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Life Technologies Corporation (LIFE)

Q4 2009 Earnings Call

January 28, 2010 8:30 pm ET

Executives

Eileen Pattinson - IR

Greg Lucier - Chairman and CEO

Mark Stevenson - President and COO

David Hoffmeister - CFO

Bernd Brust - Chief Commercial Officer

Analysts

Quintin Lai - Robert W. Baird

Tycho Peterson - JPMorgan

Doug Schenkel - Cowen and Company

Derik De Bruin - UBS

Marshall Urist - Morgan Stanley

Jonathan Groberg - Macquarie Capital

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Fourth Quarter and Full Year 2009 Life Technologies Corporation Earnings Conference Call. (Operator Instructions).

I will now turn the conference over to your host for today, Eileen Pattinson, Head of Investor Relations. Please proceed.

Eileen Pattinson

Thank you, operator and good morning, everyone. Welcome to Life Technologies' Fourth Quarter and Full Year 2009 Earnings Conference Call.

Joining me on the call today are Greg Lucier, our Chairman and CEO; Mark Stevenson, President and Chief Operating Officer; and David Hoffmeister, Chief Financial Officer. In addition, Bernd Brust, our Chief Commercial Officer is available during the Q&A portion of the call.

If you haven't received a copy of today's press release, you may obtain one from our website at lifetechnologies.com.

I want to remind our listeners that our discussion today will include forward-looking statements including, but not limited to, statements about future expectations, plans and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995.

Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website.

I will now hand the call over to Greg Lucier.

Greg Lucier

Thanks, Eileen and thank you all for joining us. I hope you've had a chance to review the press release we put out this morning.

During today's call, I will cover our achievements for the year and our recent product announcements and our outlook for 2010. Mark Stevenson will talk about our integration progress over the past year and also provide some color on divisional performance. Finally, David will then cover more specifics on our financials for the quarter and the year as well as provide additional details on our view for 2010.

We had a terrific fourth quarter with 11% organic growth, which rounded out a strong year for Life Technologies. 2009 was our first full year after the Applied Biosystems and Invitrogen merger, and our teams around the world performed in an exceptional manner.

We ended the year with 7% organic growth, 300 basis points of operating margin expansion and $534 million in free cash flow. This performance was the result of a lot of hard work and executing on our three strategic imperatives; delivering on the integration, realizing the potential of the new company and investing for future growth.

Our first strategic imperative, delivering on the integration, is critical to our success. We methodically executed upon our integration plans, which enabled us to deliver over 100 million in synergies, considerably higher than our original expectations. In addition to the sizable synergies realized, we were able to merge the two companies into truly one company with a solid foundation of processes and systems.

We still have integrations in place to realize more synergies, but in 2009 we were able to complete all the basic actions necessary to operate as one company. In terms of synergy capture in 2010, by the end of this year we'll have taken actions for both revenue acceleration and cost reductions that will generate 175 million in synergies on an annual basis in 2011, one full year ahead of the original three-year integration schedule.

Beyond the accelerated integration efforts, 2009 was a strong year on a number of measures including organic growth, new product launches and productivity gains. As we announced yesterday, our development efforts last year set us up for an impressive line of new sequencing products to be launched in the next several months, which I'll speak about in a moment.

As you know, next-generation sequencing represents less than 5% of our revenues, and as such we also had numerous new products launched in other areas of our business, the most notable of which is our new flow cytometer, Attune. This product launched in December at the American Society of Cell Biology Conference to outstanding reviews from customers and industry experts alike.

Attune will begin shipping at the beginning of the second quarter and we already have customers lined up. The launch of this product represents our entry into the $1.4 billion flow cytometry market. In the next five years, we anticipate sales will exceed $100 million from our flow cytometry products.

In addition to the new instruments introduced this year, 2009 was another year of rapid releases for new reagent products and benchtop devices, and 2010 is shaping up to be even better.

I want to now take a moment to talk about our sequencing business and a number of new and very exciting products we'll be launching this year. You'll hear more about some of these products in February at the annual AGBT meeting, but today let me focus on the press release we issued yesterday.

As we announced, we are launching our new SOLiD 4 next-generation sequencing system this quarter, a system that we believe will deliver the highest quality genome on the market. It's important to understand that as sequencing becomes more of a clinical tool, meaning that as doctors begin to look at a person's genomic data as a basis for diagnosing and treating disease, it's critical that this data be as accurate as possible.

Read the rest of this transcript for free on seekingalpha.com