Dionex Corp. has a market cap of $1.38 billion; its shares were traded at around $78.24 with a P/E ratio of 25.24 and P/S ratio of 3.59. Dionex Corp. had an annual average earning growth of 10.4% over the past 10 years. GuruFocus rated Dionex Corp. the business predictability rank of 4-star.DNEX is in the portfolios of Richard Aster Jr of Meridian Fund, Chuck Royce of Royce& Associates, RS Investment Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Net sales for the third quarter of fiscal 2010 were $112.8 million, compared with $94.4 million reported for the same period in the prior year, reflecting an increase of 19.5%. Operating income for the quarter was $26.9 million, an increase of 24.5% over operating income for the third quarter of fiscal 2009 of $21.6 million. Cash flow from operating activities for the nine months ended March 31, 2010 was $53.9 million compared with $50.5 million for the same period in fiscal 2009, reflecting an increase of 6.7%. Our gross profit margin for the quarter was 68.7%, an increase of 1.0% compared to 68.0% for the same period last year. Selling, general and administrative expenses were 37.4% of net sales during the quarter, unchanged the same period last year. Research and product development expenses for the quarter were 7.4% of net sales, down slightly from the 7.7% reported in the same period last year. Diluted earnings per share increased 17.9% to $0.99 for the third quarter, compared to $0.84 reported in the same period last year.
Net sales in North America increased by 17.9% in the third quarter of fiscal 2010 to $28.0 million, compared to $23.7 million during the same period in the prior year, partially due to the sales contribution of ESA products. Net sales in North America increased by 7.4% in the nine months ended March 31, 2010 to $81.4 million compared to $75.8 million during the nine months ended March 31, 2009 due to the increased customer demand and sales from ESA products. Net sales in Europe increased by 13.2% to $39.4 million in the third quarter of fiscal 2010, compared to $34.8 million during the same period in the prior year due to the increased customer demand and favorable currency fluctuations. Excluding the impact of currency fluctuations, net sales in Europe increased by 5.4% in the third quarter of fiscal 2010 compared to the same period in the prior year due to increased demand in chemical/petrochemical, food and beverage, and power customers in the region. Net sales increased 1.2% in the nine months ended March 31, 2010 to $119.6 million compared to $118.2 million during the nine months ended March 31, 2009, driven by continued weakness in all markets for the region offset by an overall favorable currency impact. The Asia/Pacific region continued its solid performance as it grew 26.6% in reported dollars and 10.4% in local currency for the third quarter compared to the third quarter of fiscal 2009. Sales growth was primarily driven by strong performance in Japan and China, specifically. Demand from all of our customer end markets was up for the quarter with the exception of the food and beverage customers, which remain unchanged from a year ago. Net sales increased 15.2% in the nine months ended March 31, 2010 to $111.6 million compared to $96.9 million in the nine months ended March 31, 2009 as a result of strong sales growth in Japan, China, and India.
Operating expenses of $50.6 million for the third quarter of fiscal 2010 increased by $8.0 million, or 18.7%, from the $42.6 million reported in the same quarter last year. As a percentage of net sales, operating expenses were 44.8% for the third quarter of fiscal 2010, a slight decrease from the 45.1% of sales reported in the third quarter of fiscal 2009. The effects of foreign currency fluctuations increased total operating expenses by $1.5 million, or 3.6%, for the quarter ended March 31, 2010, compared to a decrease of 5.9% during the same period in the prior year. The $6.6 million increase in operating expenses, excluding currency effects, was attributable primarily to $3.6 million of additional cost in Europe primarily associated with the implementation of our European shared service center (SSC) and the Oracle Enterprise Resource Planning (ERP) system, the additional operating expenses related to our ESA business of $1.6 million, and higher spending for both sales and marketing and research and development. Operating expenses for the nine months ended March 31, 2010 were $141.9 million, representing a 9.6% increase over the corresponding period during the prior year of $129.5 million mainly due to currency fluctuations, acquisition of ESA Life Sciences Tools business, and the SSC implementation efforts.
Selling, general and administrative (SG&A) expenses were $42.2 million for the third quarter of fiscal 2010, compared with $35.3 million for the same quarter of fiscal 2009. As a percentage of net sales, SG&A expenses were 37.4% in the third quarter of fiscal 2010, unchanged from the same period in fiscal 2009. Effects of foreign currency fluctuations increased SG&A expenses by $1.4 million, or 3.9%, in the third quarter of fiscal 2010. SG&A expenses, excluding currency effects, grew by $5.7 million, or 15.6%, compared to the third quarter of fiscal 2009, due to our implementation of the European SSC and ERP roll-out, ESA operating expenses and higher sales and marketing expenses. SG&A expenses for the nine month period ended March 31, 2010 increased to $118.7 million compared to $107.7 million in the same period of fiscal 2009. The increase was due to currency fluctuations, the implementation of Oracle ERP and the operating expenses of our ESA business.
Foreign Currency Exchange. Revenues generated from international operations are generally denominated in foreign currencies. We have 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 March 31, 2010, we had forward exchange contracts to sell foreign currencies totaling $29.3 million (including approximately $21.3 million in Euros, $5.9 million in Japanese yen, $1.1 million in Australian dollars and $1.0 million in Canadian dollars). The foreign exchange contracts outstanding at the end of the period mature within one month. Consequently, contract values and fair market values are the same.
In March 2007, we entered into a $10.0 million cross-currency swap arrangement for Japanese Yen that was originally scheduled to mature in March 2010. The arrangement was extended to March 2012 in December 2009. Starting January 2008, we determined that this cross-currency swap qualified as a net investment hedge. This derivative instrument did not qualify for net investment hedge accounting and was deemed to be an ineffective hedge instrument because, at the inception of the hedge transaction, there was no formal documentation of the hedging relationship and our risk management objective and strategy for undertaking the hedge. In January 2008, we completed our formal documentation of the hedging relationship and determined that the cross-currency swap qualified as a net investment hedge. As a result, during the three and nine months ended March 31, 2010, we marked to market an increase in value of $76,000 and a decrease in value of $466,000, respectively, in accumulated other comprehensive income as part of the foreign currency translation adjustment. During the three and nine months ended March 31, 2009, we marked to market an increase in value of $1.0 million and a decrease in value of $864,000, respectively, which were reported in accumulated other comprehensive income.
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