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QIAGEN Reports Fourth Quarter and Full-Year 2011 Results
Strong performance in fourth quarter of 2011: Net sales increase 17% (+17% CER) to $334.4 million on double-digit growth across all regions; adjusted EPS rises 19% to $0.31(PresseBox) ( Venlo, The Netherlands, )
- Significant progress on strategic initiatives to drive growth and innovation:
- Driving platform success: More than 550 QIAsymphony systems installed by year-end 2011 with a strong pipeline for 2012; QIAensemble Decapper automation unit launched
- Adding content: Expanding biomarker portfolio in Personalized Healthcare; products from Cellestis and Ipsogen acquisitions contribute to growth in second half of 2011
- Broadening geographic presence: Dynamic expansion in high-growth markets
- Growing effectively: Efficiency project launched in late 2011 with pre-tax savings goal of $50 million in 2012, reallocating resources to drive adjusted margin growth in 2013
QIAGEN expects to deliver sales and adjusted earnings growth at a faster pace in 2012 Venlo, The Netherlands, January 31, 2012 - QIAGEN N.V. (NASDAQ: QGEN; Frankfurt Prime Standard: QIA) has announced results of operations for the fourth quarter and full-year 2011, making significant progress on strategic initiatives to drive growth and innovation.
Net sales in the fourth quarter advanced 17% (+17% at constant exchange rates, or CER) to $334.4 million from the fourth quarter of 2010. Adjusted operating income in the quarter grew 16% to $95.6 million compared to the fourth quarter of 2010 as the adjusted operating income margin was steady at 29% of net sales. Adjusted diluted earnings per share (EPS) rose to $0.31 in the fourth quarter of 2011 from $0.26 in the same quarter of 2010. Results for the fourth quarter of 2011 included a restructuring charge of $75 million for a project announced in November to enhance productivity by streamlining the organization and freeing up resources for reallocation to strategic initiatives.
Full-year 2011 net sales rose 8% (+4% CER) to $1,169.7 million from $1,087.4 million in 2010. Adjusted operating income in 2011 was up 4% to $319.6 million from $308.2 million a year earlier, while adjusted diluted EPS were $0.98 compared to $0.93 in 2010.
"We are pleased with our performance in the fourth quarter of 2011, ending the year with strong growth in all areas of our business. We made significant progress in 2011 on our strategic initiatives, delivering growth at a faster pace in the second half of the year while increasing sales in Molecular Diagnostics, Applied Testing, Pharma and Academia. In particular, we are expanding our leadership in Personalized Healthcare and setting new standards for laboratory automation with the successful QIAsymphony system rollout," said Peer Schatz, Chief Executive Officer of QIAGEN N.V. "With the positive momentum we are experiencing, we expect to accelerate growth to a faster pace in 2012 than in 2011 while taking a conservative view on macroeconomic challenges and on the budget funding environment. As we intensify our focus on growth areas across all of our customer classes, we look forward to building momentum and advancing QIAGEN's position in 2012 as a global leader in molecular technologies."
Net sales grew 17% to $334.4 million in the fourth quarter of 2011 from $286.0 million in the 2010 quarter. Total sales rose 17% CER, with organic growth contributing 11 percentage points and the contributions of Cellestis (as of August 29) and Ipsogen (as of July 12) providing six percentage points. Currency movements had no net impact on the reported sales growth.
Operating income for the fourth quarter of 2011, which included a restructuring charge of $75 million, amounted to a loss of $19.6 million, compared to income of $50.8 million in the same period of 2010. Adjusted operating income, which excludes one-time items, equity-based compensation and the amortization of intangible assets, rose 16% to $95.6 million from $82.4 million in the fourth quarter of 2010.
Net loss attributable to owners of QIAGEN N.V. was $0.4 million compared to net income of $36.3 million in the fourth quarter of 2010, while adjusted net income attributable to owners of QIAGEN N.V. rose 19% to $73.6 million in the fourth quarter of 2011 from $62.0 million in the year-earlier period.
Diluted EPS in the fourth quarter of 2011 were $0.00 (based on 236.7 million diluted shares) compared to $0.15 in the same period of 2010 (based on 239.4 million diluted shares). Adjusted diluted EPS were $0.31 compared to $0.26 in the same quarter of 2010.
Reconciliations of reported results in accordance with U.S. generally accepted accounting principles (GAAP) to adjusted results are included in the tables accompanying this release.
