EX-99.1 2 a2018-q3form8xkex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
lum1n35smalla11.jpg

LUMINEX CORPORATION REPORTS THIRD QUARTER
2018 FINANCIAL RESULTS


AUSTIN, Texas (November 5, 2018) - Luminex Corporation (Nasdaq: LMNX) today announced financial results for the third quarter of 2018. Financial and operating highlights for the quarter include:

•
Third quarter 2018 consolidated revenue was $72.4 million, a decrease of 2% compared to the third quarter 2017. Revenue growth, excluding LabCorp sales, was up 7% over the prior year quarter.
•
Assay revenue was $33.7 million for the quarter ended September 30, 2018, a decrease of 11% over assay revenue for the third quarter 2017. Similarly, excluding sales to LabCorp, assay revenue increased 6% for the quarter ended September 30, 2018 over the prior year quarter.
•
Total sample-to-answer molecular product revenue grew approximately 15% from $11.9 million in the third quarter 2017 to $13.6 million in the third quarter of 2018.
•
Placed 81 sample-to-answer molecular systems under contract during the third quarter of 2018. Active sample-to-answer customers now number over 550.
•
Sample-to-answer utilization per VERIGENE® customer grew approximately 7%, to $104,000 from $97,000 in the prior year quarter; and utilization per ARIES® customer grew approximately 28%, to approximately $55,000 from $43,000 in the prior year quarter.
•
284 multiplexing analyzers were shipped during the quarter; now totaling more than 15,700 since the Company’s inception. Multiplexing analyzers consists of a combination of MAGPIX® systems, LX systems, and FLEXMAP 3D® systems.
•
Third quarter 2018 GAAP net income of $1.7 million or $0.04 per diluted share, and non-GAAP net income of $2.2 million or $0.05 per diluted share. This compares to GAAP net income of $17.6 million or $0.40 per diluted share, and non-GAAP net income of $5.5 million or $0.13 per diluted share, for the third quarter 2017. GAAP net income in the prior year included a non-recurring income tax benefit of $12.4 million related to our Canadian valuation allowance.
•
On October 18, 2018, the Company entered into a definitive agreement to acquire EMD Millipore Corporation’s flow cytometry portfolio for $75 million.


“With the acquisition of the flow cytometry assets from MilliporeSigma and the departure of LabCorp, Luminex will be a more diversified company with a substantial pipeline of products and a solid foundation for increasing our growth and enhancing our leadership,” said Homi Shamir, President and Chief Executive Officer of Luminex.  “Although order timing resulted in slightly lower revenue than expected in the third quarter, I am pleased with the significant progress we continue to make across our diversified business. Our sample-to-answer portfolio continued its strong momentum, with the addition of 81 contracted systems during the quarter. In addition, our Licensed Technologies Group revenue stream grew 7% over the prior year quarter and returned to growth mode as expected. With the closing of the strategic MilliporeSigma transaction we will begin 2019 with an additional revenue stream, beyond our planned organic growth, that we expect will add $40-$50 million dollars of revenue and should be accretive by the end of 2019.”







REVENUE SUMMARY
(in thousands, except percentages)

 
Three Months Ended
 
 
 
 
 
September 30,
 
Variance
 
2018
 
2017
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
10,026

 
$
9,903

 
$
123

 
1
 %
Consumable sales
11,627

 
10,619

 
1,008

 
9
 %
Royalty revenue
12,081

 
11,001

 
1,080

 
10
 %
Assay revenue
33,747

 
37,917

 
(4,170
)
 
(11
)%
Service revenue
3,015

 
2,894

 
121

 
4
 %
Other revenue
1,949

 
1,802

 
147

 
8
 %
 
$
72,445

 
$
74,136

 
$
(1,691
)
 
(2
)%


FINANCIAL OUTLOOK AND GUIDANCE

The Company provides annual revenue guidance, updated as appropriate, at each quarterly reporting period. Luminex anticipates fourth quarter 2018 revenue to be between $77.0 million and $79.0 million and thus expects to be in the middle of its full year 2018 revenue guidance of between $310 million and $316 million. This takes into account the departure of LabCorp Women’s Health and a moderate flu season. 

