- Posts Diluted EPS of $0.38, representing growth of 72.7% Year-over-Year -

- Gross Margin Improves 210bps Year-over-Year to Reach 41.7% -

- Provides Full Year 2009 Financial Outlook -

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Nov. 9, 2009-- Talecris Biotherapeutics Holdings Corp. (“Talecris”) (Nasdaq: TLCR) today announced its financial results for the three and nine months ended September 30, 2009 and filed its third quarter Form 10-Q today with the U.S. Securities and Exchange Commission (SEC). Third quarter 2009 net revenue increased by 12.9% to $395.7 million from $350.5 million in the third quarter of 2008. Diluted earnings per share were $0.38 in the third quarter of 2009, which is a 72.7% increase over diluted earnings per share of $0.22 for the third quarter of 2008. Total diluted shares outstanding were 93,911,201 for the third quarter of 2009 compared to diluted shares outstanding of 92,097,404 for the third quarter of 2008.

For the first nine months of 2009, Talecris’ net revenue increased by 17.5% to $1.14 billion from $972.9 million for the first nine months of 2008. Diluted EPS for the first nine months of 2009 were $1.62 compared to $0.43 for the first nine months of 2008. Total diluted shares outstanding were 93,919,553 for the first nine months of 2009 compared to diluted shares outstanding of 91,526,581 for the first nine months of 2008.

“Our third quarter results reflect the continued demand for Gamunex, our brand of IGIV, as well our success in building a vertically integrated plasma supply chain to ensure a continual supply of Gamunex,” said Lawrence D. Stern, Talecris’ chairman and chief executive officer. “Additionally, we anticipate that we will continue to benefit from our Gamunex indication to treat chronic inflammatory demyelinating polyneuropathy or CIDP, and we’re expanding our sales force to specifically target neurologists. Our pipeline of products continues to evolve with the FDA approval in October of Prolastin-C, a more concentrated version of our Prolastin A1PI therapy for the treatment of genetic emphysema. To further facilitate our continued growth, we just completed a successful $1.1 billion initial public offering and subsequent $600 million debt refinancing last month that will provide us with a flexible, long-term capital structure that permits us to move forward with our capital expansion plans.”

Talecris Form 10-Q is available on the SEC’s website at www.sec.gov and on Talecris’ website at http://ir.talecris.com

Discussion of Third Quarter Financial and Operating Results

Net revenue for the 2009 third quarter was $395.7 million compared to $350.5 million in the third quarter of 2008, representing an increase of $45.2 million or 12.9%. The increase was led by a $25.8 million increase in Gamunex^®, Immune Globulin Intravenous (Human), 10% Caprylate/Chromatography Purified (IGIV), revenue which consisted of $19.2 million in higher volumes and $6.6 million in favorable pricing. Our 2009 third quarter revenues also benefited from increased sales of Prolastin^® Alpha-1 Proteinase Inhibitor (Human) (A1PI) and albumin as well as other product net revenue largely due to higher Koate^® DVI Factor VIII (Human) and intermediate product sales.

Gross profit was $165.1 million for the 2009 third quarter compared to $138.6 million in the third quarter of 2008, representing an increase of $26.5 million or 19.1%. This increase is primarily due to the revenue increases discussed above in addition to lower unabsorbed infrastructure and start-up costs related to Talecris Plasma Resources, Inc. (TPR), the Talecris plasma collection platform, partially offset by $6.3 million in higher inventory impairment provisions. Unabsorbed TPR infrastructure and start-up costs declined by $17.0 million or 66.1% to $8.7 million for the 2009 third quarter compared to $25.7 million for the 2008 third quarter. Gross margin was 41.7% during the third quarter of 2009, an increase of 210 basis points from the gross margin of 39.6% for the 2008 third quarter.

Operating expenses for 2009 third quarter of $95.7 million represented a $14.0 million increase over the $81.7 million incurred during the prior year period. This increase was largely due to accelerated vesting of stock compensation as well as increased sales and marketing expenses relating to expansion of the sales and marketing activities for the Gamunex IGIV CIDP indication and Prolastin A1PI patient identification. These increases were partially offset by the impact of favorable foreign exchange.

