OMAHA, Neb., Nov. 14 /PRNewswire-FirstCall/ -- Transgenomic, Inc. today announced financial results for the quarter ended September 30, 2006. The Company’s financial results are presented in the tables that follow.
Third Quarter 2006
The Company reported a net loss of $1.7 million or $0.03 per share for the third quarter of 2006 as compared to a net income of $111,000 or $0.00 per share for the third quarter of 2005. The 2006 net loss was comprised of a loss from continuing operations of $1.5 million or $0.03 per share and a loss from discontinued operations of $164,000. The 2005 net income was comprised of a loss from continuing operations of $526,000 or $0.02 per share and an income from discontinued operations of $637,000 or $0.02 per share.
Net sales from continuing operations were $4.9 million during the third quarter 2006, compared to $6.7 million during the comparable period of 2005. Gross profit from continuing operations was $2.3 million or 47 percent during the third quarter of 2006 compared to $3.1 million or 47 percent during the comparable period of 2005. Operating expenses from continuing operations were $3.9 million during the third quarter of 2006 compared to $3.4 million during the same period of 2005. The Company used cash flows in operations of $185,000 during the third quarter of 2006 compared to cash flows used in operations of $804,000 during the same period of 2005. Cash and cash equivalents totaled $7.3 million at September 30, 2006.
Nine Months Ended September 30, 2006
The Company reported a net loss of $2.4 million or $0.05 per share for the nine months ended September 30, 2006 as compared to a net loss of $3.8 million or $0.12 per share during the comparable period of 2005. The 2006 net loss was comprised of a loss from continuing operations of $2.1 million or $0.04 per share and a loss from discontinued operations of $304,000 or $0.01 per share. The 2005 net loss was comprised of a loss from continuing operations of $3.2 million or $0.10 per share and a loss from discontinued operations of $618,000 or $0.02 per share.
Net sales from continuing operations were $17.6 million for the nine months ended September 30, 2006, compared to $20.5 million during the comparable period of 2005. Gross profit from continuing operations was $8.3 million or 47 percent for the nine months ended September 30, 2006 compared to $10.0 million or 49 percent in 2005. Operating expenses from continuing operations were $10.6 million for the nine months ended September 30, 2006 compared to $11.2 million during the comparable period of 2005. The Company generated positive cash flows from operations of $480,000 for the nine months ended September 30, 2006 compared to cash flows used in operations of $2.0 million during the same period in 2005.
Comment and Outlook
The Company’s President and Chief Executive Officer, Craig Tuttle, noted that this quarter’s results were well below expectations and resulted from softness in both the European and Asia Pacific markets compared to historical sales levels. Tuttle noted, “We are very disappointed in our sales result for the quarter. The typical market slowdown during summer in Europe was larger this year for our WAVE system than in years past and coincided with an unusual shortfall in system sales in Asia. Several system sales that occurred at the end of the quarter could not be recognized but will be in the fourth quarter. Therefore, we expect our fourth quarter sales level to return to that of the first two quarters of the year.” He further added, “Our Discovery Services group grew an additional $100,000 compared to the second quarter and we are very optimistic about the upcoming launch of our mutation discovery product Surveyor(R) with its new application for standard sequencing platforms. Also, we are developing new intellectual property for a large number of cancer-linked mutations that were recently discovered internally. We believe developing this intellectual property could position us for future cancer screening and prediction diagnostic opportunities. In addition, we have also engaged the investment banking firm of Thomas Weisel Partners as an advisor to help the Company maximize shareholder value for both short and long-term benefit.”
Earnings Call
Company management will discuss third quarter 2006 financial results via teleconference on Tuesday, November 14, at 5:00 p.m. Eastern Time. To access the call via telephone, dial 877-707-9628 or 785-832-1523. The company will also host a live broadcast of the call over the Internet. To listen to the webcast, investors should log on to the company’s Investor Relations web page at http://www.transgenomic.com/events.asp?id=6 and follow the instructions provided. An archived recording of the conference call will be available and can be accessed via the web using the same link listed above for 14 days after the call. Investors can also listen to a replay via telephone until 11:59 p.m. Eastern Time on Tuesday, November 28, 2006. Simply dial 800-839-4014 or 402-220-2983 from any telephone.
About Transgenomic
Transgenomic is a global biotechnology company that provides unique products and services for automated high sensitivity genetic variation and mutation analysis. Their offerings include systems, products, discovery and laboratory testing services to the academic and medical research, clinical laboratory and pharmaceutical markets in the fields of pharmacogenomics and personalized medicine. Specific offerings include Wave(TM) DHPLC systems, reagents, consumables and assay kits, Hanabi automated cytogenetics systems, and Transgenomic Discovery and CLIA Lab Services. To date there have been over 1,300 Wave systems installed in over 600 customer sites in over 35 countries and approximately 1,500 publications utilizing Transgenomic products or services. Transgenomic Discovery and Lab Services utilize their technology and expertise to provide a menu of mutation scanning tests for over 700 cancer-associated genes and more than 60 validated diagnostic tests to meet the needs of pharmaceutical and biotech companies, research and clinical laboratories, physicians and patients. For more information about the innovative systems, products and services offered by Transgenomic, please visit: www.transgenomic.com.
