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, 2016.
Quarter 3
Results
Total revenues for Q3, 2016 were $26.1m which compares to $25.8m in
Q3, 2015, an increase of 1.4%.
Point-of-Care revenues for Q3, 2016 decreased
from $5.4m to $4.9m when compared to Q3, 2015, a decline of 9.5%.
This is within the normal quarterly fluctuation range of HIV sales
in Africa.
Clinical Laboratory revenues increased to
$21.2m, which represents an increase of 4.3% compared to Q3, 2015.
This increase was primarily attributable to increased Premier and
autoimmune revenues.
Unlike in previous quarters, the impact of
foreign exchange on revenues was not significant when compared to
the equivalent quarter last year. When calculated, its impact
was to reduce this quarter’s revenues by less than 0.5% with the
weakness in Sterling being the biggest single factor.
Revenues for Q3, 2016 were as follows:
|
2015 Quarter 3
|
2016 Quarter 3
|
Increase/ (decrease)
|
|
US$’000 |
US$’000 |
% |
Point-of-Care |
5,418 |
4,903 |
(9.5 |
%) |
Clinical Laboratory |
20,343 |
21,224 |
4.3 |
% |
Total |
25,761 |
26,127 |
1.4 |
% |
|
|
|
|
|
Gross profit for Q3, 2016 amounted to $11.7m
representing a gross margin of 44.7%, which is lower than the 46.5%
achieved in Q3, 2015. This decrease is largely due to lower sales
of higher margin point-of-care products and the knock-on impact of
past currency movements – primarily the impact of the stronger
dollar on distributor pricing.
Research and Development expenses have remained
in line with the equivalent quarter last year at $1.3m. Meanwhile,
Selling, General and Administrative (SG&A) expenses have
remained at $7.5m for the quarter.
Operating profit for the quarter was $2.7m,
which is lower than the $3.0m achieved in Q3, 2015, and this is
attributable to the impact of higher revenues and lower indirect
costs being more than offset by the lower gross margin.
The net financing expense for the quarter was
$3.1m versus income of $9.6m in the equivalent quarter of 2015.
This financing income/expense can be broken down into its component
parts as follows:
Net financing income / (expense) |
Q3 2016 |
Q3 2015 |
|
US$’000 |
US$’000 |
Financial income |
|
212 |
|
|
204 |
|
|
|
|
Financial expense – Exchangeable note |
|
(1,150 |
) |
|
(1,064 |
) |
Other financial expenses |
|
(29 |
) |
|
(21 |
) |
Financial expense (cash) |
|
(1,179 |
) |
|
(1,085 |
) |
|
|
|
Non-cash financial income / (expense) |
|
(1,940 |
) |
|
10,720 |
|
Non-cash financial expense – accretion interest |
|
(180 |
) |
|
(208 |
) |
Non-cash financial income / (expense) |
|
(2,120 |
) |
|
10,512 |
|
|
|
|
Net financial income / (expense) |
|
(3,087 |
) |
|
9,631 |
|
|
|
|
|
|
|
|
Financial income increased to $212,000 from
$204,000 in the equivalent quarter last year. This was primarily
due to improved interest rates.
Financial expenses primarily consist of the cash
interest payable on the company’s Exchangeable Notes, which amounts
to $1.15m per quarter.
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 Q3, 2016, the fair value adjustment to the value of the
embedded derivatives was a charge to the income statement of
$1.9m.
The loss before tax for the period was $0.4m,
though this was largely impacted by non-cash charges related to the
Exchangeable Notes. Excluding these non-cash items, the
profit before tax for the quarter was $1.8m.
The tax charge for Q3, 2016 was $0.1m, an
effective tax rate of 8.5% on the profit for the quarter excluding
non-cash charges.
The loss after tax for the period was $0.5m.
