Illumina, Inc. (NASDAQ: ILMN) today announced its financial
results for the first quarter of fiscal year 2016.
First quarter 2016 results:
- Revenue of $572 million, a 6% increase
compared to $539 million in the first quarter of 2015, and an
increase of 7% on a constant currency basis
- GAAP net income attributable to
Illumina stockholders for the quarter of $90 million, or $0.60 per
diluted share, compared to $137 million, or $0.92 per diluted
share, for the first quarter of 2015
- Non-GAAP net income attributable to
Illumina stockholders for the quarter of $106 million, or $0.71 per
diluted share, compared to $135 million, or $0.91 per diluted
share, for the first quarter of 2015 (see the table entitled
“Itemized Reconciliation Between GAAP and Non-GAAP Net Income
Attributable to Illumina Stockholders” for a reconciliation of
these GAAP and non-GAAP financial measures)
- Cash flow from operations of $40
million and free cash flow of negative $14 million for the quarter,
compared to $67 million and positive $30 million in the prior year
period. Increased operating expenses and higher capital
expenditures contributed to the lower free cash flow.
Gross margin in the first quarter of 2016 was 69.4% compared to
69.6% in the prior year period. Excluding the effect of non-cash
stock compensation expense and amortization of acquired intangible
assets, non-GAAP gross margin was 71.7% for the first quarter of
2016 compared to 72.2% in the prior year period.
Research and development (R&D) expenses for the first
quarter of 2016 were $124.0 million compared to $91.8 million in
the prior year period. R&D expenses included $10.7 million and
$11.3 million of non-cash stock compensation expense in the first
quarters of 2016 and 2015, respectively. Excluding these charges
and contingent compensation, R&D expenses as a percentage of
revenue were 19.8%, including 0.9% attributable to GRAIL and Helix.
This compares to 14.9% in the prior year period.
Selling, general and administrative (SG&A) expenses for the
first quarter of 2016 were $149.2 million compared to $116.3
million in the prior year period. SG&A expenses included $22.0
million and $18.0 million of non-cash stock compensation expense in
the first quarters of 2016 and 2015, respectively. Excluding these
charges, amortization of acquired intangible assets, and contingent
compensation, SG&A expenses as a percentage of revenue were
21.9%, including 0.6% attributable to GRAIL and Helix. This
compares to 18.0% in the prior year period.
Depreciation and amortization expenses were $33.2 million and
capital expenditures were $53.4 million during the first quarter of
2016. The company settled the remaining 0.25% Convertible Senior
Notes of $75.5 million. At the close of the quarter, the company
held $1.34 billion in cash, cash equivalents and short-term
investments, compared to $1.39 billion as of January 3, 2016.
"As we have previously shared, Q1 was a slower start to the year
than we expected,” stated Jay Flatley, Chairman and CEO. “Our view
of the growth potential of the sequencing market remains unchanged,
as the largest opportunities are in their earliest stages of
development. In the near-term, we are focused on improving
execution to restore the growth rate we believe our markets can
support.”
Updates since our last earnings release:
- Introduced BaseSpace® Informatics
Suite, a complete set of genomics software tools and solutions to
facilitate precision medicine and genomics research
- Applied CE mark to VeriSeq™ NIPT
Analysis Software for use in clinical laboratories
- Announced partnerships to enable long
read applications including co-marketing agreements with 10X
Genomics and NRGene
- Entered into a partnership with
Genomics England to develop a platform and knowledge base to
improve and automate genome interpretation
- Committed $100 million to a new venture
capital firm that will pursue early stage investments which are
strategically aligned with Illumina’s vision
- Announced that on July 5, 2016 Jay
Flatley will assume the role of Executive Chairman of the Board of
Directors and Francis deSouza will be appointed President and Chief
Executive Officer
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain
pro forma adjustments to assist in analyzing and assessing our core
operational performance. Please see our Reconciliation of Non-GAAP
Financial Guidance included in this release for a reconciliation of
the GAAP and non-GAAP financial measures.
