MIAMI LAKES, Fla., May 18, 2015 (GLOBE NEWSWIRE) -- ERBA Diagnostics, Inc. (NYSE MKT:ERB), a fully integrated in vitro diagnostics company, reported its financial results for the year ended December 31, 2014. Net income for the year ended December 31, 2014 was $450,000, compared to net income of $676,000 for the year ended December 31, 2013. Net revenues for the year ended December 31, 2014 were $26,392,000, compared to net revenues of $28,255,000 for the year ended December 31, 2013.
"2014 was a year of consolidation for ERBA Diagnostics, during which time we maintained profitability and set the stage for future top and bottom line growth," said Mohan Gopalkrishnan, Chief Executive Officer of ERBA Diagnostics. "Regarding our delayed filing, we recently hired a new Chief Financial Officer, Ernesina Scala, who is leading our efforts to strengthen our finance and accounting systems and our internal control over financial reporting. For the remainder of 2015, we look forward to focusing our efforts on expanding the existing commercial business and continuing to evaluate potential strategic acquisitions."
During 2014 and subsequent to the end of the year, ERBA Diagnostics accomplished the following key developments:
- Centralized ERBA Diagnostics' manufacturing and service center from locations in the UK, Texas and Miami into the facility in Miami Lakes, Florida;
- Consolidated multiple ERP systems into one ERP system, which ERBA Diagnostics expects will bring about meaningful improvements in operations and financial reporting;
- Hired key senior level commercial and operational personnel;
- Expanded ERBA Diagnostics' geographic reach to Latin America, most notably in Brazil;
- Received U.S. approval for and launched ERBA Diagnostics' latest clinical chemistry system;
- Received the CE Mark for the HB Vario diabetes monitoring system;
- Submitted for U.S. approval for a urinalysis product; and
- Entered into an agreement to sell ERBA Diagnostics' former facilities located in Miami, Florida, for $23 million, which agreement, as previously disclosed, has been amended in order to extend until June 19, 2015 the examination period during which the buyer may terminate the agreement in the buyer's sole discretion, and which agreement, as previously disclosed, provides that the consummation of the sale of such former facilities would occur within 60 days after the expiration of such extended examination period.
Financial Highlights for the Year ended December 31, 2014
Net income for the year ended December 31, 2014 was $450,000, a decrease of $226,000, or 34%, from net income of $676,000 for the year ended December 31, 2013.
Net revenues decreased by $1,863,000 to $26,392,000 in 2014 from $28,255,000 in 2013. This 7% decrease was primarily attributed to a decrease in net revenues of $2,231,000 from domestic operations during 2014, compared to 2013, due to a number of factors including the move of the facility location which caused disruption in production/operation and changes in the sales organization as well as reduced headcount from attrition and reorganization initiatives. Such decrease was partially offset by an increase in net revenues from European operations.
Gross profit decreased by $1,200,000 to $12,613,000 in 2014 from $13,813,000 in 2013. This 9% decrease was primarily related to the reduction in net revenues from domestic operations as mentioned above. Gross profit margins dropped to 47.8% in 2014 from 48.9% in 2013 as a result of the lower volume as well as manufacturing inefficiencies and higher costs due to the facility move.
Total operating expenses decreased by $1,035,000 to $11,741,000 in 2014 from $12,776,000 in 2013. The 8% decrease was primarily a result of decreases in selling expenses and research and development expenses, partially offset by an increase in general and administrative expenses.
Operating income was $873,000 in 2014 compared to an operating income of $1,037,000 in 2013, a decrease of $164,000, or 16%. The decrease in operating income in 2014 as compared to 2013 resulted primarily from the reduction in gross profit, which was partially offset by the reductions in selling and research and development expenses due to cost containment efforts designed to align with the lower revenues and to fund the facility move which is reflected in the higher general and administrative expenses.
At December 31, 2014, ERBA Diagnostics' working capital was $12,133,000 compared to $11,549,000 at December 31, 2013. Cash and cash equivalents totaled $2,548,000 at December 31, 2014 and $4,031,000 at December 31, 2013.
