QIAGEN Reports First Quarter 2013 Results(PresseBox) (Venlo, The Netherlands, )
Achieves Q1 2013 targets: Net sales of $303.6 million grow 3% CER on expansion in all regions; adjusted diluted EPS at $0.23 per share; free cash flow of $30 million
Progress toward accelerating innovation and growth in 2013:
- Molecular Diagnostics (+11% CER) and Applied Testing (+5% CER) deliver solid results, more than offset weak market conditions in Pharma and Academia
- QIAsymphony automation platform well on track to surpass 1,000 cumulative placements during 2013; new QIAlink software provides interface to laboratory information management systems
- Acquisition of Ingenuity Systems, global leader in analysis and interpretation of complex biological data, adds to QIAGEN's ecosystem for molecular testing
- Advancing more than 35 diagnostic development projects, expanding leadership in Personalized Healthcare with Eli Lilly master framework collaboration
QIAGEN adjusts full-year 2013 guidance for Ingenuity acquisition and Academia market trends, continues to expect higher sales and adjusted earnings
QIAGEN N.V. (NASDAQ: QGEN; Frankfurt Prime Standard: QIA) announced results of operations for the first quarter of 2013, delivering innovation and growth in a challenging business environment.
"Our results for the first quarter of 2013 show the ability of QIAGEN to grow amid challenging conditions. Our sales to customers in Molecular Diagnostics showed solid growth, and the improved performance was supported by Applied Testing and all regions delivering growth that more than compensated for soft conditions in Academia given government funding concerns in various markets and in particular sequestration in the United States," said Peer M. Schatz, Chief Executive Officer of QIAGEN N.V. "Our portfolio of growth drivers - which include the QIAsymphony automation platform, the QuantiFERON-TB latent tuberculosis test and our Personalized Healthcare franchise - is building momentum and showed significant gains as Molecular Diagnostics delivered double-digit growth.
"QIAGEN's commitment to growing through innovation is strong. We are preparing QIAGEN's next-generation sequencing solutions for clinical research and diagnostics, and Ingenuity Systems adds a leading solution for the analysis and interpretation of complex biological data to our ecosystem for molecular testing. Our development pipeline of more than 35 diagnostic assays is advancing, and key submissions are planned for 2013 and 2014, especially for infectious disease tests in Profiling and companion diagnostics in Personalized Healthcare. As we seek new ways to improve efficiency and effectiveness, QIAGEN is well-positioned to achieve its goals for 2013 and advance our mission of making improvements in life possible."
Net sales grew 3% CER at constant exchange rates (CER) in the first quarter of 2013, led by the Molecular Diagnostics (+11% CER) and Applied Testing (+5% CER) customer classes, more than offsetting lower contributions in Pharma (-4% CER) and Academia (-4% CER). The ongoing product portfolio generated 2% CER growth, while AmniSure (acquired in May 2012) provided an additional percentage point. Currency movements had a negative impact of one percentage point on reported sales due to weakness of the Japanese yen against the U.S. dollar (reporting currency).
Operating income declined 20% to $29.1 million in the first quarter of 2013 compared to $36.5 million in the first quarter of 2012. Adjusted operating income, which excludes items such as restructuring and acquisition-related costs, share-based compensation and amortization of intangible assets, was down 2% to $78.4 million from $80.3 million in the first quarter of 2012. The adjusted operating income margin declined to 26% of net sales from 27% in the year-ago period.
Net income attributable to owners of QIAGEN N.V. amounted to $20.0 million in the first quarter of 2013 compared to $28.6 million in the year-ago period. Diluted EPS was $0.08 (based on 241.5 million diluted shares) compared to $0.12 in the year-ago period (238.9 million diluted shares), and due mainly to higher amortization and business integration expenses compared to the same period in 2012. Adjusted net income attributable to owners of QIAGEN N.V. was largely unchanged at $54.7 million compared to $54.8 million in the 2012 quarter, and adjusted diluted EPS was also unchanged at $0.23 in the first quarter of 2013 compared to the year-ago period.
Cash and cash equivalents at March 31, 2013, declined to $372.8 million from $394.0 million at December 31, 2012. Net cash provided by operating activities amounted to $45.9 million at the end of the first quarter of 2013, up from $11.1 million at the end of the same period of 2012, with free cash flow significantly improving to $30.1 million from negative free cash flow of $7.7 million. Net cash used in investing activities at the end of the first quarter of 2013 was $23.2 million, less than the $25.0 million of net cash used in the same period of 2012. Net cash used by financing activities was $40.1 million at the end of the first quarter of 2013, mainly due to the share repurchase program, compared to cash provided by financing activities of $11.2 million in the year-ago period.
Reconciliations of reported results in accordance with U.S. generally accepted accounting principles (GAAP) to adjusted results are included in the tables accompanying this release.
