Haemonetics Corp 10-Q for FY2022 Q3

Haemonetics Corp (HAE)

10-Q 2022-02-08 For: 2022-01-01

Added on April 07, 2026

About this 10-Q

Haemonetics Corp filed this 10-Q on February 8, 2022, covering the quarter ended January 1, 2022 (FY2022 Q3).

Headline figures

Quarter ended January 1, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $259.77M; up 8.1% from $240.37M a year earlier
Net income: $23.23M; down 27.1% from net income of $31.88M a year earlier
Diluted EPS: $0.45; down 27.4% from $0.62 a year earlier

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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 January 1 , 202 2 and Dec ember 26, 2020			3
Unaudited Condensed Consolidated Balance Sheet - January 1 , 202 2 and Consolidated Balance Sheet - April 3, 2021			4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity - Three and Nine Months Ended January 1 , 202 2 and Dec ember 26, 2020			5
Unaudited Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 1 , 202 2 and Dec ember 26, 2020			7
Notes to Unaudited Condensed Consolidated Financial Statements			8

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			34

ITEM 4. Controls and Procedures			35

PART II. OTHER INFORMATION			36

ITEM 1. Legal Proceedings			36

ITEM 1A. Risk Factors			36

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			36

ITEM 3. Defaults upon Senior Securities			37

ITEM 4. Mine Safety Disclosures			37

ITEM 5. Other Information			37

ITEM 6. Exhibits			38

SIGNATURES			39


	Three Months Ended				Nine Months Ended
	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net revenues	$	259,769	$	240,371	$	728,194	$	645,434
Cost of goods sold	121,204		120,114		359,003		329,403
Gross profit	138,565		120,257		369,191		316,031
Operating expenses:
Research and development	10,037		7,501		33,591		22,014
Selling, general and administrative	80,726		65,641		247,722		191,504
Amortization of intangible assets	12,151		7,805		35,930		24,204
Gains on divestitures and sale of assets	—		(1,115)		(9,603)		(32,613)
Total operating expenses	102,914		79,832		307,640		205,109
Operating income	35,651		40,425		61,551		110,922
Interest and other expense, net	(4,263)		(3,051)		(13,249)		(10,612)
Income before provision for income taxes	31,388		37,374		48,302		100,310
Provision for income taxes	8,156		5,492		14,668		9,800
Net income	$	23,232	$	31,882	$	33,634	$	90,510

Net income per share - basic	$	0.45	$	0.63	$	0.66	$	1.79
Net income per share - diluted	$	0.45	$	0.62	$	0.65	$	1.77

Weighted average shares outstanding
Basic	51,094		50,789		51,024		50,634
Diluted	51,344		51,363		51,356		51,234

Comprehensive income	$	23,419	$	40,496	$	33,832	$	105,787


	January 1, 2022		April 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	236,877	$	192,305
Accounts receivable, less allowance of $2,382 at January 1, 2022 and $2,226 at April 3, 2021	154,980		127,555
Inventories, net	305,741		322,614
Prepaid expenses and other current assets	31,857		51,072
Total current assets	729,455		693,546
Property, plant and equipment, net	238,841		217,559
Intangible assets, less accumulated amortization of $362,637 at January 1, 2022 and $320,640 at April 3, 2021	323,951		365,483
Goodwill	468,199		466,444
Deferred tax asset	6,050		6,009
Other long-term assets	64,880		70,882
Total assets	$	1,831,376	$	1,819,923
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	144,064	$	17,016
Accounts payable	51,175		50,293
Accrued payroll and related costs	39,046		47,600
Other liabilities	121,126		138,586
Total current liabilities	355,411		253,495
Long-term debt, net of current maturities	633,118		690,592
Deferred tax liability	26,132		43,825
Other long-term liabilities	85,940		100,341
Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 51,111,046 shares at January 1, 2022 and 50,868,820 shares at April 3, 2021	511		509
Additional paid-in capital	566,963		602,727
Retained earnings	192,650		157,981
Accumulated other comprehensive loss	(29,349)		(29,547)
Total stockholders’ equity	730,775		731,670
Total liabilities and stockholders’ equity	$	1,831,376	$	1,819,923


