Affymetrix, Inc. (NASDAQ:AFFX) today reported its operating
results for the three and twelve months ended December 31,
2014.
Results for the year ended December 31, 2014:
- Total revenue was $349.0 million, as
compared to total revenue of $330.4 million in 2013. Total revenue
grew by 8.9% in 2014, after adjusting for a one-time license
payment of $5.3 million in 2013 and the sale of its Anatrace
business with revenues of $4.5 million.
- Total GAAP gross margin was 59%, as
compared to 55% in 2013. Non-GAAP gross margin was 62%, as compared
to 60% in 2013.
- Non-GAAP net income was $22.3 million,
or $0.30 per diluted share, as compared to $7.4 million, or $0.10
per diluted share, for 2013. Please refer to the “Itemized
Reconciliation Between GAAP and Non-GAAP Income (Loss)” for a
reconciliation of these GAAP and non-GAAP financial measures.
- GAAP net loss was $3.8 million, or
$0.05 per diluted share, as compared to a net loss of $16.3
million, or $0.23 per diluted share, in 2013.
- Cash provided by operating activities
was $43.5 million. Total balance in cash and cash equivalents was
$79.9 million as of December 31, 2014. Senior secured debt is
$23.0 million at the end of the year following net debt payments of
$16.5 million in 2014.
Product revenue for the year ended December 31, 2014 was
$310.5 million and services and other revenue was $38.6 million.
This compares to product revenue of $302.6 million and services and
other revenue of $27.8 million in 2013. Product revenue for 2014
included consumable revenue of $294.2 million and instrument
revenue of $16.2 million. Product revenue for 2013 included
consumable revenue of $288.2 million and instrument revenue of
$14.4 million.
Total GAAP gross margin was 59%, as compared to 55% in 2013.
Excluding non-GAAP adjustments such as amortization of step-up in
inventory fair value and acquired intangible assets, total margin
was 62% in 2014, as compared to 60% in 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 2014, operating expenses were $203.7 million on a GAAP basis
as compared to $193.6 million in 2013. Excluding Non-GAAP
adjustments such as the amortization of acquired intangible assets
and non-recurring charges, operating expenses were $187.7 million,
compared to an adjusted total of $175.5 million in 2013. The
increase in 2014 is primarily driven by higher variable
compensation expenditure. Please refer to the "Itemized
Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a
reconciliation of these GAAP and Non-GAAP financial measures.
Results for the three months ended December 31,
2014:
- Total revenue was $93.5 million, as
compared to $92.6 million in the fourth quarter of 2013. Total
revenue grew by 7.3% over the fourth quarter of 2013, after
adjusting for a one-time license payment of $5.3 million in 2013
and the sale of its Anatrace business with revenues of $0.2 million
in the fourth quarter of 2014.
- Total GAAP gross margin was 63%, as
compared to 59% in the fourth quarter of 2013. Non-GAAP gross
margin was 64%, as compared to 62% in the fourth quarter of
2013.
- Non-GAAP net income was $8.9 million,
or $0.09 per diluted share, as compared to $2.2 million, or $0.02
per diluted share, for the fourth 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.
- GAAP net income was $5.2 million, or
$0.05 per diluted share, as compared to $9.4 million, or $0.10 per
diluted share, in the fourth quarter of 2013. GAAP net income in
2013 included a gain on the divestiture of the Company's Anatrace
business of $9.3 million, or $0.10 per diluted share and a one-time
license payment of $5.3 million, or $0.06 per diluted share.
Product revenue for the fourth quarter of 2014 was $82.8 million
and services and other revenue was $10.7 million. This compares to
product revenue of $82.1 million and service and other revenue of
$10.5 million in the fourth quarter of 2013. Product revenue for
the fourth quarter of 2014 included consumable revenue of $78.0
million and instrument revenue of $4.8 million. Product revenue for
the fourth quarter of 2013 included consumable revenue of $78.1
million and instrument revenue of $4.0 million.
Total GAAP gross margin was 63%, as compared to 59% in the same
period of 2013. Excluding Non-GAAP adjustments such as the
amortization of step-up in inventory fair value and one-time
licensing payment, total margin was 64% compared to 62% for the
fourth quarter 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 fourth quarter of 2014, operating expenses were $52.7
million on a GAAP basis as compared to $51.1 million in 2013.
Excluding Non-GAAP adjustments such as the amortization of acquired
intangible assets and non-recurring charges, operating expenses
were $50.2 million, compared to an adjusted total of $47.9 million
in 2013. The increase in 2014 is primarily driven by higher
variable compensation expenditure. 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 successfully executed against our priorities for 2014,
enabling us to enter Phase III of our strategic plan in a strong
financial and competitive position," said Frank Witney, President
and CEO. "We diversified our revenue and entered the large and
growing markets of translational medicine, molecular diagnostics,
and single cell biology, while also expanding our genotyping
presence. Last year we generated solid top-line growth and expanded
our reach into Non-Invasive Pregnancy Testing and AgBio
applications."
