MOCON Third Quarter 2012 Revenue Increases 30 Percent

  MOCON Third Quarter 2012 Revenue Increases 30 Percent

Business Wire

MINNEAPOLIS -- November 07, 2012

MOCON, Inc. (NASDAQ: MOCO) today reported sales of $12.3 million for the third
quarter ended September 30, 2012, an increase of 30 percent compared to $9.5
million in the same quarter in 2011. This increase was due primarily to the
addition of $4.2 million in sales from PBI-Dansensor A/S, which was acquired
on April 2, 2012.

The net income for the current quarter was $493,000, or $0.09 per diluted
share, compared to net income of $1.5 million or $0.27 per diluted share, in
the third quarter of 2011. After giving effect to certain pro forma
adjustments related to the acquisition of Dansensor and non-cash stock option
expenses, the company’s earnings totaled $760,000, or $0.13 per diluted share,
versus $0.28 per diluted share in the comparable period of 2011. A full
reconciliation between GAAP and non-GAAP financial measures reflecting the
impact of certain discrete items relating to the Dansensor acquisition and
non-cash stock option expense is included with the company’s financial tables.

Gross margin of 55 percent in the quarter was lower than the company’s
historical levels. This was primarily due to the lower sales of permeation
products which historically carries the highest margin, as well as the
recognition of costs relating to the amortization of intangible assets arising
out of the Dansensor acquisition. Selling, general and administrative expenses
in the third quarter 2012 included costs incurred in connection with the
closing of Dansensor’s New Jersey office as well as higher salaries and
professional fees compared to the prior year.

“We are pleased to report that sales in our Industrial Analyzer and Package
Testing segments showed nice increases in the current quarter compared to the
prior year which more than offset a decline in our Permeation segment,” said
Robert L. Demorest, MOCON President and CEO. “The oil and gas exploration and
environmental monitoring markets were strong contributors to the growth in the
Industrial Analyzer segment in the current quarter, and our customers in the
Package Testing segment are now benefitting from a broader product selection
in the MAP (modified atmosphere packaging) area as we continue to integrate
Dansensor’s products with our existing instruments.”

Nine-month sales totaled $34.7 million, an increase of 26 percent compared to
$27.6 million during the first nine months of 2011. Net income and diluted
earnings per share were $1.2 million and $0.21, respectively, for the first
nine months of 2012, compared to $4.1 million and $0.73 for the same period in
2011. After giving effect to certain pro forma adjustments related to the
acquisition of Dansensor and non-cash stock option expenses, the company’s
earnings totaled $2.8 million, or $0.49 per diluted share, versus $4.3
million, or $0.77 per diluted share in the comparable period of 2011.

About MOCON

MOCON is a leading provider of detectors, instruments, systems and consulting
services to research laboratories, production facilities, and quality control
and safety departments in the medical, pharmaceutical, food and beverage,
packaging, environmental, oil and gas and other industries worldwide. See
www.mocon.com for more information.

This press release contains forward-looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include statements that can be
identified by words such as “will,” “may,” “expect,” “believe,” “anticipate,”
“estimate,” “continue,” or other similar expressions. All forward-looking
statements speak only as of the date of this press release. MOCON undertakes
no obligation to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise. In addition to the
risks and uncertainties of ordinary business operations and conditions in the
general economy and the markets in which the company competes, there are
important factors that could cause actual results to differ materially from
those anticipated by the forward-looking statements made in this press
release. These factors include, but are not limited to, the integration and
performance of Dansensor, competition and technological change, worldwide
economic and political stability, setbacks in product development programs,
order cancellations, dependence on certain key industries, and other factors
set forth in the company’s Annual Report on Form 10-K for the year ended
December31, 2011 and other documents MOCON files with or furnishes to the
Securities and Exchange Commission.

MOCON's shares are traded on the NASDAQ Global Market System under the symbol
MOCO.

MOCON is a registered trademark of MOCON, Inc.; other trademarks are those of
their respective holders.


