Haemonetics Reports 3rd Quarter Fiscal 2016 Revenue of $233 Million, Constant Currency Revenue Growth of 4% and 1% As Reported

Feb 01, 2016, 06:00 ET from Haemonetics Corporation

BRAINTREE, Mass., Feb. 1, 2016 /PRNewswire/ --

Revenue Growth Highlights

The constant currency revenue increase in the third quarter included strong performance from identified growth drivers:

  • 14% growth in Plasma disposables revenue
  • 18% growth in Hemostasis Management (TEG®) disposables revenue
  • 9% growth in Emerging Markets disposables revenue, ex-Russia

Haemonetics Corporation (NYSE: HAE) reported third quarter fiscal 2016 revenue of $233.4 million, up 1%.  Revenue was up 4% over the third quarter of fiscal 2015 in constant currency. 

The Company reported a GAAP net loss of $59.4 million or $1.17 loss per share in the third quarter of fiscal 2016.  Exclusive of non-cash write-downs of goodwill and other intangible assets, transformation, restructuring and deal amortization expenses detailed below, adjusted net income was $24.6 million, down 10%, and adjusted earnings per share were $0.48, down 9% compared with the third quarter of the prior fiscal year.1   

For the first three quarters of fiscal 2016, revenue was $666.5 million, down 3%, and up 1% in constant currency.  The Company reported a year to date GAAP net loss of $46.8 million or $0.92 per share.  Exclusive of non-cash write-downs of goodwill and other intangible assets, transformation, restructuring and deal amortization expenses detailed below, year to date adjusted net income was $65.2 million, down 9%, and adjusted earnings per share were $1.27, down 8% compared with the first three quarters of the prior fiscal year.1    

GROWTH DRIVERS UPDATE

The Company's growth drivers of Plasma, TEG and Emerging Markets represented approximately 65% of disposables revenue in each of the first three quarters of fiscal 2016. In the third quarter, growth driver revenue was up 12% on a constant currency basis and 14% constant currency ex-Russia.

Plasma disposables revenue grew 15% in North America in the third quarter, as strong demand for collection volumes continued. Global plasma disposables revenue was up 14% in constant currency.

The TEG family of hemostasis management products – TEG 5000, TEG 6s and TEG Manager™ software – is well positioned for continued strong revenue growth.  Limited market release of the Company's next generation TEG 6s system continued. 

Ronald Gelbman, Haemonetics' Interim CEO, stated: "We are encouraged with 4% constant currency growth in the third quarter. This was driven by our Plasma and TEG franchises, which continued to deliver strong revenue performance. The encouraging momentum of these two franchises gives us confidence in the long-term prospects for our business."     

THIRD QUARTER 2016 REVENUE ELEMENTS

Plasma

Plasma disposables revenue was $92.5 million in the third quarter, up $9.3 million, or 11% on a reported basis and up 14% in constant currency.  North America Plasma disposables revenue was up 15% versus the prior year's third quarter, including the impact of saline and sodium citrate solutions shipments to CSL. The plasma disposables business outside the U.S. also delivered strong revenue growth.

Plasma collection volumes continued to reflect a robust end user market for plasma-derived biopharmaceuticals.

Blood Center

Platelet disposables revenue was $38.3 million in the third quarter, flat with the prior year quarter on a reported basis and up 4% on a constant currency basis. The impact of currency on reported growth rates reflects the concentration of the Company's platelet business outside of the United States. Constant currency revenue was strong in Asia Pacific, but down modestly in Japan, where benefits of a single dose market share gain substantially offset a continued market shift toward double dose collection techniques.     

Red cell disposables revenue was $9.2 million in the third quarter, down $1.7 million or 15% as reported and 14% on a constant currency basis as compared with the prior year's third quarter. Lower volume, as well as pricing associated with a previously announced U.S. customer contract, accounted for the decline.

Whole blood disposables revenue was $30.2 million in the third quarter, down $4.0 million or 12% as reported and down 10% on a constant currency basis.  This decline reflected continued volatility in the global whole blood collection market.

