Life Technologies' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Life Technologies (LIFE)

Q1 2012 Earnings Call

April 24, 2012 4:30 pm ET

Executives

Carol A. Cox - Vice President of Investor Relations

Gregory T. Lucier - Chairman and Chief Executive Officer

David F. Hoffmeister - Chief Financial Officer and Senior Vice President

Mark P. Stevenson - President and Chief Operating Officer

Carol Cox -

Analysts

Jonathan P. Groberg - Macquarie Research

Amit Bhalla - Citigroup Inc, Research Division

Quintin J. Lai - Robert W. Baird & Co. Incorporated, Research Division

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Paul R. Knight - Credit Agricole Securities (USA) Inc., Research Division

Joshua Riegelhaupt - Oppenheimer & Co. Inc., Research Division

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Derik De Bruin - BofA Merrill Lynch, Research Division

Doug Schenkel - Cowen and Company, LLC, Research Division

Vamil Divan - Crédit Suisse AG, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

Daniel L. Leonard - Leerink Swann LLC, Research Division

Bill Bonello - RBC Capital Markets, LLC, Research Division

Bryan Brokmeier - Maxim Group LLC, Research Division

Daniel Arias - UBS Investment Bank, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Life Technologies Corporation First Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce our host for today, Ms. Carol Cox, Vice President of Investor Relations. Ma'am, please go ahead.

Carol A. Cox

Thank you, Karen, and good afternoon, everyone. Welcome to Life Technologies First Quarter 2012 Earnings Conference Call. We issued a press release today at 1 p.m. Pacific Time or 4 p.m. Eastern, posted on our website at lifetechnologies.com and filed on Form 8-K with the Securities and Exchange Commission. We also posted a deck of slides to accompany the webcast today, which may be found on the Events and Presentations section of the Life Technologies Investor Relations website with our other earnings materials.

Joining me on today's call are Greg Lucier, our Chairman and CEO; and David Hoffmeister, our Chief Financial Officer. Mark Stevenson, our Chief Operating Officer, will also be available during the Q&A portion of the call. If you have not received a copy of today's press release, you may obtain one from our website at lifetechnologies.com. I would like to remind our listeners today that our discussion will include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the company.

We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. Important factors which could cause actual results to differ materially from those in the forward-looking statements are detailed in our filings with the Securities and Exchange Commission. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995.

Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website. And with that, I will turn the call over to Greg Lucier.

Gregory T. Lucier

Thanks, Carol, and thank you, everyone, for joining us on today's call. We are very pleased to open the year with stronger-than-expected first quarter results. Solid performance across all our businesses, especially in Genetic Analysis, to have revenues of $939 million, a 5% increase over last year. Excluding currency, we are able to grow revenue 2%, which is in-line with our annual guidance range of 2% to 4% organic growth and slightly ahead of where we were expected to be in the first quarter.

We increased gross margins to 66.6% and reduced operating expenses as a percentage of revenue to drive operating margin expansion of over 200 basis points, all of which we leveraged to grow non-GAAP earnings per share 17% to $0.99.

Our end markets remained in-line with our expectations, with strength in emerging markets and in Asia, and stability in the U.S. and Europe. We saw particular strength across all our businesses in Japan as the government fiscal year ended and researchers spent their remaining budget funds. We expect to see the normal sequential decline in Q2 as the Japanese government finalizes its budget for 2012 in May and researchers evaluate their spending.

Emerging markets continue to offer incredible growth opportunities. We had high-teens growth in Greater China during the quarter and saw double-digit growth in our Latin American business, as well as strong growth in Eastern Europe and Russia, where we are expanding our sales network. We are primarily a direct seller of our goods, although in new markets, we have often entered with the help of local distributors.

As these markets have grown, we have begun acquiring some of these distributors and that strategy is really starting to pay off.

In early March, I had the opportunity to spend a week in India, visiting employees at our training facility in Delhi and our customer service organization in Bangalore. During my trip, we hosted 2 events with customers where we highlighted Proton and the applications of next-generation sequencing. So far, 2 well-known genomic laboratories in India have placed orders for the Ion Proton, setting the simplicity and higher throughputs of the technology as well as Life Technologies' strong presence in the country.

Our meetings included a range of government officials, academic opinion leaders, diagnostic customers in public and private hospitals and biotech startups. We are excited about our opportunities in India and are continuing to invest in our infrastructure, partner locally and expand our employee base there to drive fundamental demand for our instrumentation and consumables. These investments are helping drive double-digit revenue growth in 2012.

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