"We achieved double-digit organic growth in the fourth quarter of 2011, led by especially strong results in Molecular Diagnostics. Strong underlying growth was also further supported by the timing of an HPV tender delivered at the end of the year. Applied Testing delivered a markedly improved performance, and we were pleased with the contributions of Pharma and Academia despite an uncertain funding environment," said Roland Sackers, Chief Financial Officer of QIAGEN N.V. "As we maintain our focus on accelerating sales and adjusted earnings growth rates, our solid financial position provides us with significant flexibility to help improve our performance through targeted acquisitions and R&D investments. The efficiency actions launched in late 2011, which are moving ahead of our initial projections, will further strengthen QIAGEN and provide effective and efficient resource allocations to support our strategic initiatives."
For the full-year 2011, net sales rose 8% to $1,169.7 million compared to $1,087.4 million in 2010. Total sales grew 4% at constant exchange rates, with organic sales and acquisitions each contributing two percentage points. Favorable currency movements added four percentage points in reported sales growth.
Operating income in 2011 was $99.6 million, a 47% decline from $188.5 million in 2010, primarily due to the impact of a restructuring-related charge in the fourth quarter of 2011 as well as one-time charges related to the acquisitions of Cellestis and Ipsogen. Adjusted operating income, which excludes one-time items, equity-based compensation and the amortization of intangible assets, rose 4% to $319.6 million from $308.2 million in 2010.
Net income attributable to owners of QIAGEN N.V. was $96.0 million in 2011, down 33% from $144.3 million in 2010, while adjusted net income attributable to owners of QIAGEN N.V. grew 5% to $234.4 million from $222.7 million in the prior year.
Diluted EPS in 2011 declined to $0.40 (based on 239.1 million diluted shares) compared to $0.60 (based on 240.5 million diluted shares) in 2010, while adjusted diluted EPS rose to $0.98 in 2011 from $0.93 in 2010.
Reconciliations of reported results in accordance with U.S. generally accepted accounting principles (GAAP) to adjusted results are included in the tables accompanying this release.
All geographic regions delivered double-digit CER growth in the fourth quarter of 2011, led by Europe / Middle East / Africa (36% of net sales, +22% CER) and driven by the rollout of the QIAsymphony automation system. Results in the Americas (46% of net sales, +16% CER) benefited from double-digit growth in Molecular Diagnostics and Applied Testing. The Asia-Pacific / Japan region (18% of net sales, +18% CER) had growth contributions from Pharma, Molecular Diagnostics and Applied Testing.
Consumables and related revenues (85% of net sales, +18% CER) rose at a solid pace in all customer classes in the fourth quarter of 2011. For the full-year 2011, consumables and related revenues rose 5% CER and represented 87% of net sales compared to 2010. Instrument sales (15% of net sales, +11% CER) were supported by targeted initiatives across QIAGEN's broad product portfolio. QIAsymphony placements contributed to growth in cash sales as well as growing pro-rata contributions under multiyear reagent rental agreements implemented since the launch of the full QIAsymphony RGQ system in late 2010. Full-year 2011 instrument sales rose 1% CER compared to 2010 and represented 13% of net sales.
Among the performances in QIAGEN's four customer classes (based on total sales results that include organic growth and acquisitions at CER):
Molecular Diagnostics (Q4 2011: 50% of net sales, +30% CER) delivered a dynamic double-digit expansion. Profiling was led by the global rollout of the QIAsymphony automation platform and increasing use of QIAGEN's extensive and expanding testing portfolio in Europe (in particular in virology, including in HIV, HCV and HBV testing) and other markets outside the U.S. Personalized Healthcare advanced at a rapid double-digit pace on significantly higher companion diagnostic test sales as well as contributions from milestone payments for co-development projects with pharmaceutical companies. In Prevention, global HPV (human papillomavirus) testing sales grew at a double-digit pace, helped by a national HPV tender in the Americas that was delivered in the fourth quarter of 2011, plus growth in other international markets. U.S. HPV sales were stable compared to the fourth quarter of 2010, as a modest improvement in volume offset the pricing effects of multiyear agreements implemented with many customers. Significant contributions from the acquisitions in the second half of 2011 of Cellestis (QuantiFERON-TB Gold test for latent TB) and Ipsogen (blood cancer biomarker and test portfolio) further contributed to total sales growth. Full-year 2011 Molecular Diagnostics sales rose 7% CER and represented 47% of net sales.
Applied Testing (Q4 2011: 7% of net sales, +18% CER) grew on significantly higher instrument sales compared to the fourth quarter of 2010. Consumable product sales improved at a double-digit pace, led by human identification and forensics products and spurred by the introduction of new European standards, as well as contributions from new veterinary testing and food safety products. Full-year 2011 Applied Testing sales rose 1% CER and represented 7% of net sales.
