HAE 10-Q

Haemonetics Corp (HAE)

10-Q 2024-02-08 For: 2023-12-30

View Original

Added on April 07, 2026


Massachusetts		04-2882273
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 Summer Street
Boston,	Massachusetts	02110
(Address of principal executive offices)		(Zip Code)



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - Three and Nine Months Ended December 30, 2023 and December 31, 2022			3
Unaudited Condensed Consolidated Balance Sheet - December 30, 2023 and Consolidated Balance Sheet - April 1, 2023			4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity - Three and Nine Months Ended December 30, 2023 and Decembe r 3 1, 2022			5
Unaudited Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 30, 2023 and December 31, 2022			7
Notes to Unaudited Condensed Consolidated Financial Statements			8

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			26

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			36

ITEM 4. Controls and Procedures			36

PART II. OTHER INFORMATION			38

ITEM 1. Legal Proceedings			38

ITEM 1A. Risk Factors			38

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			38

ITEM 3. Defaults upon Senior Securities			38

ITEM 4. Mine Safety Disclosures			38

ITEM 5. Other Information			38

ITEM 6. Exhibits			39

SIGNATURES			40


	Three Months Ended				Nine Months Ended
	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Net revenues	$	336,250	$	305,301	$	965,765	$	864,244
Cost of goods sold	158,383		146,594		450,123		405,396
Gross profit	177,867		158,707		515,642		458,848
Operating expenses:
Research and development	13,265		12,689		38,578		34,487
Selling, general and administrative	111,713		94,661		310,099		278,917
Amortization of acquired intangible assets	6,911		8,078		21,606		24,666
Impairment of intangible assets	—		—		10,419		—

Total operating expenses	131,889		115,428		380,702		338,070
Operating income	45,978		43,279		134,940		120,778
Interest and other expense, net	(1,949)		(1,055)		(6,489)		(12,001)
Income before provision for income taxes	44,029		42,224		128,451		108,777
Provision for income taxes	12,788		9,280		31,260		22,759
Net income	$	31,241	$	32,944	$	97,191	$	86,018

Net income per share - basic	$	0.62	$	0.65	$	1.92	$	1.69
Net income per share - diluted	$	0.61	$	0.64	$	1.89	$	1.67

Weighted average shares outstanding
Basic	50,768		50,509		50,679		50,896
Diluted	51,445		51,219		51,394		51,487

Comprehensive income	$	39,564	$	37,400	$	103,190	$	76,173


	December 30, 2023		April 1, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	193,978	$	284,466
Accounts receivable, less allowance for credit losses of $5,725 at December 30, 2023 and $4,932 at April 1, 2023	211,611		179,142
Inventories, net	304,024		259,379
Prepaid expenses and other current assets	55,369		46,735
Total current assets	764,982		769,722
Property, plant and equipment, net	318,665		310,885
Intangible assets, less accumulated amortization of $442,810 at December 30, 2023 and $417,422 at April 1, 2023	429,270		275,771
Goodwill	554,999		466,231
Deferred tax asset	5,070		5,241
Other long-term assets	127,442		106,975
Total assets	$	2,200,428	$	1,934,825
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	13,736	$	11,784
Accounts payable	56,845		63,929
Accrued payroll and related costs	58,762		64,475
Other current liabilities	132,412		111,628
Total current liabilities	261,755		251,816
Long-term debt	856,849		754,102
Deferred tax liability	62,246		36,195
Other long-term liabilities	76,259		74,715
Stockholders’ equity:
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,785,040 shares at December 30, 2023 and 50,448,519 shares at April 1, 2023	508		504
Additional paid-in capital	627,094		594,706
Retained earnings	340,099		253,168
Accumulated other comprehensive loss	(24,382)		(30,381)
Total stockholders’ equity	943,319		817,997
Total liabilities and stockholders’ equity	$	2,200,428	$	1,934,825


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)/Income		Total Stockholders’ Equity
	Shares	Par Value
Balance, April 1, 2023	50,449	$	504	$	594,706	$	253,168	$	(30,381)	$	817,997
Employee stock purchase plan	40	—		2,871		—		—		2,871
Exercise of stock options	145	2		5,858		(5,233)		—		627
Issuance of restricted stock, net of cancellations	140	2		(2)		—		—		—

Tax withholding on employee equity awards	(68)	(1)		(812)		(4,960)		—		(5,773)
Share-based compensation expense	—	—		6,989		—		—		6,989
Net income	—	—		—		41,042		—		41,042
Other comprehensive income	—	—		—		—		863		863
Balance, July 1, 2023	50,706	$	507	$	609,610	$	284,017	$	(29,518)	$	864,616

