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Atrion's (ATRI) Q2 Earnings Plummet Y/Y on Nordson Merger Costs
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Atrion Corporation (ATRI - Free Report) reported earnings per share (EPS) of 23 cents for the second quarter of 2024, a significant decline from the $3.73 reported in the year-ago period.
Revenues for the second quarter of 2024 totaled $48.8 million, reflecting an 11% increase compared to $43.8 million in the same quarter of 2023. Atrion saw strong revenue growth, driven by increased sales across several product lines.
Atrion's second-quarter 2024 performance presents a mixed picture. While the company delivered strong revenue growth, particularly in its Medical Products System (MPS) and fluid delivery product lines, this was offset by significant operational challenges and costs related to the Nordson acquisition. The sharp decline in operating income and net income, even after adjusting for non-recurring expenses, indicates the need for improved cost management and operational efficiency.
Atrion Corporation Price, Consensus and EPS Surprise
The company's MPS consoles and disposables were standout performers, with sales growth of 22% and 21%, respectively. Additionally, the fluid delivery products segment showed signs of recovery, with some product families posting double-digit revenue increases.
The company’s gross profit for the second quarter of 2024 was $15.8 million, down from $17.3 million in the year-ago quarter. This resulted in a gross margin decline due to the increased cost of goods sold, which rose by 23.9% year-over-year, reaching $32.9 million. The margin compression can be attributed to higher production costs and the under-absorption of overhead, as the company reduced production to manage inventory levels.
Operating income for the quarter was significantly affected, decreasing to $0.5 million from $7.4 million in the prior-year quarter. This sharp decline was primarily due to a $5 million accrual related to the merger with Nordson Corporation, which Atrion announced on May 28, 2024. Excluding this merger-related expense, operating income would have been $5.5 million, reflecting a 25% drop from the previous year. The company’s operating expenses rose sharply to $15.3 million from $9.9 million in the second quarter of 2023, further compressing operating margins.
Net income for the second quarter of 2024 was $0.4 million, down sharply from $6.6 million in the same period of 2023.
Balance Sheet Position (As of Jun 30, 2024)
Atrion reported cash and cash equivalents totaling $11.5 million, a significant increase from $3.6 million at the end of December 2023.
The company’s total assets were relatively stable, amounting to $260.4 million compared to $260.8 million at the end of 2023.
Shareholders' equity slightly declined to $238.9 million from $242.9 million as of Dec 31, 2023.
Other Developments
Acquisition by Nordson Corporation
The most significant development during the second quarter of 2024 was the announcement of Atrion's acquisition by Nordson Corporation on May 28, 2024. This merger is expected to create synergies between the two companies, particularly in the medical technology space. The $5 million in acquisition-related expenses accrued during the quarter was a direct result of this transaction. While the long-term benefits of the merger are yet to be seen, the immediate financial impact has been a substantial reduction in reported earnings.
Inventory Management
Atrion’s efforts to reduce inventory levels have been a focal point of its operational strategy. The company achieved a 10% reduction in inventory from the first quarter of 2024 to the second quarter of 2024 and an 18% reduction since Dec 31, 2023. This strategy, while effective in improving inventory turnover, has come at the cost of under-absorbed overhead, negatively impacting operating income.
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Atrion's (ATRI) Q2 Earnings Plummet Y/Y on Nordson Merger Costs
Atrion Corporation (ATRI - Free Report) reported earnings per share (EPS) of 23 cents for the second quarter of 2024, a significant decline from the $3.73 reported in the year-ago period.
Revenues for the second quarter of 2024 totaled $48.8 million, reflecting an 11% increase compared to $43.8 million in the same quarter of 2023. Atrion saw strong revenue growth, driven by increased sales across several product lines.
Atrion's second-quarter 2024 performance presents a mixed picture. While the company delivered strong revenue growth, particularly in its Medical Products System (MPS) and fluid delivery product lines, this was offset by significant operational challenges and costs related to the Nordson acquisition. The sharp decline in operating income and net income, even after adjusting for non-recurring expenses, indicates the need for improved cost management and operational efficiency.
Atrion Corporation Price, Consensus and EPS Surprise
Atrion Corporation price-consensus-eps-surprise-chart | Atrion Corporation Quote
Key Business Metrics
The company's MPS consoles and disposables were standout performers, with sales growth of 22% and 21%, respectively. Additionally, the fluid delivery products segment showed signs of recovery, with some product families posting double-digit revenue increases.
The company’s gross profit for the second quarter of 2024 was $15.8 million, down from $17.3 million in the year-ago quarter. This resulted in a gross margin decline due to the increased cost of goods sold, which rose by 23.9% year-over-year, reaching $32.9 million. The margin compression can be attributed to higher production costs and the under-absorption of overhead, as the company reduced production to manage inventory levels.
Operating income for the quarter was significantly affected, decreasing to $0.5 million from $7.4 million in the prior-year quarter. This sharp decline was primarily due to a $5 million accrual related to the merger with Nordson Corporation, which Atrion announced on May 28, 2024. Excluding this merger-related expense, operating income would have been $5.5 million, reflecting a 25% drop from the previous year. The company’s operating expenses rose sharply to $15.3 million from $9.9 million in the second quarter of 2023, further compressing operating margins.
Net income for the second quarter of 2024 was $0.4 million, down sharply from $6.6 million in the same period of 2023.
Balance Sheet Position (As of Jun 30, 2024)
Atrion reported cash and cash equivalents totaling $11.5 million, a significant increase from $3.6 million at the end of December 2023.
The company’s total assets were relatively stable, amounting to $260.4 million compared to $260.8 million at the end of 2023.
Shareholders' equity slightly declined to $238.9 million from $242.9 million as of Dec 31, 2023.
Other Developments
Acquisition by Nordson Corporation
The most significant development during the second quarter of 2024 was the announcement of Atrion's acquisition by Nordson Corporation on May 28, 2024. This merger is expected to create synergies between the two companies, particularly in the medical technology space. The $5 million in acquisition-related expenses accrued during the quarter was a direct result of this transaction. While the long-term benefits of the merger are yet to be seen, the immediate financial impact has been a substantial reduction in reported earnings.
Inventory Management
Atrion’s efforts to reduce inventory levels have been a focal point of its operational strategy. The company achieved a 10% reduction in inventory from the first quarter of 2024 to the second quarter of 2024 and an 18% reduction since Dec 31, 2023. This strategy, while effective in improving inventory turnover, has come at the cost of under-absorbed overhead, negatively impacting operating income.