Rochester Medical CEO Discusses F4Q2010 Results - Earnings Call Transcript

Rochester Medical Corporation (ROCM)

Q4 2010 Earnings Call

November 4, 2010 04:30 pm ET

Executives

Anthony Conway - CEO

David Jonas - Chief Financial Officer

Analysts

Peter Sullivan - Private Invesetor

Tyson Bauer - Wealth Monitors

Ernie Andberg - Feltl and Company

Beth Lilly - Gabelli

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Rochester Medical Corporation earnings conference call. My name is [Stacy] and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions). As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today, Mr. Anthony Conway, CEO. Please proceed.

Anthony Conway

Thank you for joining Rochester Medical's fourth quarter conference call. I am Anthony Conway, the company's President and CEO, and with me is David Jonas, Rochester Medical's Chief Financial Officer. By the way, as most of you know, everyone calls me Jim.

To start, I will review the highlights of the quarter and then Dave will present additional information on the financials and what they signify. After that, we will give you some further insight into our plans for the future and then we'll take some questions.

Before starting, let me remind you that we will be making some forward-looking statements today and I would refer you to the Safe Harbor statement found in today’s press release and also to the Risk Factors section in the company's annual report on Form 10-K for the year ended September 30th, 2009. These statements further clarify the risks and uncertainties that are associated with the forward-looking statements.

First, let me review the results as reported in the press release. We reported record sales of $11,121,000 for the current quarter compared to $9,009,000 for the fourth quarter of last year. That's a very nice 26% increase in overall sales on a constant currency basis. Rochester Medical branded sales rose a strong 31% on a constant currency basis.

For the full fiscal year we grew at a solid 19% in overall sales with strong growth of 28% in branded sales. The branded growth continues to be led by sales of our all-silicone Magic3 and HydroSil, layered hydrophilic intermittent catheters and also our new Strata brand Foley catheters. We still have only very small market share with these products and we expect excellent growth going forward.

Script-easy sales in the UK are also growing nicely. These consist primarily of competitive products, which we ship directly to patients under our Script-easy brand prescriptions. We are still working with HHS to get fence off reimbursement rate resolved and we hope to have final reimbursement based on retail prices established in the near term.

As we said last quarter, it is still too early to predict the market potential for the device but we are far enough along to have confidence in the FemSoft as a viable and integral addition to our product lines, both in the United States and in the United Kingdom. We are also in discussion with interested potential distributors in other countries.

Now let me turn it over to Dave and he will give you further insight into the numbers and then we'll talk more about our plans going forward. Dave?

David Jonas

Thanks, Jim. I'm going to spend a few minutes highlighting the results reflected in our just-released fourth quarter and fiscal year and 2010 earnings release, our record sales. For ease of discussion, unless otherwise noted, all sales information will be discussed in constant currency. I am doing this to exclude the impact of foreign currency exchange which will show a true reflection of our sales growth.

As Jim explained, our sales results for the fourth quarter showed very good overall growth, especially in our key branded markets in the US, UK and the rest of Europe. As we have discussed the last couple of years, we are focused on and continue to increase our investments and activity in our worldwide brand sales. This has been done for many reasons, including better market access, changing reimbursement rules and increased clinical demand for infection reducing in all silicone, non-latex and non-PVC devices.

We have called this our investment and growth strategy and results have been positive. These investments and focus fueled the growth in our worldwide branded sales which were a record $8.2 million this quarter versus $6.2 million last year, an increase of 31% for the fourth quarter.

For fiscal 2010, our worldwide branded sales were a record $29.8 million versus $23.2 million last year, the $6.6 million in growth equating to a very strong increase of 28%. In Q4 we continued to show strong, solid growth in all of our products including 33% growth in worldwide intermittent sales, a 27% increase in worldwide Foley sales and a 19% increase in male external catheter sales. Our branded sales accounted for 72.7% of our total sales in the fourth quarter and ended the year at 71.8%.

Let me first discuss our domestic branded sales in more detail and then our international branded sales. In total, our domestic branded sales for the fourth quarter were $2.24 million versus $1.98 million last year, a 13% increase from last year's fourth quarter. For the year, our domestic branded sales are up 23.4%. Domestically, our advanced intermittent catheter sales grew 16% in the fourth quarter and are now up 33% year to date.

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