Increased Revenues, Reduced Costs and Improved Margins Reflect
Operating Improvements
NEW YORK -- (Business Wire)
Enzo Biochem Inc. (NYSE:ENZ) today reported across-the-board improved
results for the fiscal second quarter ended January 31, 2014 as compared
to the corresponding year-ago period.
-
Total revenues improved 3%, with gains in Life Science and Clinical
Labs, despite inclement winter weather that impacted laboratory
revenues.
-
Enzo Life Sciences operating results showed benefits of strategic
realignment, including its emphasis on targeted markets with higher
margin products.
-
Enzo Clinical Labs posted operating gains as a result of its emphasis
on greater number of high-value assays and new alliances, as well as
reduced accounts receivables uncollectible provisions from better
collection experience. New alliances are expanding Clinical Labs’
range of esoteric and molecular diagnostics, particularly in women’s
health area, a growing specialty for Enzo.
-
Gross margin increased by 13%, with both Life Sciences and Enzo
Clinical Labs segments growing by double-digits.
-
Total operating expenses were reduced by 6%, due to across the board
expense reductions.
-
Net loss improved by $2.1 million, declining 37%, while EBITDA loss
fell by 46%.
-
Cash was essentially unchanged from the prior quarter ended October
31, 2013.
“Enzo Biochem’s second fiscal quarter displayed strong resiliency and
growth,” said Barry Weiner, President. “The overall improvement was
achieved despite the continuing challenges in healthcare, the cross
winds in the regulatory sector that continue to buffet our industry and
adverse weather that reduced patient volume. In particular, weather in
the second quarter probably cost Clinical Labs in excess of $500,000 in
revenue. Nonetheless, the transformation of Enzo continues, as we
increasingly and successfully reposition Life Sciences utilizing more
focused marketing programs directed at higher margin products, and as
our Clinical Labs enjoys and benefits from greater recognition from a
growing roster of women’s health and other diagnostics tests, along with
heightened efficiency at both units. Our AmpiProbe™ platform is being
designed to provide a next-generation of molecular-based diagnostics
that can impart higher sensitivity at lower cost than currently
available assays.
Our attention is on continuing to expand service and product offerings,
reducing operating expenses, while expanding on our many strengths and
focusing on new opportunities. On the legal front, we are moving
forward, with two trials slated for New York federal district court this
spring, actions in Wilmington, Delaware moving forward and addressing
the appeal by the defendants regarding the $61 million-plus judgment we
were awarded in New Haven, Connecticut. We believe these near-term
outcomes could further validate the value of our intellectual property
portfolio and serve as a catalyst for opportunities to monetize our IP.
This is shaping up as a watershed year for Enzo, and we are confident
regarding the outlook.”
Second Fiscal Quarter Results
Despite the aforementioned weather effect, total revenues increased 3%,
to $22.9 million, compared to $22.2 million in the prior year period
with positive results in all segments. Gross profit as a percent of
revenues was up 13%, to 43% from 39%, as a result of service and product
revenue with higher margins and incremental manufacturing efficiencies.
Other operating expenses declined to $13.3 million from $14.6 million, a
decrease of $1.3 million or 9% on lower research and development costs,
SG&A spending and lower provisions for uncollectible accounts
receivable. The net loss in the current year period declined to ($3.6)
million, or ($0.09) per share, from ($5.7) million, or ($0.14) per share
in the prior year period, an improvement of $2.1 million, or 37%. EBITDA
loss (earnings/loss before interest, taxes, depreciation and
amortization), a non-GAAP measure, improved by $2.1 million, to ($2.5)
million.
Segment Results
Unless otherwise indicated, results are for the second quarter ended
January 31, 2014, compared to the same prior year period.
The redirection initiated roughly a year ago of Enzo Life Sciences
towards higher end products with wider product margins, and a strategic
marketing approach resulted in second fiscal 2014 quarter top line
growth after several down quarters due to the changed product mix. While
academia and other government funded research continued to be weak, the
results of our strategy was evident in Enzo product revenues increasing
to $8.1 million, compared to $7.9 million in the prior year period.
Despite the higher revenues, cost of goods declined to $3.9 million,
from $4.1 million. As a percentage of revenues, gross margins were 57%,
compared to 53%, a 400 basis point improvement. Other operating expenses
were $3.9 million compared to $4.8 million in the prior year period, an
improvement of $0.9 million or 19%. As a result of these efforts, Life
Sciences had operating income of $1.3 million compared to breakeven
results in the prior year period.