MOCON, INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
(in Thousands, Except Per Share Data)

INCOME STATEMENT                                              
DATA: (unaudited)
                       Quarters Ended September 30,   Nine Months Ended
                                                      September 30,
                       2012            2011          2012         2011
Sales
Products               $  11,589        $  8,722      $  32,517     $  25,281
Consulting services       717             741          2,172         2,338
Total sales               12,306          9,463        34,689        27,619
                                                                       
Cost of sales
Products                  5,120            3,075         14,509        9,016
Consulting services       473             411          1,324         1,231
Total cost of sales       5,593           3,486        15,833        10,247
                                                                       
Gross profit              6,713            5,977         18,856        17,372
                                                                       
Selling, general and
administrative            5,104            3,131         14,482        9,485

expenses
Research and              844             597          2,610         1,841
development expenses
Operating income          765              2,249         1,764         6,046
                                                                       
Other income              (25     )        (6     )      117           42
(expense), net
Income before income      740              2,243         1,881         6,088
taxes
                                                                       
Income tax expense        247             726          709           2,030
                                                                       
NET INCOME             $  493          $  1,517     $  1,172      $  4,058
                                                                       
Net income per
common share:
Basic                  $  0.09          $  0.28       $  0.21       $  0.76
Diluted                $  0.09          $  0.27       $  0.21       $  0.73
                                                                       
Weighted average
common shares

outstanding:
Basic                     5,478            5,366         5,467         5,315
Diluted                   5,683            5,629         5,695         5,554



BALANCE SHEET DATA: (unaudited)                           
                                        September 30, 2012   December 31, 2011
Assets:
Cash and marketable securities          $      8,689         $      12,731
Accounts receivable, net                       8,033                4,777
Inventories                                    6,525                4,480
Other current assets                           1,828                1,369
Total current assets                           25,075               23,357
Marketable securities, noncurrent              457                  5,799
Property, plant and equipment, net             5,188                3,175
Investment in affiliated company               3,215                3,237
Goodwill, intangibles and other                21,115               4,137
assets
                                                             
Total assets                            $      55,050        $      39,705
                                                             
Liabilities and Stockholders’ Equity:
Notes payable, current                  $      6,999         $      0
Other current liabilities                      7,527                6,140
Total noncurrent liabilities                   7,807                325
Stockholders’ equity                           32,717               33,240
                                                             
Total liabilities and stockholders’     $      55,050        $      39,705
equity


Non-GAAP Discussion

The information discussed within this release includes financial results that
are in accordance with accounting principles generally accepted in the United
States (GAAP). In addition, certain non-GAAP financial measures have been
provided that exclude certain charges and expenses. The non-GAAP measures
should be read in conjunction with the corresponding GAAP measures and should
be considered in addition to, and not as an alternative or substitute for, the
measures prepared in accordance with GAAP. The non-GAAP financial measures are
provided in an effort to provide information that investors may deem relevant
to evaluate results from the company’s core business operations and to compare
the company’s performance with prior periods. The non-GAAP financial measures
identify and exclude the following discrete items: Dansensor
transaction-related expenses, amortization expenses and expenses associated
with stock-based compensation required under ASC 718.


MOCON, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
               
                 Three Months Ended                            Three Months Ended
                 September                     September       September                    September
                 30,                              30,             30,                             30,
                 2012                             2012            2011                            2011
                 As         Adjustments       Non-GAAP        As         Adjustments      Non-GAAP
                 Reported                                         Reported
Sales
Products         $  11,589   $   -                $  11,589       $  8,722    $    -              $  8,722
Consulting         717        -                  717            741         -                741
services
Total sales        12,306     -                  12,306         9,463       -                9,463
                                                                                                     
Cost of sales
Products            5,120        (201)     (a)       4,919           3,075         -                 3,075
Consulting         473        -                  473            411         -                411
services
Total cost of      5,593      (201)              5,392          3,486       -                3,486
sales
                                                                                                     
Gross profit        6,713        201                 6,914           5,977         -                 5,977
                                                                                                     
