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 September 30, 2018.
Quarter 3 Results
Total revenues for Q3, 2018 were $23.7m, which
is broken down as follows:
|
2017Quarter
3 |
2018Quarter
3 |
Change |
|
|
|
|
US$’000 |
US$’000 |
% |
|
|
|
Point-of-Care |
4,598 |
3,005 |
-34.6% |
|
|
|
Clinical Laboratory |
21,006 |
20,707 |
-1.4% |
|
|
|
Total |
25,604 |
23,712 |
-7.4% |
|
|
|
Point-of-Care revenues for Q3, 2018 decreased
from $4.6m to $3.0m. This was due to lower HIV sales in Africa due
to normal fluctuations in ordering patterns in this market. The
decrease is accentuated by the fact that Q3, 2017 point-of-care
revenues were higher than average for the same reason.
Meanwhile, Clinical Laboratory sales for the
quarter were $20.7m compared to $21.0m for the corresponding period
last year, thus representing a decrease of 1.4%. However,
excluding the impact of currency movements and primarily the weak
Brazilian Real, Q3 Clinical Laboratory revenues would have
increased by 0.4%. During the quarter both Premier and autoimmunity
revenues continued to increase, though this was offset by lower
infectious diseases revenues in the USA, including Lyme
revenues.
The gross margin for the quarter was 42.1%,
which compares to 43% in Q3, 2017. This decrease is largely due to
lower overall revenues, particularly in the case of point-of-care,
which are higher margin products. It was also significantly
impacted by currency factors, in particular the weakness of the
Brazilian Real. Meanwhile, the decrease was partially offset by
cost reductions introduced as part of the company’s recent cost
saving program. Whilst the gross margin was lower this
quarter, the year-to-date gross margin has increased from 42.5% to
43.0%.
Research and Development expenses decreased from
$1.5m in Q3, 2017 to $1.3m in Q3, 2018. Meanwhile, Selling, General
and Administrative (SG&A) expenses decreased from $7.8m to
$7.1m in Q3, 2018. SG&A costs had already been trending
downwards, in the first half of 2018 and this further decrease in
Q3, 2018 reflects the impact of the recently announced cost savings
program and as well as the gain which arose on the exchangeable
notes repurchased during the quarter.
Operating profit for the quarter decreased from $1.5m to $1.2m.
This was due to the combined impact of lower revenues and gross
margins partially offset by the lower indirect costs incurred
during the quarter.
The interest expense, which arises mainly on the
Company’s exchangeable notes, reduced by $107,000 to
$1,061,000. This reduction was due to the repurchase of $15m
of exchangeable notes during the quarter (see below). Further
non-cash income of $0.6m was recognised in this quarter’s income
statement, again in relation to the exchangeable notes. This
was due to a non-cash interest charge of $0.2m which was offset by
a gain of $0.8m arising on a decrease in the fair value of the
derivatives embedded in these notes.
Meanwhile, financial income reduced by $37,000
to $175,000 due to the lower level of cash deposits.
Overall, the Company recorded a profit of $0.9m
for the quarter, which equates to earnings per share of 4.3
cents. However, excluding non-cash items the profit for the
quarter was $0.3m or an EPS of 1.3 cents. Fully diluted EPS for the
quarter was 5.1 cents compared to 6.3 cents in Q3, 2017.
EBITDA before share option expense for the
quarter was $2.8m.
Exchangeable Notes
Repurchase
On 1 August 2018, the company repurchased $15.1m
of its exchangeable notes in the open market for $12m representing
a price of 79.75% of nominal value. This resulted in a net gain of
approximately $0.4m in the income statement this quarter relating
to this buyback. This comprises a cash gain of $3.1m on the
repurchase, partly offset by non-cash items - acceleration of
non-cash accretion interest and the write-off of the value of the
embedded derivative portion of the repurchased notes.
Following this repurchase, $99.9m of
exchangeable notes remain outstanding and the annual cash interest
expense on the exchangeable notes has now reduced from $4.6m to
$4.0m p.a.
FDA Approvals
Trinity Biotech has received two FDA approvals
for HEp-2 Elite and Immulisa RNA Polymerase III, both of which were
developed at our Buffalo facility. These products are an
enhancement to our already extensive autoimmunity product and
laboratory testing range. Our HEp-2 Elite provides a superior
screening method for antinuclear antibodies. Meanwhile, RNA
Polymerase III is a highly specific biomarker for the diagnosis of
systemic sclerosis.
Comments
Commenting on the results, Kevin Tansley, Chief
Financial Officer, said “This quarter we saw a decrease in revenues
and gross margins. Margins were lower due to the decrease in
overall revenues given the fixed nature of our cost base and also
due to the reduction in higher margin Point-of-Care sales. It was
also heavily impacted by a significant fall in the value of the
Brazilian Real. However, margins for the year to date are running
at a higher level than at this point last year. Also from a
positive perspective, indirect costs were $0.7m lower than the
comparative quarter. This was due to the combination of our recent
cost savings measures and the profit on the repurchase of our
exchangeable notes during the quarter. Our improved margin
profile and lower cost base puts us in an enhanced financial
position going into 2019.”
