Trinity Biotech plc (Nasdaq:TRIB), a leading developer and
manufacturer of diagnostic products for the point-of-care and
clinical laboratory markets, today announced results for the
quarter ended December 31, 2017 and fiscal year 2017.
Fiscal Year 2017 Results
Total revenues for fiscal year 2017 were $99.1m
versus $99.6m in 2016, a decrease of 0.5% year on year and were
broken down as follows:
|
Full Year2016 |
Full Year2017 |
Full Year2017 vs
2016 |
|
US$’000 |
US$’000 |
% |
Point-of-Care |
16,908 |
16,774 |
(0.8 |
%) |
|
|
|
|
Clinical Laboratory |
82,703 |
82,366 |
(0.4 |
%) |
|
|
|
|
Total |
99,611 |
99,140 |
(0.5 |
%) |
Point-of-Care revenues decreased marginally from
$16.9m in 2016 to $16.8m in 2017, which represents a decrease of
0.8% and was due to lower HIV sales in the USA due to lower public
health expenditure. However, this was decrease was partly
offset by an increase in HIV sales in Africa, where the Company has
maintained its dominance of the confirmatory testing market.
Meanwhile, Clinical Laboratory revenues were
$82.4m, a decrease of 0.4% versus 2016. This decrease was due
to the impact of older products which were culled at the end of
2016. Excluding this factor underlying Clinical Laboratory revenues
would have increased, largely driven by higher Diabetes and
Autoimmunity revenues.
The gross margin for the year was 42.3% compared
to 43.3% in 2016. This decrease was mainly attributable to the
foreign exchange impact on distributor pricing and sales mix. In
the case of Infectious Diseases revenues we had an increase of
sales to China, which are lower margin while our higher margin US
sales fell thus negatively impacting overall margins.
Research and Development expenses for the year
increased by $0.6m to $5.7m. Meanwhile, Selling General and
Administrative expenses increased from $29.5m to $30m, an increase
of 1.7%. This was due to higher amortisation charges as well
as normal inflationary pressures on wages and overheads.
Operating profit for the year decreased from
$7.5m to $5.5m in 2017. This decrease was mainly attributable
to the lower gross margin combined with increased indirect
costs.
Profit after tax (before the impact of once-off
items & non-cash financial income) was $2.3m which compares to
$3.6m in 2016. This reduction is due to the lower operating profit
mentioned above, partly offset by a lower tax charge. An overall
tax credit was recorded in Q4, 2017 following the impact of recent
changes to the US tax code on the Company’s deferred tax
balances.
Basic EPS (excluding once-off charges &
non-cash financial income) for the year was 10.6 cents versus 15.7
cents in 2016. Meanwhile, unconstrained diluted EPS was 25.7 cents
compared to 29.0 cents in
2016. Earnings
before interest, tax, depreciation, amortisation and share option
expense for the year was $11.5m.
The above measures exclude the impact of
once-off charges amounting to $44.2m, more details of which are
provided below.
Quarter 4
Results
Total revenues for Q4, 2017 were $24.6m which compares to $23.7m in
Q4, 2016, an increase of $0.9m and were broken down as follows:
|
2016Quarter 4 |
2017Quarter 4 |
Increase/(decrease) |
|
US$’000 |
US$’000 |
% |
Point-of-Care |
3,950 |
3,817 |
(3.4 |
%) |
Clinical Laboratory |
19,731 |
20,735 |
5.1 |
% |
Total |
23,681 |
24,552 |
3.7 |
% |
Point-of-Care revenues for Q4, 2017 decreased
slightly from $3.9m to $3.8m when compared to Q4, 2016, a decline
of 3.4% due to lower HIV sales in the USA.
Clinical Laboratory revenues increased from
$19.7m to $20.7m, which represents an increase of 5.1% compared to
Q4, 2016. This growth would have been higher if the impact of the
culled products had been taken into account. Excluding this,
the increase was due to higher Diabetes and Autoimmunity sales.
Gross profit for Q4, 2017 amounted to $10.2m
representing a gross margin of 41.5%. Whilst this was higher than
the 40% achieved in Q4, 2016, it was lower than the gross margin
reported in the other quarters of 2017 and this was attributable to
the impact of the lower margin Infectious Diseases sales to
China.
