Life Technologies Corporation
) recently reported its third-quarter 2013 adjusted earnings of
$1.02 per share. The results were 10.9% ahead of the year-ago
adjusted earnings per share (EPS) and 5 cents above the Zacks
Consensus Estimate. Apart from improved revenues, a significant
reduction in both effective tax rate and outstanding share count
contributed to the bottom-line growth. On a reported basis, EPS
was 67 cents, up a significant 81%.
Third-quarter revenues increased 3% year over year (up 4% at
constant exchange rates or CER) on a reported basis to $936
million, comfortably beating the Zacks Consensus Estimate of $930
million. A stable performance in Research Consumablesand Applied
Sciences, improved sales in Japan and in emerging markets such as
China, and continued stability in the U.S. and Europe aided the
On a regional basis, revenues in the quarter increased 2% year
over year in Europe, 18% in the Asia-Pacific and 8% in Japan.
Revenues from the Americas however, remained flat with the
The three divisions of Life Technologies posted modest
Research Consumables recorded sales of $404 million, up 5%
year over year and up 6% at CER. Growth came on the back of
strong sales from fluorescent imaging, stem cell, synthetic
biology and cell culture products.
Genetic Analysis revenues stood at $388 million, down 4% year
over year and down 3% at CER. The downfall was attributable to
the decline in qPCR royalties and SOLiD instrument sales
neutralizing the positive effect of the increase in Ion Torrent
Applied Sciences posted revenues of $194 million, increasing
12% year over year and up 13% at CER. The improvement was owing
to higher BioProduction sales.
Adjusted gross margin expanded 550 basis points (bps) to
65.8%. Manufacturing productivity and higher realized price
during the quarter were partially offset by a decline in
Adjusted operating profit came in at $263.7 million, up 35.8%
year over year. Consequently, Life Technologies recorded a 688
bps expansion in adjusted operating margin to 28.2%. Increased
expenses related to acquisitions and planned investments in Ion
Torrent were more than offset by increased revenues and gross
margin during the quarter.
Life Technologies exited the quarter with $368.2 million in
the form of cash and short-term investments, higher than $276.4
million at the end of fiscal 2012.
Free cash flow in the quarter was $225 million (versus $196
million at the end of the prior quarter). Cash flow from
operating activities stood at $250 million while capital
expenditure amounted to $25.0 million.
Aug 21, 2013,
in a special meeting, more than 98% of the shareholders of LIFE
(representing more than 72% of the company's outstanding shares)
voted in favor of its impending takeover by
Thermo Fisher Scientific
In April, Thermo Fisher had disclosed that it plans to acquire
Life Technologies for roughly $13.6 billion (or $76 per share),
plus the assumption of the latter's net debt ($2.2 billion as of
year-end 2012). The acquisition is expected to close in early
Based on its impending acquisition, Life Technologies has not
provided any quarterly guidance. However, the company still
believes that the currency exchange headwind will affect its
fiscal numbers. The company expects currency to have an impact of
approximately $57 million (earlier prediction was $75 million) on
revenues and 13 cents (17 cents) on its adjusted EPS in fiscal
We believe that, given Life Technologies' expansive line of
consumables for genomic and molecular and cell biology, the
acquisition by Thermo Fisher will effortlessly strengthen the
combined company's global foothold and commercial reach. The
merger will create a kingpin in the research, specialty
diagnostics and applied markets, thereby giving the joint company
a competitive edge over other players in the market.
The takeover should leverage Life Technologies' attractive
revenue profile. The company now carries a Zacks Rank #3
Nevertheless, some better-placed medical device stocks worth a
Align Technologies Inc.,
Cardinal Health, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
LIFE TECHNOLOGS (LIFE): Free Stock Analysis
THERMO FISHER (TMO): Free Stock Analysis
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