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Haemonetics Corp. Reports Operating Results (10-Q)

August 05, 2009 | About:

Haemonetics Corp. (HAE) filed Quarterly Report for the period ended 2009-06-27.

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 $1.43 billion; its shares were traded at around $55.56 with a P/E ratio of 22.7 and P/S ratio of 2.4. 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:

Gross profit increased 13.6% as compared to the first quarter of fiscal year 2009. The favorable effects of foreign exchange accounted for an increase of 8.2% for the quarter. The remaining increase of 5.4% for the quarter 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.

Our revenues generated outside the U.S. approximated 51% and 54% of total sales for the first quarter of fiscal years 2010 and 2009, respectively. Revenues in Japan accounted for approximately 16% and 15% of total revenues for the first quarter of fiscal year 2010 and 2009, respectively. Revenues in Europe accounted for approximately 28% and 31% of total revenues for the first quarter 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 can be 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 8.3% for the first quarter of fiscal year 2010 compared to the first quarter of fiscal year 2009. Foreign exchange resulted in a 0.7% increase for the first quarter over the comparable period in fiscal year 2009. The remaining increase of 7.6% for the quarter was driven by increases in the Plasma product line, as discussed below.

Red Cell disposables revenue decreased 0.5% compared to the first quarter of fiscal year 2009. Foreign exchange accounted for an decrease of 0.3% in the quarter over the comparable period in fiscal year 2009. The remaining decrease of 0.2% was driven by lower demand for automated collections, as a result of (i) fewer elective surgeries, thus a reduced demand for blood and (ii) 5% more donors due to the entry of 16 year olds to the blood donor population.

Gross profit increased 13.6% as compared to the first quarter of fiscal year 2009. Foreign exchange resulted in a 8.2% increase for the first quarter of fiscal year 2010. The remaining increase of 5.4% for the quarter was due primarily to the increase in net revenues and fixed cost leverage. Our gross profit margin improved 310 basis points compared to the first quarter of fiscal year 2009. The improvement was attributable to foreign exchange and improved manufacturing efficiencies, particularly for our plasma business. Product mix partly offset these improvements due to increased sales of our lower margin plasma products.

During the first quarter of fiscal year 2010, selling, general and administrative expenses increased 4.1%. Foreign exchange resulted in a 3.0% decrease in selling, general and administrative during the quarter. Excluding the impact of foreign exchange, selling, general and administrative expense increased 7.1% for the first quarter. The increase was due primarily to (i) expenses brought on from recent acquisitions (Altivation and Neoteric) that had not been reflected in the first quarter of fiscal year 2009, (ii) expenses associated with our ERP Phase II go-live, and (iii) general selling, marketing and handling costs necessary to support the 6.9% increase in sales. The noted increases were partly offset by a lack of restructuring costs in the first quarter of fiscal year 2010.

Read the The complete ReportHAE is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

Rating: 4.0/5 (3 votes)

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