UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 5, 2019
HAEMONETICS CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts | 001-14041 | 04-2882273 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
400 Wood Road, Braintree, MA | 02184 | |
(Address of principal executive offices) | (Zip code) | |
Registrant's telephone number, including area code: 781-848-7100
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||
Emerging growth company o | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o | |||
Item 2.02 Results of Operations and Financial Condition.
On February 5, 2019, Haemonetics Corporation issued a press release announcing financial results for the third quarter ended December 29, 2018. A copy of the release is furnished with this report as Exhibit 99.1.
The foregoing information, including the exhibit attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number | Description | |
Press Release of Haemonetics Corporation dated February 5, 2019 announcing financial results for the third quarter ended December 29, 2018. | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HAEMONETICS CORPORATION | ||
Date: February 5, 2019 | By: | /s/ Christopher Simon |
Name: | Christopher Simon | |
Title: | President and Chief Executive Officer | |
Exhibit 99.1 | |||
Earnings Release FY19 Q3 | Investor Contacts | Media Contact | |
Gerry Gould, VP-Investor Relations | Carla Burigatto, VP-Communications | ||
(781) 356-9402 | (781) 348-7263 | ||
gerry.gould@haemonetics.com | carla.burigatto@haemonetics.com | ||
Olga Vlasova, Sr. Mgr.-Investor Relations | |||
(781) 356-9763 | |||
olga.vlasova@haemonetics.com | |||
Haemonetics Reports 3rd Quarter and Year-to-Date Fiscal 2019 Results; Raises Cash Flow Guidance and Reaffirms Other Fiscal 2019 Guidance
Braintree, MA, February 5, 2019 - Haemonetics Corporation (NYSE: HAE) reported results for its third quarter and year-to-date ("YTD") fiscal 2019, which ended December 29, 2018:
3rd Quarter 2019 | YTD 2019 | |
Revenue, increase | $247 million, +5.7% | $718 million, +7.1% |
Revenue increase, constant currency | +5.9% | +6.7% |
Net income per diluted share | $0.35 | $0.64 |
Adjusted net income per diluted share | $0.63 | $1.78 |
Cash flow from operating activities | $58 million | $139 million |
Free cash flow before restructuring & turnaround | $37 million | $58 million |
Chris Simon, Haemonetics’ CEO, stated: “Our third quarter performance met our expectations and reinforces that our strategy is working. Our Plasma and Hospital launches are propelling us forward while our Complexity Reduction Initiative is improving profitability and freeing up resources needed for investments. We are confident that our value drivers will continue to strengthen Haemonetics’ growth trajectory.”
GAAP RESULTS
Third quarter fiscal 2019 revenue of $247.4 million was up 5.7% and YTD fiscal 2019 revenue of $718.3 million was up 7.1%, compared with the same periods of fiscal 2018. Business unit revenue and revenue growth rates versus prior fiscal year periods were as follows ($ million):
3rd Quarter 2019 | YTD 2019 | |||
Plasma | $131.8 | +16.6% | $373.1 | +15.0% |
Hospital | $ 48.4 | +3.6% | $145.3 | +8.1% |
Blood Center | $ 67.2 | ( 9.5%) | $199.9 | ( 5.5%) |
Gross margin was 44.9% in the third quarter of fiscal 2019, down 270 basis points as compared with the same quarter of the prior year, as $4.8 million of accelerated device depreciation was included in the third quarter of the current fiscal year.
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Operating expenses were $82.9 million in the third quarter of fiscal 2019, down $27.4 million or 24.9% when compared with the third quarter of fiscal 2018. Restructuring and turnaround costs of $0.9 million and $31.1 million were included in operating expenses in the third quarters of fiscal 2019 and 2018, respectively. Operating income was $28.3 million, up $27.3 million compared with the third quarter of fiscal 2018, while operating margin was 11.4% compared with 0.4% in the same quarter of fiscal 2018.
The Company reported third quarter fiscal 2019 net income of $18.3 million or $0.35 per diluted share, compared with net loss of $6.5 million or $0.12 loss per share in the prior year’s third quarter.
ADJUSTED RESULTS
On a constant currency basis, revenue for the third quarter of fiscal 2019 was up 5.9% compared with the third quarter of fiscal 2018 and up 6.7% compared with YTD fiscal 2018.