CONFERENCE CALL

Management will host a conference call at 3:30 p.m. CT / 4:30 p.m. ET, on Monday, November 5, 2018 to discuss the operating highlights and financial results for the third quarter 2018. The conference call will be webcast live and may be accessed at Luminex Corporation’s website at http://www.luminexcorp.com. Simply log on to the web at the address above, go to the Company section and access the Investor Relations link. The call will be archived for six months on the website using the ‘replay’ link.

Luminex develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry. The Company’s xMAP® system is an open-architecture, multi-analyte technology platform that delivers fast, accurate and cost-effective bioassay results to markets as diverse as pharmaceutical drug discovery, clinical diagnostics and biomedical research, including the genomics and proteomics research markets. The Company’s xMAP technology is sold worldwide and is in use in leading research laboratories as well as major pharmaceutical, diagnostic and biotechnology companies. Further information on Luminex or xMAP can be obtained on the Internet at http://www.luminexcorp.com.

ABOUT LUMINEX CORPORATION

At Luminex, our mission is to empower labs to obtain reliable, timely, and actionable answers, ultimately advancing health. We offer a wide range of solutions applicable in diverse markets including clinical diagnostics, pharmaceutical drug discovery, biomedical research, genomic and proteomic research, biodefense research, and food safety. We accelerate reliable answers while simplifying complexity and deliver certainty with a seamless experience. To learn more about Luminex, please visit us at www.luminexcorp.com.

Statements made in this release that express Luminex’s or management's intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. Forward-looking statements in this release include statements regarding expected revenue and cost savings and projected 2018 performance, including revenue guidance. The words "believe," "expect," "intend," "estimate," "anticipate," "will," "could," "should" and similar expressions are intended to further identify such forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.  It is important to note that the Company's actual results or performance could differ materially from those anticipated or projected in such forward-looking statements.  Factors that could cause Luminex’s actual results or performance to differ materially include risks and uncertainties relating to, among others, concentration




of Luminex’s revenue in a limited number of direct customers and strategic partners, some of which may be experiencing decreased demand for their products utilizing or incorporating Luminex’s technology, budget or finance constraints in the current economic environment, or periodic variability in their purchasing patterns or practices as a result of internal resource planning challenges; market demand and acceptance of Luminex’s products and technology, including ARIES®, MultiCode®, xMAP®, VERIGENE® and NxTAG® products; Luminex’s ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels; Luminex’s ability to obtain and enforce intellectual property protections on Luminex’s products and technologies; the impact on Luminex’s growth and future results of operations with respect to the loss of the LabCorp women’s health business anticipated in June 2018; Luminex’s ability to successfully launch new products in a timely manner; dependence on strategic partners for development, commercialization and distribution of products; risks and uncertainties associated with implementing Luminex’s acquisition strategy, Luminex’s challenge to identify acquisition targets, including Luminex’s ability to obtain financing on acceptable terms; Luminex’s ability to integrate acquired companies or selected assets into Luminex’s consolidated business operations, and the ability to fully realize the benefits of Luminex’s acquisitions; the timing of and process for regulatory approvals; competition and competitive technologies utilized by Luminex’s competitors; fluctuations in quarterly results due to a lengthy and unpredictable sales cycle; fluctuations in bulk purchases of consumables; fluctuations in product mix, and the seasonal nature of some of Luminex’s assay products; Luminex’s ability to comply with applicable laws, regulations, policies and procedures; the impact of the ongoing uncertainty in global finance markets and changes in governmental and governmental agency funding, including effects on the capital spending policies of Luminex’s partners and end users and their ability to finance purchases of Luminex’s products; changes in interpretation, assumptions and expectations regarding the Tax Cuts and Jobs Act, including additional guidance that may be issued by federal and state taxing authorities; changes in principal members of Luminex’s management staff; potential shortages, or increases in costs, of components or other disruptions to Luminex’s manufacturing operations; Luminex’s increasing dependency on information technology to improve the effectiveness of Luminex’s operations and to monitor financial accuracy and efficiency; the implementation, including any modification, of Luminex’s strategic operating plans; the uncertainty regarding the outcome or expense of any litigation brought against or initiated by Luminex; risks relating to Luminex’s foreign operations, including fluctuations in exchange rates, tariffs, customs and other barriers to importing/exporting materials and products in a cost effective and timely manner; difficulties in accounts receivable collections; Luminex’s ability to monitor and comply with foreign and international laws and treaties; and Luminex’s ability to comply with changes in international taxation policies; budget or finance constraints in the current economic environment, or periodic variability in their purchasing patterns or practices as a result of material resource planning challenges; reliance on third party distributors for distribution of specific Luminex-developed and manufactured assay products, as well as the risks discussed under the heading "Risk Factors" in Luminex’s Reports on Forms 10-K and 10-Q, as filed with the Securities and Exchange Commission.  The forward-looking statements, including the financial guidance and 2018 outlook, contained herein represent the judgment of Luminex as of the date of this press release, and Luminex expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Luminex’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.





LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
September 30,
 
December 31,
 
2018
 
2017
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
146,894

 
$
127,112

Accounts receivable, net
42,205

 
40,648

Inventories, net
55,046

 
49,478

Prepaids and other
11,907

 
7,403

Total current assets
256,052

 
224,641

Property and equipment, net
61,876

 
58,258

Intangible assets, net
73,815

 
75,985

Deferred income taxes
27,875

 
37,552

Goodwill
85,481

 
85,481

Other
10,729

 
8,599

Total assets
515,828

 
490,516

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,300

 
$
14,537

Accrued liabilities
19,895

 
25,990

Deferred revenue
5,589

 
4,721

Total current liabilities
38,784

 
45,248

Deferred revenue
1,277

 
1,498

Other
7,556

 
5,863

Total liabilities
47,617

 
52,609

Stockholders' equity:
 
 
 
Common stock
44

 
43

Additional paid-in capital
360,825

 
350,834

Accumulated other comprehensive loss
(1,046
)
 
(625
)
Retained earnings
108,388

 
87,655

Total stockholders' equity
468,211

 
437,907

Total liabilities and stockholders' equity
$
515,828

 
$
490,516

 
 
 
 




LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
Revenue
$
72,445

 
$
74,136

 
$
234,685

 
$
228,372

Cost of revenue
28,189

 
28,317

 
87,535

 
79,706

Gross profit
44,256

 
45,819

 
147,150

 
148,666

Operating expenses:
 
 
 
 
 
 
 
Research and development
11,996

 
10,670

 
33,994

 
35,350

Selling, general and administrative
26,340

 
26,454

 
79,780

 
78,604

Amortization of acquired intangible assets
2,166

 
2,166

 
6,498

 
6,689

Total operating expenses
40,502

 
39,290

 
120,272

 
120,643

Income from operations
3,754

 
6,529

 
26,878

 
28,023

Other income, net
8

 
(1
)
 
465

 
(6
)
Income before income taxes
3,762

 
6,528

 
27,343

 
28,017

Income tax expense
(2,025
)
 
11,085

 
(6,540
)
 
4,371

Net income
$
1,737

 
$
17,613

 
$
20,803

 
$
32,388

 
 
 
 
 
 
 
 
Net income attributable to common stock holders
 
 
 
 
 
 
Basic
$
1,708

 
$
17,299

 
$
20,447

 
$
31,789

Diluted
$
1,708

 
$
17,299

 
$
20,449

 
$
31,789

 
 
 
 
 
 
 
 
Net income per share attributable to common stock holders
 
 
 
 
 
 
 
Basic
$
0.04

 
$
0.40

 
$
0.47

 
$
0.74

Diluted
$
0.04

 
$
0.40

 
$
0.46

 
$
0.74

 
 
 
 
 
 
 
 
Weighted-average shares used in computing net income per share
 
 
 
 
 
 
 
Basic
43,836

 
43,164

 
43,679

 
43,110

Diluted
44,707

 
43,266

 
44,193

 
43,216

 
 
 
 
 
 
 
 
