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| 8-K - 8-K - VWR Corp | a2016q2earningsrelease8-k.htm |
Exhibit 99.1
VWR Corporation Reports Solid Second Quarter 2016 Financial Results
RADNOR, Pa., August 4, 2016 /PRNewswire/ — VWR Corporation (NASDAQ: VWR), the leading global independent provider of product and service solutions to laboratory and production customers, today reported its financial results for the second quarter ended June 30, 2016.
Highlights:
• | 2Q16 diluted EPS of $0.32 vs. $0.14 in 2Q15, 2Q16 Adjusted EPS of $0.42 vs. $0.34 in 2Q15. |
• | Second quarter net sales of $1.15 billion, up 6.3% year-over-year, and up 4.4% on an organic basis. |
• | 2Q16 Americas net sales increased 6.6% year-over-year, up 3.9% organic. EMEA-APAC net sales increased 5.9% year-over-year, up 5.1% organic. A description and reconciliation of GAAP to non-GAAP Adjusted EPS and net sales to organic net sales is attached. |
• | 1H16 cash flow from operating activities of $119.6 million, up 23.2% compared to prior year. |
• | Reaffirm 2016 guidance. |
Manuel Brocke-Benz, President and Chief Executive Officer of VWR, commented: “Our second quarter financial results demonstrate the robust nature of our business model and our ability to generate solid top and bottom line results. In the second quarter, VWR delivered balanced revenue growth across both of its segments, with the Americas and EMEA-APAC segments each posting roughly 6% revenue growth. A combination of strong underlying revenue growth, margin expansion and lower interest expense drove strong earnings per share growth. As we move forward, we will continue to strengthen our platform of supply-chain excellence, delivering innovative, customized solutions that eliminate our customers’ pain points, enabling them to be more productive and efficient.”
Second Quarter 2016 Results
Net sales were $1.15 billion, up $68.3 million or 6.3% compared to prior year. Operating income was $84.6 million, up $7.0 million or 9.0% year-over-year.
Americas net sales were $694.9 million, up $43.1 million or 6.6% year-over-year, with the increase driven by strong sales to biopharma and government customers. Americas operating income was $43.6 million, up $2.4 million or 5.8% compared to prior year. Second quarter 2016 results in the Americas segment included $0.4 million of secondary offering expenses as compared to $0.9 million in the prior year quarter.
EMEA-APAC net sales were $454.6 million, up $25.2 million or 5.9% year-over-year, with the increase driven by strong sales to biopharma and industrial customers. EMEA-APAC operating income was $41.0 million, up $4.6 million or 12.6% compared to prior year. Second quarter 2015 EMEA-APAC results included a non-cash earn-out benefit of $0.2 million.
Full Year 2016 Outlook
Greg Cowan, Senior Vice President and Chief Financial Officer, commented: “VWR delivered solid financial results in the second quarter and operating cash flow of $119.6 million in the first six months of the year, up 23.2% compared to the first half of 2015. We continue to deploy our strong cash flows to delever the balance sheet, invest in the business, and to execute on attractive acquisition opportunities.”
Management reaffirmed 2016 guidance. Full year 2016 outlook assumes:
• | Currency exchange rates for the remainder of 2016 remain consistent with current rates; |
• | Interest expense of about $83 to $84 million; |
• | Diluted shares outstanding of approximately 132 million; |
• | Share-based compensation expense of approximately $8.6 million before tax; |
• | Full-year 2016 income tax rate of slightly below 35%; and |
• | No impact from acquisitions closed after August 4, 2016. |
Balance Sheet & Cash Flows
At June 30, 2016, total debt was $2.025 billion and cash was $112.9 million. First half 2016 cash provided by operating activities was $119.6 million compared to $97.1 million in the first half of 2015. Capital expenditures in the first half of 2016 were $29.8 million compared to $16.5 million in the first half of 2015.