Business unit revenue growth rates, which exclude the impact of currency, compared with the prior fiscal year periods, were as follows:
3rd Quarter 2019 | YTD 2019 | |
Plasma | +16.0% | +14.5% |
Hospital | + 4.5% | + 7.3% |
Blood Center | ( 9.2%) | ( 5.8%) |
Plasma revenue growth in North America was 20.7% in the third quarter and 18.3% YTD of fiscal 2019, including 19.2% and 17.0% growth in disposables, respectively. The Company continued to demonstrate encouraging progress with respect to the rollout of NexSys PCS® devices and NexLynk DMS™ donor management software. Within Hospital, revenue growth in the Hemostasis Management product line was 9.0% in the third quarter and 17.0% YTD, with 11.3% and 17.5% disposables growth in the third quarter and YTD of fiscal 2019, respectively.
Adjusted gross margin in the third quarter of fiscal 2019 was 47.3%, down 30 basis points primarily due to unfavorable currency when compared with the third quarter of the prior year.
Adjusted operating expenses were $74.2 million in the third quarter of fiscal 2019, up $4.5 million or 6.5% when compared with the third quarter of fiscal 2018. The Company continued to realize productivity savings; however, these savings were more than offset by planned investments to accelerate revenue growth, freight cost increases attributable to volume growth and rising freight rates, NexSys PCS rollout costs and equity and other performance-based compensation costs.
Adjusted operating income was $42.7 million in the third quarter of fiscal 2019, up 2.0%, while operating margin was 17.3%, down 60 basis points as compared with the same quarter of fiscal 2018. The adjusted income tax rates of 16% and 18% in the third quarters of fiscal 2019 and 2018, respectively, reflect a discrete benefit associated with U.S. tax reform, higher share vesting and option exercises.
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Third quarter fiscal 2019 adjusted net income was $33.4 million, down $0.2 million or 0.6%, and adjusted earnings per share was $0.63, up 1.6% compared with $0.62 in the third quarter of fiscal 2018. In the third quarter of fiscal 2019, there was an unfavorable $0.02 impact on adjusted earnings due to increased interest expense and unfavorable currency partially offset by lower tax rate and lower share count. In the third quarter of fiscal 2018, the Company noted favorable adjusted earnings per share impacts attributed to a lower tax rate and favorable currency, partly offset by dilution due to increased share count.
BALANCE SHEET AND CASH FLOW
Cash on hand at December 29, 2018 was $154.9 million, a decrease of $25.3 million compared to the prior year-end. YTD fiscal 2019 free cash flow was $57.5 million before restructuring and turnaround funding, down 49.3% compared with the same period of the prior year, principally due to increased capital expenditures.
SHARE REPURCHASE PROGRAM
During the third quarter of fiscal 2019, the Company completed its previously announced $260 million share repurchase program, having repurchased a total of 3.0 million shares at an average price of $87 per share. This share repurchase program partially offset the dilutive impact of historical and recent employee equity grants.
RESTRUCTURING AND TURNAROUND EXPENSES, ASSET IMPAIRMENTS, DEAL AMORTIZATION, ACCELERATED DEPRECIATION AND GAIN ON DIVESTITURE
The Company incurred accelerated depreciation of $4.8 million in the third quarter and $13.2 million in YTD fiscal 2019 related to PCS2 devices in the Plasma business; accelerated depreciation will continue throughout the NexSys PCS rollout. The Company also incurred $21.2 million of first-quarter asset impairments in fiscal 2019. The impairments were mostly related to the write-off of a non-strategic production line in the Blood Center business.
The Company incurred restructuring and turnaround expenses of $1.8 million in the third quarter of fiscal 2019 and $31.3 million in the third quarter of fiscal 2018. In YTD fiscal 2019, the Company incurred $7.2 million of restructuring and turnaround expenses and $2.3 million of legal charges, and in the same period of fiscal 2018, $39.6 million of restructuring and turnaround expenses and $3.0 million of legal charges.
These impairments, accelerated depreciation, expenses and charges were excluded from the computation of adjusted earnings, as were deal amortization expenses of $6.1 million and $6.5 million in the third quarters of fiscal 2019 and 2018, respectively, and $18.7 million and $19.5 million in the YTD fiscal 2019 and 2018, respectively. Also excluded from YTD fiscal 2018 adjusted earnings was a gain of $8.0 million realized upon divestiture of the Company’s SEBRA line of benchtop and hand held sealers.
