Life Technologies Corporation (NASDAQ: LIFE) today announced results for its fourth quarter for the year ended Dec. 31, 2012. Non-GAAP revenue for the fourth quarter was $999 million, an increase of 3 percent over the $970 million reported for the fourth quarter of 2011. Excluding the impact of currency, revenue growth for the quarter was 4.5 percent compared to the same period of the prior year. Full year 2012 revenue was $3.8 billion, an increase of 2 percent over 2011. Excluding currency, revenue growth was also about 2.2 percent over the prior year.
"We started the year with a promise to our shareholders to grow our underlying business, invest in growth markets and regions, deliver on a balanced capital deployment strategy and introduce innovative new products to serve our customers even better. I am extremely pleased that our team remained focused and delivered against this promise, growing revenue and earnings for the thirteenth year in a row," said Gregory T. Lucier, chairman and chief executive officer of Life Technologies.
"We finished the year strong with fourth quarter revenue growth ahead of our expectations at 4.5 percent driven by strength in our Ion Torrent business, which recorded its highest revenue quarter ever. We also achieved a solid return to growth in our Research Consumables business and continued strong performance in our Bioproduction business. We expect the strength we saw across all regions and end markets as we exited 2012, including continued double digit growth in emerging markets, to provide momentum in 2013."
"With $662 million in free cash flow, we were able to return a significant amount of capital to shareholders. We ended the year having repurchased $635 million, or 13.8 million shares in total, well above our 50 percent target. Additionally, we have already repurchased $105 million, or 2 million shares, year-to-date in 2013."
"Looking ahead to 2013, we expect another significant increase in our Ion Torrent business sales for the third consecutive year and expansion in our applied and emerging markets to drive revenue growth of 3 to 5 percent over 2012 results of $3.8 billion. If sequestration is implemented, we estimate it would reduce our revenue by approximately 1 percent and we would expect to be at the low end of our guidance range, at 3 percent growth for 2013. We are guiding to non-GAAP EPS in a range of $4.30 to $4.45, which would result in 8 to 12 percent growth over 2012 results."
Life Technologies reported results compared to the quarter and fiscal year ended Dec. 31, 2011. Results are non-GAAP unless indicated otherwise. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today's press release.
Analysis of Fourth Quarter and Fiscal 2012 Results
Fourth quarter revenue increased 3 percent over the prior year, or 4.5 percent excluding the impact of currency. Full year 2012 revenue increased 2 percent to $3.8 billion. Revenue growth for the quarter and the full year were driven by strong sales from the Ion Torrent business and growth in the company's Research Consumables and Bioproduction businesses, partially offset by expected declines in SOLiD® sales and qPCR royalty revenue.
Gross margin in the fourth quarter was 64.6 percent, a 20 basis point increase compared to the same period of the prior year primarily driven by manufacturing productivity, partially offset by a higher mix of instrument sales and unfavorable currency rates. Full year gross margin was 65.6 percent, an increase of 40 basis points, primarily due to improved product mix and higher realized price, offset by the decrease in qPCR royalties and unfavorable currency rates.
Operating margin was 29.9 percent in the fourth quarter, approximately 70 basis points lower than the same period of the prior year. Operating margin was primarily impacted by unfavorable currency rates and expenses related to our acquisitions in molecular diagnostics. Full year operating margin increased 20 basis points to 29.2 percent. The increase was driven primarily by an increase in gross margins and improvement in currency, partially offset by higher expenses related to our acquisitions in molecular diagnostics.
The tax rate was 27.2 percent for the fourth quarter and 27.6 percent for the full year.
Fourth quarter EPS increased 6 percent to $1.11. Full year EPS increased 7 percent to $3.98. Fourth quarter and the full year were negatively impacted by $(0.03) due to the timing of the 2012 federal R&D tax credit benefit being moved from the fourth quarter of 2012 to 2013. The company's fourth quarter and full year 2012 guidance had assumed the reinstatement and benefit of the federal R&D tax credit by the end of 2012.
Diluted weighted shares outstanding were 175.8 million in the fourth quarter, a decrease of 8.8 million shares over the prior year. The decrease was a result of the continuation of the company's share repurchase program, partially offset by shares issued for employee stock plans. The company repurchased $100 million or 2.0 million shares in the fourth quarter.
Cash flow from operating activities for the fourth quarter was $221 million. Fourth quarter capital expenditures were $48 million, resulting in free cash flow of $173 million. The company ended the quarter with $276 million in cash and short-term investments.
Business Group Highlights
Research Consumables revenue was $409 million in the fourth quarter, an increase of 2 percent compared to the prior year. Excluding the impact from currency, revenue for the business group grew 4 percent. Full year revenue increased 1 percent to $1.6 billion, or 2 percent excluding the impact from currency. Growth for the quarter and full year was mainly driven by strong performance in our cell culture, sample prep and benchtop products.
Genetic Analysis revenue was $401 million in the fourth quarter, an increase of 2 percent over the same period last year. Excluding the impact from currency, revenue increased 4 percent. Full year revenue was flat at approximately $1.5 billion, or up 1 percent excluding the impact from currency. Growth for the quarter and the full year was primarily driven by a substantial increase in our Ion Torrent business, including sales of the Ion PGM™ instruments and Ion Proton™ System, partially offset by an expected decline in SOLiD instrument sales and in qPCR royalty revenue.
Applied Sciences revenue was $190 million in the fourth quarter, an increase of 8 percent over the same period last year. Excluding the impact from currency, revenue increased 10 percent. Full year revenue increased 7 percent to $719 million, or 8 percent excluding the impact from currency. Growth for the quarter was primarily driven by increased sales in Bioproduction and Forensics products. Growth for the full year was primarily driven by increased sales in Bioproduction.
Regional revenue growth rates excluding currency for the fourth quarter compared to the same quarter of the prior year were as follows: the Americas were flat, Europe grew 5 percent, Asia Pacific grew 18 percent and Japan grew 6 percent. Full year growth rates excluding currency were as follows: the Americas declined 1 percent, Europe grew 2 percent, Asia Pacific grew 13 percent and Japan grew 3 percent.
Fiscal Year 2013 Outlook
Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company provided its expectations for fiscal year 2013 financial performance. The company expects revenue growth, excluding currency, of 3 to 5 percent over 2012 revenues of $3.8 billion. If sequestration is implemented, it would reduce revenue by approximately 1 percent and the company would expect be at the low end of the guidance range, at 3 percent growth for 2013. The company expects non-GAAP EPS to be in a range of $4.30 to $4.45. At December month end rates, currency negatively impacts revenue by $(2) million and non-GAAP EPS by about $(0.01). The company will provide further detail on its business outlook during the webcast today.
Life Technologies Corporation