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Haemonetics Reports Double Digit Growth in Earnings Per Share for Third Quarter Fiscal 2010
BRAINTREE, Mass., Feb 01, 2010 /PRNewswire via COMTEX/ -- Haemonetics Corporation (NYSE: HAE) reported third quarter GAAP net revenues of $165 million, up 6%, net income of $18 million, up 13%, and earnings per share of $0.71, up 13%. Year-to-date, Haemonetics' GAAP net revenues are $476 million, up 7%; net income is $54 million, up 20%; and earnings per share are $2.08, up 20%.

Excluding restructuring charges in fiscal 2009 which did not recur in fiscal 2010, adjusted third quarter net income growth was 11% and adjusted earnings per share growth was 11%. Adjusted year-to-date net income growth is 16% and earnings per share are up 16%.(1)

Haemonetics ended the third quarter with $169 million in cash and $20 million of debt, and generated $21 million of free cash flow. The Company spent $34 million on share repurchases in the quarter, completing a $40 million share repurchase plan.

Brian Concannon, Haemonetics' President and CEO, said, "As we close out the year, we are well positioned to continue our legacy of delivering consistent, double digit operating income and earnings per share growth. Revenue results are solid with growth spread across multiple product lines. Our blood management solutions are gaining traction particularly in our hospital products, and that is translating into results. And our announcement this morning of our intent to acquire Global Med Technologies, Inc. reinforces our commitment to being the leading provider of blood management solutions for our customers."

In addition to revenue and earnings growth, Haemonetics reported the following results (comparisons also exclude the restructuring charges in last fiscal year): In the quarter, gross margin is 51.7%, up 140 basis points. Operating expenses are $60 million, up 12%. Operating income is $26 million, up 4%, and operating margin is 15.6%, down 40 basis points. Key strategic investments were made in the quarter, and full year expenses are in line with expectations. Year-to-date, gross margin is 52.4%, up 160 basis points. Operating expenses are $170 million, up 9%. Operating income is $79 million, up 13%, and operating margin is 16.6%, up 90 basis points. (1)

The Company tightened its full year guidance ranges to 8-9% revenue growth (from 8-11%) and earnings per share in a range of $2.80 to $2.85 (from $2.75-$2.85). Operating income growth guidance increases to 15-16% (from 12-15%).

STRATEGIC AND SEGMENT GROWTH HIGHLIGHTS

Haemonetics continues to make progress expanding its business. The Company reported the following highlights related to its blood management solutions strategy:

  • An Agreement and Plan of Merger signed with Global Med Technologies, Inc. to substantially complete the software component of Haemonetics' blood management solutions offering
  • 12 customers currently engaged in Haemonetics' comprehensive, account-wide blood management programs
  • 8 customers engaged in device-specific blood management programs
  • 29 accounts having completed the baseline assessment for Haemonetics' solutions for device implementation in specific departments
  • OrthoPAT(R) orthopedic perioperative autotransfusion system consumables sales increased 8%
  • TEG(R) hemostasis analyzer consumables sales increased 18%
  • CardioPAT(R) cardiovascular perioperative autotransfusion system consumables sales increased 25%

As noted, Haemonetics' third quarter fiscal 2010 revenues were $165 million, up 6%. Reported revenues break down as follows:

Plasma disposables revenue was $59 million for the quarter, up 10%. Year-to-date Plasma revenues are $177 million, up 18%. As anticipated, plasma collection growth moderated in the quarter sequentially, but even as plasma collection growth moderates, Haemonetics expects its plasma business will continue to be an ongoing revenue growth driver. The Company will continue to benefit not only from market growth, but also from market share gains and price improvements. Haemonetics expects full year Plasma revenue growth in a range of 18-19%.

Platelet disposables (formerly reported as Blood Bank) revenue was $40 million for the quarter, up 9%. Year-to-date Platelet revenues are $111 million, up 3%. Platelet sales were strong in the quarter against the first half of fiscal 2010 as the distribution business in key markets strengthened. Haemonetics expects full year Platelet revenue growth in a range of 1-2%.

Red Cell disposables revenue was $12 million for the quarter, down 8%. Year-to-date Red Cell revenues are $35 million, down 4%. Aggregate demand for red cells by hospitals remains down from last year, stemming partly from an increased focus by hospitals on transfusion triggers and the reduction in elective surgeries. The reduced demand for blood continues to impact Haemonetics' automated red cell collection systems. Haemonetics anticipates annual Red Cell revenue will decline 4-5%.

