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Life Technologies (LIFE)

Q3 2010 Earnings Call

October 26, 2010 4:30 pm ET

Executives

Bernd Brust - President of Commercial Operations

Eileen Pattinson - Senior Director of Investor Relations

Mark Stevenson - President and Chief Operating Officer

Gregory Lucier - Chairman and Chief Executive Officer

David Hoffmeister - Chief Financial Officer

Analysts

Derik De Bruin - UBS Investment Bank

Jonathan Groberg - Macquarie Research

Jeffrey Loo - S&P Equity Research

Tycho Peterson - JP Morgan Chase & Co

Isaac Ro - Leerink Swann

Quintin Lai - Robert W. Baird & Co. Incorporated

Marshall Urist - Morgan Stanley

Doug Schenkel - Cowen and Company, LLC

Jon Wood - Jefferies & Company, Inc.

Charles Butler - Barclays Capital

Presentation

Question-and-Answer Session

Derik De Bruin - UBS Investment Bank

So first kind of a housekeeping. So what's the interest expense forecast for 2010? I guess, could you talk about -- I think you have some converts coming up in 2011, can you just talk about the debt claim plans and what you're expectations are for the converts?

Gregory Lucier

The first part of your question was the interest expense?

Derik De Bruin - UBS Investment Bank

Yes, for 2010. I mean, another kind of pay downs of things. I'm just questioning where the expense numbers are coming out?

Gregory Lucier

So the interest expense is $110 million to $120 million. And then in terms of the converts, it obviously depends on the share price, but assuming the share price continues to rise, we would expect to retire or call those converts when they're due.

Derik De Bruin - UBS Investment Bank

And I guess I'm a little bit -- I think I'm a little bit surprised and certainly, that I think some of the investors are going to be surprised the fact that you're reporting double-digit growth in your SOLiD franchise. And I guess a couple of questions. Are you still on track throughout the SOLiD, the upgraded SOLiD, the hq, by the end of the year? Is the throughput commentary that you still have on that the same? I think it was a 200 g [ph] throughput per round there. And I guess, just where are those labs that you're placing new instruments in?

Mark Stevenson

First, just to confirm, actually it was a strong double-digit growth that we experienced in the quarter and it was the best quarter ever that we've have for SOLiD. So we've got great traction in that and saw that in the overall growth, actually like sequencing brand franchise it's not only solid you see but also strong sales of CE of the 3500. It's really across a range of labs. I mean, with regard to SOLiD, as I've mentioned in the first question, the appreciation of the accuracy is there in terms of both finding these rare mutations as I've said in the quote sort of needle in the haystack that accuracy matters. And so that's very much appreciated. That also translates into lower throughput cost when you're doing how much coverage you need. So that's one thing. On the second part of your question, we're very much on track to launch the systems. We'll give much more detail about that and our plans next week at ASHG and update you on where we are both on the platforms and throughput, and very much is an upgrade of old parts for all our customers. So they're coming with us on this journey. We've made tremendous improvement in the performance of the system, and they are coming with us on this journey as we carry on and get greater performance out of the system.

Operator

And your next question comes from the line of Marshall Urist. [Morgan Stanley]

Marshall Urist - Morgan Stanley

Just a big picture question on how you're kind of thinking about overall business trends. Typically, you guys talked about closing stronger sort of sequentially into the end of the year, both in terms of margin momentum and organic growth. So given the commentary that you've had, I guess, is there no change in sort of the sequential momentum that you're thinking about it purely a function of the tougher comp from last year? And I guess, on the margin side, sort of a similar question but sort of asking given some of the spending that you delayed this quarter, is some of that going to get pushed in the next quarter so we can kind of think about underlying margin momentum sort of improving sequentially, if we kind of share some of that spend between the two quarters.

David Hoffmeister

Right. So really, the commentary on the fourth quarter is nothing but the comparable issue. So as you know, fourth quarter is traditionally one of the larger ones of the overall year. It continues to be. And again, it just relates to the 2009 fourth quarter comp that we have. The way you think about margins is right on. They will increase, but it will be modulated somewhat by the increased spending that we'll have in the quarter on some of these projects.

Marshall Urist - Morgan Stanley

And then just one follow-up is just on the Molecular Biology Systems trends in the quarter, sort of flat organic, 4% without H1N1. Can you kind of talk about what the kind of biggest trends were there? And any sort of change from last quarter or over the first half, in terms of the sort of excluding H1N1 benefit but kind of the core business there?

Gregory Lucier

I think the only commentary about that piece of the business was it was probably more than any other part of our company impacted by the information technology project we had in Asia and the overall -- a little slower growth we had in Asia in the quarter. So again, fourth quarter, we expect Asia to snap back into the high-double digits again, and you'll see that business snap back up to higher organic growth as well.

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