CR Bard Management Discusses Q2 2012 Results - Earnings Call Transcript

CR Bard (BCR)

Q2 2012 Earnings Call

July 25, 2012 5:00 pm ET


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

Christopher S. Holland - Chief Financial Officer and Senior Vice President

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

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


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

Lawrence S. Keusch - Raymond James & Associates, Inc., Research Division

Matthew Taylor - Barclays Capital, Research Division

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

Robert A. Hopkins - BofA Merrill Lynch, Research Division

David R. Lewis - Morgan Stanley, Research Division

Matthew J. Dodds - Citigroup Inc, Research Division

Topher Orr - Goldman Sachs Group Inc., Research Division

Thomas J. Gunderson - Piper Jaffray Companies, Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division

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

Michael Matson - Mizuho Securities USA Inc., Research Division

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

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



Ladies and gentlemen, thank you for standing by. Welcome to the C. R. Bard, Inc. Second Quarter 2012 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference 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 John H. Weiland, President and Chief Operating Officer; Christopher S. Holland, 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 in Bard's March 31, 2012, Form 10-Q and the information under the caption Risk Factors in Bard's 2011 10-K, including disclosure 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 performance of the company and its individual products franchises. Reconciliations of non-GAAP measures to the most comparable GAAP measures are provided in Bard's earnings press release and on the company's website at All information that is not historical is given only as of July 25, 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, sir.

Timothy M. Ring

Thanks, Tom. Good afternoon, everybody. I'd like to welcome you to Bard's Second Quarter 2012 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 to last about 30 minutes.

I'd like to begin today by introducing Chris Holland. Chris joined us in May as our Senior VP and Chief Financial Officer, replacing Todd Schermerhorn, who, as you know, retired after 9 years of being in that role and 27 years in total at Bard. We all wish Todd the best in retirement, and I would like to publicly thank him for his passion, intellect and insight he brought to our organization.

He certainly left some big shoes to fill and I have to tell you, I couldn't be happier with our choice. Although Chris has only been here a short time, a couple of months now, his many years of senior management experience at ARAMARK and his extensive background in medical devices at JPMorgan have prepared him well to contribute significantly from day 1. As you get the chance to meet him in the coming months, I'm confident that you will quickly see, as we have, that he's an exceptional leader who will help us successfully navigate the sizable opportunities and the challenges ahead of us. So Chris, welcome.

Christopher S. Holland

Thank you very much, Tim.

Timothy M. Ring

The discussion today will go as follows. I'll begin with an overview of the results for the second quarter of 2012. John Weiland, our President and COO, will go through the second quarter product line revenue results. Then you'll hear from Chris, who will review the second quarter income statement, balance sheet and our expectations for the third quarter. And then John DeFord, our Senior VP of Science, Technology and Clinical Affairs, will give you an update on our product development pipeline, and then we'll close with Q&A.

Second quarter 2012 net sales totaled $742.6 million, up 2% over Q2 of last year on an as-reported basis and up 4% on a constant currency basis. Currency impact for the quarter versus the same quarter last year was unfavorable by about 170 basis points.

Net income for the second quarter of 2012 was $133.9 million. Diluted EPS were $1.54. Excluding items that affected the comparability of results between the periods, which Chris will cover later, second quarter 2012 net income and diluted EPS were $140.5 million and $1.62, down 1% and up 3%, respectively. That's within our guidance for the quarter, albeit at the lower end and reflects the impact from the challenging macro environment and currency headwinds. As a reminder, in Q1, we did exceed the top end of our guidance by $0.04, and Chris will give you further context on how we view the back half of the year a little bit later.

Looking at revenue growth geographically compared to Q2 last year, second quarter net sales in the U.S. increased 2% and once again, while internationally we grew 8% on a constant currency basis. Europe was a little weaker this quarter with a couple fewer sales bids compared to last year and grew 2% on constant currency basis. Japan had another strong quarter, growing 19% having some continued benefit from a competitor's quality issue in stents that we talked about last quarter. Our other international businesses grew 13% in constant currency, driven by 29% growth in our emerging markets.

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