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Mindray Medical International Ltd. (MR)

Q4 2009 Earnings Call Transcript

March 2, 2010 8:00 am ET


May Li – Head, IR

Ronnie Ede – CFO

Jie Liu – COO

David Gibson – President of Datascope Patient Monitoring, Mindray DS USA Corp.


Bin Li – Morgan Stanley

Shaojing Tong – Merrill Lynch

Richard Yeh – Citigroup

Katherine Lu – Oppenheimer & Company

Ding Ding – SIG

Jinsong Du – Credit Suisse

Wei Du – Goldman Sachs

Hongbo Lu – Piper Jaffray

Yale Jen – Maxim Group

Junaid Husain – Soleil Securities



Good morning, and thank you for standing by for Mindray’s fourth quarter and full-year 2009 earnings conference call. At this time all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections you may disconnect at this time.

I would now like to turn the call over to your host for today’s conference, Ms. May Li, Mindray’s Director, Head of Investor Relations. Please proceed.

May Li

Hi everyone, and welcome to Mindray’s fourth quarter 2009 earnings conference call. Our financial results were released last night and are available on the company’s Web site as well as on Newswire Services. In addition, an archived webcast of this conference call will be available on the Investor Relations section of our Web site at

Joining today’s call are Mr. Xu Hang, our Chairman and Co-CEO; Mr. Li Xiting, our President and Co-CEO; Mr. Ronnie Ede, our Chief Financial Officer; Mr. Jie Liu, our Chief Operating Officer; Mr. Minghe Cheng, our Executive Vice President of Strategic and Business Development; and Mr. David Gibson, our President of Mahwah operations.

Our management team will review fourth quarter and 2009 highlights as well as comments on the current financial and the market environment in each of our major sales markets, after which management will be available to answer your questions.

Before we continue, please note that this call will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today.

A number of potential risks and uncertainties are outlined in our public filings with the SEC. Mindray does not undertake any obligations to update any forward-looking statements, except as required under applicable law.

I will now turn the call over to Mindray’s CFO, Mr. Ronnie Ede.

Ronnie Ede

Thank you, May. Good morning and good evening ladies and gentlemen. Thank you for joining us today for our fourth quarter and year end 2009 earnings. First, I will provide an overview of the Company’s performance, followed by a discussion of the detailed financial results. Mr. Jie Liu, our COO, will then discuss our operations by regions. Before opening the call to questions, I will discuss the company’s 2010 outlook.

Year 2009 was both an interesting and challenging year, presenting broad uncertainties in the various geographies in which we operate. We achieved good revenue growth of 15.8% and non-GAAP diluted EPS growth of 11.4% year-over-year.

Despite the economic crisis, and impact from various proposed healthcare reform and stimulus packages, we maintain our focus on operational excellence and innovation. Now, only that we continue to invest in R&D but we also increased investments in the international delivery channel. And hence, promotional activities worldwide and improved working capital efficiency. As a result, we were able to launch 10 new products into the market while driving solid top and bottom line growth as well as cash generation.

Jie and I will go into details during this call to provide perspectives on the strong business growth that we have seen in China and the increasing stability and signs of recovery in several international markets.

We are very pleased to report that our net revenue growth 15.8% to 634.2 million for the full year over 2008. Domestic sales and international sales increased 24.28% and 9.1% respectively.

I would like to highlight the fact that our international sales growth for the last quarter was up 6.4% year-over-year, which we achieved in phase of lingering difficulties in the international operating environment, especially, within the U.S. and European markets.

The company’s full year non-GAAP net income increased 11.1% to $147.4 million over 2008, representing a non-GAAP net margin of 23.2%, non-GAAP operating margin for the year was 25.4% and non-GAAP gross margin for the year was 56.8%.

Gross margin expanded year-over-year despite dilution from four more months of acquired operations, mainly due to the continuous product mix change towards higher margin products and geographic mix changes towards higher margin regions as well as synergies for the Mahwah operations.

In 2009, we generated $172.2 million in net operating cash, compared to $93 million last year. This significant increase is mainly driven by higher cash collections from customers embedded software VAT refund as well as a one-time Beckman Coulter payment in relation to the termination of a joint development and OEM project as a result of BCI’s own acquisition of Olympus Diagnostic Division.

In continuation of our commitment to shareholders the Board of Directors has declared a cash dividend on its ordinary share of $0.20 per share based on our net income for the full year 2009. This is the first consecutive year that we have declared dividends since our IPO in 2006.

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