Software Solutions revenue was $8 million for the quarter, up 9%. Year-to-date Software Solutions revenues are $26 million, up 18%. Haemonetics benefited from sales from its acquired companies, Altivation(R) and Neoteric, whose sales were not included in the third quarter of last fiscal year. Haemonetics estimates annual Software Solutions revenue growth of 9-13%.

Haemonetics' Hospital disposable systems grew in the quarter as the Company's blood management solutions began to influence hospitals' purchasing. By product line, Surgical revenue was $18 million, up 1% in the quarter, and $52 million, up 2% year-to-date. OrthoPAT disposables revenue was $10 million, up 8% in the quarter, and $27 million, up 3% year-to-date. Diagnostics revenue was $6 million in the quarter, up 11%, and $15 million, flat year-to-date. Unlike Haemonetics' other products in which the Company reports disposables revenues separately, Diagnostics revenues include equipment and disposable sales. Year-to-date Diagnostics revenues have been impacted by the decline in hospital capital spending. Haemonetics saw a reversal of that trend in the third quarter for positive overall revenues. Year-to-date Diagnostics disposables revenue growth is up 12%. Haemonetics expects revenue will be up 4-5% for Surgical, up 5-7% for the OrthoPAT system, and up 7-9% for Diagnostics for the year.

Mr. Concannon added, "I am pleased to report several product line revenue growth rates increasing sequentially even as our Plasma business growth rates moderate as anticipated. Revenue growth reflects a more balanced product mix now that we're seeing recovery in other product lines and geographies. Beyond the improving macro environment, our blood management solutions are gaining traction."

Haemonetics has posted several items on its website: fiscal 2010 guidance; income scenarios reflecting guidance ranges; and potential fiscal 2010 product line growth. The information is posted at http://www.haemonetics.com/site/content/investor/guidance.asp.

CONFERENCE CALL

Haemonetics will host a webcast on Monday, February 1st at 10:00 am Eastern to discuss these results. Interested parties can participate at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=72118&eventID=2662404.

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.

This release contains forward-looking statements that involve risks and uncertainties, including risks and uncertainties that the expected benefits of the Global Med acquisition may not materialize, that the Global Med acquisition may not be timely completed, if at all, that prior to the completion of the transaction, Global Med's business may not perform as expected, that we may not successfully implement our Global Med integration strategies as well as technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.

This release is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. Atlas Acquisition Corp.'s, a wholly-owned subsidiary of Haemonetics, tender offer for the shares of Global Med's capital stock has not commenced. The solicitation and the offer to buy shares of Global Med's capital stock will only be made pursuant to a tender offer statement on a Schedule TO, including an offer to purchase and other related material that Atlas Acquisition Corp. intends to file with the SEC. Global Med will file a solicitation/recommendation statement on Schedule 14D-9. Once filed, Global Med stockholders should read all of these materials carefully prior to making any decisions with respect to the offer because they contain important information.

Once filed, Global Med stockholders will be able to obtain the tender offer statement on Schedule TO, the offer to purchase, and related materials with respect to the offer, free of charge at the SEC's website at www.sec.gov, from the information agent named in the tender offer materials, or by sending a written request to Atlas Acquisition Corp. Requests for documents from Atlas Acquisition Corp. or Haemonetics should be submitted in writing to Haemonetics, Attn: Investor Relations, 400 Wood Road, Braintree, MA 02184 USA. In addition, Haemonetics and Global Med each file annual, quarterly, and other reports with the SEC. Copies of these reports or other SEC filings are available for free at the SEC public reference room at 100 F Street, NE, Washington, DC 20549 and www.sec.gov.

(1) A reconciliation of GAAP to adjusted financial results is included at the end of the financial sections of this press release as well as on the web at http://www.haemonetics.com/investors. In the third quarter and year-to-date of fiscal 2009, Haemonetics incurred $0.4 million and $2.7 million respectively in pre-tax restructuring costs. Haemonetics has incurred no restructuring costs year-to-date in fiscal 2010.



