TRIB Trinity Biotech PLC

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 September 30, 2015.

Quarter 3 Results

Total revenues for Q3, 2015 were $25.8m which compares to $27.2m in Q3, 2014, a decrease of 5.2%. 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 on a like-for-like basis would have been $27.6m this quarter, thus representing an increase of almost 2% versus the equivalent quarter in 2014.

Point-of-Care revenues for Q3, 2015 increased slightly when compared to Q3, 2014. This increase was attributable to increased rapid syphilis sales offset by slightly lower HIV revenues.

Clinical Laboratory revenues increased to $22.1m, which represents an increase of over 2% compared to Q3, 2014. This increase was primarily attributable to increased Premier reagent and Immco revenues partly offset by lower Premier instrument and Lyme revenues.

Revenues for Q3, 2015 were as follows:

	2014Quarter 3	2015Quarter 3	2015Quarter 3FXadjusted*	Increase/(decrease)
	US$’000	US$’000	US$’000	%
Point-of-Care	5,463	5,418	5,472		0.2			%
Clinical Laboratory	21,698	20,343	22,148		2.1			%
Total	27,161	25,761	27,620		1.7			%

* Q3, 2015 revenues have been recalculated on a constant currency basis using the exchange rates prevailing in Q3, 2014

Gross profit for Q3, 2015 amounted to $12.0m representing a gross margin of 46.5%, which is lower than the 47.9% achieved in Q3, 2014, though similar to that reported in Q2, 2014. This decrease is due to the impact of a lower level of higher margin Lyme revenues and the impact of foreign currency movements.

Research and Development expenses have increased to $1.3m from $1.1m when compared to the equivalent quarter last year. Meanwhile, Selling, General and Administrative (SG&A) expenses have increased from $7.0m to $7.5m over the same period. This increase is attributable to higher sales and marketing costs, largely due to expenditure on Meritas.

Operating profit for the quarter has decreased from $4.6m to $3.0m, thus reflecting the lower gross margin and higher indirect costs incurred this quarter.

Financial income for the quarter was $0.2m, an increase of $0.2m versus Q3, 2014 due to the higher level of funds on deposit following the issuance of the 30 Year Exchangeable Loan Notes (“the Loan Notes”) in Q2, 2015. Meanwhile, financial expenses increased to $1.1m mainly relating to the cash element of interest associated with these notes. The non-cash elements of the Loan Notes represented income of $10.5m which is attributable to revaluation gains on the derivatives embedded in the Loan Notes of $10.7m, partly offset by non-cash interest charges of $0.2m.    

The following table summarises the impact of the Exchangeable Loan Notes on the Income Statement for Q3, 2015.

Exchangeable Loan Notes – Income Statement impact	Q3 2015US$’000
Cash element
Cash based interest charge*		(1,064			)
Non-cash element
Non-cash interest charge		(208			)
Revaluation gains on embedded derivatives		10,720
Total non-cash items		10,512
Net financing income relating to the Exchangeable Loan notes		9,448

* this is included in financial expenses in the Income Statement – the remaining element ($21,000) arises on items not related to the exchangeable note.

Profit before tax for the period was $12.6m though this was largely impacted by non-cash gains related to the Loan Notes. Excluding the non-cash elements of the Loan Notes, the profit before tax for the quarter was $2.1m.

The tax charge for Q3, 2015 was $0.3m, largely in line with the equivalent quarter in 2014.

Profit after tax for the period was $12.3m. However, excluding the non-cash elements of the Loan Notes, this would have been $1.8m, which equates to an adjusted EPS of 7.5 cents. Diluted EPS for the quarter amounted to 9.7 cents.

Cash generated from operations during the quarter was $3.7m, though this was offset by capital expenditure of $4.3m and interest and tax payments of $0.1m, resulting in a net cash outflow for the quarter of $0.7m. In addition, the company made dividend payments amounting to $5.1m with the result that the cash balance at the end of the quarter was $104.3m.

