For Immediate Release
Chicago, IL – November 8, 2010 – Zacks.com Analyst Blog features: The Washington Post Company (WPO), Cell Therapeutics Inc. (CTIC), American Tower Corp. (AMT), DaVita Inc. (DVA) and Symmetry Medical (SMA).
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Here are highlights from Friday's Analyst Blog:
Washington Post's Profit Surges
The Washington Post Company (WPO) recently posted that third-quarter earnings, excluding one-time items, jumped to $9.12 per share from $2.76 cents in the prior-year quarter. Earnings were well above the Zacks Consensus Estimate of $7.07 per share.
Revenue for the quarter rose 7.3% year over year to $1,189.7 million, driven by revenue growth at the Education, Television Broadcasting and Newspaper divisions which were partially offset by marginal declines at the cable television division.
The Education division delivered a strong performance; revenue was up 8.6% to $743.3 million, which we think will continue in fiscal 2010. At the end of the quarter, enrollment totaled 112,141, up 8%.
Television Broadcasting revenue soared 28.8% to $83.2 million due to improvement in advertising demand in a majority of the markets, including Olympics-related advertising and political advertising revenue.
The Cable division reported flat revenues year-over-year with a marginal decline of 0.5% to $188.7 million.
The Newspaper Publishing division revenue grew 5% to $163.4 million, driven by a 3% expansion in print advertising revenue. Revenue from newspaper's online publishing activities, principally washingtonpost.com and Slate, rose 21%, whereas display online advertising revenue soared 26%. However, online classified advertising revenue on washingtonpost.com tumbled 6%.
The Net Interest expense for the quarter increased 1.3% year-over-year to $7.6 million from $7.5 million in the prior-year period. At the end of the quarter, Washington Post had $399.5 in borrowings with average interest rate of 7.2%.
During the third quarter, the company divested its Newsweek, therefore the quarterly results exclude the magazine publishing division.
Narrower 3Q Loss at Cell Therapeutic
Cell Therapeutics Inc. (CTIC) suffered a net loss of $15.6 million (2 cents per share) in the third quarter of 2010 as opposed to the net loss of $48.8 million (9 cents per share) suffered in the year-ago quarter. The narrower loss was primarily attributable to lower operating expenses, lower deemed dividends on preferred stock and a one-time milestone modification expense which was taken care of in the previous year.
Excluding deemed dividends on preferred stock, foreign exchange effect and a one-time milestone modification expense, loss at Cell Therapeutics came in at $15.2 million or approximately 2 cents per share, against $28.8 million or 5 cents in the year ago quarter. The Zacks Consensus Estimate hinted at a loss of 6 cents per share for the quarter. Cell Therapeutics did not generate any revenues during the reported quarter.
Net operating expenses during the reported quarter declined 52% to $13 million, driven by a 52.9% reduction in selling, general and administrative (SG&A) expenses and a 32.9% decline in research and development (R&D) expenses. The massive decline in SG&A expenses were driven by a reduction in expenses pertaining to non-cash equity based compensation.
In another development, Cell Therapeutics recently submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for its lead candidate pixantrone (proposed trade name: Pixuvri). The company is seeking European approval of the candidate as a monotherapy for treating adults with relapsed or refractory aggressive non-Hodgkin's lymphoma (NHL). The patients did not respond to other treatment options. However, the USapproval of pixantrone is surrounded by uncertainty.
American Tower Tops, Raises Outlook
American Tower Corp. (AMT) today declared its third quarter of 2010 financial results, that outperforms the Zacks Consensus Estimates. On a GAAP basis, third quarter net income was $93.4 million or 23 cents per share compared with a net income of $67.4 million or 17 cents per share in the prior-year quarter. Quarterly EPS of 23 cents was well above the Zacks Consensus Estimate of 20 cents.
Higher revenues from the U.S., Latin America and Asia delivered solid results with a strong growth in both Adjusted EBITDA and Recurring Free Cash Flow.
Revenue
Total revenue of $513.3 million increased 15.6% year over year and was above the Zacks Consensus Estimate of $489 million. The solid top-line performance was driven by healthy growth of the company's core Rental and Management business segment.
