Exhibit 99.1
HAEMONETICS REPORTS FIRST QUARTER FISCAL 2007 FINANCIAL RESULTS
COMPANY AFFIRMS ANNUAL PRO FORMA GUIDANCE
BRAINTREE, Mass., July 27 /PRNewswire-FirstCall/ -- Haemonetics
Corporation (NYSE: HAE) reported today first quarter fiscal year 2007 GAAP net
revenue of $111 million, a 7.3% increase over the first quarter of fiscal year
2006.
Brad Nutter, Haemonetics President and CEO, said, "We are making good
progress expanding our business in existing markets. Sales growth was driven
by U.S. plasma and OrthoPAT, each growing more than 40% in the quarter, and
U.S. red cells which grew 28% in the quarter. Each of these products is off
to a strong start."
Diluted GAAP net earnings per share were $0.40 for the quarter, down 14.5%
over Q1:06 earnings of $0.47. This is the first quarter in which Haemonetics is
adopting stock option expensing. Additionally, a restructuring charge impacts
comparability between Q1:07 and Q1:06. GAAP earnings reflect share based
compensation expense under FAS 123R of $3 million (pre-tax), or $0.07 per
diluted share, and a restructuring charge of $1.6 million (pre-tax), or $0.04
per diluted share, as Haemonetics transforms its international business
operations. Therefore, first quarter pro forma diluted net earnings per share
adjusted to eliminate the impact of these items were $0.52, up 10.6%.
Mr. Nutter added, "Our business transformation initiatives are on plan.
In the quarter, we expanded our product portfolios with the introduction of
three new products, acquired a nano-technology company which strengthens our
research competencies, implemented changes for a leaner yet more efficient
international organization, and began the first phase of our ERP initiative.
We are off to a good start for the year, and, as a result, we are affirming
our annual pro forma guidance."
FINANCIALS
Excluding the charges noted above, Haemonetics reported the following Q1:07
pro forma results versus Q1:06:
* Revenue of $111 million, up 7.3%
* Gross profit of $57 million, up 5.3% from $55 million in Q1:06
* Gross margin of 51.9%, down 90 basis points
* Operating expenses of $38 million, up 4.9% from $36 million in Q1:06
* Operating income of $20 million, up 6.1% from $18 million in Q1:06
* Operating margin of 17.7%, down 20 basis points
* Earnings per share of $0.52, up 10.6% from $0.47
* Tax rate of 35% down from 36% in Q1:06
Haemonetics reported the following Q1:07 GAAP results versus Q1:06:
* Revenue of $111 million, up 7.3%
* Gross profit of $57 million, up 5.2% from $55 million in Q1:06
* Gross margin of 51.8%, down 100 basis points
* Operating expenses of $42 million, up 17.5% from $36 million in Q1:06
* Operating income of $15.0 million, down 18.7% from $18 million in Q1:06
* Operating margin of 13.6%, down 430 basis points
* Earnings per share of $0.40, down 14.5% from $0.47
* Tax rate of 35.6% down from 36% in Q1:06
Haemonetics will post detailed information on the effects of foreign
currency on the web at
http://www.haemonetics.com/site/content/investor/Non_GAAP.asp.
BALANCE SHEET
Haemonetics' cash and short term investments increased $9 million in the
quarter, for a cash balance of $260 million. The Company generated $16.8
million in cash flow from operating activities for the quarter.
PATIENT PRODUCT LINE
The Company reported strong progress in its transition to direct U.S.
sales of the OrthoPAT(R). U.S. OrthoPAT brand disposables revenue growth was
41% in the quarter even as many customers worked through inventory acquired
from a former distributor. Worldwide OrthoPAT disposables revenue was $7
million, up 28.9% over Q1:06. In contrast to the market for the Company's
Cell Saver systems, the $625 million orthopedic surgical market addressed by
the OrthoPAT system is relatively unpenetrated and growing.
