C. R. Bard (BCR: 78.72 +1.37 +1.77%) reported its second quarter results after the closing bell yesterday, with an adjusted (excluding acquisition-related items and write-downs) earnings per share of $1.39 surpassing the Zacks Consensus Estimate of $1.36 and the year-ago earnings of $1.23.Net income surged 11% year over year to $124.6 million (or $1.29 a share), driven by healthy performances across the company’s vascular and surgical specialties businesses.
Revenues
Revenues leapt 8% year over year to $673.9 million, ahead of the Zacks Consensus Estimate of $671 million, with growth registered across all major business segments. Barring a favorable foreign currency translation, sales increased 7% year over year. Geographically, U.S. sales (up 7%) contributed 69% to Bard’s total revenues while international sales (up 9%) accounted for the balance.
Segment Results
Revenues from the company’s core vascular segment grew 11% year over year to $187.5 million with U.S. and internationals sales increasing 11% and 9%, respectively. Within this segment, electrophysiology, endovascular and peripheral PTA sales grew 7%, 12% and 42%, respectively.
Urology sales rose 3% year over year to $179.7 million, benefiting from favorable distributor order trends. Oncology revenues grew 7% to $178.3 million riding on higher sales of ports (up 9%), PICC (up 6%), vascular access ultrasound (up 13%) and dialysis catheters (up 8%). Surgical Specialties division recorded the highest growth with revenues surging 16% year over year to $106.2 million, boosted by solid soft tissue repair sales (up 20%).
Margins
Gross margin improved to 62.7% from 61.8% a year-ago, benefiting from improved manufacturing efficiencies, favorable mix and sound inventory management. Marketing, selling and administrative expenses as a percentage of sales increased to 28.1% from 27.2%. Research and development expenses (as a percentage of sales) were essentially flat year over year at 6.7%. Operating margin increased to 27.1% from 26.2% a year-ago.
Bard recently completed the $200 million acquisition of medical devices maker, SenoRx Inc, which has expanded the company’s product portfolio beyond its existing product range meant for ultrasound imaging. However, Bard expects the acquisition to dilute its fiscal 2010 EPS by 8 to 11 cents, and adjusted EPS by 3 to 6 cents.
For the third quarter, Bard expects revenues to grow 8-10% on constant-currency basis with SenoRx contributing roughly 200 basis points to growth. The company expects an adjusted EPS of $1.37-$1.41 for the third quarter, which excludes special items and the dilutive impact of the SenoRx transaction.
| Overall Summary: |  30%, Bullish 70%, Bearish | Trade Quality: | Upside 25%, Poor Downside 70%, Good |
| Analysts' Targets | |
| Morgan Joseph & Co. Inc. | $97 |
| Hold | |
| Thursday, July 08, 2010 | |
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