Millipore Reports Third Quarter Financial Results

Millipore Corporation (NYSE:MIL), a life science leader that provides technologies, tools and services for bioscience research and biopharmaceutical manufacturing, today reported financial results for its third quarter ended September 29, 2007. Revenues for the third quarter grew 12 percent, totaling $371.2 million. Changes in foreign exchange rates increased total revenue growth by approximately 4 percent. Excluding currency rate changes, Millipore’s revenue growth in the third quarter was 8 percent, which included 4 percent growth in its Bioprocess Division and 15 percent growth in its Bioscience Division. On a GAAP basis, the Company reported third quarter net income of $36.3 million, or $0.66 per share, compared to $14.8 million, or $0.27 per share in the same period last year. Non-GAAP net income in the third quarter was $45.7 million, or $0.83 per share, resulting in approximately 28 percent earnings growth from the third quarter of 2006. Stock-based compensation expense in the third quarter of 2007 was $4.4 million, or $0.05 per share, and is reflected in both GAAP and non-GAAP earnings per share. A reconciliation of all GAAP to non-GAAP financial measures is provided in the Company’s financial tables accompanying this press release. "The third quarter was highlighted by the strong performance of our Bioscience Division. The Division is benefiting from a larger, more attractive product portfolio that is targeting some of the fastest growing segments of the life science research market,” said Martin Madaus, Chairman & CEO of Millipore. "We continue to make progress in expanding our presence in key life science workflows, launching new sales and marketing initiatives, and growing our business in international markets. "Our accelerated Bioscience revenue growth was offset by slower growth from our Bioprocess Division. After a strong first half of the year, some of our North American biotech customers are significantly reducing their spending in the second-half of 2007. In contrast to the slow down in North America, the Bioprocess Division experienced strong growth in Europe and Asia. Overall, we are pleased with the Company’s revenue growth, profitability improvement, and cash flow expansion in the third quarter.” For the first nine months of 2007, revenues grew 29 percent, totaling $1.1 billion. Changes in foreign exchange rates increased total revenue growth by approximately 4 percent. Excluding currency rate changes and acquisitions not in the base period, Millipore’s revenue growth for the first nine months of 2007 was 9 percent, which included 9 percent revenue growth from its Bioprocess Division and 9 percent revenue growth in its Bioscience Division. On a GAAP basis, the Company reported net income of $91.3 million, or $1.66 per share for the first nine months of 2007, compared to $78.5 million, or $1.45 per share in the same period last year. Non-GAAP net income for the first nine months was $130.6 million, or $2.38 per share, resulting in approximately 18 percent earnings growth over the first nine months of 2006. "In the third quarter, we improved our non-GAAP operating margins by 200 basis points due to a more profitable business mix and operating leverage,” said Charles Wagner, Chief Financial Officer of Millipore. "This profitability improvement and strong operating performance allowed us to generate $95 million in cash flow from operations in the quarter.” Third Quarter Highlights Bioscience Division revenue growth of 15 percent, excluding changes in foreign exchange rates, reflects strong performance from the Company’s Laboratory Water products and robust growth in its Drug Discovery business, particularly for multiplex immunoassays and biomarkers Bioprocess Division generated strong revenue growth in Europe and Asia, offset by declines in North America; the division expects to launch 14 products in 2007 compared to 8 product launches in 2006 Non-GAAP operating margins increased 200 basis points year-over-year from 18.6 percent to 20.6 percent The Company generated approximately $95 million in cash flow from operations in the third quarter compared to approximately $56 million in the same period of 2006 Launched new website to improve customer experience by offering new content highlighting Millipore’s scientific expertise and innovative solutions in research, development and production Re-branded Millipore to reflect Company’s expanded capabilities and transformation into a life science leader Revenue Growth by Geography ($ millions):     Three Months Ended   Nine Months Ended September 29,2007   September 30,2006   %Growth September 29,2007   September 30,2006   %Growth Americas $ 151.4 $ 151.5 - % $ 484.7 $ 381.5 27% Europe 157.4 126.8 24% 453.2 347.3 30% Asia/Pacific 62.4 51.8 21% 188.4 143.5 31% Total $ 371.2 $ 330.1 12% $ 1,126.3 $ 872.3 29% Revenue Growth by Division ($ millions):   Three Months Ended Nine Months