Diversa Reports Financial Results for the Quarter and Year Ended December 31, 2005
Monday February 27, 4:05 pm ET
Company Achieved 82% Increase in Product Revenue Over 2004
SAN DIEGO, Feb. 27 /PRNewswire-FirstCall/ -- Diversa Corporation (Nasdaq: DVSA - News) today reported financial results for the quarter and year ended December 31, 2005. Revenue for the year ended December 31, 2005 was $54.3 million, compared to revenue of $57.6 million in 2004. The net loss for the year, which included a non-cash impairment charge of $45.7 million, was $89.7 million, or $2.04 per share, compared to a net loss of $33.4 million, or $0.77 per share, in 2004. Product-related revenue was $9.8 million in 2005, representing an 82% increase over 2004 product-related revenue of $5.4 million. This increase resulted primarily from increased sales of Phyzyme(TM) Phytase sold through the Company's partnership with Danisco.
Revenue for the quarter ended December 31, 2005 was $14.5 million, compared to revenue of $18.1 million for the fourth quarter of 2004. The net loss for the quarter, which included a non-cash impairment charge of $45.7 million, was $54.7 million, or $1.23 per share, compared to a net loss of $6.0 million, or $0.14 per share, in the prior-year quarter. At December 31, 2005, the Company had cash, cash equivalents, and short-term investments totaling $65.4 million.
The decrease in total revenue for the quarter and year ended December 31, 2005 compared to the corresponding periods in the prior year resulted primarily from the recognition in 2004 of certain one-time fees related to the Company's collaboration with Syngenta that were not repeated in 2005. Revenues have historically fluctuated from period to period and will likely continue to fluctuate in the future based upon the levels and seasonality of new product-related revenues as well as the timing and composition of funding under existing and future grants and collaboration agreements.
In January 2006, the Company announced a restructuring designed to focus the Company's resources on products that have the greatest near-term opportunities. As part of this restructuring, the Company has reduced its workforce, is exiting certain programs, and is consolidating its facilities. During the quarter ended December 31, 2005, the Company recorded a non-cash impairment charge of $45.7 million, which consisted primarily of the write-off of approximately $43.5 million of previously recorded intangible assets that are no longer essential to the Company's focus or were otherwise determined to be impaired. The Company expects to recognize restructuring charges of approximately $15 to 17 million in 2006 related to employee separation and facilities consolidation costs.
Edward T. Shonsey, Diversa's Chief Executive Officer, stated, "Following the reorganization we announced last month, we intend to continue to rebalance our resources to focus less on early-stage research and to move to downstream activities such as process development, regulatory approvals, and sales and marketing. We will continue to focus on high-value applications where the potential exists for significant breakout opportunities, such as in the alternative fuels area for production of ethanol or biodiesel. In 2006, we expect to concentrate on:
* Expanding the sales of our Ultra-Thin(TM) enzyme for ethanol production,
which just received a key additional U.S. regulatory approval, as
reported earlier today;
* Continued progress in our programs for production of ethanol from
biomass;
* Increased adoption of our Luminase(TM) enzymes for pulp bleaching; and
* A successful U.S. regulatory filing for approval to market our
Purifine(TM) enzyme for enhanced processing of both edible oils and
potentially biodiesel fuels."
"Additionally, we expect to continue to make investments that strengthen our customer contact and focus," continued Mr. Shonsey.
2006 Financial Guidance
During 2006, the Company expects to focus on market penetration of its products while it de-emphasizes less profitable revenue sources such as grants and directed research that are not focused within the Company's key market areas. The Company expects 2006 total revenue to be between $50 and $55 million, with product-related revenue of $18 to $20 million -- which would represent roughly a doubling over 2005 product-related revenue. As a result of the Company's focus on more profitable product-related revenue and its cost containment actions, the Company expects to significantly reduce its net loss before restructuring and impairment charges and stock based compensation to approximately $20 million in 2006, as compared to $43.1 million in 2005. The Company expects to use approximately $30 million in cash in 2006, which includes the cash component of certain restructuring-related expenses as well as the Company's continued investment in manufacturing facilities necessary to meet demand for its products.
Conference Call Information
Diversa will host a conference call with live Internet broadcast later today, Monday, February 27, 2006 at 5:00 p.m. EST. The call will provide a review of 2005 financial results and guidance for 2006. The call is being webcast by Thomson/CCBN and can be accessed during the conference call and for a limited period of time following the call at phx.corporate-ir.net. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site. |
