AOT, OTOH, misses by two cents. Lehman Bros. called this one with a downgrade a couple fo weeks ago. Note weakness in lab equipment sales & lowered guidance:
>>PORTSMOUTH, N.H.--(BUSINESS WIRE)--Jan. 23, 2003--Apogent Technologies Inc. (NYSE: AOT - News), a leading manufacturer of clinical diagnostic and life science research products, today reported financial results for the first quarter ended December 31, 2002.
Net sales for the first quarter of fiscal 2003 were $267 million compared with $243 million in the same period last year, an increase of 9.6%. Labware and Life Sciences sales grew at 15.8% and Clinical Diagnostics at 7.8%, with a decline of 3.3% in the Laboratory Equipment segment. Income from continuing operations for the quarter was $28.9 million or $0.27 diluted earnings per share compared with income from continuing operations for the first quarter of fiscal 2002 of $30.1 million or $0.28 diluted earnings per share.
The first quarter is traditionally the lowest earnings quarter of the year and was further impacted by costs of relocating Murex production from a shared facility with Abbott Diagnostics to a new, state-of-the-art Apogent manufacturing facility in the United Kingdom.
Commenting on the results, Frank H. Jellinek, Jr., President and Chief Executive Officer of Apogent, said: "The first quarter was a challenging one for Apogent with strong results in most of our businesses being obscured by weak results in a few areas. Adverse industry conditions, when coupled with some non-recurring charges for moving Murex, together with increased pension and other employee-related costs, led to earnings being below expectations. We have initiated programs to consolidate certain operations and streamline production at others to enhance operating returns."
"Our Management Team will also be strengthened as Dennis Brown will, next week, be appointed Chief Financial Officer. (He is currently our Interim Chief Financial Officer.) Dennis has extensive knowledge of Apogent's operations and brings his prior experience and team building skills to the Company."
FIRST QUARTER FINANCIAL RESULTS
Quarterly comparisons of net sales by business segment are as follows:
<Pre>
Three Months Ended
December 31,
($ thousands)
Internal
Business Segment 2002 2001 Growth Growth
Clinical Diagnostics $126,700 $117,520 7.8% (1.0%)
Labware and Life Sciences 111,251 96,108 15.8% 8.6%
Laboratory Equipment 28,586 29,562 (3.3%) (4.5%)
Total $266,537 $243,190 9.6% 2.4%
Increases in Clinical Diagnostics sales for the quarter were driven, principally, by fiscal 2002 acquisitions. With the exception of clinical consumable sales, such as microscope slides, microbiology products and disposable glass culture tubes, which were strong for the quarter, the balance of this segment reported internal sales declines compared to last year. We continue to experience a decline in demand for rapid tests in both drugs-of-abuse and pregnancy.
Labware and Life Sciences sales growth of 15.8% was supported by strong growth in research consumable products such as pipette tips, multi-well plates and cell culture products and by fiscal 2002 acquisitions. Growth in this segment was negatively impacted by continued softness in the life science instrumentation business.
We believe that the decline in Laboratory Equipment sales is due to the continued reduction in capital budgets for mid-priced capital equipment including biotech, pharmaceutical and industrial accounts and that this reduction in spending unfavorably influenced quarter over quarter sales comparisons.
Apogent's sales for the quarter by geographic area were as follows:
<Pre>
Three Months Ended
December 31,
($ thousands)
Geographic Area 2002 2001
North America $196,080 $175,830
Europe 49,231 45,788
Asia 15,426 14,790
Other 5,800 6,782
Total $266,537 $243,190
DETAILED FINANCIAL RESULTS
Gross profit for the quarter was $128.5 million, an increase of 8.2%, from $118.7 million for the same period last year. Gross margin fell slightly from 48.8% in the first quarter of last year to 48.2% this year, being impacted by, decreasing margins on drugs-of-abuse and pregnancy rapid tests and life science instrumentation as well as the Murex (U.K.) relocation.
Selling, general and administrative expenses for the quarter were $72.2 million, an increase of 17.0% from $61.7 million for the same period last year. Selling, general and administrative expenses were impacted by the Murex (U.K.) relocation as well as pension and other employee-related expenses which were higher this year than the first quarter of last year.
Operating income reported for the quarter was $56.3 million, a decrease of 1.3%, from $57.1 million for the same period last year. The factors above regarding gross profit and selling, general and administrative expenses also impacted operating income, resulting in a decrease from 23.5% as a percentage of net sales in the first quarter of last year to 21.1% this quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $72.8 million, an increase of 1.3% from $71.8 million for the same period last year.
Net cash flow from operations was strong for the quarter at $27.8 million, an increase of 12.6% over last year.
Accounts receivable were $170.1 million and inventory was $219.6 million at the end of the quarter. Days sales outstanding were 60 days compared with 63 days for the same period last year. Inventory turnover was 2.5 times compared with 2.7 times for the same period last year.
ACQUISITIONS
As previously announced, on October 1, 2002, Lab Vision Corporation, an Apogent subsidiary, acquired NeoMarkers, Inc. of Fremont, California. NeoMarkers products include antibodies and specialty markers used in the discovery of drug targets and to study human tissue samples for cancer.
Also, as previously announced, on October 9, 2002, Seradyn, Inc., an Apogent subsidiary, acquired the operating assets of Opus Diagnostics, Inc. of Fort Lee, New Jersey. The Opus producta comprise a range of therapeutic drug monitoring assays, calibrators and controls.
On January 3, 2003, Barnstead International, an Apogent subsidiary, acquired the business of Tempyrox Company Inc. located in Dallas, Texas. Tempyrox designs, manufactures and sells high-temperature ovens used to clean laboratory glassware and metal parts. Barnstead expects first year sales from Tempyrox to approximate $570,000.
RESTRUCTURING CHARGES
During this current quarter, we intend to initiate a restructuring program to consolidate certain manufacturing facilities in our Clinical Diagnostic and Life Science instrumentation businesses which is expected to be completed by September 30, 2003. The total charge associated with the restructuring is estimated to approximate $9 million and is expected to generate annual savings of approximately $5 million.
OUTLOOK FOR THE BALANCE OF THE YEAR
Because of expected continued softness in instrument sales and lower than expected growth in the Clinical Diagnostics area, we are lowering our guidance for the full fiscal year of 2003 to $1.33 to $1.39 per share excluding restructuring charges. This range does not reflect any further repurchases of Company stock or acquisitions or impact from restructuring events.
First quarter (actual) $0.27
Second quarter 0.32 - 0.34
Third quarter 0.36 - 0.38
Fourth quarter 0.38 - 0.40
Fiscal year $1.33 - 1.39
SHARE BUYBACK PROGRAM
We completed our previously announced share buy back program during the quarter. As a result of that program, the Company purchased one million shares of its stock during the quarter at an average price per share of approximately $19.75 in addition to the one million shares that it purchased during the quarter ended September 30, 2002.
On Friday, January 24, 2002, at 11:00 a.m. EST, Apogent will host a conference call to discuss its first quarter financial results for the period ended December 31, 2002. The dial-in numbers for the teleconference are:
Domestic Callers (877) 679-9049
International Callers (952) 556-2803
The conference call will be simultaneously audio web cast in the Investor Relations section of Apogent's website at www.apogent.com and will be available there until February 21, 2003.
A telephone replay of the call will also be available until 1:00 p.m. EST on Tuesday, January 28, 2003. The telephone replay numbers are (800) 615-3210 (Domestic Callers) or (703) 326-3020. (International Callers), passcode 6375568.<<
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Cheers, Tuck |
