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| 8-K - FORM 8-K - LUMINEX CORP | a2014-q3form8xk.htm |
Exhibit 99.1
LUMINEX CORPORATION REPORTS THIRD QUARTER 2014 RESULTS
AUSTIN, Texas (October 27, 2014) - Luminex Corporation (NASDAQ:LMNX) today announced financial results for the third quarter ended September 30, 2014. Financial and operating highlights include the following:
• | Consolidated revenue of $56.7 million, a 12 percent increase over the third quarter of 2013. |
• | Assay revenue of $22.1 million, a 37 percent increase over the third quarter of 2013. Infectious disease assay sales comprised approximately 65 percent of total assay sales, with genetic testing assays representing 35 percent. |
• | Royalty revenue of $9.7 million, an 8 percent increase over the third quarter of 2013. |
• | Shipments of 269 multiplexing analyzers, which included 115 LX systems, 122 MAGPIX systems, and 32 FLEXMAP 3D Systems. |
• | GAAP net income was $5.6 million, or $0.13 per diluted share. This compares to a GAAP net income of $796,000, or $0.02 per diluted share for the third quarter of 2013. |
• | Non-GAAP net income was $11.5 million or $0.27 per diluted share, which compares with $2.3 million, or $0.06 per diluted share in the third quarter of 2013. (see Non-GAAP reconciliation) |
• | Received FDA Clearance to add 3 new clinical targets and additional sample type for use with xTAG® Gastrointestinal Pathogen Panel (GPP). |
“We completed a strong quarter, driven primarily by growth in assay revenues that was well-balanced across our major product categories,” said Harriss T. Currie, Senior Vice President and Chief Financial Officer. “This resulted in improved results at the net profit line. Cash flow also was positive for the quarter notwithstanding substantial capital investments in our innovative pipeline.”
“With the recent appointment of Nachum ‘Homi’ Shamir as President and CEO, we believe we are well positioned to continue executing our vision to deliver innovative diagnostic solutions to simplify and speed the delivery of health care. As we prepare for the launch of several key pipeline products in the near future, we are very pleased to have a talented and accomplished executive to lead the Company into the next stage of growth,” said Wally Loewenbaum, Chairman of the Company.
“I am excited to join Luminex at this pivotal time in the Company’s history. As I conduct my strategic and operational review, I am gaining greater insights into the business and look forward to contributing to the Company’s record of market leadership and strong financial performance. With its history of innovation, its talented, dedicated workforce, and a compelling pipeline of highly differentiated products, I believe Luminex is uniquely positioned to successfully execute in the very competitive healthcare marketplace and deliver maximum value to our stakeholders,” said Homi Shamir, President and CEO of Luminex.
REVENUE SUMMARY
(in thousands, except percentages)
Three Months Ended | ||||||||||||||
September 30, | Variance | |||||||||||||
2014 | 2013 | ($) | (%) | |||||||||||
(unaudited) | ||||||||||||||
System sales | $ | 7,624 | $ | 7,568 | $ | 56 | 1 | % | ||||||
Consumable sales | 12,124 | 12,837 | (713 | ) | (6 | )% | ||||||||
Royalty revenue | 9,690 | 8,996 | 694 | 8 | % | |||||||||
Assay revenue | 22,056 | 16,115 | 5,941 | 37 | % | |||||||||
All other revenue | 5,190 | 5,264 | (74 | ) | (1 | )% | ||||||||
$ | 56,684 | $ | 50,780 | $ | 5,904 | 12 | % | |||||||
Nine Months Ended | ||||||||||||||
September 30, | Variance | |||||||||||||
2014 | 2013 | ($) | (%) | |||||||||||
(unaudited) | ||||||||||||||
System sales | $ | 22,328 | $ | 21,772 | $ | 556 | 3 | % | ||||||
Consumable sales | 37,521 | 36,484 | 1,037 | 3 | % | |||||||||
