Hello and welcome to the Trinity Biotech Second Quarter Fiscal Year 2016 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Diaz of Lytham Partners. Please go ahead.

Thank you, Gary, and thank all of you for joining us today to review the financial results of Trinity Biotech for the second quarter of fiscal year 2016, which ended June 30, 2016. With us on the call representing the company are Ronan O’Caoimh, Chief Executive Officer; Kevin Tansley, Chief Financial Officer; and Dr. Jim Walsh, Business Development Director. At the conclusion of today’s prepared remarks, we will open the call for question-and-answer session. But before we begin with those prepared remarks, we submit for the record the following statement. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will, and other similar statements of expectation identify those forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development, commercialization and technological difficulties and other risks detailed in the company’s periodic reports filed with the Securities and Exchange Commission. Forward-looking statements reflect management’s analysis only as of today. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements. With that said, let me turn the call over to Kevin Tansley, Chief Financial Officer, for a review of the results. After Kevin’s remarks, we will hear from Jim Walsh, on product development issues and Ronan O’Caoimh will wrap up the prepared remarks with his perspectives on the quarter. Kevin?

Thank you, Joe. Today I’ll take you through the results for quarter two 2016. Beginning with our revenues, total revenues for the quarter were $26.3 million and this compares to $24.3 million in quarter two of 2015. However revenues this quarter continue to be impacted by currency movement. As you all have seen from the press release, we have restated the quarter two revenues on a constant currency basis. On a like-for-like basis, revenues for the quarter were $26.6 million. Ronan will provide more details on the revenues for the quarter later in the call, so I’ll move on now and discuss the other aspects of the income statement. Gross margin for this quarter was 45%. This compares to 47% in quarter two 2015, this continues the trend of lower margins caused by the currency factors which I mentioned earlier, something which has been a feature of our last few quarters. However, I will point out the 45%, those represent an increase on our two most recent quarters namely quarter four 2015 and quarter one 2016 both of which have margins of approximately 43%. Both represents an improvement of 2%. Now, I’ll move on to our indirect costs. Our R&D expenses for the quarter were $1.3 million, which is consistent with quarter two 2015. Meanwhile our SG&A expenses have increased in the quarter from $6.7 million in equivalent quarter last year to almost $7.8 million this quarter. As you have seen from the previous quarters, our SG&A expenses tend to fluctuate quarter-on-quarter due to a range of factors including the timing of certain expenses principally discretionary sales and marketing costs, travel, trade shows et cetera. We are also seeing the foreign exchange issue actually here and a significant portion of the increase this quarter is due to both our non-cash…

Thank you, Kevin. I’ll take the opportunity now to update you on our cardiac development programs. In particularly I’ll provide you with a detailed update on our Troponin FDA submission and an overview of our clinical trial data and of our recent communications with the FDA. I’ll also provide a brief update on our Meritas BNP product, which as you know is currently undergoing clinical trials to support an FDA’s 510(k) application. So, starting with Troponin, firstly let me give you a brief reminder of the excellent clinical performance we observed in our U.S. trials. I have discussed this data with you on a number of recent calls, so today I will provide just a very high level reminder. In our recent U.S. clinical trial the Meritas product demonstrated an admission sensitivity in whole blood of 66% and a corresponding specificity of 94%. I’ll put this data into context for you by comparing our results against two of the market leading products currently approved and widely in use in the USA today, mainly the Abbott i-STAT point-of-care Troponin products and the Abbott architect central lab Troponin products. According to the manufacturers package insert, the admission sensitivity of the current FDA approved Abbott Architect Central Lab System is 60% with a corresponding specificity of 95%. In studies carried out at Hennepin County, the Abbott i-STAT point-of-care product was determined to have admission sensitivity of 32% with the specificity of 92%. The Meritas point-of-care product does speeds the market does beats the market leading Abbott i-STAT products by 35 percentage points in sensitivity, while the Meritas also beats the Abbott Architect Central Lab System by 6 percentage points in sensitivity. However, you will remember that although these results look excellent for Meritas, you still need to keep in mind that we’re still…

Thank you. We will now being the question-and-answer session. [Operator Instructions] Our first question comes from Jim Sidoti of Sidoti and Company. Please go ahead.