Research and Development expenses of $1.5m were
higher than the equivalent quarter last year ($1.3m) though it was
consistent with levels incurred in more recent quarters. Selling,
General and Administrative (SG&A) expenses for the quarter at
$7.6m were $0.4m higher than Q4, 2016. This was due to higher
amortisation charges and wage and overhead inflation.
Operating profit for the quarter was $0.8m,
which is higher than the $0.6m achieved in Q4, 2016. This is
due to the combination of the higher revenues and gross margin,
partly offset by higher indirect costs.
The profit after tax, before once-off charges
and non-cash financial income, for the quarter was $0.9m and
compares favourably to $0.1m for the equivalent period last
year. In addition to the improved operating profit this was
also due a larger tax credit arising from recent changes in the US
tax code.
The basic EPS (excluding once-off charge and
non-cash financial income) for the quarter was 4.2 cents versus 0.2
cents in Q4, 2016. Unconstrained diluted EPS for the quarter
amounted to 7.7 cents, which compares to 4.3 cents in the
equivalent quarter in 2016.
Cash generated from operations during the
quarter was $4.8m, though this was offset by capital expenditure of
$4.7m and interest and tax of $0.4m thus resulting in free cash
outflows for the quarter of $0.3m. Other major cash outflows for
the quarter included share buybacks of $1.3m, interest payments of
$2.3m and $1.0m of payments incurred in relation to the closure of
our facility in Sweden. Overall, this resulted in a cash balance at
the end of the year of $57.6m.
Earnings before interest, tax, depreciation,
amortisation and share option expense for the quarter was
$2.4m.
The above measures exclude the impact of
once-off charges amounting to $44.2m, more details of which are
provided below.
Impairment and Once-off
Charges
During the period the Company recognised
impairment and once-off charges amounting to $44.2m (net of tax)
which is broken down in the table below.
|
$m |
|
|
|
Impairment Charge |
41.8 |
|
|
|
Flood Damage (Kansas City) |
0.9 |
|
|
|
Settlement for Back Royalties |
0.5 |
|
|
|
Sweden Closure Provision |
(1.6 |
) |
|
|
Transfer of foreign currency translation reserve (Sweden) |
2.8 |
|
|
|
Tax Impact |
(0.2 |
) |
|
|
Total |
44.2 |
|
In accordance with the provisions of accounting
standards, companies are required to carry out an annual impairment
review in order to determine the appropriate carrying value of its
net assets. This year’s review has resulted in a non-cash
impairment charge of $41.8m being recognised. A number of factors
impacted this calculation including the Company’s market
capitalisation at the end of the year which was lower compared to
the end of 2016. This as well as recent volatility in the Company’s
share price resulted in a higher cost of capital being attributable
to the Company’s expected future cash flows.
In addition to the impairment charge, the
Company has recognised a number of once-off items which are as
follows:
- Flood damage at our Kansas City facility. In late 2017
there was severe flooding in the Kansas City area caused by
extremely heavy rainfall. The impact on our plant was accentuated
by ongoing engineering works being undertaken on a nearby
waterway. This caused significant damage to instrumentation
inventory due to the electric and electronic components contained
therein. Given the plants location on a flood plain, insurance
coverage was not available to cover the particular circumstances.
The financial implications of the flooding was limited to damage to
inventory. By rescheduling new production runs the Company was able
to ensure that all customer orders were met during the
quarter.
- Back royalties were payable in relation to a dispute over the
application of the terms of a licence agreement to which the
Company is a party. Rather than undergo a lengthy and costly legal
dispute, both parties reached a mutually acceptable agreement. The
charge of $0.5m includes a payment of back royalties covering a
period of five years plus legal fees incurred up to the point of
settlement.
- There was a reduction in the provisions required to meet our
legal and commercial obligations following the closure of our
Swedish facility in late 2016. The Company has negotiated
settlements with a number of counterparties which were lower than
had been originally estimated. The resultant excess provision of
$1.6m is now being released to the income statement.
