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VWR Posts Inline Earnings in Q2, Revenues Beat the Mark

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VWR Corporation reported second-quarter 2016 adjusted earnings per share (EPS) of 42 cents, reflecting a 23.5% rise from the year-ago quarter. The quarter’s earnings, however, remained at par with the Zacks Consensus Estimate. We note that, strong top-line growth prompted the year-over-year growth in earnings.

Including one-time items, the company reported second-quarter 2016 net EPS of 32 cents, a 128.6% surge year over year.

Revenues in the reported quarter were up 6.3% year over year at $1.15 billion. Revenues edged past the Zacks Consensus Estimate of $1.14 billion. Foreign exchange headwinds impacted revenues by 0.3% year over year. On an organic basis, revenues increased 4.4%, while recent acquisitions boosted revenues by 2.2%.

Revenues in the Americas totalled $694.9 million, up 6.6% year over year (up 3.9% organically) in the second quarter. The top-line increase was supported by strong biopharma performance, on high single digits on growth in large pharma, biotech, medical devices and sales to CRO-customers.

EMEA-APAC revenues in the second quarter were $454.6 million, up 5.9% year over year (up 5.1% year over year on an organic basis), on strong sales to biopharma and industrial customers. EMEA-APAC performance was also benefitted from a shift in the timing of Easter.

VWR reported a gross margin of 28.1%, up 53 basis points (bps) year over year, on account of a stable pricing environment, favorable product mix and solid growth in private label and services. Sales, general and administrative expenses rose 8.1% to $238.8 million. VWR posted operating income of $84.6 million in the reported quarter, reflecting a 9% rise from the year-ago quarter. Accordingly, operating margin expanded 18 bps to 7.4% in the quarter under review.

VWR exited the second quarter with cash and cash equivalents of $112.9 million, down from $129.7 million at the end of the first quarter. Year-to-date operating cash flow was $119.6 million, compared with $97.1 million in the year-ago period.

VWR CORP Price, Consensus and EPS Surprise

VWR CORP Price, Consensus and EPS Surprise | VWR CORP Quote

Outlook

VWR reiterated its 2016 earnings guidance of adjusted EPS in the band of $1.68–$1.74 (annualized growth of 11% to 15%).

Our Take

VWR posted a moderate second-quarter with earnings in line with the Zacks Consensus Estimate and revenues ahead of the mark. Segment-wise, management witnessed strong sales growth in both Americas as well as the EMEA-APAC region, accompanied by strong growth in equipment and instrumentation. The extent of currency fluctuations on the company’s EMEA-APAC sales was low in the second quarter. On the profitability front, VWR posted slightly improved margin figures in spite of the competitive landscape.

Zacks Rank & Key Picks

Currently, the company bears a Zacks Rank #4 (Sell). Better-ranked medical stocks are Align Technology Inc. (ALGN - Free Report) , AmerisourceBergen Corporation and DENTSPLY International Inc. (XRAY - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).

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