BRAINTREE, Mass., May 3 /PRNewswire-FirstCall/ -- Haemonetics Corporation reported today fourth quarter fiscal year 2006 GAAP net revenue of $110 million, a 10.4% increase over the fourth quarter of fiscal year 2005 and full year revenue of $420 million, a 9.4% increase over FY05. Diluted GAAP net earnings per share were $0.62 for the quarter, up 67.2% over Q4:05 earnings of $0.37, and $2.51 for the year, up 65.8% over FY05 earnings of $1.52. Full year GAAP results include the previously reported benefit of an arbitration award received in the third quarter, which added $26.4 million to operating income and $0.62 to earnings per share.
Excluding the arbitration award, the Company’s fiscal year financial and operating results met or exceeded the performance targets the Company had previously provided to investors.
Ronald Ryan, Haemonetics’ Vice President and CFO, said, “We are particularly pleased with this year’s results. We posted ten year highs for revenue growth, at 9.4%, and operating margin, at 17.3%. Also, for the third consecutive year we’ve delivered the P&L leverage that demonstrates our success in improving profitability. On revenue growth of 9.4%, excluding the arbitration award, operating income grew 21.4% and earnings per share increased to $1.90.”
FINANCIAL HIGHLIGHTS Haemonetics reported the following GAAP results: * Q4:06 revenue of $110 million, up 10.4% from Q4:05; full year revenue of $420 million, up 9.4% from FY05 * Q4:06 gross profit of $59 million, up 9.6% from $53 million in Q4:05; full year gross profit of $221 million, up 11.5% from $198 million in FY05 * Q4:06 gross margin of 53.1%, down 40 basis points from Q4:05; full year gross margin of 52.5%, up 90 basis points from FY05 * Q4:06 operating expenses of $35 million, down 8.0% from $38 million in Q4:05; full year operating expenses of $122 million, down 12.0% from $138 million in FY05 (the full year comparison reflects $26 million of income from the arbitration award received Q3:06) * Q4:06 operating income of $24 million, up 52.1% from $16 million in Q4:05; full year operating income of $99 million, up 65.5% from $60 million in FY05 * Q4:06 operating margin of 21.6%, up 590 basis points from Q4:05; full year operating margin of 23.6%, up 800 basis points from FY05 * Q4:06 earnings per share of $0.62, up 67.2% from Q4:05; full year earnings per share of $2.51, up 65.8% from FY05
For the year, the Company’s tax rate increased to 35.4% from 33.8% reflecting the tax treatment of the arbitration award.
Haemonetics will post detailed information on the effects of the arbitration award as well as currency on the web at http://www.haemonetics.com/site/content/investor/Non_GAAP.asp.
BALANCE SHEET
Haemonetics’ cash and short term investments increased $21 million in the quarter, for a year end cash balance of $251 million. The Company also generated $26 million in cash flow from operating activities for the quarter and $86 million for the year.
PATIENT PRODUCT LINE HIGHLIGHTS
Cell Saver(R) disposables revenue was $16 million for the quarter, down 5.3% from Q4:05 and $65 million for the year, down 1.4% from FY05. Cell Saver revenues represented 75% of total patient revenues. The Cell Saver market continues to shrink because of a shift to less invasive surgeries and the impact of drug eluting stents.
In Q2:06 Haemonetics shifted from a distribution relationship to direct sales of its U.S. OrthoPAT(R) surgical blood salvage product. For the quarter, OrthoPAT brand disposables revenue was $6 million, up 6.9% over Q4:05 and $22 million for the year, up 8.5%. The Company reported excellent progress in its transition to direct sales. In contrast to the market for the Company’s Cell Saver systems, the orthopedic surgical market addressed by the OrthoPAT system is relatively unpenetrated. By going direct, Haemonetics expands its U.S. market opportunity from the one-third of the market serviced by its prior exclusive distributor to the full $400 million market. As such, the Company expects the OrthoPAT system to be a growth driver for the Patient Division in FY07 and beyond.
