AmerisourceBergen Corporation's
(
ABC
) fourth quarter fiscal 2012 earnings (excluding employee
severance and acquisition costs) of 72 cents per share beat the
Zacks Consensus Estimate of 68 cents and the year-ago earnings by
23%. A lower share count aided fourth quarter earnings.
Fourth quarter revenues slipped 4.4% to $19.5 billion. Revenues
fell short of the Zacks Consensus Estimate of $20.2 billion.
The company's fiscal 2012 earnings (excluding employee severance
and acquisition costs) of $2.87 per share beat the Zacks
Consensus Estimate of $2.83 and the year-ago earnings by 12%. A
lower share count aided fiscal 2012 earnings.
Total revenue for the year slipped 0.6% to $79.5 billion.
Revenues fell short of the Zacks Consensus Estimate of $80.3
billion.
Quarter in Details
Following the acquisition of World Courier Group earlier in the
year, AmerisourceBergen made some adjustments in its reporting
format. The company decided to report results of the ABDC and
ABSG units under the Pharmaceutical Distribution segment. Results
of the World Courier Group and ABCS have been clubbed under the
"Other" head.
The decline in total revenues in the reported quarter was
primarily attributable to the disappointing performance of the
ABDC unit, where sales slipped 8%.
Revenues from the Pharmaceutical Distribution segment, which
accounted for 98% of total revenues, slipped 6% to $19.1 billion
during the reported quarter.
The ABSG unit performed well during the quarter with sales
climbing 6%. Results of the segment were boosted by growth in
third party logistics and vaccine and physician office
distribution business at AmerisourceBergen. Revenues were boosted
by $335 million by AmerisourceBergen's acquisitions of World
Courier and TheraCom.
Gross profit for the quarter climbed 18.6% to $719.5 million.
Gross profit was boosted by AmerisourceBergen's recent
acquisitions and the encouraging performance of generic
pharmaceuticals.
Operating expenses (excluding employee severance and acquisition
costs) during the quarter climbed 16.2% to $394.1 million.
The quarter saw AmerisourceBergen buy back shares worth $648
million.
We note that AmerisourceBergen authorized a new share repurchase
program of $750 million, having completed the earlier $650
million share buyback program - this should help boost the bottom
line. Currently, the total authorized amount for repurchases
stands at $847 million. We believe that the buyback program
highlights the company's commitment to return value to
shareholders.
Along with the fourth quarter results, the company announced that
it plans to sell its contract pharmaceutical packaging business,
AndersonBrecon in order to streamline its operations. This
business has been classified by the company as discontinued
operations.
Outlook for Fiscal 2013
The company expects diluted earnings from continuing operations
in the range of $3.06 to $3.16 per share, reflecting year over
year growth of 11% - 14%. The company expects revenues to grow in
the range of 6% - 9%. The company plans to repurchase shares
worth at least $200 million in 2013.
Our Recommendation
We currently have a Neutral recommendation on AmerisourceBergen.
The stock carries a Zacks #3 Rank (short-term Hold rating).
We believe the company is well positioned for growth given the
strong performance of its generics business. However, competition
in the pharmaceutical distribution market remains tough, which
includes players like
McKesson Corporation
(
MCK
).
AMERISOURCEBRGN (ABC): Free Stock Analysis
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