Q2 results shine in gloomy economy.In the calendar-year second quarter, major analytical instrument and laboratory supply companies in general reported an increase in business compared to calendar-year first quarter as applied markets, Asia and consumables continued to be the main growth drivers. In addition, Europe gained some momentum as both Waters and Dionex reported a return to European sales growth, following a disappointing performance last quarter. Japan also showed signs of life, as Applied Biosystems Applied Biosystems, Inc. (formerly NASDAQ: ABIO) is the original name of a pioneer biotechnology company founded in 1981 in Foster City, California, among the Silicon Valley cities of the southern San Francisco Bay Area. and Dionex both highlighted sales growth in the country. For the nine of the 10 companies whose quarterly results are profiled on pages 8-11 (Mettler-Toledo does not break out figures for its Laboratory business), calendar-year second quarter revenues in aggregate improved 14.5%. Currency benefits continued to aid the sales growth of US companies, which reported a boost in the mid to high single-digit range due to the weak dollar (see graph, page 9). Also, additional days in the quarter, compared to last year, due to the timing of the Easter holiday, helped sales for some companies, including Invitrogen and Thermo Fisher Scientific Fisher Scientific, formally Fisher Scientific International, Inc. and colloquially Fisher was a biotechnology company that provided products and services to the global scientific research and United States clinical laboratory markets. AT. Seven of the nine profiled companies posted double-digit sales growth this quarter, spurred by new products and Asian markets. Applied Biosystems and Dionex also reported fiscal yearend results. Applied Biosystems' fiscal 2008 sales rose 2% on an organic basis as instrument sales suffered. Sales for Dionex in fiscal 2008 rose 10% organically, led by ion chromatography Ion-exchange chromatography (or ion chromatography) is a process that allows the separation of ions and polar molecules based on the charge properties of the molecules. sales and Asian revenues. Operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the nine companies rose 21.3% in aggregate in the quarter, led by Invitrogen and Bruker. However, operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for both Bruker and Varian SI were disappointing. Demand from industrial and applied markets remained robust, with companies reporting no signs of any adverse effects due to the global economic slowdown. However, companies did note rising freight and material costs, which many indicated they have successfully passed on to customers. Industrial markets also appeared to benefit consumables sale for Applied Biosystems, Varian SI and Waters. Growth of sales to the pharmaceutical industry was propelled by Asian markets, CROs, and biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. . However, many companies reported a soft market as Agilent posted flat organic growth for pharma and biotech sales, and Waters' pharma sales rose 4%. However, consumables sales to the pharma market were healthy, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Invitrogen. Thermo Fisher Scientific AT and PerkinElmer reported strong service revenue growth due in part to pharmaceutical industry sales. Asia remained the dominant region for growth among all companies, as did other emerging markets, such as Russia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Europe was mixed and the US sales were up in the single digits for most companies, except for Agilent, which posted 15% growth. The summaries below are based on companies' financial announcements, SEC filings and quarterly conference calls. Fiscal third-quarter revenues for Agilent Technologies' Bio-Analytical Measurement (BAM Bam (bäm), town (1996 pop. 70,100), Kerman prov., SE Iran, on the intermittent Bam River. Located on the western edge of the Dasht-e Lut, Bam is a trade center in a henna-growing region. Dates and other fruits are also grown; camels are raised. ) segment grew 13.2%, 10% excluding acquisitions, to $566 million to account for 39.2% of total sales. Orders climbed 19.3%, 15% excluding acquisitions, to $594 million. Service and consumables revenues improved 15%. Sales to the Americas, Europe and Asia grew 15%, 5% and 23%, respectively. Adjusted operating profit climbed 