TECHNE Corporation Lowers Second Quarter Revenue and Earnings Expectations

MINNEAPOLIS, Jan. 2, 2001/PRNEWSWIRE/ -- TECHNE Corporation (NASDAQ: TECH) today announced that revenue and earnings for its second quarter ended December 31, 2000 will be below the Company’s previous expectations. Revenue for the second quarter is now expected to be in the range of $26.6 to $26.7 million, and fully diluted earnings per share is expected to be $0.15 to $0.16. The revised expectations for revenue and earnings are approximately 6% and 8% below previous expectations, respectively.

Actual results for the quarter ended December 31, 2000, and further details on the Company’s second quarter and year-to-date performance, will be reported on January 30, 2001.

Compared to the prior year second quarter, the Company’s revised expectations are for a revenue increase of approximately 6% and an earnings per share increase of about 18%. Due entirely to changes in foreign currency exchange rates, R&D Systems Europe’s net sales are expected to decrease about 1%. R&D Systems’ Hematology Division net sales are expected to increase about 14% and Biotechnology Division net sales increase should be about 9%. Exclusive of fluctuations in exchange rates, Techne’s second quarter revenue increase would have been about 10%.

“Our Company targets for a 12% to 15% revenue increase over the comparable period”, said Thomas Oland, Chairman and Chief Executive Officer. “This quarter’s results are unusual due to two primary factors, foreign currency exchange rates and our Biotechnology Division growth rate. Exchange rate variances, compared to last year, reduced our net sales by $1.0 million for the second quarter and $1.9 million for the first six months of fiscal year 2001. Our Biotechnology Division net sales increase of about 9% appears lower than usual, however, last year we had an exceptionally strong second quarter revenue growth of 24%. Nine percent on top of last year’s 24% revenue growth is better than it first appears. Adjusted for three large bulk orders that were shipped in the second quarter of last year, our core revenue growth rate this quarter was 12.4%.”

“Traditionally, our first and second quarter revenues are similar. We have a seasonal slowdown in our first quarter due to long summer vacations in Europe, Japan, and the US academic markets, and a second dip between Thanksgiving and New Years for the same reason. In some years, based upon the calendar and number of prime shipping days, our second quarter revenues are higher than those in the first quarter. In other years, the opposite is true. Unfortunately, this year the combination of exchange rate changes and the holiday season slowdown in our rate of revenue growth were greater than anticipated.”

“Finally, we usually experience a significant growth in revenues in our third quarter coming out of the holiday season and stimulated by the release of our new catalog. Our 2001 catalog was printed in December and over 53,000 were mailed to our US customers between Christmas and New Years. An additional 30,000 catalogs will be distributed to our European and Pacific Rim (including Japan) customers in early January. Accordingly, we expect history to repeat itself and are looking forward to establishing a new revenue record in our third quarter.”

Statements in this release and elsewhere which look forward in time involve risks and uncertainties which may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company’s actual results: the introduction and acceptance of new biotechnology and hematology products and technologies, the levels and particular directions of research by the Company’s customers, the impact of the growing number of producers of cytokine research products and related price competition, the retention of hematology OEM and proficiency survey business, the impact of currency exchange rate fluctuations, the outcome of litigation involving the Company and the cost and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships. For additional information concerning such factors, see the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission.

Techne Corporation has two operating subsidiaries: Research and Diagnostic Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe, Ltd. (R&D Systems Europe) of Abingdon, England. R&D Systems is a specialty manufacturer of biological products and R&D Systems Europe is a distributor of biotechnology products.