Life Technologies (LIFE)

Q2 2010 Earnings Call

July 29, 2010 8:30 am ET


Bernd Brust - President of Commercial Operations

Eileen Pattinson - Senior Director of Investor Relations

Mark Stevenson - President and Chief Operating Officer

Gregory Lucier - Chairman and Chief Executive Officer

David Hoffmeister - Chief Financial Officer


Derik De Bruin - UBS Investment Bank

Jonathan Groberg - Macquarie Research

Tycho Peterson - JP Morgan Chase & Co

Quintin Lai - Robert W. Baird & Co. Incorporated

Marshall Urist - Morgan Stanley

Doug Schenkel - Cowen and Company, LLC

Jon Wood - Jefferies & Company, Inc.

Charles Butler - Barclays Capital

Steven Lichtman - Oppenheimer & Co. Inc.



Good day, ladies and gentlemen, and welcome to the Second Quarter 2010 Life Technologies Corporation Earnings Conference Call. My name is Diana, and I'll be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Eileen Pattinson, Head of Investor Relations. Please proceed.

Eileen Pattinson

Thank you, Diana, and good morning, everyone. Welcome to Life Technologies Second Quarter Earnings Conference Call. Joining me on the call today are Greg Lucier, our Chairman and CEO; and David Hoffmeister, Chief Financial Officer. In addition, Mark Stevenson, our Chief Operating Officer; and Bernd Brust, our Chief Commercial Officer, are 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 want 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'll now hand the call over to Greg Lucier.

Gregory Lucier

Thanks, Eileen, and thank you, all for joining us. Coming off the heels of our Investor Day just a few weeks ago, we are going to keep our prepared comments short this morning.

So let's get started. As you can see from our results, we delivered another quarter of strong top and bottom line growth. Revenue grew 6% organically to $906 million, 8% excluding the impact of H1N1 sales in 2009. Operating margins expanded by 290 basis points to reach a record 30.1%, and earnings per share grew 15% to $0.91 for the quarter.

We are pleased with our results for the second quarter in the first half of the year, which are a reflection of the fundamental strength of the business and the essential nature of our product offering. I'd like to extend my thanks to our teams around the world for their commitment to excellence and relentless focus on execution.

As I do every quarter, I'll take a few moments to talk about these results, give you an update on the integration and provide some color on the strength of our end markets. First, we continue to be very focused on the integration, and I'm pleased to report good progress towards our goal of putting actions in place that will generate $175 million in annual synergies by the end of 2010.

In the second quarter, we continue to execute on an integration plan, including the placement of over 50 dual-branded supply centers around the world and further optimization of our combined eBusiness platforms. We are seeing good traction from these efforts and achieve new records for the number of the total transactions, both in North America and globally, that will process through eCommerce channels.

In terms of synergy capture, these actions, as well as many others, will generate another $15 million in annualized synergies, getting it halfway to our full year goal. Looking ahead in the second half of the year, we will continue to optimize the programs already started, as well as implement new initiatives, including additional site consolidations and cities where we have multiple offices, continuing to build out the combined eBusiness platforms and optimizing our distribution network.

Now beyond these integration activities, Life Technologies is well positioned to capture opportunities that will continue to drive strong revenue growth. Commercial execution, coupled with a broad product offering of innovative tools ensures that our products are an essential part of our customers' workflows. Recent launches have gone very well. Customer response to Attune, our flow cytometry offering and the ViiA 7 PCR instrument have been very positive, and the sales of our latest CE instrumentation, the 3500, have reinvigorated that business. Since the launch of the 3500 in Q4 of last year, we have placed approximately 400 instruments and demand continues to be very robust.

I'll take a moment now to walk you through more notable points on Q2 performance and give some color on what we're seeing on our end markets. The Americas delivered 7% organic growth in the quarter, 10% without the impact of H1N1. End markets in the Americas remain strong, with pharma and biotech continuing to pick up steam. Evidenced by the strong demand for our discovery and assay services business and double-digit growth in bioproduction. On the research side, stimulus-related revenues for the quarter were approximately $10 million, about the same as we've seen in prior quarters.

Our outlook for the stimulus is unchanged. We continue to estimate that we will generate more than $100 million in stimulus-related revenue over the life of this program. However, since we have not observed the material ramp-up in spending since the third quarter of last year, we estimate that stimulus-related revenues will be around $10 million per quarter in the second half of the year, with the rest of the benefit realized in 2011.

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