) reported adjusted earnings of 38 cents per share in the first
quarter of fiscal 2015, which decreased a significant 17.4% from
the year-ago level of 46 cents per share. However, adjusted
earnings beat the Zacks Consensus Estimate by 3 cents or 8.6%. On a
reported basis, Haemonetics posted loss per share of 7 cents, up
53.3% from the year-ago loss of 15 cents per share.
The company's shares lost 1.4% to eventually close at $35.57
yesterday, following the huge year-over-year loss the company
experienced in its earnings outcome.
Haemonetics Corporation - Earnings Surprise |
Revenues increased 2.3% year over year (up 2.0% at constant
exchange rate or CER) to $224.5 million. The top line also steered
ahead the Zacks Consensus Estimate of $216 million. In the reported
quarter, net currency had no impact on the company's revenue growth
rate. Moreover, both the yen and euro spot rates, being slightly
better than expected, benefited top-line growth during the first
Revenues by Product Categories
product category (87.4% of revenues) comprising Plasma, Blood
center and Hospital Disposables, Haemonetics reported revenues of
$196.2 million, up 2.7% from the year-ago quarter. This improvement
is attributable to the robust performance of Plasma disposables and
low-single-digit growth in hospital disposables, which outweighed
the weak performance of Blood centre disposables.
(7.9% of revenues) revenues were $17.7 million for the quarter, up
5.9% year over year, which can be attributable to the BloodTrack
orders in the U.S. and the U.K. On the other hand,
Equipment and Other
(4.7% of revenues) revenues were $10.6 million, down 10.1% year
over year, driven by timing of tenders and capital budgets.
Haemonetics reported a 330 basis points (bps) contraction in
adjusted gross margin to 48.4% during the quarter. Currency
contributed 70 bps of this fall in the adjusted gross margin while
lower pricing and volume in the U.S. whole blood business and mix
toward lower gross margin plasma revenues accounted for the rest of
Adjusted operating income declined 14.1% to $28.8 million.
Consequently, adjusted operating margin also dropped 250 bps to
Haemonetics exited the quarter with cash and cash equivalents of
$139.9 million, down from $192.5 million as of Mar 29, 2014.
Capital expenditure in the second-quarter of fiscal 2015 was $37.1
million, significantly up from the year-ago figure of $13.1
million. Haemonetics reported free cash flow (before transformation
and restructuring costs) of $1 million in the reported quarter,
down from the prior-year's number of $13 million.
Fiscal 2015 Outlook
Haemonetics has reaffirmed its fiscal 2015 outlook. The company
continues to expect adjusted EPS for the fiscal in the range of
$1.85-$1.95. The Zacks Consensus Estimate of adjusted EPS of $1.88
lies below the midpoint of the guided range.
Total revenue for the year is still expected to decline in the
range of 0-2% on a year-over-year basis. In addition, $40-$50
million of revenue growth from identified growth drivers is
expected to be more than offset by $50-$55 million of revenue
headwind from net volume and pricing declines in the U.S. blood
center business and weakness in the Japanese yen. The Zacks
Consensus Estimate of $929 million lies within the guided range
representing a decline of 1.1% in revenues in fiscal
Haemonetics continues to expect adjusted gross margin of 50%
with adjusted operating income of $140−$150 million and operating
margin of approximately 16%. In addition, income taxes are still
expected at approximately 26% of pre-tax adjusted income and free
cash flow is expected at $120-$130 million.
Prelim Fiscal 2016 Outlook
Haemonetics provided an update to its preliminary outlook for
fiscal 2016. The company continues to expect to gain traction and
return to a mid-single-digit revenue growth rate. However,
Haemonetics now expects double-digit growth in adjusted EPS (up
from its previous guidance of mid-to-high EPS growth). The company
also expects double-digit growth in adjusted operating income in
fiscal 2016. The Value Creation & Capture (VCC)
investments are still expected to be completed in fiscal 2016 with
a nominal amount of $10-$15 million investments likely to be made
Haemonetics reported an impressive first quarter fiscal 2015
with both earnings and revenues outpacing the Zacks Consensus
Estimate. The company's plasma disposables continue to be a
profitable business, with particular strength in North America. The
company's hospital diagnostics business also happens to be a
booming one, with 1,800 TEG devices installed in the past three
fiscal years. Management firmly anticipates strong growth to
continue in this business segment on account of current and
anticipated trends in surgical ongoing OrthoPAT market headwinds,
and constant strong growth observed in TEG.
However, the company's Blood Centre disposable business remains
a cause of concern for management, particularly the white blood
disposables segment which drastically deteriorated in the reported
quarter. The company expects that the loss of the ARC whole blood
tender will continue to adversely affect this business segment for
the remaining quarters of fiscal 2015.
Haemonetics continues to consider fiscal 2015 as a transition
year for the company. It expects growth in Plasma, TEG and emerging
markets to be offset by three major factors: unfavorable
currency trend , the weak performance of the U.S blood collection
market and finally, fiscal 2014 bonus funding program that is
expected to escalate the operating costs. We believe Haemonetics
has every potential to overcome its existing difficulties and
achieve improved financials in the next fiscal.
Currently, Haemonetics holds a Zacks Rank #2 (Buy). Some
better-ranked stocks in the medical products industry that warrant
a look are AtriCure, Inc. (
), Abaxis, Inc. (
) and Alere Inc. (
). AtriCure sports a Zacks Rank #1 (Strong Buy) while Abaxis and
Alere hold a Zacks Rank #2 (Buy).
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