EX-99.1 2 hc4644ex991.txt EXHIBIT 99.1 Exhibit 99.1 HAEMONETICS REPORTS THIRD QUARTER FISCAL 2006 EARNINGS BRAINTREE, Mass., Jan. 31 /PRNewswire-FirstCall/ -- Haemonetics Corporation (NYSE: HAE) reported today third quarter fiscal year 2006 net revenue of $106 million, a 7.7% increase over the third quarter of fiscal year 2005 and year-to-date revenue of $309 million, a 9.1% increase over FY05. Diluted net earnings per share for the quarter were $1.02 and for year-to-date are $1.89. The Company's net income includes two unusual items. First, the Company recorded $28 million of pre-tax income following a successful arbitration award which compensates Haemonetics for sales lost when a competitor bought one of Haemonetics' largest customers and refused to honor a supply agreement. The award positively affected earnings per share by $0.61. Second, the Company recorded a $3.75 million impairment charge for an intangible asset related to pathogen reduction. Haemonetics will continue its development work on platelet collection technology for the pathogen reduction market. The impairment charge negatively affected earnings per share by ($0.09). These unusual items combined to impact the Company's diluted net earnings per share positively by $0.52. To further assist investors in understanding the unusual items, a complete description can be found on the Company's website at http://www.haemonetics.com/site/content/km/presentations.asp. FINANCIAL HIGHLIGHTS Haemonetics reported the following additional financial results: * Q3:06 gross profit of $56 million, up 7.5% from $52 million in Q3:05; year-to-date gross profit of $162 million, up 12.1% from $144 million in FY05 * Q3:06 gross margin of 52.7%, down 10 basis points from Q3:05; year-to- date gross margin of 52.4%, up 150 basis points from FY05 * Q3:06 operating expenses of $41 million(1), up 11.6% from $36 million in Q3:05; year-to-date operating expenses of $113 million, up 12.8% from $100 million in FY05 * Q3:06 operating income of $15.0 million(1), down 2.2% from $15.3 million in Q3:05; year-to-date operating income of $49 million, up 10.5% from $44 million in FY05 * Q3:06 operating margin of 14.2%, down 140 basis points from Q3:05; year- to-date operating margin of 15.8%, up 20 basis points from FY05 * Q3:06 earnings per share of $1.02(1),(2), up 142.9%; year-to-date earnings per share of $1.89, up 64.3% In the quarter, the Company's tax rate increased to 36.9% from 29.5% due to the tax treatment of the arbitration award. PATIENT PRODUCT LINE HIGHLIGHTS Total disposables revenue for the Patient family of products was $22 million for the quarter, down 1.3% from Q3:05 and $65 million year-to-date, up 2.4% from FY05. In Q2:06 Haemonetics shifted from a distribution relationship to direct sales of its US OrthoPAT surgical blood salvage product. For the quarter, OrthoPAT(R) brand disposables revenue was $6 million, level with Q3:05 and $16 million year-to-date, up 9.2%. U.S. OrthoPAT revenues increased sequentially from Q2:06, and the Company reported excellent progress in its transition to direct sales. Almost 90% of FY05 unit volume is now under long term supply contracts with Haemonetics. The Company is well poised for U.S. OrthoPAT revenue growth of greater than 20% in the fourth quarter and anticipates further strengthening of sales into FY07. Brian Concannon, President of the Patient Division, said, "We're very pleased with our progress in going direct with the OrthoPAT system. This should deliver exceptional sales momentum. Moreover, the margin improvement will be significant. We