BRAINTREE, Mass., May 2 /PRNewswire-FirstCall/ -- Haemonetics Corporation today reported its results for the fourth quarter and year end fiscal 2007. On a GAAP basis, for the fiscal year, net revenue increased to $449.6 million, up 7.1% over fiscal 2006. Full year diluted GAAP net earnings per share were $1.78 compared to $2.49 for FY 2006. GAAP financial results to which the Company is comparing include non-operating litigation related benefits of $0.61 per share in FY06 and $0.14 per share in FY07. FY07 adjusted earnings per share, excluding charges and benefits(1), were $2.17, up 14.6%.
For the fourth quarter, the Company reported GAAP net revenue of $116.9 million, up 5.9% and fourth quarter 2007 GAAP net earnings per share of $0.72, up 18.3% over Q4FY06. Q4FY07 adjusted earnings per share, excluding charges and benefits(1), were $0.65, up 6.9%.
The Company has posted a reconciliation of GAAP to adjusted results on its website at http://www.haemonetics.com/investors.
Brad Nutter, Haemonetics’ President and CEO, said, “In each of the past four years, we’ve improved the profitability of the Company. As a result, we have a four year compounded annual growth rate of 7.4% on revenue and 21.4% on adjusted operating income. This year’s financial performance repeats the positive drop through our investors have come to expect. On revenue growth of 7%, we grew adjusted operating income 10%. These results were achieved despite challenges in the Japanese market that we have previously noted. While these financial results tell part of the story, we also made excellent strategic progress, positioning us well for the future.”
EXPANDING THE BUSINESS
In the year, Haemonetics made significant progress in its efforts to expand the business for an improved growth profile. The Company reported the following highlights:
- A restructuring of its Japanese and other Asian businesses - A long term agreement with Talecris Plasma Resources to be its primary supplier of plasma collection systems - An agreement with the American Red Cross to expand its use of Haemonetics’ red cell technology - An agreement with Canadian Blood Services to convert its platelet collection systems to Haemonetics’ technology from a competitive technology - The acquisition of Arryx, Inc., giving Haemonetics access to new cell separation and manipulation technology - The acquisition of Information Data Management, Inc. (“IDM”) to strengthen Haemonetics’ position in management information products and services for blood collection and laboratory processes - Successful launch of an enterprise resource planning system (“ERP”) - The launch of new products: SmartSuction Harmony(TM), cardioPAT(R), E-Que(TM) and Cymbal(TM) systems
BALANCE SHEET AND SHARE REPURCHASE
Haemonetics ended the year with a cash balance of $229 million, and $29 million of short and long term debt. During the year Haemonetics completed a share repurchase program under which the Company spent $40 million to repurchase 853,000 shares of its common stock. The Company generated $42 million in free cash flow for the year, and reduced days sales outstanding (“DSO”) by six days from Q4FY06.
The Company also announced plans to initiate a new $75 million share repurchase program. Repurchases will begin in the near future.
REVENUE GROWTH DRIVERS
Worldwide plasma disposables revenue was $127 million for the year, up 16.4%. U.S. plasma disposables revenue was $72 million, up 30.4%. Plasma disposable sales benefited from continued growth in U.S. and European plasma collections.
Brad Nutter said, “The plasma market has exciting growth prospects for the next few years. We have strong market share, particularly in the U.S. and are well positioned to capitalize on the collection growth being driven by demand for plasma-derived pharmaceuticals. In the year, we placed approximately 1,200 incremental devices globally to meet the collection demand and anticipate placing another 1,500 in FY08.”
Red cell disposables revenue benefited from unit growth in both the U.S. and Europe. Worldwide red cell disposables revenue was $43 million for the year, up 14.7%. U.S. red cell disposables revenue was $36 million, up 18.6%. Late in the fourth quarter, Haemonetics received FDA clearance of the Cymbal blood collection system, its next generation red cell technology to collect two units of red cells from one donor. The Cymbal system, which is about half the size of Haemonetics’ current red cell technology and is battery operated, is specifically designed to meet the needs of mobile blood collections which represent over 60% of all blood donations globally. The Cymbal system is currently being evaluated at customer sites in the U.S. and Europe.