Earnings before interest, tax, depreciation, amortisation and share option expense for the quarter was $4.7m.

Other Recent Developments

Cardiac Update

The following is an update on the three main components of the Meritas Troponin-I Clinical Program:

• The most substantial component of this clinical program is the Acute Coronary Syndrome (ACS) Study for the evaluation of subjects presenting to the Emergency Departments with symptoms suggestive of ACS. As reported on the Q2 earnings call, enrolment for this study was completed in late July with the next step being the adjudication of each result by a panel of Emergency and Cardiology physicians. Thus far, this adjudication process, which conforms to the Third Universal Definition of Myocardial Infarction guidance document, has been more involved and time consuming than initially expected. Whilst an adjudication of clear positives or negatives can be performed in a relatively short time frame, some more complex or borderline cases are taking significantly longer – in some cases as long as 2 weeks. The adjudication process is now expected to conclude by the end of November.Based on our review of the data which has been adjudicated so far, we are pleased to report that the data is significantly better than observed in our own CE Marking trial and is closer to the superior results contained in the independent study carried out at Hennepin County Emergency Department by Dr. Fred Apple.
• Enrolment for the URL (99th Percentile Upper Reference Limit) Study, was completed in July and since then the data collected has been used to determined the URL or “normal level” of Troponin for inclusion in the FDA submission. We were very pleased to observe that the results of this study at three US trial sites show excellent correlation with the URL determinations from our European CE-marking clinical studies. 
• The Precision Study is currently in the process of being completed at 3 trial sites and will be completed in the coming weeks.

From a timing perspective, the completion of the adjudication analysis of the ACS Study will be the final component to be completed and based on the timelines outlined above, we expect to submit to the FDA during December 2015.

Dividend

During Q3, following approval at the company’s AGM in June 2015, an annual dividend payment of 22 US cents per ADR was made, which resulted in a total payment of $5.1m.

Comments

Commenting on the results, Kevin Tansley, Chief Financial Officer, said “The profit this quarter was $12.3m.  However, this was impacted by significant non-cash gains related to the company’s Loan Notes.  Consequently, a better way of assessing the performance this quarter is to look at operating profit, which decreased from $4.6m to $3m compared to the equivalent quarter last year.  Our gross margins continue to remain under pressure due to lower Lyme revenues and currency factors. Meanwhile, indirect costs have increased due increased sales and marketing costs including continued investment in Meritas. Also, for the first time, overall profitability has been adversely impacted by exchange rate movements.  Prior to this quarter, the impact of exchange rate movements had been neutral on the income statement as each of the currencies in which the company operates tended to move in tandem with each other versus the US dollar. However, in Q3 this was no longer the case with the significant weakening of the Brazilian Real and to a lesser extent the Canadian Dollar having an adverse impact on overall profitability.”

Ronan O’Caoimh, CEO of Trinity said “Completion of our Meritas Troponin trial constitutes an extremely important milestone for the company. We are confident that cardiologist adjudication will be completed within the next four weeks and that will enable FDA submission by the middle of December. Although the adjudication process is not yet completed, based on the results to date, we are extremely pleased with the performance of the product and in particular with its high sensitivity and specificity levels.”

