Hill-Rom Holdings, Inc. (NYSE:HRC) Q1 2020 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 08:30 am ET

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Hill-Rom Holdings, Inc. (NYSE:HRC) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to Hill-Rom's Fiscal First Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded by Hill-Rom and is copyrighted material. It cannot be recorded, rebroadcast, or transmitted without Hill-Rom's written consent. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Ms. Mary Kay Ladone, Senior Vice President, Corporate Development, Strategy and Investor Relations. Ms. Ladone, you may begin.

Executive
Mary Kay Ladone

Thanks, and good morning, everyone. Thanks for joining us for our fiscal first quarter 2020 earnings conference call. Joining me today are John Groetelaars, President and Chief Executive Officer of Hill-Rom; and Barbara Bodem, Chief Financial Officer.

Before we get started, let me begin our prepared remarks by reminding you that certain statements contained in this presentation are forward-looking statements and are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described. Please refer to today's press release and our SEC filings for more detail concerning risk factors that could cause actual results to differ materially.

In addition, on today's call, non-GAAP financial measures will be used. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release issued this morning. I would also like to mention that in addition to the press release issued this morning, we have posted a supplemental presentation, which can be accessed on the Investor Relations page of our website.

So with that introduction, let me now turn the call over to John.

Executive
John P. Groetelaars

Thanks, Mary Kay, and good morning, everyone and thanks for joining us today. Q1 was another successful quarter for Hill-Rom following a strong 2019. With disciplined operational execution, we again exceeded expectations on the bottom line. We are also pleased to reaffirm our full-year revenue growth outlook and raised the bottom of our adjusted EPS guidance range.

In the first quarter, core revenue growth was 6%, another quarter of mid-single digit growth, including a contribution of approximately 200 basis points from recent acquisitions. We achieved gross margin expansion of 160 basis points, a record level since 2015, and adjusted EPS of $1.13 per diluted share, an increase of 11%. Importantly, this strong performance provides flexibility to reinvest in our key growth initiatives, and sets a solid foundation for achievement of both our short-term and long-term financial objectives. Our teams continued to execute on our vision and four strategic priorities aimed at enhancing our global category leadership to drive durable, sustainable mid-single digit top line and double-digit bottom line growth. Our priority of advancing category leadership with innovative and differentiated solutions is off to a great start this year.

Q1 new product revenue of more than $120 million exceeded our expectation. This represents growth of approximately 30% versus last year. We remain on track to deliver full-year new product revenue of approximately $550 million this year and are looking forward to a steady cadence of six key new product launches in the second half of