Haemonetics Reports Third Quarter Results; Raises Annual Earnings Per Share Guidance.
The Company reaffirmed its full FY05 guidance of mid-single digit revenue growth, operating income growing more than 20%, and improved operating margin. The Company revised its range for diluted net earnings per share from $1.38- $1.43 to $1.43-$1.48. There are several factors fueling Haemonetics' performance: revenue growth year-to-date at the high end of annual guidance; discipline regarding price, mix, and cost of goods, leading to gross margin in the 50% range; discipline in expense management; and lower than planned year to date tax rate.
Brad Nutter, Haemonetics' President and CEO, stated, "We started the year with a revenue challenge due to consolidation in the plasma market. Our guidance reflected that business reality. We're very pleased that in the first three quarters of the year, growth in our non plasma businesses exceeded our plans. That growth, which we believe is sustainable, plus other factors, positions us to achieve earnings per share in a higher range than originally planned."
FINANCIAL HIGHLIGHTS Haemonetics reported the following financial results: Product Disposable Revenue Changes Plasma -9% Blood Bank +15% Red Cells +30% Cell Saver +5% OrthoPAT +61% * Third quarter net revenue of $98 million, up 8.1% from $91 million in Q3:04; year-to-date net revenue of $284 million, up 6.4% from $267 million in fiscal 2004 * Third quarter gross profit of $52 million, up 19.3% from $43 million in Q3:04; year-to-date gross profit of $144 million, up 15.7% from $125 million in fiscal 2004 * Third quarter gross margin of 52.8%, up from 47.8% in Q3:04; year-to- date gross margin of 50.9%, up from 46.8% in fiscal 2004 * Third quarter operating expenses of $36 million, up 25.7% from $29 million in Q3:04; year-to-date operating expenses of $100 million, up 7.9% from $93 million fiscal 2004 * Third quarter operating income of $15 million, up 6.4% from $14 million Q3:04; year-to-date operating income of $44 million, up 38.3% from $32 million in fiscal 2004 * Third quarter operating margin of 15.6%, level with 15.8% in Q3:04; year-to-date operating margin of 15.6%, up from 12.0% in fiscal 2004 * Third quarter net earnings per share of $0.42, up 10.5% from $0.38 in Q3:04; year-to-date net earnings per share of $1.15, up 42.0% from $0.81 in fiscal 2004 Several factors affected the Company's financial results.
There was a significant negative impact to revenue due to consolidation in the plasma market. This was offset by currency, changes in the mix of products being sold, price improvements, and increased sales volumes in most product lines which all affected revenue and gross margin results favorably.
Expenses increased as planned. In the quarter, $2.5 million of increased expenses supported new products. The Company also reserved for an R&D asset that it does not expect to employ. This $1.7 million impairment charge negatively affected earnings per share by 4 cents. Additionally, an incremental $1 million of expense was attributed to 404 compliance and legal services.
The Company's tax rate was 29.5% in the quarter versus 36% in Q3FY04. The lower tax rate is a result of additional export tax benefits, higher tax exempt interest income, and an adjustment to reserves.
Haemonetics will post a non-GAAP financial reconciliation on its website prior to its conference call.
The Company maintained a strong balance sheet, highlighted by a cash increase of $16 million to an ending cash balance of $160 million. The Company achieved $21 million of cash flow from operating activities for the quarter and $48.5 million year-to-date.
DONOR PRODUCT LINE HIGHLIGHTS
Plasma disposables revenue was $24 million for the quarter, down 9.4% over Q3:04 and $74 million year-to-date, down 15.1% from FY04. Industry reports indicate that plasma collections may have declined by 15-20% due to industry consolidation and efforts to reduce plasma inventory levels. Haemonetics continues to be affected by these market pressures.
Blood bank disposables revenue was $34 million, up 14.8% over Q3:04 and $98 million year-to-date, up 19.2% over FY04. There are several factors contributing to blood bank sales success year-to-date: unit volume increases, share gains and a shift to higher priced filtered platelet collection sets in Japan, and an increase in sales of intravenous solutions.
Red cell disposables revenue was $7 million, up 29.5% over Q3:04, and $20 million year-to-date, up 33.6% over FY04. This product is predominantly sold in the U.S. where blood shortages are more prevalent. Revenue benefited from unit volume increases as U.S. blood collectors integrate automated collections into their routine fixed site and mobile blood collection operations. Revenue also benefited from a product mix shift to higher-priced filtered red cell collection disposables.
PATIENT PRODUCT LINE HIGHLIGHTS
OrthoPAT(R) brand disposables revenue was $6 million, up 61.0% over Q3:04 and $14 million year-to-date, up 66.9% over FY04. The OrthoPAT brand has retained its sales momentum for more than seven quarters as orthopedic surgeons continue to adopt surgical blood salvage as an effective alternative to pre-donation by patients, or transfusion of donor blood. OrthoPAT revenue benefited from volume and price increases for the quarter.
Haemonetics also reported that customer acceptance trials in Europe and the U.S. for the cardioPAT(TM) surgical blood salvage system are going well. Haemonetics expects full market release for the cardioPAT system by the end of the calendar year and will initially target the device in beating heart surgeries. Haemonetics believes the cardioPAT system represents a $100 to $120 million market opportunity.
Brad Nutter added, "We are moving forward on a number of initiatives to expand our business in FY06. These initiatives include new product launches in both the Donor and Patient product lines that will bring us into adjacent markets."
Haemonetics will hold a conference call on Monday, January 31st at 10:00 am eastern to review financial and operational performance of Q3FY05 and to discuss the planned sales roll out of the cardioPAT system and the Blood Stream(R) surgical family of products in FY06.
