Trinity Biotech Announces Results for Q4 and Fiscal Year 2015

Annual Dividend Suspended, Share Buyback Program Announced


DUBLIN, March 03, 2016 (GLOBE NEWSWIRE) -- Trinity Biotech plc (Nasdaq:TRIB), a leading developer and manufacturer of diagnostic products for the point-of-care and clinical laboratory markets, today announced results for fiscal year 2015 and the quarter ended December 31, 2015. The Company also announced that it is suspending its annual dividend and initiating a share buyback program.

Fiscal Year 2015 Results

Total revenues for fiscal year 2015 were $100.2m versus $104.9m in 2014, a decrease of 4.5% year on year.  This was due to the impact of the strengthening US dollar on the Company’s foreign currency denominated revenues. Other factors included lower Lyme sales due to weather related factors and unusually low HIV sales in Q2. These were partly offset by underlying growth in Premier and Immco revenues for the year.

    
 Full Year
2014
Full Year
2015
Full Year
2015 vs 2014
 US$’000US$’000%
Point-of-Care20,03618,810 (6.1%)
    
Clinical Laboratory84,83581,385 (4.1%)
    
Total104,871100,195 (4.5%)
      

Point-of-care revenues decreased from $20.0m in 2014 to $18.8m in 2015, which represents a decrease of 6.1%. This was due to lower HIV sales in Africa in Q2, due to unusual ordering patterns.  These revenues immediately rebounded in Q3 and Q4 to normal levels. 

Meanwhile, Clinical Laboratory revenues were $81.4m, a decrease of 4.1% versus 2014. The impact of the abovementioned strengthening of the dollar was largely confined to Clinical Laboratory revenues. In particular, the weakness of the Euro, Brazilian Real, Canadian dollar and Sterling, all of which represent significant currencies in which the Company invoices sales, resulted in a reduction in our US dollar denominated revenues.  This was accentuated by weakness in the currencies of other countries such as Turkey, Russia and a number of South American countries where the Company invoices in US dollars. In such countries the dollar’s strength served to erode our competitiveness, which had a detrimental effect on our revenues.

The other key financial results for 2015 were as follows:

  • Operating profit for the year was $13.4m which represents an operating margin of 13.4%.
  • Profit after tax for the year was $21.8m though this includes non-cash financial income of $12.5m recognised in relation to the Company’s convertible loan notes. Excluding this, profit after tax would have been $9.3m compared with $17.2m in 2014.
  • Basic EPS for the year was 94.1 cents (40.2 cents excluding the impact of non-cash financial income) versus 75.7 cents in 2014.
  • Diluted EPS was 46.2 cents compared to 72.6 cents in 2014.

The effective tax charge for the year (which excludes the impact of non-cash financial income) was 10.4%. This low effective rate of tax is due to the competitive corporation tax rate in Ireland and the availability of research and development tax credits in a number of jurisdictions.

EBITDA before share option expense for the year was $20.7m.

Quarter 4 Results

Total revenues for Q4, 2015 were $24.9m which compares to $26.7m in Q4, 2014, a decrease of 6.5%.

    
 2014
Quarter 4
2015
Quarter 4
Increase/
(decrease)
 US$’000US$’000%
Point-of-Care5,4515,436 (0.3%)
Clinical Laboratory21,22919,501 (8.1%)
Total26,68024,937 (6.5%)
      

Point-of-Care revenues for Q4, 2015 were broadly flat compared to Q4, 2014. 

Clinical Laboratory revenues decreased from $21.2m to $19.5m, a decrease of 8.1% compared to Q4, 2014, a decrease which is largely due to the impact of exchange rate movements.      

Gross margins for the quarter were 43.2%, and this is consistent with Q4 having the lowest gross margin in the year, due to seasonality of certain products. This is lower than the gross margin noted in Q4, 2014 of 47.5%, largely reflecting the impact of foreign currency movements.

Research and Development expenses were $1.5m.  Selling, General and Administrative (SG&A) expenses decreased from $7.2m to $6.0m also partly due to foreign currency movements.

The combination of lower revenues and gross margins resulted in a reduction in operating profit from $4.3m to $3.1m. Meanwhile, profit after tax for the quarter was $2.8m, which represents an EPS for the quarter of 12.1 cents or 10.5 cents on a fully diluted basis. EBITDA before share option expense for the quarter was $4.8m.

