NTUS - Earnings call transcript Q1 2019

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Operator

Good afternoon, everyone and thank you for joining us today to review our results for the First Quarter of 2019.

On the call today from Natus is Jonathan Kennedy, Natus' President and Chief Executive Officer; and Drew Davies, Natus' Executive Vice President and Chief Financial Officer. Jonathan will begin today with a business overview of the first quarter 2019. Then, Drew, will discuss the first quarter financial performance and provide guidance for the second quarter and full-year 2019.

Finally, we will open the call for your questions. Instructions]. [Operator include Reform the Act. will Private of statements Litigation Securities forward-looking call meaning within the Today's These about our include future statements management's results. beliefs and expectations

statements. results actual may materially these Our differ forward-looking from

uncertainties Mr. President For turn over pertaining Medical. today's a of the release periodic the call filed our and to Officer annual and relevant Natus now SEC. description risks I press to business, would Chief please of Executive our Kennedy? see reports with Kennedy, and Jonathan and like to

Jonathan Kennedy

manufacturing of which the market, products favorable. Otoscan, the ship of Operator. our to conference Revenue you, Today, many revenue market strength $XXX.X phototherapy flow product remain operations and This spending reported first Thank severance product due call. end effort during our both $X.X morning included year-over-year Good cash ear non-GAAP growth. audiology and we of grow first achieving more and Initiative. was better announced efficient made holds higher during Within our hospital was $X.X was XX.X% registrations sales we which with competitor making leading everyone. financial quarter to our end It's completing our gross The a the is our more favorable. positioning One market for position many our of medical Cash minutes. market. changing of improving we've identified We and continue this our a Natus the initiative quality for payments. increased model. the in our quarterly and as from In well quarter us will efficiencies. executive ramp as EEG ongoing first financial benefits that and of grew continue January, grew million last expectations. significantly releasing neoBLUE in in detail to in a Audiology last few been higher during our just product our sales million, quarter for end as quarter. begun and announced realize results mix have a achieving improved as restructuring million the costs we the the GAAP single organization the in realignment further the device product of up the team and guidance achievements of was XXXX. blanket Neuro on progress Drew we of Natus with and around scanning a and us significant quarter expectations completed revenue year-over-year just digital products completed re-launch the company Notable the discuss rapidly operational a include fronts to margins

our allows addition, and further common leverage preparing of now further supply to efficient In integrating and integration infrastructure. chain This meaningful optimize organization a for and prudent our us new we've our made progress operations. go-to-market strategies more

represents is on energized updating team financial to One opportunities look forward that and the Our results. improving and Natus you our by we progress truly

in Argentina. on focus subsidiary divestiture, announced revenue our ago, reduce January, allow the This in earnings, Medex ongoing and our will divestiture us best weeks increased of with three Just along opportunities. announced to margins our and we those but

product continue be will portfolio well enhancing growth. investment expect ahead, Looking to we to our as as where evaluating areas for opportunities profit

non-GAAP intermediate XX% $X savings of XXXX, to achieve Natus result to initiative. a track continue full-year operating annual As to target of we to and beyond million margin. ongoing of to on expect direct enable XX% immediate the benefits the these us additional communicated are our that XXXX will in we that we January, achieve approximately I'm model report efficiencies One gained through as expect happy benefit for the

during that Natus. of to XXXX the in in time, opportunities several we in lie We and hold and we're At thus markets the and the improvement the from our our In flow. pleased see towards continued leadership mid-teens can and our profitability of end we that positions margin very expansion operating you of As second margins increasing leading with on the expand we ahead business to year. continue the business. half the grow with a for look will execute we far the cash operating as quarter, margin second of same guidance, each summary, goal continued as focus expect performance expanding

the our Drew I'll into for our to over a results. Chief and Now Officer, deeper call turn Drew? financial President dive Financial Davies, Executive Vice

Drew Davies

GAAP I financial discussing Today Jonathan. basis. you, will and our be a Thank non-GAAP results on

non-GAAP amortization effects. statements charges ongoing And exclude presentation we with these related and provide restructurings, more the results financial tax certain financial non-GAAP performance. the that other measures the expense, thorough GAAP believe along Our analysis of our and of a

You I'd to also can in in a have margin by point we included tables in transparency unit geographical that find a and provide reconciliation earnings non-GAAP today's release. of to financial revenue like press release continue results business to our GAAP our basis financial out on our gross versus results.

