DUBLIN, Ireland, July 21, 2016 — 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 June 30, 2016.
Quarter 2 Results
Total revenues for Q2, 2016 were $26.3m compared to $24.3m in Q2, 2015 which is an increase of 8%. However, when the impact of foreign exchange movements, due to the strength of the US dollar against a range of other currencies, is removed revenues would have been $26.6m this quarter, thus representing an increase of 10%.
Point-of-Care revenues for Q2, 2016 were $4.8m, which represents an increase of $1.4m or 41% compared with the same quarter last year. This increase was due to higher sales of HIV kits in Africa.
Clinical Laboratory revenues for the quarter were $21.5m. However, on a constant currency basis revenues would have been $21.8m compared to $20.9m in Q2, 2015, an increase of 5%. This increase was principally due to higher sales of diabetes and autoimmune products.
Revenues for Q2, 2016 by key product area were as follows:
| 2015 Quarter 2 |
2016 Quarter 2 |
2016 Quarter 2 FX adjusted* |
Increase/ (decrease) |
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| US$’000 | US$’000 | US$’000 | % | |||
| Point-of-Care | 3,371 | 4,786 | 4,769 | 41.5 | % | |
| Clinical Laboratory | 20,886 | 21,502 | 21,844 | 4.6 | % | |
| Total | 24,257 | 26,288 | 26,613 | 9.7 | % | |
| * quarter 2, 2016 revenues have been recalculated on a constant currency basis using the exchange rates prevailing in Q2, 2015 |
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Gross profit for Q2, 2016 amounted to $11.8m, representing a gross margin of 45.0%. Whilst this is lower than the 47.0% achieved in Q2, 2015, it does represent an improvement on the 43.1% reported in Q1 of this year and this is mainly attributable to the impact of higher margin HIV revenues.
Research and Development expenses have remained consistent with the equivalent quarter last year at $1.3m. Meanwhile, Selling, General and Administrative (SG&A) expenses have increased over the same period from $6.7m to $7.8m. This increase is due to the combination of foreign exchange rate factors and increased discretionary sales and marketing expenditure which includes pre-launch cardiac costs.
The net financing expense for the quarter was $121,000 versus $98,000 in the equivalent quarter in 2015. This expense can be broken down into its component parts as follows:
| Net financing expense | Q2 2016 | Q2 2015 | ||||
| US$’000 | US$’000 | |||||
| Financial income | 223 | 93 | ||||
| Financial expense – Exchangeable note | (1,150 | ) | (1,134 | ) | ||
| Other financial expenses | (35 | ) | (35 | ) | ||
| (1,185 | ) | (1,169 | ) | |||
| Non-cash financial income | 1,020 | 1,150 | ||||
| Non-cash financial expense – accretion interest | (179 | ) | (172 | ) | ||
| 841 | 978 | |||||
| Net financial expense | (121 | ) | (98 | ) | ||
Financial income increased to $223,000 from $93,000 in the equivalent quarter last year. This was primarily due to improved interest rates and a different time profile of deposits.
Financial expenses primarily consist of the cash interest payable on the Company’s exchangeable notes, which is $1.15m per quarter. The equivalent expense in 2015 is slightly lower than this due to the fact that the note offering closed on April 9, 2015 and so a full quarter of interest was not incurred.
Non-cash financial income represents adjustments required to the fair value of the derivatives embedded in the exchangeable notes along with an amount to accrete the fair value of the debt liability back to its nominal value ($115 million) over the term of the debt using an effective interest rate methodology. For Q2, 2016, the fair value adjustment was a gain to the income statement of $1m.
The tax charge for Q2, 2016 was $0.1m which equates to an effective tax rate of approximately 6% and is broadly in line with the effective rate of 7% in Q2, 2015.
Profit before tax for the quarter was $2.2m compared to $2.9m in Q2, 2015. Meanwhile, profit after tax for the quarter was $2.1m versus $2.7m for the comparative quarter. EPS for the quarter was 9.1 cents which compares to 11.6 cents for the equivalent period last year. The fully diluted EPS for the quarter was 8.5 cents.
Earnings before interest, tax, depreciation, amortisation and share option expense for the quarter was $4.4m.
Cardiac Update
In December, 2015 Trinity submitted a 510(k) application for its Meritas Troponin I Test and the Meritas Point-of-Care Analyzer to the FDA. The FDA’s review of the application is proceeding according to our expectations. As previously announced, as part of this review process, additional clinical data were requested, and this clinical work will be completed within the next two weeks enabling us to provide a response to the FDA during August, 2016.
