| CONTACTS: |
Don Mueller, Chief Financial Officer |
|
818-709-1244 x 7123
|
|
-or-
|
|
Ron Stabiner, The Wall Street Group, Inc. |
|
212-888-4848 |
CHATSWORTH, Calif., Aug. 2, 2006
— IRIS International, Inc. (NASDAQ: IRIS)
today announced revenues of $16.6 million for the second quarter ended June 30, 2006, a 7% increase over revenue of $15.6 million in the second quarter of 2005.
As a result of non-recurring charges and special items, and incremental stock based compensation expense related to FAS 123R which
totaled $5.9 million or $0.33 per diluted share (detailed in the attached supplementary tables), the Company reported a net loss of $4.5 million or $0.25 per diluted
share in the second quarter of 2006, versus net income of $1.6 million, or $0.09 per diluted share in the comparable year ago quarter. Excluding the non-recurring
charges and special items, and incremental stock based compensation expense related to FAS 123R, adjusted net income for the second quarter ended June 30, 2006 was
$1.4 million, or $0.08 per diluted share. Diluted average shares outstanding for the 2006 and 2005 periods were 17.9 million and 18.5 million, respectively.
Record IVD Consumables and Service revenue grew 32% and Sample Processing revenue grew 27% over the second quarter of 2005. IVD
Instrument revenue declined 19% when compared with the 2005 second quarter period, which was the strongest instrument sales quarter in the Company's history.
There were 102 iQ®200 analyzer units shipped during the current quarter compared with 117 units in the second quarter of 2005. This unit reduction
is attributable to domestic sales.
"IVD Consumables and Service and Sample Processing revenues continue to grow at impressive rates. While IVD instrument sales are
sequentially higher versus the immediately preceding first quarter of 2006, they are below our expectations," stated IRIS President and Chief Executive Officer
César García. "Iris Diagnostics is not losing opportunities or customers to competitors. Rather, in the second quarter we experienced longer-than-expected
domestic sales cycles for IVD instruments, primarily related to capital constraints on the part of customers. However, we have a sizeable pipeline of qualified sales
prospects including multi-unit and multi-site potential orders and our forecast reflects a significant acceleration of instrument placements in the second half. Our
revised full year guidance incorporates a range between 14% and 20% revenue growth in the second half over the first half of 2006. We have put together a
comprehensive program to close many of these domestic orders and to increase sales through our recently introduced market segmentation initiative, the launch of four
new diagnostics products, and increased emphasis on domestic sales. We are also very pleased with the performance of our Sample Processing Division which continues to
perform very well with a growth rate exceeding 27% as a result of our new Express 3 centrifuge and the consistent demand for our DNA hybridization work-stations."
For the six months ended June 30, 2006, IRIS had revenue of $32.7 million, an 11% increase over revenue of $29.5 million for the
first six months of 2005. The net loss for the six months of 2006 was $2.8 million or $0.16 per diluted share versus net income of $2.8 million or $0.16 per diluted
share in the first six months of 2005. Excluding the non-recurring charges and special items, and incremental stock based compensation expense related to FAS 123R,
adjusted net income for the six months was $3.1 million, or $0.17 per diluted share. Diluted average shares outstanding for the 2006 and 2005 periods were 17.6
million and 18.0 million, respectively.
Gross profit margin grew to 51% in the quarter versus 49% in the same quarter of last year resulting in $8.4 million of gross profit
for the quarter, an increase of $0.8 million compared to the second quarter of 2006. Included in the cost of sales for the 2006 period was $45,000 of incremental
stock based compensation expense attributable to the adoption of FAS 123R.
Operating expenses were $12.7 million for the current quarter compared to $5.1 million in the same quarter of the prior year and
included $6.3 million of non-recurring charges and special items, and incremental stock based compensation expense related to FAS 123R detailed in the supplementary
tables. In addition to these items, the increase from 2005 was primarily due to a $1.1 million increase in the Company's investment in research and development.
"Our gross profit margin improvement reflects the combination of improvements in manufacturing costs and the impact of the
strong growth rate of our higher margin IVD consumables and service revenue," said Mr. García. "Our increased investment in research and development
reflects our mission to ultimately deliver a full range of products to meet the urinalysis automation needs of our customers and our diversification into high-value
testing applications in microbiology, cancer and sexually transmitted diseases. We are already seeing tangible results from our increased R&D spending with the
recent introduction of our iChem™ / vChem™ product line and the expanded iQ200 product line introduced at the AACC last week. Our product development
programs are on schedule and we are particularly excited by the progress of our recently acquired Molecular Diagnostics Subsidiary."
