Millipore Corp. (MIL)
Q2 2009 Earnings Call
August 6, 2009 4:45 pm ET
Joshua Young - Director of IR
Martin Madaus - Chairman, President and CEO;
Charlie Wagner - CFO
Jon Wood - Bank of America
Tycho Peterson - JPMorgan
Marshall Urist - Morgan Stanley
Derik DeBruin - UBS
Jon Groberg - Macquarie
Robert Hawkins - Stifel Nicolaus
Isaac Ro - Leerink Swann
Chris Pohl - Thomas Weisel Partners
Previous Statements by MIL
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So with that we'll turn the call over to our host, Joshua Young. Please go ahead, sir.
Thank you very much, Bob. Good evening. I would like to welcome you to Millipore's second quarter 2009 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 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 millipore.com homepage, 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 is included in our earnings release and posted on our website.
Before we begin, I would like to 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 the following information is related to current business conditions and our outlook as of today, August 6, 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 third quarter financial results.
Now, I would like to turn the call over to Martin Madaus.
Thanks, Joshua. Good evening, everybody and thank you for joining us on this call today. I am very pleased to report that Q2 was another very strong quarter for the company and we're well positioned to report a solid year of financing performance.
Although the macro-economic environment remains challenging, we all know that our business continues to be resilient and our markets remain fundamentally healthy. I would summarize the key takeaways from our Q2 performance as follows.
First, our Bioprocess division continues to sustain the recovery again last quarter. The division's growth was driven by large biotechnology customers in North America and Asia. After two straight quarters of solid performance the challenges division faced last year is really now behind us. Bioprocess is back to growth trajectory and will report a tracked performance in 2009.
Second, the market for our Bioscience division remains a little bit more difficult as large pharma is consolidating their curtailing spending on research tools, services and as they sort out research priorities and prepare to integrate acquisitions.
Additionally, it's a very weak environment for selling laboratory instrumentation which is adversely impacting our Lab Water business. The good news is that we're being less impacted than many of all other peer in this space. Most of our products are consumables and then are funded through capital budgets.
Third, we continue to show solid operating leverage in the business. For our second straight quarter, we showed a nice improvement of profit margin and we expect to report healthy margin expansion for the full year.
Fourth, our cash flow performance continues to be excellent. We generate approximately $53 million in free cash flow in the quarter and in the first six months, we generated a record $121 million of free cash flow. We are using this cash flow to further pay down our debt and execute strategic acquisitions. We have an attractive business model. Our ability to generate strong cash flow is an important advantage in this market.
Finally, we are continuing to improve our innovation capabilities throughout the company. We are investing in projects and then partnerships that will help us to develop innovative new products to deliver greater value for our customer and this level of commitment and investments reflect in a higher year-over-year R&D spending increasing number of partnerships.
In Bioscience alone, we signed seven new partnerships in the quarter. We expect that these investments will lead to important technological breakthroughs that will enable us to drive profitable growth in the future. So with that brief summary, let me now move into more specific commentary about the second quarter.
Second quarter revenues declined 1% to $409 million, excluding a 6% unfavorable effect from changes and foreign currency exchange rate, revenues in the quarter grew 5%. From a divisional perspective, if you exclude the effects of changes in foreign currency exchange rate, the Bioprocess grew 7% while the Bioscience Division grew 4%.
From a profitability perspective, we increased our non-GAAP operating margin by 80 basis points in the quarter to 21.8%. On the bottomline, we reported $1 in non-GAAP earnings per share which represents 9% growth over Q2 of last year. Our free cash flow grew 18% totaling 53 million.