For fiscal 2016, the company is projecting
approximately 12% revenue growth and non-GAAP earnings
per diluted share attributable to Illumina stockholders
of $3.35 to $3.45. For the second quarter 2016, the
company is projecting revenue of $590 million to $595 million and
non-GAAP earnings per diluted share attributable to Illumina
stockholders of $0.72 to $0.74.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm
Eastern Time) on Tuesday, May 3, 2016. Interested parties may
listen to the call by dialing 888.687.3295 (passcode: 85797542), or
if outside North America by dialing +1.503.406.4070 (passcode:
85797542). Individuals may access the live teleconference in the
Investor Relations section of Illumina’s web site under the
“company” tab at www.illumina.com.
A replay of the conference call will be available from 5:00 pm
Pacific Time (8:00 pm Eastern Time) on May 3, 2016 through May 10,
2016 by dialing 855.859.2056 (passcode: 85797542), or if outside
North America by dialing +1.404.537.3406 (passcode: 85797542).
Statement regarding use of non-GAAP financial
measures
The company reports non-GAAP results for diluted net income per
share, net income, gross margins, operating expenses, operating
margins, other income, and free cash flow in addition to, and not
as a substitute for, or superior to, financial measures calculated
in accordance with GAAP.
The company’s financial measures under GAAP include substantial
charges such as stock compensation expense, amortization of
acquired intangible assets, non-cash interest expense associated
with the company’s convertible debt instruments that may be settled
in cash, and others that are listed in the itemized reconciliations
between GAAP and non-GAAP financial measures included in this press
release. Management believes that presentation of operating results
that excludes these items provides useful supplemental information
to investors and facilitates the analysis of the company’s core
operating results and comparison of operating results across
reporting periods. Management also believes that this supplemental
non-GAAP information is useful to investors in analyzing and
assessing the company’s past and future operating performance.
The company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Reconciliations between GAAP
and non-GAAP results are presented in the tables of this
release.
Use of forward-looking statements
This release contains projections, information about our
financial outlook, earnings guidance, and other forward-looking
statements that involve risks and uncertainties. These
forward-looking statements are based on our expectations as of the
date of this release and may differ materially from actual future
events or results. Among the important factors that could cause
actual results to differ materially from those in any
forward-looking statements are (i) our ability to further develop
and commercialize our instruments and consumables and to deploy new
products, services and applications, and expand the markets for our
technology platforms; (ii) our ability to manufacture robust
instrumentation and consumables; (iii) our ability to successfully
identify and integrate acquired technologies, products or
businesses; (iv) our expectations and beliefs regarding future
conduct and growth of the business and the markets in which we
operate; (v) challenges inherent in developing, manufacturing, and
launching new products and services; and (vi) the application of
generally accepted accounting principles, which are highly complex
and involve many subjective assumptions, estimates, and judgments,
together with other factors detailed in our filings with the
Securities and Exchange Commission, including our most recent
filings on Forms 10-K and 10-Q, or in information disclosed in
public conference calls, the date and time of which are released
beforehand. We undertake no obligation, and do not intend, to
update these forward-looking statements, to review or confirm
analysts’ expectations, or to provide interim reports or updates on
the progress of the current quarter.
About Illumina
Illumina is improving human health by unlocking the power of the
genome. Our focus on innovation has established us as the global
leader in DNA sequencing and array-based technologies, serving
customers in the research, clinical and applied markets. Our
products are used for applications in the life sciences, oncology,
reproductive health, agriculture and other emerging segments. To
learn more, visit www.illumina.com and follow
@illumina.
