News Column

BASi Reports Third Quarter Net Income of $.03 Per Share

August 14, 2014

WEST LAFAYETTE, Ind.--(BUSINESS WIRE)-- Bioanalytical Systems, Inc. (NASDAQ:BASI) today announced financial results for the third quarter and first nine months of fiscal 2014.

"BASi's financial performance for the first nine months of fiscal 2014 showed significant improvement over last year, as revenue increased 9.7% and net income before the change in fair value of the warrant liability increased 88%. EBITDA for this fiscal year's first nine months was a solid 11.5% of revenue versus 13.5% of revenue for the same period in fiscal 2013, reflecting the planned increase in our investments in selling and R&D as well as a change in the mix of business. Also, cash flow from operations for the first nine months of fiscal 2014 remained strong at $1,215,000 versus $1,418,000 for the same period of fiscal 2013, while we reduced our line of credit borrowings by $1,400,000 so far this year in addition to the $1,100,000 reduction in line of credit borrowings we achieved for the first nine months of fiscal 2013," said President & Chief Executive Officer Jacqueline Lemke.

"These results clearly demonstrate the benefits of our intense focus on three key areas: boosting operating efficiency, driving top line growth, and generating free cash flow. We will continue to take decisive actions and make targeted investments to improve our financial performance. Expanding our marketing efforts by building on BASi's inherent strengths and reputation for excellence, combined with our unrelenting effort to accelerate best practices and drive continuous improvement, has positioned BASi for higher profitable growth in the future."

Highlights of the third quarter included:

  • Establishment of a new $7,500,000 credit facility with The Huntington National Bank, consisting of a $5,500,000 term loan at LIBOR plus 325 basis points, and a $2,000,000 revolving line of credit at LIBOR plus 300 basis points. With substantially more favorable terms than the long-term debt and line of credit it replaces, this new credit facility lowers BASi's borrowing costs and enhances the Company's ability to implement its growth plan.
  • Naming of James Bourdage as Vice President of Bioanalytical Operations and Jeffrey Potrzebowski as Vice President of Finance and Chief Financial Officer. The appointment of these two senior executives represents a significant step forward in BASi's continuing program to build a management team with the depth, experience and dedication to take BASi to the next level and achieve its goals for growth and profitability.
  • Initial implementation of an electronic notebook system to improve laboratory efficiency and data management. This step positions BASi to not only meet but exceed customer expectations on a consistent basis, creating a significant competitive advantage.

    Ms. Lemke concluded, "While we remain focused on reducing our costs through productivity and place continued emphasis on generating free cash flow, we are also dedicated to the strategies that drive our top-line growth. Our commitment to our customers, shareholders, and employees has never been stronger. We are intensifying our efforts to improve our processes, embrace change, and wisely employ our stronger liquidity position. We will continue to take actions to make BASi a stronger company. We see many opportunities for growth, and we are pursuing them with confidence."

    Third Quarter Results

    For the three months ended June 30, 2014, revenue increased 7.7% to $6,032,000 compared to $5,600,000 for the third quarter of fiscal 2013. Net income for the three months ended June 30, 2014 amounted to $215,000, or $0.02 per diluted share, compared to net income for the third quarter of fiscal 2013 of $576,000, or $0.07 per diluted share. Net income for this fiscal third quarter was affected by a non-cash decrease in the fair value of the warrant liability of $66,000. Excluding this item, non-GAAP net income for the third quarter of fiscal 2014 was $149,000, or $0.02 per diluted share. For the third quarter of fiscal 2013, net income included a non-cash decrease in the fair value of the warrant liability of $318,000. Excluding this item, the non-GAAP net income for the third quarter of fiscal 2013 was $258,000, or $0.03 per diluted share.

    Service revenue for this fiscal third quarter increased 14.4% to $4,754,000 compared to $4,156,000 for the same period of the prior fiscal year. This increase was primarily due to higher toxicology revenue offset slightly by lower bioanalytical analysis revenue.

    Product revenue decreased 11.5% for the third quarter of fiscal 2014 to $1,278,000 compared to $1,444,000 for the third quarter of fiscal 2013.

    Gross profit decreased to $1,984,000, or 32.9% of revenue, in the third quarter of fiscal 2014 compared to $2,032,000, or 36.3% of revenue, during the comparable period last fiscal year, primarily reflecting the change in the mix of business between quarters.

    Operating expenses for the third quarter of fiscal 2014 increased to $1,728,000 compared to $1,594,000 during the third quarter fiscal 2013, primarily due to planned increases in selling and R&D expenses. Operating income declined to $256,000 in the third quarter of fiscal 2014 compared to operating income of $438,000 for the same period one year ago.

    EBITDA for the third quarter of fiscal 2014 amounted to $672,000 compared to EBITDA for the third quarter of fiscal 2013 of $896,000.

