Medtronic 4Q14 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

11% EPS growth

“This morning we reported third quarter revenue of $4.3 billion, which represents growth of 8% and Q3 non-GAAP diluted earnings per share of $1.01, growing 11%.”

Covidien acquisition closes next quarter

“Before turning the call over to Gary I would like to discuss the integration of Covedian. We decided to complete the acquisition in early Q4 and immediately began executing the comprehensive integration plans that our two companies have developed over the past seven months. Throughout the planning process and now into the integration we’ve had four clear priorities that are guiding our two organizations. These priorities are, preserve, optimize, accelerate and transform. Our first and highest priority is to preserve.'”

Return 50% of cash flow to shareholders

“In Q3, we generated $1.7 billion in free cash flow. We remain committed to returning 50% of our free cash flow to shareholders. In Q3, we paid $300 million in dividends and there were no share repurchases giving restrictions related to the Covidien acquisition.”

.30c impact from exchange rates on FY 2016

“if exchange rates were to remain similar to yesterday’s broad FY16, our combined FY16 revenue will be negatively affected by approximately $1.2 billion to $1.4 billion. On a bottom-line based on today’s rates, this could translate into our $0.30 to $0.40 negative impact to earnings per share.”

Organize the sales force by who the customers are

“over time some of those technologies show that there are opportunities for one sales force to have a broader basket of products depending on who the customers are. What I will point out is that our philosophy here starts with the customer and the physician and then works back to the technology we don’t start with the technology. So if customers require us, require products that come from some other group or division, that makes sense for the usage we will put it through that channel. We don’t want to force that technologies into places where customers aren’t necessarily using them.”