Exercise of stock options	12	—		655		37		—		692

Issuance of restricted stock, net of cancellations	22	—		—		—		—		—
Tax withholding on employee equity awards	—	—		(11)		(64)		—		(75)

Share-based compensation expense	—	—		6,706		—		—		6,706
Net income	—	—		—		24,908		—		24,908
Other comprehensive loss	—	—		—		—		(3,187)		(3,187)
Balance, September 30, 2023	50,740	$	507	$	616,960	$	308,898	$	(32,705)	$	893,660
Employee stock purchase plan	39	—		2,732		—		—		2,732

Exercise of stock options	4	1		189		(4)		—		186
Issuance of restricted stock, net of cancellations	3	—		—		—		—		—
Tax withholding on employee equity awards	(1)	—		(4)		(36)		—		(40)

Share-based compensation expense	—	—		7,217		—		—		7,217
Net income	—	—		—		31,241		—		31,241
Other comprehensive income	—	—		—		—		8,323		8,323
Balance, December 30, 2023	50,785	$	508	$	627,094	$	340,099	$	(24,382)	$	943,319


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(In thousands)	December 12, 2023
Accounts receivable	$	5,960
Inventories	11,255
Prepaid expenses and other current assets	2,062
Property, plant and equipment	3,028
Intangible assets	180,500
Goodwill	87,079
Other long-term assets	4,705
Total assets acquired	$	294,589
Accounts payable	5,626
Accrued payroll and related costs	1,723
Other liabilities	7,277
Deferred tax liability	30,258
Other long-term liabilities	5,853
Total liabilities assumed	$	50,737
Net assets acquired	$	243,852


(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Developed technology	$	121,600	15 years	20.0	%
Customer contracts and related relationships	53,900		15 years	18.4	%
Trade names	5,000		15 years	20.0	%
Total	$	180,500


(In thousands)	Portfolio Rationalization		2020 Program		Prior Programs		Total
Balance at April 1, 2023	$	—	$	1,810	$	340	$	2,150
Costs incurred, net of reversals	7,656		356		31		8,043
Payments	(126)		(1,006)		(58)		(1,190)
Balance at December 30, 2023	$	7,530	$	1,160	$	313	$	9,003


Restructuring costs	Three Months Ended				Nine Months Ended
(In thousands)	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Plasma	$	33	$	(50)	$	(164)	$	(261)
Blood Center	4,546		—		4,546		—
Hospital	2,503		—		2,745		—
Corporate	886		94		916		426
Total	$	7,968	$	44	$	8,043	$	165

Restructuring related costs	Three Months Ended				Nine Months Ended
(In thousands)	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Plasma	$	72	$	241	$	315	$	989
Blood Center	93		21		166		39
Hospital	251		224		398		424
Corporate	1,987		3,595		5,675		9,180
Total	$	2,403	$	4,081	$	6,554	$	10,632

Total restructuring and restructuring related costs	$	10,371	$	4,125	$	14,597	$	10,797


	Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Basic EPS
Net income	$	31,241	$	32,944	$	97,191	$	86,018
Weighted average shares	50,768		50,509		50,679		50,896
Basic income per share	$	0.62	$	0.65	$	1.92	$	1.69
Diluted EPS
Net income	$	31,241	$	32,944	$	97,191	$	86,018
Basic weighted average shares	50,768		50,509		50,679		50,896
Net effect of common stock equivalents	677		710		715		591
Diluted weighted average shares	51,445		51,219		51,394		51,487
Diluted income per share	$	0.61	$	0.64	$	1.89	$	1.67


(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net

As of December 30, 2023
Amortizable:
Patents	$	18,504	$	11,562	$	6,942
Capitalized software	84,443		67,169		17,274
Other developed technology	474,406		169,844		304,562
Customer contracts and related relationships	258,720		188,977		69,743
Trade names	14,662		5,258		9,404
Total	$	850,735	$	442,810	$	407,925
Non-amortizable:
In-process software development	$	3,877
In-process research and development	13,667
In-process patents	3,801
Total	$	21,345


(In thousands)
Remainder of Fiscal 2024	$	12,211
Fiscal 2025	$	42,010
Fiscal 2026	$	36,583
Fiscal 2027	$	34,610
Fiscal 2028	$	32,839


Hedged Item	Original Notional Amount		Notional Amount as of December 30, 2023		Designation Date	Effective Date	Termination Date	Fixed Interest Rate	Estimated Fair Value Assets (Liabilities)
(In thousands)




