Distributor/Equipment Index's Q1 operating profits shine.

First quarter revenues for the IBO Lab Equipment/Consumables Index jumped 12.4% to $799 million. Operating profits improved 25.6% to $232 million, and operating margin climbed 310 basis points to 29.0% of sales. Fisher Scientific's merger with Thermo Electron had a significant impact on the revenue and operating growth for the Index (see IBO 5/15/06). Fourteen of the 15 companies in the Index have reported first quarter results, with estimates made only for Whatman.

Biohit Oyj's first quarter sales grew 6.6% to 8.1 million [euro] ($10.7 million = 0.76 [euro] = $1) from 7.6 million [euro] ($9.2 million = 0.83 [euro] = $1). Operating income was 0.2 million [euro] ($0.3 million) compared to a break-even point a year ago. Liquid Handling sales improved 6.9% to 7.7 million [euro] ($10.1 million) and generated a profit of 0.8 million [euro] ($1.1 million), while Diagnostics sales grew 25% to 0.5 million [euro] ($0.6 million), but recorded an operating loss of 0.6 million [euro] ($0.8 million). The company reported good sales growth in Russia and restructured its Japanese subsidiary.

Kewaunee Scientific reported a 4.1% decline in fiscal fourth quarter revenues ended April 30 to $22.7 million. Operating profit climbed to $0.9 million compared to a loss of $0.1 million a year ago. Domestic sales for the quarter were flat, while international sales declined following several large orders in the previous fourth quarter. Fiscal year-end revenues declined 3.1% to $84.1 million, and operating profit improved 200% to $3.4 million. Domestic sales slipped 7.6% to $66.6 million, while International sales improved 23.3% to $14.9 million. Emerging markets in Asia, India, Singapore and China continued to show strong growth. Despite a decline in fourth quarter domestic sales, incoming orders were strong in the second half of the fiscal year. As of April 30, the company's order backlog had increased 40.4% to $51.1 million from the previous year. For the year, operating expenses declined 280 basis points to 14.5% of sales as a result of manufacturing efficiencies.

Revenues for Millipore's Bioscience division grew 50.5% to $157.7 million to account for 42.4% of Millipore's total sales. Revenue growth was primarily attributed to the Serologicals acquisition (see IBO 4/30/06) and favorable foreign currency translation, contributing approximately 40% and 5% growth, respectively. Organic revenues grew 6%, driven by increased demand of laboratory water products in Asian markets, particularly India. Adjusted operating margin climbed 170 basis points to 19.4% of sales as a result of productivity improvements, increased prices and higher sales volume. For the company as a whole, sales to the Americas grew 44%, European sales improved 34% and Asia/Pacific revenue gained 4.2% to represent 44%, 39% and 17% of total sales, respectively.

New Brunswick Scientific's first quarter revenues declined 11.6%, or 16.5% on a currency-neutral basis, to $15.0 million, primarily due to the implementation of a new enterprise resource planning system. This implementation slowed down the manufacturing process at the company's largest facility, which resulted in a temporary reduction in shipments and net sales. As a result, international sales dipped 4.4% and domestic sales decreased 24.2%. The shortfall in manufacturing drastically affected operating profits, which fell 91.4% to $86,000. For the quarter, orders increased 30.6% and backlog increased 52.7%. The company's manufacturing and shipment levels resumed to normal levels in March.

Fiscal third quarter sales ended April 30 for Pail's BioPharmaceuticals segment grew 14.9%, or 9.2% on a currency-neutral basis, to $107.1 million. Revenue growth was driven by a 13% climb in consumables revenues, in particular for the vaccine and large-scale biotechnology sectors. Operating profits improved 20.0% to $24.6 million, benefiting from manufacturing efficiencies and price increases. The company also saved significant labor costs by moving a blood bank-related manufacturing operation to Mexico. Total company revenues from the Western Hemisphere grew 6.3% to account for 42.5% of total sales, European sales improved 19.6% to represent 45% and Asian revenues climbed 1.9% to make up 12.5%. On a constant-currency basis, sales to the Western Hemisphere and Europe climbed 6.3% and 9.2%, respectively, while sales to Asia declined 0.4%. For the full fiscal year, BioPharmaceuticals revenue is expected to grow approximately 10%.

On a pro forma basis, Thermo Fisher Scientific's Laboratory Products and Services reported a 9.0% climb in first quarter sales to $1,416.5 million, which accounts for 61% of the company's total revenues. Favorable currency translation contributed 1.7% to the segment's revenue growth, while organic sales improved 6.0%. Revenue growth was particularly strong in the research and biopharma markets. Operating income jumped 36.6% to $185.7 million due to price increases and productivity improvements, including restructuring actions. As a result, operating profit margin improved 260 basis points to 13.1% of sales. For full-year 2007, the company raised its adjusted earnings per share guidance to $2.43-$2.53 from $2.35-$2.45 based on a more favorable tax rate. Full-year revenues are estimated to grow 6%-8% over the company's pro forma 2006 results.

VWR International's first quarter revenues improved 5.9% to $843.1 million, or 2.7% excluding favorable currency effects. Sales in the North American Lab segment grew 1.9%, or 2.1% on a constant-currency basis, to make up 60% of total revenues. Sales to the pharmaceutical and industrial markets grew in the low-single and mid-single digits, respectively, while education and biotechnology sales remained flat. The European Lab segment's revenue improved 14.9%, or 5.2% on a constant-currency basis, to account for 37% of sales. This segment reported high single-digit growth in the biopharmaceutical market, low-single digit growth in the industrial and education markets, and mid-single digit growth in the clinical markets. Sales in the Science Education segment declined 8.5% to make up 3% of sales, due to declining publishing sales and lower international business. Operating profit for the quarter jumped 23.1% to $56.5 million, and gross margins improved 140 basis points to 28.3% of sales. Operating income for the North American Lab and European Lab segments grew 10.8% and 60.1% to $32.6 and $22.9 million, respectively, while operating profits for the Science Education segment slipped 58.3% to $1.0 million.

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Laboratory Equipment/Distribution Index, Total

                                 2004    2005    2006    2007

Total Annual Revenues ($M)       2500    2743    2950      --
1st Quarter Revenues ($M)         636     690     712     800
Annual Oper. Profits ($M)         618     696     772      --
Annual Oper. Profits (%)         24.7    25.4    26.2      --
1st Quarter Oper. Profits ($M)    160     184     185     232
1st Quarter Oper. Profits (%)    25.1    26.6    25.9    29.0

                                       % Change

                                 04/05   05/06   06/07

Total Annual Revenues ($M)        9.7     7.6      --
1st Quarter Revenues ($M)         8.5     3.1    12.4
Annual Oper. Profits ($M)        12.6    10.9      --
Annual Oper. Profits (%)           --      --      --
1st Quarter Oper. Profits ($M)   15.1     0.4    25.6
1st Quarter Oper. Profits (%)      --      --      --

IBO Laboratory Equipment/Consumables Sales Index companies: Biohit
Oyl, Diploma (Life Sciences), Invitrogen, Kewaunee Scientific,
Millipore * (Bioscience), New Brunswick Scientific, Pall
(BioPharmaceuticals), Sigma-Aldrich * (Biotechnology, Scientific
Research), Stratagene, Techne (Biotechnology, R&D Europe), Thermo
Fisher Scientific (Laboratory Products and Services). VWR
International, Whatman (Lab Sciences, Bioscience). * Segment
operating profit based on company operating margin.