Life Technologies reports fourth-quarter and fiscal year results ended December 31, 2009

Life Technologies Corporation (NASDAQ: LIFE) today announced results for its fourth quarter and full year ending December 31, 2009. Non-GAAP revenue for the fourth quarter was $874 million, resulting in full year non-GAAP revenues of $3.30 billion, an increase of 5 percent over the $3.14 billion reported for 2008, as if Invitrogen and Applied Biosystems had been combined. Excluding the impact of currency and completed divestitures, organic revenue for the quarter grew 11 percent over the same period in the previous year and full year organic growth for 2009 was 7 percent.

“I’m very pleased with our organic growth in the fourth quarter and throughout 2009”

“I’m very pleased with our organic growth in the fourth quarter and throughout 2009,” said Gregory T. Lucier, Chairman and Chief Executive Officer of Life Technologies. “Our results, on both the top and the bottom line, demonstrate the value we have been able to bring to our shareholders by combining the best of Invitrogen and Applied Biosystems to create a technological leader in the life sciences. Moving forward, we aim to leverage those strengths to further expand our position in areas such as sequencing, applied markets and clinical applications.”

Fourth quarter GAAP diluted earnings per share were $0.26, which includes $0.29 per share of acquisition related intangible amortization expense, $0.04 per share of non-cash interest expense associated with the adoption of FSP APB14-1, and $0.19 per share of business integration costs and other items. In addition, GAAP earnings per share include $0.02 per share of accelerated amortization of debt issuance cost resulting from the early payment of debt incurred as a result of the Applied Biosystems merger. On a non-GAAP basis, which excludes these items, diluted earning per share was $0.80.

For the full year GAAP diluted earnings per share were $0.80, which includes $1.43 per share of acquisition related amortization expense, $0.17 per share of non-cash interest expense associated with the adoption of convertible debt accounting guidance (FSP APB14-1), $0.59 per share of business integration costs and other items, and $0.05 per share of accelerated amortization of debt issuance cost resulting from the early payment of debt. On a non-GAAP basis, which excludes these items, diluted earnings per share were $3.04.

Analysis of Fourth Quarter 2009 and Fiscal Year 2009 Results

• Fourth quarter non-GAAP 2009 revenue increased 14 percent over the previous year as if Invitrogen and Applied Biosystems had been combined for the entire fourth quarter in 2008. Revenue growth without the impact from currency and completed divestitures was 11 percent, which was a result of double-digit growth in Europe and Asia Pacific and high single-digit growth in the Americas and Japan. Revenue from foreign currency exchange had a positive 4-point effect on reported revenue growth. The completed divestiture of the SQL*LIMS business had a negative 1 point effect on reported revenue growth.
• Full year 2009 non-GAAP revenue increased 5 percent over the previous year. Excluding the impact of currency and completed divestitures, revenue growth was 7 percent organically
• Non-GAAP gross margin in the fourth quarter was 65 percent, an improvement of 130 basis points over the prior year. Gross margin expansion was a result of positive price realization across the portfolio, positive currency impact, synergy realization and lower royalty expense slightly offset by the negative impact of lower royalty revenue. Full year non-GAAP gross margin was 66.3 percent, an increase of 70 basis points over prior year. Full year gross margin expansion was a result of positive price realization, lower royalty expense and synergy realization, offset partially by the negative impact of lower royalty revenue and currency.
• Non-GAAP operating margin was 25.8 percent in the fourth quarter, representing an increase of approximately 300 basis points over the same period in 2008. The increase in operating margin primarily resulted from gross margin expansion and synergies. Full year operating margin was 26.6 percent; an increase of 300 basis points over the prior year, resulting from improved gross margin and decreased headcount and travel related expenses; partially offset by increases in depreciation and purchased services costs.
• Fourth quarter non-GAAP tax rate was 26.2 percent and 28.5 percent for the full year. The tax rate in the fourth quarter was lower than in previous quarters due to a shift of pre-tax income to lower tax rate jurisdictions such as Singapore.
• Diluted weighted shares outstanding were 187.3 million in the fourth quarter.
• Cash flow from operating activities for the fourth quarter was $264 million. Fourth quarter capital expenditures were $77 million and resulting free cash flow was $187 million. Full year cash flow from operating activities was $715 million, capital expenditures were $181 million and free cash flow was $534 million. The company ended the year with $648 million in cash and short-term investments, including $41 million held as restricted cash.

