Valeant Pharmaceuticals International, Inc. (NYSE:VRX) Q4 2017 Earnings Conference Call Transcript

Feb 28, 2018 • 08:00 am ET

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Valeant Pharmaceuticals International, Inc. (NYSE:VRX) Q4 2017 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) Your first question comes from the line of Gregg Gilbert with Deutsche Bank. Gregg, your line is open.

Analyst
Gregg Gilbert

Thanks. Good morning, team. I have a few, starting with you, Paul. On the tax rate, does the 13% represent a cash rate and how should we think about the cash rate beyond this year? Secondly, for both of you, perhaps, on the heels of your comments about the shelf, your decision to share longer term growth goals, what's your sense of urgency and your appetite to reduce debt in addition to doing it the old fashioned way with cash flow?

And lastly for Joe, can you update us on any recent developments in the XIFAXAN case with Teva? If the litigation stay were to be extended beyond April 30, is that something you would discuss soon? Any update on that front would be helpful. Thanks.

Executive
Joseph C. Papa

Okay. Paul, why don't you start with the tax rate and then we'll go to that long-term growth.

Executive
Paul S. Herendeen

Yeah, sure. Yeah. Starting with the tax rate, the 13% -- the cash tax rate is a component of the 13%. And I think that when we're passed on a public -- something's going wrong with the phone here. Okay.

Executive
Joseph C. Papa

Everyone, please mute their phones.

Executive
Paul S. Herendeen

Yeah, we're back. Thank you. When we were last speaking publicly about the impact of tax reform, our belief was that there would be a marginal increase in our tax rate and specifically called out that we expected that the US cash component of our global tax rate would go up. And that's the way it is playing out. I think you saw -- heard in my prepared remarks around the tax rate, we're guiding in 2018 to a 13% rate on our adjusted earnings. So that's a global effective tax rate.

So the cash component is a part of that. Very importantly, and I did have this in my prepared remarks, we continue to have a very good tax structure, which enables us to convert a large proportion of our earnings to cash, which is a good thing when you're a leveraged Company like ours, where we need to generate cash in order to continue to address our debt maturities.

The second thing on the shelf -- we covered that, I said, you linked it into the -- providing longer term guidance. Let me first say that we're providing the longer term guidance because it is difficult for the market to look at the progression of our Company, as Joe's says, moving from stabilizing the Company and getting us back to a growth mode. It's hard for the market at large to be able to see that. So we wanted to provide some information about our expectations about revenue and profit over the three years following 2018, because they're important years for us where we get past the stabilization and we get back to a growth mode with our Company.

Clearly, in looking at the way people model us, we wanted