Natus Medical Inc. (NASDAQ:BABY) Q4 2014 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 11:00 am ET


Natus Medical Inc. (NASDAQ:BABY) Q4 2014 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the Natus Medical Fourth Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference call is being recorded today, January 28, 2015, and contains time-sensitive information that is accurate only as of today. Earlier today, Natus Medical released financial results for the fourth quarter 2014. If you have not received the news release, or if you would like to be added to the company's distribution list, please email your request to This call is being broadcast live over the Internet on the company's website at and a replay of the call will be available on the website for the next 90 days. The agenda for today's call will be as follows. Jim Hawkins, President and CEO of Natus will present opening comments then Jonathan Kennedy, Senior VP and CFO of Natus will summarize the company's financial results and then Jim Hawkins will conclude the prepared remarks with comments about the company's financial guidance for 2015 before opening the call up to questions.

(Forward-Looking Cautionary Statements) I would now like to turn the call over to Jim Hawkins, President and CEO of Natus Medical, Mr. Hawkins?

James B. Hawkins

Thank you, operator. Our fourth quarter results that we released earlier this morning reported revenue of $94 million compared to $90.6 million last year. We also reported non-GAAP earnings of $0.40 compared to $0.38 in our first quarter last year. I am very satisfied with these results as we posted record revenues and earnings that exceeded our guidance and equally important, we outperformed on all of our stated goals.

In the quarter, I'm pleased to report we achieved a non-GAAP gross profit of 62.9%. This is an increase of 3.3% over the 59.6% we reported in the fourth quarter, last year. Also, our non-GAAP operating profit of 18% in the fourth quarter allowed us to achieve our 2014 non-GAAP operating profit goal of 16%.

Combined with our 4% organic revenue growth made for a great quarter. We established a long-term non-GAAP operating margin goal of 20%, replacing the 13% to 17% annual goal that we had communicated in the past.

Our 2015 goal is to achieve 18% operating profit for the full year. We are driving to achieve our 20% operating profit goal in 2016. Our improved operating margin has been driven by solid organic revenue growth achieved through new products and new markets, and by leveraging our market-leading products in both newborn care and neurology.

Our increased operating leverage and efficiencies are a result of integrating our past acquisitions along with excellent execution of our operating plan by all at Natus. As we have communicated, reestablishing consistent organic revenue was a major goal for Natus last year. I'm extremely pleased to report that we achieved this goal. For the last many years, our focus has been to build a leadership position in both