First quarter 2019 results:
- Revenue of
$846 million , an 8% increase compared to$782 million in the first quarter of 2018 - GAAP net income attributable to
Illumina stockholders for the quarter of$233 million , or$1.57 per diluted share, compared to$208 million , or$1.41 per diluted share, for the first quarter of 2018 - Non-GAAP net income attributable to
Illumina stockholders for the quarter of$237 million , or$1.60 per diluted share, compared to$214 million , or$1.45 per diluted share, for the first quarter of 2018 (see the table entitled “Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of these GAAP and non-GAAP financial measures) - Cash flow from operations of
$198 million compared to$255 million in the first quarter of 2018 - Free cash flow (cash flow from operations less capital expenditures) of
$142 million for the quarter compared to$165 million in the first quarter of 2018
Gross margin in the first quarter of 2019 was 69.1% compared to 68.8% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 70.2% for the first quarter of 2019 compared to 69.8% in the prior year period.
Research and development (R&D) expenses for the first quarter of 2019 were
Selling, general and administrative (SG&A) expenses for the first quarter of 2019 were
Depreciation and amortization expenses were
“This was a strong start to the year, with
Updates since our last earnings release:
- Launched the S Prime (SP) flow cell, enabling smaller batch sizes and lower output sequencing methods on the NovaSeq System
- Launched TruSight™ Oncology 500 as a Research Use Only product, empowering laboratories with comprehensive genomic profiling
- Authorized a share repurchase program to repurchase
$550 million of outstanding common stock and repurchased approximately$63 million of common stock in the first quarter - Welcomed
Susan E. Siegel to Illumina’s Board of Directors, adding leadership experience in personalized medicine and digital health - Accelerated Helix’s path to independence to allow Helix to address a broader opportunity in population and consumer genomics; as a result, Helix will be deconsolidated effective
April 25, 2019
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.
For fiscal 2019, the company continues to expect revenue growth in the range of 13% to 14%, and now expects GAAP earnings per diluted share attributable to Illumina stockholders of
Except for acquisition-related expenses incurred during the first quarter of 2019 which are reflected in our GAAP guidance, this guidance excludes any impact from the pending acquisition of Pacific Biosciences, which we expect to close in mid-2019.
Quarterly conference call information
The conference call will begin at
A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.
Statement regarding use of non-GAAP financial measures
The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include substantial charges such as amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance. Additionally, non-GAAP net income attributable to
The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.
Use of forward-looking statements
This release contains forward-looking statements that involve risks and uncertainties, including our financial outlook and guidance for fiscal 2019. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: (i) our expectations and beliefs regarding future conduct and growth of the business and the markets in which we operate; (ii) the volume, timing and mix of customer orders among our products and services; (iii) our expectations regarding the pending acquisition of Pacific Biosciences; (iv) our ability to manufacture robust instrumentation and consumables; (v) the success of products and services competitive with our own; (vi) challenges inherent in developing, manufacturing, and launching new products and services, including expanding or modifying manufacturing operations and reliance on third-party suppliers for critical components; (vii) the impact of recently launched or pre-announced products and services on existing products and services; (viii) our ability to further develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and to expand the markets for our technology platforms; (ix) our ability to successfully identify and integrate acquired technologies, products, or businesses; and (x) the application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments, together with other factors detailed in our filings with the
