Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating
results for the third quarter of 2014.
Results for the three months ended September 30,
2014:
- Total revenue was $87.1 million,
compared to $80.4 million in third quarter of 2013. Total revenue
grew by 8.4% over the third quarter of 2013.
- Product revenue was $78.1 million
compared to $74.8 million in the third quarter of 2013, an increase
of 4.4%.
- GAAP net income was $2.4 million, or
$0.03 per diluted share, as compared to a GAAP net loss of $4.2
million, or $0.06 per diluted share, in the third quarter of 2013,
an increase of $6.6 million or $0.09 per diluted share.
- Non-GAAP net income was $6.3 million,
or $0.08 per diluted share, compared to a non-GAAP net income of
$3.3 million, or $0.05 per diluted share, for the third quarter of
2013. Please refer to "Itemized Reconciliation Between GAAP and
Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and
non-GAAP financial measures.
- Total balance in cash and cash
equivalents was $68.3 million and senior debt was $24.0 million as
of September 30, 2014.
Product revenue for the third quarter of 2014 was $78.1 million
and service and other revenue was $9.0 million. This compares to
product revenue of $74.8 million and service and other revenue of
$5.6 million in the third quarter of 2013. Product revenue for the
third quarter of 2014 included consumable revenue of $73.7 million
and instrument revenue of $4.4 million. Product revenue for the
third quarter of 2013 included consumable revenue of $72.0 million
and instrument revenue of $2.8 million.
Total GAAP gross margin was 59%, as compared to 55% in the same
period of 2013. Excluding non-GAAP adjustments such as the
amortization of acquired intangible assets, gross margin for the
third quarter of 2014 was 61% compared to 61% in the same period of
2013. Please refer to the "Itemized Reconciliation Between GAAP and
Non-GAAP Gross Margin" for a reconciliation of these GAAP and
non-GAAP financial measures.
For the third quarter of 2014, operating expenses were $46.6
million on a GAAP basis as compared to $45.1 million in the same
period of 2013. Excluding non-GAAP adjustments, such as the
amortization of acquired intangible assets and non-recurring
charges, operating expenses for the third quarter of 2014 were
$44.1 million, compared to an adjusted total of $41.9 million in
the same period of 2013. The increase is primarily due to higher
variable compensation costs and legal costs associated with
litigation matters. Please refer to the "Itemized Reconciliation
Between GAAP and Non-GAAP Operating Expenses" for a reconciliation
of these GAAP and non-GAAP financial measures.
“We are pleased with our overall financial performance for the
third quarter. From a year-to-date perspective, we have grown our
total revenue by approximately 7.5%,” stated Frank Witney,
President and CEO. “This underscores the strength of our product
portfolio and validates our strategy of diversifying our revenues
and focusing on high-growth markets.”
"During the third quarter, we generated a GAAP profit driven by
strong topline growth, rigorous cost controls and exceeding our
target non-GAAP gross margin," stated Gavin Wood, EVP and CFO. "As
a result of our strong year-to-date performance, we are raising our
full-year guidance to total revenue of $345 million and adjusted
EBITDA of approximately 17% of revenue."
Recent developments:
- The Company signed a multi-year supply
agreement covering Affymetrix arrays and instruments to be utilized
as part of Ariosa’s Harmony™ Non-Invasive Prenatal Test (NIPT). The
partnership enables Ariosa to pursue the development of a Harmony
test kit that will allow other laboratories around the world to
adopt and perform this test. This announcement follows the recent
publication of a study in Fetal Diagnosis and Therapy online in
which Ariosa’s scientists successfully tested and implemented
Affymetrix microarrays as part of a DNA quantification method for
the Harmony test. The study demonstrated better performance of
Affymetrix microarrays in comparison to a next generation
sequencing approach in regard to shorter turn-around time and
improved precision in measuring chromosome concentration and fetal
fraction of cell-free DNA.
- Affymetrix exclusively licensed
technology from Peptide Groove LLP that enables HLA
typing of human samples from genotyping data generated from a
variety of assays including the company's Axiom® genotyping
assays. The partners at Peptide Groove LLP developed
HLA*IMP, the first HLA typing statistical imputation method which
can call 4-digit HLA types from SNP genotyping data with high
accuracy. Alternative methods for HLA typing, such as DNA
sequencing, can be laborious, time consuming, and expensive.
Imputing HLA types from genotyping data, such as those from
Affymetrix’ Axiom genotyping platform, offers a new, very
high-throughput, and low-cost approach. The technology will enable
purpose-built, highly efficient HLA typing screening arrays that
could prove useful for a broad range of HLA typing application
needs, including donor repositories, drug development clinical
trials, and many translational research studies. Additionally,
customers using Affymetrix Axiom biobank arrays and other
genotyping arrays for GWAS and fine mapping will be able to
ascertain HLA type information without the need for further
experimentation.
Affymetrix will host a conference call on Thursday, October 30,
2014 at 2:00 p.m. PT to review its operating results for the third
quarter of 2014. A live webcast can be accessed by visiting the
Investor Relations section of the Company's website at www.affymetrix.com. In addition, investors
and other interested parties can listen by dialing domestic: (877)
407-8291, international: (201) 689-8345.
