OCDX - Earnings call transcript Q1 2022 | Ortho Clinical Diagnostics Holdings plc

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Operator

Welcome to the Ortho Clinical Diagnostics First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants lines are in a listen-only mode. Please note this conference is being recorded. An audio replay of the conference call will be available on the company's website within a few hours after the call. I would now like to turn the call over to Bryan Brokmeier, Vice President of Investor Relations. Bryan?

Bryan Brokmeier

This presentation Ortho's webcast being are afternoon there. quarter can investors of welcome me earnings discuss financial Good Clinical the be today operator. Officer. the a and Chairman call our our first Ortho's Diagnostics conference results is downloaded you, and Joe website everyone, Financial version to conference and Busky, section Chief Ortho simultaneously to on and Thank CEO; Smith, Chris call. With of . today's

Before we our harbor begin, I will safe statement. cover

Some the statements. of XXXX, the of the the forward-looking and call statements of we will Act such within make company's prospects which during provides this meaning statements plans XXE Exchange about of a Section future safe expectations, Securities for constitute harbor

not subject differ identified those materially uncertainties SEC our forward-looking to will realized. detailed statements. or risks presentation risks any update We with reflect events, cannot circumstances and of number factors not both included Please include, no three diluted most not our list statements and of the to such a Please to, other in section but other future filings Principles, there discussion and These core free to, comparable two constant GAAP adjusted as EBITDA, use flow that uncertainties our statements of some make from EBITDA, to law. refer Generally developments Accepted are GAAP. and their but in Reconciliations changed will to discussion measures Accounting refer limited could factors press revenue, cash a a uncertainties website. available measures, to forward-looking of cause the the results for presentation are release which of on today's the conform to for and directly you assure to today's Ortho obligation We except non-GAAP and during statements investor these share. of this filings U.S. by measures call, that required we are earnings reason, slide SEC. the forward-looking and investors including, more slide adjusted of the non-GAAP afternoon, a is other to to the per of undertake any be appendix adjusted current forward-looking items of currency, of these expectations. actual for risks, that do Our limited or statement issued be Also or

to also our core In our clinical business. addition, clinical our clinical core business, medicine labs, -- businesses refer our on and will represent non-core today's lab we laboratories, call, known as transfusion

are is licensing revenue Our year-over-year our basis. on call, constant revenue. ranges growth contract currency stated given otherwise, given growth on comprised of non-core today's rates, comparable Unless a all manufacturing revenue including business and

Lastly, transaction remarks a due that out Ortho we Quidel, prepared the will conducting our to like and point be session pending following between Q&A to I not today. would

Chris to CEO. over I'd and Now, Smith, Chris? to Ortho's the like turn call Chairman

Chris Smith

I that example, give for you our do. world our through investors, that's Thanks the the just technologies. our today to Thanks thank what and over whether an the day. and us we and why we to is role or on they four we system have is this with around do, a to the We're single mention we'll start And Great. or presentation around teammates every world. do test to because for every love drives obviously customers slide welcome it credo it's of go always to earnings XXX,XXX QX like. our and joining everyone. products critical everything To begin teammates the And today patients healthcare every in Bryan, update. company our really to I afternoon going play I because And what do want our

to Now, move quarter first the to earnings. and get into slide six let's

as off, you a broad portfolio. we have First diagnostics know,

as So, been has assay ago, some million on COVID business assays said, for only in the million company. four-point other revenue a approximate to have not and the That $XX we been XXXX, pandemic throughout factor generated on growth a to an it impact $XX compared of sales meaningful our profitability. COVID representing QX, year the headwind corresponding

that, underlying we base excludes assay revenue. today our largely focus business, on will Given which COVID

test, be in COVID revenue headwind currency in the assay the growth the X% in core from constant Our continue Market global disruptions with transfusion to analyzer $XXX in immunoassays. grew slightly X% we be core our as both though approximately on currency very medicine revenue million. discussed revenue, to particularly solid Including quarter, challenge, supply a chain constant to excluding our grew strong, quarter, non-COVID demand continues COVID placement. over and last

