MIAMI LAKES, Fla., June 26, 2015 (GLOBE NEWSWIRE) -- ERBA Diagnostics, Inc. (NYSE MKT:ERB), a fully integrated in vitro diagnostics company, today announced first quarter 2015 financial results. During the first quarter of 2015, ERBA Diagnostics recorded revenue of $4.9 million and net loss of $1.0 million. This compares to revenue of $6.4 million and net income of $0.2 million for the first quarter of 2014. Gross margin decreased to 43% with gross profit of $2.1 million in the first quarter of 2015, compared to gross margin of 46% with gross profit of $2.9 million for the same period in 2014.
Revenues in the first quarter of 2015 decreased compared to the same period of 2014 due to decreased sales in many of our major international markets. In addition, the strengthening of the U.S. dollar relative to foreign currencies adversely impacted ERBA Diagnostics' net revenue for the first quarter of 2015 as compared to the same period of 2014. ERBA Diagnostics also experienced challenges with certain end of life components and parts for its hematology and diabetes instruments that have since been resourced and are expected to be available for sale beginning on July 1, 2015. ERBA Diagnostics expects sales of these instruments for the rest for the year to drive reagents revenues as well. The decreases in gross margin and net income during the first quarter of 2015 compared to the same period of 2014 were primarily the result of decreased revenues during the 2015 period.
"The first quarter for ERBA Diagnostics was a period of re-organization as we focused on talent search for key management positions to better align with our longer term growth strategy," said Mohan Gopalkrishnan, Chief Executive Officer of ERBA Diagnostics. "With that goal, we have since filled many positions in our top leadership and remain focused on new product launches and further market penetration. We continue our focus to shift our product mix to new and higher margin instruments and consumables, including the latest clinical chemistry platform, the XL-400, in the U.S. in 2015. We are successfully expanding to new geographies, notably our recent entry into Brazil. Operationally, we consolidated our U.S. manufacturing into a single site in Miami Lakes, Florida, which we believe has capacity to meet anticipated growth and has the ability to contribute to operational efficiencies. As a result, we believe that we are positioned to become a premier worldwide provider of comprehensive testing solutions for the growing segment of smaller hospitals, reference labs and physicians clinics."
First Quarter Financial Highlights
ERBA Diagnostics recognized revenues of $4.9 million for the first quarter of 2015, compared to $6.4 million for the first quarter of 2014. The decrease in domestic revenue is attributed to a number of factors, including a decrease in instrument and reagent orders in the international market, primarily in Russia which was affected by a weakening ruble as compared to the U.S. dollar. In addition, we entered the first quarter of 2015 with a significant volume of backorders to work through as a result of the consolidation of facilities into our Miami Lakes, Florida, facility. Another factor impacting our revenues is the competition from new technology in our immunology clinical chemistry sector where we have mature products. The decrease in European revenues is the result of, among other factors, lower and/or delayed orders from the public sector in Italy. In addition, the change in foreign currency exchange rates unfavorably impacted revenues by $181,000.
Gross margin decreased to 43% with gross profit of $2.1 million during the first quarter of 2015, compared to gross margin of 46% with a gross profit of $2.9 million for the same period in 2014. Gross margins were impacted by the lower sales volume mentioned above as well as lower absorption of manufacturing costs and product mix.
Total operating expenses were $2.8 million in the first quarter of 2015, compared to $2.7 million in the first quarter of 2014. While total operating expenses remained relatively flat, an increase in general and administrative expenses was driven by incremental recruiting costs to upgrade talent and fill key vacant positions, royalty expense, and higher legal and accounting costs. The increase in general and administrative expenses was partially offset by a decrease in selling expenses, which was primarily due to open sales positions, which were subsequently filled at the end of the second quarter of 2015.
Loss from operations totaled $0.7 million for the first quarter of 2015, compared to operating income of $0.2 million in the first quarter of 2014. Net loss was $1.0 million for the first quarter of 2015, or loss of $0.02 per basic and diluted share, compared to net income of $0.2 million for the first quarter of 2014, or earnings of $0.00 per basic and diluted share.
Cash and cash equivalents were $2.1 million as of March 31, 2015, and $2.5 million as of December 31, 2014.
Operational Highlights
ERBA Diagnostics has recently accomplished several operational milestones. These milestones include:
-
Stabilized U.S. manufacturing operations after the relocation to its Miami Lakes, Florida, facility in the fourth quarter of 2014; and
- Expanded market presence for the small hospitals and physician office labs segment through a formal distribution agreement with a large distribution house in the U.S.
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, Inc., including, without limitation, the risks and uncertainties related to: ERBA Diagnostics' ability to successfully improve its financial condition, results of operations and cash flows; ERBA Diagnostics may not be able to achieve or sustain growth in revenue or income, whether as a result of expanding sales from existing products, launching new products, exploring additional acquisitions, or otherwise; ERBA Diagnostics' ability to successfully implement its strategic initiatives, in the timeframes anticipated, or at all, including, without limitation, that ERBA Diagnostics may not be able to successfully shift its product mix to new and higher margin instruments and reagents, including, without limitation, the XL-400; that ERBA Diagnostics may not continue to expand into new geographic regions and that ERBA Diagnostics' expansion into new geographic regions, including Brazil, may not result in earnings growth or otherwise positively impact ERBA Diagnostics' financial condition, operating results and cash flows; that ERBA Diagnostics may continue to face challenges with respect to its products and instruments and that such challenges, including those related to end of life components and parts for ERBA Diagnostics' hematology and diabetes instruments, may not be resolved as expected or in the timeframe anticipated, or at all, and that such products and instruments, including end of life components and parts for ERBA Diagnostics' hematology and diabetes instruments, may not be reintroduced into the market for sale in the timeframe anticipated, or at all, or otherwise be accepted by the market; that instrument sales may not increase or result in an increase in reagent revenues; that ERBA Diagnostics' Miami Lakes, Florida, facility may not have the capacity to meet anticipated growth or contribute to operational efficiencies; that ERBA Diagnostics may not become a premier worldwide provider of comprehensive testing solutions for the growing segment of smaller hospitals, reference labs and physicians clinics; and economic, competitive, political, governmental and other factors affecting ERBA Diagnostics and its operations, markets and products. In addition to the risks and uncertainties set forth above, investors should consider the economic, competitive, governmental, technological and other risks and uncertainties discussed in ERBA Diagnostics' filings with the Securities and Exchange Commission, including, without limitation, the risks and uncertainties discussed under the heading "Risk Factors" in such filings.