Hospital

TEG disposables revenue was $12.7 million for the quarter, up $1.8 million or 17% on a reported basis and up 18% in constant currency over the prior year's third quarter, with continued growth in China and the U.S.

The TEG installed base continued to increase in the third quarter, benefiting from expanded adoption by new and existing accounts.  The TEG family of devices, disposables and software remain well positioned for acceleration of revenue growth, consistent with the Company's multi-year growth outlook.

Surgical disposables revenue was $15.2 million in the third quarter, down 3% as reported and up 2% on a constant currency basis over the prior year's third quarter.  Growth was driven by strong performance in the emerging markets. 

Software and Equipment

Software Solutions revenue was $18.2 million in the third quarter, flat with the prior year's third quarter on a reported basis and up 2% in constant currency.  

Equipment and other revenue was $13.9 million, down $1.5 million or 10% as reported and down 7% on a constant currency basis, due primarily to weakness in Russia.  Ex-Russia, equipment and other revenue was up 1% on a constant currency basis.

Equipment revenue is influenced by timing of tenders and capital budgets. The installed base of equipment, including devices sold and placed for use with customers, increased 5% in the first three quarters of fiscal 2016.

Geographic

Haemonetics reported third quarter fiscal 2016 revenue growth of 5% in the Americas and 3% in Asia Pacific, with declines of 6% in Europe and 9% in Japan.  On a constant currency basis, the Company had revenue growth of 5% in the Americas, 9% in Asia Pacific and 1% in Europe, with a decline of 4% in Japan.  Constant currency disposables revenue growth was 9% in both China and Europe ex-Russia in the third quarter.

In the Americas, strength in Plasma and TEG businesses was offset by declines in the Blood Center business. Weakness in Russia contributed to declines in Europe. Japan revenue was impacted by the timing of equipment purchases.    

OPERATING RESULTS

Adjusted gross profit was $109.9 million, down $4.2 million or 4% from the prior year third quarter and included $7.2 million of unfavorable currency impact.  Adjusted gross margin was 47.1%, down 210 basis points, but down only 30 basis points on a constant currency basis.  Adjusted gross margin improvement, driven by productivity programs including Value Creation & Capture ("VCC") initiatives, was more than offset by unfavorable product mix and reduced pricing, in particular recent pricing concessions in the U.S. red cell disposables business.

Incremental savings from VCC programs and other identified cost reductions were $2 million in the third quarter and are expected to approximate $8 million in fiscal 2016.

Adjusted operating expenses were $75.0 million in the third quarter, down $0.7 million or 1% from the prior year third quarter.  R&D expense expanded to 4.6% of revenue, as compared with 4.3% in the third quarter of the prior year, as investments in growth drivers continued.  Increased investments in R&D were more than offset by favorable currency translation.       

In the third quarter, adjusted operating income was $34.9 million, down $3.5 million, or 9%. Currency headwinds of $4.5 million impacted operating income and, on a constant currency basis, operating income was up 3%. Adjusted operating margin in the quarter was 15.0%, down 160 basis points.    

Adjusted interest expense on loans was $2.0 million. The adjusted income tax rate was 25% in the third quarters of the current and prior fiscal years.   

GOODWILL AND OTHER NON-CASH INTANGIBLE ASSET WRITE-DOWNS

The Company announced that, as a result of its annual impairment test required under generally accepted accounting principles (GAAP), a write-down of goodwill was required. The write-down follows the Company's annual strategic planning cycle, which established long-term expectations for revenue, income and operating cash flows in its European reporting unit that were lower than when goodwill was tested a year ago.

The Company recorded a non-cash goodwill impairment charge of $66.3 million in the third quarter of fiscal 2016, with the bulk of the impairment related to goodwill arising from the whole blood collection business acquired in fiscal 2013.

The Company announced it completed an assessment of opportunities for its SOLX technology and concluded that current and expected future market conditions do not support further investment and commercialization. The Company recorded a $13.8 million non-cash charge, net of related contingent consideration, in the third quarter of fiscal 2016, to write off SOLX-related intangible assets resulting from the fiscal 2013 Hemerus Corp. acquisition.

