CR Bard's CEO Discusses Q1 2012 Results - Earnings Call Transcript

CR Bard (BCR)

Q1 2012 Earnings Call

April 24, 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

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

Michael Matson - Mizuho Securities USA Inc., Research Division

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

Frederick A. Wise - Leerink Swann LLC, Research Division

Matthew J. Dodds - Citigroup Inc, Research Division

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

David R. Lewis - Morgan Stanley, Research Division

Topher Orr - Goldman Sachs Group Inc., Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division

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

Lennox Ketner - BofA Merrill Lynch, Research Division

Daniel Sollof - Barclays Capital, Research Division

Joshua T. Jennings - Cowen and Company, LLC, Research Division

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

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

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the C. R. Bard, Inc. First Quarter 2012 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded and will be available for future on-demand replay through Bard's website. Today's presentation will be hosted by Timothy M. Ring, Chairman and Chief Executive Officer; along with Jay H. Weiland, President and Chief Operating Officer; Todd C. Schermerhorn, Senior Vice President and Chief Financial Officer; and John A. DeFord, Senior Vice President, Science Technology and Clinical Affairs. Also in attendance today is 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 and the information under the caption Risk Factors, each in Bard's 2011 10-K, including disclosures of 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 the core operating performances of the company and its individual product franchises. Reconciliations of non-GAAP measures to most comparable GAAP measures are provided in Bard's earnings press release and on the company's website at www.crbard.com. All information that is not historical is given only as of April 24, 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 will turn the call over to Mr. Timothy Ring. Please go ahead.

Timothy M. Ring

Thank you. Good afternoon, everybody. I'd like to welcome you to Bard's first quarter 2012 earnings call, and thank you all for taking the time to join us today. I'd expect the presentation portion of the call to last about 30 minutes.

The agenda today will go as follows. I'll begin with an overview of the results for the first quarter of 2012. John Weiland, our President and COO, will review first quarter product line revenue. Todd Schermerhorn, our Senior VP and CFO, will review the first quarter income statement and balance sheet, as well as our expectations for the second quarter. John DeFord, our Senior VP Science Technology and Clinical Affairs, will then provide an update on our product development pipeline. And then finally, we'll close with a question-and-answer period.

First quarter 2012 net sales totaled $730 million. That's up 4% over Q1 of last year on an as-reported basis and up 5% on a constant-currency basis. Currency impact for the quarter versus Q1 of last year was unfavorable by about 40 basis points.

Net income for the first quarter of 2012 was $138.7 million and diluted earnings per share were $1.60. Excluding items that affected the comparability of results between periods, which Todd will cover later, first quarter 2012 net income and diluted EPS were $139.5 million and $1.61, up 4% and 7%, respectively. We're off to a good start this year, which Todd will put in perspective for you when he discusses this quarter's financial performance and our guidance for the second quarter.

Looking at revenue growth geographically, compared to last year, first quarter net sales in the U.S. increased 2%, while internationally, we grew an impressive 11%. In Europe, we were up 6% on a constant-currency basis. Japan had a particularly strong quarter, growing 19%, which included some benefit from a competitor's quality issue in stents that John Weiland will address a little later. Our other international businesses grew 15% in constant currency, driven by a 29% growth in our emerging markets.

On the business development front, we don't have any new deals coming up at this time, but I can tell you that the transactions we closed in the fourth quarter last year are proceeding as planned. We told you that we had expected ClearStream and Medivance together to contribute about 200 basis points of growth this year, and that was their impact on the first quarter. Later, you'll hear John DeFord's update at the LEVANT 2 trial from the Lutonix acquisition continues its rapid enrollment and is going according to our plans.

So in summary, I'd characterize the first quarter as a good start to the year. While we still haven't seen much change in the U.S. environment, our increased focused in investments in international markets are providing rapid returns and strengthening our growth profile. We remain focused on daily execution of our product leadership strategy to take advantage of the opportunities in front of us while positioning ourselves for stronger growth in the future.

Before I turn the call over to John Weiland, I wanted to give you an update on the Gore litigation. As most of you know, on February 10, the Court of Appeals for the Federal Circuit affirmed the District Court's decision in our favor. Gore has since filed a petition requesting a rehearing of the case, so we're currently waiting to find out if there will be further hearings or not. In the meantime, we're in the process of evaluating alternatives for the use of these potential funds in the best interest of shareholders.

As we've told you in the past, we intend to invest approximately half of the earnings power associated with the favorable ruling in the growth programs for the business. The timing of potential resolution of this case remains uncertain. Having said that, we think the most likely scenario is a final resolution late this year and at that time, we expect to provide further details about the use of funds.

With that, let me turn you over to John Weiland for a review of our product line revenue.

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