Immucor Inc. (BLUD) reported an EPS of 32 cents for the third quarter of fiscal 2011 (ending in February 2011), surpassing the Zacks Consensus Estimate of 27 cents and 14.3% higher than the year-ago quarter’s earning. Revenues were $ 83.3 million, ahead of both the Zacks Consensus Estimate and year-ago sales by 4%. Currency fluctuations had a negative impact of $ 0.40 million during the quarter.
Gross profit was up 5.9% to $ 59.0 million compared with $ 55.7 million in the year-ago period. Moreover, gross margin improved 160 basis points (bps) to 70.8%. However, the third quarter of fiscal 2010 included the impact of $ 1.8 million of costs related to the company’s Quality Process Improvement Project, Phase I.
While the year-ago quarter’s gross margin was negatively impacted by costs related to the quality improvement project, the latest quarter witnessed negative impact primarily due to unfavorable mix of instrument-related revenues and higher instruments expenses.
During the quarter, Immucor emphasized more on product development and distribution. It increased the research and development expenses by 8.8% to $ 3.9 million, and distribution costs by 11.2%. However general and administrative expenses led to a 4.8% decline.Consequently, operating expenses were higher by 1.3% resulting in an increase in operating margin was higher by 220 bps to 41.9%.
Immucor’s main products – traditional reagents, capture reagents and instruments – accounted for 59.5%, 25.8% and 12.9%, respectively, of total revenue. Immucor earns most by manufacturing traditional reagents, which also carries the highest gross margin of 81.2%.
Gross margin of capture reagents and instruments were 78.6% and 11.6%, respectively. While there was a 19% and 5% year-over-year rise in capture reagent sales and instrument revenues to $ 21.5 million and $ 10.8 million respectively, revenues from traditional reagents ($ 49.6 million) decreased 2%.
Although overall reagent revenues in the quarter benefited from an increased number of ship cycles, lower sales volume due to weaker industry demand in the US adversely impacted the sales.
Immucor’s fourth generation automated instrument, Neo recorded 31 Echo orders and 39 NEO orders during the quarter. Till date, the company recorded 86 Echo orders and 83 NEO orders worldwide.
Outlook
Immucor updated its guidance for fiscal 2011. The company has narrowed down its revenue guidance range to $ 328−$ 330 million (the previous revenue guidance was $ 320−$ 332 million) with gross margin and EPS at 69.5%−71.0% and $ 1.18−$ 1.20 respectively.
With respect to instrument orders, the company expects to place 140-180 Echo orders and 80-120 Neo orders globally during fiscal 2011.
Currently we remain Neutral on the stock.
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