BRAINTREE, Mass., Aug. 2 /PRNewswire-FirstCall/ -- Haemonetics Corporation today reported first quarter fiscal 2008 GAAP net revenues of $122 million, up 10.2%, net income of $13 million, up 13.6%, and net earnings per share of $0.46, up 16.0%.
First quarter fiscal 2008 adjusted net income, excluding charges, was $14 million, up 13.0%, and adjusted earnings per share were $0.50, up 15.1%. Haemonetics’ FY08 adjusted financial results exclude restructuring costs in connection with changes to the Company’s international operations resulting in (pre-tax) charges of $1.6 million, or $0.04 per share. Q1FY07 adjusted financial results to which the Company is comparing also exclude restructuring charges of $1.6 million (pre-tax), or $0.04 per share. 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 the quarter, Haemonetics performed well. We executed to our new vision to be the global leader in blood management solutions for our customers. On an adjusted basis, we leveraged 10% growth in revenue into 13% growth in net income and 15% growth in earnings per share.”
FINANCIALS
In addition to revenues and earnings per share, Haemonetics reported first quarter gross profit of $61 million, up 7.2%, and gross margin of 50.4%, down 140 basis points. Gross margin was impacted by product mix as the Company’s lower gross margin contributors, plasma and equipment, had strong sales growth. Adjusted operating expenses were $44 million, up 7.7%, with the increase coming from two areas: 1) planned Enterprise Resource Planning (“ERP”) spending; and 2) the acquisitions of Arryx and IDM, whose expenses were not included in Q1FY07 financial reports. Haemonetics’ tax rate was 31.5% in the quarter and reflects the resolution of a foreign tax contingency.
Haemonetics ended the quarter with a cash balance of $216 million, and $25 million of short and long term debt. The Company generated $4 million in free cash flow for the quarter. During the quarter Haemonetics initiated a $75 million share repurchase program. Under that program, the Company spent $25 million in the quarter.
EXPANDING THE BUSINESS
In the quarter, Haemonetics continued to make progress expanding the business. The Company reported the following highlights:
-- Ongoing restructuring of the European business, which reported 14.4% growth in the quarter -- The non-dilutive acquisition of Infonale, Inc., giving Haemonetics access to information technology and services platforms for the hospital market -- Revenues of $1.2 million from seven new products that the Company has launched
QUARTERLY PRODUCT LINE GROWTH
Plasma disposables revenue was $36 million for the quarter, up 13.0%. Plasma disposable sales benefited from continued growth in U.S. and European plasma collections. Haemonetics expects that growth in the plasma market will continue to drive strong plasma sales well into fiscal 2009.
Blood bank disposables revenue was $33 million for the quarter, up 5.3%. Blood bank growth was driven by strong sales in Europe and Asia as the Company sees early benefits from a new sales structure that mirrors the structure in the U.S.
Red cell disposables revenue was $11 million for the quarter, up 3.2%. Red cell disposables revenue softness was offset by strong sales of red cell equipment as the Company launched the Cymbal blood collection system. Including equipment sales, total revenues for the Red Cell product line grew 16.1%. The Company expects that red cell equipment sales will continue to contribute to product line revenue growth in the year. The Cymbal system is Haemonetics’ next generation red cell technology to collect two units of red cells from one donor, and strong Cymbal equipment sales are a leading indicator of future disposable sales.
Software and services revenue grew to $10 million for the quarter, up 55.7%. Software and services showed strength across all product lines. Information Data Management, Inc. (“IDM”), which Haemonetics acquired in January 2007, contributed $1.9 million in sales. Additional sales growth was driven by Haemonetics’ 5D(TM) Information Management division which grew organically by 23%.
OrthoPAT(R) disposables revenue was $8 million for the quarter, up 8.4%. OrthoPAT system revenue growth was driven by disposable unit growth. The Company placed an incremental 89 OrthoPAT devices and contracted with 28 new accounts. Equipment placements are expected to continue to drive disposables growth in the second half of the year.
Equipment revenue was $7 million for the quarter, up 24.3% and driven by strong red cell equipment sales in the U.S. and plasma equipment sales in Europe.
FY08 GUIDANCE
Haemonetics affirmed its FY08 guidance of revenue growth of 7-9%, and said that it now expects full year revenues will grow in the high end of that range. The Company also affirmed adjusted operating income growing approximately 10%, and adjusted earnings per share in the range of $2.02- $2.12. The Company also said it will achieve the gross profit range of $248- $253 million that it guided to at its May investor meeting.
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.
FY08 GAAP earnings per share guidance is $1.91-$2.01 including the impact of restructuring costs.
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, its installed base of plasma collection devices, and plant expansion.
Haemonetics has posted potential income scenarios reflecting guidance ranges on its website at http://www.haemonetics.com.
CONFERENCE CALL
Haemonetics will hold a conference call on Thursday, August 2nd at 10:00 am Eastern to discuss these results. Interested parties can participate in the conference call by dialing 888-802-8577 (U.S. only) or (973) 935-8754 (International) with conference ID 8987526. The call will be replayed through August 17, 2007 at (877) 519-4471 (U.S. only) or (973) 341-3080 (International) using PIN 8987526.
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.