remain confident that this strategic decision supports the long term growth of the Company." DONOR PRODUCT LINE HIGHLIGHTS Blood bank disposables revenue was $34 million for the quarter, down 1.3% from Q3:05 and $98 million year-to-date, level with FY05. While sales of platelet collection disposables remained stable in both of Haemonetics' key markets (Japan and Europe), the prior year's significant intravenous solutions sales did not repeat. Plasma disposables revenue was $27 million for the quarter, up 13.0% from Q3:05 and $81 million year-to-date, up 9.0% from FY05. In the quarter, sales benefited from disposables unit growth in the U.S. as the plasma collection market rebounds and as Haemonetics executes its plan to convert a large, new customer to its plasma collection systems. Red cell disposables revenue was $9 million for the quarter, up 30.8% over Q3:05 and $27 million year-to-date, up 31.8% from FY05. Quarterly revenue growth came from the U.S. where sales increased 41.1% over Q3:05. Unit growth and a favorable shift in product mix were key drivers of U.S. red cell disposables revenue. BALANCE SHEET AND GUIDANCE UPDATES Haemonetics' cash and short term investments increased $19 million in the quarter, for a third quarter end cash balance of $229 million. The Company also generated $17 million in cash flow from operating activities for the quarter. Haemonetics also reported that it revised its full year sales guidance to 8-10% growth. A primary reason for this change results from the strategic decision to convert to direct U.S. OrthoPAT sales. Brad Nutter, Haemonetics' President and CEO, said, "The loss of OrthoPAT sales momentum during the third quarter was a temporary effect of the transition to direct sales. This trend has already reversed, and OrthoPAT sales are now growing faster than originally expected in our conversion plan." Additionally, the Company raised its annual earnings per share estimate to a range of $2.44 to $2.51, including the unusual items, and affirmed its other annual guidance of gross and operating margin improvement, and operating income growth of approximately 20%. Haemonetics will post detailed information on the effects of currency on the web at http://www.haemonetics.com/site/content/investor/Non_GAAP.asp. CONFERENCE CALL Haemonetics will hold a conference call on Tuesday, January 31st at 10:00 am Eastern to review in more detail the financial and operational performance of the quarter. Interested parties can participate by calling (800) 322-0079 (US only) or (973) 935-2100 with conference ID 6898706. The call will be replayed through February 15th at (877) 519-4471 (US only) or (973) 341-3080 using PIN 6898706. (1) Including $3.75 million, or $0.09 loss in earnings per share, recorded as R&D expenses for the impairment charge related to pathogen reduction (2) Including $28 million in pre-tax income, or $0.61 gain in earnings per share, related to the arbitration award 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. 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. CONTACT: Julie Fallon Tel. (781) 356-9517 Alternate Tel. (617) 320-2401 fallon@haemonetics.com HAEMONETICS CORPORATION FINANCIAL SUMMARY (UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENTS OF INCOME THIRD QUARTER FYE06
