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Millipore Corporation (MIL)

Q4 2009 Earnings Call

February 2, 2010 4:45pm ET


Joshua S. Young - Director, Investor Relations

Martin D. Madaus - Chairman of the Board, President, Chief Executive Officer

Charles F. Wagner Jr. - Chief Financial Officer, Vice President


Jon Wood - Jefferies

Isaac Ro - Leerink Swann

Ross Muken - Deutsche Bank

Dan Leonard – First Analysis

Marshall Urist – Morgan Stanley

Tycho Peterson – JPMorgan

Marshall Urist – Morgan Stanley

Eric Kriskola (ph) - Thomas Weisel

Jon Groberg – Macquarie Capital



Good afternoon. My name is Stephanie, and I will be your conference operator today. At this time I would like to welcome everyone to Millipore's fourth quarter and full year 2009 earnings conference call. (Operator's Instructions) I would now like to turn the conference over to Joshua Young. Please go ahead.

Joshua S. Young

Thank you very much Stephanie. Good evening, I'd like to welcome everyone to Millipore's fourth quarter and full year 2009 earnings conference call. My name is Joshua Young and I'm the Director of Investor Relations for Millipore. Joining me on today's call are Martin Madaus President Chairman 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 clocking on the web-cast link on the homepage or by accessing Millipore's investor relations website. A PDF copy of our slides will be posted to the website after the call.

We will also be highlighting non-GAAP financial information. Our 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 for the financial performance of the company that will involve risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences may 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 02, 2010. 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 2010 financial results. Now I'd like to turn the call over to Martin Madaus.

Martin D. Madaus

Thank you, Joshua. Good evening everyone and thank you for joining us today on the call. I'm very pleased with the outstanding financial results Millipore generated in 2008 – 2009. Our fourth quarter performance was indicative of many of the same trends we have experienced throughout the year. I would say the key takeaways for 2009 are the following.

First, we generated excellent financial performance in the midst of one of the worst global recessions we have seen in the last fifty years. We have met or exceeded our guidance for revenue growth earnings and cash flow. This is a testament to the resilience and strength of our business model. We have percentage of revenues we derived from consumer products and the attractiveness of our core markets makes our business less susceptible to economic downturns. Millipore is one of the most attractive franchises in the life science tools market and our excellent execution in a very challenging market enables us to report strong performance in 2009.

Second, our bioprocess division had a great year and rebounded and as we had predicted in our earnings call one year ago the significant amount of exposure that we have to the biotech industry benefited as these customers increased their levels of production for monoclonal antibodies and vaccines.

Third our bioscience division outperformed most of its peers during 2009 despite weak demand from large pharmaceutical customers and a challenging environment for laboratory instrumentation sales. For the past few years we have expanded our exposure to academic customers and life science consumable products and this really helped us to be less affected by lower levels of capital spending.

Fourth, 2009was a year in which we significantly advanced our innovation strategy. We increased our R&D spending by 12% completed four acquisitions and signed eleven technology agreements. The strength of our business provided us flexibility investor in the downturn which will benefit our future growth. We began our journey to transform our R&D capabilities when I joined Millipore five years ago and I'm more (inaudible) today than I ever have been about the potential impact of the new products we're bringing to the market.

Finally our cash flow performance in 2009 was exceptional. We generated nearly $300 million of free cash flow. An important driver of this performance was a substantial increase of our working capital efficiency, and this improvement was the result of initiative we have launched the past eight months. I'm extremely pleased with our excellent cash flow performance.

So these are the key takeaways. Let me move now into a bit more detail about the results of the fourth quarter and the full year 2009.

Fourth quarter revenues increased 7% to $426 million excluding a 5% favorable effect from changes in foreign currency exchange rates. Organic revenue growth in the quarter was 2%. From a divisional perspective if you exclude the effects of changes in foreign currency rates the bioprocess division grew 4% organically. The bioscience divisions revenue was unchanged from the previous year.

Our fourth quarter revenue growth was adversely affected by six fewer days in the quarter compared to the fourth quarter of 2008. Charlie will talk more about the effect that fewer days have on the quarter.

On the bottom line we recorded $1.00 in non-GAAP earnings per share which was $0.05 higher than last year. Our free cash flow grew nearly $8 million year over year to $65 million in the fourth quarter.

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