Royalty revenue | 29,215 | 27,683 | 1,532 | 6 | % | |||||||||
Assay revenue | 63,602 | 56,138 | 7,464 | 13 | % | |||||||||
All other revenue | 16,211 | 16,190 | 21 | — | % | |||||||||
$ | 168,877 | $ | 158,267 | $ | 10,610 | 7 | % | |||||||
LUMINEX CORPORATION
REPORTABLE SEGMENT HIGHLIGHTS
(in thousands, except percentages)
Three Months Ended | |||||||||||||||
September 30, | Variance | ||||||||||||||
2014 | 2013 | ($) | (%) | ||||||||||||
(unaudited) | |||||||||||||||
Revenue | |||||||||||||||
Technology and strategic partnerships | $ | 32,645 | $ | 33,335 | $ | (690 | ) | (2 | )% | ||||||
Assays and related products | 24,039 | 17,445 | 6,594 | 38 | % | ||||||||||
Total Revenue | 56,684 | 50,780 | 5,904 | 12 | % | ||||||||||
Operating income (loss) | |||||||||||||||
Technology and strategic partnerships | 8,792 | 9,293 | (501 | ) | (5 | )% | |||||||||
Assays and related products | (3,796 | ) | (13,487 | ) | 9,691 | 72 | % | ||||||||
Total Operating income | 4,996 | (4,194 | ) | 9,190 | 219 | % | |||||||||
Nine Months Ended | |||||||||||||||
September 30, | Variance | ||||||||||||||
2014 | 2013 | ($) | (%) | ||||||||||||
(unaudited) | |||||||||||||||
Revenue | |||||||||||||||
Technology and strategic partnerships | 98,094 | 96,352 | $ | 1,742 | 2 | % | |||||||||
Assays and related products | 70,783 | 61,915 | 8,868 | 14 | % | ||||||||||
Total Revenue | 168,877 | 158,267 | 10,610 | 7 | % | ||||||||||
Operating income (loss) | |||||||||||||||
Technology and strategic partnerships | 27,348 | 23,368 | 3,980 | 17 | % | ||||||||||
Assays and related products | (9,396 | ) | (24,073 | ) | 14,677 | 61 | % | ||||||||
Total Operating income | 17,952 | (705 | ) | 18,657 | 2,646 | % | |||||||||
FINANCIAL OUTLOOK AND GUIDANCE
The Company has revised its 2014 annual revenue guidance to a range of between $225 and $228 million from $225 and $240 million.
CONFERENCE CALL
Management will host a conference call to discuss the operating highlights and financial results for the third quarter ended September 30, 2014, at 4:00 p.m. CDT/5:00 p.m. EDT, Monday, October 27, 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: growth in our partner business, including systems, consumables and royalties; the development progress of our pipeline products, including ARIES systems and assay menu and NxTAG technology, market acceptance of our genetic and infectious disease products, regulatory clearance of our products; the ability of our executives to execute our vision to launch our pipeline products and drive Company growth, market leadership and financial performance; the ability to execute in the marketplace and of our investment in current initiatives and new products to drive long-term value for our shareholders; 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, Luminex’s ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels, potential shortages of components, competition, the timing and process 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) | |||||||
September 30, | December 31, | ||||||
2014 | 2013 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 89,123 | $ | 67,924 | |||
Short-term investments | — | 4,517 | |||||
Accounts receivable, net | 27,354 | 30,948 | |||||
Inventories, net | 33,129 | 30,487 | |||||
Deferred income taxes | 8,169 | 7,265 | |||||
Prepaids and other | 5,293 | 5,229 | |||||
Total current assets | 163,068 | 146,370 | |||||
Property and equipment, net | 37,096 | 32,793 | |||||
Intangible assets, net | 57,346 | 60,295 | |||||
Deferred income taxes | 11,913 | 11,913 | |||||
Long-term investments | 7,975 | — | |||||
Goodwill | 49,619 | 50,738 | |||||
Other | 3,495 | 3,937 | |||||
Total assets | $ | 330,512 | $ | 306,046 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 10,138 | $ | 10,698 | |||
