Slower 4Q 2014 Lab Index Sales Growth Year Over Year

With fewer than half the IBO Laboratory Instrument Index companies reporting quarterly results before this issue’s publication, IBO estimates fourth quarter 2014 sales for the Index improved roughly 5%–6% organically. Operating profit for the Index is expected to have advanced 8%. Operating profit margin is projected to have climbed roughly 250 basis points to more than 21% of sales. Similarly, organic revenue and adjusted operating growth of 5% and 8%, respectively, is projected for the Index for the full-year 2014.

Fourth quarter 2014 sales for Affymetrix improved 1.0% to $93.5 million (see page 12). However, excluding the one-time $5.3 million licensing payment from Roche in 2013 and divested Anatrace product line (see IBO 10/15/13), sales climbed 7.3%. The better-than-expected growth was driven by genotyping demand from biobanking and agbio applications. All figures below are calculated on an organic basis (excluding the one-time payment and divested Anatrace products). Product revenue grew 1% to make up 89% of revenues, including 20% Instruments sales growth and roughly flat Consumables sales, which accounted for 5% and 83% of revenues, respectively. Service and Other revenue soared 105.2% to account for 11% of sales. Despite certain areas of pricing pressure, adjusted gross profit margin expanded 264 basis points to 64.4% of sales as a result of increased internal production. Adjusted operating profit jumped 66.5% to $10.1 million due to improved margins and lower operating expenses.

Quarterly Affymetrix’s Genetic Analysis and Clinical Applications sales grew 36.0% to make up 42% of revenues. Genotyping products and services sales climbed 42%, driven by demand from biobank and agbio customers. Sales for agbio applications accounted for 25% of Genotyping revenues. Cytogenetic sales climbed 28% due to demand for the new CytoScan Dx and higher partnering revenue for noninvasive pregnancy testing. Increased placements of instruments further boosted segment growth. Life Science Reagents (LSR) sales grew 4.3% to account for 6% of revenues. Expression sales fell 23.9% to make up 21% of revenues because of weak demand and a strong year-over-year comparison. EBioscience revenue grew 2.9% to account for 25% of sales, but was negatively impacted by the discontinued FlowCytomix product line. Core flow cytometry and immunoassays sales grew 5.9%, including 81% sales growth of Procarta Plex immunoassays.

Full-year 2014 Affymetrix sales grew 5.6%, 8.8% organically, to $349.0 million. All sales figures below are organic. Product revenue expanded 4.1% to make up 89% of sales. Consumables and Instruments sales grew roughly 3.7% and 12.5% to account for 84% and 5% of revenues, respectively. Service and Other revenue jumped 71.5% to make up 11%. Overall, sales of microarray solutions accounted for 61% of revenues. Adjusted gross margin expanded 348 basis points to 61.9% of sales. Adjusted operating profit improved 37.7% to $28.2 million.

Full-year 2014 Affymetrix Genetic Analysis and Clinical Applications sales jumped 39.9% to make up 40% of revenues. Genotyping revenue leaped 47% and cytogenetic sales grew 22%. LSR improved 1.6% excluding the divested products to make up 7% of sales. Expression sales declined 15.5% to represent 21% of revenues. This decline was towards the higher end of company expectations. EBioscience sales expanded 4.0% to make up 27% of revenues. For 2015, the company projected sales to grow 4%–6%, with potential currency headwinds of roughly 1%. Sales growth for the Genetic Analysis business is expected to improve in the mid-teens and 6%–8% for the eBioscience business. Conversely, LSR sales are projected to decline in the low single digits, and Expression sales are estimated to contract roughly10%.

Fourth quarter 2014 Luminex sales expanded 5.3% to $58.1 million, driven primarily by Assay revenue, which climbed 33.9% to account for 41% of sales. Consumables revenue, which contracted 10.6% to make up 19% of sales, continued to be hindered by inventory control from the largest customers. System sales slumped 31.4% to make up 24% of revenues. Total placements of multiplexing analyzers fell 37.3% to 205 units. Shipments of MAGPIX and LX systems fell 53.1% and 28.8% to 76 and 94 units, respectively. The number of FLEXMAP 3D systems sold increased by two units to 35. Royalty and Other revenue improved 10.0% and 6.0% to make up 18% and 11% of sales, respectively. Gross margin soared 680 basis points to 73.6% of sales due to the increased percentage of Assay and Royalty revenues. Adjusted operating profit jumped 65.1% to $12.4 million.

Full-year 2014 Luminex sales advanced 6.4% to $227.0 million. Assay and Royalty revenue grew 18.3% and 6.7% to account for 39% and 17% of sales, respectively. Consumables sales were flat to represent 21%. System sales fell 8.1% to make up 13%, as the total number of multiplexing analyzer sold declined 11.9% to 950 units. Shipments of MAGPIX and LX systems declined 24.8% and 6.3% to 372 and 478 units, respectively. Sales of MAGPIX systems increased 37.0% to 100 units. All Other revenue improved 1.7% to represent 10% of sales. Gross margin expanded 312 basis points to 70.4% of sales. Adjusted operating profit climbed 75.0% to $39.6 million due to improved margins and completed restructuring activity. Luminex projected 2015 sales to grow 1%–4% to $230–$260 million. First quarter sales are expected to be flat based on the company’s midpoint forecast of $55–$58 million.

For the fiscal third quarter ending December 31, sales for Shimadzu’s Analytical and Measuring Instrument (AMI) division grew 8.8% to ¥45.4 billion ($395.8 million = ¥114.59 = $1) to represent 61% of company revenues (see page 12). Excluding currency, AMI sales grew in the low to mid single digits. Japanese sales grew roughly in the low single digits, led by higher sales of nondestructive inspection systems, LC and MS. Overseas sales were boosted by currency as well as demand for LC and MS products in the US and Europe. Chinese revenues also benefited from currency but declined organically because of delayed government orders. Sales in India rebounded due to strong demand for LC from pharmaceutical customers. AMI operating profit jumped 34.0% to ¥5.0 billion ($43.8 million) due to higher sales volume and currency.

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