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GUIDANCE
The Company is raising its cash flow guidance and otherwise reaffirming its previous fiscal 2019 guidance as follows:
($ Millions, except per Share Data)
FY19 - Guidance | |
As Of Feb. 5, 2019 | |
Plasma Revenue | 14-16% |
Hospital Revenue | 6-9% |
Blood Center Revenue | (3-6%) |
Total Revenue | 6-8% |
Operating Margin (GAAP) | 7-9% of Revenue |
Adjusted Operating Margin | 16-18% of Revenue |
Earnings per Diluted Share (EPS) (GAAP) | $0.85 - $0.95 |
Adjusted Earnings per Diluted Share (Adj'd EPS) | $2.25 - $2.35 |
Cash Flow From Operating Activities (GAAP) | $160 - $185 |
Free Cash Flow, Before Restructuring & Turnaround Expenses | $65 - $75 |
Total and business unit revenue growth guidance is on a constant currency basis. Plasma revenue guidance includes 17-19% growth in North America and high-teens percentage revenue growth rate in Hemostasis Management.
The Company’s prior guidance for Cash Flow from Operating Activities and Free Cash Flow, Before Restructuring & Turnaround Expenses issued as of November 6, 2018 was $150-$175 million and $25-$50 million, respectively.
WEBCAST CONFERENCE CALL AND RESULTS ANALYSIS
The Company will host a conference call with investors and analysts to discuss third quarter and YTD fiscal 2019 results on Tuesday, February 5, 2019 at 8:00am Eastern Time. Interested parties may participate by telephone by dialing (877) 848-8880 from within the U.S. or Canada or (716) 335-9512 from international locations, using the access code 4381128. Alternatively, a live webcast of the call can be accessed on Haemonetics’ investor relations website at the following direct link: https://edge.media-server.com/m6/p/hwhyr95b
The Company is posting this press release to its Investor Relations website, in addition to results analyses that will be referenced on the webcast. These analyses can be accessed by the following direct link: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDE1NTYwfENoaWxkSUQ9LTF8VHlwZT0z&t=1&cb=636843649531731198
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ABOUT HAEMONETICS
Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions for customers to help improve patient care and reduce the cost of healthcare. The Company’s technology addresses important medical markets including commercial plasma collection, hospital-based diagnostics, blood and blood component collection and devices and software products. To learn more about Haemonetics, visit www.haemonetics.com.
FORWARD LOOKING STATEMENTS
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements. Forward-looking statements in this press release may include, without limitation, statements regarding (i) plans and objectives of management for operations of the Company, including plans or objectives related to the development and commercialization of, and regulatory approvals related to, the Company’s products, and plans or objectives related to the Complexity Reduction Initiative, (ii) estimates or projections of financial results, financial condition, capital expenditures, capital structure or other financial items, (iii) the Company's future financial performance and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above. Such forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon the Company's current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our ability to implement the Complexity Reduction Initiative as planned, on the anticipated timeline and at the anticipated cost, our ability to realize the estimated savings from the Complexity Reduction Initiative, technological advances in the medical field and standards for transfusion medicine and our ability to successfully offer products that incorporate such advances and standards, 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, and the effect of industry consolidation as seen in the plasma market. These and other factors are identified and described in more detail in the Company's filings with the SEC. The Company does not undertake to update these forward-looking statements.
MANAGEMENT’S USE OF NON-GAAP MEASURES
Management uses non-GAAP measures to monitor the financial performance of the business, make informed business decisions, establish budgets, and forecast future results. These non‐GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP.
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In this release, supplemental non-GAAP measures have been provided to assist investors in evaluating the performance of the Company’s core operations. When used in this release, constant currency measures the change in revenue using a constant currency conversion rate. Adjusted operating expenses, operating income, net income and earnings per share exclude restructuring and turnaround and deal amortization expenses, asset impairments, accelerated depreciation and legal charges. Adjusted net income and earnings per share also exclude gains and losses on asset dispositions. Free cash flow before restructuring and turnaround is defined as cash provided by operating activities less capital expenditures, net of the proceeds from the sale of property, plant and equipment.
