Medical technologies major
CR Bard Inc.
) 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 |
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
Product Group Results
Revenues from the core
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
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
Revenues from the
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
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.
product line rose 5.0% to $23.0 million from $21.9 million in the
second quarter of 2013.
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
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.
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
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.
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.
), Bio-Reference Laboratories Inc. (
) and The Cooper Companies Inc. (
). All these stocks carry a Zacks Rank #2 (Buy).
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