Q1 2012 Earnings Call Transcript

Transcript Call Date 01/26/2012

Operator: Good day, ladies and gentlemen and welcome to the First Quarter 2012 Covidien plc Earnings Conference Call. My name is Larry and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session.

I would now like to turn the conference over to your host for today, Mr. Cole Lannum, Vice President of Investor Relations. Please proceed.

Coleman N. Lannum - VP, IR: Thanks Larry and good morning everyone. With me today are Joe Almeida, Covidien's President and CEO; and Chuck Dockendorff, our Chief Financial Officer. We will be making some brief introductory comments and then spend most of the time this morning answering your questions. The press release with details of our first quarter results was issued earlier this morning and is available on our website and on newswires.

Now, during today's call, we'll make some forward-looking statements and it's possible that actual results could differ materially from our current expectations. Please note that under the Safe Harbor rules we are under no obligation to update these forward-looking statements even if actual results or our future expectations change materially. We ask that you please refer to the cautionary statements contained in our SEC filings for a more detailed explanation of the inherent limitations of such forward-looking statements.

We'll also discuss some non-GAAP financial measures with respect to our performance. A reconciliation of non-GAAP to GAAP measures can be found in our press release and its related financial tables, as well as in the Investor Relations section of our website,

For the first quarter, we reported GAAP diluted earnings per share of $1.02. After adjusting for certain specified items, our non-GAAP earnings came in at $1.13 per share.

Now, I'll turn it over to Joe, who'll go into more detail on the first quarter results. Joe?

Jose E. Almeida - President and CEO: Thanks Cole. We are off to a very strong start of fiscal 2012. Our sales came in ahead of plan and we reported record growth in operating margins. We also delivered an outstanding 19% increase in adjusted EPS. Making it the sixth quarter in a row that we have exceeded our expectations on the bottom line.

In the Medical Devices segment we had another solid quarter with broad-based growth led by energy and vascular products. In the pharmaceuticals business sales growth was paced by strong performance in active pharmaceutical ingredients, favorable pricing in the generic business. And further gains for new products. In Supply sales were about even with at year ago.

In our emerging markets comprising Eastern Europe, Middle East and Africa, Asia and Latin America sales grew at a double-digit pace in the first quarter with broad-based gains led by stapling and energy products. This excellent performance reflects our recent investments to accelerate growth in these geographies.

In our large Endomechanical business we reported strong growth in stapling products led by the innovative Tri-Staple reloads. We're making good progress increasing Tri-Staple capacity, however we experienced a strong demand for the product as we continue to gain market share.

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