Good afternoon. Can you hear me? Ronan O’Caoimh: Hi, Jim.

Yeah.

Great, great. You talked a little bit about Brazil and about how you thought that situation would improve when you built that manufacturing there. What’s the timetable for that? Ronan O’Caoimh: Probably about 9 months realistically by the time we get up and running, Jim.

Okay, all right. So some time midway through 2017 you should see that pick up? Ronan O’Caoimh: Yeah, we’ve received approval in Brazil now to basically to manufacture and thereby to receive the reduced VAT or sales tax rate, now I think it will be saving us 17%. So now it’s a matter of just activating that and activating basically point of sales of – sorry. What we need now to do is to setup a new factory and to extricate ourselves from our existing contract manufacturing arrangement.

Okay. Ronan O’Caoimh: It just takes about 9 months.

All right, great. And then on Troponin, it sounds like you are on track with the schedule you put out regarding the FDA, but you did have some increased spending in sales and marketing this quarter after the launch. Can you just give us a sense, is that adding people or is that creating literature, what’s going into that cost?

It’s about making sure both instead of seeing – instead of – as we continue to take on people, we are sort of others continue to take on people [indiscernible] would have been taken on the previous quarter exception, we do a lot of hands on for marketing costs and travel costs and exhibition related costs as well. So it’s a mix there to be honest.

So how quickly after approval is won do you expect to be out selling the product? Ronan O’Caoimh: We would expect to be within a couple of months into the market, Jim.

Okay. So a couple of months after approval you would be in the market? Ronan O’Caoimh: Yeah.

Okay, thanks you.

Thanks, Jim.

Our next question comes from Bill Bonello of Craig-Hallum. Please go ahead.

Great, thanks. Couple of follow-up questions. Just first of all on the point of care side number was a lot better than we’ve been looking for. Is Q2 do you think a good proxy for the rest of the year, I know this can be a kind of a lumpy business just trying to think about what you think of sort of a run rate for this business? Ronan O’Caoimh: I think it probably is. I think quarter one was particular weak quarter; certainly we don’t see anything like that on the horizon. I think quarter three will be at the level of quarter two or stronger, but I mean clearly some other to be indicating that. But I think in general terms our pipeline is looking strong and we are positive on basically what we’ve produced this quarter can be exceeded.

Okay. That’s helpful. And then just as a follow-up to the last line of questioning. Can you maybe elaborate a bit more on what is in place at this point for Troponin commercialization, what you’ve done from a sales force standpoint and what you’ve been able to do in terms of identifying target accounts, et cetera? Ronan O’Caoimh: Well, we have marketing team in place, we are preparing for the launch of the product in Canada and in the United States to key into our existing sales force. So we have – we have a sales force of 27 – existing sales force of 27 people and they have undergone – ongoing training on our Troponin product and on Troponin market in general and they have been out in the market for the past number of years sending information on the hospitals – on all the hospitals that they just – in terms of how they handle Troponin. We are seeking a senior appointment as in – sales and marketing director to spearhead our efforts in the U.S. market. So we are looking for somebody experienced in this year and that would be – it’s quite a senior requirement within the company and we have just commenced that process with the intention of having somebody onboard around the turn of the year. And beyond that I think – beyond that specific appointment I think all the pieces are in place. We will add in addition maybe somewhere between five and maybe eight sales reps, especially sales reps in the United States. But the detection of that and the key individual, I think we are ready to move.

Okay. That’s helpful. And then just one last question. On the premier side, you talked about the placements, can you talk a little bit about just how the pull through is trending these days? Ronan O’Caoimh: Just in general terms, China is performing very well in terms of the number of instruments that we are placing. So we are more of placing 25 instruments per quarter, more or less exactly. So you can take it at 100 a year, that’s the positive side. The negative side is that the pull-through is so much disappointing right around the $4,000 per instrument per year level, which compares to – roughly our business is more like $10,000 or $11,000 per instrument per year, but we are trying to believe that that will increase and I do believe that we will truly assembled four years time, but actually the most productive instrument of all will be the Chinese’s ones, again the background of 90 million diabetics type 1 and type 2 in the country and universal reimbursement. The missing link clearly is the general practitioner doctor who isn’t at this moment of time basically sending samples into the hospitals, but our instrument is in the hospital ready to be utilized. So – and then moving on to [indiscernible], our best performing instruments are United States instruments, pull-through there is very, very high. Our placements are strong, but they remind that the U.S. market is also immune and immunoassay markets. And so therefore, the pie is somewhat smaller for us. [indiscernible] is our partner in Europe and they have 40% of the European market and basically -- we are basically replacing hybrid [ph] instruments in that market and are enhancing [ph] in effect 40% of the European market and that process continuing exactly as we…

Great, thank you so much. Ronan O’Caoimh: Thanks, Bill.

