Halyard Health, Inc. (NYSE:HYH) Q4 2016 Earnings Conference Call - Final Transcript
Feb 27, 2017 • 09:00 am ET
Good morning and welcome to the Halyard Health Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note today's event is being recorded.
I would now like to turn the conference over to Dave Crawford, Vice President, Treasurer, Investor Relations. Please go ahead sir.
Thank you, and good morning, everyone. It is my pleasure to welcome you to the Halyard Health fourth quarter earnings conference call. With me this morning are Robert Abernathy, Chairman and CEO; and Steve Voskuil, Senior Vice President and CFO. Robert will begin with an assessment of our fourth quarter and full-year performance against our 2016 priorities and provide an overview of our 2017 priorities and outlook. Then Steve will review our results and provide additional detail on our planning assumptions for the year. We will finish with Q&A. A presentation for today's call is available on the Investors section of our website, halyardhealth.com.
(Forward-Looking Cautionary Statements)
Now, I'll turn the call over to Robert.
Thanks, Dave and good morning, everyone. I appreciate your interest in Halyard Health. Let me start by saying 2016 was a strong year for Halyard. We delivered results ahead of our financial plan, successfully integrated our first acquisition, increased our research and development investment and generated $160 million of free cash flow. My management team and I are pleased with our accomplishments and the progress we made, advancing Halyard's transformation into a leading medical devices company.
At this time last year, we laid out two main priorities; deliver our plan and fuel our growth pipeline. We delivered on both counts. Fourth quarter adjusted diluted earnings per share was $0.50 and full-year adjusted diluted earnings per share was $1.97, which came in at the high end of our guidance. Our fourth quarter net sales of $410 million puts us at $1.6 billion for the year. Both Medical Devices and S&IP produced sales in line with or above our expectations.
Medical Devices net sales increased 15% for the second consecutive quarter and 11% for the year, strengthened by our CORPAK acquisition and solid demand across all categories. S&IP sales were down 2% for the year and declined 4% for the fourth quarter, due to lower selling prices.
Looking at our growth pipeline, we successfully executed our first acquisition to augment our Medical Devices polio. We are ahead of plan with our integration and have realized synergies earlier than we expected. We will continue to pursue M&A to fuel growth. We also laid the foundation for growth by increasing our research and development spending last year to $41 million. In 2016, we launched 11 products, exceeding our expectations and up from six the prior year. Finally, we generated free cash flow above our plan. Our strong cash position allows us to invest for more growth in 2017.
Now, turning to our 2017 priorities, they remain consistent. We're going to deliver our plan and we're going to