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Beckman Coulter Announces First Quarter 2008 Results

Posted by David in April 30th 2008

Beckman Coulter, Inc. (NYSE:BEC) , a leading provider of products that simplify, automate and innovate biomedical testing, today announced first quarter ended March 31, 2008 results. Total revenue of $730.5 million rose 19.1% over first quarter 2007. In constant currency, revenue rose 14.5%. Net earnings grew 15.6% to $42.9 million, or $0.67 per fully diluted share. Adjusting for special items, net earnings were $44.0 million, or $0.68 per fully diluted share, an increase of 4.6% over prior year quarter

Scott Garrett, chairman, president and chief executive officer, said, “First quarter sales were very encouraging. Sales to both Clinical Diagnostics and Life Sciences customers grew well above market at double-digit rates. Revenue mix favored lower-margin instrumentation and emerging markets. Although the heavy sales of instrumentation is unfavorable in the short-term from a mix and margin perspective, the anticipated recurring revenue supports achievement of our growth and earnings goals. We also made significant progress integrating our recent flow cytometry acquisition and funded key development programs.”

Total revenue from clinical diagnostics customers increased 19.2% over prior year quarter, or 14.8% in constant currency. Within Clinical Diagnostics, Immunoassay was up more than 23% and autochemistry was up 16%. Cellular was up more than 19%, with the flow cytometry products acquired from Dako contributing 3.1% to this growth. Clinical automation continued its momentum in the market growing almost 28% in the quarter. (See Revenue by Segment summary. Segments have been realigned to provide more visibility of Clinical Diagnostics and Life Sciences businesses.)

Revenue from life sciences customers increased 18.3% when compared to prior year, or 12.8% in constant currency. Increased demand in centrifugation and life sciences automation contributed to this growth, each up over 20%.

Recurring revenue continued its steady growth, increasing nearly 13% to $574.9 million, or 78.7% of total revenue. Above-market growth in Immunoassay continued with recurring revenue in Access-family Immunoassay up 22.4%, or 17.5% in constant currency.

Cash instrument sales were up considerably in the period, increasing $51.7 million over prior year quarter. China, India and emerging markets, where instrument sales doubled in the period, contributed to this increase. Heightened instrument sales in Cellular, up 50% in the quarter, were driven in part by an increase in production, helping the company to overcome a previously disclosed supply chain disruption. Life Sciences instrument revenue increased 29% compared to a weak prior year quarter.

On a geographic basis, first quarter revenue in the United States increased 10.7%. In constant currency, international revenue grew 19.1%, driven by an increase of more than 50% in China and other emerging markets, versus first quarter 2007.

Exceptionally strong instrument placements resulted in a product mix that decreased gross profit margin by 260 basis points to 45.9%. Greater service expense, associated with the significant increase in instrument shipments, also reduced the overall gross profit margin.

Total operating expense, including operating costs from the flow cytometry acquisition, was $267 million, or 36.6% of sales, down from 39.1% of sales in the prior year quarter. In total, the acquisition trimmed earnings per share by approximately $0.04 in the quarter.

Operating income for the quarter was $68.3 million, up 19.2% over first quarter 2007. Adjusted operating income grew 9.0% to $70.0 million, and adjusted operating income margin decreased from 10.5% to 9.6%, due entirely to the gross profit margin decrease in the quarter. (See “Non-GAAP Financial Measures.”)

The effective tax rate in the quarter was 24.3%, as compared to 21.6% in prior year quarter. The increase in tax rate is due to higher favorable discrete items in the first quarter of 2007 mainly for adjustments of prior years’ taxes, as compared to the first quarter 2008 discrete items. Net earnings grew 15.6% to $42.9 million or $0.67 per fully diluted share. Adjusting for special items, fully diluted earnings per share were $0.68. (See “Non-GAAP Financial Measures.”)

Garrett stated, “Heavy instrument placements in the quarter give us increased confidence in our company’s growth potential going forward. We made considerable gains in market share, extending our installed base in Clinical Diagnostics and Life Sciences. Positive placement trends for our high-volume Immunoassay and workcell products were particularly encouraging. In the first quarter, we launched the second of our five planned workcells, and we remain on schedule to launch our next generation hematology system, the DxH, in the second half of 2008. The product portfolio acquired from Dako furthers our capability in the research flow cytometry market. These new products extend our unparalleled range of industry-leading instrument systems and should help us to continue to expand our installed base.”