Johnson & Johnson Conference Call Highlights

Johnson & Johnson JNJ reported its third quarter earnings on Tuesday. Shares of the company are down 2 percent.

Below are some key highlights from its conference call.

International:

• Worldwide sales to customers were $18.5 billion for the third quarter of 2014.
• In the U.S., sales were up 11.6%.
• On an operational basis sales were up 5.8% and currency had a negative impact of 0.7%. In the U.S., sales were up 11.6%.
• In regions outside the U.S. our operational growth was 1%
• On an operational basis, the Western Hemisphere excluding the U.S. grew by 3.5%,Asia-Pacific Africa region grew 2% and Europe declined 0.8%.
• Net earnings were $4.7 billion and earnings per
• share were $1.66 versus $1.04 a year ago

Business Segments:

• Worldwide Consumer segment sales of
• $3.6 billion increased 0.3% with U.S. sales down 4.2% while outside the U.S. sales grew 2.6%.
• Excluding the impact of divestitures, worldwide growth was approximately 2.5% with U.S. growth of approximately 1.5% and growth outside the U.S. of approximately 3%.
• Major drivers of the results were Over-the-Counter and Oral Care products.
• OTC sales growth was driven by upper respiratory products and analgesics.
• Analgesic growth was 7% in the U.S.
• In the U.S. adult analgesic market share was approximately 11%, up from 8.5% a year ago.
• U.S. pediatric share was over 40%, up from 26% a year ago.
• Pharmaceutical segment, worldwide sales of $8.3 billion increased 18.7% with U.S. sales up 33.1% and sales outside the U.S. up 4.1%
• Sales in the pharmaceutical segment driven by both strong sales of new products as well as core growth products.
• Worldwide Medical Devices and Diagnostics segment sales of $6.6 billion decreased 4.6%.
• U.S. sales declined 6.5% while sales outside the U.S. declined 2.8%.
• Orthopedic sales growth was driven by trauma, sports medicine, knees and hip.

Business Growth:

• Although modest, we have now seen two consecutive quarters of positive momentum in hospital utilization rates.
• Utilization rates are going to increase.
• Continue to create value through innovation as evidenced by the strong performance of our newly launched products.
• We continue to make important investments to access early-stage innovation.
• In the quarter, we acquired Covagen, a company that is focused on developing new therapeutics for the treatment of a broad range of inflammatory diseases.
• In July we announced a $5 billion share repurchase program.
• Our sales increased nearly 8.5% on an operational basis in the quarter.
• Adjusted net earnings were $4.3 billion reflecting an increase of 9.5% over the third quarter of 2013.
• And adjusted earnings per share were $1.50 in the quarter versus $1.36 a year ago which was up 10.3%

Guidance:

• At the end of the quarter we had approximately $17.7 billion of net cash.
• If the R&D tax credit is not approved, it will negatively impact our effective tax rate by approximately 0.5%.
• Estimated tax rate of 20% to 21%.
• Operational sales increase on a constant currency basis of between 5.5% and 6.5% for the year.
• This would result in sales for 2014 ona constant currency basis of approximately $75 billion to $76 billion.
• Full-year estimates of $5.94 and $5.99 per share on an operational or constant currency basis, which is higher than our previous guidance.
• And while we're not providing guidance for 2015, if currency exchange rates were to remain where they were as of last week for
• All of 2015, that impact would be a headwind to earnings per share of approximately $0.15 per share to $0.20 per share.