Haemonetics Reports Strong Results

Haemonetics Corporation (HAE - Analyst Report) reported strong results for the second quarter of fiscal 2010. Earnings per share were 69 cents, beating the Zacks Consensus Estimate of 65 cents and the year-ago earnings of 58 cents.

Sales

Total revenues in the reported quarter were $157 million, increasing 8% year over year. Excluding a favorable foreign currency translation (FX), revenues increased 6% year over year. On a geographic basis, U.S. sales represented roughly 48% of total sales and increased 12.5% year over year. International sales increased 3.5% year over year.

Plasma disposables revenues increased 19% year over year to $59 million. Growth can be attributed to higher global demand for plasma collections, higher pricing and implementation of several long-term contracts with customers in the reported quarter. Platelet disposables revenues increased 3% year over year to $37 million due to the company’s strong distribution network in different key markets.

Red Cell disposables revenues declined 2% year over year to $11 million. The decline was primarily due to lower demand for red cells from hospitals as a result of a reduction in elective surgeries owing to the global recession. Hospital disposables revenues increased 2% year over year to roughly $30 million.

Margins

Haemonetics reported an expansion in margins. Gross margin increased 30 basis points (bps) year over year to 51.5%. Research and development (R&D) expenses as a percentage of sales increased 50 bps year over year to 4.1%. Selling, general and administrative (SG&A) expenses as a percentage of sales declined 120 bps year over year to 30.2%.

Higher gross margin coupled with lower SG&A expenses as a percentage of sales increased the operating margin 100 bps year over year to 17.2%.

Balance Sheet & Cash Flow

Haemonetics ended the quarter with cash and cash equivalents of approximately $178 million. The company’s outstanding debt stood at $20 million at the end of the quarter. Free cash flow was $24 million for the quarter.

Guidance

Haemonetics affirmed its full fiscal 2010 guidance. For the year, sales growth is expected in the range of 8% to 11% year over year. Operating income should grow in the range of 12% to 15% year over year. Earnings per share should be between $2.75 and $2.85.

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 - Analyst Report), Abbott Laboratories (ABT - Analyst Report) and Medtronic Inc. (MDT - Analyst Report).

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