Illumina Reports Financial Results for Third Quarter 2007
Tuesday October 23, 4:01 pm ET
biz.yahoo.com
Revenue Increases 82% Over Prior Year and 15% Sequentially
SAN DIEGO--(BUSINESS WIRE)--Illumina, Inc. (NASDAQ:ILMN - News) today announced its financial results for the third quarter of 2007.
For the third quarter of 2007, Illumina reported revenue of $97.5 million, an 82% increase over the $53.5 million reported in the third quarter of 2006 and a 15% increase over revenue of $84.5 million in the second quarter of 2007. This represents the Company's 25th consecutive quarter of revenue growth. The Company reported third quarter net income of $14.5 million, or $0.24 per diluted share, compared to net income of $16.2 million, or $0.32 per diluted share in the comparable period of 2006. Net income for the third quarter includes non-cash charges of $0.7 million associated with the January 26, 2007 acquisition of Solexa, and $8.7 million in non-cash stock compensation expense associated with SFAS No. 123R. Excluding the impact of these items and net of pro forma tax expense, Illumina’s net income on a non-GAAP basis was $19.9 million, or $0.34 per diluted share, for the third quarter of 2007, compared to $19.9 million, or $0.39 per diluted share for the third quarter of 2006.
The combined gross margin for products and services in the third quarter of 2007 was 61.9%, compared to 69.3% in the comparable period of 2006. Excluding the effect of the non-cash charges associated with the acquisition of Solexa and stock compensation mentioned above, the non-GAAP combined gross margin of products and services was 63.1% for the third quarter of 2007, compared to 70.1% in the prior year period. The year-over-year decrease in gross margin was primarily attributable to a change in product mix.
Research and development (R&D) expenses for the third quarter of 2007 were $19.8 million, compared to $7.7 million in the third quarter of 2006. R&D expenses include $2.6 million and $1.0 million in non-cash stock compensation expense in the third quarter of 2007 and 2006, respectively. Excluding these non-cash charges, R&D expenses as a percentage of revenues were 17.6%, compared to 12.7% in the prior year period.
Selling, general and administrative (SG&A) expenses for the quarter were $24.3 million, compared to $14.1 million for the third quarter of 2006. SG&A expenses include $4.9 million and $2.4 million of non-cash stock compensation expense in the third quarter of 2007 and 2006, respectively. Excluding these non-cash charges, SG&A expenses as a percentage of revenues were 19.9%, compared to 21.9% in the prior year period.
The Company generated $5.3 million in cash from operations during the third quarter of 2007, compared to $13.0 million in the comparable quarter of 2006. The decline in cash from operations was primarily attributable to an increase in accounts receivable. Depreciation and amortization was $3.4 million and capital expenditures were $5.3 million during the quarter. The Company ended the quarter with $352.9 million in cash and short-term investments, compared to $343.3 million as of July 1, 2007.
Highlights since our last earnings release:
Announced a multi-million dollar collaboration with the University of Virginia and the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) to process more than 6,500 samples for researchers of the Type I Diabetes Genetics Consortium (T1DGC) via the Company’s FastTrack Genotyping Services.
Signed a service agreement with Cancer Research UK to genotype over 15,500 samples to uncover factors linked to the development of lung and ovarian cancer.
Announced that the Company has shipped over 100 Genome Analyzers since the product’s inception.
Introduced the Infinium HumanHap550-Duo BeadChip, the Company's fourth multi-sample DNA Analysis solution for genome-wide association (GWA) studies.
Kevin Harley joined the Company as Vice President of Human Resources; Richard Shen was promoted to Vice President of Assay Biochemistry and Reagent Manufacturing; Tim Orpin joined the Company as General Manager of Asia Pacific and Japan; and Arthur Holden resigned from the Company to become the CEO of the Severe Adverse Events Consortium.
Financial Outlook and Guidance
The non-GAAP financial guidance discussed below excludes the effect of non-cash stock compensation expense and non-cash charges related to the acquisition of Solexa, Inc. (see table which reconciles these non-GAAP financial measures to the related GAAP measures).
Guidance for Fourth Quarter and Fiscal 2007
We expect fourth quarter revenue to be between $100 and $104 million, which implies full year revenue between $354 and $358 million. The full year figures represent an increase of $16 million above the mid-point of our previous guidance that we provided on July 24, 2007.
Research and development expenses are expected to be between $64 and $66 million for the full year, equal to the mid-point of our previous guidance.
Selling, general and administrative expenses are expected to be between $79 and $81 million for the full year, at the mid-point of our previous guidance.
We expect the effective tax rate for the calculation of non-GAAP financial measures to be approximately 32% for the full year.
We expect fourth quarter non-GAAP net income to be between $19 and $21 million, or $0.32 to $0.35 per diluted share, assuming fully diluted weighted-average shares of 60 million. This implies full year net income of $69 to $71 million, $7 million over the mid-point of our previous guidance and $1.17 to $1.20 per diluted share, assuming fully diluted weighted-average shares of 60 million.
We expect non-cash stock compensation expense related to SFAS No. 123R to be approximately $33 million for the full year on a pre-tax basis, or approximately $0.42 per diluted share on a pro-forma tax adjusted basis.
Quarterly Conference Call Information
Our conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on October 23, 2007. Interested parties may listen to the call by dialing 866.831.6291 (passcode: 80284720), or if outside North America, by dialing +1.617.213.8860 (passcode: 80284720). Individuals may access the live webcast under the "Corporate/Investor Information" tab of Illumina's web site at www.illumina.com.
A replay of the conference call will be available from 4:00 pm Pacific Time (7:00 pm Eastern Time) on October 23, 2007 through October 30, 2007 by dialing 888.286.8010, or if outside North America, by dialing +1.617.601.6888 (passcode: 13961533).
About Illumina
Illumina is a leading developer, manufacturer and marketer of next-generation life science tools and integrated systems for the large scale analysis of genetic variation and biological function. Using our proprietary technologies, we provide a comprehensive line of products and services that currently serve the sequencing, genotyping, and gene expression markets, and we expect to enter the market for molecular diagnostics. Our customers include leading genomic research centers, pharmaceutical companies, academic institutions, clinical research organizations and biotechnology companies. Our tools provide researchers around the world with the performance, throughput, cost effectiveness and flexibility necessary to perform the billions of genetic tests needed to extract valuable medical information from advances in genomics and proteomics. We believe this information will enable researchers to correlate genetic variation and biological function, which will enhance drug discovery and clinical research, allow diseases to be detected earlier and permit better choices of drugs for individual patients.
Statement Regarding Use of Non-GAAP Financial Measures
The Company has reported non-GAAP results for diluted net income per share, net income, gross margins and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. |
