Invitrogen Announces Third Quarter 2006 Results
Thursday October 26, 4:05 pm ET
CARLSBAD, Calif.--(BUSINESS WIRE)--Invitrogen Corporation (Nasdaq:IVGN - News) today announced results for its third quarter ended September 30, 2006. Revenues for the third quarter were $311 million, an increase of 7% over the $290 million reported for the third quarter of 2005. Foreign currency translation had a positive 1 percentage point impact on sales growth rate. Net loss for the third quarter was $130 million versus a net income of $24 million for the same quarter in 2005. The third quarter net loss was due to a non-cash charge of $150 million associated with a goodwill impairment within the Cell Culture Systems segment. GAAP earnings per share for the third quarter of 2006 were a loss of $2.53 per share, as compared to a gain of $0.42 per share reported in the third quarter of 2005. Earnings per share in third quarter 2006 includes the impact from goodwill impairment of $2.85 per share, and stock option expense of $.15 per share.
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Invitrogen reports pro forma results, which exclude certain items primarily related to acquisitions, business divestitures and stock option expensing. The Company reports these pro forma results to better enable financial statement users to assess our historical performance and project our future earnings and cash flows. Reconciliations between Invitrogen's results and pro forma results for the periods reported are presented in the attached tables and on the Company's Investor Relations web page at www.invitrogen.com.
Pro forma net income for the third quarter of 2006 was $46 million, or $0.87 per share, compared with pro forma net income in the third quarter of 2005 of $47 million, or $0.80 per share, representing an increase of 9% year over year in earnings per share.
Through the first nine months of 2006, revenues for the Company were $934 million, a 7% increase over revenues in the first nine months of 2005 of $873 million. Pro forma net income for the first nine months was $144 million, or $2.67 earnings per share, compared with $148 million, or $2.56 earnings per share for the same period in 2005.
Third Quarter Review
Third quarter revenue growth of 7% included a net positive impact from acquisitions, divestitures, currency translation and 3% organic growth. The organic growth was driven by both the BioDiscovery and Cell Culture Systems reporting segments. The BioDiscovery segment grew 2% organically with good growth in a number of areas such as cellular and protein analysis, partially offset by less than anticipated growth in selected acquisitions and continued weakness in Japan; Cell Culture Systems grew 4% organically, attributable to solid growth in both research and production media, which was partially offset by a decline in its sera business unit.
Third quarter 2006 pro forma gross margin was 58% versus 62% last year. BioDiscovery gross margin decreased to 64% in the third quarter of 2006 from 70% last year, primarily due to an unfavorable mix of lower margin products and increased manufacturing costs. Cell Culture Systems gross margin was 48%, a slight increase over the same period last year.
Pro forma operating margin was 22% of revenues in the third quarter of 2006 versus 24% in the third quarter of 2005. The decline was driven by a decrease in gross margin, which was partially offset by a reduction in the accrual for incentive compensation due to the Company's expected full year performance.
"After three consecutive years of double-digit revenue and earnings growth, we had expectations to achieve similar results this year. That has clearly not happened. As a result, we are executing plans to refocus the business on those areas where either science or our leading brand can provide meaningful differentiation. These actions include focusing on improving our go-to-market strategy in regional markets to ensure our sales growth matches the leading reputation we hold for being the quality and technology leader in scientific tools, completing the acquisition integrations, and responsibly reducing our cost structure. These action plans will set the company up for a solid year of execution in 2007," said Greg Lucier, Chairman and CEO, Invitrogen Corporation.
Cash flows from operating activities were $129 million for the nine months ended September 30, 2006. Capital expenditures were $44 million during the first nine months of 2006. Free cash flow, defined as cash from operating activities less capital expenditures, was $84 million for the first nine months of 2006.
Share Repurchase Program
Cash and investments on September 30, 2006 was $513 million, a decline of $239 million from December 31, 2005. The decline was primarily a result of the company's stock repurchase program under which approximately 4.7 million shares of common stock were repurchased at a cost of $287 million as of September 30, 2006.
"In August, the Board of Directors authorized a $500 million share repurchase program. The first phase of our program was completed in early October. We have $200 million remaining on the share authorization. We will continue to execute upon our buyback plan, but the amount and timing will depend on many different factors, including stock price, other needs of cash and 4th quarter cash generation," stated David Hoffmeister, CFO, Invitrogen Corporation.
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 (888) 396-2356 (domestic) or (617) 847-8709 (international) and use passcode 17178737. A replay of the call will be available for one week by dialing (888) 286-8010 (domestic) and (617) 801-6888 (international). The passcode is 20822144.
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 Cell Culture Systems. Invitrogen's own research and development efforts are focused on breakthrough innovation in all major areas of biological discovery including functional genomics, proteomics 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 4,800 scientists and other professionals and had revenues of $1.2 billion in 2005. For more information about Invitrogen, visit the Company's web site at www.invitrogen.com. |
