Meridian Bioscience Reports Record Operating Results, Declares Regular Cash Dividend, Reaffirms Higher Fiscal 2006 Guidance, and Comments on Fiscal 2007 Outlook.CINCINNATI -- Meridian Meridian (mərĭd`ēən), city (1990 pop. 41,036), seat of Lauderdale co., E Miss., near the Ala. line; settled 1831, inc. 1860. Bioscience, Inc., Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :VIVO (Video In Video Out) Refers to a display adapter with analog video capture and analog video out (NTSC out) capabilities. See display adapter. ) today: --reported record third quarter and nine-month sales of $26,583,000 and $79,763,000, respectively, an increase of 5% and 17% over the same periods of the prior fiscal year; --reported record third quarter and nine-month operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $6,893,000 and $20,040,000, respectively, an increase of 21% and 39% over the same periods of the prior fiscal year; --reported record third quarter and nine-month diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.18 and $0.51, respectively, an increase of 29% and 38% over the same periods of the prior fiscal year; --declared the regular quarterly cash dividend of $0.115 per share (indicated annual rate of $0.46 per share), 44% higher than the regular quarterly rate of fiscal 2005; and --reaffirmed its recently increased guidance of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight between $106 million and $109 million (previously $103 to $107 million) and per share-diluted earnings between $0.63 and $0.66 (previously $0.60 to $0.63) for the fiscal year ending September 30, 2006. --expects continuing double-digit sales and earning growth for fiscal 2007, initial guidance to be provided by mid-August
FINANCIAL HIGHLIGHTS
In Thousands, Except per Share Data
------------------------------------
Three Months Nine Months
June 30, June 30,
2006 2005 Change 2006 2005 Change
---------------------------------------------
Net sales $26,583 $25,421 +5% $79,763 $67,949 +17%
Operating income 6,893 5,708 +21% 20,040 14,373 +39%
Net earnings 4,862 3,498 +39% 13,547 8,804 +54%
Earnings per share
(diluted) $0.18 $0.14 +29% $0.51 $0.37 +38%
Cash and investments $35,728 $4,028
Working capital 58,391 18,477
Long-term debt
obligations 1,823 5,386
Shareholders' equity 92,140 48,965
Total assets 114,836 80,666
THIRD QUARTER RESULTS Net sales for the third fiscal quarter ended June 30, 2006, were $26,583,000 as compared to $25,421,000 for the same period of the prior fiscal year, an increase of 5%. Net earnings for the third quarter of fiscal 2006 were $4,862,000, or $0.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up 39% and 29%, respectively, over the third quarter of fiscal 2005. Diluted common shares outstanding for the third quarter of fiscal 2006 and 2005 were 26,788,000 and 24,302,000 respectively, an increase of 10% due primarily to the issuance of 1,800,000 shares in September 2005 and conversions of 5% convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. . YEAR-TO-DATE RESULTS Net sales for the nine months ended June 30, 2006, were $79,763,000 as compared to $67,949,000 for the same period of the prior fiscal year, an increase of 17%. Net earnings for the nine months ended June 30, 2006, were $13,547,000, or $0.51 per diluted share, up 54% and 38%, respectively, over the same period of prior fiscal year 2005. Diluted common shares outstanding for the first nine months of fiscal 2006 and 2005 were 26,768,000 and 23,892,000 respectively, an increase of 12%. CASH DIVIDEND MATTERS The Board of Directors declared the regular quarterly cash dividend of $0.115 per share for the third quarter ended June 30, 2006. The record date is July 31, 2006 and the dividend is payable August 7, 2006. The annual indicated cash dividend rate for fiscal 2006 is $0.46 per share, an increase of 44% over the fiscal 2005 rate of $0.32 per share. Meridian has increased its regular cash dividend rate fourteen times since it established a regular dividend sixteen years ago. Guided by the Company's policy of setting a payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. of between 75% and 85% of each fiscal year's expected net earnings, the actual declaration and amount of dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements and future business developments, including acquisitions. FISCAL 2006 HIGHER GUIDANCE REAFFIRMED On April 20, 2006, Meridian announced that it increased its previous guidance for fiscal 2006 earnings from a range of $0.60 to $0.63 per diluted share to a new range of $0.63 to $0.66 per diluted share. The per share estimates assume an increase in average shares outstanding from approximately 24.1 million at fiscal 2005 year end to 26.8 million at fiscal 2006 year end. Net sales guidance for fiscal 2006 was increased from $103 million to $107 million to a new range of $106 million to $109 million. This earnings and sales guidance does not include the effect of any acquisitions the Company might complete during fiscal 2006. FINANCIAL CONDITION The Company's financial condition is sound. At June 30, 2006, current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. were $75,027,000 compared to current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. of $16,636,000 thereby producing working capital of $58,391,000 and a current ratio of 4.5. Cash and investments on hand were $35,728,000, including proceeds from the September 2005 common stock offering, and the Company had 100% borrowing capacity under its $22,500,000 commercial bank credit facility. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. obligations were $1,823,000 compared to shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $92,140,000.
