LUMINEX    CORPORATION    4Q and Full Year 2010   Patrick J. Balthrop,                            President and Chief Exec...
Safe Harbor    Certain statements made during the course of this presentation may not be purely historical and consequentl...
Today’s Agenda         4Q and 2010 Highlights         4Q and 2010 Financial Review         2011 Outlook and Guidance      ...
4Q 2010 Financial Highlights    Record consolidated revenue of $41.2M, +8% Y/Y    Key revenue segments:      Consumable re...
Executing on the Growth Plan                           Revenue ($M)                                                       ...
2010 Corporate Highlights    Operational Accomplishments:      Developed and successfully launched MAGPIX®      Acquired a...
4Q and 2010 Highlights    4Q and 2010 Financial Review    2011 Outlook and Guidance    Q&A7
Q4 and 2010 Income Statement    ($ in thousands - except per share amounts)                                               ...
Q4 and 2010 Segment Results    ($ in thousands)                               4Q 2010       4Q 2009      Variance        2...
Consolidated Revenue Distribution     ($ in thousands)                                   ($ in thousands)      $45,000    ...
Bulk Consumables        Bulk purchases of consumables account for the majority of the volatility     ($ in thousands)     ...
Potential for Operating Leverage SG&A (% of Total Revenue)                Research and Development ($M)     47%           ...
Long Term Financial Targets        Consolidated TSP and ARP Operations        Long-term Compounded Annual Revenue Growth o...
Strong Balance Sheet     ($ in millions)                           12/31/2010   09/30/2010   12/31/2009     Cash & Investm...
Cash & Investment Flow($ in millions)     145                          24.2M              11.1M     140     135           ...
4Q and 2010 Highlights     4Q and 2010 Financial Review     2011 Outlook and Guidance     Q&A16
2011 Outlook – Growth Drivers       Platforms / Product Line Strategy         MAGPIX®       Automation Initiatives        ...
2011 Outlook - Macro Environment     Stable cap-ex across key markets/customers        EU – FY11 funding stable at core me...
2011 Guidance             2011 revenue of $163M - $170M or up to 20% growth Y/Y     2011     2010     2009        100     ...
4Q and 2010 Highlights     4Q and 2010 Financial Review     2011 Outlook and Guidance     Q&A20
LUMINEX     CORPORATION     4Q and Full Year 2010   Patrick J. Balthrop,                             President and Chief E...
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Luminex Q4 2010 Earnings Call

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Luminex Q4 2010 Earnings Call

  1. 1. LUMINEX CORPORATION 4Q and Full Year 2010 Patrick J. Balthrop, President and Chief Executive Officer Results of Operations Harriss T. Currie, Vice President and Chief Financial Officer February 7, 20111
  2. 2. Safe Harbor Certain statements made during the course of this presentation may not be purely historical and consequently may be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to: Statements made regarding our growth initiatives, including new product offerings and new and renewed partner channel relationships, and their ability to create long term shareholder value; our ability to drive growth through innovation; our ability to continue to expand operating margins; prospects for, expected placements of, and expected demand for our MAGPIX instrument; continued expansion of our clinical assay menu; future benefits of our partnership with Advanced Liquid Logic; future effective tax rates and resulting cash payments; future revenues from consumables, royalties and assays as a portion of total revenue mix and future volatility in consumable purchases; future bulk purchases and their effect on the distribution of our total revenue across the 2011 fiscal year; our ability to deliver revenue growth and manage operating costs; future R&D, SG&A and PP&E expenditures; our pipeline of assay and system products, and expected launch dates for assay products; the sustainable level of days sales outstanding; our platform product line strategy, including automation initiatives; driving growth through our indirect partners and international expansion; the macroeconomic environment and expected restraints on capital expenditures; the ability of our products to enhance productivity; distribution of our revenues between the diagnostic and life science research market; the FDA and changes to the 510(k) approval process, and resulting cost increases for Luminex; our revenue guidance and distribution of our revenue over the 2011 fiscal year; overall demand from our end customers; expected instrument placements; future growth rates; the reasonableness of current first quarter street consensus revenue; expectations regarding flu