Medtronic plc (NYSE:MDT) Q2 2018 Earnings Conference Call Transcript

Nov 21, 2017 • 08:00 am ET


Medtronic plc (NYSE:MDT) Q2 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Medtronic's Second Quarter Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. And after the speakers' remarks there will be a question-and-answer session. (Operator Instructions)

I will now turn the conference over to Mr. Ryan Weispfenning. Please go ahead.

Ryan Weispfenning

Great. Thank you, Crystal. Good morning, and welcome to Medtronic's Second Quarter Conference Call and Webcast. During the next hour, Omar Ishrak, Medtronic Chairman and CEO; and Karen Parkhill, Medtronic CFO, will provide comments on the results of our second quarter, which ended on October 27, 2017. After our prepared remarks, we'll be happy to take your questions.

First, a few logistical comments. Earlier this morning, we issued a press release containing our financial statements and a revenue by division summary. We also issued an earnings presentation that provides additional details on our performance and outlook.

(Forward-Looking Cautionary Statements)

Unless we say otherwise, references to quarterly results increasing or decreasing are in comparison to the second quarter of fiscal year 2017 and rates and ranges are given on a comparable constant-currency basis, which adjusts for our recent Patient Care, DVT and Nutritional Insufficiency divestiture as well as the impact of foreign currency. These adjustment details can be found in the reconciliation tables included with our earnings press release. Finally, other than as noted, our EPS growth and guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year.

With that, I'm now pleased to turn the call over to Medtronic Chairman and CEO, Omar Ishrak. Omar?

Omar Ishrak

Good morning, and thank you, Ryan. And thank you to everyone for joining us. This morning, we reported second quarter financial results, including revenue of $7.1 billion. Non-GAAP diluted earnings per share were $1.07, growing 2% or 5% after adjusting for the approximate 3% -- $0.03 impact from Hurricane Maria. These financial results are very encouraging when considered in the context of a quarter in which we faced three hurricanes and the California wildfires. Hurricane Maria in particular significantly affected our manufacturing operations in Puerto Rico. The lives of thousands of our employees were affected by these natural disasters, and yet, the resiliency, dedication and persistence of our team to overcome these challenges was remarkable.

Against this backdrop, which resulted in not only a quantifiable impact to our quarter but also an unquantifiable impact from the disruption to our teams, we delivered 3% comparable constant-currency revenue growth or 4% excluding the direct impact from Hurricane Maria. Our performance continues to be driven by growth strategies of therapy innovation, globalization and economic value. In therapy innovation, as I noted last quarter, we have entered a period of clear acceleration in our innovation cycle. We've seen increased revenue momentum from several important new product launches, which we expect will continue into the second half of the fiscal year.

In Q2, organic growth in our Cardiac and Vascular Group was 6%,