These non-cash accounting charges, which totaled $80.2 million pre-tax or $73.1 million after-tax, $1.44 per share, will not impact the Company's liquidity, cash flows from operations, future operations or compliance with its debt covenants.

BALANCE SHEET AND CASH FLOW

Cash on hand was $105 million, a decrease of $55 million during the first three quarters of fiscal 2016, as the Company utilized $31 million of cash, net of $11 million of cash tax benefits, to fund VCC and other restructuring initiatives and $61 million to repurchase shares in the open market. The Company reported free cash flow, before transformation and restructuring costs, of $26 million in the first three quarters of fiscal 2016.

VALUE CREATION & CAPTURE ACTIVITIES

The Company's VCC programs were designed to transform its manufacturing and distribution operations and to support its productivity initiatives. These programs are expected to be substantially completed with approximately $34 million of after-tax cash outflow in fiscal 2016 and cumulative VCC program spending of roughly $180 million. Cumulative cost savings generated through VCC programs are expected to approximate $40 million by the end of fiscal 2016. 

FISCAL 2016 GUIDANCE

The Company reaffirms its overall fiscal 2016 revenue guidance range of $910$920 million.

Continued strong revenue growth is expected from growth drivers – Plasma, TEG and Emerging Markets ex-Russia – along with the benefit of a 53rd week in the fourth quarter of fiscal 2016, offset by foreign currency weakness.

The Company reaffirms its fiscal 2016 adjusted earnings per share guidance range of $1.65 to $1.75

Acquisition related amortization is expected to approximate $30 million, or $0.40 per share, and is excluded from adjusted operating income and adjusted earnings per share. 

Free cash flow guidance for fiscal 2016 is estimated to be approximately $70 million before funding approximately $34 million of capital and transformation expenditures to complete the VCC initiatives.

More information on fiscal 2016 guidance, including income statement scenarios underlying the lower and upper ends of the adjusted earnings per share guidance range, can be found in the Investor Relations section of our web site at http://www.haemonetics.com.1

ADJUSTMENTS TO REPORTED EARNINGS

Non-cash accounting charges for the write-downs of goodwill and other intangible assets, net of the reversal of contingent consideration, totaling $80 million pre-tax, were excluded from third quarter and year-to-date fiscal 2016 adjusted earnings. 

In the third quarter of fiscal 2016, $9 million of pre-tax charges for VCC transformation and other restructuring activities were excluded.  In the third quarter of fiscal 2015, $13 million of pre-tax integration, restructuring, transformation and transaction costs were excluded from adjusted earnings.

In the first three quarters of fiscal 2016, $30 million of pre-tax charges for VCC transformation and other restructuring activities were excluded from adjusted earnings.  In the first three quarters of fiscal 2015, $51 million of such costs were excluded from adjusted earnings.

The Company also excludes acquisition related amortization expenses from its adjusted operating income and earnings per share.  Excluded from third quarter adjusted earnings was acquisition related amortization of $7.4 million in fiscal 2016 and $7.5 million in fiscal 2015, or $0.10 per share in the third quarters of both fiscal years. 

Deal amortization excluded from adjusted earnings was $22.2 million and $22.8 million, respectively, in the first three quarters of fiscal 2016 and 2015, or $0.30 per share in each year's first three quarters. For fiscal year 2016, acquisition related amortization is expected to approximate $30 million or $0.40 per share.

CONFERENCE CALL

Haemonetics will host a webcast to discuss third quarter results on Monday, February 1, 2016 at 8:00am Eastern. Interested parties may participate at: http://edge.media-server.com/m/p/mieb5m8u.

ABOUT HAEMONETICS

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 patient care 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.

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements that involve risks and uncertainties, including the effects of disruption from the manufacturing transformation making it more difficult to maintain relationships with employees and timely deliver high quality products, unexpected expenses incurred during our Value Creation and Capture program, asset revaluations to reflect current business conditions, technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, demand for whole blood and blood components, product quality, market acceptance, regulatory uncertainties, including in the receipt or timing of regulatory approvals, 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 including single-source tenders, the effect of industry consolidation as seen in the plasma and blood center markets, 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. 

Forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though inherently uncertain and difficult to predict.  Actual results and experience could differ materially from the forward-looking statements. Information set forth in this press release is current as of today and the Company undertakes no duty or obligation to update this information.         

1 A reconciliation of GAAP to adjusted financial results is included at the end of the financial sections of this press release as well as on the web at http://www.haemonetics.com.     

CONTACT:
Gerry Gould, VP-Investor Relations
Tel. (781) 356-9402
gerry.gould@haemonetics.com

 


Haemonetics Corporation Financial Summary

Condensed Consolidated Statements of (Loss) Income for the Third Quarter of FY16 and FY15

(Data in thousands, except per share data)










12/26/2015


12/27/2014


% Inc/(Dec)



As Reported


As Reported


vs Prior Year



(unaudited)



Net revenues

$

233,384



$

231,827



0.7

%

Gross profit

108,855



111,661



(2.5)

%









R&D

10,942



10,643



2.8

%


S,G&A

78,940



82,512



(4.3)

%


Impairment of goodwill and intangible assets

85,048





n/m



Contingent consideration (income) expense

(4,898)



246



n/m


Operating expenses

170,032



93,401



82.0

%








Operating (loss) income

(61,177)



18,260



n/m









Interest and other expense, net

(2,141)



(2,308)



(7.2)

%








(Loss) income before taxes

(63,318)



15,952



n/m









Tax benefit

(3,878)



(36)



n/m









Net (loss) income

$

(59,440)



$

15,988



n/m















Net (loss) income per common share assuming dilution

$

(1.17)



$

0.31



n/m









Weighted average number of shares:







Basic

50,741



51,432





Diluted

50,741



51,962











Profit Margins:





Inc/(Dec) vs prior
year profit margin %

Gross profit

46.6

%


48.2

%


(1.6)

%

R&D

4.7

%


4.6

%


0.1

%

S,G&A

33.8

%


35.6

%


(1.8)

%

Operating (loss) income

(26.2)

%


7.9

%


(34.1)

%

(Loss) income before taxes

(27.1)

%


6.9

%


(34.0)

%

Net (loss) income

(25.5)

%


6.9

%


(32.4)

%

 

 

 

Haemonetics Corporation Financial Summary

Condensed Consolidated Statements of (Loss) Income for Year-to-Date FY16 and FY15

(Data in thousands, except per share data)










12/26/2015


12/27/2014


% Inc/(Dec)



As Reported


As Reported


vs Prior Year



(unaudited)



Net revenues

$

666,490



$

683,895



(2.5)

%

Gross profit

316,691



326,053



(2.9)

%









R&D

33,816



36,962



(8.5)

%


S,G&A

240,946



259,383



(7.1)

%


Impairment of goodwill and intangible assets

85,048





n/m



Contingent consideration (income) expense

(4,727)



706



n/m


Operating expenses

355,083



297,051



19.5

%








Operating (loss) income

(38,392)



29,002



n/m









Interest and other expense, net

(6,756)



(7,496)



(9.9)

%








(Loss) income before taxes

(45,148)



21,506



n/m









Tax expense

1,696



1,679



1.0

%








Net (loss) income

$

(46,844)



$

19,827



n/m















Net (loss) income per common share assuming dilution

$

(0.92)



$

0.38



n/m









Weighted average number of shares:







Basic

50,927



51,521





Diluted

50,927



52,024











Profit Margins:





Inc/(Dec) vs prior
year profit margin %

Gross profit

47.5

%


47.7

%


(0.2)

%

R&D

5.1

%


5.4

%


(0.3)

%

S,G&A

36.2

%


37.9

%


(1.7)

%

Operating (loss) income

(5.8)

%


4.2

%


(10.0)

%

(Loss) income before taxes

(6.8)

%


3.1

%


(9.9)

%

Net (loss) income

(7.0)

%


2.9

%


(9.9)

%

 

 


 

