QIAGEN Reports Strong Third Quarter 2006 Results
Nov 13 2006

QIAGEN Reports Strong Third Quarter 2006 Results

18% Constant Currency and 11% Organic Revenue Growth in Consumables

$0.14 Adjusted Earnings per Share: 17% Growth

Venlo , The Netherlands, November 13, 2006 - QIAGEN N.V. (Nasdaq: QGEN; Frankfurt , Prime Standard: QIA) today announced the results of operations for the third quarter and the nine-month period ended September 30, 2006.

The reported net sales for the third quarter 2006 were in line and the adjusted earnings per share were on the high end of the guidance provided by the Company on May 9, 2006.

  

QIAGEN's Third Quarter:

 

Guidance

Constant currency on guidance
Jan 31, 2006

Reported

Net sales (US$ million)

115 - 118

116

118

Operating margin, adj.*

26% - 28%

 

26%

EPS, adj. (US$) *

0.13 - 0.14

 

0.14

* excluding acquisition, integration and restructuring related charges as well as amortization of acquired IP and equity-based compensation

The Company reported that consolidated net sales for its third quarter 2006 increased 20% to $117.9 million from $98.7 million for the same period in 2005. Reported operating income for the quarter increased 3% to $26.7 million from $25.9 million in the same quarter of 2005, and net income for the quarter increased 10% to $19.4 million from $17.6 million in the same quarter of 2005. Diluted earnings per share for the third quarter increased to $0.13 in 2006 (based on 153.8 million weighted average shares and share equivalents outstanding) from $0.12 in 2005 (based on 150.1 million weighted average shares and share equivalents outstanding) .

The Company has regularly reported adjusted results to give an 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 include 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

Q3 2006

Q3 2005

 

   

Operating income, reported

26.74

25.88

Acquisition and integration related expenses

1.45

0.30

SFAS 123R Impact

0.04

-

Amortization on acquisition-related intangibles

2.36

1.18

Operating income, adjusted

30.59

27.36

     

Net income, reported

19.36

17.64

Acquisition and integration related expenses

0.93

0.19

SFAS 123R Impact

0.03

-

Amortization on acquisition-related intangibles

1.54

0.75

Net income, adjusted

21.86

18.58

 

 

 

Weighted average number of diluted common shares

153,755,000

150,085,000

EPS, reported in US$

0.13

0.12

EPS, adjusted in US$

0.14

0.12

 

The impact of these costs and charges during the third quarter 2006 totaled $3.9 million ($2.5 million net of tax). Included in operating income in the third quarter 2006 is amortization on acquisition-related intangibles of $2.4 million ($1.5 million net of tax), acquisition, integration and related costs of $1.4 million ($932,000 net of tax), and SFAS 123R compensation cost of $43,000 ($28,000 net of tax). Included in operating income in the third quarter 2005 is amortization on acquisition-related intangibles of $1.2 million ($744,000 net of tax) and acquisition, integration and related costs of $299,000 ($193,000 net of tax). Excluding these charges, adjusted third quarter operating income increased 12% to $30.6 million in 2006 from $27.4 million in 2005, and third quarter 2006 adjusted net income increased 18% to $21.9 million from $18.6 million. Adjusted diluted earnings per share in the third quarter 2006 increased 17% to $0.14 per share, from $0.12 per share in the third quarter 2005.

"QIAGEN experienced a successful third quarter 2006. Our organic growth rate of 11% in our sample and assay consumables business significantly outperformed the industry growth and once again demonstrated the strength of our focused and innovation driven strategy", said Peer Schatz, QIAGEN's Chief Executive Officer.

"With the acquisition of Genaco Biomedical Products, Inc. in October we expanded our assay product and technology portfolio and entered the field of PCR-based multiplexing testing. This transaction added a very exciting growth opportunity to QIAGEN's technology leadership in molecular diagnostics - a market in which QIAGEN continues to perform well, also in this third quarter."

"We also expanded our positions in our Applied Testing market segment through an important agreement with the British Veterinary Laboratories Agency (VLA). This agreement builds the basis for a strong partnership directed towards expanding our portfolio of molecular tests for infectious and other diseases in the veterinary market."

"Our innovation engine performed very strongly in the third quarter. We launched 14 new products during the third quarter. New product launches included QIAGEN's Fast Cycling PCR product line which dramatically reduces the assay times by 75% as well as Flexiplate, which creates a new dimension of value for our customers performing assays using RNAi - the technology which was the basis for this year's Nobel Prize. Our drive for continued expansion of our innovation leadership is the basis for our technology and market leadership in our target markets: life sciences, molecular diagnostics and applied testing. "

"We are very pleased with our financial and operating performance in this third quarter 2006. Net sales were in line with our guidance and EPS came in at the high end of our guidance range," said Roland Sackers, QIAGEN's Chief Financial Officer. "Revenues in the third quarter grew 20% reflecting a very strong revenue growth of 20% in our consumables business. Overall growth was also fueled by a strong organic growth of 10% and a positive contribution of 7% from acquisitions. The growth in consumable product sales was based on a strong organic growth of 11% and on contributions from acquisitions of 7% while sales from our instrumentation products recorded 7% organic growth. We evidenced growth across all of our customer groups, in particular in the applied testing, molecular diagnostics and also pharmaceutical customer groups. Net sales recorded in North America represented 46% of our overall business and recorded a growth rate of 13% and European sales, which represented 42% of our revenues recorded a growth rate of 19%. Net sales in Asia showed a very strong growth rate of 63% in the third quarter 2006 driven strong demand, primarily in the Chinese markets."

