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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results -
`Earnings Call Transcript
`
`Apr. 14, 2015 3:17 PM ET5 comments
`by: SA Transcripts
`
`Q1: 04-12-15 Earnings Summary
`
` 10-Q
`
` Analysis
`
` News
`
`EPS of $1.56 beats by $0.02 | Revenue of $17.37B (- 4.1% Y/Y) beats by $60M
`
`Johnson & Johnson. (NYSE:JNJ)
`
`Q1 2015 Results Earnings Conference Call
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`April 14, 2015, 08:30 AM ET
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`Executives
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`Louise Mehrotra - Vice President of Investor Relations
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`Dominic Caruso - Vice President, Finance and Chief Financial Officer
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`Analysts
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`Mike Weinstein - JPMorgan
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`Vamil Divan - Credit Suisse
`
`Larry Biegelsen - Wells Fargo
`
`Glenn Novarro - RBC Capital Markets.
`
`David Lewis - Morgan Stanley
`
`Rick Wise - Stifel
`
`Josh Jenning - Cowen & Company
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`http://seekingalpha.com/article/3069996-johnson-and-johnsons-jnj-management-on-q1-2015-results-earnings-call-transcript?part=single
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`1/29
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`JANSSEN EXHIBIT 2147
`Mylan v. Janssen IPR2016-01332
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`3/7/2017
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
`
`Jayson Bedford - Raymond James
`
`Operator
`
`Good morning. And welcome to Johnson & Johnson’s First Quarter 2015 Earnings
`
`Conference Call. All participants will be able to listen-only until the question-and-answer
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`session of the conference. This call is being recorded. If anyone has any objections, you
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`may disconnect at this time. [Operator Instructions]
`
`I would now like to turn the conference call over to Johnson & Johnson. You may begin.
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`Louise Mehrotra
`
`Good morning and welcome. I’m Louise Mehrotra, Vice President of Investor Relations for
`
`Johnson & Johnson and it is my pleasure this morning to review our business results for
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`first quarter of 2015. Joining me on the call today is Dominic Caruso, Vice President,
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`Finance and Chief Financial Officer.
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`A few logistics before we get into the details. This review is being made available via
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`webcast accessible through the Investor Relations section of the Johnson & Johnson
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`website at investor.jnj.com. I’ll begin by briefly reviewing first quarter for the corporation
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`and for our three business segments. Then Dominic will provide some additional
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`commentary on the business, review the income statement and provide guidance for
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`2015. We will then open the call to your questions. We expect the call to last
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`approximately one hour.
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`Included with the press release that was issued earlier this morning is the schedule of
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`sales for key products and/or businesses to facilitate updating your models. These
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`schedules are available on the Johnson & Johnson website, as is the press release.
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`Please note, we will be using a presentation to complement today’s commentary. The
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`presentation is also available on our website.
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`Before we begin, let me remind you that some of the statements made during this review
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`are or maybe considered forward-looking statements. The 10-K for the fiscal year 2014
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`and the Company’s subsequent filings identify certain factors that could cause the
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`Company’s actual results to differ materially from those projected in any forward-looking
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`statements made today. The Company does not undertake to update any forward-looking
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`statements as a result of new information or future events or developments. Our SEC
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`filings including the 10-K are available through the Company and on our website.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`During the review, non-GAAP financial measures are used to provide information pertinent
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`to ongoing business performance. These non-GAAP financial measures should not be
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`considered replacements for and should be read together with GAAP results. Tables
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`reconciling these measures to the most comparable GAAP measures are available in the
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`schedules accompanying the press release and on the Investor Relations section of the
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`Johnson & Johnson website. Please note our 2015 sales schedules, breakout sales for
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`both IMBRUVICA and INVOKANA/INVOKAMET to assist in updating your models we
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`have also provided the quarterly split for 2014 for those products on the sales schedule by
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`product.