Company Outlook
The Company is revising its guidance for 2006, anticipating that revenue for the year will now be between $70.0 million and $71.5
million. Adjusted research and development expense is expected to be approximately 12% of revenues. Adjusted net income is expected to be between $6.5 million and
$6.9 million with diluted earnings per share between $0.35 and $0.37. The Company's guidance excludes the effect of the non-recurring charges and special items
detailed in the supplementary tables and approximately $0.5 million, net of tax, of incremental stock based compensation expense related to FAS 123R. In total, we
expect these excluded items to amount to approximately $0.33 per share.
Conference Call
The Company will host a conference call today at 4:30 p.m. Eastern time, 1:30 p.m. Pacific time. To participate dial 1-800-289-0528.
International callers dial 913-981-5522. A Web cast of the call can be accessed at www.proiris.com, or at
www.vcall.com
THE COMPANY
IRIS International, Inc. (http://www.proiris.com), based in Chatsworth, Calif.,
is a leader in automated urinalysis technology with systems in major medical institutions throughout the world. The Company's Sample Processing business unit
(formerly the StatSpin® subsidiary) (www.statspin.com), based in Westwood, Mass., manufactures
innovative centrifuges and blood analysis products. Advanced Digital Imaging Research, LLC (ADIR) (www.adires.com),
based near Houston, Texas, is the Company's imaging research and development subsidiary. The IRIS Molecular Diagnostics (IMD) Subsidiary develops innovative
ultra-sensitive diagnostics and sample processing products with applications in the urinalysis, oncology and infectious disease markets.
USE OF NON-GAAP MEASURES OF FINANCIAL PERFORMANCE
To supplement IRIS International's financial statements presented in accordance with accounting principles generally accepted in the
United States of America (GAAP), the Company provides certain non-GAAP measures of financial performance. The non-GAAP measures used in this release are historical
and projected adjusted net income and adjusted net income per diluted share, and projected adjusted research and development expense as a percentage of projected
revenues. Adjusted net income reflects net income (loss) excluding the effect of incremental stock based compensation expense related to the adoption of FAS 123R,
non-recurring charges relating to the write-off of research and development assets acquired in the purchase of Leucadia Technologies, a bad debt expense due to a
default by the purchaser of certain of the Company's equipment lease agreements and severance, recruiting and relocation expenses relating to the change in the
Company's CFO. Adjusted net income per diluted share is adjusted net income divided by adjusted diluted shares outstanding. Adjusted research and development
expense as a percentage of revenues reflects research and development expense excluding non-recurring charges relating to the write-off of research and development
assets acquired in the purchase of Leucadia Technologies and incremental stock based compensation expense related to the adoption of FAS 123R attributable to R&D
personnel. The Company calculates and discloses these non-GAAP measures because it believes that these measures may assist investors in evaluating trends of the
Company's operating results without regard to the effect of equity-based compensation expense related to the adoption of FAS 123R, which expense was not included
in the comparable 2005 periods, and items that are special or not considered recurring.
The Company has attached supplementary information tables that show these non-GAAP measures of financial performance for the second
quarter and six months ended June 30, 2006, and reconcile these items to the most direct comparable measures of financial performance computed in accordance with
GAAP.
Investors should recognize that these non-GAAP measures may not be comparable to similarly titled measures of other companies and
that the measures presented are not a substitute or alternative for measures of financial performance determined in accordance with GAAP.
SAFE HARBOR PROVISION
This news release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, the Company's views on future financial performance, market growth, capital requirements, new
product introductions and acquisitions, and are generally identified by phrases such as "thinks," "anticipates," "believes,"
"estimates," "expects," "intends," "plans," and similar words. Forward-looking statements are not guarantees of future
performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statement.
These statements are based upon, among other things, assumptions made by, and information currently available to, management, including management's own
knowledge and assessment of the Company's industry, R&D initiatives, competition and capital requirements. Other factors and uncertainties that could affect
the Company's forward-looking statements include, among other things, the following: identification of feasible new product initiatives, management of R&D
efforts and the resulting successful development of new products and product platforms; acceptance by customers of the Company's products; integration of
acquired businesses; substantial expansion of international sales; reliance on key suppliers; the potential need for changes in long-term strategy in response to
future developments; future advances in diagnostic testing methods and procedures; potential changes in government regulations and healthcare policies, both of which
could adversely affect the economics of the diagnostic testing procedures automated by the Company's products; rapid technological change in the microelectronics
and software industries; and competitive factors, including pricing pressures and the introduction by others of new products with similar or better functionality than
our products. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission, including the Company's most
recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors
that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise.
IRIS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
IRIS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - in thousands, except EPS)
IRIS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Supplemental Information
(unaudited - in thousands, except EPS)
IRIS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Supplemental Information - Adjustments
(unaudited - in thousands, except EPS)
