Full Press Release Details
| NEWS RELEASE | |
| CONTACT : CONMED Corporation Luke A. Pomilio Chief Financial Officer 315-624-3202 LukePomilio@conmed.com |
CONMED Corporation Announces Third Quarter 2016 Financial
Utica, New York, October 27,
2016 --- CONMED Corporation (Nasdaq: CNMD) today announced financial results for the third quarter ended September 30, 2016.
Third Quarter 2016 Highlights
"We are encouraged by the
continued progress in our international markets, strong contribution from AirSeal , and solid organic growth within
General Surgery. While the rebuilding of our domestic Orthopedics franchise is taking longer than expected, we feel confident
that we are making the appropriate changes to return this business to growth. Overall, we are pleased with a return to positive
organic growth on a constant currency basis," commented Curt R. Hartman, CONMED's President and Chief Executive Officer.
"As we close out the year, we look to build upon the recent momentum across several of our businesses while continuing to
focus on improving operating efficiencies and reaccelerating organic growth across all of our product categories."
For the quarter ended September
30, 2016, domestic sales, which represented 53.7% of total revenue, increased 13.0% as strong growth in General Surgery was partially
offset by declines in Orthopedics and Visualization. The SurgiQuest acquisition contributed to 32.1% year-over-year growth in the
U.S. General Surgery business. International sales, which represented 46.3% of total revenue, increased 5.1% compared to the third
quarter of 2015 on a reported basis. Foreign currency exchange rates, including the effects of the FX hedging program, had a negative
impact of $3.4 million on third quarter sales. In constant currency, international sales increased 9.2% versus the prior-year period.
For the quarter ended September
30, 2016, reported net earnings totaled $7.3 million, compared to reported net earnings of $8.9 million a year ago. Reported diluted
net earnings per share were $0.26 in the quarter, compared to reported diluted net earnings per share of $0.32 in the prior-year
period. Reported net earnings for 2016 include business acquisition and restructuring costs, as well as a gain on the sale of the
Company's facility in Centennial, Colorado, while reported net earnings for 2015 include restructuring costs. The effect
of each of these items on reported net earnings and reported diluted net earnings per share appears in the reconciliation of GAAP
to non-GAAP measures below.
The Company excludes the after-tax
costs of special items including acquisitions, restructuring, the gain on the sale of the Company's facility in Centennial,
Colorado, and debt refinancing, as well as amortization of intangible assets, net of tax, from its adjusted diluted net earnings
per share. Excluding the impact of these items, adjusted net earnings(2) of $11.5 million decreased 8.0% year over year
and adjusted diluted net earnings per share(1) of $0.41 decreased 8.9% year over year. The decrease in adjusted net
earnings was largely attributable to lower gross margin, higher R&D as a percentage of sales, and the unfavorable impact of
foreign exchange rates, partially offset by a lower tax rate during the quarter.
There is no change to CONMED's
previously issued financial guidance. The Company continues to expect 2016 constant currency organic sales growth in the range
of -1% to 1% and sales related to the SurgiQuest acquisition in the range of $62 to $67 million. Based on foreign currency exchange
rates as of October 21, 2016, the Company continues to anticipate the negative impact of foreign exchange for the year in the range
of $17 to $19 million.
The Company continues to expect
2016 reported sales in the range of $757 to $767 million, which represents growth of 5.3% to 6.7% over reported 2015 revenue of
$719 million. Adjusted diluted net earnings per share are still expected in the range of $1.83 to $1.93. The adjusted diluted net
earnings per share estimates for 2016 exclude the cost of special items including acquisition costs, restructuring costs, the gain
on the sale of the Company's facility in Centennial, Colorado, and debt refinancing, which are now estimated in the range
of $19 to $21 million, net of tax, compared to the previous range of $21 to $23 million, and amortization of intangible assets,
which continue to be estimated in the range of $12 to $14 million, net of tax.
Supplemental Financial Disclosures
(1) A reconciliation
of reported diluted net earnings per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears below.
(2) A reconciliation
of reported net earnings to adjusted net earnings, a non-GAAP financial measure, appears below.
In conjunction with this earnings
press release, CONMED has prepared supplemental financial disclosures which are available on the home page of the "Investors
- Financial Reports" section of the Company's website at www.conmed.com.
The Company's management will
host a conference call today at 5:30 p.m. ET to discuss its third quarter 2016 results.
To participate in the conference
call, dial 844-889-7792 (domestic) or 661-378-9936 (international) and enter the passcode 95238932.
This conference call will also
be webcast and can be accessed from the "Investors" section of CONMED's website at www.conmed.com. The webcast
replay of the call will be available at the same site approximately one hour after the end of the call.
A recording of the call will also
be available from 8:30 p.m. ET on Thursday, October 27, 2016, until 7:30 p.m. ET on Thursday, November 10, 2016. To hear this recording,
dial 855-859-2056 (domestic) or 404-537-3406 (international) and enter the passcode 95238932.
About CONMED Corporation
CONMED is a medical technology
company that provides surgical devices and equipment for minimally invasive procedures. The Company's products are used
by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, neurosurgery, and
gastroenterology. The Company distributes its products worldwide from several manufacturing locations. CONMED has a direct selling
presence in 17 countries, and international sales constitute approximately 50% of the Company's total sales. Headquartered
in Utica, New York, the Company employs approximately 3,400 people. For more information, visit www.conmed.com.
Forward-Looking Statements
This press release and today's
conference call may contain forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties,
which could cause actual results, performance, or trends to differ materially from those expressed in the forward-looking statements
herein or in previous disclosures. For example, in addition to general industry and economic conditions, factors that could cause
actual results to differ materially from those in the forward-looking statements may include, but are not limited to, the risk
factors discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Any and all forward-looking
statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to
the Company's performance on a going-forward basis. The Company believes that all forward-looking statements made by it have
a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as expressed in
the forward-looking statements will actually occur or prove to be correct.
Supplemental Information - Reconciliation
of GAAP to Non-GAAP Financial Measures
The Company supplements the reporting
of its financial information determined under accounting principles generally accepted in the United States (GAAP) with certain
non-GAAP financial measures, including percentage sales growth in constant currency; adjusted gross profit; cost of sales excluding
specified items; adjusted selling and administrative expenses; adjusted operating income; adjusted income tax expense; adjusted
effective income tax rate; adjusted net earnings and adjusted diluted net earnings per share (EPS). The Company believes that these
non-GAAP measures provide meaningful information to assist investors and shareholders in understanding our financial results and
assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other
adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative
of, or are unrelated to, our core operating results and provide a baseline for analyzing trends in the Company's underlying
business. Further, the presentation of EBITDA is a non-GAAP measurement that management considers useful for measuring aspects
of the Company's cash flow. Management uses these non-GAAP financial measures for reviewing the operating results and analyzing
potential future business trends in connection with our budget process and bases certain management incentive compensation on these
non-GAAP financial measures.
To measure percentage sales growth
in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability
and trend of sales. To measure earnings performance on a consistent and comparable basis, the Company excludes certain items that
affect the comparability of operating results and the trend of earnings. These adjustments are irregular in timing, may not
be indicative of our past and future performance and are therefore excluded to allow investors to better understand underlying