MIAMI LAKES, Fla., Aug. 5, 2015 (GLOBE NEWSWIRE) -- ERBA Diagnostics, Inc. (NYSE MKT:ERB), a fully integrated in vitro diagnostics company, today announced financial results for the quarter and six months ended June 30, 2015. During the second quarter of 2015, ERBA Diagnostics recorded revenue of $5.9 million and net loss of $0.6 million. This compares to revenue of $7.5 million and net income of $0.5 million for the second quarter of 2014. Gross margin decreased to 44% with gross profit of $2.6 million in the second quarter of 2015, compared to gross margin of 47% with gross profit of $3.6 million for the same period in 2014. For the six months in 2015, ERBA Diagnostics recorded revenue of $10.8 million and net loss of $1.6 million. This compares to revenue of $13.9 million and net income of $0.6 million for the same period in 2014. Gross margin decreased to 44% with gross profit of $4.7 million in the six months of 2015, compared to gross margin of 46% with gross profit of $6.4 million for the same period in 2014.
"As stated previously, the first half of 2015 has been a period of reorganization as we filled many positions in our top leadership, as well as in the sales organization, in an effort to better align with our long term growth strategy and remain focused on sales growth through new product launches and further market penetration," said Mohan Gopalkrishnan, Chief Executive Officer of ERBA Diagnostics. "The reorganization added focus to customer segmentation, target customer requirements, product design and configurations expected to improve performance and customer satisfaction while setting the benchmark to reduce overall cost. Looking ahead to the rest of 2015, we believe we are well positioned to execute on a number of new initiatives to drive revenue growth in the US and internationally."
"We were also pleased to see a slight growth this quarter in our Immunology and Clinical Chemistry instruments placements in the US and Hematology instruments placements internationally versus the same quarter last year that is expected to drive reagents sales in future" added Mr. Gopalkrishnan
Operational Highlights
ERBA Diagnostics has recently accomplished several operational milestones. These milestones include:
- Stabilizing the manufacturing operations after relocating to our Miami Lakes, Florida, facility, which has enabled us to meet sales demand and we believe we are well positioned to meet increased sales demands.
- We have completed retrofitting some of our instruments to meet customer requirements and have started shipping late Quarter 2.
- Our Finance and Accounting, Operations and Sales and Marketing organizations have been revamped to address the growth objectives.
- We have been strengthening our Latin American presence and have started seeing improved results.
Second Quarter and Six Months Financial Highlights
ERBA Diagnostics recognized revenues of $5.9 million for the second quarter of 2015, compared to $7.5 million for the second quarter of 2014. While revenue for the second quarter of 2015 increased sequentially from the first quarter of 2015 by $1.1 million driven by higher instruments sales, revenue for the second quarter of 2015 showed a $1.6 million decline versus a strong second quarter of 2014, due to decreased clinical chemistry reagent orders in the international market, primarily India and China, lower and/or delayed orders from the public sector in Italy, and the strengthening of the U.S. dollar relative to other currencies which unfavorably impacted revenues. In the latter part of the second quarter of 2015, ERBA Diagnostics resolved the challenges with certain end of life components and parts for its hematology and diabetes instruments and expects to accelerate sales of these instruments for the rest for the year as well as drive higher reagents revenues. Revenues for the six months of 2015 were $10.8 million compared to $13.9 million for the same period in 2014 primarily due to 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, a significant volume of backorders to work through at the beginning of 2015 as a result of the consolidation of facilities into our Miami Lakes, Florida, facility, and challenges with some components for its hematology and diabetes instruments.
Gross margin decreased to 44% with gross profit of $2.6 million during the second quarter of 2015, compared to gross margin of 47% with a gross profit of $3.5 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. For the six months in 2015, gross margin decreased to 44% with gross profit of $4.7 million, compared to gross margin of 46% with gross profit of $6.4 million for the same period in 2014.