Talecris realized operating income of $69.4 million during the 2009 third quarter, which represents a 21.8% increase over the $57.0 million in operating income reported during the third quarter of 2008. Operating margin was 17.5% in the 2009 third quarter compared to 16.3% in the 2008 third quarter, an increase of 120 basis points.

Net interest expense was $19.6 million in the 2009 third quarter compared to $24.4 million in the prior year’s period, a decrease of $4.8 million primarily due to lower weighted average interest rates. Income tax expense during the third quarter of 2009 was $14.1 million compared to $12.1 million in the third quarter of 2008.

Net income was $35.8 million for the 2009 third quarter. This represented a 74.2% increase over the $20.6 million reported during the third quarter of 2008.

Diluted EPS for the 2009 third quarter was $0.38 compared to $0.22 for the 2008 third quarter. Total diluted shares outstanding were 93,911,201 for the 2009 third quarter and 92,097,404 for the 2008 third quarter.

The 2009 third quarter EBITDA increased $14.3 million or 22.8% to $77.0 million from $62.7 million in the 2008 third quarter. Adjusted EBITDA rose to $102.5 million in the 2009 third quarter which represented an increase of $33.9 million or 49.5% from the 2008 third quarter adjusted EBITDA of $68.6 million.

Discussion of Nine Month Financial and Operational Results

Net revenue was $1.14 billion for the first nine months of 2009 compared to $972.9 million during the first nine months of 2008, representing an increase of $170.2 million or 17.5%. The increase was mainly due to $146.8 million in higher Gamunex IGIV revenue, consisting of $116.1 million in higher volumes and $30.7 million in improved pricing, net of $2.5 million in unfavorable foreign exchange. The first nine months of 2009 also reflected $20.1 million in higher albumin sales and $18.3 million in higher other product net revenue primarily resulting from higher intermediate product and Koate DVI Factor VIII (human) sales. These were partially offset by a $5.2 million reduction in Prolastin A1PI revenue mainly as a result of foreign exchange losses of $8.9 million.

Gross profit realized during the first nine months of 2009 totaled $479.2 million compared to $344.5 million during the first nine months of 2008, an increase of 39.1%. The $134.7 million increase was primarily driven by higher revenue, reduced unabsorbed TPR infrastructure and start-up costs, and $12.7 million in lower inventory impairment provisions. Unabsorbed TPR infrastructure and start-up costs decreased $43.6 million or 56.1% to $34.1 million in the first nine months of 2009 compared to $77.7 million for the first nine months of 2008. Gross margin was 41.9% during the first nine months of 2009, an increase of 650 basis points from the gross margin of 35.4% for first nine months of 2008.

Operating expenses totaled $265.6 million for the first nine months of 2009, which is a 28.2% increase over the $207.3 million incurred during the first nine months of 2008. The $58.3 million increase was primarily due to $11.8 million in accelerated vesting of stock-based compensation, $8.6 million associated with the terminated CSL merger, higher sales and marketing expenses resulting from the expansion of the sales force and marketing activities for the Gamunex IGIV CIDP and Prolastin A1PI patient identification as well as increased R&D spending.

Operating income during the first nine months of 2009 was $213.6 million compared to $137.3 million during the first nine months of 2008, representing an increase of $76.3 million or 55.6%. Operating margin was 18.7% in the first nine months of 2009 compared to 14.1% in the first nine months of 2008, an increase of 460 basis points.

Net interest expense was $61.4 million in the first nine months of 2009 compared to $73.0 million in the prior year’s period, a decrease of $11.6 million due largely to a decline in our weighted average interest rates. Income tax expense during the first nine months of 2009 was $74.9 million compared to $25.3 million during the first nine months of 2008, representing an increase of $49.6 million primarily due to the increase in taxable income.

Net income for the first nine months of 2009 was $152.5 million (including the tax-effected CSL merger termination fee of $48.8 million), an increase of $112.9 million versus net income of $39.6 million for the first nine months of 2008.