Pharma (Q4 2011: 19% of net sales, +8% CER) showed healthy sales growth for instruments and consumables, led by demand for products used in oncology research as well as the GeneGlobe portfolio of molecular pathway analysis products. Also contributing was ongoing expansion of Certal products used on QIAsymphony for quality control in biopharmaceutical processing. Full-year 2011 Pharma sales rose 4% CER and represented 20% of net sales.
Academia (Q4 2011: 24% of net sales, +3% CER) generated single-digit sales growth in both consumable kits and instruments in the fourth quarter of 2011, benefiting from initiatives in the second half of 2011 to accelerate growth in this customer class. Europe and Asia-Pacific / Japan delivered single-digit CER growth, while sales in the Americas were flat amid ongoing budget uncertainty and cautious spending. Full-year Academia sales rose 2% CER and represented 26% of net sales.
Building momentum for growth in 2012
QIAGEN continues to make good progress on strategic initiatives to drive growth and innovation, as demonstrated by the stronger performance in the second half of 2011 with 9% CER total sales growth over the same period in 2010. QIAGEN intends to build on this momentum and accelerate full-year growth in 2012 compared to 2011, leveraging its leadership in Sample & Assay Technologies by (1) driving platform success, especially the rollout of QIAsymphony RGQ; (2) adding content to these platforms across all customer classes; (3) broadening its geographic presence in high-growth markets; and (4) growing efficiently and effectively.
QIAsymphony RGQ is a breakthrough modular platform that has started a new era of laboratory automation and workflow consolidation. This flagship instrument is expected to be a key growth driver during the next decade and support global expansion in all customer classes, particularly Molecular Diagnostics. QIAGEN achieved its year-end 2011 goal of more than 550 QIAsymphony systems installed worldwide, and has set a new goal to reach more than 750 installed systems by the end of 2012. Customer demand is very strong for QIAsymphony given its many features, including its status as the industry's first automation system that can process both commercial assays and a broad array of laboratory-developed tests from sample to clinical result. Also in late 2011, QIAGEN introduced the novel QIAensemble Decapper, which is the first system automating the tedious process of manually handling clinical liquid sample vials.
Building on the QIAsymphony success, QIAGEN is adding high-value content for use on its automated systems, particularly novel biomarkers and companion diagnostics for use in Personalized Healthcare as well as by customers in Pharma and Academia:
- Two separate U.S. regulatory submissions are under review for QIAGEN's therascreen KRAS assay as companion diagnostics for use in combination with two medicines for treatment of patients with metastatic colorectal cancer. These submissions were completed in July and August 2011, marking the first regulatory submissions by QIAGEN for companion diagnostics in the U.S. Discussions with the FDA are progressing well.
- A further milestone in the Personalized Healthcare strategy was achieved in December 2011 with the regulatory approval of the therascreen EGFR mutation detection kit in Japan, which built on the country's approval of the therascreen KRAS assay in April 2011. Both tests have been shown to play an important role in guiding cancer treatment decisions. Japan is one of the largest markets for companion diagnostic tests, with a combined potential patient population for EGFR and KRAS testing estimated at approximately 100,000 per year.
- At the end of 2011, QIAGEN held an 89% stake in Ipsogen S.A. (Alternext:ALIPS), a French company that is a pioneer in molecular testing for leukemia and other blood cancers. Ipsogen products are based on a rich intellectual property portfolio that includes 15 biomarkers such as JAK2, for which QIAGEN plans to develop a companion diagnostic in collaboration with Eli Lilly & Company. In July 2011 QIAGEN announced its acquisition of a majority stake in Ipsogen, and subsequently increased its holding through a public offer to acquire all remaining shares. QIAGEN intends to fully acquire Ipsogen through future public offers.
- In January 2012, QIAGEN reached agreements to acquire worldwide exclusive rights to three biomarkers expected to play important roles in personalizing treatment of various cancers. A strategic co-development partnership and licensing agreement with Insight Genetics, Inc. covers a genetic test for the ALK (anaplastic lymphoma kinase) biomarker, a promising target for a novel class of lung cancer drugs. In a separate agreement between Ipsogen and Personal Genome Diagnostics Inc., QIAGEN acquired exclusive rights to testing for mutations of the IDH1 and IDH2 genes, implicated in brain cancers, acute myelogenous leukemia (AML) and certain other malignancies. QIAGEN plans to provide these biomarker assays to researchers and to develop companion diagnostics for use with new medicines.
