Rochester Medical Corporation ( ROCM) Q2 2011 Earnings Call July 28, 2011, 04:30 pm ET Executives Anthony Conway - Chairman, CEO & President Dave Jonas - Director, CFO & Secretary Analysts Ernest Andberg - Feltl & Company Tyson Bauer - Wealth Monitors Elizabeth Lilly - Gabelli Presentation Operator
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Now, in the third quarter we reported record sales of $14.3 million, a 39% increase over last year on a reported basis and a 35% gain on a constant currency basis. This growth was due in constant currency terms to 46% growth in global direct sales including our acquisition of Laprolan and 1% growth in global private label sales. In terms of GAAP earnings, we reported a loss of approximately $294,000 on a non-GAAP basis excluding acquisition costs and certain non-cash expenses, we reported income of $398,000. Within direct sales we experienced strong organic growth in the US and UK and the addition of Laprolan further bolstered our direct sales.Overall direct sales in the acute care market which make up 13% of the global direct sales total grew nicely due to a very strong 195% constant currency growth in international acute care sales. However, they were below our expectation in the US. The 12% drop was primarily due to spike last year in Q3 male external catheters sales because of actual orders from a large VA hospital distributor. Earlier this year we increased the US acute care sales team from 6 to 23. As we have said in previous conference calls, we expect to increase sales force will have a positive impact beginning in Q4. Also we have further strengthened our US acute care sales efforts by adding a clinical nurse specialist to the team, a person who can really arm hospital managers with hard data on reducing infections rate of our catheters. Home care sales which are 87% of our total global direct sales and which are the leading engine of our growth grew strongly this quarter led by 53% constant currency increase in international homecare sales and a 19% increase in US homecare sales. In homecare, we’ve added 17 people bringing our US homecare sales force to 20, up from 3.
In short in the past year, we have more than quadrupled our combined US sales force. Last year, we had very limited sales coverage of the U.S. and essentially no regional sales management. Today, our sales force substantially covers the major US population centers, and our new regional managers help to better coordinate our sales efforts, both in existing accounts as well as in many new accounts. We firmly believe that all the upfront cost was considerable. This decision was prudent and necessary to growing our company and achieving our long-term financial growth. Now let turn it over to Dave for further details in the quarter.Dave Jonas Thanks Jim. I’m going to spend a few minutes highlighting the results reflected in our just released third quarter 2011 earnings. In this discussion, unless otherwise noted all sales information will be discussed in constant currency. I’m doing this to exclude the impact of foreign currency exchange in order to show a true reflection of our sales growth. Foreign currency add approximately $350,000 to top line results for the third quarter and has added about $330,000 in the nine-month period. As Jim mentioned total sales rose 35% including Laprolan to $14.3 million from $10.2 million a year ago. Organic growth excluding Laprolan was in the lower double digits for the third quarter. Total sales in the US increased 11% to $4.4 million from $3.9 million in the third quarter of 2010, driven by growth in both our US direct sales and our US private label business. Total sales outside of the US mainly in the Europe and Middle East region or EME grew 49% due to a very robust growth in direct sales and a combination of strong organic growth and Laprolan. This performance was partially offset by a decline international private label sales.
Geographically 31% of our sales in the third quarter were in US compared to 39% last year, with 69% of our sales outside of the US compared to 61% last year. This change is primarily driven by our April 1st acquisition of Laprolan. We were generally pleased with our performance, both domestically and abroad. Total sales for the first nine months of year increased 24% to reach $38.1 million from $30.3 million in same period of last year.Read the rest of this transcript for free on seekingalpha.com