At Enzo Clinical Labs, recent severe winter weather curtailed
physician visits and reduced specimen counts. However, the Labs results
were comfortably above year ago levels reflecting in part higher revenue
from the new test offerings. Revenues were $13.8 million, compared to
$13.3 million in the prior year period, an increase of $0.5 million or
4% despite the weather’s impact that resulted in more than $500,000 in
lost revenues With decreases in costs and supplies, cost of goods
declined to $9.3 million from $9.4 million, a decrease of 1%. As a
percentage of revenues, gross profit increased by 400 basis points to
33%. Benefiting as well from the reduced provision for uncollectible
accounts receivables, the Lab reported an operating loss of $1.5 million
compared to $2.4 million, an improvement of $0.9 million, or 38%.
First Half Fiscal 2014 Results
First half revenues in the current year period amounted to $47.0
million, compared with $47.8 million in the prior year period, a decline
of $0.8 million or 2%. Enzo Clinical Lab revenue was higher over the
prior year period, but Life Sciences revenue was slightly lower due to
both market softness and the realignment program to focus on higher
margin products. Gross margin, as a percentage of revenues, remained
constant with lower reported revenues. Other operating expenses declined
to $26.9 million from $30.3 million, a decrease of $3.4 million or more
than 11% on reduced SG&A expenses and lower provisions for uncollectible
accounts receivables. The net loss for the six months was ($6.4)
million, or ($0.15) per share, compared to ($9.4) million, or ($0.24)
per share, an improvement over the prior year period of $3.0 million, or
32%. As a result, EBITDA loss improved by $3.1 million, to ($4.2)
million.
As of January 31, 2014, current assets of $30.6 million, included $7.6
million in cash and cash equivalents, compared with current liabilities
of $22.6 million. Working capital amounted to $8.0 million. The Cash and
working capital amounts are essentially unchanged from the prior quarter
end at October 31, 2013.
President’s Comments
Mr. Weiner added: “Our progress is underscored by the attention Enzo
Clinical Labs is attracting for its strategic and strong position in one
of the key medical markets in the country, with an increasing number of
companies developing new molecular diagnostic and other approaches
partnering with us in introducing their path breaking tests to
physicians. To illustrate, we recently entered into a non-exclusive
distribution agreement to market a non-invasive HER-2/neu serum test, a
key assay in the monitoring of metastatic breast cancer. Esoteric
testing is rapidly becoming a growing specialty, as is our extensive
panel of diagnostics afforded to women’s health. In another alliance, we
have entered into a joint effort involving pharmaceutical clients that
ultimately could result in tissue-based companion diagnostics enabling
personalized diagnosis and treatment of disease with a major impact on
drug development. These activities are in addition to our own
development program at Enzo Life Sciences, where we are focused on
extending our highly valued patent estate with new approaches built upon
our long successful history of product development, while we also
continue to explore new opportunities to maximize the value of our broad
and proven capabilities.”
Conference Call
The Company will conduct a conference call Wednesday March 12, 2014
at 8:30 AM ET.The call can be accessed by dialing
1-888-459-5609. International callers can dial 1-973-321-1024. Please
reference PIN number 10213172. Interested parties may also listen over
the Internet at http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=94391&eventID=5114961To listen to the live call on the Internet, please go to the web site
at least fifteen minutes early to register, download and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available approximately two hours after the
end of the live call, through midnight (ET) on March 26, 2014. The
replay of the conference call can be accessed by dialing 1-800-585-8367,
and when prompted, use PIN number 10213172. International callers can
dial 1-404-537-3406, using the same PIN number.
NON-GAAP Financial Measures
To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley
Act, Enzo Biochem attached to this news release and will post to the
Company's investor relations web site (www.enzo.com)
any reconciliation of differences between non-GAAP financial information
that may be required in connection with issuing the Company's quarterly
financial results.
The Company uses EBITDA, as a measure of performance to demonstrate
earnings exclusive of interest, taxes, depreciation and amortization.
Adjustments to EBITDA are for items of a non-recurring nature and are
reconciled on the table provided. The Company manages its business based
on its operating cash flows. The Company, in its daily management of its
business affairs and analysis of its monthly, quarterly and annual
performance, makes its decisions based on cash flows, not on the
amortization of assets obtained through historical activities. The
Company, in managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an outside
investor may base its evaluation of the Company's performance based on
the Company's net loss not its cash flows, there is a limitation to the
EBITDA measurement. EBITDA is not, and should not be considered, an
alternative to net loss, loss from operations, or any other measure for
determining operating performance of liquidity, as determined under
accounting principles generally accepted in the United States (GAAP).
The most directly comparable GAAP reference in the Company's case is the
removal of interest, taxes, depreciation and amortization.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and therapeutics
through the development of unique diagnostic platform technologies that
provide numerous advantages over previous standards. A global company,
Enzo Biochem utilizes cross-functional teams to develop and deploy
products systems and services that meet the ever-changing and rapidly
growing needs of health care both today and into the future.
Underpinning Enzo Biochem’s products and technologies is a broad and
deep intellectual property portfolio, with patent coverage across a
number of key enabling technologies.