About
| Illumina, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (In millions) | |||||||||
| March 31, 2019 | December 30, 2018 | ||||||||
| ASSETS | (unaudited) | ||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 2,270 | $ | 1,144 | |||||
| Short-term investments | 1,345 | 2,368 | |||||||
| Accounts receivable, net | 457 | 514 | |||||||
| Inventory | 412 | 386 | |||||||
| Prepaid expenses and other current assets | 61 | 78 | |||||||
| Total current assets | 4,545 | 4,490 | |||||||
| Property and equipment, net | 852 | 1,075 | |||||||
| Operating lease right-of-use assets | 574 | — | |||||||
| Goodwill | 831 | 831 | |||||||
| Intangible assets, net | 175 | 185 | |||||||
| Deferred tax assets, net | 87 | 70 | |||||||
| Other assets | 326 | 308 | |||||||
| Total assets | $ | 7,390 | $ | 6,959 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 137 | $ | 184 | |||||
| Accrued liabilities | 473 | 513 | |||||||
| Long-term debt, current portion | 631 | 1,107 | |||||||
| Total current liabilities | 1,241 | 1,804 | |||||||
| Operating lease liabilities | 718 | — | |||||||
| Long-term debt | 1,112 | 890 | |||||||
| Other long-term liabilities | 212 | 359 | |||||||
| Redeemable noncontrolling interests | 37 | 61 | |||||||
| Stockholders’ equity | 4,070 | 3,845 | |||||||
| Total liabilities and stockholders’ equity | $ | 7,390 | $ | 6,959 | |||||
| Illumina, Inc. | ||||||||
| Condensed Consolidated Statements of Income | ||||||||
| (In millions, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, 2019 | April 1, 2018 | |||||||
| Revenue: | ||||||||
| Product revenue | $ | 667 | $ | 628 | ||||
| Service and other revenue | 179 | 154 | ||||||
| Total revenue | 846 | 782 | ||||||
| Cost of revenue: | ||||||||
| Cost of product revenue (a) | 182 | 174 | ||||||
| Cost of service and other revenue (a) | 71 | 62 | ||||||
| Amortization of acquired intangible assets | 9 | 8 | ||||||
| Total cost of revenue | 262 | 244 | ||||||
| Gross profit | 584 | 538 | ||||||
| Operating expense: | ||||||||
| Research and development (a) | 169 | 137 | ||||||
| Selling, general and administrative (a) | 211 | 183 | ||||||
| Total operating expense | 380 | 320 | ||||||
| Income from operations | 204 | 218 | ||||||
| Other income, net | 29 | 3 | ||||||
| Income before income taxes | 233 | 221 | ||||||
| Provision for income taxes | 9 | 24 | ||||||
| Consolidated net income | 224 | 197 | ||||||
| Add: Net loss attributable to noncontrolling interests | 9 | 11 | ||||||
| Net income attributable to Illumina stockholders | $ | 233 | $ | 208 | ||||
| Earnings per share attributable to Illumina stockholders: | ||||||||
| Basic | $ | 1.58 | $ | 1.42 | ||||
| Diluted | $ | 1.57 | $ | 1.41 | ||||
| Shares used in computing earnings per common share: | ||||||||
| Basic | 147 | 147 | ||||||
| Diluted | 149 | 148 | ||||||
| (a) Includes stock-based compensation expense for stock-based awards: | ||||||||
| Three Months Ended | ||||||||
| March 31, 2019 | April 1, 2018 | |||||||
| Cost of product revenue | $ | 5 | $ | 4 | ||||
| Cost of service and other revenue | 1 | 1 | ||||||
| Research and development | 18 | 15 | ||||||
| Selling, general and administrative | 27 | 28 | ||||||
| Stock-based compensation expense before taxes (1) | $ | 51 | $ | 48 | ||||
| (1) | Includes stock-based compensation of $1.1 million and $0.6 million for Helix for the three months ended March 31, 2019 and April 1, 2018, respectively. | |||||
| Illumina, Inc. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In millions) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, 2019 | April 1, 2018 | |||||||||