Ended September 29,2007   September 30,2006   %Growth September 29,2007   September 30,2006   %Growth Bioprocess $ 210.5 $ 194.9 8% $ 651.6 $ 525.5 24% Bioscience 160.7 135.2 19% 474.7 346.8 37% Total $ 371.2 $ 330.1 12% $ 1,126.3 $ 872.3 29% Quarterly Earnings Call Millipore will host a conference call and webcast to discuss its financial results, business outlook, and related corporate and financial matters at 4:45 p.m. Eastern Time today. The call can be accessed through Millipore’s website: http://www.millipore.com. A replay of the call will be archived on the Investor Relations section of the website and will also be available via telephone by dialing (800) 642-1687 or (706) 645-9291 and entering confirmation code: 3838965. The telephonic replay will be available beginning at 8:00 p.m. ET on November 1, 2007 until 11:59 p.m. ET on November 5, 2007. About Millipore – Advancing Life Science Together™ Millipore (NYSE: MIL) is a Life Science leader providing cutting-edge technologies, tools, and services for bioscience research and biopharmaceutical manufacturing. As a strategic partner, we collaborate with customers to confront the world’s challenging human health issues. From research to development to production, our scientific expertise and innovative solutions help customers tackle their most complex problems and achieve their goals. Millipore Corporation is an S&P 500 company with more than 6,100 employees in 47 countries worldwide. Use of Non-GAAP Financial Measures The non-GAAP financial measures used in this press release – which are non-GAAP gross profit, gross profit margin, operating income, operating margin, pre-tax income, net income, and diluted earnings per share – exclude costs related to our manufacturing consolidation strategy, acquisition integration and restructuring expenses related to the acquisition of Serologicals, amortization of intangible assets, inventory fair value adjustments related to business acquisitions, accrual for environmental site remediation costs, bridge loan commitment fees in connection with the acquisition of Serologicals and changes in tax accruals. There are limitations in using non-GAAP financial measures as they are not prepared in accordance with generally accepted accounting principles and may be different than non-GAAP financial measures used by other companies. We believe that the non-GAAP financial measures provide useful and supplementary information to investors regarding our quarterly performance. It is our belief that these non-GAAP financial measures have been particularly useful to investors over the last couple of years because of the significant changes that have occurred outside of our day-to-day business in accordance with the execution of our new strategy. This strategy includes strengthening our leadership position with bioscience customers, becoming a strategic supplier in bioscience research markets, leading our industry in product quality and manufacturing effectiveness, becoming a magnet for talent, and doubling the value of the Company between 2004 and 2009. The financial impact of certain elements of these activities, particularly our manufacturing consolidation strategy and acquisitions, are often large relative to our overall financial performance and most of the related charges are recorded in one or two financial quarters but not in other financial quarters, which can adversely affect the comparability of our results on a period-to-period comparable basis. As an example, the scope and scale of our manufacturing consolidation strategy was the largest in our history. When we complete this initiative, we will have closed six manufacturing plants. We regularly use non-GAAP financial measures internally to understand, manage, and evaluate our business results and make operating decisions. We also measure our employees and compensate them, in part, based on such non-GAAP measures. For the same reasons, we also use this information for our forecasting activities. The non-GAAP financial measures presented herein also facilitate comparisons to our historical operating results, which have consistently been presented in this manner. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of the financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release. Our earnings guidance, however, is only provided on a non-GAAP basis. It is not feasible to provide GAAP diluted earnings per share guidance because the items excluded, other than amortization expense, are difficult to predict and estimate and are primarily dependent on future events. Forward Looking Statements: The matters discussed herein, as well as in future oral and written statements by management of Millipore Corporation that are forward-looking statements, are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Potential risks and uncertainties that could affect Millipore's future operating results include, without limitation, the inability to successfully integrate