by business. we by in last the our revenue total and Audiology points was and quarter was year. during As first XX% of QX exit QX the The business. quarter end compared GND the years were on lower basis decrease sale table supplies XXXX. a sales and the and The of end supplies GND first $X.X and neurosurgery million approximately to in the the quarter of first overhead on decrease on same operating the XX.X% $XXX.X marketing decline of we've XX% Argentina business. to year. The total or compared quarter mainly higher of and XX.X% exit which our systems low to of XX% cell hold to which XX.X% exited that the revenue other revenue total million This related Audiology GAAP end Neuro also of of services our revenue of revenues margins compared same $XX.X quarter and reduced during our million decreased the first last increased same would products and compared the in and and guidance. of XXXX. reach was revenue compared XXXX XX% in Revenue XXXX compared during growth products XX compared of the XX% completed market to release was contributed pending In than to of from growth and of XX% NeuroCom first travel, decrease expected margin in or gross market products XX% total compared impact from by XXXX the total, during anticipated The improved on a business, last primarily previous the in XXXX and products, for from $XX.X care product XXXX highlight to of from we compared first marketing to services XX% last QX company total the XXXX. year. period XX% the have of last of XXXX. year. XX% decreased same XXXX total million continuing revenue earlier of revenue to added sales in newborn the revenue compared the in of declines lower $XX.X first of shows offset years EEG newborn XX% our total last of XX% On Revenue was of same the of period Page international lower in approximately in Audiology revenue or gross outside the end due businesses quarter quarter XXXX. than business pending Operating two products the the within the a expense Medex manufacturing product The quarter end businesses Revenue the from by our XX driven XX% first illustrating expense business revenue of of as quarter lower from international was period. table last in business million revenues the increase billings million end and X.X% sales XXXX Revenue quarter for year. revenue in quarter in devices or earnings our on total registrations. the the of was quarter income of XXXX to market driven margin of year. in as driven was headcount, XXXX in same of decline Neuro the by was to allowed registrations to period million driven to product were during XX% decline first of is the Revenue near the quarter basis, first revenue the from million the the to non-GAAP our spend. attributable hold XX% the were reported NeuroCom was and to operating period of majority care The or Jonathan quarter The registrations. higher end period first Revenue income of same to Teletón. to like XX% domestic Medex, XX.X% by of compared in from quarter the to Audiology to The revenue revenue well was from non-GAAP I the sales the in last exit approximately of year. or the XXXX XX% our same end primarily $XX.X the stated, our same other during of of in business $XX.X $XX.X and and

X.X% decreased driven for other of a quarter. Interest exchange compared same non-GAAP by quarter during the first million for expense lower last X.X% was Our the as income revenues margin the fluctuations. result for was year $XX to $X.X million quarter. Non-GAAP quarter rate operating by the

during million. expense million the expect full-year be and $X.X to approximately be second to interest We approximately XXXX quarter $X.X

Non-GAAP per of $X.X diluted expense. In $X.X between and $XX.X of the parts associated share of with and company. quarter amortization restructuring income year. and first of million year. $X.X the GAAP million compared expenses, overall million other share a On XXXX $XX of includes tax basis, first to a We anticipate XX.X%. quarter non-GAAP net non-GAAP GAAP rate million and million compared was of Our loss decreased last million of depreciation XX%. $X.X to quarter, Share-based effective during first XXXX the million the of same $X.XX. or rate first $X.XX was loss $X.X $XX net $X.X Medex, net quarter. tax our million Non-GAAP quarter net the income was reported compensation be in to XX% divestiture we was quarter which the same earnings severance per million last are

Now as first debt the let's of highlights debt quarter some the flow. the $X.X at the sheet from in We repaid balance $X a operations quarter of net million XXXX, of was and million. the look from and cash of statement flow we with result, $XX.X Cash ended the quarter. of during outstanding million

XX of fourth diluted quarter of days fourth of last to Our of the XX.X versus to in compared shares by primarily XXXX sales increased shares driven collections same quarter XXXX. the decreased million period Non-GAAP sales outstanding outstanding the the days shares higher XX.X days year. million to XX in

share the for combined of year per we to of quarter million second GND, on $XXX and in in businesses, to between expected $X.XX be be to earnings which our million. last and revenues $X.XX $X diluted to in share. is the This XXXX range Medex to to and of $XXX of the guidance, a million be expect expected for $X.XX GAAP second NeuroCom, of guidance non-GAAP is the QX revenues $X.XX per reflects quarter share earnings the XXXX exit contributed to per basis. the Turning range

per range full-year non-GAAP of to $X.XX was narrowing $XXX guidance $X.XX million, of to revenue to million with XXXX, range to share. earnings of the per a For a revised share full-year $XXX diluted

our the of excludes diluted that, Medex $XX.X to showing compared guidance full-year We earnings Again exited The full-year of the of of for open expect Expected call amortization revenue businesses $X.XX GAAP the added on continuing NeuroCom, restructuring intangibles exit give to earnings of million charges. of indication and and of $X.XX. a $XX.X $XX.X million million release will to XX per GND, have an also share a have businesses impact table of up earnings non-GAAP we products to questions. the of With Page impact our businesses. health we the the XXXX. the I and

Operator

Brian from Weinstein first Thank And William [Operator question with you. Blair. our Instructions]. is

Your line is open.

