MFC Industrial Ltd. (MIL)

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Millipore Corporation (MIL)

Q4 2008 Earnings Call Transcript

February 5, 2009 4:45 pm ET

Executives

Joshua Young – Director, IR

Martin Madaus – Chairman, President and CEO

Charlie Wagner – Corporate VP and CFO

Analysts

Jon Wood – Banc of America Securities

Abigail Darby – JPMorgan

Derik De Bruin – UBS

Ross Muken – Deutsche Bank

Dan Leonard – First Analysis

Jodi Dai – Leerink Swann

Paul Li – Brown Advisory

Presentation

Operator

Good afternoon. My name is Christian and I will be your conference operator today. At this time I would like to welcome everyone to the Millipore Fourth Quarter Full Year 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you.

I would now like to turn the call over to Mr. Joshua Young, Director of Investor Relations for Millipore. Please go ahead, sir.

Joshua Young

Thank you very much. Good evening. I would like to welcome everyone to Millipore’s fourth quarter 2008 earnings conference call. My name is Joshua Young and I am the Director of Investor Relations for Millipore.

Joining me on today’s call are Martin Madaus, Chairman, President and CEO; and Charlie Wagner, Chief Financial Officer.

In addition to Monday's acquisition announcement and the earnings release we issued earlier today, we will also be referencing a slide presentation as part of today’s call. The presentation can be viewed by clicking on the webcast link on millipore.com, or by accessing Millipore’s investor relations website. A PDF copy of the slides will be posted to our website after the call.

We will also be highlighting non-GAAP information. A reconciliation of our GAAP financials to our non-GAAP financial measures will be posted on the website after the call as well.

Before we begin, I will make the usual Safe Harbor statement that during the course of this conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involves risks and uncertainties. The company’s actual results may differ materially from the projections described in such statements. Factors that might cause such differences include but are not limited to those discussed in today’s earnings release and in our Form 10-K, as well as other subsequent SEC filings.

Also note that the following information is related to current business conditions and our outlook as of today, February 5, 2009. Consistent with our prior practice, we do not intend to update our projections based on new information, future events or other reasons prior to the release of our first quarter 2009 financial results in late April.

Now, I would like to turn the call over to Martin Madaus.

Martin Madaus

Thanks, Joshua; and good evening. I will speak briefly about the fourth-quarter results before giving you a more detailed commentary about our 2008 performance.

Millipore's financial results in the fourth quarter were in line with our expectations. The Bioscience division delivered strong performance, while the Bioprocess division reported a modest decline in revenues. We generated – I would say outstanding free cash flow while adapting our cost structure and making investments for long-term growth.

Fourth quarter revenues were approximately $397 million, which represents a 2% decline from last year. If we exclude changes in foreign currency rates, revenues in the quarter grew about 2%. For the full year 2008, we reported revenues of approximately $1.6 billion, which represents 5% growth. Excluding changes in foreign currency exchange rates, revenues grew 1% in 2008 and on this slide you can see now I show our reported revenues since 2004. We really have become a more innovative company and we really added very important scale to our business are generating about 16% compound annual growth rate during that time.

I would characterize the fourth quarter similar to the way I would characterize Millipore's performance during the last 12 months. Clearly, 2008 was a tough year. It was a year in which we faced challenges in our largest biotech accounts, resulting into a disappointing top line growth. But despite these difficult circumstances, I am very proud how Millipore employees responded to the challenges and executed initiatives quickly that helped us to align our cost structure and compensate for lower revenue growth. Additionally, we also launched a program to improve our working capital and we saw the early results from these efforts in Q4 as inventory and accounts receivable were sources of cash flow for the company. Now these efforts, combined with strong revenue growth from our Bioscience division enabled us to deliver a 60% increase in our free cash flow and generate 7% growth in non-GAAP earnings per share.

So think about this, during a year in which our largest division reported a sharp decline in revenues, these financial results are solid. We effectively balanced delivering improvements in earnings and cash flow while also very important investing for future growth. I have spoken before to you about the importance of this new balance that we have established on our business portfolio and the advantages that we have now with a more diversified business compared to our business portfolio from a few years ago. And I started about four years ago in January 2005. Roughly 40% of our revenues were derived from the Bioscience division. At the time, we made the strategic decision to increase our exposure to bioscience markets and today, approximately 45% of our revenues come from Bioscience and the division has almost doubled its revenues during that period of about four years. So not only is the division a higher percentage of our revenues, but also has consistently generated mid to high single-digit organic revenue growth since 2004.

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