Mylan Management Discusses Q2 2012 Results - Earnings Call Transcript

Mylan (MYL)

Q2 2012 Earnings Call

July 26, 2012 10:30 am ET


Kris King

Heather Bresch - Chief Executive Officer and Director

John D. Sheehan - Chief Financial Officer and Executive Vice President


David Risinger - Morgan Stanley, Research Division

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Frank H. Pinkerton - SunTrust Robinson Humphrey, Inc., Research Division

Marc Goodman - UBS Investment Bank, Research Division

Elliot Wilbur - Needham & Company, LLC, Research Division

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

Ken Cacciatore - Cowen and Company, LLC, Research Division

Shibani Malhotra - RBC Capital Markets, LLC, Research Division

Jami Rubin - Goldman Sachs Group Inc., Research Division



Welcome to Mylan's Second Quarter Earnings Conference Call and Webcast. Hosting the call today from Mylan is Ms. Kris King, Vice President, Global Investor Relations. Today's call is being recorded and will be available for replay beginning at 1 p.m. Eastern Standard Time. The dial-in number is (800) 585-8367 or (404) 537-3406 for international callers, with pin number 94584310. [Operator Instructions] It is now my pleasure to turn the floor over to Kris King. You may begin.

Kris King

Thank you, Beverly. Good morning, everyone. Welcome to Mylan's Second Quarter 2012 Earnings Call. Joining me for today's call are Mylan's Chief Executive Officer, Heather Bresch; President, Rajiv Malik; Chief Operating Officer, Hal Korman; and Executive Vice President and Chief Financial Officer, John Sheehan.

During today's call, including the Q&A, we will be making numerous forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often may be identified with the use of words such as may, will, could, should, would, project, believe, anticipate, expect, plan, estimate, guidance, trends, forecast, potential, intend, continue and variations of these words or comparable words.

Our forward-looking statements may today include, among others, statements related to anticipated business levels, trends in some European countries, planned launches of and anticipated exclusivity period for new products, our ability to achieve forecasted full year results while absorbing the impact of negative pricing pressures, expectations for capital expenditures, expectations for R&D, SG&A and other spending.

Our guidance range, future earnings, planned activities, anticipated growth and other expectations and targets for future periods, including our expectations regarding the third and fourth quarters for the 2012 overall. Because these statements are forward looking, they inherently involve risks and uncertainties and, accordingly, our actual results may differ materially from those expressed or implied by such forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, the factors set forth under forward-looking statements in our recent earnings release dated July 26, 2012, as well as the risk factors set forth in our report on Form 10-Q for the period ended March 31, 2012, and in our other SEC filings. You can access our Form 10-Q and other SEC filings, including our earnings press release, which we filed on Form 8-K through the SEC website at And we strongly encourage you to do so.

In addition, during this call, we will be referring to certain actual and projected financial metrics of Mylan on an adjusted basis, which are non-GAAP financial measures. It should be noted that non-GAAP measures such as adjusted revenue, adjusted gross margin and adjusted diluted EPS should be used only as a supplement to, not as a substitute for, or as a superior measure to measures of financial performance prepared in accordance with Generally Accepted Accounting Principles or GAAP.

Please refer to today's earnings press release, which is available on our website, as well as on SEC website, as it contains detailed reconciliations of the non-GAAP financial measures we use for our second quarter results prepared in accordance with GAAP.

Before I turn the call over to Heather, let me also remind you that the materials in the call, with the exception of the participant questions, is a property of Mylan and cannot be recorded or rebroadcast without Mylan's expressed written permission.

With that, I will turn the call over to Heather.

Heather Bresch

Thank you, Kris, and good morning, everyone, and thank you for joining us. I would also like to welcome and recognize Mylan's employees around the world. Because of their dedication and hard work, we once again delivered very strong results. On behalf of the Board of Directors and our entire management team, I would like to congratulate them on a job well done.

Mylan had an outstanding second quarter, delivering double-digit top line and bottom line year-over-year growth. Sales were about $1.7 billion, up 12% on a constant currency basis, and our adjusted diluted EPS increased 15% from the same prior year quarter to $0.60 a share. Building on our strong first quarter, this stellar performance supports our confidence that 2012 will be the best year-to-date in Mylan's history, with many more to come.

Among the second quarter's highlights were growth of more than 50% in our Specialty business, double-digit growth in North America and strong performance of our ARV franchise. Our performance this quarter was strong compared to last year's second quarter when we had several very significant product launches. Further, we delivered this growth while continuing to invest in our global platform through increased R&D and sales and marketing programs. In addition, our gross margin was up almost half a percentage point.

We also saw improvement in some European countries. Constant currency third-party net sales in our EMEA region were down about 3% year-over-year, a smaller decline than we've seen in recent quarters. EMEA's top line was essentially flat from Q1 to Q2 of this year. These results are yet another demonstration of our ability to manage our global platform for growth by optimizing new launches and seizing opportunities as we continue to build our base business and effectively manage pricing pressures. It's against this factor of that we look forward to the third quarter, which we project to be by far our strongest of the year, and a fourth quarter that is similar to or slightly higher than the second quarter. We are reaffirming our 2012 adjusted EPS guidance of $2.45 to $2.55 per share, as well as our 2013 target of $2.75.

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