Diluted EPS for the first nine months of 2009 was $1.62 (including $0.52 related to the effect of the CSL merger termination fee) compared to $0.43 in the first nine months of 2008. Total diluted shares outstanding were 93,919,553 in the first nine months of 2009 compared to diluted shares outstanding of 91,526,581 in the first nine months of 2008.

EBITDA for the first nine months of 2009 increased $158.2 million (including $75.0 million related to the CSL merger termination fee) or 104.0% to $310.3 million from $152.1 million in the first nine months of 2008. Adjusted EBITDA rose to $370.4 million (including $75.0 million related to the CSL merger termination fee) in the first nine months of 2009 compared to $202.4 million in the first nine months of 2008, an increase of $168.0 million or 83.0%.

Full Year 2009 Outlook

Based on current business trends, Talecris expects full year 2009 revenues to be in the range of $1.52 billion and $1.53 billion. Gross margin is anticipated to be in the range of 40.6% to 41.0% and earnings per diluted share are estimated to be in the range of $1.42 to $1.46 based on a weighted average diluted shares count of approximately 102 million. Diluted earnings per share estimates reflect charges related to the fourth quarter refinancing activities, including approximately $12.1 million in write-offs of deferred debt issuance costs related to the First and Second Lien Term Loans, which were repaid and terminated, and $30.8 million in interest rate swap termination costs. The combined amounts total $42.9 million and represent approximately $0.28 in fully diluted earnings per share assuming diluted shares of approximately 102 million and an effective tax rate of 32.8%. Capital expenditures for 2009 are estimated to be approximately $75.0 million.

Recent Events

Talecris has achieved a number of financial and commercial milestones since the conclusion of the third quarter of 2009. These include:

• Talecris received FDA Approval for Prolastin-C A1PI, a new concentrated version of Prolastin A1PI that delivers the same amount of active protein in half the infusion volume. This product was developed using advances in manufacturing technology;
• Talecris has received approval from Paul Ehrlich Institute (PEI) to proceed with a proof of concept trial for Plasmin to treat ischemic stroke in Germany, adding to our approval in Canada;
• On October 6, 2009, Talecris completed its initial public offering of 56,000,000 shares of its common stock at an offering price of $19.00 per share resulting in total proceeds of approximately $1.1 billion. The IPO included 28,947,368 newly issued shares sold by Talecris and 27,052,632 shares sold by the selling stockholder, Talecris Holdings, LLC, including 6,000,000 shares sold pursuant to the underwriters’ exercise of their over allotment option. The net primary proceeds to Talecris were approximately $519.7 million which were used to repay $389.8 million and $129.9 million of principal under our First and Second Lien Term Loans, respectively. Talecris also issued 2,381,548 shares of common stock to settle $45.3 million of accrued dividends upon conversion of its series A and B preferred stock;

• On October 15, 2009, Talecris amended certain provisions of its Revolving Credit Facility to permit the issuance of the 7.75% Senior Notes described below including increasing the capital expenditure covenants;
• During October, Talecris’ corporate family credit ratings were increased to BB (Stable Outlook) by Standard & Poor’s and to Ba3 (Stable Outlook) by Moody’s Investor Services;
• On October 21, 2009, Talecris successfully completed a $600 million private placement of 7.75% Senior Notes due 2016. The unsecured notes were issued at a price of 99.321% of par resulting in a yield to maturity of 7.875%. The net proceeds of $583.9 million were used to repay the remaining principal and interest amounts under the First and Second Lien Term Loans of $295.5 million and $204.1 million, respectively, which were subsequently terminated, $55.6 million to repay principal under our amended Revolving Credit Facility, and $28.7 million to settle and terminate certain interest rate swap contracts;
• Talecris completed the acquisition of the remaining two plasma centers under its center development agreement with International BioResources, L.L.C. and affiliated entities on October 31, 2009 concluding this agreement.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "Non-GAAP Financial Measures."

Conference Call and Webcast Information

Talecris will hold a conference call on Tuesday, November 10, 2009, at 8:30 a.m. (EST) to discuss the company’s results, outlook and related matters. The conference call dial in number is 1-888-713-4199 (domestic) or 1-617-213-4861 (international), passcode number 28819752. To ensure timely access, please dial into the call approximately 10 minutes before it is scheduled to begin. The conference call will also be accessible as an audio webcast through the Investor Relations section of Talecris’ website, http://ir.talecris.com.