Transgenomic Cautionary Statements
Certain statements in this press release constitute “forward-looking statements” of Transgenomic within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements include, but are not limited to, those with respect to management’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results, including the ability of the Company to grow its involvement in the diagnostic products and services markets. The known risks, uncertainties and other factors affecting these forward-looking statements are described from time to time in Transgenomic’s reports to the Securities and Exchange Commission. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. Accordingly, the company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all statements contained in this press release. All information in this press release is as of the date of the release and Transgenomic does not undertake any duty to update this information, including any forward-looking statements, unless required by law.
Transgenomic, Inc. Summary Financial Results Unaudited Condensed Consolidated Statements of Operations (dollars in thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 NET SALES $4,919 $6,663 $17,605 $20,480 COST OF GOODS SOLD 2,607 3,548 9,261 10,480 Gross profit 2,312 3,115 8,344 10,000 OPERATING EXPENSES: Selling, general and administrative 3,305 2,692 8,834 9,284 Research and development 586 510 1,721 1,697 Impairment charge -- 247 -- 247 3,891 3,449 10,555 11,228 LOSS FROM OPERATIONS (1,579) (334) (2,211) (1,228) OTHER INCOME (EXPENSE): Interest expense (7) (181) (7) (1,921) Other, net 68 (3) 156 14 61 (184) 149 (1,907) LOSS BEFORE INCOME TAXES (1,518) (518) (2,062) (3,135) INCOME TAX EXPENSE 7 8 24 26 LOSS FROM CONTINUING OPERATIONS (1,525) (526) (2,086) (3,161) INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (164) 637 (304) (618) NET INCOME (LOSS) $(1,689) $111 $(2,390) $(3,779) BASIC AND DILUTED LOSS PER SHARE: From continuing operations $(0.03) $(0.02) $(0.04) $(0.10) From discontinued operations 0.00 0.02 (0.01) (0.02) $(0.03) $(0.00) $(0.05) $(0.12) BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 49,189,672 34,242,966 49,188,040 32,837,078 Transgenomic, Inc. Summary Financial Results Unaudited Condensed Consolidated Statements of Cash Flows (dollars in thousands) Nine Months Ended September 30, 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(2,390) $(3,779) Adjustments to reconcile net loss to net cash flows used in operating activities: Depreciation and amortization 1,361 3,294 Impairment charge 437 247 Non-cash financing costs -- 1,298 Non-cash stock based compensation 152 -- Gain on sale of securities -- (9) Loss on sale of assets 15 -- Other -- 2 Changes in operating assets and liabilities: Accounts receivable 2,585 (626) Inventories 805 960 Prepaid expenses and other current assets 26 650 Accounts payable (820) (912) Accrued expenses (1,691) (3,101) Net cash flows from (used in) operating activities 480 (1,976) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the maturities and sale of available for sales securities -- 617 Purchase of property and equipment (228) (554) Change in other assets (54) 34 Proceeds from asset sales 95 139 Net cash flows from (used in) investing activities (187) 236 CASH FLOWS FROM FINANCING ACTIVITIES: Net change in credit line -- 2,519 Payments on term note -- (178) Issuance of common stock 5 (35) Net cash flows from financing activities 5 2,306 EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH 271 (207) NET CHANGE IN CASH AND CASH EQUIVALENTS 569 359 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,736 1,002 CASH AND CASH EQUIVALENTS AT END OF PERIOD $7,305 $1,361 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $-- $491 Income taxes, net 24 27 Non-cash transactions: Available for sale securities acquired for goods and services -- 2,099 Conversions of debt to equity -- 2,535 Transgenomic, Inc. Summary Financial Results Unaudited Condensed Consolidated Balance Sheets (dollars in thousands except per share data) September 30, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $7,305 $6,736 Accounts receivable (net of allowances for bad debts of $376 and $615, respectively) 5,349 7,542 Inventories 2,336 2,990 Prepaid expenses and other current assets 732 653 Current assets of discontinued operations -- 197 Total current assets 15,722 18,118 PROPERTY AND EQUIPMENT, NET 1,761 2,577 OTHER ASSETS: Goodwill 638 638 Other assets 923 1,074 Non-current assets of discontinued operations 2,668 2,933 $21,712 $25,340 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $1,437 $1,796 Other accrued expenses 2,800 3,114 Accrued compensation 684 602 Current liabilities of discontinued operations 280 1,922 Total current liabilities 5,201 7,434 Long-term debt -- -- Total liabilities 5,201 7,434 STOCKHOLDERS’ EQUITY 16,511 17,906 $21,712 $25,340
Transgenomic, Inc.
CONTACT: Craig J. Tuttle of Transgenomic, Inc., +1-402-452-5400,InvestorsRelations@Transgenomic.com
