Sigma-Aldrich Surpasses – Analyst Blog

Sigma-Aldrich (SIAL) has reported a 23.5% increase in net income to 84 cents per share in the first quarter of 2010 from 68 cents per share in the year-ago period. With this, the company has exceeded the Zacks Consensus Estimate of 79 cents per share. The improvement in net income was attributable to strong sales during the quarter.

 

Consolidated revenues rose 10.2% to $572 million. Excluding a 5.8% benefit from favorable currency rates, organic sales growth was 4.4%, driven by a growth in unit volume. Revenues in the company’s Research business increased 8.8% to $420 million and 2.8% organically.

 

Sales in the Sigma-Aldrich Fine Chemicals (“SAFC”) grew 14% to $152 million, with an organic growth of 9%. This was driven by strong demand for high potency active pharmaceutical ingredients and the company’s Hitech products in the markets.

 

 

In the reported quarter, net cash from operating activities rose to $151 million from $114 million in the year-ago period. Free cash flow increased to $133 million from $86 million in the first quarter of 2009.

 

The improvement in cash flow was attributable to a higher net income and continued reduction in cash required for inventory that enabled management to reduce inventory levels to 6.2 months as of March 31, 2010 from 6.5 months as of December 31, 2009. Capital expenditures reduced to $18 million from $28 million in the year-ago period.

 

The debt-to-capital ratio declined to 24.8% as of March 31, 2010 from 25.5% as of December 31, 2009. The company repurchased 700,000 shares in the quarter at an average price of $48.69. This left 121 million shares outstanding as of March 31, 2010.

 

 

Sigma-Aldrich forecasted its earnings per share to increase to $3.05−$3.20 for 2010 from $2.80 reported for the full year 2009. This is primarily attributable to higher sales expectations, improvements in the supply chain process, favorable impact from changes in workforce and other cost improvement activities.

 

The company expects its net cash from operating activities to exceed $480 million for the year. Capital expenditures are expected to reach $130 million, producing a free cash flow in excess of $350 million for 2010.