    Nine Months Results

    For the first nine months of fiscal 2014, revenue increased 9.7% to $18,164,000 compared to $16,560,000 for the first nine months of fiscal 2013. The Company reported a net loss for the first nine months of fiscal 2014 of $666,000, or $0.08 per basic and diluted share, compared to reported net income of $521,000, or $0.06 per diluted share, for the same period one year ago. The net loss for the first nine months of fiscal 2014 included an increase in the fair value of the warrant liability of $1,095,000. Excluding this charge, non-GAAP net income for the first nine months of fiscal 2014 was $429,000, or $0.05 per basic and diluted share. Net income for the first nine months of fiscal 2013 included a decrease in the fair value of the warrant liability of $293,000. Excluding this item, non-GAAP net income was $228,000, or $0.03 per diluted share.

    Gross profit for the first nine months of fiscal 2014 increased 19.3% to $6,141,000, or 33.8% of revenue, compared to $5,146,000, or 31.1% of revenue, for the same period of the prior fiscal year. Operating income for the first nine months of fiscal 2014 increased 12.4% to $823,000 compared to $732,000 for the first nine months of fiscal 2013.

    EBITDA for the first nine months of fiscal 2014 was $2,089,000 compared to EBITDA for the first nine months of fiscal 2013 of $2,238,000.

    Earnings Conference Call

    BASi has scheduled a conference call at 11:00 a.m. EDT this morning to discuss its results for the quarter. To participate in the call, dial 866.713.8563, passcode #24051454 at least five minutes before the start of the call. A simultaneous webcast may be accessed from the Investors tab at www.BASInc.com. The webcast will be available for replay after 2:00 p.m. EDT at this same Internet address. For a telephone replay, dial 888.286.8010, passcode #60437922 after 2:00 p.m. EDT.

    Non-GAAP to GAAP Reconciliation

    This press release contains financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). The non-GAAP financial measures are net income and net income per basic and diluted share, excluding the income or expense of the change in the warrant liability, and EBITDA, in each case for the third quarter and for the first three quarters of fiscal 2014 and 2013. EBITDA refers to financial performance measures that exclude certain income statement line items, such as interest, taxes, depreciation, and amortization. EBITDA may also exclude certain non-cash or one-time expenses, such as stock-based compensation and the income or expense from the change in the warrant liability.

    The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management, however, believes that these non-GAAP financial measures, when used in conjunction with the results presented in accordance with GAAP, may provide a more complete understanding of the Company's results and may facilitate a fuller analysis of the Company's results, particularly in evaluating performance from one period to another.

    Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of results and to illustrate the results giving effect to the non-GAAP adjustments shown in the reconciliation. Management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

    About Bioanalytical Systems, Inc.

    BASi is a pharmaceutical development company providing contract research services and monitoring instruments to the world's leading drug development companies and medical research organizations. The company focuses on developing innovative services and products that increase efficiency and reduce the cost of taking a new drug to market. Visit www.BASinc.com for more about BASi.

    This release contains forward-looking statements that are subject to risks and uncertainties including, but not limited to, risks and uncertainties related to changes in the market and demand for our products and services, the development, marketing and sales of products and services, changes in technology, industry standards and regulatory standards, and various market and operating risks detailed in the Company's filings with the Securities and Exchange Commission.BASi assumes no obligation to update any forward-looking statement. Actual results may vary, and could differ materially, from those anticipated, estimated, projected or expected in these forward-looking statements for a number of reasons, including, among others, the risk factors disclosed in the Company's most recent filing with the Securities and Exchange Commission.

    (SEE BELOW FOR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS)

     
     
    BIOANALYTICAL SYSTEMS, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
    (In thousands, except per share amounts)

    (Unaudited)

     
     
          Three Months Ended       Nine Months Ended
    June 30, June 30,
    2014       2013 2014       2013
     
    Service revenue $ 4,754 $ 4,156 $ 14,196 $ 12,493
    Product revenue   1,278     1,444     3,968     4,067  
    Total revenue 6,032 5,600 18,164 16,560
     
    Cost of service revenue 3,368 2,897 10,021 9,509
    Cost of product revenue   680     671     2,002     1,905  
    Total cost of revenue 4,048 3,568 12,023 11,414
     
    Gross profit 1,984 2,032 6,141 5,146
     
    Operating expenses:
    Selling 399 317 1,315 979
    Research and development 167 124 480 332
    General and administrative   1,162     1,153     3,523     3,103  
    Total operating expenses 1,728 1,594 5,318 4,414
     
    Operating income (loss) 256 438 823 732
     
    Interest expense (123 ) (163 ) (408 ) (492 )
    Change in fair value of warrant liability decrease (increase) 66 318 (1,095 ) 293
    Other income   1     1     6     6  
    Net Income (loss) before income taxes 200 594 (674 ) 539
     
    Income tax (benefit) expense   (15 )   18     (8 )   18  
    Net Income (loss) $ 215 $ 576 $ (666 ) $ 521
     
    Other comprehensive income (loss):
    Fair value adjustment of interest rate swap (41 ) -- (41 ) --
    Foreign currency translation adjustment   (31 )   11     (65 )   66  
    Comprehensive Income (loss) $ 143   $ 587   $ (772 ) $ 587  
     