Selling,                                   (a),
general and         5,104        (200)     (b),      4,904           3,131         (97)     (c)      3,034
administrative                             (c)
expenses
Research and
development        844        -                  844            597         -                597
expenses
Operating           765          401                 1,166           2,249         97                2,346
income
                                                                                                     
Other income       (25)       -                  (25)           (6)         -                (6)
(expense), net
Income before       740          401                 1,141           2,243         97                2,340
income taxes
                                                                                                     
Income tax         247        134       (d)      381            726         31       (d)     757
expense
                                                                                                     
NET INCOME       $  493     $   267              $  760          $  1,517   $    66             $  1,583
                                                                                                     
Net income per
common share:
Basic            $  0.09     $   0.05             $  0.14         $  0.28     $    0.01           $  0.29
Diluted          $  0.09     $   0.04             $  0.13         $  0.27     $    0.01           $  0.28
                                                                                                     
Weighted
average common
shares:
Basic               5,478                            5,478           5,366                           5,366
Diluted             5,683                            5,683           5,629                           5,629
                                                                                                     

(a)    Represents the amortization of intangible assets associated with the
          Dansensor acquisition: Cost of sales - $201, SG&A - $69.
(b)       Represents the acquisition costs associated with the purchase of
          Dansensor - $14.
(c)       Represents non-cash stock-based compensation expense - $117 in 2012;
          $97 in 2011.
(d)       Represents the tax expense related to non-GAAP adjustments.



MOCON, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)

                Nine Months Ended                                    Nine Months Ended
                 September                            September       September                    September
                 30,                                     30,             30,                             30,
                 2012                                    2012            2011                            2011
                 As         Adjustments              Non-GAAP        As         Adjustments      Non-GAAP
                 Reported                                                Reported
Sales
Products         $  32,517   $  -                        $  32,517       $  25,281   $   -               $  25,281
Consulting         2,172     -                          2,172          2,338      -                 2,338
services
Total sales        34,689    -                          34,689         27,619     -                 27,619
                                                                                                            
Cost of sales
Products            14,509      (1,276)    (a),(b)          13,233          9,016        -                  9,016
Consulting         1,324     -                          1,324          1,231      -                 1,231
services
Total cost of      15,833    (1,276)                    14,557         10,247     -                 10,247
sales
                                                                                                            
Gross profit        18,856      1,276                       20,132          17,372       -                  17,372
                                                                                                            
Selling,
general and         14,482      (1,278)    (b),(c),(d)      13,204          9,485        (292)     (d)      9,193
administrative
expenses
Research and
development        2,610     -                          2,610          1,841      -                 1,841
expenses
Operating           1,764       2,554                       4,318           6,046        292                6,338
income
                                                                                                            
Other income,      117       -                          117            42         -                 42
net
Income before       1,881       2,554                       4,435           6,088        292                6,380
income taxes
                                                                                                            
Income tax         709       963        (e)             1,672          2,030      97        (e)     2,127
expense
                                                                                                            
NET INCOME       $  1,172   $  1,591                    $  2,763        $  4,058   $   195             $  4,253
                                                                                                            
Net income per
common share:
Basic            $  0.21     $  0.30                     $  0.51         $  0.76     $   0.04            $  0.80
Diluted          $  0.21     $  0.28                     $  0.49         $  0.73     $   0.04            $  0.77
                                                                                                            
Weighted
average common
shares:
Basic               5,467                                   5,467           5,315                           5,315
Diluted             5,695                                   5,695           5,554                           5,554


          Represents the revaluation of Dansensor inventory at the time of
(a)    acquisition - $865. This revaluation will not occur again in the
          future.
(b)       Represents the amortization of intangible assets associated with the
          Dansensor acquisition: Cost of sales - $411, SG&A - $137.
(c)       Represents the acquisition costs associated with the purchase of
          Dansensor - $790.
(d)       Represents non-cash stock-based compensation expense - $351 in 2012;
          $292 in 2011.
(e)       Represents the tax expense related to non-GAAP adjustments.

Contact:

MOCON, Inc.
Darrell Lee, CFO/VP, 763-493-6370
www.mocon.com
 
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