Business Highlights:

• Molecular Biology Systems division revenue was $422 million in the fourth quarter, an increase of approximately 19 percent over the same period last year. Excluding the impact from currency, organic revenue growth was 15 percent. For the full year revenue was $1.58 billion, an increase of 7 percent over 2008. Excluding the impact from currency, organic revenue growth for the full year was 9 percent. Organic growth was a result of increases in all business units with a few highlights as follows:
  • Demand for the company’s Influenza A (H1N1) related products, which now serve as the defacto standard for global surveillance, contributed approximately $45M in revenues or 3 points to full-year growth.
  • Continued expansion of the leading line of TaqMan® assays including the introduction of a new line of real-time PCR assays that enable researchers to rapidly detect and quantify proteins in human cell samples.
  • Strong demand for whole workflow solutions ranging from sample preparation kits, including the Ambion® suite of products, library generation kits for next generation sequencing and TaqMan® assays for validation studies.
• Genetic Systems division revenue was $234 million in the fourth quarter, an increase of 16 percent over the same period last year. Excluding the impact from currency and the completed divestiture of the SQL*LIMS business, organic revenue growth was 13 percent. Revenue for the full year equaled $907 million, an 8 percent increase over 2008. Excluding the impact of currency and completed divestitures, organic revenue grew 9 percent, as a result of the following areas:
  • Double-digit growth for consumable kits and capillary electrophoresis instruments sold into applied markets such as forensics and environmental testing.
  • Continued innovation of the SOLiD platform including two major system launches, SOLiD 3 and SOLiD 3 Plus, which increased throughput 10-fold and doubled read length output.
• Cell Systems division revenue was $211 million in the fourth quarter, an increase of 6 percent over the same period last year. Excluding the impact from currency, organic revenue grew 4 percent year over year. Full year revenue was $789 million, representing flat growth year over year. Excluding the impact from currency, full year organic growth was 4 percent, as a result of the following areas:
  • Weakness in sales to pharmaceutical and biotech customers was offset by strong demand from academic and government accounts.
  • New product launches including Dynabeads® SSEA-4, which separates differentiated stem cells addressing a key challenge in translational research.
  • Strong price realization across business units and in particular on the innovative GIBCO® cell culture bottles.
• The Mass Spectrometry division, the company’s joint venture with MDS Analytical Technologies, contributed $16 million in other income for the quarter. Revenues were $130 million, an increase of 14 percent over prior year. Excluding the impact from currency, organic growth was 7 percent. For the full year, the joint venture contributed $46 million in other income. Revenues were $492 million, a year over year decrease of 2 percent and a decline of 1 percent organically. As announced on September 2^nd, a definitive agreement has been signed to sell the company’s ownership stake in the division to Danaher Corporation. The transaction is expected to close shortly.
• Regional organic growth rates for the quarter, excluding the impact from the company’s mass spectrometry joint venture, were as follows compared to the same quarter of the prior year: the America’s increased 9 percent, Europe 11 percent, Asia Pacific 23 percent, and Japan 9 percent. For the full year regional organic growth rates were as follows: the Americas increased 4 percent, Europe 9 percent, Asia Pacific 25 percent and Japan 4 percent.
• Orders transacted through Life Technologies eCommerce channels reached record levels in the Americas and Europe, accounting for 65 percent, and 39 percent of all transactions respectively. Approximately 33 percent of consumables revenues now flow through eCommerce channels.
• The company achieved over $100 million in synergies in 2009.
• Fourth quarter company and technology highlights include
  • Introduction of a new generation of forensic DNA kits with chemistry reagents designed to address the increasing challenges facing 21^st century forensic laboratories. The new AmpFℓSTR^® Identifiler^® Direct, Identifiler^® Plus and NGM^™ PCR Amplification Kits provide a new level of performance, efficiency and data quality, enabling faster recovery of more DNA results from a wider range of samples.
  • Launch of a first of its kind flow cytometry system, Attune™, designed to use sound waves to precisely control the movement of cells. The launch of this instrument represents entry into the $1.4 billion dollar flow cytometry market.
  • Signing of a definitive agreement to acquire BioTrove, Inc. BioTrove’s primary technology is the OpenArray^® platform, a high throughput gene expression and genotyping analysis system based on a flexible array format that enables researchers to perform more than 3,000 PCR genotyping or qPCR gene expression assays at a time.

Fiscal Year 2010 Outlook

Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company provided its expectations for fiscal year 2010 financial performance. Organic revenues are expected to increase in the mid- to high-single digits. This level of organic revenue growth is expected to result in approximately $3.30 to $3.50 of non-GAAP earnings per share. Including the hedges already in place, currency is expected to have a positive impact of 1 to 2 percentage points on revenue growth rates in 2010. The company will provide further detail on its business outlook during the conference call today.

Use of Pro-forma statements for comparison purposes

Posted on the Company’s investor relations Web site is a quarterly pro-forma 2008 Income Statement, down to operating income, for the combined companies of Invitrogen and Applied Biosystems. Also provided is quarterly revenue detail for each of Life Technologies’ technology divisions. These pro-forma income statements are meant for reference only and represent what the company profitability would have been if Invitrogen and Applied Biosystems had been combined during those years. In addition, incorporated in this press release is a table comparing the current quarter results to the same quarter from the previous year using the pro-forma data provided in the table titled Life Technologies Corporate Condensed Non-GAAP and Reconciliation of Non-GAAP Adjustments. All comparisons of financial results from revenue to operating income will use the provided pro-forma statements.

Source: Life Technologies Corporation