| Net cash provided by operating activities | $ | 198 | $ | 255 | ||||||
| Net cash provided by investing activities | 988 | 12 | ||||||||
| Net cash (used in) provided by financing activities | (60 | ) | 67 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | — | 1 | ||||||||
| Net increase in cash and cash equivalents | 1,126 | 335 | ||||||||
| Cash and cash equivalents, beginning of period | 1,144 | 1,225 | ||||||||
| Cash and cash equivalents, end of period | $ | 2,270 | $ | 1,560 | ||||||
| Calculation of free cash flow: | ||||||||||
| Net cash provided by operating activities | $ | 198 | $ | 255 | ||||||
| Purchases of property and equipment | (56 | ) | (90 | ) | ||||||
| Free cash flow (a) | $ | 142 | $ | 165 | ||||||
| (a) | Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by purchases of property and equipment. Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry. However, our calculation of free cash flow may not be comparable to similar measures used by other companies. | |
| Illumina, Inc. | ||||||||||
| Results of Operations - Non-GAAP | ||||||||||
| (In millions, except per share amounts) | ||||||||||
| (unaudited) | ||||||||||
| RECONCILIATION BETWEEN GAAP AND NON-GAAP EARNINGS PER SHARE ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: | ||||||||||
| Three Months Ended | ||||||||||
| March 31, 2019 | April 1, 2018 | |||||||||
| GAAP earnings per share attributable to Illumina stockholders - diluted | $ | 1.57 | $ | 1.41 | ||||||
| Costs of revenue (b) | 0.06 | 0.05 | ||||||||
| Selling, general and administrative costs (b) | 0.12 | 0.03 | ||||||||
| Other income, net (b) | (0.06 | ) | — | |||||||
| Incremental non-GAAP tax expense (c) | (0.03 | ) | (0.02 | ) | ||||||
| Income tax benefit (d) | (0.06 | ) | (0.02 | ) | ||||||
| Non-GAAP earnings per share attributable to Illumina stockholders - diluted (a) | $ | 1.60 | $ | 1.45 | ||||||
| RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: | ||||||||||
| GAAP net income attributable to Illumina stockholders | $ | 233 | $ | 208 | ||||||
| Costs of revenue (b) | 9 | 8 | ||||||||
| Selling, general and administrative costs (b) | 17 | 4 | ||||||||
| Other income, net (b) | (9 | ) | — | |||||||
| Incremental non-GAAP tax expense (c) | (4 | ) | (3 | ) | ||||||
| Income tax benefit (d) | (9 | ) | (3 | ) | ||||||
| Non-GAAP net income attributable to Illumina stockholders (a) | $ | 237 | $ | 214 | ||||||
| All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided. | ||
| (a) | Non-GAAP net income attributable to Illumina stockholders and diluted earnings per share attributable to Illumina stockholders exclude the effect of the pro forma adjustments as detailed above. Non-GAAP net income attributable to Illumina stockholders and diluted earnings per share attributable to Illumina stockholders are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future core operating performance. | |
| (b) | Refer to our “Itemized Reconciliation between GAAP and Non-GAAP Results of Operations as a Percent of Revenue,” below, for the components of these amounts. | |
| (c) | Incremental non-GAAP tax expense reflects the tax impact of the non-GAAP adjustments listed. | |
| (d) | Amounts represent tax deductions taken in excess of stock compensation cost. | |
| Illumina, Inc. | ||||||||||||||||||
| Results of Operations - Non-GAAP (continued) | ||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| March 31, 2019 | April 1, 2018 | |||||||||||||||||
| GAAP gross profit | $ | 584 | 69.1 | % | $ | 538 | 68.8 | % | ||||||||||
| Amortization of acquired intangible assets | 9 | 1.1 | % | 8 | 1.0 | % | ||||||||||||
| Non-GAAP gross profit (a) | $ | 593 | 70.2 | % | $ | 546 | 69.8 | % | ||||||||||
| GAAP selling, general and administrative expense | $ | 211 | 24.9 | % | $ | 183 | 23.5 | % | ||||||||||
| Amortization of acquired intangible assets | (1 | ) | — | (1 | ) | (0.1 | )% | |||||||||||
| Acquisition-related expenses (b) | (16 | ) | (1.9 | )% | — | — | ||||||||||||