QIAGEN also added novel content to its portfolio through the acquisition of Cellestis Limited in August 2011, gaining access to a breakthrough "pre-molecular" technology for diagnosing diseases earlier than possible with other diagnostic methods. The QuantiFERON-TB Gold (QFT) test for latent tuberculosis (TB), which is approved and recommended in national guidelines in many developed countries (including U.S., Europe and Japan), had pro forma full-year net sales of approximately $55 million in 2011 and grew at a strong double-digit CER pace. Building on that success, QIAGEN intends to submit two tests for U.S. regulatory approval in 2012 for detection of the cytomegalovirus (CMV): the QuantiFERON-CMV test and a complementary DNA-based molecular diagnostic test.
QIAGEN is expanding its geographic presence after beginning direct sales in India and Taiwan during 2011. The top seven emerging markets (Brazil, Russia, India, China, South Korea, Mexico and Turkey) represented 12% of net sales in 2011 and generated 21% CER growth compared to 2010. Key areas under consideration for expansion are in Eastern Europe, Latin America and Asia.
To grow more efficiently and effectively, QIAGEN launched a project in November 2011 to enhance productivity and free up resources for reallocation to strategic initiatives. Initial actions have focused on eliminating organizational layers, overlapping structures and duplication between global, regional and local activities. As part of this project, R&D activities will focus on high-growth areas in all customer classes. QIAGEN also plans to optimize capacity utilization at selected sites and capture savings from shared service functions. As a result of these reallocations and efficiency programs, the number of positions in QIAGEN's worldwide workforce is being reduced by approximately 8-10%, with the vast majority of actions completed by the end of January 2012. Annual pre-tax cost savings of approximately $50 million are expected to be created in 2012, with the majority to be reinvested. These actions are expected to drive improvement in the adjusted operating income margin in 2013. A pre-tax restructuring charge of approximately $75 million was taken in the fourth quarter of 2011, of which approximately 40% was cash-related. As previously announced, QIAGEN plans to take a restructuring charge in 2012 for additional restructuring measures related to this program.
QIAGEN has set a goal to accelerate sales and adjusted earnings growth in 2012, building on the progress on strategic initiatives during 2011. For the full year, total net sales are expected to rise approximately 6-8% CER on a mix of organic growth and contributions from the Cellestis and Ipsogen acquisitions in 2011. Based on year-end 2011 foreign exchange rates, reported sales results are expected to be adversely affected by currency movements. Adjusted diluted earnings per share (EPS) are expected to rise to approximately $1.03 - 1.05 for full-year 2012. These expectations do not take into account any acquisitions that could be completed during the year.
Conference Call and Webcast Details
Information on QIAGEN's performance will be presented during a conference call on Wednesday, February 1, 2012, at 9:30 ET / 14:30 GMT / 15:30 CET. The corresponding presentation slides will be available for download shortly before the event at www.qiagen.com/goto/ConferenceCall, and a webcast will be available at this website. A replay will also be made available on this website.
Use of Adjusted Results
QIAGEN has regularly reported adjusted results, as well as results considered on a constant exchange rate basis, to give additional insight into its financial performance. These adjusted results include adjusted gross profit, adjusted operating income, adjusted net income attributable to owners of QIAGEN N.V. and adjusted diluted EPS. In addition, QIAGEN provides information on free cash flow, which it defines as net cash provided by operating activities minus purchases of property and equipment. Adjusted results are non-GAAP financial measures that the company believes should be considered in addition to the reported results prepared in accordance with generally accepted accounting principles, but should not be considered as a substitute. QIAGEN believes certain items should be excluded from adjusted results when they are outside of its ongoing core operations, vary significantly from period to period, or affect the comparability of results with its competitors and its own prior periods. Reconciliations of reported results to adjusted results are included in the tables accompanying this release.
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, including without limitation its expected operating results, are forward-looking, such statements are based on current expectations and assumptions 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, regulatory processes and dependence on logistics), variability of operating results and allocations between customer classes, the commercial development of markets for our products in applied testing, personalized healthcare, clinical research, proteomics, women's health/HPV testing and nucleic acid-based molecular diagnostics; changing relationships with customers, suppliers and strategic partners; competition; rapid or unexpected changes in technologies; fluctuations in demand for QIAGEN's products (including fluctuations due to general economic conditions, the level and timing of customers' funding, budgets and other factors); our ability to obtain regulatory approval of our products; 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 and protect our products from competitors' products; market acceptance of QIAGEN's new products, the consummation of acquisitions, and the integration of acquired technologies and businesses. For further information, please 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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