In the year, Haemonetics also announced a multi-year agreement with the American Red Cross to continue to penetrate the large, untapped whole blood collection market by converting manual, whole blood donations to Haemonetics’ automated red cell systems.
The Company reported ongoing progress in its transition to direct U.S. sales of the OrthoPAT(R) system. Worldwide OrthoPAT disposables revenue was $31 million for the year, up 39.6%. U.S. OrthoPAT annual disposables revenue grew 60.7%. OrthoPAT revenue growth was driven by U.S. price improvement and new customers. Sales gained momentum in the fourth quarter with sequential unit growth of more than 10%. Haemonetics continues to see significant opportunity for growth at existing accounts with low penetration.
Worldwide software and services revenue grew to $34 million for the year, up 25.4%. U.S. software and services sales revenue was $26 million, up 44%. Software and services sales growth has been driven largely by Haemonetics’ 5D(TM) Information Management division, and was bolstered in the fourth quarter with the addition of the IDM product portfolio. Haemonetics acquired IDM in February 2007. IDM’s information technology for blood banks complements 5D’s suite of software products and supports Haemonetics’ objective to help blood banks better manage their supply chains through information management systems that reduce errors and optimize efficiencies.
FY08 GUIDANCE
FY08 guidance is adjusted to exclude approximately $4-5 million, or approximately $0.11 per share, of anticipated costs to restructure Haemonetics’ European business. FY08 guidance includes stock compensation expense of $0.29 per share which compares to $0.26 per share of stock compensation expense in FY07. Stock compensation expense was excluded from the adjusted results reported in FY07 for reasons of comparability with FY06 when stock compensation was not required to be expensed.
As a result, Haemonetics FY08 full year as adjusted guidance is: - revenue growth of 7-9% - gross margins improving to approximately 51% - operating income growing approximately 10% - earnings per share in the range of $2.02-$2.12
FY08 GAAP earnings per share guidance is $1.91-$2.01 including the impact of restructuring costs.
Revenue growth drivers include: plasma, growing by 10-13%; red cell, growing by 15-20%; the OrthoPAT system, growing by 10-15%; and software and services growing by 18-22%.
In FY08, the Company expects to generate over $30 million of free cash flow. The Company continues to make investments in the business, including ERP and plant expansion.
Haemonetics has posted potential income scenarios reflecting guidance ranges on its website at www.haemonetics.com.
COMPANY TO HOST INVESTOR ROUNDTABLE
Haemonetics will host an investor roundtable on May 23, 2007 at its corporate headquarters in Braintree, MA. For more information, please contact Denise McEvily at dmcevily@haemonetics.com.
CONFERENCE CALL
Haemonetics will hold a conference call on Wednesday, May 2nd at 10:00 am Eastern to discuss these results. Interested parties can participate in the conference call by dialing 888-694-4641 (U.S. only) or (973) 582-2734 (International) with conference ID 8655838. The call will be replayed through May 17, 2007 at (877) 519-4471 (U.S. only) or (973) 341-3080 (International) using PIN 8655838.
FOOTNOTES (1) As indicated in the attachment titled, “Consolidated Statement of Income Adjusted for the Effect of Stock Based Compensation Expense, Restructuring Costs, Arryx IPRD, and Other Unusual Charges,” Haemonetics’ FY07 GAAP financial results include five previously announced items: - FAS 123R required stock option expense (pre-tax) charges of $10.3 million, or $0.26 per share - Restructuring costs in connection with changes to the Company’s international operations resulting in (pre-tax) charges of $3.5 million, or $0.08 per share - An in-process R&D charge arising from the acquisition of Arryx resulting in a (pre- and after tax) charge of $9 million, or $0.34 per share - A one-time tax benefit from a resolution of tax contingencies resulting in a benefit of $4 million, or $0.14 per share - Proceeds from a litigation settlement
FY06 GAAP financial results to which the Company is comparing include an arbitration award benefit (pre-tax) of $26 million, or $0.61 per share.