Ronan O’Caoimh, CEO said “Whilst our revenues
were lower this quarter we are continuing to see revenue growth in
our key haemoglobins and autoimmune revenues lines. With the
rollout of Premier Resolution and a new version of our haemoglobin
point-of-care device Tri-stat, as well as a greater emphasis on
autoimmunity product sales, we expect that this revenue growth will
accelerate in 2019. Whilst it was obviously disappointing that HIV
revenues were weaker this quarter, we are pleased to be able to say
that this is due to the unpredictable nature of NGO purchasing
rather than any underlying loss of market share.
During the quarter, we repurchased $15.1m of our
exchangeable notes for cash consideration of $12m. In so
doing, we were taking advantage of the discount versus nominal
values at which the notes have been trading, thus achieving an
effective cash saving of $3.1m in the process. It will also result
in a reduction in the interest charge on the notes of $0.6m
p.a. Following the transaction the nominal value of our notes
now stands at just under $100m.”
Forward-looking statements in this release are
made pursuant to the "safe harbor" provision of the Private
SecuritiesLitigation 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 September
30, 2018
(unaudited) |
Three
Months Ended
September 30,
2017(unaudited) |
Nine
Months Ended
September 30,
2018(unaudited) |
Nine
Months Ended
September 30,
2017
(unaudited) |
|
|
|
|
|
|
Revenues |
|
23,712 |
|
25,604 |
|
72,512 |
|
74,588 |
|
|
|
|
|
|
|
Cost of sales |
|
(13,731 |
) |
(14,606 |
) |
(41,296 |
) |
(42,889 |
) |
|
|
|
|
|
|
Gross profit |
|
9,981 |
|
10,998 |
|
31,216 |
|
31,699 |
|
Gross margin % |
|
42.1 |
% |
43.0 |
% |
43.0 |
% |
42.5 |
% |
|
|
|
|
|
|
Other operating income |
|
27 |
|
25 |
|
76 |
|
73 |
|
|
|
|
|
|
|
Research & development expenses |
|
(1,292 |
) |
(1,469 |
) |
(3,983 |
) |
(4,119 |
) |
Selling, general and administrative expenses |
|
(7,113 |
) |
(7,761 |
) |
(21,412 |
) |
(22,341 |
) |
Indirect share based payments |
|
(367 |
) |
(265 |
) |
(1,130 |
) |
(644 |
) |
|
|
|
|
|
|
Operating profit |
|
1,236 |
|
1,528 |
|
4,767 |
|
4,668 |
|
|
|
|
|
|
|
Financial income |
|
175 |
|
212 |
|
577 |
|
584 |
|
Financial expenses |
|
(1,061 |
) |
(1,168 |
) |
(3,378 |
) |
(3,506 |
) |
Net financing expense |
|
(886 |
) |
(956 |
) |
(2,801 |
) |
(2,922 |
) |
|
|
|
|
|
|
Profit before tax & non-cash
financial income / (expense) |
|
350 |
|
572 |
|
1,966 |
|
1,746 |
|
|
|
|
|
|
|
Income tax expense |
|
(76 |
) |
(56 |
) |
(366 |
) |
(331 |
) |
Profit for the period before non-cash
financial income / (expense) |
|
274 |
|
516 |
1,600 |
|
1,415 |
|
Non-cash financial income / (expense) |
|
622 |
|
(71) |
268 |
|
1,178 |
|
Profit after tax
and once-off items |
|
896 |
|
445 |
|
1,868 |
|
2,593 |
|
Earnings per ADR (US cents) |
|
4.3 |
|
2.1 |
|
8.9 |
|
11.9 |
|
Earnings per ADR excluding non-cash financial
income/expense (US cents) |
|
1.3 |
|
2.4 |
|
7.6 |
|
6.5 |
|
|
|
|
|
|
|
Diluted earnings per ADR (US cents)* |
|
5.1 |
|
6.3 |
|
18.9 |
|
18.0 |
|
|
|
|
|
|
|
Weighted average no. of ADRs used in computing
basic earnings per ADR |
|
20,901,703 |
|
21,379,422 |
|
20,902,386 |
|
21,773,874 |
|
|
|
|
|
|
|
Weighted average no. of ADRs used in computing
diluted earnings per ADR |
|
26,157,644 |
|
26,636,857 |
|
26,158,326 |
|
27,031,396 |
|
|
|
|
|
|
|
* Under IAS 33 Earnings per Share, diluted earnings per share
cannot be anti-dilutive. In a reporting period where it is
anti-dilutive, diluted earnings per ADR should be constrained to
equal basic earnings per ADR.