Conference Call
As previously announced, VWR will hold a conference call today, August 4, 2016, to discuss its second quarter 2016 financial results beginning at 8:00 a.m. ET. The conference call can be accessed live over the phone by dialing (877) 845-1003, or for international callers, (760) 298-5093. Callers will need to request to join the VWR Corporation second quarter 2016 earnings conference call. A replay will be available two hours after the conclusion of the live call and can be accessed by dialing (855) 859-2056, or for international callers, (404) 537-3406. The conference ID number for both the live call and replay will be 40733272. The replay will be available through August 9, 2016. A presentation relating to the conference call will be available at http://investors.vwr.com.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of our website at http://investors.vwr.com. The online replay will remain available for a limited time beginning immediately following the call. To learn more about VWR, please visit our website at www.vwr.com.
Use of Non-GAAP Financial Measures
As appropriate, we supplement our results of operations determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measurements that are used by management, and which we believe are useful to investors, as supplemental operational measurements to evaluate our financial performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements included in publicly filed reports in their entirety and not rely solely on any one, single financial measurement.
The non-GAAP measurements used in this press release are Adjusted EPS and organic net sales:
• | Adjusted EPS is a non-GAAP financial measurement that eliminates the effect of the amortization of acquired intangible assets, changes in foreign currency exchange rates related to financing decisions and certain other items. We then add or subtract an estimated incremental income tax effect applicable to those items. We believe that this measurement is useful to investors as an additional way to analyze the underlying trends in our business consistently across the periods presented. This measurement is used by our management for the same reason. |
• | Organic net sales is a non-GAAP financial measurement that eliminates the contribution from recently acquired businesses and the impact of changes in foreign currency exchange rates from our reported net sales. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across the periods presented. This measurement is used by our management for the same reason. |
Reconciliations of our non-GAAP measurements to their most directly comparable GAAP-based financial measurements are included at the end of this press release.
About VWR Corporation
VWR (NASDAQ: VWR), headquartered in Radnor, Pennsylvania, is the leading global independent provider of product and service solutions to laboratory and production customers. With sales in excess of $4.3 billion in 2015, VWR enables science for customers in the pharmaceutical, biotechnology, industrial, education, government and healthcare industries. With more than 160 years of experience, VWR has cultivated a value proposition delivering product choice, operational excellence and differentiated services to improve our customers’ productivity from research to production. VWR’s differentiated services provide innovative, flexible and customized solutions from scientific research services to custom-manufactured chemical blends. Our dedicated team of more than 9,300 associates is focused on supporting scientists, medical professionals and production engineers to achieve their goals.
Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning.
Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct. Factors that could contribute to these risks, uncertainties and assumptions include, but are not limited to, the factors described in “Risk Factors” in our most recently filed Annual Report on Form 10-K and our Form 10-Q that will be filed later today.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this press release. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.