DONOR PRODUCT LINE HIGHLIGHTS
Plasma disposables revenue was $28 million for the quarter, up 22.3% from Q4:05 and $109 million for the year, up 12.2% from FY05. For the year, sales benefited from disposables unit growth in the U.S. as the plasma collection market rebounded and as Haemonetics executed its plan to convert a large, new customer to its plasma collection systems.
Blood bank disposables revenue was $34 million for the quarter, up 5.1% from Q4:05 and $132 million for the year, up 1.5% from FY05. For the quarter, growth was largely due to gains in the Asian platelet market. For the year, sales of platelet collection disposables remained stable in the Company’s key markets (Japan and Europe), and significant I.V. solutions sales reported in FY05 did not repeat in FY06.
Red cell disposables revenue was $11 million for the quarter, up 32.2% over Q4:05 and $38 million for the year, up 31.9% from FY05. Quarterly revenue growth came from the U.S. where sales increased 39.2% over FY05. For the year, unit growth and a favorable shift in product mix were key drivers of U.S. red cell disposables revenue.
FY07 GUIDANCE
Haemonetics also provided FY07 guidance. For guidance purposes, pro forma FY07 results will be measured against pro forma FY06 results that exclude the arbitration award. FY07 pro forma guidance is:
* revenue growth of 10-14% * gross margins in the range of 52% * operating income growing 18-25% * operating margins improving to approximately 19% * earnings per share in the range of $2.15-$2.25
This FY07 guidance is based on anticipated pro forma results that exclude the impact from stock compensation expense, expected to be approximately $0.25 per share and a restructuring charge (pre-tax) of $3-$4 million, with costs spread throughout the year. Therefore, FY07 GAAP earnings per share are expected to be in the range of $1.81 to $1.93.
In FY07, the Company expects to generate $35-$40 million of operating cash flow, Haemonetics’ internal cash flow measurement.
Key revenue drivers include: plasma, growing by 17-19%; red cells, growing by 25-30%; and, the OrthoPAT system, growing by 70-90%. The Company said it expects gross margins to remain level with FY06 reflecting a product mix shift as its plasma business ramps up.
Brad Nutter, Haemonetics’ President and CEO, said “We operate to two strategies: leveraging the core business to improve profitability and expanding the business by leveraging our core competencies. Our discipline in executing to these strategies over the last three years allowed us to reposition the business for a transformation into a company that grows double digits in both revenue and operating income in FY07.”
Haemonetics has posted potential income scenarios reflecting the high and low ranges of guidance on its website at http://www.haemonetics.com.
CONFERENCE CALL AND INVESTOR ROUNDTABLE
Haemonetics will hold a conference call on Thursday, May 4th at 8:00 am eastern and an Investor Roundtable on May 4th at 10:00 am eastern to review in more detail the financial and operational performance of the Company. Interested parties can participate in the conference call by dialing (877) 241-6895 (US only) or (973) 582-2822 with conference ID 7268456. The call will be replayed through May 19th at (877) 519-4471 (US only) or (973) 341- 3080 using PIN 7268456. Interested parties can participate in the Investor Roundtable in person at the Sheraton Boston Hotel or via webcast at http://www.shareholder.com/hae/medialist.cfm.
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.
Haemonetics has presented supplemental non-GAAP financial results excluding the arbitration award as part of this release. Haemonetics believes that these non-GAAP results are useful to investors because it allows for an evaluation of the Company with a focus on the results of our core business.