However, excluding the non-cash elements of the Exchangeable Notes,
this would have been a profit of $1.6m, which equates to an
adjusted EPS of 7.0 cents. This compares to $1.8m and an adjusted
EPS of 7.5 cents in Q3, 2015. Diluted EPS for the quarter amounted
to 9.7 cents, which is consistent with the equivalent quarter in
2015.
The above results do not reflect the impact of
the decisions to withdraw the Meritas Troponin submission from the
FDA and to close the company’s facility in Uppsala, Sweden as both
of these events occurred after the quarter end. It is expected that
the company will record an impairment charge of in excess of $50m
in relation to the costs incurred on the Meritas project as well as
a provision for closure costs associated with the Swedish facility.
Both of these will be reflected in the company’s Q4 income
statement.
Cash generated from operations during the
quarter was $5.6m, though this was offset by capital expenditure of
$5.6m and interest and tax payments of $0.2m, resulting in a net
cash outflow for the quarter of under $0.2m. This resulted in a
cash balance at the end of the quarter of $84.8m.
Earnings before interest, tax, depreciation,
amortisation and share option expense for the quarter was
$4.6m.
Meritas – withdrawal of FDA
submission
On October 4, 2016 Trinity Biotech announced
that it was withdrawing its 510(k) premarket notification
submission for the Meritas Troponin-I Test and Meritas
Point-of-Care Analyzer. This followed a meeting with the FDA, where
they asked Trinity to consider withdrawing its submission due to
their concerns about clinical performance. These concerns focussed
on the analyzer’s operating temperature range and the inconsistency
of the test’s performance with the most recently cleared laboratory
Troponin test.
Given these concerns, the company decided to
withdraw the submission and to cease development of its Troponin
product for the U.S. market. It was felt that, even after
carrying out additional development work on the product, which
would be both lengthy and likely to cost an additional $20-30m,
there was insufficient certainty that its performance could ever
match a recently approved laboratory Troponin test. As a
consequence of this, the company also decided not to submit its
Meritas BNP test for heart failure to the FDA, as this was being
developed as a sister product for Troponin.
The Meritas platform has many potential
applications in the point-of-care arena, and thus the company has
embarked on an internal review process to determine the best future
opportunity for this technically excellent platform. This process
is expected to take between 9 and 12 months. In conjunction with
this, the Company will close its facility in Uppsala, Sweden and
transfer the technology to its headquarters in Bray, Ireland.
In its Q4 income statement, the company expects
to recognise an impairment charge in excess of $50m reflecting the
costs incurred on the Meritas platform to date plus an additional
provision for closure costs in relation to the Swedish
facility.
Comments
Commenting on the results, Kevin Tansley, Chief
Financial Officer, said “Operating profit this quarter was $2.7m,
which whilst lower than the equivalent quarter last year, did
represent an improvement compared to our more recent
quarters. This was driven by improved top line
performance. Whilst our gross margin remains under pressure,
mainly due to product mix and carry over currency factors, higher
revenues combined with control over indirect costs has resulted in
an operating margin of over 10%. Meanwhile, our diluted EPS for the
quarter remained consistent at 9.7 cents per ADR.”
Ronan O’Caoimh, CEO of Trinity said “The last
few weeks have been difficult for the company. We had
invested considerable time and effort in developing our Troponin
test on the Meritas platform and it was extremely frustrating that,
even with its clear performance advantages over its competitors,
FDA approval was not forthcoming. Following this we have taken
decisive action. We are closing our facility in Sweden, resulting
in 40 redundancies and transferring the technology to our Bray
facility. Once all closure costs have been incurred, this will
result in a reduction in expenditure on the platform from $9m p.a.
to $1.5m p.a. thus returning the company to a near break-even cash
flow position.
We also believe that the excellent technical
performance of Meritas still makes this a valuable platform. In the
months ahead we will look closely at a wide range of alternatives
with a view to maximising this value. This will include looking at
alternative menus and/or collaborations with third parties.
In the meantime, we will focus on expanding our
core business which has a number of growth drivers. In particular,
we will continue to place large numbers of Premier instruments in
an ever increasing number of countries, thus building market share.
