Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating
results for the second quarter of 2013.
Results for the three months ended June 30,
2013:
- Total revenue was $79.5 million, which
included revenue from eBioscience of $18.8 million.
- Product revenue was $74.2 million, as
compared to product revenue on a combined pro forma basis for the
second quarter of 2012 of $75.5 million, a decline of less than 2%.
Please refer to "Itemized Reconciliation Between GAAP and Pro Forma
Product Revenue" for a reconciliation of these GAAP and Non-GAAP
financial measures.
- GAAP net loss was $6.1 million, or
$0.09 per diluted share, as compared to a net loss of $21.5
million, or $0.30 per diluted share, in the second quarter of
2012.
- Non-GAAP net income was $2.8 million,
or $0.04 per diluted share, as compared to a Non-GAAP net loss of
$1.2 million, or $0.02 per diluted share, for the second quarter of
2012. Please refer to "Itemized Reconciliation Between GAAP and
Non-GAAP Net Loss" for a reconciliation of these GAAP and Non-GAAP
financial measures.
- Total balance in cash and cash
equivalents was $44.1 million at the end of June 30,
2013.
Product revenue for the second quarter of 2013 was $74.2 million
and service and other revenue was $5.3 million. This compares to
product revenue of $58.5 million and service and other revenue of
$7.9 million in the second quarter of 2012. Product revenue for the
second quarter of 2013 included Affymetrix core consumable revenue
of $51.2 million, instrument revenue of $4.2 million and revenue
from eBioscience of $18.8 million. Product revenue for the second
quarter of 2012 included Affymetrix core consumable revenue of
$53.3 million and instrument revenue of $3.8 million and revenue
from eBioscience of $1.4 million.
Total gross margin was 53%, as compared to 58% in the same
period of 2012. Excluding Non-GAAP adjustments such as the
amortization of step-up in inventory fair value, total margin was
60% and 59% for both years, respectively. 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 second quarter of 2013, operating expenses were $45.1
million on a GAAP basis as compared to $54.1 million in 2012.
Excluding Non-GAAP adjustments such as the amortization of acquired
intangible assets and non-recurring charges, operating expenses
were $42.0 million, compared to an adjusted total of $48.3 million
in 2012. The decrease in 2013 is primarily driven by lower
headcount and variable compensation expenditure following the
restructuring announced on January 11, 2013 and due to
non-recurring acquisition- and integration-related costs incurred
during 2012. 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 were encouraged by the second quarter revenue results across
all our business units as compared to the first quarter of the
year, including another quarter of strong growth in our Genetic
Analysis business and improved results in our Expression business,"
said Frank Witney, President and CEO. "From a geographic
perspective our business strengthened in both Europe and North
America while Japan remained soft."
“We are pleased that our careful control of operating expenses
and stronger revenue has generated approximately $10.3 million in
cash flow from operations. Since June of last year we have reduced
our senior-secured debt by nearly 25%,” stated Gavin Wood, EVP and
CFO. “We exited the quarter with $44 million in cash-on-hand.”
Recent developments:
- Earlier this week the Company announced
the introduction of the Axiom® 384HT Genotyping Format, a
cost-effective, high-throughput platform for simultaneously
genotyping up to 384 samples. The array content of the new Axiom
384HT format is fully customizable, supporting applications ranging
from detailed assessment of human disease to high throughput
agricultural screening and marker assisted breeding. This new
384-array format runs on the existing GeneTitan® Instrument,
providing researchers with flexible choice of array formats on a
single automated platform for identification, validation, and
screening of complex genetic traits.
- Affymetrix appointed Mr. Gavin Wood to
the position of Executive Vice President and Chief Financial
Officer. Mr. Wood joined Affymetrix in 2006 and served most
recently as VP Finance, International Controller based in the
United Kingdom.