Total operating expenses were $3.1 million in the second quarter of 2015, compared to $3.0 million in the second quarter of 2014. While total operating expenses remained relatively flat, an increase in general and administrative expenses was driven by incremental recruiting costs, increased headcount for new or filled key vacant positions, higher legal and accounting costs associated with the delayed SEC filings, and various professional fees. The increase in general and administrative expenses was partially offset by a decrease in research and development expenses, due to decreased research and development efforts and decreased headcount. Total operating expenses increased from $5.6 million for the six months in 2014 to $5.8 million for the six months in 2015 driven by an increase in general and administrative expenses from increased headcount and professional fees.
Loss from operations totaled $0.4 million for the second quarter of 2015, compared to operating income of $0.6 million in the second quarter of 2014. Net loss was $0.6 million for the second quarter of 2015, or loss of $0.01 per basic and diluted share, compared to net income of $0.4 million for the second quarter of 2014, or earnings of $0.01 per basic and diluted share. For the six month period, loss from operations totaled $1.1 million for 2015, compared to operating income of $0.8 million in 2014. Net loss was $1.6 million for the six month period of 2015, or loss of $0.04 per basic and diluted share, compared to net income of $0.6 million for the same period of 2014, or earnings of $0.02 and $0.01, respectively, per basic and diluted share.
Cash and cash equivalents were $1.6 million as of June 30, 2015, and $2.5 million as of December 31, 2014.
Conference Call Details:
ERBA Diagnostics invites all interested parties to participate in the management's conference call to discuss the results of operations.
The call will begin promptly at 9:00 am EDT tomorrow, August 6, 2015, and may be accessed by dialing (877) 440-5803 or (719) 325-4802 for those dialing internationally. Please ask to be placed into the ERBA Diagnostics earnings call.
For those unable to join the earnings call, a playback of the call will be available via telephone approximately three hours after the call. The number for this service is: (877) 870-5176 or (858) 384-5517, and can be accessed by entering pin 5519920. The playback will be available until 11:59 p.m. Central Time August 9, 2015.
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' reorganizing and filling many positions may not align with or result in achievement of its long term growth strategies or objectives or in sales growth whether through new product launches, further market penetration or otherwise; ERBA Diagnostics' reorganizing may not result in improved performance and customer satisfaction or setting a benchmark to reduce or achieving reduced overall costs; ERBA Diagnostics' resolution of challenges with respect to certain end of life components and parts for its hematology and diabetes instruments may not result in the acceleration of sales of those instruments or drive higher reagents revenues; ERBA Diagnostics' relocation of manufacturing operations into its Miami Lakes, Florida, facility may not result in the ability to meet anticipated growth or increased sales demands; ERBA Diagnostics' expansion into and strengthening of its presence in the Latin American region may not result in earnings growth or otherwise positively impact ERBA Diagnostics' financial condition, operating results 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; 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 June 30, 2015 and December 31, 2014 | ||
| June 30, 2015 | December 31, 2014 | |
| ASSETS | (Unaudited) | |
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $1,596,381 | $2,548,295 |
| Accounts receivable, net | 5,714,864 | 6,414,895 |
