Haemonetics Corporation (HAE) reported third quarter fiscal 2010 earnings per share of 71 cents, missing the Zacks Consensus Estimate of 72 cents. Earnings in the year-ago quarter were 63 cents.
The earnings estimate revision for Haemonetics has demonstrated a downtrend in the past 30 days. During the period, one out of twelve analysts has downgraded his earnings estimate for the fourth quarter of fiscal 2010 and full fiscal 2010. However, there were no earnings downgrades for fiscal 2011.
Haemonetics has witnessed earnings surprises in all the preceding four quarters varying between 3.17% and 6.15%, with the four-quarter average being 4.69%. In both the first and second quarter, Haemonetics beat the Zacks Consensus Estimate by 6.15%.
Sales
Total sales in the third quarter increased 6.3% year over year to $165.2 million. Growth was registered across all major business segments.
Plasma disposables revenues increased 10.4% year over year to $59.2 million. Growth was driven by higher market growth of plasma disposables coupled with Haemonetics’ gain in market share and favorable price movements. Platelet disposables revenue increased 9.2% year over year to $39.8 million due to the company’s strong platelet distribution business in key markets.
Red Cell disposables revenues declined 7.9% year over year to $12.0 million. The decline in revenue can be attributed to lower demand for red cells in hospitals owing to a reduction in elective surgeries.
Haemonetics’ Surgical, OrthoPAT and Diagnostics revenues increased 0.7%, 8.3% and 11.3% to $17.9 million, $9.9 million and $5.8 million, respectively. The company’s Software solutions registered a revenue growth of 9.0% year over year to $8.3 million. Equipment and other revenues declined 2.6% year over year to $12.4 million.
On a geographic basis, the U.S. contributed 45% to total revenue and increased 2.1% year over year. International revenues increased 10.0% year over year.
Gross margin increased 130 basis points (bps) year over year to 51.7%. Non-GAAP operating margin declined 40 bps year over year to 15.6%. Non-GAAP net income increased 50 bps year over year to 11.1%. Both non-GAAP operating and net margins exclude restructuring costs associated with the company’s business transformation in fiscal 2008 and 2009.
Balance Sheet and Cash Flow
Haemonetics ended the third quarter with cash and cash equivalents of $169 million. The company had an outstanding debt of approximately $20 million at the end of the reported quarter. Haemonetics generated free cash flow of roughly $21 million in the third quarter.
Outlook
Haemonetics expects total revenues in full fiscal 2010 to grow between 8% and 9%, compared to the previous guidance of 8% to 11%. Earnings per share should range between $2.80 and $2.85, versus the previous guidance of $2.75 to $2.85. Operating income should grow in the range of 15% to 16%, compared to the prior guidance of 12% to 15%.
Haemonetics has also provided revenue guidance for fiscal 2010 in terms of its product line. Plasma disposables revenues should grow between 18% and 19% year over year. Platelet disposables revenues should grow in the range of 1% to 2%. Red Cell disposables revenues should decline by 4% to 5%. Software Solutions revenues are anticipated to grow between 9% and 13%.
Haemonetics Corporation is the market leader in developing and manufacturing blood collection and processing technology. Haemonetics operates in a very competitive environment, both for manual and automated systems, which includes big players like Baxter International Inc. (BAX), Abbott Laboratories (ABT) and Medtronic Inc. (MDT).
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