Delay in Filing Quarterly Report on Form 10-Q
ERBA Diagnostics also announced that it is delaying the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 with the Securities and Exchange Commission.
As disclosed in the Notification of Late Filing on Form 12b-25, which ERBA Diagnostics filed with the SEC on May 15, 2015, ERBA Diagnostics delayed filing its Quarterly Report on Form 10-Q because of unforeseen delays in connection with completing and filing its consolidated financial statements and the accompanying footnotes.
ERBA Diagnostics is working diligently to complete and file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 with the SEC as promptly as practicable.
About ERBA Diagnostics, Inc.
ERBA Diagnostics, Inc. (NYSE MKT:ERB), is a fully integrated in vitro diagnostics company, offering a comprehensive suite of clinical testing products throughout the U.S. and emerging markets. The Company serves as a one-stop shop for the testing needs of the growing number of smaller hospitals, reference labs, and physician clinics. ERBA Diagnostics' line of proprietary and automated instruments, test kits, and reagents provide customers with autoimmune, infectious diseases, clinical chemistry, hematology, and diabetes testing.
Safe Harbor Statement
Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect the business and prospects of ERBA Diagnostics, including, without limitation, the risks and uncertainties that: ERBA Diagnostics' ability to successfully improve its financial condition, results of operations and cash flows; ERBA Diagnostics' ability to successfully implement its initiatives to achieve future top and bottom line growth, to expand the existing commercial business and continue evaluating potential strategic acquisitions; ERBA Diagnostics may not be successful in identifying or consummating acquisitions or other strategic opportunities and any identified and consummated acquisition or other strategic opportunity may not be successfully integrated and may not result in synergies, operational efficiencies or other benefits anticipated and may not otherwise improve ERBA Diagnostics' financial condition, operating results or cash position; acquisitions of businesses and products, and the integration of acquired businesses and products, may disrupt ERBA Diagnostics' business, distract its management and may not proceed as planned; ERBA Diagnostics may not succeed in its efforts to strengthen its finance and accounting systems and its internal control over financial reporting; ERBA Diagnostics' consolidation of its multiple ERP systems into one ERP system may not result in meaningful improvements in its operations and financial reporting; ERBA Diagnostics' submissions for regulatory approvals or clearances for new products, kits and instruments may not be granted by regulatory authorities within the timeframe anticipated or at all; under ERBA Diagnostics' agreement to sell its former facilities in Miami, Florida, the buyer in its sole and absolute discretion may terminate the purchase and sale agreement during examination period which runs until June 19, 2015; the consummation of the sale of ERBA Diagnostics' former facilities in Miami, Florida, may not occur when anticipated or at all;ERBA Diagnostics' financial results for the quarter ended March 31, 2015 may take longer to prepare than anticipated; ERBA Diagnostics may not be able to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 when anticipated; ERBA Diagnostics may receive a non-compliance or delisting letter from the NYSE MKT regarding ERBA Diagnostics' failure to timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2015; the NYSE MKT may initiate delisting proceedings, which could result in ERBA Diagnostics' common stock being delisted by the NYSE MKT; economic, competitive, political, governmental and other factors affecting ERBA Diagnostics and its operations, markets and products; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. See also the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC, for further discussion of certain risks and uncertainties that could materially and adversely affect our business, operating results or financial condition. Many of these factors are beyond our control.
