Illumina Reports Financial Results for Fourth Quarter and Fiscal Year 2005
Wednesday February 1, 4:02 pm ET
Revenue Growth of 56% Over Prior Year Yields Profitable Fourth Quarter
SAN DIEGO--(BUSINESS WIRE)--Feb. 1, 2006--Illumina, Inc. (NASDAQ:ILMN - News) announced today its financial results for the fourth quarter and fiscal year ended January 1, 2006.
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For the fourth quarter of 2005, Illumina reported revenue of $23.0 million, a 56% increase over the $14.8 million reported in the fourth quarter of 2004. This represents the Company's 18th consecutive quarter of revenue growth. For the fiscal year, total revenue was $73.5 million, a 45% increase over the $50.6 million reported for the prior fiscal year.
The Company reported net income of $0.3 million, or $0.01 per basic and diluted share for the fourth quarter of 2005, compared to net income of $3.2 million, or $0.08 per diluted share, in the prior year. 2004 fourth quarter results included a one-time gain of $3.3 million, or $0.08 per diluted share, related to reduction of damages previously awarded in a wrongful termination lawsuit. For the year, the Company reported a net loss of $20.9 million, or $0.52 per share, compared to a net loss of $6.2 million, or $0.17 per share, for the prior year. The Company's net loss for the 2005 fiscal year included a one-time charge of $0.39 per basic and diluted share related to the write-off of $15.8 million of acquired in-process research and development in connection with the Company's acquisition of CyVera Corporation in April. Excluding this one-time charge, the net loss for the fiscal year was $5.1 million, or $0.13 per basic and diluted share.
Cash and investments totaled $50.8 million at year end, an increase of approximately $0.7 million over the third quarter of 2005.
Gross margins for products and services in the fourth quarter of 2005 were 67.6% compared to 73.2% in the comparable period of 2004. For the fiscal year ended January 1, 2006, gross margins were 67.7%, compared to 72.7% for the comparable period in 2004. Research and development expenses were $7.5 million compared to $5.3 million in the fourth quarter of 2004. Selling, general and administrative expenses for the quarter were $8.2 million, compared to $5.8 million for the prior year. For the year, research and development expenses were $27.7 million compared to $21.1 million in 2004. Selling, general and administrative expenses were $28.0 million compared to $25.1 million in 2004.
Highlights since our last quarterly conference call include:
Shipped a record 24 BeadStations (of which 6 were rental units) during the quarter, bringing our total number of BeadLabs and BeadStations shipped to 126.
Commenced commercial shipments of Sentrix® HumanHap300 BeadChips for genome-wide disease association studies. Enabled by Illumina's revolutionary Infinium(TM) assay, the new BeadChip offers the most comprehensive genomic coverage and highest data quality of any product currently available and is expected to become an important discovery tool for researchers seeking to understand the genetic basis of common, yet complex diseases.
Announced several large agreements for the purchase of HumanHap300 BeadChips and Infinium assay reagents for disease association research including the following:
Genizon Biosciences will use the Infinium(TM) assay and the Company's whole-genome genotyping chips to analyze up to 16,000 case and control samples in 11 common diseases over the next 12 to18 months.
The Center for Inherited Disease Research (CIDR) is genotyping over 2,500 case-control samples for a pilot Type 2 diabetes study.
The NIDDK (an NIH institute) Inflammatory Bowel Disease (IBD) Genetics Consortium will genotype over 2,000 samples to help identify genetic variants that increase susceptibility to Crohn's disease.
Announced two significant genotyping service agreements:
A multi-phase, multi-million dollar project with Cancer Research-UK, starting with whole-genome Infinium genotyping of 4,000 colorectal cancer and controls, followed by custom Infinium genotyping of 10,000 samples.
A set of custom SNP panels and GoldenGate® genotyping of over 4,000 samples for Aviagen, a UK firm identifying traits for selective breeding of broiler chickens.
Introduced new BeadStudio software to detect and visualize chromosomal aberrations including copy number changes and loss of heterozygosity (LOH) - important molecular indicators of cancer.
Expanded our patent portfolio, bringing our total to 43 issued or allowed and 96 pending.
These highlights underscore Illumina's strategy of building a comprehensive offering of scalable, multi-application systems. At the foundation of our systems are the Sentrix® Array Matrix, the Sentrix BeadChip, the BeadArray Reader and our Oligator® DNA synthesis capability. Illumina systems can be scaled in multiple dimensions, providing customers the flexibility to perform SNP genotyping or gene expression experiments on the same platform, with content ranging from whole genomes to focused sets, at various levels of throughput and automation. Illumina has also developed a portfolio of powerful assay technologies to enable customers to leverage BeadArray(TM) technology and generate industry-leading data quality and array performance.
Financial Outlook
As of January 2, 2006, Illumina adopted the new accounting standard (Statement of Financial Accounting Standards No. 123R ("SFAS No. 123R")) requiring compensation expense be recorded when stock options and other stock related awards vest. Illumina expects the 2006 impact to range from $9 to $12 million or $0.21 to $0.29 per basic share, assuming 42 million basic shares, and $0.20 to $0.27 per diluted share, assuming 45 million fully diluted shares. To aid investors in understanding the underlying components of our business, the financial outlook below excludes the effect of stock compensation expense.
For fiscal 2006 we expect the following:
Revenue growth will be in the range of 55% to 70% resulting in total revenue from $115 to $125 million. Revenue growth will be driven primarily by organic growth in the Company's genotyping products.
Gross margins will range from 66% to 70% and will vary based on the product mix in any particular quarter.
Research & development expenses will decline as a percentage of total revenue and are expected to range from $30 to $34 million.
Selling, general and administrative expenses will be in the range of $38 to $43 million.
Excluding the effect of stock compensation expense, we expect non-GAAP net income to be in the range of $5 to $13 million or $0.12 to $0.31 per basic share assuming 42 million primary shares outstanding. On a fully diluted basis non-GAAP net income is expected to range from $0.11 to $0.29 per diluted share, assuming 45 million fully diluted shares outstanding. Additionally, excluding the effect of stock compensation expense, we expect to be profitable in each quarter of 2006 (see note below regarding non-GAAP financial measures).
For the year, we expect net cash flow to range from a use of up to $5 million to being slightly cash flow positive. Working capital requirements and spending on capacity expansion will be key drivers of cash flow in 2006.
For the first quarter of 2006, the Company expects total revenue to range between $22 million and $24 million. Excluding the impact of stock compensation expense, management expects net income per basic and diluted share between break-even and $0.02.
Conference Call Information
Management will conduct a conference call at 2:00 p.m. Pacific Time today to discuss Illumina's fourth quarter and fiscal year 2005 results and to provide guidance for fiscal 2006. Individuals may listen to the call by dialing 800-289-0572 (international callers should dial +1 913 981-5543) or by accessing the live webcast under the "Investors" tab of Illumina's website at: www.illumina.com.
About Illumina
Illumina (www.illumina.com) is developing next-generation tools for the large-scale analysis of genetic variation and function. The Company's proprietary BeadArray technology -- now used in leading genomics centers around the world -- provides the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics and proteomics. This information will help pave the way to personalized medicine by correlating genetic variation and gene function with particular disease states, enhancing drug discovery, allowing diseases to be detected earlier and more specifically, and permitting better choices of drugs for individual patients. |
