Life Technologies (LIFE)
Q4 2010 Earnings Call
February 03, 2011 4:30 pm ET
David Hoffmeister - Chief Financial Officer and Senior Vice President
Eileen Pattinson - Senior Director of Investor Relations
Gregory Lucier - Chairman and Chief Executive Officer
Michael Cherny - Deutsche Bank AG
Derik De Bruin - UBS Investment Bank
Jonathan Groberg - Macquarie Research
Tycho Peterson - JP Morgan Chase & Co
Quintin Lai - Robert W. Baird & Co. Incorporated
Marshall Urist - Morgan Stanley
Doug Schenkel - Cowen and Company, LLC
Jon Wood - Jefferies & Company, Inc.
Amit Bhalla - Citigroup Inc
Previous Statements by LIFE
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Thank you, operator, and good afternoon, everyone. Welcome to Life Technologies' Fourth Quarter and Full Year 2010 Earnings Conference Call. Joining me on the call today are Greg Lucier, our Chairman and CEO; and David Hoffmeister, Chief Financial Officer. In addition, Mark Stevenson, President and Chief Operating Officer will be available during the Q&A portion of the call. If you haven't received a copy of today's press release, you may obtain one from our website at lifetechnologies.com.
I want to remind our listeners that our discussion today will include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. Additionally, we'll be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website.
I'll now hand the call over to Greg Lucier.
Thanks, Eileen, and thank you all for joining us. I hope you've had a chance to review the press release we put out this afternoon. We had a terrific fourth quarter, with 5% organic revenue growth and $0.90 of earnings per share, rounding out a record year for Life Technologies. For the full year, we achieved 7% organic growth and 200 basis points of operating margin expansion, generating over $1 billion in operating profit. Free cash flow for the year was $614 million. Excluding the impact of H1N1 and the large Japanese Police deal, organic revenue growth was, for the fourth quarter and the full year, was 9%.
Earnings per share grew 17% in 2010, the result of a lot of hard work and focused execution from our teams around the world. Throughout the year, these teams have focused on building shareholder value through excellence in four key areas that ultimately drive our strong financial performance. These areas are product innovation, geographic reach, market expansion and operational excellence. I'll spend a little time highlighting what we have done in each of these areas over the course of the last year.
In 2010, we launched a multitude of new innovative products that are designed to accelerate the pace of discovery by making research simpler, faster and more accurate. The successes of our Bioproduction business throughout the year is a notable example of how new products are driving top line growth. In 2010, this business grew more than 20%, driven in large part by the success of several newly launched products, including biological detection for the rapid identification of common contaminants in biomanufacturing, and optimized animal origin free media for CHO cells, the most commonly used cell industrial production of protein-based therapeutics. Key product launches in other areas such as sample prep, real-time PCR, bench-time devices and sequencing to name a few, solidified our leadership position in these areas as we continue to provide our customers with the best products available.
The Instrument business, which makes up approximately 20% of our revenues, grew over 8% in 2010, 14% excluding the impact of H1N1 and the Japanese Police order. This performance was driven in part by the strong demand for the ViiA 7 PCR System, the 3500 CE sequencer and the SOLiD next-generation systems, expanding our footprint in the labs and locking in highly profitable consumable revenue stream benefiting us for the years to come.
The Consumables business, which makes up the remaining 80% of revenues, grew 7% in 2010 and 8%, excluding the impact of H1N1 and the Japanese Police order. Researchers in every field of science use our consumable products each and everyday to perform the fundamental research that advances scientific discovery. Growth in this business continue to be very stable due to the essential nature of these products and the high volume of small orders that we process everyday. Continued investments in R&D and small tuck-in technology acquisitions have allowed us to continually refresh our portfolio and offer cutting-edge technologies across the entire spectrum of biological research.
Taking a closer look at some of our larger franchises, you can see where these investments and innovation are paying off. Since 2009, we have made a number of investments in our Real-time PCR business, including the acquisition of Stokes Bio in 2010. The Stokes platform is a transformational technology that speed, scalability and high performance will not only drive growth in our traditional PCR applications but also expand our addressable market by taking share from the $1.2 billion microarray market.
With our TaqMan assays, this platform will allow customers to analyze up to 50,000 data points in one hour to get the industry's best quality and most reliable results. The Stokes platform is cost competitive with microarrays on per sample basis, performs better than microarray platforms in terms of throughput and is significant better in terms of the data quality. Early access to the Stokes Bio platform will be available this year with a full launch expected in early 2012.