Interested parties can participate by calling (800) 921-9431 (US only) or (973) 935-8505. The call will be replayed through February 14th at (877) 519- 4471 (US only) or (973) 341-3080 using PIN 5561461.
Haemonetics is a global company engaged in the design, manufacture and worldwide marketing of automated blood processing systems. These systems address important medical markets: surgical blood salvage, blood component collection, plasma collection, and blood component safety. To learn more about Haemonetics' products and markets, visit its web site at http://www.haemonetics.com/.
This release contains forward looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.
CONTACT: Julie Fallon Tel. (781) 356-9517 Alternate Tel. (617) 320-2401 firstname.lastname@example.org HAEMONETICS CORPORATION FINANCIAL SUMMARY (UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRD QUARTER FYE05 % Inc/(Dec) vs prior 01/01/05 12/27/03 year NET REVENUES $98,098 $90,737 8.1% Gross profit 51,781 43,390 19.3 R&D 6,584 4,072 61.7 S, G & A 29,897 24,945 19.9 Operating expenses 36,481 29,017 25.7 Operating income 15,300 14,373 6.4 Interest expense (553) (682) (18.9) Interest income 598 805 (25.7) Other income, net 262 58 351.7 Income before taxes 15,607 14,554 7.2 Tax expense 4,600 5,240 (12.2) NET INCOME $11,007 $9,314 18.2 Net income per common share assuming dilution $0.42 $0.38 10.5 Weighted average number of shares Basic 25,628 24,518 Diluted 26,314 24,780 PROFIT MARGINS Inc/(Dec) vs prior year Gross profit 52.8% 47.8% R&D 6.7% 4.5% S, G & A 30.5% 27.5% Operating income 15.6% 15.8% (0.2) Income before taxes 15.9% 16.0% (0.1) Net income 11.2% 10.3% CONSOLIDATED STATEMENTS OF INCOME FOR NINE MONTHS ENDED 1/1/05 % Inc/(Dec) vs prior 01/01/05 12/27/03 year NET REVENUES $283,623 $266,508 6.4% Gross profit 144,430 124,833 15.7% R&D 14,891 13,691 8.8% S, G & A 85,366 79,200 7.8% Operating expenses 100,257 92,891 7.9% Operating income 44,173 31,942 38.3% Interest expense (1,850) (2,235) (17.2%) Interest income 1,463 1,274 14.8% Other expense, net (39) (55) (29.1%) Income before taxes 43,747 30,926 41.5% Tax expense 14,046 11,134 26.2% NET INCOME $29,701 $19,792 50.1% Net income per common share assuming dilution $1.15 $0.81 42.0% Weighted average number of shares Basic 25,347 24,234 Diluted 25,886 24,446 PROFIT MARGINS: Inc/(Dec) vs prior year Gross profit 50.9% 46.8% R&D 5.3% 5.1% S,G&A 30.1% 29.7% Operating income 15.6% 12.0% 3.6% Income before taxes 15.4% 11.6% 3.8% Net income 10.5% 7.4% REVENUE ANALYSIS THIRD QUARTER 01/01/05 12/27/03 % Inc/(Dec) Revenues by Geography United States $33,068 $30,372 8.9 International 65,030 60,365 7.7 Net Revenues $98,098 $90,737 8.1 Disposable Revenues by Product Family Donor: Plasma 24,297 26,830 (9.4) Blood Bank 34,031 29,650 14.8 Red Cell 7,111 5,493 29.5 $65,439 $61,973 5.6 Patient: Surgical 22,736 19,810 14.8 Subtotal $88,175 $81,783 7.8 Equipment 4,714 3,953 19.3 Misc & Service 5,209 5,001 4.2 Net Revenues $98,098 $90,737 8.1 NINE MONTHS ENDED 01/01/05 12/27/03 % Inc/(Dec) Revenues by Geography United States $96,374 $94,241 2.3 International 187,249 172,267 8.7 Net Revenues $283,623 $266,508 6.4 Disposable Revenues by Product Family Donor: Plasma 74,021 87,139 (15.1) Blood Bank 98,138 82,330 19.2 Red Cell 20,225 15,139 33.6 $192,384 $184,608 4.2 Patient: Surgical 63,554 55,042 15.5 Subtotal $255,938 $239,650 6.8 Equipment 13,967 11,551 20.9 Misc & Service 13,718 15,307 (10.4) Net Revenues $283,623 $266,508 6.4 CONSOLIDATED BALANCE SHEETS Period ending 01/01/05 04/03/04 Assets Cash & cash equivalents $160,276 $118,117 Accounts receivable, net 87,578 82,640 Inventories, net 52,485 52,235 Other current assets 28,117 28,457 Total current assets 328,456 281,449 Net PP&E 72,684 78,030 Other assets 55,634 47,915 Total assets $456,774 $407,394 Period ending 01/01/05 04/03/04 Liabilities & Stockholders' Equity S/T debt & current maturities $29,862 $32,818 Other current liabilities 65,083 63,025 Total current liabilities 94,945 95,843 Deferred tax liability, net 1,388 1,682 Long-term debt 19,359 25,442 Other long-term liabilities 5,143 4,678 Stockholders' equity 335,939 279,749 Total liabilities & equity $456,774 $407,394
CONTACT: Julie Fallon, +1-781-356-9517, or +1-617-320-2401 (Alternate Tel.), email@example.com
Web site: http://www.haemonetics.com/
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|Date:||Jan 31, 2005|
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