CINCINNATI--(BUSINESS WIRE)--
Meridian Bioscience, Inc. (NASDAQ: VIVO):
GENERAL HIGHLIGHTS
Meridian Bioscience, Inc., Cincinnati, Ohio (NASDAQ: VIVO) today:
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reported fiscal 2012 third quarter and nine months net sales of $42.1
million and $129.8 million, respectively, increases of 5% and 10%,
respectively, from the same periods of the prior fiscal year;
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reported third quarter operating income of $12.6 million, an increase
of 24% compared to the prior year third quarter;
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reported nine months operating income of $37.2 million, an increase of
23% compared to the same period of the prior fiscal year;
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reported third quarter net earnings of $8.6 million, or $0.21 per
diluted share, increases of 26% and 24%, respectively, compared to the
fiscal 2011 third quarter. On a non-GAAP basis, earnings were $8.8
million, or $0.21 per diluted share, increases of 29% and 24%,
respectively. In the fiscal 2012 third quarter, this non-GAAP basis
excludes the effect of costs associated with the consolidation of its
Saco, Maine operations into its Tennessee facility (see non-GAAP
financial measure reconciliation);
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reported nine months net earnings of $24.8 million, or $0.60 per
diluted share, increases of 23% and 22%, respectively, compared to the
same period of fiscal 2011. On a non-GAAP basis, earnings were $25.5
million, or $0.61 per diluted share, increases of 21% and 20%,
respectively. In the fiscal 2012 year-to-date period, this non-GAAP
basis excludes the effect of costs associated with the consolidation
of its Saco, Maine operations into its Tennessee facility, and in the
fiscal 2011 year-to-date period it excludes the costs of reorganizing
its sales and marketing leadership (see non-GAAP financial measure
reconciliation);
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declared the regular quarterly cash dividend of $0.19 per share for
the third quarter of fiscal 2012, (indicated annual rate of $0.76 per
share), the same as the regular quarterly rate of fiscal 2011; and
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revised downward its fiscal 2012 guidance of per share diluted
earnings to between $0.78 and $0.81 (excluding plant consolidation
costs of $0.02) on net sales of $171 million to $175 million.
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FINANCIAL HIGHLIGHTS (UNAUDITED)
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In Thousands, Except per Share Data
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Three Months Ended June 30,
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Nine Months Ended June 30,
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2012
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2011
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% Change
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2012
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2011
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% Change
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Net Sales
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$
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42,141
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$
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40,052
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5
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%
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$
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129,848
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$
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118,374
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10
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%
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Operating Income
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12,612
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10,131
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24
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%
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37,244
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30,183
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23
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%
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Net Earnings
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8,594
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6,836
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26
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%
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24,798
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20,121
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23
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%
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Diluted Earnings per Share
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$
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0.21
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$
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0.17
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24
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%
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$
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0.60
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$
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0.49
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22
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%
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Diluted Earnings per Share
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excluding effect of plant
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consolidation costs (2012) and
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sales and marketing leadership
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reorganization costs (2011)
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(see non-GAAP financial measure
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reconciliation)
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$
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0.21
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$
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0.17
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24
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%
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$
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0.61
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$
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0.51
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20
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%
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June 30,
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2012
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2011
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Cash and Short-Term Investments
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$
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27,938
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$
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25,563
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Working Capital
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76,298
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75,340
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Shareholders’ Equity
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141,005
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138,120
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Total Assets
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158,814
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157,951
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COMPANY COMMENTS
John A. Kraeutler, Chief Executive Officer, said, “The third quarter,
despite positive sales growth (+5%) and strong operating income (+24%),
was disappointing given our good performance in the second quarter,
along with the expectation that the majority of downside surprises had
been minimized. While U.S. Diagnostic sales increased by 10% during the
period, European Diagnostics revenues were flat on a local currency
basis but down 11% on a U. S. dollar basis. Revenue growth was led by
our tests for C. difficile, foodborne and H. pylori
pathogens in the U.S.; however, in each product group, growth rates
declined from the strong second quarter rates. Meridian Life Science
revenues improved by 4%, with the timing of large orders, again causing
volatility when viewed on a sequential quarter-over-quarter basis. The
Bioline business grew revenues by 12% on a local currency basis;
however, negative currency dropped that rate to 9% in U.S. dollars.
Operating income increased by 24%, once again reinforcing our
efficiency, and reflecting the savings from the consolidation of our
core Life Science manufacturing facilities. Gross profit improved from
63% in the prior year to 66% and operating income improved to 30% of
revenues. Operating strength was due to improved margins and level
spending versus the prior year resulting from strong spending controls
and currency.