Reconciliations of these measures to their most comparable GAAP measure are included at the end of the financial sections of this press release as well as on the Company’s website at www.haemonetics.com.
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Haemonetics Corporation Financial Summary | ||||||||||
Condensed Consolidated Statements of Income (Loss) for the Third Quarter of FY19 and FY18 | ||||||||||
(Data in thousands, except per share data) | ||||||||||
12/29/2018 | 12/30/2017 | % Inc/(Dec) | ||||||||
vs Prior Year | ||||||||||
(unaudited) | ||||||||||
Net revenues | $ | 247,356 | $ | 234,043 | 5.7% | |||||
Gross profit | 111,175 | 111,295 | (0.1)% | |||||||
R&D | 8,978 | 12,427 | (27.8)% | |||||||
S,G&A | 73,877 | 97,855 | (24.5)% | |||||||
Operating expenses | 82,855 | 110,282 | (24.9)% | |||||||
Operating income | 28,320 | 1,013 | n/m | |||||||
Interest and other expense, net | (2,858 | ) | (806 | ) | n/m | |||||
Income before taxes | 25,462 | 207 | n/m | |||||||
Tax expense | 7,185 | 6,754 | 6.4% | |||||||
Net income (loss) | $ | 18,277 | $ | (6,547 | ) | n/m | ||||
Net income (loss) per common share assuming dilution | $ | 0.35 | $ | (0.12 | ) | n/m | ||||
Weighted average number of shares: | ||||||||||
Basic | 51,401 | 53,090 | ||||||||
Diluted | 52,822 | 53,090 | ||||||||
Profit Margins: | Inc/(Dec) vs prior year profit margin % | |||||||||
Gross profit | 44.9 | % | 47.6 | % | (2.7)% | |||||
R&D | 3.6 | % | 5.3 | % | (1.7)% | |||||
S,G&A | 29.9 | % | 41.8 | % | (11.9)% | |||||
Operating income | 11.4 | % | 0.4 | % | 11.0% | |||||
Income before taxes | 10.3 | % | 0.1 | % | 10.2% | |||||
Net income (loss) | 7.4 | % | (2.8 | )% | 10.2% | |||||
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Haemonetics Corporation Financial Summary | ||||||||||
Condensed Consolidated Statements of Income for Year-to-Date FY19 and FY18 | ||||||||||
(Data in thousands, except per share data) | ||||||||||
12/29/2018 | 12/30/2017 | % Inc/(Dec) | ||||||||
vs Prior Year | ||||||||||
(unaudited) | ||||||||||
Net revenues | 718,284 | 670,371 | 7.1% | |||||||
Gross profit | 306,326 | 307,522 | (0.4)% | |||||||
R&D | 26,967 | 28,141 | (4.2)% | |||||||
S,G&A | 219,670 | 237,499 | (7.5)% | |||||||
Operating expenses | 246,637 | 265,640 | (7.2)% | |||||||
Operating income | 59,689 | 41,882 | 42.5% | |||||||
Gain on divestiture | — | 8,000 | (100.0)% | |||||||
Interest and other expense, net | (7,875 | ) | (3,562 | ) | n/m | |||||
Income before taxes | 51,814 | 46,320 | 11.9% | |||||||
Tax expense | 17,630 | 12,628 | 39.6% | |||||||
Net income | $ | 34,184 | $ | 33,692 | 1.5% | |||||
Net income per common share assuming dilution | $ | 0.64 | $ | 0.63 | 1.6% | |||||
Weighted average number of shares: | ||||||||||
Basic | 51,708 | 52,717 | ||||||||
Diluted | 53,184 | 53,285 | ||||||||
Profit Margins: | Inc/(Dec) vs prior year profit margin % | |||||||||
Gross profit | 42.6 | % | 45.9 | % | (3.3)% | |||||
R&D | 3.8 | % | 4.2 | % | (0.4)% | |||||
S,G&A | 30.6 | % | 35.4 | % | (4.8)% | |||||
Operating income | 8.3 | % | 6.2 | % | 2.1% | |||||
Income before taxes | 7.2 | % | 6.9 | % | 0.3% | |||||
Net income | 4.8 | % | 5.0 | % | (0.2)% | |||||
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Revenue Analysis for the Third Quarter of FY19 and FY18 | |||||||||||||||||
(Data in thousands) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
12/29/2018 | 12/30/2017 | Reported growth | Currency impact | Constant currency growth (1) | |||||||||||||
(unaudited) | |||||||||||||||||
Revenues by geography | |||||||||||||||||
United States | $ | 157,457 | $ | 140,840 | 11.8 | % | — | % | 11.8 | % | |||||||
International | 89,899 | 93,203 | (3.5 | )% | (0.6 | )% | (2.9 | )% | |||||||||