Illumina, Inc. Condensed Consolidated Balance Sheets
(In thousands) April 3, 2016 January
3, 2016 ASSETS (unaudited) Current assets:
Cash and cash equivalents $ 754,910 $ 768,770 Short-term
investments 588,182 617,450 Accounts receivable, net 402,514
385,529 Inventory 287,919 270,777 Prepaid expenses and other
current assets 40,273 54,297 Total current assets 2,073,798
2,096,823 Property and equipment, net 385,253 342,694 Goodwill
776,029 752,629 Intangible assets, net 269,576 273,621 Deferred tax
assets 196,198 134,515 Other assets 92,852 87,465 Total
assets $ 3,793,706 $ 3,687,747
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $
154,680 $ 148,721 Accrued liabilities 326,548 386,844 Long-term
debt, current portion — 74,929 Total current liabilities
481,228 610,494 Long-term debt 1,022,646 1,015,649 Other long-term
liabilities 185,526 180,505 Redeemable noncontrolling interests
33,383 32,546 Stockholders’ equity 2,070,923 1,848,553 Total
liabilities and stockholders’ equity $ 3,793,706 $ 3,687,747
Illumina, Inc. Condensed Consolidated Statements
of Income (In thousands, except per share amounts)
(unaudited) Three Months Ended April 3,
2016 March 29, 2015 Revenue: Product revenue $
482,750 $ 459,127 Service and other revenue 89,013 79,438
Total revenue 571,763 538,565 Cost of revenue:
Cost of product revenue
(a) 125,326 119,624 Cost of service
and other revenue
(a) 38,887 32,529 Amortization of acquired
intangible assets 10,496 11,385 Total cost of revenue
174,709 163,538 Gross profit 397,054 375,027
Operating expense: Research and development
(a)
123,994 91,772 Selling, general and administrative
(a)
149,233 116,317 Legal contingencies 2,000 — Headquarter relocation
382 699 Acquisition related gain, net — (9,887 ) Total
operating expense 275,609 198,901 Income from
operations 121,445 176,126 Other (expense) income, net (5,849 )
1,920 Income before income taxes 115,596 178,046 Provision
for income taxes 28,377 41,388 Consolidated net
income 87,219 136,658 Add: Net loss attributable to noncontrolling
interests 2,368 — Net income attributable to Illumina
stockholders $ 89,587 $ 136,658 Earnings per share
attributable to Illumina stockholders: Basic $ 0.61 $ 0.95 Diluted
$ 0.60 $ 0.92 Shares used in computing earnings per common share:
Basic 146,866 143,771 Diluted 148,357 148,683
(a) Includes stock-based compensation expense for
stock-based awards:
Three Months Ended April
3, 2016 March 29, 2015 Cost of product
revenue $ 2,192 $ 2,332 Cost of service and other revenue 432 279
Research and development 10,681 11,307 Selling, general and
administrative 21,987 18,000 Stock-based compensation
expense before taxes $ 35,292 $ 31,918
Illumina, Inc. Condensed Consolidated Statements of Cash
Flows (In thousands) (unaudited)
Three Months Ended April 3, 2016 March
29, 2015 Net cash provided by operating activities
(a) $ 39,738 $ 66,779 Net cash used in investing activities
(43,553 ) (154,147 ) Net cash used in financing activities
(a) (12,349 ) (12,534 ) Effect of exchange rate changes on
cash and cash equivalents 2,304 (2,715 ) Net decrease in
cash and cash equivalents (13,860 ) (102,617 ) Cash and cash
equivalents, beginning of period 768,770 636,154 Cash
and cash equivalents, end of period $ 754,910 $ 533,537
Calculation of free cash flow: Net cash provided by
operating activities
(a) $ 39,738 $ 66,779 Purchases of
property and equipment (53,418 ) (36,551 ) Free cash flow
(b) $ (13,680 ) $ 30,228
______________________________________________________________________________________________________
(a) Net cash provided by operating activities excludes
excess tax benefit related to stock-based compensation of $59.0
million in Q1 2016 and $76.4 million in Q1 2015. Net cash used in
financing activities reflects the excess tax benefit as a
corresponding in-flow in the respective periods.
(b) Free cash flow, which is a non-GAAP financial
measure, is calculated as net cash provided by operating activities
reduced by purchases of property and equipment. Free cash flow is
useful to management as it is one of the metrics used to evaluate
our performance and to compare us with other companies in our
industry. However, our calculation of free cash flow may not be
comparable to similar measures used by other companies.
