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.
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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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.
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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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