Net revenues | $ | 247,356 | $ | 234,043 | 5.7 | % | (0.2 | )% | 5.9 | % | |||||||
Revenues by business unit | |||||||||||||||||
Plasma | $ | 131,823 | $ | 113,098 | 16.6 | % | 0.6 | % | 16.0 | % | |||||||
Blood Center | 67,155 | 74,227 | (9.5 | )% | (0.3 | )% | (9.2 | )% | |||||||||
Hospital(2) | 48,378 | 46,718 | 3.6 | % | (0.9 | )% | 4.5 | % | |||||||||
Net revenues | $ | 247,356 | $ | 234,043 | 5.7 | % | (0.2 | )% | 5.9 | % | |||||||
(1) Constant currency growth, a non-GAAP financial measure, measures the change in sales between the current and prior year period using a constant currency. See description of non-GAAP financial measures contained in this release. (2) Hospital revenue includes both Cell Processing and Hemostasis Management revenue. Hemostasis Management revenue was $21.3 million and $19.9 million for the three months ended December 29, 2018 and December 30, 2017, respectively. Hemostasis Management revenue increased 7.3% in the third quarter of fiscal 2019 as compared with the same period of fiscal 2018. Without the effect of foreign exchange, Hemostasis Management revenue increased 9.0% in the third quarter of fiscal 2019 as compared with the same period of fiscal 2018. | |||||||||||||||||
Revenue Analysis for the Year-to-Date FY19 and FY18 | |||||||||||||||||
(Data in thousands) | |||||||||||||||||
Nine Months Ended | |||||||||||||||||
12/29/2018 | 12/30/2017 | Reported growth | Currency impact | Constant currency growth (1) | |||||||||||||
(unaudited) | |||||||||||||||||
Revenues by geography | |||||||||||||||||
United States | $ | 452,523 | $ | 410,671 | 10.2 | % | — | % | 10.2 | % | |||||||
International | 265,761 | 259,700 | 2.3 | % | 0.9 | % | 1.4 | % | |||||||||
Net revenues | $ | 718,284 | $ | 670,371 | 7.1 | % | 0.4 | % | 6.7 | % | |||||||
Revenues by business unit | |||||||||||||||||
Plasma | $ | 373,078 | $ | 324,376 | 15.0 | % | 0.5 | % | 14.5 | % | |||||||
Blood Center | 199,881 | 211,502 | (5.5 | )% | 0.3 | % | (5.8 | )% | |||||||||
Hospital(2) | 145,325 | 134,493 | 8.1 | % | 0.8 | % | 7.3 | % | |||||||||
Net revenues | $ | 718,284 | $ | 670,371 | 7.1 | % | 0.4 | % | 6.7 | % | |||||||
(1) Constant currency growth, a non-GAAP financial measure, measures the change in sales between the current and prior year period using a constant currency. See description of non-GAAP financial measures contained in this release. (2) Hospital revenue includes both Cell Processing and Hemostasis Management revenue. Hemostasis Management revenue was $65.4 million and $55.6 million for the nine months ended December 29, 2018 and December 30, 2017, respectively. Hemostasis Management revenue increased 17.6% in the first nine months of fiscal 2019 as compared with the same period of fiscal 2018. Without the effect of foreign exchange, Hemostasis Management revenue increased 17.0% in the first nine months of fiscal 2019 as compared with the same period of fiscal 2018. | |||||||||||||||||
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Condensed Consolidated Balance Sheets | |||||||||
(Data in thousands) | |||||||||
As of | |||||||||
12/29/2018 | 3/31/2018 | ||||||||
(unaudited) | |||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 154,871 | $ | 180,169 | |||||
Accounts receivable, net | 167,641 | 151,226 | |||||||
Inventories, net | 168,936 | 160,799 | |||||||
Other current assets | 24,449 | 28,983 | |||||||
Total current assets | 515,897 | 521,177 | |||||||
Property, plant & equipment, net | 351,108 | 332,156 | |||||||
Intangible assets, net | 134,724 | 156,589 | |||||||
Goodwill | 210,723 | 211,395 | |||||||
Other assets | 15,185 | 16,022 | |||||||