Our next question comes from Larry Solow of CJS Securities. Please go ahead.

Great, thank you and good afternoon. If I could just may, just a couple of follow-up and just clarifications, just on Troponin it sounds like everything is pretty much aligned with where we were once you guys had your last call, Jim is there any formal process going forward so you re-submit, you answer all the questions for the FDA, is there a new clock or some sort of 90 day clock or should we expect the FDA to come back to you with more questions or how do you, what would be some of the next milestone to look for, if there is something to look for or is it sort of uncertain?

Well it’s sort of uncertain Larry, quite frankly. The first one, there is a formal process, okay. The clock has stopped as we speak, okay. So the FDA are not on the clock right now. As soon as we submit and acknowledge that they have received this resubmission than the clock starts again and in theory I believe they had 90 days to review and before they need comment, okay. Our belief will be that we should receive comments back from them. I would have thought within a month to six weeks of our answers, against our questions going in. And at that stage, a number of things are going to happen. First thing could happen is they could say everything is perfect, thank you very much and let’s get ready to approve this product with more likely to go and come back with some comments, suggestions, something like that, hopefully not asking for anymore data to be generated, but maybe just for clarifications etcetera. At which time when they had sent back they questions or comments like that, the clock stops again and we get extra amount of time to make our answers back to that. We would do that obviously and then start so that again another 90 day clock starts again from the FDA, but because it’s such a thorough review of the first application, okay, and they really did when some of our applications would have gone. We have answered as we believe very, very well all of the questions they have put to us. It should, with a fair way and there should be maybe a couple of months of six weeks to get their comments back. There will be then follow up questions with normally on things like labelling and stuff like that where they say well, okay we are approving it, but we are curtailing the claims to x, y, z or whatever, okay and so you have to change your labelling. You get the labelling approved and then to say, yes you are free to market. So, all going well, as I said in the prepared remarks there is that reasonable chance that this product could be approved before the end of 2016, pending what they come back with.

Okay, great, fair enough. And then just if I may just one, on just switching gears to just SG&A expense and maybe Kevin you could help, in terms of the sequential increase, you mentioned that the substantial significant piece of that was actually related to FX loses recognized with that, is that non-cash, can you just elaborate more on that and maybe quantify it?

It is actually a combination of both. This quarter, actually interesting enough is the currencies have moved somewhat differently. We actually had a strengthening of the euro as such in some other currencies versus last year were weaker. So, not everything moved in the same direction. So, the fact that the currency rate of the euro was stronger that pushed cash cost up from what’s now the differential between the two rates was enormous, but that was the fact, but also what is at play here is when you do your revaluations of any foreign currency denominated assets or liabilities at the end of the quarter, that creates bulk or sort of non-cash amounts and in the case of the last one, I suppose somewhere between 300,000 and 400,000. The cash amounts will be more modest maybe of the order of 100,000 or so.

Got it. So that is basically a balance sheet item that should it has to come through the P&L and you are putting it through on the SG&A line?

Yes it is. It’s something at the retranslation adjustment that has to be performed at the end of each quarter it hits the P&L because you have restage your assets and liabilities of the prevailing rates at the end of the quarter.

Got it. So, all things are equal and SG&A were flat sequentially on a cash basis, next quarter would be closer to the 8 million number or that 8 million that includes your stock comp, so close to a 7 million number I think?

If you would – it is a 7.8 million, which is the number we are having there at the moment, if for example none of those items are there so if the euro went back to the way it was and if we had a complete flash currency then you will be back around the sort of 7.3.

Got it, great. Okay, great, thank you very much.

Thanks Larry.

Our next question comes from Chris Lewis of Roth Capital. Please go ahead.

Hi guys, thanks for taking the questions. Ronan O’Caoimh: Hi Chris.

