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Luminex Corporation Reports Third Quarter 2017 Financial Results

AUSTIN, Texas, Oct. 30, 2017 /PRNewswire/ -- Luminex Corporation (Nasdaq: LMNX) today announced financial results for the third quarter of 2017. Financial and operating highlights for the quarter include the following:

  • Consolidated revenue of $74.1 million, an increase of 4% compared to the third quarter 2016.
  • Assay revenue was $37.9 million for the quarter ended September 30, 2017, representing a 17% increase over assay revenue for the third quarter of 2016.
  • Total sample-to-answer molecular product revenue of $11.9 million; growth of 55% compared to $7.7 million in the third quarter of 2016.
  • Placed 60 sample-to-answer molecular systems under contract, bringing the total number of active customers to over 400.
  • 266 multiplexing analyzers were shipped during the quarter; a combination of MAGPIX® systems, LX systems, and FLEXMAP 3D® systems.
  • GAAP net income of $17.6 million, or $0.40 per diluted share. Non-GAAP net income of $10.7 million, or $0.25 per diluted share (see Non-GAAP reconciliation).
  • In September, Luminex agreed to continue to provide a major customer with our Cystic Fibrosis product portfolio through the end of 2019, with an option to extend beyond this time period.

"The tremendous momentum in our sample-to-answer molecular business drove the Company's performance this quarter. Our VERIGENE and ARIES systems are experiencing excellent traction in the market resulting from a combination of factors, including their ease of use, a rapidly expanding FDA cleared test menu, differentiated pricing strategies, and a large, fully integrated sales and support team," said Homi Shamir, President and Chief Executive Officer of Luminex. "We remain enthusiastic about our diversified business model, our solid balance sheet, positive cash flow profile, and the significant future growth opportunities in both our Licensed Technologies Group and our molecular diagnostics business."

REVENUE SUMMARY

(in thousands, except percentages)








Three Months Ended






September 30,


Variance


2017


2016


($)


(%)


(unaudited)













System sales

$ 9,903


$ 10,494


$ (591)


-6%

Consumable sales

10,619


12,305


(1,686)


-14%

Royalty revenue

11,001


11,068


(67)


-1%

Assay revenue

37,917


32,443


5,474


17%

Service revenue

2,894


2,934


(40)


-1%

Other revenue

1,802


1,977


(175)


-9%


$ 74,136


$ 71,221


$ 2,915


4%


















Nine Months Ended






September 30,


Variance


2017


2016


($)


(%)


(unaudited)













System sales

$ 28,309


$ 27,805


$ 504


2%

Consumable sales

39,314


37,489


1,825


5%

Royalty revenue

33,375


33,888


(513)


-2%

Assay revenue

113,077


85,367


27,710


32%

Service revenue

8,594


7,892


702


9%

Other revenue

5,703


5,927


(224)


-4%


$ 228,372


$ 198,368


$ 30,004


15%

FINANCIAL OUTLOOK AND GUIDANCE

The Company reaffirms its guidance for the full year and expects fourth quarter 2017 revenue to be between $76 million to $78 million.

