CR Bard's CEO Discusses Q4 2011 Results - Earnings Call Transcript

CR Bard (BCR)

Q4 2011 Earnings Call

January 31, 2012 5:00 pm ET

Executives

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

John H. Weiland - President, Chief Operating Officer and Director

Todd C. Schermerhorn - Chief Financial Officer and Senior Vice President

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

Analysts

Lawrence S. Keusch - Morgan Keegan & Company, Inc., Research Division

Brooks E. West - Piper Jaffray Companies, Research Division

Jonathan J. Palmer - Credit Agricole Securities (USA) Inc., Research Division

David R. Lewis - Morgan Stanley, Research Division

Matthew Taylor - Barclays Capital, Research Division

Michael Matson - Mizuho Securities USA Inc., Research Division

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

Miroslava Minkova - Leerink Swann LLC, Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division

Topher Orr - Goldman Sachs Group Inc., Research Division

Joanne K. Wuensch - BMO Capital Markets U.S.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

Jason Wittes - Caris & Company, Inc., Research Division

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

Anthony Petrone - Jefferies & Company, Inc., Research Division

Suraj Kalia - Rodman & Renshaw, LLC, Research Division

Gregory Hertz - Citigroup Inc, Research Division

Robert M. Goldman - CL King & Associates, Inc.

Jayson T. Bedford - Raymond James & Associates, Inc., Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CR Bard Inc. Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded and will be available for future on-demand replay through the Bard website.

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 of Science Technology and Clinical Affairs; and Todd W. Garner, 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, 2011 10-Q and the information under the caption Risk Factors in the company's 2010 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 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 it's on the company's website at www.crbard.com.

All information that is not historical is given only as of January 31, 2012, 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'd like to turn the conference over to Mr. Timothy Ring. Please go ahead, sir.

Timothy M. Ring

Thank you, Tom. I'd like to welcome everybody to Bard's Fourth Quarter 2011 Earnings Conference Call and thank all of you for taking the time to join us today. I would expect the presentation portion of the call would last about 20 minutes. And just to further go along with the introductions, John DeFord, our Senior VP of Science Technology and Clinical Affairs is in attendance with us as well today.

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 Schermerhorn, our Senior VP and CFO, will review the fourth quarter income statement, balance sheet, as well as our expectations for Q1. And since we just covered our product development pipeline in a fair amount of detail at our December 20 analyst meeting, we'll wait until our first quarter earnings call to do a detailed update on that. And then finally, we will close with Q&A.

Fourth quarter 2011 net sales totaled $751.9 million. That's up 5% over Q4 of last year on both an as-reported and constant-currency basis. Currency impact for the quarter versus Q4 2010 was favorable by about 30 basis points. And as we predicted, the deal that we closed in Q4 contributed about 1% of growth for the quarter.

Net sales for the full year 2011 were $2.896.4 billion (sic) [$2,896.4 million], up 6% as reported and 5% on a constant-currency basis. Net income for the fourth quarter was $113.8 million and diluted EPS were $1.30.

As previously disclosed, we took a charge of $51 million related to a legal matter in our brachy therapy business. Excluding this and other items that affected the comparability of results between periods, which Todd will get into later, fourth quarter 2011 net income and diluted earnings per share were $148.6 million and $1.70, up 4% and 10%, respectively.

Full year 2011 net income was $328 million and diluted earnings per share were $3.69. Excluding items that affect comparability between periods, full year 2011 net income was $568.9 million and diluted EPS was $6.40, up 6% and 14%, respectively, over 2010 results.

Looking at revenue growth geographically compared to the fourth quarter 2010 on a constant-currency basis, net sales from the U.S. increased 2% and Europe was up 4%. In Japan, we were up 13% against the light prior year quarter. Our other international businesses grew 18%, including 38% growth in our emerging markets.

In the past 3 years, we've added close to 300 people in emerging markets and have built 2 state-of-the-art physician training centers. These investments have provided rapid returns and the opportunity in front of us remains significant. We're pleased with the caliber of the teams that we've built and we'll continue to build on that foundation and increase our share in these rapidly expanding markets.

On the business development front, as we've discussed at our annual analyst meeting last month, during the fourth quarter, we closed the Clearstream, Medivance, and Lutonix fields. As we've always said, the business development process is opportunistic and can be a little bit lumpy, and we saw that last quarter. But I want to be clear that you should not assume a strategic shift here to more or necessarily bigger M&A deals.

Our strategy, our filters and our priorities for cash, and our processes remain consistent. We have a growth agenda that includes geographic investment, new product development, acquisitions and share repurchases. This approach has served us well in the past and we believe it will continue to allow us to meet our short-term commitments, while at the same time positioning ourselves appropriately for the long term.

Looking back at 2011, despite increasing headwinds in the macro environment, we hit our original revenue and EPS guidance for the year because of our multifaceted approach. Our geographic portfolio was on display this year as our international businesses grew 9% in constant currency, while the U.S. markets were under pressure.

We allocated resources to the best opportunities for growth from a geographic and product perspective. In the past year, you've seen us continue this process through some restructuring as well as the U.S. sales realignment at the end of the year that we believe will get us even closer to our customers.

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