season and revenue contribution from new assay launches; the longer term health of our business and demand for our technology; our strategic outlook and growth plan for our business for 2011 and beyond; our long term financial targets; operational trends, including those related to sales of consumables, royalty revenues and inventory levels; our business outlook and projections about revenues, cash flow, system shipments, expenses and market conditions, and their anticipated impact on Luminex; information regarding development, timing and performance of new products; and, any statements of the plans, strategies and objectives of management for future operations. These forward looking statements speak only as of the date hereof and are based on our current beliefs and expectations and are subject to known or unknown risks and uncertainties some of which are beyond the company’s control that could cause actual results or plans to differ materially and adversely from those anticipated in the forward looking statements. Factors that could cause or contribute to such differences are detailed in our press release or in our annual, quarterly, or other filings with the Securities and Exchange Commission. We undertake no obligation to update these forward looking statements. Also, certain non-GAAP financial measures as defined by SEC Regulation G, may be covered in this presentation. To the extent that any non-GAAP financial measures are covered, a presentation of and reconciliation to the most directly comparable GAAP financial measures will be included in this presentation and/or be available on our website at www.luminexcorp.com in accordance with Regulation G.2
  3. 3. Today’s Agenda 4Q and 2010 Highlights 4Q and 2010 Financial Review 2011 Outlook and Guidance Q&A3
  4. 4. 4Q 2010 Financial Highlights Record consolidated revenue of $41.2M, +8% Y/Y Key revenue segments: Consumable revenue of $12.0M, +49% Royalty revenue of $6.0M, +26% Assay revenue of $9.2M, -28% (H1N1 boost in 4Q09) System revenue of $10.3M, +11% 286 multiplexing analyzers, incl. 16 FLEXMAP 3D and 34 MAGPIX units Consolidated gross margin of 69.4%, +220bps Y/Y Operating income of 12.4% of consolidated revenue Net income of $3.2M, or $0.07 per fully diluted share4
  5. 5. Executing on the Growth Plan Revenue ($M) Margins (%) OM CAGR = 28% 68% 67% 68% 67% 68% $140 9% GM $120 7% $100 $80 5% $60 $40 3% $20 1% $0 2006 2007 2008 2009 2010 -1% 2006 2007 2008 2009 2010 -23%* * 2007 not to scale -3% 2006 2007 2008 2009 2010 Investment in R&D Investment in R&D +77% Y/Y FDA Clearance of RVP Rollout of RVP Package Launch of MAGPIX ® +55% Y/Y Insert- H1N1 Tm Acquisition Closed 5000th instrument Renew OLI agreement LBG investment, shipped LMNX Shanghai Announce Next Gen Launch of qBead launch of two assays Instrument: FLEXMAP 3D® Launch FLEXMAP 3D® LMNX Tokyo 7000th instrument shipped Investment in ® Launch xTAG RVP SG&A Management New CF w/ ‘Fast Chemistry’ Infrastructure, Reg, ® BSD Robotics acquisition Mktg, Service Launch FlexmiR Select Strategic Partnerships RVP Awareness Campaign ALL and HTG agreements miRNA5
  6. 6. 2010 Corporate Highlights Operational Accomplishments: Developed and successfully launched MAGPIX® Acquired and fully integrated BSD Robotics Renewed partnership with leader in the HLA testing market, One Lambda Received FDA clearance for assays: CYP450 2D6, CF-60 V2 Advanced with Biothreat programs Strategic Initiatives: Signed exclusive collaboration/license agreement with Advanced Liquid Logic HTG Partnership – Custom gene expression assay (qBead) Tecan partnership for high volume automation6
  7. 7. 4Q and 2010 Highlights 4Q and 2010 Financial Review 2011 Outlook and Guidance Q&A7
  8. 8. Q4 and 2010 Income Statement ($ in thousands - except per share amounts) 4Q 2010 4Q 2009 Variance 2010 2009 Variance Revenue $ 41,190 $ 38,167 $ 3,023 $ 141,557 $ 120,643 $ 20,914 Gross Margin % 69% 67% 2% 68% 67% 1% Operating Expenses 23,496 20,357 (3,139) 85,126 73,895 (11,231) Operating Profit 5,083 5,298 (215) 11,251 7,399 3,852 Operating Profit % 12% 14% -2% 8% 6% 2% Net Income: As Reported $ 3,199 $ 20,016 $ (16,817) $ 5,231 $ 17,729 $ (12,498) Income Tax Adjustment* - (15,707) 15,707 - (19,004) 19,004 Adjusted Net Income (Loss) $ 3,199 $ 4,309 $ (1,110) $ 5,231 $ (1,275) $ 6,506 EPS, As Reported (Basic) $ 0.08 $ 0.49 $ (0.41) $ 0.13 $ 0.44 $ (0.31) EPS, Adjusted (Basic) $ 0.08 $ 0.11 $ (0.03) $ 0.13 $ (0.03) $ 0.16 * The income tax adjustment of $15.7M in the fourth quarter of 2009 and $19.0M for the full year 2009 reflects the amount of additional tax expense that would have been recorded had the valuation allowance been released prior to 2009 and the U.S. income was shown as if fully taxed. The Company believes that the non-GAAP measure used in this presentation, when presented in conjunction with the comparable GAAP measure, is useful to both management and investors in analyzing financial and business trends regarding the Companys ongoing business and operating performance. This non-GAAP measure should be considered in addition to, but not as a substitute for, items prepared in accordance with GAAP.8