Accrued liabilities | 13,066 | 11,624 | |||||
Deferred revenue | 5,079 | 4,980 | |||||
Current portion of long term debt | — | 1,194 | |||||
Total current liabilities | 28,283 | 28,496 | |||||
Long-term debt | — | 463 | |||||
Deferred revenue | 2,436 | 2,482 | |||||
Other | 4,924 | 4,985 | |||||
Total liabilities | 35,643 | 36,426 | |||||
Stockholders' equity: | |||||||
Common stock | 42 | 41 | |||||
Additional paid-in capital | 306,766 | 296,931 | |||||
Accumulated other comprehensive (loss) income | (409 | ) | 419 | ||||
Accumulated deficit | (11,530 | ) | (27,771 | ) | |||
Total stockholders' equity | 294,869 | 269,620 | |||||
Total liabilities and stockholders' equity | $ | 330,512 | $ | 306,046 | |||
LUMINEX CORPORATION | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue | $ | 56,684 | $ | 50,780 | $ | 168,877 | $ | 158,267 | |||||||
Cost of revenue | 17,674 | 19,999 | 51,766 | 51,472 | |||||||||||
Gross profit | 39,010 | 30,781 | 117,111 | 106,795 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 10,327 | 10,346 | 32,719 | 34,852 | |||||||||||
Selling, general and administrative | 21,423 | 21,466 | 61,838 | 67,429 | |||||||||||
Amortization of acquired intangible assets | 964 | 1,021 | 2,949 | 3,077 | |||||||||||
Restructuring costs | 1,300 | 2,142 | 1,653 | 2,142 | |||||||||||
Total operating expenses | 34,014 | 34,975 | 99,159 | 107,500 | |||||||||||
Income (loss) from operations | 4,996 | (4,194 | ) | 17,952 | (705 | ) | |||||||||
Interest expense from long-term debt | — | (16 | ) | (6 | ) | (67 | ) | ||||||||
Other expense, net | (15 | ) | 6,638 | (35 | ) | 6,730 | |||||||||
Income before income taxes | 4,981 | 2,428 | 17,911 | 5,958 | |||||||||||
Income tax benefit (expense) | 569 | (1,632 | ) | (1,670 | ) | (3,978 | ) | ||||||||
Net income | $ | 5,550 | $ | 796 | $ | 16,241 | $ | 1,980 | |||||||
Net income per share, basic | $ | 0.13 | $ | 0.02 | $ | 0.39 | $ | 0.05 | |||||||
Shares used in computing net income per share, basic | 41,714 | 40,752 | 41,496 | 40,712 | |||||||||||
Net income per share, diluted | $ | 0.13 | $ | 0.02 | $ | 0.39 | $ | 0.05 | |||||||
Shares used in computing net income per share, diluted | 42,381 | 41,919 | 42,127 | 41,771 | |||||||||||
LUMINEX CORPORATION | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 5,550 | $ | 796 | $ | 16,241 | $ | 1,980 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 3,400 | 3,994 | 10,935 | 11,747 | |||||||||||
Stock-based compensation | 2,622 | 1,889 | 7,052 | 6,733 | |||||||||||
Deferred income tax (benefit) expense | (3,568 | ) | 1,989 | (1,048 | ) | 3,415 | |||||||||
Excess income tax (benefit) expense from employee stock-based awards | (1,315 | ) | (15 | ) | (1,315 | ) | 274 | ||||||||
Loss (gain) on disposal of assets | 48 | (5,388 | ) | 231 | (5,305 | ) | |||||||||
Non-cash restructuring charges | 1,192 | 3,695 | 2,388 | 3,695 | |||||||||||
Other | (28 | ) | (34 | ) | (360 | ) | (1,115 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable, net | 203 | 1,384 | 3,742 | 3,076 | |||||||||||
Inventories, net | (1,943 | ) | 1,769 | (3,465 | ) | (1,914 | ) | ||||||||
Other assets | (829 | ) | (415 | ) | (792 | ) | (2,058 | ) | |||||||
Accounts payable | 1,227 | 2,215 | (878 | ) | (718 | ) | |||||||||
Accrued liabilities | 4,922 | (1,184 | ) | 407 | (2,727 | ) | |||||||||
Deferred revenue | 46 | 439 | 53 | 409 | |||||||||||
Net cash provided by operating activities | 11,527 | 11,134 | 33,191 | 17,492 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchases of available-for-sale securities | (8,000 | ) | (2,997 | ) | (10,996 | ) | (8,489 | ) | |||||||
Sales and maturities of available-for-sale securities | 2,996 | 2,996 | 7,509 | 19,632 | |||||||||||