We will also increase our penetration of the haemoglobin variant
market with our newly launched Premier Resolution instrument. We
will continue to grow our autoimmune business, building on our
growth of product sales and reference laboratory services. We are
also determined to expand our HIV franchise in Africa. Having
already conquered the confirmatory market, we will now look to
enter the higher volume screening market.
Whilst we will continue to look for highly
synergistic and earnings accretive acquisitions, I believe that at
our current share price, buying back our own shares represents the
best deployment of capital at this juncture. This, coupled
with the growth opportunities inherent in our existing business,
will enhance our earnings capacity and drive shareholder value.”
Forward-looking statements in this release are
made pursuant to the "safe harbor" provision of the Private
Securities 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 other0 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 plcConsolidated
Income Statements |
|
|
|
|
|
|
(US$000’s except
share data) |
|
Three
MonthsEndedSeptember
30,2016(unaudited) |
|
|
|
|
Three
MonthsEndedSeptember
30,2015(unaudited) |
|
|
|
Nine
MonthsEndedSeptember
30,2016(unaudited) |
|
|
|
Nine
MonthsEndedSeptember
30,2015(unaudited) |
|
|
|
|
|
|
|
Revenues |
|
26,127 |
|
|
|
|
25,761 |
|
|
|
75,931 |
|
|
|
75,258 |
|
|
|
|
|
|
|
Cost of sales |
|
(14,460 |
) |
|
|
|
(13,776 |
) |
|
|
(42,316 |
) |
|
|
(39,780 |
) |
|
|
|
|
|
|
Gross
profit |
|
11,667 |
|
|
|
|
11,985 |
|
|
|
33,615 |
|
|
|
35,478 |
|
Gross profit % |
|
44.7 |
% |
|
|
|
46.5 |
% |
|
|
44.3 |
% |
|
|
47.1 |
% |
|
|
|
|
|
|
Other operating
income |
|
70 |
|
|
|
|
73 |
|
|
|
211 |
|
|
|
222 |
|
|
|
|
|
|
|
Research
& development expenses |
|
(1,296 |
) |
|
|
|
(1,293 |
) |
|
|
(3,711 |
) |
|
|
(3,560 |
) |
Selling, general and
administrative expenses |
|
(7,487 |
) |
|
|
|
(7,467 |
) |
|
|
(22,245 |
) |
|
|
(20,467 |
) |
Indirect share based
payments |
|
(236 |
) |
|
|
|
(327 |
) |
|
|
(971 |
) |
|
|
(1,357 |
) |
|
|
|
|
|
|
Operating
profit |
|
2,718 |
|
|
|
|
2,971 |
|
|
|
6,899 |
|
|
|
10,316 |
|
|
|
|
|
|
|
Financial income |
|
212 |
|
|
|
|
204 |
|
|
|
657 |
|
|
|
299 |
|
Financial expenses |
|
(1,179 |
) |
|
|
|
(1,085 |
) |
|
|
(3,545 |
) |
|
|
(2,279 |
) |
Non-cash financial income
/ (expense) |
|
(2,120 |
) |
|
|
|
10,512 |
|
|
|
(3,308 |
) |
|
|
11,490 |
|
Net financing
income / (expense) |
|
(3,087 |
) |
|
|
|
9,631 |
|
|
|
(6,196 |
) |
|
|
9,510 |
|
|
|
|
|
|
|
Profit / (loss)
before tax |
|
(369 |
) |
|
|
|
12,602 |
|
|
|
703 |
|
|
|
19,826 |
|
|
|
|
|
|
|
Income tax expense |
|
(148 |
) |
|
|
|
(339 |
) |
|
|
(462 |
) |
|
|
(858 |
) |
