Immucor's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Immucor (BLUD)

Q3 2011 Earnings Call

April 07, 2011 8:30 am ET


Michele Howard -

Richard Flynt - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Gioacchino De Chirico - Chief Executive Officer, President and Executive Director


William Quirk - Piper Jaffray Companies

Daniel Owczarski - Avondale Partners, LLC

David Turkaly - Susquehanna Financial Group, LLLP

James Sidoti - Sidoti & Company, LLC

S. Brandon Couillard - Jefferies & Company, Inc.

Matthew Notarianni - Robert W. Baird

Joshua Zable - Natixis Bleichroeder

Bill Bonello - RBC Capital Markets, LLC



Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Immucor Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference, Michele Howard, Immucor's Vice President of Investor Relations. Ms. Howard, you may begin.

Michele Howard

Good morning, and thank you for joining us to discuss our third quarter fiscal 2011 results. Participating with me on this call are Dr. Nino De Chirico, our President and Chief Executive Officer; and Rick Flynt, our Chief Financial Officer.

Before we begin, I'd like to read the following Safe Harbor statement. Many statements on this call constitute forward-looking statements that reflect our judgment about future events and circumstances, including statements or projections about future financial results or economic performance or statements about plans and objectives for future operations. Actual results could differ materially from these forward-looking statements.

The company does not intend to update these forward-looking statements, unless required to do so by the Federal Securities law. For a detailed discussion of factors that could cause actual results to differ from these forward-looking statements, please refer to yesterday's press release and the company's most recent SEC filings.

We will make some brief comments and then go to Q&A.

I would now like to turn the call over to Nino.

Gioacchino De Chirico

Thank you, Michele. Good morning. I'll begin this morning with a discussion of overall industry condition in both the United States and Europe.

In the United States, the market continues to experience softness due to macroeconomic environment. Consistent with our previous expectations, we continue to believe that demand for blood from hospital in our fiscal year 2011 will be down between 3% and 4% from the depressed level since fiscal 2010. We believe that the lower blood demand in the United States is primarily driven by the economy and is heavily influenced by the number of uninsured and underinsured people.

Blood demand is an important factor in the volume of testing performed in the industry and the volume of our reagents used by our customers. We believe that demand for blood in the United States market may stabilize in our fiscal 2012 even though it will be at depressed levels.

Over the longer term, due to the aging population and with an improvement in the macroeconomic conditions, we believe that the industry in the United States will return to its historic low single-digit growth rates.

Turning to Europe. We are seeing ongoing macroeconomic issues with continued delays in the tender process in some countries. Having said that, Germany, a major market for us, continues to be strong, and we had another strong quarter for NEO orders in Europe.

Let me give you the details on instrument orders in the third quarter, starting with NEO. We had 39 NEO orders in the third quarter with 22 orders in United States and Canada and 17 orders in rest of the world including distributors. Our competitive takeaway rate for NEO on a launch-to-date basis is more than 40%. NEO continues to generate excitement with end-users worldwide because of its functionality, turnaround time and what we believe is the highest volume throughput available in the market. We take NEO orders on year-to-date basis. We now expect to be near to high end of our previous NEO order guidance range of between 80 and 120 orders for fiscal 2011.

Turning to Echo. We had 31 Echo orders in the quarter, with 20 orders in the United States and Canada and 11 orders in rest of the world including distributors. As we have stated previously, we believe our Echo orders in the past several quarter in the United States have been negatively impacted by the economy, which has resulted in a longer sales cycle and more economic bias involved in the process with increased oversight from legal, purchasing and finance departments.

We have taken steps to compete more effectively, which we believe are paying off. We had a good March in terms of Echo orders, and we have a strong pipeline for the remainder of our fourth quarter. We expect to be near to the low end of our previous guidance range of between 140 and 180 orders for Echo in fiscal 2011.

We continue to believe there is a significant opportunity in the lower-volume labs for our product offering as Echo, which was specifically designed to meet this category’s needs, combined with our deep line of traditional reagents, allows hospital to meet the full range of testing needs and achieve the benefits of automation. At the end of the third quarter, we had an instrument order backlog of 95 Echos and a combination of 62 Galileos and NEOs.

I would like to give you an update on our Molecular business before I turn the call over to Rick to discuss our third quarter financials.

We continued to develop our molecular offering, which we believe is an important part of our future growth. As you may remember, the current semi-automated instrument and assay achieved CE Mark approval in Europe in fiscal 2010 and early fiscal 2011 and, as a result, can be used as a test of record in Europe.

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