Qiagen NV (QGEN)
Q2 2012 Earnings Call
July 25, 2012 9:30 AM ET
Albert Fleury – Director, IR
Peer Schatz – CEO
Roland Sackers – CFO
Daniel Wendorff – Commerzbank
Tycho Peterson – JP Morgan
Bill Quirk – Piper Jaffray
Pete – William Blair
Romain Zana – Exane BNP Paribas
Jeff Elliott – Robert W Baird
Doug Schenkel – Cowen & Co
Vamel Geven – Credit Suisse
Ladies and gentlemen, thank you for standing by. Welcome to the QIAGEN Conference Call on the Q2 Results 2012. (Operator Instructions)
I would now like to turn the conference over to Albert Fleury, Director, Investor Relations and Corporate Finance NA. Please go ahead sir.
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Thank you, operator. Good afternoon and welcome to the QIAGEN conference call to discuss our latest quarterly results. Joining me on the call 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 call can be downloaded from the Investor Relations section of our webpage at www.qiagen.com.
Moving on to slide two, before I turn the call over to Peer, please keep in mind that the following discussions and responses to your questions reflect management’s view as of today, July 25, 2012. As we share information to help you better understand our business, we will make statements and provide responses that state our intention, beliefs, expectations, or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions. They 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 filings with the U.S. Securities and Exchange Commission.
I would now like to hand the call over to Peer.
Thank you, Al. Hello. I would like to welcome you to our conference call and the opportunity to discuss our results for the second quarter and first half of 2012. As you saw in our release last night, we are achieving our goal to deliver faster growth in 2012 despite a continued challenging macro business environment. We are very pleased with our strong performance for the first half of the year. The success of our actions we are taking to drive growth and innovation at a faster pace, alongside a solid outlook for the remainder of the year, allowed us to raise our full year outlook.
In the second quarter net sales rose 14% at constant exchange rates to $307 million on growth across all customer classes and regions. Adjusted operating income grew 10% to approximately $86 million and adjusted diluted earnings per share rose to $0.25 per share from $0.23 in the second quarter of 2012.
As you can see on the slide, we achieved similar growth rates for the first half of the year as well, led by a 14% improvement in sales and adjusted earnings per share of $0.48 per share. These results were again ahead of our targets, but what were the reasons? Demand for our product among customers and pharma, applied testing and academia continues to be strong, especially in light of these challenging macro economic conditions.
We also continued to see solid gains among our growth drivers in molecular diagnostics. These include companion diagnostics for personalized healthcare and tests in our profiling portfolio, both of which are underpinned by QIAsymphony.
In Point of Need we gained about 1% of growth in the second quarter through the addition of AmniSure, a novel premature ruptured fetal membrane test for use in pregnant women. In prevention, sales of products testing for HPV were lower in the second quarter as we had been predicting and the year to date trends are in line with our expectations.
As we have been saying, we are maximizing the value of our HPV franchise and are effectively and successfully competing in this market. But the overall market is not expected to be a growth driver in 2012. In terms of the 14%, constant exchange rate growth in the second quarter of 2012, about 9 percentage points came in from Cellestis, Ipsogen and AmniSure acquisitions.
At the same time, the rest of our business delivered 5 percentage points in the second quarter and provided 6 percentage points in the first half. So, we are seeing an improving trend over 2011. A key driver has been the progress we have been making on our strategic initiatives to drive platform success, add content, broaden our geographic presence, and grow efficiently and effectively.
Among the highlights, we are on track to achieve our goal for more than 200 new placements of the QIAsymphony automation platform. This builds on the more than 550 systems in place at the end of 2011. These systems are being placed across all customer classes and geographic regions. Critical to our success has been the Rotor-Gene Q real-time PCR cycler and its recent U.S. regulatory approvals. In combination, we can offer the industry’s fastest growing, broadest and most versatile menu.
In terms of adding content, launch plans are in full implementation for the therascreen KRAS test that received FDA approval in early July. This milestone reaffirms our global leadership in companion diagnostics and is just the beginning of a significant development in the U.S. companion diagnostics market.
We also announced in June our initiative to enter select segments in the field of next-generation sequencing. Our aim here is to capitalize on many of the already existing elements that QIAGEN has in place, along with external partners to offer workflows that will expand the use of NGS into clinical research and molecular diagnostics. First products are expected to launch in 2013 and I will provide more insights later in the presentation.
We also announced last night plans to launch a $100 million share repurchase program, the first in the history of QIAGEN. This program is a signal of our conviction in the growth opportunities of QIAGEN and our belief that the current share price does not reflect the company’s potential. As we launch this program, we are maintaining our financial flexibility to take advantage of opportunities in the marketplace while increasing our return on capital and building shareholder value.