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Q4 2013 Earnings Call
February 05, 2014 5:00 pm ET
Doug Farrell - Vice President of Investor Relations and Treasury
Franklin R. Witney - Chief Executive Officer, President and Director
Gavin Wood - Chief Financial Officer and Executive Vice President
Andrew J. Last - Chief Operating Officer and Executive Vice President
Peter Lawson - Mizuho Securities USA Inc., Research Division
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Bryan Brokmeier - Maxim Group LLC, Research Division
Douglas Schenkel - Cowen and Company, LLC, Research Division
Reginald Miller - UBS Investment Bank, Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
Daniel L. Leonard - Leerink Swann LLC, Research Division
Previous Statements by AFFX
» Affymetrix Management Discusses Q3 2013 Results - Earnings Call Transcript
» Affymetrix, Inc. Discusses Q3 2013 Results (Webcast)
» Affymetrix Management Discusses Q2 2013 Results - Earnings Call Transcript
Thank you, operator. Good afternoon, everyone. Welcome to Affymetrix's Fourth Quarter and Fiscal Year 2013 Conference Call. At the close of the market today, we released our results for Q4, as well as the full year. Joining me on the call today are our President and CEO, Frank Witney; our CFO, Gavin Wood; and our COO, Andy Last, will be joining us for the Q&A session.
I would like to remind callers that our discussion may include forward-looking statements about future expectations, plans and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. Important factors which could cause actual results to differ are in the forward-looking statements and detailed in our SEC filings.
It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. We encourage you to review these documents carefully as forward-looking statements are made as of today's date and we make no obligation to update this information.
Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of non-GAAP to GAAP measures can be found in our press release today, as well as on our website.
As a reminder, the call is being recorded and the audio from this call is being webcast on the Internet at our homepage at affymetrix.com.
So with that, let me turn the call over to Frank.
Franklin R. Witney
Thanks, Doug. Good afternoon, everyone, and thank you for joining us. Before I review our commercial and operational highlights for the fourth quarter, I'd like to reiterate our goals for the second phase of our strategic plan, which spans 2013 and 2014. Our primary goal is to return the company to consistent growth. Our second goal is to achieve sustained profitability. Finally, we intend to strengthen our balance sheet and increase our strategic flexibility.
We made significant progress on these goals in 2013, most notably returning to growth in the second half of the year. We continue to execute on our strategy of expanding our reach into the translational science, molecular diagnostics and applied genomics markets. We're confident that we'll exit Phase 2 of our turnaround plan at the end of 2014 with a growing business, strengthened balance sheet, profitability and a sharpened business focus.
Let's take a look at some of the key metrics that we use to track our progress on these objectives. With regard to growth, our fourth quarter revenue of $92.6 million represents a significant improvement over the prior year. Our product revenue for the fourth quarter increased by 7.5% over the prior year. In fact, excluding the one-time licensing fee of $5.3 million received in Q4, we achieved overall revenue growth in the second half of 2013, driven by the strength of our CytoScan and our Axiom product lines, the sequential improvements in Expression and eBioscience, as well as the contribution from new products.
As for profit, our non-GAAP EBITDAO for the fourth quarter of 2013 was $19.5 million or 21% of sales. And for the full year, our non-GAAP EBITDAO was approximately $57.5 million or 17% of sales. In addition, we made significant progress in strengthening our balance sheet since our last quarterly report. Gavin will provide details later in the call.
For fiscal year 2013, consumables represented 90% of our total revenues, excluding the onetime licensing fee. In Q4, our consumable revenues increased by nearly 10% over the prior year.
From a geographic perspective, our business strengthened in Europe, China and North America, while Japan remained challenged. Now, I'd like to give you a little more color on each business unit, beginning with our primary growth driver, Genetic Analysis. For the fourth quarter, our cytogenetics product revenue increased by approximately 18% over the prior year, excluding the one-time payment that represents 12% of our revenue. The growth in this product line is being driven by a combination of factors including expanding our customer base in all geographies, increased business in existing accounts, as well as expanding our application base. For example, we are seeing increased use of our CytoScan product in research-use-only applications in reproductive health and oncology.
For the full year, our cytogenetics business grew by more than 25%. Looking forward, we see a number of important factors that will help us to continue to grow this business for years to come. Most notably, last month, we received 510(k) clearance from the U.S. Food and Drug Administration for postnatal detection of DNA copy number variants in patients referred for chromosomal testing.