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Millipore Corp. (MIL)

Q1 2009 Earnings Call

May 07, 2009, 4:45 pm ET


Joshua Young - Director, IR

Martin Madaus - Chairman, President and CEO

Charlie Wagner - Corporate VP and CFO


Jon Wood - Banc of America

Ross Muken - Deutsche Bank

Marshall Urist - Morgan Stanley

Tycho Peterson - JPMorgan

Derik DeBruin - UBS

Isaac Ro - Leerink Swann & Company

Peter Lawson - Thomas Weisel Partners



Good afternoon. My name is [Chastity] and I will be your conference operator today. At this time, I would like to welcome everyone to the Millipore Q1 2009 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.

Mr. Young you may begin your conference.

Joshua Young

Thank you very much [Chastity]. Good evening everybody. I would like to welcome you to Millipore’s first quarter 2009 earnings conference call. My name is Joshua Young and I am the Director of Investor Relations for Millipore and joining me on today’s call are Martin Madaus, Chairman, President and CEO; and Charlie Wagner, Chief Financial Officer.

In addition to the earnings release we issued earlier today, we will also be referencing a slide presentation as part of today’s call. This presentation can be viewed by clicking on the webcast link on, 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 referencing non-GAAP information. A reconciliation of our GAAP financials to our non-GAAP financial measures is included in our earnings release and posted on our website.

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 the future events or 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 the following information is related to current business conditions and our outlook as of today, May 7, 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 second quarter 2009 financial results which we will issue in August.

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

Martin Madaus

Thanks, Joshua; I will speak briefly about the first quarter results before getting into a more detailed commentary about our performance.

I am very pleased to report that the first quarter was an outstanding quarter of financial performance for Millipore. This performance is especially impressive when you consider that we are operating in one of the most challenging economic environments we have experienced quite sometime.

We have reported strong revenue growth in the quarter. This top-line performance was driven by a rebound by our process division. The division generated best performance in the past six quarters as our large North American biotechnology customers return to higher levels of spending.

Our bioscience division also posted solid results in a competitive environment while many of our peers are reporting decline in revenues.

Our strong top-line performance this past quarter reflects the resiliency and attractiveness of our business model. We have build a differentiated portfolio of consumable products and services that are less effected by reductions in capital spending. But approximately 90% of our revenues derived from consumable products and services we are well positioned to grow during this tough economic down cycle.

Millipore’s business is down globally and also across several end markets such as pharmaceuticals, biotech, academic research, medical devices. Additionally our exposure to industrial markets is small which makes us less effective by the current steep decline in those markets.

In addition to our healthy top line growth in Q1, another key takeaway, significant operating leverage we generated in the quarter. This high level of operating leverage led to exceptional earnings and free cash flow growth.

In the middle of last year, we decided to implement initiatives that would increase our operational efficiency. In retrospect, these were clearly the right decisions, and the financial benefits of these actions were reflected in our Q1 results.

Sharp rebound of our revenues combined with a more efficient cost structure resulted in one of the strongest quarter of profitability and cash flow we had ever had.

With this brief introduction of summary, let me now move into more specific commentary about first quarter.

First quarter revenues grew 3% to $408 million, excluding a 7% unfavorable effect from changes in foreign currency exchange rates. Revenues in the quarter grew 10%.

From a division perspective, we exclude the effects of changes in foreign exchange rates to Bioprocess division grew 13%, while the Bioscience division grew 6%.

From a profitability perspective, we increased our non-GAAP operating margin by 310 basis points in the quarter to 22.2%. On the bottom-line, we recorded $1.06 in non-GAAP earnings per share. This represents a 33% growth over Q1 of last year.

Our free cash flow outstanding totaling $69 million more than doubling what we reported last year. So, I think these numbers speak for themselves. Our Q1 results were strong across the board and we are off to a great start for the year.

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