CONFERENCE CALL

Management will host a conference call at 3:30 p.m. CDT / 4:30 p.m. EDT, Monday, October 30, 2017 to discuss the operating highlights and financial results for the third quarter 2017 ended September 30, 2017. The conference call will be webcast live and 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 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 expected revenue and cost savings, projected 2017 performance, including revenue guidance, including the revenue contribution from our recently completed acquisition of Nanosphere, Inc. 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 in development, including ARIES®, Verigene® and NxTAG® products; dependence on strategic partners for development, commercialization and distribution of products; concentration of Luminex's revenue in a limited number of direct customers and strategic partners, some of which may be experiencing decreased demand for their products utilizing or incorporating Luminex's technology; budget or finance constraints in the current economic environment, or periodic variability in their purchasing patterns or practices as a result of material resource planning challenges; the timing of and process for regulatory approvals; the impact of the ongoing uncertainty in global finance markets and changes in governmental funding, including its effects on the capital spending policies of Luminex's partners and end users and their ability to finance purchases of Luminex's products; fluctuations in quarterly results due to a lengthy and unpredictable sales cycle; fluctuations in bulk purchases of consumables; fluctuations in product mix, and the seasonal nature of some of Luminex's assay products; Luminex's ability to obtain and enforce intellectual property protections on Luminex's products and technologies; risks and uncertainties associated with implementing Luminex's acquisition strategy, including Luminex's ability to obtain financing; Luminex's ability to integrate acquired companies or selected assets into Luminex's consolidated business operations, and the ability to recognize the benefits of Luminex's acquisitions; reliance on third party distributors for distribution of specific Luminex-developed and manufactured assay products; Luminex's ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels; changes in principal members of Luminex's management staff; potential shortages, or increases in costs, of components or other disruptions to Luminex's manufacturing operations; competition and competitive technologies utilized by Luminex's competitors; Luminex's ability to successfully launch new products in a timely manner; Luminex's increasing dependency on information technology to improve the effectiveness of Luminex's operations and to monitor financial accuracy and efficiency; the implementation, including any modification, of Luminex's strategic operating plans; the uncertainty regarding the outcome or expense of any litigation brought against or initiated by Luminex, risks relating to Luminex's foreign operations, including fluctuations in exchange rates, tariffs, customs and other barriers to importing/exporting materials and products in a cost effective and timely manner; difficulties in accounts receivable collections; the burden of monitoring and complying with foreign and international laws and treaties; and the burden of complying with and change in international taxation policies, 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 2017 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.

LUMINEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)






September 30,


December 31,


2017


2016


(unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$ 110,911


$ 93,452

Accounts receivable, net

36,432


32,365

Inventories, net

46,114


40,775

Prepaids and other

9,915


7,145

Total current assets

203,372


173,737

Property and equipment, net

57,686


57,375

Intangible assets, net

78,152


84,841

Deferred income taxes

45,943


42,497

Goodwill

85,481


85,481

Other

8,094


6,785

Total assets

$ 478,728


$ 450,716





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$ 7,813


$ 12,276

Accrued liabilities

21,175


22,804

Deferred revenue

5,123


5,120

Total current liabilities

34,111


40,200

Deferred revenue

1,609


1,875

Other

4,828


4,962

Total liabilities

40,548


47,037

Stockholders' equity:




Common stock

43


43

Additional paid-in capital

345,663


336,430

Accumulated other comprehensive loss

(817)


(1,692)

Retained earnings

93,291


68,898

Total stockholders' equity

438,180


403,679

Total liabilities and stockholders' equity

$ 478,728


$ 450,716

LUMINEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016


(unaudited)


(unaudited)









Revenue

$ 74,136


$ 71,221


$ 228,372


$ 198,368

Cost of revenue

28,317


25,556


79,706


62,976

Gross profit

45,819


45,665


148,666


135,392

Operating expenses:








Research and development

10,670


12,762


35,350


35,324

Selling, general and administrative

26,454


26,393


78,604


70,942

Amortization of acquired intangible assets

2,166


2,482


6,689


5,797

Total operating expenses

39,290


41,637


120,643


112,063

Income from operations

6,529


4,028


28,023


23,329

Other income, net

(1)


30


(6)


(1,395)

Income before income taxes

6,528


4,058


28,017


21,934

Income tax benefit (expense)

11,085


(1,307)


4,371


(4,760)

Net income

$ 17,613


$ 2,751


$ 32,388


$ 17,174









Net income attributable to common stock holders








Basic

$ 17,299


$ 2,751


$ 31,789


$ 17,174

Diluted

$ 17,299


$ 2,751


$ 31,789


$ 17,174

Net income per share attributable to common stock holders







Basic

$ 0.40


$ 0.06


$ 0.74


$ 0.40

Diluted

$ 0.40


$ 0.06


$ 0.74


$ 0.40

Weighted-average shares used in computing net income per share







Basic

43,164


42,683


43,110


42,522

Diluted

43,266


43,136


43,216


42,929









Dividends declared per share

$ 0.06


-


$ 0.18


-

LUMINEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016


(unaudited)


(unaudited)



Cash flows from operating activities:








