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Haemonetics Corp. Reports Operating Results (10-Q)

February 03, 2010 | About:
10qk

10qk

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Haemonetics Corp. (HAE) filed Quarterly Report for the period ended 2009-12-26.

Haemonetics Corp. has a market cap of $1.35 billion; its shares were traded at around $52.65 with a P/E ratio of 19.8 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 5-star.HAE is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

Highlight of Business Operations:

Operating expenses increased 10.8% and 7.3% for the third quarter and first nine months of fiscal year 2010 over the comparable periods of fiscal year 2009. The unfavorable effects of foreign exchange accounted for an increase in operating expenses of 3.8% for the quarter and 0.3% for the nine months, respectively. Without the effects of foreign exchange, operating expenses increased 7.0% in the third quarter and 7.0% in the first nine 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 marketing of blood management solutions. The recent acquisitions accounted for an increase in expenses of 3.4% in the third quarter and 2.3% in the first nine months. The noted increases in operating expenses were partly offset by a lack of restructuring costs in the first nine months of fiscal year 2010 when compared to the first nine months of fiscal year 2009.

Net income increased 12.8% and 19.9% for the third quarter and first nine months of fiscal year 2010 over the comparable periods of fiscal year 2009. The effects of foreign exchange accounted for an increase in net income of 11.7% and 19.8% for the quarter and nine months, respectively. Without the effects of foreign exchange, net income increased 1.1% for the quarter and 0.1% for the nine months ended December 26, 2009. The increase in net income in the quarter is a result of a reduction in other expense and a reduction in the income tax rate, while the increase in the first nine months results from a reduction in the income tax rate that was partially offset by lower interest income.

Our revenues generated outside the U.S. approximated 55% for the third quarter and 53% for the first nine months of fiscal year 2010 and 53% for the third quarter and 54% for the first nine months of fiscal year 2009. Revenues in Japan accounted for approximately 18.8% and 17.7% of total revenues for the third quarter of fiscal year 2010 and 2009, respectively and 17.2% and 16.5% of total revenues for the first nine months of fiscal year 2010 and 2009, respectively. Revenues in Europe accounted for approximately 27.7% and 27.6% of total revenues for the third quarters of fiscal year 2010 and 2009, respectively, and 27.7% and 29.5% of total revenues for the first nine 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 6.9% and 7.8% for the third quarter and the first nine months, respectively, of fiscal year 2010 over the comparable periods of fiscal year 2009. Foreign exchange resulted in a 3.2% and 2.4% increase for the quarter and nine months, respectively. The remaining increase of 3.7% and 5.4% for the third quarter and the first nine months, respectively, of fiscal year 2010 were driven primarily by increases in the Plasma product line, as discussed below.

Red cell disposables decreased 7.9% and 3.7% for the third quarter and the first nine months, respectively, of fiscal year 2010 compared to the same periods in fiscal year 2009. Comparing the third quarter and the first nine months of fiscal year 2010 to that of 2009, foreign exchange accounted for an increase of 0.2% and a decrease of 0.4%, respectively. The remaining decrease of 8.1% for the quarter and 3.3% for the nine months was driven by lower demand for red cells as a result of fewer surgeries and a reduced demand for automated collection driven by (i) 5% more donors due to the entry of 16 year olds to the

Our equipment & other revenues include revenue from equipment sales, repairs performed under preventive maintenance contracts or emergency service visits, spare part sales, and various service and training programs. Equipment & other revenues decreased 2.6% and 9.8% for the third quarter and the first nine months, respectively, of fiscal year 2010 over the comparable period of fiscal year 2009. Foreign exchange resulted in a 1.5% increase for the quarter and a 1.7% decrease for the nine months. Without the effect of currency, the decrease of 4.1% and 8.1% for the third quarter and the first nine months of fiscal year 2010 is primarily the result of fewer equipment sales, particularly to distributor customers due to macro economic trends impacting health care funding. Equipment sales also continue to be impacted by restricted hospital capital spending. Despite the decline in equipment sales, our installed base (which includes both devices placed with customers and sold to customers) has increased 5% since the beginning of the fiscal year. Also, offsetting these declines is the impact of the SEBRA acquisition on September 4, 2009.

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