Except for historical information, the matters discussed in this news
release may be considered "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements include declarations regarding the intent, belief or current
expectations of the Company and its management, including those related
to cash flow, gross margins, revenues, and expenses are dependent on a
number of factors outside of the control of the company including, inter
alia, the markets for the Company’s products and services, costs of
goods and services, other expenses, government regulations, litigations,
and general business conditions. See Risk Factors in the Company’s Form
10-K for the fiscal year ended July 31, 2013. Investors are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that could
materially affect actual results. The Company disclaims any obligations
to update any forward-looking statement as a result of developments
occurring after the date of this press release.
Table Follows
ENZO BIOCHEM, INC. |
(in thousands, except per share data)
|
|
| |
| |
| |
| |
| | | | | | | |
|
| | Three months ended | | Six months ended |
Selected operations data: | | January 31, | | January 31, |
| | (unaudited) | | (unaudited) |
| | | | | | | |
|
| | 2014 | | 2013 | | 2014 | | 2013 |
Revenues:
| | | | | | | | |
Clinical laboratory services
| |
$
|
13,848
| |
$
|
13,320
| |
$
|
28,707
| |
$
|
28,497
|
Product revenues
| | |
8,054
| | |
7,876
| | |
15,717
| | |
16,309
|
Royalty and license fee income
| |
|
1,026
| |
|
1,014
| |
|
2,637
| |
|
3,033
|
| | | | | | | |
|
| | | | | | | |
|
Total revenues
| |
$
|
22,928
| |
$
|
22,210
| |
$
|
47,061
| |
$
|
47,839
|
| | | | | | | |
|
Gross profit
| |
$
|
9,771
| |
$
|
8,642
| |
$
|
20,348
| |
$
|
20,377
|
| | | | | | | |
|
Gross profit %
| |
|
43%
| |
|
39%
| |
|
43%
| |
|
43%
|
| | | | | | | |
|
Loss before income taxes
| |
$
|
(3,570)
| |
$
|
(5,854)
| |
$
|
(6,295)
| |
$
|
(9,607)
|
| | | | | | | |
|
Benefit (provision) for income taxes (A)
| |
$
|
4
| |
$
|
180
| |
$
|
(58)
| |
$
|
242
|
| |
| |
| |
| |
|
Net loss
| |
$
|
(3,566)
| |
$
|
(5,674)
| |
$
|
(6,353)
| |
$
|
(9,365)
|
| | | | | | | |
|
Basic and diluted loss per share
| |
$
|
(0.09)
| |
$
|
(0.14)
| |
$
|
(0.15)
| |
$
|
(0.24)
|
| | | | | | | |
|
Weighted average shares outstanding - basic and diluted
| |
|
41,887
| |
|
39,312
| |
|
41472
| |
|
39,295
|
| | | | | | | |
|
Reconciliation of GAAP Net Loss to
EBITDA: | | | | | | | | |
| | | | | | | |
|
Net loss
| |
$
|
(3,566)
| |
$
|
(5,674)
| |
$
|
(6,353)
| |
$
|
(9,365)
|
Add-back (deduct):
| | | | | | | | |
Depreciation and amortization
| | |
1002
| | |
1,186
| | |
1937
| | |
2,336
|
Interest expense
| | |
52
| | |
7
| | |
114
| | |
15
|
(Benefit) provision for income taxes
| |
|
(4)
| |
|
(180)
| |
|
58
| |
|
(242)
|
EBITDA (B)
| |
$
|
(2,516)
| |
$
|
(4,661)
| |
$
|
(4,244)
| |
$
|
(7,256)
|
| | | | | | | |
|
Notes: | | | | | | | | |
| | | | | | | |
|
A- All periods reflect effective tax rates below the statutory rate
due to inability to recognize future tax benefits.
|
| | | | | | | |
|
B- EBITDA is a non-GAAP measure, as described in the attached press
release
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
Selected balance sheet data: | | | | | | | | |
| | January 31, 2014 | | July 31, 2013 | | | | |
| | | | | | | |
|
Cash and cash equivalents
| |
$
|
7,621
| |
$
|
9,007
| | | | |
| | | | | | | |
|
Working capital
| |
$
|
7,994
| |
$
|
8,704
| | | | |
| | | | | | | |
|
Stockholders' equity
| |
$
|
32,190
| |
$
|
34,132
| | | | |
| | | | | | | |
|
Total assets
| |
$
|
55,734
| |
$
|
58,958
| | | | |
Contacts:
For Enzo Biochem, Inc.
Anreder & Company
Steven
Anreder, 212-532-3232
steven.anreder@anreder.com
or
CEOcast,
Inc.
Michael Wachs, 212-732-4300
mwachs@ceocast.com
Source: Enzo Biochem Inc.
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