- Separately on Sweden, with the resolution of the above
mentioned items, our Swedish entity has now totally ceased to
operate and consequently we are now unwinding its associated
foreign currency translation reserve. This is a non-cash accounting
adjustment transferring the foreign currency translation reserve
from Other Reserves to Accumulated Surplus and has no impact on net
assets in the balance sheet.
The tax impact of the above mentioned items was
a tax credit of $0.2m.
Share Buyback
During the quarter the Company bought back
328,000 shares at an average price of $4.95 and a total value of
$1.6m, of which $1.3m was paid out during the quarter. This
brings the total buyback for the year to over 1.3 million shares at
an average price of $5.55 and a total value of $7.5m. A
further 27,000 shares at an average price of $5.15 were bought back
during the period since the end of 2017.
Comments
Commenting on the results Kevin Tansley, Chief
Financial Officer stated “The profit before non-cash and once-off
items for 2017 amounted to $2.3m compared to $3.6m in the previous
year. Overall revenues were slightly lower and gross margins
continued to be impacted by foreign exchange factors. Meanwhile,
indirect costs increased by 1.8% for the year. This resulted in a
diluted EPS of 25.7 cents versus 29 cents in 2016.
However, we did see improved financial
performance in Q4, 2017 versus the equivalent quarter last
year. In particular, the higher revenues and improved gross
margins contributed to enhanced operating profit and resulted in an
increase in diluted earnings per share from 4.3 cent to 7.7
cents.”
Commenting, Ronan O’Caoimh, Chief Executive
Officer stated “Our revenues in 2017 were $99.1m which was slightly
lower than $99.6m in 2016. This reduction was attributable to the
impact of a number of products which were culled at the end of
2016. Our HIV revenues were broadly flat and this reflects our
continuing domination of the confirmatory HIV market in Africa.
Meanwhile, our Clinical Laboratory revenues (excluding culled
products) experienced growth driven by higher Diabetes and
Autoimmunity product sales.
In the year ahead, we will focus on continuing
to grow revenues with particular emphasis on Diabetes and
Autoimmunity. In this regard, we will benefit from our return to
the Brazilian market, which is expected midway through the year. We
will continue seek new markets for all of products, including
Infectious Diseases where we will seek to counter the continuing
decline of USA sales. From a HIV perspective we will look to grow
revenues with the launch of our new screening assay.”
Forward-looking statements in this release are
made pursuant to the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties including, but not limited to, the results of
research and development efforts, the effect of regulation by the
United States Food and Drug Administration and other agencies, the
impact of competitive products, product development
commercialisation and technological difficulties, and other risks
detailed in the Company's periodic reports filed with the
Securities and Exchange Commission.
Trinity Biotech develops, acquires, manufactures
and markets diagnostic systems, including both reagents and
instrumentation, for the point-of-care and clinical laboratory
segments of the diagnostic market. The products are used to detect
infectious diseases and to quantify the level of Haemoglobin A1c
and other chemistry parameters in serum, plasma and whole blood.
Trinity Biotech sells direct in the United States, Germany, France
and the U.K. and through a network of international distributors
and strategic partners in over 75 countries worldwide. For further
information please see the Company's website:
www.trinitybiotech.com.
