Medtronic plc (NYSE:MDT) Q1 2020 Earnings Conference Call Transcript

Aug 20, 2019 • 08:00 am ET

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Medtronic plc (NYSE:MDT) Q1 2020 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medtronic First Quarter Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Ryan Weispfenning, Vice President, Investor Relations. Sir, you may begin.

Executive
Ryan Weispfenning

Thank you. Good morning, and welcome to Medtronic's Fiscal Year 2020 First Quarter Conference Call and Webcast. During the next hour, Omar Ishrak, Medtronic, Chairman and Chief Executive Officer; and Karen Parkhill, Medtronic Chief Financial Officer will provide comments on the results of our first quarter, which ended on July 26, 2019. After our prepared remarks, we'll be happy to take your question.

First, a few logistical comments. Earlier this morning, we issued a press release containing our financial statements and the revenue by division summary. We also issued an earnings presentation that provides additional details on our performance and outlook. During today's earnings call, many of the statements made may be considered forward-looking statements and actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC and we do not undertake to update any forward-looking statement.

For this call, unless we say otherwise, rates and ranges are given on a constant currency basis, which compares to the first quarter of fiscal year 2019 after adjusting for foreign currency. References to organic revenue growth exclude the impact of material acquisitions and currency. Reconciliations of these and all non-GAAP financial measures can be found in the attachment to our earnings press release or on our website at investorrelations.medtronic.com. Finally, our EPS 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 Chief Executive Officer, Omar Ishrak. Omar?

Executive
Omar Ishrak

Thank you, Ryan, and thank you to everyone for joining us. This morning we reported solid quarterly results and we are off to a good start to the fiscal year. Despite tough comparisons, we delivered revenue growth, operating margin and EPS all ahead of Street expectations.

Q1 revenue grew 3.5% constant currency with our performances in CVG, MITG and RTG, while diabetes matched our expectations. This reflects the success in the market of our innovation and the benefit of our business and geographic diversification. Our adjusted operating margin expanded 90 basis points, including currency and 70 basis points, constant currency, as we continue to see the benefits of our enterprise excellence initiatives particularly on the SG&A line. On the bottom line, we grew diluted EPS 7.7% or 9.4% at constant currency, despite a 230 basis point headwind on EPS growth from the increase in our non-GAAP nominal tax rate.

Let's discuss some of the more important drivers of our performance, starting with our Minimally Invasive Therapies Group, which delivered another strong