For the nine-month period ended September 30, 2006, net sales increased 16% to $339.9 million compared to $294.1 million in the comparable period of 2005. Operating income as reported during the nine-month period ended September 30, 2006 increased 7% to $73.7 million from $68.9 million for the same period in 2005, and net income increased 13% to $51.1 million from $45.4 million in 2005, and diluted earnings per share increased 10% to $0.33 from $0.30.

Included in operating income in the first nine months of 2006 is amortization on acquisition-related intangibles of $5.8 million ($3.7 million net of tax), acquisition, integration and related costs of $7.0 million ($5.4 million net of tax), relocation and restructuring costs of $785,000 ($565,000 net of tax), and SFAS 123R equity based compensation cost of $187,000 ($122,000 net of tax). Included in operating income in the first nine months of 2005 is amortization on acquisition-related intangibles of $2.5 million ($1.6 million net of tax) and acquisition, integration and related costs of $3.3 million ($2.4 million net of tax). Excluding these charges, adjusted operating income for the nine month period ended September 30, 2006 increased 17% to $87.5 million in 2006 from $74.7 million in 2005, and adjusted net income increased 23% to $60.9 million from $49.3 million. Adjusted diluted earnings per share in the nine months ended September 30, 2006 increased 21% to $0.40 per share, from $0.33 per share in the same period of 2005.

 

QIAGEN's Third Quarter 2006 at Constant Currencies:

 

2006

2006

2005

Growth Rates

As percentage

Q3

Q3

Q3

 

 

of net sales,
unless indicated

Reported

Constant Currency

Reported

Reported

Constant Currency

Consumables

89%

89%

89%

20%

18%

Instruments

10%

10%

10%

15%

13%

Others

1%

1%

1%

15%

11%

Total revenues

100%

100%

100%

20%

17%

 

 

 

 

 

 

Operating income margin

23%

23%

26%

3%

1%

Operating income margin, adj. *

26%

26%

28%

12%

10%

 

 

 

 

 

 

Net income margin

16%

17%

18%

10%

9%

Net income margin, adj. *

19%

19%

19%

18%

16%

           

EPS in US$ per share

0.13

0.12

0.12

8%

0%

EPS in US$ per share, adj. *

0.14

0.14

0.12

17%

17%

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

amortization of acquired IP and equity-based compensation

 

Highlights:

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.

QIAGEN entered into a relationship with Veterinary Laboratories Agency (VLA) to significantly expand QIAGEN's portfolio of molecular tests for infectious diseases in the veterinary markets. QIAGEN and VLA expect that VLA's assay portfolio and assay development capabilities as well as its access to large volumes of sample materials can significantly contribute towards the expansion of QIAGEN's current assay portfolio and further leverage QIAGEN's well established leadership in molecular diagnostics into the growing applied testing market of veterinary testing.

QIAGEN developed and launched 14 new products during the third quarter 2006 including innovative sample and assay technologies in the areas of gene expression, miRNA research, gene silencing, proteomics and molecular diagnostics.

QIAGEN developed and launched FlexiPlate siRNA , the first worldwide product to fully customize sets of siRNAs for RNA interference (RNAi) research. The FlexiPlate products can be ordered through a new web-based platform which hosts the world's largest database of matching siRNA for all human and mouse genes.

QIAGEN developed and launched the Fast Cycling PCR product line , which substantially accelerates and streamlines the polymerase chain reaction (PCR) and reduces the time of a PCR reaction by 75%. QIAGEN Fast Cycling PCR products are compatible with all major types of thermal cyclers and with current PCR based assays and extends QIAGEN's wide portfolio of assay technology solutions for research and diagnostics.

QIAGEN developed and launched the Biomedical Tissue Management System, a comprehensive set of integrated solutions which standardizes the entire workflow for the preparation of tissue samples, from sample collection to data analysis to further drive biomedical research, enabling new discoveries in diagnostics and therapeutics.

 

Detailed information on the Company's business and financial performance will be presented in the Company's conference call on November 14, 2006 at 9:30am EDT. The corresponding presentation slides are available for download on the Company's website at www.qiagen.com/goto/141106. A webcast of the conference call will be available on the same website at www.qiagen.com/goto/141106.

About QIAGEN:

QIAGEN N.V., a Netherlands holding company, is a leading provider of innovative technologies and products for pre-analytical sample preparation and molecular diagnostics solutions. QIAGEN has developed a comprehensive portfolio of more than 500 proprietary, consumable products and automated solutions for sample collection, and nucleic acid and protein handling, separation, and purification. QIAGEN also supplies diagnostic kits, tests, and assays for human and veterinary molecular diagnostics. The company's products are sold to academic research markets, and to leading pharmaceutical and biotechnology companies; as well as to diagnostics laboratories. QIAGEN also provides purification and testing solutions to applied testing markets: such as forensics, animal or food testing, and pharmaceutical process control. QIAGEN employs more than 1,800 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 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 acquisitions of 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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