Profit / (loss) for the period
|
|
(517 |
) |
|
|
|
12,263 |
|
|
|
241 |
|
|
|
18,968 |
|
|
|
|
|
|
|
Earnings per ADR (US
cents) |
|
(2.3 |
) |
|
|
|
52.9 |
|
|
|
1.0 |
|
|
|
82.0 |
|
|
|
|
|
|
|
Earnings per ADR excluding
non-cash financial income (US cents) |
|
7.0 |
|
|
|
|
7.5 |
|
|
|
15.4 |
|
|
|
32.3 |
|
|
|
|
|
|
|
Diluted earnings per ADR
(US cents) |
|
9.7* |
|
|
|
|
9.7 |
|
|
|
24.6* |
|
|
|
35.7 |
|
Weighted average no. of
ADRs used in computing basic earnings per ADR |
|
22,797,208 |
|
|
|
|
23,202,228 |
|
|
|
23,032,885 |
|
|
|
23,128,287 |
|
|
|
|
|
|
|
Weighted average no. of
ADRs used in computing diluted earnings per ADR |
|
28,379,444 |
|
|
|
|
28,766,691 |
|
|
|
28,452,580 |
|
|
|
27,059,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 1.0 cents for the year to date, and a
loss of 2.3 cents for the quarter (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
plcConsolidated Balance
Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,2016US$
‘000(unaudited) |
|
|
|
June 30,2016US$
‘000(unaudited) |
|
|
|
March 31,2016US$
‘000(unaudited) |
|
|
|
Dec 31,2015US$
‘000(audited) |
|
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
21,495 |
|
|
|
|
21,760 |
|
|
|
|
21,460 |
|
|
|
|
20,659 |
|
Goodwill and intangible
assets |
|
173,240 |
|
|
|
|
169,049 |
|
|
|
|
165,157 |
|
|
|
|
161,324 |
|
Deferred tax assets |
|
13,531 |
|
|
|
|
13,312 |
|
|
|
|
13,096 |
|
|
|
|
12,792 |
|
Other assets |
|
849 |
|
|
|
|
932 |
|
|
|
|
860 |
|
|
|
|
954 |
|
Total non-current
assets |
|
209,115 |
|
|
|
|
205,053 |
|
|
|
|
200,573 |
|
|
|
|
195,729 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
Inventories |
|
39,989 |
|
|
|
|
39,253 |
|
|
|
|
35,709 |
|
|
|
|
35,125 |
|
Trade and other
receivables |
|
25,802 |
|
|
|
|
27,832 |
|
|
|
|
26,260 |
|
|
|
|
25,602 |
|
Income tax receivable |
|
811 |
|
|
|
|
712 |
|
|
|
|
664 |
|
|
|
|
550 |
|
Cash and cash
equivalents |
|
84,751 |
|
|
|
|
84,920 |
|
|
|
|
96,829 |
|
|
|
|
101,953 |
|
Total current
assets |
|
151,353 |
|
|
|
|
152,717 |
|
|
|
|
159,462 |
|
|
|
|
163,230 |
|
|
|
|
|
|
TOTAL
ASSETS |
|
360,468 |
|
|
|
|
357,770 |
|
|
|
|
360,035 |
|
|
|
|
358,959 |
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
|
|
Share capital |
|
1,222 |
|
|
|
|
1,221 |
|
|
|
|
1,220 |
|
|
|
|
1,220 |
|
Share premium |
|
15,801 |
|
|
|
|
15,575 |
|
|
|
|
15,521 |
|
|
|
|
15,526 |
|
Accumulated surplus |
|
197,379 |
|
|
|
|
197,588 |
|
|
|
|
199,453 |
|
|
|
|
201,951 |
|
Other reserves |
|
(4,002 |
) |
|
|
|
(3,721 |
) |
|
|
|
(3,723 |
) |
|
|
|
(4,809 |
) |
Total
equity |
|
210,400 |
|
|
|
|
210,663 |
|
|
|
|
212,471 |
|
|
|
|
213,888 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
Income tax payable |
|
772 |
|
|
|
|
657 |
|
|
|
|
1,026 |
