Becton, Dickinson And Management Discusses Q3 2012 Results - Earnings Call Transcript

Becton, Dickinson and (BDX)

Q3 2012 Earnings Call

August 02, 2012 8:00 am ET

Executives

Monique Dolecki

Vincent A. Forlenza - Chairman of the Board, Chief Executive Officer and President

David V. Elkins - Chief Financial Officer and Executive Vice President

Tom Polen - President

William A. Kozy - Executive Vice President

Analysts

Amit Bhalla - Citigroup Inc, Research Division

Jon Davis Wood - Jefferies & Company, Inc., Research Division

David R. Lewis - Morgan Stanley, Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division

Jonathan P. Groberg - Macquarie Research

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

Brian Weinstein - William Blair & Company L.L.C., Research Division

Doug Schenkel - Cowen and Company, LLC, Research Division

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

William R. Quirk - Piper Jaffray Companies, Research Division

Jeffrey Frelick - Canaccord Genuity, Research Division

Eric Criscuolo - Mizuho Securities USA Inc., Research Division

Presentation

Operator

Hello, and welcome to BD's Third Fiscal Quarter 2012 Earnings Call. At the request of BD, today's call is being recorded. It will be available for replay through August 9, 2012, on the Investors page of the bd.com website or by phone at (800) 585-8367 for domestic calls and (404) 537-3406 for international calls, using conference ID 96886040.

[Operator Instructions] Beginning today's call is Ms. Monique Dolecki. Ms. Dolecki, you may begin.

Monique Dolecki

Thank you, Jackie. Good morning, everyone, and thank you for joining us to review our third fiscal quarter results. As we referenced in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com.

During today's call, we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our third fiscal quarter press release and in the MD&A sections of our recent SEC filings.

We will also discuss some non-GAAP financial measures with respect to our performance. A reconciliation to GAAP measures can be found in our press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the bd.com website.

Leading the call this morning is Vince Forlenza, Chairman, Chief Executive Officer and President. Also joining us are David Elkins, Executive Vice President and Chief Financial Officer; Bill Kozy, Executive Vice President; and Tom Polen, President of Diagnostics Systems.

It is now my pleasure to turn the call over to Vince.

Vincent A. Forlenza

Thank you, Monique, and good morning, everyone. As we stated in our press release, we were pleased with our third quarter results, which were in line with our expectations.

Growth was driven by our BD Medical and BD Diagnostics segments, and we continue to experience strong growth in international safety and emerging markets. We believe that our revenue and earnings growth this quarter demonstrate that our strategy implementation is on track. We're seeing improved performance in the back half of the fiscal year, as we expected and outlined for you earlier this year.

We continue to face challenges in our Biosciences business in the U.S., which was in line with our expectations. The Biosciences business continues to be impacted by an uncertain research spending environment and lack of overall demand for instruments and research reagents. In other areas of our business, we see utilization in the U.S. as stable but constrained, with some uncertainty in Europe due to continued macroeconomic challenges.

Overall, we believe that our results this quarter continue to highlight the benefits of our diversified portfolio, with softness in 1 segment being offset by strength in our other 2 segments. We also continue to see a positive impact from our new product launches in addition to growth from the Accuri, Carmel and KIESTRA acquisitions.

We recently announced our plans to acquire Safety Syringes, Inc., SSI, a privately held company that specializes in the development of passive anti-needlestick devices for prefillable syringes. This transaction is subject to regulatory review and is expected to close by the end of the fiscal year. This acquisition will nicely complement our Pharmaceutical Systems unit and our safety-engineered products, and it is well aligned with BD's strategy of applying technology in clinical knowledge to make health care more effective, efficient and safe. We believe that BD's expertise, in conjunction with Safety Syringes' portfolio, will enable innovative safety technology development and will bring forth the next generation of safety-engineered prefillable syringes.

SSI's latest annual sales were about $30 million, with a compound annual growth rate of about 10% over the past 3 years. Once the acquisition is complete, revenues will be accounted for under our Pharmaceutical Systems unit.

Based on our results year-to-date, we are now guiding currency-neutral revenue growth to be about 4%, the higher end of our previously communicated range. We are reaffirming our currency-neutral EPS growth of 4% to 5% even as we continue to invest in new products and absorb costs from our recent acquisitions.

On Slide 5, we've outlined our third quarter revenue and EPS results, which I will speak to on a currency-neutral basis. The results of our Discovery Labware business, excluding Advanced Bioprocessing, have been reclassified to discontinued operations. David will go through this later in his remarks.

Total company revenues were solid, increasing by 4.9%. Fully diluted EPS came in at $1.52, [indiscernible] and get 9.7% over the [indiscernible]. For the 9 months year-to-date results, revenue growth was 4.1%; EPS of $3.95 increased by 1%.

Now I'd like to turn things over to David for a more detailed discussion of our third quarter financial performance.

David V. Elkins

Thank you, Vince, and good morning, everyone. I'd like to begin by discussing the key financial highlights for the third quarter. As Vince stated, our third quarter results were in line with our expectations. We continue to proceed with the sale of our Discovery Labware unit. Its results have been reclassified as discontinued operations. I will provide some more detail around this on the next slide.

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