1-month USD Term SOFR	109,900		107,800		9/23/2022	6/15/2023	6/15/2025	4.08%	372
1-month USD Term SOFR	109,900		106,400		9/23/2022	6/15/2023	6/15/2025	4.15%	302
Total	$	219,800	$	214,200					$	674


	Nine Months Ended
	December 30, 2023		December 31, 2022
Cash Flows from Operating Activities:
Net income	$	97,191	$	86,018
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization	69,576		69,453

Share-based compensation expense	20,912		18,525
Impairment of assets	10,419		94
Amortization of deferred financing costs	2,393		1,098
Inventory reserve adjustment	6,904		483



Other non-cash operating activities	(2,430)		160
Change in operating assets and liabilities:
Change in accounts receivable	(27,743)		(24,370)
Change in inventories	(40,721)		34,506
Change in prepaid income taxes	1,730		1,970
Change in other assets and other liabilities	(15,619)		(10,664)
Change in accounts payable and accrued expenses	(4,942)		16,174
Net cash provided by operating activities	117,670		193,447
Cash Flows from Investing Activities:
Capital expenditures	(56,611)		(98,272)
Acquisitions	(243,852)		(2,850)
Proceeds from divestiture	—		850
Proceeds from sale of property, plant and equipment	1,259		7,695
Other investments	(10,129)		(33,205)
Net cash used in investing activities	(309,333)		(125,782)
Cash Flows from Financing Activities:

Term loan borrowings	—		280,000
Term loan redemption	—		(280,000)
Proceeds from revolving facility	110,000		50,000
Payments on revolving facility	—		(50,000)
Repayment of term loan borrowings	(8,750)		(7,875)
Debt issuance costs	—		(1,118)
Share repurchases	—		(75,000)


(In thousands)	December 30, 2023		April 1, 2023
Raw materials	$	135,057	$	115,016
Work-in-process	18,374		12,572
Finished goods	150,593		131,791
Total inventories	$	304,024	$	259,379


(In thousands)	December 30, 2023		April 1, 2023
Land	$	5,573	$	5,358
Building and building improvements	119,024		127,634
Plant equipment and machinery	200,154		194,539
Office equipment and information technology	129,488		123,611
Haemonetics equipment	480,083		463,706
Construction in progress	44,969		29,367
Total	979,291		944,215
Less: accumulated depreciation	(660,626)		(633,330)
Property, plant and equipment, net	$	318,665	$	310,885


(In thousands)	Location in Condensed Consolidated Balance Sheets	As of		As of
		December 30, 2023		April 1, 2023
Derivative Assets:
Designated foreign currency hedge contracts	Other current assets	$	668	$	1,401
Non-designated foreign currency hedge contracts	Other current assets	177		302
Designated interest rate swaps	Other current assets	1,146		1,110

		$	1,991	$	2,813
Derivative Liabilities:
Designated foreign currency hedge contracts	Other current liabilities	$	18	$	24
Non-designated foreign currency hedge contracts	Other current liabilities	179		58

Designated interest rate swaps	Other long-term liabilities	472		1,807
		$	669	$	1,889


Derivative Instruments	Amount of Gain Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of Income and Comprehensive Income	Amount of Gain Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive Income
(In thousands)
Designated foreign currency hedge contracts, net of tax	$	1,992	$	(2,745)	Net revenues, COGS and SG&A	$	1,222	Interest and other expense, net
Non-designated foreign currency hedge contracts	$	—	$	—		$	1,363	Interest and other expense, net
Designated interest rate swaps, net of tax	$	1,312	$	2	Interest and other expense, net	$	—


	As of December 30, 2023
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	7,583	$	—	$	—	$	7,583
Designated foreign currency hedge contracts	—		668		—		668
Non-designated foreign currency hedge contracts	—		177		—		177
Designated interest rate swaps	—		1,146		—		1,146
	$	7,583	$	1,991	$	—	$	9,574
Liabilities
Designated foreign currency hedge contracts	$	—	$	18	$	—	$	18
Non-designated foreign currency hedge contracts	—		179		—		179
Designated interest rate swaps	—		472		—		472

	$	—	$	669	$	—	$	669

	As of April 1, 2023
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	132,341	$	—	$	—	$	132,341
Designated foreign currency hedge contracts	—		1,401		—		1,401
Non-designated foreign currency hedge contracts	—		302		—		302
Designated interest rate swaps	—		1,110		—		1,110
	$	132,341	$	2,813	$	—	$	135,154
Liabilities
Designated foreign currency hedge contracts	$	—	$	24	$	—	$	24
Non-designated foreign currency hedge contracts	—		58		—		58
Designated interest rate swaps	—		1,807		—		1,807
Contingent consideration	—		—		863		863
	$	—	$	1,889	$	863	$	2,752


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total
Balance as of April 1, 2023	$	(33,935)	$	4,075	$	(521)	$	(30,381)
Other comprehensive income (loss) before reclassifications(1)	5,438		—		3,304		8,742
Amounts reclassified from accumulated other comprehensive income(1)	—		—		(2,743)		(2,743)
Net current period other comprehensive income (loss)	5,438		—		561		5,999
Balance as of December 30, 2023	$	(28,497)	$	4,075	$	40	$	(24,382)
(1) Presented net of income taxes, the amounts of which are insignificant.


