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Illumina reports record financial results for fourth quarter and fiscal year 2014


San Diego, California, USA
January 27, 2015

Illumina, Inc. (NASDAQ:ILMN) today announced its financial results for the fourth quarter and fiscal year 2014.

Fourth quarter 2014 results:

  • Revenue of $512 million, a 32% increase compared to $387 million in the fourth quarter of 2013
  • GAAP net income for the quarter of $153 million, or $1.03 per diluted share, compared to $81 million, or $0.56 per diluted share, for the fourth quarter of 2013
  • Non-GAAP net income for the quarter of $129 million, or $0.87 per diluted share, compared to $65 million, or $0.45 per diluted share, for the fourth quarter of 2013 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income” for a reconciliation of these GAAP and non-GAAP financial measures)
  • Cash flow from operations of $141 million and free cash flow of $106 million for the quarter

Gross margin in the fourth quarter of 2014 was 75.1% compared to 66.9% in the prior year period. Excluding the effect of non-cash stock compensation expense, legal contingencies, amortization of acquired intangible assets, and impairments, non-GAAP gross margin was 72.3% for the fourth quarter of 2014 compared to 71.4% in the prior year period.

Research and development (R&D) expenses for the fourth quarter of 2014 were $142.9 million compared to $76.7 million in the prior year period. R&D expenses included $11.8 million and $10.9 million of non-cash stock compensation expense in the fourth quarters of 2014 and 2013, respectively. Excluding these charges, legal contingencies, impairments, and contingent compensation, R&D expenses as a percentage of revenue were 15.7% compared to 17.0% in the prior year period.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2014 were $122.2 million compared to $111.6 million in the prior year period. SG&A expenses included $23.7 million and $16.8 million of non-cash stock compensation expense in the fourth quarters of 2014 and 2013, respectively. Excluding these charges, and amortization of acquired intangible assets, SG&A expenses as a percentage of revenue were 18.9% compared to 22.2% in the prior year period.

Depreciation and amortization expenses were $30.0 million and capital expenditures were $34.8 million during the fourth quarter of 2014. The Company ended the fourth quarter of 2014 with $1.34 billion in cash, cash equivalents and short-term investments, compared to $1.17 billion as of December 29, 2013.

Fiscal 2014 results:

  • Revenue of $1,861 million, a 31% increase compared to $1,421 million in fiscal 2013
  • GAAP net income of $353 million, or $2.37 per diluted share, compared to $125 million, or $0.90 per diluted share, in fiscal 2013
  • Non-GAAP net income of $407 million, or $2.74 per diluted share, compared to $250 million, or $1.80 per diluted share, in fiscal 2013 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income” for a reconciliation of these GAAP and non-GAAP financial measures)
  • Cash flow from operations of $501 million and free cash flow of $395 million for the fiscal year

Gross margin for fiscal 2014 was 69.7% compared to 64.2% in the prior year; the prior year period included impairment charges of $25.2 million related to the discontinuation of a non-core product line. Excluding the effect of non-cash stock compensation expense, legal contingencies, amortization of acquired intangible assets, and impairments, non-GAAP gross margin was 71.7% for fiscal 2014 compared to 70.1% in the prior year.

Research and development (R&D) expenses for fiscal 2014 were $388.1 million compared to $276.7 million in the prior year. R&D expenses included $50.9 million and $37.4 million of non-cash stock compensation expense in fiscal 2014 and 2013, respectively. Excluding these charges, legal contingencies, impairments, and contingent compensation, R&D expenses as a percentage of revenue were 15.3% compared to 16.8% in the prior year.

Selling, general and administrative (SG&A) expenses for fiscal 2014 were $466.3 million compared to $381.0 million in the prior year. SG&A expenses included $91.0 million and $61.4 million of non-cash stock compensation expense in fiscal 2014 and 2013, respectively. Excluding these charges, amortization of acquired intangible assets, and contingent compensation, SG&A expenses as a percentage of revenue were 19.5% compared to 20.8% in the prior year.