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`Now I would like to review our results for the first quarter of 2015. Worldwide sales to
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`customers were $17.4 billion for the first quarter of 2015, down 4.1% versus the first
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`quarter of 2014. On an operational basis, sales were up 3.1% and currency had a
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`negative impact of 7.2%. In the U.S., sales were up 5.9%. In regions outside the U.S. our
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`operational growth was 0.8%, while the effect of currency exchange rates negatively
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`impacted our reported results by 13.2%.
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`On an operational basis, the Western Hemisphere excluding the U.S. grew by 9.9%, while
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`Europe grew 0.3% and Asia Pacific Africa declined 3%. Growth in the U.S. and Japan was
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`negatively impacted by hepatitis C completion or growth in all regions was impacted by
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`divestitures, the most significant one being Ortho-Clinical Diagnostics. Excluding the net
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`impact of acquisitions and divestitures underlying operational growth was 5.7% worldwide,
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`9.1% in the U.S. and 3% outside the U.S.
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`Turning now to earnings, net earnings were $4.3 billion and earnings per share were
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`$1.53 versus $1.64 a year-ago. As referenced in the table reconciling non-GAAP
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`measures, 2015 first quarter net earnings were adjusted to exclude after-tax amortization
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`expense of $226 million and a net gain of $128 million for after-tax special items.
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`Dominic will discuss special items in his remarks. Excluding amortization expense and
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`special items for both periods, adjusted net earnings for the current quarter were $4.4
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`billion and diluted earnings per share were $1.56, representing decreases of 5.9% and
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`4.3% respectively as compared to the same period in 2014. Currency translations
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`significantly impacted net earnings. On an operational basis, adjusted net earnings grew
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`3.7%.
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`Turning now to business segment highlights. Please note percentages quoted represent
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`operational sales change in comparison to the first quarter of 2014 unless otherwise
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`stated and therefore exclude the currency translation impact. I’ll begin with the consumer
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`segment.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`Worldwide Consumer segment sales of $3.4 billion increased 3.4% with U.S. sales up
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`3.8%, while outside the U.S. sales grew 3.1%. Excluding the net impact of acquisitions
`
`and divestitures, underlying operational growth was 4.7% worldwide, 5.1% in the U.S. and
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`4.5% outside the U.S. Growth was driven by OTC worldwide, Skin Care, as well as Oral
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`Care and Women’s Health outside the U.S.
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`OTC sales growth was driven by analgesics, upper respiratory products outside the U.S.
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`as well as new products and re-launches in Digestive Health, Anti-smoking aids and
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`ROGAINE. In the U.S., adult analgesic market share was approximately 12% up from
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`approximately 11% a year ago, while U.S. paediatric share was nearly 43%, up from
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`nearly 38% a year ago.
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`In Skin Care seasonal inventory build and strong market growth drove results for
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`NEUTROGENA and AVEENO. New product launches and successful marketing
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`campaigns drove the results for LISTERINE in Oral Care and Women’s Health products
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`outside the U.S.
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`Moving now to our Pharmaceutical segment, worldwide sales of $7.7 billion increased
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`10.2% with U.S. sales up 16.9% and sales outside the U.S. up 3.7%, driven by both
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`strong sales of new products, as well as core growth products. New competitors in
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`Hepatitis C significantly impacted sales this quarter.
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`Excluding sales of Hepatitis C products, OLYSIO and INCIVO, underlying pharmaceutical
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`growth worldwide U.S. and outside the U.S. was approximately 13%, 24% and 3%
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`respectively. U.S. results include a positive adjustment for growth to net including
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`managed Medicaid rebates. Significant contributors to growth were immunology products,
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`STELARA and SIMPONI, SIMPONI ARIA as well as INVOKANA/INVOKAMET, XARELTO,
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`IMBRUVICA, ZYTIGA, CONCERTA and INVEGA SUSTENNA or XEPLION.
