QIAGEN Reports Strong Fourth Quarter and Fiscal Year-End 2006 Results
Feb 12 2007

QIAGEN Reports Strong Fourth Quarter and Fiscal Year-End 2006 Results

17% Constant Currency and 11% Organic Revenue Growth in 2006

22% Growth in Adjusted EPS in 2006

Fourth Quarter 2006 Adjusted EPS Exceeds Guidance

Venlo, The Netherlands, February 12, 2007 - QIAGEN N.V. (Nasdaq: QGEN; Frankfurt, Prime Standard: QIA) today announced the results of operations for the fourth quarter and the fiscal year ended December 31, 2006.

The reported net sales and adjusted earnings per share for the fourth quarter and fiscal 2006 met or exceeded the guidance provided by the company on May 9, 2006.

QIAGEN's Fiscal 2006:

 

Guidance
May 9, 20061

Reported

Net sales (US$ million) 453 - 462 4662
Operating margin, adj.3 26% -28% 26%
EPS, adj. (US$)3 0.52 - 0.56 0.56

1 Based on January 31, 2006 foreign currency exchange rates
2 US$459 million using January 31, 2006 foreign currency exchange rates
3 excluding acquisition, integration and restructuring related charges as well as amortization of acquired IP and equity-based compensation (SFAS 123R)

The Company reported that consolidated net sales for its fourth quarter 2006 increased 21% to $125.9 million from $104.3 million for the same quarter in 2005. Reported operating income for the quarter increased 4% to $26.9 million from $26.0 million in the same quarter of 2005, and net income for the quarter increased 15% to $19.4 million from $16.9 million in the same quarter of 2005. Diluted earnings per share for the fourth quarter increased 18% to $0.13 in 2006 (based on 154.8 million weighted average shares and share equivalents outstanding) from $0.11 in 2005 (based on 149.7 million weighted average shares and share equivalents outstanding).

The Company has regularly reported adjusted results to give additional insight into the Company's financial performance. Adjusted results should be considered in addition to the reported results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute. Costs and charges excluded from adjusted results are acquisition, integration, restructuring and related costs, acquisition-related amortization, and beginning in the first quarter of 2006, compensation cost due to equity based compensation in accordance with the adoption of revised Statement of Financial Accounting Standards No. 123 (SFAS 123R).

 

QIAGEN's Adjustments to Operating Income, Net Income and EPS:

In US$ millions unless indicated

Q4 2006

Q4 2005

 

   

Operating income, reported

26.98 25.97

Acquisition and integration related charges

3.28 3.57
Relocation and restructuring charges
0.67 -

SFAS 123R Impact

0.14 -

Amortization of acquired IP

2.46 1.21

Operating income, adjusted

33.44 30.75
     

Net income, reported

19.45 16.86

Acquisition and integration related charges

2.84 2.24
Relocation and restructuring charges 0.44 -

SFAS 123R Impact

0.09 -

Amortization of acquired IP

1.60 0.77

Net income, adjusted

24.42 19.78

 

   

Weighted average number of diluted common shares

154,783,000 149,736,000

EPS, reported in US$

0.13 0.11

EPS, adjusted in US$

0.16 0.13

 

The impact of these costs and charges during the fourth quarter 2006 totaled $6.6 million ($5.0 million net of tax). Included in operating income in the fourth quarter 2006 are amortization on acquisition-related intangibles of $2.5 million ($1.6 million net of tax), acquisition, integration and related costs of $3.3 million ($2.8 million net of tax), relocation and restructuring costs of $667,000 ($438,000 net of tax), and SFAS 123R compensation cost of $138,000 ($91,000 net of tax). Included in operating income in the fourth quarter 2005 are amortization on acquisition-related intangibles of $1.2 million ($772,000 net of tax) and acquisition, integration and related costs of $3.6 million ($2.2 million net of tax). Excluding these charges, adjusted fourth quarter operating income increased 9% to $33.4 million in 2006 from $30.7 million in 2005, and fourth quarter adjusted net income increased 23% to $24.4 million in 2006 from $19.9 million in 2005. Adjusted diluted earnings per share in the fourth quarter 2006 increased 23% to $0.16 per share from $0.13 per share in the fourth quarter 2005.

For the year ended December 31, 2006, net sales increased 17% to $465.8 million compared to $398.4 million in 2005. Operating income as reported for fiscal 2006 increased 6% to $100.6 million from $94.8 million for 2005, and net income increased 13% to $70.5 million from $62.2 million in 2005, and diluted earnings per share increased 12% to $0.46 from $0.41.