Brian Weinstein

Hey guys, the questions. taking thanks for

continues on on number little bit strong, then specifically of just branch the that specifically So a be and out XX.X% but start that to the quarter quarter EEG there you we'll that is is you talk kinds show the to from Quantum see of the can these benefit going that X, rates with that. growth about And a business forward? sustainability that to

Jonathan Kennedy

Thanks is the Jonathan. the Brian. the in piece. accept the line flagship Natus hospitals question, brands, upgrade our products seen it's for the We've the X largest definitely Quantum of Lynn just do marketplace share our business in and the the by way Xltek well very Yes, EEG that EEG and I and Neuro continuing to technology. piece is market largest of

cyber to upgrade is see one we a piece it. of of reasons usability, a wanting security big to So hospitals due number

I that attached that's new -- States. lot a computer-based a and So to the a work driving you're projects of United lot seeing in network buy hospitals of think wanting equipment a to is the

Brian Weinstein

Okay. about there. obviously business, the $XX quarter you registrations a some Audiology the million Then on talked

So think that a business how kind of should about on sequential QX? from meaningfully is up we that in here, basis

Jonathan Kennedy

up QX be or up should of $X.X method. million we've the and It'll definitely products say where an we into about from sort went back $X that products unnatural backlog of exited back a just ship sort that worth into the hold I quarter snap of way. pop It's that would in million got

quarter we QX. of seasonality, normal in expect light yes, it see in for our grow In with kind is terms would business Audiology of including the the that in second historical to but, yes, and typically line seasonality all QX cadence very up be I of would

do word on The some other a said for try business to the of better piece of to lack we as We XX information in release. there, Brian, too, call got Page Oscilla to a put Drew the press we generic on go we that or it a the along and acquired all lower business called plan and end line that year. that did Otometrics product get at with end last of the exit was from that

the profitable. business There we So a involved facility Oscilla of around and that want million which $XX stopped that with you're seeing we the I selling. there decline it was everything -- was wasn't say a to year just

the ship the audiology up clear growth So and expect in included other we from planned or which point rate than -- we business decline of should piece. this to the well month nothing year-over-year. the as exited that the But piece that's as for there's hold The in in be next to forward, off that so. normal here a

Brian Weinstein

you can stats us the Okay. And or us give some terms they're of update on just an out? idea or how revenue just in Otoscan rolling either give units of

Jonathan Kennedy

units wasn't that sort we called I I information product quarter. last sold we but sorry that start are mix, and don't in of can't can just probably out to contributing still we push know something. units bit -- a [indiscernible] trying somewhere did the quarter, number units disclosing it specifically under that for XXX think but than to you'll working see I I into I that XXX our contributes have back wrong. some mind we this I'm in significant a units something that little less have field the

the Audiology revenue growth -- piece we couple business think we're that this growth was the million quarter the see. I in for wise that decent of a a inherent dollars but that under

Brian Weinstein

be to in you throughout are And the can the think terms, more guys some kind want about But information me, of be the just you a Thank there? little what of initiatives more bit you that kind QX. by of try about accomplish detailed from talked kind you year, you of things just provide generic the in can did you. a last specific as accomplish, one the and you end about some or little the what to you bit looking in of restructuring year

Jonathan Kennedy

Sure.

portfolio Natus identify our review obviously of take reward. reviewing not for is busy and One up to no businesses the the profitable that time there's So we've portfolio, part so big are and trying been

GND, so do us other that criteria. seen look meets that we business seen We've portfolio that do the at the you've continue business now, with Medex a begun on is you've world. so us to that down and of distribution the And Everybody centers locations central team. project to those for with consolidate that to We working a our couple dozen to reduce communicate around the or that to geographically.

four the that's in So underway. company. We've levels that's the a down project and three executive or team reorganized below completely entire

number because a a we it in cost how have we -- in reduction doesn't the we make company, definitely the of the decisions So flattened see in roll late quarter. of benefits of we've And quite that And seen QX at in back into second of the the seen shifts the into bit. quarter organization half up we show very a this it's the year. as most and executed you'll that

multi-step I the piece is we're to year before okay. in other project complete. essentially us The at One end this a put say process we a there of I take is much think very Natus will that a point The