A replay of this call will be available from 5:00 p.m. PT on
October 30, 2014 until 8:00 p.m. PT on November 7, 2014 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The conference call passcode to access the replay is
13592101. An archived webcast of the conference call will be
available under the Investor Relations section of the Company's
website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical,
diagnostic, and biotechnology companies, as well as leading
academic, government, and nonprofit research institutes. More than
2,300 systems have been shipped around the world and more than
65,000 peer-reviewed papers have been published using the
technology. Affymetrix is headquartered in Santa Clara, California,
and has manufacturing facilities in Cleveland, Ohio, San Diego,
California, Singapore and Vienna, Austria. The Company has about
1,100 employees worldwide and maintains sales and distribution
operations across Europe, Asia and Latin America.
All statements in this press release that are not historical are
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act as amended, including statements
related to our plans to return to growth and sustained
profitability as well as other statements regarding Affymetrix's
"expectations," "beliefs," "hopes," "intentions," "strategies" or
the like. Such statements are subject to risks and uncertainties
that could cause actual results to differ materially for Affymetrix
from those projected, including, but not limited to: Affymetrix's
ability to stabilize its business and grow revenue, Affymetrix's
ability to timely and successfully integrate and realize the
anticipated strategic benefits and costs savings or other synergies
of the acquisition of eBioscience in a cost-effective manner while
minimizing the disruption to its business; risks that eBioscience's
future performance may not be consistent with its historical
performance; risks relating to Affymetrix's ability to make
scheduled payments of the principal of, to pay interest on or to
refinance its indebtedness; risks relating to Affymetrix's ability
to successfully develop and commercialize new products, including
its ability to successfully develop and commercialize novel
molecular solutions based on eBioscience's portfolio of reagents;
risks relating to past and future acquisitions, including the
ability of Affymetrix to successfully integrate such acquisitions
into its existing business; risks of Affymetrix's ability to
achieve and sustain higher levels of revenue, higher gross margins
and reduced operating expenses; risks relating to Affymetrix's
ability to generate cash after interest and principal payments;
uncertainties relating to technological approaches; risks
associated with manufacturing and product development; personnel
retention; uncertainties relating to cost and pricing of Affymetrix
products; dependence on collaborative partners; uncertainties
relating to sole-source suppliers; uncertainties relating to FDA
and other regulatory approvals; competition; risks relating to
intellectual property of others and the uncertainties of patent
protection and litigation. These and other risk factors are
discussed in Affymetrix's Annual Report on Form 10-K for the year
ended December 31, 2013, and other SEC reports. Affymetrix
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in Affymetrix's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statements are based.
In addition to providing financial measures based on generally
accepted accounting principles in the United States (GAAP),
Affymetrix has disclosed in this press release its net loss and net
loss per share as well as its total gross margin and operating
expenses for the third quarter of 2014 and 2013 excluding specified
items. Reconciliation of GAAP to Non-GAAP measures can be found in
the tables included in this press release. Affymetrix has
determined to disclose this financial information to investors
because it believes it will be useful, as a supplement to GAAP
measures, in comparing Affymetrix's operating performance in the
third quarter of 2014 as compared to the prior-year period. These
Non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, financial information prepared in
accordance with GAAP.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other
trademarks are the property of Affymetrix, Inc.
- Financial Charts to Follow -
AFFYMETRIX, INC. UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS (IN THOUSANDS) September
30, December 31, 2014 2013
ASSETS: (Note 1) Current assets: Cash and cash equivalents $
68,327 $ 57,128 Accounts receivable, net 46,037 50,862 Inventories,
net—short-term portion 51,674 58,059 Deferred tax assets—short-term
portion 1,974 767 Prepaid expenses and other current assets 8,964
8,920 Total current assets 176,976 175,736 Property
and equipment, net 16,137 18,671 Inventories, net—long-term portion
6,098 5,972 Goodwill 157,962 161,595 Intangible assets, net 112,339
131,108 Deferred tax assets—long-term portion 344 355 Other
long-term assets 10,699 11,074 Total assets $ 480,555
$ 504,511
LIABILITIES AND STOCKHOLDERS’
EQUITY: Current liabilities: $ 47,806 $ 45,534 Accounts payable
