Dan Hurren

Dan Hurren asked CFO Brett Sandercock about the SG&A growth exceeding revenue growth, questioning if it was due to transient acquisition-related expenses or a higher baseline from promotional activities and sales force investments.

Answer

CFO Brett Sandercock clarified that excluding the Virtuox acquisition, SG&A growth would be in the high single digits, aligning more closely with revenue growth. He also mentioned specific marketing programs and promotions, such as China's Singles' Day, contributing to expenses.

Dan Hurren asked about the SG&A growth exceeding revenue growth, questioning if it was due to transient acquisition expenses or a higher baseline from promotional activities and sales force investments.

Answer

CFO Brett Sandercock explained that the VirtuOx acquisition had some impact, and excluding it, SG&A growth would be in the high single digits, tracking closer to revenue growth. He also mentioned marketing programs like China Singles' Day contributing to the increase.

Dan Hurren from MST Financial asked for details on the significant gross margin expansion and the key factors supporting the strong guidance for fiscal year 2026.

Answer

CFO Brett Sandercock attributed the margin improvement to procurement, manufacturing, and logistics efficiencies, noting that favorable FX accounted for nearly half the sequential gain. CEO Michael Farrell added that a new science-based approach to supply chain gives them confidence in the 61-63% guidance for FY26.

Dan Hurren from MST Financial asked for details on the strong gross margin performance and the factors supporting the optimistic guidance for fiscal year 2026, including the impact of foreign exchange.

Answer

CFO Brett Sandercock attributed the Q4 margin expansion to procurement, manufacturing, and logistics efficiencies, with favorable foreign currency movements accounting for nearly half of the sequential improvement. CEO Michael Farrell added that a new 'science-based approach' to supply chain provides confidence in the FY2026 guidance of 61% to 63%, noting a sustainable pipeline of improvements.

Dan Hurren of MST Marquee, on behalf of Andrew Goodsall, asked if the U.S. tariff exemption applies to all CPAP therapy imports, noting a competitor might be pulling Chinese-made products.

Answer

CEO Michael Farrell clarified that ResMed's exemption, which it has held for decades and recently reaffirmed, is specific to its products imported from Australia and Singapore under the Nairobi Protocol. He suggested that competitors importing from other countries, such as China, would face a different situation and should be asked directly about their status.

Dan Hurren inquired about the forward-looking impact of foreign currency fluctuations on ResMed's P&L, particularly on gross margin, based on current spot rates and the strong U.S. dollar.

Answer

Executive Brett Sandercock explained that while Q2 saw a $0.02 negative impact on EPS from FX, the outlook for Q3 is expected to be relatively neutral for gross margin. He noted that benefits from a weaker Singapore and Australian dollar would likely offset the weakness in the euro, with a slight net benefit expected on a headline basis for R&D and SG&A.

Daniel Hurren inquired about ResMed's M&A priorities, the potential scale of "tuck-in" acquisitions given its debt capacity, and the overall capital management strategy.

Answer

CEO Michael Farrell highlighted successful tuck-ins like Snap and Somnoware that add digital capabilities. CFO Brett Sandercock defined "tuck-in" as potentially up to $500 million and outlined the capital priorities as R&D investment, tuck-in M&A, and an increasing quarterly share buyback program.