CR Bard Inc. (BCR)
Q2 2010 Earnings Call
July 22, 2010 17:00 am ET
Timothy M. Ring - Chairman and CEO
John H. Weiland - President and COO
Todd C. Schermerhorn - SVP and CFO
John A. DeFord - SVP - Science, Technology and Clinical Affairs
Eric J. Shick - VP, IR
Rick Wise - Leerink Swann
Mike Weinstein - JPMorgan
Joanne Wuensch - BMO Capital Markets
Tom Gunderson - Piper Jaffray
Michael Matson – Wells Fargo Securities
Bob Hopkins -Bank of America
Kristen Stewart - Deutsche Bank
Larry Keusch - Morgan Keegan
Gregory Hertz - Citi
Bob Goldman - C.L. King
Douglas Tsao - Barclays Capital
Tom Kouchoukos - Stifel Nicolaus
Welcome to the C. R. Bard, Incorporated Second Quarter 2010 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions)
As a reminder, this conference call is being recorded and will be available for future on-demand replay through the Bard website.
Today's presentation will be hosted by Timothy M. Ring, Chairman and Chief Executive Officer along with John H. Weiland, President and Chief Operating Officer, Todd C. Schermerhorn, Senior Vice President and Chief Financial Officer and John A. DeFord, Senior Vice President - Science, Technology and Clinical Affairs. Also in attendance today is Eric J. Shick, Vice President, Investor Relations.
Today, Bard's management will discuss some forward-looking statements, the accuracy of which are necessarily subject to risks and uncertainties. Please refer to the cautionary statement regarding forward-looking information in Bard's March 31, 2010 10-Q, and the information under the caption Risk Factors in the company's 2009 10-K and first quarter 10-Q, including disclosure of the factors that could cause actual results to differ materially from those expressed or implied.
During the call, references will be made to certain non-GAAP measures, which management believes provide an additional and meaningful assessment of the core operating performance of the company and its individual product franchises. Reconciliations of non-GAAP measures to the most comparable GAAP measures are provided in Bard's earnings press release and on the company's website at www.crbard.com.
All information that is not historical is given only as of July 22, 2010, and the company undertakes no responsibility to update any information. Unless otherwise noted, all comparisons are to the prior year period.
At this time, I'll turn the call over to Mr. Timothy Ring. Please go ahead.
Timothy M. Ring
I'd like to welcome you to Bard's second quarter 2010 earnings conference call. Thank you all for taking the time to join us today. I would expect the presentation portion of the call to last about 35 minutes.
The call today will go as follows. I'll begin with an overview of the results for the second quarter. John Weiland, our President and COO, will review second quarter product line revenue. Todd Schermerhorn, our Senior VP and CFO will review the second quarter income statement and balance sheet as well as our expectations for the third quarter, and then John DeFord, our Senior VP of Science, Technology, and Clinical Affairs, will provide an update on the product development pipeline and then we'll close out with the Q&A.
Second quarter 2010 net sales totaled $673.9 million. That's up 8% over Q2 of last year on an as reported basis and 7% on a constant currency basis. The currency impact for the quarter versus the second quarter of last year was favorable by 110 basis points.
Net income for the second quarter was $124.6 million and diluted earnings per share were $1.29. Excluding items that affected the comparability of results between periods, which Todd will get into, the second quarter 2010 net income and diluted EPS were $134 million and $1.39 up 8% and 13%, respectively.
Looking our revenue growth geographically compared to the second quarter of '09 on a constant currency basis, second quarter net sales in the US increased 7%, Europe was up 3% and Japan grew 4%. Our other international businesses grew 14%, driven by 28% growth in our emerging markets.
Turning to business development, as we announced in early July, we closed the acquisition of SenoRx. I would like to take this opportunity to welcome the SenoRx organization to Bard as part of our Peripheral Vascular division
The merger represents a very compelling strategic opportunity for Breast Biopsy business since the SenoRx stereotactic and therapeutic products and technology are highly complementary to Bard's ultrasound product line.
We believe the combination provides us with the best products in each segment of the percutaneous breast biopsy and treatment markets. The merger was driven by our product leadership strategy with the combination intended to yield positive benefits for hospitals, physicians and patients alike.
Within our broader strategy to grow revenue, business development continues to be hurdle ground for us. Further you will know that our level of organic R&D investment expanded this quarter. This includes the addition of several multidisciplinary new product development teams as we ramp up our investment in line with the strategy we outlined at our Annual Analyst meeting last December.
Let me turn it over to John for review of our product line revenue.
John H. Weiland
Before I start let me remind you that I will be giving all percentage growth data in comparison to the prior year period on a constant currency basis unless that I noted otherwise.
Let's start with Vascular. This category improved further this quarter with growth of 10%. Total net sales were $187.5 million, up 11% over the last year on an as reported basis. Our United States business, which represented 56% of the global vascular revenue was up 11% for the quarter. Internationally we grew 9%.
Our Electrophysiology sales grew 7% again this quarter. EP Lab Systems sales were up 47% versus the second quarter of last year and we have now seen full quarter’s of solid growth year despite what has been a weak overall capital equipment market.
Revenue in our disposable EP product lines was up 2% versus the second quarter last year, led by our steerable diagnostic catheters, which were up 6%. Sales in our surgical graft category, which represent a 12% of our Vascular business were about flat in Q2, which is within a typical range with this category.
Our Endovascular business increased 12% in the second quarter. Within Endovascular, our biopsy products were up 11%. Continued healthy growth in our core needle and vacuum assisted products gives us a great base to build on with SenoRx. The integration of our product lines and sales activities began following closure of the deal on July 6.
Sales in our peripheral PTA line increased 42%. Growth this quarter was driven large part by our recent entrance in the small vessel PTA market with our VascuTrak’s specialty catheter and our CROSSER catheter for addressing chronic total occlusions.
As we discussed in the last call, we closed the acquisition of FlowCardia and their flagship product, the CROSSER early in Q2. This device enables physicians to remain in the true lumen of the vessel and cross chronic total occlusions in the coronary and lower limb arterial system, thereby maximizing therapeutic options for subsequent treatment. Today, all aspects of the integration are going according to schedule.