As part of this release, Haemonetics has presented supplemental non-GAAP financial results restructuring costs. 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 FIRST QUARTER FYE08 % Inc/(Dec) 6/30/07 As 7/01/06 As vs Prior Reported Reported Year NET REVENUES $121,936 $110,674 10.2% Gross profit 61,494 57,373 7.2 R&D 6,276 5,574 12.6 S,G&A 39,439 36,908 6.9 Operating expenses 45,715 42,482 7.6 Operating income 15,779 14,891 6.0 Interest expense (207) (425) (51.3) Interest income 1,903 2,026 (6.1) Other income, net 957 912 4.9 Income before taxes 18,432 17,404 5.9 Tax expense 5,755 6,248 (7.9) NET INCOME $12,677 $11,156 13.6 Net income per common share assuming dilution $0.46 $0.40 16.0% Weighted average number of shares Basic 26,534 26,900 Diluted 27,403 27,929 Inc/(Dec) vs prior year profit PROFIT MARGINS: margin % Gross profit 50.4% 51.8% (1.4%) R&D 5.1% 5.0% 0.1% S,G&A 32.3% 33.3% (1.0%) Operating income 12.9% 13.5% (0.6%) Income before taxes 15.1% 15.7% (0.6%) Net income 10.4% 10.1% 0.3% REVENUE ANALYSIS FOR THE FIRST QUARTER FYE08 6/30/07 As 07/01/06 As % Inc/ Reported Reported (Dec) Revenues by Geography United States $54,831 $46,420 18.1% International 67,105 64,254 4.4 Net Revenues $121,936 $110,674 10.2 Disposable Revenues by Product Family Donor: Plasma $35,955 $31,819 13.0 Blood Bank 33,032 31,366 5.3 Red Cell 10,944 10,600 3.2 $79,931 $73,785 8.3 Patient: Surgical 16,694 17,201 (2.9) OrthoPAT 8,187 7,556 8.4 $24,881 $24,757 0.5 Subtotal $104,812 $98,542 6.4 Equipment $6,968 $5,608 24.3 Software & Services 10,156 6,524 55.7 Net Revenues $121,936 $110,674 10.2% CONSOLIDATED BALANCE SHEETS Period ending Balance Sheet: 06/30/07 3/31/07 (1) Assets Cash & cash equivalents $216,056 $229,227 Accounts receivable, net $91,917 $91,832 Inventories, net $68,209 $61,797 Other current assets $26,884 $20,815 Total current assets $403,066 $403,671 Net PP&E $95,330 $90,775 Other assets $79,708 $78,289 Total assets $578,104 $572,735 Period ending 06/30/07 3/31/007 (1) Liabilities & Stockholders’ Equity S/T debt & current maturities $18,601 $22,201 Other current liabilities 67,514 $59,816 Total current liabilities 86,115 82,017 Long-term debt 6,522 6,675 Other long-term liabilities 8,912 4,395 Stockholders’ equity 476,555 479,648 Total liabilities & equity $578,104 $572,735 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR CERTAIN ITEMS FIRST QUARTER FYE08 Restruct- 6/30/07 As uring 6/30/07 As Reported Costs(2) Adjusted (3) NET REVENUES $121,936 $0 $121,936 Gross profit 61,494 0 61,494 R&D 6,276 0 6,276 S,G&A 39,439 1,629 37,810 Operating expenses 45,715 1,629 44,086 Operating income 15,779 (1,629) 17,408 Interest expense (207) 0 (207) Interest income 1,903 0 1,903 Other income/(expense), net 957 0 957 Income before taxes 18,432 (1,629) 20,061 Tax expense 5,755 (558) 6,313 NET INCOME $12,677 ($1,071) $13,748 Net income per common share assuming dilution $0.46 ($0.04) $0.50 Weighted average number of shares Basic 26,534 26,534 26,534 Diluted 27,403 27,403 27,403 Restru- Adjusted % 7/01/06 As cturing 7/01/06 As Inc/(Dec) vs Reported Costs(2) Adjusted (4) Prior Year NET REVENUES $110,674 $0 $110,674 10.2% Gross profit 57,373 0 57,373 7.2 R&D 5,574 0 5,574 12.6 S,G&A 36,908 1,561 35,347 7.0 Operating expenses 42,482 1,561 40,921 7.7 Operating income 14,891 (1,561) 16,452 5.8 Interest expense (425) 0 (425) (51.3) Interest income 2,026 0 2,026 (6.1) Other income/ (expense), net 912 0 912 4.9 Income before taxes 17,404 (1,561) 18,965 5.8 Tax expense 6,248 (546) 6,794 (7.1) NET INCOME $11,156 (1,015) $12,171 13.0 Net income per common share assuming dilution $0.40 ($0.04) $0.44 15.1% Weighted average number of shares Basic 26,900 26,900 26,900 Diluted 27,929 27,929 27,929 Inc/(Dec) vs 6/30/07 7/01/06 prior year As As profit Adjusted(3) Adjusted(4) margin % PROFIT MARGINS: Gross profit 50.4% 51.8% (1.4%) R&D 5.1% 5.0% 0.1% S,G&A 31.0% 31.9% (0.9%) Operating income 14.3% 14.9% (0.6%) Income before taxes 16.5% 17.1% (0.6%) Net income 11.3% 11.0% 0.3% FREE CASH FLOW RECONCILIATION 6/30/07 7/01/06 GAAP CASH FLOW FROM OPERATIONS $14,181 $17,509 Capital expenditures ($11,448) ($10,307) Proceeds from sale of property, plant and equipment $1,305 $1,024 Net investment in property, plant and equipment ($10,143) ($9,283) Free Cash Flow $4,038 $8,226 (1) Reflects the adjustment to convert our investment in Arryx, Inc. to the equity method for periods prior to the acquisition (2) Restructuring costs primarily include severance and related costs associated with eliminating or reorganizing certain positions in our international business operations (3) “As Adjusted” for FY 08 is comprised of “As Reported” less the “Restructuring Costs” (4) “As Adjusted” for FY 07 is comprised of “As Reported” less the “Restructuring Costs”
Haemonetics Corporation
CONTACT: Julie Fallon of Haemonetics Corporation, +1-781-356-9517,+1-617-320-2401, fallon@haemonetics.com
