Life Technologies (LIFE)

Q3 2011 Earnings Call

October 25, 2011 4:30 pm ET


Gregory T. Lucier - Chairman and Chief Executive Officer

Amanda Clardy - Chief Marketing Officer

David F. Hoffmeister - Chief Financial Officer and Senior Vice President

Mark P. Stevenson - President and Chief Operating Officer

Agnes Lee -


David Ferreiro - Oppenheimer & Co. Inc., Research Division

Derik De Bruin - UBS

Bill Bonello - RBC Capital Markets, LLC, Research Division

Amit Bhalla - Citigroup Inc, Research Division

Jonathan P. Groberg - Macquarie Research

Daniel Arias - UBS Investment Bank, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

Nandita Koshal - Barclays Capital, Research Division

Vijay Kumar - Deutsche Bank AG, Research Division

Doug Schenkel - Cowen and Company, LLC, Research Division

Jon Davis Wood - Jefferies & Company, Inc., Research Division

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

Quintin J. Lai - Robert W. Baird & Co. Incorporated, Research Division

Unknown Analyst -



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Thank you for standing by, and welcome to the Life Technologies Corporation Q3 2011 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded, today, Tuesday, October 25, 2011. I would now like to hand the conference over to your speaker today, Ms. Agnes Lee, Director of Investor Relations. Please go ahead.

Agnes Lee

Thank you, Vivian, and good afternoon, everyone. Welcome to Life Technologies Third Quarter 2011 Earnings Conference Call. Joining me on the call today are Greg Lucier, our Chairman and CEO; and David Hoffmeister, our Chief Financial Officer. In addition, Mark Stevenson, our Chief Operating Officer, will be available during the Q&A portion of the call. If you haven't received a copy of today's press release, you may obtain one from our website, at I would like to remind our listeners that our discussion today will include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website.

I will now hand the call over to Greg Lucier.

Gregory T. Lucier

Thanks, Agnes, and thank you, all, for joining our call today. I hope you've had a chance to review the press release that we issued earlier this afternoon. As you will have seen, our year-on-your non-GAAP revenue increased 7% including currency and 4% without currency. This translated to almost 30% operating margins and $0.94 of non-GAAP earnings per share. We're pleased with these results, especially given the tough macro environment we're all facing. Our broad range of consumable products continue to be sought out after customers who want to ensure the highest quality tools for their everyday research needs.

Because of the breadth of our product lines, we're exposed to all types of labs and customers that provides us with a useful perspective. Let me take a moment to share some color on what we're seeing in various end markets.

There's been a lot of discussion recently about government funding on research. In our view, it's clear that funding in developed markets is going to be less than it was historically. That said, we believe this environment has settled for the next few months, specifically in the U.S. and Europe. But there remains multiple end markets that are stable, even demonstrating very attractive growth. A few of those markets are government-funded research in emerging markets and applied markets such as food and animal safety and molecular diagnostics.

In addition, the biotech segment for us is still growing quite nicely as demand for our Bioproduction offerings increases.

As it relates to regional growth, we see the same macroeconomic trends we saw in the second quarter prevailing again in this quarter, leading to growth by region of 2% in the Americas, 5% in Europe, 14% in Asia-Pacific and a decline of 2% in Japan.

This year, we have placed a greater intensity on increasing our competitiveness in core markets. Our goal is to remain the vendor of choice by providing a complete range of product offerings that fit every level of budget and research need. Further, we continue to look for ways of adding value by providing more convenient and efficient ways to purchase from us. One such new example is our new website, which went live several weeks ago. This new site was designed around the users that visit our website every day to find the latest scientific protocols and purchase their lab essentials. This website has been live in beta form for over 2 months, and we received extremely positive feedback from the user community. We're happy to present this new site to our customers and expect it will make their purchasing experience with us even easier and more favorable than ever.

Other bright spots within the quarter include our applied businesses such as molecular diagnostics and forensics, as well as several new product introductions. As I said earlier, the applied markets continue to present good growth opportunities for us as demonstrated through a large forensic order delivered to the Russian government this quarter. We have also just received China SFDA clearance for our 3500 diagnostics CE instrument. In addition, we have announced several molecular diagnostic collaborations recently that are worthy of note, specifically an agreement with GlaxoSmithKline to develop a QPCR-based companion diagnostic for an innovative cancer therapy. You should expect more of these types of companion diagnostic arrangements from us in the future.

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