Our expectations going forward are for continued organic growth,
although at a moderated rate in the near term. Our simple-to-use
molecular platform, illumigene® has
continued to perform well. We now have approximately 900 customers
servicing over 1,000 hospitals and private labs. Growth in this category
continues to come primarily from illumigene C.
difficile, and illumigene GBS is gaining traction for
prenatal screening. During July, we submitted illumigene
Group A Strep (GAS) for FDA marketing clearance. In the strep testing
market, many labs must perform a back-up test for all negative quick
tests. Today, most of those back-up tests are 1-2 day cultures. We
believe illumigene GAS, once cleared for use in the U.S.,
will be a better alternative due to its faster time-to-results and its
potentially greater accuracy. illumigene is approaching
its second year anniversary and, while results have been quite good thus
far, we believe that the customer uptake can accelerate, especially as
our menu evolves with the addition of Group A strep followed by
Mycoplasma pneumoniae and Whooping Cough (Pertussis) later this year.
Overall, Meridian has multiple innovations and a powerful pipeline that
can drive our organic growth in all reporting units. Our operating
capabilities continue to meet supply and quality demands. Our focus
continues to be on the refinement of our global capability to execute
our plans rapidly, uniformly and with the highest standards of
professionalism.”
William J. Motto, Executive Chairman of the Board, commented, “Although
we were pleased to see our gross profit margin increase to 66% and our
operating income margin reach 30% of revenues, we were disappointed that
net sales fell short of target. We continue to operate very efficiently,
have strong cash flow, regularly introduce new products, see broader
acceptance of our illumigene molecular
testing platform, and maintain a strong and unlevered balance sheet. Our
principal challenge is to accelerate our organic growth in net sales
which, of course, we are actively addressing. During the most recent
quarter, we generated $4.3 million in cash after capital expenditures
and payment of dividends. We continue to look for accretive acquisition
opportunities. We look forward to continued long-term growth in net
sales and earnings and expect to provide guidance for fiscal 2013 in
late August or early September.”
CASH DIVIDEND MATTERS
The Board of Directors declared the regular quarterly cash dividend of
$0.19 per share for the third fiscal quarter ended June 30, 2012. The
dividend is of record August 6, 2012 and payable August 16, 2012. This
annual indicated rate of $0.76 per share remains the same as the rate in
fiscal 2011. Guided by the Company’s policy of setting a payout ratio of
between 75% and 85% of each fiscal year’s expected net earnings, the
actual declaration and amount of dividends will be determined by the
Board of Directors in its discretion based upon its evaluation of
earnings, cash flow requirements and future business developments,
including potential acquisitions.
FISCAL 2012 GUIDANCE UPDATED
Based on actual third quarter results and expected fourth quarter
operating results for the fiscal year ending September 30, 2012,
management expects net sales to be in the range of $171 million to $175
million and per share diluted earnings to be between $0.78 and $0.81.
Previous guidance called for net sales to be between $183 million and
$192 million and per share diluted earnings to be between $0.85 and
$0.89. The per share estimates assume an increase in average diluted
shares outstanding from approximately 41.4 million at fiscal 2011 year
end to 41.6 million at fiscal 2012 year end. The sales and earnings
guidance provided in this press release does not include the impact of
any acquisitions the Company might complete during fiscal 2012 or
charges of $0.02 diluted earnings per share in fiscal 2012 associated
with the consolidation of its Maine operations into its Tennessee
facility (see non-GAAP financial measure reconciliations).
FINANCIAL CONDITION
The Company’s financial condition is sound. At June 30, 2012, current
assets were $93.8 million compared to current liabilities of $17.5
million, resulting in working capital of $76.3 million and a current
ratio of 5.4. Cash and short-term investments were $27.9 million and the
Company had 100% borrowing capacity under its $30,000,000 commercial
bank credit facility. The Company has no bank-debt obligations
outstanding.
INTERIM UNAUDITED OPERATING RESULTS
(In Thousands, Except per Share
Data)
The following table sets forth the unaudited comparative results of
Meridian on a U.S. GAAP basis for the interim periods of fiscal 2012 and
fiscal 2011.