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 as part of this release which exclude the resolution of a tax contingency, stock compensation expense, restructuring costs, and an in-process research and development charge and other unusual items associated with the acquisition of Arryx. 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 FYE07 3/31/07 4/01/06 %Inc/(Dec) vs As Reported As Reported Prior Year NET REVENUES $116,919 $110,395 5.9% Gross profit 58,346 58,577 (0.4) R&D 6,540 5,229 25.1 S,G&A 31,815 29,510 7.8 Arbitration and Settlement Income (5,700) 0 --- Cost to Equity 0 152 (100.0) Operating expenses 32,654 34,891 (6.4) Operating income 25,691 23,686 8.5 Interest expense (68) (419) (83.8) Interest income 1,961 1,692 15.9 Other income, net 830 731 13.5 Income before taxes 28,415 25,690 10.6 Tax expense 8,631 8,684 (0.6) NET INCOME $19,784 $17,006 16.3 Net income per common share assuming dilution $0.72 $0.61 18.3% Weighted average number of shares Basic 26,469 26,695 Diluted 27,313 27,768 Inc/(Dec)vs prior year profit margin Profit Margins: % Gross profit 49.9% 53.1% (3.2)% R&D 5.6% 4.7% 0.9% S,G&A 27.2% 26.7% 0.5% Operating income 22.0% 21.5% 0.5% Income before taxes 24.3% 23.3% 1.0% Net income 16.9% 15.4% 1.5% CONSOLIDATED STATEMENTS OF INCOME FOR FYE07 3/31/07 4/01/06 %Inc/(Dec)vs As Reported As Reported Prior Year NET REVENUES $449,607 $419,733 7.1% Gross profit 227,300 220,535 3.1 R&D 23,884 26,516 (9.9) S,G&A 137,073 121,351 13.0 Arbitration and Settlement Income (5,700) (26,350) (78.4) In Process R&D 9,073 0 --- Cost to Equity 225 680 (66.9) Operating expenses 164,555 122,197 34.7 Operating income 62,745 98,338 (36.2) Interest expense (1,256) (1,917) (34.5) Interest income 7,864 6,963 12.9 Other income/(expense), net 2,983 2,818 5.9 Income before taxes 72,336 106,202 (31.9) Tax expense 23,227 37,806 (38.6) NET INCOME 49,109 68,396 (28.2) Net income per common share assuming dilution $1.78 $2.49 (28.7%) Weighted average number of shares Basic 26,745 26,478 Diluted 27,648 27,474 Inc/(Dec)vs prior year profit margin Profit Margins: % Gross profit 50.6% 52.5% (1.9)% R&D 5.3% 6.3% (1.0)% S,G&A 30.5% 28.9% 1.6% Operating income 14.0% 23.4% (9.4)% Income before taxes 16.1% 25.3% (9.2)% Net income 10.9% 16.3% (5.4)% REVENUE ANALYSIS FOR THE FOURTH QUARTER FYE07 3/31/07 04/01/06 As Reported As Reported %Inc/(Dec) Revenues by Geography United States $50,570 $45,449 11.3% International 66,349 64,946 2.2 Net Revenues $116,919 $110,395 5.9 Disposable Revenues by Product Family Donor: Plasma $30,718 $28,398 8.2 Blood Bank 32,218 33,936 (5.1) Red Cell 11,301 11,168 1.2 $74,237 $73,502 1.0 Patient: Surgical 17,254 16,612 3.9 OrthoPAT 8,383 6,042 38.7 $25,637 $22,654 13.2 Subtotal $99,874 $96,156 3.9 Equipment $7,022 $7,212 (2.6) Software & Service 10,023 7,027 42.6 Net Revenues $116,919 $110,395 5.9% REVENUE ANALYSIS FOR FYE07 3/31/07 04/01/06 As Reported As Reported % Inc/(Dec) Revenues by Geography United States $193,620 $161,679 19.8% International 255,987 258,054 (0.8) Net Revenues $449,607 $419,733 7.1 Disposable Revenues by Product Family Donor: Plasma $126,971 $109,100 16.4 Blood Bank 126,216 132,407 (4.7) Red Cell 43,406 37,830 14.7 $296,593 $279,337 6.2 Patient: Surgical 66,552 65,893 1.0 OrthoPAT 30,515 21,864 39.6 $97,067 $87,757 10.6 Subtotal $393,660 $367,094 7.2 Equipment $22,229 $25,759 (13.7) Software & Service 33,718 26,880 25.4 Net Revenues $449,607 $419,733 7.1% CONSOLIDATED BALANCE SHEETS Period ending 03/31/07 4/1/2006(1) Assets Cash & cash equivalents $229,227 $250,667 Accounts receivable, net 91,832 86,901 Inventories, net 61,797 54,571 Other current assets 20,815 26,265 Total current assets 403,671 418,404 Net PP&E 90,775 75,266 Other assets 78,289 51,787 Total assets $572,735 $545,457 CONSOLIDATED BALANCE SHEETS Period ending 03/31/07 4/1/2006(1) Liabilities & Stockholders’ Equity S/T debt & current maturities $22,201 $26,176 Other current liabilities 59,816 61,940 Total current liabilities 82,017 88,116 Long-term debt 6,675 12,977 Other long-term liabilities 4,069 3,800 Stockholders’ equity 479,974 440,564 Total liabilities & equity $572,735 $545,457 Haemonetics Corporation Financial Summary for FYE07 FREE CASH FLOW RECONCILIATION (Unaudited data in thousands) FREE CASH FLOW RECONCILIATION: Fourth Quarter Year To Date 3-31-07 4-1-06 3-31-07 4-1-06 GAAP CASH FLOW FROM OPERATIONS $24,095 $26,123 $83,562 $85,616 Capital expenditures ($13,453) ($12,412) ($40,438) ($33,774) Proceeds from sale of property, plant and equipment $255 $1,734 $2,843 $5,689 Net investment in property, plant and equipment ($13,198) ($10,678) ($37,595) ($28,085) Less: Legal settlement and arbitration award, net of tax $3,979 $178 $3,979 $19,671 Free Cash Flow, adjusted for legal settlement and arbitration award $6,918 $15,267 $41,988 $37,860 FOURTH QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS (7) Effect of Resolution Stock of Based Tax Compen- Restruc- 3/31/07 Contin- sation turing As gencies Expense Costs Reported (3) (4) (5) NET REVENUES $116,919 $0 $0 $0 Gross profit 58,346 0 (59) 0 R&D 6,540 0 91 0 S,G&A 31,815 0 2,681 586 Arbitration and Settlement Income (5,700) 0 0 0 Cost to Equity 0 0 0 0 Operating expenses 32,654 0 2,772 586 Operating income 25,691 0 (2,831) (586) Interest expense (68) 0 0 0 Interest income 1,961 0 0 0 Other income/(expense), net 830 0 0 0 Income before taxes 28,415 0 (2,831) (586) Tax expense 8,631 (399) (820) (176) NET INCOME $19,784 $399 ($2,011) ($410) Net income per common share assuming dilution $0.72 $0.01 ($0.07) ($0.02) Weighted average number of shares Basic 26,469 26,469 26,469 26,469 Diluted 27,313 27,313 27,313 27,313 FOURTH QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS (7) Adjusted % Baxter 3/31/07 4/01/06 Inc/(Dec) PI As As vs Settlement Adjusted Adjusted Prior (6) (7) (8) Year NET REVENUES $0 $116,919 $110,395 5.9% Gross profit 0 58,405 58,577 (0.3) R&D 0 6,449 5,229 23.3 S,G&A 0 28,548 29,510 (3.3) Arbitration and Settlement Income (5,700) 0 0 --- Cost to Equity 0 0 0 --- Operating expenses (5,700) 34,997 34,739 0.7 Operating income 5,700 23,409 23,838 (1.8) Interest expense 0 (68) (419) (83.8) Interest income 0 1,961 1,692 15.9 Other income/(expense), net 0 830 731 13.5 Income