"In addition to our strong revenue growth, we also expanded our
gross margin and maintained tight control of our operating
expenses. The combined effect of these actions is a substantial
improvement of $14.9 million in our Non-GAAP net income over 2013,
representing an EPS increase of $0.20 per diluted share on a
Non-GAAP basis,” stated Gavin Wood, EVP and CFO. "We also reduced
our outstanding senior debt to $23 million and exited the year with
cash-on-hand of $80 million."
Recent developments:
- Axiom® Genotyping Solution has been
selected by Toshiba Corporation’s (TYO:
6502) Healthcare Company as the platform for its newly
launched genotyping service. Affymetrix collaborated
with Toshiba to custom design and manufacture the
Japonica Array™, which is based on the Axiom platform. This array
contains unique genetic content specifically optimized for the
Japanese population. Toshiba has launched this genotyping
service as of Dec. 1, 2014 for Japanese population
genotyping studies primarily servicing universities, hospitals, and
other research agencies and institutes.
- eBioscience, launched PrimeFlow™
RNA Assay, the first and only flow cytometry assay capable of
simultaneous detection of RNA and protein within millions of cells
at single-cell resolution. Current flow cytometry applications are
limited to antibody-based interrogation of cell surface and
intracellular proteins. With the novel PrimeFlow assay, researchers
can now incorporate the simultaneous analysis of RNA transcripts
and proteins to elevate their understanding of single-cell
dynamics.
- The launch of Concurrent Molecular
Analysis Profiling (CoMAP™) capability, which enables cancer
researchers to gain rapid insight into the functional impact of DNA
copy number alterations by combining whole-genome copy number data
with gene expression profiles to easily and cost-effectively
visualize and identify cancer driver events. The CoMAP capability
is a new functionality included in Affymetrix’ new Chromosome
Analysis Suite (ChAS) 3.0 Software that enables researchers to
easily and quickly analyze and visualize the functional impact of
copy number changes on gene expression in cancer samples, including
FFPE tissue.
- eBioscience and Binding Site Group
Ltd. have entered into a multi-year global distribution
agreement. Under this agreement, The Binding Site has
been granted the exclusive rights to distribute the eBioscience
clinical flow cytometry reagents (ASR & CE marked) in the
clinical care market, including hospitals and reference labs.
Affymetrix will host a conference call on Wednesday,
February 4, 2015 at 2:00 p.m. PT to review its operating
results for the fourth quarter and fiscal year 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
February 4, 2015 until 8:00 p.m. PT on February 11, 2015 at
the following numbers: domestic: (877) 660-6853, international:
(201) 612-7415. The conference call passcode to access the replay
is 13598692. 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
94,500 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 income
(loss) and net income (loss) per share as well as its total gross
margin and operating expenses for the fourth quarter of and fiscal
year ended 2014 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 fourth quarter of and year ended 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)
December 31,2014
December 31,2013
ASSETS: (See Note 1) Current assets: Cash and cash
equivalents $ 79,923 $ 57,128 Accounts receivable, net 46,896
50,862 Inventories—short-term portion 50,676 58,059 Deferred tax
assets—short-term portion 3,778 767 Prepaid expenses and other
current assets 9,197 8,920 Total current assets
190,470 175,736 Property and equipment, net 18,087 18,671
Inventories—long-term portion 5,956 5,972 Goodwill 156,178 161,595
Intangible assets, net 106,183 131,108 Deferred tax
assets—long-term portion 303 355 Other long-term assets 9,371
11,074 Total assets $ 486,548 $ 504,511
LIABILITIES AND STOCKHOLDERS' EQUITY: Current
liabilities: Accounts payable and accrued liabilities $ 53,063 $
45,534 Term loan—short-term portion 4,000 12,750 Deferred
revenue—short-term portion 9,210 18,660
Total current liabilities
66,273 76,944 Deferred revenue—long-term portion 2,372 2,824
Convertible notes 105,000 105,000 Term loan—long-term portion
18,950 26,700 Other long-term liabilities 21,626 21,496
Stockholders' equity: Common stock 743 723 Additional paid-in
capital 781,747 768,149 Accumulated other comprehensive income (612
) 8,392 Accumulated deficit (509,551 ) (505,717 ) Total
stockholders' equity 272,327 271,547 Total
liabilities and stockholders' equity $ 486,548 $ 504,511
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 EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014 2013
REVENUE: (See Note 1) Product sales $ 82,814 $ 82,113 $
310,458 $ 302,618 Services and other 10,716 10,523
38,561 27,781 Total revenue 93,530 92,636