“We delivered record fourth quarter and fiscal year 2014 financial results which greatly exceeded our expectations. Our focus on technology innovation, as evidenced by the launch of HiSeq XTM Ten, which enables the $1,000 genome, and the NextSeq® 500, were major contributors to our outperformance,” stated Jay Flatley, CEO. “The recently announced HiSeq X Five, HiSeq® 3000/4000 and NextSeq 550 instruments further enhance the most extensive sequencing portfolio available, and will position us for continued long-term growth as we develop and address the large and nascent market opportunities ahead of us.”

Updates since our last earnings release:

  • Launched the HiSeq X Five System to further enable the adoption of high-throughput WGS
  • Introduced the HiSeq 3000/4000 Systems which are based on the same innovative patterned flow cell technology as HiSeq X, to deliver an exceptional level of throughput at lower cost per base
  • Introduced the NextSeq 550 System which combines microarray scanning with the robust NextSeq 500 Sequencing System
  • Announced the launch of the MiSeq FGxTM Forensic Genomics System, which simultaneously interrogates short tandem repeats and other valuable genetic markers
  • Announced key goals for the company’s oncology circulating tumor DNA program, which includes the release of research use only kits and a laboratory developed test to gather clinical evidence for regulatory submission
  • Announced the upcoming launch of the VeriSeqTM NIPT Solution in Europe which offers significant workflow and cost benefits compared to current testing methods
  • Announced a strategic alliance with Lockheed Martin to collaborate on scalable and affordable genomic solutions to provide personalized health care for national populations in many geographies
  • Announced an agreement with bioMérieux to launch an NGS epidemiology solution for service labs
  • Entered into a partnership with the U.S. Agency for International Development (USAID) and the Broad Institute of MIT and Harvard to combat the Ebola epidemic in West Africa
  • Announced the purchase of 15 HiSeq X instruments by the Universities of Edinburgh and Glasgow to facilitate the Scottish Genomes Partnership
  • Settled all pending infringement claims and other disputes between Sequenom and Verinata Health, Inc. and entered into a broad licensing agreement
  • Entered into a settlement and license agreement with Syntrix Biosystems, Inc., resolving all outstanding issues between the parties
  • Repurchased $35 million of common stock under our previously announced share repurchase programs

Financial outlook and guidance

The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.

For fiscal 2015 the Company is projecting approximately 20% revenue growth, assuming current currency exchange rates, and non-GAAP earnings per diluted share of $3.12 to $3.18. These projections assume full year non-GAAP gross margin of approximately 73%, and a pro forma tax rate of approximately 28%. Full-year weighted average diluted shares outstanding, for the measurement of pro forma amounts, is expected to be approximately 150 million shares.

Quarterly conference call information

The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Tuesday, January 27, 2015. Interested parties may listen to the call by dialing 888.713.4215 (passcode: 97717286), or if outside North America by dialing 1.617.213.4867 (passcode: 97717286). Individuals may access the live teleconference in the Investor Relations section of Illumina’s web site under the “Company” tab at www.illumina.com.

A replay of the conference call will be available from 6:00 pm Pacific Time (9:00 pm Eastern Time) on January 27, 2015 through February 3, 2015 by dialing 888.286.8010 (passcode: 56089407), or if outside North America by dialing 1.617.801.6888 (passcode: 56089407).

Statement regarding use of non-GAAP financial measures

The Company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company’s financial measures under GAAP include substantial charges related to stock compensation expense, legal contingencies, amortization of acquired intangible assets, non-cash interest expense associated with the Company’s convertible debt instruments that may be settled in cash, acquisition related expense, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Per share amounts also include, through the first quarter of 2014, the double dilution associated with the accounting treatment of the Company’s 0.625% convertible senior notes and the corresponding call option overlay. Management believes that presentation of operating results that excludes these items and per share double dilution provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company’s past and future operating performance.

The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

 

About Illumina

Illumina is transforming human health as the global leader in sequencing and array-based technologies. The company serves customers in a broad range of markets, enabling the universal adoption of genomic solutions in research and clinical settings. To learn how Illumina is unlocking the power of the genome, visit www.illumina.com and follow @illumina.    



More news from: Illumina, Inc.


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Published: January 29, 2015

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