WEB NEWS Comments & Business Outlook
First Quarter 2012 Results
Net sales for the first quarter 2012 were $9,183,000, an increase of one percent compared to $9,074,000 for the first quarter 2011.
Operating income decreased 37 percent to $1,298,000 for the first quarter 2012 compared to $2,053,000 for the same period last year.
Net income for the first quarter 2012 was $821,000, a 38 percent decrease compared to $1,317,000 in the first quarter 2011. Diluted earnings per share were $0.14 in the first quarter 2012 compared to $0.24 for the same period in 2011.
Sales of our permeation instruments and services, which amounted to 57 percent of our consolidated sales in the first quarter 2012, decreased seven percent compared to the same period in 2011. This decrease resulted from lower domestic shipments of instruments which was partially offset by a slight increase in international orders. Sales of our gas analyzer instruments, sensors and detectors product group, which accounted for 21 percent of our consolidated sales in the first quarter 2012, increased 28 percent compared to the first quarter in 2011. Sales of OEM sensors showed the largest increase in this group due to the timing of scheduled customer releases, and instrument sales were stronger in the emission monitoring and oil and gas exploration markets. Sales of our packaging products and services, which accounted for 17 percent of our consolidated sales in the first quarter 2012, increased 25 percent compared to the same period in the prior year. This increase in shipments of headspace analyzers and leak detection instruments was realized in both our domestic and foreign markets. Overall, international sales accounted for 61 percent of total consolidated sales in the first quarter 2012 compared to 57 percent in the same period last year.
“We are pleased to report a solid quarter for shipments as well as maintaining favorable gross margins. Our international sales increased by eight percent despite the continued uncertainty in some European countries. We are excited that we completed the acquisition of Dansensor on April 2 and that we will be reporting results of our combined operations beginning in the second quarter this year. We incurred some significant transaction expenses this quarter related to the acquisition that negatively impacted our earnings, and we expect to incur a lesser amount of additional acquisition related costs in our second quarter,” commented Robert L. Demorest, MOCON President and CEO.
Acquisition Activity
MINNEAPOLIS--(BUSINESS WIRE acquire PBI-Dansensor A/S (Dansensor ) of Ringsted, Denmark, a privately-held leading manufacturer of specialized instrumentation for Modified Atmosphere Packaging (MAP) of foods, beverages, pharmaceuticals, and other perishable items. In 2011, Dansensor recorded sales of approximately $19.3 million.
The acquisition agreement contains customary closing conditions, and MOCON expects the closing to occur on or about April 2, 2012. Under the terms of the acquisition agreement, MOCON will pay an aggregate amount of approximately $20,000,000, two-thirds of which will be paid in cash at closing, and the remainder of which will be paid over four years pursuant to a seller note.
Although MOCON cannot finalize the purchase price allocation until the closing and thus cannot yet assess the exact expected impact on its 2012 GAAP earnings, MOCON anticipates that the transaction will be slightly dilutive to its GAAP earnings in 2012 due to, among other things, the expected level of transaction-related charges. The transaction is expected to be accretive to EPS on a GAAP basis in 2013 and thereafter.
“PBI-Dansensor is a company that we have been interested in for a long time,” commented Robert L. Demorest, MOCON’s Chairman, President, and CEO. “Their MAP product line dovetails nicely with our offerings, and their international distributor channels will enable many of MOCON’s new products to flow to major markets around the world without the necessity of setting up these distribution networks ourselves. Our two companies are very synergistic and an excellent fit with each other. Combining our two companies will allow us to be a strong competitor in the overall MAP marketplace, with many successful offerings to the large customer base of our two companies, as well as to the expected growth in this sector around the world. The acquisition will give us a 2011 combined revenue base of $56.7 million. We are excited to be a part of a company that is now well situated to take advantage of this growing marketplace with a full slate of product offerings.”
Dansensor designs, manufactures, sells, and services quality control and assurance equipment for businesses that utilize modified atmosphere packaging. Dansensor offers a complete range of gas mixers, analyzers, and leak detection equipment. Dansensor sells its products worldwide and the acquisition will significantly expand MOCON’s presence in Europe and particularly in the MAP technology market, a worldwide growing market. MAP has long been utilized to safely extend the shelf-life of these products by reducing the negative effects of oxidation, microbial growth, changes in color, taste, flavor and aroma without the use of artificial preservatives and other un-natural methods.
By acquiring Dansensor, MOCON will supplement its Package Testing line of products. Dansensor’s line of gas mixers fills a current gap in MOCON’s product line, while Dansensor’s line of on-line and off-line headspace analyzers and controls, and on-line and off-line package leak detectors, will add to MOCON’s existing product offerings. Their on-line headspace analyzers are considered to be the market leader globally. The unique technologies of both companies, combined with MOCON’s strong portfolio of intellectual property holdings, will contribute to the continuation of the state-of-the-art, leading edge products currently available from both companies.
Historically, most of MOCON’s sales of Package Testing products have been inside the US, while the majority of Dansensor’s have been outside of the US. The mix of products and market channels is complementary, and will lead to an excellent fit for the two companies.
To help finance the acquisition, MOCON has obtained a commitment letter from Wells Fargo Bank, N.A. for a combination of a secured revolving credit line and term debt totaling $8.5 million. MOCON does not anticipate that the transaction, or the financing through Wells Fargo, will negatively impact its ability to continue to pay quarterly dividends.
Comments & Business Outlook
Second Quarter 2011 Results
Net sales for the second quarter 2011 were $9,082,000, an increase of 24 percent compared to $7,351,000 for the second quarter 2010.
Net income for the second quarter 2011 was $1,224,000, a 12 percent increase compared to $1,092,000 in the second quarter 2010.
Diluted earnings per share were $0.22 in the second quarter 2011 compared to $0.20 for the same period in 2010.
We are pleased to report another strong quarter for the Company. It is encouraging to see our domestic sales increase by 35 percent for the quarter, led by a 91 percent increase in domestic permeation sales, our largest product line. Our continuing RD efforts are showing tangible results as we are close to releasing the GreenLight Model 930, which is the third product in the series that is targeted for the food safety markets. We feel that the financial markets have rewarded us for the recent strong quarters as the Companys stock price recently hit an all time high, commented Robert L. Demorest, MOCON President and CEO.
