Lab chemical and life sciences company
) posted adjusted earnings of $1.05 per share in the second
quarter of 2013, above the year-ago earnings of 97 cents. The
results beat the Zacks Consensus Estimate of $1.03. The adjusted
earnings exclude other charges of 7 cents a share.
Profit, as reported, rose roughly 3.5% year over year to $119
million (or 98 cents per share) in the quarter from $115 million
(or 94 cents per share) a year ago.
Revenues and Margins
Net sales increased 3% year over year to $681 million in the
reported quarter, surpassing the Zacks Consensus Estimate of $679
million. Organic sales growth in the quarter was 4%, while
foreign exchange translation had a negative impact of 1%.
Adjusted operating margin for the second quarter was 26.1%
compared with 25.8% recorded a year ago. Adjusted operating
margin in the reported quarter excludes other charges of $12
million related to merger/acquisition activity and settlement of
a licensing dispute.
Research Chemicals sales were $353 million, up 3% on an organic
basis. The year over year increase is mainly due to growth in
emerging regions, especially China. Organic sales growth through
the dealer network was in the mid single-digits. However, pharma
organic sales growth was in the low-to-mid single-digits
continuing a four-quarter trend of sequential improvement.
Applied business unit's sales amounted to $160 million. Organic
sales increased 6% driven by high single-digits growth in
Diagnostics and Testing division. However, Industrial sales
growth was in the low-to-mid single-digits. The year over year
improvement is also attributable to the launch of the new
business unit, led by multiple Diagnostic and Testing wins in
standards and OEM sales.
Sales from the SAFC Commercial segment were $168 million. Organic
sales rose 2%, driven by strong growth in contract manufacturing
and biopharma segment. However, Hitech sales declined because of
challenging chemical precursor market for the LED industry. The
industrial cell culture media business performed well in the
Sigma-Aldrich's cash and cash equivalents stood at $562 million
as of Jun 30, 2013, compared with $572 million as of Jun 30,
2012. Long-term debt remained flat year over year at $300
million. Debt to capital ratio was 14% as of Jun 30, 2013,
compared with 24% as of Jun 30, 2012. For the first half of 2013,
operating cash flow jumped 19% to $269 million.
The company repurchased 0.35 million shares during the second
quarter for $29 million. It expects to continue to buyback shares
to offset dilution associated with stock-based compensation.
Sigma-Aldrich reiterated its overall organic sales growth
guidance for 2013. The company expects low-to-mid single-digit
organic sales gain in 2013. However, Sigma-Aldrich lowered its
adjusted earnings per share guidance from the previous range of
$4.10 to $4.20 to a new band of $4.05 to $4.15 for the year,
citing incremental changes in foreign currency exchange rates.
Free cash flow expectations for the full year have also been
reaffirmed by Sigma-Aldrich, which is expected to exceed $430
million. Capital expenditures guidance also remains same at
around $130 million. Operating cash flow has been projected to
exceed $560 million. Effective tax rate is expected to be about
28% in 2013.
Sigma-Aldrich is expected to move forward to capital deployment
for mergers/acqusitions, dividends and share repurchases to
generate long-term shareholder value. BioReliance acquisition and
expansion initiatives in Asia Pacific and other high growth
markets are expected to add to Sigma-Aldrich's growth in 2013.
However, unfavorable currency exchange translation may continue
to weigh on its revenues and earnings.
Sigma-Aldrich currently maintains a Zacks Rank #4 (Sell).
), which also belongs to the specialty chemical industry, carries
a Zacks Rank #2 (Buy).
Other specialty chemical companies such as
OM Group Inc.
Rockwood Holdings, Inc.
) will announce their quarterly results on Aug 1 and Aug 5,
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