2008-07-24 07:30:00
Invitrogen Announces Second Quarter 2008 Financial Results
Second Quarter Revenue of $368 Million, 14.3 Percent Increase
Second Quarter GAAP EPS of $0.55 and non-GAAP EPS $0.73
Free Cash Flow $65 Million for the Quarter
CARLSBAD, Calif.–(EMWNews)–Invitrogen Corporation (Nasdaq:IVGN) today announced results for its
second quarter ended June 30, 2008. Revenues for the second quarter were
$368 million, an increase of 14.3 percent over the $322 million reported
for the second quarter of 2007.
“We continue to see consistent, solid growth in our business, leading to
yet another quarter of strong financial results,”
said Greg Lucier, Chairman and Chief Executive Officer of Invitrogen. “Once
the transaction with Applied Biosystems is complete, we look forward to
combining our strong portfolios, world-class systems and talented people
to create a truly remarkable life sciences company.”
Second quarter diluted earnings per share were $0.55, which includes
$0.05 per share of stock option expensing and $0.13 per share of
amortization, business integration and other expenses. On a non-GAAP
basis, which excludes these items, diluted earnings per share were
$0.73, an increase of 28 percent over the same period last year.
Analysis of Second Quarter 2008 Results
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— Second quarter 2008 revenues increased 14.3 percent over the previous year, driven by solid growth in all businesses and regions, as well as positive currency benefits. Organic revenue growth, without the impact from currency and acquisitions, was 6.2 percent. Revenue from foreign exchange contributed $22 million or seven points of growth. |
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— Gross margin, on a non-GAAP basis, was 66.3 percent in the second quarter. This represents an increase of 260 basis points from the same period in the prior year, due to positive price realization, productivity and currency exchange benefits. |
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— Non-GAAP operating margin was 27.7 percent in the second quarter, representing an increase of 370 basis points over the same period in 2007. Operating expenses as a percent of revenue declined year over year due to lower general and administrative costs. G&A costs were lower primarily as the result of the elimination of one-time legal expenses present in 2007. |
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— Non-GAAP tax rate was 28.7 percent, a decrease of approximately 2 percentage points from the previous year. The decrease was related primarily to a projected higher percentage of income being earned in lower tax jurisdictions, as well as $1 million of tax benefits resulting from the completion of prior period audits. |
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— Weighted shares outstanding were 97.1 million in the second quarter. |
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— Cash flow from operating activities for the second quarter was $82 million. Second quarter capital expenditures were $17 million and free cash flow was $65 million. The company ended the second quarter with $646 million in cash & short-term investments. |
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— The following analysis of diluted earnings per share identifies specific items that affect the comparability of results between periods. Reconciliations between Invitrogen’s results and non-GAAP results for the periods reported are presented in the attached tables and on the company’s Investor Relations page at www.invitrogen.com. |
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Three Months Ending June 30, |
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2008 |
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2007 |
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% Change |
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GAAP earnings per share |
$ |
0.55 |
$ |
0.31 |
78 |
% |
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Amortization of acquisition related expenses |
$ |
0.12 |
$ |
0.18 |
(33 |
%) |
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Stock option expense (FAS123R) |
$ |
0.05 |
$ |
0.07 |
(29 |
%) |
||||
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Business integration and other expense |
$ |
0.01 |
$ |
0.01 |
n/a |
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Non-GAAP earnings per share |
$ |
0.73 |
$ |
0.57 |
28 |
% |
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Segment and Geographic Highlights
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— BioDiscovery revenue was $253 million in the second quarter, an increase of 13.6 percent over the same period the previous year. Organic revenue growth, which excludes the impact from currency, was 6.5 percent. Revenue growth was a result of positive price realization and volume in almost all product areas, most notably in drug discovery sciences, molecular biology and cellular analysis products. |
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— BioDiscovery non-GAAP gross margins increased 250 basis points year over year due to positive price realization and operational productivity. |
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— Cell Systems revenue was $115 million in the second quarter 2008, an increase of 16 percent over the same period the previous year. Organic revenue growth, which excludes the impact from currency and acquisitions, was 5.6 percent. Solid growth in cell culture research continued, driven by accelerating sales of stem cell and other specialty cell culture media. Production media and sera grew in the mid single digits, as expected. |