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 fallon@haemonetics.com HAEMONETICS CORPORATION FINANCIAL SUMMARY (Unaudited data in thousands, except per share data) Consolidated Statements of Income for the Fourth Quarter % Inc/(Dec) vs Prior 04/01/06 04/02/05 Year NET REVENUES $110,395 $99,975 10.4% Gross profit 58,577 53,446 9.6 R&D 5,229 5,103 2.5 S,G&A 29,510 32,673 (9.7) Arbitration Award Income 0 0 Operating expenses 34,739 37,776 (8.0) Operating income 23,838 15,670 52.1 Interest expense (419) (511) (18.0) Interest income 1,692 770 119.7 Other income/(expense), net 731 165 343.0 Income before taxes 25,842 16,094 60.6 Tax expense 8,684 6,156 41.1 NET INCOME $17,158 $9,938 72.7 Net income per common share assuming dilution $0.62 $0.37 67.2% Weighted average number of shares Basic 26,695 26,051 Diluted 27,768 26,888 Inc/(Dec) vs prior year profit margin % Profit Margins: Gross profit 53.1% 53.5% (0.4) R&D 4.7% 5.1% S,G&A 26.7% 32.7% Operating income 21.6% 15.7% 5.9 Income before taxes 23.4% 16.1% 7.3 Net income 15.5% 9.9% Consolidated Statements of Income for FYE06 % Inc/(Dec) vs Prior 04/01/06 04/02/05 Year NET REVENUES $419,733 $383,598 9.4% Gross profit 220,535 197,876 11.5 R&D 26,516 19,994 32.6 S,G&A 121,351 118,039 2.8 Arbitration Award Income(1) (26,350) 0 Operating expenses 121,517 138,033 (12.0) Operating income 99,018 59,843 65.5 Interest expense (1,917) (2,361) (18.8) Interest income 6,963 2,233 211.8 Other income/(expense), net 2,818 126 2,136.5 Income before taxes 106,882 59,841 78.6 Tax expense 37,806 20,202 87.1 NET INCOME $69,076 $39,639 74.3 Net income per common share assuming dilution $2.51 $1.52 65.8% Weighted average number of shares Basic 26,478 25,523 Diluted 27,474 26,145 Inc/(Dec) vs prior year profit margin % Profit Margins: Gross profit 52.5% 51.6% 0.9 R&D 6.3% 5.2% S,G&A 28.9% 30.8% Operating income 23.6% 15.6% 8.0 Income before taxes 25.5% 15.6% 9.9 Net income 16.5% 10.3% Revenue Analysis Fourth quarter Twelve Months Ended 04/01/06 04/02/05 % Inc/ 04/01/06 04/02/05 % Inc/ (Dec) (Dec) Revenues by Geography United States $45,449 $35,258 28.9% $161,679 $131,632 22.8% International 64,946 64,717 0.4 258,054 251,966 2.4 Net Revenues $110,395 $99,975 10.4 $419,733 $383,598 9.4 Disposable Revenues by Product Family Donor: Plasma $28,398 $23,229 22.3% $109,100 $97,250 12.2% Blood Bank 33,936 32,289 5.1 132,407 130,427 1.5 Red Cell 11,168 8,451 32.2 37,830 28,676 31.9 $73,502 $63,969 14.9 $279,337 $256,353 9.0 Patient: Surgical $22,406 $22,823 (1.8) $87,454 $86,377 1.2 Subtotal $95,908 $86,792 10.5 $366,791 $342,730 7.0 Equipment $7,212 $6,728 7.2 $25,759 $20,695 24.5 Misc & Service 7,275 6,455 12.7 27,183 20,173 34.7 Net Revenues $110,395 $99,975 10.4 $419,733 $383,598 9.4 Consolidated Balance Sheets Period ending 04/01/06 04/02/05 Assets Cash & cash equivalents $250,667 $185,815 Short-term investments -- -- Accounts receivable, net 86,901 80,719 Inventories, net 54,571 53,088 Other current assets 26,265 23,989 Total current assets 418,404 343,611 Net PP&E 75,266 69,337 Other assets 52,873 54,809 Total assets $546,543 $467,757 Period ending 04/01/06 04/02/05 Liabilities & Stockholders’ Equity S/T debt & current maturities $26,176 $26,612 Other current liabilities 61,940 61,310 Total current liabilities 88,116 87,922 Long-term debt 12,977 19,231 Other long-term liabilities 3,800 5,469 Stockholders’ equity 441,650 355,135 Total liabilities & equity $546,543 $467,757 Consolidated Statements of Income Adjusted for the Effect of the Arbitration Award Fourth Quarter FYE06 04/01/06 04/02/05 % Inc/ Effect Adjusted (Dec) of for the vs As Award Effect of As Prior Reported (1,2) Award Reported Year NET REVENUES $110,395 $0 $110,395 $99,975 10.4% Gross profit 58,577 0 58,577 53,446 9.6 R&D 5,229 0 5,229 5,103 2.5 S,G&A 29,510 0 29,510 32,673 (9.7) Arbitration Award Income 0 0 0 0 Operating expenses 34,739 0 34,739 37,776 (8.0) Operating income 23,838 0 23,838 15,670 52.1 Interest expense (419) 0 (419) (511) (18.0) Interest income 1,692 0 1,692 770 119.7 Other income/(expense), net 731 0 731 165 343.0 Income before taxes 25,842 0 25,842 16,094 60.6 Tax expense 8,684 (178) 8,862 6,156 44.0 NET INCOME $17,158 $178 $16,980 $9,938 70.9 Net income per common share assuming dilution $0.62 $0.01 $0.61 $0.37 64.9% Weighted average number of shares Basic 26,695 26,695 26,695 26,051 Diluted 27,768 27,768 27,768 26,888 Inc/(Dec) vs prior year profit margin % Profit Margins: Gross profit 53.1% 53.1% 53.5% (0.4) R&D 4.7% 4.7% 5.1% S,G&A 26.7% 26.7% 32.7% Operating income 21.6% 21.6% 15.7% 5.9 Income before taxes 23.4% 23.4% 16.1% 7.3 Net income 15.5% 15.4% 9.9% Consolidated Statements of Income Adjusted for the Effect of the Arbitration Award FYE06 04/01/06 04/02/05 % Inc/ Effect Adjusted (Dec) of for the vs As Award Effect of As Prior Reported (1,3) Award Reported Year NET REVENUES $419,733 $0 $419,733 $383,598 9.4% Gross profit 220,535 0 220,535 197,876 11.5 R&D 26,516 0 26,516 19,994 32.6 S,G&A 121,351 0 121,351 118,039 2.8 Arbitration Award Income (26,350) (26,350) 0 0 Operating expenses 121,517 (26,350) 147,867 138,033 7.1 Operating income 99,018 26,350 72,668 59,843 21.4 Interest expense (1,917) 0 (1,917) (2,361) (18.8) Interest income 6,963 1,333 5,630 2,233 152.1 Other income/(expense), net 2,818 0 2,818 126 2,136.5 Income before taxes 106,882 27,683 79,199 59,841 32.3 Tax expense 37,806 10,717 27,089 20,202 34.1 NET INCOME $69,076 $16,966 $52,110 $39,639 31.5 Net income per common share assuming dilution $2.51 $0.62 $1.90 $1.52 25.0% Weighted average number of shares Basic 26,478 26,478 26,478 25,523 Diluted 27,474 27,474 27,474 26,145 Inc/(Dec) vs prior year profit margin % Profit Margins: Gross profit 52.5% 52.5% 51.6% 0.9 R&D 6.3% 6.3% 5.2% S,G&A 28.9% 28.9% 30.8% Operating income 23.6% 17.3% 15.6% 1.7 Income before taxes 25.5% 18.9% 15.6% 3.3 Net income 16.5% 12.4% 10.3% (1) Haemonetics issued its Q3FY06 earnings press release on January 31, 2006. At that time, $26.4 million in income from an arbitration award was classified as Other Income in the financial summary attached to the earnings release. In our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 9, 2006, the arbitration award income was classified within Operating Income. The financial information above represents Haemonetics’ Q3FY06 results with the award income reclassified to Operating Income. (2) Represents a reduction in the estimated income taxes relating to the arbitration award received on October 13, 2005 from Baxter including damages, reimbursement of attorneys’ fees and costs, and statutory interest since the time of the arbitration panel’s initial award on May 20, 2005 which was recorded in our third quarter ending December 31, 2005. (3) Represents the effect of the arbitration award received on October 13, 2005 from Baxter including damages, reimbursement of attorneys’ fees and costs, and statutory interest since the time of the arbitration panel’s initial award on May 20, 2005.
Haemonetics Corporation
CONTACT: Julie Fallon of Haemonetics Corporation, +1-781-356-9517,fallon@haemonetics.com
Web site: http://www.haemonetics.com//