Revenue Analysis for the Third Quarter of FY16 and FY15

(Data in thousands)






Three Months Ended



12/26/2015


12/27/2014


% Inc/(Dec)



As Reported


As Reported


vs Prior Year



(unaudited)



Revenues by geography







United States

$

131,664



$

124,766



5.5

%


International

101,720



107,061



(5.0)

%

Net revenues

$

233,384



$

231,827



0.7

%








Disposable revenues














Plasma disposables

$

92,461



$

83,178



11.2

%









Blood center disposables







Platelet

38,333



38,401



(0.2)

%


Red cell

9,198



10,873



(15.4)

%


Whole blood

30,180



34,182



(11.7)

%



77,711



83,456



(6.9)

%


Hospital disposables







Diagnostics

12,691



10,890



16.5

%


Surgical

15,203



15,608



(2.6)

%


OrthoPAT

3,154



5,024



(37.2)

%



31,048



31,522



(1.5)

%









Total disposables revenues

201,220



198,156



1.5

%








Software solutions

18,241



18,211



0.2

%

Equipment & other

13,923



15,460



(9.9)

%

Net revenues

$

233,384



$

231,827



0.7

%

 

 

 

Revenue Analysis for Year-to-Date FY16 and FY15

(Data in thousands)






Nine Months Ended



12/26/2015


12/27/2014


% Inc/(Dec)



As Reported


As Reported


vs Prior Year



(unaudited)



Revenues by geography







United States

$

379,390



$

369,921



2.6

%


International

287,100



313,974



(8.6)

%

Net revenues

$

666,490



$

683,895



(2.5)

%








Disposable revenues














Plasma disposables

$

257,332



$

242,760



6.0

%









Blood center disposables







Platelet

103,500



115,941



(10.7)

%


Red cell

29,153



31,296



(6.8)

%


Whole blood

93,007



105,870



(12.1)

%



225,660



253,107



(10.8)

%


Hospital disposables







Diagnostics

36,925



30,535



20.9

%


Surgical

44,814



46,889



(4.4)

%


OrthoPAT

10,794



15,302



(29.5)

%



92,533



92,726



(0.2)

%









Total disposables revenues

575,525



588,593



(2.2)

%








Software solutions

52,781



54,094



(2.4)

%

Equipment & other

38,184



41,208



(7.3)

%

Net revenues

$

666,490



$

683,895



(2.5)

%

 

 

 


Condensed Consolidated Balance Sheets

(Data in thousands)








As of




12/26/2015


3/28/2015




(unaudited)



Assets




Cash and cash equivalents

$

105,167



$

160,662


Accounts receivable, net

148,774



145,827


Inventories, net

203,863



211,077


Other current assets

43,559



52,711




Total current assets

501,363



570,277


Property, plant & equipment, net

332,772



321,948


Intangible assets, net

214,809



244,588


Goodwill

266,945



334,310


Other assets

20,533



14,294



Total assets

$

1,336,422



$

1,485,417








Liabilities & Stockholders' Equity




Short-term debt & current maturities

$

46,293



$

21,522


Other current liabilities

129,041



167,570




Total current liabilities

175,334



189,092


Long-term debt

380,814



406,369


Other long-term liabilities

60,722



63,834


Stockholders' equity

719,552



826,122



Total liabilities & stockholders' equity

$

1,336,422



$

1,485,417


 

 

 


Condensed Consolidated Statements of Cash Flows

(Data in thousands)




Nine Months Ended


12/26/2015


12/27/2014


(unaudited)

Cash Flows from Operating Activities:




Net (loss) income

$

(46,844)



$

19,827


Adjustments to reconcile net (loss) income to net cash provided by operating activities:




Depreciation and amortization

67,721



63,891


Stock compensation expense

6,199



10,219


Impairment of goodwill and intangible assets

85,048




Change in other non-cash operating activities

(13,820)



4,838


Change in accounts receivable, net

(3,608)



14,422


Change in inventories

6,268



(17,906)


Change in other working capital

(32,352)



(23,418)


Net cash provided by operating activities

68,612



71,873


Cash Flows from Investing Activities:




Capital expenditures

(73,871)



(100,530)


Proceeds from sale of property, plant and equipment

397



387


Other acquisitions and investments

(3,000)




Net cash used in investing activities

(76,474)



(100,143)


Cash Flows from Financing Activities:




Change in repayments, net

(816)



(9,666)


Change in employee stock programs

14,829



12,689


Share repurchases

(60,984)



(38,701)


Net cash used in financing activities

(46,971)



(35,678)


Effect of exchange rates on cash and cash equivalents

(662)



(3,321)


Net Change in Cash and Cash Equivalents

(55,495)



(67,269)


Cash and Cash Equivalents at Beginning of the Period

160,662



192,469


Cash and Cash Equivalents at End of Period

$

105,167



$

125,200






Free Cash Flow Reconciliation:








Free cash flow after restructuring and transformation costs

$

(4,862)



$

(28,270)


Restructuring and transformation costs

34,555



54,819


Tax benefit on restructuring and transformation costs

(10,582)



(18,079)


Capital expenditures on VCC initiatives

7,374



44,725


Free cash flow before restructuring, transformation costs and VCC capital expenditures

$

26,485



$

53,195


 

Haemonetics Corporation Financial Summary
Reconciliation of Non-GAAP Measures

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, make informed business decisions, establish budgets and forecast future results. Performance targets for management are established based upon these non-GAAP measures. In the reconciliations below, we have removed restructuring, transformation and other costs from our GAAP expenses. Our restructuring and transformation costs for the periods reported are principally related to:

  • Value Creation & Capture (VCC): employee severance and retention, product line transfer costs, accelerated depreciation and other costs associated with these initiatives, principally our manufacturing network optimization, but also including commercial excellence, productivity and other operating initiatives.
         
  • In Process Research and Development: charges relate to the acquisition of certain technology and manufacturing rights to be used in a next generation device and related costs.

In addition to restructuring and transformation costs, we are reporting adjusted earnings before deal amortization, impairment of goodwill and intangible assets, and contingent consideration.

We believe this information is useful to investors because it allows for an evaluation of the Company with a focus on the performance of our core operations.

 


Reconciliation of Non-GAAP Measures for the Third Quarter of FY16 and FY15

(Data in thousands)


Three Months Ended


12/26/2015


12/27/2014


(unaudited)

Non-GAAP gross profit




GAAP gross profit

$

108,855



$

111,661


Restructuring and transformation costs

1,064



2,459


Non-GAAP gross profit

$

109,919



$

114,120






Non-GAAP R&D



GAAP R&D

$

10,942



$

10,643


Restructuring and transformation costs

(269)



(627)


Non-GAAP R&D

$

10,673



$

10,016





Non-GAAP S,G&A




GAAP S,G&A

$

78,940



$

82,512


Restructuring and transformation costs

(7,237)



(9,333)


Deal amortization

(7,389)



(7,468)


Non-GAAP S,G&A

$

64,314



$

65,711






Non-GAAP operating expenses




GAAP operating expenses

$

170,032



$

93,401


Restructuring and transformation costs

(7,506)



(9,960)


Deal amortization

(7,389)



(7,468)


Impairment of goodwill and intangible assets

(85,048)




Contingent consideration income (expense)

4,898



(246)


Non-GAAP operating expenses

$

74,987



$

75,727






Non-GAAP operating income




GAAP operating (loss) income

$

(61,177)



$

18,260


Restructuring and transformation costs

8,570



12,419


Deal amortization

7,389



7,468


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,898)



246


Non-GAAP operating income

$

34,932



$

38,393






Non-GAAP interest and other expense, net




GAAP interest and other expense, net

$

2,141



$

2,308


Restructuring and transformation costs

13



(244)


Non-GAAP interest and other expense, net

$

2,154



$

2,064






Non-GAAP income before taxes




GAAP (loss) income before taxes

$

(63,318)



$

15,952


Restructuring and transformation costs

8,557



12,663


Deal amortization

7,389



7,468


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,898)



