BRAINTREE, Mass., May 1 /PRNewswire-FirstCall/ -- Haemonetics Corporation (NYSE: HAE) today reported fourth quarter fiscal 2008 GAAP net revenues of $139 million, up 19%; operating income of $20 million, down 21%; and net earnings per share of $0.52, down 29%. The Company also reported fiscal year end 2008 GAAP net revenues of $516 million, up 15%; operating income of $70 million, up 12%, and net earnings per share of $1.94, up 9%.
Excluding charges in both fiscal 2007 and 2008 and a legal settlement and certain tax benefits in 2007, fourth quarter fiscal 2008 adjusted operating income was $23 million, up 10%, and adjusted earnings per share were $0.58, level with prior year. Full year 2008 adjusted operating income was $77 million, up 10%, and adjusted earnings per share were $2.10, up 10%.(1)
Brad Nutter, Haemonetics' Chairman and CEO, said, "I am pleased to report four consecutive quarters of double digit revenue growth and double digit growth in adjusted operating income and adjusted earnings per share for the year. Growth continues to come from strength across multiple product lines and geographies, and we have a positive outlook for all these markets."
"In the year, we made good strides in our vision to be the global leader in blood management solutions for our customers. We introduced several new products in both the blood bank and hospital markets. We acquired a new device for patient blood management and a consulting and information technology platform for hospital blood management. Haemonetics now provides customers with a value proposition that includes the most extensive depth and breadth of devices, services, and information technology platforms across the blood bank and hospital markets."
FINANCIALS
In addition to revenues and earnings per share, Haemonetics reported fourth quarter gross profit of $70 million, up 20%, and gross margin of 50.6%, up 70 basis points. For the year, gross profit was $258 million, up 13%, and gross margin was 49.9%, down 70 basis points. Gross margin was impacted by product mix as lower gross margin contributors, plasma and equipment, had very strong sales growth.
Adjusted operating expenses were $47 million in the quarter, up 26%, and $181 million for the year, up 15%. Nearly half of the year's increase came from three areas: 1) planned enterprise resource planning ("ERP") spending; 2) the acquisitions of IDM, Infonale, and Haemoscope, whose expenses were not included in most of fiscal 2007 financial results; and 3) continued investment in Arryx R&D.
Haemonetics' tax rate was 35.5% in the quarter and 32.8% for the year. In the year, Haemonetics benefited from resolution of certain tax contingencies.
Haemonetics ended the year with a cash balance of $134 million, and $12 million of debt. During the year, the Company generated $76 million of cash flow from operations and invested $57 million in capital expenditures to invest in ERP, the plasma business, and software development. In the year, the Company invested $75 million in a share repurchase and $46 million on acquisitions.
EXPANDING THE BUSINESS
Haemonetics continues to make progress expanding the business. The Company reported the following highlights during the fiscal year just ended:
ANNUAL PRODUCT LINE GROWTH
Among the product lines, plasma disposables revenue was $40 million for the quarter, up 32%. Annual plasma disposables revenue was $155 million, up 22%. Plasma disposable sales benefited from continued growth in U.S. and European plasma collections as well as from Haemonetics' collection growth at new customer sites. Haemonetics expects that growth in the plasma market will continue to drive strong plasma sales for the next several years.
Blood bank disposables revenue was $36 million for the quarter, up 11%. Annual blood bank disposables revenue was $136 million, up 8%. Blood bank growth was driven by strong sales in Europe and Asia as the Company sees early benefits from last year's reorganization initiatives.
Red cell disposables revenue was $12 million for the quarter, up 7%. Annual red cell disposables revenue was $46 million, up 7%. Strong equipment sales of the newest generation Cymbal(R) automated blood collection system and the MCS(R)+ mobile collection system in the first half of the year drove strong product line sales. Including equipment, total revenues for the red cell product line grew 13% in the year.
