RADNOR, Pa., March 4, 2015 /PRNewswire/ -- VWR Corporation (NASDAQ: VWR), a leading, independent provider of laboratory products, services and solutions to the global life sciences, general research and applied markets, today reported its financial results for the fourth quarter and full year ended December 31, 2014.
Fourth Quarter 2014 Highlights:
- Consolidated revenues increased $42.3 million, or 4.0%, to $1.10 billion; up 5.9% on an organic basis
- Americas and EMEA-APAC segments’ organic revenues increased 7.2% and 4.4%, respectively
- Adjusted EPS increased 16.2% to $0.43
- Operating cash flows of $104 million, a record quarterly level
- Acquired Integra Companies, Inc. and STI Components, Inc. in November 2014, strengthening VWR’s position in the fast growing Bioprocess chemicals and consumables market
“Our fourth quarter saw acceleration in our growth trend in the Americas segment, with 7.2% organic revenue growth, fueled by strong sales to Biopharma customers and robust private label product sales. In addition, our EMEA-APAC segment continued its track-record, delivering yet another quarter of above-market organic growth,” said Manuel Brocke-Benz, President and Chief Executive Officer of VWR.
Mr. Brocke-Benz continued, “This solid organic revenue growth translated into even stronger earnings growth, with Adjusted Net Income increasing 16.8% and operating cash flow reaching a quarterly record level of $104 million. The fourth quarter topped off a highly successful year for VWR. The year benefited from recent investments in our management team, IT systems and infrastructure. In 2014, we delevered the Company, strengthened our balance sheet, increased our financial flexibility, and lowered our interest burden. All of these factors bolster our position as a leading global independent solutions provider to the lab market. I am confident that with VWR’s extensive product choice, supply chain excellence and differentiated services, we are ideally positioned to meet our customers’ needs and increase our share of global lab spending.”
Fourth Quarter 2014 Consolidated Results
Revenues of $1.10 billion, increased $42.3 million, or 4.0% compared to prior year. On an organic basis, revenues increased 5.9% while recent acquisitions increased revenues by an additional $25.1 million, or 2.4%. The strengthening of the U.S. dollar compared to the euro and other major currencies reduced revenues by $45.2 million, or 4.3%, compared to prior year.
Operating income increased $21.8 million, or 33.8%, compared to prior year. Excluding the impact of currency, acquisitions and restructuring charges in the 2013 period, comparable operating income increased $1.2 million, or 1.4%. Adjusted Net Income increased $8.1 million, or 16.8%, compared to prior year, to $56.2 million, resulting in a 16.2% increase in Adjusted EPS to $0.43. Adjusted EBITDA increased $1.1 million compared to the fourth quarter of 2013, up 0.9%, to $119.5 million.
Fourth Quarter 2014 Segment Results
Americas
Revenues in our Americas segment increased $50.0 million, or 8.9%, compared to prior year, to $611.4 million. The increase was the result of recent initiatives to improve the customer experience. These initiatives include investments in infrastructure, IT systems, and management, as well as a strategic shift to a more targeted, customer-centric sales approach. On an organic basis, revenues increased 7.2% year-over-year, driven by strong sales to Biopharma customers.
Operating income increased $8.7 million, or 28.9%, compared to prior year. Excluding the impact of currency, acquisitions and restructuring charges in the 2013 period, comparable operating income increased $5.7 million, or 18.1% year-over-year, driven by higher sales volume and margin improvement.
EMEA-APAC
Revenues in our EMEA-APAC segment declined $7.7 million, or 1.5%, compared to prior year, to $490.2 million. The strengthening of the U.S. dollar compared to the euro and other major currencies reduced reported sales by 8.0%, while acquisitions added 2.1%. On an organic basis, revenues increased 4.4%, a continuation of the above-market growth trend this segment has exhibited in recent years.
Operating income increased $13.1 million, or 38.1%, compared to prior year. Excluding the impact of currency, acquisitions and restructuring charges in the 2013 period, comparable operating income declined $4.5 million, or 8.4% year-over-year, driven by the change in our supply agreements with Merck KGaA that were renegotiated in April of 2014.
Full Year 2014 Consolidated Results
- Consolidated revenues increased $187.5 million, or 4.5%, to $4.38 billion; up 3.1% on an organic basis
- Americas and EMEA-APAC segments’ organic revenues increased 2.1% and 4.5%, respectively
- Adjusted EPS increased to $1.21, up 28.7% compared to $0.94 in the prior year
- Adjusted EBITDA increased $30.9 million, or 7.4%, to $449.4 million
Revenues increased $187.5 million, or 4.5%, to $4.38 billion, up 3.1% on an organic basis compared to the prior year. Recent acquisitions increased revenues by $74.5 million, or an additional 1.8%, while the strengthening of the U.S. dollar reduced revenues by $18.6 million, or 0.4%, each as compared to prior year.
Operating income increased $63.9 million, or 25.2%, compared to prior year. Adjusted Net Income increased $36.0 million year-over-year, or 29.1%, to $159.6 million.