Purchase of property and equipment | (5,540 | ) | (6,914 | ) | (11,795 | ) | (15,136 | ) | |||||||
Proceeds from sale of assets | 5 | 9,533 | 44 | 9,564 | |||||||||||
Acquired technology rights | — | — | (64 | ) | (930 | ) | |||||||||
Net cash (used in) provided by investing activities | (10,539 | ) | 2,618 | (15,302 | ) | 4,641 | |||||||||
Cash flows from financing activities: | |||||||||||||||
Payments on debt | — | — | (1,621 | ) | (1,105 | ) | |||||||||
Proceeds from employee stock plans and issuance of common stock | 327 | 5,973 | 3,807 | 7,891 | |||||||||||
Payments for stock repurchases | — | — | — | (14,343 | ) | ||||||||||
Excess income tax benefit (expense) from employee stock-based awards | 1,315 | 15 | 1,315 | (274 | ) | ||||||||||
Net cash provided by (used in) financing activities | 1,642 | 5,988 | 3,501 | (7,831 | ) | ||||||||||
Effect of foreign currency exchange rate on cash | (217 | ) | (49 | ) | (191 | ) | 78 | ||||||||
Change in cash and cash equivalents | 2,413 | 19,691 | 21,199 | 14,380 | |||||||||||
Cash and cash equivalents, beginning of period | 86,710 | 37,478 | 67,924 | 42,789 | |||||||||||
Cash and cash equivalents, end of period | $ | 89,123 | $ | 57,169 | $ | 89,123 | $ | 57,169 | |||||||
LUMINEX CORPORATION | |||||||||||||||
NON-GAAP RECONCILIATION | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Income from operations | $ | 4,996 | $ | (4,194 | ) | $ | 17,952 | $ | (705 | ) | |||||
Stock-based compensation | 2,622 | 1,889 | 7,052 | 6,733 | |||||||||||
Amortization of acquired intangible assets | 964 | 1,021 | 2,949 | 3,077 | |||||||||||
Costs associated with legal proceedings | 1,028 | 105 | 2,628 | 358 | |||||||||||
Resolution of molecular diagnostic distribution agreements | — | — | — | 7,000 | |||||||||||
Severance costs | 942 | 216 | 987 | 1,031 | |||||||||||
Restructuring costs | 1,332 | 4,343 | 2,652 | 4,343 | |||||||||||
Adjusted income from operations | $ | 11,884 | $ | 3,380 | $ | 34,220 | $ | 21,837 | |||||||
Interest expense from long-term debt | — | (16 | ) | (6 | ) | (67 | ) | ||||||||
Other income, net | (15 | ) | 6,638 | (35 | ) | 6,730 | |||||||||
Gain on sale of cost method equity investment | — | (5,452 | ) | — | (5,452 | ) | |||||||||
Contingent consideration adjustments | — | (1,220 | ) | — | (1,370 | ) | |||||||||
Income tax benefit (expense) | 569 | (1,632 | ) | (1,670 | ) | (3,978 | ) | ||||||||
Income tax effect of above adjusting items | (941 | ) | 637 | (1,649 | ) | (376 | ) | ||||||||
Income tax benefit from intercompany debt cancellation | — | — | (994 | ) | — | ||||||||||
Adjusted net income | $ | 11,497 | $ | 2,335 | $ | 29,866 | $ | 17,324 | |||||||
Adjusted net income per share, basic | $ | 0.28 | $ | 0.06 | $ | 0.72 | $ | 0.43 | |||||||
Shares used in computing adjusted net income per share, basic | 41,714 | 40,752 | 41,496 | 40,712 | |||||||||||
Adjusted net income per share, diluted | $ | 0.27 | $ | 0.06 | $ | 0.71 | $ | 0.41 | |||||||
Shares used in computing adjusted net income per share, diluted | 42,381 | 41,919 | 42,127 | 41,771 | |||||||||||
The Company makes reference in this release to “non-GAAP operating income” and “non-GAAP net income” which excludes stock-based compensation expense, amortization of acquired intangible assets and the impact of costs associated with legal proceedings, which are unpredictable and can vary significantly from period to period, including costs associated with the ENZO Life Sciences, Inc. and Irori Technologies, Inc. complaints, discussed in the Legal Proceedings section of our previously filed 10-K and 10-Qs filed year-to-date 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. In addition, the Company’s management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. 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.