|
|
|
|
1,163 |
|
Trade and other
payables |
|
19,976 |
|
|
|
|
19,384 |
|
|
|
|
19,195 |
|
|
|
|
18,874 |
|
Provisions |
|
75 |
|
|
|
|
75 |
|
|
|
|
75 |
|
|
|
|
75 |
|
Total current
liabilities |
|
20,823 |
|
|
|
|
20,116 |
|
|
|
|
20,296 |
|
|
|
|
20,112 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Exchangeable senior note
payable |
|
101,351 |
|
|
|
|
99,232 |
|
|
|
|
100,073 |
|
|
|
|
98,044 |
|
Other payables |
|
1,939 |
|
|
|
|
1,986 |
|
|
|
|
2,057 |
|
|
|
|
2,096 |
|
Deferred tax
liabilities |
|
25,955 |
|
|
|
|
25,773 |
|
|
|
|
25,138 |
|
|
|
|
24,819 |
|
Total non-current
liabilities |
|
129,245 |
|
|
|
|
126,991 |
|
|
|
|
127,268 |
|
|
|
|
124,959 |
|
|
|
|
|
|
TOTAL
LIABILITIES |
|
150,068 |
|
|
|
|
147,107 |
|
|
|
|
147,564 |
|
|
|
|
145,071 |
|
|
|
|
|
|
TOTAL EQUITY AND
LIABILITIES |
|
360,468 |
|
|
|
|
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
plcConsolidated Statement of Cash
Flows |
|
|
|
|
|
(US$000’s) |
Three
MonthsEndedSeptember
30,2016(unaudited) |
|
|
|
Three
MonthsEndedSeptember
30,2015(unaudited) |
|
|
|
Nine
MonthsEndedSeptember
30,2016(unaudited) |
|
|
|
Nine
MonthsEndedSeptember
30,2015(unaudited) |
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
84,920 |
|
|
|
|
110,257 |
|
|
|
|
101,953 |
|
|
|
|
9,102 |
|
|
|
|
|
|
Operating cash flows
before changes in working capital |
|
5,164 |
|
|
|
|
3,851 |
|
|
|
|
12,950 |
|
|
|
|
14,279 |
|
Changes in working
capital |
|
393 |
|
|
|
|
(166 |
) |
|
|
|
(3,469 |
) |
|
|
|
(8,504 |
) |
Cash generated from
operations |
|
5,557 |
|
|
|
|
3,685 |
|
|
|
|
9,481 |
|
|
|
|
5,775 |
|
|
|
|
|
|
Net Interest and Income
taxes paid |
|
(171 |
) |
|
|
|
(108 |
) |
|
|
|
(263 |
) |
|
|
|
(440 |
) |
|
|
|
|
|
Capital Expenditure &
Financing (net) |
|
(5,555 |
) |
|
|
|
(4,290 |
) |
|
|
|
(16,982 |
) |
|
|
|
(15,623 |
) |
|
|
|
|
|
Free cash flow |
|
(169 |
) |
|
|
|
(713 |
) |
|
|
|
(7,764 |
) |
|
|
|
(10,288 |
) |
|
|
|
|
|
Share buyback |
|
- |
|
|
|
|
- |
|
|
|
|
(6,026 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of HIV-2 licence
fee |
|
- |
|
|
|
|
- |
|
|
|
|
(1,112 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 year Convertible Note
interest payment |
|
- |
|
|
|
|
- |
|
|
|
|
(2,300 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 year Convertible Note
proceeds, net of fees |
|
- |
|
|
|
|
(156 |
) |
|
|
|
- |
|
|
|
|
110,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payment |
|
- |
|
|
|
|
(5,099 |
) |
|
|
|
- |
|
|
|
|
(5,099 |
) |
|
|
|
|
|
Cash and cash
equivalents at end of period |
|
84,751 |
|
|
|
|
104,289 |
|
|
|
|
84,751 |
|
|
|
|
104,289 |
|
|
|
|
|
|
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
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