Serologicals or other acquired businesses; failure to achieve design wins into our pharmaceutical and biotechnology customers’ manufacturing design phase for a particular drug; delay, suspension or termination of a customer’s volume production; lack of availability of raw materials or component products on a timely basis; regulatory delay in the approval of new therapeutics; limitations on cash flow available for operations and investment due to increased debt service obligations; the inability to establish and maintain necessary product and process quality levels; reduced demand for cell culture products using bovine serum; the inability to realize the expected benefits of development, marketing, licensing and other alliances; competitive factors such as new membrane or chromatography technology; the inability to achieve anticipated cost benefits of our supply chain initiative; risks relating to our concentration of principal manufacturing operations; the inability to utilize technology in current or planned products due to overriding rights by third parties; potential environmental liabilities; conditions in the economy in general and in the bioscience and bioprocess markets in particular; foreign exchange fluctuations; reduced private and government research funding; exposure to product liability claims; and difficulties inherent in transferring or outsourcing of manufacturing operations. Please refer to our filings with the SEC, including our most recent Annual Report on Form 10-K, for more information on these and other risks that could cause actual results to differ. Millipore Corporation Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)         Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30,   2007     2006     2007     2006     Net sales $ 371,174 $ 330,117 $ 1,126,341 $ 872,307 Cost of sales   169,128     169,261     534,039     425,282   Gross profit 202,046 160,856 592,302 447,025   Selling, general and administrative expenses 118,143 106,785 364,047 276,609 Research and development expenses   26,492     24,637     79,949     62,767   Operating income 57,411 29,434 148,306 107,649   Interest income 382 4,713 1,152 20,873 Interest expense   (16,542 )   (16,548 )   (49,615 )   (28,733 ) Income before income taxes and minority interest 41,251 17,599 99,843 99,789 Provision for income taxes 4,130 2,347 5,649 20,348 Minority interest   859     439     2,860     960     Net income $ 36,262   $ 14,813   $ 91,334   $ 78,481     Diluted earnings per share $ 0.66   $ 0.27   $ 1.66   $ 1.45     Diluted weighted average shares outstanding   55,184     54,172     54,905     54,168   Millipore Corporation Condensed Consolidated Balance Sheets (In thousands) (Unaudited)       September 29, December 31, 2007 2006 ASSETS Current assets: Cash and cash equivalents $ 24,347 $ 77,481 Accounts receivable, net 295,690 277,410 Inventories 277,222 256,666 Assets held for sale - 17,150 Deferred income taxes and other current assets   63,781   80,648 Total current assets 661,040 709,355 Property, plant and equipment, net 578,632 525,903 Deferred income taxes 37,319 8,366 Intangible assets, net 446,841 488,303 Goodwill 1,019,918 1,014,194 Other assets   23,652   25,370 Total assets $ 2,767,402 $ 2,771,491   LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ - $ 100,000 Accounts payable 91,343 90,843 Accrued expenses and other current liabilities 189,913 191,265 Income taxes payable and deferred income taxes   18,702   19,722 Total current liabilities 299,958 401,830 Long-term debt 1,285,322 1,316,256 Deferred income taxes 11,675 16,121 Other liabilities 80,125 83,793 Minority interest 6,656 5,080 Shareholders' equity   1,083,666   948,411 Total liabilities and shareholders' equity $ 2,767,402 $ 2,771,491 Millipore Corporation Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)   Nine Months Ended September 29, September 30, 2007 2006 Cash flows from operating activities: Net income $ 91,334 $ 78,481 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92,367 49,373 Stock-based compensation 11,598 9,032 Deferred income tax benefit (20,593 ) (2,873 ) Business acquisition inventory fair value adjustments 11,121 13,279 Other (4,182 ) (5,014 ) Changes in operating assets and liabilities: Accounts receivable (4,973 ) (11,049 ) Inventories (18,586 ) (16,217 ) Other assets 7,165 3,227 Income taxes payable 7,035 (20,681 ) Other liabilities   (27,900 )   (17,652 ) Net cash provided by operating activities   144,386     79,906   Cash flows from investing activities: Additions to property, plant and equipment (77,585 ) (77,505 ) Sale/purchases of marketable securities, net - 113,947 Acquisition of businesses, net of cash acquired - (1,176,389 ) Other   6,080     -   Net cash used in investing activities   (71,505 )   (1,139,947 ) Cash flows from financing activities: Proceeds from issuance of common stock under stock plans 39,692 48,438 Payment of long term debt (100,000 ) (277,313 ) Net repayments