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`The results for immunology were driven by strong double-digit market growth,
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`complemented by increased market share for STELARA and combined SIMPONI,
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`SIMPONI ARIA. Regarding REMICADE export and international sales, as a reminder the
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`company made certain supply changes resulting in sales to distributors previously
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`recorded as U.S. export sales being recorded as international sales. Combined
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`international and export sales for REMICADE in the first quarter of 2015 were down
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`approximately 2%. Strong growth in Canada was offset by lower sales to our distributors
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`reflecting the weakening of the euro and the loss of exclusivity in Europe partially offset by
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`an inventory build.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`INVOKANA/INVOKAMET sales were up nearly 40% on a sequential basis. In the U.S.
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`INVOKANA/INVOKAMET achieved 4.9% TRx within the defined market of Type 2
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`diabetes excluding insulin and Metformin, up from 4.2% in the fourth quarter of 2014. TRx
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`with endocrinologist grew to 11.8% for the quarter, and 4.3% in primary care, up 1.5% and
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`0.7% respectively on a sequential basis.
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`INVOKANA/INVOKAMET remains the category-leader in new-to-brand share with
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`endocrinologists at nearly 18% at the end of the quarter.
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`XARELTO sales were up 38% and total prescription share of TRx for the quarter in the
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`U.S. anti coagulant market grew to 15%, up over 3 points from a year ago. TRx and
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`primary care reached 12% and in cardiology 23.8% up on a sequential basis.
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`XARELTO is broadly reimbursed with over 90% of Commercial and Medicare Part D
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`patients covered at the lowest co-pay for a branded product. Strong patient update with
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`new indications approvals and demonstrated efficacy drove results for IMBRUVICA both in
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`the U.S. and outside the U.S. primarily Europe with launches in Germany, France and the
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`U.K.
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`Strong growth of the combined metastatic castrate resistant prostate cancer or mCRPC
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`market at 12.5% drove the results for ZYTIGA in the U.S. ZYTIGA’s share was
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`approximately 30.3% of that market down approximately 1.2 points on a sequential basis
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`due to increased competition.
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`During the quarter the FDA approved a label update for ZYTIGA plus prednisone noting
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`significantly prolonged median overall survival compared to placebo plus prednisone, in
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`chemo-naïve men with mCRPC.
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`Continued strong market uptake and additional country launches drove the strong results
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`outside the U.S. ZYTIGA is approved in more than 95 countries. CONCERTA growth was
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`primarily due to a therapeutic equivalent reclassification of generic competitors. INVEGA,
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`SUSTENNA or XEPLION, achieved strong result in all regions due primarily to increased
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`market share.
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`I’ll now review the Medical Devices segment results. Worldwide Medical Devices segment
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`sales of $6.3 billion decreased 4.6%. U.S. sales declined 6.1%, while sales outside the
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`U.S declined 3.3%. Ortho-Clinical Diagnostics was divested mid-year 2014.
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`Excluding the net impact of acquisitions and divestures, underlying operational growth
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`was 1.3% worldwide, with the U.S up 1.1% and growth of 1.5% outside the U.S. Growth
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`was driven by orthopaedics, cardiovascular care, surgical care and diabetes care partially
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`offset by lower sales in vision care. Competitive pricing dynamics and buying patterns
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`negatively impacted growth for vision care.
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`Orthopaedics sales growth was driven by ORTHOVISC and MONOVISC in Sports
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`Medicine as well as trauma hips and knees partially offset by competitive and pricing
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`challenges in the U.S in spine.
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`Trauma growth of 3% Worldwide was driven by 7% growth outside the U.S. due to strong
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`volume growth including a tender. Hips growth of 3% worldwide was driven by strong
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`volume growth partially offset by continued pricing pressure.
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`Primary stem platform sales were a major contributor to the results. Knees worldwide
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`increased 1% with the U.S. up 2% due to strong sales of ATTUNE, partially offset by
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`pricing pressure.
