MOCON Fourth Quarter 2012 Revenue Increases 57 Percent

MINNEAPOLIS--()--MOCON, Inc. (NASDAQ: MOCO) today reported sales of $15.3 million for the fourth quarter ended December 31, 2012, an increase of 57 percent compared to $9.7 million in the same quarter in 2011. This increase was due primarily to the addition of $5.1 million in sales from Dansensor A/S (Dansensor), which was acquired on April 2, 2012, and is included in our Package Testing segment. The Industrial Analyzer segment sales increased 50 percent in the current quarter compared to the prior year’s fourth quarter as a result of strong demand for our gas analyzers, sensors and detectors. The Permeation segment recorded an 18 percent decrease in sales for the fourth quarter 2012 compared to the prior year due to an unusually strong quarter in 2011.

The net income for the fourth quarter was $830,000, or $0.15 per diluted share, compared to net income of $1.4 million or $0.25 per diluted share, in the fourth quarter of 2011. After giving effect to certain non-GAAP adjustments related to the acquisition of Dansensor and non-cash stock option expenses, the company’s earnings totaled $1,055,000, or $0.19 per diluted share, versus $0.26 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.

The gross margin of 56 percent in the fourth quarter was lower than the company’s historical levels. This was primarily due to a shift in product mix to a higher percentage of our package testing instruments which traditionally carries lower margins as compared to our permeation products. In addition, the cost of sales includes $202,000 of non-cash amortization relating to the amortization of intangible assets arising out of the Dansensor acquisition. Selling, general and administrative expenses and research and development expenses are higher in the fourth quarter 2012 compared to the same period last year primarily due to the addition of Dansensor’s results.

“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 the addition of Dansensor’s sales to our traditional headspace and leak detection product sales resulted in a very strong quarter for our Package Testing segment.”

Twelve-month sales totaled $49.9 million, an increase of 34 percent compared to $37.4 million during 2011. Net income and diluted earnings per share were $2.0 million and $0.35, respectively, for the year ended December 31, 2012, compared to $5.5 million and $0.98 for the same period in 2011. After giving effect to certain non-GAAP adjustments related to the acquisition of Dansensor and non-cash stock option expenses, the company’s earnings for the year ended December 31, 2012 totaled $3.7 million, or $0.66 per diluted share, versus $5.7 million, or $1.02 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 December 31, 2012 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 December 31, Years Ended December 31,
2012   2011 2012   2011
Sales
Products $ 14,538 $ 9,102 $ 47,055 $ 34,383
Consulting services 713   639 2,886 2,978
Total sales 15,251   9,741 49,941 37,361
 
Cost of sales
Products 6,384 3,268 20,893 12,284
Consulting services 390   377 1,714 1,609
Total cost of sales 6,774   3,645 22,607 13,893
 
Gross profit 8,477 6,096 27,334 23,468
 
Selling, general and administrative expenses 5,856 3,456 20,339 12,941
Research and development expenses 1,026   562 3,635 2,403
Operating income 1,595 2,078 3,360 8,124
 
Other income (expense), net (96 ) 37 20 80
Income before income taxes 1,499 2,115 3,380 8,204
 
Income tax expense 669   722 1,378 2,753
 
NET INCOME $ 830   $ 1,393 $ 2,002 $ 5,451
 
Net income per common share:
Basic $ 0.15 $ 0.26 $ 0.37 $ 1.02
Diluted $ 0.15 $ 0.25 $ 0.35 $ 0.98
 

Weighted average common shares outstanding:

 

Basic 5,506 5,426 5,477 5,343
Diluted 5,677 5,660 5,671 5,573
 
     
BALANCE SHEET DATA: (unaudited)
December 31, 2012 December 31, 2011
Assets:
Cash and marketable securities $ 7,911 $ 12,731
Accounts receivable, net 10,652 4,777
Inventories 6,345 4,480
Other current assets 2,005 1,369
Total current assets 26,913 23,357
Marketable securities, noncurrent 210 5,799
Property, plant and equipment, net 5,350 3,175
Investment in affiliated company 3,304 3,237
Goodwill, intangibles and other assets 21,443 4,137
 
Total assets $ 57,220 $ 39,705
 
Liabilities and Stockholders’ Equity:
Notes payable, current $ 7,894 $ 0
Other current liabilities 8,563 6,140
Total noncurrent liabilities 6,845 325
Stockholders’ equity 33,918 33,240
 