X% base with so integrated We growth. our even growth during driven installed are XX% pleased instrument QX by the and more

have have two open and percentage chip with quarter XXX semiconductor three orders challenges. the placements, points to installed instruments an open other chain ended revenue those to we higher. I'll been been due and closer in shipped supply we our new to moment. instrument had our If of approximately we discuss additional growth X%, would orders for a further However, believe total growth this would

to profitability. our Turning

variance an that XX.X% basis down assay XXX of to approximately revenue due to high Our basis margins COVID decline year a compared XXX in XXX headwind manufacturing estimated year. of points points points last benefited by ago from adjusted that the margin EBITDA is basis margin and

Let's at now world. we performed the look how and regions the around

transfusion region. to grew the with excluding COVID commercial highlight by U.S. growth slide to and seven the X%, continues assays driven our The quite X%, strong medicine. immunoassay up Americas, business If geography largest you well. see EMEA, growth each of turn In you'll go

Russia our COVID and less Northern strength If Africa. by sales. and immunoassay medicine included and as you look X% our our well Middle East assay, of it Europe business XX%, particularly excluding was growth, in at transfusion than driven in as global

to lockdowns in to relating key the impact impacts attention X% war, wasn't our direct paying COVID to meaningful. are declined the and China during developments regions. on business Greater due we QX Russian/Ukraine while So, close

still grew greater However, the in quarter. immunoassay XX% business than

While were for instrument in will our XX% integrated placements negatively a X%, underlying of high grew single remains China, by strong. low grow in instrument system by solid growth demand availability installed still the China and the still base double-digits driven quarter, think We year. or the affected

X% emerging X%. the Looking our markets developed our assay markets grew COVID excluding at grew emerging markets versus developed revenue, and markets,

but growth below installed in While base and in solid, integrated recent largely see is line other growth trend, chain continue emerging Latin to our market and China, double-digit APAC. remains due is supply instrument this challenges, the demand America the to we

and let's about pillars. Next, move strategic to talk slide our eight

to continue executing priorities drive growth We value. efficiency. to These these three strategic excellence profitable against on product steadfastly priorities and shareholder operational innovation, global are remain focused and commercial

and large from as response the further has individuals' spike areas progress last just COVID highlights. understanding first We growth, each been to U.S. to that in government use for immune partner a we excited turbocharger the received selected I'm me our of and product quarter, let of funded a these study few CDC against in announce antibody a quarter authorization of that to infection the we discussed for vaccination. a the quantitative emergency make continue to cover Beginning Ortho with innovation, assay.

were our individual's in to assay Red for at testing donors enough and and determine CTS finally, second innovations our quant levels levels American with recently win around This for therapy. the customers in be the won a row to convalescent our the began the Cross detected demonstrating patients antibody used addition, supporting category, our XXXX Gold plasma assay is plasma world. if In category. commitment our recently high our an Edison And in this Award to

second global commercial Turning excellence. priority, to our

operational of that commitment excellence award and our commercial award excellence world, net a in business. our healthy drive strong Thanks times. our implementation which recognizes continue a differentiator which balance base. pleased were continue we Ortho to to efficiency. for a is I'm revenue programs leverage for our and our service remain integrated a sheet we the of our awarded entire the we the and by to strong ratio through performance the and is continue support, year. care around strategy, to service X.X installed announce finally, third to to double-digit also believe sales execution The And with further priority, We to CD team key customer growth and growth

by I'd supply challenges. comment through chain to today supply impacted continues inflationary disruptions. our quarter, Lastly, for demand Market like on chain and strong to the was but first the industry-wide products be

weather As I analyzers. And approximately we're growth. we well-positioned our supply We negatively of this the open limited affected stated earlier, with XXX that installed to of orders ended base environment. quarter however, chips believe, the

raising prices where adding surcharges and We possible. are

these our some our adding of we business challenges impact additionally, impact on manufacturers who and job contract to leading strategic would early done a mitigate on more than additional buying and have business. XXXX since many employing have we enabling foresaw the significantly to partnerships initiatives suppliers our them fantastic And reduce own. power, team We with have more coming, on the our has

analyzers that of new and over well meet as integrated by profitable that shipments testing installations greater as are more customer We prioritizing to demand, an to delivery existing revenue. of base replacement customers installed of analyzers need followed customers to provide instrument

us specific chips, our key to anticipate analyzer. dependency a exploring We will on allow our components We in reduce and to further supply diversify our also are this alternative reduce our which component are costs.

