) reported third-quarter 2013 adjusted earnings of 45 cents,
surpassing the Zacks Consensus Estimate of 40 cents per share by
5%. The third-quarter figure also remained ahead of the
prior-year quarter's earnings of 41 cents per share, registering
an increase of 4% year over year.
On a reported basis, the company posted net income of $31 million
or 22 cents, versus the net income of $30 million or 22 cents per
share in third-quarter 2012.
Revenue in Details
Revenues climbed 25% to $357 million from $286 million in the
prior-year quarter, surpassing the Zacks Consensus Estimate of
Top-line growth was driven by strong worldwide demand for
products and solid contributions from the sequencing business.
Organic revenues registered an increase of 20% year over year,
owing to strong demand for sequencing consumables and consistent
sales growth of HiSeq instruments.
On a geographic basis, revenues in the Americas rose 25% from the
year-ago quarter, while sales from Europe shot up 27% year over
year. The company also posted robust growth in Japan, especially
in HiSeq instruments.
The company derived 89.3% of its total revenues from Products,
while the remaining came from services. Product revenues,
consisting of sales proceeds from the Consumables and Instruments
segment, were primarily attributed to the sale of Microarrays and
DNA Sequencing products. In the quarter under review, product
revenues surged 21.4% year over year to $318.6 million.
Service and other revenues comprise genotyping and sequencing
services as well as instrument maintenance contracts. Service
revenues jumped 62% year over year to $38.2 million. The marked
improvement in service revenues was mainly driven by the
continued demand for genotyping services from agriculture and
consumer customers, along with ongoing growth experienced in
The company's adjusted gross margin was 70.2% in the reported
quarter, down 30 basis points (bps) year over year, due to the
lower mix of consumables. Adjusted operating margin was 32.4%,
down 270 bps from the year-ago quarter, owing to high selling,
general & administrative expenses coupled with increased
investment in research and development.
Adjusted R&D expenses for the quarter was $61 million or
17.2% of revenue, compared to $59 million or 17% of revenue in
the previous quarter.
Adjusted SG&A expenses for the quarter were $74 million or
20.6% of revenue compared to $70 million or 23 - 20.3% of revenue
in the previous quarter.
Illumina exited the quarter with cash and cash equivalents and
short-term investment of $1.03 billion compared with $1.35
billion at the end of 2012.
The company generated $83.1 million in cash flow from operations
in the third quarter, marking an increase of $31.9 million from
the prior-year period. Illumina generated free cash flow of $64.2
million in the reported quarter, up $30.7 million from the prior
Following the strong third quarter, Illumina revised its outlook
for full year 2013. The company now expects revenue growth of 22%
compared with 20% estimated earlier. Moreover, Illumina
anticipates earnings per share in the range of $1.75-$1.77
compared with the prior outlook of $1.68-$1.72.
Illumina continued with its impressive performance in third
quarter as well, beating our EPS estimate for straight four
quarters, with the average beat of 9.68%.
We are encouraged by the company's consistent top-line growth
and a strong global demand for its products. The upward revision
of guidance will also boost investors' confidence.
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Currently, Illumina carries a Zacks Rank #3 (Hold). Other
well-placed stocks that are worth a look are
Alexion Pharmaceuticals, Inc.
AMAG Pharmaceuticals, Inc.
), each carrying a Zacks Rank #1 (Strong Buy).