23.2% to $101 million, and gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. improved 100 basis points to 55% of sales. Life Sciences revenue improved 18%, 11% excluding acquisitions, to account for 43.6% of BAM sales. Acquisitions helped boost sales for the academic and government markets, which grew 36%, driven by strong sales of microarrays, bioreagents and MS. Sales of microarrays climbed nearly 50%. Sales to the pharmaceutical and biotech markets improved 14% due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency transactions and acquisitions, however, organic growth was flat. Demand from the pharmaceutical and biotech markets remained modest for both the US and Europe, but showed strength in Asia. Chemical Analysis revenue grew 10% to make up 56.4% of BAM sales, led by strong demand from the food safety and petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. markets, which grew 17% and 24%, respectively. Environmental revenues were fiat [Latin, Let it be done.] In old English practice, a short order or warrant of a judge or magistrate directing some act to be done; an authority issuing from some competent source for the doing of some legal act. and material science revenues declined 15% due to declining semiconductor-related interferometer interferometer: see interference under Interference as a Scientific Tool. See also virtual telescope. An instrument that measures the wavelengths of light and distances. business. Applied Biosystems' fiscal fourth-quarter revenues grew 9.3% to $609.0 million, including approximately 5% growth from currency effects. Adjusted 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. climbed 21.1% to $114.9 million, and gross margins improved 108 basis points to 56.5% of sales. Instruments and Consumables revenues improved 4.7% and 12.9% to represent 42% and 41% of sales, respectively. Revenue for Other Sources grew 12.5% to account for 17% of sales and included $74.8 million in sales from services and $24.5 million in sales from royalties and licenses. The main source of growth in the Real-Time PCR/Applied Genomics business continued to be consumables, The DNA Sequencing DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. business benefited from sales of the SOLID 2.0, which realized nearly 100 orders as of July 24, 75% of which were from outside major genome centers. Mass Spectrometry mass spectrometry or mass spectroscopy Analytic technique by which chemical substances are identified by sorting gaseous ions by mass using electric and magnetic fields. growth was primarily due to service revenues and double-digit growth from applied markets, partially offset by declining sales to the pharma industry, particularly in Europe, and declining proteomics product sales. Sales to the US grew 3% to account for 39% of total sales, while European sales rose 9%, but were flat on a currency-neutral basis, to make up 38% of sales. Sales to Japan and other Asia Pacific regions grew 10% and 42%, including 12% and 6% growth from currency effects, to make up 9% and 10% of sales, respectively. For fiscal 2008, Applied Biosystems' revenues increased 6.3% to $2,224.7 million, including 4% growth from currency transactions. Adjusted operating income grew 19.1% to $429.3 million, and gross profit margins improved 157 basis points to 56.9% of sales due to lower product costs and favorable exchange rates. Revenues for Instruments, Consumables and Other Sources grew 0.2%, 10.9% and 10.3% to account for 40%, 42% and 18% of sales, respectively. Sales to the US were flat, making up 40% of total sales; European sales grew 10%, 3% in local currency, to represent 38%; Asia Pacific sales improved 11%, 5% in local currency, to account for 19%; and sales to Other markets grew 17%, 9% on a currency-netural basis. The company anticipates first-quarter and 2009 revenue to each grow in the mid-single digits. Full-year DNA Sequencing, PCR/Applied Genomics and Mass Spectrometry sales are expected to grow, while Core PCR PCR polymerase chain reaction. PCR abbr. polymerase chain reaction Polymerase chain reaction (PCR) and Other Products Lines sales are anticipated to decline. Revenue for Bio-Rad Laboratories' Life Sciences segment (LS) grew 10.7%, 3.2% on a currency-neutral basis, to $161.6 million, to make up 35.7% of total sales. Revenue growth was led by process chromatography chromatography (krō'mətŏg`rəfē), resolution of a chemical mixture