LIFE 3Q Earnings

Life Technologies announced today their quarterly earnings for the third quarter FY2010 ending September 30th. They reported third quarter GAAP revenue of $867million. Their EPS was $0.56, and FCF was $187million. On a Non-GAAP basis revenue was $869 million which was an increase of 8% from $805 reported in Q3 of 2009. Non-GAAP gross margins were 66.8% 20 bp lower than prior years due to impact from mix of sales. Non-GAAP operating margin however was 29% which was an increase of 170 bp from last year’s 3rd quarter. This improvement resulted from acquisition related synergies and cost controls implemented this year.

Cash flow from operating activities for the third quarter was $215 million. Third quarter capital expenditures were $28 million and resulting free cash flow was $187 million. The company ended the quarter with $537 million in cash and short-term investments, including $19 million held as restricted cash. Regional organic growth rates for the quarter compared to the same quarter of the prior year were as follows: the Americas increased 8 percent, Europe 5 percent, and Asia Pacific 7 percent. Japan declined 1 percent. Revenue from orders transacted through Life Technologies’ eCommerce channels grew 26% percent during the quarter. Over 50% of all transactions are processed using eCommerce platforms.

LIFE beat expected EPS by 9 cents $0.87 over $0.78 Non-GAAP forecasted. Management has risen their guidance for FY 2010 to $3.48-$3.52 from $3.35-$3.50. With LIFE beating estimates again this quarter, it extends their record of beating estimates I believe now for as far back as Q1 2009. Afterhours the stock has been up 2%. Historically LIFE has seen significant slowdown in business during 3Q yet these were not far off of Q2. With management increasing their outlook I believe we should be seeing upside in the stock as the market prices management’s new guidance in. Furthermore, LIFE has been producing mid-high single digit organic growth since 2007 and this quarter’s organic growth was 6% providing evidence that management is capable of continuing this growth which will result in an increase of equity value. I will update the model with this quarter’s results and post my new price target.



-Michael Arias

Life Technologies beats forecast

* Q1 ex-items $0.87/shr vs. forecast of $0.80/shr



* Q1 revenue $887 mln vs. forecast of $864 mln

* Shares rise 1 pct after-hours

NEW YORK, April 27 (Reuters) - Life Technologies Corp (LIFE.O) on Tuesday reported better-than-expected first-quarter earnings, on strong demand for its tools and equipment used in genetic testing and stem cell research.

The company earned $91.5 million, or 48 cents per share, compared with $15.6 million, or 9 cents per share, in the year-earlier period.

Excluding special items, Life Technologies said it earned 87 cents per share. Analysts on average expected 80 cents per share, according to Thomson Reuters I/B/E/S.

The company reported revenue of $887 million, well above Wall Street expectations of $864 million.

Life Technologies, created by the merger of Invitrogen and Applied Biosystems, said it expects full-year revenue to grow in the mid-to high-single digit percentage range. It predicted 2010 earnings, excluding special items, of $3.30 to $3.50 per share, in line with Wall Street expectations of $3.41 per share.

Shares of the company rose 1 percent in after-hours trading to $51.69 from their closing share price on Tuesday of $51.15 on the Nasdaq. (Reporting by Ransdell Pierson; Editing by Bernard Orr)

This is just a copy and paste job. I will review the numbers in detail tonight and repost an analysis of results and explain affects on my price target.


----- Michael Arias

Life Technologies business with SUNY Albany

Today I was finally able to speak to someone on campus about the molecular and academic research being done and whether or not UAlbany was purchasing products from Life Tech. I first spoke to James A. Large, senior assistant to the Chairpserson for Facilities and Fiscal Management for the Department of Biological Sciences. He knew that they did buy products from Life Tech but not specifically any monetary amounts. He referred me to Bernie O'Connor in the chem building. I spoke to Mr. O'Connor and he is the purchaser of all of the supplies that academic researchers need as well as faculty needs for classes.

What Mr. O'Connor told me was that a few times a year they would purchase supplies from Life Tech specifically Applied Biosystems. Each purchase was for very small materials, he showed me maybe half the size of his index finger that sold for over $1200 a pop, so this again paints the gross margins that Life Tech is able to achieve. One recent order was placed for $4200. These purchases he showed me were just in the last 6 months, and if you multiply this by the 90% of academic research facilities in the US that Life Technologies sells to you can understand the amount of money they are making, just alone from academic research customers in the US. He also told me that their websites were absolutely phenomenal, never had any problems with ordering products online and that they had overnight shipping. Furthermore, he mentioned that they basically had a monopoly on the forensics industry, because he really knew of no other company providing those forensic systems.

To conclude, I just want to reiterate that Life Technologies is a very profitable company and remains a very good investment. I maintain that a 12 month price target of $57.00 is a conservative one, and I will be adjusting the model for a potentially higher price target after 2010 Q1 earnings are released.

-------Michael Arias

Fitch rates Life Tech's new unsecured notes

http://www.marketwatch.com/story/fitch-rates-life-technologies-new-unsecured-notes-bbb-outlook-stable-2010-02-10?reflink=MW_news_stmp



-MA