349,019 330,399
COSTS AND EXPENSES:
Cost of product sales 28,288 33,361 117,499 133,982 Cost of
services and other 6,300 4,251 25,659 15,379 Research and
development 12,784 11,984 50,227 47,670 Selling, general and
administrative 39,866 39,144 148,411 141,430 Litigation settlement
— — 5,100 — Restructuring charges — 6 — 4,490
Total costs and expenses 87,238 88,746 346,896
342,951 Income (loss) from operations 6,292 3,890
2,123 (12,552 ) Interest income and other, net (50 ) 301 652 802
Interest expense 1,401 4,437 6,373 12,711 Gain on sale of product
line — 9,295 — 9,295 Income (loss)
before income taxes 4,841 9,049 (3,598 ) (15,166 ) Income tax
(benefit) provision (326 ) (324 ) 236 1,161 Net
income (loss) $ 5,167 $ 9,373 $ (3,834 ) $ (16,327 )
Basic net income (loss) per common share $ 0.07 $
0.13 $ (0.05 ) $ (0.23 ) Diluted net income (loss) per
common share $ 0.05 $ 0.10 $ (0.05 ) $ (0.23 )
Shares used in computing basic net income (loss) per common share
73,933 72,077 73,202 71,441 Shares used
in computing diluted net income (loss) per common share 94,585
92,513 73,202 71,441 Note 1: The
condensed consolidated statement of operations for the twelve
months ended 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. RESULTS OF
OPERATIONS – NON-GAAP (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS) (UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP NET INCOME (LOSS)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014 2013 GAAP
net income (loss) - basic and diluted $ 5,167 $ 9,373 $ (3,834 ) $
(16,327 ) Amortization of inventory fair value adjustment — 2,896
4,666 14,876 Amortization of acquired intangible assets 3,759 4,543
16,352 18,234 Litigation settlement — — 5,100 — Acquisition-related
integration costs — — — 748 Gain on sale of product line — (9,295 )
— (9,295 ) One-time licensing payment — (5,300 ) — (5,300 )
Restructuring charges — 6 — 4,490
Non-GAAP net income - basic and diluted $ 8,926 $ 2,223
$ 22,284 $ 7,426 Non-GAAP basic net
income per common share $ 0.12 $ 0.03 $ 0.30 $
0.10 Non-GAAP diluted net income per common share $ 0.09
$ 0.02 $ 0.30 $ 0.10 Shares used
in computing Non-GAAP basic net income per common share 73,933
72,077 73,202 71,441 Shares used in
computing Non-GAAP diluted net income per common share 94,585
92,513 73,202 71,411
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014 2013 GAAP
total gross margin $ 58,942 63 % $ 55,024 59 %
$ 205,861 59 % $ 181,038 55 % Amortization of
inventory fair value adjustment — — % 2,896 3 % 4,666 1 % 14,876 5
% Amortization of acquired intangible assets 1,316 1 % 1,345 2 %
5,389 2 % 5,367 1 % One-time licensing payment — — % (5,300
) (2 )% — — % (5,300 ) (1 )% Non-GAAP total gross margin* $
60,258 64 % $ 53,965 62 % $ 215,916 62 % $
195,981 60 %
*Non-GAAP total gross margin percentage is calculated as
Non-GAAP total gross margin divided by Pro forma revenue for the
three and twelve months ended December 31, 2013. Refer to "Itemized
Reconciliation Between GAAP and Pro Forma Revenue" below.
ITEMIZED RECONCILIATION BETWEEN GAAP
AND PRO FORMA REVENUE
Three Months EndedDecember 31,
2013
Twelve Months EndedDecember 31,
2013
GAAP revenue $ 92,636
$
330,399
One-time licensing payment (5,300 )
(5,300
) Pro forma revenue $ 87,336
$
325,099
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014 2013
Total GAAP operating expenses
$ 52,650 $ 51,134 $ 203,738 $ 193,590 Amortization of acquired
intangible assets (2,443 ) (3,198 ) (10,963 ) (12,869 ) Litigation
settlement — — (5,100 ) — Acquisition-related integration costs — —
— (748 ) Share-based compensation charge related to acquisition — —
— — Restructuring charges — (6 ) — (4,490 ) Total
Non-GAAP operating expenses $ 50,207 $ 47,930 $
187,675 $ 175,483
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP ADJUSTED EBITDA AS PERCENTAGE OF REVENUE
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014 2013 GAAP
net income (loss) $ 5,167 $ 9,373 $ (3,834 ) $ (16,327 )
Depreciation and amortization 6,932 8,948 30,776 39,023
Amortization of inventory fair value adjustment — 2,896 4,666
14,876 Interest expense, net 1,397 4,376 6,315 12,655 Income tax
provision (327 ) (324 ) 236 1,161 EBITDA 13,169
25,269 38,159 51,388 Adjustments to EBITDA: Share-based
compensation 2,975 2,619 12,411 7,727 Loss (gain) on foreign
currency 651 (88 ) 2,458 (66 ) Litigation charges 757 560 9,917
2,318 (Gain) loss on sales of securities (742 ) 13 (2,426 ) 187
Restructuring and integration charges — 606 — 5,413 Other
adjustments 146 (166 ) (624 ) (912 ) Acquisition-related
integration costs — — — 748 Gain on sale of product line —
(9,295 ) — (9,295 ) Adjusted EBITDA $ 16,956 $ 19,518
$ 59,895 $ 57,508 Revenue $ 93,530
$ 92,636 $ 349,019 $ 330,399
Adjusted EBITDA as percentage of revenue 18 % 21 % 17 % 17 %
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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