QIAGEN N.V. (QGEN)
1Q 2012 Earnings Call
April 24, 2012 9:30 a.m. ET
Albert Fleury – Director Investor Relations North America
Peer Schatz – Chief Executive Officer
Roland Sackers – Chief Financial Officer
John Gilardi – Vice President, Corporate Communications and Investor Relations
Daniel Wendorff - Commerzbank
Tycho Peterson - JP Morgan
Quintin Lai - Baird
Martin Wales - UBS
Zarak Khurshid - Wedbusch
Travis - Macquarie
Bill Bonello - RBC Capital Markets
Brian Weinstein - William Blair & Company
Peter Lawson - Mizuho Securities
Dan Leonard - Leerink Swann
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Ladies and gentlemen, thank you for standing by. Welcome to QIAGEN N.V. investor and analyst conference call on the Q1 results 2012. (Operator instructions) I would not like to turn the conference over to Albert Fleury, Director Investor Relations and Corporate Finance NA. Please go ahead, sir.
Thank you. Good afternoon and good morning to you in the U.S. and welcome to the QIAGEN conference call to discuss our latest quarterly results. Joining me on the call this morning are Peer Schatz, Chief Executive Officer, Roland Sackers, Chief Financial Officer, and John Gilardi, Vice President, Corporate Communications and Investor Relations. A copy of this announcement and the presentation for this conference can be downloaded from the Investor Relation’s section of our home page at www.qiagen.com.
Before I turn the call over to Peer, please keep in mind that the following discussion and responses to your questions reflect management’s view as of today, April 26, 2012. As we share information to help you better understand our business, we will make statements and provide responses that state our intentions, beliefs, expectations or predictions of the future. These constitute forward-looking statements for the purpose of the Safe Harbor provisions. These involve certain risks and uncertainties that could cause QIAGEN’s actual results to differ materially from those projected. QIAGEN disclaims any intention or obligation to revise any forward-looking statements. For a complete description of the risks and uncertainties, please refer to our Form 20-F filed with the U.S. Securities and Exchange Commission.
At this time I’d like to now hand the call over to Peer.
Thank you, Al. Good morning to all joining us from the United States and good afternoon to all joining from Europe. I’d like to welcome you all into our conference call and the opportunity to discuss our results for the first quarter of 2012. As you saw in our release last night, we are pleased with our start into 2012 and improving demand for our products across all customer classes and regions. And sales were $296 million representing a 13% increase at constant exchange rates.
Adjusted operating income rose 14% to approximately $80 million and adjusted diluted earnings per share rose to $0.23 per share. These results led by double-digit growth in all regions and also contributions from all customer classes were ahead of our targets. What were the reasons? Demand for our product among customers and Pharma Applied Testing and Academia improved better over the first quarter of 2011, a period that was adversely affected by the disasters in Japan as well as unrest in Northern Africa.
We also saw solid gains among our growth drivers in molecular diagnostics. These include companion diagnostics for personalized health care. These areas are contributing more than $75 million in sales across QIAGEN and growing rapidly. We’re also seeing solid growth for our disease profiling tests. Growth in this area is further underpinned by the success of QIAsymphony. HPV sales were flat in the quarter. As we have said, HPV is not expected to be a growth driver in 2012, however, remains a solid foundation for our expansion in molecular diagnostics into the growth driver areas that include personalized health care and profiling.
In terms of the 13% constant exchange sales growth, about 7% percentage points came from the Celestus and Ipsogen acquisitions completed in the third quarter of 2011. The rest of business delivered 6 percentage points, so we’re seeing signs of improvement over 2011. A key driver has been the progress we have been making on our strategic initiatives to drive platform success, to add content, to broaden our geographic presence and to grow efficiently and effectively.
Important developments in the first quarter of 2012 included the first regulatory clearance of a QIAsymphony component in the United States, the Roto-Gene Q real-time PCR cycler and in China we received approval for the second of three components, in this case, the QIAsymphony SP module.
In terms of adding content, we are preparing for the U.S. approval of the KRAS biomarket tests. FDA decisions are expected during 2012.
And we are improving our efficiency and effectiveness. The efficiency program launched in late 2011 is making good progress and we are now implementing projects that are freeing up resources to reinvest. Also in our press release we announced some organizational leadership changes. Effective July 1, we are creating two business areas; Molecular Diagnostics and Life Sciences. I will touch on this topic later.
Moving to Slide 5, I wanted to show you how we view the various contributors to our performance; Molecular Diagnostics which represented 47% of QIAGEN sales rose 21% on the constant exchange rate basis. We are to invest even more in our rapid growth drivers. These include personalized health care, profiling and QuantiFERON-TB test. These and other products together delivered 37% constant exchange rate growth and represented 29% of our sales.
As I mentioned earlier, we are seeking to maximize the value of our HPV franchise. We had flat sales in the first quarter of 2012, both in the U.S. and globally and this product now represents 18% of net sales globally. In the United States the contribution is fallen to 14% of sales in the first quarter of 2012 compared to 16% in the first quarter of 2011.