CR Bard Inc. (BCR)
Q3 2010 Earnings Call
October 21, 2010 5:00 pm ET
Timothy Ring - Chairman & CEO
John DeFord - SVP - Science, Technology and Clinical Affairs
John Weiland - President & COO
Todd Schermerhorn - SVP & CFO
Rick Wise - Leerink Swann
Mike Weinstein - JPMorgan
Bob Hopkins - Bank of America
Lawrence Keusch - Morgan Keegan
Matthew Dodds - Citigroup
David Roman - Goldman Sachs
Ben Andrew - William Blair
Joanne Wuensch - BMO Capital Markets
Douglas Tsao - Barclays Capital
Paul Choi - Caris & Company
Robert Goldman - CL King
Jayson Bedford - Raymond James
Brooks West - Craig-Hallum Capital
Bruce Jackson - Morgan Joseph
Previous Statements by BCR
» CR Bard Inc. Q2 2010 Earnings Call Transcript
» C. R. Bard, Inc. Q1 2010 Earnings Call Transcript
» CR Bard Inc. Q4 2009 Earnings Call Transcript
Today's presentation will be hosted by Timothy M. Ring, Chairman and Chief Executive Officer, along with John H. Weiland, President and Chief Operating Officer; Todd C. Schermerhorn, Senior Vice President and Chief Financial Officer; and John A. DeFord, Senior Vice President of Science, Technology, and Clinical Affairs. Also in attendance today is Eric J. Shick, Vice President of Investor Relations.
Today, Bard's management will discuss some forward-looking statements, the accuracy of which are necessarily subject to risks and uncertainties. Please refer to the cautionary statement regarding forward-looking information in Bard's June 30, 2010 10-Q, and the information under the caption Risk Factors and the company’s 2009 10-K and second quarter 10-Q, including disclosure of the factors that could cause actual results to differ materially from those expressed or implied.
During the call, references will be made to certain non-GAAP measures, which management believes provide an additional and meaningful assessment of the core operating performance of the company’s and its individual product franchises.
Reconciliations of non-GAAP measures to the most comparable GAAP measures are provided in Bard's earnings press release and on the company's website at www.crbard.com.
All information that is not historical is given only as of October 21, 2010, and the company undertakes no responsibility to update any information. Unless otherwise noted, all comparisons are to the prior year period.
At this time, I will turn the conference over to Mr. Timothy Ring. Please go ahead.
Thanks Laurie. I’d like to welcome everybody to Bard’s third quarter 2010 earnings call. I thank all of you for taking the time to join us today. I would expect the presentation portion of the call to last about 35 minutes.
The discussion today will go as follows: I’ll begin with an overview of the results for the third quarter of 2010: John Weiland, our President and COO, will review third quarter product line revenue; Todd Schermerhorn, our Senior VP and CFO will review the third quarter income statement and balance sheet as well as our expectations for the fourth quarter; John DeFord, our Senior VP of Science, Technology and Clinical Affairs, will provide you an update on our product development pipeline, then we'll close finally with our Q&A.
Third quarter 2010 net sales totaled $678.4 million, that’s up 6% over Q3 of last year on an as reported basis and 8% on a constant currency basis. The impact of currency for the quarter versus the same quarter last year was unfavorable by 140 basis points.
Net income for the quarter was a $127.5 million and diluted earnings per share were $1.34, excluding items that affected the comparability of results between the periods which Todd will cover later. Third quarter 2010 net income and diluted earnings per share were $135.9 million and $1.43, up 5% and 9% respectively.
Looking at revenue growth geographically compared to the same quarter last year on a constant currency basis, net sales in the US increased 8%. Europe was flat and Japan grew 20%. As we’ve discussed in the past the results in Japan reflect odd sales into our joint venture there and in Q3 a portion of the growth was driven by an inventory build, an advance of several new product launches. Further we are likely seeing some inventory rebalancing as our sales into the JV in the first half of the year were flat.
Our other international businesses grew 13% including 24% growth in our emerging markets. While certainly healthy, this growth doesn’t reflect two demands of a period as our timing on revenue growth was negatively impacted in the third quarter by the vertical integration of a distribution partner there.
On the business development front beyond the SenoRx deal, during the quarter we closed two additional transactions, one was a smaller deal for coating technology that we plan to use in our specialty vascular access products. The other was the acquisition of a unique early stage product called the EZ Huber Safety Winged Infusion Set which is used for accessing implanted ports. This deal comes with related IP and a small base of existing sales which represents a nice addition to our market leading line of port access devices.
Looking ahead, we have a number of potential deals in the pipeline across all of our four major businesses. Now before I turn you over to John Weiland for a review of the product line revenue. I'd like to extend all of you an invitation to our annual analyst meeting where we'll discuss our strategy and tactics for 2011 and beyond. We'll also review our new product pipeline and provide financial guidance for 2011. The meeting will be at the Waldorf Astoria in New York City on December 13th continuing at 4:30. And for those of you that can’t attend the meeting will be webcast.
Let me turn it over to John.
Good afternoon, everyone. Before I start, let me note that I will be giving all percentage growth there in comparison to prior year periods on a constant currency basis unless otherwise noted.
So let’s begin with Vascular. Growth in this category for the quarter was 13%, total net sales were $190.7 million up 10% over the last year on an as reported basis.
Our United States business was up 20% for the quarter, internationally we grew 4%. Our Electrophysiology sales were down 8% this quarter. After four quarters of very strong EP Lab Systems growth, sales in this line were down 37% versus Q3 of last year. We don’t regard this as a market signal necessarily since historically it’s not been unusual to see these types of quarterly fluctuations in the product line.
Growth in steerable diagnostic catheters was 9% this quarter which was offset by declines in other disposable EP devices. Sales in our surgical graft category were down 2% in the third quarter. Our endovascular business which represented 74% of our vascular category increased 22% in the third quarter. Within endovascular our biopsy products were up 47%. We closed the SenoRx deal on July 6th, so the addition of the oncore device for stereotactic x-ray guided biopsy and related tissue markers along with the contour brachytherapy balloon catheters added roughly $10 million to our growth here.