) reported adjusted earnings per share (EPS) of 66 cents in the
second quarter of fiscal 2014, a growth of 24% from the year-ago
quarter and ahead of the Zacks Consensus Estimate of 56 cents.
On a reported basis Haemonetics' earnings per share was 32 cents,
a major improvement from the year-ago quarter of 13 cents.
Revenue in Details
Total revenues during the reported quarter were $235.7 million,
up 8.1% from $218.2 million recorded a year-ago quarter.
Excluding recently-acquired whole blood business, organic revenue
declined 1% year over year and increased 2% on a constant
Total Revenue, however, missed the Zacks Consensus Estimate of
Segments in Detail
Haemonetics has three product categories namely Disposables,
Equipment and Software solutions.
comprising of Plasma Disposables, Blood center disposables and
Hospital Disposables reported revenues of $203.7 million, up 9.6%
from the year ago quarter. Russia, China and other emerging
markets were the major revenue drivers, fueled by growth in North
revenue were $17.1 million for the quarter, down $0.9 million or
5.1% year over year.
Equipment and Other Revenue
were $14.9 million for the quarter, improving $0.6 million or 4%
year over year. Particular strength was noticed in TEG equipment
sales in North America, Russia and China.
During the quarter, Haemonetics experienced organic revenue
growth of 4% in North America and 26% in Asia Pacific. Strength
in the Plasma business drove growth in North America. Sales
improvement in the Asia Pacific region was attributable to the
shift to a direct business model in Australia and New Zealand,
complemented by robust growth in China and other emerging
On the other hand, a 9% decline in Europe accounted from the
aggressive return of a surgical competitor in the market. The 16%
fall in Japan was mainly owing to the weakness of the Yen
The fiscal second-quarter gross profit was $123.4 million, up 11%
year over year. Adjusted gross margin was 52.3%, a healthy
expansion of 120 basis points (bps) from the year-ago quarter.
The surge in the gross margin can be attributed to significant
improvement in the base business, driven by productivity programs
yielding cost efficiencies, partially offset by unfavorable
revenue mix of lower-margin whole blood and plasma disposables.
Adjusted operating expenses were $74 million in the reported
quarter, up $2.5 million or 4% year over year. Adjusted operating
margin was 20.8%, marking a rise of 260 basis points.
The company ended the second quarter of fiscal 2014 with $159.1
million of cash and cash equivalent and long term debt of $420
During the reported quarter, the company generated $49 million in
free cash flow (before integration and transformation costs).
Haemonetics provided an update to its fiscal 2014 outlook. The
company expects organic revenues to grow 2-4% in constant
currency and 0-2% on year on year basis, including the impact of
Yen weakness. Whole blood revenues are expected to be
around $190 million for fiscal 2014. Total revenue growth is
expected to vary in the range of 5-7% for the full year.
Adjusted gross margin is expected to remain at 52% while adjusted
operating income is estimated to be within $175 million to $180
million in fiscal 2014, inducing an operating margin of 19%.
The company reaffirms its previous adjusted EPS in the range of
$2.30-$2.40, excluding 0.37 cents of deal amortization.
The company delivered an impressive growth during the quarter.
All its products are steadily gaining momentum. With a strong
cash balance and potential opportunities evolving from emerging
markets, the company has excellent growth prospects.
Moreover, the successful integration of the SOLX collection
with the recent acquisition of Hemerus Medical, is expected to
garner greater revenue share in the forthcoming quarters.
However, the global downturn and a tough competitive landscape
continue to pose threats to Haemonetics going forward.
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Currently, Haemonetics carries a Zacks Rank #3 (Hold). Other
well-placed stocks that are worth a look are
Bio-Rad Laboratories, Inc.
INSYS Therapeutics, Inc.
) each carrying a Zacks Rank #1 (Strong Buy) and
Boston Scientific Corp.
) carrying a Zacks Rank #2 (Buy).