    Basic net income (loss) per share $ 0.03 $ 0.08 $ (0.08 ) $ 0.07
    Diluted net income (loss) per share $ 0.02 $ 0.07 $ (0.08 ) $ 0.06
     
    Weighted common shares outstanding:
    Basic 8,068 7,673 7,922 7,656

    Diluted

    9,625 8,400 7,922 8,353
     
     
    BIOANALYTICAL SYSTEMS, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except share amounts)
               
     
    Jun. 30, Sep. 30,
    2014 2013
    Assets (Unaudited)
     
    Current assets:
    Cash and cash equivalents $ 736 $ 1,304
    Accounts receivable
    Trade, net 2,646 3, 621
    Unbilled revenues and other 1,303 691
    Inventories 1,535 1,379
    Refundable income taxes 11 --
    Prepaid expenses   892     238  
    Total current assets 7,123 7,233
     
    Property and equipment, net 16,180 16,913
    Goodwill 1,383 1,383
    Debt issue costs 129 21
    Other assets   41     47  
    Total assets $ 24,856   $ 25,597  
     
     
    Liabilities and shareholders’ equity
     
    Current liabilities:
    Accounts payable $ 3,369 $ 3,584
    Accrued expenses 1,332 1,689
    Customer advances 3,322 2,815
    Income tax accruals 16 30
    Revolving line of credit -- 1,415
    Fair value of warrant liability 852 612
    Current portion of capital lease obligation 288 268
    Current portion of long-term debt   786     613  
    Total current liabilities 9,965 11,026
     
    Capital lease obligation, less current portion 363 471
    Fair value of interest rate swap 41 --
    Long-term debt, less current portion   4,649     4,641  
    Total liabilities 15,019 16,138
     
    Commitments and contingencies
     
    Shareholders’ equity:
    Preferred shares, authorized 1,000,000 shares, no par value: 1,185
    Series A shares at $1,000 stated value issued and outstanding
    at March 31, 2014 and 1,335 at September 30, 2013 1,185 1,335
    Common shares, no par value: authorized 19,000,000 shares; 8,072,738 issued
    and outstanding at March 31, 2014 and 7,703,891 at September 30, 2013 1,980 1,887
    Additional paid-in capital 21,133 19,925
    Accumulated deficit (14,386 ) (13,720 )
    Accumulated other comprehensive income   (74 )   32  
    Total shareholders’ equity   9,838     9,459  
    Total liabilities and shareholders’ equity $ 24,856   $ 25,597  
     
     
    BIOANALYTICAL SYSTEMS, INC.
    RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
    (In thousands) (Unaudited)
     
     
          Three Months Ended       Nine Months Ended
    June 30, June 30,
    2014       2013 2014       2013
     
    GAAP Net income (loss) $ 215 $ 576 $ (666 ) $ 521
     
    Add back: Interest expense 123 163 408 492
    Income taxes (15 ) 18 (8 ) 18
    Depreciation and amortization 396 405 1,195 1313
    Change in fair value of warrant liability (66 ) (318 ) 1,095 (293 )
    Stock option expense   19     52     65     187  
     
    EBITDA $ 672   $ 896   $ 2,089   $ 2,238  
     

    EBITDA - Earnings before interest, taxes, depreciation, amortization, stock option expenses and the change in the fair value of warrant liability.

     
     
     
     
    Reconciliation of GAAP to NON-GAAP
    Basic and Diluted Net Income (Loss) Per Share
     
     
    Three Months Ended Nine Months Ended
    June 30, June 30,
    2014 2013 2014 2013
     
    GAAP Net Income (loss) $ 215 $ 576 $ (666 ) $ 521
     
    Adjust for: Change in fair value of warrant liability
    (Decrease) Increase   (66 )   (318 )   1,095     (293 )
     
    Non-GAAP Net Income (loss)   149     258     429     228  
     
    GAAP Basic Net Income (loss) per share $ 0.03 $ 0.08 $ (0.08 ) $ 0.07
     
    Adjust for:
    Change in fair value of warrant
    liability - Increase (Decrease)   (0.01 )   (0.04 )   0.13     (0.04 )
     
    Non-GAAP Basic Net Income (loss) per share   0.02     0.04     0.05     0.03  
     
    GAAP Diluted Net Income (loss) per share 0.02 0.07 (0.08 ) 0.06
     
    Adjust for:
    Change in fair value of warrant
    liability - Increase (Decrease)   --     (0.04 )   0.13     (0.03 )
     
    Non-GAAP Diluted Net Income (loss) per share $ 0.02   $ 0.03   $ 0.05   $ 0.03  
     
    Weighted average common shares outstanding
    Basic 8,068 7,673 7,922 7,656
    Diluted 9,625 8,400 7,922 8,353





    Company Contact:

    Bioanalytical Systems, Inc.

    Jeffrey Potrzebowski

    Chief Financial Officer &

    Vice President of Finance

    Phone: 765-497-8409

    jpotrzebowski@BASinc.com

    or

    Agency Contact:

    Berkman Associates

    Neil Berkman

    Phone: 310-477-3118

    info@berkmanassociates.com

    Source: Bioanalytical Systems, Inc.


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