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`Outside the U.S. knees were down 1% with growth in Asia Pacific and Latin America offset
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`by lower sales in Europe. Slowing elective procedure volume primarily in the U.K
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`contributed to the soft sales in Europe. Cardiovascular growth was driven by a 12%
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`worldwide increase in Electrophysiology business due to strong sales of the ThermoCool
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`SmartTouch Catheter.
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`Surgical care growth was driven by strong future growth and the success of new products
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`in the ECHELON FLEX family partially offset by lower sales in Women’s Health. Results
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`for diabetes care were driven by ANIMAS strong double digit growth with the successful
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`launch of VIBE in the U.S. and expanded paediatric indications outside the U.S.
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`That concludes the segment highlights for Johnson & Johnson’s first quarter of 2015. It is
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`now my pleasure to turn the call over to Dominic Caruso. Dominic?
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`Dominic Caruso
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`Thank you, Louise and good morning everyone. We are very pleased with our strong start
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`to 2015 and I believe we are well positioned for continued growth in this dynamic
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`healthcare environment. At Johnson & Johnson we continue to make very good progress
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`on our near term priorities as well as our long term growth drivers which we discussed
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`during our January call. I’ll take the next few minutes to highlight some key developments
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`we’ve made to advance our business as well as some key points regarding our results for
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`the quarter and then I’ll provide some updates to our guidance for you to consider in
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`refining your models for 2015.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`During the quarter we had several key developments across our business. We received
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`new approvals for IMBRUVICA, PREZCOBIX and VELCADE in our pharmaceutical
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`business and also added a new anti-thrombin antibody to our early stage development
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`pipeline through the acquisition of XO1 Limited which we announced last month.
`
`We also continued expanding our efforts to combat major global public health challenges
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`through collaborations with government organization and others in the industry to search
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`for new solutions to stand the threats posed by dementia and Ebola.
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`In much more in-depth preview of the outstanding work our pharmaceutical business is
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`doing will be provided at our upcoming pharmaceutical business review meeting on May
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`20th which will take place in New Brunswick, New Jersey.
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`In Medical devices in line with our priority to accelerate growth through innovation we
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`announced in March definitive agreement to collaborate with Google Life Sciences to
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`advance development of a surgical robotics program which we see as an important step in
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`our commitment to advancing surgical care around the world.
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`Finally we continued making disciplined decisions regarding the management of our
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`enterprise portfolio and completed our divestiture of the U.S. Licensing rights for
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`NUCYNTA in April. We announced the binding offer from Cardinal Health to acquire our
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`Cordis business which we expect to close in the latter part of the year.
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`Please now turn to the consolidated statement of earnings. We are very pleased with the
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`strong start to the year as reflected in our first quarter results. While overall sales results
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`were impacted by currency headwinds our operational sales growth was 3.1% and our
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`operational sales growth excluding the impact of acquisitions and divestitures was a
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`strong 5.7%. Competition in the Hepatitis C market negatively impacted that growth by a
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`full percentage point. You may recall that this same analysis for 2014 resulted in
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`underlying operational growth of 5%, so we are very pleased to see underlying operational
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`growth accelerating and very healthy.
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`Now if you please direct your attention to the boxed section of the schedule you will see
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`we have provided our earnings adjusted to exclude intangible amortization expense and
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`special items. In the quarter, our adjusted earnings per share of $1.56 exceeded the mean
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`of the analyst estimate as published by Firstcall.
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`The decline in adjusted EPS of 4.3% versus the prior year was entirely due to the negative
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`impact of movements and currency rates in the translation of our results, particularly the
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`weakening of the euro compared to the prior year. This resulted in a negative impact to
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`EPS in the quarter of approximately $0.13 per share. EPS on a constant currency basis
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`was $1.69 or up 3.7% over the prior year. This is slightly higher than our operational sales
`
`growth rate of 3.1%.
