Immucor Beats Second Quarter Estimates

| About: Immucor, Inc. (BLUD)

Immucor (NASDAQ:BLUD) announced second quarter 2010 earnings per share of 28 cents, which was better than the Zacks Consensus Estimate of 26 cents and the year-ago quarter’s 24 cents. Net income for the quarter was $19.7 million, compared with $17.3 million for the same quarter last year.

The company reported $82.6 million in revenues, an increase of 13% from $73 million in the corresponding period last year. The increase in revenues was based on both price and volume contributions, as well as a positive impact of $1.9 million due to foreign exchange fluctuations.

While Immucor recorded robust growth in its top line, its gross margin suffered due to costs related to the company’s Quality Process Improvement Project, targeted at establishing a better quality system. The project, expected to be completed by the third quarter of this fiscal year, has been undertaken to address some deficiencies noted by the US Food and Drug Administration (FDA) in June last year.

During the quarter, Immucor incurred expenses of about $1.8 million related to this project, which brought down gross margin by 290 bps to 70.4% compared to the year-ago period. Operating expenses increased 7% year over year to $27.5 million primarily due to the increase in R&D expenses related to the development of more advanced instruments.

Immucor’s main products -- traditional reagents, capture reagents and instruments -- accounted for 63%, 25% and 12%, respectively, of total revenues. Although Immucor earns the most from the manufacture of traditional reagents, its gross margin at 76.8% is lower compared to capture reagents (81.6%). These three segments recorded a year-over-year revenue growth of 8.9%, 21.2% and 16.3%, respectively.

During the quarter, Immucor had steady order flow for two of its most important instruments -- Echo (77) and Galileo (27). Immucor is witnessing longer sales cycles for its Echo instruments. It expects orders for the product to be at the lower end of its guidance of 280 to 320 for the fiscal 2010.

Immucor reaffirmed its fiscal 2010 revenue and earnings guidance, which are expected in the range of $322 million - $332 million and $1.10 - $1.17 per share, respectively. The company repurchased about 300,000 shares of its stock during the second quarter for $5.5 million. Cash balance at the end of the quarter was $156 million, up from $136 million recorded during the quarter ended May 2009. We have a Neutral recommendation on the stock.

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Tagged: , Diagnostic Substances, Earnings
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