Trinity Biotech plc |
|
Consolidated Income Statements |
|
(US$000’s except
share data) |
|
Three Months
Ended Dec
31,
2017(unaudited) |
|
Three
MonthsEndedDec
31,2016(unaudited) |
|
YearEndedDec
31,2017(unaudited) |
|
YearEndedDec
31,2016(unaudited) |
|
|
|
|
|
|
|
Revenues |
|
24,552 |
|
23,681 |
|
99,140 |
|
99,611 |
|
|
|
|
|
|
|
Cost of sales |
|
(14,370 |
) |
(14,202 |
) |
(57,251 |
) |
(56,518 |
) |
|
|
|
|
|
|
Gross
profit |
|
10,182 |
|
9,479 |
|
41,889 |
|
43,093 |
|
Gross profit % |
|
41.5% |
|
40.0% |
|
42.3% |
|
43.3% |
|
|
|
|
|
|
|
Other operating
income |
|
27 |
|
28 |
|
101 |
|
239 |
|
|
|
|
|
|
|
Research & development expenses |
|
(1,539 |
) |
(1,330 |
) |
(5,658 |
) |
(5,041 |
) |
Selling, general and
administrative expenses |
|
(7,611 |
) |
(7,206 |
) |
(29,961 |
) |
(29,451 |
) |
Indirect share based
payments |
|
(249 |
) |
(378 |
) |
(893 |
) |
(1,349 |
) |
|
|
|
|
|
|
Operating
profit |
|
810 |
|
593 |
|
5,478 |
|
7,491 |
|
|
|
|
|
|
|
Financial income |
|
224 |
|
221 |
|
808 |
|
877 |
|
Financial expenses |
|
(1,176 |
) |
(1,182 |
) |
(4,682 |
) |
(4,726 |
) |
Net financing
expense |
|
(952 |
) |
(961 |
) |
(3,874 |
) |
(3,849 |
) |
|
|
|
|
|
|
(Loss)/Profit
before tax, non-cash & once-off items |
|
(142 |
) |
(368 |
) |
1,604 |
|
3,642 |
|
Income tax
credit / (expense) |
|
1,028 |
|
421 |
|
697 |
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
Profit after
tax before non-cash & once-off items |
|
886 |
|
53 |
|
2,301 |
|
3,601 |
|
|
|
|
|
|
|
|
|
|
|
Non-cash financial
income |
|
489 |
|
4,860 |
|
1,667 |
|
1,552 |
|
|
|
|
|
|
|
|
|
|
|
Impairment &
once-off items (net of tax) |
|
(44,238 |
) |
(105,779 |
) |
(44,238 |
) |
(105,779 |
) |
Loss after tax
and once-off items |
|
(42,863 |
) |
(100,866 |
) |
(40,270 |
) |
(100,626 |
) |
|
|
|
|
|
|
Loss per ADR (US
cents) |
|
(202.9 |
) |
(443.1 |
) |
(186.2 |
) |
(438.2 |
) |
|
|
|
|
|
|
Earnings per ADR (US
cents)** |
|
4.2 |
|
0.2 |
|
10.6 |
|
15.7 |
|
|
|
|
|
|
|
Diluted loss per ADR
(US cents) |
|
(159.9 |
)* |
(373.1 |
)* |
(138.9 |
)* |
(344.8 |
)* |
|
|
|
|
|
|
Diluted earnings per
ADR (US cents)** |
|
7.7 |
* |
4.3 |
* |
25.7 |
* |
29.0 |
* |
|
|
|
|
|
|
Weighted average no. of
ADRs used in computing basic earnings per ADR |
|
21,129,969 |
|
22,761,641 |
|
21,621,602 |
|
22,964,703 |
|
|
|
|
|
|
|
Weighted average no. of
ADRs used in computing diluted earnings per ADR |
|
26,385,912 |
|
28,031,122 |
|
26,877,545 |
|
28,299,399 |
|
* Under IAS 33 Earnings per Share, diluted earnings per share
cannot be anti-dilutive. Therefore, diluted loss per ADR in
accordance with IFRS would be equal to basic earnings per ADR.**
Excluding once-off charges & non-cash financial income
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting). Once-off charges is a non-GAAP accounting
presentation.