VWR Corporation and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in millions, except per share data)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 1,149.5 | $ | 1,081.2 | $ | 2,247.8 | $ | 2,110.8 | |||||||
Cost of goods sold | 826.1 | 782.7 | 1,613.8 | 1,521.1 | |||||||||||
Gross profit | 323.4 | 298.5 | 634.0 | 589.7 | |||||||||||
Selling, general and administrative expenses | 238.8 | 220.9 | 469.7 | 438.3 | |||||||||||
Operating income | 84.6 | 77.6 | 164.3 | 151.4 | |||||||||||
Interest expense | (20.7 | ) | (28.4 | ) | (39.9 | ) | (55.6 | ) | |||||||
Other income (expense), net | 0.1 | (18.6 | ) | (0.5 | ) | 51.7 | |||||||||
Loss on extinguishment of debt | — | (0.6 | ) | — | (2.4 | ) | |||||||||
Income before income taxes | 64.0 | 30.0 | 123.9 | 145.1 | |||||||||||
Income tax provision | (22.2 | ) | (11.7 | ) | (43.3 | ) | (55.3 | ) | |||||||
Net income | $ | 41.8 | $ | 18.3 | $ | 80.6 | $ | 89.8 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.14 | $ | 0.61 | $ | 0.68 | |||||||
Diluted | 0.32 | 0.14 | 0.61 | 0.68 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 131.4 | 131.4 | 131.4 | 131.4 | |||||||||||
Diluted | 131.7 | 132.1 | 131.6 | 132.0 | |||||||||||
VWR Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except per share data)
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 112.9 | $ | 136.3 | |||
Trade accounts receivable, net of reserves of $11.0 and $12.0 | 639.2 | 583.2 | |||||
Inventories | 457.9 | 424.0 | |||||
Other current assets | 96.3 | 89.5 | |||||
Total current assets | 1,306.3 | 1,233.0 | |||||
Property and equipment, net | 239.4 | 228.2 | |||||
Goodwill | 1,836.7 | 1,791.4 | |||||
Other intangible assets, net | 1,452.1 | 1,455.6 | |||||
Other assets | 91.3 | 85.6 | |||||
Total assets | $ | 4,925.8 | $ | 4,793.8 | |||
Liabilities, Redeemable Equity and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of debt | $ | 129.1 | $ | 92.8 | |||
Accounts payable | 501.2 | 474.5 | |||||
Employee-related liabilities | 83.7 | 61.4 | |||||
Current amount due to Varietal — ITRA | 29.2 | 78.1 | |||||
Other current liabilities | 125.1 | 112.3 | |||||
Total current liabilities | 868.3 | 819.1 | |||||
Debt, net of current portion | 1,895.8 | 1,896.2 | |||||
Amount due to Varietal — ITRA, net of current portion | 55.8 | 85.0 | |||||
Deferred income tax liabilities | 466.9 | 459.5 | |||||
Other liabilities | 158.2 | 158.8 | |||||
Total liabilities | 3,445.0 | 3,418.6 | |||||
Redeemable equity, at redemption value | 25.8 | 38.8 | |||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value; 50.0 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $0.01 par value; 750.0 shares authorized, 131.5 and 131.4 shares issued and outstanding | 1.3 | 1.3 | |||||
Additional paid-in capital | 1,753.2 | 1,735.1 | |||||
Retained earnings | 86.9 | 6.3 | |||||
Accumulated other comprehensive loss | (386.4 | ) | (406.3 | ) | |||
Total stockholders’ equity | 1,455.0 | 1,336.4 | |||||
Total liabilities, redeemable equity and stockholders’ equity | $ | 4,925.8 | $ | 4,793.8 | |||
VWR Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in millions)
Six months ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 80.6 | $ | 89.8 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 63.4 | 61.3 | |||||
Net foreign currency remeasurement loss (gain) | 3.8 | (50.2 | ) | ||||
Deferred income tax provision | 11.9 | 31.0 | |||||
Loss on extinguishment of debt | — | 2.4 | |||||
Share-based compensation expense | 3.8 | 2.4 | |||||
Other, net | 4.0 | 6.7 | |||||
Changes in working capital, net of business acquisitions: | |||||||
Trade accounts receivable | (40.7 | ) | (43.1 | ) | |||
Inventories | (25.0 | ) | (12.0 | ) | |||
Accounts payable | 22.6 | 6.0 | |||||
Other assets and liabilities | (4.8 | ) | 2.8 | ||||
Net cash provided by operating activities | 119.6 | 97.1 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of businesses, net of cash acquired | (45.0 | ) | (44.6 | ) | |||
