income taxes
11,913

 
14,360

Long-term investments
—

 
3,000

Goodwill
50,738

 
51,128

Other
3,937

 
8,463

 
 
 
 
Total assets
$
306,046

 
$
297,175

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
10,698

 
$
9,650

Accrued liabilities
11,624

 
12,866

Deferred revenue
4,980

 
4,134

Current portion of long term debt
1,194

 
1,138

 
 
 
 
Total current liabilities
28,496

 
27,788

 
 
 
 
Long-term debt
463

 
1,702

Deferred revenue
2,482

 
2,933

Other
4,985

 
5,085

 
 
 
 
Total liabilities
36,426

 
37,508

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
41

 
41

Additional paid-in capital
296,931

 
293,392

Accumulated other comprehensive gain
419

 
1,101

Accumulated deficit
(27,771
)
 
(34,867
)
 
 
 
 
Total stockholders' equity
269,620

 
259,667

 
 
 
 
Total liabilities and stockholders' equity
$
306,046

 
$
297,175

 
 
 
 




LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Revenue
$
55,156

 
$
55,535

 
$
213,423

 
$
202,582

Cost of revenue
18,325

 
16,178

 
69,797

 
60,008

 
 
 
 
 
 
 
 
Gross profit
36,831

 
39,357

 
143,626

 
142,574

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
10,189

 
11,522

 
45,041

 
42,989

Selling, general and administrative
19,872

 
19,551

 
87,301

 
72,626

Amortization of acquired intangible assets
1,022

 
1,029

 
4,099

 
4,243

Restructuring costs
276

 
—

 
2,418

 
—

 
 
 
 
 
 
 
 
Total operating expenses
31,359

 
32,102

 
138,859

 
119,858

 
 
 
 
 
 
 
 
Income from operations
5,472

 
7,255

 
4,767

 
22,716

Interest expense from long-term debt
(9
)
 
(36
)
 
(76
)
 
(198
)
Other income, net
3

 
138

 
6,733

 
262

 
 
 
 
 
 
 
 
Income before income taxes
5,466

 
7,357

 
11,424

 
22,780

Income taxes
(350
)
 
(3,105
)
 
(4,328
)
 
(10,373
)
 
 
 
 
 
 
 
 
Net income
$
5,116

 
$
4,252

 
$
7,096

 
$
12,407

 
 
 
 
 
 
 
 
Net income per share, basic
$
0.12

 
$
0.10

 
$
0.17

 
$
0.30

 
 
 
 
 
 
 
 
Shares used in computing net income per share, basic
41,055

 
40,724

 
40,799

 
40,927

 
 
 
 
 
 
 
 
Net income per share, diluted
$
0.12

 
$
0.10

 
$
0.17

 
$
0.30

 
 
 
 
 
 
 
 
Shares used in computing net income per share, diluted
42,229

 
41,332

 
41,986

 
41,884

 
 
 
 
 
 
 
 





LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
5,116

 
$
4,252

 
$
7,096

 
$
12,407

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
4,175

 
3,696

 
15,922

 
14,364

Stock-based compensation
2,488

 
2,363

 
9,221

 
9,915

Deferred income tax expense (benefit)
(2,864
)
 
(217
)
 
551

 
2,699

Excess income tax (benefit) expense from employee stock-based awards
(2,843
)
 
(4,274
)
 
(2,569
)
 
(6,457
)
Loss (gain) on sale of assets
132

 
—

 
(5,173
)
 
—

Non-cash restructuring charges
442

 
—

 
4,137

 
—

Other
(94
)
 
502

 
(1,209
)
 
1,157

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable, net
(730
)
 
(2,041
)
 
2,346

 
(10,267
)
Inventories, net
(1,091
)
 
(2,742
)
 
(3,005
)
 
(5,346
)
Other assets
588

 
1,677

 
(1,470
)
 
(617
)
Accounts payable
1,680

 
1,580

 
962

 
3,286

Accrued liabilities
2,403

 
5,470

 
(324
)
 
3,463

Deferred revenue
8

 
(84
)
 
417

 
(321
)
 
 
 
 
 
 
 
 
Net cash provided by operating activities
9,410

 
10,182

 
26,902

 
24,283

 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
Purchases of available-for-sale securities
(1,516
)
 
(1,498
)
 
(10,005
)
 