Brian Concannon, President of Haemonetics' Patient Division, said, "I'm
pleased with our first quarter OrthoPAT sales growth. We beat our U.S. sales
unit plan. In the first quarter, our plan was to sell 9,900 disposable units
in the U.S. We exceeded our plan by selling more than 10,500 units. As the
sales force matures and inventory is consumed, our targets increase to 12,500
units in Q2, 15,000 units in Q3, and 17,000 units in Q4. So we'll see growing
momentum in sales as the year rolls out."
Surgical disposables revenue, principally sales of Cell Saver(R) systems,
was $17 million for the quarter, level with Q1:06. The Cell Saver market
continues to shrink because of a shift to less invasive surgeries and the
impact of drug eluting stents.
DONOR PRODUCT LINE
For the quarter, plasma disposable sales benefited from growth of 41.0% in
the U.S. and 14.0% in Europe as the plasma collection market continues to
grow. Haemonetics placed nearly 400 incremental PCS(R)2 devices in the
quarter to meet increasing demand for plasma collections. Worldwide plasma
disposables revenue was $32 million for the quarter, up 16.9% from Q1:06.
Blood bank disposables revenue was $31 million for the quarter, down 4.1%
from Q1:06.
Peter Allen, President of the Donor Division, said, "The blood bank
revenue decline in the quarter is attributable to lower Japanese platelet
disposable revenues. This decline is a result of lower platelet collections
and of a rebalancing of platelet disposables market share as a local
competitor has resolved its quality issues and returned to the market."
Quarterly red cell revenue was driven by U.S. growth of 28.1% due to unit
growth and a favorable shift in product mix. Worldwide red cell disposables
revenue was $11 million for the quarter, up 25.4% over Q1:06.
SIGNIFICANT ANNOUNCEMENTS
Haemonetics completed its previously announced acquisition of Arryx, Inc.,
a privately held nano-technology company. Haemonetics has been collaborating
with Arryx since October 2004 in developing next generation blood separation
and processing technologies, and the Company previously owned a 19% minority
stake in Arryx. Haemonetics acquired the remaining outstanding shares of
Arryx for $26 million in cash. The Arryx technology strengthens and
diversifies Haemonetics' research capabilities, providing the Company with a
new technology platform for future product development.
The Company also announced it received a Company-record number of 510(k)
clearances from the U.S. Food and Drug Administration (EQue(TM) automated
donor interview and assessment software, a filter bag for use with
Haemonetics' surgical products, and AS-5 intravenous solution).
FY07 GUIDANCE
Haemonetics affirmed its pro forma FY07 guidance which will be measured
against pro forma FY06 results. Annual FY07 pro forma guidance is:
* Revenue growth of 10-14%
* Gross margins in the range of 52%
* Operating income growing 14-21%
* Operating margins improving to approximately 18%
* Earnings per share in the range of $2.05-$2.17
For comparison purposes, the FY06 pro forma results exclude the benefit of
an arbitration award received in the third quarter which added $26.4 million
to operating income and $0.62 to earnings per share.
The FY07 guidance is based on anticipated annual pro forma results that
exclude three items: 1) the impact from stock compensation expense (FAS 123R),
expected to be approximately $10 million (pre-tax), or $0.25 per share with
costs spread throughout the year; 2) a restructuring charge of $3-$4 million
(pre-tax), or $0.07 to $0.09 per share, with costs spread throughout the year;
and 3) up to $16 million, or $0.56 per share in one-time acquisition charges,
primarily in process R&D charges, resulting from the Arryx acquisition.
Therefore, FY07 GAAP earnings per share are expected to be in the range of
$1.15 to $1.29.
In FY07, the Company expects to generate $35-$40 million of operating cash
flow, Haemonetics' internal cash flow measurement.
Haemonetics has posted potential income scenarios reflecting the high and
low ranges of guidance on its website at http://www.haemonetics.com.
CONFERENCE CALL
Haemonetics will hold a conference call on Thursday, July 27th at 10:00
a.m. eastern. The call will discuss the first quarter results and other
business developments including an update on the Arryx acquisition and
integration. Interested parties can participate in the conference call by
dialing 888-802-8579 (US only) or 973-633-6740 (International) with conference
ID 7605624. The call will be replayed through August 11th at 877-519-4471 (US
only) or 973-341-3080 (International) using PIN 7605624.