    CONTACT:
    Julie Fallon
    Tel. (781) 356-9517
    Alternate Tel. (617) 320-2401
    fallon@haemonetics.com


                  Haemonetics Corporation Financial Summary
            (Unaudited data in thousands, except per share data)

         Consolidated Statements of Income for the Third Quarter FY10

                           12/26/09       12/27/08       % Inc/ (Dec)
                          As Reported    As Reported       vs Prior Year
                          -----------    -----------       -------------
    NET REVENUES            $165,169      $155,447            6.3%
    Gross profit              85,447        78,296            9.1%

      R&D                      6,461         5,840           10.6%
      S,G&A                   53,151        47,965           10.8%
                              ------        ------
    Operating expenses        59,613        53,805           10.8%
                              ------        ------

    Operating income          25,835        24,491            5.5%
      Interest expense          (248)          (20)        1140.0%
      Interest income             56           469          (88.1%)
      Other (expense)/income,
       net                      (266)       (1,451)         (81.7%)
                                ----        ------

    Income before taxes       25,377        23,489            8.0%

    Tax expense                7,091         7,273           (2.5%)
                               -----         -----

    NET INCOME               $18,286       $16,216           12.8%
                             =======       =======

    Net income per common
     share assuming dilution   $0.71         $0.62           13.4%

    Weighted average number
     of shares
      Basic                   25,289        25,375
      Diluted                 25,907        26,056


    Profit Margins:                                      Inc/(Dec) vs
                                                       prior year profit
                                                            margin %
                                                            --------
    Gross profit                51.7%         50.4%           1.4%
    R&D                          3.9%          3.8%           0.2%
    S,G&A                       32.2%         30.9%           1.3%
    Operating income            15.6%         15.8%          (0.1%)
    Income before taxes         15.4%         15.1%           0.3%
    Net income                  11.1%         10.4%           0.6%



          Consolidated Statements of Income for FY10 Year-To-Date

                           12/26/09        12/27/08         % Inc/(Dec)
                          As Reported    As Reported         vs Prior Year
                          -----------    -----------         -------------
    NET REVENUES            $476,326      $445,482              6.9%
    Gross profit             249,357       226,022             10.3%

      R&D                     19,714        16,901             16.6%
      S,G&A                  150,459       141,687              6.2%
                             -------       -------
    Operating expenses       170,173       158,588              7.3%
                             -------       -------

    Operating income          79,184        67,434             17.4%
      Interest expense          (722)          (54)          1237.0%
      Interest income            309         1,623            (81.0%)
      Other (expense)/income,
       net                    (1,389)       (2,366)           (41.3%)
                              ------        ------

    Income before taxes       77,382        66,637             16.1%

    Tax expense               22,973        21,272              8.0%
                              ------        ------

    NET INCOME               $54,409       $45,365             19.9%
                             =======       =======

    Net income per common
     share assuming dilution   $2.08         $1.73             20.0%

    Weighted average
     number of shares
      Basic                   25,544        25,340
      Diluted                 26,150        26,163


    Profit Margins:                                        Inc/(Dec) vs
                                                        prior year profit
                                                              margin %
                                                              --------
    Gross profit                52.4%         50.7%             1.6%
    R&D                          4.1%          3.8%             0.3%
    S,G&A                       31.6%         31.8%           (0.2%)
    Operating income            16.6%         15.1%             1.5%
    Income before taxes         16.2%         15.0%             1.3%
    Net income                  11.4%         10.2%             1.2%



          Revenue Analysis for the Third Quarter and Year-To-Date FY10

                                          Third Quarter
                                          -------------
                              12/26/09       12/27/08      % Inc/(Dec) vs
                            As Reported    As Reported       Prior Year
                            -----------    -----------       ----------
    Revenues by geography
      United States            $74,997       $73,448             2.1%
      International            $90,172       $81,999            10.0%
                               -------       -------
      Net revenues            $165,169      $155,447             6.3%
                              ========      ========

      Disposable revenues

      Plasma disposables       $59,177       $53,594            10.4%

      Blood bank disposables
          Platelet             $39,793       $36,435             9.2%
          Red cell             $12,022       $13,051            (7.9%)
                               -------       -------
                               $51,815       $49,486             4.7%
                               -------       -------
      Hospital disposables
          Surgical             $17,864       $17,742             0.7%
          OrthoPAT              $9,864        $9,112             8.3%
          Diagnostics           $5,813        $5,225            11.3%
                                ------        ------
                               $33,541       $32,079             4.6%
                               -------       -------

      Subtotal                $144,533      $135,159             6.9%

      Software solutions        $8,256        $7,576             9.0%
      Equipment & other        $12,380       $12,712            (2.6%)
                               -------       -------
      Net revenues            $165,169      $155,447             6.3%
                              ========      ========


                                      Nine Months Ended
                                      -----------------
                             12/26/09       12/27/08      % Inc/(Dec) vs
                            As Reported    As Reported       Prior Year
                            -----------    -----------       ----------
    Revenues by geography
      United States           $225,223      $205,748             9.5%
      International           $251,103      $239,734             4.7%
                              --------      --------
      Net revenues            $476,326      $445,482             6.9%
                              ========      ========

      Disposable revenues

      Plasma disposables      $177,469      $150,386            18.0%

      Blood bank disposables
          Platelet            $111,350      $108,388             2.7%
          Red cell             $35,285       $36,651            (3.7%)
                               -------       -------
                              $146,635      $145,039             1.1%
                              --------      --------
      Hospital disposables
          Surgical             $51,920       $50,995             1.8%
          OrthoPAT             $27,126       $26,301             3.1%
          Diagnostics          $15,092       $15,082             0.1%
                               -------       -------
                               $94,138       $92,378             1.9%
                               -------       -------

      Subtotal                $418,242      $387,803             7.8%

      Software solutions       $25,810       $21,913            17.8%
      Equipment & other        $32,274       $35,766            (9.8%)
                               -------       -------
      Net revenues            $476,326      $445,482             6.9%
                              ========      ========



                   Consolidated Balance Sheets

                                        Period ending
                                        -------------
                                 12/26/09           3/29/09
                                 --------           -------
    Assets
    ------
    Cash & cash equivalents      $168,993          $156,721
    Accounts receivable, net      114,732           113,598
    Inventories, net               78,806            76,522
    Other current assets           31,577            35,552
                                   ------            ------
      Total current assets        394,107           382,393
    Net PP&E                      154,006           137,807
    Other assets                  154,099           129,493
                                  -------           -------

       Total assets              $702,212          $649,693
                                 ========          ========


                                        Period ending
                                        -------------
                                 12/26/09           3/29/09
                                 --------           -------

    Liabilities & Stockholders' Equity
    ----------------------------------
    S/T debt & current
     maturities                   $15,132              $695
    Other current liabilities      92,013            92,168
                                   ------            ------
    Total current liabilities     107,145            92,863
    Long-term debt                  4,778             5,343
    Other long-term liabilities    17,209            11,603
    Stockholders' equity          573,080           539,884
                                  -------           -------

       Total liabilities &
        equity                   $702,212          $649,693
                                 ========          ========



                      Free Cash Flow Reconciliation

                                               Three Months Ended
                                               ------------------
                                            12/26/09       12/27/08
                                            --------       --------

    GAAP cash flow from operations           $32,502        $30,881
                                             -------        -------

    Capital expenditures                     (11,996)       (16,895)
    Proceeds from sale of property,
     plant and equipment                         227             25
                                                 ---            ---
    Net investment in property, plant
     and equipment                           (11,769)       (16,870)
                                             -------        -------

    Free cash flow                           $20,733        $14,011
                                             =======        =======


                                                Nine Months Ended
                                                -----------------
                                            12/26/09       12/27/08
                                            --------       --------

    GAAP cash flow from operations           $93,981        $72,658
                                             -------        -------

    Capital expenditures                     (44,876)       (45,670)
    Proceeds from sale of property,
     plant and equipment                         610          2,522
                                                 ---          -----
    Net investment in property, plant
     and equipment                           (44,266)       (43,148)
                                             -------        -------

    Free cash flow                           $49,715        $29,510
                                             =======        =======



                  Haemonetics Corporation Financial Summary
                     Reconciliation of Non-GAAP Measures

    Haemonetics has presented supplemental non-GAAP financial measures as part
    of this earnings release.  A reconciliation is provided below that
    reconciles each non-GAAP financial measure with the most comparable GAAP
    measure.  The presentation of non-GAAP financial measures should not be
    considered in isolation from, or as a substitute for, the most directly
    comparable GAAP measures. There are material limitations to the usefulness
    of non-GAAP measures on a standalone basis, including the lack of
    comparability to the GAAP financial results of other companies.

    These measures are used by management to monitor the financial performance
    of the business, inform business decision making, and forecast future
    results.  Performance targets for management are established based upon
    these non-GAAP measures.  In the reconciliations below, we have removed
    restructuring costs from our GAAP expenses.  These restructuring costs
    result from a significant transformation of our business during our fiscal
    years 2009 and 2008.  This transformation resulted in the formation of a
    shared service center in Europe, exiting various offices across Europe and
    Japan and, most recently, in repositioning our technical operations
    organization. We believe this information is useful for investors because
    it allows for an evaluation of the Company with a focus on the performance
    of our core operations.

    Non-GAAP Gross Profit
    The use of these non-GAAP measures allows management to monitor the level
    of total gross profits without the costs of our business transformation.
    We establish our budgets, forecasts, and performance targets on this
    basis.

    Non-GAAP S,G&A and Non-GAAP Operating Expenses
    The use of this non-GAAP measure allows management to monitor the ongoing
    level of spend that is necessary to support the business in a period when
    we are not transforming our business or completing an acquisition of in-
    process research and development.  We establish our budgets, forecasts,
    and performance targets excluding these costs.