| ERBA Diagnostics, Inc. and Subsidiaries, Consolidated Balance Sheets | ||
| December 31, 2014 and 2013 | ||
| 2014 | 2013 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 2,548,295 | $ 4,031,071 |
| Accounts receivable, net | 6,414,895 | 5,546,715 |
| Inventories, net | 6,999,335 | 6,494,173 |
| Related party receivables | 1,489,461 | 1,834,732 |
| Other current assets | 1,029,982 | 395,196 |
| Total current assets | 18,481,968 | 18,301,887 |
| PROPERTY, PLANT AND EQUIPMENT: | ||
| Land | 352,957 | 352,957 |
| Buildings and improvements | 3,794,422 | 3,136,434 |
| Machinery and equipment | 4,063,424 | 3,831,213 |
| Furniture and fixtures | 2,048,813 | 2,216,720 |
| 10,259,616 | 9,537,324 | |
| Less: accumulated depreciation | (8,276,970) | (7,976,121) |
| Property, plant and equipment, net | 1,982,646 | 1,561,203 |
| OTHER LONG-TERM ASSETS: | ||
| Intangible assets, net | 1,165,325 | 1,480,151 |
| Goodwill | 3,494,619 | 3,494,619 |
| Equipment on lease, net | 573,293 | 586,785 |
| Product license | 169,762 | 226,349 |
| Restricted deposits | 311,516 | 204,686 |
| Other assets | 16,656 | 18,786 |
| Total other long-term assets | 5,731,171 | 6,011,376 |
| Total assets | $ 26,195,785 | $ 25,874,466 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 2,399,874 | $ 1,953,906 |
| Revolving line of credit | 1,939,661 | 1,904,879 |
| Other accrued expenses | 2,009,661 | 2,894,430 |
| Total current liabilities | 6,349,196 | 6,753,215 |
| OTHER LONG-TERM LIABILITIES: | ||
| Deferred tax liabilities | 644,948 | 576,160 |
| Other long-term liabilities | 985,513 | 1,027,425 |
| Total other long-term liabilities | 1,630,461 | 1,603,585 |
| Total liabilities | 7,979,657 | 8,356,800 |
| COMMITMENTS AND CONTINGENCIES | ||
| SHAREHOLDERS' EQUITY: | ||
| Preferred stock, par value $0.01, authorized 5,000,000 shares, none issued and outstanding in 2014 and 2013 | -- | -- |
| Common stock, par value $0.01, authorized 100,000,000 shares, issued and outstanding 44,086,009 and 43,658,221 in 2014 and 2013 | 440,860 | 436,582 |
| Additional paid-in capital | 53,540,057 | 53,081,370 |
| Accumulated deficit | (35,411,738) | (35,861,343) |
| Accumulated other comprehensive loss | (353,051) | (138,943) |
| Total shareholders' equity | 18,216,128 | 17,517,666 |
| Total liabilities and shareholders' equity | $ 26,195,785 | $ 25,874,46 |
| ERBA Diagnostics, Inc. and Subsidiaries, Consolidated Statements of Income and Comprehensive Income | ||
| For the Years Ended December 31, 2014 and 2013 | ||
| 2014 | 2013 | |
| NET REVENUE | $ 26,391,600 | $ 28,255,317 |
| COST OF SALES | 13,778,126 | 14,442,815 |
| Gross profit | 12,613,474 | 13,812,502 |
| OPERATING EXPENSES: | ||
| Selling | 4,038,809 | 5,308,528 |
| General and administrative | 6,289,621 | 5,547,078 |
| Research and development | 1,412,077 | 1,920,171 |
| Total operating expenses | 11,740,507 | 12,775,777 |
| Income from operations | 872,967 | 1,036,725 |
| OTHER INCOME (EXPENSE), NET: | ||
| Interest expense | (38,447) | (121,963) |
| Unrealized (loss) gain on foreign currency transactions | (256,420) | 187,252 |
| Acquisition expenses | -- | (211,045) |
| Other income (expense), net | (11,852) | (96,087) |
| Total other income (expense), net | (306,719) | (241,843) |
| Income before provision for income taxes | 566,248 | 794,882 |
| PROVISION FOR INCOME TAXES | (116,643) | (119,054) |
| Net income | 449,605 | 675,828 |
| OTHER COMPREHENSIVE INCOME (LOSS): | ||
| Foreign currency translation adjustment | (214,108) | 375,960 |
| Total comprehensive income | $ 235,497 | $ 1,051,788 |
| NET INCOME PER SHARE – Basic | $ 0.01 | $ 0.02 |
| NET INCOME PER SHARE – Diluted | $ 0.01 | $ 0.01 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||
| Basic | 43,882,959 | 43,658,221 |
| Diluted | 54,842,733 | 48,542,706 |