Global genetic devices maker,
) fourth-quarter 2012 adjusted loss of 2 cents per share was in
line the Zacks Consensus Estimate. The adjusted loss excludes
one-time items such as acquisition, integration and
amortization-related expenses along with impairment charges.
Reported net loss in the quarter was $12.3 million (or 17
cents per share) versus a loss of $14.7 million (or a loss of 21
cents per share) in the year-ago quarter. This reflects improved
operating efficiency together with moderate revenue growth,
despite a difficult macroeconomic environment.
For 2012, the company reported a loss of 10 cents per share,
which was narrower than the Zacks Consensus Estimate of a loss of
14 cents. Reported net loss was $10.7 million (or 15 cents per
share) versus a loss of $28.2 million (or a loss of 40 cents per
share) in the year-ago quarter.
Revenues increased 2% (excluding the eBioscience acquisition)
year over year to $84.4 million. The results beat the Zacks
Consensus Estimate of $84 million marginally.
Revenues from products were up 30.2% year over year to $76.4
million in the quarter, which included consumable sales of $53.1
million (excluding eBioscience), down 3.3%. However, instrument
sales grew 36.8% to $5.2 million. Revenues included roughly $18.1
million from the eBioscience acquisition (up 5%). Services and
other revenues jumped 25% to $8.0 million.
For the full year, sales dipped 3% (excluding eBioscience)
year over year to $295.6 million, but marginally surpassed the
Zacks Consensus Estimate of $295 million.
Gross margin for the fourth quarter edged up to 54% from 53%
in the year-ago period. Adjusted gross margin was 61% versus 54%
in the prior-year quarter.
Operating expenses were $54.4 million in the quarter compared
with $45.5 million, a year-ago, mostly due to expenses related to
the eBioscience acquisition. Adjusted operating expenses were
$48.5 million versus $41.5 million in 2011.
Selling, General and Administrative (SG&A) expenses were
higher at 45.2% of sales versus 44.2% in the year-ago quarter,
Research and Development (R&D) expenses, as a percentage of
sales, fell to 17.2% from 25.7% in the year-ago period, due to
reduced headcount-related expenses, partially offset by higher
spending on clinical trials.
Affymetrix ended the fourth quarter of 2012 with cash and cash
equivalents of $25.7 million, down 87.3% year over year. Cash
flow from operations was $2 million.
The company prepaid $9.6 million (the entire principal amount
due in 2013) of its senior-secured debt in Dec 2012, partly
funded by the sale of its Sacramento manufacturing facility. At
the end of 2012, the senior debt was $73 million and cash-on-hand
stood at roughly $35 million.
Affymetrix also announced a restructuring initiative to boost
its bottom-line growth. The company will disembark 100 employees,
representing 8% of its workforce. The company will incur most of
the additional cost associated with the restructuring in the
first quarter of 2013, which is expected to be roughly $7
Post restructuring, Affymetrix will be able to save roughly
$25 million annually based on its 2013 outlook, of which $5
million is in cost of goods sold. Management believes that the
restructuring effort will improve the company's free cash flow
position in 2013 and quicken repayment of its senior debt.
Affymetrix is a leading provider of microarray-based products
and services to the global research community. Along with
), it is one of the two major providers of microarray
technologies, primarily used in the field of genetic research.
Affymetrix holds a leading position in the gene expression
products and services market.
Affymetrix is expanding its customer base through new product
launches and strategic alliances. Moreover, the company is
pursuing a number of strategies (including acquisitions and
expansion into new markets) aimed at expanding its top line.
However, research and development spending by Affymetrix's
customers have fallen considerably due to a weak macroeconomic
environment coupled with stringent government actions including
We currently have a Zacks Rank #3 (Hold) on the stock.
), both carrying a Zacks Rank #1 (Strong Buy), are expected to do
well in the Medical-Biomed/Gene industry.
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