Included in operating income in fiscal 2006 is amortization on acquisition-related intangibles of $8.2 million ($5.3 million net of tax), acquisition, integration and related costs of $10.3 million ($8.3 million net of tax), relocation and restructuring costs of $1.5 million ($1.0 million net of tax), and SFAS 123R equity based compensation cost of $325,000 ($213,000 net of tax). Included in operating income in fiscal 2005 is amortization on acquisition-related intangibles of $3.7 million ($2.4 million net of tax) and acquisition, integration and related costs of $6.9 million ($4.6 million net of tax). Excluding these charges, adjusted operating income for the year ended December 31, 2006 increased 15% to $120.9 million from $105.4 million in 2005, and adjusted net income increased 23% to $85.3 million in 2006 from $69.2 million in 2005. Adjusted diluted earnings per share for the year ended December 31, 2006 increased 22% to $0.56 per share, from $0.46 per share in 2005.

Guidance for 2007:

QIAGEN expects to record revenues between $518 and $535 million in 2007 and adjusted diluted earnings per share between $0.60 and $0.63. The guidance for adjusted EPS includes a diluting effect on EPS of approximately $0.03 related to the acquisition of Genaco in 2006. Excluding these expenses and costs related to Genaco, which are primarily expenses for clinical trials and regulatory activities for certain multiplexed PCR test panels, guidance for adjusted EPS would have been $0.63 - 0.66. The Company will provide detailed guidance in the Company's conference call on February 13, 2007.

"2006 was a very successful year for QIAGEN. We executed on our strategy and significantly increased our technology and market leadership in our markets", said Peer Schatz, QIAGEN's Chief Executive Officer. "The launch of 67 new products in 2006 including innovative sample and assay technologies for research in the areas of epigenetics, gene expression, micro RNA, proteomics, RNAi, applied testing and molecular diagnostics contributed a record 4% to 2006 net sales and was another strong demonstration of QIAGEN's innovation power. With a full pipeline of new products and a strong strategic position we built a solid basis for our success in 2007 and beyond."

"We expect a number of exciting new market introductions in 2007. These include a further expansion of our sample and assay technology portfolio for research in applied testing and molecular diagnostics. We are planning a significant investment in clinical trials for a number of molecular diagnostic products with the goal of adding more regulated products to our portfolio." Mr. Schatz added. "Our pipeline of automated solutions for our sample and assay technologies is strong as well. The first launch in this portfolio, our recently introduced QIAcube, is already generating a lot of excitement and has the potential to bring significant value to our customers as they can now process on the QIAcube the same QIAGEN consumables that are such strong standards in their workflows."

"Our acquisition strategy remained focused, consistent and value creating. With the acquisitions of Gentra Systems, Inc. in the area of sample technologies and Genaco Biomedical Products, Inc. in the area of assay technologies, we enhanced our technology leadership even further. Genaco's PCR-based multiplexing technologies provide us with vast opportunities for multiplexed (multiple target) assays for research in clinical development, applied testing and molecular diagnostics and further strengthen our position as a leading company in these markets. QIAGEN today is perceived as the market, technology and innovation leader in sample and assay technologies and we believe to be well positioned to take advantage of the exciting growth opportunities in our target markets including research in life sciences, applied testing and molecular diagnostics."

"QIAGEN experienced an exciting fourth quarter 2006 and fiscal year 2006. Reported revenues and adjusted earnings per share met or exceeded our guidance and operating income was in-line with our expectations," said Roland Sackers, QIAGEN's Chief Financial Officer. "Revenue growth for the full year was 17% and was fueled by a strong organic growth of 11% and a positive contribution of 6% from acquisitions. Our consumable portfolio contributed 17% growth."

"QIAGEN also experienced a very good year in terms of sales of instrumentation products especially through our dedicated sales channels in clinical research and molecular diagnostics markets," Mr. Sackers continued. "QIAGEN's instrumentation business showed a very strong growth rate at constant exchange rates of 18% in 2006 (47% in the fourth quarter 2006) and the product pipeline is strong for 2007. Net sales for the fiscal year 2006 recorded in North America represented approximately 44% of our overall business and recorded a growth rate of 12% whereby European sales, which represent approximately 44% of our revenues showed a growth rate of approximately 17% at constant exchange rates. Net sales in Asia showed a very strong growth rate of 45% at constant exchange rates in fiscal 2006 driven by a strong demand, primarily in China."

