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Dionex Corp. Reports Operating Results (10-Q)

February 06, 2009 | About:

Dionex Corp. (DNEX) filed Quarterly Report for the period ended 2008-12-31.

Dionex Corporation designs manufactures markets and services analytical instrumentation and related accessories and chemicals. The company's products are used to analyze chemical substances in the environment and in a broad range of industrial and scientific applications. Since July of 1998 there have been no material changes in the mode of conducting the business of the company. Dionex Corp. has a market cap of $822.3 million; its shares were traded at around $50.3 with a P/E ratio of 15.7 and P/S ratio of 2.18. Dionex Corp. had an annual average earning growth of 8% over the past 10 years. GuruFocus rated Dionex Corp. the business predictability rank of 2.5-star.

Highlight of Business Operations:

Net sales for the second quarter of fiscal 2009 were $103.0 million, compared with $98.0 million reported for the same period in the prior year, reflecting an increase of 5.1%. Operating income for the quarter was $25.9 million, an increase of 13.9% over operating income for the second quarter of fiscal 2008 of $22.8 million. Cash flow from operating activities during the quarter was $23.4 million compared with $12.0 million for the second quarter of fiscal 2008, reflecting an increase of 96%. Our gross profit margin for the quarter was 67.5%, unchanged compared to the same period last year. Selling, general and administrative expenses were 35.1% of net sales during the quarter, compared to 36.6% reported in the same period last year. Research and product development expenses for the quarter were 7.2% of net sales, down slightly from the 7.7% reported in the same period last year. Diluted earnings per share increased 20.8% to $0.93 for the second quarter, compared to $0.77 reported in the same period last year. Net sales in the six months ended December 31, 2008 were $196.5 million, an increase of 8.9% compared with the $180.5 million reported in the first six months of fiscal 2008. Operating income was $45.4 million during the first six months of fiscal 2009, an increase of 17.2% over operating income for the same period during the prior year of $38.7 million. Cash flow from operations for the first six months of fiscal 2008 was $32.1 million. Gross profit margin for the six months ended December 31, 2008 was 67.3% compared to 66.5% during the same period in the prior year.

Net sales for the second quarter of fiscal 2009 were $103.0 million, compared with $98.0 million reported for the same period in the prior year, reflecting an increase of 5.1%, including a $4.1 million in adverse currency effect. Net sales in North America decreased by 1.9% in the second quarter of fiscal 2009 to $27.0 million, compared to $27.5 million during the same period in the prior year due to an adverse currency fluctuation of $0.5 million and lower demand from our life sciences and chemical/petrochemical customers. Net sales in North America decreased by 1.0% in the six months ended December 31, 2008 to $52.1 million compared to $52.4 million during the six months ended December 31, 2007 due to the continuing weakening demand. Net sales in Europe decreased by 2.7% to $43.4 million in the second quarter of fiscal 2009, compared to $44.6 million during the same period in the prior year due to adverse currency fluctuations of $3.3 million. Excluding the impact of currency fluctuations, net sales in Europe increased to $46.7 million, or 15.1%, in the second quarter of fiscal 2009, compared to $40.5 million during the same period in the prior year due to the increasing demand for IC products over the year. Net sales grew 5.0% in the six months ended December 31, 2008 to $83.4 million compared to $79.4 million during the six months ended December 31, 2007, driven by good demand for IC products offsetting some weakness in our HPLC products especially from our life sciences customers. Net sales in the Asia/Pacific region increased by 26% in the second quarter of fiscal 2009 to $32.7 million, compared to $25.9 million during the same period in the prior year, driven by increased sales in Japan, China, India and Australia. Net sales increased 25.4% in the six months ended December 31, 2008 to $61.0 million compared to $48.6 million in the six months ended December 31, 2007 as a result of strong sales growth in China, Australia, Singapore and India.

Operating expenses of $43.7 million for the second quarter of fiscal 2009 increased by $0.2 million, or 0.5%, from the $43.5 million reported in the same quarter last year. As a percentage of net sales, operating expenses were 42.4% for the second quarter of fiscal 2009, a decrease from the 44.3% of sales reported in the second quarter of fiscal 2008. The effects of foreign currency fluctuations decreased total operating expenses by $1.5 million, or 3.3%, for the quarter ended December 31, 2008, compared to an increase of 6.0% during the same period in the prior year. The $1.7 million increase in operating expenses, excluding currency effects, was attributable primarily to $1.4 million of additional expenses associated with expansion of our Asia/Pacific operations and expenses from our new subsidiary in Sweden. Operating expenses for the six months ended December 31, 2008 were $86.9 million, representing a 7.0% increase over the corresponding period during the prior year of $81.2 million mainly due to the continued expansion in China, India and Sweden.

Selling, general and administrative (SG&A) expenses were $36.2 million for the second quarter of fiscal 2009, compared with $35.9 million for the same quarter of fiscal 2008. As a percentage of net sales, SG&A expenses were 35.1% in the second quarter of fiscal 2009, compared to 36.6% the same period in fiscal 2008. Effects of foreign currency fluctuations decreased SG&A expenses by $1.3 million, or 3.6%, in the second quarter of fiscal 2009. SG&A expenses, excluding currency effects, grew by $1.6 million, or 3.8%, compared to the second quarter of fiscal 2008, due to our continued expansion in the Asia/Pacific region and expenses from our new subsidiary in Sweden. SG&A expenses for the six month period ended December 31, 2008 increased by 8.0%, or $5.4 million to $72.4 million from $67.0 million during the same period of fiscal 2008 mainly due to the net effect of foreign currency fluctuations and expansion in the Asia/Pacific region particularly in China and India to further build our infrastructure and footprint in these two strategic markets.

Cash used for financing activities was $17.5 million in the first six months of fiscal 2009. The use of cash was primarily attributable to the repurchase of 322,046 shares of our common stock for $19.3 million, offset by $1.9 million in proceeds from issuance of common stock, a tax benefit related to equity incentive plans of $159,000 and net reduction of $293,000 million in short-term borrowings.

Foreign Currency Exchange. Revenues generated from international operations are generally denominated in foreign currencies. We entered into forward foreign exchange contracts to hedge against fluctuations of intercompany account balances. Market value gains and losses on these hedge contracts are substantially offset by fluctuations in the underlying balances being hedged, and the net financial impact is not expected to be material in future periods. At December 31, 2008, we had forward exchange contracts to sell foreign currencies totaling $19.3 million, including approximately $12.4 million in Euros, $4.8 million in Japanese yen, $1.0 million in Australian dollars and $1.1 million in Canadian dollars. The foreign exchange contracts outstanding at the end of the period mature within one month. Additionally, contract values and fair market values are the same.

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DNEX is in the portfolios of Richard Aster Jr.

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