Chris, hi.

Wanted to start on the Immco business it continues to be a nice growth driver for you, can you elaborate on just how big that business has grown to at this stage and kind of what’s driving the growth and the continued strength within that segment?

Chris, the business is approximately it is just sort of about 4.5 million per quarter of that order.

And you continue, it obviously is growing above where you are, your corporate average, so can you walk us through kind of what’s driving that growth. Ronan O’Caoimh: Yes, number of factors, obviously Sjogren’s is part of that. The lab business in general is doing well, it has got – we’ve got a reference laboratory in down town Buffalo, which has been performing very well since we have acquired this. Within this obviously Sjogren’s has been a new product we have added on since we have acquired Immco and that has been growing hopefully as well that that will accelerate now that the new arrangement that we have put in place, one of the mega labs in the U.S. On top of that we are looking at growth outside of the U.S. in the international markets, we’ve got a very good distribution network, we’ve got a base business of infectious diseases in place, which we would look to marry with the Immco range of products, there are natural synergies there and so that is about as an opportunity as well. As is the case in the U.S. prior to the acquisition Immco made very little sales directly in the U.S. They essentially is another sales force. We have obviously now plugged that product range into our sales network and looking to get growth there through again giving them the first opportunity to sell in the U.S., but also by having synergies at are existing infectious diseases business.

And then the growth margin ticked up nicely compared to the past two quarters, how should we think about gross margins going forward?

What I would say about gross margin is, gross margins will hope around quite a bit and the reason being that there are lot of factors that have played there, you are talking about sales mix, even within sales mix you allow customer mix layer on top of that you have got currency issues and then other factors can effect like levels of production etcetera timing of which batches our completed etcetera. There are a whole range of factors that go into it. So, I would never, I would always caution people about sort of expecting them to be very linear and predictable per say. They were always [indiscernible] of hopping around per say. We expect that over time that we will improve the key drivers to make that happen will be one, obviously a growth in revenue, by virtue of the fact that we have got a very significant fixed cost base, the more we can drive through our cost save the greater we will be able to spread our overheads and that would help us in terms of our gross margin. We also have out here our premier business the more instruments we put out in the field, the more throughput that we will get in those instruments and the reagents pull through essentially the higher margin business. So, over time that has been increasing each quarter, obviously we started with a very low base because initially we are putting out very significant numbers of instruments, which would be very low margins and then over time building up a revenue stream of reagents, let’s say which are higher margin. So, those types of factors will lead to an underlying growth, that’s before cardiac comes on or cardiac separately. So you can expect it to go up but I caution again they’re expecting just a very linear growth rates. There are a number of factors, they play each quarter and 13 weeks is very short. So I’ll be looking at underlying trend over a number of quarters rather than from one quarter to the next. I did say I come back to cardiac. When we get up to speed of cardiac post launch, you can expect higher margins again there. So if you’re looking at the medium to long term that’s a further driver of improved margin for the company.

Great and I just have one more question. Congrats on returning to the positive revenue growth, reported revenue growth in the quarter. Going forward, I know you don’t give guidance but can you just talk about how you feel you’re positioned to continue and sustain that year-over-year quarterly revenue growth on the positive side going forward? Thanks.

Yes. Chris, I think Larry asked something there, Bill asked something there and so I just repeat what I said there. We don’t have huge – we don’t have much visibility on quarter three for example. I do think the quarter one was of course we won’t see repeated over an unusually poor quarter, and I would expect that quarter three would match or exceed quarter two. And similarly for quarter four, let’s say, that we have less confidence for quarter four because typically it’s just a slightly – it’s a slightly softer quarter because Lyme, for example, disappears in quarter four. But certainly quarter three is looking stronger than this quarter, but visibility at this moment in time in the middle of – just after the middle of July isn’t great but I would certainly see nothing like quarter one again and I think quarter two will be beaten next quarter.

Okay. Thanks for the time guys.

[Operator Instructions] Our next question comes from Nicholas Johnson of Raymond James. Please go ahead.