UNAUDITED OPERATING RESULTS
In Thousands, Except per Share Data
------------------------------------
The following table sets forth the unaudited comparative operating
results of Meridian Bioscience for the interim periods of fiscal 2006
and fiscal 2005.
Three Months Nine Months
June 30, June 30,
2006 2005 2006 2005
----------------------------------------------------------------------
Net sales $26,583 $25,421 $79,763 $67,949
Cost of goods sold 10,228 9,735 31,678 27,673
-------------------------------------
Gross profit 16,355 15,686 48,085 40,276
-------------------------------------
Operating expenses
Research and development 1,278 1,190 3,633 2,884
Sales and marketing 3,955 3,647 12,226 11,019
General and administrative 4,229 5,141 12,186 12,000
-------------------------------------
Total operating expenses 9,462 9,978 28,045 25,903
-------------------------------------
Operating income 6,893 5,708 20,040 14,373
Other income (expense), net 416 (193) 807 (545)
-------------------------------------
Income before income taxes 7,309 5,515 20,847 13,828
Income tax provision 2,447 2,017 7,300 5,024
-------------------------------------
Net earnings $4,862 $3,498 $13,547 $8,804
=====================================
Net earnings per basic common
share $0.19 $0.15 $0.52 $0.38
Basic common shares outstanding 26,097 23,652 26,070 23,217
Net earnings per diluted common
share $0.18 $0.14 $0.51 $0.37
Diluted common shares outstanding 26,788 24,302 26,768 23,892
SEGMENT DATA
In Thousands
--------------
The following table sets forth the unaudited operating segment
data for the interim periods in fiscal 2006 and fiscal 2005.
Three Months Nine Months
June 30, June 30,
2006 2005 2006 2005
--------------------------------------------
Net sales (third-party)
U.S. Diagnostics $15,533 $13,646 $48,539 $40,035
European Diagnostics 5,287 4,880 14,841 13,805
Life Science 5,763 6,895 16,383 14,109
--------------------- ----------------------
$26,583 $25,421 $79,763 $67,949
===================== ======================
Operating Income
U.S. Diagnostics $5,240 $3,296 $15,058 $9,949
European Diagnostics 1,021 835 2,560 1,985
Life Science 686 1,744 2,491 2,548
Eliminations (54) (167) (69) (109)
--------------------- ----------------------
$6,893 $5,708 $20,040 $14,373
===================== ======================
COMPANY COMMENTS John A. Kraeutler, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented, "Our diagnostics businesses continue to generate solid growth in sales, operating income and cash flow, leading to impressive gains in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . Led by our innovative tests for stomach ulcers stomach ulcer n → úlcera de estómago stomach ulcer n → ulcère m à l'estomac stomach ulcer stomach n → , C. difficile disease and upper respiratory infections Noun 1. upper respiratory infection - infection of the upper respiratory tract respiratory infection, respiratory tract infection - any infection of the respiratory tract , we continue to capture market share in the primary strategic segments of Meridian's global diagnostics business. Our Life Science business, which is up 16% year-to-date, was affected by shifts in buying patterns from several of our larger federal and commercial customers during the quarter. We have recently added manufacturing capacity at several of our Life Science locations to support our growth plans. "During the quarter, we received CLIA CLIA Clinical Laboratory Improvement Amendments of 1988 Congressional legislation that promulgated quality assurance practices in clinical labs, and required them to measure performance at each step of the testing process from the beginning to the end-point of a (federal regulatory) waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. status for our ImmunoCard STAT!(R) HpSA stomach ulcer test, allowing this rapid test to be used in physicians' offices. In addition, our dedicated focus on gaining support for H. pylori Noun 1. H. pylori - the type species of genus Heliobacter; produces urease and is associated with several gastroduodenal diseases (including gastritis and gastric ulcers and duodenal ulcers and other peptic ulcers) Heliobacter pylori testing in the managed care network is yielding good early signs of success with physicians and payors." William J. Motto, Chairman and Chief Executive Officer, commented, "Once again, the profitability of the business during the third quarter demonstrated favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . As sales continued to increase for the third quarter, our gross profit and operating income margins were 61.5% and 25.9%, respectively. We recently increased our guidance for fiscal 2006 and continue to be comfortable with the outlook for the fourth