fourth quarter and year-end results millipore conference call, january 26, 2004
TRANSCRIPT
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Fourth Quarter and Year-End ResultsMillipore Conference Call, January 26, 2004
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Forward-looking statements/risk factors
In order to take advantage of the safe harbor provisions of the private securities litigation reform act of 1995, you should understand that we will be making forward-looking statements in this conference. These statements involve a number of risks and uncertainties, all of which are set forth in detail in our annual report on form 10-K, subsequent quarterly reports on form 10-Q, and our other SEC filings. We assume no obligation to update any forward-looking statement based on new information, future events or any other reason.
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Q4, 2003 - better than expected
16% revenue growth over Q4 2002
7% revenue growth in local currency
GAAP earnings $0.66 per share
Pro-forma earnings from operations $0.53
Biotechnology - 7% growth
Life sciences - 11% growth
Other bioscience - 6% growth
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Americas44%
Europe37%
Asia/Pacific19%
FY 2003
2003 revenues (in local currencies)
Biotechnology34%
Life Science
14%
OtherBioscience Applications
52%
FY 2003
Consumables and Services
82%
Equipment18%
FY 2003
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Q4 revenue growth - by geographic region
Americas $ 89 $ 79 12% 12%
Europe 86 72 19% 2%
Asia/Pacific 41 35 18% 7%
Total U.S. dollar $216 $186 16% 7%
% Growth Local
$ in millions Q4 2003 Q4 2002 % Growth Currency
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Revenue growth - by market
Biotechnology $69 $65 7% 6%
Life Science 29 26 11% 5%
Other Bioscience 102 96 6% 5%
Total local currency 200 187 7% 6%
Foreign Exchange 16 (1)
Total U.S. dollar $216 $186 16% 14%
Q4 Full Year
$ in millions Q4, 2003 Q4, 2002 % Growth % Growth
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Biotechnology - quarter to quarter variations (in local currencies)
$ millions
Quarterly Growth Q1 2000 – Q4 2003
$0
$10
$20
$30
$40
$50
$60
$70
$80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0%
3%
6%
9%
12%
15%
18%
21%
24%
27%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenues by Quarter Q1 2000 – Q4 2003
‘00 ‘01 ‘02 ‘03 ‘00 ‘01 ‘02 ‘03
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Biotechnology - strength in consumables (in local currencies)
Revenues by Quarter Biotech Consumables and Hardware: Q1 2001 – Q4 2003
’02 ’03
Quarterly Growth Biotech Consumables and Hardware: Q1 2002 – Q4 2003
-10%
-5%
0%
5%
10%
15%
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Biotech ConsumablesBiotech Hardware
$ millions
$0
$10
$20
$30
$40
$50
$60
$70
$80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Biotech ConsumablesBiotech Hardware
’01 ’02 ’03
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Volume variables Patient population Indications Dosage
Biotech growth/Millipore growth
Other manufacturing variables Expression level Purity in cell harvest Dosage form Degree of optimization New/retrofitted plant
MAb Revenues for Millipore$15 - $55 per gram
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Biological pipeline
Over 2000 biologicals in pipeline or launched
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
Pre-clinical Phase 1 Phase 2 Phase 3 AwaitingApproval orApproved
1194
227
357
84
374
Pharmaprojects V5, from PJP Publications, NYC & London, January, 2004
0
100
200
300
400
500
600
700
800
900
1000
Pre-clinical Phase 1 Phase 2 Phase 3 AwaitingApproval orApproved
Over 500 therapeutic antibodies in pipeline or launched
4579
20 22
339
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Forecast
Data
Review
Phase 3
Phase 2
Phase 1
Recombinant Products
-
50
100
150
200250
300
350
400
450
500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Num
ber
of d
rugs
vaccine
other
hormone
gene therapy
cytokine
Ab
Current Drug Development Phase corresponding to year of marketing approval - one scenario
Source : PharmaProjects
Potential drug approvals
Recombinant Products
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Life science: quarterly revenue growth and trends (in local currencies)
$ millionsQuarterly Growth Q1 2000 – Q4 2003
$0
$5
$10
$15
$20
$25
$30