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, April 3, 2021	50,869	$	509	$	602,727	$	157,981	$	(29,547)	$	731,670
Employee stock purchase plan	39	—		2,210		—		—		2,210
Exercise of stock options	14	—		500		—		—		500
Issuance of restricted stock, net of cancellations	91	1		(1)		—		—		—
Cumulative effect of change in accounting standards	—	—		(61,156)		1,035		—		(60,121)
Share-based compensation expense	—	—		6,828		—		—		6,828
Net loss	—	—		—		(4,454)		—		(4,454)
Other comprehensive income	—	—		—		—		447		447
Balance, July 3, 2021	51,013	$	510	$	551,108	$	154,562	$	(29,100)	$	677,080

Exercise of stock options	28	1		1,069		—		—		1,070
Issuance of restricted stock, net of cancellations	19	—		—		—		—		—

Share-based compensation expense	—	—		5,979		—		—		5,979
Net income	—	—		—		14,856		—		14,856
Other comprehensive income	—	—		—		—		(436)		(436)
Balance, October 2, 2021	51,060	$	511	$	558,156	$	169,418	$	(29,536)	$	698,549
Employee stock purchase plan	36	—		1,999		—		—		1,999
Exercise of stock options	12	—		353		—		—		353
Issuance of restricted stock, net of cancellations	3	—		—		—		—		—

Share-based compensation expense	—	—		6,455		—		—		6,455
Net income	—	—		—		23,232		—		23,232
Other comprehensive income	—	—		—		—		187		187
Balance, January 1, 2022	51,111	$	511	$	566,963	$	192,650	$	(29,349)	$	730,775


☒			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)	2020 Program		Prior Programs		Total
Balance at April 3, 2021	$	575	$	437	$	1,012
Costs incurred, net of reversals	4,008		28		4,036
Payments	(1,988)		(33)		(2,021)
Balance at January 1, 2022	$	2,595	$	432	$	3,027


Restructuring costs	Three Months Ended				Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Plasma	$	(192)	$	(27)	$	2,507	$	454
Blood Center	—		66		3		240
Hospital	—		—		(91)		(18)
Corporate	113		(131)		1,617		224
Total	$	(79)	$	(92)	$	4,036	$	900

Restructuring related costs	Three Months Ended				Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Plasma	$	1,400	$	431	$	4,541	$	1,235
Blood Center	24		518		554		1,024
Hospital	127		4		292		14
Corporate	4,210		2,282		10,827		8,410
Total	$	5,761	$	3,235	$	16,214	$	10,683

Total restructuring and restructuring related costs	$	5,682	$	3,143	$	20,250	$	11,583


(In thousands)	March 1, 2021
Accounts receivable	$	7,304
Inventories	18,765
Prepaid expenses and other current assets	850
Property, plant and equipment	1,186
Intangible assets	250,560
Goodwill	253,966
Other long-term assets	1,868
Total assets acquired	$	534,499
Accounts payable	3,292
Accrued payroll and related costs	58,211
Other liabilities	1,853
Deferred tax liability	27,102
Other long-term liabilities	1,772
Total liabilities assumed	$	92,230
Net assets acquired	$	442,269


(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology	$	213,290	13 years	13.5	%
Customer relationships	18,166		12 years	13.0	%
Trademarks	5,437		13 years	13.5	%
IPR&D	13,667		Indefinite	15.0	%
Total	$	250,560


(In thousands)	April 1, 2020

Inventory	$	634
Other current assets	685
Property, plant and equipment	289
Intangible assets	14,090
Goodwill	8,153
Total assets acquired	$	23,851
Other current liabilities	289
Deferred tax liability	3,036
Total liabilities assumed	$	3,325
Net assets acquired	$	20,526


	Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Basic EPS
Net income	$	23,232	$	31,882	$	33,634	$	90,510
Weighted average shares	51,094		50,789		51,024		50,634
Basic income per share	$	0.45	$	0.63	$	0.66	$	1.79
Diluted EPS
Net income	$	23,232	$	31,882	$	33,634	$	90,510
Basic weighted average shares	51,094		50,789		51,024		50,634
Net effect of common stock equivalents	250		574		332		600
Diluted weighted average shares	51,344		51,363		51,356		51,234
Diluted income per share	$	0.45	$	0.62	$	0.65	$	1.77