the to course, in Joe we're Joe? redesigns quickly strong to the allow like that financials. our us QX R&D turn market. discuss deliver time, call take our time confident will Of that, over further With I'd to to this will to but some analyzer they

Joseph Busky

a quarter, everyone. flat currency. revenue on a on basis Thanks our basis other results resulting sales growth excludes our of a by constant I'll constant XX. decline contract $XXX quarter, and currency about detail increased Okay. million, afternoon, In Currency on total sales to starting slide decreased good in the of X% points, on operating X% our more a with Chris Core revenues first licensing with the manufacturing we for begin bit XXX reported basis. which revenue, recorded the revenues and year-over-year million. in approximately $XXX breakdown translation

across basis primarily our recurring year-over-year XXX couple both just labs on of revenue the from COVID solid over last driven the headwind growth core years clinical point was by pull-through instruments medicine. the and the transfusion in X%, geographies over sales, placed Excluding assay up we revenue

year QX the by sales, our COVID strength softness by orders, in to largely mentioned labs previously building with revenue, due a line we China. in businesses. partially to analyzers by offset and screening immunoassay, due quarter the grew to the as donor In lockdowns certain million driven and in manufacturing immunohematology particularly performance from both X% clinical open $X driven well grew of in as million declined excluding contract Non-core in arrangements. transfusion medicine, first our assay chemistry, strength ago XX%, COVID business, Turning clin revenue by the to of completion $X

continue expect million we $X ahead, be $X in the million non-core range. revenue to Looking per to quarter to

Turning to On core Americas by revenue decreased X%. geography. our constant performance currency a basis,

grew Asia-Pacific The region, declined X% issues due excluding Japan COVID markets X%. up revenue, Western XX% Americas and Africa EMEA up our including markets. which Chris East, was was COVID region assay in to COVID assay revenue. the X%. other lockdowns emerging Excluding that XX%, Middle mentioned, grew revenue revenue other with China and growth includes Europe X%, Greater

revenue by consumables, X%. grew reagents, and which QX revenue, other our recurring service core includes at Looking category,

immunoassays, in the revenue, Chris earlier. both to supply chain revenue driven solid Instrument quarter growth well instrument our as declined due as COVID assay transfusion XX% mentioned actually Excluding non-COVID in grew recurring clin-chemistry medicine. the as and X%, revenue challenges by

approximately the offset and And by volume to versus XXX chain delivered I'd points basis by on the point business ago. year to mix. COVID for slide XXX Now an comment of basis as translation, base financial costs, GP well margin assay was unusual XX. XX.X%, quarter quarter prior the XX We performance decrease a like revenue point manufacturing variances a that due basis performance currency first partially benefited below our year. high line. a turning margin to the headwind from margins supply solid quarter top as

inflationary COVID in impact, materials. margin from high a XX revenue margin on been have XXX pressures despite assay profit Excluding headwind would basis up basis the points, drop gross point

efficiency includes year-over-year a point invest of Moving down in percentage basis administrative points the P&L anticipated we base revenue of X.X% XX business XX.X%. and first percentage from Sales, revenue and increased have a points, at expense was quarter. a for R&D average the And due $XX flat to margin materials. marketing as continue to as XX as this inflationary million revenue as positive to estimated previously test outstanding to [indiscernible] new the a The of high drop improvements. been Excluding XXX but basis platforms, margin by Adjusted and million, and headwind most platform. headwind for first EBITDA XXX quarter decline, the our interest basis balances due was for EBITDA COVID XX.X% Net revenue, margin would period variances menu on notably downward pressure an mentioned XXX to adjusted manufacturing interest debt in is the from $XX basis basis decrease mix offset our assay impact, down points. and lower the assay down again, lower X COVID the pressures was point rates. of partially in

