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Luminex Corporation Reports First Quarter 2014 Results

Companies mentioned in this article: Luminex Corporation

AUSTIN, Texas, April 28, 2014 /PRNewswire/ -- Luminex Corporation (NASDAQ:LMNX) today announced financial results for the first quarter ended March 31, 2014. Financial and operating highlights include the following:

    --  Consolidated first quarter revenues reached $56.6 million, a 6 percent
        increase over the first quarter of 2013
    --  Consolidated gross profit margin was 71 percent for the first quarter of
        2014
    --  First quarter assay revenue of $21.7 million, an 18 percent increase
        over the first quarter of 2013. Infectious disease sales comprised
        approximately 65 percent of total assay revenue, with genetic testing
        representing 35 percent.
    --  First quarter consumable sales of $12.8 million, a 7 percent increase
        over the first quarter of 2013
    --  Operating income for the first quarter of 2014 was $8.2 million,
        compared to an operating loss of $1.6 million in the first quarter of
        2013. Excluding the $7.0 million expense related to the resolution of
        our molecular diagnostics distribution agreements in the first quarter
        of 2013, operating income would have been $5.4 million.
    --  GAAP net income for the first quarter was $6.0 million, or $0.14 per
        diluted share.  This compares to a GAAP net loss of $2.5 million, or
        ($0.06) per diluted share for the first quarter of 2013.
    --  Non-GAAP net income for the first quarter was $9.9 million or $0.24 per
        diluted share. This compares to non-GAAP net income of $7.9 million, or
        $0.19 per diluted share in the first quarter of 2013. (see Non-GAAP
        reconciliation)

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"We began 2014 with a quarter of solid financial performance, driven by strong growth in our assay business as highlighted above. We are optimistic about the continued prospects and future success of our assay segment, given our current portfolio and pipeline," said Patrick J. Balthrop, president and chief executive officer of Luminex. "We are also pleased with the traction we are achieving in the adoption of our new products and their performance versus competition; principally our xTAG® infectious disease panels and our new pharmacogenomics tests."

"In addition, our R&D team continues to achieve key development milestones with our pipeline products, including ARIES, our sample-to-answer real-time PCR instrument, which is on schedule and nearing initiation of clinical trials. As we prepare for the commercial launch of ARIES and our other exciting pipeline products throughout 2014, we will be showcasing them at industry trade shows and conferences demonstrating that the Company is positioned for strategic success."


                            REVENUE SUMMARY

                   (in thousands, except percentages)


                                  Three Months
                                     Ended

                                   March 31,          Variance
                                   ---------          --------

                                  2014         2013       ($)       (%)
                                  ----         ----       ---       ---

                                  (unaudited)


    System sales                $6,400       $6,557          $(157)     -2%

    Consumable sales            12,768       11,897            871       7%

    Royalty revenue             10,049       10,109            (60)     -1%

    Assay revenue               21,660       18,324          3,336      18%

    All other revenue            5,684        6,313           (629)    -10%

                               $56,561      $53,200         $3,361       6%
                               =======      =======         ======     ===

"We are pleased with the overall financial performance in the first quarter of 2014, which benefited from a concentration of our higher margin items, consumables, royalties and assays. In addition, by managing spending levels across our operating expense classes, we were able to deliver excellent operating leverage and improved performance at the net profit line," said Harriss T. Currie, senior vice president and chief financial officer.


                          LUMINEX CORPORATION

                     REPORTABLE SEGMENT HIGHLIGHTS

                  (in thousands, except percentages)


                                     Three Months
                                        Ended

                                       March 31,        Variance
                                       ---------        --------

                                     2014         2013       ($)    (%)
                                     ----         ----       ---    ---

                                     (unaudited)

    Revenue

       Technology and strategic
        partnerships              $32,061      $31,869         $192       1%

       Assays and related
        products                   24,500       21,331        3,169      15%
                                   ------       ------        -----     ---

       Total Revenue               56,561       53,200        3,361       6%


    Operating income (loss)

       Technology and strategic
        partnerships                9,934        7,681        2,253      29%

       Assays and related
        products                   (1,749)      (9,233)       7,484      81%
                                   ------       ------        -----     ---

       Total Operating income       8,185       (1,552)       9,737     627%

FINANCIAL OUTLOOK AND GUIDANCE

The Company reaffirms its 2014 annual revenue guidance of between $225 and $240 million.

CONFERENCE CALL

Management will host a conference call to discuss the operating highlights and financial results for the first quarter ended March 31, 2014, at 4:00 p.m. CDT/5:00 p.m. EDT, Monday, April 28, 2014. The conference call will be webcast live and will be accompanied by a slide presentation, both of which may be accessed at Luminex Corporation's website at http://www.luminexcorp.com. Simply log on to the web at the address above, go to the Company section and access the Investor Relations link. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary audio/video software. If you are unable to participate during the live webcast, the call and slides will be archived for six months on the website using the 'replay' link.