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Three Months Ended June 30,
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Nine Months Ended June 30,
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2012
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2011
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2012
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2011
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Net sales
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$
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42,141
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$
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40,052
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$
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129,848
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$
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118,374
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Cost of goods sold
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14,498
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14,701
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47,722
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43,564
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Gross profit
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27,643
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25,351
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82,126
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74,810
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Operating expenses
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Research and development
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2,660
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2,693
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7,441
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7,328
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Selling and marketing
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5,843
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5,968
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17,192
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17,041
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General and administrative
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6,162
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6,559
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19,236
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19,018
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Plant consolidation costs
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366
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-
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1,013
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-
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Sales and marketing leadership
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reorganization costs
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-
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-
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-
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1,240
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Total operating expenses
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15,031
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15,220
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44,882
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44,627
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Operating income
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12,612
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10,131
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37,244
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30,183
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Other income (expense), net
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45
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62
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331
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427
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Income before income taxes
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12,657
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10,193
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37,575
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30,610
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Income tax provision
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4,063
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3,357
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12,777
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10,489
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Net earnings
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$
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8,594
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$
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6,836
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$
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24,798
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$
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20,121
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Net earnings per basic common share
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$
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0.21
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$
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0.17
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$
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0.60
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$
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0.49
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Basic common shares outstanding
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41,091
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40,737
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41,075
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40,680
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Net earnings per diluted common share
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$
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0.21
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$
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0.17
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$
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0.60
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$
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0.49
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Diluted common shares outstanding
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41,684
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41,394
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41,605
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41,353
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The following table sets forth the unaudited operating segment data for
the interim periods in fiscal 2012 and fiscal 2011 (in thousands).
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Three Months Ended June 30,
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Nine Months Ended June 30,
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2012
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2011
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2012
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2011
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Net sales
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U.S. Diagnostics
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$
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26,234
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$
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23,829
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$
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80,091
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$
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72,007
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European Diagnostics
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5,897
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6,612
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18,326
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18,926
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Life Science
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10,010
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9,611
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31,431
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27,441
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$
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42,141
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$
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40,052
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$
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129,848
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$
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118,374
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Operating Income
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U.S. Diagnostics
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$
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9,442
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$
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8,399
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$
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29,377
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$
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26,780
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European Diagnostics
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998
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978
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2,398
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1,781
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Life Science
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2,118
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797
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5,526
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1,499
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Eliminations
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54
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(43)
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(57)
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123
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$
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12,612
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$
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10,131
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$
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37,244
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$
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30,183
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NON-GAAP FINANCIAL MEASURES
In this press release, we have provided information on net earnings and
diluted earnings per share excluding the effect of costs associated with
the consolidation of our Saco, Maine operations into our Tennessee
facility (2012) and the reorganizing of our Sales and Marketing
Leadership (2011). We believe this information is useful to an investor
in evaluating our performance because:
1. These measures help investors to more meaningfully evaluate and
compare the results of operations from period to period by removing the
impact of non-routine costs related to consolidating the Maine
operations and reorganizing our Sales and Marketing Leadership; and
2. These measures are used by our management for various purposes,
including evaluating performance against incentive bonus achievement
targets, comparing performance from period to period in presentations to
our board of directors, and as a basis for strategic planning and
forecasting.
We have provided reconciliations of net earnings, basic earnings per
share and diluted earnings per share, with and without the effects of
the plant consolidation and leadership reorganization costs noted above,
in the tables below for the three and nine month periods ended June 30,
2012.
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THIRD QUARTER AND NINE MONTH YEAR TO DATE
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GAAP TO NON-GAAP RECONCILIATION TABLES
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(In Thousands, Except per Share Data)
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Three Months
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Nine Months
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Ended June 30,
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Ended June 30,
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2012
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2011
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2012
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2011
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Net Earnings -
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U.S. GAAP basis
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$
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8,594
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$
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6,836
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$
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24,798
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$
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20,121
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Facility Consolidation costs
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238
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-
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659
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-
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Sales & Marketing Leadership Reorganization
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-
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-
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-
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|
872
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Adjusted Earnings
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$
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8,832
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$
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6,836
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$
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25,457
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$
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20,993
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Net Earnings per Basic Common Share -
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U.S. GAAP basis
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$
|
0.21
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$
|
0.17
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$
|
0.60
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$
|
0.49
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Facility Consolidation costs
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|
0.01
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|
-
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|
|
0.02
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|
|
-
|
|
|
Sales & Marketing Leadership Reorganization
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|
-
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|
-
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|
|
-
|
|
|
0.02
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Adjusted Basic EPS
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$
|
0.21*
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$
|
0.17
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$
|
0.62
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$
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0.52*
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Net Earnings per Diluted Common Share -
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U.S. GAAP basis
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$
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0.21
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$
|
0.17
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$
|
0.60
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$
|
0.49
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Facility Consolidation costs
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0.01
|
|
|
-
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|
|
0.02
|
|
|
-
|
|
|
Sales & Marketing Leadership Reorganization
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|
|
-
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|
|
-
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|
|
-
|
|
|
0.02
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|
|
Adjusted Diluted EPS
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|
$
|
0.21*
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|
$
|
0.17
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$
|
0.61 *
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$
|
0.51
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*Does not sum to total due to rounding.