before taxes 5,700 26,131 25,842 1.1 Tax expense 1,721 8,305 8,862 (6.3) NET INCOME $3,979 $17,826 $16,980 5.0 Net income per common share assuming dilution $0.15 $0.65 $0.61 6.9% Weighted average number of shares Basic 26,469 26,469 26,695 Diluted 27,313 27,313 27,768 Inc/(Dec) 3/31/07 4/01/06 vs prior 3/31/07 As As year As Adjusted Adjusted profit Profit Margins: Reported (6) (7) margin % Gross profit 49.9% 50.0% 53.1% (3.1)% R&D 5.6% 5.5% 4.7% 0.8% S,G&A 27.2% 24.4% 26.7% (2.3)% Operating income 22.0% 20.0% 21.6% (1.6)% Income before taxes 24.3% 22.4% 23.4% (1.0)% Net income 16.9% 15.2% 15.4% (0.2)% FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS (7) Effect of Resolution Stock Arryx of Based IPRD and Tax Compensa- Restruc- 3/31/07 Other Contin- tion turing As Unusual gencies Expense Costs Income Statement: Reported (2) (3) (4) (5) NET REVENUES $449,607 $0 $0 $0 $0 Gross profit 227,300 0 0 (217) 0 R&D 23,884 0 0 335 0 S,G&A 137,073 0 0 9,700 3,518 Arbitration and Settlement Income (5,700) 0 0 0 0 In-Process R&D 9,073 9,073 0 0 0 Cost to Equity 225 225 0 0 0 Operating expenses 164,555 9,298 0 10,035 3,518 Operating income 62,745 (9,298) 0 (10,252) (3,518) Interest expense (1,256) 0 0 0 0 Interest income 7,864 0 0 0 0 Other income/ (expense), net 2,983 0 0 0 0 Income before taxes 72,336 (9,298) 0 (10,252) (3,518) Tax expense 23,227 0 (3,967) (2,945) (1,180) NET INCOME 49,109 (9,298) $3,967 (7,307) (2,338) Net income per common share assuming dilution $1.78 ($0.34) $0.14 ($0.26) ($0.08) Weighted average number of shares Basic 26,745 26,745 26,745 26,745 26,745 Diluted 27,648 27,648 27,648 27,648 27,648 FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS (7) Adjusted % Baxter 3/31/07 04/01/06 Inc/(Dec) PI As As vs. Settlement Adjusted Adjusted Prior Income Statement: (6) (7) (8) Year NET REVENUES $0 449,607 $419,733 7.1% Gross profit 0 227,517 220,535 3.2 R&D 0 23,549 26,516 (11.2) S,G&A 0 123,855 121,351 2.1 Arbitration and Settlement Income (5,700) 0 0 In-Process R&D 0 0 0 --- Cost to Equity 0 0 0 --- Operating expenses (5,700) 147,404 147,867 (0.3) Operating income 5,700 80,113 72,668 10.2 Interest expense 0 (1,256) (1,917) (34.5) Interest income 0 7,864 5,630 39.7 Other income/(expense), net 0 2,983 2,818 5.9 Income before taxes 5,700 89,704 79,199 13.3 Tax expense 1,721 29,598 27,089 9.3 NET INCOME $3,979 $60,106 $52,110 15.3 Net income per common share assuming dilution $0.14 $2.17 $1.90 14.6% Weighted average number of shares Basic 26,745 26,745 26,478 Diluted 27,648 27,648 27,474 Inc/(Dec) vs. prior 3/31/07 3/31/07 04/01/06 year As Reported As Adjusted As Adjusted profit Profit Margins: (7) (8) margin % Gross profit 50.6% 50.6% 52.5% (1.9)% R&D 5.3% 5.2% 6.3% (1.1)% S,G&A 30.5% 27.5% 28.9% (1.4)% Operating income 14.0% 17.8% 17.3% 0.5% Income before taxes 16.1% 20.0% 18.9% 1.1% Net income 10.9% 13.4% 12.4% 1.0% (1) Reflects the adjustment to convert our investment in Arryx, Inc. to the equity method for periods prior to the acquisition. (2) IPRD and Cost to Equity impact of Arryx acquisition (3) Income tax expense was reduced during the quarter due to the fina