$35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4-5%
0%
5%
10%
15%
20%
25%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenues by Quarter Q1 2000 – Q4 2003
‘00 ‘01 ‘02 ’03 ‘00 ‘01 ‘02 ’03
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Other bioscience – quarterly revenue and trends (in local currencies)
$ millionsQuarterly Growth: Q1 2000 – Q4 2003
$0
$20
$40
$60
$80
$100
$120
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-5%
0%
5%
10%
15%
20%
25%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenues by Quarter: Q1 2000 – Q4 2003
‘00 ‘01 ‘02 ’03 ‘00 ‘01 ‘02 ’03
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Actual Dollars (In millions, except EPS) Q4, 2003 Q4, 2002 Growth
Sales $ 215.8 $ 185.9 16%
Gross Profit 109.0 98.6 11%% of Sales 50.5% 53.0%
SG&A 64.9 56.0 16%% of Sales 30.1% 30.1%
R&D 16.5 13.5 22%% of Sales 7.6% 7.3%
Restructuring and other - 0.1 N/A% of Sales 0.0% 0.1%
Operating income 27.6 29.0 (5%)% of Sales 12.8% 15.6%
Net income $ 32.6 $ 19.9 64%
EPS $ 0.66 $ 0.41 61%
Q4 income statement – GAAP Results
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Q4 2003 Reconciliation
Quarter ended December 31, 2003
Impact of Q4Severance Costs
Impact of Tax and Fixed Asset Proforma(In millions, except per share data) GAAP Results Adjustment Write-Offs Results
Sales $ 215.8 $ - $ - $ 215.8
Gross Profit 109.0 2.4 111.4% of Sales 50.5% 51.6%
SG&A 64.9 (4.4) 60.5% of Sales 30.1% 28.0%
R&D 16.5 (1.5) 15.0% of Sales 7.6% 7.0%
Operating Income 27.6 - 8.3 35.9% of Sales 12.8% 16.6%
Pretax Income 24.2 8.3 32.5
(Benefit) provision for income taxes (8.4) 12.0 2.9 6.5
Net Income $ 32.6 $ (12.0) $ 5.4 $ 26.0
EPS $ 0.66 $ (0.24) $ 0.11 $ 0.53
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Actual Dollars (In millions, except EPS) 2003 2002 Growth
Sales $ 799.6 $ 704.3 14%
Gross Profit 430.4 396.1 9%% of Sales 53.8% 56.2%
SG&A 246.8 219.1 13%% of Sales 30.9% 31.1%
R&D 58.4 52.3 12%% of Sales 7.3% 7.4%
Restructuring and other (1.4) 1.1 N/A% of Sales (0.2%) 0.2%
Operating income 126.6 123.6 2%% of Sales 15.8% 17.5%
Net income from continuing operations $ 100.8 $ 80.8 25%
EPS from continuing operations $ 2.06 $ 1.67 23%
Full Year GAAP Results
Year ended December 31,
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Net Sales $ 799.6 $ $ - $ 799.6
Gross Profit 430.4 2.4 432.8% of Sales 53.8% 54.1%
SG&A 246.8 (4.4) 242.4% of Sales 30.9% 30.3%
R&D 58.4 (1.5) 56.9% of Sales 7.3% 7.1%
Restructuring and Other (1.4) 1.4 -% of Sales (0.2%) 0.0%
Operating Income 126.6 - 6.9 133.5% of Sales 15.8% 16.7%
Pretax Income 112.2 6.9 119.1
Provision for income taxes 11.4 12.0 2.6 26.0
Net Income $ 100.8 $ (12.0) $ 4.3 $ 93.1
EPS $ 2.06 $ (0.24) $ 0.08 $ 1.90
Full Year 2003 Reconciliation
Impact of Q2 & Q3Restructuring and
Other and Q4Severance Costs
Impact of Tax and Fixed Asset ProformaActual Dollars (In millions, except EPS) GAAP Results Adjustment Write-Offs Results
Year ended December 31, 2003
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50.0
50.5
51.0
51.5
52.0
52.5
53.0
53.5
54.0
54.5
55.0
55.5
56.0
2003 vs 2004 Margin Analysis
2003 Volume Leverage
2003 Unusual Charges
Mix to Higher Margin
Products
NHMembrane
Plant Start-up
Plant Rationalization
Quality Process
Improvements
Fx 2004
53.8%0.4%
0.7%
0.5%
-0.3%-0.4% 54.0%
2003 2004
-0.4%
-0.3%
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Currency effects
Euro/Dollar, 10/1/03 - 12/31/03Yen/Dollar, 10/1/03 - 12/31/03
0.78
0.8
0.82
0.84
0.86
0.88
0.9
10/1
/200
3
10/8
/200
3
10/1
5/20
03
10/2
2/20
03
10/2
9/20
03
11/5
/200
3
11/1
2/20
03
11/1
9/20
03
11/2
6/20
03
12/3
/200
3
12/1
0/20
03
12/1
7/20
03
12/2
4/20
03
12/3
1/20
03
104
106
108
110
112
114
10/1
/200
3
10/8
/200
3
10/1
5/20
03
10/2
2/20
03
10/2
9/20
03
11/5
/200
3
11/1
2/20
03
11/1
9/20
03
11/2
6/20
03
12/3
/200
3
12/1
0/20
03
12/1
7/20
03
12/2
4/20
03
12/3
1/20
03
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Guidance, 2004
Revenue growth: Actual dollar: 9 to 11% Local currency: 4 to 6%
Revenue growth by market - local currency Biotechnology: 5 to 7% Life Sciences: 6 to 8% Other Bioscience: 3
to 5%
Gross Margins: averaging 54% of revenue
SG&A: averaging 30% of revenue
R&D: between 7 and 7.5% of revenue
Contribution: approximately 17% of revenue
EPS: $2.14 to $2.23 per share
Capital Expenditures $65M
Depreciation and amortization $43M
Free cash flow $125M-$130M
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