Hologic (HOLX)

Q1 2012 Earnings Call

January 30, 2012 5:00 pm ET


Deborah R. Gordon - Vice President of Investor Relations

Robert A. Cascella - Chief Executive Officer, President and Director

Glenn P. Muir - Chief Financial Officer, Executive Vice President of Finance & Administration and Director

David P. Harding - Senior Vice President and General Manager of International

Steven Williamson - Senior Vice President and General Manager of GYN Surgical Products

Peter K. Soltani - Senior Vice President and General Manager of Breast Health Line of Business


Amit Bhalla - Citigroup Inc, Research Division

Anthony Petrone - Jefferies & Company, Inc., Research Division

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Jayson T. Bedford - Raymond James & Associates, Inc., Research Division

William Carlile - Morgan Stanley, Research Division

Sara Michelmore - Brean Murray, Carret & Co., LLC, Research Division

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

William R. Quirk - Piper Jaffray Companies, Research Division

Richard Newitter - Leerink Swann LLC, Research Division

Bill Bonello - RBC Capital Markets, LLC, Research Division

Thomas Kouchoukos - Stifel, Nicolaus & Co., Inc., Research Division

Jason R. Mills - Canaccord Genuity, Research Division



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Good afternoon, and welcome to the Hologic Inc. First Quarter Fiscal 2012 Earnings Conference Call. My name is Melissa and I'm your operator for today's call. Today's conference is being recorded. [Operator Instructions] I would now like to introduce Deborah Gordon, Vice President, Investor Relations to begin the call. Please go ahead, Ms. Gordon.

Deborah R. Gordon

Thank you, Melissa. Good afternoon, and thank you for joining us for Hologic's First Quarter Fiscal 2012 Earnings Call. I encourage everyone to visit Hologic's Investor Relations page of our website in order to view the PowerPoint presentation related to the comments that will be made during today's opening remarks. The replay of this call will be archived on our website through Friday, February 17. Please also note that a copy of the press release discussing our first quarter fiscal 2012 results, as well as our second quarter and fiscal 2012 guidance, is available in the Investor Relations section of our website under the heading, Financial Results.

Before we begin, I would like to remind you of our Safe Harbor statements. Certain statements made by management of Hologic during the course of this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of Hologic to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those detailed from time to time in the company's filings with the Securities and Exchange Commission. We expressly disclaim any obligation or undertaking to publicly release any update or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

Also, during this call, we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP financial measures to the related GAAP financial measures can be found in Hologic's first quarter 2012 earnings release, including the financial tables in the release.

Please note, today's call will consist of 30 minutes of opening remarks from management followed by a 30-minute question-and-answer session. [Operator Instructions]

I would now like to turn the call over to Rob Cascella, President and Chief Executive Officer.

Robert A. Cascella

Thanks, Deb. Good afternoon, and thank you for dialing in to our first quarter earnings call. Joining me on the call is Glenn Muir, our Executive Vice President and Chief Financial Officer; Steve Williamson, our General Manager of our GYN Surgical business; Peter Soltani, our General Manager of our Breast Health business; and David Harding, our General Manager of our International Operations.

Today, I'm going to cover just a brief summary of the first quarter performance. I'll provide some insight into what we experienced in terms of procedural volumes and capital equipment trends, update you on the launch of our Dimensions 3D tomo unit as well as provide an update on the growth in our digital mammography business overall. I'll provide an update on some of our key growth drivers and review our four-part growth strategy with you. Glenn will then discuss the financial results in greater detail and provide some color on our second quarter and fiscal '12 guidance, including increasing our fiscal year earnings guidance. We'll then open up the call for 30 minutes of Q&A.

While we started fiscal '12 off very, very strongly with growth in all 4 of our operating segments, including robust double-digit revenue growth in Breast Health, Diagnostics and Skeletal, for the ninth consecutive quarter, we achieved record revenues. In Q1, revenues of $473 million increased 9% over the prior year's first quarter. We also improved year-over-year our non-GAAP gross margins in 3 of our operating segments. Our non-GAAP earnings per share were $0.34, $0.02 ahead of guidance and 13% above last year. We continue to execute on bringing new products to market with the FDA approval of our Cervista HTA; CE Marking of C-View; and the SFDA approval of our China manufacturing product, the Selenia -- the Serenity products, excuse me. Subsequent to the end of the quarter, we also announced the favorable outcome of our injunction hearing with Conceptus. And lastly, tomosynthesis was voted the hottest clinical procedure in 2011 as discussed in an AuntMinnie broadcast. AuntMinnie is a website that serves radiologists and imaging professionals. We're very proud to have our new product recognized by this panel of experts in a field through 2 rounds of voting.

And now I want to spend a little bit of time addressing some of the economic trends that have impacted our business. As we previously stated, typical capital equipment spending trends in the U.S. are not relevant when a superior successor technology is introduced to a market. We are certainly seeing this with our tomo product and, to a lesser extent, with our Dimensions 2D. On an international basis, we are seeing solid growth especially in emerging markets. However, some developed countries are generally struggling, which puts pressure on buying patterns as well as pricing. Another concern is the further weakening in the euro and the impact this will have on dollar-denominated businesses.

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