| Restructuring (c) | — | — | (3 | ) | (0.5 | )% | ||||||||||||
| Non-GAAP selling, general and administrative expense | $ | 194 | 23.0 | % | $ | 179 | 22.9 | % | ||||||||||
| GAAP operating profit | $ | 204 | 24.2 | % | $ | 218 | 27.8 | % | ||||||||||
| Costs of revenue | 9 | 1.1 | % | 8 | 1.1 | % | ||||||||||||
| Selling, general and administrative costs | 17 | 1.9 | % | 4 | 0.6 | % | ||||||||||||
| Non-GAAP operating profit (a) | $ | 230 | 27.2 | % | $ | 230 | 29.5 | % | ||||||||||
| GAAP other income, net | $ | 29 | 3.4 | % | $ | 3 | 0.4 | % | ||||||||||
| Non-cash interest expense (d) | 14 | 1.7 | % | 8 | 1.0 | % | ||||||||||||
| Strategic investment related gain, net (e) | (8 | ) | (0.9 | )% | (8 | ) | (1.0 | )% | ||||||||||
| Gain on deconsolidation of GRAIL (f) | (15 | ) | (1.8 | )% | — | — | ||||||||||||
| Non-GAAP other income, net (a) | $ | 20 | 2.4 | % | $ | 3 | 0.4 | % | ||||||||||
| All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided. | ||
| (a) | Non-GAAP gross profit, included within non-GAAP operating profit, is a key measure of the effectiveness and efficiency of manufacturing processes, product mix and the average selling prices of our products and services. Non-GAAP operating profit, and non-GAAP other income, net, exclude the effects of the pro forma adjustments as detailed above. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing past and future operating performance. | |
| (b) | Amount consists of acquisition-related expenses related to the pending Pacific Biosciences acquisition. | |
| (c) | Amount consists primarily of employee costs related to restructuring that occurred in Q1 2018 and Q4 2017. | |
| (d) | Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash. | |
| (e) | Amount consists primarily of mark-to-market adjustments from our strategic investments. | |
| (f) | Amount represents additional gain resulting from the settlement of a contingency related to the deconsolidation of GRAIL in 2017. | |
Reconciliation of Non-GAAP Financial Guidance
Our future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect our financial results are stated above in this press release. More information on potential factors that could affect our financial results is included from time to time in the public reports filed with the
| Fiscal Year 2019 | |||
| GAAP diluted earnings per share attributable to Illumina stockholders (a) | $6.29 - $6.39 | ||
| Non-cash interest expense (b) | 0.33 | ||
| Amortization of acquired intangible assets | 0.24 | ||
| Acquisition-related expenses (c) | 0.11 | ||
| Gain on deconsolidation of GRAIL (d) | (0.10) | ||
| Strategic investment related gain, net (e) | (0.05) | ||
| Incremental non-GAAP tax expense (f) | (0.13) | ||
| Excess tax benefits from share-based compensation (g) | (0.06) | ||
| Non-GAAP diluted earnings per share attributable to Illumina stockholders (a) | $6.63 - $6.73 | ||
| (a) | Except for acquisition-related expenses incurred during the first quarter of 2019, this guidance excludes any impact from the pending acquisition of Pacific Biosciences, which we expect to close in mid-2019. | |
| (b) | Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash. | |
| (c) | Amount consists of acquisition-related expenses incurred during the first quarter of 2019 related to the pending Pacific Biosciences acquisition. | |
| (d) | Amount represents additional gain resulting from the settlement of a contingency related to the deconsolidation of GRAIL in 2017. | |
| (e) | Amount consists primarily of mark-to-market adjustments from our strategic investments. | |
| (f) | Incremental non-GAAP tax expense reflects the tax impact related to the non-GAAP adjustments listed. | |
| (g) | Amount represents tax deductions taken in excess of stock compensation cost. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190425005746/en/
Source:
Investors:
Jacquie Ross, CFA
858-882-2172
ir@illumina.com
Media:
Eric Endicott
858-882-6822
pr@illumina.com