Affymetrix will host a conference call on July 31, 2013 at
2:00 p.m. PT to review its operating results for the second quarter
of 2013. 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
July 31, 2013 until 8:00 p.m. PT on August 7, 2013 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The conference call passcode to access the replay is
417309. 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
48,000 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 profitability in 2013
and our estimated annualized cost savings 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, 2012, 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 loss and net
loss per share as well as its total gross margin and operating
expenses for the second quarter of 2013 and 2012 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
second quarter of 2013 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.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(IN THOUSANDS)
June
30, 2013
December 31,2012
ASSETS: (Note 1) Current assets: Cash and cash equivalents $
43,674 $ 25,671 Restricted cash 412 699 Available-for-sale
securities—short-term portion — 9,366 Accounts receivable, net
46,962 53,893 Inventories—short-term portion 69,210 72,691 Deferred
tax assets—short-term portion 294 359 Prepaid expenses and other
current assets 8,632 10,126 Total current assets
169,184 172,805 Property and equipment, net 23,330 28,663
Inventories—long-term portion 6,454 11,772 Goodwill 159,108 159,736
Intangible assets, net 140,610 152,718 Deferred tax
assets—long-term portion 401 3,394 Other long-term assets 13,086
15,206 Total assets $ 512,173 $ 544,294
LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities:
Accounts payable and accrued liabilities $ 38,977 $ 50,355
Convertible notes—short-term portion — 3,855 Term loan—short-term
portion 12,750 12,713 Deferred revenue—short-term portion 19,382
8,498 Total current liabilities 71,109 75,421
Deferred revenue—long-term portion 3,303 3,450 Convertible notes
105,000 105,000 Term loan—long-term portion 54,150 60,563 Other
long-term liabilities 20,813 22,689 Stockholders' equity: Common
stock 714 710 Additional paid-in capital 763,176 759,549
Accumulated other comprehensive income 4,842 6,302 Accumulated
deficit (510,934 ) (489,390 ) Total stockholders' equity 257,798
277,171 Total liabilities and stockholders' equity $
512,173 $ 544,294 Note 1: The condensed
consolidated balance sheet at December 31, 2012 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, 2012.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
Three Months Ended June
30,
Six Months EndedJune 30,
2013 2012 2013 2012
REVENUE: (Note 2) (Note 2) Product sales $ 74,170 $ 58,505 $
145,728 $ 116,996 Services and other 5,294 7,898
11,681 14,654 Total revenue 79,464 66,403
157,409 131,650
COSTS AND EXPENSES:
Cost of product sales 33,587 24,363 68,021 47,928 Cost of services
and other 3,706 3,319 7,213 7,098 Research and development 11,959
13,588 24,207 26,919 Selling, general and administrative 33,518
40,526 68,638 68,450 Restructuring charges (355 ) — 4,487
— Total costs and expenses 82,415 81,796
172,566 150,395 Loss from operations (2,951 )
(15,393 ) (15,157 ) (18,745 ) Interest income and other, net 89
2,276 432 2,302 Interest expense 2,724 218 5,622
1,198 Loss before income taxes (5,586 ) (13,335 )
(20,347 ) (17,641 ) Income tax provision (benefit) 521
(36,984 ) 1,196 (37,073 ) Net (loss) income $ (6,107 ) $
23,649 $ (21,543 ) $ 19,432 Basic net (loss) income per
common share (0.09 ) $ 0.34 (0.30 ) $ 0.28 Diluted
net (loss) income per common share (0.09 ) $ 0.33 (0.30 ) $
0.27 Shares used in computing basic net (loss) income
per common share 71,154 70,161 71,038 70,069
Shares used in computing diluted net (loss) income per
common share 71,154 71,918 71,038 72,263
Note 2: The Company's comparative Unaudited
Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 2012 include adjustments that were made
during the three months ended September 30, 2012 upon finalization
of the valuation of certain assets acquired and liabilities assumed
from the acquisition of eBioscience Holdings, inc. ("eBioscience").
The results have been recast to reflect these adjustments.
AFFYMETRIX, INC.
RESULTS OF OPERATIONS –
NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP NET LOSS
Three Months EndedJune
30,
Six Months Ended
June 30,
2013 2012 2013 2012 GAAP
net loss - basic and diluted $ (6,107 ) $ 23,649 $ (21,543 ) $
19,432 Amortization of inventory fair value adjustment 4,495 319
9,084 319 Amortization of acquired intangible assets 4,520 1,543
9,155 2,903 Acquisition-related transaction costs — 4,710 — 5,767
Acquisition-related integration costs 233 — 748 — Share-based
compensation charge related to acquisition — 8,265 — 8,265
Provision (recovery) of notes receivable — (2,215 ) — (2,215 )
Income tax benefit related to acquisition — (37,462 ) — (37,462 )
Restructuring charges (355 ) — 4,487 —
Non-GAAP net income (loss) - basic and diluted $ 2,786 $
(1,191 ) $ 1,931 $ (2,991 ) Basic net income (loss)
per common share $ 0.04 $ (0.02 ) $ 0.03 $ (0.04 )
Diluted net income (loss) per common share $ 0.04 $ (0.02 )
$ 0.03 $ (0.04 ) Shares used in computing basic net
income (loss) per common share 71,154 70,161 71,038
70,069 Shares used in computing diluted net income
(loss) per common share 71,154 71,918 71,038
72,263
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months Ended June
30,
Six Months EndedJune 30,
2013 2012 2013
2012 GAAP total gross margin $ 42,171
53 % $ 38,721 58 % $ 82,175 52 %
$ 76,624 57 % Amortization of inventory fair value
adjustment 4,495 6 % 319 — % 9,084 6 % 319 — % Amortization of
acquired intangible assets 1,325 2 % 467 1 % 2,691
3 % 917 1 % Non-GAAP total gross margin $ 47,991
60 % $ 39,507 59 % $ 93,950 $ 77,860
59 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months EndedJune
30,
Six Months EndedJune 30,
2013 2012 2013 2012 Total
GAAP operating expenses $ 45,122 $ 54,114 $ 97,332 $ 95,369
Amortization of acquired intangible assets (3,195 ) (1,076 ) (6,464
) (1,987 ) Acquisition-related transaction costs — (4,710 ) —
(5,767 ) Acquisition-related integration costs (233 ) — (748 ) —
Restructuring charges 355 — (4,487 ) —
Total Non-GAAP operating expenses
$ 42,049 $ 48,328 $ 85,633 $ 87,615
ITEMIZED RECONCILIATION BETWEEN GAAP
AND PRO FORMA PRODUCT REVENUE
Three Months EndedJune
30,
2012 GAAP product revenue $ 58,505 Pre-acquisition revenue
reported by eBiosciences 16,983 Pro forma product revenue $ 75,488
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