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C.R. Bard (BCR) Beats Q1 Earnings & Sales, FY16 View Up

C.R. Bard Inc. BCR reported adjusted earnings of $2.34 in the first quarter of 2016, exceeding the Zacks Consensus Estimate by 17 cents and also improving 11.4% from the year-ago quarter. Adjusted earnings were also better than management’s guided range of $2.14 to $2.18 per share.

Net sales increased 6.6% on a year-over-year basis at $873.5 million, much better than the Zacks Consensus Estimate of $846 million. At constant currency (cc), net sales increased 8.5% from the year-ago quarter, which surpassed management’s guided range of 4.5% to 5%. Organic growth was 9%, in line with the mid-point of the guided range of 5% to 6%.

U.S. net sales improved 9%, while international sales increased 20% at cc in the reported quarter. At cc, Europe and other international territories reported sales increases of 7% and 20%, respectively. The year-over-year growth in Europe was driven by strong demand from endovascular radiology in PICCs.

Sales in Japan declined 16%, while emerging market revenues (10% of total revenues) grew double digit. The decline in Japan can be attributed to inventory fluctuations.

C.R. Bard launched almost 40 products in 2015. Net sales increased 6% on a year-over-year basis at cc to $3.4 billion, while organic growth was approximately 6.8%, much better than management’s guided range of 4% to 5%. Adjusted earnings were up 8.1% to $9.08 per share in 2015.

Segment Details

Vascular product sales increased 3.3% year over year (up 5% at cc) to $239.5 million. Excluding the royalty payment and divestiture of Electrophysiology products, vascular sales were up 12%. Sales in the U.S. increased 3%, whereas international sales were up 10%.

Sales from surgical graft were up 3% in the quarter. The Endovascular business sales improved 9%, excluding the royalty payment from Gore. Within the Endovascular business, peripheral PTA line sales increased 19% driven by accelerating demand for the Lutonix drug-coated balloon in the U.S.

Sales from biopsy products climbed 16%, driven by healthy growth across the emerging markets. Sales from the stent business decreased 1%, mainly because of weakness in Japan. Vena cava filter line sales increased 3% in the quarter.

Urology sales increased 5% on a year-over-year basis (up 7% at cc) to $216.7 million. Excluding the Japanese inventory issue and the acquisition of Liberator Medical, global sales growth was 5%. Sales in the U.S. increased 5%, while improving 3% internationally.

Within Urology, sales from the basic drainage business increased 5% globally and 6% in the U.S. Sales of I.C. Foley increased 4% in both the U.S. and global markets. Sales from the continence business decreased 3% in the quarter.

Temperature management product sales grew at a double-digit rate. Continence business sales surged 22% from the year-ago quarter.

Sales from urological specialties were up 8%, including the Brachytherapy product line, which was also up 8% globally. StatLock catheter stabilization line decreased 5% in the reported quarter.

Oncology sales were up 7.7% (up 10% at cc) at $241.9 million. Adjusting for the Japan inventory issue, sales grew 8%. Sales climbed 6% in the U.S. and 10% outside the U.S. PICC sales grew 9% globally while port line sales were up 8% on a year-over-year basis.

Meanwhile, sales from the vascular access ultrasound product line were up 15%. Lastly, sales from the dialysis catheter business rose 12% in the quarter.

Surgical Specialties sales increased 11% (up 13% at cc) to $151.4 million. Excluding the Japan inventory issue, global sales were up 13%. U.S. sales increased 12%, while international sales were up 14%. Sales at the bio-surgery business grew in double-digit in the quarter.

Sales from the soft tissue repair business grew 13%. Within soft tissue, synthetic hernia products sales grew 19% from the year-ago quarter. Moreover, hernia fixation business sales improved 37%, while natural tissue products decreased 19% on a year-over-year basis. Performance irrigation business declined 6% in the reported quarter.

Sales from the Other product line increased 10.6% on a year-over-year basis to $24 million.

Operating Performance

Adjusted gross margin expanded 220 basis points (bps) on a year-over-year basis to 66.5%. Favorable product mix (160 bps) and cost improvements (90 bps) were partially offset by pricing pressure (40 bps).

Marketing, selling & administrative expenses increased 13.2% year over year to $266.5 million. The rise was primarily due to acquisition-related expenses. Research & development (R&D) expenses increased 10.2% to $66.8 million.


For the second quarter of 2016, sales growth is forecasted between 6.5% and 8%, at cc. On an organic basis, management estimates sales growth in the 5.5% to 6% range. Adjusted earnings are projected in the range of $2.43 to $2.47 per share. Management expects gross margin to expand more than 100 bps on a year-over-year basis.

For full-year 2016, C.R. Bard now projects organic revenue increase in the range of 7% to 8.5%, up from earlier guided range of 5% to 6%, at cc. Organic sales growth is likely to grow in the range 6% to 6.5%, up from 5% to 6% guided earlier. Including the impact of strong U.S. dollar (50 to 100 bps), sales is projected to grow in the range of 6% to 8%.

Earnings are forecasted in the range of $10.05 to $10.18 per share, up from earlier guided range of $9.90 to $10.05, reflecting year-over-year growth of 11% to 12%. Including foreign exchange rate volatility headwind of 20 cents, growth is expected in the range of 13% to 14%.

Zacks Rank & Stocks to Consider

Currently, C.R. Bard carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same space are Align Technology ALGN, Becton, Dickinson BDX and The Cooper Companies COO. All the three stocks carry a Zacks Rank #2 (Buy).

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BARD C R INC (BCR): Free Stock Analysis Report
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COOPER COS (COO): Free Stock Analysis Report
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