SDIX Reports Second Quarter 2012 Results

  SDIX Reports Second Quarter 2012 Results

    Sequential Financial Performance Strengthening, GAT Progress Continues

             Conference Call to Review Results at 4:30PM ET Today

Business Wire

NEWARK, Del. -- August 08, 2012

SDIX (Nasdaq: SDIX), a leading provider of biotechnology-based products and
services for a broad range of life science, biotechnology, diagnostic and food
safety applications, today reported financial results for the quarter ended
June 30, 2012.

Revenue for the second quarter of 2012 was $5.5 million, decreasing from $6.1
million for the same period in 2011. The decrease was primarily related to the
timing of IVD sales and continued softness in the biopharmaceutical market.
Food Safety revenue continued to show improvement over the fourth quarter of
2011 which marked a recent low point for quarterly revenue as a result of
regulatory changes that started impacting the Company during the second
quarter of 2011. Second quarter Food Safety revenue increased 8.8% over first
quarter 2012 revenue, which in turn was 5% over fourth quarter 2011 revenue.
Year-to-date revenue for the six months ended June 30, 2012 was $11.1 million,
decreasing 12% from $12.6 million for the same period in 2011.

Net loss for the second quarter of 2012 was $1.5 million, compared to net loss
of $657,000 for the same period in 2011. Net loss for the second quarter of
2011 included income from discontinued operations of $438,000. Net loss for
the six months ended June 30, 2012 was $2.7 million, compared to a net loss of
$1.3 million for the same period in 2011. Net loss in 2011 included income
from discontinued operations of $826,000.

Francis M. DiNuzzo, President and CEO of SDIX, commented, “We were pleased to
see our Life Science customer orders at the highest level since the second
quarter of 2011. While we continue to experience spending challenges in our
Life Science end markets, efforts undertaken late in the first quarter to
refocus and reorganize our commercial team have played a key role in the
improved order performance. Notably, our Food Safety revenues continued to
strengthen, with sequential quarterly growth over the last two quarters,
driven primarily by success in our Listeria and Salmonella product offerings.
This is a trend we believe will continue in subsequent quarters.” Mr. DiNuzzo
continued, “We are excited about our continued progress with the Advanced
Genomic Antibody Technology™ platform development. Our R&D team continues to
meet milestones, including generating recent data that validates our ability
to utilize the technology to discover potentially novel monoclonal antibodies
against key therapeutic targets. Based on current market trends, this
technology could represent a large market opportunity for SDIX. Our next key
objective is to compile a full data package which we will use to engage
additional pharmaceutical and biotechnology companies in partnership
discussions. We are on target to complete the data package in the fourth
quarter of this year.”

Financials

Gross profit for the second quarter of 2012 was $3.0 million, as compared to
$3.5 million for the same period in 2011. Gross margins were 54% for the
second quarter of 2012, compared to 58% for the same period in 2011. This
decrease was primarily due to lower revenue, especially in Life Science which
has high fixed manufacturing costs. The gross margin in the second quarter
reflects improvement over the gross margin in both the first quarter of 2012
(after eliminating gross margin on licensing revenue) and the fourth quarter
of 2011 reflecting both increased Life Science product revenue and improved
operating efficiencies in the recently concluded quarter.

Second quarter 2012 operating expenses of $4.4 million were down $217,000,
compared to the second quarter of 2011. The overall decrease in SG&A expenses
offset the planned R&D investments in SDIX’s next generation GAT^TM platform,
which increased, as planned, to $976,000 from $842,000 in the second quarter
of 2011.

Operating loss for the second quarter was $1.5 million, compared with
operating loss of $1.1 million for the second quarter of 2011. R&D spending on
the Company’s advanced GAT platform was approximately $750,000 during the
second quarter of 2012, representing over 50% of the operating loss for the
quarter.

Loss from continuing operations for the second quarter was $1.5 million in
2012, as compared with $1.1 million in 2011. Net loss for the second quarter
of 2012 increased to $1.5 million, or $0.07 per diluted share, compared to net
loss of $657,000, or $0.03 per diluted share, for the same period in 2011.