into its component compounds by passing it through a system that retards each compound to a varying degree; a system capable of accomplishing this is called a , protein identification and expression, and gene amplification Gene amplification The process by which a cell specifically increases the copy number of a particular gene to a greater extent than it increases the copy number of genes composing the remainder of the genome (all the genes which make up the genetic machinery instrument sales, particularly in the Americas and Asia. Excluding BSE See Bombay Stock Exchange. BSE See Boston Stock Exchange (BSE). , LS revenue increased 7.8% on a currency-neutral basis. The company also reported lower sales of capital instruments to academic and biopharmaceutical customers. Bio-Rad LS's adjusted operating profit soared 5.2 percentage points to $9.3 million due to lower operating and manufacturing costs. Bruker's revenues grew 30.7% to $311.5 million, including 11.3% growth from currency effects. Product and Service revenues climbed 35.7% and 15.1% to account for 89.5% and 10.2% of total sales, respectively, while Other revenue grew 48.4% to make up just 0.3%. Adjusted operating income rose 32.2% to $28.8 million, while operating margins were flat at 9.1% of sales due to increased operating costs operating costs npl → gastos mpl operacionales . Gross profit margin slipped 62 basis points to 41.3% of sales. In resopnse to the disappoInting gross margins, Bruker has reaccelerated a gross margin improvement program, which includes a partial hiring freeze Noun 1. hiring freeze - a freeze on hiring freeze - fixing (of prices or wages etc) at a particular level; "a freeze on hiring" . The regions contributing the most to sales growth were India, Asia and Latin America, while North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Japan remained "challenging". BioSciences sales rose 29.3%, 20.0% on a currency-neutral basis, to $160.6 million led by Aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. and System sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. , particularly X-ray, molecular spectroscopy spectroscopy Branch of analysis devoted to identifying elements and compounds and elucidating atomic and molecular structure by measuring the radiant energy absorbed or emitted by a substance at characteristic wavelengths of the electromagnetic spectrum (including gamma ray, and chemical detection systems. However, operating profits for the segment declined 17.2% to $6.7 million due to higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , Including unfavorable exchange rates. BioSpin revenue improved 30.2%, 18.0% on a currency-neutral basis, to $163.8 million, due to higher sales of magnetic resonance magnetic resonance, in physics and chemistry, phenomenon produced by simultaneously applying a steady magnetic field and electromagnetic radiation (usually radio waves) to a sample of atoms and then adjusting the frequency of the radiation and the strength of the systems. Operating income for the segment jumped 65.8% to $26.5 million due to improved operating efficiencies and higher gross profit margins. Dionex's fiscal fourth-quarter revenues climbed 14.9% to $98.7 million, 8.5% on a currency-neutral basis. The life science, chemical/petrochemical and electronic/power segments all grew in the mid-single digits, while the food business rose in the high single digits. Product sales for Ion Chromatography (IC) rose 14%, 12% in local currency, led by demand from the environmental market, which grew roughly 30%. HPLC HPLC high-performance liquid chromatography. HPLC high performance liquid chromatography. HPLC High-performance liquid chromatography Lab instrumentation A highly sensitive analytic method in which analytes are placed sales grew 18%, 8% local currency, as sales in Europe recovered. Sales in North America and Europe grew 4% and 16%, 3% in local currency, respectively, while sales to Asia Pacific grew 25%, 23% in local currency, to make up approximately 30% of sales, as Japanese sales rose 6%. Operating profits climbed 7.8% to $20.6 million, but gross profit margins fell 114 basis points to 67.2% of sales. For fiscal 2008, Dionex revenues improved 15.4%, 9.8% on a currency-neutral basis, to $377.5 million. Sales of IC and HPLC grew 18% and 8%, respectively. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales grew 13%, 12% on a currency-neutral basis, to 25% of sales. Asia-Pacific revenus Increased grew 24%, 21% on a currency -neutral basis, and European sales climbed 12%, 2% excluding currency effects. Sales to Europe (excluding Germany), Japan, Germany and Other countries represented 31%, 9% 11% and 24% of company sales, respectively. The company expects first-quarter sales to grow 10%-13% to $91-$93 million and 2009 sales to increase 7%-9% to $403-$411 million. Invitrogen's second-quarter sales grew 14.3% to $367.8 million, including 6.8% growth from favorable currency transactions and 1.2% growth from acquisitions. Adjusted operating profits rose 39.5% to $94.4 million, while adjusted gross profits improved 235 basis points to 65.9% of sales. Sales to the US, Europe and Asia-Pacific (excluding Japan) grew approximately 5%, 11% and 20%, respectively, while sales to Japan improved in the low-single digits. The company expects full-year revenue to grow In the high single digits, including currency effects, but excluding any potential benefit from the Applied Biosystems merger. BioDiscovery revenue climbed 13.6% to account for 68.8% of sales. Revenue growth was driven by new product introductions, increased pricing and higher sales volume, particularly for molecular biology molecular biology, scientific study of the molecular basis of life processes, including cellular respiration, excretion, and reproduction. The term molecular biology was coined in 1938 by Warren Weaver, then director of the natural sciences program at the Rockefeller , drug discovery services See service discovery. and cellular analysis products. The cell biology Cell biology The study of the activities, functions, properties, and structures of cells. Cells were discovered in the middle of the seventeenth century after the microscope was invented. business reported double-digit growth, led by sales of labeling and detection products. Segment operating profits jumped 33.1% to $76.4 million, and gross margins improved 250 basis points to 72.5% of sales due to increased sales and improved productivity. Cell Culture Systems revenue grew 16.0% to make up 31.2% of sales and was led by strong sales of culture research products. Favorable currency transaction and acquisitions accounted for 7.4% and 3.8% of growth, respectively. Segment operating profit grew 28.5% to $25.6 million, and gross margins jumped 310 basis points to 52.8% of sales. Sales of Merrier-Toledo's Laboratory products trait trait (trat) 1. any genetically determined characteristic; also, the condition prevailing in the heterozygous state of a recessive disorder, as the sickle cell trait. 2. a distinctive behavior pattern. increased 11% organically to account for 43% of total company revenues or approximately $185.0 million. Revenue growth was driven primarily by analytical instruments and laboratory balances. Revenues for PerkinElmer's Life and Analytical Sciences (LAS) grew 21.7% to $397.1 million to account for 75.1% of total sales. Acquisitions and favorable currency effects each contributed approximately 6% to LAS sales. Genetic Screening and Service each grew over 20% to contribute 9.6% and 5.0% to revenue growth, while Analytical Sciences and Biodiscovery accounted for 4.3% and 2.8% of revenue growth, respectively. LAS adjusted operating profits grew 25.4% to $50.1 million, and operating profit margin Operating profit margin The ratio of operating profit to net sales. improved 40 basis points to 12.6% of sales. The company anticipates third-quarter revenues to grow in the mid to high teens, including high single-digit growth in the biopharma end-markets. Revenues for Thermo Fisher Scientific's Analytical Technologies (AT) unit grew 13.7% in the second quarter to $1.16 billion, including 5.0% growth from currency transactions and 1.0% growth from acquisitions. The company reported above average growth for scientific instruments, specialty diagnostics and biopharma services, primarily due to the introduction of new products. Overall, demand from the life sciences and health care markets remained strong, while growth for the industrial markets was below average due to declining demand for process products. Adjusted operating income grew 21.4% to $245.1 million, and operating margin improved 130 basis points to 21.1% of sales due to acquisitions and productivity improvements. Fiscal third-quarter revenues for Varian's Scientific Instruments division (SI) grew 7.3%, approximately 