under the revolving credit facility (68,225 ) (22,657 ) Issuance of debt - 860,877 Other   (1,874 )   3,942   Net cash (used in) provided by financing activities   (130,407 )   613,287   Effect of foreign exchange rates on cash and cash equivalents   4,392     1,110   Net decrease in cash and cash equivalents (53,134 ) (445,644 ) Cash and cash equivalents at beginning of period   77,481     537,052   Cash and cash equivalents at end of period $ 24,347   $ 91,408   Millipore Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (a) Three Months Ended September 29, 2007 (dollars in thousands, except EPS data)                 Gross Profit Gross Profit Margin   Operating Income   Operating Margin   Pre-tax Income   Net Income Diluted EPS GAAP results, three months ended September 29, 2007 $ 202,046 54.4 % $ 57,411 15.5 % $ 41,251 $ 36,262 $ 0.66 Non-GAAP adjustments: Costs related to manufacturing consolidation strategy 2,480 0.7 % 2,480 0.7 % 2,480 1,587 0.03 Acquisition integration and restructuring expenses 576 0.2 % 1,985 0.5 % 1,985 1,271 0.02 Purchased intangibles amortization 2,370 0.6 % 14,587 3.9 % 14,587 9,339 0.17 Change in tax accrual - - - - - (2,800 ) (0.05 )               Total non-GAAP adjustments   5,426 1.5 %   19,052 5.1 %   19,052   9,397     0.17   Non-GAAP results, three months ended September 29, 2007 $ 207,472 55.9 % $ 76,463 20.6 % $ 60,303 $ 45,659   $ 0.83     (a) Please refer to our press release for a full explanation for the use of non-GAAP measures. Millipore Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (a) Nine Months Ended September 29, 2007 (dollars in thousands, except EPS data)                 Gross Profit   Gross Profit Margin   Operating Income   Operating Margin   Pre-tax Income   Net Income   Diluted EPS GAAP results, nine months ended September 29, 2007 $ 592,302 52.6 % $ 148,306 13.2 % $ 99,843 $ 91,334 $ 1.66 Non-GAAP adjustments: Costs related to manufacturing consolidation strategy 9,712 0.9 % 9,712 0.8 % 9,712 6,521 0.12 Business acquisition inventory fair value adjustments 11,121 1.0 % 11,121 1.0 % 11,121 7,765 0.14 Acquisition integration and restructuring expenses 2,649 0.2 % 11,470 1.0 % 11,470 7,747 0.14 Purchased intangibles amortization 7,088 0.6 % 43,700 3.9 % 43,700 29,172 0.53 Changes in tax accruals - - - - - (11,900 ) (0.21 )               Total non-GAAP adjustments   30,570 2.7 %   76,003 6.7 %   76,003   39,305     0.72   Non-GAAP results, nine months ended September 29, 2007 $ 622,872 55.3 % $ 224,309 19.9 % $ 175,846 $ 130,639   $ 2.38     (a) Please refer to our press release for a full explanation for the use of non-GAAP measures. Millipore Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (a) Three Months Ended September 30, 2006 (dollars in thousands, except EPS data)                 Gross Profit Gross Profit Margin   Operating Income   Operating Margin   Pre-tax Income   Net Income Diluted EPS GAAP results, three months ended September 30, 2006 $ 160,856 48.7 % $ 29,434 8.9 % $ 17,599 $ 14,813 $ 0.27 Non-GAAP adjustments: Costs related to manufacturing consolidation strategy 4,474 1.4 % 4,474 1.4 % 4,474 2,811 0.06 Business acquisition inventory fair value adjustments 13,279 4.0 % 13,279 4.0 % 13,279 8,344 0.15 Acquisition integration and restructuring expenses 399 0.1 % 6,105 1.9 % 6,105 3,836 0.07 Purchased intangibles amortization 2,153 0.7 % 6,065 1.8 % 6,065 3,811 0.07 Environmental accrual - 2,100 0.6 % 2,100 1,319 0.02               Total non-GAAP adjustments   20,305 6.2 %   32,023 9.7 %   32,023   20,121   0.37 Non-GAAP results, three months ended September 30, 2006 $ 181,161 54.9 % $ 61,457 18.6 % $ 49,622 $ 34,934 $ 0.64   (a) Please refer to our press release for a full explanation for the use of non-GAAP measures. Millipore Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (a) Nine Months Ended September 30, 2006 (dollars in thousands, except EPS data)                 Gross Profit   Gross Profit Margin   Operating Income   Operating Margin   Pre-tax Income   Net Income   Diluted EPS GAAP results, nine months ended September 30, 2006 $ 447,025 51.2 % $ 107,649 12.3 % $ 99,789 $ 78,481 $ 1.45 Non-GAAP adjustments: Costs related to manufacturing consolidation strategy 15,038 1.7 % 15,038 1.8 % 15,038 9,778 0.18 Business acquisition inventory fair value adjustments 13,279 1.5 % 13,279 1.6 % 13,279 8,344 0.15 Acquisition integration and restructuring expenses 469 0.1 % 8,060 0.9 % 8,060 5,171 0.09 Purchased intangibles amortization 2,153 0.3 % 8,985 1.0 % 8,985 5,722 0.11 Environmental accrual 2,100 0.2 % 2,100 1,319 0.03 Bridge loan commitment fees in connection with acquisition of Serologicals 1,310 895 0.02               Total non-GAAP adjustments   30,939 3.6 %   47,462 5.5 %   48,772   31,229   0.58 Non-GAAP results, nine months ended September 30, 2006 $ 477,964 54.8 % $ 155,111 17.8 % $ 148,561 $ 109,710 $ 2.03   (a) Please refer to our press release for a full explanation for the use of non-GAAP measures.