I had the same sinking feeling Mason until I listened to the conference call. I expected a bunch of lame excuses and "well get 'em next year" type of presentation, but was pleasantly surprised. It doesn't mean we won't hit $5 Friday but I actually was impressed - as a long term investor.
Here's the conference call info to the extent my notes and memory are correct - and I'll skip around a little to fit everything in:
Management made a very short statement then opened for questions. Was surprised management did not elaborate more but they stated they assumed everyone had seen the release and it pretty well for itself. I didn't keep track of the number of analysts/investors who asked questins but I would guess maybe 6-8 questioners.
FY96 versus FY97 are difficult to compare on a bottom line basis because in FY96 the company had an 8 cents a share tax credit - so if you look at FY96 versus FY97 you should look at operating earnings in mgts opinion which was 27 cents FY96 and 36 cents in FY97. This is a 33% or so increase in operating earnings.
If you look at profitable biotech companies - and there are not many - BIOI was mentioned in the March 9 Forbes as one of the few - "you can't reach a conclusion other than the company is 'grossly undervalued'" according to managment. Management thinks the company is "extrememly attractive" at $6 a share, and will continue a share buyback after a 3 day waiting period after the announcement. They have not aquired shares recently due to the blackout period before earnings but did acquire shares in December and January. They have authorization to acquire an additional 800,000 shares under previously approved programs by the Board.
Going forward management said it saw estimates for 47-48 cents in FY98 and it was comfortable with those estimates, and pointed out that would conform with the 30% or so growth the company has seen in the last few years before tax considerations skew the numbers.
Europe went from losing $2.5 million in FY95 to break even in FY96 to making $0.5 million in FY97 and they expect the trend to continue - but expenses will make it difficult to make European operations as profitable as the U.S. even in the future. A new manager of the European operations will be named shortly.
Revenue growth will be 15-20% in the US and 10% in Europe in FY98. The company has not hedged but has looked at it - while revenues are impacted by hedging expenses incurred are also, and from an economic standpoint hedging does not make sense economically according to management. Around 45% of revenues are European. Company will move to new headquarters in Europe that should save money after FY98 - move will be neutral due to costs involved in FY98.
Company is looking at aquisitions constantly but will not overpay for them. Management said a lot of these fall apart becase the selling party wants too much, and that they would not hire a consultant to search because of the expense with no guarantee of success. Personal note: sort of refreshing to see a management not expanding for expansion sake alone, and one that will walk from overpriced deals.
The company has a number of new products that should add to the bottom line in FY98, and should gain market share with several of its products. A deal in Germany will kick in in two three months that should aid European performance with LaRouche (sp?). R&D should increase 10% in line with revenues or slightly less than revenue growth, and sales and marketing costs should increase considerably less than revenue growth, which should aid the bottom line.
Company closed by emphasizing that investors should look at company after removing tax impact and distortions, and that they were very pleased with results of FY97 and looked forward to FY98.
No mention or question that street was expecting 11 cents, and why company missed that target (I know I should have asked a question here :)). Overall I think it went well. Having said that maybe we will see $5 Friday.
Joe |