Hey, guys. Just wanted to talk a little bit about the balance sheet and cash flow use for the balance of the year. Certainly you’ve always been acquisitive, we haven’t seen a deal about a year or so. So just wanted to get your thoughts on the pipeline and then secondly on kind of free cash flow. I would assume that some of the capitalized R&D tied towards the Meritas launch. We’ll start to ease a bit but I would assume some of the operating expenses associated with ramping up that sales force might be an offsetting. But just wanted to get your views on where the cash on the balance sheet looks at your end? Thanks.

Nicholas, your question there in relation to the free cash flow, you’re correct absolutely when you say that the investment in the Meritas will decrease. We are going through a phase now. We are actually having reduced expenditure in relation to Troponin you’d have seen that in the cash flow compared to say this time last and we will be spending an awful lot of money on trials etc. We’re putting a lot of resources into that. The whole process of getting back to the FDA is hugely a labor intensive, lot of work going into that and obviously there were certain amount of third party cost associated with trials and for the additional data, but that has been coming down. I will point out though that the EMP is still going through very much. Its regulatory process and the cash intensive phase of its trials etc where the trials and sales are nearly completed the cash as you can imagine tends to follow a little bit afterward. So that remain to be a feature for some time. You’re right as well that there is an off selection relation to the investment from making a relation to the SG&A cost. So I do expect that there will be an improvement from that sort of nice position in terms of investments and in terms of the intangible costs versus the OpEx as such. In relation to the rest of the business and it only meets [indiscernible] as the level of revenues will very much drive the profitability. The profitability will drive the operational cash flows per se. So whilst we are not giving guidance in relation to revenues, the stronger the quarters we have will be better for the operational cash flows per se.

Okay, then on M&A? Ronan O’Caoimh: With M&A, we are continuing to seek out acquisitions and we’re looking at few things at the moment. We really at all times in the past year we have been looking at something finding difficulty really with price expectations of vendors, but we are looking at a couple of things at the moment. But we are – I couldn’t say that we are anyway close to doing a deal. We are just really continuing to search, finding it little bit frustrating but have to determine not to overpay. So we’re just continuing on our search, nothing to report.

Okay. And then my last question would be on Troponin in terms of the national lab agreement that you called out that should help drive an acceleration of the current revenue base that you disclosed earlier in the call, just wanted to get a little bit more details if you can? I know it’s perhaps a contract that you can’t disclose but any broader thoughts there might be helpful in terms of the magnitude of opportunity there. Thank you. Ronan O’Caoimh: There is only two national mega-labs [indiscernible] so it’s fair enough to say which one it is but it is a significant development for us because they will be processing quite a lot of dry eye samples. And so really it actually has – it will have a significant impact on our business in terms of how, what percentage it can grow 30%, 40% over a period of the year. It is that kind of potential. But that still needs – it still needs input from Bausch & Lomb sales reps because really want to tell, it opens up a market that was previously closed to us but it’s not just – you still have to sell us to the specialist if you’re following. So basically in the absence of a deal with either Quest or LabCorp, some of that customer wasn’t available to us and now is worthy.

Okay. Thanks for the color. Nice job on the quarter. Ronan O’Caoimh: I think it’s a typical stage. I think there is only one question left which is Paul from Novel Equity. So I think maybe we’ll make that the last question if we could and then we’d wrap it up.

Our next question is from Paul Norrie of Novel Equity. Please go ahead.

Hi, thanks for taking my question. A quick one, why the inventory build in the quarter?

Our inventories tend to fluctuate a bit as well partially due to seasonal factors. We are entering now the heavy lime season, so we’ve been building up our inventory in advances as we tend to manufacture more in quarter two than for any other quarter so that we’ve got the inventory available to service customers in quarter three. We also had unusually low HIV inventory at the end of quarter one, so we have built up back up again somewhat as well. So you’re seeing what was unusual dip in quarter one being reversed in quarter two. We are very optimistic in relation to the rest of the year in relation to Premier. We’ve bought a lot of parts there in relation to manufacturing but also spare parts. We carry a significant spare parts inventory in line with the continued growth of our installed base. So there are a number of factors driving that but again I would caution and looking at one quarter versus the next, I would tend to look over a period of time rather than one.

Okay. Thanks.

Okay. Thanks, Paul.

So maybe at this stage, I would close up the call. Thank you very much everybody for your support and look forward to talking to you again in a couple of months time, so good-bye and good afternoon.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your lines. Have a great day.