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 Balance
Sheets
|
September
30,2018US$
‘000(unaudited) |
June
30,2018US$
‘000(unaudited) |
March
31,2018US$
‘000(unaudited) |
Dec
31,2017US$
‘000(audited) |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10,046 |
7,769 |
7,033 |
5,800 |
Goodwill and intangible assets |
69,804 |
68,263 |
66,474 |
64,754 |
Deferred tax assets |
9,342 |
9,047 |
8,968 |
8,698 |
Other assets |
656 |
701 |
779 |
771 |
Total non-current assets |
89,848 |
85,780 |
83,254 |
80,023 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
32,888 |
34,818 |
34,179 |
32,805 |
Trade and other receivables |
23,380 |
23,138 |
22,118 |
20,740 |
Income tax receivable |
1,532 |
1,287 |
1,234 |
1,440 |
Cash and cash equivalents |
35,679 |
49,426 |
53,895 |
57,607 |
Total current assets |
93,479 |
108,669 |
111,426 |
112,592 |
|
|
|
|
|
TOTAL ASSETS |
183,327 |
194,449 |
194,680 |
192,615 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Equity attributable to the equity holders
of the parent |
|
|
|
|
Share capital |
1,224 |
1,224 |
1,224 |
1,224 |
Share premium |
16,187 |
16,187 |
16,187 |
16,187 |
Accumulated surplus |
48,325 |
47,430 |
46,837 |
46,157 |
Other reserves |
2,347 |
1,853 |
1,529 |
1,628 |
Total equity |
68,083 |
66,694 |
65,777 |
65,196 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Income tax payable |
135 |
252 |
344 |
310 |
Trade and other payables |
20,682 |
20,494 |
21,761 |
20,870 |
Provisions |
50 |
50 |
50 |
50 |
Total current liabilities |
20,867 |
20,796 |
22,155 |
21,230 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Exchangeable senior note payable |
82,051 |
95,179 |
95,167 |
94,825 |
Other payables |
498 |
341 |
453 |
532 |
Deferred tax liabilities |
11,828 |
11,439 |
11,128 |
10,832 |
Total non-current
liabilities |
94,377 |
106,959 |
106,748 |
106,189 |
|
|
|
|
|
TOTAL LIABILITIES |
115,244 |
127,755 |
128,903 |
127,419 |
|
|
|
|
|
TOTAL EQUITY AND
LIABILITIES |
183,327 |
194,449 |
194,680 |
192,615 |
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
Months Ended
September 30,
2018 (unaudited) |
Three
Months Ended
September 30,
2017 (unaudited) |
Nine
Months Ended
September 30,
2018 (unaudited) |
Nine
Months Ended
September 30,
2017 (unaudited) |
|
|
|
|
|
Cash and cash equivalents at beginning of
period |
49,426 |
|
63,977 |
|
57,607 |
|
77,109 |
|
|
|
|
|
|
Operating cash flows before changes in working capital |
3,445 |
|
3,672 |
|
9,907 |
|
9,679 |
|
Changes in working capital |
(512 |
) |
313 |
|
(4,656 |
) |
(2,262 |
) |
Cash generated from operations |
2,933 |
|
3,985 |
|
5,251 |
|
7,417 |
|
|
|
|
|
|
Net Interest and Income taxes (paid)/received |
(125 |
) |
86 |
|
49 |
|
324 |
|
|
|
|
|
|
Capital Expenditure & Financing (net) |
(4,308 |
) |
(3,727 |
) |
(12,247 |
) |
(10,559 |
) |
|
|
|
|
|
Free cash flow |
(1,500 |
) |
344 |
|
(6,947 |
) |
(2,818 |
) |
|
|
|
|
|
Share buyback |
- |
|
(1,543 |
) |
(434 |
) |
(6,472 |
) |
|
|
|
|
|
Payment of HIV-2 licence fee |
- |
|
- |
|
- |
|
(1,112 |
) |
|
|
|
|
|
30 year Exchangeable Note interest payment |
(205 |
) |
- |
|
(2,505 |
) |
(2,300 |
) |
|
|
|
|
|
Once-off items |
- |
|
(249 |
) |
- |
|
(1,878 |
) |
|
|
|
|
|
Purchase of Exchangeable Notes |
(12,042 |
) |
- |
|
(12,042 |
) |
- |
|
|
|
|
|
|
Cash and cash equivalents at end of period |
35,679 |
|
62,529 |
|
35,679 |
|
62,529 |
|
|
|
|
|
|
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
Kevin Tansley
(353)-1-2769800
E-mail:
kevin.tansley@trinitybiotech.com
Lytham Partners LLCJoe Diaz, Joe
Dorame & Robert Blum602-889-9700
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