Illumina, Inc. Results of Operations - Non-GAAP
(In thousands, except per share amounts) (unaudited)
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP
EARNINGS PER SHARE ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS:
Three Months Ended April 3, 2016
March 29, 2015 GAAP earnings per share
attributable to Illumina stockholders - diluted $
0.60 $ 0.92 Amortization of acquired
intangible assets 0.09 0.09 Non-cash interest expense
(a)
0.05 0.07 Legal contingencies
(b) 0.01 — Acquisition related
gain, net
(c) — (0.07 ) Cost-method investment gain, net
(d) — (0.08 ) Incremental non-GAAP tax expense
(e)
(0.04 ) (0.02 ) Non-GAAP earnings per share attributable to
Illumina stockholders - diluted
(f) $ 0.71 $ 0.91
Shares used in calculating non-GAAP diluted earnings per
share attributable to Illumina stockholders 148,357 148,683
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP
NET INCOME ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: GAAP net
income attributable to Illumina stockholders $
89,587 $ 136,658 Amortization of acquired
intangible assets 12,026 12,887 Non-cash interest expense
(a) 7,746 10,188 Legal contingencies
(b) 2,000 —
Contingent compensation expense
(g) 700 — Headquarter
relocation 382 699 Acquisition related gain, net
(c) —
(9,887 ) Cost-method investment gain, net
(d) — (12,582 )
Incremental non-GAAP tax expense
(e) (6,904 ) (2,587 )
Non-GAAP net income attributable to Illumina stockholders
(f) $ 105,537 $ 135,376
______________________________________________________________________________________________________
(a) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
(b) Legal contingencies represent charges related to
patent litigation.
(c) Acquisition related gain, net consists of changes in
fair value of contingent consideration.
(d) Cost-method investment gain, net consists primarily
of a gain on the sale of a cost-method investment.
(e) Incremental non-GAAP tax expense reflects the tax
impact related to the non-GAAP adjustments listed above.
(f) Non-GAAP net income attributable to Illumina
stockholders and diluted earnings per share attributable to
Illumina stockholders exclude the effect of the pro forma
adjustments as detailed above. Non-GAAP net income attributable to
Illumina stockholders and diluted earnings per share attributable
to Illumina stockholders are key drivers of the company’s core
operating performance and major factors in management’s bonus
compensation each year. Management has excluded the effects of
these items in these measures to assist investors in analyzing and
assessing our past and future core operating performance.
(g) Contingent compensation expense relates to contingent
payments for post-combination services associated with an
acquisition.
Illumina, Inc. Results of Operations - Non-GAAP
(continued) (Dollars in thousands) (unaudited)
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF
OPERATIONS AS A PERCENT OF REVENUE: Three Months Ended
April 3, 2016 March 29, 2015
GAAP gross profit $ 397,054 69.4
% $ 375,027 69.6 %
Stock-based compensation expense 2,624 0.5 % 2,611 0.5 %
Amortization of acquired intangible assets 10,496 1.8 %
11,385 2.1 % Non-GAAP gross profit
(a) $ 410,174
71.7 % $ 389,023 72.2 %
GAAP research and
development expense $ 123,994 21.7
% $ 91,772 17.0 % Stock-based
compensation expense (10,681 ) (1.9 )% (11,307 ) (2.1 )% Contingent
compensation expense
(b) (108 ) — — —
Non-GAAP research and development expense $ 113,205 19.8 % $
80,465 14.9 %
GAAP selling, general and
administrative expense $ 149,233 26.1
% $ 116,317 21.6 % Stock-based
compensation expense (21,987 ) (3.8 )% (18,000 ) (3.3 )%
Amortization of acquired intangible assets (1,530 ) (0.3 )% (1,502
) (0.3 )% Contingent compensation expense
(b) (592 ) (0.1 )%
— — Non-GAAP selling, general and administrative
expense $ 125,124 21.9 % $ 96,815 18.0 %
GAAP operating profit $ 121,445 21.2
% $ 176,126 32.7 % Stock-based
compensation expense 35,292 6.3 % 31,918 5.9 % Amortization of
acquired intangible assets 12,026 2.1 % 12,887 2.4 % Legal
contingencies
(c) 2,000 0.3 % — — Contingent compensation
expense
(b) 700 0.1 % — — Headquarter relocation 382 0.1 %
699 0.1 % Acquisition related gain, net
(d) — —
(9,887 ) (1.8 )% Non-GAAP operating profit
(a) $
171,845 30.1 % $ 211,743 39.3 %
GAAP other
(expense) income, net $ (5,849 )
(1.0 )% $ 1,920 0.4 %
Non-cash interest expense
(e) 7,746 1.3 % 10,188 1.9 %
Cost-method investment gain, net
(f) — —
(12,582 ) (2.4 )% Non-GAAP other income (expense), net
(a) $
1,897 0.3 % $ (474 ) (0.1 )%
______________________________________________________________________________________________________
(a) Non-GAAP gross profit, included within non-GAAP
operating profit, is a key measure of the effectiveness and
efficiency of manufacturing processes, product mix and the average
selling prices of the company’s products and services. Non-GAAP
operating profit, and non-GAAP other income (expense), net, exclude
the effects of the pro forma adjustments as detailed above.