Capital expenditures | (29.8 | ) | (16.5 | ) | |||
Other investing activities | — | 1.9 | |||||
Net cash used in investing activities | (74.8 | ) | (59.2 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from debt | 363.7 | 1,188.9 | |||||
Repayment of debt | (354.6 | ) | (1,193.0 | ) | |||
Payment to Varietal under ITRA | (78.1 | ) | (9.8 | ) | |||
Payment of debt issuance costs | — | (5.2 | ) | ||||
Other financing activities | (1.7 | ) | (0.6 | ) | |||
Net cash used in financing activities | (70.7 | ) | (19.7 | ) | |||
Effect of exchange rate changes on cash | 2.5 | (6.3 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (23.4 | ) | 11.9 | ||||
Cash and cash equivalents at beginning of period | 136.3 | 118.0 | |||||
Cash and cash equivalents at end of period | $ | 112.9 | $ | 129.9 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | 41.7 | $ | 44.9 | |||
Cash paid for income taxes, net | 33.5 | 19.7 | |||||
VWR Corporation and Subsidiaries
Supplemental Financial Information (Unaudited)
(dollars in millions)
Three months ended June 30, | Reported change | |||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Net sales: | ||||||||||||||
Americas | $ | 694.9 | $ | 651.8 | $ | 43.1 | 6.6 | % | ||||||
EMEA-APAC | 454.6 | 429.4 | 25.2 | 5.9 | % | |||||||||
Total | 1,149.5 | 1,081.2 | 68.3 | 6.3 | % | |||||||||
Gross profit | 323.4 | 298.5 | 24.9 | 8.3 | % | |||||||||
Gross margin | 28.1 | % | 27.6 | % | 50 | bps | ||||||||
SG&A expenses | $ | 238.8 | $ | 220.9 | $ | 17.9 | 8.1 | % | ||||||
as a % of net sales | 20.8 | % | 20.4 | % | 40 | bps | ||||||||
Operating income: | ||||||||||||||
Americas | $ | 43.6 | $ | 41.2 | $ | 2.4 | 5.8 | % | ||||||
EMEA-APAC | 41.0 | 36.4 | 4.6 | 12.6 | % | |||||||||
Total | $ | 84.6 | $ | 77.6 | $ | 7.0 | 9.0 | % | ||||||
Operating income margin: | ||||||||||||||
Americas | 6.3 | % | 6.3 | % | — | |||||||||
EMEA-APAC | 9.0 | % | 8.5 | % | 50 | bps | ||||||||
Total | 7.4 | % | 7.2 | % | 20 | bps | ||||||||
VWR Corporation and Subsidiaries
Reconciliation of Adjusted EPS (Unaudited)
Three months ended June 30, | |||||||||||||||
2016 | 2015 | ||||||||||||||
Adjustments in millions | Per share | Adjustments in millions | Per share | ||||||||||||
Diluted earnings per share (GAAP) | $ | 0.32 | $ | 0.14 | |||||||||||
Adjustments to reconcile diluted earnings per share to Adjusted EPS: | |||||||||||||||
Amortization of acquired intangible assets | $ | 21.3 | 0.16 | $ | 20.7 | 0.16 | |||||||||
Net foreign currency remeasurement (gain) loss from financing activities | (0.1 | ) | — | 18.6 | 0.14 | ||||||||||
Loss on extinguishment of debt | — | — | 0.6 | — | |||||||||||
Secondary equity offering costs | 0.4 | — | 0.9 | 0.01 | |||||||||||
Gains from changes to estimated fair value of contingent consideration | — | — | (0.2 | ) | — | ||||||||||
Income tax benefit applicable to adjustments, net* | (7.5 | ) | (0.06 | ) | (14.5 | ) | (0.11 | ) | |||||||
Adjusted EPS (non-GAAP) | $ | 0.42 | $ | 0.34 | |||||||||||
* | Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates between 27% and 39%, depending upon the applicable jurisdiction. |
VWR Corporation and Subsidiaries
Reconciliation of Organic Net Sales Growth (Unaudited)
(dollars in millions)
Three months ended June 30, | Reported change | Non-GAAP reconciliation | |||||||||||||||||||||||||||
Currency translation | Acquisitions | Organic net sales growth | |||||||||||||||||||||||||||
2016 | 2015 | Amount | % | Amount | % | ||||||||||||||||||||||||
Americas | $ | 694.9 | $ | 651.8 | $ | 43.1 | 6.6 | % | $ | (3.7 | ) | $ | 21.1 | $ | 25.7 | 3.9 | % | ||||||||||||
EMEA-APAC | 454.6 | 429.4 | 25.2 | 5.9 | % | 0.3 | 3.1 | 21.8 | 5.1 | % | |||||||||||||||||||
Net sales | $ | 1,149.5 | $ | 1,081.2 | $ | 68.3 | 6.3 | % | $ | (3.4 | ) | $ | 24.2 | $ | 47.5 | 4.4 | % | ||||||||||||
Media Contact:
Valerie Collado
Director, Corporate Communications
VWR Corporation
Phone: +484.885.9338
valerie_collado@vwr.com
Investor Contact:
John Sweeney, CFA
VP, Investor Relations
VWR Corporation
Phone: +610.386.1483
ir@vwr.com