HTL Hamilton Thorne Inc

The Company Reports Record Revenues and Net Income for Q4 and Year

BEVERLY, MA and TORONTO, ON--(Marketwired - Apr 29, 2014) - Hamilton Thorne Ltd. (TSX-VENTURE: HTL), a leading provider of precision laser devices and advanced image analysis systems for the fertility, stem cell and developmental biology research markets, today reported operational and financial results for the fourth quarter and year-ended December 31, 2013.

"We are extremely pleased with our results for the fourth quarter and the year," said David Wolf, President and Chief Executive Officer of Hamilton Thorne Ltd.

Sales increased 18% to a record $7.5 million for the year, and fourth quarter sales increased 10% to a record $2.3 million. In addition, the Company generated fourth quarter and annual net income of $252,000 and $125,000 respectively, and EBITDA of $426,000 for the year. 

Michael Bruns, the Company's Chief Financial Officer commented, "We have now achieved five consecutive quarters of period over period sales growth and generated both operating income and positive cash flow from operations in four of the last five quarters. As a result of significant sales growth, combined with strong expense controls we substantially improved our financial position as well, generating over $225,000 of cash from operations, to end the year with $450,000 of cash, up over 20% from last year."

Mr. Wolf continued, "Our move towards sustained profitability and positive cash flow is now providing us with the resources to invest judiciously in both R&D and sales and marketing activities to accelerate revenue growth. We are looking forward to continuing these trends with a strong first quarter."

2013 Business Highlights

• Sales of image analysis products for the year were up substantially for the year with strong growth in human and toxicology markets. Laser sales growth remains strong, particularly in the human clinical market. The Company also saw an increase in funding, leading to substantial sales growth for its research products.
• At the European Society of Human Reproduction and Embryology annual meeting in July, the Company released its second-generation CASA software for the human market and Dimensions II, a specialized human sperm analysis package, for sale outside the US (FDA clearance pending).
• Hamilton Thorne continues to strengthen its IP position. In January 2013, the European Patent Office granted Hamilton Thorne patent approval covering its LYKOS® and XYRCOS® modular objective assembly which incorporates a laser inside a microscope objective. Patents were issued in Germany, France and the UK in February, 2013. In April, 2013, Hamilton Thorne received US patent approval (Patent No. 8,422,128) for this modular objective assembly.
• In September the Company and the holders of the $300,000 of outstanding subordinated debentures agreed to extend the maturity date by three years to October 2016 and reduce the interest rate, improving the Company's working capital and strengthening its balance sheet. 
• In 2013, Hamilton Thorne's products were referenced by customers at world-leading research labs and academic institutions in over 100 new peer-reviewed scientific articles, including many of the most prestigious scientific journals such as Nature, Fertility and Sterility, Andrology, Stem Cells & Development, Journal of Cell Biology and Cell.

All amounts are in US dollars, unless specified otherwise, and results, with the exception of EBITDA, are expressed in accordance with the International Financial Reporting Standards ("IFRS").

Results of Operations for year ended December 31, 2013 

Hamilton Thorne sales increased 18.2% to $7,477,297 for the year-ended December 31, 2013, an increase of $1,151,291 from $6,326,006 during the previous year. This increase was attributable to substantial sales growth of imaging systems supported by strong growth in laser sales.

Gross profit for the year increased 25.4% to $4,625,977 in the year-ended December 31, 2013, compared to $3,687,749 in the previous year. Gross profit as a percentage of sales increased from 58.3% to 61.9% for the year-ended December 31, 2013, due primarily to improved product mix, increased sales volume spread over a relatively constant manufacturing cost base, and reduced discounting on volume orders.

Operating expenses were reduced 14.9%, or $748,667, to $4,280,094 for the year-ended December 31, 2013, down from $5,028,761 for the previous year, and also, as a percentage of sales, reduced to 57.2% versus 79.5% for the prior year. The substantial reduction in operating expenses was a result of significant cost cutting initiated in 2012 carrying over into 2013, partially offset by higher commission and other variable costs on a higher sales volume. 