	Three Months Ended								Nine Months Ended
(In thousands, except per share data)	December 30, 2023			December 31, 2022			% Increase/ (Decrease)		December 30, 2023			December 31, 2022			% Increase/ (Decrease)
Net revenues	$	336,250		$	305,301		10.1	%	$	965,765		$	864,244		11.7	%
Gross profit	$	177,867		$	158,707		12.1	%	$	515,642		$	458,848		12.4	%
% of net revenues	52.9		%	52.0		%			53.4		%	53.1		%
Operating expenses	$	131,889		$	115,428		14.3	%	$	380,702		$	338,070		12.6	%
Operating income	$	45,978		$	43,279		6.2	%	$	134,940		$	120,778		11.7	%
% of net revenues	13.7		%	14.2		%			14.0		%	14.0		%
Interest and other expense, net	$	(1,949)		$	(1,055)		84.7	%	$	(6,489)		$	(12,001)		(45.9)	%
Income before provision for income taxes	$	44,029		$	42,224		4.3	%	$	128,451		$	108,777		18.1	%
Provision for income taxes	$	12,788		$	9,280		37.8	%	$	31,260		$	22,759		37.4	%
% of pre-tax income	29.0		%	22.0		%			24.3		%	20.9		%
Net income	$	31,241		$	32,944		(5.2)	%	$	97,191		$	86,018		13.0	%
% of net revenues	9.3		%	10.8		%			10.1		%	10.0		%
Net income per share - basic	$	0.62		$	0.65		(4.6)	%	$	1.92		$	1.69		13.6	%
Net income per share - diluted	$	0.61		$	0.64		(4.7)	%	$	1.89		$	1.67		13.2	%


(Dollars in thousands)	December 30, 2023		April 1, 2023
Cash and cash equivalents	$	193,978	$	284,466
Working capital	$	503,227	$	517,906
Current ratio	2.9		3.1
Net debt position(1)	$	(676,607)	$	(481,420)
Days sales outstanding (DSO)	57		53
Inventory turnover	1.8		1.8




3.1			Restated Articles of Organization of the Company, reflecting Articles of Amendment dated August 23, 1993, August 21, 2006, July 26, 2018 and July 25, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K dated July 29, 2019 and incorporated herein by reference).

3.2			By-Laws of the Company, as amended through June 29, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K dated June 30, 2020 and incorporated herein by reference).

10.1			Arrangement Agreement, dated as of October 10, 2023, by and among the Company, OpSens Inc. and 9500-7704 Quebec Inc. (filed as Exhibit 2.1 to the Company’s Form 8-K/A dated October 12, 2023 and incorporated herein by reference) (1).

10.2			Form of Voting and Support Agreement (filed as Exhibit 10.1 to the Company’s Form 8-K/A dated October 12, 2023 and incorporated herein by reference) (1).

10.3*			Sixth Amendment to Lease dated February 21, 2000, made as of December 13, 2023, by and between Santa Maria Industrial Partners, L.P. (as successor to the lease), Haemonetics Mexico Manufacturing, S. de R.L. de C.V. and the Company, in its capacity as guarantor, for property located in Tijuana, Mexico (1).

10.4*			Office Lease Agreement, dated as of December 18, 2018, by and between OPG 125 Summer Owner (DE) LLC and the Company (1).

31.1*			Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

31.2*			Certification pursuant to Section 302 of Sarbanes-Oxley of 2002, of James C. D'Arecca, Executive Vice President, Chief Financial Officer of the Company.

32.1**			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

32.2**			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of James C. D'Arecca, Executive Vice President, Chief Financial Officer of the Company.

101*			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended July 2, 2022 formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of Income and Comprehensive Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statement of Stockholders' Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

104*			Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).





*						Document filed with this report.

**						Document furnished with this report.

(1)						Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations. The Company agrees to furnish supplementally a copy of any omitted portions to the U.S. Securities and Exchange Commission upon request.


	HAEMONETICS CORPORATION

February 8, 2024	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

February 8, 2024	By:	/s/ James C. D’Arecca
		James C. D’Arecca, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)