Haemonetics (NYSE: HAE) 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 collection, plasma collection, and blood component safety. To learn
more about Haemonetics' products and markets, visit its web site at
http://www.haemonetics.com.
Haemonetics has presented supplemental non-GAAP financial results
excluding stock compensation expense and restructuring costs as part of this
release. Haemonetics believes that these non-GAAP results are useful to
investors because it allows for an evaluation of the Company with a focus on
the results of our core business.
This release contains forward looking statements that involve risks and
uncertainties, including technological advances in the medical field and
standards for transfusion medicine and our ability to successfully implement
products that incorporate such advances and standards, product demand, market
acceptance, regulatory uncertainties, the effect of economic and political
conditions, the impact of competitive products and pricing, blood product
reimbursement policies and practices, foreign currency exchange rates, changes
in customers' ordering patterns, the effect of industry consolidation as seen
in the plasma market, the effect of communicable diseases and the effect of
uncertainties in markets outside the U.S. (including Europe and Asia) in which
we operate and other risks detailed in the Company's filings with the
Securities and Exchange Commission. The foregoing list should not be
construed as exhaustive. The forward-looking statements are based on
estimates and assumptions made by management of the Company and are believed
to be reasonable, though are inherently uncertain and difficult to predict.
Actual results and experience could differ materially from the forward-looking
statements.
HAEMONETICS CORPORATION FINANCIAL SUMMARY FOR THE FIRST QUARTER FYE07
(UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF INCOME
% Inc/(Dec)
vs Prior
07/01/06 07/02/05 Year
------------ ------------ ------------
NET REVENUES $ 110,674 $ 103,173 7.3%
Gross profit 57,373 54,524 5.2
R&D 5,422 5,541 (2.1)
S,G&A 36,908 30,488 21.1
Operating expenses 42,330 36,029 17.5
Operating income 15,043 18,495 (18.7)
Interest expense (425) (541) (21.4)
Interest income 2,026 1,313 54.3
Other income/(expense), net 912 864 5.6
Income before taxes 17,556 20,131 (12.8)
Tax expense 6,248 7,247 (13.8)
NET INCOME $ 11,308 $ 12,884 (12.2)
Net income per common share
assuming dilution $ 0.40 $ 0.47 (14.5)%
Weighted average number of shares
Basic 26,900 26,280
Diluted 27,929 27,209
Inc/(Dec) vs
prior year
profit
Profit Margins: margin %
- ----------------------------------- ------------ ------------ ------------
Gross profit 51.8% 52.8% (1.0)
R&D 4.9% 5.4%
S,G&A 33.3% 29.6%
Operating income 13.6% 17.9% (4.3)
Income before taxes 15.9% 19.5% (3.6)
Net income 10.2% 12.5%
CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK
BASED COMPENSATION EXPENSE & RESTRUCTURING COSTS
07/01/06
Effect of 07/01/06
07/01/06 Stock Based Restructur- 07/01/06
As Compensation ing As Adjusted
Reported Expense(1) Costs(2) (3)
------------ ------------ ------------ ------------
NET REVENUES $ 110,674 $ 0 $ 0 $ 110,674
Gross profit 57,373 (64) 0 57,437
R&D 5,422 100 0 5,322
S,G&A 36,908 2,863 1,561 32,484
Operating expenses 42,330 2,963 1,561 37,806
Operating income 15,043 (3,027) (1,561) 19,631
Interest expense (425) 0 0 (425)
Interest income 2,026 0 0 2,026
Other
income/(expense),
net 912 0 0 912
Income before taxes 17,556 (3,027) (1,561) 22,144