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`As referenced in the table of non-GAAP measures the 2015 first quarter net earnings were
`
`adjusted to exclude intangible asset amortization expense and special items which
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`consisted primarily of the following. Intangible asset amortization expense was
`
`approximately $200 million, net litigation gains were approximately $250 million and we
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`had an increase in the accrual for the DePuy ASR Hip program of approximately $100
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`million.
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`Now let’s take a few moments to talk about the other items on the statement of earnings.
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`Cost of goods sold increased 30 basis points; this is mostly due to currency impacts.
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`Selling, marketing and administrative expenses were 27.9% of sales or 70 basis points
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`lower as compared to the first quarter of 2014 due to good cost management.
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`Our investment in research and development as a percent of sales was 10.9% and it was
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`higher than the prior year, as we continue to make important investments for the future.
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`Overall, our pre-tax operating margin when excluding special items and intangible
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`amortization expense was 32.6% or 50 basis points lower than the prior year primarily due
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`to such R&D investments.
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`Interest expense net of interest income was similar to last year. And other income and
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`expense was a net gain of $348 million in the quarter compared to a net charge of $86
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`million in the same period last year. Excluding special items that are reflected in this line
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`item, other income and expense was a net gain of $91 million compared to a net gain of
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`$50 million in the prior year period.
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`Now excluding special items, the effective tax rate was 21.5% compared to 20.8% in the
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`same period last year. This effective tax rate is higher than our previous guidance as it
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`does not yet reflect the benefit of the R&D tax credit as that legislation has not yet been
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`passed.
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`Now I will provide some guidance for you to consider as you refine your models for 2015.
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`At the end of the quarter we had approximately $12 billion of net cash which consist of
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`approximately $31 billion of cash and marketable securities and approximately $19 billion
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`of debt. I’m also pleased to report that we have made significant progress and nearly
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`completed our share repurchase program which will offset the ongoing impact of the
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`Ortho-Clinical Diagnostics divestiture we did last year.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`For purposes of your model and assuming no major acquisitions or other major uses of
`
`cash, I’d suggest you consider modelling net interest expense between $450 million and
`
`$550 million; this is unchanged from our prior guidance.
`
`Regarding other income and expense as a reminder this is the account where we record
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`royalty income as well as gains and losses arising from such items as litigation,
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`investments by our development corporation, divestitures, asset sales and write-offs. We
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`would be comfortable with your models for 2015 reflecting net other income and expense
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`excluding special items as a gain ranging from approximately $2 billion to $2.1 billion,
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`which includes the gain from the divestiture of our U.S. rights to the NUCYNTA pain
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`medicine which we announced close in the early second quarter and we’ve updated our
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`guidance now to reflect the anticipated gain on the pending divestiture of the Cordis
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`business.
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`As we noted in January, we expect to use the increase in other income to compensate for
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`the anticipated decrease in income from OLYSIO in 2015 as compared to 2014 while
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`continuing to invest in our core business and opportunities for future growth. We firmly
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`believe that continued portfolio decisions are an important process and enable us to focus
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`our resources on the highest growth opportunities.
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`With the anticipated Cordis gain we will be able to mitigate some of the impact of strong
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`foreign currency headwinds this year. The increase in guidance for other income and
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`expense will flow directly through to increase operational earnings versus our prior
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`guidance.
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`And now a word on taxes. Our guidance for 2015 anticipates that the R&D tax credit will
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`be renewed by Congress, although that has not happened. We therefore will be
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`comfortable with your models reflecting an effective tax rate for 2015 excluding special
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`items of approximately 20% to 21%. This is higher than our previous guidance reflecting
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`changes in the mix of our earnings. If the R&D tax credit is not approved it would
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`negatively impact the tax rate by approximately 0.5% for 2015.
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`Now turning to sales and earnings, our sales and earnings guidance for 2015 takes into
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`account several assumptions and key factors that I would like to highlight, which may not
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`be fully reflected in your models.