246


Non-GAAP income before taxes

$

32,778



$

36,329






Non-GAAP net income




GAAP net (loss) income

$

(59,440)



$

15,988


Restructuring and transformation costs

8,557



12,663


Deal amortization

7,389



7,468


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,898)



246


Tax benefit associated with non-GAAP adjustments

(12,031)



(8,900)


Non-GAAP net income

$

24,625



$

27,465






Non-GAAP net income per common share assuming dilution




GAAP net (loss) income per common share

$

(1.17)



$

0.31


Non-GAAP items after tax per common share assuming dilution

$

1.65



$

0.22


Non-GAAP net income per common share assuming dilution

$

0.48



$

0.53




Presented below are additional Constant Currency performance measures. We measure different components of our business at constant currency. We believe this information is useful for investors because it allows for an evaluation of the Company without the effect of changes in foreign exchange rates. These results convert our local foreign currency operating results to the US Dollar at constant exchange rates of 0.833 Euro to 1.00 US Dollar and 110 Yen to 1.00 US Dollar. They also exclude the results of our foreign currency hedging program described in Note 7 to our consolidated financial statements in our Form 10-K.






Three Months Ended


12/26/2015


12/27/2014


(unaudited)

Non-GAAP revenues




GAAP revenue

$

233,384



$

231,827


Foreign currency effects

1,179



(5,247)


Non-GAAP revenue - constant currency

$

234,563



$

226,580






Non-GAAP net income




Non-GAAP net income, adjusted for restructuring and transformation costs, deal amortization, impairment of goodwill and intangible assets, and contingent consideration

$

24,625



$

27,465


Foreign currency effects

47



(4,474)


Income tax associated with foreign currency effects

(23)



1,091


Non-GAAP net income - constant currency

$

24,649



$

24,082






Non-GAAP net income per common share assuming dilution




Non-GAAP net income per common share assuming dilution, adjusted for restructuring and transformation costs, deal amortization, impairment of goodwill and intangible assets, and contingent consideration

$

0.48



$

0.53


Foreign currency effects after tax per common share assuming dilution

$



$

(0.07)


Non-GAAP net income per common share assuming dilution - constant currency

$

0.48



$

0.46


 

 

 


Reconciliation of Non-GAAP Measures for FY16 and FY15

(Data in thousands)


Nine Months Ended


12/26/2015


12/27/2014


(unaudited)

Non-GAAP gross profit




GAAP gross profit

$

316,691



$

326,053


Restructuring and transformation costs

3,295



7,746


Non-GAAP gross profit

$

319,986



$

333,799






Non-GAAP R&D



GAAP R&D

$

33,816



$

36,962


Restructuring and transformation costs

(708)



(5,207)


Non-GAAP R&D

$

33,108



$

31,755





Non-GAAP S,G&A




GAAP S,G&A

$

240,946



$

259,383


Restructuring and transformation costs

(25,743)



(36,883)


Deal amortization

(22,193)



(22,769)


Non-GAAP S,G&A

$

193,010



$

199,731






Non-GAAP operating expenses




GAAP operating expenses

$

355,083



$

297,051


Restructuring and transformation costs

(26,451)



(42,090)


Deal amortization

(22,193)



(22,769)


Impairment of goodwill and intangible assets

(85,048)




Contingent consideration income (expense)

4,727



(706)


Non-GAAP operating expenses

$

226,118



$

231,486






Non-GAAP operating income




GAAP operating (loss) income

$

(38,392)



$

29,002


Restructuring and transformation costs

29,746



49,836


Deal amortization

22,193



22,769


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,727)



706


Non-GAAP operating income

$

93,868



$

102,313






Non-GAAP interest and other expense, net




GAAP interest and other expense, net

$

6,756



$

7,496


Restructuring and transformation costs

(108)



(705)


Non-GAAP interest and other expense, net

$

6,648



$

6,791






Non-GAAP income before taxes




GAAP (loss) income before taxes

$

(45,148)



$

21,506


Restructuring and transformation costs

29,854



50,541


Deal amortization

22,193



22,769


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,727)