and accrued liabilities 4,000 12,750 Current portion of long-term
debt 12,953 18,660 Deferred revenue—short-term
portion 64,759 76,944 Total current liabilities 2,524 2,824
Deferred revenue—long-term portion 105,000 105,000 4.00% notes
19,950 26,700 Term loan—long-term portion 20,445 21,496
Other long-term liabilities 212,678 232,964
Total liabilities Stockholders’ equity: 736 723 Common stock
778,393 768,149 Additional paid-in capital 3,466 8,392 Accumulated
other comprehensive income (514,718 ) (505,717 ) Accumulated
deficit 267,877 271,547 Total stockholders’ equity $
480,555 $ 504,511 Total liabilities and stockholders’
equity Note 1: The condensed consolidated balance
sheet at December 31, 2013 has been derived from the audited
consolidated financial statements at that date included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2013.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 REVENUE: Product
sales $ 78,069 $ 74,776 $ 227,644 $ 220,505 Services and other
9,017 5,578 27,845 17,258 Total revenue
87,086 80,354 255,489 237,763
COSTS
AND EXPENSES: Cost of product sales 29,140 32,600 89,211
100,621 Cost of services and other 6,426 3,915 19,358 11,128
Research and development 12,926 11,478 37,443 35,686 Selling,
general and administrative 33,718 33,646 108,546 102,286 Litigation
settlement — — 5,100 — Restructuring charges — (2
)
— 4,484 Total costs and expenses 82,210 81,637
259,658 254,205 Income (loss) from operations
4,876 (1,283 ) (4,169 ) (16,442 ) Other (expense) income, net
(1,008 ) 68 703 501 Interest expense 1,595 2,652
4,972 8,274 Income (loss) before income taxes 2,273
(3,867 ) (8,438 ) (24,215 ) Income tax (benefit) provision (111 )
289 563 1,485 Net income (loss) $ 2,384
$ (4,156 ) $ (9,001 ) $ (25,700 ) Basic net income (loss)
per common share $ 0.03 $ (0.06 ) $ (0.12 ) $ (0.36 )
Diluted net income (loss) per common share $ 0.03 $ (0.06 )
$ (0.12 ) $ (0.36 ) Shares used in computing basic net
income (loss) per common share 73,413 71,600 72,955
71,227 Shares used in computing diluted net income
(loss) per common share 76,315 71,600 72,955
71,227
AFFYMETRIX, INC. RESULTS OF
OPERATIONS – NON-GAAP (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS) (UNAUDITED) ITEMIZED RECONCILIATION
BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS)
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 GAAP net income (loss) -
basic and diluted $ 2,384 $ (4,156 ) $ (9,001 ) $ (25,700 )
Amortization of inventory fair value adjustment — 2,896 4,666
11,980 Amortization of acquired intangible assets 3,913 4,536
12,593 13,691 Acquisition-related integration costs — — — 748
Litigation settlement — — 5,100 — Restructuring charges — (2
) — 4,484 Non-GAAP net income - basic and diluted $
6,297 $ 3,274 $ 13,358 $ 5,203
Non-GAAP basic net income per common share $ 0.09 $ 0.05
$ 0.18 $ 0.07 Non-GAAP diluted net income per
common share $ 0.08 $ 0.05 $ 0.18 $ 0.07
Shares used in computing Non-GAAP basic net income
per common share 73,413 71,600 72,955 71,227
Shares used in computing Non-GAAP diluted net income per
common share 76,315 71,600 72,955 71,227
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months Ended September 30,
Nine Months Ended September 30, 2014
2013 2014 2013 GAAP total gross margin
$ 51,520 59 % $ 43,839 55 % $ 146,920
58 % $ 126,014 53 % Amortization of
inventory fair value adjustment — — % 2,896 4 % 4,666 2 % 11,980 5
% Amortization of acquired intangible assets 1,352 2 % 1,332
2 % 4,073 1 % 4,023 2 % Non-GAAP total gross
margin $ 52,872 61 % $ 48,067 61 % $ 155,659
61 % $ 142,017 60 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months Ended Nine Months
Ended September 30, September 30, 2014
2013 2014 2013 Total GAAP
operating expenses $ 46,644 $ 45,122 $ 151,089 $ 142,456
Amortization of acquired intangible assets (2,561 ) (3,206 ) (8,520
) (9,670 ) Acquisition-related integration costs — — — (748 )
Litigation settlement — — (5,100 ) — Restructuring charges —
2 — (4,484 ) Total Non-GAAP operating expenses $
44,083 $ 41,918 $ 137,469 $ 127,554
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP ADJUSTED EBITDA AS PERCENTAGE OF REVENUE
Three Months Ended Nine Months
Ended September 30, September 30, 2014
2013 2014 2013 GAAP net income
(loss) $ 2,384 $ (4,156 ) $ (9,001 ) $ (25,700 ) Depreciation and
amortization 7,318 9,612 23,844 30,076 Amortization of inventory
fair value adjustment — 2,896 4,666 11,980 Interest expense, net
1,588 2,646 4,919 8,279 Income tax provision (111 ) 289 563
1,485 EBITDA 11,179 11,287 24,991 26,120
Adjustments to EBITDA: Share-based compensation 3,164 1,952 9,436
5,109 Loss (gain) on foreign currency 1,472 (499 ) 1,807 22
Litigation charges 801 522 9,160 1,759 (Gain) loss on sales of
securities (444 ) 175 (1,684 ) 205 Restructuring and integration
charges — (2 ) — 5,555 Other adjustments (14 ) 260 (772 )
(779 ) Adjusted EBITDA $ 16,158 $ 13,695 $ 42,938
$ 37,991
Revenue $ 87,086 $ 80,354 $ 255,489
$ 237,763 Adjusted EBITDA as percentage of
revenue 19 % 17 % 17 % 16 %
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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