Millipore Corp. (MIL) reported fourth-quarter earnings per share of $1.00, seven cents above the Zacks Consensus Estimate of $0.93. Fourth quarter earnings increased 5.2% from the year-ago period. Earnings for the full year 2009 came in at $4.00, beating the Zacks Consensus Estimate of $3.94 and the year-ago earnings of $3.59.
Revenues for the fourth quarter grew 7% to $426 million. Excluding a 5% benefit from changes in foreign currency, Millipore generated organic revenue growth of 2%. While the Bioprocess division recorded growth of 9% with sales coming in at $232 million, the Bioscience division grew 6% to $194 million.
For the full year, revenues increased 3% to $1.6 billion with the Bioprocess and Bioscience divisions contributing $925.8 million (up 5%) and $728.6 million (up 1%), respectively. New product sales, increased demand from biotech customers and higher production of the H1N1 vaccine helped the Bioprocess division generate organic growth of 8% in 2009. The division also witnessed growth across all geographies. Demand should remain strong with large pharma companies increasing their investment in biotech drugs. Meanwhile, demand for regular vaccines should also remain strong.
Growth in the Bioscience division in 2009 was driven primarily by strong consumables sales to academic customers. However, the company witnessed lower spending by large pharma customers during the year. New product launches should help drive future growth.
On a geographic basis, the company witnessed 10% and 7% growth in Asia Pacific and the Americas, respectively, in 2009. However, growth in Europe declined 3%. We expect growth in the Asia Pacific region to remain strong given the increased investment in this region by multinational companies, governments and contract manufacturing organizations.
Millipore continued to increase its R&D spending in 2009 as it ventures into further innovations. However, SG&A spend declined slightly due to the favorable impact of foreign currency translation. Operating margins for the full year improved 80 basis points to 20.6%.
Millipore exited the year with $168 million in cash and equivalents. Millipore generated approximately $298 million of free cash flow in 2009, representing 54% growth over 2008.
For 2010, the company expects to generate earnings in the range of $4.35 to $4.45 per share on revenue growth of approximately 7%. The revenue growth projection includes a 2% favorable impact from changes in foreign currency. Millipore is looking to generate $310 million in free cash flow in 2010. The current Zacks Consensus Estimate for 2010 is $4.42.
We currently have a Neutral recommendation on Millipore. The company’s business model ensures that its performance does not get severely hampered by economic turbulence. Millipore’s business is well diversified across end-markets, product lines, and geographies – this helps maintain growth even in challenging economic scenarios. Long-term, Millipore stands to gain with the number of monoclonal antibodies and bioengineered vaccines, expected to grow substantially over the next five years.
However, the company faces challenges like intense competition, spending cuts by customers and a potential slowdown in new biologic product approvals.
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