 

QIAGEN's Fiscal Year 2006 at Constant Currencies:

 

2006

2006

2005

Growth Rates

As percentage

 

 

 

 

 

of net sales,
unless indicated

Reported

Constant Currency

Reported

Reported

Constant Currency

Consumables

89%
89%
88%
17%
17%

Instruments

10%
10%
10%
19%
18%

Others

1%
1%
2%
-16%
-16%

Total revenues

100%
100%
100%
17%
17%

 

         

Operating income margin

22%
22%
24%
6%
8%

Operating income margin, adj.1

26%
26%
26%
15%
16%

 

         

Net income margin

15%
16%
16%
13%
16%

Net income margin, adj.1

18%
19%
17%
23%
25%
           

EPS in US$ per share

0.46
0.47
0.41
12%
15%

EPS in US$ per share, adj.1

0.56
0.57
0.46
22%
24%

1excluding acquisition, integration and restructuring related charges as well as

amortization of acquired IP and equity-based compensation (SFAS 123R)

 

Highlights:

QIAGEN developed and launched 67 new products during 2006 including innovative sample and assay technologies for research in the areas of epigenetics, gene expression, micro RNA, proteomics, RNAi and molecular diagnostics.

QIAGEN in early 2007, launched the QIAcube, a revolutionary sample processing platform incorporating novel and proprietary technologies which allow users in over 40,000 laboratories in research in life sciences, applied testing and molecular diagnostics to fully automate the processing of almost all QIAGEN consumable products. The QIAcube received the distinguished New Product Award (NPA) Designation of the Association for Laboratory Automation (ALA) in February, 2007.

QIAGEN acquired Gentra Systems, Inc., a leading provider of large volume nucleic acid sample preparation products with a strong brand value in well-defined market niches, including biobanking and DNA archiving.

QIAGEN acquired Genaco Biomedical Products, Inc., an early stage company applying a proprietary PCR-based multiplexing technology, TEM-PCR. The Genaco solutions leverage and employ QIAGEN sample and assay technologies and open the door for PCR-based, multiplexed testing in clinical research, applied testing and molecular diagnostics.

 

Detailed information on the Company's business and financial performance as well as guidance on the Company's outlook for 2007 will be presented in the Company's conference call on February 13, 2007 at 9:30am EST. The corresponding presentation slides will be available for download on the Company's website at http://www.qiagen.com/goto/141106. A webcast of the conference call will be available on the same website at http://www.qiagen.com/goto/141106.

About QIAGEN:

QIAGEN N.V., a Netherlands holding company is the leading provider of innovative sample and assay technologies and products. QIAGEN's products are considered standards in areas such pre-analytical sample preparation and assay solutions in research for life sciences, applied testing and molecular diagnostics. QIAGEN has developed a comprehensive portfolio of more than 500 proprietary, consumable products and automated solutions for sample collection, nucleic acid and protein handling, separation, and purification and open and target specific assays. The company's products are sold to academic research markets, to leading pharmaceutical and biotechnology companies, to applied testing customers (such as in forensics, veterinary, biodefense and industrial applications) as well as to molecular diagnostics laboratories. In this press release QIAGEN is using the term molecular diagnostics. The use of this term is in reference to certain countries, such as the United States, limited to products subject to regulatory requirements. Current QIAGEN molecular diagnostics products are 34 EU CE IVD assays, three EU CE IVD sample preparation products, one 510k PAX RNA product, nine China SFDA IVD assays and 98 general purpose reagents. QIAGEN employs more than 1,900 people worldwide. QIAGEN products are sold through a dedicated sales force and a global network of distributors in more than 40 countries. Further information about QIAGEN can be found at http://www.qiagen.com/.

Certain of the statements contained in this news release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products, markets, strategy or operating results are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations and risks of dependency on logistics), variability of operating results, the commercial development of the applied testing markets, clinical research markets and proteomics markets, nucleic acid-based molecular diagnostics market, and genetic vaccination and gene therapy markets, competition, rapid or unexpected changes in technologies, fluctuations in demand for QIAGEN's, products (including fluctuations due to the level and timing of customers' funding, budgets, and other factors), difficulties in successfully adapting QIAGEN's products to integrated solutions and producing such products, the ability of QIAGEN to identify and develop new products and to differentiate its products from competitors' products, market acceptance of QIAGEN's new products, the integration of acquired technologies and businesses, and the timing of product introductions by our commercial partners. For further information, refer to the discussions in reports that QIAGEN has filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC).

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