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— Cell Systems non-GAAP gross margins increased by 310 basis points year over year due to improved productivity and currency benefits. |
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— Revenue growth, including impact from currency, by region for the second quarter was 5 percent in the Americas, 24 percent in Europe and 22 percent in Asia Pacific. The emerging markets of India, China and Korea had strong double-digit growth. |
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— Orders transacted through e-commerce channels reached another record high of 63 percent in the Americas during the second quarter, and over 50 percent globally. |
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— New product highlights included: |
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— Food and Drug Administration premarket approval for the HER2 CISH Kit, indicated as an aid in the assessment of breast cancer patients for whom trastuzumab (Herceptin(R)) treatment is being considered. The approval marks the first PMA that Invitrogen has received from the FDA; |
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— The SequalPrep(TM) System; a complete sample enrichment and normalization solution for next generation sequencing technologies; and |
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— CELLstart(TM), the first fully defined, completely animal origin free substrate in the marketplace for the attachment and expansion of embryonic, mesenchymal and neural stem cells. |
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— The company won six Life Science Industry Awards, the most of any company. The awards are given to top life science suppliers, with the winners being determined by the industry’s customers — scientists in biotechnology and pharmaceutical companies, in government and academia. This was the fourth year in a row that Invitrogen was recognized through these awards. |
Applied Biosystems Transaction
As previously announced on June 12, 2008, the Boards of Directors of
Invitrogen and Applera Corporation approved a definitive merger
agreement under which Invitrogen will acquire all of the outstanding
stock of Applied Biosystems, Inc. for $38.00 per share in a cash and
stock transaction valued at $6.7 billion.
The company expects the transaction to close in late October to early
November. The company has filed under Hart Scott Rodino for U.S.
antitrust review and will soon be engaging with the European Commission
for a similar review process. The company expects to file the
preliminary proxy by the end of July or early August.
Fiscal Year 2008 Outlook
Subject to the risk factors detailed in the Safe Harbor Statement
section of this release, the company expects full year 2008 organic
revenue, excluding the impact from currency and acquisitions, to
increase in the mid single digits. Non-GAAP earnings per share are
expected to increase at a rate of one and a half to two times that of
revenue. The company will provide further detail on its business outlook
during the conference call today.
Conference Call and Webcast Details
The company will discuss its financial and business results as well as
its business outlook on its conference call at 9:00 a.m. Eastern Time
today. This conference call will contain forward-looking information.
The conference call will include a discussion of “non-GAAP
financial measures” as that term is defined in
Regulation G. For actual results, the most directly comparable GAAP
financial measures and information reconciling these non-GAAP financial
measures to the company’s financial results
determined in accordance with GAAP, as well as other material financial
and statistical information to be discussed on the conference call will
be posted at the company’s Investor Relations
website at www.invitrogen.com.
The webcast can be accessed on Invitrogen’s website at www.invitrogen.com
on the Investor Relations home page. Alternatively, callers may listen
to the live conference call by dialing 866.831.5605 (domestic) or
617.213.8851 (international) and use passcode 21567755. A replay of the
webcast will be available on the Company’s
website through Thursday, August 14, 2008.
About Invitrogen
Invitrogen Corporation (Nasdaq:IVGN) provides products and services that
support academic and government research institutions and pharmaceutical
and biotech companies worldwide in their efforts to improve the human
condition. The company provides essential life science technologies for
disease research, drug discovery, and commercial bioproduction.
Invitrogen’s own research and development efforts are focused on
breakthrough innovation in all major areas of biological discovery
including functional genomics, proteomics, stem cells, cell therapy, and
cell biology — placing Invitrogen’s products in nearly every major
laboratory in the world. Founded in 1987, Invitrogen is headquartered in
Carlsbad, California, and conducts business in more than 70 countries
around the world. The company employs approximately 4,700 scientists and
other professionals and had revenues of approximately $1.3 billion in
2007. For more information, visit www.invitrogen.com.
Statement Regarding Use of Non-GAAP Measures
We regularly have reported non-GAAP measures for net income and earnings
per share as non-GAAP results. These measures are provided as
supplementary information and are not a substitute for, or superior to,
financial measures calculated in accordance with GAAP. These non-GAAP
measures are limited because they do not reflect the entirety of our
business results.
