C R Bard Q2 Earnings and Revenues Beat Estimates - Analyst Blog

By
A A A

Medical technologies major CR Bard Inc. ( BCR ) posted an impressive 29.6% rise in adjusted earnings per share to $2.06 for the second quarter of 2014 from $1.59 in the prior-year quarter. Earnings per share surpassed the Zacks Consensus Estimate of $2.00 as well as the company's previously announced guidance of $1.98 to $2.02.

Adjusted earnings rose 22.0% to $160.7 million from $131.7 million in the prior-year quarter. Adjusted earnings exclude one-time items such as acquisition-related expenses, asset impairments, restructuring and litigation charges.

On a reported basis, BCR recorded a net loss of $119.4 million in the quarter, narrower than the year-ago level of $161.6 million by 26.1%. On a per share basis, net loss declined 21.7% to $1.59 from $2.03 in the second quarter of 2013.

C R Bard, Inc - Earnings Surprise | FindTheBest


Revenue

BCR reported revenues of $827.1 million, up 8.8% from $759.9 million in the second quarter of 2013. On a constant currency basis, revenues during the quarter grew 8.0%. Also, revenues steered past the Zacks Consensus Estimate of $814 million while revenue growth exceeded the company's previously announced guidance of 6 to 8%.

The quarterly royalty payment from Gore was approximately $37.6 million during the quarter. Revenues in the U.S. spiked 12.0% to $555.1 million in the second quarter of 2014.

Excluding the royalty payment, U.S. revenues went up 4.0% in the quarter.  International revenues grew 4.0% (or 2% in constant currency) to $272.0 million, led by healthy sales in emerging markets.

Product Group Results

Revenues from the core Vascular product category spiked 9.8% year over year (or 8% in constant currency) to $233.0 million. Sales in the U.S. dipped 4% whereas international sales were up 10%. Excluding the royalty payment from Gore and the impact from the divestiture of the Electrophysiology business, total Vascular sales inched up 2% in the second quarter.

Revenues from surgical graft went down 2% in the quarter. The Endovascular business grew 3% in the second quarter, excluding the royalty payment from Gore. Within the Endovascular business, peripheral PTA line revenues increased 12% with healthy double-digit growth outside the U.S., especially Europe, driven by sales of BCR's Lutonix drug-coated balloon.

Revenues from both the vena cava filter line and biopsy family of products increased 2%, whereas, revenues from the Stent business declined 5% due to continued price headwinds.

Revenues from the Urology business came in at $207.1 million, up 8.0% both in terms of reported and constant currency. Revenues from the U.S. increased 6%, while it improved 10% internationally. Sale of products acquired from Rochester Medical contributed roughly 700 bps to global growth in this business.

Within Urology, revenues from the basic drainage business increased 7%, with about 400 bps of growth generated from the acquired Rochester medical products.  I.C. Foley's revenues were up 3% globally and increased in the U.S. for the first time in the last four years. Revenues from the continence business soared 46% in the quarter, mainly driven by the recently acquired products.

Revenues from neurological specialties went down 2% on the back of double-digit decline in brachytherapy revenues while revenues from StatLock catheter stabilization line increased 3% in the reported quarter.

Revenues from the Oncology category rose 5.0% to $224.7 million, both in reported and constant currency. Revenues were up 4% in the U.S. and 8% outside the U.S. Revenues from peripherally inserted central catheters (PICC) grew 10% in the quarter with continued strong performance in the U.S. and abroad. However, revenues from Vascular Access ultrasound product line dipped 6%. Lastly, revenues from the dialysis catheter business rose 10% with strong performance in both the U.S. and emerging markets.

Revenues from Surgical Specialties business escalated 16.1% to $139.3 million, both in reported and constant currency. U.S. revenues soared 17% while international revenues were up 14%. About 10 percentage points of global growth was attributed to the sales of Arista Hemostat product line, acquired during the fourth quarter of 2013.

Revenues from the soft tissue repair business grew 7%. Within soft tissue, synthetic hernia products revenues posted a double-digit rise from the last-year quarter, aided by sales of BCR's new Phasix hybrid mesh. However, BCR reported declines of 18%, 6% and 8% in revenues from its natural tissue product line, hernia fixation business and performance irrigation business, respectively.

Revenues from Other product line rose 5.0% to $23.0 million from $21.9 million in the second quarter of 2013.

Margins

On an adjusted basis, gross margin stood at $507.3 million or 61.3%, up 20 bps from the prior-year quarter. Gross margin improvement was primarily led by the Gore royalty, partially mitigated by amortization of intangibles and unfavorable pricing.

Marketing, selling, and administrative (SG&A) expenses increased 8.6% to $244.9 million on an adjusted basis. However, as a percentage of sales, SG&A expenses contracted 10 bps to 29.6%. Research and development (R&D) expenses declined 1.5% to $64.2 million on an adjusted basis. As a percentage of sales, R&D expenses fell 80 bps to 7.8% in the second quarter.

Adjusted operating earnings increased 20.1% to $192.4 million while adjusted operating margin expanded 220 bps to 23.3% in the second quarter.

Financial Position

BCR exited the second quarter with cash, restricted cash and short-term investments of approximately $1 billion as of Jun 30, 2014 versus $1.1 billion as of Dec 31, 2013. Total debt stood at $1.6 billion, up 14.3% from $1.4 billion as of Dec 31, 2013. The debt-to-capital ratio was roughly 49% as of Jun 30, 2014.

Capital expenditures totaled $32.9 million for the second quarter.

Guidance

For the third quarter of 2014, BCR expects adjusted earnings in the range of $2.07 to $2.11 a share. The current Zacks Consensus Estimate of $2.09 lies within the guided range. The company also expects constant currency sales growth between 7 and 9% in the quarter.

For the full year, BCR increased its adjusted earnings per share guidance to the band of $8.25-$8.35 from the prior range of $8.20-$8.30. The current Zacks Consensus Estimate of $8.26 lies within the guided range. Constant currency sales growth is anticipated between 8 and 9% for 2014.

Our Take

BCR's second-quarter earnings and revenue beat hold promise, with both increasing on a year-over-year basis and exceeding the company's previously announced guidance. We are also encouraged by the company's updated earnings guidance for 2014.

BCR continues to focus on enhancing revenues from emerging markets which reflect immense potential. By capitalizing on strategic opportunities and efficiently executing its investment plans, BCR aims to drive sustainable revenue growth.

BCR currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical/dental supply industry include Align Technology Inc. ( ALGN ), Bio-Reference Laboratories Inc. ( BRLI ) and The Cooper Companies Inc. ( COO ). All these stocks carry a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BARD C R INC (BCR): Free Stock Analysis Report

ALIGN TECH INC (ALGN): Free Stock Analysis Report

COOPER COS (COO): Free Stock Analysis Report

BIO REFERNC LAB (BRLI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BCR , ALGN , COO , BRLI

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

89,070,840
  • $17.26 ▲ 3.23%
78,931,485
  • $7.02 ▲ 4.46%
77,555,734
  • $6.70 ▲ 6.69%
77,025,346
  • $24.66 ▲ 0.69%
74,713,335
  • $101.80 ▲ 1.82%
72,324,726
  • $7.64 ▲ 0.79%
57,112,188
  • $17.84 ▲ 55.27%
53,321,397
  • $18.01 ▼ 4.46%
As of 12/17/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com