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Luminex (LMNX) Beats on Q4 Earnings & Revenues, Issues View

Zacks

Luminex Corporation LMNX reported adjusted earnings of 17 cents per share in the fourth quarter of 2017, surpassing the Zacks Consensus Estimate of 9 cents by 88.9%. Adjusted earnings also increased 216.7% year over year.

On a GAAP basis, the company reported fourth-quarter loss of 7 cents per share, considering the necessary adjustments to expected company tax obligations, and deferred tax assets and liabilities related to the passage of the Tax Cuts and Jobs Act.

Revenues in the quarter increased almost 8.2% year over year to $78.2 million, outpacing the Zacks Consensus Estimate of $77.3 million.

Luminex Corporation Price, Consensus and EPS Surprise


Luminex Corporation Price, Consensus and EPS Surprise | Luminex Corporation Quote

2017 at a Glance

Full-year earnings per share came in at 67 cents per share, a 109.3% increase from the year-ago number and ahead of the Zacks Consensus Estimate of 49 cents.

Full-year revenue came in at $306.6 million, a 13% increase from the year-ago adjusted number and ahead of the Zacks Consensus Estimate of $305.4 million.

System Sales segment reported 12.6% of total revenues and Assay Revenues accounted for 50.5% of total sales. Royalty Revenues contributed 14.6% of total revenues in the year. Consumables Sales contributed 16.1% in the year. Other revenue segment also contributed 2.5% and Service revenue contributed 3.7% of the total revenue in the year.

Segment Analysis

System Sales: Revenues increased 7.6% on a year-over-year basis to $10.3 million. Notably, the company shipped 288 multiplexing analyzers in the quarter. Here we note that the systems included MAGPIX, LX and FLEXMAP 3D. Also, the company placed 88 sample-to-answer molecular systems under contract, reaching the total number of active customers to more than 425.

Assay Revenues: Assay revenues grew 13.9% year over year to $41.8 million.

Royalty Revenues: Sales at this segment increased 11.5% on a year-over-year basis to around $11.3 million.

Consumables Sales: Revenues at the segment declined 9.9% to $10 million.

Financials

Luminex exited full-year 2017 with cash and cash equivalents of $127.1 million, compared with $93.5 million at the end of 2016.

Margins

Gross profits increased 13.8% from the year-ago quarter to $50.4 million, primarily driven by higher revenues. The gross margin expanded 318 basis points (bps) to 64.4%. Increasing volumes for both VERIGENE and ARIES and internal manufacturing process improvements resulted in strong gross margin expansion.

Adjusted operating expenses totaled $39.1 million, reflecting a 6.7% decline from the year-ago quarter. Selling, general and administrative expenses increased 0.5% to $28.7 million. Research and development (R&D) expenses contracted 22.3% year over year to $10.4 million.

Meanwhile, adjusted operating margin expanded a massive 1118 bps to 14.4%. Revenue growths across most of the segments, gross profit expansion and consistent efforts to control operating expenses boosted the company’s operating margin the quarter.

Guidance

Luminex provided its 2018 annual revenue guidance in the range of $310-$316 million, which indicates a growth of 2% at the midpoint year over year. The company expects first-quarter 2018 revenues in the band of $79-$81 million.

Bottom Line

Luminex exited the fourth quarter on a solid note. The company saw a strong top line, solid cash flow as well as profits. The company also witnessed favorable tidings at the regulatory front. In this regard, the company won FDA nod for the ARIES Group A Strep Assay. Per management, this is the sixth assay the FDA has cleared for use on the ARIES system in the last two years. Also, we are looking forward to the company’s recently provided long term outlook which is quite promising. In 2022 the company expects to achieve total revenue in the band of $425 million and $500 million, which increases at a CAGR of 7% to 10%.

Further, the expansion in operating margin buoys optimism. On the flip side, low consumable revenues raise concern. Furthermore, the year-over-year drop in R&D expenses is discouraging. Cutthroat competition in the niche space is another headwind.

Zacks Rank & Key Picks

Luminex carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that reported solid results this earnings season are PetMed Express PETS, PerkinElmer PKI and Becton, Dickinson and Company BDX. While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported third-quarter fiscal 2018 adjusted earnings per share of 44 cents, up 88.3% from the prior-year quarter. Revenues rose 13.7% to $60.1 million.

PerkinElmer posted fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

Becton, Dickinson reported first-quarter 2018 adjusted earnings per share of $2.48, up 3.9% at constant currency. Revenues totaled $3.08 billion, up 3.7% at constant currency.

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