We define our non-GAAP results as our GAAP results excluding the after
tax impact of the following:
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— Acquisition related amortization; |
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— In process research and development expenses; |
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— Acquisition related gains and losses; |
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— Asset impairment charges related to a portfolio review; |
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— Business consolidation costs required to realize cost synergies from combining our acquired entities with our existing operations; |
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— Certain significant one time events that are unlikely to recur; and |
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— Share based payment expenses as a result of adoption of FAS123R. |
Management views these excluded items as not indicative of the operating
results or cash flows of its operations and excludes these items as a
supplemental disclosure to assist investors in evaluating and assessing
our past and future operational performance. This presentation of our
non-GAAP results is consistent with how management internally evaluates
the performance of its operations.
We encourage investors to carefully consider our results under GAAP, as
well as our non-GAAP disclosures and the reconciliation between these
presentations to more fully understand our business. Reconciliations
between GAAP results and non-GAAP results are presented on the following
pages.
Safe Harbor Statement
Certain statements contained in this press release and in today’s
conference call are considered “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, and it
is Invitrogen’s intent that such statements
be protected by the safe harbor created thereby. Such statements
include, but are not limited to statements regarding Invitrogen’s:
1) financial projections, including revenue and non-GAAP earnings per
share; 2) plans regarding our share repurchase program; 3) momentum in
2008; 4) plans to sustain and expand organic growth and increase
operating margins; and 5) plans to acquire Applied Biosystems, Inc. Such
forward-looking statements are subject to a number of risks,
uncertainties and other factors that could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include,
but are not limited to a) the Company’s
ability to identify promising technology and new product development
opportunities; b) the Company’s repurchase
shares of its common stock at prices that are acceptable to its Board of
Directors and management; c) the Company’s
ability to identify acquisitions and organic growth opportunities that
will position it to serve growing markets; and d) the closing conditions
in the Agreement & Plan of Merger to acquire Applied Biosystems, as well
as other risks and uncertainties detailed from time to time in Invitrogen’s
Securities and Exchange Commission filings.
Herceptin® is a registered trademark of
Genentech. No sponsorship or endorsement by Genentech is implied herein.
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INVITROGEN CORPORATION |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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AND RECONCILIATION OF NON-GAAP ADJUSTMENTS(1) |
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For the three months |
For the three months |
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(in thousands, except per share data) |
ended June 30, 2008 |
ended June 30, 2007 |
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(unaudited) |
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GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
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Revenues |
$ |
367,791 |
$ |
– |
$ |
367,791 |
$ |
321,690 |
$ |
– |
$ |
321,690 |
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Cost of revenues |
125,268 |
(1,405 |
) |
(2)(3) |
123,863 |
118,191 |
(1,546 |
) |
(2)(3) |
116,645 |
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Purchased intangibles amortization |
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17,416 |
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(17,416 |
) |
(4) |
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– |
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27,957 |
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(27,957 |
) |
(4) |
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– |
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Gross profit |
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225,107 |
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18,821 |
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243,928 |
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175,542 |
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29,503 |
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205,045 |
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Gross margin |
61.2 |
% |
66.3 |
% |
54.6 |
% |
63.7 |
% |
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Operating expenses: |
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Sales and marketing |
73,338 |
(2,127 |
) |
(3) |
71,211 |
62,436 |
(1,649 |
) |
(3) |
60,787 |
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General and administrative |
42,188 |
(3,781 |
) |
(3) |
38,407 |
44,791 |
(5,360 |
) |
(3) |
39,431 |
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Research and development |
33,173 |
(868 |
) |
(3) |
32,305 |
28,604 |
(1,113 |
) |
(3)
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27,491 |
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Business consolidation costs |
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1,413 |
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(1,413 |
) |
(5) |
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– |
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724 |
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(724 |
) |
(5) |
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– |
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Total operating expenses |
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150,112 |
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(8,189 |
) |
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141,923 |
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136,555 |
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(8,846 |
) |
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127,709 |
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Operating income |
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