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Luminex Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 02:20PM

Luminex Corp. (LMNX) filed Quarterly Report for the period ended 2011-03-31. Luminex Corp. has a market cap of $820.2 million; its shares were traded at around $19.85 with a P/E ratio of 165.4 and P/S ratio of 5.8.



Highlight of Business Operations:

Total revenue increased by 30% to $43.3 million for the three months ended March 31, 2011 from $33.3 million for the comparable period in 2010. The increase in revenue was primarily attributable to an increase of $6.6 million in consumable and royalty revenue resulting from volume increases in bulk purchases from one of our partners and expansion of the active installed base coupled with continued menu expansion by our partners. We also experienced an increase of $1.9 million in assay revenue in the three months ended March 31, 2011, driven primarily by increased sales of our Cystic Fibrosis (“CF”) and xTAG Respiratory Viral Panel (“RVP”) products. We sold 197 multiplexing analyzers in the first quarter of 2011, which includes 38 of our new MAGPIX systems as compared to 197 multiplexing analyzers sold for the corresponding prior year period bringing total multiplexing analyzer sales since inception to 7,897 as of March 31, 2011. Also included in system revenue were sales of 34 sample preparation systems. We experienced an increase of $1.0 million in system sales in comparison to the first quarter of 2010 due to the addition of these sample preparation systems.

Gross profit margin percentage for the three months ended March 31, 2011 increased to 71% from 68% for the comparable period in 2010. Gross profit increased to $30.7 million for the three months ended March 31, 2011, as compared to $22.8 million for the three months ended March 31, 2010. The increase in gross profit was attributable to the overall increase in revenue and an increase in gross profit margins due to the increased percentage of our higher margin revenue items. Consumables and royalties, two of our higher margin items, comprised $22.3 million, or 51%, of total revenue for the current quarter and $15.7 million, or 47%, of total revenue for the quarter ended March 31, 2010. The increase in total operating expense dollars from $19.0 million to $22.4 million, but decrease in total operating expenses as a percentage of total revenue from 57% for the first quarter of 2010 to 52% for the first quarter of 2011, illustrates the effect of the leverage inherent in our partnership and distribution business model. We anticipate continued fluctuation in gross profit margin and related gross profit primarily as a result of variability in consumable and system purchases and the seasonality effect inherent in our assay revenue. See additional discussions by segment below.

Revenue. Total revenue for our TSP segment increased by 27% to $31.9 million for the three months ended March 31, 2011 from $25.2 million for the comparable period in 2010. The increase in revenue was primarily attributable to an increase of $6.6 million in consumable and royalty revenue attributable to volume increases in bulk purchases from one of our partners and expansion of the active installed base coupled with continued menu expansion by our partners. These increases in consumable and royalty revenue are offset by a decrease of $0.2 million in system sales as a result of the mix of systems sold as the average selling price varies for each platform.

Consumable sales, comprised of microspheres and sheath fluid, increased 53% to $15.0 million for the three months ended March 31, 2011 from $9.8 million for the three months ended March 31, 2010. The increase in revenue was primarily attributable to volume increases in bulk purchases from one of our partners as a result of a change in the timing of their consumable needs due to a modification to their inventory control practices. In addition, this could create increased volatility in quarterly demand. A bulk purchase is defined as the purchase of $100,000 or more of consumables in a quarter. During the three months ended March 31, 2011, we had 19 bulk purchases of consumables totaling approximately $13.3 million as compared with 12 bulk purchases totaling approximately $7.6 million in the three months ended March 31, 2010. Partners who reported royalty bearing sales accounted for $12.5 million, or 83%, of total consumable sales for the three months ended March 31, 2011.

Royalty revenue, which results when our partners sell products or services incorporating our technology, increased by 24% to $7.3 million for the three months ended March 31, 2011 compared with $5.8 million for the three months ended March 31, 2010. We believe this is primarily the result of menu expansion and increased utilization of our partners assays on our technology. Our partners end user sales may reflect volatility from quarter to quarter and therefore, that same volatility is reflected in our reported royalty revenues on a quarterly basis. Additionally, we expect modest fluctuations in the number of commercial partners submitting royalties quarter to quarter based upon the varying contractual terms, consolidations among partners, differing reporting and payment requirements, and the addition of new partners. For the three months ended March 31, 2011 and 2010, we had 39 commercial partners submitting royalties. One of our partners reported royalties totaling approximately $2.5 million or 35% of total royalties for the current quarter compared to $1.8 million or 32% for the quarter ended March 31, 2010. Two other customers reported royalties totaling approximately $1.6 million or 22% of total TSP segment revenue (12% and 10%, respectively) for the current quarter. No other customer accounted for more than 10% of total royalty revenue for the current quarter. For comparative purposes, these same two customers accounted for approximately $1.2 million or 21% (11% and 10%, respectively) of total TSP royalty revenue in the first quarter of 2010. Total royalty bearing sales reported to us by our partners were over $93 million for the quarter ended March 31, 2011 compared with over $85 million for the quarter ended March 31, 2010.

Gross profit. The gross profit margin percentage (gross profit as a percentage of total revenue) for the TSP segment increased to 73% for the three months ended March 31, 2011 compared to 69% for the three months ended March 31, 2010. Gross profit for the TSP segment increased to $23.4 million for the three months ended March 31, 2011, as compared to $17.5 million for the three months ended March 31, 2010. The increase in gross profit was attributable to the overall increase in revenue and an increase in gross profit margins due to the increased percentage of our higher margin revenue items. Consumables and royalties, two of our higher margin items, comprised $22.2 million, or 70%, of TSP segment revenue for the current quarter and $15.6 million, or 62%, of TSP segment revenue for the quarter ended March 31, 2010.

Read the The complete Report



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