Meridian Bioscience, Inc., Cincinnati, Ohio (NASDAQ: VIVO) today:
- reported first quarter net sales of $37.3 million, a decrease of 12%, from the same period of the prior fiscal year;
- reported first quarter operating income of $9.1 million, a decrease of 34%, from the same period of the prior fiscal year;
- reported first quarter earnings and diluted earnings per share of $6 million and $0.15, both decreases of 32% compared to the fiscal 2010 first quarter;
- declared the regular quarterly cash dividend of $0.19 per share for the first quarter of fiscal 2011, (indicated annual rate of $0.76 per share), the same as the regular quarterly rate of fiscal 2010; and
- reaffirmed its fiscal 2011 guidance of per share diluted earnings between $0.77 and $0.82 on net sales of $165 million to $170 million.
FIRST QUARTER OPERATING RESULTS
Net sales for the first quarter of fiscal 2011 were $37,263,000 as compared to $42,457,000 for the same period of the prior fiscal year, a decrease of 12%. Net earnings for the first quarter of fiscal 2011 were $6,025,000, or $0.15 per diluted share, both decreases of 32% from the first quarter of fiscal 2010. Diluted common shares outstanding for the first quarter of fiscal 2011 and 2010 were 41,294,000 and 41,185,000, respectively.
CASH DIVIDEND MATTERS
The Board of Directors declared the regular quarterly cash dividend of $0.19 per share for the quarter ended December 31, 2010. The dividend is of record January 31, 2011 and payable February 10, 2011. This annual indicated dividend rate of $0.76 per share remains the same as fiscal 2010. Guided by the Company's policy of setting a payout ratio 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 2011 GUIDANCE REAFFIRMED
For the fiscal year ending September 30, 2011, management expects net sales to be in the range of $165 million to $170 million and per share diluted earnings to be between $0.77 and $0.82. The sales and earnings guidance provided in this press release does not include the impact of any acquisitions the Company might complete during fiscal 2011.
The Company's financial condition is sound. At December 31, 2010, current assets were $95.2 million compared to current liabilities of $17.5 million, thereby producing working capital of $77.7 million and a current ratio of 5.4. Cash and short-term investments were $41.5 million and the Company had 100% borrowing capacity under its $30,000,000 commercial bank credit facility. The Company has no bank-debt obligations outstanding.
John A. Kraeutler, Chief Executive Officer, said, "With sales of the year ago period heavily impacted by high swine flu driven demand for our rapid flu tests, and very limited flu incidence and related sales in the first fiscal quarter of 2011, assessments based upon the comparative financial results are challenging. Quarterly revenues declined by $5.2 million, with the $9 million decline in upper respiratory revenues partially offset by the $3.4 million in sales contributed by our Bioline acquisition which closed in July 2010. The shortfall in flu revenues had been anticipated in our fiscal 2011 Plan and guidance.
In our Diagnostics business, the strategic focus products performed well. H. pylori sales, in response to our continuing collaborations with managed care agencies, grew by 16% in the U.S. and 11% globally, exceeding $5 million for the quarter. Our foodborne testing category grew by 10% globally. Large distributor purchases in the year ago period, some of which were product launch-related, affected the current quarter comparison. However, shipments of foodborne tests to labs, which includes both direct shipments as well as distributor shipments, grew by nearly 50% in the quarter. We achieved stability in our C. difficile category with illumigene® revenues almost entirely offsetting declines from our traditional immunoassay tests. illumigene is still in the early phases of launch; however, I am pleased to say that we have approximately 200 customers thus far, an increase from 125 in early November. Recently, we initiated a series of workshops in the U.S. and expanded our distribution capabilities for this new technology. Importantly, gross profit margins in Cincinnati, our diagnostic test manufacturing facility, reached nearly 70% for the period signaling continued efficiencies favorably impacting results.
Meridian Life Science, led by strong sales at Bioline, grew by nearly 60%. We are very pleased with the performance of Bioline thus far. New product sales from the MyTaq and SensiFast reagents look very promising and are expected to lead Bioline to outperform expectations. As originally planned, we expect Bioline to contribute profits in the second half of the year after certain purchase accounting adjustments related to inventory are behind us. Lighter production resulted in unfavorable manufacturing variances in our Tennessee facility that negatively impacted the quarter. This will be remedied in the subsequent quarters as revenues and production increase. Overall, we expect Life Science to perform well.
Due to strong customer demand for our H. pylori and foodborne testing products, ramping conversions of labs to our illumigene platform, a robust follow-on illumigene pipeline including Group B strep, and positive early experience with the Bioline business, we are maintaining our guidance for the year. We look forward to reporting second quarter results with clean comparables not impacted by flu test sales cycles."
William J. Motto, Executive Chairman of the Board, said, "Profitability and efficiency measures are favorable and our main challenge is to increase sales. Meridian's financial condition is strong and cash flow is adequate to fund operating requirements and dividends. The integration of our acquisition of Bioline has gone very smoothly and we continue to look for additional businesses to acquire."
Meridian Bioscience, Inc.,