ResMed Management Discusses Q4 2012 Results - Earnings Call Transcript

ResMed (RMD)

Q4 2012 Earnings Call

August 02, 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

Michael J. Farrell - President of Americas Operations

Donald Darkin - President of SDB Strategic Business Unit

David Pendarvis - Chief Administrative Officer, Global General Counsel and Secretary

Geoff Neilson - President of Respiratory Care Strategic Business Unit

Robert Douglas - Chief Operating Officer


Dan Hurren - UBS Investment Bank, Research Division

Jacob Messina

Michael Matson - Mizuho Securities USA Inc., Research Division

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

Ian Abbott - Goldman Sachs Group Inc., Research Division

Nicholas Cameron - Deutsche Bank AG, Research Division

Anthony Petrone - Jefferies & Company, Inc., Research Division

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

Matthew Prior - BofA Merrill Lynch, Research Division

Saul Hadassin - Crédit Suisse AG, Research Division



Good afternoon, ladies and gentlemen. Welcome to the Fourth Quarter 2012 ResMed, Inc. Earnings Conference Call. My name is Chris, and I will be your conference moderator for today. [Operator Instructions]

The company has asked me to address certain matters: First, ResMed does not authorize the recording of any portion of this conference for any purpose. Second, during the conference call, ResMed may make forward-looking statements, such as projections of future revenue 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 you may access 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, Chris, and thanks, everyone, for joining.

I'll begin as usual with some summary remarks, and then turn the call over to Brett Sandercock for some more granularity on the finances. And we will then do some Q&A.

First, the financial summary. We finished with another extremely solid quarter and fiscal year. Global revenues in the fourth quarter of 2012 grew 9% to $372 million, up 13% on a constant currency basis.

Revenues in the Americas grew 13% year-over-year to $207 million. And ROW revenues increased by 3% or 13% in constant currency terms to $165 million. This represents our 70th consecutive quarter in which we've grown the top line since we went public.

I don't believe there are too many companies in that category that can boast a record like that. But we'll get some more granularity on that for those who are interested.

For fiscal 2012, we reported revenues of approximately $1.4 billion, up 10% year-over-year and earnings per share of $1.71, up 19% year-over-year. We believe that superior product quality continues to drive our growth.

Net income for the quarter increased 31% to $77 million, while GAAP EPS increased a robust 43% to a record $0.53 for this quarter. Excluding amortization of acquired intangibles, EPS was a record $0.54.

With respect to product performance, let me start with masks. All mask categories showed strong growth. And we continue to take market share, particularly with the Mirage nasal mask, which is thus far proving to be a seeming game changer.

Accessories also grew strongly, as both large and small HMEs and DMEs are becoming more systematic about resupply and delivery of replenishment supplies to the patients who need them.

Our global growth in Flow Generators this quarter was primarily driven by the high-end devices. Strong sales reflect the benefits of having all of our PAP devices configured on the smaller, quieter and more appealing S9 platform.

In the Americas the S9 AutoSet and the VPAP Adapt, which is an adaptive servo-ventilator did particularly well.

Growth in the Flow Generator segment was also driven by a positive mix shift from basic CPAP to APAP due to the ongoing growth of home sleep testing, as well as, we believe, physician preference to put patients on the AutoSet, which provides more flexible therapy, improves patient comfort and appears to enhance compliance.

The new EasyCare Online Compliance Management system continues to be well received, and we expect to see some solid ongoing uptake from existing, as well as new accounts.

Products and programs which provide superior therapy and better compliance are what bring the most value to the patients, customers and service providers. In other words, across the whole food chain.

Europe continues to be challenging due to difficult macroeconomic environment, although sales were relatively strong in both Germany and the U.K. Despite this challenging economic climate, bilevel, AutoSets CS, which is also our version of the adaptive servo-ventilator in the rest of the world, and the Stellar products all did well in this quarter.

We also believe that great opportunities exist in Europe to address the connection between sleep-disordered breathing and various comorbidities, such as heart disease, diabetes and so on, as well as occupational health and the more compelling economic case and the more -- and the more and more compelling economic case for treating sleep apnea in general.

There's also a great deal more focus on compliance, which certainly positions us well with our high-quality products.

The Asia Pacific region also had a solid quarter, particularly in the Japanese market, due to strong sales in sleep, as well as our bilevel and respiratory product portfolio, which also did very well.

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