"Our healthy financial position provides QIAGEN with resources to support attractive business expansion opportunities, and the acquisition of Ingenuity Systems fits into our strategy of integrating new technologies that can catalyze value creation across our portfolio of Sample & Assay Technologies," said Roland Sackers, Chief Financial Officer of QIAGEN N.V. "We were pleased with the positive reception of our recently completed $100 million share repurchase program. This program and the acquisition of Ingenuity Systems, are examples of our capital allocation strategy, committed to creating value for shareholders and supporting QIAGEN's business expansion. We are on track to deliver higher sales and adjusted earnings in 2013 and further improve profitability."
All regions delivered growth at single-digit CER rates in the first quarter of 2013, led by the Europe / Middle East / Africa region (+4% CER, 34% of sales). The Americas (+2% CER, 47% of sales) also generated growth driven by Molecular Diagnostics. In Asia-Pacific / Japan (+3% CER, 18% of sales), China and India provided important growth contributions, while sales in Japan were down slightly, as the distribution of some academic research funds was postponed to later in 2013. Sales in the top seven emerging markets rose about 19% CER and represented 11% of total sales.
Consumables and related revenues (+4% CER, 89% of sales) rose on the double-digit advance in Molecular Diagnostics and solid single-digit growth in Applied Testing, which more than offset modest declines in Pharma and Academia.
Instrument sales (-3% CER, 11% of sales) rose in Pharma, but declined in Academia due to uncertain government funding conditions in the U.S. and other countries and were slightly lower in Applied Testing. QIAGEN continued its strong pace of placements for the QIAsymphony automation platform, building on the year-end 2012 installed base of more than 750 and set to surpass 1,000 placements during 2013. The ongoing transition to reagent rental agreements, where sales are recognized over a multi-year period, led to a single-digit CER decline in Molecular Diagnostics.
An overview of performance in QIAGEN's four customer classes (based on total sales results including organic growth and acquisitions at CER):
Molecular Diagnostics (Q1 2013: +11% CER, 50% of sales) reported solid growth in the first quarter of 2013 based on double-digit CER improvement in consumables, while instrument sales were lower due mainly to the focus on QIAsymphony placements under multi-year reagent rental agreements. In Prevention, the QuantiFERON-TB test for detection of latent tuberculosis (TB) continued to deliver 20% CER growth on successful market penetration initiatives in the U.S. and Europe. Sales of products for HPV testing (-2% CER, 17% of sales) declined at a mid-single-digit CER rate in the U.S., where pricing pressure continues amid implementation of multi-year customer agreements, but showed growth in other regions. Sales in products related to Profiling rose at a healthy double-digit CER pace on increasing consumables use on QIAsymphony automation platforms. Personalized Healthcare sales were also higher in the first quarter of 2013. In Point of Need, the AmniSure assay for premature rupture of fetal membranes in pregnant women continued its rapid growth pace.
Applied Testing (Q1 2013: +5% CER, 8% of sales) provided high-single-digit CER growth in consumables on steady business expansion in all three areas - human identification / forensics, veterinary medicine and food safety. The European horsemeat scandal generated demand, providing additional growth impulses and awareness about the benefits of molecular food testing and QIAGEN's strong position and product offering which significantly increased over the last two years in this customer class. Instrument sales were slightly lower against a very strong performance in the first quarter of 2012 when the rollout of the QIAsymphony automation platform began to these customers.
Pharma (Q1 2013: -4% CER, 18% of sales) showed growth in Asia-Pacific / Japan, but lower results in the Americas and EMEA regions due to the impact of restructuring activities and site consolidations among some customers that has continued from 2012.
Academia (Q1 2013: -4% CER, 24% of sales) experienced lower sales of both consumables and instruments, primarily due to concerns about reduced government funding trends in various markets, including the implementation of the U.S. government sequestration that took effect in March. Academia sales were also weaker in Europe as well as in some markets in the Asia-Pacific / Japan region outside of China. QIAGEN estimates that the reduced government funding environment, particularly in the U.S., could lead to a reduction in full-year 2013 consolidated sales growth of at least 1 percentage point.
Certain of the statements contained in this news release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products, markets, strategy or operating results, including without limitation its expected operating results, new product developments, new product launches, regulatory submissions, and financing plans are forward-looking, such statements are based on current expectations and assumptions that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations, regulatory processes and dependence on logistics), variability of operating results and allocations between customer classes, the commercial development of markets for our products in applied testing, personalized healthcare, clinical research, proteomics, women's health/HPV testing and nucleic acid-based molecular diagnostics; changing relationships with customers, suppliers and strategic partners; competition; rapid or unexpected changes in technologies; fluctuations in demand for QIAGEN's products (including fluctuations due to general economic conditions, the level and timing of customers' funding, budgets and other factors); our ability to obtain regulatory approval of our products; difficulties in successfully adapting QIAGEN's products to integrated solutions and producing such products; the ability of QIAGEN to identify and develop new products and to differentiate and protect our products from competitors' products; market acceptance of QIAGEN's new products, the consummation of acquisitions, and the integration of acquired technologies and businesses. For further information, please refer to the discussions in reports that QIAGEN has filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC).