Immucor Inc. (BLUD) announced third quarter 2010 (ending in Feb 2010) earnings per share (EPS) of 28 cents, in line with the Zacks Consensus Estimate and a penny higher than the year ago quarter. Net income for the quarter was $20.1 million, compared with $19.5 million for the same quarter in 2009.
The company reported $80.5 million in revenues, an increase of 7% from $75.3 million in the year-ago period. The increase in revenues was primarily based on price increases and a positive impact of $1.8 million due to foreign exchange fluctuations. Volume contribution from reagents was negatively impacted by fewer shipping cycles in the current year as well as sales mix.
While Immucor has recorded growth in its top line, its gross margin suffered due to costs related to the company’s Quality Process Improvement Project, targeted at establishing a better quality system. During the quarter, Immucor incurred expenses of about $1.8 million related to this project which brought down the gross margin by 220 bps to 69.2%, compared to the year ago period.
Operating expenses increased 1% year-over-year to $24.8 million primarily due to an increase in R&D expenses related to the development of more advanced instruments.
Immucor’s main products – traditional reagents, capture reagents and instruments – accounted for 64%, 23% and 13%, respectively of total revenues. Although Immucor earns the most from the manufacture of traditional reagents, its gross margin at 77.4% is lower than capture reagents (80.2%).
While traditional reagent revenues declined marginally from the year-ago period, revenues from capture reagents and instruments segments increased 17% and 22%, respectively. During the quarter, Immucor had a steady order flow for two of its most important instruments – Echo (71) and Galileo (13).
In February 2010, Immucor launched its new high volume instrument, Neo in Europe, which recorded 11 orders. The company is yet to receive approval to market the product in the US.
Immucor is witnessing longer sales cycles for its Echo instruments. It expects orders for the product to be at the lower end of its guidance of 280 units for fiscal 2010.
Immucor has narrowed the range of its fiscal 2010 revenue and earnings guidance. It expects revenues in the range of $326 million – $330 million (earlier guidance of $322 million – $332 million) and earnings of $1.14 – $1.16 per share ($1.10 – $1.17).
Cash balance at the end of the quarter was $175.6 million, up from $136.5 million recorded at the end of fiscal 2009. We are currently Neutral on the stock.
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