Rochester Medical Corporation ( ROCM)

F4Q 2011 Earnings Call

November 3, 2011 4:30 PM ET

Executives

Jim Conway – Chairman, CEO and President

David Jonas – CFO, Treasurer and Secretary

Analysts

Shaun Vincent [ph] – Feltl & Company

Tyson Bauer – Wealth Monitors

Larry Haimovitch – HMTC

Presentation

Operator

Good day ladies and gentlemen and welcome to the fourth quarter 2011 Rochester Medical Corp earnings conference call. My name is Ryan and I will be your operator for today’s event. At this time all attendee lines are muted in a listen-only mode. And we will be facilitating a question and answer session at the end of today’s call. Additional instructions will be provided at that time. (Operator’s Instructions) As a reminder this call is being recorded for replay purposes.

And I would now like to turn the call over to Mr. Anthony J. Conway, President and CEO. Please proceed sir.

Jim Conway

Thank you and thank you for joining Rochester Medical’s fourth quarter conference call. I am Jim Conway, the Company’s President and CEO. And with me is David Jonas, Rochester Medical’s Chief Financial Officer.

First, I will provide a brief high level review of our fourth quarter. Dave will then provide you with more details on our financial results and then I will give a quick update on a few items and summarize. And then we will take your questions.

Now 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 30, 2010. These statements further clarify the risks and uncertainties that are associated with the forward-looking statements.

Now, I am pleased to report that we achieved a solid fourth quarter on both the top line and bottom line with record sales and positive net income as we were anticipating. Total sales reached $14.8 million, up 33% over the last year on a reported basis and up 32% on a constant currency basis. This growth was driven by in constant currency rates 43% growth in global direct sales including our acquisition of Laprolan and 15% growth on an organic basis excluding the Laprolan’s contribution. Global private label sales were down 1%.

In terms of GAAP earnings, we reported net income of approximately $407,000 and on a non-GAAP basis excluding certain non-cash expenses we reported income of $822,000. Today’s performance is on track with our expectations. These results are gratifying and are evidence of the solid progress we are making for growing revenues and improving profitability on a sustainable basis. I am encouraged by our performance in fiscal 2011 and optimistic about the future.

Now let me turn over to Dave for further details on the quarter.

David Jonas

Thanks Jim. I’m going to spend a few minutes highlighting the results reflected in our just released fourth quarter 2011 earnings release. 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 added approximately $160,000 to top line results in the fourth quarter and added about $490,000 in the 12-month period. As Jim mentioned, total sales rose 32% in the fourth quarter including Laprolan to $14.8 million versus $11.3 million a year ago. Organic growth excluding Laprolan was approximately 11% for the fourth quarter and there is 11% organic growth consisted of 18% direct organic growth offset by a nearly flat private label quarter.

Total sales in the US increased 9% to $4.9 million from $4.5 million in the fourth quarter of 2010 driven by 30% growth in our US direct sales, somewhat offset by a 10% decline in our US private label business. Total sales outside of the US mainly in Europe and the Middle East region or EME grew 46% led by 48% growth in direct sales. This growth came from a combination of strong organic growth and from our Laprolan acquisition. International private label sales also improved, up 30% over the fourth quarter of 2010.

Geographically 33% of our sales in the fourth quarter were in US with 67% of our sales outside the US compared to 41% and 59% last year respectively. This change is primarily driven by our April 1st acquisition of Laprolan based in the Netherlands. We are pleased with our performance, both domestically and abroad. Total sales for the fiscal year 2011 increased 28% on a reported basis to $52.9 million from $41.4 million in same period of last year. Foreign currency added 150 basis points with total sales growth in the period implying constant currency growth of 26.5%.

Total fiscal year 2011 sales growth excluding the effects of foreign currency and our acquisition of Laprolan was 9%. Turning to direct sales, total global direct sales increased 43% year-over-year in the fourth quarter. Our US direct sales for the fourth quarter totaled $2.9 million versus $2.2 million last year or a gain of 29%. Our intermittent catheter line, which represents 48% of US direct sales in the fourth quarter, was 48% year-over-year in the fourth quarter. This growth was complemented by a 13% increase in male external catheters and 21% increase in Foley catheter sales.

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