2% organically, to $200.7 million to make up 82.1% of total sales. Acquisitions contribued around 1% growth. Sales were lower than expected because of manufacturing constraints due to the consolidation of various locations and because of installation delays of larger NMR NMR: see magnetic resonance. systems. Industrial sales accounted for 60% of revenue growth due to environmental and energy applications. Life Science applications benefited from higher sales of consumables, particularly GC columns and sample preparation products, but were partially offset by lower sales of magnetic resonance systems. Adjusted operating profit declined 16.8% to $18.4 million, while operating margins fell 260 basis points to 9.2% of sales. Operating margins were adversely affected by foreign exchange rates and increased costs associated with the relocation of manufacturing activities. Total company sales to North America (excluding Mexico), Europe (Including the Middle East and Africa), Asia Pacific (including India) and Latin America (including Mexico) improved 0.2%, 8.5%, 8.8% and 52% to account for 32.4%, 40.1%, 21.1% and 15.6% of sales. Waters' revenues climbed 13.1% to $398.8 million in the second quarter, including 6.0% growth from currency transactions. Products sales grew 11.0% to account for 72% of sales, while service revenue improved 18.8% to make up 28%. Sales to pharmaceutical customers grew 4%, sales to government and academic customers improved 21%, while sales to industrial and food safety markets grew 28%. Sales to the US improved 6%, while sales to Europe, Asia (including Japan) and the Rest of World increased 17%, 18% and 9% (3%, 12% and 8% on a currency-neutral basis), respectively. Adjusted operating income improved 13.0% to $89.4 million, but gross margins declined 77 basis points to 56.1% of sales, partially due to unfavorable currency translation. Sales for the Waters Division grew 12.4% to $360.7 million, including 6% growth from currency. Revenue growth benefited from strong sales of ACQUITY UPLC UPLC United Power Line Council UPLC Ultra Performance Liquid Chromatography , Tandem Quadrupole A quadrupole is one of a sequence of configurations of electric charge or gravitational mass that can exist in ideal form, but it is usually just part of a multipole expansion of a more complex structure reflecting various orders of complexity. MS and Synapt HDMS HDMS hexamethyldisilazane (hydrophobic substance) HDMS Her Danish Majesty's Ship HDMS High Density Modem System HDMS Honorable Discharge, Medical Survey HDMS Health Data Management Solutions HDMS Hipath Domain Management System systems, as well as increased service and chemical consumables sales. TA Division sales climbed 19.6% to $38.0 million, including 5% growth from currency effects and 3% from aquisitions. Growth was driven by product introductions and service to customers from recently acquired companies. The company anticipates third-quarter revenue growth of 11%-12% and year-end revenue growth of 11%-13%, with each forecast including approximately 5% growth from currency transactions.
Applied Biosystems FY08 Q4 and FY08
Q4 % of FY08 % of
Growth Total Growth Total
DNA Sequencing 9.4% 25% 2.9% 26%
Real-Time PCR/Applied 15.2% 36% 14.0% 36%
Genomics
Mass Spectrometry 4.0% 25% 2.6% 24%
Core PCR and DNA 11.0% 9% 4.9% 9%
Synthesis
Other Product Lines -5.7% 5% -6.1% 5%
Bruker FY08 Q2
% Rev. Growth % Segment Rev.
BioSciences
System 25.8% 73.3%
Other System 35.4% 7.8%
Aftermarket 41.9% 18.9%
BioSpin
System and Wire 41.8% 82.0%
Other System 281.6% 4.3%
Aftermarket -21.6% 13.7%
Waters FY08 Q2
Waters Div. % Rev. Growth % Segment Rev.
Instrument Systems 8.5% 54%
Chemistry Consum. 18.0% 18%
Service 17.2% 28%
TA
Instrument Systems 14.4% 75%
Service 38.1% 25%
Nine Cos. Q2 CY08 Total Reported Growth
vs. Currency-Neutral Growth
Reported 14.5%
Currency-Neutral 8.6%
Note: Table made from bar graph.
Q2 CY08 Revenue Growth ($US)
Bruker 30.7%
PerkinElmer (LAS) 21.7%
Dionex 14.9%
Invitrogen 14.3%
Thermo Fisher Scientific (AT) 13.7%
Agilent (BAM) 13.2%
Waters 13.1%
Applied Biosystems 9.3%
Varian (SI) 7.3%
Note: Table made from bar graph.
Q2 CY08 Adj. Operating Profit Growth ($US)
Invitrogen 39.5%
Bruker 32.2%
PerkinElmer (LAS) 25.4%
Agilent (BAM) 23.2%
Thermo Fisher Scientific (AT) 21.4%
Applied Biosystems 21.1%
Waters 13.0%
Dionex 7.8%
Varian (SI) 16.8%
Note: Table made from bar graph.
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