  9. 9. Q4 and 2010 Segment Results ($ in thousands) 4Q 2010 4Q 2009 Variance 2010 2009 Variance Revenue Technology & $ 30,550 $ 24,794 $ 5,756 $ 105,586 $ 87,389 $ 18,197 Strategic Partnerships Assays & 10,640 13,373 (2,733) 35,971 33,254 2,717 Related Products Total Revenue 41,190 38,167 3,023 141,557 120,643 20,914 Operating Income (Loss) Technology & 5,872 2,669 3,203 15,977 8,122 7,855 Strategic Partnerships Assays & (789) 2,629 (3,418) (4,726) (723) (4,003) Related Products Total Operating Income $ 5,083 $ 5,298 $ (215) $ 11,251 $ 7,399 $ 3,852 Total Operating Margin 12% 14% -2% 8% 6% 2%9
  10. 10. Consolidated Revenue Distribution ($ in thousands) ($ in thousands) $45,000 $40,000 $140,000 $35,000 $120,000 $30,000 $100,000 $25,000 66% $80,000 67% 67% $20,000 64% $60,000 $15,000 $40,000 $10,000 $5,000 $20,000 $0 $0 Q4 2010 Q4 2009 2010 2009 System Revenue Consumable Revenue Royalty Revenue Assay Revenue Service Revenue Other Revenue10
  11. 11. Bulk Consumables Bulk purchases of consumables account for the majority of the volatility ($ in thousands) $12,000 $10,000 $8,000 84% $6,000 $4,000 $2,000 $0 08-Q4 09-Q1 09-Q2 09-Q3 09-Q4 10-Q1 10-Q2 10-Q3 10-Q4 Non-bulk Bulk 4 Qtr MA11
  12. 12. Potential for Operating Leverage SG&A (% of Total Revenue) Research and Development ($M) 47% $25 20% 18% 17% 17% % of Rev 46% $22 CAGR = 17% 45% $19 44% $16 43% $13 42% $10 2007 2008 2009 2010 2007 2008 2009 2010 Management focus on driving Focus on driving long term operating leverage, particularly growth through significant from the G&A portion continued investment in R&D12
  13. 13. Long Term Financial Targets Consolidated TSP and ARP Operations Long-term Compounded Annual Revenue Growth of 20+ Percent All Metrics Except Revenue Growth Expressed in Percent of Current Year Revenue Metric 2007 2008 2009 2010 Long Term Targets Revenue 100% 100% 100% 100% Revenue Growth (YoY) 42% 39% 16% 17% 20+% Focused on delivering results in 2010 Focused on delivering results in 2010 Gross Profit 61% 68% 67% 68% 65% - 75% R&D Expense 21% 18% 17% 17% 15% Pretax Income (Loss) (3)% 4% 6%* 8% 25% - 35% *Adjusted for the settlement of litigation13
  14. 14. Strong Balance Sheet ($ in millions) 12/31/2010 09/30/2010 12/31/2009 Cash & Investments $ 123.9 $ 118.3 $ 119.6 Accounts Receivable $ 20.9 $ 19.0 $ 22.1 DSO 47 52 53 Inventory $ 24.9 $ 24.1 $ 17.5 Inventory Turns 0.5 0.5 0.8 Total Assets $ 265.8 $ 259.0 $ 248.0 Current Ratio 8.7 8.6 7.2 Days Payable 56 53 6214
  15. 15. Cash & Investment Flow($ in millions) 145 24.2M 11.1M 140 135 8.3M 130 2.2M 2.7M 123.9M 125 119.6M 120 115 110 Cash & Investments Operating Cash Flow PP&E Purchases Strategic Equity Issuances Other Items Cash & Investments 12/31/09 Investments 12/31/1015
  16. 16. 4Q and 2010 Highlights 4Q and 2010 Financial Review 2011 Outlook and Guidance Q&A16
  17. 17. 2011 Outlook – Growth Drivers Platforms / Product Line Strategy MAGPIX® Automation Initiatives BSD Robotics, ALL, Tecan Assay Launches RVP Fast Gastrointestinal Pathogen Panel – CE Mark Newborn Screening / NeoPlex 4™ - CE Mark Meningitis - CE Mark Specialty Markets Biothreat program International Expansion17
  18. 18. 2011 Outlook - Macro Environment Stable cap-ex across key markets/customers EU – FY11 funding stable at core members US – House proposed flat FY11 NIH budget Y/Y Asia – Japan +3%, strong growth in China Luminex has limited exposure to LSR Capex LSR systems account <20% of total revenue Regulatory environment is challenging Improving clarity on 510(k) process in 2011 Still plan for the FDA to require more data per 510(k) submission, higher costs per clinical study18
  19. 19. 2011 Guidance 2011 revenue of $163M - $170M or up to 20% growth Y/Y 2011 2010 2009 100 110 120 130 140 150 160 170 180 Actual Lower End of 2011 Guidance Upper End of 2011 Guidance $M Revenue Segment Lower End of Range Upper End of Range Very strong demand for Systems Strong demand for MAGPIX® MAGPIX® Strong partner expansion of Consumables Consistent partner utilization development activities Expansion of partner assay Royalties Continued growth menu; high market demand Moderate contribution from Higher contribution from new Assays new products, light ILI season products, normal ILI season19
  20. 20. 4Q and 2010 Highlights 4Q and 2010 Financial Review 2011 Outlook and Guidance Q&A20
  21. 21. LUMINEX CORPORATION 4Q and Full Year 2010 Patrick J. Balthrop, President and Chief Executive Officer Results of Operations Harriss T. Currie, Vice President and Chief Financial Officer February 7, 201121

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