Watson Pharmaceuticals' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Watson Pharmaceuticals (WPI)

Q4 2011 Earnings Call

February 14, 2012 8:30 am ET

Executives

Patricia L. Eisenhaur - Vice President of Investor Relations & Corporate Communications

Paul M. Bisaro - Chief Executive Officer, President and Director

R. Todd Joyce - Chief Financial Officer, Executive Vice President, Principal Accounting Officer, Corporate Controller and Treasurer

Sigurdur Oli Olafsson - Executive Vice President of Global Generics

George Frederick Wilkinson - Executive Vice President of Global Brands

Robert A. Stewart - Executive Vice President of Global Operations

David A. Buchen - Executive Vice President, Secretary and General Counsel

Analysts

Marc Goodman - UBS Investment Bank, Research Division

Ken Cacciatore - Cowen and Company, LLC, Research Division

Timothy Chiang - CRT Capital Group LLC, Research Division

Douglas D. Tsao - Barclays Capital, Research Division

David G. Buck - Buckingham Research Group Incorporated

Dewey Steadman

Elliot Wilbur - Needham & Company, LLC, Research Division

Christopher Caponetti - Morgan Stanley, Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Frank H. Pinkerton - SunTrust Robinson Humphrey, Inc., Research Division

Randall Stanicky - Canaccord Genuity, Research Division

David Amsellem - Piper Jaffray Companies, Research Division

Michael Faerm - Crédit Suisse AG, Research Division

John T. Boris - Citigroup Inc, Research Division

Michael K. Tong - Wells Fargo Securities, LLC, Research Division

Jason M. Gerberry - Leerink Swann LLC, Research Division

Presentation

Operator

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Good morning. My name is Therese, and I will be your conference operator today. At this time, I would like to welcome everyone to the Watson Pharmaceuticals Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Patty Eisenhaur. Go ahead, Patty.

Patricia L. Eisenhaur

Thank you, Therese, and good morning, everyone. I'd like to welcome you to Watson's Fourth Quarter 2011 Earnings Conference Call. Early this morning, Watson issued a press release reporting its earnings for the fourth quarter and full year ended December 31, 2011. The press release, together with additional materials reconciling our GAAP and non-GAAP financial results and forecasts, are available on our website at www.watson.com. Additionally, we are conducting a live webcast of this call, which will also be available on our website after its conclusion.

With us on today's call are Paul Bisaro, our President and CEO, who will provide an overview of the fourth quarter and full year results; Todd Joyce, our Chief Financial Officer, will then provide additional details on the performance of our business segments, as well as our consolidated financial results for the quarter and year. Paul will conclude our presentation with our updated outlook for 2012. We'll then open the call up for questions and answers.

Also on the call and available during the Q&A are Siggi Olafsson, Executive Vice President of our Global Generics division; Fred Wilkinson, Executive Vice President of Global Brands; Bob Stewart, Executive Vice President of Operations; Al Paonessa, Executive Vice President and Chief Operating Officer of our Anda Distribution division; and David Buchen, our Executive Vice President, General Counsel and Secretary.

Please note that today’s call is copyrighted material of Watson Pharmaceuticals, Inc. and cannot be rebroadcast without the company’s expressed written consent.

I’d also like to remind you that during the course of this call, management will make projections or other forward-looking remarks regarding future events or future financial performance of the company. It's important to note that such statements about estimated or anticipated Watson results, prospects or other non-historical facts are forward-looking statements and reflect our current perspective of existing trends and information as of today’s date.

Watson disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. Actual results may differ materially from current expectations and projections, depending on a number of factors affecting the Watson business. These factors are detailed in our periodic public filings with the Securities and Exchange Commission including, but not limited to, the Watson Form 10-K for the period ended December 31, 2010, and the Form 10-Q for the period ended September 30, 2011.

With that, I'll turn the call over to Paul.

Paul M. Bisaro

Thanks, Patty, and good morning, everyone, and thank you for joining us today. 2011 was an extraordinary year for Watson. We continued to execute on our strategy for growth and ended the year with a number of important accomplishments, which will provide a solid foundation for Watson as we continue our growth trajectory.

But first, looking to the fourth quarter of 2011, we delivered record growth and profitability with net revenues of 62% and non-GAAP earnings per share of 90% to $1.77. Adjusted EBITDA increased 78% to $393 million. Excluding the launch of generic LIPITOR, non-GAAP earnings per share were $1.13, up 22% from last year.

I would now like to highlight a few of our accomplishments in 2011. In our Global Generics business, net revenues increased 44% from the prior year. In the U.S., we launched 16 new products. The most important launch of the year was generic Concerta, which we launched in May. We expect this product to remain a strong contributor to Watson's growth and profitability.

Additionally, our launch of the authorized generic LIPITOR on November 30 represented important accomplishment for our Generics business and the importance of an integrated supply chain. We expanded outside the U.S. through the launch of more than 180 new products and had solid execution in our key markets around the world. We also strengthened our presence and expanded our capabilities in Europe through the acquisition of Specifar.

Our Global Brands business continues to grow. We added new products to our portfolio: Generess Fe and ANDRODERM 2-milligram and 4-milligram. We continue to see strong sales of key promoted products including RAPAFLO, Gelnique and CRINONE. We took steps to expand our brand business in Canada and recently launched RAPAFLO and Gelnique with our new commercial team. And our Antares' oxybutynin gel product received FDA approval and is scheduled for launch in early 2012. We also announced the collaboration with Amgen to develop and commercialize a portfolio of oncology biosimilars. This, coupled with our continued work on rFSH, positions us well to be a major player in the biosimilars space.

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