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`Consistent with our previous guidance for sales our assumptions for PROCRIT is that
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`there will not be biosimilar competition in 2015. We also do not anticipate generic
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`competition this year for RISPERDAL CONSTA or INVEGA SUSTENNA, but we are
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`expecting the generic entrant for INVEGA in 2015. As expected, we have seen additional
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`biosimilar competition for REMICADE in Europe following the patent exploration in many
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`countries in February.
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`As we’ve done for several years, our guidance will be based first on a constant currency
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`basis reflecting our results from operations. This is the way we manage our business and
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`we believe this provides a good understanding of the underlying performance of our
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`business. We will also provide an estimate of our sales and EPS results for 2015 with the
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`impact that current exchange rates could have on the translation of those results.
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`Consistent with our previous guidance we would be comfortable with your models
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`reflecting an operational sales increase on a constant currency basis of between 1% and
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`2% for the year. This would result in sales for 2015 on a constant currency basis of
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`approximately $75 billion to $76 billion. Additionally, by way of comparison to how we
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`describe our sales results in 2014 our operational sales growth for 2015 excluding the
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`impact of all acquisitions and divestitures as well as the impact of Hepatitis C would be
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`approximately 6% a higher level of growth than the comparable 5% for 2014 which we
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`noted earlier.
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`As of last week the euro was lower by approximately 17% as compared to 2014 average
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`levels and the dollar has strengthened recently versus virtually all major currencies. And
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`though we are not predicting the impact of currency movements to give you an idea of the
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`potential impact on sales if currency exchange rates were to remain where they were as of
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`last week for the balance of the year our sales growth rate would decrease by nearly 7%
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`reflecting the weakening of the euro and other major currencies against the U.S. dollar.
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`Now turning to earnings, a significant factor impacting our earnings guidance for 2015 is
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`the impact of currency movements on transactions which although hedged, is still
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`somewhat negative incrementally versus the prior year. We expect transaction currency
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`impacts to be negative to our gross profit by approximately 60 to 70 basis points in 2015
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`as compared to 2014.
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`Consistent with the reporting practices by the majority of our competitors as we explained
`
`last quarter we now exclude intangible, amortization expense in addition to special items
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`when providing our adjusted earnings guidance and actual results.
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`Accordingly, we would be comfortable with adjusted EPS guidance in a range between
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`$6.64 to $6.79 per share on a constant currency basis, reflecting an operational or
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`constant currency growth rate of 4% to 6%, this is higher than our previous guidance by
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`$0.10 per share reflecting some operational improvements and the higher other income
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`and expense I noted earlier partially offset by higher tax rate.
`
`Again, we are not impacting – we're not predicting the impact of currency movements, but
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`to give you an idea of the potential impact on EPS, if currency exchange rates for all of
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`2015 were to remain where they were as of last week, that our reported earnings per
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`share would be negatively impacted by approximately $60 per share, which is a higher
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`negative impact of approximately $0.18 per share than we provided in our January
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`guidance.
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`Therefore our reported adjusted EPS range will range from $6.04 to $6.19 per share
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`primarily due to the increased headwind of currency on ESP of $0.18 per share which is
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`partially offset by our improved operating performance of approximately $0.10 per share.
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`At this stage and year we would be comfortable with your models reflecting the midpoint of
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`this range. So, in summary as update you models for the guidance that I just provided I
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`would like to make a few key points.
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`Although operational sales growth is expected to range between 1% and 2% we are
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`pleased to note that when excluding the impact of acquisition and divestitures and the
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`impact of Hepatitis C products, our operational sales growth at the midpoint of our
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`guidance is approximately 6% for the full year 2015 as compared to 5% for all of 2014.
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`We expect that the higher level of other income in our guidance for 2015 will mitigate the
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`lower level of income from OLYSIO into 2015 as compared to 2014, and allow for
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`continued investment in the business particularly in research and development as we
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`continue to build our pipeline and now with the inclusion of the gain from the Cordis
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`divestiture we are able to offset some currency headwinds to earnings as well. With regard
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`to earnings on the constant currency basis our guidance on an operational EPS growth is
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`strong and in the range between 4% and 6%.