Trinity Biotech plc |
|
Consolidated Balance Sheets |
|
|
Dec 31,2017US$
‘000(unaudited) |
Sept 30,2017US$
‘000(unaudited) |
|
June 30,2017US$
‘000(unaudited) |
|
Dec 31,2016US$
‘000(unaudited) |
|
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
5,800 |
15,191 |
|
14,462 |
|
13,403 |
|
Goodwill and intangible
assets |
64,754 |
92,185 |
|
90,438 |
|
87,275 |
|
Deferred tax
assets |
8,698 |
15,074 |
|
15,352 |
|
14,556 |
|
Other assets |
771 |
904 |
|
873 |
|
870 |
|
Total
non-current assets |
80,023 |
123,354 |
|
121,125 |
|
116,104 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
Inventories |
32,805 |
32,711 |
|
33,620 |
|
32,589 |
|
Trade and other
receivables |
20,740 |
24,603 |
|
24,856 |
|
22,586 |
|
Income tax
receivable |
1,440 |
1,427 |
|
1,220 |
|
1,205 |
|
Cash, cash equivalents
and deposits |
57,607 |
62,529 |
|
63,977 |
|
77,108 |
|
Total current
assets |
112,592 |
121,270 |
|
123,673 |
|
133,488 |
|
|
|
|
|
|
TOTAL
ASSETS |
192,615 |
244,624 |
|
244,798 |
|
249,592 |
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
|
|
Share capital |
1,224 |
1,224 |
|
1,176 |
|
1,224 |
|
Share premium |
16,187 |
16,077 |
|
16,122 |
|
16,187 |
|
Accumulated
surplus |
46,157 |
89,878 |
|
90,977 |
|
93,004 |
|
Other reserves |
1,628 |
(792 |
) |
(1,409 |
) |
(1,688 |
) |
Total
equity |
65,196 |
106,387 |
|
106,866 |
|
108,727 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
Income tax payable |
310 |
502 |
|
582 |
|
175 |
|
Trade and other
payables |
20,845 |
22,923 |
|
22,572 |
|
25,028 |
|
Provisions |
75 |
75 |
|
75 |
|
75 |
|
Total current
liabilities |
21,230 |
23,500 |
|
23,229 |
|
25,278 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Exchangeable senior
note payable |
94,825 |
95,316 |
|
95,245 |
|
96,491 |
|
Other payables |
532 |
582 |
|
640 |
|
735 |
|
Deferred tax
liabilities |
10,832 |
18,839 |
|
18,818 |
|
18,361 |
|
Total
non-current liabilities |
106,189 |
114,737 |
|
114,703 |
|
115,587 |
|
|
|
|
|
|
TOTAL
LIABILITIES |
127,419 |
138,237 |
|
137,932 |
|
140,865 |
|
|
|
|
|
|
TOTAL EQUITY
AND LIABILITIES |
192,615 |
244,624 |
|
244,798 |
|
249,592 |
|
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting).
Trinity Biotech plc |
|
Consolidated Statement of Cash Flows |
|
(US$000’s) |
Three
MonthsEndedDec
31,2017(unaudited) |
|
Three
MonthsEndedDec
31,2016(unaudited) |
|
YearEndedDec
31,2017(unaudited) |
|
YearEndedDec
31,2016(unaudited) |
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
62,529 |
|
84,751 |
|
77,108 |
|
101,953 |
|
|
|
|
|
|
Operating cash flows
before changes in working capital |
3,088 |
|
3,294 |
|
12,768 |
|
16,245 |
|
Changes in working
capital |
1,727 |
|
1,325 |
|
(535 |
) |
(2,147 |
) |
Cash generated from
operations |
4,815 |
|
4,619 |
|
12,233 |
|
14,098 |
|
|
|
|
|
|
Net Interest and Income
taxes paid |
(445 |
) |
(64 |
) |
(121 |
) |
(327 |
) |
|
|
|
|
|
Capital Expenditure
& Financing (net) |
(4,696 |
) |
(4,185 |
) |
(15,255 |
) |
(21,165 |
) |
|
|
|
|
|
Free cash flow |
(326 |
) |
370 |
|
(3,143 |
) |
(7,394 |
) |
|
|
|
|
|
Payment of HIV-2
licence fee |
- |
|
- |
|
(1,112 |
) |
(1,112 |
) |
|
|
|
|
|
Share buyback |
(1,327 |
) |
(3,296 |
) |
(7,799 |
) |
(9,322 |
) |
|
|
|
|
|
Once-off items |
(969 |
) |
(2,417 |
) |
(2,847 |
) |
(2,417 |
) |
|
|
|
|
|
30 year Exchangeable
Note interest payment |
(2,300 |
) |
(2,300 |
) |
(4,600 |
) |
(4,600 |
) |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period |
57,607 |
|
77,108 |
|
57,607 |
|
77,108 |
|
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting).
Contact: |
Trinity Biotech
plc |
Lytham Partners
LLC |
|
Kevin Tansley |
Joe Diaz, Joe Dorame
& Robert Blum |
|
(353)-1-2769800 |
602-889-9700 |
|
E-mail:
kevin.tansley@trinitybiotech.com |
|
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