quarter and full year. We will provide our initial guidance for fiscal 2007 by mid-August. Preliminary indications are for the continuation of double-digit sales and earnings growth. Our balance sheet is sound and the Company is conservatively capitalized with shareholders' equity of $92.1 million and long-term debt of only $1.8 million. At June 30, 2006, cash and investments totaled $35.7 million. Clearly, we are in an excellent position to pursue additional acquisitions. We are constantly exploring ways to build the business through external growth. Cash flow remains strong and we will review the appropriateness of another increase in our regular cash dividend rate after fiscal 2006 year-end. Our vision of building shareholder value through higher sales, earnings, cash flow, and dividends coupled with a sound financial condition continues." FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. from civil litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements which may be identified by words such as "estimates", "anticipates", "projects", "plans", "seeks", "may", "will", "expects", "intends", "believes", "should" and similar expressions or the negative versions thereof and which also may be identified by their context. Such statements are based upon current expectations of the Company and speak only as of the date made. The Company assumes no obligation to publicly update any forward-looking statements. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ, including, without limitation, the following: Meridian's continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian's competition. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Costs and difficulties in complying with laws and regulations administered by the United States Food and Drug Administration United States Food and Drug Administration (FDA), n.pr a unit of the Public Health Service created to protect the health of the nation against impure and unsafe foods, drugs, and cosmetics. can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. Changes in the relative strength or weakness of the U.S. dollar can change expected results. One of Meridian's main growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses successfully integrated into Meridian's operations. Meridian is a fully integrated life science company that manufactures, markets and distributes a broad range of innovative diagnostic test kits, purified reagents and related products and offers biopharmaceutical enabling technologies. Utilizing a variety of methods, these diagnostic products and tests provide accuracy, simplicity and speed in the early diagnosis and treatment of common medical conditions See carpal tunnel syndrome, computer vision syndrome, dry eyes and deep vein thrombosis. , such as gastrointestinal, viral, urinary and respiratory infections Noun 1. respiratory infection - any infection of the respiratory tract respiratory tract infection infection - the pathological state resulting from the invasion of the body by pathogenic microorganisms . Meridian diagnostic products are used outside of the human body and require little or no special equipment. The Company's products are designed to enhance patient well-being while reducing the total outcome costs of healthcare. Meridian has strong market positions in the areas of gastrointestinal and upper respiratory infections, serology Serology The division of biological science concerned with antigen-antibody reactions in serum. It properly encompasses any of these reactions, but is often used in a limited sense to denote laboratory diagnostic tests, especially for syphilis. , parasitology Parasitology The scientific study of parasites and of parasitism. Parasitism is a subdivision of symbiosis and is defined as an intimate association between an organism (parasite) and another, larger species of organism (host) upon which the parasite is and fungal fungal /fun·gal/ (fun´g'l) fungous; pertaining to fungi. fun·gal or fun·gous adj. 1. Of, relating to, resembling, or characteristic of a fungus. 2. disease diagnosis. In addition, Meridian is a supplier of rare reagents, specialty biologicals and related technologies used by biopharmaceutical companies engaged in research for new drugs and vaccines. The Company markets its products and technologies to hospitals, reference laboratories, research centers, veterinary testing centers, physician offices, diagnostics manufacturers and biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. companies in more than 60 countries around the world. The Company's shares are traded through Nasdaq's National Market, symbol VIVO. Meridian's website address is www.meridianbioscience.com. |
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