For those unable to listen to the live broadcast, a replay will be available on http://ir.talecris.com or by dialing 1-888-286-8010 (domestic) or 1-617-801-6888 (international), passcode number 19852415, beginning approximately two hours after the event and for up to seven days after the event.

Cautionary statement regarding forward-looking statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, quotations from management, statements regarding strategic and operation plans, expected fourth quarter charges, and pro forma financial information. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties. You are cautioned not to place undue reliance on forward-looking statements. Although Talecris believes that the forward-looking statements contained in this press release are reasonable, there is no assurance that expectations will be fulfilled.

The following factors, among others, could cause actual results to differ materially from those expressed or implied in forward-looking statements: possible U.S. legislation or regulatory action affecting, among other things, the U.S. healthcare system, pharmaceutical pricing and reimbursement, including Medicaid and Medicare; our ability to procure adequate quantities of plasma and other materials which are acceptable for use in our manufacturing processes from our own plasma collection centers or from third-party vendors; our ability to maintain compliance with government regulations and licenses, including those related to plasma collection, production and marketing; our ability to identify growth opportunities for existing products and our ability to identify and develop new product candidates through our research and development activities; and the timing of, and our ability to, obtain and/or maintain regulatory approvals for new product candidates, the rate and degree of market acceptance, and the clinical utility of our products. Talecris undertakes no duty to update any forward-looking statement.

Exhibits

Earning Per Share (Exhibit A)

Non-GAAP Financial Measures (Exhibit B)

Pro Forma Long-term Debt (Exhibit C)

About Talecris Biotherapeutics: Inspiration. Dedication. Innovation.

Talecris Biotherapeutics is a global biotherapeutic and biotechnology company that discovers, develops and produces critical care treatments for people with life-threatening disorders in a variety of therapeutic areas including immunology, pulmonology, neurology and hemostasis.

Exhibit A: Earnings Per Share

The following table illustrates the calculation of our basic earnings per common share outstanding for the periods presented:

The pro forma earnings per common share calculations reflect an adjustment to net income for reduced interest expense as if the net primary proceeds to us from our IPO had been applied to repay our debt at the beginning of the periods presented. The pro forma adjustment to the denominator reflects the impacts for the issuance of common shares to convert preferred stock, settle accrued dividends, and complete the IPO as if these events occurred at the beginning of the periods presented.

Exhibit A: Earnings Per Share (continued)

The following table illustrates the calculation of our diluted earnings per common share outstanding for the periods presented:

The pro forma earnings per common share calculations reflect an adjustment to net income for reduced interest expense as if the net primary proceeds to us from our IPO had been applied to repay our debt at the beginning of the periods presented. The pro forma adjustment to the denominator reflects the impacts for the issuance of common shares to convert preferred stock, settle accrued dividends, and complete the IPO as if these events occurred at the beginning of the periods presented.

Exhibit B: Non-GAAP Financial Measures

We believe that a meaningful analysis of our historical operating performance is enhanced by the use of adjusted EBITDA, a supplemental non-GAAP operating performance measure utilized by our management in the day to day operation of our business, our compensation committee in determining incentive compensation and vesting of performance-based stock options, and our lenders in determining compliance with debt covenants. We believe that analysts and investors will also use adjusted EBITDA as a supplemental measure to evaluate our operating performance across historical periods and to compare our historical operating performance to other companies in our industry, as well as to determine our valuation, and our ability to service debt. Adjusted EBITDA is a financial measure that is not defined by accounting principles generally accepted in the U.S. (U.S. GAAP). Adjusted EBITDA should not be considered a substitute for any performance measure determined in accordance with U.S. GAAP. We do not rely solely on adjusted EBITDA as a performance measure and also consider our U.S. GAAP results. Because adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to similarly titled measures used by other companies. To properly and prudently evaluate our business, we encourage you to also review the U.S. GAAP financial statements included elsewhere in this press release, and not to rely on any single financial measure to evaluate our business. Adjusted EBITDA has material limitations as an analytical tool and you should not consider this measure in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Additional information regarding our use of adjusted EBITDA is included in our prospectus filed pursuant to Rule 424(b) on October 1, 2009, which is available on the SEC’s website at www.sec.gov and our website at http://ir.talecris.com.