706


Non-GAAP income before taxes

$

87,220



$

95,522






Non-GAAP net income




GAAP net (loss) income

$

(46,844)



$

19,827


Restructuring and transformation costs

29,854



50,541


Deal amortization

22,193



22,769


Impairment of goodwill and intangible assets

85,048




Contingent consideration (income) expense

(4,727)



706


Tax benefit associated with non-GAAP adjustments

(20,374)



(22,288)


Non-GAAP net income

$

65,150



$

71,555






Non-GAAP net income per common share assuming dilution




GAAP net (loss) income per common share

$

(0.92)



$

0.38


Non-GAAP items after tax per common share assuming dilution

$

2.19



$

1.00


Non-GAAP net income per common share assuming dilution

$

1.27



$

1.38




Presented below are additional Constant Currency performance measures. We measure different components of our business at constant currency. We believe this information is useful for investors because it allows for an evaluation of the Company without the effect of changes in foreign exchange rates. These results convert our local foreign currency operating results to the US Dollar at constant exchange rates of 0.833 Euro to 1.00 US Dollar and 110 Yen to 1.00 US Dollar. They also exclude the results of our foreign currency hedging program described in Note 7 to our consolidated financial statements in our Form 10-K.






Nine Months Ended


12/26/2015


12/27/2014


(unaudited)

Non-GAAP revenues




GAAP revenue

$

666,490



$

683,895


Foreign currency effects

(1,367)



(23,216)


Non-GAAP revenue - constant currency

$

665,123



$

660,679






Non-GAAP net income




Non-GAAP net income, adjusted for restructuring and transformation costs, deal amortization, impairment of goodwill and intangible assets, and contingent consideration

$

65,150



$

71,555


Foreign currency effects

(3,763)



(10,390)


Income tax associated with foreign currency effects

952



2,607


Non-GAAP net income - constant currency

$

62,339



$

63,772






Non-GAAP net income per common share assuming dilution




Non-GAAP net income per common share assuming dilution, adjusted for restructuring and transformation costs, deal amortization, impairment of goodwill and intangible assets, and contingent consideration

$

1.27



$

1.38


Foreign currency effects after tax per common share assuming dilution

$

(0.06)



$

(0.15)


Non-GAAP net income per common share assuming dilution - constant currency

$

1.21



$

1.23


 

 

 


Restructuring, Transformation and Other Costs
(Data in thousands)
GAAP results include the following items which are excluded from adjusted results.




Three Months Ended


12/26/2015


12/27/2014


(unaudited)

Manufacturing network optimization

$

4,587



$

7,155


Commercial excellence initiatives

995



1,413


Productivity and operational initiatives

2,384



1,863


Accelerated depreciation, asset write-down and other non-cash items

442



1,440


In process research and development and related costs



326


Market-based stock compensation

149



466


Total restructuring, transformation and other costs

$

8,557



$

12,663




Nine Months Ended


12/26/2015


12/27/2014


(unaudited)

Manufacturing network optimization

$

15,929



$

29,919


Commercial excellence initiatives

3,949



7,181


Productivity and operational initiatives

9,448



6,592


Accelerated depreciation, asset write-down and other non-cash items

1,346



2,693


In process research and development and related costs



2,122


Market-based stock compensation

(818)



2,034


Total restructuring, transformation and other costs

$

29,854



$

50,541




Deal Amortization, Impairment Charges, and Contingent Consideration
(Data in thousands)
GAAP results include the following items which are excluded from adjusted results.



Three Months Ended


12/26/2015


12/27/2014


(unaudited)

Deal amortization

$

7,389



$

7,468


Impairment of goodwill and intangible assets

$

85,048



$


Contingent consideration (income) expense

$

(4,898)



$

246







Nine Months Ended


12/26/2015


12/27/2014


(unaudited)

Deal amortization

$

22,193



$

22,769


Impairment of goodwill and intangible assets

$

85,048



$


Contingent consideration (income) expense

$

(4,727)



$

706


 

 

SOURCE Haemonetics Corporation



RELATED LINKS

http://www.haemonetics.com