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 MonthsEndedSeptember 30,2015(unaudited)			Three MonthsEndedSeptember 30,2014(unaudited)			Nine MonthsEndedSeptember 30,2015(unaudited)			Nine MonthsEndedSeptember 30,2014 (unaudited)
Revenues		25,761			27,161			75,258			78,191
Cost of sales		(13,776	)		(14,150	)		(39,780	)		(40,510	)
Gross profit		11,985			13,011			35,478			37,681
Gross profit %		46.5	%		47.9	%		47.1	%		48.2	%
Other operating income		73			91			222			339
Research & development expenses		(1,293	)		(1,138	)		(3,560	)		(3,329	)
Selling, general and administrative expenses		(7,467	)		(6,995	)		(20,467	)		(19,726	)
Indirect share based payments		(327	)		(326	)		(1,357	)		(1,223	)
Operating profit		2,971			4,643			10,316			13,742
Financial income		204			9			299			93
Financial expenses		(1,085	)		(15	)		(2,279	)		(79	)
Non-cash financial income		10,512			-			11,490			-
Net financing income / (expense)		9,631			(6	)		9,510			14
Profit before tax		12,602			4,637			19,826			13,756
Income tax expense		(339	)		(276	)		(858	)		(667	)
Profit for the period		12,263			4,361			18,968			13,089
Earnings per ADR (US cents)		52.9			19.0			82.0			57.7
Earnings per ADR excluding non-cash financial income (US cents)		7.5			19.0			32.3			57.7
Diluted earnings per ADR (US cents)		9.7			18.4			35.7			55.2
Weighted average no. of ADRs used in computing basic earnings per ADR		23,202,228			22,907,333			23,128,287			22,693,552
Weighted average no. of ADRs used in computing diluted earnings per ADR		28,766,691			23,674,859			27,059,058			23,719,930

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
	September 30,2015US$ ‘000(unaudited)			June 30,2015US$ ‘000(unaudited)			March 31,2015US$ ‘000(unaudited)			Dec 31,2014US$ ‘000(audited)
ASSETS
Non-current assets
Property, plant and equipment		19,198			19,212			17,760			17,877
Goodwill and intangible assets		156,326			152,338			147,568			145,024
Deferred tax assets		10,370			10,117			9,528			9,798
Other assets		1,040			1,091			1,249			1,194
Total non-current assets		186,934			182,758			176,105			173,893
Current assets
Inventories		36,882			38,193			37,064			33,516
Trade and other receivables		27,153			28,344			27,640			25,976
Income tax receivable		119			212			221			351
Cash and cash equivalents		104,289			110,257			5,745			9,102
Total current assets		168,443			177,006			70,670			68,945
TOTAL ASSETS		355,377			359,764			246,775			242,838
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent
Share capital		1,216			1,216			1,215			1,204
Share premium		14,560			14,533			14,393			12,422
Accumulated surplus		198,882			191,368			188,094			183,375
Other reserves		(3,661	)		(2,056	)		(2,463	)		(29	)
Total equity		210,997			205,061			201,239			196,972
Current liabilities
Income tax payable		951			497			467			785
Trade and other payables		18,694			19,756			20,116			21,197
Provisions		75			75			75			75
Total current liabilities		19,720			20,328			20,658			22,057
Non-current liabilities
Exchangeable senior note payable		99,069			109,124			-			-
Other payables		3,569			3,180			3,205			2,370
Deferred tax liabilities		22,022			22,071			21,673			21,439
Total non-current liabilities		124,660			134,375			24,878			23,809
TOTAL LIABILITIES		144,380			154,703			45,536			45,866
TOTAL EQUITY AND LIABILITIES		355,377			359,764			246,775			242,838

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 MonthsEndedSeptember 30,2015(unaudited)			Three MonthsEndedSeptember 30,2014(unaudited)			Nine MonthsEndedSeptember 30,2015(unaudited)			Nine MonthsEndedSeptember 30,2014(unaudited)
Cash and cash equivalents at beginning of period		110,257			15,153			9,102			22,317
Operating cash flows before changes in working capital		3,851			6,068			14,279			16,979
Changes in working capital		(166	)		(538	)		(8,504	)		(10,108	)
Cash generated from operations		3,685			5,530			5,775			6,871
Net Interest and Income taxes received/(paid)		(108	)		(324	)		(440	)		290
Capital Expenditure & Financing (net)		(4,290	)		(6,380	)		(15,623	)		(15,499	)
Free cash flow		(713	)		(1,174	)		(10,288	)		(8,338	)
30 year Convertible Note proceeds, net of fees		(156	)		-			110,574			-
Dividend payment		(5,099	)		(5,030	)		(5,099	)		(5,030	)
Cash and cash equivalents at end of period		104,289			8,949			104,289			8,949

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