Net income

$ 17,613


$ 2,751


$ 32,388


$ 17,174

Adjustments to reconcile net income to net cash provided by operating activities:








Depreciation and amortization

5,609


5,913


16,879


14,401

Stock-based compensation

3,829


3,526


8,577


8,181

Deferred income tax expense

(10,379)


1,540


(3,112)


4,471

Loss (gain) on sale or disposal of assets

417


87


417


128

Other

357


(799)


1,279


(870)

Changes in operating assets and liabilities:








Accounts receivable, net

(3,295)


(3,118)


(4,053)


3,555

Inventories, net

988


(2,125)


(5,316)


(6,165)

Other assets

(1,564)


(902)


(2,761)


(230)

Accounts payable

(2,163)


(1,674)


(4,532)


1,050

Accrued liabilities

2,273


(428)


(5,138)


(6,602)

Deferred revenue

81


112


(269)


733

Net cash provided by operating activities

13,766


4,883


34,359


35,826

Cash flows from investing activities:








Sales and maturities of available-for-sale securities

-


-


-


19,491

Purchase of property and equipment

(3,981)


(2,675)


(10,384)


(8,394)

Proceeds from sale of assets

1


42


1


45

Business acquisition consideration, net of cash acquired

-


(1,196)


-


(68,098)

Issuance of note receivable

(700)


-


(700)


-

Purchase of cost method investment

-


(500)


(1,000)


(500)

Acquired technology rights

(60)


-


(60)


(200)

Net cash used in investing activities

(4,740)


(4,329)


(12,143)


(57,656)

Cash flows from financing activities:








Payments on debt

-


-


-


(25,000)

Proceeds from issuance of common stock

1,005


1,799


3,234


3,561

Shares surrendered for tax withholding

(28)


(13)


(2,124)


(1,497)

Dividends

(2,645)


-


(5,281)


-

Net cash (used in) provided by financing activities

(1,668)


1,786


(4,171)


(22,936)

Effect of foreign currency exchange rate on cash

(152)


87


(586)


365

Change in cash and cash equivalents

7,206


2,427


17,459


(44,401)

Cash and cash equivalents, beginning of period

103,705


81,718


93,452


128,546

Cash and cash equivalents, end of period

$ 110,911


$ 84,145


$ 110,911


$ 84,145

LUMINEX CORPORATION

NON-GAAP RECONCILIATION

(in thousands)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016


(unaudited)


(unaudited)









Income from operations

$ 6,529


$ 4,028


$ 28,023


$ 23,329

Stock-based compensation

3,829


3,526


8,577


8,181

Amortization of acquired intangible assets

2,166


2,482


6,689


5,797

Acquisition costs

-


479


-


2,487

Severance costs

243


126


901


940

Adjusted income from operations

$ 12,767


$ 10,641


$ 44,190


$ 40,734

Other income, net

(1)


30


(6)


(1,395)

Acquisition costs

-


-


-


1,500

Income tax expense

11,085


(1,307)


4,371


(4,760)

Income tax effect of above adjusting items

(761)


(305)


(2,053)


(721)

Income tax benefit from discrete tax items

(12,400)




(12,400)



Adjusted net income

$ 10,690


$ 9,059


$ 34,102


$ 35,358

Adjusted net income per share, basic

$ 0.25


$ 0.21


$ 0.79


$ 0.83

Shares used in computing adjusted net income per share, basic

43,164


42,683


43,110


42,522

Adjusted net income per share, diluted

$ 0.25


$ 0.21


$ 0.79


$ 0.82

Shares used in computing adjusted net income per share, diluted

43,266


43,136


43,216


42,929

The Company makes reference in this release to "non-GAAP net income" which excludes stock-based compensation expense, amortization of acquired intangible assets and the impact of costs associated with legal proceedings; some of which are unpredictable and can vary significantly from period to period; 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. In addition, the Company's management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. 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.

Contacts:

Harriss T. Currie

Matthew Scalo


Sr. Vice President, Finance and Chief Financial Officer

Sr. Director, Investor Relations


512-219-8020

512-219-8020


hcurrie@luminexcorp.com

mscalo@luminexcorp.com

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SOURCE Luminex Corporation