Software and services revenue was $10 million for the quarter, down 5%. Annual software and services revenue was $39 million, up 17%. Software and services revenue growth in the year came from several areas: 1) the acquisition of IDM, Inc. in January 2007; 2) the integration of the Surround software suite into the operations of Hema Quebec, completing the integration of Surround into all Canadian blood testing; and 3) the ongoing management of and enhancements to the U.S. Department of Defense's Defense Blood Standard System.
Surgical disposables revenue was $21 million, up 23% for the quarter. Annual Surgical disposables revenue was $72 million, up 8%. Growth for the quarter and year was driven by the TEG product line which Haemonetics acquired in November 2007.
OrthoPAT(R) disposables revenue was $9 million for the quarter, up 10%. Annual OrthoPAT disposables revenue was $34 million, up 12%. The Company placed more than 175 OrthoPAT devices in the field in fiscal 2008. Equipment placements are expected to continue to drive disposables growth into fiscal 2009.
Equipment revenue was $11 million for the quarter, up 50%, and $33 million for the year, up 48%. Equipment sales growth was driven by sales of plasma devices in the growing European and Asian markets, platelet equipment in Europe, and red cell equipment in the U.S.
FISCAL 2009 SHARE REPURCHASE PLAN
Haemonetics said today that its Board of Directors has authorized a $60 million share repurchase program.
FISCAL 2009 GUIDANCE
Haemonetics announced its fiscal 2009 guidance. In fiscal 2009, the Company anticipates revenue growth of 8-11%, with growth again being driven by multiple product lines. Growth is planned from plasma, red cells, software, OrthoPAT, internal new products, and the acquired TEG product line. Adjusted operating income is expected to grow 14-17%, and adjusted earnings per share are expected to be in a range of $2.31 to $2.41, up 10-14%.
The Company further expects gross margin improvement of more than 150 basis points and operating margin improvement of 70 basis points in fiscal 2009.
Adjusted fiscal 2009 guidance excludes $7-8 million, or approximately $0.17-$0.20 per share, of costs to restructure other areas of Haemonetics' business, including manufacturing, quality, R&D, and Europe Phase II.
For the full year 2009, the Company expects to generate $40 million of free cash flow.
Fiscal 2009 GAAP earnings per share guidance is $2.14 to $2.21.
Haemonetics has posted potential income scenarios reflecting guidance ranges as well as potential fiscal 2009 product line growth on its website at www.haemonetics.com.
CONFERENCE CALL
Haemonetics will hold a conference call on Thursday, May 1st at 10:00 am Eastern to discuss these results. Interested parties can participate in the conference call by dialing 888-802-8577 (U.S. only) or (973) 935-8754 (International) with conference ID 42384135. The call will be replayed through May 15, 2008 at (800) 642-1687 (U.S. only) or (706) 645-9291 (International) using PIN 42384135.
Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.
As part of this release, Haemonetics has presented supplemental non-GAAP financial results which exclude restructuring costs in FY08 and restructuring costs, an in-process research and development charge, a legal settlement and the resolution of an audit of a prior year tax return in FY07. 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 has presented supplemental non-GAAP financial measures as part of this earnings release. A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the most directly comparable GAAP measures. There are material limitations to the usefulness of non-GAAP measures on a standalone basis, including the lack of comparability to the GAAP financial results of other companies.
These measures are used by management to monitor the financial performance of the business, inform business decision making, and to forecast future results. Performance targets for management are established based upon these non-GAAP measures. In the reconciliations below we have removed restructuring costs from our GAAP expenses. These restructuring costs result from a significant transformation of our International businesses during our fiscal years 2008 and 2007. This transformation resulted in the formation of a shared service center in Europe, and exiting various offices across Europe, and Japan. We have also removed In-Process research and development expenses associated with the acquisition of Arryx, Inc. in FY07. Additionally, we removed the receipt of an award resulting from a net settlement agreement against a competitor in FY07. Lastly removed is the impact of a reduction to income tax due to the finalization of an audit of prior year income tax returns in FY07. We believe this information is useful for investors because it allows for an evaluation of the Company with a focus on the performance of our core operations.
SOURCE Haemonetics Corporation
