Business context and reporting period
This is Fluidigm Corporation’s unaudited Form 10-Q for the quarter ended March 31, 2013, comparing the first quarter of 2013 with the first quarter of 2012. The filing describes its microfluidic instruments and consumables for genomics and related life-science applications. The request names STANDARD BIOTOOLS INC.; the filing itself is for Fluidigm Corporation.
Financial results and liquidity
Amounts are in millions of U.S. dollars except per-share data.
| Metric | Q1 2013 | Q1 2012 |
|---|---|---|
| Total revenue | $14.535 | $10.945 |
| Product revenue | $14.254 | $10.756 |
| Product margin | 70% | 67% |
| Operating loss | $(5.067) | $(6.283) |
| Net loss | $(3.551) | $(6.690) |
| Net loss per share, diluted | $(0.14) | $(0.33) |
| Cash used in operating activities | $(0.884) | $(6.643) |
- Product revenue rose 33%; instrument revenue increased 34% and consumables revenue 31%. Management attributed growth to instrument sales, a larger installed base, and higher consumables sales.
- Product margin improved three percentage points, primarily from sales mix, higher assays and reagent volume, and lower warranty costs; higher service and freight costs partly offset the improvement.
- SG&A increased 19% to $11.146 million, largely from compensation and expanded commercial capabilities. R&D was $4.197 million, down 2%.
- Net loss improvement included a $1.777 million gain on the Verinata investment sale and lower interest expense following repayment of long-term debt in 2012. Other expense was $0.213 million, mainly foreign-exchange losses.
- At March 31, cash and cash equivalents were $61.815 million and investments totaled approximately $25.053 million; working capital was $87.0 million. Total liabilities were $13.113 million. No long-term debt or line-of-credit borrowing was outstanding.
- Operating cash use narrowed year over year, helped by customer collections and lower cash use for working capital. Cash increased $3.166 million during the quarter.
Material changes, outlook, risks and unusual items
- Revenue growth was broad across product geographies. International customers accounted for 51% of product revenue, compared with 46% in Q1 2012; the five largest customers together represented 21% of total revenue in both periods.
- Fluidigm received $3.117 million from selling its Verinata stake and recognized a $1.777 million gain. It could receive up to $3.2 million more if future acquisition milestones are achieved.
- Management said existing cash, cash equivalents and investments should meet working-capital and capital-expenditure needs for at least 18 months. It anticipated higher 2013 capital expenditures and expected SG&A to rise as the business and global commercial operations expand. Management also expected instrument and consumable unit sales to increase over time, while noting selling prices may fluctuate. No specific revenue or earnings guidance was provided.
- A bank credit facility allows borrowing up to $10 million, subject to covenants and restrictions; none was drawn at quarter-end. The company was in compliance with applicable covenants.
- An April 9, 2013 headquarters lease amendment expands office and laboratory space through April 2020, with total minimum payments of $15.927 million and specified tenant-improvement allowances.
- Key disclosed risks include continued losses and possible negative operating cash flow; uncertain adoption and development of emerging markets; quarterly sales volatility; competition; reliance on suppliers and Singapore manufacturing; foreign-exchange exposure; and possible future financing needs. The filing says cash adequacy depends on operating performance and capital spending.
- The company’s NanoString false-advertising and unfair-competition lawsuit was in early written discovery. A separate intellectual-property-related loss contingency of up to $1 million was considered possible but not probable, and no amount was accrued.
Important facts for investors to verify
- Whether revenue growth and the 37% year-over-year increase in the installed instrument base translate into sustained consumables demand and improved margins.
- Whether operating cash use remains controlled as SG&A, R&D and capital expenditures increase, and whether management’s 18-month liquidity assessment remains valid.
- Whether the potential Verinata milestone proceeds are achieved, and the status and possible costs or outcomes of the NanoString litigation and intellectual-property contingency.
- Whether manufacturing capacity, supplier availability, and international operations can support growth without disrupting shipments or increasing costs.
- Reconcile the requested company name with the filing: this document reports Fluidigm Corporation, not Standard Biotools Inc.