Mindray Medical International CEO Discusses Q1 2012 Results - Earnings Call Transcript

Mindray Medical International (MR)

Q1 2012 Earnings Call

May 08, 2012 08:00 AM ET


Cathy Gao - Manager of Investor Relations

Jie Liu - COO

David Gibson - President

Alex Lung - CFO


Richard Yeh - Citigroup

Shaojing Tong - Bank of America/Merrill Lynch

Jinsong Du - Credit Suisse

Jack Hu - Deutsche Bank

Bin Li - Morgan Stanley

Hao Zhou - Piper Jaffray

Sean Wu - JPMorgan

Jessica Li - CICC

Ingrid Yin - Oppenheimer

Wei Du - Goldman Sachs

Jason Mann - Barclays Capital

Anthony Petrone - Jeffries Group



Good morning everyone, thank you for standing by and welcome to Mindray’s First Quarter 2012 Earnings Conference Call. (Operator Instructions). I would now like to turn the call over to your host for today’s conference, Ms. Cathy Gao, Mindray’s Manager of Investor Relations. Please proceed Ms. Gao.

Cathy Gao

Thank you. Hi, everyone. Welcome to Mindray's 2012 First Quarter Earnings Conference Call. We released our financial results last night and they are now available on the Company's website and Newswire services. There will also be an archived webcast of this conference call on our Investor Relations website.

Joining today's call are Mr. Xu Hang, our Chairman and the Co-CEO; Mr. Li Xiting, our President and the Co-CEO; Mr. Alex Lung, our Chief Financial Officer; Mr. Jie Liu, our Chief Operating Officer; Mr. Minghe Cheng, our Chief Strategic Officer; Mr. David Gibson, our President of North America Operations; and Ms. May Li, our Deputy Chief Financial Officer.

In a moment, Mr. Jie Liu will provide an update of the Company's operational performance. Mr. David Gibson will discuss Mindray's operations in the North America region. Mr. Alex Lung will review the details financial results as well as the Company’s outlook for 2012. After that they will be happy to take your questions.

Before we continue, please note that this call will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements made and the views expressed here which are not historical facts are forward-looking statements. You should be cautioned that the forward-looking statements are only predictions and may involve inherent risks and uncertainties. As such, our actual results may be materially different from the statements and the views expressed here today due to a variety of factors.

A number of such risks and uncertainties, and factors are outlined in our public filings with the SEC. In particular, please refer to risk factors beginning on Page 5 of our Annual Report on Form 20-F filed with the SEC on April 30, 2012. Any projections made here today are based only on limited information currently available to us, and are subject to change. Mindray does not undertake any obligations to update any forward-looking statements, except as required under applicable law.

I will now turn the call over to Mindray's COO, Mr. Jie Liu.

Jie Liu

Thank you Cathy. Good morning and good evening ladies and gentlemen we are all just good start in the first of 2012, overall we continued our sales momentum in the last few quarters and achieved year-over-year revenue growth of 21.1% at $219 million and delivered 16.5 non-GAAP net income growth excluding tax benefit. Net operating cash flow was strong with over 80% year-over-year growth. For the past quarter China in the emerging markets remained the key gross driver for company with each achieving over 20% year-over-year growth.

We also delivered a high single digit year-over-year growth in development market, to be more at systematic R&D approach, we studied a medical product innovation project r MPI project in the first quarter of this year. We expect this initiative to streamline the R&D process between different R&D centers worldwide, he has our product development management and the increased R&D efficiency.

The project we expected lasted for few years, on the merger acquisition front. Today we announced that we acquired a continuous state of Hangzhou Optcla Medical Instrument Corporation Limited. The company there specialized in rigid endoscopes in the surgical device development. These transactions were further strengthening our capabilities to provide operating room to the solutions.

We have to get access to the fastest growing, minimum invasive and digitalized creating equipment market. This is the fifth acquisition we did since 2011, though we continue to actively seek external opportunities. Now let’s look at the detailed performance by geographic and segment respectively.

We had another robust quarter for our domestic sale, China sales growth was 26.8% year-over-year and we have discussed in the last few quarters, the Chinese government intends to increase patient in traffic to (inaudible) hospital and as a result we continue to use robust infrastructure upgrade and device process activity in this segment and other market.

(Inaudible) hospital, our strong segment and we expect the fair well spending trend to continue. Our key account team strategy has pulling to walk way out in the past year and half and that we expect our team to continue grow.

Longer term we are also continued to invest and expand the drug service platform in order to build relationship with key hospital decline and the full serve customer loyalty. We believe that this strategy is important to drive both topline and the bottom line growth in China.

Our long term trend such as green, aging population specifically in our health insurance

coverage, increasing levels reimbursement, urbanization, lifestyle changing. We continue to accelerate the demand of healthcare products and services in China.

In some we remain optimistic about the near and the long term operating environment in the domestic market. We are confident that we have a strong competitive position to seize market alternative. Moving on to our international affairs, we recorded 17.3% sales growth in the first quarter. The emerging markets was again a key gross driver with sales growth of more than 23%. Demand the overall emerging markets remain strong inspite of political uncertainty in the Middle-East Africa regions and the forex exchange control imposed by a few American governments.

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