The US clinical validation studies in support of a 510(k) submission to the US FDA for a second cardiac marker assay, B-type Natriuretic Protein (BNP), are progressing well. There are 10 clinical sites, across the US, that have been actively enrolling patient samples. Overall enrolment is currently at 90% of study target, with completion of enrolment anticipated by the end of July, 2016. We are anticipating submission of our BNP 510(k) application to the FDA by the end of Q3, 2016.
Share Buyback
The Company announced the commencement of a share repurchase program in March, 2016. During the quarter, the Company repurchased 406,000 ADRs at an average price of $11.14, representing a total value of $4.5m.
For the year to date, the Company has repurchased 538,000 ADRs, at an average price of $11.20. The total spent on share repurchases for the year to date has been $6.0m.
Comments
Commenting on the results, Kevin Tansley, Chief Financial Officer, said “Operating profit for the quarter was $2.4m. This was lower than that achieved in Q2, 2015 partly due to tighter gross margins – which is partly due to the impact of exchange rate movements. In addition we are seeing the impact of higher indirect costs again due to exchange rate factors as well as higher sales and marketing costs. However, when compared to Q1 this year, operating profits and EPS have increased by approximately 30%, with the key factor being the growth in revenues this quarter.”
Ronan O’Caoimh, CEO, stated “We were very pleased with the revenue growth of 10% achieved this quarter. This was due to higher HIV sales in Africa and strong growth in our diabetes and autoimmune product lines.
In terms of our cardiac products we have made very significant progress. We have almost completed the patient enrolment to support the additional data requested by the FDA following its initial review of our Troponin submission. This data will form part of a full and comprehensive response document, which will be submitted to the FDA in August, in order to address all of its queries. Meanwhile, we are on the verge of completing our clinical trials for our BNP product and remain on target to make our 510(k) submission to the FDA by the end of Q3, 2016. Both of these products are key to our strategic development and we are very pleased to be reaching these regulatory milestones on the road to obtaining FDA approvals.”
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 June 30, 2016 (unaudited) |
Three Months Ended June 30, 2015 (unaudited) |
Six Months Ended June 30, 2016 (unaudited) |
Six Months Ended June 30, 2015 (unaudited) |
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| Revenues | 26,288 | 24,257 | 49,804 | 49,267 | ||||||||||||
| Cost of sales | (14,472 | ) | (12,864 | ) | (27,856 | ) | (25,869 | ) | ||||||||
| Gross profit | 11,816 | 11,393 | 21,948 | 23,398 | ||||||||||||
| Gross profit % | 45.0 | % | 47.0 | % | 44.1 | % | 47.5 | % | ||||||||
| Other operating income | 72 | 72 | 141 | 150 | ||||||||||||
| Research & development expenses | (1,267 | ) | (1,269 | ) | (2,414 | ) | (2,267 | ) | ||||||||
| Selling, general and administrative expenses | (7,797 | ) | (6,713 | ) | (14,758 | ) | (12,905 | ) | ||||||||
| Indirect share based payments | (468 | ) | (473 | ) | (735 | ) | (1,031 | ) | ||||||||
| Operating profit | 2,356 | 3,010 | 4,182 | 7,345 | ||||||||||||
| Financial income | 223 | 93 | 443 | 94 | ||||||||||||
| Financial expenses | (1,185 | ) | (1,169 | ) | (2,366 | ) | (1,193 | ) | ||||||||
| Non-cash financial income | 841 | 978 | (1,188 | ) | 978 | |||||||||||
| Net financing expense | (121 | ) | (98 | ) | (3,111 | ) | (121 | ) | ||||||||
| Profit before tax | 2,235 | 2,912 | 1,071 | 7,224 | ||||||||||||
| Income tax expense | (131 | ) | (218 | ) | (313 | ) | (522 | ) | ||||||||
| Profit for the period | 2,104 | 2,694 | 758 | 6,702 | ||||||||||||
| Earnings per ADR (US cents) | 9.1 | 11.6 | 3.3 | 29.0 | ||||||||||||
| Earnings per ADR excluding non-cash financial income (US cents) | 5.5 | 7.4 | 8.4 | 24.8 | ||||||||||||
