Haemonetics Corp. (HAE) filed Quarterly Report for the period ended 2009-09-26.
Haemonetics is a global company engaged in the design manufacture and worldwide marketing of automated blood processing systems. These systems address important medical markets: surgical blood salvage blood component collections and plasma collections. The majority of their business is outside the US. Haemonetics Corp. has a market cap of $1.4 billion; its shares were traded at around $54.48 with a P/E ratio of 21.4 and P/S ratio of 2.3. Haemonetics Corp. had an annual average earning growth of 9.9% over the past 10 years. GuruFocus rated Haemonetics Corp. the business predictability rank of 4.5-star.
Highlight of Business Operations:
Net revenues increased 7.6% and 7.3% for the second quarter and first six months of fiscal year 2010 over the comparable periods of fiscal year 2009. The effects of foreign exchange accounted for an increase of 2.1% and 1.4% for the second quarter and six months, respectively. The remaining increase of 5.5% for the quarter and 5.9% for the six months is mainly due to increases in our plasma disposables revenue and software solutions revenue.
Gross profit increased 8.4% and 11.0% as compared to the second quarter and first six months of fiscal year 2009. The favorable effects of foreign exchange accounted for an increase of 3.4% and 5.8% for the second quarter and first six months of fiscal year 2010, respectively. The remaining increase of 5.0% for the quarter and 5.2% for the six months was due primarily to increased sales and manufacturing efficiencies. This was partly offset by changes in product mix driven by higher sales of our lower margin plasma products.
Operating expenses increased 5.6% and 5.5% for the second quarter and first six months of fiscal year 2010 over the comparable periods of fiscal year 2009. The favorable effects of foreign exchange accounted for a decrease in operating expenses of 0.5% for the quarter and 1.7% for the six months, respectively. Without the effects of foreign exchange, operating expenses increased 6.1% in the second quarter and 7.2% in the first six months of fiscal year 2010. The higher operating expenses are primarily related to increased investment in research and development, the expenses from recent acquisitions, expenses associated with our ERP Phase II go-live, and higher expenses due to the introduction of blood management solutions. The noted increases in operating expenses were partly offset by a lack of restructuring costs in the first six months of fiscal year 2010 when compared to the first six months of fiscal year 2009.
Our revenues generated outside the U.S. approximated 52% for both the second quarter and the first six months of fiscal year 2010 and 54% for both the second quarter and the first six months of fiscal year 2009. Revenues in Japan accounted for approximately 17.0% and 16.6% of total revenues for the second quarter of fiscal year 2010 and 2009, respectively and 16.4% and 15.9% of total revenues for the first six months of fiscal year 2010 and 2009, respectively. Revenues in Europe accounted for approximately 27.3% and 29.6% of total revenues for the second quarters of fiscal year 2010 and 2009 and 27.6% and 30.5% of total revenues for the first six months of fiscal year 2010 and 2009, respectively. International sales are primarily conducted in local currencies, primarily the Japanese Yen and the Euro. As discussed above, our results of operations are impacted by changes in the value of the Yen and the Euro relative to the U.S. dollar.
Disposables include the Plasma, Blood Bank, and Hospital product lines. Disposables revenue increased 8.4% and 8.3% for the second quarter and the first six months of fiscal year 2010 over the comparable periods of fiscal year 2009. Foreign exchange resulted in a 1.8% and 1.2% increase for the quarter and six months. The remaining increase of 6.6% and 7.1% for the second quarter and the first six months of fiscal year 2010 were driven by increases in the Plasma product line, as discussed below.
Revenues from our diagnostics products decreased 10.1% and 5.9% for the second quarter and the first six months of fiscal year 2010 compared to the same periods in fiscal year 2009. Diagnostics product revenue consists principally of the TEG products. Comparing the second quarter and the first six months of fiscal year 2010 to that of 2009, foreign exchange accounted for an increase of 3.9% and 0.4%, respectively. Without the effect of currency, diagnostic product revenues decreased of 15.0% for the quarter and 6.3% for the six months. Diagnostics product revenue is unique, compared to revenue from other products, in that it includes TEG disposable and equipment sales. The revenue decline in the quarter and year-to-date are due to a decline in TEG equipment sales. The noted decrease was partly offset by an 11.1% and 10.0% increase in TEG disposables for the second quarter and the first six months of fiscal year 2010.
HAE is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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