Full Year 2015 Outlook
Greg Cowan, Chief Financial Officer, commented, “Our fourth quarter results highlight the continued fundamental underlying strength of the VWR business, and our 2015 outlook contemplates a continuation of this trend. Our guidance also incorporates the impact of the recent strengthening of the U.S. dollar versus the euro and other major currencies, as approximately half of our revenues come from sales outside the United States. If current exchange rates were to remain stable for the remainder of 2015, the current strengthening of the U.S. dollar would represent an approximate 7% headwind to 2015 revenues, offsetting our expectation of solid organic revenue growth in the 3 to 4% range. With our expectation of continued organic growth and the attractive capital deployment opportunities, VWR is well positioned to continue to create substantial value for our shareholders.”
Management now projects 2015 revenues in the range of $4.24 to $4.31 billion and 2015 Adjusted EBITDA in the range of $456 to $463 million, excluding stock based compensation. 2015 Adjusted EPS, which now includes stock based compensation expense, is expected to be in the range of $1.42 to $1.50.
Our full year 2015 outlook assumes:
- Current foreign currency exchange rates constant for the remainder of the year
- Adjusted diluted shares outstanding of 132 million
- Annual effective tax rate of 35%
- Share-based compensation expense in the range of $5 to $6 million before tax in 2015
- The effects of acquisitions closed prior to March 4, 2015
A number of sell-side analysts are currently projecting 2015 earnings inclusive of share-based compensation expense. We are changing our 2015 Adjusted EPS guidance methodology to conform to this presentation by including share-based compensation expense. However, our 2015 Adjusted EBITDA guidance will continue to exclude share-based compensation expense.
Balance Sheet & Cash Flows
As of December 31, 2014, we had total debt of $2.11 billion, cash and cash equivalents (including compensating cash balances) of $120.5 million, resulting in Net Debt of $1.99 billion, down $701.5 million compared to Net Debt of $2.69 billion as of December 31, 2013. The reduction in Net Debt during 2014 was due to the repayment of our 10.75% unsecured senior subordinated notes in the fourth quarter of 2014 using the net proceeds from our Initial Public Offering and the weakening of the euro compared to the U.S. dollar. Our ratio of Net Debt to Adjusted EBITDA was 4.4x as of December 31, 2014, compared to 6.4x as of December 31, 2013. The Company had $687 million of euro denominated debt at the end of December 2014 and this debt is revalued at the end of each reporting period. Our euro denominated interest mitigates some of the earnings and cash flow volatility caused by fluctuations in the dollar euro exchange rate.
In 2014, net cash provided by operating activities was $191.1 million compared to $200.9 million in 2013, reflecting relatively higher business growth and working capital investments in the 2014 period.
Capital expenditures in 2014 were $33.6 million compared to $45.3 million in 2013. Free Cash Flow, or net cash provided by operating activities less capital expenditures, for 2014 was $157.5 million. During 2014, we completed four acquisitions with an aggregate purchase price of $89.9 million, excluding a business that was acquired and then disposed.
Conference Call
As previously announced, VWR Corporation will hold a conference call today, March 4, 2015, to discuss its fourth quarter and full year 2014 financial results beginning at 8:30 a.m. EST. The conference call can be accessed live over the phone by dialing (877) 845-1003, or for international callers, (760) 298-5093. Callers will need to request to join the VWR Corporation fourth quarter 2014 earnings conference call. A replay will be available two hours after the conclusion of the live call and can be accessed by dialing (855) 859-2056, or for international callers, (404) 537-3406. The conference ID number for both the live call and replay will be 70884454. The replay will be available through March 9, 2015. A presentation relating to the conference call will be available at investors.vwr.com.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of our website at investors.vwr.com. The online replay will remain available for a limited time beginning immediately following the call. To learn more about VWR, please visit our website at www.vwr.com.
Use of Non-GAAP Financial Measures
As appropriate, we supplement our results of operations determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. We strongly encourage readers to review our consolidated financial statements in their entirety and not rely solely on any one, single financial measurement.
The non-GAAP measurements used in this press release are Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Free Cash Flow, Net Debt and Net Leverage:
- Adjusted EBITDA is our net income or loss adjusted for the following items: (i) interest expense, net of interest income, (ii) income tax provision or benefit, (iii) depreciation and amortization, (iv) net foreign currency remeasurement gains or losses relating to financing activities, (v) losses on extinguishment of debt, (vi) charges associated with restructurings and other cost reduction initiatives, (vii) charges associated with executive departures, (viii) impairment charges, (ix) gains or losses upon business disposals, (x) share-based compensation expense and (xi) other costs or credits that are either isolated or cannot be expected to recur with any regularity or predictability.
Adjusted Net Income is our net income or loss first adjusted for the following items: (i) amortization of acquired intangible assets, (ii) net foreign currency remeasurement gains or losses relating to financing activities, (iii) losses on extinguishment of debt, (iv) charges associated with restructurings and other cost reduction initiatives, (v) charges associated with executive departures, (vi) impairment charges, (vii) gains or losses upon business disposals, (viii) share-based compensation expense and (ix) other costs or credits that are either isolated or cannot be expected to recur with any regularity or predictability.
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