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VWR Corp (VWR) Tops Q1 Earnings, Revenues; Ups '16 View

VWR Corporation VWR reported first-quarter 2016 adjusted earnings per share (EPS) of 40 cents, reflecting a 21.2% rise from the year-ago quarter. The quarter’s earnings were also 5.3% ahead of the Zacks Consensus Estimate of 38 cents. Strong top-line growth prompted the year-over-year growth in earnings.

Including one-time items, the company reported first-quarter 2016 net EPS of 29 cents, down 46.3% year over year.

Revenues in the reported quarter were up 6.7% year over year at $1.10 billion. Revenues also edged past the Zacks Consensus Estimate of $1.07 billion. Foreign exchange headwinds, owing to the strengthening of the dollar compared to the euro and other major currencies, impacted revenues by $19.3 million, or 1.9% year over year. On an organic basis, revenues increased 6%, while recent acquisitions boosted revenues by 2.6%.

Revenues in the Americas totaled $666.7 million, up 10.1% year over year (up 7.6% organically) in the first quarter. The top-line increase was supported by strong sales to biopharma and government customers while the organic revenue growth was led by solid equipment and instrumentation sales.

Revenues from EMEA-APAC were $431.6 million, up 1.7% year over year (up 3.6% organically). In the EMEA-APAC region, foreign currency affected sales by $12.8 million or 3%; while acquisitions added $4.9 million or 1.2%. Within this segment, sales to biopharma customers increased in high-single-digits, buoyed by consistent growth in biotech. Further, strong equipment sales to biopharma customers were observed while solid reference labs’ sales drove mid-single digit growth in healthcare customer revenues.

VWR reported a gross margin of 28.3%, flat year over year, on account of positive pricing momentum, which was offset by growth in services and mix. Sales, general and administrative expenses rose 6.2% to $230.9 million. VWR posted operating income of $79.7 million in the reported quarter, reflecting an 8% rise from the year-ago quarter. Accordingly, operating margin expanded 10 basis points to 7.3% in the quarter under review.

VWR exited the first quarter with cash and cash equivalents of $129.7 million, down from $136.3 million at the end of 2015. Operating cash flow at the end of the first quarter was $42 million, compared with operating cash outflow of $9.9 million in the year-ago period.

Outlook

VWR raised its 2016 guidance and now expects revenues in the range of $4.54–$4.63 billion (an annualized increase of 5% to 7%) compared to the prior guidance of $4.49–$4.57 billion (an annualized increase of 4% to 6%). At the bottom line front, the company projects adjusted EPS in the band of $1.68–$1.74 (annualized growth of 11% to 15%) compared with the previous range of $1.62 to $1.70 (7% to 12%). The current Zacks Consensus Estimate for revenues is pegged at $4.52 billion, below the guided range, while that for EPS stands at $1.69, within the projected range.

Our Take

VWR made a promising start to 2016, with its first-quarter financial numbers squarely beating the Zacks Consensus Estimate. Segment-wise, management witnessed strong sales growth in both Americas as well as the EMEA-APAC region, accompanied by exceptionally strong growth in equipment and instrumentation. Although currency fluctuations proved to be a major drag on sales, the extent of its impact on the company’s EMEA-APAC sales was lower in the first quarter when compared to the 2015 levels. On the profitability front, VWR posted improved margin figures in spite of the competitive landscape.

Zacks Rank & Key Picks

Currently, the company carries a Zacks Rank #3 (Hold). Better-ranked medical stocks are Baxter International Inc. BAX, SurModics, Inc. SRDX and Boston Scientific Corporation BSX. While Baxter and SurModics sport a Zacks Rank #1 (Strong Buy), Boston Scientific carries a Zacks Rank #2 (Buy).

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BOSTON SCIENTIF (BSX): Free Stock Analysis Report
 
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