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Life Technologies (LIFE)

Q3 2012 Earnings Call

November 01, 2012 4:30 pm ET

Executives

Carol A. Cox - Senior Vice President of External Affairs & Corporate Communications

Gregory T. Lucier - Chairman and Chief Executive Officer

David F. Hoffmeister - Chief Financial Officer and Senior Vice President

Mark P. Stevenson - President and Chief Operating Officer

Analysts

Jonathan P. Groberg - Macquarie Research

Amanda Murphy - William Blair & Company L.L.C., Research Division

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

William R. Quirk - Piper Jaffray Companies, Research Division

Charles Anthony Butler - Barclays Capital, Research Division

Derik De Bruin - BofA Merrill Lynch, Research Division

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Daniel Brennan - Morgan Stanley, Research Division

Shaun Rodriguez - Cowen and Company, LLC, Research Division

Daniel L. Leonard - Leerink Swann LLC, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

Vijay Kumar - ISI Group Inc., Research Division

Vamil Divan - Crédit Suisse AG, Research Division

Bryan Brokmeier - Maxim Group LLC, Research Division

Peter Lawson - Mizuho Securities USA Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Life Technologies Corporation Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this program is being recorded. I would now like to introduce your host for today's program, Ms. Carol Cox, Head of Investor Relations. Please go ahead.

Carol A. Cox

Thank you, Jonathan. Good afternoon, everyone. Welcome to Life Technologies Third Quarter 2012 Earnings Conference Call. We issued our press release today a little after 1 p.m. Pacific Time. It posted it on our website at lifetechnologies.com, and we'll be filing it on Form 8-K with the Securities and Exchange Commission. We've also posted a deck of slides to accompany the webcast today, which may be found on the Events and Presentations section of our Investor Relations website, along with our other additional earnings materials.

Joining me on today's call are Greg Lucier, our Chairman and CEO; and Dave Hoffmeister, our Chief Financial Officer. Mark Stevenson, our Chief Operating Officer, will also be available during the Q&A portion of the call to answer any questions. If you've not had a chance to review the earnings release, it can be found on our website, at lifetechnologies.com.

I would like to remind our listeners today that our discussion 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. Important factors, which could cause actual results to differ materially from those in the forward-looking statements, are detailed in our filings with the Securities and Exchange Commission. 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 GAAP -- excuse me, the non-GAAP measures to GAAP can be found in today's press release or on our website.

And with that, I will hand the call over to Greg.

Gregory T. Lucier

Thanks, Carol, and thank you to everyone who's joining us today as we provide an overview of our third quarter results and expectations for the remainder of the year. At a high level, we continue to gain momentum, as we expand into higher growth markets through partnerships, acquisitions and internal development.

During the quarter, we entered into strategic business partnerships for companion diagnostics, completed the foundation of our Medical Sciences business with tuck-in acquisitions of Navigenics, Pinpoint and Compendia and acquired distributors in China and Chile to continue to extend our footprint in emerging markets.

We achieved important milestones with several highly anticipated product launches, including the Ion Proton System, a platform whose speed, ease-of-use and affordability will democratize genome sequencing, as well as our Pervenio Lung test, the first-of-its-kind molecular test to identify early-stage lung cancer patients, who are at a high risk of reoccurrence following surgery. I'm extremely pleased with the progress of our management team is making across our business platforms and geographies. We are moving fast in a disciplined way.

Now let me turn to the results. We finished the quarter ahead of our expectations as continued strength across several our businesses contributed to results. Revenue for the quarter came in higher than expected at $911 million, as significantly increased sales in our Ion Torrent platform driven by Ion Proton System sales and continued strong demand for the Ion PGM, as well as growth in Forensics and Research Consumables drove the 1.4% increase.

Recall that this growth rate includes overcoming headwinds from the decline in sales of our SOLiD 5500 instruments. Our non-GAAP earnings per share came in at $0.92, ahead of our guidance due to slightly higher sales, higher-than-forecasted gross and operating margins and the benefit of a lower share count, as we continue to aggressively repurchase shares. Overall, our end markets remain largely in line with our expectations.

In the U.S. and Europe, we continue to see a cautious but stable environment. Last quarter, we guided to growth in Europe of low single digits, which is generally what we saw in the third quarter with growth coming in at 2%. We saw a strength in Asia-Pacific and Japan, as well as our emerging markets where we continue to expand our operations.

China continues to be a growth market for us, as we continue to invest there on multiple fronts, including expanding our operational capabilities. We completed the acquisition of Genewindows, Life's distributor, covering mainly the Invitrogen brand reagent portfolio in South and West China. This acquisition complements our go-direct strategy for consumables in mainland China. We also expanded our footprint with the completion of our state-of-the-art facility in Beijing, where we will manufacture advanced DNA testing solutions locally to help Forensics labs and law enforcement agencies solve crimes more cost effectively.

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