Shire plc (NASDAQ:SHPG) Q2 2018 Earnings Conference Call - Final Transcript

Jul 31, 2018 • 09:00 am ET

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Shire plc (NASDAQ:SHPG) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Thomas Dittrich

track with our previously stated deleveraging plans.

Moving to Slide 15 on 2018 full year guidance. We are on track with our current 2018 non-GAAP EPS guidance. Our underlying revenue performance is solid, and our current revenue outlook is at the midpoint of our revenue guidance range. As I previously discussed, some gross headwinds are pushing us towards the low end of the non-GAAP gross margin guidance range, that on our first half tax rate, we now expect the full year tax rate towards the low end of the non-GAAP tax guidance range. Net of these items, we reiterate our full year non-GAAP earnings per share guidance range.

Importantly, these expectations exclude changes to foreign exchange rate assumptions. As you can see, we provide our foreign exchange rate assumptions on this guidance slide, and you will note that current rates are unfavorable to these rates due to the strengthening U.S. dollar. As a scenario, based on the sensitivities we provide on this slide, you will calculate a potential impact of roughly $150 million revenue and $0.15 EPS if current rates were to prevail for the remainder of the year.

And when thinking about the third quarter, please keep in mind my comments about Q2 inventory stocking as well as sequential gross margin, operating expense and depreciation expectations. Lastly, please note we plan to update our guidance for the impact of the sale of our Oncology business after the closing of the transaction expected in Q3.

With that, I will turn the call back to Flemming.

Executive
Flemming Ornskov

Thank you, Thomas, and please now turn your attention to Slide 17. In the second quarter, we delivered solid results with 6% product sales growth, while overcoming the impact of generic LIALDA in the U.S. We also continue to progress our innovative pipeline, and we received FDA approval of our state-of-the-art Covington plasma manufacturing site. These achievements were made in the same quarter that our board reached an agreement with Takeda on the terms of recommended offer for Takeda to acquire Shire, which reaffirms our continued focus on our patients and our priorities. As we look forward, we have additional regulatory milestones, including the potential approvals of lanadelumab in the U.S., Europe and Canada and prucalopride in the U.S. All of these events are, of course, subject to regulatory approval.

In summary, Shire delivered solid performance during the first half of this year, executing against our key priorities and advancing our late-stage pipeline. I'm extremely proud of the entire Shire team, and would like to thank all Shire employees for their dedication to our patients.

With that, I'll now turn the call over to the operator for the Q&A portion of our call. Please keep in mind Christoph's comments regarding the restrictions, resulting from us being in an offer period, and limit question to Shire's current operations and performance.