Tax expense 6,248 (956) (546) 7,750
NET INCOME $ 11,308 $ (2,071) $ (1,015) $ 14,394
Net income per common share
assuming dilution $ 0.40 $ (0.07) $ (0.04) $ 0.52(4)
Weighted average number of
shares
Basic 26,900 26,900 26,900 26,900
Diluted 27,929 27,929 27,929 27,929
Profit Margins:
Gross profit 51.8% 51.9%
R&D 4.9% 4.8%
S,G&A 33.3% 29.4%
Operating income 13.6% 17.7%
Income before taxes 15.9% 20.0%
Net income 10.2% 13.0%
07/01/06 07/02/05 Adjusted %
As As Inc/(Dec) vs
Adjusted(3) Reported Prior Year
------------ ------------ ------------
NET REVENUES $ 110,674 $ 103,173 7.3%
Gross profit 57,437 54,524 5.3
R&D 5,322 5,541 (4.0)
S,G&A 32,484 30,488 6.5
Operating expenses 37,806 36,029 4.9
Operating income 19,631 18,495 6.1
Interest expense (425) (541) (21.4)
Interest income 2,026 1,313 54.3
Other income/(expense), net 912 864 5.6
Income before taxes 22,144 20,131 10.0
Tax expense 7,750 7,247 6.9
NET INCOME $ 14,394 $ 12,884 11.7
Net income per common share
assuming dilution $ 0.52(4) $ 0.47 10.6%
Weighted average number of shares
Basic 26,900 26,280
Diluted 27,929 27,209
Inc/(Dec) vs
prior year
profit
Profit Margins: margin %
- ---------------------------------- ------------ ------------ ------------
Gross profit 51.9% 52.8% (0.9)
R&D 4.8% 5.4%
S,G&A 29.4% 29.6%
Operating income 17.7% 17.9% (0.2)
Income before taxes 20.0% 19.5% 0.5
Net income 13.0% 12.5%
(1) Stock based compensation expense related to the adoption of FAS 123R.
(2) Restructuring costs primarily include severence and related costs
associated with eliminating or reorganizing certain positions in our
international business operations.
(3) "As Adjusted" is comprised of "As Reported" less the "Effect of Stock Based
Compensation" and "Restructuring Costs."
(4) Does not cross-foot due to rounding.
REVENUE ANALYSIS
First Quarter
------------------------------------------
07/01/06 07/02/05 % Inc/(Dec)
------------ ------------ ------------
Revenues by Geography
United States $ 46,420 $ 38,223 21.4%
International 64,254 64,950 (1.1)
Net Revenues $ 110,674 $ 103,173 7.3
Disposable Revenues by Product Family
Donor:
Plasma $ 31,919 $ 27,303 16.9%
Blood Bank 31,346 32,690 (4.1)
Red Cell 10,600 8,455 25.4
$ 73,865 $ 68,448 7.9
Patient:
Surgical 17,133 17,096 0.2
Orthopat 7,206 5,589 28.9
$ 24,339 $ 22,685 7.3
Subtotal $ 98,204 $ 91,133 7.8
Equipment $ 5,608 $ 6,111 (8.2)
Misc & Service 6,862 5,929 15.7
Net Revenues $ 110,674 $ 103,173 7.3
CONSOLIDATED BALANCE SHEETS
Period ending
---------------------------
07/01/06 04/01/06
------------ ------------
Assets
Cash & cash
equivalents $ 260,031 $ 250,667
Short-term
investments 0 0
Accounts
receivable, net 89,281 86,901
Inventories,
net 55,561 54,571
Other current
assets 28,404 26,265
Total current
assets 433,277 418,404
Net PP&E 79,920 75,266
Other assets 55,037 52,873
Total assets $ 568,234 $ 546,543
Liabilities & Stockholders' Equity
S/T debt &
current
maturities $ 22,226 $ 26,176
Other current
liabilities 67,356 61,940
Total current
liabilities 89,582 88,116
Long-term debt 12,835 12,977
Other long-term
liabilities 3,982 3,800
Stockholders'
equity 461,835 441,650
Total
liabilities
& equity $ 568,234 $ 546,543
CONTACT:
Julie Fallon
Tel. (781) 356-9517
Alternate Tel. (617) 320-2401
fallon@haemonetics.com
SOURCE Haemonetics Corporation
-0- 07/27/2006
/CONTACT: Julie Fallon of Haemonetics Corporation, +1-781-356-9517,
Alternate Tel., +1-617-320-2401, or fallon@haemonetics.com/
/Web site: http://www.haemonetics.com/