Research and development expenses decreased by $140,828 (14.4%) from $976,872 to $836,044 for the year-ended December 31, 2013, primarily due to approximately $76,000 of expenses relating to the development of its CASA products which the Company capitalized, compared to no capitalization in the prior year.

Sales and marketing expenses decreased $328,501 (13.7%) from $2,405,911 to $2,077,410 for the year-ended December 31, 2013 due to decreased staffing and reduced variable costs of selling, particularly travel expenses, partially offset by higher commission expense on increased sales volume. 

General and administrative expenses decreased $279,338 (17.0%) from $1,645,978 to $1,366,640 for the year-ended December 31, 2013 due primarily to reduced payroll expense, continued expense controls, a one-time insurance premium reduction of approximately $63,000, and reduced rent as the Company eliminated excess space. 

Net interest expense decreased $15,369 (5.2%) from $297,318 to $281,949 for the year-ended December 31, 2013 versus the prior year. The decrease was primarily due to debenture conversions to equity in 2012, partially offset by the issuance of $300,000 of new subordinated debt in August 2012.

In September 2013, the Company recognized a gain of $61,221 on extinguishment of debt due to the substantial favorable modification of the terms of the 2012 debentures. The change in terms was accounted for under IFRS as an extinguishment of the original financial liability and the recognition of a new financial liability. The gain is based upon the difference in the discounted present values of the cash flows under the new terms and the carrying value of the existing liability.  

The net income for the year-ended December 31, 2013 was $125,155 versus a net loss of ($1,638,330) for the prior year, an improvement of $1,763,485. Net income (loss) improved due to revenue and gross profit growth, reduced operating and interest expenses, and the $61,221 gain on the extinguishment of indebtedness. 

Fourth Quarter 2013 Results

The Company's total sales increased 10.0% to $2,270,869 during the quarter ended December 31, 2013, which was up $206,529 from $2,064,340 during the previous year quarter. Gross profit was up 26.4% to $1,495,711, and gross profit as a percentage of sales increased to 65.9% from 57.3% in the previous year. Operating expenses were up $66,739 or 6.1% reflecting the Company's strategy of continuing to invest judiciously in growth as well as increased variable expenses associated with sales growth. 

Net income for the fourth quarter was $252,217, an improvement of $233,918 from the net income of $18,299 for the same period of the previous year. The improvement was due primarily to increased sales and gross profits, partially offset by increased operating expenses.

Financial statements and accompanying Management Discussion and Analysis for the periods are available on www.sedar.com and the Hamilton Thorne website.

About Hamilton Thorne Ltd. (www.hamiltonthorne.com)

Hamilton Thorne designs, manufactures and distributes precision laser devices and advanced imaging systems for the fertility, stem cell and development biology research markets. It provides novel solutions for Life Science that reduce cost, increase productivity, improve results and enable research breakthroughs in regenerative medicine, stem cell research and fertility markets. Hamilton Thorne's laser products attach to standard inverted microscopes and operate as robotic micro-surgeons, enabling a wide array of scientific applications and IVF procedures. Its imaging systems improve outcomes in human IVF clinics and animal breeding facilities and provide high-end toxicology analyses. 

Hamilton Thorne's growing customer base includes pharmaceutical companies, biotechnology companies, fertility clinics, university research centers, and other commercial and academic research establishments worldwide. Current customers include world-leading research labs such as Harvard, MIT, Yale, McGill, DuPont, Monsanto, Charles River Labs, Jackson Labs, Merck, Novartis, Pfizer, and Oxford and Cambridge.

Neither the Toronto Venture Exchange, nor its regulation services provider (as that term is defined in the policies of the exchange), accepts responsibility for the adequacy or accuracy of this release.

The Company has included earnings before interest, income taxes, depreciation and amortization, certain non-recurring expenses and certain other non-cash amounts ("EBITDA") as a non-IFRS measure, which is used by management as a measure of financial performance. See section entitled "Non-IFRS Measures" in the Company's Management Discussion and Analysis for the periods covered for further information.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

For more information, please contact: David Wolf President and CEO Hamilton Thorne Ltd. 978-921-2050 Email Contact Michael Bruns CFO Hamilton Thorne Ltd. 978-921-2050 Email Contact

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