Cardiac Update

In December, 2015 we submitted our 510(k) application for our high sensitivity cardiac Troponin-I assay and Meritas Point-of-Care Analyzer to the FDA. The application was supported by three clinical studies:

  • determination of the 99th percentile Upper Reference Limit;
  • point-of-care precision performance; and
  • the validation of clinical performance of the Meritas system with subjects presenting to Emergency Departments with symptoms suggestive of Acute Coronary Syndrome (ACS).

In the ACS clinical study, we enrolled subjects at 14 different sites in the USA. Results were adjudicated by a panel of cardiologists according to the Third Universal Definition of Myocardial Infarction (MI), which includes both Type-I and Type-II MI subjects. We were pleased to report sensitivity at admission of 78% for plasma and 66% for whole blood. These results are better than we obtained with the clinical studies supporting the test’s CE Mark. The 510(k) application is currently under FDA review. 

Clinical trials are currently in progress for our second cardiac marker assay, B-type Natriuretic Protein (BNP). We have 10 clinical sites that are actively enrolling and to date we have obtained approximately 50% of the patient samples we require.  Enrollment is expected to be completed in Q2, 2016, and we are anticipating submission of our BNP 510(k) application to the FDA in Q3, 2016.

Share Buyback and Suspension of Dividend 

The Company’s Board of Directors has authorized the commencement of a share repurchase program. Based on a resolution passed at its most recent AGM, the Company is currently authorized to repurchase up to 10% of its own shares (approximately 2.3m ADRs).  The Company’s ability to buy back shares will be determined by available liquidity and general market conditions and will be carried out in accordance with applicable securities laws and regulations.  

In conjunction with its initiation of a share repurchase program, the Company has decided to suspend the payment of annual dividends. It is felt that given the Company’s current share price, share repurchases represent a better deployment of capital.

Comments

Commenting on the results, Kevin Tansley, Chief Financial Officer, said “Revenues for Q4, 2015 were $24.9m, which resulted in an operating profit of $3.1m and profit after tax of $2.8m.  This equates to a basic EPS of 12.1 cents or 10.5 cents on a fully diluted basis.

Total revenues in 2015 decreased from $104.9m to $100.2m and this decrease was effectively driven by exchange rate movements.  These exchange rate movements also contributed to a 2% reduction in gross margins.  As a direct result, operating profits for the year were $13.4m, $4.6m lower than in 2014. In addition, we incurred interest charges of $3.5m on our convertible loan notes which were issued during the year. Overall profit for the year was $21.8m, though if we were to exclude the non-cash income recognized on the convertible loan notes the profit for the year would have been $9.3m.”    

Ronan O’Caoimh, CEO of Trinity said “During 2015 we operated in a very challenging economic environment.  The strength of the US dollar against a range of currencies had a very significant adverse impact on our foreign currency denominated revenues.  Meanwhile, in many of the countries where we actually sell in US dollars, the strength of the dollar negatively impacted on our competitiveness resulting in a knock-on effect on both revenues and margins.   

We announced the submission of our high sensitivity cardiac Troponin-I assay and Meritas Point-of-Care Analyzer to the FDA in December, 2015. This is the culmination of over three years work completing the development of both the test and associated analyzer as well as running extensive clinical trials in the USA.  We were very pleased with the data that was submitted and the FDA is currently reviewing the submission. We expect to be liaising with them closely in the months ahead as the review process continues. Meanwhile, the trials for the second test on the Meritas platform, BNP, are progressing well and we expect to submit this to the FDA in Q3, 2016. 

Today, we are also announcing that we are initiating a share buyback program.  At our current share price and in the absence of suitable acquisition targets at present, we believe that buying Trinity’s shares constitutes a sensible use of capital. At the same time, we have decided to suspend our annual dividend payment. We feel that given our size, level of R&D expenditure and the stage of the Company’s development it is not appropriate to be paying dividends.”

Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other risks detailed in the Company's periodic reports filed with the Securities and Exchange Commission.

Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company's website: www.trinitybiotech.com.

