Life Technologies first-quarter non-GAAP 2010 revenue increases 13% to $887 million

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Life Technologies Corporation (NASDAQ: LIFE) today announced results for its first quarter ending March 31, 2010. Non-GAAP revenue for the first quarter was $887 million, an increase of 13 percent over the $785 million reported for the first quarter of 2009. Excluding the impact of currency and completed acquisitions and divestitures, organic revenue for the quarter grew 10 percent over the same period in the previous year.

“Our singular focus on disciplined execution has enabled us to successfully navigate through a tough economic period while still increasing our investment in new technologies and markets.”

"I am very pleased with the continued strong growth in both revenue and earnings that we achieved in the first quarter of this year, especially given the strength of our performance in 2009," said Gregory T. Lucier, Chairman and Chief Executive Officer of Life Technologies. "Our singular focus on disciplined execution has enabled us to successfully navigate through a tough economic period while still increasing our investment in new technologies and markets."

Analysis of First Quarter 2010 Results

  • First quarter non-GAAP 2010 revenue increased 13 percent over the previous year, which was a result of strong growth across all businesses and geographies. Revenue growth without the impact from currency, completed acquisitions, and divestitures was 10 percent. Foreign currency exchange had a positive 4-point effect and completed acquisitions and divestitures had a negative 1-point effect on reported revenue growth.
  • Non-GAAP gross margin in the first quarter was 68.3 percent, an improvement of 160 basis points over the prior year. Gross margin expansion was a result of manufacturing productivity, synergy realization such as savings in procurement, price gains across the portfolio, and currency.
  • Non-GAAP operating margin was 29.5 percent in the first quarter, representing an increase of approximately 330 basis points over the same period in 2009. The increase in operating margin primarily resulted from gross margin expansion, synergies, and other operating expense reductions.
  • First quarter non-GAAP tax rate was 30.0 percent.
  • Diluted weighted shares outstanding were 190 million in the first quarter.
  • Cash flow from operating activities for the first quarter was $71 million. First quarter capital expenditures were $30 million and resulting free cash flow was $41 million. The company ended the quarter with $642 million in cash and short-term investments, including $20 million held as restricted cash.
  • The following analysis of diluted earnings per share identifies specific items that affect the comparability of results between periods. Reconciliations between the company's GAAP and non-GAAP results for the periods reported are presented in the attached tables and on the company's Investor Relations page at www.lifetechnologies.com.

Business Highlights:

  • Molecular Biology Systems division revenue was $432 million in the first quarter, an increase of approximately 13 percent over the same period last year. Excluding the impact from currency and acquisitions, organic revenue growth was 10 percent. This growth was a result of broad demand across the portfolio, including robust growth in the PCR and Genomic Assays units and strong demand for animal, food and environmental testing products.

Technology highlights include:

  • The 7500 Fast Dx Real-Time PCR Instrument gained CE IVD mark and is available as a platform suitable for in vitro diagnostics (IVD) use in Europe. Clinical laboratories from 22 European countries and institutions that develop in vitro molecular diagnostic assays will now be able to leverage the instrument's regulatory clearance to develop tests for clinical applications.
  • The introduction of MicroSEQ Salmonella spp. Detection Kit which is part of a complete pathogen detection workflow and optimized for use with the Applied Biosystems 7500 Fast Real-Time PCR System. The kit has been validated by the AOAC Research Institute for use with 11 different food sample types, and for both high and low-throughput testing workflows.
  • Genetic Systems division revenue was $238 million in the first quarter, an increase of 14 percent over the same period last year. Excluding the impact from currency and the completed divestiture of the SQL*LIMS business, organic revenue growth was 12 percent. This increase was a result of double-digit growth in the next generation sequencing and human identification businesses, in addition to strength in capillary electrophoresis instruments and reagents sold to research and clinical labs.

Technology highlights include:

  • The introduction and shipment of the SOLiD™ 4 Sequencing System which generates up to 100 gigabases of mappable sequence data per run at a cost of $6,000 per genome.
  • The announcement of the SOLiD PI™ System which will provide individual researchers and sequencing core laboratories with a cost-effective instrument that delivers an accuracy level of 99.99 percent.
  • The approval of the AmpFℓSTR® MiniFiler™ PCR Amplification Kit for inclusion in the National DNA Index System (NDIS). The MiniFiler kit is designed to obtain DNA results from compromised or degraded samples and has proven its utility globally in a wide range of investigations, including cold cases, missing person cases, exonerations and historical and archeological cases.
  • Cell Systems division revenue was $214 million in the first quarter, an increase of 11 percent over the same period last year. Excluding the impact from currency, organic revenue grew 8 percent year over year, as a result of double-digit growth in Bioproduction, Primary and Stem Cell Systems and Beads Based Separation unit.

Technology highlights include:

  • The Applied Biosystems ViralSEQTM Vesivirus Detection Kit, a new molecular test for the detection of Vesivirus 2117, a potential contaminant of mammalian cell culture based biopharmaceutical manufacturing. The kit is a highly sensitive and accurate test that enables the quick isolation and detection of Vesivirus 2117 from cell culture samples.
  • The Mass Spectrometry division, the company's joint venture with MDS Analytical Technologies, was divested on February 1st. The division contributed a loss of $1 million in other income for the quarter, excluding amortization and the gain recognized upon sale.
  • Regional organic growth rates for the quarter compared to the same quarter of the prior year were as follows: the Americas increased 8 percent, Europe 5 percent, Asia Pacific 25 percent, and Japan 23 percent.
  • Revenue from orders transacted through Life Technologies eCommerce channels grew 18 percent during the quarter. Approximately 35 percent of all consumables revenue flows through eCommerce channels.

Fiscal Year 2010 Outlook

Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company reiterated its expectations for fiscal year 2010 financial performance. Organic revenues are expected to increase in the mid- to high-single digits. This level of organic revenue growth is expected to result in approximately $3.30 to $3.50 of non-GAAP earnings per share. Including the hedges already in place, currency is expected to have a positive impact of 1 to 2 percentage points on revenue growth rates in 2010. The company will provide further detail on its business outlook during the conference call today.

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