ResMed Inc. (NYSE:RMD) Q2 2015 Earnings Conference Call - Final Transcript

Jan 22, 2015 • 04:30 pm ET


ResMed Inc. (NYSE:RMD) Q2 2015 Earnings Conference Call - Final Transcript


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Welcome to the second quarter 2015 ResMed Inc. earnings conference call. My name is Ellen, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. (Operator Instructions) I will now turn the call over to Agnes Lee, Senior Director of Investor Relations. Agnes, you may begin.

Agnes Lee

Thank you, Ellen, and thank you everyone for attending ResMed's live webcast. Joining me on the call today are Mick Farrell, our CEO; and Brett Sandercock, our CFO. Other members of the management team will also be available during the Q&A portion of the call. If you have not had a chance to review the earnings release, it can be found on our website at

(Forward-Looking Cautionary Statements) I will now hand the call over to Mick Farrell.

Michael Farrell

Thanks, Agnes, and thank you to our shareholders, who are joining us on today's investor call, as we provide an overview of our Q2 fiscal 2015 results. I'm pleased to report that we achieved very strong sales growth this quarter with excellent progress from new product launches in our core market of sleep disordered breathing, as well as our cardio and respiratory care markets. In the introductory remarks, I'll discuss our sales achievements; I'll also provide an update on our product launches; and finally, I'll cover progress against our longer-term three horizons growth strategy.

Then, I'll turn the call over to Brett, our CFO, to walk you through our financial results in greater detail. As you saw in our press release, our global business achieved double-digit revenue growth in Q2 or 14% on a constant currency basis. Including currency headwinds, our global growth was 10% year-on-year.

We saw strength across all geographic regions, with robust double-digit growth in the Americas as well as double-digit growth in our combined European and Asia-Pac regions on a constant currency basis. These results were fueled by the success of new product launches in our sleep apnea and respiratory care markets, including both COPD and neuromuscular disease.

We delivered gross margin of 62.2%, which was just above the middle of our guidance range for the quarter. At the same time, we continue to invest SG&A to promote our global product launches.

Michael Farrell

As a percentage of sales, SG&A remained roughly in line on a year-over-year basis at 29% of sales. We also continued to invest in research and development, as we continue to innovate to build long-term, sustainable, competitive advantage in the marketplace. R&D represented about 7% of revenues, which is slightly down from prior quarters, primarily as a result of currency movements, particularly in the Australian dollar. Looking at the bottomline, our GAAP diluted earnings per share grew 7% to $0.64. On a non-GAAP basis, diluted EPS was a $0.01 higher at $0.65.

Zooming in on our combined European and Asia-Pac businesses, we grew at 16% on a constant currency basis in the second quarter. Including currency headwinds,