Techne Corp. Reports Operating Results (10-Q)
Techne Corp. has a market cap of $2.23 billion; its shares were traded at around $60.3 with a P/E ratio of 20.6 and P/S ratio of 8.3. The dividend yield of Techne Corp. stocks is 1.8%. Techne Corp. had an annual average earning growth of 14.9% over the past 10 years. GuruFocus rated Techne Corp. the business predictability rank of 5-star.TECH is in the portfolios of Bill Frels of Mairs & Power Inc. , Ron Baron of Baron Funds, Jim Simons of Renaissance Technologies LLC, Columbia Wanger of Columbia Wanger Asset Management, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:Consolidated net sales increased 2.1% and consolidated net earnings decreased 1.5% for the quarter ended September 30, 2010 compared to the quarter ended September 30, 2009. Consolidated net sales and net earnings were negatively affected by changes in exchange rates from the prior year used to convert consolidated net sales and consolidated net earnings in foreign currencies into U.S. dollars. The unfavorable impact on consolidated net sales of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily British pounds sterling and euros) into U.S. dollars was $1.2 million for the quarter ended September 30, 2010. The unfavorable impact on consolidated net earnings of the change from the prior year in exchange rates used to convert foreign currency financial statements to U.S. dollars was $341,000 for the quarter ended September 30, 2010. In the first three months of fiscal 2011, the Company generated cash of $30.7 million from operating activities, paid cash dividends of $9.6 million, and paid $1.9 million for the repurchase of stock. At September 30, 2010 the Company had cash, cash equivalents and available-for-sale investments of $334 million compared to $310 million at June 30, 2010.
Consolidated gross margin for the quarter ended September 30, 2010 decreased $929,000 from the quarter ended September 30, 2009. Biotechnology gross margin increased $797,000 for the quarter ended September 30, 2010 as a result of increased net sales partially offset by a decrease in gross margin percentage. Fiscal 2011 first quarter R&D Europe gross margin decreased $1.8 million compared to the quarter ended September 30, 2009. Approximately $1.2 million of the decrease in R&D Europe gross margin was the result of changes in exchange rates used to translate sales in foreign currencies into U.S. dollars. Approximately 13.9% and 6.3% of consolidated net sales for the quarter ended September 30, 2010 were made in euro and British pound sterling, respectively. The average euro exchange rate declined 9.0% against the U.S. dollar for the quarter ended September 30, 2010 (:$1.31) compared to the same prior-year period (:$1.44). The average British pound sterling exchange rate declined 4.3% against the U.S. dollar for the quarter ended September 30, 2010 (£:$1.56) compared to the same prior-year period (£:$1.63). The remainder of the R&D Europe decrease in gross margin was the result of decreased net sales and changes in product mix.
Selling, general and administrative expenses for the quarter ended September 30, 2010 decreased $486,000 (6.0%) from the same prior-year period. The decrease in selling, general and administrative expense for the quarter ended September 30, 2010 resulted from lower legal expense of $108,000, lower profit sharing expense of $224,000 and the effect of the change in the exchange rate used to convert R&D Europe expenses from British pounds and euros into U.S. dollars of $134,000.
During the quarter ended September 30, 2010, the Company purchased $42.9 million and had sales or maturities of $41.6 million of available-for-sale investments. During the quarter ended September 30, 2009, the Company purchased $6.4 million and had sales or maturities of $5.3 million of available-for-sale investment. The Companys investment policy is to place excess cash in bonds and other investments with maturities of less than three years. The objective of this policy is to obtain the highest possible return while minimizing risk and keeping the funds accessible.
Cash of $867,000 and $22,000 was received during the quarters ended September 30, 2010 and 2009, respectively, from the exercise of stock options. The Company also recognized excess tax benefits from stock option exercises of $83,000 and $10,000 for the quarters ended September 30, 2010 and 2009, respectively.
During the first quarter of fiscal 2011 and 2010, the Company paid cash dividends of $9.6 million and $9.3 million, respectively, to all common shareholders. On October 28, 2010, the Company announced the payment of a $0.27 per share cash dividend. The dividend of approximately $10.0 million will be payable November 22, 2010 to all common shareholders of record on November 8, 2010.
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