Luminex develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry. The Company's xMAP system is an open-architecture, multi-analyte technology platform that delivers fast, accurate and cost-effective bioassay results to markets as diverse as pharmaceutical drug discovery, clinical diagnostics and biomedical research, including the genomics and proteomics research markets. The Company's xMAP technology is sold worldwide and is in use in leading research laboratories as well as major pharmaceutical, diagnostic and biotechnology companies. Further information on Luminex or xMAP can be obtained on the Internet at http://www.luminexcorp.com.

Statements made in this release that express Luminex's or management's intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. Forward-looking statements in this release include statements regarding: growth in our partner business, including systems, consumables and royalties; our efforts to sell our molecular diagnostic products directly to end users; the development progress of our pipeline products, including ARIES systems and assay menu, market acceptance of our genetic and infectious disease products, regulatory clearance of our products; the ability of our investment in current initiatives and new products to drive long-term value for our shareholders, management of expenses to create operating leverage; and, projected 2014 revenue. The words "believe," "expect," "intend," "estimate," "anticipate," "will," "could," "should" and similar expressions are intended to further identify such forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. It is important to note that the Company's actual results or performance could differ materially from those anticipated or projected in such forward-looking statements. Factors that could cause Luminex's actual results or performance to differ materially include risks and uncertainties relating to, among others, market demand and acceptance of Luminex's products and technology, the Company's dependence on strategic partners for development, commercialization and distribution of products, concentration of the Company's revenue in a limited number of strategic partners, fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and bulk purchases of consumables, our ability to sell products directly to end users, our ability to launch products on time that satisfy market needs with products that we sell, setting of medicare reimbursement codes that adequately reflect the value of our products, Luminex's ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels, potential shortages of components, competition, the timing of regulatory approvals, the implementation, including any modification, of the Company's strategic operating plans, the uncertainty regarding the outcome or expense of any litigation brought against Luminex, risks relating to Luminex's foreign operations, risks and uncertainties associated with implementing our acquisition strategy and the ability to integrate acquired companies, or selected assets into our consolidated business operations, including the ability to recognize the benefits of our acquisitions, as well as the risks discussed under the heading "Risk Factors" in Luminex's Reports on Forms 10-K and 10-Q, as filed with the Securities and Exchange Commission. The forward-looking statements, including the financial guidance and 2014 outlook, contained herein represent the judgment of Luminex as of the date of this press release, and Luminex expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Luminex's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.


    Contacts: Harriss T. Currie           Matt Norman

              Sr. Vice President, Finance Manager, Government and Investor
                                          Relations
              and Chief Financial Officer

              512-219-8020                512-219-8020

              hcurrie@luminexcorp.com     mnorman@luminexcorp.com


                                        LUMINEX CORPORATION

                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                           (in thousands)


                                                  March 31,          December 31,

                                                               2014               2013
                                                               ----               ----

                                                 (unaudited)

    ASSETS

    Current assets:

       Cash and cash
        equivalents                                         $77,386            $67,924

       Short-term
        investments                                           4,516              4,517

       Accounts receivable,
        net                                                  26,994             30,948

       Inventories, net                                      30,850             30,487

       Deferred income
        taxes                                                 6,561              7,265

       Prepaids and other                                     4,014              5,229
                                                              -----              -----

       Total current assets                                 150,321            146,370

    Property and
     equipment, net                                          33,148             32,793

    Intangible assets,
     net                                                     59,275             60,295

    Deferred income
     taxes                                                   11,913             11,913

    Goodwill                                                 50,836             50,738

    Other                                                     4,463              3,937

    Total assets                                           $309,956           $306,046
                                                           ========           ========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

       Accounts payable                                      $8,401            $10,698

       Accrued liabilities                                   10,783             11,624

       Deferred revenue                                       5,307              4,980

       Current portion of
        long term debt                                        1,548              1,194

       Total current
        liabilities                                          26,039             28,496

    Long-term debt                                               62                463

    Deferred revenue                                          2,374              2,482

    Other                                                     5,339              4,985
                                                              -----              -----

    Total liabilities                                        33,814             36,426
                                                             ------             ------

    Stockholders' equity:

       Common stock                                              41                 41

       Additional paid-in
        capital                                             297,720            296,931

       Accumulated other
        comprehensive gain                                      186                419

       Accumulated deficit                                  (21,805)           (27,771)
                                                            -------            -------

       Total stockholders'
        equity                                              276,142            269,620

    Total liabilities
     and stockholders'
     equity                                                $309,956           $306,046
                                                           ========           ========


              LUMINEX CORPORATION

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (in thousands, except per share amounts)


                                     Three Months
                                        Ended

                                       March 31,
                                       ---------

                                     2014         2013
                                     ----         ----

                                     (unaudited)


    Revenue                       $56,561      $53,200

    Cost of revenue                16,607       15,243

    Gross profit                   39,954       37,957

    Operating expenses:

