Invitrogen Announces Third Quarter 2005 Results
Thursday October 27, 4:05 pm ET
CARLSBAD, Calif.--(BUSINESS WIRE)--Oct. 27, 2005--Invitrogen Corporation (Nasdaq:IVGN - News) today announced results for its third quarter ended September 30, 2005. Revenues for the third quarter were $289.6 million, an increase of 13% over the $256.3 million reported for the third quarter of 2004. Net income for the third quarter was $23.9 million versus $28.2 million for the same quarter in 2004, a decrease of 15% due to a non-cash charge of approximately $5.2 million related to purchase accounting inventory adjustments associated with the recent acquisition of Dynal Biotech. Earnings per share for the third quarter of 2005 decreased 18% to $0.42 per share, as compared to $0.51 per share reported in the third quarter of 2004.
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Revenues for the nine months ended September 30, 2005, were $873.2 million, an increase of 15% over the $761.6 million reported for the first nine months of 2004. Net income for the nine months ended September 30, 2005, was $85.8 million versus $58.4 million for the same period in 2004, an increase of 47%. Earnings per share for the first nine months of 2005 increased 41% to $1.52 per share, as compared to $1.08 per share reported in the first nine months of 2004.
Invitrogen has regularly reported pro forma results which exclude acquisition related amortization and other costs. Third quarter pro forma net income was $46.7 million, or $0.80 per share, compared with pro forma net income in the third quarter of 2004 of $43.0 million, or $0.76 per share. Pro forma net income and pro forma earnings per share increased 8% and 5%, respectively.
Reconciliations between Invitrogen's results and pro forma results for the periods reported are presented in the attached tables with information also presented on the Company's Investor Relations web page at www.invitrogen.com.
Performance Highlights
Revenue growth of 15% for the total company year to date
Year to date free cash flow of $167 million
Completed acquisitions of BioSource International, Quantum Dot Corporation and the BioPixels® business unit of BioCrystal, Ltd.
Conference Call and Webcast Today at 5:00 PM Eastern
The Company will discuss its third quarter results, as well as its revised 2005 guidance on its conference call at 5:00 pm Eastern Time today. Additional details regarding the call and webcast are included later in this release.
Third Quarter Review
Greg Lucier, Invitrogen's Chairman and CEO, commented: "Invitrogen had a solid third quarter. We continue to improve our operational execution and delivered solid margins and strong cash flow. The BioDiscovery segment performed well with a 24% growth rate, and we continue to see a strong rate of growth taking place in the fourth quarter. The BioProduction segment's performance did not meet our expectations. The continued softness at our BioReliance unit, coupled with the timing of media orders to large biomanufacturing accounts, made the third quarter a difficult period. A number of changes are being made in that segment in the fourth quarter to address this performance. The acquisition of Quantum Dot in the quarter, and the early closing of BioSource, build on our strategy to position the business in the higher growth areas of life science research."
Third quarter revenue growth of 13% included approximately 12% from acquisitions and no impact from foreign currency exchange rates. The BioDiscovery segment grew 24% compared to the comparable quarter in 2004. Acquisitions contributed 20% to the growth rate for the quarter. Revenues in BioProduction declined 2% compared with the third quarter of 2004 due to a decline in service revenues at BioReliance.
Revenues for the nine months ended September 30, 2005 grew 15%, of which 2% resulted from favorable foreign currency exchange rates and a 9% contribution from acquisitions. Sales of BioDiscovery products increased 20% for the nine months ended September 30, 2005 versus the same period in 2004. For the same period, BioProduction revenues increased 8%.
Third quarter 2005 pro forma gross margin was 62%, compared to 61% in the third quarter of 2004. BioDiscovery gross margin was 70% in the third quarter of both 2005 and 2004. BioProduction gross margin were 47% in the third quarter of 2005 and 50% in the comparable quarter of 2004.
Operating income was 12% of revenues in the third quarter of 2005 versus 16% in the third quarter of 2004. Pro forma operating margin was 24% of revenues in the third quarter of 2005 compared with 25% in the third quarter of 2004.
Cash flows from operating activities were approximately $82 million in the third quarter and $218 million for the nine months ended September 30, 2005. Capital expenditures were approximately $18 million during the third quarter of 2005 and $51 million for the nine months ended September 30, 2005. Free cash flow, defined as cash from operating activities less capital expenditures, was $64 million for the third quarter and $167 million for the nine months ended September 30, 2005.
Revised 2005 Outlook
The Company's revenue guidance for the full-year remains at a range of $1,190 to $1,195 which accounts for both the early closing of the BioSource acquisition and the significant movements in currency rates since the Company originally provided guidance. This range implies an organic growth rate of at least 6%, consistent with previous guidance. Pro forma earnings per share are expected to range from $3.42 to $3.45 to account for dilution related to both the BioSource and Quantum Dot acquisitions. The Company will provide further detail on its business outlook and guidance on the conference call today.
Repatriation of Cash
The company is taking the opportunity provided by the American Jobs Creation Act of 2004 to repatriate approximately $115 million prior to the end of the year. The repatriation pursuant to the Act will allow the company to reduce the U.S. tax liability arising from the repatriation, resulting in a net tax benefit of approximately $10 million to be recorded in the fourth quarter. In addition, the subsidiaries from which earnings are being repatriated will then be liquidated. As a result of the liquidation of these subsidiaries, the company will also record currency gains of approximately $28 million.
Share Repurchase
During the third quarter, Invitrogen repurchased 500,000 shares of its common stock. This repurchase concluded the existing share repurchase authorization. Future repurchases will depend on market conditions and other considerations. Funds for any additional repurchases are expected to come primarily from cash generated from operations, or funds on hand.
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 5 pm 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 conference call will be webcast live over the Company's investor relations website at www.invitrogen.com and will be archived at the site for one month.
To listen to the live conference call, please dial (866) 202-3109 (domestic) or (617) 213-8844 (international) and use passcode 72377218. A replay of the call will be available for one week by dialing (888) 286-8010 (domestic) and (617) 801-6888 (international). The passcode for the replay is 55982310.
About Invitrogen
Invitrogen Corporation (Nasdaq:IVGN - News) 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, bioinformatics 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 globally employs approximately 4,500 scientists and other professionals and had revenues of more than $1 billion in 2004. For more information about Invitrogen, visit the company's web site at www.invitrogen.com.
Statement Regarding Use of Non-GAAP Measures
We regularly have reported pro forma results for net income and earnings per share in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Our financial results under GAAP include substantial non-cash charges and tax benefits related to acquired businesses. Our pro forma calculations of gross margin, net income and earnings per share, excluding acquisition related amortization and other similar costs, are limited because they do not reflect the entirety of our business costs. However, management believes that the pro forma presentation is a useful supplemental disclosure to investors as it provides an indication of the profitability and cash flows of the combined businesses apart from the initial, sunk cost of the acquisition. Management believes that this information is therefore useful to investors in analyzing and assessing our past and future operating performance.
In addition to the non-cash charges above, we exclude from our pro forma results the costs to integrate our acquired businesses or significant costs to restructure existing businesses as well as related tax benefits. Management views these costs as not indicative of the profitability or cash flows of its ongoing or future operations and excludes these costs as a supplemental disclosure to assist investors in evaluating and assessing our past and future operational performance.
We encourage investors to carefully consider our results under GAAP, as well as our pro forma disclosures and the reconciliation between these presentations to more fully understand our business. Reconciliations between GAAP results and pro forma results are presented on the following pages. |