| ERBA Diagnostics, Inc. and Subsidiaries | ||
| Condensed Consolidated Balance Sheets | ||
| As of March 31, 2015 and December 31, 2014 | ||
| March 2015 | 2014 | |
| ASSETS | (Unaudited) | |
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 2,060,000 | $ 2,548,295 |
| Accounts receivable, net | 5,531,524 | 6,414,895 |
| Inventories, net | 7,934,312 | 6,999,335 |
| Related party receivables | 928,906 | 1,489,461 |
| Other current assets | 392,978 | 1,029,982 |
| Total current assets | 16,847,720 | 18,481,968 |
| PROPERTY, PLANT AND EQUIPMENT: | ||
| Land | 352,957 | 352,957 |
| Buildings and improvements | 3,929,133 | 3,794,422 |
| Machinery and equipment | 4,068,479 | 4,063,424 |
| Furniture and fixtures | 1,972,486 | 2,048,813 |
| 10,323,055 | 10,259,616 | |
| Less: accumulated depreciation | (8,259,026) | (8,276,970) |
| Property, plant and equipment, net | 2,064,029 | 1,982,646 |
| OTHER LONG-TERM ASSETS: | ||
| Intangible assets, net | 1,089,440 | 1,165,325 |
| Goodwill | 3,494,619 | 3,494,619 |
| Equipment on lease, net | 542,350 | 573,293 |
| Product license | 155,615 | 169,762 |
| Restricted deposits | 278,892 | 311,516 |
| Other assets | 14,807 | 16,656 |
| Total other long-term assets | 5,575,723 | 5,731,171 |
| Total assets | $ 24,487,472 | $ 26,195,785 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 2,610,791 | $ 2,399,874 |
| Revolving line of credit | 1,939,661 | 1,939,661 |
| Other accrued expenses | 1,429,282 | 2,009,661 |
| Total current liabilities | 5,979,734 | 6,349,196 |
| OTHER LONG-TERM LIABILITIES: | ||
| Deferred tax liabilities | 662,145 | 644,948 |
| Other long-term liabilities | 891,705 | 985,513 |
| Total other long-term liabilities | 1,553,850 | 1,630,461 |
| Total liabilities | 7,533,584 | 7,979,657 |
| COMMITMENTS AND CONTINGENCIES | ||
| SHAREHOLDERS' EQUITY: | ||
| Preferred stock, par value $0.01, authorized 5,000,000 shares, none issued and outstanding in 2015 and 2014 | -- | -- |
| Common stock, par value $0.01, authorized 100,000,000 shares, issued and outstanding 44,086,009 at March 31, 2015 and December 31, 2014 | 440,860 | 440,860 |
| Additional paid-in capital | 53,551,050 | 53,540,057 |
| Accumulated deficit | (36,430,705) | (35,411,738) |
| Accumulated other comprehensive loss | (607,317) | (353,051) |
| Total shareholders' equity | 16,953,888 | 18,216,128 |
| Total liabilities and shareholders' equity | $ 24,487,472 | $ 26,195,785 |
| ERBA Diagnostics, Inc. and Subsidiaries | ||
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||
| For the Three Months Ended March 31, 2015 and 2014 | ||
| (Unaudited) | ||
| 2015 | 2014 | |
| NET REVENUE | $ 4,853,076 | $ 6,371,112 |
| COST OF SALES | 2,752,372 | 3,424,867 |
| Gross profit | 2,100,704 | 2,946,245 |
| OPERATING EXPENSES: | ||
| Selling | 866,177 | 1,095,678 |
| General and administrative | 1,707,947 | 1,398,078 |
| Research and development | 200,285 | 203,243 |
| Total operating expenses | 2,774,409 | 2,696,999 |
| (Loss) Income from operations | (673,705) | 249,246 |
| OTHER INCOME (EXPENSE), NET: | ||
| Interest expense | (56,571) | (9,560) |
| Unrealized (loss) gain on foreign currency transactions | (216,616) | 1,974 |
| Other expense, net | (44,723) | (47,885) |
| Total other income (expense), net | (317,910) | (55,471) |
| (Loss) income before provision for income taxes | (991,615) | 193,775 |
| PROVISION FOR INCOME TAXES | 27,352 | 29,529 |
| Net (loss) income | (1,018,967) | 164,246 |
| OTHER COMPREHENSIVE INCOME (LOSS): | ||
| Foreign currency translation adjustment | (254,266) | (22,311) |
| Total comprehensive (loss) income | $ (1,273,233) | $ 141,935 |
| NET INCOME (LOSS) PER SHARE – Basic | $(0.02) | $0.00 |
| NET INCOME (LOSS) PER SHARE – Diluted | $(0.02) | $0.00 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||
| Basic | 44,086,009 | 43,783,221 |
| Diluted | 44,086,009 | 55,237,472 |