Liquidity and Capital Resources

Investments in the GAT platform were a major factor in the adjusted EBITDA
loss of $935,000 for the quarter and $1.7 million for the six months ended
June 30, 2012. These were planned investments to develop this key technology
platform. Capital expenditures to expand the Company’s R&D laboratories and
operational capabilities were approximately $1.3 million for the six months
ended June 30, 2012. Based on the progress made on the GAT platform, SDIX
believes these investments in R&D and capital expenditures will begin to slow
as the year progresses. As of June 30, 2012, the Company had approximately
$7.5 million in available cash and total debt of $363,000.

Conference Call

The dial-in number for the live conference call at 4:30 PM ET today will be
877-407-8035 (201-689-8035 outside the U.S.). A live webcast of the conference
call will be available on the Company’s website, www.sdix.com, as well as
www.investorcalendar.com. For those who cannot listen to the live broadcast,
an audio replay of the call will be available on each of these websites for 90
days. Telephone replays of the call will be available from 7:30 p.m. ET on
August 8, 2012 through 11:59 p.m. ET on August 23, 2012. To listen to the
telephone replay, dial 877-660-6853 (201-612-7415 outside the U.S.) and enter
account number 286 and conference ID 398583.

About SDIX  (www.sdix.com)

SDIX is a biotechnology company with a core expertise in creating better
antigens, better antibodies and better assays for the pharmaceutical,
biotechnology and food safety markets. For over 20 years, SDIX has been a
leading immuno-solutions company, developing results-oriented and innovative
antibody-based solutions that enable customers to meet high performance
research, diagnostic and commercialization objectives.

In the life science market, SDIX’s technology and capabilities are being used
to help discover disease mechanisms, facilitate development of new drugs and
provide antibodies and assays for the diagnosis of disease. In the food safety
market, SDIX continues to expand its footprint as an international supplier of
rapid pathogen test technologies that enable more accurate and cost-effective
results.

This news release may contain forward-looking statements reflecting SDIX's
current expectations. When used in this press release, words like
“anticipate”, “could”, “enable”, “estimate”, “intend”, “expect”, “believe”,
“can”, “potential”, “will”, “should”, “project”, “plan” and similar
expressions as they relate to SDIX are intended to identify said
forward-looking statements. Investors are cautioned that all forward-looking
statements involve risks and uncertainties, which may cause actual results to
differ from those anticipated by SDIX at this time. Such risks and
uncertainties include, without limitation, changes in demand for products, the
application of our technologies to various uses, delays in product
development, delays in market acceptance of new products, retention of
customers and employees, adequate supply of raw materials, inability to obtain
or delays in obtaining fourth party, or required government approvals, the
ability to meet increased market demand, competition, protection of
intellectual property, non-infringement of intellectual property, seasonality,
and other factors more fully described in SDIX's public filings with the U.S.
Securities and Exchange Commission.

                                                               
STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
                                                                  
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
                                                                  
                                                  June 30,     December 31,
                                                  2012         2011
ASSETS
Current Assets :
Cash and cash equivalents                           $ 7,535       $  10,665
Restricted cash                                       100            300
Receivables, net                                      3,503          3,758
Inventories                                           2,720          2,142
Other current assets                                802         618     
Total current assets                                14,660      17,483  
                                                                  
Property and equipment, net                           4,951          3,890
Other assets                                          48             6
Deferred tax asset                                    36             36
Intangible assets, net                              1,150       1,207   
Total assets                                       $ 20,845    $  22,622  
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities :
Current portion of debt                             $ 146         $  300
Accounts payable                                      673            556
Accrued expenses                                      1,855          1,769
Deferred revenue                                    239         -       
Total current liabilities                           2,913       2,625   
                                                                  
Long-term debt                                      217         -       
                                                                  
Stockholders' Equity:
Preferred stock, $.01 par value, 20,920,648
shares authorized, no shares issued or                -              -
outstanding
Common stock, $.01 par value, 50,000,000 shares
authorized, 21,667,032 and 21,000,960 issued at       210            210
June 30, 2012 and December 31, 2011, respectively
Additional paid-in capital                            42,513         42,146
Treasury stock, 406,627 common shares at cost at      (555    )      (555    )
June 30, 2012 and December 31, 2011
Accumulated deficit                                   (24,190 )      (21,537 )
Cumulative translation adjustments                  (263    )    (267    )
Total stockholders' equity                          17,715      19,997  
Total liabilities and stockholders' equity         $ 20,845    $  22,622  
                                                                  


STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
                                                                
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
                                                                     
                 Three Months Ended June 30,        Six Months Ended June 30,
                 2012            2011              2012            2011
                                                                     
Revenues         $ 5,492          $ 6,057           $ 11,129         $ 12,615
                                                                     
Cost of sales      2,535            2,517             4,977            5,429
                                                                  
Gross profit      2,957          3,540           6,152          7,186      
                                                                     
Operating
expenses:
Research and       976              842               2,074            1,705
development
Selling,
general and       3,427          3,778           6,714          7,603      
administrative
Total
operating         4,403          4,620           8,788          9,308      
expenses
                                                                     
Operating loss     (1,446     )     (1,080     )      (2,636     )     (2,122     )
                                                                     
Interest          (10        )    (8         )     (17        )    (17        )
expense, net
                                                                     
Loss from
continuing         (1,456     )     (1,088     )      (2,653     )     (2,139     )
operations
before taxes
                                                                     
Income tax        -              7               -              2          
expense
                                                                     
Loss from
continuing         (1,456     )     (1,095     )      (2,653     )     (2,141     )
operations,
net of taxes
                                                                     
                                                                     
Income from
discontinued      -              438             -              826        
operations
                                                                     
                                                                     
Net loss         $ (1,456     )   $ (657       )    $ (2,653     )   $ (1,315     )
                                                                     
Basic loss per
share from       $ (0.07      )   $ (0.05      )    $ (0.13      )   $ (0.10      )
continuing
operations
Basic income
per share from    0.00           0.02            0.00           0.04       
discontinued
operations
                                                                     
Basic net loss   $ (0.07      )   $ (0.03      )    $ (0.13      )   $ (0.06      )
per share
                                                                     
Shares used in
computing         20,506,499     20,418,363      20,497,523     20,401,055 
basic net loss
per share
                                                                     
Diluted loss
per share from   $ (0.07      )   $ (0.05      )    $ (0.13      )   $ (0.10      )
continuing
operations
Diluted income
per share from    0.00           0.02            0.00           0.04       
discontinued
operations
                                                                     
Diluted net      $ (0.07      )   $ (0.03      )    $ (0.13      )   $ (0.06      )
loss per share
                                                                     
Shares used in
computing         20,506,499     20,418,363      20,497,523     20,401,055 
diluted net
loss per share
                                                                     


STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)

The information in this press release reports Adjusted EBITDA, which the
Company defines as net loss plus income from discontinued operations, income
tax expense, interest expense, depreciation and amortization expense, and
share-based compensation expense. The following table provides a
reconciliation of net loss calculated in accordance with GAAP to Adjusted
EBITDA. We are presenting Non-GAAP Adjusted EBITDA as we believe it is a
useful tool for investors to assess the operating performance of the business
without the effect of these items. This non-GAAP information should not be
construed as an alternative to the reported results determined in accordance
with GAAP.

                                                               
Adjusted EBITDA:
                       Three Months Ended June 30,   Six Months Ended June 30,
                       2012            2011         2012          2011
                                                                    
Net loss               $  (1,456  )     $  (657  )   $  (2,653  )   $ (1,315 )
Income from
discontinued              -                (438  )      -             (826   )
operations
Income tax expense        -                7            -             2
Interest expense          10               8            17            17
Depreciation and          285              306          545           613
amortization
Share-based               226              121          360           250
compensation
                                                                 
Adjusted EBITDA        $  (935    )     $  (653  )   $  (1,731  )   $ (1,259 )
                                                                    

Contact:

SDIX Company Contact:
Kevin Bratton, VP and CFO
302-456-6789
kbratton@sdix.com
or
Investor Relations Contact:
The Trout Group
Jessica Lloyd
646-378-2928
jlloyd@troutgroup.com
 
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