Total assets | $ | 1,227,637 | $ | 1,237,339 | |||||
Liabilities & Stockholders' Equity | |||||||||
Short-term debt & current maturities | $ | 17,199 | $ | 194,259 | |||||
Other current liabilities | 194,083 | 190,444 | |||||||
Total current liabilities | 211,282 | 384,703 | |||||||
Long-term debt | 326,618 | 59,423 | |||||||
Other long-term liabilities | 46,608 | 40,784 | |||||||
Stockholders' equity | 643,129 | 752,429 | |||||||
Total liabilities & stockholders' equity | $ | 1,227,637 | $ | 1,237,339 | |||||
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Condensed Consolidated Statements of Cash Flows | |||||||
(Data in thousands) | |||||||
Nine Months Ended | |||||||
12/29/2018 | 12/30/2017 | ||||||
(unaudited) | |||||||
Cash Flows from Operating Activities: | |||||||
Net income | $ | 34,184 | $ | 33,692 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 79,637 | 66,267 | |||||
Impairment of assets | 21,170 | 218 | |||||
Stock-based compensation expense | 12,743 | 7,360 | |||||
Gain on divestiture | — | (8,000 | ) | ||||
Provision for losses on accounts receivable and inventory | 3,220 | 514 | |||||
Change in other non-cash operating activities | 1,038 | 398 | |||||
Change in accounts receivable, net | (19,752 | ) | 8,204 | ||||
Change in inventories, net | (11,624 | ) | 17,460 | ||||
Change in other working capital | 18,027 | 36,610 | |||||
Net cash provided by operating activities | 138,643 | 162,723 | |||||
Cash Flows from Investing Activities: | |||||||
Capital expenditures | (105,245 | ) | (55,696 | ) | |||
Proceeds from divestiture | — | 9,000 | |||||
Proceeds from sale of property, plant and equipment | 2,314 | 1,627 | |||||
Net cash used in investing activities | (102,931 | ) | (45,069 | ) | |||
Cash Flows from Financing Activities: | |||||||
Borrowings, net of repayments | 89,677 | (44,475 | ) | ||||
Share repurchases | (160,000 | ) | — | ||||
Proceeds from employee stock programs | 12,700 | 36,485 | |||||
Net cash provided used in financing activities | (57,623 | ) | (7,990 | ) | |||
Effect of exchange rates on cash and cash equivalents | (3,387 | ) | 2,363 | ||||
Net Change in Cash and Cash Equivalents | (25,298 | ) | 112,027 | ||||
Cash and Cash Equivalents at Beginning of the Period | 180,169 | 139,564 | |||||
Cash and Cash Equivalents at End of Period | $ | 154,871 | $ | 251,591 | |||
Free Cash Flow Reconciliation: | |||||||
Cash provided by operating activities | $ | 138,643 | $ | 162,723 | |||
Capital expenditures, net of proceeds from sale of property, plant and equipment | (102,931 | ) | (54,069 | ) | |||
Free cash flow after restructuring and turnaround costs | 35,712 | 108,654 | |||||
Restructuring and turnaround costs | 27,528 | 13,253 | |||||
Tax benefit on restructuring and turnaround costs | (5,734 | ) | (8,549 | ) | |||
Free cash flow before restructuring and turnaround costs | $ | 57,506 | $ | 113,358 | |||
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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 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, turnaround and other costs from our GAAP expenses. Our restructuring and turnaround costs for the periods reported are principally related to employee severance and retention, program management costs associated with the implementation of outsourcing initiatives and recent accounting standards and other costs associated with the fiscal 2018 Complexity Reduction Initiative launched on November 1, 2017.
In addition to restructuring and turnaround costs, we are reporting non-GAAP earnings before deal amortization, asset impairments, accelerated depreciation, legal charges and gain on divestiture.
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.
