Life Technologies Corporation announced results for its first quarter ended March 31, 2013. Revenue for the first quarter was $963 million, an increase of 2.5 percent over the $939 million reported for the first quarter of 2012. Excluding the impact of currency, revenue growth for the quarter was 4.4 percent compared to the same period of the prior year.
"We had a successful start to the year with strength across our Applied Sciences and Genetic Analysis business groups, including double digit growth in both our Bioproduction and Forensics businesses, which drove revenues and earnings growth above our guidance expectations," said Gregory T. Lucier, chairman and chief executive officer of Life Technologies. "Our end markets remained in line with our expectations, with strength in emerging markets and across much of Asia, and continued cautious spending in the United States and Europe, as expected.
"During the quarter, we continued our rapid pace of innovation with new bioinformatics tools for Ion Torrent and software for our synthetic biology business. We also continued to execute against our strategy to expand in growth and emerging markets as we entered into new collaborations in stem cells, Rapid DNA products, and acquired our reagent distributor in South Korea."
Lucier continued, "On April 15, Life Technologies and Thermo Fisher Scientific announced that the two companies had signed a definitive agreement under which Thermo Fisher will acquire Life for $76.00 in cash per fully diluted common share, or approximately $13.6 billion. We look forward to joining forces with the outstanding team at Thermo Fisher, which shares our commitment to customers, employees and shareholders."
Life Technologies reported results compared to the quarter ended March 31, 2012. Results are non-GAAP unless indicated otherwise. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today's press release.
Analysis of First Quarter 2013 Results
• First quarter revenue increased 2.5 percent over the prior year, or 4.4 percent excluding the impact of currency. Revenue growth for the quarter was driven by strong sales from the Ion Torrent, Bioproduction and Forensics businesses, partially offset by expected declines in SOLiD® sales and lower Research Consumables and capital equipment sales primarily due to the expected slowdown in the U.S. as the threat of sequestration impacted customer buying patterns.
• Gross margin in the first quarter was 66.2 percent, approximately 40 basis points lower than the same period of the prior year. Gross margin was negatively impacted by a higher mix of Ion Torrent instrument sales, Bioproduction sales and unfavorable currency rates, partially offset by manufacturing productivity and royalties including licensing agreements.
• Operating margin was 29.4 percent in the first quarter, approximately 80 basis points lower than the same period of the prior year. Operating margin was primarily impacted by lower gross margin and planned investments in emerging markets and molecular diagnostics.
• The tax rate was 26.2 percent for the first quarter.
• First quarter EPS increased 8 percent to $1.07.
• Diluted weighted shares outstanding were 174.5 million in the first quarter, a decrease of 8.6 million shares over the prior year. The decrease was a result of the company's share repurchase program, partially offset by shares issued for employee stock plans. The company repurchased $105 million or 2 million shares in the first quarter.
• Cash flow from operating activities for the first quarter was $135 million. First quarter capital expenditures were $24 million, offset by $37 million of cash proceeds from the sale of assets, resulting in free cash flow of $148 million. The company ended the quarter with $293 million in cash and short-term investments.
Business Group and Regional Highlights
• Research Consumables revenue was $409 million in the first quarter, a decrease of 3 percent compared to the prior year. Excluding the impact from currency, revenue for the business group declined 1 percent. The decline in growth for the quarter was primarily driven by cautious spending in the U.S. and Europe and a tough comparison to prior year in Japan, which benefited from stimulus spending in Q1 2012.
• Genetic Analysis revenue was $365 million in the first quarter, an increase of 3 percent over the same period last year. Excluding the impact from currency, revenue increased 5 percent. Growth for the quarter was primarily driven by an increase in our Ion Torrent business and royalties including licensing agreements, partially offset by lower CE instrument sales and an expected decline in SOLiD product sales.
• Applied Sciences revenue was $189 million in the first quarter, an increase of 17 percent over the same period last year. Excluding the impact from currency, revenue increased 19 percent. Growth for the quarter was primarily driven by sales in Bioproduction and Forensics products.
• Regional revenue growth rates excluding currency for the first quarter compared to the same quarter of the prior year were as follows: the Americas grew 5 percent, Europe grew 3 percent, Asia Pacific grew 10 percent and Japan grew 1 percent. The Americas benefited from increased sales in Ion Torrent, Forensics, Bioproduction and higher royalties including licensing agreements. Europe saw growth in Forensics and Bioproduction, offset by lower Research Consumables. Asia Pacific grew across all business groups primarily due to Ion Torrent, Research Consumables, and Bioproduction. Japan growth was primarily due to Ion Torrent and Bioproduction sales, offset by lower sales from government stimulus programs that took place in the same period last year.