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Life Technologies (LIFE)

Q1 2011 Earnings Call

April 26, 2011 4:30 pm ET

Executives

David Hoffmeister - Chief Financial Officer and Senior Vice President

Eileen Pattinson - Senior Director of Investor Relations

Mark Stevenson - President and Chief Operating Officer

Gregory Lucier - Chairman and Chief Executive Officer

Analysts

Derik De Bruin - UBS Investment Bank

Jonathan Groberg - Macquarie Research

Ross Muken - Deutsche Bank AG

Tycho Peterson - JP Morgan Chase & Co

Quintin Lai - Robert W. Baird & Co. Incorporated

Daniel Leonard - Leerink Swann LLC

Marshall Urist - Morgan Stanley

Isaac Ro - Goldman Sachs Group Inc.

Doug Schenkel - Cowen and Company, LLC

Jon Wood - Jefferies & Company, Inc.

Amit Bhalla - Citigroup Inc

Charles Butler - Barclays Capital

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2011 Life Technologies Corporation Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host today, Eileen Pattinson, Head of Investor Relations. Please begin.

Eileen Pattinson

Thank you, John, and good afternoon, everyone. Welcome to Life Technologies' first quarter earnings conference call. Joining me on the call today are Greg Lucier, our Chairman and CEO; and David Hoffmeister, Chief Financial Officer. In addition, Mark Stevenson, our Chief Operating Officer, will be 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 vary. 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.

Gregory Lucier

Thanks, Eileen, and thank you all for joining us. I hope you all had a chance to review the press release that we issued earlier today. Total non-GAAP revenue grew 1% for the quarter to $897 million and grew 2% excluding currency. Due to the difficult year-over-year comparables and the extraordinary events in Japan, organic growth was flat for the quarter. Excluding the impact from these items, organic revenue grew 5% and total revenue grew 6%. Non-GAAP earnings per share declined 2% for the quarter to $0.85. Excluding the estimated impact from Japan, earnings per share was $0.87, representing flat growth year-over-year.

As a reminder, guidance for the first quarter was 1% to 3% revenue growth, excluding currency, and EPS flat to down, 5%. And so, I'm pleased to report continued strong underlying growth in the business. Looking ahead, our full year guidance of mid-single digit organic growth for the year is unchanged and we're on track to deliver non-GAAP earnings per share of $3.80 to $3.95.

Since we've been getting a lot of questions on the events in Japan, I'll start out by providing an update on that situation. Clearly, the start of 2011 was a difficult one for our employees and customers in Japan. Thankfully, all our employees are safe and our facilities are undamaged. As you might expect, in the aftermath of the disaster, our offices were closed for several days as were many of our customers' labs. However, as soon as it was deemed safe, we commenced operations and began fulfilling customer orders. Never before has the dedication and fortitude of our employees been more apparent. And as a result, we are able to minimize the impact on the company's financial results.

In terms of impact to our suppliers and partners, our distributors were all relatively undamaged and our regional supply chain was operational within a very short period of time. As we announced earlier in the quarter, our partner Hitachi High Technologies suffered damages at several of their facilities in the Ibaraki Prefecture. The site that was damaged produces our CE instruments and capillary arrays, as well as the 5500 sequencer.

For a period of time following the earthquake, the Hitachi site was not manufacturing products as they assessed and repaired damages. As we announced in March, this halt in production caused the delay in shipments of the 5500, which was originally planned for the final weeks of the first quarter. At this point, Hitachi has resumed manufacturing of the 5500, CE instruments and capillary arrays. Customer shipments of the 5500 have begun and we expect to be able to clear a large portion of that backlog in the second quarter.

The performance of our team during these extremely difficult times is a testament to the culture of execution that pervades the organization. In 2011, we continue on our efforts to create shareholder value by focusing on 4 key performance drivers. These are: Product innovation, geographic growth, expansion into new end markets and operational excellence. We made good progress on all of these areas in the first quarter, laying the groundwork for accelerated growth, both in revenue and earnings in the second half of the year. I'll walk you through some of the highlights before I hand it off to David to give you the detailed financial results.

Over the last few years, we have assembled a portfolio of innovative products, heavily weighted towards high-margin consumables. It covered the entire spectrum of biological research. Due to the breadth and scale of our operations, our commercial and R&D teams have more conversations and interactions with scientists around the world than any other company in our space. These conversations and our relationships ensure that we understand the needs of our customers better than anyone else. And also serve as the cornerstone of our efforts to bring new products to market that are designed to the make essential research of our customers easier, faster and more accurate.

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