Hill-Rom Holdings' CEO Discusses F1Q 2012 Results - Earnings Call Transcript

Hill-Rom Holdings, Inc. ( HRC)

F1Q 2012 Earnings Conference Call

January 26, 2012 8:00 AM ET


John Greisch – President and Chief Executive Officer

Mark Guinan – Senior Vice President and Chief Financial Officer

Blair A. Rieth - Vice President of Investor Relations


Matt Miksic - Piper Jaffray

Lawrence Keusch - Morgan Keegan

John Demchak – Morgan Stanley

Lennox Ketner – Bank of America

Gregory Halter – Great Lakes Review



Good morning and welcome to the Hill-Rom Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded and will be available for telephonic replay through February 2, 2011. See Hill-Rom’s website for access information.

The webcast will also be archived in the Investor Relations section of Hill-Rom’s website, www.hill-rom.com. If you choose to ask a question today, it will be included in any further use of this recording. Also note that any recording transcript or other transmission of the text or audio is not permitted without the written consent of Hill-Rom. (Operator Instructions)

Now, I’d like to turn the call over to Mr. Andy Rieth, Vice President, Investor Relations.

Blair A. Reith

Thank you, Juan. Good morning everyone and thanks for joining us for our first quarter fiscal year 2012 earnings call.

Before we begin, I’d like to provide our usual caution that this morning’s call may contain forward-looking statements, such as forecasts of business performance and company results, as well as expectations about the company’s plans and future initiatives. Actual results may differ materially from those projected. For an in-depth discussion of risk factors that could cause actual results to differ from those contained in forward-looking statements made on today’s call, please see the risk factors in our Annual Report on Form 10-K and subsequent quarterly reports on Forms 10-Q. We plan to file our 10-Q for the first quarter later this week.

Joining me on the call today will be John Greisch, President and CEO of Hill-Rom and Mark Guinan, Hill-Rom’s Senior Vice President and Chief Financial Officer. The usual ground rules will apply to make the call more efficient. We scheduled an hour in order to accommodate our prepared remarks and leave plenty of time for Q&A.

During Q&A, please limit your inquiries to one question plus a follow-up per person. If you have additional questions, you may rejoin the queue. As you listen to our remarks, we’re also displaying slides that amplify our disclosure and I would encourage you to follow along with us. The slides were posted last night on our website and will also be part of the archive.

And with that, I’ll turn the call over to John.

John Greisch

Thanks, Andy. Good morning, everybody, and thanks for joining us today. As you read in our press release issued last night we reported earnings and revenue for the quarter in line with our preannouncement of a couple of weeks ago. The quarter was one of mixed results for our company.

Let me start with some comments on our largest business, North America Acute Care. We continue to see strong performance here, 7% revenue growth in the quarter led by a 13% increase in our patient support systems category. Many of you’re aware that our [PSS] products have fueled much of our growth over the past two years. The 25% growth rate for this product category that we have achieved over the past 12 months has been driven by our stronger – by stronger hospital capital spending, our broader product offering and improved execution in the field by our sales team.

As pleased as we’re with the 25% growth over the last year, on our fourth quarter call we stated that we expected the rate of growth for this product category to slow in 2012. That is exactly what we saw in the first quarter. As we mentioned in our preannouncement, our North American Acute Care business also experienced a reduction in incoming orders during the quarter.

Given the headwinds that our customers continue to face, we’re acutely focused on the order trends that we’re experiencing and what they portent for the future. Despite the tough macro conditions, our sales team continues to execute exceptionally well and I’m confident that we have the portfolio and the people to continue to success we’ve achieved over the past two years.

As expected, we saw decline in our international business in the first quarter compared to last year. The first quarter of fiscal 2011 was the strongest quarter of the year for us in constant currency. And we knew coming into 2012 the comparables for this quarter were going to be particularly difficult.

However, we did have a solid quarter with respect to international order rates with an increase of approximately 8% over the prior-year. Given this increase in order rates combined with more favorable revenue comparisons for the remainder of the year, we’re confident that we will see improving revenue growth rates in our international business for the remainder of fiscal 2012.

Europe has remained relatively steady overall, although conditions remained somewhat volatile country to country. We’re seeing good performance in other regions around the world. Our North American Post-Acute business had a difficult quarter. Revenue overall declined approximately 3%. Reimbursement pressures are affecting all of our businesses here and we expect that the challenges our customers are facing in this regard will continue to put pressure on our top line.

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