ResMed's CEO Discusses Q3 2012 Results - Earnings Call Transcript

ResMed (RMD)

Q3 2012 Earnings Call

April 26, 2012 4:30 pm ET


Peter C. Farrell - Founder, Executive Chairman, Chief Executive Officer and President

Brett A. Sandercock - Chief Financial Officer and Principal Accounting Officer

Unknown Executive -

Michael J. Farrell - President of Americas Operations

Geoff Neilson - President of Respiratory Care Strategic Business Unit

Robert Douglas - Chief Operating Officer


David Low - Deutsche Bank AG, Research Division

Ben Andrew - William Blair & Company L.L.C., Research Division

Matthew Prior - BofA Merrill Lynch, Research Division

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

David C. Clair - Piper Jaffray Companies, Research Division

Saul Hadassin - Crédit Suisse AG, Research Division

David Stanton - Nomura Securities Co. Ltd., Research Division

Steven D. Wheen - JP Morgan Chase & Co, Research Division

Ben C. Haynor - Feltl and Company, Inc., Research Division

Michael Matson - Mizuho Securities USA Inc., Research Division



Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 ResMed Incorporated Earnings Conference Call. My name is Angela, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

The company has asked me to read -- address certain matters. First, ResMed does not authorize the recording of any portion of this conference call for any purpose. Second, during the conference call, ResMed may make forward-looking statements such as: Projections of future revenue or earnings, new product development or new markets for the company's products. These statements are made under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Risks and uncertainties exist that could cause actual results to materially differ from the forward-looking statements.

These factors are discussed in ResMed's SEC filings, such as forms 10-Q and 10-K, which may be accessed through the company's website at

With that said, I would like to turn the call over to Dr. Peter Farrell, ResMed's Chairman and CEO. Dr. Farrell, please go ahead, sir.

Peter C. Farrell

Thank you, Angela, and I think we still have some time left. And thanks, everyone for joining us. I'll begin with some summary remarks, and then turn the call over to Brett Sandercock, our CFO. And Brett will provide more granularity on the numbers. And then we'll go to Q&A. So first, the financials. A short summary. We finished with a very solid quarter. Global revenues were $349.1 million, up 11% headline in growth or 13% constant currency. Revenues in the Americas grew by an extremely robust 18% year-over-year to $189.9 million and ROW revenue increased by 4% headline or 7% in constant currency to $159.2 million. This represents the 69th consecutive quarter in which we've grown the top line that is quarter-over-quarter since we went public in 1995. And obviously we're pleased with that result and will be able to continue that record growth. Net profit after tax increased 21% to $64.6 million while GAAP EPS increased by robust 29% to $0.44 for the quarter. Excluding amortization of acquired intangibles, EPS was a record $0.46.

With respect to product performance, let me first start with masks, this category continued to perform extremely well especially in the Americas. The 3 new masks in the Forex trilogy, the Quattro FX, the Mirage FX and the Swift FX, as well as the for her versions of these masks continued to enjoy brisk sales. In fact, the Mirage FX is doing particularly well and we are steadily gaining additional share in this category. In fact, our data show that the Mirage FX is currently the biggest selling nasal mask on a global basis. And the new Swift FX Bella, mask for female patients, with loops that wrap around the ears, and this allows us to not have additional headgear, that is also doing very well and we expect to see continuing traction with it.

As we've been highlighting in the last few quarters, another big reason we continue to see strong growth in the Mask category, other than the continued introduction of outstanding products, is that there is excellent business in the resupply replenishment to the existing patient base. Our global growth in Flow Generators this quarter was primarily driven by our high-end devices, which are now all on the S9 device platform. Strong sales reflect the benefits of having these products configured on the small but more appealing S9 platform. In the Americas, the S9 VPAP bilevel range is also regaining market share because of its excellent quality algorithms and also the performance that we get with those algorithms. The bilevels are providing strong value proposition for both HMEs and positions. Growth in the basic Flow Generator segment is still problematic and, partially, this is driven by the positive mix shift to APAP or our AutoSet from basic CPAP. And this is primarily due to the ongoing growth of home sleep testing. Europe continues to be challenging due to difficult macroeconomic environment there. Although sales were relatively strong in Germany and the U.K. Although the European economic climate remains somewhat muted bilevels, AutoSets and Stellar Stellar products all continue to do well.

We also just announced the release of our new patient compliance management solution called EasyCare Online. This innovative new tool used by sleep labs home medical equipment and DMEs and other healthcare providers aggregates usage and efficacy data from sleep-disordered breathing, obviously patient's on CPAP therapy, with simply a single click. Simple to use while saving time and money. The EasyCare Online employs a secure cloud-based system that provides compliance data that can differentiate our customers and is critical in today's environment.

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