    Non-GAAP Operating Income and Non-GAAP Income before Income Taxes
    The use of these non-GAAP measures allows management to monitor the level
    of operating and total pre-tax profits without the costs of our business
    transformation.  We establish our budgets, forecasts, and performance
    targets on this basis.

    Non-GAAP Net Income and Earnings per Share
    The use of these non-GAAP measures allows management to monitor the level
    of net income and earnings per share excluding both the costs of our
    business transformation, as well as any related tax effects.  We establish
    our budgets, forecasts, and performance targets on this basis.



    Reconciliation of Non-GAAP Measures for the Third Quarter of FY10 and FY09

                                         12/26/09      12/27/08
                                         --------      --------
    Non-GAAP gross profit
    GAAP gross profit                     $85,447       $78,296
    Restructuring costs                         0             0
                                              ---           ---
    Non-GAAP gross profit                 $85,447       $78,296
                                          =======       =======


    Non-GAAP S,G&A
    GAAP S,G&A                            $53,151       $47,965
    Restructuring costs                         0          (432)
                                              ---          ----
    Non-GAAP S,G&A                        $53,151       $47,533
                                          =======       =======


    Non-GAAP operating expenses
    GAAP operating expenses               $59,613       $53,805
    Restructuring costs                         0          (432)
                                              ---          ----
    Non-GAAP operating expenses           $59,613       $53,373
                                          =======       =======


    Non-GAAP operating income
    GAAP operating income                 $25,835       $24,491
    Restructuring costs                         0           432
                                              ---           ---
    Non-GAAP operating income             $25,835       $24,923
                                          =======       =======


    Non-GAAP income before taxes
    GAAP income before taxes              $25,377       $23,489
    Restructuring costs                         0           432
                                              ---           ---
    Non-GAAP income before taxes          $25,377       $23,921
                                          =======       =======


    Non-GAAP net income
    GAAP net income                       $18,286       $16,216
    Restructuring costs                         0           432
    Tax benefit associated with
     restructuring costs                        0          (152)
                                              ---          ----
    Non-GAAP net income                   $18,286       $16,496
                                          =======       =======

    Non-GAAP net income per common share
     assuming dilution GAAP net income
     per common share assuming dilution     $0.71         $0.62
    Restructuring costs after tax per
     common share assuming dilution         $0.00         $0.01
                                            -----         -----
    Non-GAAP net income per common
     share assuming dilution                $0.71         $0.63
                                            =====         =====



    Reconciliation of Non-GAAP Measures for the First Nine Months of FY10 and
                                    FY09

                                         12/26/09      12/27/08
                                         --------      --------
    Non-GAAP gross profit
    GAAP gross profit                    $249,357      $226,022
    Restructuring costs                         0            72
                                              ---           ---
    Non-GAAP gross profit                $249,357      $226,094
                                         ========      ========


    Non-GAAP S,G&A
    GAAP S,G&A                           $150,459      $141,687
    Restructuring costs                         0        (2,605)
                                              ---        ------
    Non-GAAP S,G&A                       $150,459      $139,082
                                         ========      ========


    Non-GAAP operating expenses
    GAAP operating expenses              $170,173      $158,588
    Restructuring costs                         0        (2,605)
                                              ---        ------
    Non-GAAP operating expenses          $170,173      $155,983
                                         ========      ========


    Non-GAAP operating income
    GAAP operating income                 $79,184       $67,434
    Restructuring costs                         0         2,677
                                              ---         -----
    Non-GAAP operating income             $79,184       $70,111
                                          =======       =======


    Non-GAAP income before taxes
    GAAP income before taxes              $77,382       $66,637
    Restructuring costs                         0         2,677
                                              ---         -----
    Non-GAAP income before taxes          $77,382       $69,314
                                          =======       =======


    Non-GAAP net income
    GAAP net income                       $54,409       $45,365
    Restructuring costs                         0         2,677
    Tax benefit associated with
     restructuring costs                        0          (939)
                                              ---          ----
    Non-GAAP net income                   $54,409       $47,103
                                          =======       =======


    Non-GAAP net income per common share
     assuming dilution
    GAAP net income per common share
     assuming dilution                      $2.08         $1.73
    Restructuring costs after tax per
     common share assuming dilution         $0.00         $0.07
                                            -----         -----
    Non-GAAP net income per common
     share assuming dilution                $2.08         $1.80
                                            =====         =====


SOURCE Haemonetics Corporation