Management has excluded the effects of these items in these
measures to assist investors in analyzing and assessing past and
future core operating performance.
(b) Contingent compensation expense relates to contingent
payments for post-combination services associated with an
acquisition.
(c) Legal contingencies represent charges related to
patent litigation.
(d) Acquisition related gain, net consists of changes in
fair value of contingent consideration.
(e) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
(f) Cost-method investment gain, net consists primarily
of a gain on the sale of a cost-method investment.
Illumina, Inc.
Reconciliation of Non-GAAP Financial
Guidance
The company’s future performance and financial results are
subject to risks and uncertainties, and actual results could differ
materially from the guidance set forth below. Some of the factors
that could affect the company’s financial results are stated above
in this press release. More information on potential factors that
could affect the company’s financial results is included from time
to time in the company’s public reports filed with the Securities
and Exchange Commission, including the company’s Form 10-K for the
fiscal year ended January 3, 2016 filed with the SEC on March 2,
2016. The company assumes no obligation to update any
forward-looking statements or information.
Fiscal Year 2016 Operating margin Non-GAAP operating
margin
(a) 31.5% Stock-based compensation expense (5.9)%
Amortization of acquired intangible assets (1.9)% Legal
contingencies
(b) (0.1)% Contingent compensation
(c)
(0.1)% Headquarter relocation
(d) (0.1)%
GAAP operating
margin 23.4% Diluted earnings per share
attributable to Illumina stockholders Non-GAAP diluted earnings
per share attributable to Illumina stockholders $3.35 - $3.45
Amortization of acquired intangible assets (0.32) Non-cash interest
expense
(d) (0.20) Contingent compensation
(c) (0.02)
Legal contingencies
(b) (0.01) Headquarter relocation
(d) (0.01) Incremental non-GAAP tax expense
(f) 0.18
GAAP diluted earnings per share attributable to Illumina
stockholders $2.97 - $3.07 Q2 2016
Diluted earnings per share attributable to Illumina
stockholders Non-GAAP diluted earnings per share attributable
to Illumina stockholders $0.72 - $0.74 Amortization of acquired
intangible assets (0.08) Non-cash interest expense
(e)
(0.05) Incremental non-GAAP tax expense
(f) 0.04
GAAP
diluted earnings per share attributable to Illumina
stockholders $0.63 - $0.65
______________________________________________________________________________________________________
(a) Operating margin implied at the mid-point of guidance
provided for non-GAAP diluted earnings per share.
(b) Legal contingencies represent charges related to
patent litigation.
(c) Contingent compensation expense relates to contingent
payments for post-combination services associated with an
acquisition.
(d) Headquarter relocation represents accretion of
interest expense on lease exit liability and changes in estimate of
such liability.
(e) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
(f) Incremental non-GAAP tax expense reflects the tax
impact related to the non-GAAP adjustments listed above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160503006960/en/
Illumina, Inc.Investors:Rebecca Chambers,
858.255.5243ir@illumina.comorMedia:Eric Endicott,
858.882.6822pr@illumina.com
Illumina (NASDAQ:ILMN)
Historical Stock Chart
From Feb 2024 to Mar 2024
Illumina (NASDAQ:ILMN)
Historical Stock Chart
From Mar 2023 to Mar 2024