Baxter Tops Earnings & Revenues Ests
Baxter International Inc. (BAX) posted a decent 9.2% rise in adjusted net earnings to $1.19 per share for the first quarter of 2014 from $1.09 per in the same quarter a year back. With this, the company not only surpassed its previously issued guidance of $1.06 to $1.09 per share but also the Zacks Consensus Estimate by 9 cents per share.
Net earnings improved 8.5% to $652 million from $601 million in the first quarter of 2013. The adjustments include intangible asset amortization and costs associated with the integration of its Gambro AB acquisition, business development and business optimization initiatives.
Revenues and Margins
Revenues for the quarter went up 14.6% to $3,951 million globally and exceeded the Zacks Consensus Estimate of $3,885 million. Excluding the contribution from Gambro, revenues in the quarter grew 3% to $3.55 billion (or 5% excluding the impact of foreign currency).
Revenues within the U.S. escalated 12.0% to $1,660 million while international revenues rose 16.5% (19% excluding the impact of foreign currency) to $2,291 million in the quarter.
Adjusted gross profit rose 13.1% to $2,016 million while adjusted gross margin grew 70 basis points to 51.0% in the quarter. Adjusted pre-tax earnings rose 8.65% to $829 million in the quarter.
Segment Results
Revenues from BioScience zoomed 5.1% (6% excluding the impact of foreign currency) to $1,608 million in the quarter. The increase was attributable to double-digit growth of ADVATE (Antihemophilic Factor [Recombinant], Plasma/Albumin-Free Method) and FEIBA (an inhibitor therapy), higher U.S. sales of plasma-based therapeutics including GAMMAGARD LIQUID (Immune Globulin Intravenous [Human]), and a benefit from accelerated timing of milestone payments related to the company's ongoing collaborations with governments on the development of influenza vaccines.
Revenues from Medical Products surged 22.2% (or 24% excluding the impact of foreign currency) to $2,343 million. Revenues from Gambro acquisition and strong sales of peritoneal dialysis products and certain injectable drugs led to the improvement in revenues. Excluding contributions from Gambro acquisition, segment revenues inched up 1% (or 4% percent excluding the impact of foreign currency).
Financial Position
BAX had cash and cash equivalents of $2,049 million as of Mar 31, 2014, down from $2,689 million as of Mar 31, 2013. Total debt stood at $8,694 million as of Mar 31, 2014, up significantly by 48.2% from $5,867 million as of Mar 31, 2013.
In the quarter, BAX generated cash flow from operations of $559 million, up 44.8% from $386 million in the 2013-quarter. Capital expenditures soared 44.2% to $421 million from $292 million in the first quarter of 2013.
Looking Ahead
For the second quarter of 2014, Baxter expects revenues to grow between 12 and 13%, barring the impact of foreign currency. The company also expects adjusted earnings in the range of $1.18 to $1.22 per share for the quarter, which is lower than the current Zacks Consensus Estimate of $1.28.
BAX reiterated its outlook for full-year 2014. The company continues to expect revenues growth in the range of 9 to 10%, excluding the impact of foreign exchange, for the year. The company also expects adjusted earnings between $5.05 and $5.25 per share and operating cash flow of $3.5 billion for the year. The Zacks Consensus Estimate of $5.16 for the year lies within the guided range.
Zacks Rank
Currently, BAX has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical products industry include Enzymotec Ltd. (ENZY), Edwards Lifesciences Corp. (EW), and St. Jude Medical Inc. (STJ). Enzymotec sports a Zacks Rank #1 (Strong Buy), while both Edwards Lifesciences Corp. and St. Jude Medical retain a Zacks Rank #2 (Buy).
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