(In thousands)	Amount of Gain (Loss) 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 (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive Income
Designated foreign currency hedge contracts, net of tax	$	351	$	1,520	Net revenues, COGS and SG&A	$	(931)	Interest and other expense, net
Non-designated foreign currency hedge contracts	$	—	$	—		$	1,004	Interest and other expense, net
Designated interest rate swaps, net of tax	$	1,488	$	(3,367)	Interest and other expense, net	$	—


(In thousands)	Location in Condensed Consolidated Balance Sheets	As of		As of
		January 1, 2022		April 3, 2021
Derivative Assets:
Designated foreign currency hedge contracts	Other current assets	$	1,597	$	2,061
Non-designated foreign currency hedge contracts	Other current assets	127		104

		$	1,724	$	2,165
Derivative Liabilities:
Designated foreign currency hedge contracts	Other current liabilities	$	84	$	454
Non-designated foreign currency hedge contracts	Other current liabilities	82		349
Designated interest rate swaps	Other current liabilities	4,466		5,550
Designated interest rate swaps	Other long-term liabilities	622		4,301
		$	5,254	$	10,654


	Nine Months Ended
	January 1, 2022		December 26, 2020
Cash Flows from Operating Activities:
Net income	$	33,634	$	90,510
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization	72,934		62,377
Amortization of fair value inventory step-up	5,295		—
Impairment of assets	5,144		1,028
Share-based compensation expense	19,262		18,406
Amortization of deferred finance costs	2,608		425
(Benefit) provision for losses on inventory	(280)		3,779
Gains on divestitures and sale of assets	(9,603)		(32,613)
Deferred tax benefit	1,999		(3,953)
Contingent consideration expense	10,272		—
Other non-cash operating activities	1,103		89
Change in operating assets and liabilities:
Change in accounts receivable	(28,736)		18,588
Change in inventories	11,589		(33,728)
Change in prepaid income taxes	4,400		1,181
Change in other assets and other liabilities	(6,010)		2,687
Change in accounts payable and accrued expenses	(19,398)		(21,518)
Net cash provided by operating activities	104,213		107,258
Cash Flows from Investing Activities:
Capital expenditures	(61,394)		(25,408)
Acquisition	(2,500)		(16,606)
Proceeds from divestitures	10,642		44,587
Proceeds from sale of property, plant and equipment	1,419		1,085
Net cash (used in) provided by investing activities	(51,833)		3,658
Cash Flows from Financing Activities:
Net (decrease) in short-term loans	—		(60,000)
Repayment of term loan borrowings	(13,125)		(13,125)
Proceeds from employee stock purchase plan	4,210		4,012
Proceeds from exercise of stock options	1,923		3,838
Other	8		(32)
Net cash used in financing activities	(6,984)		(65,307)
Effect of exchange rates on cash and cash equivalents	(824)		6,082
Net Change in Cash and Cash Equivalents	44,572		51,691
Cash and Cash Equivalents at Beginning of Period	192,305		137,311


(In thousands)	January 1, 2022		April 3, 2021
Raw materials	$	89,503	$	74,910
Work-in-process	18,281		23,111
Finished goods	197,957		224,593
Total inventories	$	305,741	$	322,614


	Three Months Ended				Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Beginning balance	$	2,701	$	2,699	$	2,226	$	3,824
Credit (gain) loss	(305)		(95)		226		(838)
Write-offs	(14)		(79)		(70)		(461)
Ending balance	$	2,382	$	2,525	$	2,382	$	2,525


(In thousands)
Balance at April 3, 2021	$	28,733
Change in fair value	10,272
Payments	(367)
Currency translation	(261)
Balance at January 1, 2022	$	38,377


	As of January 1, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	93,192	$	—	$	—	$	93,192
Designated foreign currency hedge contracts	—		1,597		—		1,597
Non-designated foreign currency hedge contracts	—		127		—		127

	$	93,192	$	1,724	$	—	$	94,916
Liabilities
Designated foreign currency hedge contracts	$	—	$	84	$	—	$	84
Non-designated foreign currency hedge contracts	—		82		—		82
Designated interest rate swaps	—		5,088		—		5,088
Contingent consideration	—		—		38,377		38,377
	$	—	$	5,254	$	38,377	$	43,631