% Inc/(Dec) vs Prior 12/31/05 01/01/05 Year ---------- ---------- ----------- NET REVENUES $ 105,677 $ 98,098 7.7% Gross profit 55,669 51,781 7.5 R&D 9,463 6,584 43.7 S,G&A 31,250 29,897 4.5 Operating expenses 40,713 36,481 11.6 OPERATING INCOME 14,956 15,300 (2.2) Interest expense (435) (553) (21.3) Interest income 2,875 598 380.8 Other income/(expense), net 27,092 262 10,240.5 Income before taxes 44,488 15,607 185.1 Tax expense 16,399 4,600 256.5 NET INCOME $ 28,089 $ 11,007 155.2 Net income per common share assuming dilution $ 1.02 $ 0.42 142.9% Weighted average number of shares Basic 26,542 25,628 Diluted 27,646 26,314
Inc/(Dec) vs prior year profit margin % ----------- Profit Margins: Gross profit 52.7% 52.8% (0.1) R&D 9.0% 6.7% S,G&A 29.6% 30.5% Operating income 14.2% 15.6% (1.4) Income before taxes 42.1% 15.9% 26.2 Net income 26.6% 11.2%
YEAR-TO-DATE FOR FYE06
% Inc/(Dec) vs Prior 12/31/05 01/01/05 Year ---------- ---------- ----------- NET REVENUES $ 309,338 $ 283,623 9.1% Gross profit 161,958 144,430 12.1 R&D 21,287 14,891 43.0 S,G&A 91,841 85,366 7.6 Operating expenses 113,128 100,257 12.8 OPERATING INCOME 48,830 44,173 10.5 Interest expense (1,498) (1,850) (19.0) Interest income 5,271 1,463 260.3 Other income/(expense), net 28,437 (39) (73,015.4) Income before taxes 81,040 43,747 85.2 Tax expense 29,122 14,046 107.3 NET INCOME $ 51,918 $ 29,701 74.8 Net income per common share assuming dilution $ 1.89 $ 1.15 64.3% Weighted average number of shares Basic 26,406 25,347 Diluted 27,413 25,886
Inc/(Dec) vs prior year profit margin % ----------- Profit Margins: Gross profit 52.4% 50.9% 1.5 R&D 6.9% 5.3% S,G&A 29.7% 30.1% Operating income 15.8% 15.6% 0.2 Income before taxes 26.2% 15.4% 10.8 Net income 16.8% 10.5%
REVENUE ANALYSIS
Third quarter ------------------------------------- 12/31/05 01/01/05 %Inc/(Dec) ---------- ---------- ----------- Revenues by Geography United States $ 40,077 $ 33,068 21.2% International 65,600 65,030 0.9 Net Revenues $ 105,677 $ 98,098 7.7 Disposable Revenues by Product Family Donor: Plasma $ 27,461 $ 24,297 13.0 Blood Bank 33,588 34,031 (1.3) Red Cell 9,304 7,111 30.8 $ 70,353 $ 65,439 7.5 Patient: Surgical $ 22,433 $ 22,736 (1.3) Subtotal $ 92,786 $ 88,175 5.2 Equipment $ 5,813 $ 4,714 23.3 Misc & Service 7,078 5,209 35.9 Net Revenues $ 105,677 $ 98,098 7.7
Nine Months Ended FYE06 ------------------------------------- 12/31/05 01/01/05 %Inc/(Dec) ---------- ---------- ----------- Revenues by Geography United States $ 116,230 $ 96,374 20.6% International 193,108 187,249 3.1 Net Revenues $ 309,338 $ 283,623 9.1 Disposable Revenues by Product Family Donor: Plasma $ 80,702 $ 74,021 9.0 Blood Bank 98,471 98,138 0.3 Red Cell 26,662 20,225 31.8 $ 205,835 $ 192,384 7.0 Patient: Surgical $ 65,048 $ 63,554 2.4 Subtotal $ 270,883 $ 255,938 5.8 Equipment $ 18,547 $ 13,967 32.8 Misc & Service 19,908 13,718 45.1 Net Revenues $ 309,338 $ 283,623 9.1
CONSOLIDATED BALANCE SHEETS Period ending ----------------------- 12/31/05 04/02/05 ---------- ---------- ASSETS Cash & cash equivalents $ 229,351 $ 185,815 Short-term investments 0 0 Accounts receivable, net 86,262 80,719 Inventories, net 56,313 53,088 Other current assets 30,172 23,989 Total current assets 402,098 343,611 Net PP&E 70,294 69,337 Other assets 50,744 54,809 TOTAL ASSETS $ 523,136 $ 467,757 LIABILITIES & STOCKHOLDERS' EQUITY S/T debt & current maturities $ 25,796 $ 26,612 Other current liabilities 60,274 61,310 Total current liabilities 86,070 87,922 Long-term debt 13,117 19,231 Other long-term liabilities 4,976 5,469 Stockholders' equity 418,973 355,135 TOTAL LIABILITIES & EQUITY $ 523,136 $ 467,757 SOURCE Haemonetics Corporation -0- 01/31/2006 /CONTACT: Julie Fallon of Haemonetics Corporation, +1-781-356-9517, +1-617-320-2401, fallon@haemonetics.com / /First Call Analyst: / /FCMN Contact: / /Web site: http://www.haemonetics.com/ (HAE)