VWR Funding reports lower debt of $2.7 billion in Q1, continues to eyes acquisition opportunities

By Lisa Kerner

Charlotte, N.C., May 15 - VWR Funding, Inc. president and chief executive officer Manuel Brocke-Benz said he was pleased with the performance of the company's Americas segment in the first quarter and is "encouraged by the recent improving trends of the topline."

"I'm confident that we will build on recent positive performance as we leverage our improved go-to-market strategy," Brocke-Benz said during VWR's earnings conference call on Thursday.

Inclement weather during the first two months of the year cost the company $10 million in sales, but operating income increased 23.8% year over year in its EMEA-APAC segment, according to the CEO.

VWR has an "extensive pipeline of acquisition opportunities," according to Brocke-Benz, and "will continue to deploy capital toward accretive acquisitions when it is commercially advantageous and economically justified."

On March 3, VWR completed the acquisition of Germany-based Peqlab Biotechnologie GmbH.

Liquidity, financial highlights

Senior vice president and chief financial officer Gregory L. Cowan noted that VWR's liquidity increased in what he described as an "excellent first quarter."

Net debt decreased by about $28 million year over year to $2.7 billion. At March 31, VWR had $130.2 million of cash and cash equivalents on hand and unused availability of $195.1 million under its multicurrency revolving loan facility and A/R facility.

The average total borrowings outstanding under these facilities during the three months ended March 31, 2014 and 2013, were $160.9 million and $255.3 million, respectively, according to the company's form 10-Q filed with the Securities and Exchange Commission.

During the quarter, VWR refinanced its dollar and euro term loans with reduced spreads, which will result in lower cash interest expense of about $10 million on an annualized basis, Cowan said on the call.

VWR's leverage for the most recent 12-month period as of March 31 was 6.3 times, 0.6 times lower than the prior-year period.

Compared to a year ago, the company's gross profit was up 5.1% at $312.6 million. Cash flows from operating activities declined $5.3 million from the prior-year quarter to $15.2 million.

Consolidated gross margin was 29.6% for the quarter, a 60-basis-point improvement from the first quarter of 2013, "reflecting efficient pricing and a favorable customer and product mix in our Americas segment," said Cowan.

VWR Funding is the parent company of VWR International, LLC, a global solutions provider of laboratory supplies, equipment and services based in Radnor, Pa.

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