    Research and development       11,084       12,714

    Selling, general and
     administrative                19,445       25,766

    Amortization of acquired
     intangible assets              1,020        1,029

    Restructuring costs               220            -

    Total operating expenses       31,769       39,509
                                   ------       ------

    Income (loss) from
     operations                     8,185       (1,552)

    Interest expense from long-
     term debt                         (6)         (28)

    Other expense, net                (19)          (7)

    Income (loss) before income
     taxes                          8,160       (1,587)

    Income taxes                   (2,194)        (924)
                                   ------         ----

    Net income (loss)              $5,966      $(2,511)
                                   ======       ======


    Net income (loss) per
     share, basic                   $0.14       $(0.06)
                                    =====       ======

    Shares used in computing
     net income (loss) per
     share, basic                  41,209       40,887


    Net income per share,
     diluted                        $0.14       $(0.06)
                                    =====       ======

    Shares used in computing
     net income per share,
     diluted                       41,825       40,887


                     LUMINEX CORPORATION

       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                        (in thousands)


                                                    Three Months
                                                        Ended

                                                     March 31,
                                                     ---------

                                                    2014         2013
                                                    ----         ----

                                                    (unaudited)

    Cash flows from operating activities:

    Net income (loss)                             $5,966      $(2,511)

    Adjustments to reconcile net income (loss)
     to net cash provided by operating
     activities:

    Depreciation and
     amortization                                  3,928        3,804

    Stock-based compensation                       1,629        2,432

    Deferred income tax expense                      678          700

    Excess income tax expense
     from employee stock-based
     awards                                            -          274

    Loss on disposal of assets                         5           18

    Non-cash restructuring
     charges                                         772            -

    Other                                           (192)         198

    Changes in operating assets and
     liabilities:

    Accounts receivable, net                       4,017        8,095

    Inventories, net                                (899)      (2,404)

    Other assets                                     332         (896)

    Accounts payable                              (2,581)      (1,731)

    Accrued liabilities                           (2,434)       1,777

    Deferred revenue                                 216          263
                                                     ---          ---

    Net cash provided by
     operating activities                         11,437       10,019
                                                  ------       ------

    Cash flows from investing activities:

    Purchases of available-
     for-sale securities                          (2,996)      (2,995)

    Sales and maturities of
     available-for-sale
     securities                                    2,997       13,033

    Purchase of property and
     equipment                                    (3,105)      (2,791)

    Proceeds from sale of
     assets                                            -           31

    Acquired technology rights                         -         (930)

    Net cash (used in) provided
     by investing activities                      (3,104)       6,348
                                                  ------        -----

    Cash flows from financing activities:

    Proceeds from issuance of
     common stock                                  1,102        1,401

    Payments for stock
     repurchases                                       -       (5,775)

    Excess income tax expense
     from employee stock-based
     awards                                            -         (274)

    Net cash provided by (used
     in) financing activities                      1,102       (4,648)
                                                   -----       ------

    Effect of foreign currency
     exchange rate on cash                            27         (219)

    Change in cash and cash
     equivalents                                   9,462       11,500

    Cash and cash equivalents,
     beginning of period                          67,924       42,789
                                                  ------       ------

    Cash and cash equivalents,
     end of period                               $77,386      $54,289
                                                 =======      =======


               LUMINEX CORPORATION

             NON-GAAP RECONCILIATION

                  (in thousands)


                                        Three Months
                                           Ended

                                          March 31,
                                          ---------

                                        2014         2013
                                        ----         ----

                                        (unaudited)


    Income (loss) from
     operations                       $8,185      $(1,552)


       Stock-based compensation        1,629        2,432

       Amortization of acquired
        intangible assets              1,020        1,029

       Costs associated with legal
        proceedings                      790          113

       Resolution of molecular
        diagnostic distribution
        agreements                         -        7,000

       Severance costs                    45          330

       Restructuring costs               810            -


    Adjusted income from
     operations                      $12,479       $9,352


       Interest expense from long-
        term debt                         (6)         (28)

       Other income, net                 (19)          (7)

       Income taxes                   (2,194)        (924)

       Income tax effect of above
        adjusting items                 (388)        (535)


    Adjusted net income               $9,872       $7,858
                                      ======       ======


    Adjusted net income per
     share, basic                      $0.24        $0.19
                                       =====        =====


    Shares used in computing
     adjusted net income per
     share, basic                     41,209       40,887


    Adjusted net income per
     share, diluted                    $0.24        $0.19
                                       =====        =====


    Shares used in computing
     adjusted net income per
     share, diluted                   41,825       41,750

The Company makes reference in this release to "non-GAAP operating income" and "non-GAAP net income" which excludes the impact of costs associated with the ENZO Life Sciences, Inc. and Irori Technologies, Inc. complaints discussed in the Legal Proceedings section of our previously filed 10-Ks and certain other recurring and non-recurring expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company's ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company's past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for income from operations, net income, net income per share or expense information prepared in accordance with GAAP.

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SOURCE Luminex Corporation