	As of April 3, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	49,699	$	—	$	—	$	49,699
Designated foreign currency hedge contracts	—		2,061		—		2,061
Non-designated foreign currency hedge contracts	—		104		—		104

	$	49,699	$	2,165	$	—	$	51,864
Liabilities
Designated foreign currency hedge contracts	$	—	$	454	$	—	$	454
Non-designated foreign currency hedge contracts	—		349		—		349
Designated interest rate swaps	—		9,851		—		9,851
Contingent Consideration	—		—		28,733		28,733
	$	—	$	10,654	$	28,733	$	39,387


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total
Balance as of April 3, 2021	$	(21,528)	$	(560)	$	(7,459)	$	(29,547)
Other comprehensive income (loss) before reclassifications(1)	(3,488)		—		1,839		(1,649)
Amounts reclassified from Accumulated Other Comprehensive Income(1)	—		—		1,847		1,847
Net current period other comprehensive income (loss)	(3,488)		—		3,686		198
Balance as of January 1, 2022	$	(25,016)	$	(560)	$	(3,773)	$	(29,349)
(1) Presented net of income taxes, the amounts of which are insignificant.


	Three Months Ended								Nine Months Ended
(In thousands, except per share data)	January 1, 2022			December 26, 2020			% Increase/ (Decrease)		January 1, 2022			December 26, 2020			% Increase/ (Decrease)
Net revenues	$	259,769		$	240,371		8.1	%	$	728,194		$	645,434		12.8	%
Gross profit	$	138,565		$	120,257		15.2	%	$	369,191		$	316,031		16.8	%
% of net revenues	53.3		%	50.0		%			50.7		%	49.0		%
Operating expenses	$	102,914		$	79,832		28.9	%	$	307,640		$	205,109		50.0	%
Operating income	$	35,651		$	40,425		(11.8)	%	$	61,551		$	110,922		(44.5)	%
% of net revenues	13.7		%	16.8		%			8.5		%	17.2		%
Interest and other expense, net	$	(4,263)		$	(3,051)		39.7	%	$	(13,249)		$	(10,612)		24.8	%
Income before provision for income taxes	$	31,388		$	37,374		(16.0)	%	$	48,302		$	100,310		(51.8)	%
Provision for income taxes	$	8,156		$	5,492		48.5	%	$	14,668		$	9,800		49.7	%
% of pre-tax income	26.0		%	14.7		%			30.4		%	9.8		%
Net income	$	23,232		$	31,882		(27.1)	%	$	33,634		$	90,510		(62.8)	%
% of net revenues	8.9		%	13.3		%			4.6		%	14.0		%
Net income per share - basic	$	0.45		$	0.63		(28.6)	%	$	0.66		$	1.79		(63.1)	%
Net income per share - diluted	$	0.45		$	0.62		(27.4)	%	$	0.65		$	1.77		(63.3)	%


(Dollars in thousands)	January 1, 2022		April 3, 2021
Cash & cash equivalents	$	236,877	$	192,305
Working capital	$	374,044	$	440,051
Current ratio	2.1		2.7
Net debt(1)	$	(540,305)	$	(515,303)
Days sales outstanding (DSO)	54		51
Inventory turnover	1.3		1.2


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*			Fourteenth Amendment to lease dated July 17, 1990, made as of November 11, 2021 by and between Buncher Company and the Company for property located in Leetsdale, Pennsylvania (1).

10.2*			CFO Retention and Transition Agreement, dated as of November 8, 2021, by and between the Company and William P. Burke (2).





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 William Burke, 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 William Burke, Executive Vice President, Chief Financial Officer of the Company.

101*			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended January 1, 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 Statements of Cash Flows, and (iv) 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.

(2)						Agreement, plan or arrangement related to the compensation of officers or directors.


	HAEMONETICS CORPORATION
February 8, 2022	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

February 8, 2022	By:	/s/ William Burke
		William Burke, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)


						HAEMONETICS CORPORATION

						By:			/s/ William P. Burke
									William P. Burke
									CFO


By:			/s/ Christopher A. Simon
Name:			Christopher A. Simon
Title:			President and Chief Executive Officer


Accepted and Agreed:

/s/ William P. Burke
Name:			William P. Burke

Date:			November 8, 2021