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Reconciliation of Adjusted Measures for the Third Quarter of FY19 and FY18 | |||||||
(Data in thousands except per share data) | |||||||
Three Months Ended | |||||||
12/29/2018 | 12/30/2017 | ||||||
(unaudited) | |||||||
GAAP gross profit | $ | 111,175 | $ | 111,295 | |||
Accelerated depreciation | 4,822 | — | |||||
Restructuring and turnaround costs | 894 | 212 | |||||
Adjusted gross profit | $ | 116,891 | $ | 111,507 | |||
GAAP operating expenses | $ | 82,855 | $ | 110,282 | |||
Restructuring and turnaround costs | (897 | ) | (31,086 | ) | |||
Deal amortization | (6,131 | ) | (6,506 | ) | |||
Legal charges (1) | (1,614 | ) | (3,011 | ) | |||
Adjusted operating expenses | $ | 74,213 | $ | 69,679 | |||
GAAP operating income | $ | 28,320 | $ | 1,013 | |||
Accelerated depreciation | 4,822 | — | |||||
Restructuring and turnaround costs | 1,791 | 31,298 | |||||
Deal amortization | 6,131 | 6,506 | |||||
Legal charges (1) | 1,614 | 3,011 | |||||
Adjusted operating income | $ | 42,678 | $ | 41,828 | |||
GAAP net income (loss) | 18,277 | (6,547 | ) | ||||
Accelerated depreciation | 4,822 | — | |||||
Restructuring and turnaround costs | 1,754 | 31,298 | |||||
Deal amortization | 6,131 | 6,506 | |||||
Legal charges (1) | 1,614 | 3,011 | |||||
Tax impact associated with adjustments | 829 | (630 | ) | ||||
Adjusted net income | $ | 33,427 | $ | 33,638 | |||
GAAP net income (loss) per common share assuming dilution | $ | 0.35 | $ | (0.12 | ) | ||
Adjusted items after tax per common share assuming dilution | 0.28 | 0.74 | |||||
Adjusted net income per common share assuming dilution | $ | 0.63 | $ | 0.62 | |||
(1) Reflects amounts accrued for resolution of customer damages assessments associated with product recalls. | |||||||
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Reconciliation of Adjusted Measures for Year-to-Date FY19 and FY18 | |||||||
(Data in thousands except per share data) | |||||||
Nine Months Ended | |||||||
12/29/2018 | 12/30/2017 | ||||||
(unaudited) | |||||||
GAAP gross profit | $ | 306,326 | $ | 307,522 | |||
Impairment of assets | 21,170 | — | |||||
Accelerated depreciation | 13,203 | — | |||||
Restructuring and turnaround costs | 984 | 478 | |||||
Adjusted gross profit | $ | 341,683 | $ | 308,000 | |||
GAAP operating expenses | $ | 246,637 | $ | 265,640 | |||
Restructuring and turnaround costs | (6,274 | ) | (39,090 | ) | |||
Deal amortization | (18,667 | ) | (19,501 | ) | |||
Legal charges (1) | (2,289 | ) | (3,011 | ) | |||
Adjusted operating expenses | $ | 219,407 | $ | 204,038 | |||
GAAP operating income | $ | 59,689 | $ | 41,882 | |||
Impairment of assets | 21,170 | — | |||||
Accelerated depreciation | 13,203 | — | |||||
Restructuring and turnaround costs | 7,258 | 39,568 | |||||
Deal amortization | 18,667 | 19,501 | |||||
Legal charges (1) | 2,289 | 3,011 | |||||
Adjusted operating income | $ | 122,276 | $ | 103,962 | |||
GAAP net income | $ | 34,184 | $ | 33,692 | |||
Impairment of assets | 21,170 | — | |||||
Accelerated depreciation | 13,203 | — | |||||
Restructuring and turnaround costs | 7,221 | 39,568 | |||||
Deal amortization | 18,667 | 19,501 | |||||
Legal charges (1) | 2,289 | 3,011 | |||||
Gain on divestiture | — | (8,000 | ) | ||||
Tax impact associated with adjustments | (1,926 | ) | (10,996 | ) | |||
Adjusted net income | $ | 94,808 | $ | 76,776 | |||
GAAP net income per common share assuming dilution | $ | 0.64 | $ | 0.63 | |||
Adjusted items after tax per common share assuming dilution | 1.14 | 0.81 | |||||
Adjusted net income per common share assuming dilution | $ | 1.78 | $ | 1.44 | |||
(1) Reflects amounts accrued for resolution of customer damages assessments associated with product recalls. | |||||||
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