 
Trinity Biotech plc
Consolidated Income Statements
      
(US$000’s  except share data) Three Months
Ended
Dec 31,
2015
 
(unaudited)
Three Months
Ended
Dec 31,
2014
 
(unaudited)
Year
Ended
Dec 31,
2015
 
(unaudited)
Year
Ended
Dec 31,
2014
 
(unaudited)
      
Revenues  24,937  26,680  100,195  104,871 
      
Cost of sales  (14,170) (14,014) (53,950) (54,524)
      
Gross profit   10,767  12,666  46,245  50,347 
Gross profit %  43.2% 47.5% 46.2% 48.0%
      
Other operating income  65  85  288  424 
      
Research & development expenses  (1,508) (961) (5,068) (4,290)
Selling, general and administrative expenses  (6,009) (7,238) (26,475) (26,964)
Indirect share based payments  (184) (255) (1,541) (1,478)
      
Operating profit   3,131  4,297  13,449  18,039 
      
Financial income  132  48  431  96 
Financial expenses  (1,189) (34) (3,483) (69)
Non-cash financial income  975  -  12,480  - 
Net financing (expense) / income   (82) 14  9,428  27 
      
Profit before tax   3,049  4,311  22,877  18,066 
      
Income tax expense  (223) (187) (1,081) (853)
              
 Profit for the period   2,826   4,124   21,796   17,213 
      
Earnings per ADR (US cents)  12.1  18.0  94.1  75.7 
      
Earnings per ADR excluding non-cash financial income (US cents)  8.0  18.0  40.2  75.7 
      
Diluted earnings per ADR (US cents)  10.5  17.6  46.2  72.6 
      
Weighted average no. of ADRs used in computing basic earnings per ADR  23,259,669  22,916,417  23,161,773  22,749,726 
      
Weighted average no. of ADRs used in computing diluted earnings per ADR  28,690,599  23,482,268  27,407,793
  23,717,747 
      


 
Trinity Biotech plc
Consolidated Balance Sheets
    
 Dec 31,
2015
US$ ‘000
(unaudited)
Sept 30,
2015
US$ ‘000
(unaudited)
Dec 31,
2014
US$ ‘000
(unaudited)
ASSETS   
Non-current assets   
Property, plant and equipment 20,659  19,198  17,877 
Goodwill and intangible assets 161,324  156,326  145,024 
Deferred tax assets 12,792  10,370  9,798 
Other assets 954  1,040  1,091 
Total non-current assets 195,729  186,934  173,790 
    
Current assets   
Inventories 35,125  36,882  33,517 
Trade and other receivables 25,602  27,153  26,080 
Income tax receivable 550  119  351 
Cash and cash equivalents 101,953  104,289  9,102 
Total current assets 163,230  168,443  69,050 
    
TOTAL ASSETS 358,959  355,377  242,840 
    
EQUITY AND LIABILITIES   
Equity attributable to the equity holders of the parent   
Share capital 1,220  1,216  1,204 
Share premium 15,526  14,560  12,422 
Accumulated surplus 201,951  198,882  183,375 
Other reserves (4,809) (3,661) (26)
Total equity 213,888  210,997  196,975 
    
Current liabilities   
Income tax payable 1,163  951  785 
Trade and other payables 18,874  18,694  21,196 
Provisions 75  75  75 
Total current liabilities 20,112  19,720  22,056 
    
Non-current liabilities   
Exchangeable senior note payable 98,044  99,069  - 
Other payables 2,096  3,569  2,370 
Deferred tax liabilities 24,819  22,022  21,439 
Total non-current liabilities 124,959  124,660  23,809 
    
TOTAL LIABILITIES 145,071  144,380  45,865 
    
TOTAL EQUITY AND LIABILITIES 358,959  355,377  242,840 
          


 
Trinity Biotech plc
Consolidated Statement of Cash Flows
     
(US$000’s)Three Months
Ended
Dec 31,
2015
(unaudited)
Three Months
Ended
Dec 31,
2014
(unaudited)
Year
Ended
Dec 31,
2015
(unaudited)
Year
Ended
Dec 31,
2014
(unaudited)
     
Cash and cash equivalents at beginning of period 104,289  8,949  9,102  22,317 
     
Operating cash flows before changes in working capital 5,574  5,048  19,853  22,027 
Changes in working capital 234  3,596  (7,157) (6,512)
Cash generated from operations 5,808  8,644  12,696  15,515 
     
Net Interest and Income taxes received/(paid) 79  (53) (361) 237 
     
Capital Expenditure & Financing (net) (5,980) (8,438) (21,604) (23,937)
     
Free cash flow (93) 153  (9,269) (8,185)
     
Payment of HIV-2 licence fee -  -  (1,112) - 
     
30 year Convertible Note proceeds, net of fees (45) -  110,529  - 
     
30 year Convertible Note interest payment (2,198) -  (2,198) - 
     
Dividend payment -  -  (5,099) (5,030)
     
Cash and cash equivalents at end of period 101,953  9,102  101,953  9,102 
     



            

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