the year million income ago for period. taxes provision Our was $X to million $X compared in

previously to $X.XX, share IPO. a the a mentioned headwind, per negative $X.XX earnings the from share resulting adjusted count from year-over-year as the well fully from increase quarter for in impact XXXX COVID year-over-year Our the as $X.XX our February impact including $X.XX fourth decreased diluted

to Now revenue net $X.XX been income versus share basis, normalize the loss share exclude COVID $X.XX XXXX. and if X% count per QX the in year. -- would share you the reported net GAAP for up the EPS of drop per of a $X.XX prior were our testing in QX have compared we to On the assay -- IPO, we for a

the flow, $XX quarterly consistent slide cash flow business. free in in to capital we normal sheet seasonality funding balance Turning after on quarter, the free CapEx, first adjusted in XX. our and million deployment cash $XX with In million used

quarter sales in came Our days days, at last the XX of an first XX compared improvement to of outstanding year. days

of of quarters, our still the discussed three by but QX to improved U.S. as of transaction, this an Now would the $XX first and our this sheet in DSO XXXX without includes securitization year. the compared of last receivable financing quarter million days transaction benefit accounts prior have off-balance

ratio us cash $XXX ended including net a billion, net QX debt Our the billion. total $X.X We enabled EBITDA performance debt sheet $X.X of cash to equivalents with with maintain and of our quarter to and of continue to strong balance X.X. of cash debt million

outlook pending with until want detailed the We providing last largely are the provided given we off transaction we combination Quidel, guidance closes. on holding the Lastly, quarter to reiterate though.

make point including to surcharges the cost impact adjusted full So, materials. back mentioned. expected $XX flow adjusted negatively XXX approximate or like is, is headwind margin, before Chris to on to over free year And approximately summary that an comments. cash any impacts EBITDA I'd price however, increases with in million, Chris from of This be affected due basis offsetting by few now to that, call turn a the to increase

Chris Smith

in of Ortho. XX, earnings solid over move growth quarter quarter. We in margins the my the excluding may call slide Russian/Ukraine start a and shutdowns Joe. EBITDA challenges, to and constant business, currency with summary COVID XX% to year be supply a the assay quick last Thanks slide This the war. adjusted We with despite chain China global X% had our the core it's

I'd a It's last of honored few and over comments. make years. been the chains like it. global disrupted as the The the the CEO seen to to Chairman privilege healthcare we've pandemic a serve So, COVID-XX before three as economy, Clinical Ortho final supply concluding, community and global Diagnostics

incredibly commercial We analyzers accelerated completed more significant talk analyzers increased the We rose executed innovation We combination newer and exciting combining sixth what to offering. of in world, the pivoted these the idea, customers revenues of market pending the built started that highly efficiency to and one earned excellence an our the foundation company we growth product enhanced with reoccurring will with reoccurring and Quidel combination on lot offerings, profile be this growth next by excellence company, that period. during our time product strong with for the improved continue of two And And by than our ServiceTrak. these in business. this business our our at around a range number penetration leadership clearly us Quidel. really the we differentiated the Ortho companies. we program integrated you accelerated drove proposed chapter that the believe the ahead, XX%. service especially feel our in amazing given we year XX have a consecutive QX, growth the launch wide companies is serving new This announced about achieved for will the To IPO pull-through our a in challenge operational revenues. our reinforced confident We innovation, Corporation. new to we accomplishments service a However, ranking This complementary, strategy a shareholder and thrive. value driving robust commercial the strategy investment give looking then as finalize was around core and an combination provides teammates and four and Ortho two in We and growth, successful and assays.

thank investors to It's again best. very well for day. a Finally, pleasure joining our our us. with today the Bye. wish this customers a covering and on been teammates have great you, I for working and all QX the of analysts our as want update Thanks call, and as you I us sell-side and

End of Q&A

today's conference all this for joining. call. concludes And you Thank

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Ortho Clinical Diagnostics (OCDX) 7 May 222022 Q1 Earnings call transcript