Margins
Adjusted EBITDA in the third quarter of 2010 was $350 million, up 15.1% over the prior-year quarter. Adjusted EBITDA margin was 68%. Adjusted EBITDA growth was positively impacted by approximately 0.5% due to foreign currency exchange rate fluctuations and approximately 8.9% due to straight-line revenues and expense recognition.
Gross margin was 76% in the same quarter compared to 75.6% in the year-ago quarter. Selling, general & administrative expenditure was $57.3 million compared to $47.9 million in the year-ago quarter.
Financial Outlook
For fiscal 2010, revenues from the Rental & Management segment are expected to range between $1,920 million - $1,930 million. Income from continuing operations will be within the range of $360 million - $370 million. Adjusted EBITDA will be within the range of $1,338 million - $1,348 million. Cash flow from operating activities will be around $1,000 million - $1,010 million. Capital expenditures will be around $300 million - $320 million.
Recommendation
We maintain our long-term Neutral recommendation for American Tower. Currently it is a short-term Zacks #3 Rank (Hold) stock.
DaVita Exceeds, Revises Guidance
DaVita Inc. (DVA) reported third-quarter net operating income, excluding debt redemption charges of $119.4 million, or $1.15 per share, exceeding the Zacks Consensus Estimate of $1.13. DaVita earned $110.9 million or $1.06 per share in the comparable quarter of 2009. Net operating revenues for the reported quarter climbed 5.1% year-over-year to $1.65 billion, exceeding the Zacks Consensus Estimate of $1.62 billion.
Segment wise, revenues from the Dialysis and related Lab Services segment for the quarter came in at $1.55 billion as against $1.50 billion in the prior-year quarter. Operating income for the segment increased to $266 million in the reported quarter from $254 million in the year-ago quarter.
Ancillary services and strategic initiatives generated revenues of $98 million as against $91 million in the year-ago quarter. The segment suffered an operating loss of $2 million in the year-ago quarter. DaVita's quarterly consolidated operating income, including stock based compensation and equity investment income climbed approximately 6.2% year-over-year to $257 million.
Operating income margin for the reported quarter stood at 15.5% as opposed to15.3% in the year-ago quarter. Total operating expenses and charges for the quarter climbed 5.0% year-over-year to $1.40 billion.
DaVita provided administrative services across 1,598 outpatient dialysis centers serving approximately 124,000 patients as of September 30, 2010. DaVita acquired 10 centers, opened 12 new centers, and closed 7 centers during the reported quarter.
Total treatments for the reported quarter came in at approximately 4.6 million. This represents a per day increase of 5.5% over the year-ago quarter. The growth of non-acquired treatment in the quarter stood at 3.7%. The company's effective tax rate was 34.4% in the reported quarter. The third party owners' income attributable to non-tax paying entities impacted the effective tax rate. The effective tax rate attributable to DaVita in the reported quarter was 38.5%.
Symmetry EPS Misses, Profit Skids
Symmetry Medical's (SMA) third-quarter fiscal 2010 adjusted earnings per share of 10 cents missed the Zacks Consensus Estimate of 17 cents and were also below the year-ago earnings of 16 cents. Adjusted earnings exclude facility consolidation costs and employee severance payments. Net income slid 33% year over year to $3.6 million as revenue growth was more than offset by higher expenses.
Revenues
Revenues rose 5% year over year to $91.5 million, ahead of the Zacks Consensus Estimate of $90 million, supported by improved demand across the company's orthopedic implants and medical devices businesses as reflected by higher customer orders.
By product lines, surgical instruments sales clipped 13% year over year to $36 million. Orthopedic implants revenues surged 17% to $28.3 million. Revenues from orthopedic, endoscopy and dental cases business soared 31% year over year to $21.5 million while other revenues increased 8% to $5.7 million.
Margins
Symmetry continues to experience contraction in its margins. Gross margin fell to 21.7% from 24.9% a year-ago on account of higher cost of sales (up 9.6% year over year) due to increased manufacturing expenses. Operating margin declined to 8.2% from 12% a year-ago as the company spent more on selling, general and administrative expenses (up 15.7%).
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