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Omnicell, Inc. (OMCL)
Q4 2008 Earnings Call
January 29, 2009 4:30 pm ET
Rob Seim – Vice President, Finance & Chief Financial Officer
Randall A. Lipps – Chairman, President & Chief Executive Officer
Steven Crowley – Craig-Hallum Capital
Sean Wieland – Piper Jaffray
Newton Juhng – BB&T Capital Markets
Glenn Garmont – ThinkEquity
Gene Mannheimer – Auriga Securities
Leo Carpio – Caris & Company
Alan Fishman – Thomas Weisel Partners
Previous Statements by OMCL
» Omnicell, Inc. Q3 2008 Earnings Call Transcript
» Omnicell, Inc. Q2 2008 Earnings Call Transcript
» Omnicell, Inc. Q1 2008 Earnings Call Transcript
Thank you and good afternoon and welcome to the Omnicell 2008 fourth quarter results conference call. Joining me today is Randall Lipps, Omnicell Chairman, President and CEO. You can find our results in the Omnicell fourth quarter press release posted in the Investor Relations section of our website at www.omnicell.com.
This call will include forward-looking statements subject to risks, uncertainties, and other factors that could cause the actual results to differ materially from those expressed or implied. For a more detailed description of the risks that impact these forward-looking statements please refer to the information under the heading Risk Factors and under the heading Management's Discussions and Analysis of Financial Conditions and Results of Operations. In the Omnicell Annual Report on Form 10-K filed with the SEC on March 14, 2008, as well as our more recent filings with the SEC.
Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of this conference call is January 29, 2009. And all forward-looking statements made on this call are made based on the beliefs of Omnicell’s of this date only. Future events or simply the passage of time may cause these beliefs to change. Finally, this conference call is a property of Omnicell Incorporated and any taping, other duplication or rebroadcast without the expressed written consent of Omnicell is prohibited.
During the call today, I will start with an overview of the financial results for the quarter and for the full year of 2008. Followed by Randy, who will cover some of the quarter’s business highlights. I will then discuss our guidance for 2009 and after that we will open the call for your questions. Fourth quarter revenue met objectives and profit exceeded expectations. However, order volume was less than expected as global economic conditions caused major new customers to slow their acquisition processes.
Backlog, which consists of firm orders due to completion, or due to complete installation within one-year, was a $110 million considerably short of our expectations. While two large contracts and orders with the Duke University Health System and with Emory Healthcare were received in January, we believe the economic environment that is causing our customers to postpone their acquisition decisions will continue well into 2009 and we will experience delays in closing contracts.
We do not see our competitive position changing, we do not see a loss of market share, and we do not see fewer greenfield or competitive swap out opportunities in our pipeline of potential orders to 2009. In the fourth quarter, 30% of our orders came from new customers. New customers are comprised of a combination of competitive conversions and greenfield accounts or accounts installing automation for the first time. The split between greenfield and competitive conversions was about 50:50. The new customer volume continues to broad-based and was not driven by any one particular new customer.
Orders from new customers comprised 33% of our total orders for all of 2008. We continue to see developments of our international business with orders from Europe, Asia, and the Middle East in Q4. We believe international opportunities are good source of growth for us and expect international orders to increase, to be up to 5% of our orders in 2009. The credit markets were challenging for some our leasing partners during the quarter, but we continue to shift our business to other leasing partners that are not as challenged by the current market.
We were able to pay in financing for all customers that were ready to place an order with us in the fourth quarter at immediate credit. Providing financing alternatives to our customers remains an important part of our business and one that we have so far been able to manage with no disruptions to the sales process. We did see a delay in collections in the fourth quarter due to the transition to new leasing partners which drove our receivable balance higher than it has historically been. This is mostly a paperwork transition from customers who signed leasing documents with one partner at the time of placing an order and are now signing documents with a new leasing partner at the time of installation. We expect this receivable issue to work itself through in Q1 of 2009.
Now, I would like to discuss our fourth quarter financial performance. I will first discuss our financial performance in accordance with Generally Accepted Accounting Principles, with year-to-year comparison. Revenue for the fourth quarter of fiscal 2008 was $62.1 million, up 7% year-over-year, but down $2.3 million or 4% from the third quarter of 2008. Revenue for the full year of 2008 was $252 million, an 18% increase from 2007 revenue of $213 million and consistent with our guidance. Net earnings after taxes were $3.3 million or $0.10 per share, which compares to $14.3 million or $0.39 per share in Q4 2007.