Henry Schein, Inc. (HSIC)

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Henry Schein (HSIC)

Q4 2012 Earnings Call

February 13, 2013 10:00 am ET


Carolynne Borders - Vice President of Investor Relations

Stanley M. Bergman - Executive Chairman and Chief Executive Officer

Steven Paladino - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Executive Director

Susan Vassallo - Vice President of Corporate Communications


Glen J. Santangelo - Crédit Suisse AG, Research Division

Kevin K. Ellich - Piper Jaffray Companies, Research Division

Michael Cherny - ISI Group Inc., Research Division

Robert P. Jones - Goldman Sachs Group Inc., Research Division

John Kreger - William Blair & Company L.L.C., Research Division

Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division

S. Brandon Couillard - Jefferies & Company, Inc., Research Division



Good morning, ladies and gentlemen, and welcome to the Henry Schein Fourth Quarter Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Carolynne Borders, Henry Schein's Vice President of Investor Relations. Please go ahead, Carolynne.

Carolynne Borders

Thank you, operator, and my thanks to each of you for joining us to discuss Henry Schein's fourth quarter results. With me this morning are Stanley Bergman, Chairman and Chief Executive Officer of Henry Schein; and Steven Paladino, Executive Vice President and Chief Financial Officer.

Before we begin, I would like to state that certain comments made during this call will include information that is forward-looking. As you know, risks and uncertainties involved in the company’s business may affect the matters referred to in forward-looking statements. As a result, the company's performance may differ from those expressed in or indicated by such forward-looking statements. Also, these forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's Securities and Exchange Commission filings. The contents of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 13, 2013. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.

[Operator Instructions] With that, I would like to turn the call over to Stanley Bergman.

Stanley M. Bergman

Good morning, and thank you, Carolynne. Our fourth quarter financial results were highlighted by strong profitability with growth in diluted earnings per share of approximately 10%. We also are very pleased to be affirming guidance for 2013 that represents earnings per share growth of somewhere between 8% and 11%, in that range, compared with our 2012 results and, of course, excluding restructuring costs. Once again, we believe we've gained market share during the quarter in each of our business groups, driven by strong domestic results across the board and despite some challenges in certain overseas markets.

Looking at our financial results for the year, there are a number of highlights worth noting upfront. So sales in 2012 increased 4.8% to just shy of $9 billion, while internal sales in local currencies were up 5.1% on a comparable basis. So 5.1% is at least twice the market growth rate in the markets that we serve.

Diluted earnings per share increased nearly 12% to $4.44, excluding the new restructuring costs, so on an apples-to-apples basis. I'd like to point out that earnings per share for the year was $0.10 above the top of the guidance range we originally established back in November of 2011. So clearly, 2012 was an excellent year for Henry Schein and for Team Schein indeed.

We also completed a number of strategic acquisitions during 2012 involving each of our 4 global business groups. As well, we are particularly proud of the fact that Henry Schein now serves more than 1 million dental, medical and animal health practitioners around the world. That is a significantly greater number than any other company in our space. I'll speak in greater detail about our fourth quarter and full year accomplishments in a moment. Suffice to say is we are very, very pleased with our performance and we feel very comfortable with where the company is heading. In fact, very excited with the direction. Our strategic plan that we started with for the period January 1, 2012, and ends December 31, 2014, is well under way. Both from an organizational point of view, we are aligned to support the strategic plan goals and also from an operational point of view, we have made significant progress in 2012 advancing the strategic plan. So very, very excited with where we're heading, very comfortable with the direction and with the team. And so Steven, perhaps give us some specifics on the financial side, and then I'll return on later with some more color on the business units.

Steven Paladino

Okay. Thank you, Stan, and good morning to all. I'm also very pleased to be reporting strong financial results and sales growth for the fourth quarter of 2012. Let me point out that the fourth quarter of last year, 2011, included 1 additional selling week compared with the fourth quarter of the current year. This occurs for Henry Schein once every 6 years, given that we are on a 52/53 weeks fiscal year end, and the year end is the last Saturday of December each year. We previously discussed this impact as it related to our 2011 growth versus 2010 on last year's Q4 call. So we have estimated the impact of the extra week on sales and in order to provide a more meaningful analysis, I will be thus discussing our internal sales growth in local currencies and adjusting for the impact of the extra week in last year's fourth quarter.

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