| Diluted earnings per ADR (US cents) | 8.5 | 9.9 | 14.9* | 26.1 | ||||||||||||
| Weighted average no. of ADRs used in computing basic earnings per ADR | 23,016,169 | 23,195,016 | 23,152,018 | 23,090,704 | ||||||||||||
| Weighted average no. of ADRs used in computing diluted earnings per ADR | 28,409,024 | 28,812,187 | 28,526,486 | 26,285,071 | ||||||||||||
* Under IAS 33 Earnings per Share, diluted earnings per share cannot be anti-dilutive. Therefore, diluted earnings per ADR in accordance with IFRS would be 3.3 cents (i.e. equal to 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 | |||||||||
| June 30, 2016 US$ ‘000 (unaudited) |
March 31, 2016 US$ ‘000 (unaudited) |
Dec 31, 2015 US$ ‘000 (audited) |
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| ASSETS | |||||||||
| Non-current assets | |||||||||
| Property, plant and equipment | 21,760 | 21,460 | 20,659 | ||||||
| Goodwill and intangible assets | 169,049 | 165,157 | 161,324 | ||||||
| Deferred tax assets | 13,312 | 13,096 | 12,792 | ||||||
| Other assets | 932 | 860 | 954 | ||||||
| Total non-current assets | 205,053 | 200,573 | 195,729 | ||||||
| Current assets | |||||||||
| Inventories | 39,253 | 35,709 | 35,125 | ||||||
| Trade and other receivables | 27,832 | 26,260 | 25,602 | ||||||
| Income tax receivable | 712 | 664 | 550 | ||||||
| Cash and cash equivalents | 84,920 | 96,829 | 101,953 | ||||||
| Total current assets | 152,717 | 159,462 | 163,230 | ||||||
| TOTAL ASSETS | 357,770 | 360,035 | 358,959 | ||||||
| EQUITY AND LIABILITIES | |||||||||
| Equity attributable to the equity holders of the parent | |||||||||
| Share capital | 1,221 | 1,220 | 1,220 | ||||||
| Share premium | 15,575 | 15,521 | 15,526 | ||||||
| Accumulated surplus | 197,588 | 199,453 | 201,951 | ||||||
| Other reserves | (3,721 | ) | (3,723 | ) | (4,809 | ) | |||
| Total equity | 210,663 | 212,471 | 213,888 | ||||||
| Current liabilities | |||||||||
| Income tax payable | 657 | 1,026 | 1,163 | ||||||
| Trade and other payables | 19,384 | 19,195 | 18,874 | ||||||
| Provisions | 75 | 75 | 75 | ||||||
| Total current liabilities | 20,116 | 20,296 | 20,112 | ||||||
| Non-current liabilities | |||||||||
| Exchangeable senior note payable | 99,232 | 100,073 | 98,044 | ||||||
| Other payables | 1,986 | 2,057 | 2,096 | ||||||
| Deferred tax liabilities | 25,773 | 25,138 | 24,819 | ||||||
| Total non-current liabilities | 126,991 | 127,268 | 124,959 | ||||||
| TOTAL LIABILITIES | 147,107 | 147,564 | 145,071 | ||||||
| TOTAL EQUITY AND LIABILITIES | 357,770 | 360,035 | 358,959 | ||||||
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 June 30, 2016 (unaudited) |
Three Months Ended June 30, 2015 (unaudited) |
Six Months Ended June 30, 2016 (unaudited) |
Six Months Ended June 30, 2015 (unaudited) |
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| Cash and cash equivalents at beginning of period | 96,829 | 5,744 | 101,953 | 9,102 | ||||||||||
| Operating cash flows before changes in working capital | 5,282 | 4,130 | 7,786 | 10,428 | ||||||||||
| Changes in working capital | (3,234 | ) | (2,906 | ) | (3,862 | ) | (7,225 | ) | ||||||
| Cash generated from operations | 2,048 | 1,224 | 3,924 | 3,203 | ||||||||||
| Net Interest and Income taxes (paid)/received | 149 | (223 | ) | (92 | ) | (332 | ) | |||||||
| Capital Expenditure & Financing (net) | (5,995 | ) | (7,218 | ) | (11,427 | ) | (11,334 | ) | ||||||
| Free cash flow | (3,798 | ) | (6,217 | ) | (7,595 | ) | (8,463 | ) | ||||||
| Share buyback | (4,699 | ) | – | (6,026 | ) | – | ||||||||
| Payment of HIV-2 licence fee | (1,112 | ) | – | (1,112 | ) | (1,112 | ) | |||||||
| 30 year Convertible Note interest payment | (2,300 | ) | – | (2,300 | ) | – | ||||||||
| 30 year Convertible Note proceeds, net of fees | – | 110,730 | – | 110,730 | ||||||||||
| Cash and cash equivalents at end of period | 84,920 | 110,257 | 84,920 | 110,257 | ||||||||||
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 LLC Joe Diaz, Joe Dorame & Robert Blum 602-889-9700