Dividends declared per share
$
0.06

 
$
0.06

 
$
0.18

 
$
0.18






LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
1,737

 
$
17,613

 
$
20,803

 
$
32,388

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
5,714

 
5,609

 
17,737

 
16,879

Stock-based compensation
3,652

 
3,829

 
8,460

 
8,577

Deferred income tax benefit
4,889

 
(10,379
)
 
8,650

 
(3,112
)
Loss on sale or disposal of assets
332

 
417

 
443

 
417

Other
(159
)
 
357

 
(1,286
)
 
1,279

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable, net
4,570

 
(3,295
)
 
9,623

 
(4,053
)
Inventories, net
(2,982
)
 
988

 
(5,584
)
 
(5,316
)
Other assets
(4,187
)
 
(1,564
)
 
(4,743
)
 
(2,761
)
Accounts payable
(47
)
 
(2,163
)
 
(1,708
)
 
(4,532
)
Accrued liabilities
1,633

 
2,273

 
(6,440
)
 
(5,138
)
Deferred revenue
—

 
81

 
653

 
(269
)
Net cash provided by operating activities
15,152

 
13,766

 
46,608

 
34,359

Cash flows from investing activities:
 
 
 
 
 
 
 
Purchase of property and equipment
(5,228
)
 
(3,981
)
 
(14,264
)
 
(10,384
)
Proceeds from sale of assets
—

 
1

 
—

 
1

Issuance of note receivable
—

 
(700
)
 
(1,000
)
 
(700
)
Purchase of investment
—

 
—

 
(1,782
)
 
(1,000
)
Acquired technology rights
—

 
(60
)
 
(4,000
)
 
(60
)
Net cash used in investing activities
(5,228
)
 
(4,740
)
 
(21,046
)
 
(12,143
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from employee stock plans and issuance of common stock
566

 
1,005

 
3,982

 
3,234

Shares surrendered for tax withholding
(18
)
 
(28
)
 
(2,034
)
 
(2,124
)
Dividends
(2,676
)
 
(2,645
)
 
(7,978
)
 
(5,281
)
Net cash used in financing activities
(2,128
)
 
(1,668
)
 
(6,030
)
 
(4,171
)
Effect of foreign currency exchange rate on cash
102

 
(152
)
 
250

 
(586
)
Change in cash and cash equivalents
7,898

 
7,206

 
19,782

 
17,459

Cash and cash equivalents, beginning of period
138,996

 
103,705

 
127,112

 
93,452

Cash and cash equivalents, end of period
$
146,894

 
$
110,911

 
$
146,894

 
$
110,911





LUMINEX CORPORATION
NON-GAAP RECONCILIATION
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
Reported Net Income
$
1,737

 
$
17,613

 
$
20,803

 
$
32,388

Acquisition related costs
215

 
—

 
233

 
—

Severance & costs associated with legal proceedings
177

 
347

 
301

 
1,005

Income tax effect of above adjusting items
(188
)
 
(71
)
 
(211
)
 
(250
)
Income tax effect from discrete tax items
223

 
(12,423
)
 
(1,384
)
 
(12,423
)
Adjusted Net Income
$
2,164

 
$
5,466

 
$
19,742

 
$
20,720

 
 
 
 
 
 
 
 
Adjusted net income per share, basic
$
0.05

 
$
0.13

 
$
0.45

 
$
0.48

Shares used in computing adjusted net income per share, basic
43,836

 
43,164

 
43,679

 
43,110

Adjusted net income per share, diluted
$
0.05

 
$
0.13

 
$
0.45

 
$
0.48

Shares used in computing adjusted net income per share, diluted
44,707

 
43,266

 
44,193

 
43,216



The Company’s “non-GAAP net income” excludes costs associated with legal proceedings, acquisition costs, and severance costs; some of which are unpredictable and can vary significantly from period to period; and certain other recurring and non-recurring expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company’s ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company’s past financial performance and prospects for the future. In addition, the Company’s management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. This information is not intended to be considered in isolation or as a substitute for income from operations, net income, net income per share or expense information prepared in accordance with GAAP.

-END-