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`In closing, we are very pleased with our strong results for the first quarter of the year and
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`we're pleased with what we see for the full year namely strong underlying sales growth,
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`solid operational earnings per share and the benefits of the decisive portfolio actions
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`enabling us to fund investments in future growth opportunities and also help us mitigate
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`some of the currency headwinds.
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`Now I'd like to turn things back to Louise for the Q&A portion of the meeting. Louise?
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`Louise Mehrotra
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`Thank you, Dominic. And Andrea, could you please provide the instructions for the Q&A
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`session.
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`Question-and-Answer Session
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`Operator
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`[Operator Instructions] Your first question comes from Mike Weinstein with JPMorgan.
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`Louise Mehrotra
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`Good morning, Mike.
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`Dominic Caruso
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`Hi, Mike.
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`Mike Weinstein
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`Good morning. Thanks guys taking my questions. So Dominic, the first question you'll
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`probably going to have is the FX headwind obviously has gotten worse over the course of
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`the last few months, and you reflected that in the guidance. You're helping manage
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`through 2015 with the gains from NUCYNTA and Cordis, but that won't help you for 2016.
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`So we're a long ways away from there, but obviously the question is, can you grow
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`earnings in 2016 after the gains you'll be taking in 2015, assuming the dollar holds at
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`least?
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`Dominic Caruso
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`Sure. Mike, it’s a good question and let assume the dollar holds and there isn't further
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`currency headwinds. Yes, we did purposely offset some of the OLYSIO income we saw in
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`2014 with now this benefit from the divestitures that we talked about and are very
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`transparent about in 2015.
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`I would say, with a business of our size $70 billion to $75 billion in sales, we actively
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`manage our portfolio and we would expect that we would continue to do so and as we
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`talked about before, look at the businesses that we expect to not be in and make the right
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`portfolio choices and take the size of actions and that will further enable us to refocus our
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`resources in the right areas. So I think, although I can't predict the level of other income
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`we would have in 2016, I wouldn't expect the drop off so dramatically.
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`Johnson & Johnson's (JNJ) Management on Q1 2015 Results - Earnings Call Transcript | Seeking Alpha
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`And secondly, as I mentioned our sales growth is accelerating, our business has been
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`managed well by all of our business leaders around the world. So I'd expect continued
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`sales growth and increase profitability from those sales as we move forward. So, more to
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`come and we'll obviously keep you posted throughout the year.
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`Mike Weinstein
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`Okay. Let me ask two kind of balance sheet, capital allocation questions and one, you and
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`I discussed this a few weeks ago in our call, but I know lot of you like questions on the
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`back of the press reports on Pharmacyclics and Abbey's acquisition there and JNJ's
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`potential involvement. So I won't ask you to comment on JNJ's involvement, but can you
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`talk about the companies thinking about larger M&A particularly in the pharmaceutical
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`space, but really across portfolio, the appetite for larger M&A at this point.
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`And then, second, I'd be interested just in your comment on the back the GE activity on
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`Friday. As you're aware, GE is part of its move to slim down to being more of a pure
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`industrial company to offset some of that dilution announced that they were going to
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`repatriate $36 billion in cash that was sitting outside the U.S. to fund the stock buyback,
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`that doesn't help your discussions with the Washington about getting the holiday or more
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`meaningful change in tax laws to allow you guys to access that cash. So, with GE being
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`this very high profile and U.S. multinational repatriating all this cash, does it change your
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`thinking at all about how you're managing your cash balance all of which sits outside the
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`U.S? Thanks.
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`Dominic Caruso
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`Okay. Mike. There's a lot there. So let me start with the first half which was about, I think
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`the appetite for large acquisitions and I won't comment on rumours or speculation about
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`our involvement in the Pharmacyclics. I think just to take a step back our capital allocation
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