CR Bard Inc.
) third quarter 2012 adjusted earnings of $1.64 per share beat
the Zacks Consensus Estimate by a penny and surpassed the
year-ago earnings of $1.62 per share (up 1%). Adjusted earnings
exclude one-time items such as acquisition-related expenses and
asset impairment charges.
In the reported quarter, profit was $129.3 million (or $1.50 a
share), down 1% from the year-ago quarter. Higher operating
expenses dampened moderate revenue growth in the quarter.
Revenues inched up 1% (up 3% in constant currency) year over
year to $722.9 million, but fell short of the Zacks Consensus
Estimate of $735 million. Moderate growth across Urology and
Oncology product groups was partially offset by declining
On a geographic basis, revenues in the U.S. dipped 1% to
$483.4 million due to sustained softness in the market. However,
international sales grew 3% (up 11% in constant currency) to
$239.5 million, led by solid sales in Japan and moderate growth
in Europe. Moreover, international sales were boosted by
double-digit growth in emerging markets.
Revenues from the core Vascular segment decreased 3% (up 1% in
constant currency) year over year to $202.5 million. Within
Vascular, endovascular sales grew 3%. Biopsy sales fell 1% year
over year due to the prevailing softness in the U.S. economy.
Electrophysiology ("EP") revenues dropped 4% due to lower EP Lab
system sales (down 8%) along with declining disposable EP sales
(down 3%) and surgical graft sales (down 6%).
Revenues from peripheral PTA increased 7%, driven by
double-digit sales from Chronic Total Occlusion (CTO) offerings.
Vena Cava Filter sales decreased 4% in the reported quarter.
Revenues from the stent franchise grew only 5%, as the Japanese
competitor, who had pulled back its product line six months ago
returned to the market.
Sales from Urology division increased 3% (up 5% in constant
currency) to $188.1 million led by the company's latest targeted
temperature management products. Revenues from the basic drainage
division were flat in the U.S and up 1% globally. I.C. Foley
sales dropped 4% in the U.S and remained flat globally, as these
segments faced continued pricing pressure.
Continence segment's sales were flat year-over-year in the
reported quarter, after declining for 10 straight quarters. The
company's fecal management products posted double-digit growth in
the quarter, which partially offset the decline in women's health
Urological specialties sales were down 5%, with a 14% fall in
brachytherapy sales. Revenues from StatLock catheter
stabilization line (15% of total urology sales) declined 4% in
The company's Oncology segment reported revenue growth of 3%
(up 4% in constant currency) year over year to $203.9 million,
backed by higher international sales. Peripherally inserted
central catheters (PICC) sales climbed 5% (impacted by softness
in volume in the U.S.) while Port revenues inched up 2% in the
quarter. Revenues from vascular access ultrasound products
increased 3% in the reported quarter.
Sales from Surgical Specialties business were $107.7 million,
flat year over year (up 2% in constant currency). Soft tissue
repair business grew 2%, whereas natural tissue products sales
dipped 1% in the quarter. Revenues from hernia fixation business
plunged 19%, hurt by increased competition. The performance
irrigation business inched down 1% while the hemostasis segment
climbed up 7% in the quarter.
Gross margin was 62.3% in the reported quarter compared to
61.8% in the prior year quarter. Operating margin was 24.7%
versus 25.3% in the year-ago quarter.
Marketing, selling and administrative expenses (as a
percentage of sales) increased to 27.2% from 26.3% a year ago.
Research and development expenses, as a percentage of sales,
increased to 7.2% from 6.5%.
CR Bard ended the third quarter of 2012 with cash, restricted
cash and short-term investments of $836.6 million, up 8.7% on a
sequential basis. Total debt increased 6.5% sequentially to
For fourth quarter 2012, CR Bard expects constant currency
revenue growth in the range of 0% to 2%. For full year, the
company anticipates constant currency revenues growth in the band
of 3% and 4%. The company expects adjusted earnings for the
fourth quarter to be in a band of $1.64 and $1.68 per share,
reflecting 5 cents dilution from the Neomend
The current Zacks Consensus Estimates for revenue and earnings
per share for full year 2012 are $2,977 million and $6.63,
C.R. Bard's well-diversified end markets and a vast product
portfolio insulate it from fluctuations in any single therapeutic
category. We expect new product launches to drive organic revenue
growth and help CR Bard meet its sales objective. We are also
impressed by the company's initiative to expand into emerging
markets with attractive growth opportunities.
The company recently entered into a definitive agreement to
acquire privately-owned innovative surgical sealants maker,
Neomend, Inc. to expand its surgical specialty product line.
However, increasing competition, fluctuating currency,
pricing/volume pressure and an overall tough U.S. economy remain
areas of concern. C.R. Bard faces strong competition from
Johnson & Johnson
). We currently have a Neutral recommendation on C.R. Bard. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term "Hold" rating.
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