CR Bard (BCR)

Q4 2010 Earnings Call

January 31, 2011 5:00 pm ET


John Weiland - President, Chief Operating Officer and Director

Timothy Ring - Chairman, Chief Executive Officer and Chairman of Executive Committee

Todd Schermerhorn - Chief Financial Officer and Senior Vice President

John DeFord - Senior Vice President of Science Technology & Clinical Affairs

Eric Shick - Vice President of Investor Relations


Matthew Dodds - Citigroup Inc

David Roman - Goldman Sachs Group Inc.

Robert Hopkins

Michael Weinstein - JP Morgan Chase & Co

Douglas Tsao - Barclays Capital

Matthew O'Brien - William Blair & Company L.L.C.

Kristen Stewart - Deutsche Bank AG

Thomas Gunderson - Piper Jaffray Companies

Frederick Wise - Leerink Swann LLC

David Lewis - Morgan Stanley

Robert Goldman - CL King & Associates, Inc

Paul Choi - Caris & Company

Lawrence Keusch - Morgan Keegan & Company, Inc.

Joanne Wuensch - BMO Capital Markets U.S.



Ladies and gentlemen, thank you for standing by. Welcome to the CR Bard Inc. Fourth Quarter 2010 Earnings Results Conference Call. [Operator Instructions] Today's presentation will be hosted by Timothy M. Ring, Chairman and Chief Executive Officer; along with John H. Weiland, President and Chief Operating Officer; and Todd C. Schermerhorn, Senior Vice President and Chief Financial Officer. Also in attendance today are John A. DeFord, Senior Vice President, Science, Technology And Clinical Affairs; and Eric J. Shick, Vice President, Investor Relations.

Today, Bard's management will discuss some forward-looking statements, the accuracy of which are necessarily subject to risks and uncertainties. Please refer to the cautionary statement regarding forward-looking information in Bard's September 30, 2010 10-Q and the information under the caption Risk Factors in the company's 2009 10-K, including disclosure of the factors that could cause actual results to differ materially from those expressed or implied. During the call, references will be made to certain non-GAAP measures, which management believes provide an additional and meaningful assessment of the core operating performance of the company and its individual product franchises. Reconciliations of non-GAAP measures to the most comparable GAAP measures are provided in Bard's earnings press release and on the company's website at All information that is not historical is given only as of January 31, 2011, and the company undertakes no responsibility to update any information. Unless otherwise noted, all comparisons are to the prior-year period. At this time, I will turn the call over to Timothy Ring. Please go ahead.

Timothy Ring

Thank you. Good afternoon, everybody. I'd like to welcome you all to Bard's fourth quarter 2010 earnings call. We expect the presentation portion of this call will last about 25 minutes. The agenda today will go as follows: I'll begin with an overview of the results for the fourth quarter; John Weiland, our President and COO, will review fourth quarter product line revenue; Todd Schemerhorn, our Senior VP and CFO, will review the fourth quarter income statement, balance sheet, as well as our expectations for the first quarter. And since we've just covered our product development pipeline in depth at our December 13 analyst meeting, we'll wait until our first quarter earnings call to give you a detailed update on those projects. And then finally, we'll close with a Q&A.

Fourth quarter 2010 net sales totaled $717.1 million. That's up 6% over Q4 of last year on an as reported basis and 7% on a constant currency basis. The currency impact for the quarter versus the Q4 was unfavorable by 100 basis points. Our net sales for the full year 2010 were $2,720,200,000, up 7% on both an as reported and a constant currency basis. Net income for the fourth quarter was $136.2 million and diluted EPS were $1.47. Excluding items that affected the comparability results between periods, which Todd will cover later, fourth quarter 2010 net income and diluted EPS were $143.4 million and $1.54, up 5% and 11% respectively. EPS for the quarter versus our guidance benefited from the true up of our tax rate for the last minute retroactive renewal of the R&D tax credit, and Todd will cover this again later. Full year 2010 net income was $509.2 million. Diluted EPS were $5.32. Excluding items that again affect comparability between periods, full year 2010 net income was $535.7 million and diluted EPS were $5.60, up 5% and 10% respectively over 2009 results.

Looking at our revenue growth geographically compared to the fourth quarter of 2009, again on a constant currency basis, net sales in the U.S. increased 6%. Europe was up 5%. Japan, we were down 3% versus the prior year period, following a particularly strong Q3 as sales into our joint venture there tend to be somewhat variable from period to period. Our other international businesses had a very strong quarter, growing 22%, including 43% in our emerging markets, which now represent about 4% of our global revenue. We define our emerging markets as Central and South America and Asia, excluding Japan. We are rapidly expanding our presence in China, which is helping fuel our growth in emerging markets. In fact, over the last two years, we've expanded our headcount there by four-fold. We're also making selective investments in several other countries in our emerging markets.

The business development has been discussed at our analyst meeting last month. During Q4, we closed the Romadex [ph] (14:48) transaction, acquiring the Sapiens TCS tip confirmation system. Beyond that, we acquired technology that we plan to use in the development of a next generation cranial repairing implant.

Looking back on 2010, we did 10 deals, ranging from technology acquisitions to the SenoRx transaction. And looking ahead, we have a number of potential product and technology deals in our business development pipeline. As Todd discussed when he laid out the recash [ph] (15:18) transaction at our analyst meeting, what's important here is our strategic objectives remain unchanged and most importantly, our commitment to strategic acquisitions remains a top priority. Let me now turn you over to John Weiland for a review of our product line revenue

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