NEW YORK (GenomeWeb News) – Life Technologies today reported that its revenues increased 9 percent in the second quarter with growth across all three of its divisions.
For the three months ended June 30, the company posted revenues of $903.7 million on a GAAP basis, up from $832.8 million a year ago. On a non-GAAP basis, Life Tech had $905.5 million in revenues for the quarter, an 8 percent increase from $839.1 million a year ago and beating a consensus Wall Street estimate of $903.4 million.
The company's Genetic Systems division saw non-GAAP revenues bounce 5 percent year-over year, or 7 percent organically, to $235 million in the quarter, aided by mid-single digit growth for its capillary electrophoresis sequencers and double-digit growth in its next-generation sequencing business, said Life Technologies CFO David Hoffmeister during a conference call following the company's earnings release.
Last year, the company launched its 3500 Dx CE instrument, and on the conference call CEO Greg Lucier said that the sales of the instrument have "reinvigorated" the capillary electrophoresis business. Since its launch, the company has placed about 400 of the instruments "and demand continues to be very robust," he added.
In Life Tech's next-gen sequencing business, Hoffmeister said that about half of the installed base of SOLiD 3.5 instruments has been upgraded to SOLiD 4. Mark Stevenson, president and COO for Life Tech, added that uptake for the SOLiD platform continues to be strong in the smaller genome centers, particularly those doing cancer research.
Later this year, the company anticipates launching the SOLiD PI, a smaller version of the SOLiD 4, and Life Tech expects that system to broaden that customer base, Stevenson said.
Revenues for the company's Molecular Biology Systems division increased 6 percent year-over-year to $434 million. Organically, the growth was 2 percent. Responding to an analyst's question concerning a possible perception that growth in the division was soft compared to the rest of the company, Lucier said that the results "were very robust."
The division is Life Tech's largest based on revenue, and the company continues to invest in it, Lucier said, highlighting the PCR business. The company has the broadest product offering in that space "by far," he said. "We have millions of assays available on demand, and it really is the standard that people continue to come to more and more."
Meanwhile, Cell Systems, Life Tech's smallest division by revenue, grew 13 percent year over year to $230 million. Organic growth for the division was also 13 percent.
For the quarter, Life Tech reported net income of $110.5 million, or $0.58 per share on a GAAP basis, up from $38.9 million, $0.22 per share, from Q2 2009. On a non-GAAP basis, profits increased to $174.5 million, $0.91 per share, from $141.1 million, $0.79 per share a year ago, and beating analyst estimates of $0.87 per share.
R&D spending rose to $90.3 million from $81.8 million a year ago, and SG&A costs decreased slightly to $252.8 million from $253 million a year ago.
As of June 30, Life Tech had $706.4 million in cash and short-term investments, it said.
The company also announced a two-year share repurchase program for up to $350 million, which will begin in the fourth quarter. "The share repurchase program reflects our strategy for balanced capital deployment," Hoffmeister said. "We will be within our target leverage after the convertible debt is redeemed."
Going forward, the company's growth strategy will focus on three areas, Lucier said. First, about 30 percent of Life Tech's portfolio is in what it calls "the broadly applied biology segments," which include forensics, animal health, and bioproduction, and those segments continue to grow rapidly and to grow as a percentage of the company's portfolio, Lucier said.
Secondly, while there may be concerns about academic funding both in the US and Europe, he said that Life Tech would be able to weather the headwinds. Pointing to 2003 and 2004, when academic funding was similarly pinched, he said that "we actually grew OK through that period by really focusing the portfolio on where the money would be spent."
Lastly, he cited Life Tech's investment in Asia, where it has built a "very robust" infrastructure. The company sells directly in many parts of the region and is building logistic centers in that area, "so geographically we're exposed to where higher growth will be," Lucier said.
"When you couple all that together, Life Technologies will do fine over the next couple of years," he said.
The company slightly raised its guidance for full-year 2010 to between $3.35 per share and $3.50 on a non-GAAP basis. Its guidance on revenue growth organically was unchanged and is expected to increase in the mid- to high-single digits.
The company had earlier given guidance of $3.30 to $3.50 per share on a non-GAAP basis, on organic revenue growth in the mid- to high-single digits.
In morning trade Thursday on the Nasdaq, shares of Life Tech were down around 5 percent at $42.75 per share.