Total liabilities and stockholders’ equity $ 57,220 $ 39,705
 

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
December 31, December 31, December 31, December 31,
2012 2012 2011 2011
As Reported   Adjustments       Non-GAAP As Reported   Adjustments       Non-GAAP
Sales
Products $ 14,538 $ - $ 14,538 $ 9,102 $ - $ 9,102
Consulting services   713       -     713     639     -     639
Total sales   15,251       -     15,251     9,741     -     9,741
 
Cost of sales
Products 6,384 (202 ) (a) 6,182 3,268 - 3,268
Consulting services   390       -     390     377     -     377
Total cost of sales   6,774       (202 )   6,572     3,645     -     3,645
 
Gross profit 8,477 202 8,679 6,096 - 6,096
 
Selling, general and administrative expenses 5,856 (204 ) (a),(b),(c) 5,652 3,456 (97 ) (c) 3,359
Research and development expenses   1,026       -     1,026     562     -     562
Operating income 1,595 406 2,001 2,078 97 2,175
 
Other income (expense)   (96 )     -     (96 )   37     -     37
Income before income taxes 1,499 406 1,905 2,115 97 2,212
 
Income taxes   669       181   (d)   850     722     33   (d)   755
 
NET INCOME $ 830     $ 225   $ 1,055   $ 1,393   $ 64   $ 1,457
 
Net income per common share:
Basic $ 0.15 $ 0.04 $ 0.19 $ 0.26 $ 0.01 $ 0.27
Diluted $ 0.15 $ 0.04 $ 0.19 $ 0.25 $ 0.01 $ 0.26
 
Weighted average common shares:
Basic 5,506 5,506 5,426 5,426
Diluted 5,677 5,677 5,660 5,660
 
(a)     Represents the amortization of intangible assets associated with the Dansensor acquisition: Cost of sales - $202, SG&A - $70.
(b) Represents the acquisition costs associated with the purchase of Dansensor - $21. Additional acquisition costs are not expected in the future.
(c) Represents non-cash stock-based compensation expense - $113 in 2012; $97 in 2011.
(d) Represents the tax expense related to non-GAAP adjustments. The rate used is the effective rate for the quarter.
 
 
MOCON, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
                 
Twelve Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2012 2012 2011 2011
As Reported   Adjustments       Non-GAAP As Reported   Adjustments       Non-GAAP
Sales
Products $ 47,055 $ - $ 47,055 $ 34,383 $ - $ 34,383
Consulting services   2,886     -     2,886   2,978     -     2,978
Total sales   49,941     -     49,941   37,361     -     37,361
 
Cost of sales
Products 20,893 (1,464 ) (a),(b) 19,429 12,284 - 12,284
Consulting services   1,714     -     1,714   1,609     -     1,609
Total cost of sales   22,607     (1,464 )   21,143   13,893     -     13,893
 
Gross profit 27,334 1,464 28,798 23,468 - 23,468
 
Selling, general and administrative expenses 20,339 (1,484 ) (b),(c),(d) 18,855 12,941 (389 ) (d) 12,552
Research and development expenses   3,635     -     3,635   2,403     -     2,403
Operating income 3,360 2,948 6,308 8,124 389 8,513
 
Other income   20     -     20   80     -     80
Income before income taxes 3,380 2,948 6,328 8,204 389 8,593
 
Income taxes   1,378     1,202   (e)   2,580   2,753     131   (e)   2,884
 
NET INCOME $ 2,002   $ 1,746   $ 3,748 $ 5,451   $ 258   $ 5,709
 
Net income per common share:
Basic $ 0.37 $ 0.31 $ 0.68 $ 1.02 $ 0.05 $ 1.07
Diluted $ 0.35 $ 0.31 $ 0.66 $ 0.98 $ 0.04 $ 1.02
 
Weighted average common shares:
Basic 5,477 5,477 5,343 5,343
Diluted 5,671 5,671 5,573 5,573
 
(a)     Represents the revaluation of Dansensor inventory at the time of 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 - $599, SG&A - $207.
(c) Represents the acquisition costs associated with the purchase of Dansensor - $812. Additional acquisition costs are not expected in the future.
(d) Represents non-cash stock-based compensation expense - $465 in 2012; $389 in 2011.
(e) Represents the tax expense related to non-GAAP adjustments. The rate used is the effective rate for the year.

Contacts

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

Release Summary

MOCON, Inc. reported sales of $15.3 million for the fourth quarter 2012, an increase of 57 percent compared to the same quarter in 2011.

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Contacts

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