In the following table, we have presented a reconciliation of EBITDA and adjusted EBITDA to the most comparable U.S. GAAP measure, net income:

(a) Represents interest expense associated with our debt structure. During the periods presented, our capital structure consisted of a $1.355 billion credit facility, of which approximately $1.1 billion was outstanding at September 30, 2009.

(b) Represents our income tax expense as presented on our consolidated income statements.

(c) Represents depreciation and amortization associated with our property, plant, and equipment, and all other intangible assets.

(d) Represents the advisory fees paid to Talecris Holdings, LLC, under the Management Agreement, as amended. This agreement was terminated in connection with our initial public offering.

(e) Represents our non-cash equity compensation expense associated with stock options and restricted stock.

(f) Represents compensation expense associated with special recognition bonus awards granted to certain of our employees and senior executives. These awards were granted to reward past performance and were provided to these individuals in recognition of the extraordinary value realized by us and our stockholders due to the efforts of such individuals since inception of our operating activities on April 1, 2005. While the awards included deferred distributions for employee retention, we do not anticipate granting similar awards in the future.

(g) Represents non-operating income associated with our investment in Centric Health Resources, Inc., which we believe are not part of our core operations.

(h) Represents net losses on sales of equipment, which we believe are not part of our core operations.

(i) For the nine months ended September 30, 2008, represents an inventory impairment charge, net of recoveries, of $9.2 million, due to deviations from our standard operating procedures and cGMP at one of our plasma collection centers, as well as approximately $0.2 million of other impairment charges related to certain equipment. Asset impairment charges, net of recoveries includes $11.4 million, $0.4 million, and $1.1 million of recoveries related to this issue for the three months ended September 30, 2008 and the three and nine months ended September 30, 2009, respectively. Other asset impairment charges totaled $0.6 million and $1.0 million for the three and nine months ended September 30, 2009, respectively.

(j) Represents merger related retention expense and other bonuses related to our terminated merger agreement with CSL.

(k) Represents $0.9 million of costs related to the IPO that was discontinued during 2008 for the three and nine months ended September 30, 2008, partially offset by an insurance recovery of $0.3 million for the nine months ended September 30, 2008. Represents $0.9 million and $1.2 million of costs related to our IPO for the three and nine months ended September 30, 2009, respectively.

(l) Our adjusted EBITDA for the nine months ended September 30, 2009 includes a $75.0 million termination fee received from CSL as a result of the termination of the definitive merger agreement. In addition, we incurred legal and other costs associated with the regulatory review process of our terminated merger agreement with CSL of $6.0 million for the nine months ended September 30, 2009 and $0.7 million and $1.5 million for the three and nine months ended September 30, 2008, respectively. This termination fee and these expenses are not permitted as adjustments to our adjusted EBITDA as defined in our credit facilities at September 30, 2009.

Exhibit C: Pro Forma Long-term Debt

The following table illustrates the pro forma impact to our long-term debt from the application of the net proceeds from the IPO and refinancing transactions:

As a result of the IPO and refinancing transactions, Talecris expects to recognize a charge during the 2009 fourth quarter of approximately $42.9 million representing the write-off of deferred debt issuance costs associated with the First and Second Lien Term Loans as well as costs associated with the termination of certain interest rate swap contracts. In addition, we expect to capitalize an estimated $17.5 million of debt issue costs primarily associated with the 7.75% Notes, which will be amortized over the terms of the facilities.

Source: Talecris Biotherapeutics Holdings Corp.

Talecris Investor Relations
John Hanson, Chief Financial Officer
919-316-6139
investor.relations@talecris.com
or
Becky Levine, 919-316-6590
becky.levine@talecris.com
or
Brunswick Group
Susan Stillings / Greg Faje
212-333-3810