Omnicell Inc. (OMCL)
Q2 2010 Earnings Call
July 22, 2010 04:30 pm ET
Rob Seim - VP, Finance and CFO
Randy Lipps - Chairman, President and CEO
Steven Crowley - Craig-Hallum Capital
Glenn Garmont - Think Equity
Mohan Naidu - Piper Jaffray
Gene Mannheimer - Auriga
Leo Carpio - Caris & Company
Good afternoon. My name is Phillip and I will be your conference operator today. At this time, I would like to welcome everyone to the Omnicell Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).
Thank you. Mr. Seim, you may begin your conference.
Thank you. Good afternoon, and welcome to the Omnicell 2010 second quarter results conference call. Joining me today is Randall Lipps, Omnicell’s Chairman, President and CEO. You can find our results in the Omnicell second quarter press release posted in the Investor Relations section of our website at www.omnicell.com.
This call will include forward-looking statements subject to risks, uncertainties and other factors that could cause the actual results to differ materially from those expressed or implied. For a more detailed description of the risks that impact these forward-looking statements, please refer to the information under the heading Risk Factors, and under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations in the Omnicell Annual Report on Form 10-K filed with the SEC on February 24, 2010. As well as any more recent reports filed with the SEC.
Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of this conference call is July 22, 2010 and all forward-looking statements made on this call are made based on the belief of Omnicell as of this date only.
Future events or simply the passage of time may cause these beliefs to change.
Finally, this conference call is the property of Omnicell Incorporated and any taping, or the duplication or the rebroadcast without the express written consent of Omnicell is prohibited.
I'll start the call today with an overview of the financial results for the quarter, followed by Randy who’ll cover some of the quarter's business highlights. And then, I’ll discuss our guidance for the remainder of 2010 and after that we’ll open the call to your questions.
In the second quarter of 2010, we exceeded profit expectations and continued to make improvements in our financial ratios with higher margins and increased cash on hand. We had a very good operational quarter, aided by a favorable mix of products installed, a focused effort to get our customers caught up on renewal of service contracts, and some favorable timing of non-recurring spending.
Our solutions won more awards from the class institute. We announced further technological advancements in our software and we continued our consistent track record of adding new accounts to our customer base.
Of our orders in Q2, 36% were from competitive conversions and from Greenfield customers, which are customers who had never installed automation before. About half of the 36% was from competitive conversions and the other half was from Greenfield accounts.
The percentage of our business from new and competitive conversion customers fluctuates from quarter-to-quarter, but we believe new and competitive conversion orders will be within our historical annual range of 33% to 40% of our business for the full year of 2010.
The market environment did not change much from previous quarters during Q2 with worldwide economic conditions affecting our customers' overall sentiments. We still expect the market to grow slightly during the year, but our orders remain more highly concentrated in large customers and timing of a broader base recovery is unclear in our market.
Revenues, for the second quarter of fiscal 2010 was $54.7 million, up 1% from the first quarter of 2010. And up 4% from the second quarter of a year ago.
Net earnings after taxes, were $2 million or $0.06 per share for Q2, 2010. This compares to $0.9 million or $0.03 per share in Q2, 2009. Included in our results for the quarter are some improvements in margins driven primarily from product mix and timing of non-recurring spending.
Now, I'd like to cover our non-GAAP results, the only adjustments to GAAP results are the exclusion of stock compensation expenses. Stock compensation expense includes the estimated future value of employee stock options, restricted stock and our employee stock purchase plan. And since stock compensation expense is a non-cash expense, we use financial statements internally that exclude stock compensation expense. In order to measure some of our operating results.
We use these adjusted statements in addition to GAAP financial statements and we feel that’s useful for investors to understand the non-cash stock compensation expenses that are a component of our reported results. A full reconciliation of our GAAP to non-GAAP results is included in our press release, and will be posted on our website.
Our Q2, 2010 non-GAAP net income was $4.1 million or $0.12 per share, exceeding consensus by $0.01 per share. Our Q2, 2010 non-GAAP net income was up $1 million or $0.03 per share from Q1, 2010 and up $0.8 million or $0.02 per share from Q2, 2009.
Our profits were impacted favorably by about $0.01 per share by factors that we did not expect to continue in subsequent quarters such as the favorable timing of non-recurring spending in our efforts to get customers caught up on service contracts.