QIAGEN(QGEN) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales for Q2 2019 were $381.6 million, representing a 5% increase at constant exchange rates (CER) and a 1% increase on a reported basis due to currency headwinds [10][20] - Adjusted earnings per share (EPS) were $0.34 at CER and $0.33 on a reported basis, with an adjusted tax rate of 20% [10][25] - For the first half of 2019, net sales were $730.3 million, also up 5% CER and 1% on a reported basis [21] Business Line Data and Key Metrics Changes - Consumables and related revenues rose 4% CER to $335 million in Q2 2019, representing 88% of total sales [26] - Instrument sales grew 9% CER to $47 million in Q2 2019, accounting for 12% of total sales [26] - Sales of the QuantiFERON-TB test grew 6% CER, while companion diagnostics co-development revenues declined by 21% CER [28][50] Market Data and Key Metrics Changes - The Asia-Pacific/Japan region led growth with 12% CER growth in Q2 2019, contributing 22% of total sales [31] - Europe, Middle East, and Africa (EMEA) grew 5% CER to $118 million, representing 31% of total sales [32] - The Americas region grew only 1% CER to $181 million, accounting for 47% of sales [33] Company Strategy and Development Direction - The company announced a restructuring of its clinical sequencing joint venture in China, impacting the 2019 outlook [11][15] - QIAGEN aims for an 8% to 9% CER sales compound annual growth rate from 2019 to 2023 and at least a 10% CER CAGR for adjusted earnings during the same period [16] - The focus is on maximizing opportunities from new product launches and reallocating resources to the most attractive opportunities [62] Management's Comments on Operating Environment and Future Outlook - Management noted that the market for NGS in China is complex and dynamic, leading to the decision to restructure the joint venture [69][70] - There is caution in the European market due to political uncertainty, impacting predictability of funding [78][79] - The company expects full-year 2019 growth above the 15% CER target for the QuantiFERON-TB test despite slower growth in Q2 [13][82] Other Important Information - The company updated its full-year 2019 outlook, expecting net sales growth of about 5% to 6% CER and adjusted EPS of about $1.42 to $1.44 per share [15][57] - The company is experiencing strong growth in its universal NGS portfolio in China, independent of the joint venture [12][41] Q&A Session Summary Question: Insights on the China NGS decision and partnership failure - Management explained that the complexity of the market and difficulties in aligning components for an integrated workflow led to the decision to restructure the partnership [69][70] Question: Details on the QIAstat launch and growth initiatives - Management highlighted the importance of the U.S. market for syndromic testing and the partnership with McKesson to drive placements [74] Question: Trends in Europe and expectations for growth - Management acknowledged softness in core European markets, attributing it to political uncertainty and caution in funding [78][79] Question: Update on the DiaSorin partnership and TB strategy - Management clarified the distribution terms and expected growth contributions from the DiaSorin collaboration [83] Question: Long-term growth outlook and investment strategy - Management emphasized commitment to high-growth opportunities and the potential of new product launches to drive future growth [88][90]