| Inventories, net | 8,365,167 | 6,999,335 |
| Related party receivables | 1,155,839 | 1,489,461 |
| Other current assets | 1,510,725 | 1,029,982 |
| Assets held for sale | 352,957 | -- |
| Total current assets | 18,695,933 | 18,481,968 |
| PROPERTY, PLANT AND EQUIPMENT: | ||
| Land | -- | 352,957 |
| Buildings and improvements | 1,845,557 | 3,794,422 |
| Machinery and equipment | 4,148,079 | 4,063,424 |
| Furniture and fixtures | 1,995,542 | 2,048,813 |
| 7,989,178 | 10,259,616 | |
| Less: accumulated depreciation | (6,369,568) | (8,276,970) |
| Property, plant and equipment, net | 1,619,610 | 1,982,646 |
| OTHER LONG-TERM ASSETS: | ||
| Intangible assets, net | 1,013,555 | 1,165,325 |
| Goodwill | 3,494,619 | 3,494,619 |
| Equipment on lease, net | 503,675 | 573,293 |
| Product license | 141,468 | 169,762 |
| Restricted deposits | 278,892 | 311,516 |
| Other assets | 15,139 | 16,656 |
| Total other long-term assets | 5,447,348 | 5,731,171 |
| Total assets | $25,762,891 | $26,195,785 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $25,671,500 | $2,399,874 |
| Revolving line of credit | 34,946,611 | 1,939,661 |
| Other accrued expenses | 16,648,700 | 2,009,661 |
| Total current liabilities | 77,266,811 | 6,349,196 |
| OTHER LONG-TERM LIABILITIES: | ||
| Deferred tax liabilities | 679,342 | 644,948 |
| Other long-term liabilities | 8,723,966 | 985,513 |
| Total other long-term liabilities | 15,517,388 | 1,630,461 |
| Total liabilities | 92,784,199 | 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 June 30, 2015 and December 31, 2014 | 440,860 | 440,860 |
| Additional paid-in capital | 53,586,808 | 53,540,057 |
| Accumulated deficit | (36,983,802) | (35,411,738) |
| Accumulated other comprehensive loss | (559,394) | (353,051) |
| Total shareholders' equity | 16,484,472 | 18,216,128 |
| Total liabilities and shareholders' equity | $25,762,891 | $26,195,785 |
| ERBA Diagnostics, Inc. and Subsidiaries | ||||
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||
| For the Three and Six Months Ended June 30, 2015 and 2014 | ||||
| (Unaudited) | ||||
| Three months | Six months | |||
| 2015 | 2014 | 2015 | 2014 | |
| NET REVENUE | $ 5,945,670 | $ 7,540,657 | $ 10,798,746 | $ 13,911,769 |
| COST OF SALES | 3,304,716 | 3,976,247 | 6,057,087 | 7,478,210 |
| Gross profit | 2,640,954 | 3,564,410 | 4,741,659 | 6,433,559 |
| OPERATING EXPENSES: | ||||
| Selling | 981,754 | 1,034,029 | 1,847,930 | 2,052,610 |
| General and administrative | 1,929,588 | 1,603,759 | 3,637,534 | 3,001,837 |
| Research and development | 160,965 | 372,652 | 361,250 | 575,895 |
| Total operating expenses | 3,072,307 | 3,010,440 | 5,846,714 | 5,630,342 |
| (Loss) Income from operations | (431,353) | 553,970 | (1,105,055) | 803,217 |
| OTHER INCOME (EXPENSE), NET: | ||||
| Interest expense | (71,953) | (11,952) | (128,525) | (21,512) |
| Unrealized gain (loss) on foreign currency transactions | 151,272 | (16,178) | (65,344) | (14,204) |
| Other expense, net | (173,715) | (45,890) | (218,436) | (93,776) |
| Total other (expense) income, net | (94,396) | (74,020) | (412,305) | (129,492) |
| Income (loss) before provision for income taxes | (525,749) | 479,950 | (1,517,360) | 673,725 |
| PROVISION FOR INCOME TAXES | (27,352) | (29,514) | (54,704) | (59,043) |
| Net income (loss) | (553,101) | 450,436 | (1,572,064) | 614,682 |
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||
| Foreign currency translation adjustment | 47,923 | 141,324 | (206,343) | 119,013 |
| Total comprehensive income (loss) | $ (505,178) | $ 591,760 | $ (1,778,407) | $ 733,695 |
| NET INCOME (LOSS) PER SHARE – Basic | $ (0.01) | $ 0.01 | $ (0.04) | $ 0.02 |
| NET INCOME (LOSS) PER SHARE – Diluted | $ (0.01) | $ 0.01 | $ (0.04) | $ 0.01 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||
| Basic | 44,086,009 | 43,806,554 | 44,086,009 | 43,781,277 |
| Diluted | 44,086,009 | 54,431,579 | 44,086,009 | 54,346,301 |