(14,987
)
Sales and maturities of available-for-sale securities
2,496

 
4,042

 
22,128

 
47,117

Purchase of property and equipment
(2,952
)
 
(2,258
)
 
(18,088
)
 
(9,767
)
Business acquisition consideration, net of cash acquired
—

 
78

 
—

 
(48,199
)
Purchase of cost method investment
—

 
—

 
—

 
(1,000
)
Proceeds from sale of assets
34

 
—

 
9,598

 
—

Acquired technology rights
—

 
(1,250
)
 
(930
)
 
(1,592
)
 
 
 
 
 
 
 
 
Net cash (used in) provided by investing activities
(1,938
)
 
(886
)
 
2,703

 
(28,428
)
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Payments on debt
—

 
—

 
(1,105
)
 
(1,025
)
Proceeds from employee stock plans and issuance of common stock
786

 
798

 
8,677

 
4,022

Payments for stock repurchases
(213
)
 
—

 
(14,556
)
 
(20,916
)
Excess income tax (expense) benefit from employee stock-based awards
2,843

 
4,274

 
2,569

 
6,457

 
 
 
 
 
 
 
 
Net cash provided by (used in) financing activities
3,416

 
5,072

 
(4,415
)
 
(11,462
)
 
 
 
 
 
 
 
 
Effect of foreign currency exchange rate on cash
(133
)
 
(65
)
 
(55
)
 
114

Change in cash and cash equivalents
10,755

 
14,303

 
25,135

 
(15,493
)
Cash and cash equivalents, beginning of period
57,169

 
28,486

 
42,789

 
58,282

 
 
 
 
 
 
 
 
Cash and cash equivalents, end of period
$
67,924

 
$
42,789

 
$
67,924

 
$
42,789







LUMINEX CORPORATION
NON-GAAP RECONCILIATION
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
Income from operations
$
5,472

 
$
7,255

 
$
4,767

 
$
22,716

 
 
 
 
 
 
 
 
Stock-based compensation
2,488

 
2,363

 
9,221

 
9,915

Amortization of acquired intangible assets
1,022

 
1,029

 
4,099

 
4,243

Costs associated with legal proceedings
373

 
—

 
731

 
—

Resolution of molecular diagnostic distribution agreements
—

 
—

 
7,000

 
—

Acquisition and severance costs
29

 
1,740

 
1,060

 
5,159

Restructuring costs
626

 
—

 
4,969

 
—

 
 
 
 
 
 
 
 
Adjusted income from operations
$
10,010

 
$
12,387

 
$
31,847

 
$
42,033

 
 
 
 
 
 
 
 
Interest expense from long-term debt
(9
)
 
(36
)
 
(76
)
 
(198
)
Other income, net
3

 
138

 
6,733

 
262

Gain on sale of cost method equity investment
—

 
—

 
(5,452
)
 
—

Contingent consideration adjustments
—

 
—

 
(1,370
)
 
—

Income taxes
(350
)
 
(3,105
)
 
(4,328
)
 
(10,373
)
Valuation allowance reserve
—

 
1,471

 
—

 
1,471

Income tax effect of above adjusting items
(826
)
 
(1,297
)
 
(1,202
)
 
(4,290
)
 
 
 
 
 
 
 
 
Adjusted net income
$
8,828

 
$
9,558

 
$
26,152

 
$
28,905

 
 
 
 
 
 
 
 
Adjusted net income per share, basic
$
0.22

 
$
0.23

 
$
0.64

 
$
0.71

 
 
 
 
 
 
 
 
Shares used in computing adjusted net income per share, basic
41,055

 
40,724

 
40,799

 
40,927

 
 
 
 
 
 
 
 
Adjusted net income per share, diluted
$
0.21

 
$
0.23

 
$
0.62

 
$
0.69

 
 
 
 
 
 
 
 
Shares used in computing adjusted net income per share, diluted
42,229

 
41,332

 
41,986

 
41,884



The Company makes reference in this release to “non-GAAP operating income” and “non-GAAP net income” which excludes the impact of costs associated with the ENZO Life Sciences, Inc. complaint discussed in the Legal Proceedings section of our previously filed 10-Qs and certain other recurring and non-recurring expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company’s ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company’s past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for income from operations, net income, net income per share or expense information prepared in accordance with GAAP.


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