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FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor from civil litigation for forward-looking statements accompanied
by meaningful cautionary statements. Except for historical information,
this report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, which may be identified by words
such as "estimates", "anticipates", "projects", "plans", "seeks", "may",
"will", "expects", "intends", "believes", "should" and similar
expressions or the negative versions thereof and which also may be
identified by their context. Such statements, whether expressed or
implied, are based upon current expectations of the Company and speak
only as of the date made. The Company assumes no obligation to publicly
update or revise any forward-looking statements even if experience or
future changes make it clear that any projected results expressed or
implied therein will not be realized. These statements are subject to
various risks, uncertainties and other factors that could cause actual
results to differ materially, including, without limitation, the
following:
Meridian's continued growth depends, in part, on its ability to
introduce into the marketplace enhancements of existing products or new
products that incorporate technological advances, meet customer
requirements and respond to products developed by Meridian's
competition. While Meridian has introduced a number of internally
developed products, there can be no assurance that it will be successful
in the future in introducing such products on a timely basis. Meridian
relies on proprietary, patented and licensed technologies, and the
Company’s ability to protect its intellectual property rights, as well
as the potential for intellectual property litigation, would impact its
results. Ongoing consolidations of reference laboratories and formation
of multi-hospital alliances may cause adverse changes to pricing and
distribution. Recessionary pressures on the economy and the markets in
which our customers operate, as well as adverse trends in buying
patterns from customers can change expected results. Costs and
difficulties in complying with laws and regulations, including those
administered by the United States Food and Drug Administration, can
result in unanticipated expenses and delays and interruptions to the
sale of new and existing products. The international scope of Meridian’s
operations, including changes in the relative strength or weakness of
the U.S. dollar and general economic conditions in foreign countries,
can impact results and make them difficult to predict. One of Meridian's
main growth strategies is the acquisition of companies and product
lines. There can be no assurance that additional acquisitions will be
consummated or that, if consummated, will be successful and the acquired
businesses will be successfully integrated into Meridian's operations.
There may be risks that acquisitions may disrupt operations and may pose
potential difficulties in employee retention and there may be additional
risks with respect to Meridian’s ability to recognize the benefits of
acquisitions, including potential synergies and cost savings or the
failure of acquisitions to achieve their plans and objectives. The
Company cannot predict the possible impact of recently-enacted United
States healthcare legislation and any similar initiatives in other
countries on its results of operations. In addition to the factors
described in this paragraph, Part I, Item 1A Risk Factors of our Form
10-K contains a list and description of uncertainties, risks and other
matters that may affect the Company.
Meridian is a fully integrated life science company that manufactures,
markets and distributes a broad range of innovative diagnostic test
kits, purified reagents and related products and offers
biopharmaceutical enabling technologies. Utilizing a variety of methods,
these products and diagnostic tests provide accuracy, simplicity and
speed in the early diagnosis and treatment of common medical conditions,
such as gastrointestinal, viral and respiratory infections. Meridian’s
diagnostic products are used outside of the human body and require
little or no special equipment. The Company's products are designed to
enhance patient well-being while reducing the total outcome costs of
healthcare. Meridian has strong market positions in the areas of
gastrointestinal and upper respiratory infections, serology,
parasitology and fungal disease diagnosis. In addition, Meridian is a
supplier of rare reagents, specialty biologicals and related
technologies used by biopharmaceutical companies engaged in research for
new drugs and vaccines. The Company markets its products and
technologies to hospitals, reference laboratories, research centers,
diagnostics manufacturers and biotech companies in more than 60
countries around the world. The Company’s shares are traded through
NASDAQ’s Global Select Market, symbol VIVO. Meridian's website address
is www.meridianbioscience.com.
Meridian Bioscience, Inc.
John A. Kraeutler, Chief Executive
Officer, 513-271-3700
Source: Meridian Bioscience, Inc.