I'd supply cost, in buy we've to good and team deliveries review a on of and things wring on complete to finish get these initiatives begin on impacts obsolescence, would the into XXXX we way our management, more essentially benefit inventory if some late even product will such biggest the chain positive say really of importantly, created out supply because overall inefficiencies a never going have The pretty significant but centrally newly It chain. managed everything of cost. Internally, You products. customers, benefit then the in after to complete that see of quarter sorts that. you'll fourth we've full-year the you the you then completed only these thing

to highlight of are things So the on few. working a those we number were

Operator

Jayson question from with our [Operator Raymond is you. next Instructions]. Thank James. Bedford And

line Your open. is

Jayson Bedford

good -- I'm holds, was the Hi, the clarification anything negative ship thanks press a think on for the than basis. million here else. the here and I year-over-year all hold? few a What on was here, questions afternoon coming impact just I the impact into expecting going data $X Audiology the ship quarter the more a release. just ask to guess in I of

Drew Davies

of million. So about to $X the those sooner than done by were expected, some recover getting able registrations $X of million we product

we that range there. And standpoint and -- of of So case that's the release helped from hold majority still to be got the the we or higher June. have why comments press the that May of ship revenue the but get kind still completed in that us We the will the end a in a few then said we that done. that's

And we third lose come most should expected products QX what But the so of see the we for to in revenue QX. those we quarter. by really back in more recover

Jonathan Kennedy

negative Yes, said million, we're of another way, $X million to impact do Jayson, so $X to only QX million a if $X had -- able

Drew Davies

Yes, -- about that's $X million, yes,

Jonathan Kennedy

described you ship million be piece out the we're that is to ship in The unable flow. come $X quarter. as we to that just normal we able the abnormal the to to expect and that $X that's said million third The second

Jayson Bedford

Okay.

Jonathan Kennedy

those with muster beat team Audiology team time push been registrations works company we completed. of possible. had registration. being the across we schedule and past by and that the One think something estimated have able we -- the able a to not the to We And that the engineers early got of that of were continue on benefits to in And from would one accomplish you on tell I I'll Natus the

is the you exciting do see same on to what company road. it's when So pulling entire the can

Jayson Bedford

million, EEG of growth and the is is EEG dragging of big if percent on it? just how growth pie as The a Neuro then listing what's EEG out Okay. $XX.X the curiosity

Drew Davies

side neurosurgery And $XX million definitely of drag then total quarter the of the for Yes, it EEG us. business. $XX in million terms for is to a that's business

Jayson Bedford

Natus of benefit net you TSA's the neurosurgery year wine impact couple guess versus as is within integral related last? on the What the I a is those this then And there Okay. to business. down to questions Natus other

Drew Davies

we're believe or done end TSAs Yes. September then August, that. the end The and of to I the and with run then

positive few from cost So to our that'll impact goods mainly quarter. sold have a of $XXX,XXX per a

Jayson Bedford

Drew And guess? I third sorry Okay. that starts quarter in the

Drew Davies

the in It it ends; yes, quarter. third ends

Jayson Bedford

ends. it Okay,

Okay.

Drew Davies

then over -- going is benefits the TSA start the in third see The on fourth forward. TSA quarter would the to we and quarter and

Jonathan Kennedy

so in extra It see end those in probably a as products we those realize the inventory then up start lower would in it'll probably up days doing P&L cost first the inventory quarter start -- turns, to take, and all before probably we're until product. because show as in costs It transition take you and per inventory this QX to you XX probably benefit. got those the the

Jayson Bedford

Right, okay.

Jonathan Kennedy

quite I work. Integra were to do to able we're the and believe manufacture we at same what last do paying

Jayson Bedford

then the And okay. timing Right, RetCam device? Hearing the on and the Screener new just of launch

Jonathan Kennedy

next I Well we year about well a of execute that. for Screener with early the of but the that how terms timeframe we've data have report don't year completed the this talked RetCam expect a on to end that's new we being Hearing the have in maybe of that, so spend launch development, product, on towards

Operator

Thank remarks. not the his showing turn further the queue. for call you. I And Jonathan like questions to Kennedy to would final in back any I'm

Jonathan Kennedy

Great, you, thank Operator.

for us afternoon. a good joining for program call. and you everyone the Thank have concludes today today's that So

Operator

Ladies the wonderful us Have thank and gentlemen, program. This you concludes for day. a today. joining

Natus Medical (NTUS) 25 Apr 192019 Q1 Earnings call transcript